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, 2004

[ ] 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 Number)
 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    New York Stock Exchange
        and guaranteed by First Banks, Inc.)

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

                  10.24% Cumulative Trust Preferred Securities
                   (issued by First Preferred Capital Trust II
                      and guaranteed by First Banks, Inc.)
                                (Title of class)

                   9.00% Cumulative Trust Preferred Securities
                  (issued by First Preferred Capital Trust III
                      and guaranteed by First Banks, Inc.)
                                (Title of class)

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

                      Yes   X            No
                         -------            -------


         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act).

                      Yes                No    X
                         -------            -------

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K 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
amendments to this Form 10-K. [ X ]

         None of the voting stock of the Company is held by  nonaffiliates.  All
of the  voting  stock of the  Company  is owned by  various  trusts,  which were
created 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 25, 2005, there were 23,661 shares of the registrant's  common
stock outstanding.

<PAGE>

<TABLE>
<CAPTION>


                                                   FIRST BANKS, INC.

                                             2004 FORM 10-K ANNUAL REPORT

                                                  TABLE OF CONTENTS
                                                                                                          Page
                                                                                                          ----
                                                       Part I
<S>                                                                                                       <C>
     Item 1.    Business...............................................................................     1
     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..........................................    17
     Item 6.    Selected Financial Data................................................................    18
     Item 7.    Management's Discussion and Analysis of Financial Condition and
                    Results of Operations..............................................................    19
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.............................    51
     Item 8.    Financial Statements and Supplementary Data............................................    51
     Item 9.    Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure...........................................................    51
     Item 9A.   Controls and Procedures................................................................    51

                                                     Part III
     Item 10.   Directors and Executive Officers of the Registrant.....................................    52
     Item 11.   Executive Compensation.................................................................    56
     Item 12.   Security Ownership of Certain Beneficial Owners and Management
                    and Related Stockholder Matters....................................................    57
     Item 13.   Certain Relationships and Related Transactions.........................................    58
     Item 14.   Principal Accountant Fees and Services.................................................    59

                                                     Part IV
     Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................    60

     Signatures .......................................................................................   106
</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,
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 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.  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 and
headquartered in St. Louis County, Missouri. We operate through our wholly-owned
subsidiary  bank  holding   company,   The  San  Francisco   Company,   or  SFC,
headquartered  in San Francisco,  California,  and its  wholly-owned  subsidiary
bank,  First Bank,  headquartered  in St.  Louis  County,  Missouri.  First Bank
currently  operates 167 branch  offices in  California,  Illinois,  Missouri and
Texas.  Since 1994, our  organization  has grown  significantly,  primarily as a
result of our  acquisition  strategy,  as well as through  internal  growth.  At
December 31, 2004,  we had total assets of $8.73  billion,  total loans,  net of
unearned discount,  of $6.14 billion,  total deposits of $7.15 billion and total
stockholders' equity of $600.9 million.

         Through First Bank,  we offer a broad range of commercial  and personal
deposit  products,  including  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.  We also offer 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  real  estate  loans,
asset-based loans and trade financing. Other financial services include mortgage
banking, debit cards,  brokerage services,  credit-related  insurance,  internet
banking,  automated teller machines,  telephone banking,  safe deposit boxes and
trust, private banking and institutional money management services.

         Primary  responsibility  for managing our banking  units rests with the
officers  and  directors  of each  unit,  but we  centralize  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.

         Since 1996,  we have formed nine  financing  entities  that  operate as
affiliated business or statutory trusts.  These trusts 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.  These interest and  distribution  payments are
paid quarterly in arrears, in March, June, September, and December of each year,
with the exception of the trust  preferred  securities and related  subordinated
debentures  of First Bank  Capital  Trust,  which are payable  semi-annually  in
arrears on April 22nd and October 22nd of each year. The  distributions  payable
on  our  subordinated  debentures  are  included  in  interest  expense  in  our
consolidated statements of income.
<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, is as follows:
<TABLE>
<CAPTION>

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

<S>                                                  <C>                      <C>          <C>             <C>
First Preferred Capital Trust II   October 2000      Publicly Underwritten    10.24        57,500,000      59,278,375
First Preferred Capital Trust III  November 2001     Publicly Underwritten     9.00        55,200,000      56,907,250
First Bank Capital Trust            April 2002         Private Placement      Variable     25,000,000      25,774,000
First Bank Statutory Trust          March 2003         Private Placement       8.10        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 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
</TABLE>

         Each of our existing financing entities operates as a Delaware business
trust with the  exception of First Bank  Statutory  Trust,  which  operates as a
Connecticut  statutory  trust.  The trust preferred  securities  issued by First
Preferred  Capital Trust II and First  Preferred  Capital Trust III are publicly
held and traded on the Nasdaq Stock Market's  National Market system.  The trust
preferred  securities  issued by First  Preferred  Capital Trust IV are publicly
held and traded on the New York Stock Exchange.  The trust preferred  securities
issued by First Bank  Capital  Trust,  First Bank  Statutory  Trust,  First Bank
Statutory  Trust II and First Bank  Statutory  Trust III were  issued in private
placements  and rank  equal to the trust  preferred  securities  issued by First
Preferred  Capital Trust II and First Preferred  Capital Trust IV, and junior to
the trust preferred  securities issued by First Preferred Capital Trust III. The
trust  preferred  securities  have no voting  rights  except in certain  limited
circumstances.
<PAGE>

         Various trusts,  which were created 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. Mr. Dierberg and his family,
therefore, control our management and policies.

Strategy. In  the  development  of  our  banking  franchise,  we  acquire  other
financial  institutions  as  one  means  of  achieving  our  growth  objectives.
Acquisitions may serve to enhance our presence in a given market,  to expand the
extent of our market area or to enable us to enter new or noncontiguous markets.
Due to the nature of our  ownership,  we have  elected  to only  engage in those
acquisitions  that  can  be  accomplished  for  cash,  rather  than  by  issuing
securities.  However, by using cash in our acquisitions,  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.  Furthermore,  the intangible  assets recorded in conjunction with these
acquisitions  create an immediate  reduction  in our  regulatory  capital.  This
reduction,   as  required  by  regulatory  policy,  provides  further  financial
disincentives to paying large premiums in cash acquisitions.

         Recognizing   these   facts,   we  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.  However, we
may  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.

         During  the  five  years  ended   December  31,   2004,   we  primarily
concentrated  our  acquisitions  in  Illinois  and  California,   completing  12
acquisitions  of banks,  one  acquisition of a loan  origination  business,  one
acquisition of a leasing  company,  and two purchases of branch  offices,  which
provided us with an  aggregate  of $3.23  billion in total assets and 52 banking
locations  as of the dates of the  acquisitions.  Additionally,  certain  of our
acquisitions  have  occurred in our other  geographic  markets of  Missouri  and
Texas.  In 2003,  we further  expanded our Midwest  banking  franchise  with our
acquisition of Bank of Ste. Genevieve in Ste. Genevieve,  Missouri.  In 2002, we
completed our acquisition of a bank holding company in Des Plaines, Illinois, as
well as the purchase of two branch offices in Denton and Garland, Texas. On July
30,  2004,  we  expanded  our  Chicago,  Illinois  banking  franchise  with  our
acquisition of Continental  Mortgage  Corporation - Delaware,  or CMC in Aurora,
Illinois.  On August 31, 2004,  we acquired  substantially  all of the assets of
Small Business Loan Source, Inc. in Houston, Texas, which originates,  sells and
services   loans  to  small  business   concerns.   On  November  30,  2004,  we
significantly  expanded  our  Chicago,   Illinois  banking  franchise  with  our
acquisition  of Hillside  Investors,  Ltd.,  or Hillside,  and its  wholly-owned
banking  subsidiary,  CIB  Bank  (collectively,  CIB).  The  acquisition  of CIB
represented  the largest  acquisition  in our  history,  providing us with total
assets of $1.20 billion and expanding our branch banking  network in the Chicago
metropolitan area by an additional 16 branches.  These acquisitions have allowed
us to significantly expand our presence throughout our geographic areas, 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  activities  required are  specifically  dependent  upon the
individual  circumstances  surrounding  each  acquisition,  the  majority of our
efforts have been concentrated in various areas including, but not limited to:

         >>    improving asset quality;

         >>    reducing  unnecessary,   duplicative  and/or  excessive  expenses
               including  personnel,  information  technology  and certain other
               operational and administrative expenses;
<PAGE>

         >>    maintaining,  repairing  and,  in some cases,  refurbishing  bank
               premises necessitated by the deferral of such projects by some of
               the acquired entities;

         >>    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;

         >>    relocating  branch  offices which are not adequate,  conducive or
               convenient for banking operations; and

         >>    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  significant  resources to  reorganize
staff,  recruit  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  contributed  to the increases in  noninterest
expense,  and  resulted in the  creation of new banking  units  within the newly
integrated  combined entity,  which conveyed a more consistent image and quality
of service.  The new banking units provided a broad array of banking products to
their  customers  and compete  effectively  in their  marketplaces,  even in the
presence of other financial institutions with much greater resources. While some
of these modifications did not contribute to reductions of noninterest  expense,
they  contributed to the commercial and retail business  development  efforts of
the banks, and ultimately to their prospects for improving future profitability.

         In 2002 and 2003,  our  acquisition  prospects  were  somewhat  limited
primarily due to the market environment requiring  significantly higher premiums
in order  to  transact  financial  institution  acquisitions.  As a  result,  we
expanded our business  strategy to include the opening of de novo branch offices
as another means of further achieving our growth objectives.  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. In 2004,
we opened de novo branches in Houston and McKinney,  Texas, Wildwood,  Missouri,
which is  located  in West  St.  Louis  County,  and in San  Diego,  California.
Furthermore,  in  January  2005,  we  opened  an  additional  de novo  branch in
Farmington,  Missouri, which has experienced substantial growth during its first
few weeks of  operation.  We expect to further  concentrate  our efforts on this
portion of our business strategy while continuing to identify viable acquisition
candidates at more reasonable  acquisition  premiums that are commensurate  with
our established acquisition strategy.

         In conjunction with our de novo and acquisition  strategy, we have also
focused on building and reorganizing the infrastructure  necessary to accomplish
our  objectives  for internal  growth.  This  process has  required  significant
increases  in the  resources  dedicated  to  commercial  and  consumer  business
development,  financial  service  product  line  and  delivery  systems,  branch
development and training, advertising and marketing programs, and administrative
and  operational  support.  In  addition,  during  1999,  we began  an  internal
restructuring  process  designed  to better  position  us for future  growth and
opportunities expected to become available as consolidation and changes continue
in the  delivery  of  financial  services.  The  magnitude  of this  project was
extensive  and covered  almost  every area of our  organization.  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 that 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.

Lending Activities.  Our enhanced business development resources assisted in the
realignment of certain acquired loan  portfolios,  which were skewed toward loan
types that  reflected  the abilities and  experiences  of the  management 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 which were
acquired  during this time through  payments,  refinancing  with other financial
institutions,  charge-offs  and,  in  certain  instances,  sales of loans.  As a
result,  our  portfolio  of  consumer  and  installment  loans,  net of unearned
discount,  decreased significantly from $225.3 million, or 5.69% of total loans,
excluding  loans held for sale, at December 31, 1999 to $49.7 million,  or 0.83%
of total  loans,  excluding  loans held for sale,  at  December  31,  2004.  The
decrease  primarily  reflects  reductions in our indirect auto,  credit card and
student loan portfolios. The sale of our student loan and credit card portfolios
in  2001,  which  totaled   approximately   $16.9  million  and  $13.5  million,
respectively, at the time of sale, was consistent with our objective of reducing
the amount of less  profitable  loans and expanding our  commercial  lending and
other consumer loans, including home equity loans. We do not have any continuing
involvement in the  transferred  assets  relating to the student loan and credit
card portfolios sold in 2001. Our expansion of other consumer loans is reflected

<PAGE>

in our portfolio of one-to-four  family  residential real estate mortgage loans,
excluding loans held for sale, which increased from $720.6 million,  or 18.2% of
total  loans,  excluding  loans held for sale,  at  December  31, 1999 to $870.9
million,  or 14.50% of total loans,  excluding  loans held for sale, at December
31, 2004.  Loans held for sale increased from $37.4 million at December 31, 1999
to $133.1 million at December 31, 2004.

         As these components of our loan portfolio  decreased,  we replaced them
with  higher  yielding  loans that were  internally  generated  by our  business
development   function.   With  our  acquisitions,   we  expanded  our  business
development  function into the new market areas in which we were then operating.
We have continued to grow through internal growth and acquisitions, and recently
completed the largest acquisition in our history in November 2004. Consequently,
in spite of relatively  large  reductions in certain  acquired  portfolios,  our
aggregate loan portfolio, net of unearned discount,  increased 53.59% from $4.00
billion at December 31, 1999 to $6.14 billion at December 31, 2004.

         Our  business   development   efforts  are  primarily  focused  on  the
origination  of  loans  in  three  general  types:  commercial,   financial  and
agricultural  loans,  which totaled $1.57 billion,  or 25.57% of total loans, at
December 31, 2004;  commercial real estate  mortgage loans,  which totaled $2.09
billion,  or 34.02% of total loans, at December 31, 2004; and  construction  and
land development loans,  which totaled $1.32 billion,  or 21.48% of total loans,
at December  31, 2004.  We have also  focused our efforts on  retaining  certain
residential real estate mortgage loans in our loan portfolio. Such loans totaled
approximately $871,000, or 14.12% of total loans, at December 31, 2004.

         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  primary  geographic  trade areas of Missouri,  Illinois,  California 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.  The largest
general  concentration in this portfolio,  that is not homogeneous in nature, is
agricultural which totals approximately $30.9 million, representing 1.97% of the
commercial,  financial  and  agricultural  portfolio at December 31, 2004.  This
portfolio, however, is diverse in geography and collateral, secured by a mixture
of  agricultural   equipment,   livestock  and  crop  production.   The  largest
homogeneous  industry  segment  included  within this portfolio is the fast-food
restaurant  segment,  in which we had total loans  outstanding of  approximately
$54.4  million,  representing  3.47% of this  portfolio  at December  31,  2004.
Diversity in this segment of our portfolio is  represented by both geography and
a mixture  of loans to both  franchisees  and  franchisors,  with  77.29% of the
portfolio involving loans to franchisees and 22.71% to franchisors.  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 with our commercial borrowers,  particularly deposit
accounts.

         Commercial  real  estate  loans  include  loans for which the  intended
source of  repayment  is the  rental  and  other  income  from the real  estate,
including  commercial  real estate  developed for both lease and owner  occupied
commercial  real estate.  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,  although  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 seven  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>

         Construction  and  land  development  loans  include   commitments  for
construction  of both  residential  and commercial  properties.  Commercial real
estate projects 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  require  lease
commitments  from a substantial  primary tenant or tenants prior to commencement
of  construction.  We finance some projects for  borrowers  whose home office is
within our trade area for which the particular project may be outside our normal
trade area.  However,  we generally do not engage in developing  commercial  and
residential construction lending business outside of 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.

         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 personal guarantees of the
principals of the borrowing entity.

         Our commercial leasing portfolio totaled $5.9 million and $67.3 million
at December 31, 2004 and 2003, respectively.  This portfolio consisted of leases
originated by our former subsidiary, First Capital Group, Inc., headquartered in
Albuquerque,   New  Mexico,  primarily  through  third  parties,  on  commercial
equipment  including  aircraft parts and equipment.  During 2002, we changed the
nature of this business,  ultimately  deciding to discontinue  the operations of
First  Capital  Group,  Inc.  and the transfer of all  responsibilities  for the
existing portfolio to a new leasing staff in St. Louis, Missouri. Our commercial
leasing  portfolio at December 31, 2001 was  comprised of  approximately  40% of
leases of parts and  equipment to the  commercial  airline  industry and related
aircraft  service  providers.  This  equipment  consisted  primarily of engines,
landing  gear  and  replacement  parts,  most of which  was used in  maintenance
operations  by  commercial   airlines  or  by  third  party  vendors  performing
maintenance for the airlines, in addition to several leases for smaller aircraft
used by charter  services.  Earlier in 2001, the airline industry in general was
experiencing problems with overcapacity, and as a result, had begun reducing its
requirements  for new and replacement  aircraft.  This was evidenced by airlines
taking portions of their fleets, particularly older less efficient aircraft, out
of service and reducing  orders for new  equipment.  This  affected  maintenance
operations  because  as  the  usage  of  aircraft  decreased,   the  maintenance
requirements were also reduced.  Consequently, by late 2001, we discontinued new
leases of equipment related to the airline industry. While some of the leases in
our portfolio had evidenced  problems by early 2001,  overcapacity  problems and
resulting  financial  distress in the commercial  airline  industry  became more
critical  after the  terrorist  attacks  of 2001.  Following  these  events,  we
re-evaluated  our  aviation  related  lease  portfolio  to examine  our  overall
exposure  to the  industry,  the  effects  of  recent  trends on  valuations  of
equipment and the financial strength of our lessees.  As a result of our review,
we incurred significant  charge-offs during 2002 and 2003 in connection with the
aircraft  leasing  portfolio,  resulting in a reduction of the aviation  related
lease  portfolio  from $60.1  million at December  31, 2001 to $19.6  million at
December 31, 2003.  This portfolio has been further  reduced to $4.1 at December
31, 2004. Furthermore, we recorded net lease charge-offs of $5.5 million in 2003
related to three equipment  leases that were unrelated to the airline  industry.
On June  30,  2004,  we  completed  the  sale of a  significant  portion  of our
commercial leasing portfolio, resulting in a reduction of the commercial leasing
portfolio  by $33.1  million to $9.6  million.  The  portfolio  has been further
reduced  to  $5.9  million  at  December  31,   2004,   including   $907,000  of
nonperforming  leases,  reflecting our overall  business  strategy to reduce our
commercial leasing activities.

         Our expanded level of commercial lending carries with it greater credit
risk,  which we manage through uniform loan policies,  procedures,  underwriting
and credit administration.  As a consequence of such greater risk, the growth of
our loan  portfolio  must also be  accompanied  by adequate  allowances for loan
losses. Nonperforming loans increased $10.4 million in 2004, remained relatively
constant in 2003, with a $199,000 increase from December 31, 2002, and increased
$7.9  million and $14.1  million for the years ended  December 31 2002 and 2001,
respectively.  We associate the  higher-than-historical  level of  nonperforming
loans  during these  periods  with our  acquisitions  and  increased  commercial
lending  activities.  During  2004,  we showed  substantial  improvement  in our
existing  portfolio  of  nonperforming  loans as a result  of  significant  loan
payoffs,  the  sale  of a  portion  of  our  commercial  leasing  portfolio  and
management's decision to sell certain nonperforming loans to reduce the level of
such assets, as further discussed under "--Loans and Allowance for Loan Losses."
However,  this improvement was offset by a significant increase in nonperforming
loans  acquired  with the loan  portfolios of CMC,  Small  Business Loan Source,
Inc., or SBLS, and CIB. Nonperforming loans at December 31, 2004 attributable to
these   acquisitions   were  $58.6  million,   or  approximately  68%  of  total
nonperforming  loans. Of this amount, $50.5 million was attributable to the loan
portfolio of CIB. In addition,  the loan portfolios of Millennium Bank and Union
Financial  Group,   Ltd.,  or  Union,  which  we  acquired  in  2000  and  2001,
respectively,  exhibited significant distress,  which further contributed to the
overall increase in nonperforming loans over historical levels.
<PAGE>

         Millennium  Bank,  which  operated a factoring  business  for  doctors,
hospitals and other health care  professionals,  had approximately $11.0 million
of  receivables  at the  time  of  our  acquisition  in  late  2000.  Due to the
relatively short life of this operation,  the portfolio did not exhibit signs of
problems at that time.  Consequently,  we allowed the business to continue after
the acquisition to determine whether it would be an appropriate line of business
in the future. However, in late 2001, the factoring receivables began to exhibit
signs of distress,  and in early 2002, we determined one of the larger borrowers
was incorrectly accounting for its receivables,  causing the factored balance to
be substantially over-funded.  During 2002, other asset quality issues arose and
we  charged  off  approximately  $2.6  million,  or 24.8%,  of the  health  care
factoring  portfolio.  At December 31, 2002,  we had $10.2  million of factoring
business  receivables,  which  further  declined to $2.1 million at December 31,
2003. The remaining balance of the factoring business receivables was reduced to
zero during 2004,  reflecting our decision to discontinue this line of business.
Since no value was assigned to goodwill or other intangible  assets of this line
of  business  in the  acquisition,  we  determined  that this did not  create an
impairment of the goodwill that we recorded in connection with the acquisition.

         In evaluating the loan portfolios of Union's two subsidiary banks prior
to its  acquisition,  it was clear that  substantial  problems  existed in those
portfolios.  Generally,  credit documentation was poor,  underwriting  standards
were lax and loan terms  were  aggressive.  As we  conducted  our due  diligence
review,  we applied the same asset  quality  standards,  risk rating  system and
allowance  methodology  that we apply to our own loan  portfolio.  Based on this
review, and to address concerns we had regarding Union's loan portfolios and the
level  of its  allowance  for  loan and  lease  losses,  an  escrow  account  of
approximately  $1.6 million was  established  at the time of the  acquisition by
withholding  that  amount  from the  purchase  price.  This  escrow  account was
available to absorb losses during the two-year period  following the acquisition
from Union's loan  portfolio  that were in excess of Union Bank's  allowance for
loan  and  lease  losses  at the  time  of the  due  diligence  review.  Union's
consolidated allowance for loan and lease losses was $8.6 million relative to an
aggregate  loan  portfolio of $262.3  million at December 31, 2001,  the date of
acquisition.  While we believed there were  substantial  problems with the Union
loan  portfolio,  few of these had been  identified  or addressed by Union as of
December  31,  2001.  Consequently,  when we  assimilated  these  loans into our
systems and  procedures,  the  problems in the  portfolio  surfaced,  causing an
increase in the amount of problem  assets,  as well as contributing to the level
of loans  charged-off  during 2002. Loan  charge-offs  from the Union portfolios
were $1.8  million,  $1.4 million and $5.2 million for the years ended  December
31, 2004, 2003 and 2002, respectively, including an amount within the Union Bank
portfolio  that was in excess of the  allowance at the date of our due diligence
review and the entire $1.6 million escrow  account.  Nonperforming  loans in the
Union  portfolio have decreased to $3.0 million at December 31, 2004,  from $7.5
million and $6.9 million at December 31, 2003 and 2002, respectively.

         SBLS holds a significant  concentration  of assets  associated with the
shrimping vessel industry, reflected in both loans and other repossessed assets.
Our purchase of substantially  all of the assets of SBLS resulted in an increase
to nonperforming loans of $8.8 million,  which represented  approximately 37% of
SBLS's loan portfolio at the time of acquisition.  The shrimping vessel industry
concentration and its currently depressed status were reflected in our net asset
purchase price. SBLS's nonperforming loans have declined slightly since the date
of acquisition to $6.2 million at December 31, 2004.

         As with our Union acquisition, the results of our due diligence reviews
of the loan  portfolios  of CMC and CIB  prior to  their  acquisition  indicated
significant  asset  quality  problems and,  particularly  with respect to CIB, a
significant  concentration  in  commercial  real estate loans  outstanding  to a
relatively  small number of borrowers.  The  acquisition of CMC on July 30, 2004
resulted in a $2.5 million increase in our nonperforming  loans,  which declined
to $1.9  million at December  31,  2004.  The  acquisition  of CIB resulted in a
significant  increase in our nonperforming loans. As of the date of acquisition,
November  30,  2004,  CIB  had  $60.3  million  of  nonperforming  loans,  which
represented  approximately  9% of  CIB's  total  loan  portfolio.  The  level of
nonperforming loans related to our CIB acquisition  declined to $50.5 million at
December 31, 2004,  primarily as a result of loan payoffs.  Nonperforming  loans
from the CIB acquired loan portfolio  represent  approximately  59% of our total
nonperforming  loans  at  December  31,  2004.  While we had  anticipated  these
problems  in  negotiating  the  acquisition   price,  in  conjunction  with  our
acquisition of CIB, we adjusted CIB's allowance for loan losses by reclassifying
specific  reserves  of $21.7  million,  which had been  allocated  within  CIB's
allowance for loan losses,  as a reduction of the basis of the  individual  loan
relationships  in  order  to  conform  to  our  allowance  for  loan  and  lease
methodology,  which is based upon a risk rating system that applies loss factors
to individual  loans and homogenous  pools of loans, as further  discussed under
"--Loans and Allowance for Loan  Losses." The  reclassification  of the specific
reserves  had no  impact on the net loan  balances  acquired.  Additionally,  we
transferred  $18.3 million of CIB's  nonperforming  loans to loans held for sale
and recorded 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 is expected to be realized at the time of the sale. While CIB
had  utilized a  long-term  workout  strategy to address  certain  nonperforming
assets, our strategy is 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  and we are  actively  marketing  these  assets  through  an
independent third party. Furthermore, we increased the allowance for loan losses

<PAGE>

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's loan  portfolio  risk ratings,  reflecting  our use of strategies for more
rapid disposition and recovery of certain acquired  classified and nonperforming
assets. These nonperforming loans will continue to be a primary focus of members
of our  Credit  Administration  function  as we work to resolve  the  individual
issues surrounding these credit relationships that led to their deterioration.

         For the years ended December 31, 2004, 2003 and 2002, our nonperforming
assets  were $89.8  million,  $86.5  million  and $82.8  million,  respectively.
Nonperforming  loans were $85.8 million at December 31, 2004,  compared to $75.4
million and $75.2  million at  December  31,  2003 and 2002,  respectively.  Our
nonperforming assets,  exclusive of the 2004 acquisitions  previously discussed,
exhibited  substantial  improvement  throughout  2004,  primarily as a result of
significant loan payoffs, the liquidation of certain real property that had been
acquired through  foreclosure,  the sale of a portion of our commercial  leasing
portfolio,  and our continued efforts to improve asset quality.  However,  as we
continued to further  analyze the CIB  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 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. Additionally, at December 31, 2004, we
had $12.9  million of loans  classified  as held for sale that we acquired  from
CIB, as discussed above.  The increase in  nonperforming  loans in 2002 and 2003
was 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.  Furthermore,  in January  2003,  we
foreclosed on a residential and recreational  development property that had been
placed on nonaccrual  status during the second quarter of 2002. The relationship
related  to  a  residential  and  recreational   development  project  that  had
significant financial difficulties and experienced inadequate project financing,
project  delays and weak project  management.  We sold this property in February
2004, thereby reducing our nonperforming assets by $9.2 million, and realizing a
gain of $2.7 million, before applicable income taxes. We believe these increases
in nonperforming  assets,  while partially  attributable to our acquisitions and
the overall  risk in our loan  portfolio,  are  reflective  of  cyclical  trends
experienced within the banking industry as a result of weak economic  conditions
within our market areas. Loan charge-offs, net of recoveries, decreased to $24.8
million for 2004, compared to $32.7 million for 2003 and $54.6 million for 2002,
as further discussed under "--Loans and Allowance for Loan Losses."

         During 2001 and 2002,  the nation  generally  experienced  a relatively
mild,  but  prolonged  economic  slow down  that  affected  much of the  banking
industry,  including us. This was  exacerbated by the terrorist  attacks in late
2001 and the  effects the attacks  and  related  governmental  responses  had on
economic activity.  In 2003, we continued to experience weak economic conditions
in our market  areas,  despite  some  slight  economic  improvements  in certain
sectors.  The overall  effects of the economic  downturn have been  inconsistent
between various  geographic areas of the country,  as well as different segments
of the economy.  To us, the effects of the downturn can be observed in generally
lower interest rates,  which have a negative impact on our net interest  income,
and on the  performance  of our loan  portfolio,  which is  reflected  in higher
delinquencies, nonperforming assets, charge-offs and provisions for loan losses,
as well as reduced  loan demand  from  customers.  The impact of lower  interest
rates was significantly  reduced through the use of various derivative financial
instruments that provide hedges of this interest rate risk. However, the benefit
of these derivative financial instruments was substantially reduced in late 2004
with the maturity of certain  interest rate swap agreements and increases in the
overall interest rates in 2004, as further discussed under "--Interest Rate Risk
Management."  During 2002 and 2003, we incurred  continued  asset quality issues
that were at least partially  attributable to economic conditions.  During 2004,
certain sectors of the economy have stabilized, which contributed to the overall
improvement   in  our  asset   quality,   exclusive  of  our  2004   acquisition
transactions.

         Within our market areas,  the impact of the economy has become  evident
at different times. In our Midwestern  markets,  a perceptible  increase in loan
delinquencies began in late 2000 and continued throughout 2001, with some modest
improvement  in 2002 and 2003.  The  increase  in  delinquencies  was  primarily
focused in commercial,  financial and agricultural  loans, lease financing loans
and, to a lesser extent,  commercial real estate loans,  and initially  involved
borrowers that had already encountered some operating problems that continued to
deteriorate as the economy became weaker.  Included in this were loans on hotels
and leases to the commercial airline industry.  In both instances,  the industry
had been suffering from overcapacity prior to 2001, which then became much worse
with  the  economic  downturn  and the  effects  of  terrorist  attacks.  As the
recession  continued,  the effects expanded to companies that had been stronger,
but  succumbed  to the ongoing  effects of slowed  economic  activity.  Net loan
charge-offs for our Midwest banking region were $11.2 million for the year ended
December 31,  2004,  compared to $25.7  million and $22.1  million for the years
ended  December  31,  2003  and  2002,  respectively.  The  decrease  in 2004 is
attributable to a $14.7 million decrease in net loan charge-offs associated with
our commercial leasing business,  partially offset by a $3.0 million increase in
net loan  charge-offs  associated with our CMC loan portfolio.  The increase for
2003 is attributable to a $6.4 million  increase in net loan  charge-offs in our

<PAGE>

commercial  leasing  portfolio.  Nonperforming  loans and leases for this region
were $76.0  million at December  31, 2004,  compared to $56.2  million and $50.5
million at December 31, 2003 and 2002, respectively. The significant improvement
in nonperforming assets that was reflected during most of 2004 was offset by the
previously-discussed   increase  in  nonperforming  assets  resulting  from  our
acquisitions of CMC and CIB.

         Generally,  the effects on us of the  economic  downturn in  California
have been limited to the San  Francisco  Bay area,  including  the area known as
"Silicon  Valley."  Although we have a substantial  banking  presence in the San
Francisco  Bay area,  we have  relatively  little  direct  exposure  to the high
technology  companies.  Consequently,  the decline in that industry beginning in
2000 had little  direct effect on our  California  operations.  However,  as the
magnitude of the problems in the high technology sector  increased,  the effects
spread to companies  that were  suppliers and  servicers of the high  technology
sector,  and to  commercial  real  estate  in the area.  As a result,  our asset
quality issues in California have been concentrated within the San Francisco Bay
area,   and   generally   do   not   involve   Southern    California   or   the
Sacramento-Roseville  area in Northern California.  These issues primarily arose
during 2002 and  consequently,  our California  banking region incurred net loan
charge-offs of $27.6 million for the year ended December 31, 2002, in comparison
to net loan  recoveries  of $680,000 in 2003. In 2004,  we  experienced  certain
problems with two significant commercial credit relationships  concentrated in a
single lending unit in the southern  California  region.  As a result,  net loan
charge-offs  in our  California  banking  region for the year ended December 31,
2004 were $8.6  million,  and included  $6.9 million of  charge-offs  related to
these two  individual  relationships.  Nonperforming  loans  for our  California
banking  region  decreased  to $1.6  million at December  31,  2004,  from $13.0
million and $17.2 million at December 31, 2003 and 2002, respectively.

         Our Texas banking  operation  represents a somewhat  smaller portion of
our overall lending function. However, the Texas economy has generally continued
to be fairly  strong,  resulting in  relatively  few asset  quality  issues.  We
recorded net loan  charge-offs  of $4.9 million for the year ended  December 31,
2004,  which included $3.4 million on two credit  relationships  and $690,000 of
net loan  charge-offs  related to our recent  purchase of assets  from SBLS.  We
recorded net loan  charge-offs  of $7.7 million for the year ended  December 31,
2003,  which  included  $6.6  million on three  credit  relationships.  Net loan
charge-offs were $4.9 million for the year ended December 31, 2002, and included
a charge-off  of $5.3  million on a single loan to a company  engaged in leasing
equipment,  primarily to  manufacturers.  This company  encountered  significant
operating  problems  from  rapid  expansion,  principally  through  acquisition,
accompanied  by  the  economic  downturn,   which   particularly   affected  the
manufacturing  sector.  Total  nonperforming  loans  for this  region  were $8.2
million at December 31, 2004, of which $6.2 million were  associated  with SBLS,
whose loan portfolio  included a significant  concentration of assets associated
with the shrimping vessels  industry.  Total  nonperforming  loans for the Texas
region  were $6.2  million  and $5.5  million  at  December  31,  2003 and 2002,
respectively.

         In addition to restructuring  our loan portfolio,  we also have changed
the  composition  of our deposit  base.  The deposit  mix of 2004  reflects  our
continued  efforts  in this  regard as a  majority  of our  deposit  development
programs are directed toward increased transaction accounts,  such as demand and
savings  accounts,  rather  than  time  deposits.  We  have  also  expanded  our
development of multiple account  relationships with individual  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.  In addition,  commercial  borrowers  are  encouraged  to
maintain their operating  deposit  accounts with us. Although time deposits have
increased to $2.83 billion at December 31, 2004, they represented 39.6% of total
deposits,  as compared to $2.03 billion,  or 47.8% of total deposits at December
31, 1999. Total demand and savings accounts have increased to $4.32 billion,  or
60.4% of total  deposits,  at December 31, 2004,  from $2.22 billion or 52.2% of
total  deposits  at  December  31,  1999,  reflecting  our  continued  focus  on
transactional   accounts  and  full  service  deposit   relationships  with  our
customers.

         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, 2004 and 2003,  net income was $82.9
million  and $62.8  million,  respectively,  compared  to $45.2  million,  $64.5
million and $56.1 million in 2002, 2001 and 2000, respectively. Factors that led
to the decline in our earnings for 2002 included the interest rate  environment,
asset  quality  issues  requiring  additional  provisions  for loan losses,  and
increased operating  expenses.  The  higher-than-historical  provisions for loan
losses  in  2002  and  2003  reflect  the  current   economic   environment  and
significantly increased loan charge-off, delinquency and nonperforming trends as
further discussed under "--Comparison of Results of Operations for 2003 and 2002
- Provision  for Loan  Losses."  The reduced  provision  for loan losses in 2004
reflects recent loan sales of problem credits and, exclusive of 2004 acquisition
activity,   an  overall   improvement  in  asset  quality,   reduced  levels  of
nonperforming  loans and lower net loan charge-offs,  as further discussed under
"--Comparison  of Results of  Operations  for 2004 and 2003 - Provision for Loan
Losses."  Although  we  anticipate  certain  short-term  adverse  effects on our
operating  results  associated  with  acquisitions,  we  believe  the  long-term

<PAGE>

benefits  of  our  acquisition   program  will  exceed  the  short-term   issues
encountered with some 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.

Acquisitions.  In  the  development  of  our  banking  franchise,  we  emphasize
acquiring  other  financial  institutions  as one means of achieving  our growth
objectives. Acquisitions may serve to enhance our presence in a given market, to
expand  the  extent  of  our  market  area  or to  enable  us to  enter  new  or
noncontiguous  market areas.  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.  We have  primarily  utilized  cash,  borrowings  and the  issuance of
subordinated debentures through our various statutory and business trusts, which
serve as financing entities, to meet our growth objectives under our acquisition
program.

         During the three years ended  December  31,  2004,  we  completed  four
acquisitions  of banks and two branch office  purchases.  We also  completed the
purchase  of  substantially   all  of  the  assets  and  assumption  of  certain
liabilities of a company that originates, sells and services U.S. Small Business
Administration  loans  to  small  business  concerns.  As  demonstrated  in  the
following table, our acquisitions during the three years ended December 31, 2004
have  primarily  served to increase  our presence in the  metropolitan  Chicago,
Illinois  market and to further  augment  our  existing  markets and our Midwest
banking franchise. These transactions are summarized as follows:
<TABLE>
<CAPTION>
                                                                                                               Number
                                                                     Loans, Net of                               of
                                                          Total        Unearned      Investment                Banking
         Entity                       Closing Date        Assets       Discount      Securities   Deposits    Locations
         ------                       ------------        ------       --------      ----------   ---------   ---------
                                                                (dollars expressed in thousands)

    2004
    ----

      Hillside Investors, Ltd.
<S>                                                    <C>              <C>          <C>           <C>             <C>
      Hillside, Illinois            November 30, 2004  $ 1,196,700      683,300      393,200       1,102,000       16

      Small Business Loan
      Source, Inc.
      Houston, Texas                 August 31, 2004        47,100       24,000           --              --       --

      Continental Mortgage
      Corporation - Delaware
      Aurora, Illinois                July 30, 2004        140,700       73,600       44,800         104,600        2
                                                       -----------     --------      -------      ----------     ----
                                                       $ 1,384,500      780,900      438,000       1,206,600       18
                                                       ===========     ========      =======      ==========     ====

    2003
    ----

      Bank of Ste. Genevieve
      Ste. Genevieve, Missouri       March 31, 2003    $   115,100       43,700       47,800          93,700        2
                                                       ===========     ========      =======      ==========     ====

    2002
    ----

      Union Planters Bank, N.A.
      Denton and Garland, Texas
      branch offices                  June 22, 2002    $    63,700          600           --          64,900        2

      Plains Financial Corporation
      Des Plaines, Illinois         January 15, 2002       256,300      150,400       81,000         213,400        4
                                                       -----------     --------      -------      ----------     ----
                                                       $   320,000      151,000       81,000         278,300        6
                                                       ===========     ========      =======      ==========     ====
</TABLE>

         We funded the completed  acquisitions  from  available  cash  reserves,
borrowings under our revolving credit  agreement,  proceeds from the issuance of
subordinated debentures and proceeds from the exchange,  sales and maturities of
available-for-sale investment securities.

         Completed Acquisitions and Other Corporate Transactions

         On  March  31,  2003,  we  completed  our  acquisition  of Bank of Ste.
Genevieve,  or BSG, Ste. Genevieve,  Missouri,  from Allegiant Bancorp, Inc., or
Allegiant,  in exchange for  approximately  974,150  shares of Allegiant  common
stock that we previously  held.  The purpose of the  transaction  was to further
expand our Midwest banking  franchise.  At the time of the acquisition,  BSG had

<PAGE>

$115.1  million  in total  assets,  $43.7  million  in  loans,  net of  unearned
discount, $47.8 million in investment securities,  and $93.7 million in deposits
and operated two locations in Ste.  Genevieve,  Missouri.  The  transaction  was
accounted  for using the purchase  method of  accounting.  We recorded a gain of
$6.3  million on the  exchange of the  Allegiant  common  stock and  goodwill of
approximately  $3.4  million.  The  core  deposit  intangibles,  which  are  not
deductible  for tax  purposes,  were  approximately  $3.5  million and are being
amortized over seven years utilizing the  straight-line  method.  BSG was merged
with and into First Bank.  Subsequent  to the  acquisition,  we continued to own
231,779 shares, or approximately  1.52% of the issued and outstanding  shares of
Allegiant  common stock. In October 2003, we contributed our remaining shares of
Allegiant common stock to a previously  established  charitable  foundation.  In
conjunction with this transaction,  we recorded charitable  contribution expense
of $5.1 million,  which was partially  offset by a gain on the  contribution  of
these available-for-sale investment securities of $2.3 million, representing the
difference  between the cost basis and the fair value of the common stock on the
date of the contribution. In addition, we recorded a tax benefit of $2.5 million
associated with this transaction.  The contribution of this stock eliminated our
investment in Allegiant.

         On March 31, 2003, we completed the merger of our two wholly-owned bank
subsidiaries,  First  Bank and First  Bank & Trust,  or FB&T,  to allow  certain
administrative  and  operational  economies  not  available  while the two banks
maintained separate charters.

         On October 17, 2003,  First Bank  completed  its  divestiture  of three
branch offices in the northern and central Illinois market area, and on December
5, 2003,  First Bank  completed its  divestiture of one branch office in eastern
Missouri.  These  branch  divestitures  resulted in a reduction  of First Bank's
deposit base of approximately $88.3 million, and a pre-tax gain of approximately
$4.0 million.

         On February 6, 2004, First Bank completed its divestiture of one branch
office in rural Missouri. On April 16, 2004, First Bank completed its
divestiture of one branch office in southern Illinois. These branch divestitures
resulted in a reduction of the deposit base of approximately $23.4 million, and
a pre-tax gain of approximately $1.0 million.

         During  the year  ended  December  31,  2004,  First  Bank  opened  the
following four de novo branch offices:

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

         On June 30,  2004,  First  Bank  completed  the  sale of a  significant
portion of the leases in its commercial leasing portfolio.  The sale reduced our
commercial  leasing portfolio by approximately  $33.1 million to $9.6 million at
June 30, 2004. No gain or loss was recorded on the  transaction.  In conjunction
with the transaction, First Bank established a $2.0 million liability associated
with the related  recourse  obligations  for  certain  leases  sold,  as further
discussed in Note 24 to our Consolidated  Financial  Statements.  Our commercial
leasing  portfolio  has further  declined to $5.9  million at December 31, 2004,
reflecting  our  overall  business   strategy  to  reduce   commercial   leasing
activities.

         On July  30,  2004,  we  completed  our  acquisition  of  CMC,  and its
wholly-owned banking subsidiary,  Continental  Community Bank and Trust Company,
or CCB,  acquiring  all of the  outstanding  common stock of CMC in exchange for
$4.2 million in cash.  In addition,  we 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 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 total  assets of $140.7  million,  loans,  net of unearned
discount, of $73.6 million and total deposits of $104.6 million. Goodwill, which
is not deductible for tax purposes,  was approximately $1.5 million and the core
deposit  intangibles,  which are not  deductible  for tax purposes and are being
amortized   over  seven  years   utilizing  the   straight-line   method,   were
approximately $2.0 million.  CMC was merged with and into SFC and CCB was merged
with and into First Bank.

         On August 31,  2004,  Small  Business  Loan  Source LLC, or SBLS LLC, a
newly formed  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 our 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
United States Small  Business  Administration,  or 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
approximately  $5.9 million and is deductible  for tax purposes.  In conjunction
with this  transaction,  on August 30, 2004, First Bank granted to First Capital

<PAGE>

America, Inc. (FCA), a corporation owned by First Banks' Chairman and members of
his immediate  family, an option to purchase  Membership  Interests of SBLS LLC.
This option to purchase was extended on December 31, 2004. Upon exercise of this
option,  SBLS LLC will become  51.0% owned by First Bank and 49.0% owned by FCA,
as further discussed in Note 19 to our Consolidated Financial Statements.

         On  November  30,  2004,   we  completed   our   acquisition   of  CIB,
headquartered in Hillside,  Illinois,  for approximately  $67.4 million in cash.
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,  of which $20.0  million was issued on September 20, 2004
through our newly formed affiliated  statutory trust, First Bank Statutory Trust
II, or FBST II, and an additional  $40.0 million was issued on November 23, 2004
through our newly formed affiliated  statutory trust, First Bank Statutory Trust
III, or FBST III, as further discussed in Note 12 to our Consolidated  Financial
Statements.  In addition,  the  acquisition  was also funded through  borrowings
under  our  revolving  line of  credit  with a group of  unaffiliated  financial
institutions.   CIB  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 had  total  assets  of $1.20  billion,  loans,  net of
unearned discount,  of $683.3 million,  investment  securities of $393.2 million
and  total  deposits  of  $1.10  billion.  Preliminary  goodwill,  which  is not
deductible for tax purposes, was approximately $4.3 million and the core deposit
intangibles,  which are not deductible for tax purposes and are being  amortized
over seven years utilizing the straight-line  method,  were approximately  $13.4
million.  Hillside was merged with and into SFC and CIB Bank was merged with and
into First Bank.

         Pending Acquisitions

         On  January  10,   2005,   we  executed  an   Agreement   and  Plan  of
Reorganization providing for the acquisition of FBA Bancorp, Inc. and its wholly
owned  subsidiary,  First Bank of the  Americas,  S.S.B.  FBA  Bancorp,  Inc. is
headquartered  in Chicago,  Illinois,  and through  First Bank of the  Americas,
operates three banking offices in the southwestern  Chicago  metropolitan  area.
Under  the  terms of the  agreement,  we will  acquire  FBA  Bancorp,  Inc.  for
approximately  $10.5  million  in cash.  The  transaction,  which is  subject to
regulatory  approvals,  is expected to be completed during the second quarter of
2005. At December 31, 2004, FBA Bancorp,  Inc. reported  consolidated  assets of
$75.0 million,  loans, net of unearned discount,  of $48.6 million,  deposits of
$55.9 million and stockholders' equity of $7.4 million.

         Acquisition and Integration Costs

         We accrue  certain costs  associated  with our  acquisitions  as of the
respective  consummation  dates.  Essentially  all of these accrued costs relate
either 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 we incur 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 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 our existing  operations  are
normally paid to the recipients  within 90 days of the  respective  consummation
date. Our accrued severance balance of $761,000,  as further described in Note 2
to  our  Consolidated   Financial   Statements,   is  comprised  of  contractual
obligations  under salary  continuation  agreements to six individuals that have
remaining terms ranging from approximately two years to 11 years.  Payments made
under these agreements are paid from accrued liabilities and consequently do not
have any impact on our consolidated statements of income.

         A summary of acquisition  and  integration  costs  attributable  to the
acquisitions  included  in the  foregoing  table,  which were  accrued as of the
consummation dates of the respective  acquisition,  is included in Note 2 to our
Consolidated  Financial  Statements.   Acquisition  and  integration  costs  are
reflected  in  accrued  expenses  and  other  liabilities  in  our  consolidated
financial statements.

         As further  discussed and quantified under  "--Comparison of Results of
Operations  for 2004 and 2003," and  "--Comparison  of Results of Operations for
2003 and 2002," we also incur costs  associated with our  acquisitions  that are
expensed  in  our  consolidated   statements  of  income.   These  costs  relate
exclusively to additional  costs incurred in  conjunction  with the  information
technology conversions of the respective entities.

         Market  Area.  As of  December  31,  2004,  First  Bank's  167  banking
facilities  were located in Illinois,  California,  eastern  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  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,  Dallas,  Irving,

<PAGE>

McKinney  and Denton  metropolitan  areas.  Through our recent  expansion in the
Chicago  metropolitan  area, our primary market area is northern  Illinois.  Our
second and third largest market areas are southern California and the St. Louis,
Missouri  metropolitan  area,  and our fourth  largest  market  area is northern
California.

         The  following  table  lists  the  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, 2004:
<TABLE>
<CAPTION>

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

<S>                                                                      <C>                 <C>            <C>
Northern Illinois....................................................    $ 1,580.0           22.1%          31
Southern California..................................................      1,408.5           19.7           32
St. Louis, Missouri metropolitan area................................      1,318.5           18.4           29
Northern California..................................................      1,070.3           15.0           16
Central and southern Illinois........................................        988.7           13.8           34
Eastern Missouri.....................................................        458.6            6.4           15
Texas................................................................        327.4            4.6           10
                                                                         ---------          -----          ---
     Total deposits..................................................    $ 7,152.0          100.0%         167
                                                                         =========          =====          ===
</TABLE>

Competition and Branch Banking.  First  Bank  engages  in   highly   competitive
activities. 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.  Financial  institutions  compete  based  upon
interest rates offered on deposit accounts,  interest rates charged on loans and
other  credit and  service  charges,  the  quality  of  services  rendered,  the
convenience of banking  facilities 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,  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 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 continue to face  competition in the  acquisition of
independent banks and savings banks from banks and financial holding  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, 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,  or OCC,  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 Note 21 and Note 25 to our Consolidated  Financial  Statements,  on

<PAGE>

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.

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 banks.  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  was
enacted.  The  Sarbanes-Oxley  Act imposes a myriad of corporate  governance and
accounting  measures  designed  to ensure  that the  shareholders  of  corporate
America  are treated  fairly and have full and  accurate  information  about the
public companies in which they invest. All public companies, including companies
such as First Banks, that file periodic reports with the Securities and Exchange
Commission, or SEC, are affected by the Sarbanes-Oxley Act.

         Certain   provisions  of  the   Sarbanes-Oxley   Act  became  effective
immediately,  while other  provisions  will become  effective  as the SEC adopts
rules to implement  those  provisions.  Some of the principal  provisions of the
Sarbanes-Oxley Act which may affect us include:

         >>    the  creation of an  independent  accounting  oversight  board to
               oversee the audit of public  companies  and  auditors who perform
               such audits;

         >>    auditor independence provisions which restrict non-audit services
               that independent accountants may provide to their audit clients;

         >>    additional corporate governance and responsibility measures which
               (i)  require  the chief  executive  officer  and chief  financial
               officer to certify financial statements and to forfeit salary and
               bonuses in certain  situations,  and (ii) protect  whistleblowers
               and informants;

         >>    expansion of the audit committee's  authority and  responsibility
               by requiring that the audit  committee (i) have direct control of
               the outside  auditor,  (ii) be able to hire and fire the auditor,
               and (iii) approve all non-audit services;

         >>    mandatory  disclosure  by  analysts  of  potential  conflicts  of
               interest; and

         >>    enhanced penalties for fraud and other violations.

         The Sarbanes-Oxley Act is expected to increase the administrative costs
and burden of doing business for public  companies;  however,  we cannot predict
the significance of such increase at this time.

The USA Patriot Act. In October 2001, the Patriot Act was enacted 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 at this time, 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

<PAGE>

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 members, First Bank is required to hold investments in
regional  banks within those  systems.  First Bank was in compliance  with these
requirements at December 31, 2004, with  investments of $8.8 million in stock of
the Federal  Home Loan Bank of Des Moines,  $1.8 million in stock of the Federal
Home Loan Bank of Chicago (associated with several acquisitions completed in the
state of Illinois) and $18.4 million in stock of the Federal Reserve Bank of St.
Louis.

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:

         >>    changes in the discount  rate on member bank  borrowings  and the
               targeted federal funds rate;

         >>    the availability of credit at the "discount window;"

         >>    open market operations;

         >>    the  imposition  of  changes  in  reserve   requirements  against
               deposits of domestic banks;

         >>    the  imposition  of  changes  in  reserve   requirements  against
               deposits and assets of foreign branches; and

         >>    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 25, 2005, we employed  approximately 2,350 employees.  None
of the employees are subject to a collective bargaining  agreement.  We consider
our relationships with our employees to be good.

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  8,177 square feet is currently leased to others. Of our other 166
offices and three operations and  administrative  facilities,  94 are located in
buildings that we own and 75 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.


<PAGE>
                                     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 created 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 by the
receipt  of  dividend  payments  from  First  Bank,  which  is also  subject  to
regulatory requirements. The dividend limitations are included in Note 22 to our
Consolidated Financial Statements appearing elsewhere in this report.


<PAGE>


Item 6.  Selected Financial Data

         The selected  consolidated  financial  data set forth below are derived
from our consolidated financial statements, which have been audited by KPMG LLP.
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."
<TABLE>
<CAPTION>

                                                                As of or For the Year Ended December 31, (1)
                                                          ------------------------------------------------------------
                                                             2004         2003        2002         2001        2000
                                                             ----         ----        ----         ----        ----
                                                      (dollars expressed in thousands, except share and per share data)
Income Statement Data:
<S>                                                       <C>            <C>         <C>          <C>         <C>
    Interest income.....................................  $   394,782    391,153     425,721      445,385     423,294
    Interest expense....................................       94,767    104,026     157,551      210,246     201,320
                                                          -----------  ---------   ---------    ---------   ---------
    Net interest income.................................      300,015    287,127     268,170      235,139     221,974
    Provision for loan losses...........................       25,750     49,000      55,500       23,510      14,127
                                                          -----------  ---------   ---------    ---------   ---------
    Net interest income after provision
      for loan losses...................................      274,265    238,127     212,670      211,629     207,847
    Noninterest income..................................       83,486     87,708      67,511       89,095      37,414
    Noninterest expense.................................      229,505    227,069     210,812      202,157     152,626
                                                          -----------  ---------   ---------    ---------   ---------
    Income before provision for income taxes,
      minority interest in income of subsidiary
      and cumulative effect of change in
      accounting principle..............................      128,246     98,766      69,369       98,567      92,635
    Provision for income taxes..........................       45,338     35,955      22,771       30,048      34,482
                                                          -----------  ---------   ---------    ---------   ---------
    Income before minority interest in income
      of subsidiary and cumulative effect of
      change in accounting principle....................       82,908     62,811      46,598       68,519      58,153
    Minority interest in income of subsidiary...........           --         --       1,431        2,629       2,046
                                                          -----------  ---------   ---------    ---------   ---------
    Income before cumulative effect of change in
      accounting principle..............................       82,908     62,811      45,167       65,890      56,107
    Cumulative effect of change in accounting
      principle, net of tax.............................           --         --          --       (1,376)         --
                                                          -----------  ---------   ---------    ---------   ---------
    Net income..........................................  $    82,908     62,811      45,167       64,514      56,107
                                                          ===========  =========   =========    =========   =========

Dividends:
    Preferred stock.....................................  $       786        786         786          786         786
    Common stock........................................           --         --          --           --          --
    Ratio of total dividends declared to net income.....         0.95%      1.25%       1.74%        1.22%       1.40%

Per Share Data:
    Earnings per common share:
      Basic:
       Income before cumulative effect of change
         in accounting principle........................  $  3,470.80   2,621.39    1,875.69     2,751.54    2,338.04
       Cumulative effect of change in
         accounting principle, net of tax...............           --         --          --       (58.16)         --
                                                          -----------  ---------   ---------    ---------   ---------
       Basic............................................  $  3,470.80   2,621.39    1,875.69     2,693.38    2,338.04
                                                          ===========  =========   =========    =========   =========
      Diluted:
       Income before cumulative effect of change
         in accounting principle........................  $  3,421.58   2,588.31    1,853.64     2,684.93    2,267.41
       Cumulative effect of change in accounting
         principle, net of tax..........................           --         --          --       (58.16)         --
                                                          -----------  ---------   ---------    ---------   ---------
       Diluted..........................................  $  3,421.58   2,588.31    1,853.64     2,626.77    2,267.41
                                                          ===========  =========   =========    =========   =========

    Weighted average common stock outstanding...........       23,661     23,661      23,661       23,661      23,661
<PAGE>
Balance Sheet Data:
    Investment securities...............................  $ 1,813,349  1,049,714   1,145,670      638,644     569,403
    Loans, net of unearned discount.....................    6,137,968  5,328,075   5,432,588    5,408,869   4,752,265
    Total assets........................................    8,732,841  7,106,940   7,351,177    6,786,045   5,882,706
    Total deposits......................................    7,151,970  5,961,615   6,172,820    5,683,904   5,012,415
    Note payable........................................       15,000     17,000       7,000       27,500      83,000
    Subordinated debentures.............................      273,300    209,320     278,389      243,457     188,718
    Common stockholders' equity.........................      587,830    536,752     505,978      435,594     339,783
    Total stockholders' equity..........................      600,893    549,815     519,041      448,657     352,846

Earnings Ratios:
    Return on average total assets......................         1.10%      0.87%       0.64%        1.08%       1.09%
    Return on average total stockholders' equity........        14.44      11.68        9.44        15.96       17.43
    Efficiency ratio (2)................................        59.84      60.58       62.80        62.35       58.84
    Net interest margin (3).............................         4.36       4.45        4.23         4.34        4.65

Asset Quality Ratios:
    Allowance for loan losses to loans..................         2.46       2.19        1.83         1.80        1.72
    Nonperforming loans to loans (4)....................         1.40       1.41        1.38         1.24        1.12
    Allowance for loan losses to
      nonperforming loans (4)...........................       175.65     154.52      132.29       144.36      153.47
    Nonperforming assets to loans and
      other real estate (5).............................         1.46       1.62        1.52         1.32        1.17
    Net loan charge-offs to average loans...............         0.45       0.61        1.01         0.45        0.17

Capital Ratios:
    Average total stockholders' equity to
      average total assets..............................         7.61       7.48        6.78         6.74        6.25
    Total risk-based capital ratio......................        10.61      10.27       10.68        10.53       10.21
    Leverage ratio......................................         7.89       7.62        6.45         7.24        7.46

-----------------------------
(1)  The comparability of the selected data presented is affected by the acquisitions of 12 banks, a loan origination
     business, a leasing company and two branch offices during the five-year  period  ended  December 31, 2004. These
     acquisitions were accounted for as purchases and, accordingly, 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.  You should read this  discussion  in  conjunction  with our
"Selected Financial Data," our Consolidated Financial Statements and the related
notes thereto, and the other financial data contained 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.


RESULTS OF OPERATIONS

Overview

         Net income was $82.9  million,  $62.8 million and $45.2 million for the
years  ended  December  31,  2004,  2003 and 2002,  respectively.  Our return on
average assets and our return on average stockholders' equity increased to 1.10%
and 14.44%,  respectively,  for the year ended  December 31,  2004,  compared to
0.87% and 11.68%, respectively,  for 2003 and 0.64% and 9.44%, respectively, for
2002.  Results for 2004  reflect  increased  net  interest  income and a reduced
provision for loan losses,  partially offset by decreased noninterest income and
increased  noninterest  expense and provision  for income  taxes.  For the three
months ended  December 31, 2004 and 2003,  our net income was $18.9  million and
$15.4 million, respectively.

         The   increase  in  net  income  for  2004  over  2003  was   primarily
attributable to a significant reduction in our provision for loan losses as well
as increased  net interest  income  resulting  from  higher-yielding  investment
portfolio  securities and reduced deposit rates,  partially  offset by decreased
earnings on our loan portfolio  attributable to reduced earnings on our interest
rate swap agreements  associated with our interest rate risk management program.
Results for 2004 also included a gain of $2.7 million,  before applicable income
taxes,  recorded in February  2004  relating  to the sale of a  residential  and
recreational  development  property that was  foreclosed on in January 2003, and
gains, net of expenses,  totaling $1.0 million,  before applicable income taxes,
recorded in February  and April 2004 on the sale of two Midwest  branch  banking
offices.   The  increase  in  net  income  for  2003  over  2002  was  primarily
attributable  to increased net interest  income  resulting from reduced  deposit
rates and  earnings on our interest  rate swap  agreements  associated  with our
interest rate risk management program in addition to increased gains on mortgage
loans sold and held for sale. Results for 2003 also included gains totaling $4.0
million,  before  applicable  income taxes,  on the sale of four branch  banking
offices,  a nonrecurring  gain of $6.3 million,  before applicable income taxes,
recorded in the first quarter relating to the partial exchange of our investment
in Allegiant Bancorp, Inc., or Allegiant,  for a 100% ownership interest in Bank
of Ste. Genevieve,  or BSG, located in Ste. Genevieve,  Missouri.  Our remaining
investment  in the  common  stock  of  Allegiant  was  contributed  in full to a
previously  established  charitable foundation in the fourth quarter of 2003. In
conjunction  with  that  transaction,   we  recorded   nonrecurring   charitable
contribution  expense of $5.1 million,  which was  partially  offset by the gain
realized on the increase in the market value of the  Allegiant  common stock and
the related income tax effects of the transaction. Throughout 2003, we continued
to address residual  problems in our loan and lease portfolio  stemming from the
reduced interest rate environment and the 2002 and 2003 decline in asset quality
that was primarily a result of weak economic conditions within our markets.  Our
provision  for loan losses in 2003  declined  from 2002  levels but  remained at
higher-than-historical  levels. Our provision for loan losses in 2004 reflects a
significant  reduction from 2003 and is primarily  attributable to loan sales of
problem  credits  completed in late 2004 and,  exclusive  of recent  acquisition
activity,   substantial   improvement  in  asset  quality,   reduced  levels  of
nonperforming  loans and lower net loan  charge-offs.  We  continue  to  closely
monitor  asset  quality  and  address  ongoing  challenges  posed by the current
economic  environment  and  expect  nonperforming  assets to remain at  somewhat
elevated  levels  in  the  near  future  due  to  the  significant  increase  in
nonperforming loans associated with our acquisition of CIB that was completed on
November 30, 2004. Our net interest margin decreased to 4.36% for the year ended
December  31, 2004,  compared to 4.45% for 2003.  Noninterest  income  decreased
4.81% to $83.5 million in 2004, from $87.7 million in 2003. Our efficiency ratio
improved  to 59.84%  in 2004 from  60.58% in 2003,  reflecting  the  results  of
management's ongoing cost containment objectives.


<PAGE>

Financial Condition and Average Balances

         Our average total assets were $7.54 billion for the year ended December
31,  2004,  compared  to $7.18  billion  and $7.06  billion  for the years ended
December 31, 2003 and 2002, respectively. Total assets were $8.73 billion, $7.11
billion and $7.35 billion at December 31, 2004, 2003 and 2002, respectively.  We
attribute  the  $1.63  billion   increase  in  total  assets  primarily  to  our
acquisition of CIB on November 30, 2004, which provided assets of $1.20 billion,
and our  acquisitions  of CCB and  SBLS in the  third  quarter  of  2004,  which
provided  assets of $187.8  million,  in  aggregate,  as well as the  intangible
assets associated with these transactions.  Additionally, exclusive of the loans
provided by the acquisitions, our commercial and residential real estate lending
portfolios  increased $124.1 million in 2004,  reflecting internal growth within
these portfolios. The overall increase in total assets was partially offset by a
$44.6 million  decrease in the fair value of our derivative  instruments to $4.7
million at December 31, 2004 from $49.3 million at December 31, 2003,  primarily
resulting  from the maturity of a  significant  notional  amount of our interest
rate swap  agreements  in March and  September  2004.  We  attribute  the $244.2
million  decrease  in  total  assets  for  2003 to weak  loan  demand  from  our
commercial  customers,  a reduction  in loans and bank  premises  and  equipment
related to the  divestiture  of four branch  offices,  an  anticipated  level of
deposit attrition associated with lower deposit rates,  maturities and exchanges
of  investment  securities  and a decline in derivative  financial  instruments,
partially  offset by our  acquisition  of BSG on March 31, 2003,  which provided
assets of $115.1 million.

         The  increase  in average  assets for 2004 was  primarily  funded by an
increase  in average  deposits of $114.8  million to $6.17  billion for the year
ended  December 31,  2004,  and an increase of $266.7  million in average  other
borrowings  to $486.0  million for the year ended  December 31, 2004,  primarily
attributable  to term  reverse  repurchase  agreements.  The increase in average
assets for 2003 was primarily funded by an increase in average deposits of $98.1
million to $6.05 billion for the year ended  December 31, 2003,  and an increase
of $25.2  million in average  other  borrowings  to $219.3  million for the year
ended  December 31, 2003. We utilized the majority of the funds  generated  from
our deposit growth to invest in available-for-sale  investment  securities,  and
the remaining funds were temporarily  invested in federal funds sold,  resulting
in increases in average investment  securities and average federal funds sold of
$135.5  million and $19.8  million,  respectively,  to $957.4 million and $143.0
million,  respectively,  for the year ended December 31, 2003.  Interest-earning
assets averaged $6.91 billion for the year ended December 31, 2004,  compared to
$6.49 billion and $6.37 billion for the years ended  December 31, 2003 and 2002,
respectively,  while interest-bearing liabilities averaged $5.78 billion for the
year ended  December 31, 2004,  compared to $5.53  billion and $5.52 billion for
the years ended December 31, 2003 and 2002, respectively.

         Average loans,  net of unearned  discount,  were $5.51  billion,  $5.39
billion and $5.42 billion for the years ended December 31, 2004,  2003 and 2002,
respectively.  The acquisitions we completed during 2004 and 2003 provided total
loans,  net  of  unearned  discount,   of  $780.9  million  and  $43.7  million,
respectively. Our acquisitions of CIB, CCB and SBLS provided total loans, net of
unearned  discount,  of  $683.3  million,   $73.6  million  and  $24.0  million,
respectively.  Additionally, internal loan growth contributed to a $91.8 million
increase in commercial  loans and a $32.3 million  increase in residential  real
estate mortgage loans, partially offset by a decrease in consumer loans of $11.9
million.  The overall  increase in our loan portfolio was partially  offset by a
decrease in our loan  portfolio of $83.2  million  resulting  from the sale of a
portion of our commercial  leasing portfolio and management's  business decision
to  reduce  our  level of  nonperforming  assets  through  the  sale of  certain
nonperforming  loans in November and December 2004, as further  discussed  under
"--Loans and  Allowance  for Loan  Losses." We attribute the decrease in average
loans in 2003 to general  economic  conditions  resulting in continued weak loan
demand and lower  prevailing  interest  rates as well as  increased  competition
within our markets areas.  In addition to growth provided by  acquisitions,  for
2003,  internal loan growth was provided by a $73.6 million increase in our real
estate  construction and development  portfolio and a $100.6 million increase in
our  residential  real  estate  mortgage  portfolio  due  to  increased  volumes
resulting from the current interest rate  environment and our business  strategy
decision to retain a portion of our  residential  mortgage loan  production that
would  have  previously  been  sold  in the  secondary  mortgage  market.  These
increases  were  offset by a $204.2  million  decline in our loans held for sale
resulting  from the timing of loan sales in the  secondary  mortgage  market and
reduced loan volumes in the fourth  quarter of 2003, a continued  decline in our
lease  financing  portfolio of $59.5 million that is consistent with our overall
business  strategy to de-emphasize our commercial  leasing  activities,  a $56.1
million  decline in  commercial,  financial and  agricultural  loans and a $22.4
million decline in consumer and installment loans, net of unearned discount.

         Investment securities averaged $1.28 billion, $957.4 million and $821.9
million for the years ended  December  31,  2004,  2003 and 2002,  respectively,
reflecting  increases of $325.6 and $135.5  million for the years ended December
31, 2004 and 2003, respectively.  We attribute the increase in 2004 primarily to
the  investment  of  additional  funds  provided  by an  increase  in our  other
borrowings as well as our  acquisitions  of CIB and CCB,  which provided us with
$393.2  million  and  $44.8  million  of  investment  securities,  respectively.
Additionally,  a portion  of excess  short-term  investments  were  utilized  to
purchase higher-yielding  available-for-sale investment securities, resulting in
a decline in average  short-term  investments of $23.7 million to $119.4 million
for the year ended December 31, 2004,  from $143.0 million in 2003. The increase

<PAGE>

in 2003 was primarily associated with purchases of available-for-sale investment
securities due to deposit  growth and our  acquisition of BSG, which provided us
with $47.8 million of investment  securities.  The overall  increase in 2003 was
partially offset by the exchange of our Allegiant common stock for our ownership
in BSG and the subsequent  charitable  contribution  of our remaining  Allegiant
shares.

         Nonearning  assets  averaged $633.2 million for the year ended December
31,  2004,  compared to $698.7  million  and $687.8  million for the years ended
December  31,  2003 and 2002,  respectively.  Derivative  financial  instruments
averaged $25.9 million for the year ended  December 31, 2004,  compared to $78.7
million  and $72.8  million  for the years  ended  December  31,  2003 and 2002,
respectively,  consistent with a decline in the fair value of certain derivative
financial  instruments  and the maturity of $800.0  million  notional  amount of
interest  rate  swap  agreements   during  2004,  as  further   discussed  under
"--Interest  Rate  Risk  Management"  and Note 5 to our  Consolidated  Financial
Statements.  In 2004,  the  acquisitions  of CIB and CCB, the opening of four de
novo branch banking  offices,  partially  offset by continued  depreciation  and
amortization and the divestiture of two branch banking  offices,  contributed to
the  overall  increase  in  bank  premises  and  equipment.   In  addition,  our
liquidation of certain parcels of other real estate,  as further discussed under
"--Loans and  Allowance  for Loan Losses,"  further  contributed  to the overall
decline  in  average   nonearning   assets  in  2004.  In  2003,  lower  capital
expenditures,  continued  depreciation and amortization,  and the divestiture of
four branch  offices  contributed  to the overall  decrease in bank premises and
equipment.  Intangible  assets  increased  $24.0  million in 2004 and  primarily
relate to goodwill  associated  with our  acquisitions of CIB, CCB and SBLS, and
core  deposit  intangibles  associated  with  our  acquisitions  of CIB and CCB.
Intangible assets increased $6.6 million in 2003 and were primarily attributable
to goodwill and core deposit intangibles associated with our acquisition of BSG.

         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 $6.17 billion,  $6.05 billion and $5.96 billion for the years
ended December 31, 2004, 2003 and 2002,  respectively.  Total deposits increased
by $1.19  billion to $7.15  billion at December  31, 2004 from $5.96  billion at
December 31, 2003. The increase is primarily  attributable  our  acquisitions of
CIB and CCB, which provided total deposits of $1.10 billion and $104.6  million,
respectively, as well as the expansion of our banking franchise with the opening
of four de novo branch  offices in 2004,  in West St.  Louis  County,  Missouri,
Houston,  Texas,  McKinney,  Texas and San Diego,  California.  The increase was
partially  offset by a $23.4  million  reduction in our deposit base  associated
with our  divestiture of two Midwest branch banking offices during the first and
second quarters of 2004, as well as an anticipated level of attrition associated
with our  acquisitions.  Our continued  deposit marketing efforts and efforts to
further develop multiple account relationships with our customers, in additional
to slightly  higher  deposit  rates on certain  products,  have  contributed  to
deposit growth despite continued aggressive  competition within our market areas
and an anticipated level of attrition associated with ongoing low deposit rates.
The deposit mix reflects our continued efforts to restructure the composition of
our  deposit  base as the  majority  of our  deposit  development  programs  are
directed  toward  increased  transaction  accounts,  such as demand and  savings
accounts,  rather than time deposits. Total deposits decreased by $211.2 million
to $5.96  billion at December 31, 2003,  and  primarily  reflect an  anticipated
level of  attrition  associated  with  ongoing low deposit  rates and  continued
aggressive  competition  within  our  market  areas as well as an $88.3  million
reduction in our deposit base  associated  with our  divestiture  of four branch
offices in late 2003.  The overall  decline in deposits was partially  offset by
$93.7 million of deposits acquired from BSG.

         Other  borrowings  averaged $486.0  million,  $219.3 million and $194.1
million for the years ended December 31, 2004, 2003 and 2002, respectively.  The
increase  in the  average  balance  for 2004  reflects  $250.0  million  of term
securities  sold  under  agreements  to  repurchase  that  we  entered  into  in
conjunction with our interest rate risk management  program during the first and
second  quarters  of 2004,  as  further  discussed  in Note 5 and Note 10 to our
Consolidated  Financial  Statements.  The increase also reflects a $42.6 million
increase in daily securities sold under agreements to repurchase  principally in
connection  with  the  cash  management  activities  of our  commercial  deposit
customers,  as well as a $28.6  million  increase  in  Federal  Home  Loan  Bank
advances that we assumed in conjunction  with our  acquisitions  of CIB and CCB.
The increase in the average  balance for 2003  reflects  $100.0  million of term
securities  sold under  agreements to repurchase that we entered into during the
third  quarter of 2003,  offset by a $55.0  million  reduction in federal  funds
purchased, a $30.2 million decrease in daily securities sold under agreements to
repurchase and a $7.0 million reduction in Federal Home Loan Bank advances.

         Our note payable averaged $3.7 million, $15.4 million and $17.9 million
for the years ended  December 31, 2004,  2003 and 2002,  respectively.  Our note
payable  was $15.0  million at  December  31,  2004 and  resulted  from a single
advance drawn under our revolving  credit line on November 30, 2004 to partially
fund our  acquisition  of CIB.  The balance of our note  payable at December 31,
2003 was $17.0 million and resulted from a $34.5 million advance in June 2003 to
partially fund the redemption of $47.4 million of our  subordinated  debentures.
This advance was  subsequently  repaid in April 2004 through  dividends from our
subsidiary bank.
<PAGE>

         Subordinated  debentures  issued to our statutory  and business  trusts
averaged $220.4  million,  $249.1 million and $265.5 million for the years ended
December 31, 2004,  2003 and 2002,  respectively.  Our  subordinated  debentures
increased  $61.9  million  during 2004 due to the  issuance of $20.6  million of
subordinated  debentures to First Bank  Statutory  Trust II, or FBST II, a newly
formed  affiliated  statutory  trust, on September 20, 2004, and the issuance of
$41.2 million of  subordinated  debentures to First Bank Statutory Trust III, or
FBST III, a newly formed  affiliated  statutory  trust, on November 23, 2004, as
further  discussed  in Note 12 to our  Consolidated  Financial  Statements.  The
proceeds  from the issuance of these  subordinated  debentures  were utilized to
partially fund our  acquisition of CIB. Our  subordinated  debentures  decreased
$69.1  during  2003  due  primarily  to a net  reduction  of  $63.1  million  in
outstanding subordinated  debentures.  In March 2003, we issued $25.8 million of
8.10%  subordinated  debentures  to First Bank  Statutory  Trust,  or FBST, in a
private  placement  and  in  April  2003,  we  issued  $47.4  million  of  8.15%
subordinated  debentures to First Preferred Capital Trust IV, or First Preferred
IV, in a publicly  underwritten  offering.  Proceeds from the 2003  issuances of
subordinated debentures, in addition to approximately $30.9 million of available
cash reserves and a $34.5 million advance on our note payable, were used for the
May 2003 redemption of $88.9 million of 9.25% subordinated  debentures that were
issued to First Preferred Capital Trust in 1997, and the June 2003 redemption of
$47.4 million of 8.50% subordinated debentures that were issued to First America
Capital Trust in 1998.

         Stockholders' equity averaged $574.3 million, $537.6 million and $478.6
million for the years ended December 31, 2004, 2003 and 2002,  respectively.  We
primarily  attribute  the  increase  for 2004 to net  income  of $82.9  million,
partially  offset by dividends paid on our Class A and Class B preferred  stock,
and a $31.0 million decrease in accumulated other  comprehensive  income,  which
was comprised of $25.2 million  associated  with the change in the fair value of
our derivative financial instruments and $5.8 million associated with the change
in our unrealized gains and losses on available-for-sale  investment securities.
These  decreases  are  reflective  of changes in prevailing  interest  rates,  a
decline  in the fair  value of our  derivative  financial  instruments,  and the
maturity of $800.0 million  notional amount of our interest rate swap agreements
throughout  2004, as further  discussed under  "--Interest Rate Risk Management"
and Note 5 to our Consolidated  Financial  Statements.  The increase for 2003 is
attributable to net income of $62.8 million,  partially offset by dividends paid
on our Class A and Class B  preferred  stock,  and a $31.3  million  decrease in
accumulated  other  comprehensive  income that was  comprised  of $21.3  million
associated  with the  change  in the  fair  value  of our  derivative  financial
instruments and $10.0 million associated with the change in our unrealized gains
and losses on available-for-sale investment securities.



<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  interest-earning  assets, the average cost of  interest-bearing
liabilities and the resulting net interest income for the periods indicated.
<TABLE>
<CAPTION>

                                                                      Years Ended December 31,
                                        --------------------------------------------------------------------------------------
                                                    2004                            2003                        2002
                                        -----------------------------   --------------------------  --------------------------
                                                    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........................ $5,493,867   340,660    6.20%   $5,369,046   354,649   6.61% $5,408,018  389,090   7.19%
       Tax-exempt (4).................     15,187     1,260    8.30        16,317     1,266   7.76      16,490    1,495   9.07
    Investment securities:
       Taxable........................  1,245,226    50,170    4.03       914,357    32,442   3.55     773,871   31,845   4.12
       Tax-exempt (4).................     37,775     2,292    6.07        43,074     2,672   6.20      48,078    2,869   5.97
    Short-term investments............    119,370     1,643    1.38       143,046     1,502   1.05     123,285    1,949   1.58
                                       ----------   -------            ----------  --------         ----------  -------
         Total interest-
           earning assets.............  6,911,425   396,025    5.73     6,485,840   392,531   6.05   6,369,742  427,248   6.71
                                                    -------                        --------                     -------

Nonearning assets.....................    633,154                         698,740                      687,843
                                       ----------                      ----------                   ----------
         Total assets................. $7,544,579                      $7,184,580                   $7,057,585
                                       ==========                      ==========                   ==========

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

Interest-bearing liabilities:
    Interest-bearing deposits:
       Interest-bearing
         demand deposits.............. $  856,765     3,472    0.41%   $  852,104     5,470   0.64% $  755,879    7,551   1.00%
       Savings deposits...............  2,175,425    20,128    0.93     2,147,573    23,373   1.09   1,991,510   35,668   1.79
       Time deposits (3)..............  2,036,323    49,467    2.43     2,046,741    54,276   2.65   2,295,431   85,049   3.71
                                       ----------   -------            ----------  --------         ----------  -------
         Total interest-
           bearing deposits...........  5,068,513    73,067    1.44     5,046,418    83,119   1.65   5,042,820  128,268   2.54
    Other borrowings..................    485,994     6,102    1.26       219,264     2,243   1.02     194,077    3,450   1.78
    Note payable (5)..................      3,657       506   13.84        15,418       785   5.09      17,947    1,032   5.75
    Subordinated debentures (3) ......    220,428    15,092    6.85       249,146    17,879   7.18     265,503   24,801   9.34
                                       ----------   -------            ----------  --------         ----------  -------
         Total interest-
           bearing liabilities........  5,778,592    94,767    1.64     5,530,246   104,026   1.88   5,520,347  157,551   2.85
                                                    -------                        --------                     -------
Noninterest-bearing liabilities:
    Demand deposits...................  1,100,072                       1,007,400                      912,915
    Other liabilities.................     91,660                         109,357                      145,731
                                       ----------                       ---------                   ----------
         Total liabilities............  6,970,324                       6,647,003                    6,578,993
Stockholders' equity..................    574,255                         537,577                      478,592
                                       ----------                       ---------                   ----------
         Total liabilities and
           stockholders' equity....... $7,544,579                      $7,184,580                   $7,057,585
                                       ==========                      ==========                   ==========
Net interest income...................              301,258                         288,505                     269,697
                                                    =======                        ========                     =======
Interest rate spread..................                         4.09                           4.17                        3.86
Net interest margin (6)...............                         4.36%                          4.45%                       4.23%
                                                              =====                           ====                        ====
----------------------------
(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 includes 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  $1.2 million,  $1.4 million and  $1.5 million for the years ended December 31, 2004, 2003 and 2002,
      respectively.
(5)   Interest expense on our note  payable includes commitment, arrangement and renewal fees. Exclusive of  these fees,
      the  interest  rates  paid  were  2.87%,  2.35% and  2.96% for the years ended  December 31, 2004, 2003  and 2002,
      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, 2004 Compared         December 31, 2003 Compared
                                                     to December 31, 2003               to December 31, 2002
                                                -----------------------------      -------------------------------
                                                                         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.............................    $ 8,189     (22,178)   (13,989)     (2,824)    (31,617)   (34,441)
       Tax-exempt (4)......................        (91)         85         (6)        (16)       (213)      (229)
    Investment securities:
       Taxable.............................     12,906       4,822     17,728       5,345      (4,748)       597
       Tax-exempt (4)......................       (325)        (55)      (380)       (305)        108       (197)
    Short-term investments.................       (277)        418        141         278        (725)      (447)
                                               -------     -------    -------     -------     -------    -------
           Total interest income...........     20,402     (16,908)     3,494       2,478     (37,195)   (34,717)
                                               -------     -------    -------     -------     -------    -------
Interest paid on:
    Interest-bearing demand deposits.......         29      (2,027)    (1,998)        878      (2,959)    (2,081)
    Savings deposits.......................        294      (3,539)    (3,245)      2,602     (14,897)   (12,295)
    Time deposits (3) .....................       (278)     (4,531)    (4,809)     (8,461)    (22,312)   (30,773)
    Other borrowings.......................      3,234         625      3,859         406      (1,613)    (1,207)
    Note payable (5).......................       (915)        636       (279)       (136)       (111)      (247)
    Subordinated debentures (3)............     (1,993)       (794)    (2,787)     (1,456)     (5,466)    (6,922)
                                               -------     -------    -------     -------     -------    -------
           Total interest expense..........        371      (9,630)    (9,259)     (6,167)    (47,358)   (53,525)
                                               -------     -------    -------     -------     -------    -------
           Net interest income.............    $20,031      (7,278)    12,753       8,645      10,163     18,808
                                               =======     =======    =======     =======     =======    =======
------------------------
(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 includes 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 note 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 $301.3 million for the
year ended  December 31, 2004,  from $288.5  million and $269.7  million for the
years ended December 31, 2003 and 2002,  respectively.  Net interest  margin was
4.36% for the year ended December 31, 2004,  compared to 4.45% and 4.23% for the
years ended December 31, 2003 and 2002, 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 credit the increased net interest  income for 2004  primarily to the
net interest-earning  assets provided by our acquisitions  completed in 2003 and
2004,  increased  average  investment  securities with higher yields,  partially
offset by  increased  rates on other  borrowings,  lower rates paid on deposits,
increased  average  investment  securities  with higher  yields,  and  increased
average loan balances  associated with our acquisitions and internal growth. The
improved  net  interest  income  is also  attributable  to a $63.1  million  net
reduction in our  outstanding  subordinated  debentures  during 2003 and reduced
rates  associated with our outstanding  subordinated  debentures.  As more fully
described  in Note 12 to our  Consolidated  Financial  Statements,  in 2003,  we
redeemed $136.3 million of subordinated  debentures that were issued during 1997
and 1998,  and we issued $25.8  million of  subordinated  debentures to FBST and
$47.4 million of subordinated debentures to First Preferred IV. On September 20,
2004,  we issued  $20.6  million of  subordinated  debentures  to FBST II and on
November 23, 2004,  we issued $41.2 million of  subordinated  debentures to FBST
III. These transactions, coupled with the use of additional derivative financial

<PAGE>
instruments,  have allowed us to reduce our overall interest expense  associated
with our subordinated debentures.  Earnings on our interest rate swap agreements
that we entered  into in  conjunction  with our  interest  rate risk  management
program to mitigate the effects of decreasing interest rates also contributed to
the  maintenance  of our net interest  margin in 2004 and an increase in our net
interest margin in 2003.  These derivative  financial  instruments used to hedge
our  interest  rate risk  contributed  $50.1  million,  $64.6  million and $53.0
million,  respectively,  to net interest income for the years ended December 31,
2004,  2003 and 2002. We attribute  the decreased  earnings on our interest rate
swap agreements for 2004 to increasing  interest rates and the maturity of $50.0
million, $150.0 million and $600.0 million notional amount of interest rate swap
agreements in January, March and September 2004, respectively. Specifically, the
net  interest  income  associated  with  the swap  agreements  that  matured  in
September  2004  declined by $9.0 million  during 2004.  Although the Company is
implementing  other  methods to offset the  reduction  in net  interest  income,
including the funding of investment  security  purchases through the issuance of
term reverse  repurchase  agreements,  the maturity of the swap  agreements  has
resulted  and will  continue  to result in a  sizeable  reduction  of future net
interest income,  which may be further adversely affected if prevailing interest
rates  decrease.  In  addition,  earning  assets  increased  as a result  of our
acquisitions of BSG in 2003, which provided assets of $115.1 million, and Plains
Financial Corporation,  or Plains, and two Texas branch purchases in 2002, which
provided assets of $256.3 million and $63.7 million,  respectively. The increase
in net interest  income in 2003,  however,  was  partially  offset by prevailing
lower interest rates, generally weak loan demand and overall economic conditions
that continue to exert pressure on our net interest margin.

         Average total loans, net of unearned  discount,  were $5.51 billion for
the year ended  December  31, 2004,  in  comparison  to $5.39  billion and $5.42
billion for the years ended December 31, 2003 and 2002, respectively.  The yield
on our loan  portfolio  decreased to 6.21% for the year ended December 31, 2004,
in  comparison  to 6.61% for 2003 and 7.20% for 2002.  We attribute  the overall
increase  in average  loans in 2004 to our  acquisitions  and to  internal  loan
growth, partially offset by reductions in our loans held for sale portfolio, the
sale of a portion of our commercial  leasing  portfolio on June 30, 2004 and the
sale of certain  nonperforming  loans  late in the  fourth  quarter of 2004 as a
result  of  management's  business  decision  to  reduce  our  overall  level of
nonperforming  assets  through  the  sale of  certain  nonperforming  loans.  In
addition,  increased  competition  and general  economic  conditions  within our
market areas have  contributed  to continued  weak loan demand and generally low
prevailing  interest  rates,  despite the recent  increases in the prime lending
rate  experienced  in the third and fourth  quarters of 2004. In 2004, the prime
rate of interest  increased  to 5.25% at December 31, 2004 from 4.00% at January
1, 2004.  We attribute  the overall  decline in yields in 2003  primarily to the
decreases in prevailing  interest rates.  During the period from January 1, 2002
through  December 31, 2003, the Board of Governors of the Federal Reserve System
decreased the targeted federal funds rate two times,  resulting in two decreases
in the prime rate of interest from 4.75% to 4.00%. This is 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 matured or repriced  during this period.  As discussed above and
under  "--Interest  Rate Risk  Management," the reduced level of interest income
earned on our loan  portfolio as a result of the interest rate  environment  and
increased  competition  within our market areas was  partially  mitigated by the
earnings associated with our interest rate swap agreements and the net reduction
of our outstanding subordinated debentures.

         For the years ended  December 31, 2004,  2003 and 2002,  the  aggregate
weighted average rate paid on our interest-bearing  deposit portfolio was 1.44%,
1.65%  and  2.54%,   respectively.   We  attribute  the  decline   primarily  to
significantly decreased rates paid on our savings and time deposits,  which have
continued to decline in conjunction with the interest rate reductions previously
discussed.  However, the continued  competitive pressures on deposits within our
market  areas  precluded  us from fully  reflecting  the general  interest  rate
decreases  in our deposit  pricing  while still  providing  an adequate  funding
source for our loan  portfolio.  The  earnings  associated  with  certain of our
interest  rate  swap   agreements   designated  as  fair  value  hedges  further
contributed  to the overall  reduction in deposit  rates paid on time  deposits;
however,  as  further  discussed  in  Note 5 and  Note  25 to  our  Consolidated
Financial Statements,  the earnings associated with certain of our interest rate
swap  agreements  were  significantly   reduced  in  2003  and  2004  due  to  a
substantially  increasing  level of  ineffectiveness  experienced in the hedging
relationships  as  the  underlying  hedged   liabilities  neared  maturity  that
ultimately  led to  management's  decision to  terminate  the  remaining  $150.0
million of fair value  hedges that hedged a portion of our other time  deposits,
effective February 25, 2005.

         The aggregate  weighted average rate on our note payable was 13.84% for
the year ended  December  31,  2004,  compared  to 5.09% and 5.75% for the years
ended  December  31, 2003 and 2002,  respectively.  The  overall  changes in the
weighted  average rates paid reflect changing market interest rates during these
periods.  Amounts  outstanding  under our $75.0 million revolving line of credit
with a group of unaffiliated  financial  institutions  bear interest at the lead
bank's corporate base rate or, at our option,  at the London Interbank  Offering
Rate plus a margin  determined by the outstanding  balance and our profitability
for the  preceding  four calendar  quarters.  Thus,  our  revolving  credit line
represents a relatively  high-cost funding source as increased advances have the
effect of increasing the weighted average rate of non-deposit  liabilities.  The
overall  cost  of  this  funding  source  during  2004  was  higher  due to fees
associated with the credit facility  coupled with minimal  borrowings  under the

<PAGE>
revolving  credit line during 2004 as compared to 2003. The overall cost of this
funding source during 2003 however, was mitigated by the reductions in the prime
lending rate and in the average  outstanding balance of our note payable in 2003
as  compared  to 2002.  The  balance of our note  payable at  December  31, 2003
resulted from a $34.5 million  advance drawn in June 2003 to partially  fund our
redemption of $47.4 million of  subordinated  debentures,  and was  subsequently
reduced by $17.5  million of  internally  funded  repayments.  This  advance was
repaid  in April  2004  and no  additional  advances  were  drawn in 2004  until
November 30, 2004,  when an advance was drawn to partially fund our  acquisition
of CIB, resulting in the outstanding balance of our note payable being increased
to $15.0  million at December 31, 2004. In January 2005, we reduced this advance
by $11.0 million  through  dividends  from our  subsidiary  bank.  The aggregate
weighted  average rate paid on our other borrowings was 1.26% for the year ended
December 31, 2004,  as compared to 1.02% and 1.78% for the years ended  December
31, 2003 and 2002, respectively, reflecting changes in the current interest rate
environment during these periods.

         The aggregate weighted average rate paid on our subordinated debentures
was 6.85%, 7.18% and 9.34% for the years ended December 31, 2004, 2003 and 2002,
respectively.  The  aggregate  weighted  average  rates  paid  for 2004 and 2003
reflect the issuance of $61.9  million of  subordinated  debentures in late 2004
associated  with our  acquisition  of CIB, the  redemption of $136.3  million of
subordinated  debentures  and the  issuance  of $73.2  million  of  subordinated
debentures at lower  interest  rates in 2003, as well as the earnings  impact of
our interest  rate swap  agreements  entered into in 2002 and in March and April
2003. The rate for 2002 reflects the net interest  differential  earnings impact
of $4.5 million  associated with our interest rate swap agreements  entered into
in May and June 2002. The decline was partially offset by the additional expense
of our subordinated debentures issued in November 2001 and April 2002 as well as
a change in estimate regarding the period over which the deferred issuance costs
associated with these  obligations are being  amortized.  The change in estimate
resulted  in a  reduction  of net  income in the  amount of  approximately  $2.8
million for the year ended  December 31, 2002, as compared to what results would
have been without the change.

Comparison of Results of Operations for 2004 and 2003

         Net Income.  Net income was $82.9  million for the year ended  December
31, 2004,  compared to $62.8 million for 2003.  Our return on average assets and
our return on average stockholders' equity were 1.10% and 14.44%,  respectively,
for  the  year  ended   December  31,  2004,   compared  to  0.87%  and  11.68%,
respectively,  for 2003.  Results for 2004 reflect increased net interest income
and  a  reduced  provision  for  loan  losses,  partially  offset  by  decreased
noninterest income, increased noninterest expense and an increased provision for
income taxes.  The provision for loan losses for 2004,  which was  significantly
lower  than the  higher-than-historical  amounts  reflected  in 2003  and  2002,
reflects  an  overall   improvement   in  asset   quality,   reduced  levels  of
nonperforming  loans and lower net loan  charge-offs  than experienced in recent
years, as further discussed under "--Provision for Loan Losses" and exclusive of
our 2004 acquisition. Increased net interest income is primarily attributable to
our 2004  acquisitions,  reduced deposit rates and earnings on our interest rate
swap  agreements,  as  further  discussed  under  "--Net  Interest  Income."  We
attribute the decreased noninterest income to a nonrecurring gain on the sale of
our  investment  in Allegiant for a 100%  ownership  interest in BSG in 2003 and
decreased  gains on the  divestiture  of branch  offices in 2004 as  compared to
2003,  partially offset by increased service charges on deposit accounts,  gains
on mortgage loans sold and held for sale, and investment  management  income, as
further  discussed  under  "--Noninterest   Income."  The  overall  increase  in
operating expenses for 2004, as further discussed under "--Noninterest Expense,"
was  primarily due to increases in salaries and employee  benefit  expenses that
were  partially  offset  by  a  decrease  in  write-downs  on  operating  leases
associated with our commercial  leasing  business and a nonrecurring  charitable
contribution  expense  related to the  contribution  of our shares of  Allegiant
common stock in the fourth quarter of 2003.

         Provision  for Loan  Losses.  The  provision  for loan losses was $25.8
million  and $49.0  million  for the years  ended  December  31,  2004 and 2003,
respectively.  Net loan charge-offs were $24.8 million and $32.7 million for the
years ended December 31, 2004 and 2003,  respectively.  In 2003, we continued to
experience the higher level of problem loans,  related  charge-offs and past due
loans that we began to experience  in early 2002.  This was a result of economic
conditions within our market areas,  additional  problems  identified in certain
acquired loan portfolios and continuing  deterioration in our commercial leasing
portfolio,  particularly  the segment of the  portfolio  relating to the airline
industry.  These factors  necessitated higher provisions for loan losses than in
prior periods.  The reduced provision for loan losses in 2004 resulted from loan
sales  completed  late in the fourth  quarter of 2004 and,  exclusive  of recent
acquisition activity,  substantial improvement in asset quality,  reduced levels
of nonperforming  loans,  primarily resulting from significant loan payoffs, and
lower net loan charge-offs,  as further  discussed under "--Lending  Activities"
and "--Loans and Allowance for Loan Losses." Our  nonperforming  loans increased
to $85.8  million at December 31, 2004 from $75.4  million at December 31, 2003,
reflecting  the  acquisition  of a  significant  amount of  nonperforming  loans
associated  with  our  2004   acquisitions,   particularly  CIB  which  provided
nonperforming loans of $60.3 million. In addition, our acquisitions of CCB, SBLS
and CIB provided $4.4 million, $3.0 million and $26.4 million,  respectively, in

<PAGE>
additional  allowance for loan losses.  Our loan policy requires all loans to be
placed on a nonaccrual status once principal or interest payments become 90 days
past due. Our general  procedures  for monitoring  these loans allow  individual
loan  officers to submit a written  request 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 placed on nonaccrual  status.  Management
expects nonperforming assets to remain at higher levels in the near term because
of our CIB and CCB  acquisitions  and  considered  these  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, 2004
and 2003:
<TABLE>
<CAPTION>
                                                                                December 31,        Increase (Decrease)
                                                                                ------------        -------------------
                                                                              2004         2003        Amount       %
                                                                              ----         ----        ------      --
                                                                                  (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>         <C>
        Service charges on deposit accounts and customer service fees.....  $  38,230     36,113      2,117       5.86%
        Gain on loans sold and held for sale..............................     18,497     15,645      2,852      18.23
        Net gain on sales of available-for-sale investment securities.....        257      8,761     (8,504)    (97.07)
        Gain on sales of branches, net of expenses........................      1,000      3,992     (2,992)    (74.95)
        Bank-owned life insurance investment income.......................      5,201      5,469       (268)     (4.90)
        Investment management income......................................      6,870      4,762      2,108      44.27
        Other.............................................................     13,431     12,966        465       3.59
                                                                            ---------   --------   --------
              Total noninterest income....................................  $  83,486     87,708     (4,222)     (4.81)
                                                                            =========   ========   ========   ========
     Noninterest expense:
        Salaries and employee benefits....................................  $ 117,492     95,441     22,051      23.10%
        Occupancy, net of rental income...................................     19,882     20,940     (1,058)     (5.05)
        Furniture and equipment...........................................     17,017     18,286     (1,269)     (6.94)
        Postage, printing and supplies....................................      5,010      5,100        (90)     (1.76)
        Information technology fees.......................................     32,019     32,136       (117)     (0.36)
        Legal, examination and professional fees..........................      7,412      8,131       (719)     (8.84)
        Amortization of intangibles associated with the purchase of
           subsidiaries...................................................      2,912      2,506        406      16.20
        Communications....................................................      1,866      2,667       (801)    (30.03)
        Advertising and business development..............................      5,493      4,271      1,222      28.61
        Charitable contributions..........................................        577      5,334     (4,757)    (89.18)
        Other.............................................................     19,825     32,257    (12,432)    (38.54)
                                                                            ---------   --------   --------
              Total noninterest expense...................................  $ 229,505    227,069      2,436       1.07
                                                                            =========   ========   ========   ========

</TABLE>

         Noninterest  Income.  Noninterest income was $83.5 million for the year
ended December 31, 2004, compared to $87.7 million for 2003.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees,  mortgage-banking  revenues,  net  gain  on  sales  of  available-for-sale
investment securities,  bank-owned life insurance investment income,  investment
management income and other income.

         Service charges on deposit accounts and customer service fees increased
to $38.2  million  for 2004,  from $36.1  million  for 2003.  We  attribute  the
increase in service charges and customer service fees to:

         >>    our acquisitions completed during 2003 and 2004;

         >>    increased demand deposit account balances;

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

         >>    increased fee income resulting from revisions of customer service
               charges for non-sufficient fund and returned check fee rates that
               became  effective in December 2003,  and enhanced  control of fee
               waivers; and

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

         The gain on loans  sold and held for sale  increased  to $18.5  million
from $15.6 million for the years ended December 31, 2004 and 2003, respectively.
The change  reflects  the  continued  slowdown in 2004 in the volume of mortgage
loans  originated and sold that was initially  experienced in the fourth quarter

<PAGE>
of  2003,  management's  decision  to  retain a  portion  of new  mortgage  loan
production in the real estate  mortgage  portfolio in mid-2003 and a decrease in
the  allocation  of direct  mortgage  loan  origination  costs  from  salary and
employee  benefits  expense  to gain on loans  sold and held for sale since late
2003, and a change in the fallout percentage associated with the allocation. The
fallout percentage  represents the percentage of the number of loan applications
that do not result in the  ultimate  origination  of a loan divided by the total
number of loan applications received.

         Noninterest  income  for the years  ended  December  31,  2004 and 2003
includes  net  gains on sales of  available-for-sale  investment  securities  of
$257,000  and  $8.8  million,  respectively.  The net  gain  for  2004  resulted
primarily  from the sales of  certain  investment  securities  held by  acquired
institutions that did not meet our overall investment  objectives.  The net gain
for 2003  includes a $6.3 million gain on the exchange of our  Allegiant  common
stock for a 100%  ownership  interest in BSG in the first  quarter of 2003 and a
$2.3 million  gain  realized on the  subsequent  contribution  of our  remaining
shares  of  Allegiant  common  stock  to  a  previously  established  charitable
foundation  in the  fourth  quarter  of 2003,  partially  offset  by a  $431,000
impairment  loss  resulting  from a  permanent  decline  in the fair value of an
equity fund investment.

         Gains,  net of expenses,  on the sale of two Midwest banking offices in
2004 totaled $1.0  million and reflect a $392,000  gain,  net of expenses on the
sale of one of our Missouri  branch  banking  offices on February 6, 2004, and a
$630,000  gain,  net of  expenses,  on the sale of one of our  Illinois  banking
offices on April 16, 2004. The additional  adjustment to gains, net of expenses,
in 2004 relates to an adjustment to the fourth quarter 2003 gain recorded on the
divestiture  of four  banking  offices  due to an  expense  incurred  to correct
certain environmental issues associated with one of the banking offices.  During
the fourth quarter of 2003, we recorded a $4.0 million gain, net of expenses, on
the sale of the four branch offices in eastern Missouri and central and northern
Illinois,  as  further  discussed  in  Note  2  to  our  Consolidated  Financial
Statements.

         Bank-owned  life  insurance  income was $5.2 million for the year ended
December 31, 2004,  in comparison to $5.5 million in 2003 and reflects a reduced
return on this  product  primarily  associated  with the reduced  interest  rate
environment and overall market conditions.

         Investment  management  income  was $6.9  million  for the  year  ended
December 31, 2004, in  comparison to $4.8 million in 2003.  The increase in 2004
reflects  increased   portfolio   management  fee  income  associated  with  our
Institutional Money Management division.

         Other  income was $13.4  million and $13.0  million for the years ended
December 31, 2004 and 2003, respectively. We attribute the primary components of
the increase in other income to:

         >>    increased  loan   servicing   fees  of  $3.0  million   primarily
               attributable  to increased  fees from loans  serviced for others,
               including fees from the SBA assets purchased from SBLS, decreased
               amortization  of mortgage  servicing  rights and a lower level of
               interest shortfall.  Interest shortfall is 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.  Loan  servicing
               fees for 2004 also included an  impairment  charge of $459,000 on
               the SBA servicing asset;

         >>    an increase of $665,000 in fees from fiduciary activities,  which
               were $2.8 million and $2.1  million for the years ended  December
               31, 2004 and 2003, respectively;

         >>    our acquisitions completed during 2003 and 2004;

         >>    increased income of $512,000 from standby letters of credit; and

         >>    an increase of $375,000  reflecting the reduction of a contingent
               liability  recorded in conjunction  with the sale of a portion of
               our leasing  portfolio as a result of reductions in related lease
               balances  for the  specific  pools of  leases  sold,  as  further
               discussed in Note 24 to our  Consolidated  Financial  Statements;
               partially offset by

         >>    decreased  net gains on derivative  instruments  of $2.0 million.
               The net loss on derivative  instruments  was $1.5 million for the
               year ended  December 31,  2004,  in  comparison  to a net gain of
               $496,000  in 2003.  The  decrease  in the net gain on  derivative
               instruments  reflects  changes in the fair value of our  interest
               rate cap  agreements,  fair value  hedges and  underlying  hedged
               liabilities. The decrease reflects the discontinuation,  in 2003,
               of  hedge   accounting   treatment  on  two  interest  rate  swap
               agreements that matured in January 2004,  resulting from the loss
               of  our  highly  correlated  hedge  positions  between  the  swap
               agreements  and the  underlying  hedged  liabilities,  as further
               discussed under  "--Interest  Rate Risk Management" and Note 5 to
               our Consolidated Financial Statements;

<PAGE>

         >>    a decrease of $1.1 million in rental income  associated  with our
               reduced commercial leasing activities;

         >>    a  $282,000   write-off  of  fixed  assets  associated  with  the
               remodeling of a branch  office  facility to  accommodate  our St.
               Louis based mortgage banking operation;

         >>    a decline of $265,000 in brokerage revenue  primarily  associated
               with overall market conditions and reduced customer demand; and

         >>    a net  increase of $643,000 in losses on sales or  reductions  in
               valuations of repossessed  assets,  primarily  related to leasing
               equipment  associated with our commercial  leasing business.  Net
               losses  for 2004  were  $1.6  million  and  included  a  $750,000
               write-down on repossessed  aircraft  equipment and a $1.3 million
               write-down  on  repossessed  equipment  unrelated  to the airline
               industry.  These  write-downs were partially offset by a $350,000
               gain  on  the  sale  of  other  repossessed   aircraft  equipment
               associated with our commercial leasing portfolio.  Net losses for
               2003 were  $950,000 and included  write-downs  of $855,000 on the
               disposition of certain aircraft and aircraft equipment parts.

         Noninterest  Expense.  Noninterest  expense was $229.5  million for the
year ended  December 31, 2004,  in comparison  to $227.1  million for 2003.  Our
efficiency  ratio was 59.84% for the year ended  December 31, 2004,  compared to
60.58% for 2003. 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 net  increase  in  noninterest  expense  for 2004
primarily reflects the noninterest expense of our acquisitions  completed during
2003 and 2004, as well as increases in salaries and employee benefits  expenses,
partially  offset  by the  nonrecurring  $5.1  million  charitable  contribution
expense  recognized  in the fourth  quarter of 2003 on the  contribution  of our
Allegiant common stock, a decline in expenses and losses, net of gains, on other
real  estate  owned,  a decrease  in  write-downs  on various  operating  leases
associated with our commercial  leasing  business,  and a decrease in occupancy,
net of rental income, and furniture and equipment expense.

         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  (severance
               costs) as further  discussed under  "--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.  In conjunction with the
               merger and integration of our acquisitions, the acquired entities
               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  "--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

<PAGE>

conjunction with the information  technology and item processing  conversions of
the acquired entities as further described and quantified below.

         Salaries and  employee  benefits  increased by $22.1  million to $117.5
million for the year ended  December 31, 2004,  from $95.4  million in 2003.  We
primarily  associate the overall  increase with our 2003 and 2004  acquisitions;
generally higher salary and employee benefit costs associated with employing and
retaining  qualified  personnel;  and  additions  to  staff  to  enhance  senior
management  expertise  and  expand  our  product  lines.  The  increase  is also
attributable  to a lower  allocation of direct mortgage loan  origination  costs
from salaries and employee  benefits  expense to gain on loans sold and held for
sale due to a slowdown  in the volume of  mortgage  loans  originated  and sold,
management's decision to retain a portion of new mortgage loan production in our
real  estate  mortgage  portfolio  in  mid-2003  and a  change  in  the  fallout
percentage associated with the allocation.

         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $36.9  million and $39.2  million for the years ended  December 31, 2004
and 2003,  respectively.  We primarily  attribute the continued higher levels of
expense to acquisitions,  technology equipment expenditures, continued expansion
and  renovation of various  corporate and branch  offices and the  relocation of
certain  branches  and  operational  areas.  The  decrease in 2004 is  partially
attributable   to  decreased   rent  expense   associated   with  various  lease
terminations  in 2003,  including a $1.0 million  lease  termination  obligation
associated with the relocation of our San  Francisco-based  loan  administration
department to southern  California  and a $200,000  lease buyout on a California
branch  facility  recorded in the first quarter of 2003, a $979,000  decrease in
depreciation  expense on leased equipment associated with our reduced commercial
leasing  activities,  partially  offset by an increase  attributable to our 2004
acquisitions.

         Information  technology  fees were $32.0  million and $32.1 million for
the years ended December 31, 2004 and 2003,  respectively.  As discussed 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.  We  attribute  the  level of fees to  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
the information  technology  conversion of BSG completed in 2003, as well as the
achievement  of  certain  efficiencies  associated  with the  implementation  of
various technology projects.  The information  technology  conversion of CCB was
completed in September 2004.

         Legal,  examination  and  professional  fees were $7.4 million and $8.1
million  for the years  ended  December  31,  2004 and 2003,  respectively.  The
decrease in these fees in 2004 is  primarily  associated  with higher legal fees
paid in 2003 related to an ongoing lawsuit that reached final  resolution in the
second quarter of 2004. 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 defense  litigation related to acquired entities
have all contributed to the overall expense levels in 2003 and 2004.

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $2.9 million and $2.5 million for the years ended December 31,
2004 and 2003,  respectively.  We  attribute  the  increase to the core  deposit
intangibles associated with our 2003 and 2004 acquisitions.

         Communications and advertising and business  development  expenses were
$7.4  million and $6.9  million for the years ended  December 31, 2004 and 2003,
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. 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 $577,000 and $5.3 million for the
years ended December 31, 2004 and 2003,  respectively.  We recorded contribution
expense  of  $5.1  million  in  the  fourth  quarter  of  2003  related  to  the
contribution  of our  remaining  shares of Allegiant  common  stock,  as further
discussed under "--Overview" and "--Acquisitions - Closed Acquisitions and Other
Corporate Transactions."

         Other  expense was $19.8  million and $32.3 million for the years ended
December 31, 2004 and 2003,  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.  We attribute the
majority of the decrease in other expense for 2004, as compared to 2003, to:
<PAGE>

         >>    a decrease of $5.2  million on  expenditures  and losses,  net of
               gains,  on other real  estate.  Expenditures  and losses,  net of
               gains,  on other real estate  reflected net gains of $3.3 million
               for the year  ended  December  31,  2004,  in  comparison  to net
               expenses and losses of $1.9  million in 2003.  Net gains on sales
               of other real estate in 2004  include a $2.7  million gain on the
               sale of a residential and recreational  development property that
               was  transferred to other real estate in January 2003, as further
               discussed  under  "--Loans and  Allowance  for Loan  Losses," and
               approximately  $454,000  in  gains  recorded  on the  sale of two
               additional  holdings of other real estate.  Net  expenditures  on
               other  real  estate  for  2003  primarily  included  expenditures
               associated with the operation of the residential and recreational
               development  property that was sold in February 2004 as well as a
               $200,000  expenditure  associated  with an unrelated  residential
               real estate property located in the northern California region;

         >>    decreased write-downs of $6.1 million on various operating leases
               associated  with our  commercial  leasing  business,  which  were
               primarily a result of reductions in estimated residual values. We
               recorded  write-downs of $664,000 for the year ended December 31,
               2004, compared to $6.8 million in 2003; and

         >>    a $1.0 million specific reserve  established in December 2003 for
               the estimated loss associated with a $5.3 million unfunded letter
               of credit that we subsequently  funded as a loan in January 2004;
               partially offset by

         >>    higher expenses associated with our acquisitions completed during
               2003  and   2004,   including   increased   travel,   meals   and
               entertainment expenses incurred by our conversion team members in
               anticipation of the information technology conversion of CIB that
               occurred in February 2005; and

         >>    continued growth and expansion of our banking franchise.

         Provision  for Income  Taxes.  The provision for income taxes was $45.3
million for the year ended December 31, 2004,  representing an effective  income
tax rate of 35.4%,  in comparison to $36.0  million,  representing  an effective
income tax rate of 36.4%,  for the year ended December 31, 2003. The decrease in
the  effective  income tax rate is primarily  attributable  to the reversal of a
$2.8 million tax reserve in the second quarter of 2004 that was no longer deemed
necessary as a result of the resolution of a potential tax liability.  Excluding
this  transaction,  the  effective  income tax rate was 37.5% for the year ended
December 31, 2004,  reflecting  higher  taxable income and the merger of our two
bank  charters on March 31, 2003,  which has resulted in higher  taxable  income
allocations in states where we file separate tax returns.

Comparison of Results of Operations for 2003 and 2002

         Net Income.  Net income was $62.8  million for the year ended  December
31, 2003,  compared to $45.2 million for 2002.  Our return on average assets and
our return on average stockholders' equity were 0.87% and 11.68%,  respectively,
for the year ended December 31, 2003, compared to 0.64% and 9.44%, respectively,
for 2002. Results for 2003 reflect increased net interest income and noninterest
income and  decreased  provisions  for loan losses,  partially  offset by higher
operating expenses and increased  provisions for income taxes. The provision for
loan losses,  although  higher than  historical  averages,  is indicative of the
current  economic  environment,  reflected in continued  higher loan charge-off,
past due and nonperforming  trends as further  discussed under  "--Provision for
Loan Losses." Increased net interest income is primarily attributable to reduced
deposit  rates and earnings on our  interest  rate swap  agreements,  as further
discussed under "--Net Interest Income." We attribute the increased  noninterest
income to gains on mortgage  loans sold and held for sale,  net gain on sales of
available-for-sale  investment  securities  and net gains on the  divestiture of
four branch offices as further discussed under "--Noninterest Income," partially
offset by reduced other income and net gain on derivative instruments as further
discussed  under  "--Interest  Rate Risk  Management."  The overall  increase in
operating expenses for 2003, as further discussed under "--Noninterest Expense,"
was  primarily  due to  general  increases  in  salaries  and  employee  benefit
expenses, write-downs on operating leases associated with our commercial leasing
business and charitable  contribution expense related to the contribution of our
shares of Allegiant common stock in late 2003.

         Provision  for Loan  Losses.  The  provision  for loan losses was $49.0
million  and $55.5  million  for the years  ended  December  31,  2003 and 2002,
respectively.   We  experienced  a  higher  level  of  problem  loans,   related
charge-offs  and past due loans during 2002 due to overall  economic  conditions
within our market areas, problems identified in two acquired loan portfolios and
deterioration in our commercial leasing  portfolio,  particularly the segment of
the  portfolio  relating  to  the  airline  industry.   We  experienced  further
deterioration  in our  commercial  leasing  portfolio in 2003,  contributing  to
continued higher-than-historical provisions for loan losses as further discussed
under  "--Lending  Activities"  and "--Loans and Allowance for Loan Losses." Net
loan  charge-offs  were $32.7  million  and $54.6  million  for the years  ended

<PAGE>

December 31, 2003 and 2002, respectively. Net loan charge-offs, unrelated to our
commercial  leasing  portfolio,  included a $6.1 million net  charge-off  on one
significant  credit  relationship  in 2003 and $38.6 million on ten  significant
credit relationships in 2002. Our nonperforming loans increased to $75.4 million
at  December  31,  2003  from  $75.2  million  at  December  31,  2002,  further
contributing to the need for  higher-than-historical  provisions for loan losses
in 2003.  Management expects nonperforming assets to remain at the higher levels
recently  experienced and considered  these trends in its overall  assessment of
the adequacy of the allowance for loan losses.  In addition,  our acquisition of
BSG provided $757,000 of additional 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, 2003
and 2002:
<TABLE>
<CAPTION>

                                                                                December 31,         Increase (Decrease)
                                                                             --------------------    -------------------
                                                                               2003        2002       Amount       %
                                                                               ----        ----       ------      --
                                                                                  (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>        <C>
        Service charges on deposit accounts and customer service fees.....  $  36,113     30,978      5,135      16.58%
        Gain on loans sold and held for sale..............................     15,645      6,471      9,174     141.77
        Net gain on sales of available-for-sale investment securities.....      8,761         90      8,671   9,634.44
        Gain on sales of branches, net of expenses........................      3,992         --      3,992     100.00
        Bank-owned life insurance investment income.......................      5,469      5,928       (459)     (7.74)
        Investment management income......................................      4,762      4,157        605      14.55
        Other.............................................................     12,966     19,887     (6,921)    (34.80)
                                                                            ---------   --------    -------
              Total noninterest income....................................  $  87,708     67,511     20,197      29.92
                                                                            =========   ========    =======   ========

     Noninterest expense:
        Salaries and employee benefits....................................  $  95,441     89,569      5,872       6.56%
        Occupancy, net of rental income...................................     20,940     21,030        (90)     (0.43)
        Furniture and equipment...........................................     18,286     17,495        791       4.52
        Postage, printing and supplies....................................      5,100      5,556       (456)     (8.21)
        Information technology fees.......................................     32,136     32,135          1         --
        Legal, examination and professional fees..........................      8,131      9,284     (1,153)    (12.42)
        Amortization of intangibles associated with the
           purchase of subsidiaries.......................................      2,506      2,012        494      24.55
        Communications....................................................      2,667      3,166       (499)    (15.76)
        Advertising and business development..............................      4,271      5,023       (752)    (14.97)
        Charitable contributions..........................................      5,334        204      5,130   2,514.71
        Other.............................................................     32,257     25,338      6,919      27.31
                                                                            ---------   --------    -------
              Total noninterest expense...................................  $ 227,069    210,812     16,257       7.71
                                                                            =========   ========    =======   ========
</TABLE>

         Noninterest  Income.  Noninterest income was $87.7 million for the year
ended December 31, 2003, compared to $67.5 million for 2002.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees,  mortgage-banking  revenues,  net  gain  on  sales  of  available-for-sale
investment  securities,  bank-owned life insurance  investment  income and other
income.

         Service charges on deposit accounts and customer service fees increased
to $36.1  million  for 2003,  from $31.0  million  for 2002.  We  attribute  the
increase in service charges and customer service fees to:

         >>    our acquisitions completed during 2002 and 2003;

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

         >>    increased fee income resulting from revisions of customer service
               charge rates effective July 1, 2002, and enhanced  control of fee
               waivers; and

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

         The gain on loans  sold and held for sale  increased  to $15.6  million
from $6.5 million for the years ended December 31, 2003 and 2002,  respectively.
The increase reflects the continued growth of our mortgage banking activities in
addition to overall reductions in mortgage loan rates that contributed to higher
volumes of new  originations  and  refinancings,  partially  offset by increased
commissions  paid to mortgage loan  originators  associated with the higher loan
volumes. We experienced a slowdown in overall loan volumes in the fourth quarter
of 2003  resulting  in a decline  in gains on  mortgage  loans sold and held for
sale.
<PAGE>

         Noninterest  income  for the years  ended  December  31,  2003 and 2002
includes net gains on sales of available-for-sale  investment securities of $8.8
million and $90,000, respectively. The net gain for 2003 includes a $6.3 million
gain on the exchange of our Allegiant common stock for a 100% ownership interest
in BSG in the first  quarter of 2003 and a $2.3  million  gain  realized  on the
subsequent  contribution of our remaining  shares of Allegiant common stock to a
previously  established  charitable  foundation  in the fourth  quarter of 2003,
partially  offset by a  $431,000  impairment  loss  resulting  from a  permanent
decline in the fair value of an equity  fund  investment.  The net gain for 2002
resulted  primarily  from the sales of  certain  investment  securities  held by
acquired institutions that did not meet our overall investment objectives.

         During the fourth quarter of 2003, we recorded a $4.0 million gain, net
of expenses,  on the sale of four branch offices in eastern Missouri and central
and  northern  Illinois,  as  further  discussed  in Note 2 to our  Consolidated
Financial Statements.

         Bank-owned  life  insurance  income was $5.5 million for the year ended
December 31, 2003, in comparison to $5.9 million in 2002.  The decrease for 2003
reflects a reduced return on this product primarily  associated with the reduced
interest rate environment and overall market conditions.

         Investment  management  fees  were  $4.8  million  for the  year  ended
December 31, 2003, in comparison to $4.2 million in 2002. The increase  reflects
increased  portfolio  management fee income  associated  with our  Institutional
Money Management Division.

         Other  income was $13.0  million and $19.9  million for the years ended
December 31, 2003 and 2002, respectively. We attribute the primary components of
the decrease in other income to:

         >>    decreased  loan   servicing   fees  of  $4.2  million   primarily
               attributable  to  increased  amortization  of mortgage  servicing
               rights and a higher  level of interest  shortfall.  This  decline
               partially  offsets the continued  growth of our mortgage  banking
               activities  due to overall  reductions in mortgage loan rates and
               higher origination and refinancing volumes;

         >>    a net gain on derivative instruments,  which was $496,000 for the
               year ended  December 31, 2003,  in  comparison to $2.2 million in
               2002.  The  decrease  in the net gain on  derivative  instruments
               reflects  changes  in the  fair  value of our  interest  rate cap
               agreements,  fair value hedges and underlying hedged liabilities.
               The lower  2003 net gain also  reflects  the  discontinuation  of
               hedge  accounting  treatment on two interest rate swap agreements
               that  mature  in  January  2004,  resulting  from the loss of our
               highly correlated hedge positions between the swap agreements and
               the underlying  hedged  liabilities,  as further  discussed under
               "--Interest Rate Risk Management;"

         >>    a decline of $419,000 in brokerage revenue  primarily  associated
               with overall market conditions and reduced customer demand;

         >>    a decrease  of  $830,000  in rental  income  associated  with our
               reduced commercial leasing activities;

         >>    a gain of  approximately  $448,000 in 2002 on the sale of certain
               operating  lease  equipment  associated  with  equipment  leasing
               activities  that we acquired in conjunction  with our acquisition
               of Bank of San Francisco in December 2000; and

         >>    a loss of $386,000 on the sale of a vacant branch office building
               in 2003; partially offset by

         >>    a decrease  in net losses of  approximately  $393,000  associated
               with the sale or  write-down  of  repossessed  assets,  primarily
               related  to  leasing  equipment  associated  with our  commercial
               leasing business. Leasing equipment write-downs related solely to
               certain  aircraft and aircraft  equipment and parts were $855,000
               and $1.2 million in 2003 and 2002, respectively;

         >>    increased income of $569,000 from standby letters of credit;

         >>    higher  earnings   associated  with  our  international   banking
               products;

         >>    increased rental fees from First Services,  L.P. of approximately
               $385,000 for the use of data processing and other equipment owned
               by First Bank; and

         >>    our acquisitions completed during 2002 and 2003.
<PAGE>

         Noninterest  Expense.  Noninterest  expense was $227.1  million for the
year ended  December 31, 2003,  in comparison  to $210.8  million for 2002.  The
increase for 2003 reflects the noninterest expense of our acquisitions completed
during 2002 and 2003,  as well as general  increases  in salaries  and  employee
benefit expenses, occupancy and furniture and equipment expenses, write-downs on
operating leases associated with our commercial  leasing business and charitable
contributions expense.

         Salaries  and  employee  benefits  increased  by $5.9  million to $95.4
million  from $89.6  million  for the years  ended  December  31, 2003 and 2002,
respectively.  We  primarily  associate  the  increase  with  our  2002 and 2003
acquisitions;  overall higher salary and employee  benefit costs associated with
employing  and  retaining  qualified  personnel;  additions  to staff to enhance
senior  management  expertise and expand our product lines,  partially offset by
staff  realignments  surrounding  our core  business  strategies;  and increased
medical benefit costs  associated with an overall increase in medical claims and
increasing costs.

         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $39.2  million and $38.5  million for the years ended  December 31, 2003
and 2002,  respectively.  We primarily  attribute the continued higher levels of
expense to acquisitions,  technology equipment expenditures, continued expansion
and  renovation  of various  corporate  and branch  offices,  the  relocation of
certain  branches  and  operational  areas and  increased  depreciation  expense
associated  with  capital  expenditures.  Included in these  expenses are a $1.0
million  lease  termination  obligation  incurred  in 2003  associated  with the
relocation of our San Francisco-based loan administration department to southern
California  and a $1.4 million  lease buyout  obligation in 2002 on a California
facility acquired through a previous acquisition.

         Information  technology  fees were $32.1  million  for the years  ended
December 31, 2003 and 2002. We attribute the  consistently  higher level of fees
to growth and technological advancements consistent with our product and service
offerings,  and  continued  expansion and upgrades to  technological  equipment,
networks and  communication  channels.  These increases were partially offset by
expense  reductions  of  $554,000  associated  with the  information  technology
conversions of Union, Plains and the Denton and Garland,  Texas branch purchases
in 2002.

         Legal,  examination  and  professional  fees were $8.1 million and $9.3
million  for the years  ended  December  31,  2003 and 2002,  respectively.  The
decrease is primarily  attributable  to various fees paid in 2002 related to our
commercial  leasing  portfolio.  This decrease was partially  offset by a slight
increase in other legal,  examination and professional  fees associated with our
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,  expanded
corporate   activities  and  certain  defense  litigation  related  to  acquired
entities.

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $2.5 million and $2.0 million for the years ended December 31,
2003 and 2002, respectively. The increase is due to the core deposit intangibles
associated with our 2002 and 2003 acquisitions.

         Communications  and  advertising  and  business   development  expenses
decreased  $1.3  million to $6.9  million  from $8.2 million for the years ended
December 31, 2003 and 2002, respectively, primarily as a result of our continued
efforts to reduce these expenses through renegotiation of contracts,  reductions
in the  level  of  advertising  and  promotional  activities  and  ongoing  cost
containment efforts.

         Charitable  contribution  expense was $5.3 million and $204,000 for the
years ended December 31, 2003 and 2002,  respectively.  We recorded contribution
expense  of  $5.1  million  in  the  fourth  quarter  of  2003  related  to  the
contribution  of our  remaining  shares of  Allegiant  common  stock as  further
discussed under "--Overview" and "--Acquisitions - Closed Acquisitions and Other
Corporate Transactions."

         Other  expense was $32.3  million and $25.3 million for the years ended
December 31, 2003 and 2002,  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.  We attribute the
majority of the increase in other expense for 2003, as compared to 2002, to:

         >>    increased write-downs of $4.2 million on various operating leases
               associated  with our  commercial  leasing  business,  which  were
               primarily a result of  reductions in estimated  residual  values.
               These  write-downs  were $6.8 million for the year ended December
               31, 2003, compared to $2.6 million in 2002;
<PAGE>

         >>    increased   expenses  on  other  real  estate  of  $1.6  million,
               including  gains  and  losses  on  sales  of  other  real  estate
               properties.  The majority of these  increased  expenditures  were
               associated with the operation of the residential and recreational
               development  property transferred to other real estate in January
               2003 and further  discussed under "--Loans and Allowance for Loan
               Losses;"

         >>    a $1.0 million specific reserve  established in December 2003 for
               the estimated loss associated with a $5.3 million unfunded letter
               of credit that we subsequently funded as a loan in January 2004;

         >>    expenses  associated with our acquisitions  completed during 2002
               and 2003; and

         >>    continued   growth  and  expansion  of  our  banking   franchise;
               partially offset by

         >>    reductions in various expenses, primarily including travel, meals
               and  entertainment,  director's  fees  and  transfer  agent  fees
               associated  with  economies   achieved  from  completion  of  our
               purchase of the minority  interest in First Banks America,  Inc.,
               San  Francisco,   California,  or  FBA,  on  December  31,  2002,
               resulting in the  elimination  of the  requirements  for separate
               public financial reporting of this subsidiary.

         Provision  for Income  Taxes.  The provision for income taxes was $36.0
million for the year ended December 31, 2003,  representing an effective  income
tax rate of 36.4%,  in comparison to $22.8  million,  representing  an effective
income tax rate of 32.8%,  for the year ended December 31, 2002. The increase in
the effective income tax rate is primarily attributable to higher taxable income
and the merger of our two bank  charters,  which has resulted in higher  taxable
income allocations in states where we file separate state tax returns.

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,  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 Credit
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 8.9% of net interest income,
based on assets  and  liabilities  at  December  31,  2004.  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, 2004,  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>     <C>
   Loans (1)......................................  $4,300,725    279,785    424,911  1,050,703     81,844  6,137,968
   Investment securities..........................     239,087    172,893    236,803    978,584    185,982  1,813,349
   Short-term investments.........................     117,505         --         --         --         --    117,505
                                                    ----------  ----------  --------  ---------  ---------  ---------
       Total interest-earning assets..............   4,657,317    452,678    661,714  2,029,287    267,826  8,068,822
   Effect of interest rate swap agreements........    (300,000)        --         --    300,000         --         --
                                                    ----------  ----------  --------  ---------  ---------  ---------
       Total interest-earning assets after
         the effect of interest
         rate swap agreements.....................  $4,357,317    452,678    661,714  2,329,287    267,826  8,068,822
                                                    ==========  =========   ========  =========  =========  =========
Interest-bearing liabilities:
   Interest-bearing demand accounts...............  $  323,932    201,362    131,323     96,304    122,568    875,489
   Money market accounts..........................   1,749,981         --         --         --         --  1,749,981
   Savings accounts...............................      84,943     69,953     59,960     84,942    199,865    499,663
   Time deposits..................................     641,748    421,632    709,072  1,024,268     35,455  2,832,175
   Other borrowings...............................     215,106         --        144    368,500     11,000    594,750
   Note payable...................................          --         --     15,000         --         --     15,000
   Subordinated debentures........................          --         --         --         --    273,300    273,300
                                                    ----------  ---------   --------  ---------  ---------  ---------
       Total interest-bearing liabilities.........   3,015,710    692,947    915,499  1,574,014    642,188  6,840,358
   Effect of interest rate swap agreements........     276,200         --         --   (150,000)  (126,200)        --
                                                    ----------  ---------   --------  ---------  ---------  ---------
       Total interest-bearing liabilities
         after the effect of interest
         rate swap agreements.....................  $3,291,910    692,947    915,499  1,424,014    515,988  6,840,358
                                                    ==========  =========   ========  =========  =========  =========
Interest-sensitivity gap:
   Periodic.......................................  $1,065,407   (240,269)  (253,785)   905,273   (248,162) 1,228,464
                                                                                                            =========
   Cumulative.....................................   1,065,407    825,138    571,353  1,476,626  1,228,464
                                                    ==========  =========   ========  =========  =========
Ratio of interest-sensitive assets to
   interest-sensitive liabilities:
     Periodic.....................................        1.32       0.65       0.72       1.64       0.52       1.18
                                                                                                            =========
     Cumulative...................................        1.32       1.21       1.12       1.23       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 accounts 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 table.

         At December  31,  2004,  our  asset-sensitive  position on a cumulative
basis  through the  twelve-month  time horizon was $571.4  million,  or 6.54% of
total  assets,  in comparison  to our  asset-sensitive  position on a cumulative
basis through the twelve-month time horizon of $361.1 million, or 5.08% of total
assets,  at December 31, 2003.  We attribute the increase for 2004 to changes in
customer  preferences  related to the current low interest rate  environment and
economic  conditions  and growth.  This is observed in the  shifting of deposits
from time  deposits to  transactional  accounts and in continued low loan demand
resulting  in  increases  in the  amount  of  short-term  investments.  This was
partially  offset  by  our  interest  rate  swap  agreements   entered  into  in
conjunction with our interest rate risk management program.

         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,
2004 and 2003 are summarized as follows:
<TABLE>
<CAPTION>

                                                           December 31, 2004          December 31, 2003
                                                       -------------------------   -----------------------
                                                        Notional      Credit        Notional      Credit
                                                         Amount      Exposure        Amount      Exposure
                                                         ------      --------        ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                   <C>              <C>          <C>            <C>
         Cash flow hedges............................ $  500,000       1,233        1,250,000      2,857
         Fair value hedges...........................    276,200       9,609          326,200     12,614
         Interest rate cap agreements................         --          --          450,000         --
         Interest rate lock commitments..............      5,400          --           15,500         --
         Forward commitments to sell
           mortgage-backed securities................     34,000          --           58,500         --
                                                      ==========      ======       ==========    =======
</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 accounting  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.

         During  2004,  2003 and  2002,  we  realized  net  interest  income  on
derivative  financial  instruments  of $50.1  million,  $64.6  million and $53.0
million,  respectively.  In  addition,  we  recorded  a net  loss on  derivative
instruments,  which  is  included  in  noninterest  income  in the  consolidated
statements of income,  of $1.5 million for the year ended  December 31, 2004, in
comparison  to net  gains of  $496,000  and $2.2  million  for the  years  ended
December  31, 2003 and 2002,  respectively.  Information  regarding  our various
derivative financial instruments is further discussed in detail 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,  we made a  business  strategy  decision  to retain a  portion  of new
residential  mortgage  loan  production  in our real estate  mortgage  portfolio
primarily as a result of continued weak loan demand in other sectors of our loan

<PAGE>
portfolio,  as further  discussed in "--Loans and Allowance for Loan Losses." In
general,  new residential  mortgage loan production  originated in our St. Louis
production  offices is  retained  in  portfolio,  with the  exception  of 20 and
30-year  fixed  rate  loans,  which are  typically  sold in the  secondary  loan
markets.  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,  2004,  2003 and  2002,  we
originated  loans for resale  totaling  $1.14  billion,  $2.16 billion and $1.95
billion and sold loans totaling $983.2 million, $2.00 billion and $1.60 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 $1.06 billion,  $1.22 billion and $1.29 billion at December 31, 2004,
2003 and 2002, respectively.

         The gain on mortgage loans originated for resale,  including loans sold
and held for sale,  was $17.8  million,  $15.6  million and $6.5 million for the
years ended December 31, 2004, 2003 and 2002,  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,"  (loans not funded due to issues  discovered  during the underwriting
process or withdrawal of the loan request by the customer) adjusted for the cost
of hedging these loan commitments. The increases for 2004 and 2003 are 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  experienced  throughout  2002 and 2003,
partially  offset by the  continued  slowdown  in 2004 in the volume of mortgage
loans originated and sold that we initially experienced in the fourth quarter of
2003.  During the third quarter of 2003,  we  recognized  impairment of $800,000
through a valuation allowance  associated with a decline in the fair value of an
individual  mortgage  servicing  rights stratum below its carrying value, net of
the  valuation  allowance.  We  subsequently  reversed the  $800,000  impairment
valuation  allowance  during the third and fourth quarters of 2003 based upon an
increase in the fair value of the mortgage  servicing  rights  stratum above the
carrying value, net of the valuation  allowance,  as further discussed in Note 6
to our Consolidated Financial Statements appearing elsewhere in this report.

         Interest  income on loans held for sale was $8.8  million  for the year
ended  December 31, 2004,  in  comparison to $17.0 million and $15.1 million for
the years ended December 31, 2003 and 2002, 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 $133.3  million,  $273.0 million and $206.0 million for the years ended
December 31, 2004,  2003 and 2002,  respectively.  On an annualized  basis,  our
yield on the portfolio of loans held for sale was 6.61%, 6.21% and 7.32% for the
years ended December 31, 2004, 2003 and 2002,  respectively.  This compares with
our cost of funds, as a percentage of average interest-bearing  liabilities,  of
1.64%,  1.88% and 2.85% for the years ended  December 31,  2004,  2003 and 2002,
respectively.

         We report  mortgage loan servicing fees net of amortization of mortgage
servicing rights, interest shortfall and mortgage-backed  security guarantee fee
expense in other noninterest  income.  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.  Loan servicing  fees,  net, are included in other  noninterest
income in the consolidated statements of operations. Net mortgage loan servicing
fees decreased other noninterest income by $1.5 million and $3.8 million for the
years ended  December  31, 2004 and 2003,  respectively,  whereas  such net fees
increased other  noninterest  income by $321,000 for the year ended December 31,
2002.  Amortization of mortgage servicing rights was $6.5 million,  $7.5 million
and $3.8  million  for the  years  ended  December  31,  2004,  2003  and  2002,
respectively.  We attribute the decrease in net loan  servicing fees in 2004 and
2003 primarily to increased amortization of mortgage servicing rights, resulting
from the high volumes of loan refinancings and payoffs associated with continued
low  mortgage  interest  rates  experienced  in 2002 and 2003, a higher level of
interest shortfall in 2003, and increased unused commitment fees in 2004.

         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,
2004,  2003 and 2002, we had $35.3  million,  $58.2 million and $234.6  million,
respectively,  of loans held for sale and related commitments,  net of committed
loan sales and estimated  underwriting  fallout,  of which $34.0 million,  $58.5
million and $245.0  million,  respectively,  were hedged through the use of such
forward commitments.



<PAGE>

Investment Securities

         We classify the securities  within our investment  portfolio as held to
maturity or available  for sale.  We do not engage in the trading of  investment
securities.  Our investment  security portfolio consists primarily of securities
designated as available for sale.  The investment  security  portfolio was $1.81
billion at December 31,  2004,  compared to $1.05  billion and $1.15  billion at
December  31,  2003 and 2002,  respectively.  The  significant  increase  in the
investment  securities  portfolio in 2004 is attributable to securities acquired
through  acquisitions  and funds  provided by an  increase in other  borrowings,
primarily term reverse repurchase agreements, combined with the overall level of
loan demand within our market areas, which affects the amount of funds available
for investment.

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 86.5%, 90.9% and 91.6%
of total interest  income for the years ended December 31, 2004,  2003 and 2002,
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  which would warrant the resumption of
interest accruals.

         Loans, net of unearned  discount,  represented 70.3% of total assets as
of December  31,  2004,  compared to 75.0% of total assets at December 31, 2003.
Total loans, net of unearned discount, increased $809.9 million to $6.14 billion
at December 31, 2004 from $5.33 billion at December 31, 2003.  Our  acquisitions
of CIB,  CCB and SBLS  provided  loans,  net of  unearned  discount,  of  $683.3
million,  $73.6 million and $24.0  million,  respectively,  or $780.9 million in
aggregate. In addition, we reduced our loans and leases by $83.2 million in 2004
from the sale of a portion of our commercial  leasing  portfolio in June and the
sale of certain  nonperforming  loans in November and December,  resulting  from
management's  business decision to reduce the level of our nonperforming  assets
through the sale of certain nonperforming loans. Exclusive of these acquisitions
and loan sales completed in 2004, our loans, net of unearned discount, increased
$112.2  million  from  internal  growth in 2004.  Total  loans,  net of unearned
discount,  decreased $104.5 million to $5.33 billion for the year ended December
31, 2003. Exclusive of our acquisition of BSG in 2003, which provided loans, net
of  unearned  discount,  of $43.7  million,  loans,  net of  unearned  discount,
decreased $148.2 million in 2003. The overall increase in loans, net of unearned
discount, in 2004 primarily results from:

         >>    an  increase  of  $479.3  million  in our  real  estate  mortgage
               portfolio,  primarily  attributable to internal  growth,  and our
               acquisitions  completed  during 2004 which  provided  real estate
               mortgage  loans  of  $460.5  million,  as  well  as  management's
               business strategy decision in mid-2003 to retain a portion of our
               new  residential  mortgage  loan  production  in our real  estate
               mortgage  portfolio as a result of continued  weak loan demand in
               other sectors of our loan portfolio, as previously discussed, and
               a home equity  product  line  campaign  that we held in mid-2004.
               These  increases were partially  offset by a decrease  associated
               with  the  sale of  certain  nonperforming  loans  in the  fourth
               quarter of 2004, as previously discussed;

         >>    an increase of $254.5 million in our real estate construction and
               development  portfolio  resulting from internal growth,  seasonal
               increases  on existing  and  available  credit lines and an $85.2
               million increase  associated with our  acquisitions  completed in
               2004,  partially offset by a slight decrease  associated with the
               sale of  certain  nonperforming  loans in the  fourth  quarter of
               2004, as previously discussed, and

         >>    an increase of $161.7  million in our  commercial,  financial and
               agricultural  portfolio,  that we attribute  to a $235.2  million
               increase from our acquisitions  completed during 2004,  partially
               offset by (a) a decline in our internal  loan  volumes  resulting
               from an  anticipated  amount  of  attrition  associated  with our
               acquisitions  completed  during 2002 and 2003, (b) general runoff
               of the balances  within this  portfolio,  and (c) a $19.2 million
               reduction  related to two  significant  nonperforming  commercial
               credits, as further discussed below; partially offset by
<PAGE>

         >>    a  continued  decline  of $61.4  million  in our lease  financing
               portfolio  to $5.9  million at  December  31,  2004.  The decline
               primarily resulted from the sale of a significant  portion of our
               commercial   leasing   portfolio,   reducing  the   portfolio  by
               approximately $33.1 million to $9.6 million on June 30, 2004. The
               remaining decline in the balance of this portfolio was consistent
               with  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  from
               borrowers;

         >>    a decline of $12.7 million in loans held for sale  resulting from
               the  timing  of loan  sales  in the  secondary  mortgage  market,
               combined with management's business strategy decision in mid-2003
               to  retain  a  portion  of  the  new  residential  mortgage  loan
               production  in our  portfolio,  and an overall  slowdown  in loan
               origination  volumes  initially  experienced  during  the  fourth
               quarter of 2003 and continuing through 2004; and

         >>    a decline of $11.6  million in consumer  and  installment  loans,
               reflecting the continued  decline of new non-real estate consumer
               lending and the repayment of principal on our existing portfolio.

         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  with  another
financial  institution,  because: (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 relatively  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, 2004,  total  loans,  net of
unearned  discount,  increased  significantly from $4.00 billion at December 31,
1999 to $6.14  billion at December 31,  2004.  Throughout  this period,  we have
substantially  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,  substantially all of our conforming  residential  mortgage
loan  production has been  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.  We have  also  substantially
reduced  our  consumer  lending by  discontinuing  the  origination  of indirect
automobile  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.

         In  addition,  our  acquisitions  have  contributed  to  a  substantial
increase in the portfolios of new loans.  Typically,  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  relationships.  We continue to experience this trend as a
result of our acquisitions of CCB and CIB,  completed in July and November 2004,
respectively, and expect the resolution of certain problem credits acquired from
CIB to continue in the near term.
<PAGE>

         The following  table  summarizes  the components of changes in our loan
portfolio, net of unearned discount, for the five years ended December 31, 2004:

<TABLE>
<CAPTION>
                                                                   Increase (Decrease) For the Year Ended December 31,
                                                              ----------------------------------------------------------
                                                                   2004         2003        2002       2001       2000
                                                                   ----         ----        ----       ----       ----
                                                                            (dollars expressed in thousands)
      Internal loan volume increase (decrease):
<S>                                                           <C>             <C>        <C>         <C>        <C>
          Commercial lending................................  $   91,760      (22,211)   (119,295)   174,568    360,410
          Residential real estate lending (1) ..............      32,348     (103,573)     36,074     48,616     20,137
          Consumer lending, net of unearned discount........     (11,900)     (22,429)    (44,060)   (75,280)   (64,606)
      Loans and leases sold.................................     (83,216)          --          --         --         --
      Loans provided by acquisitions........................     780,901       43,700     151,000    508,700    440,000
                                                              ----------    ---------   ---------  ---------  ---------
          Total increase (decrease).........................  $  809,893     (104,513)     23,719    656,604    755,941
                                                              ==========    =========   =========  =========  =========
      --------------------------------
       (1) Includes loans held for sale, which decreased $12.7 million for the year ended December 31, 2004.
</TABLE>

         Our lending strategy  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,  automobile financing 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  primarily  of 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.

         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,
                                    ------------------------------------------------------------------------------------------
                                          2004               2003                2002            2001              2000
                                    -----------------   ---------------    --------------    -------------   -----------------
                                     Amount       %      Amount     %     Amount      %     Amount      %    Amount        %
                                     ------       -      ------     -     ------      -     ------      -    ------        -
                                                                (dollars expressed in thousands)

Commercial, financial
<S>                                 <C>         <C>   <C>         <C>   <C>         <C>   <C>          <C>   <C>         <C>
    and agricultural.............   $1,569,321  26.1% $1,407,626  27.1% $1,443,016  28.4% $1,532,875   29.5% $1,372,196  29.3%
Real estate construction
    and development..............    1,318,413  22.0   1,063,889  20.5     989,650  19.5     954,913   18.4     809,682  17.3
Real estate mortgage:
    One-to-four-family
      residential loans..........      870,889  14.5     811,650  15.7     694,604  13.7     798,089   15.3     726,474  15.5
    Multi-family residential
      loans......................      102,447   1.7     108,163   2.1     112,517   2.2     148,684    2.9      80,220   1.7
    Commercial real estate
      loans......................    2,088,245  34.8   1,662,451  32.1   1,637,001  32.2   1,499,074   28.8   1,396,163  29.8
Lease financing..................        5,911   0.1      67,282   1.3     126,738   2.5     148,971    2.8     124,088   2.7
Consumer and installment, net
    of unearned discount.........       49,677   0.8      61,268   1.2      79,097   1.5     122,057    2.3     174,337   3.7
                                    ---------- -----  ---------- -----  ---------- -----  ----------  -----  ---------- -----
        Total loans, excluding
           loans held for sale...    6,004,903 100.0%  5,182,329 100.0%  5,082,623 100.0%  5,204,663  100.0%  4,683,160 100.0%
                                               =====             =====             =====              =====             =====
Loans held for sale..............      133,065           145,746           349,965           204,206             69,105
                                    ----------        ----------        ----------        ----------         ----------
        Total loans..............   $6,137,968        $5,328,075        $5,432,588        $5,408,869         $4,752,265
                                    ==========        ==========        ==========        ==========         ==========
</TABLE>
<PAGE>

      Loans at December 31, 2004 mature as follows:
<TABLE>
<CAPTION>

                                                                             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....................  $  985,464    161,071    318,337   29,746   74,703  1,569,321
Real estate construction and development..................     867,387     25,678    405,683      590   19,075  1,318,413
Real estate mortgage:
    One-to-four family residential loans..................     147,643    124,317    109,256  184,884  304,789    870,889
    Multi-family residential loans........................      11,838     25,536     49,647      397   15,029    102,447
    Commercial real estate loans..........................     514,802    527,275    685,642  107,480  253,046  2,088,245
Lease financing...........................................         611      5,300         --       --       --      5,911
Consumer and installment, net of unearned discount........      15,897     29,226      2,528    1,558      468     49,677
Loans held for sale.......................................     133,065         --         --       --       --    133,065
                                                            ----------  ---------  ---------  -------  -------  ---------
      Total loans.........................................  $2,676,707    898,403  1,571,093  324,655  667,110  6,137,968
                                                            ==========  =========  =========  =======  =======  =========

</TABLE>

         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 indicated:
<TABLE>
<CAPTION>

                                                                                  December 31,
                                                           ------------------------------------------------------------
                                                              2004        2003         2002          2001         2000
                                                              ----        ----         ----          ----         ----
                                                                           (dollars expressed in thousands)

   Commercial, financial and agricultural:
<S>                                                        <C>             <C>          <C>         <C>         <C>
     Nonaccrual........................................    $   10,147      26,876       15,787      17,141      21,424
     Restructured terms................................             4          --           --          --          22
   Real estate construction and development:
     Nonaccrual........................................        13,435       6,402       23,378       3,270      11,068
   Real estate mortgage:
     One-to-four family residential loans:
       Nonaccrual......................................         9,881      21,611       14,833      20,780       5,645
       Restructured terms..............................            11          13           15          20          28
     Multi-family residential loans:
       Nonaccrual......................................           434         804          772         476         593
       Restructured terms..............................            --          --           --          --         908
     Commercial real estate loans:
       Nonaccrual......................................        50,671      13,994        8,890      20,642      10,286
       Restructured terms..............................            --          --        1,907       1,993       2,016
   Lease financing:
     Nonaccrual........................................           907       5,328        8,723       2,185       1,013
   Consumer and installment:
     Nonaccrual........................................           310         336          860         794         155
     Restructured terms................................            --          --           --           7           8
                                                           ----------   ---------    ---------   ---------   ---------
              Total nonperforming loans................        85,800      75,364       75,165      67,308      53,166
   Other real estate...................................         4,030      11,130        7,609       4,316       2,487
                                                           ----------   ---------    ---------   ---------   ---------
              Total nonperforming assets...............    $   89,830      86,494       82,774      71,624      55,653
                                                           ==========   =========    =========   =========   =========

   Loans, net of unearned discount.....................    $6,137,968   5,328,075    5,432,588   5,408,869   4,752,265
                                                           ==========   =========    =========   =========   =========

   Loans past due 90 days or more and still accruing...    $   28,689       2,776        4,635      15,156       3,009
                                                           ==========   =========    =========   =========   =========

   Ratio of:
     Allowance for loan losses to loans................          2.46%       2.19%        1.83%       1.80%       1.72%
     Nonperforming loans to loans......................          1.40        1.41         1.38        1.24        1.12
     Allowance for loan losses to
       nonperforming loans.............................        175.65      154.52       132.29      144.36      153.47
     Nonperforming assets to loans and
       other real estate...............................          1.46        1.62         1.52        1.32        1.17
                                                           ==========   =========    =========   ==========  =========
</TABLE>
<PAGE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
certain  restructured  loans,  were  $85.8  million at  December  31,  2004,  in
comparison  to $75.4  million and $75.2  million at December  31, 2003 and 2002,
respectively. As further discussed under "--Lending Activities," the increase in
nonperforming loans in 2004 is primarily  associated with our 2004 acquisitions,
partially  offset by a  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 is primarily attributable to the current economic conditions as
previously  discussed,  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. Other
real estate owned was $4.0  million,  $11.1 million and $7.6 million at December
31, 2004,  2003 and 2002,  respectively.  Nonperforming  assets,  consisting  of
nonperforming  loans and other real  estate  owned,  were $89.8  million,  $86.5
million and $82.8 million for the years ended December 31, 2004,  2003 and 2002,
respectively.  The  3.86% net  increase  in  nonperforming  assets  during  2004
reflects the following significant changes:

         >>    Our  recent  acquisition  of  CIB on  November  30,  2004,  which
               resulted  in a  significant  increase  in  nonperforming  assets,
               primarily  attributable  to an  increase in  nonaccrual  loans of
               $60.3  million and an increase in other real estate owned of $1.9
               million.  At December 31, 2004,  nonperforming  assets related to
               our CIB  acquisition  included $50.5 million of nonaccrual  loans
               and $1.9 million of other real estate owned;

         >>    Our acquisition of SBLS on August 31, 2004,  which resulted in an
               increase in nonperforming assets of $8.8 million. At December 31,
               2004,  nonperforming assets related to this acquisition primarily
               included $6.2 million of nonaccrual loans. SBLS has a significant
               concentration  of assets  associated  with the shrimping  vessels
               industry, which are reflected in both loans and other repossessed
               assets.  Although we adjusted our asset purchase price to reflect
               this concentration,  asset quality issues will likely continue in
               the near future as a result of this  industry  concentration  and
               its currently depressed status; and

         >>    Our  acquisition  of CCB on July 30, 2004,  which  resulted in an
               increase in nonperforming assets of $2.5 million. At December 31,
               2004,  nonperforming  assets related to this acquisition included
               $1.9 million of nonaccrual loans; partially offset by

         >>    The sale of certain  problem loans in the fourth  quarter of 2004
               totaling  approximately  $50.2 million,  including  approximately
               $19.1   million  of  loans  that  were  on   nonaccrual   status.
               Additionally, at December 31, 2004, we had $12.9 million of loans
               classified  as loans held for sale that we acquired  from CIB and
               are being  actively  marketed  for sale  through  an  independent
               third-party broker;

         >>    On June 30, 2004, we completed the sale of a significant  portion
               of our commercial  leasing  portfolio,  reducing the portfolio by
               $33.1 million.  The level of  nonperforming  loans related to the
               remaining  lease  portfolio  was  $907,000 at December  31, 2004,
               compared to $5.3 million at December 31, 2003;

         >>    In March  2004,  we  placed  a $13.9  million  commercial  credit
               relationship  in the  southern  California  region on  nonaccrual
               status,  representing  approximately 15.9% of nonperforming loans
               at March 31,  2004.  In April 2004,  we  recorded a $3.9  million
               charge-off  on this  credit  relationship  as a result of workout
               negotiations with the borrower and in May 2004, the remaining net
               balance of $10.0 million was repaid in cash;

         >>    In  February  2004,  we  sold  a  residential  and   recreational
               development  property  that had been  held as other  real  estate
               since  January  2003.  Prior  to  foreclosure,  the  real  estate
               construction and development  loan had been on nonaccrual  status
               due to significant  financial  difficulties,  inadequate  project
               financing,  project  delays and weak project  management.  At the
               time of sale,  the property had a carrying value of $9.2 million,
               representing  approximately  83.0% of our total other real estate
               assets.  We recorded a gain,  before  applicable income taxes, of
               approximately $2.7 million on the sale of this property; and

         >>    In  January  2004,  we  funded a $5.3  million  letter  of credit
               associated with a commercial credit relationship in the St. Louis
               region and  subsequently  recorded a $750,000  charge-off on this
               credit   relationship   and  placed  the  remaining   balance  on
               nonaccrual   status,   bringing  the  total   commercial   credit
               relationship on nonaccrual status to approximately  $7.3 million.
               In April 2004, we sold the entire $7.3 million  commercial credit
               relationship  to an independent  third party for $9.6 million and
               recorded  a  $2.3  million   recovery  of   previously   recorded
               charge-offs.
<PAGE>

         Loans past due 90 days or more and still  accruing  increased  to $28.7
million at December 31, 2004, from $2.8 million and $4.6 million at December 31,
2003 and 2002,  respectively,  resulting  almost solely from our acquisitions of
CIB and CCB, which comprised $27.2 million of our loans past due 90 days or more
and still  accruing 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 2.46%,
2.19% and 1.83% at December 31, 2004, 2003 and 2002, respectively. Our allowance
for loan losses as a percentage of  nonperforming  loans increased to 175.65% at
December  31,  2004,  from  154.52% and  132.29% at December  31, 2003 and 2002,
respectively.  The allowance for loan losses was $150.7  million at December 31,
2004,  compared  to $116.5  million and $99.4  million at December  31, 2003 and
2002,  respectively.  As reflected in the table below,  a $1.0 million  specific
reserve was  established in December 2003 for the estimated loss associated with
a $5.3 million unfunded letter of credit.  The letter of credit was subsequently
funded as a loan in January 2004, and the related $1.0 million  specific reserve
was transferred to the allowance for loan losses. In addition, on June 30, 2004,
we transferred  approximately $1.5 million from the allowance for loan losses to
a contingent liability related to recourse obligations  associated with the sale
of certain leases in our commercial leasing  portfolio,  as further described in
Note  2 and  Note  24 to  our  Consolidated  Financial  Statements.  As  further
described in the table below and under  "--Business - Lending  Activities,"  the
allowance  for loan losses also reflects an increase in 2004 of $33.8 million of
balances  acquired  in  conjunction  with our  acquisitions,  including  a $15.7
million  increase to reflect the  application  of our loss factors to CIB'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'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 is expected to be realized at the time of sale.

         Loan  charge-offs  were $50.6 million,  $55.8 million and $70.5 million
for the  years  ended  December  31,  2004,  2003 and 2002,  respectively.  Loan
charge-offs, net of recoveries, decreased to $24.8 million for 2004, compared to
$32.7 million for 2003 and $54.6 million for 2002. Net loan charge-offs for 2004
reflect $2.5 million in net  charge-offs  related to certain  nonperforming  and
problem  loans that were sold in the fourth  quarter of 2004.  In addition,  net
loan recoveries  associated with our commercial  leasing portfolio were $342,000
in 2004,  compared to net loan charge-offs of $14.4 million in 2003. We continue
to closely  monitor  our loan and  leasing  portfolios  and  address the ongoing
challenges posed by the current  economic  environment,  including  reduced loan
demand  within our markets and  generally  low  prevailing  interest  rates.  We
consider  this in our overall  assessment  of the adequacy of the  allowance for
loan losses. While we have made substantial improvement in reducing our existing
portfolio of problem assets in 2004,  nonperforming assets continue to remain at
somewhat  elevated  levels that initially began in late 2001 with the decline in
economic  conditions.  Furthermore,  the level of nonperforming  assets from our
recent  acquisitions  have  significantly  contributed  to  increased  levels of
problem loans and past due loans,  and we anticipate the level of  nonperforming
and  delinquent  loans to  continue  in the near term as we work to resolve  the
underlying issues associated with the nonperforming assets of CCB and CIB.

         As of December 31, 2004,  2003,  2002,  2001 and 2000,  $161.8 million,
$109.4 million, $98.2 million,  $123.2 million and $50.2 million,  respectively,
of loans not included in the table above were identified by management as having
potential credit problems (problem loans). The significant increase in the level
of problem loans for the year ended December 31, 2004 is primarily  attributable
to our acquisitions of CCB and CIB, in addition to internal portfolio growth and
economic  conditions  within the  markets in which we operate.  The  significant
level of  problem  loans  for the years  ended  December  31,  2003 and 2002 are
primarily due to continuing  deterioration of our commercial  leasing portfolio,
portfolio  growth  (both  internal  and  external),  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 our  acquisitions  of Millenium
Bank  and  Union,  completed  in  December  2000  and  2001,  respectively,.  As
previously  discussed  under  "--Lending   Activities,"  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.
<PAGE>

         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 rating all loans at
the time they are originated,  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 these ratings  based on payment  experience  subsequent to their
origination.

         We include  adversely  rated credits,  including  loans requiring close
monitoring  which  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 whenever any adverse  circumstance is detected which might
affect the borrower's  ability to meet the 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 senior or 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
profiles 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 levels of risk in
the  portfolio.  Factors are applied to the loan  portfolio for each category of
loan risk to determine  acceptable  levels of the 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,  additional
provisions 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 provisions  necessary to maintain the
allowance at appropriate  levels.  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 change 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,  provisions are made to the allowance for
loan losses.  Such  provisions 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  loans for which risk  ratings  are  changed  based on
payment performance; and (c) changes in loan concentrations by borrower.

         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 the  redistribution  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.
<PAGE>

         The following  table is a summary of loan loss  experience for the five
years ended December 31, 2004:
<TABLE>
<CAPTION>

                                                                As of or For the Years Ended December 31,
                                                     --------------------------------------------------------------
                                                          2004        2003         2002         2001         2000
                                                          ----        ----         ----         ----         ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>             <C>          <C>          <C>          <C>
Allowance for loan losses, beginning of year......... $  116,451      99,439       97,164       81,592       68,611
Acquired allowances for loan losses..................     33,752         757        1,366       14,046        6,062
Other adjustments (1) (2)............................       (479)         --           --           --           --
                                                      ----------   ---------    ---------    ---------    ---------
                                                         149,724     100,196       98,530       95,638       74,673
                                                      ----------   ---------    ---------    ---------    ---------
Loans charged-off:
    Commercial, financial and agricultural...........    (26,550)    (23,476)     (45,697)     (21,085)      (9,690)
    Real estate construction and development.........     (3,481)     (5,825)      (7,778)        (108)      (2,229)
    Real estate mortgage:
       One-to-four family residential loans..........     (4,891)     (4,167)      (2,697)        (802)        (452)
       Multi-family residential loans................       (139)        (87)        (109)          (4)          --
       Commercial real estate loans..................     (9,995)     (1,708)      (2,747)      (1,012)      (1,761)
    Lease financing..................................     (4,536)    (19,160)      (8,426)      (6,749)         (78)
    Consumer and installment.........................     (1,051)     (1,350)      (3,070)      (1,693)      (2,840)
                                                      ----------   ---------    ---------    ---------    ---------
          Total......................................    (50,643)    (55,773)     (70,524)     (31,453)     (17,050)
                                                      ----------   ---------    ---------    ---------    ---------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........     14,983      10,147        8,331        4,015        5,556
    Real estate construction and development.........        748       1,659          631        1,171          319
    Real estate mortgage:
       One-to-four family residential loans..........      1,597         781          628          755          536
       Multi-family residential loans................         27          99          792           15           93
       Commercial real estate loans..................      2,659       4,174        3,491        1,332        1,308
    Lease financing..................................      4,878       4,805          494          435           65
    Consumer and installment.........................        984       1,363        1,566        1,746        1,965
                                                      ----------   ---------    ---------    ---------    ---------
          Total......................................     25,876      23,028       15,933        9,469        9,842
                                                      ----------   ---------    ---------    ---------    ---------
          Net loans charged-off......................    (24,767)    (32,745)     (54,591)     (21,984)      (7,208)
                                                      ----------   ---------    ---------    ---------    ---------
Provision for loan losses............................     25,750      49,000       55,500       23,510       14,127
                                                      ----------   ---------    ---------    ---------    ---------
Allowance for loan losses, end of year............... $  150,707     116,451       99,439       97,164       81,592
                                                      ==========   =========    =========    =========    =========

Loans outstanding, net of unearned discount:
    Average.......................................... $5,509,054   5,385,363    5,424,508    4,884,299    4,290,958
    End of year......................................  6,137,968   5,328,075    5,432,588    5,408,869    4,752,265
    End of year, excluding loans held for sale.......  6,004,903   5,182,329    5,082,623    5,204,663    4,683,160
                                                      ==========   =========    =========    =========    =========

Ratio of allowance for loan losses
  to loans outstanding:
    Average..........................................       2.74%       2.16%        1.83%        1.99%        1.90%
    End of year......................................       2.46        2.19         1.83         1.80         1.72
    End of year, excluding loans held for sale.......       2.51        2.25         1.96         1.87         1.74
Ratio of net charge-offs to
  average loans outstanding..........................       0.45        0.61         1.01         0.45         0.17
Ratio of current year recoveries to
    preceding year's total charge-offs...............      46.40       32.65        50.66        55.54        55.54
                                                      ==========   =========    =========    =========    =========
---------------
(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 the consolidated balance sheets. On January 5,
     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.
(2)  On  June 30, 2004,  we  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.

</TABLE>

<PAGE>


         The following table is a summary of the allocation of the allowance for
loan losses for the five years ended December 31, 2004:
<TABLE>
<CAPTION>

                                           2004              2003              2002             2001              2000
                                      ---------------  ----------------  ---------------  ----------------  ---------------
                                              Percent          Percent           Percent          Percent           Percent
                                                of               of                of               of                of
                                             Category         Category          Category         Category          Category
                                                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.................. $ 46,195  25.57% $ 37,142  26.42%   $34,915  26.56%  $40,161  28.34%   $32,130   28.87%
Real estate construction
  and development...................   38,525  21.48    26,782  19.97     22,667  18.22    21,598  17.65     14,667   17.04
Real estate mortgage:
  One-to-four family
   residential loans................    8,466  14.19     9,684  15.23      7,913  12.79     5,349  14.76      4,334   15.29
  Multi-family residential loans....       20   1.67       186   2.03         32   2.07        81   2.75         12    1.69
  Commercial real estate loans......   55,922  34.01    36,632  31.20     28,477  30.13    25,167  27.71     20,345   29.38
Lease financing.....................      628   0.10     4,830   1.26      3,649   2.33     3,062   2.75      1,114    2.61
Consumer and installment............      617   0.81       668   1.15        703   1.46       937   2.26      2,028    3.67
Loans held for sale.................      334   2.17       527   2.74      1,083   6.44       809   3.78        222    1.45
Unallocated (1).....................       --     --        --     --         --     --        --     --      6,740      --
                                     -------- ------  -------- ------    ------- ------   ------- ------    -------  ------
     Total.......................... $150,707 100.00% $116,451 100.00%   $99,439 100.00%  $97,164 100.00%   $81,592  100.00%
                                     ======== ======  ======== ======    ======= ======   ======= ======    =======  ======
----------------------
(1) During 2001, we reviewed our practice of maintaining unallocated reserves in light of continuing refinement in our loss
    estimation processes. We  concluded  the use of unallocated reserves would be discontinued.  Consequently, all reserves
    were aligned with their respective portfolios.
</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,
                                    -------------------------------------------------------------------------------------
                                               2004                        2003                         2002
                                    --------------------------  --------------------------   ----------------------------
                                                Percent                      Percent                     Percent
                                                  of                           of                          of
                                     Amount    Deposits   Rate    Amount    Deposits  Rate     Amount    Deposits    Rate
                                     ------    --------   ----    ------    --------  ----     ------    --------    ----
                                                                (dollars expressed in thousands)

Noninterest-bearing
<S>                                 <C>          <C>        <C>  <C>           <C>      <C>  <C>         <C>          <C>
  demand deposits.................. $1,100,072   17.83%     --%  $1,007,400    16.64%    --% $  912,915   15.33%      --%
Interest-bearing demand deposits...    856,765   13.89    0.41      852,104    14.08   0.64     755,879   12.69     1.00
Savings deposits...................  2,175,425   35.27    0.93    2,147,573    35.47   1.09   1,991,510   33.44     1.79
Time deposits .....................  2,036,323   33.01    2.43    2,046,741    33.81   2.65   2,295,431   38.54     3.71
                                    ----------  ------    ====   ----------   ------   ====  ----------  ------     ====
      Total average deposits....... $6,168,585  100.00%          $6,053,818   100.00%        $5,955,735  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, 2004,
2003 and 2002.

         Management believes as of December 31, 2004 and 2003, First Bank and we
were "well  capitalized,"  as defined in  regulations  adopted  pursuant  to the
Federal Deposit Insurance Corporation Improvement Act of 1991.

         We have formed nine statutory and business  trusts,  which 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.  Initially,  the
trusts served as financing subsidiaries,  however, as discussed in Note 1 to our
<PAGE>

Consolidated  Financial  Statements,   on  December  31,  2003,  we  implemented
Financial   Accounting   Standards  Board,  or  FASB,   Interpretation  No.  46,
Consolidation of Variable  Interest  Entities,  an interpretation of ARB No. 51,
which  resulted  in  the   deconsolidation  of  these  financing   subsidiaries.
Consequently,  the trusts now serve as affiliated statutory and business trusts.
The  implementation  of  this  Interpretation  had  no  material  effect  on our
consolidated financial position or results of operations.

         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, is as follows:
<TABLE>
<CAPTION>
                                                                                          Preferred      Subordinated
            Name of Trust                 Date Formed            Type of Offering         Securities      Debentures
            -------------                 -----------            ----------------         ----------      ----------

<S>                                           <C>              <C>                        <C>              <C>
    First Preferred Capital Trust II     October 2000          Publicly Underwritten      57,500,000       59,278,375
    First Preferred Capital Trust III    November 2001         Publicly Underwritten      55,200,000       56,907,250
    First Bank Capital Trust              April 2002             Private Placement        25,000,000       25,774,000
    First Bank Statutory Trust            March 2003             Private Placement        25,000,000       25,774,000
    First Preferred Capital Trust IV     January 2003          Publicly Underwritten      46,000,000       47,422,700
    First Bank Statutory Trust II       September 2004           Private Placement        20,000,000       20,619,000
    First Bank Statutory Trust III       November 2004           Private Placement        40,000,000       41,238,000
</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, 2004,  $67.8  million of the
trust preferred  securities were not includable in our Tier 1 capital,  although
this amount was included in our total risk-based capital.

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 Federal Home Loan Banks and other borrowings,
including our revolving  credit line.  The aggregate  funds  acquired from these
sources  were $1.42  billion and $726.9  million at December  31, 2004 and 2003,
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 note payable, at December 31, 2004:
<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....................................    $218,909             215,106        434,015
         Over three months through six months....................     107,883                  --        107,883
         Over six months through twelve months...................     183,894              15,144        199,038
         Over twelve months......................................     296,534             379,500        676,034
                                                                     --------            --------      ---------
              Total..............................................    $807,220             609,750      1,416,970
                                                                     ========            ========      =========
</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, 2004 and 2003, First Bank's borrowing  capacity under the agreement
was approximately $778.7 million and $909.3 million,  respectively. In addition,
First Bank's borrowing  capacity through its relationship  with the Federal Home
Loan Bank was  approximately  $505.2  million and $449.5 million at December 31,
2004 and 2003,  respectively.  Exclusive of the Federal Home Loan Bank  advances
outstanding  of $35.6  million and $7.0  million at December  31, 2004 and 2003,
respectively,  which  represent  advances  assumed in  conjunction  with various
acquisitions,  First  Bank  had  no  amounts  outstanding  under  its  borrowing
arrangement with the Federal Home Loan Bank at December 31, 2004 and 2003.

<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, 2004 are
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........................   $   10,024       15,467       10,702       18,395        54,588
         Certificates of deposit.................    1,761,966      855,850      169,050       45,309     2,832,175
         Other borrowings........................      215,250      356,000       12,500       11,000       594,750
         Note payable............................       15,000           --           --           --        15,000
         Subordinated debentures.................           --           --           --      273,300       273,300
         Other contractual obligations...........        2,422          366          126           26         2,940
                                                    ----------    ---------      -------      -------     ---------
              Total..............................   $2,004,662    1,227,683      192,378      348,030     3,772,753
                                                    ==========    =========      =======      =======     =========
</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.  For a  detailed  discussion  on the  application  of these  and  other
accounting  policies,  see  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. See further discussion under "--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.
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

<PAGE>
continuation of hedge accounting. Greater inefficiency and/or discontinuation of
hedge  accounting  are likely to result in increased  volatility to 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.  See
further  discussion under "--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 and deferred tax
liabilities 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 net 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. See further discussion under  "--Comparison
of Results of  Operations  for 2004 and 2003 - 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 to our reported earnings. In addition, we may need to make additional
adjustments  to the recorded  value of our  intangible  assets,  which  directly
impacts  our  regulatory   capital   levels.   See  further   discussion   under
"--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 2003, the Emerging  Issues Task Force,  or EITF,  reached a
consensus  on certain  disclosure  requirements  under  EITF Issue No 03-1,  The
Meaning  of  Other-Than-Temporary  Impairment  and Its  Application  to  Certain
Investments.  The new  disclosure  requirements  apply to investment in debt and
marketable equity  securities that are accounted under SFAS No. 115,  Accounting
for  Certain  Investments  in Debt and  Equity  Securities,  and  SFAS No.  124,
Accounting  for  Certain  Investments  Held  by  Not-for-Profit   Organizations.
Effective  for fiscal  years  ending after  December  15,  2003,  companies  are
required to disclose information about debt or marketable equity securities with
market values below carrying values.  We adopted the disclosure  requirements of
EITF Issue No. 03-1, which are included in Note 3 to our Consolidated  Financial
Statements.  In March 2004,  the EITF came to a consensus  regarding  EITF 03-1.
Securities in scope are those subject to SFAS 115 and SFAS 124. The EITF adopted
a three-step model that requires  management to determine if impairment  exists,
decide  whether it is other  than  temporary,  and  record  other-than-temporary
losses  in  earnings.  In  September  2004,  the FASB  approved  issuing a Staff
Position to delay the requirement to record  impairment  losses under EITF 03-1,
but broadened the scope to include additional types of securities.  As proposed,
the  delay  would  have  applied  only to those  debt  securities  described  in
paragraph 16 of EITF 03-1, the Consensus that provides  guidance for determining
whether  an  investment's  impairment  is other  than  temporary  and  should be
recognized in income. The approved delay will apply to all securities within the
scope of EITF 03-1 and is expected to end when new  guidance is issued and comes
into effect.

         In  December  2003,  the  FASB  issued  FASB   Interpretation  No.  46,
Consolidation of Variable Interest Entities,  an interpretation of ARB No. 51, a
revision to FASB  Interpretation  No. 46,  Consolidation  of  Variable  Interest
Entities issued in January 2003. This Interpretation is intended to achieve more
consistent  application of consolidation  policies to variable interest entities
and,  thus to  improve  comparability  between  enterprises  engaged  in similar
activities  even if some of those  activities  are  conducted  through  variable
interest  entities.  The  provisions  of this  Interpretation  are effective for
financial  statements issued for fiscal years ending after December 15, 2003. We
have several statutory and business trusts that were formed for the sole purpose
of issuing trust preferred  securities.  As further described in Note 1 and Note
12 to our Consolidated  Financial Statements appearing elsewhere in this report,
on December 31, 2003, we  implemented  FASB  Interpretation  No. 46, as amended,
which resulted in the  deconsolidation  of our all of our statutory and business
trusts. The implementation of this  Interpretation had no material effect on our
consolidated financial position or results of operations.  Furthermore, in March
2005,  the Board of Governors of the Federal  Reserve System issued a final rule
instructing  bank holding  companies to continue to include the trust  preferred
securities in their Tier I capital for regulatory  capital purposes,  subject to
stricter  quantitative and qualitative  limits. As discussed in Note 21 and Note
25 to our Consolidated Financial Statements, we have evaluated the impact of the
<PAGE>

final rule on our financial condition and results of operations,  and determined
the  implementation of the final rule, as adopted,  will reduce our bank holding
company's Tier 1 regulatory  capital ratios,  however the overall reduction will
not  result  in a  situation  where we would  fall  below  the well  capitalized
thresholds under the regulatory framework for prompt corrective action.

         In December 2003,  the Accounting  Standards  Executive  Committee,  or
AcSEC, issued SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired
in a Transfer,  effective  for loans  acquired in fiscal years  beginning  after
December 15, 2004. The scope of SOP 03-3 applies to problem loans that have been
acquired, either individually in a portfolio, or in an acquisition.  These loans
must have evidence of credit  deterioration and the purchaser must not expect to
collect  contractual  cash flows.  SOP 03-3  updates  Practice  Bulletin  No. 6,
Amortization of Discounts on Certain  Acquired  Loans,  for more recently issued
literature,  including  FASB  Statements  No. 114,  Accounting  by Creditors for
Impairment of a Loan; No. 115,  Accounting  for Certain  Investments in Debt and
Equity  Securities;  and No. 140,  Accounting  for  Transfers  and  Servicing of
Financial Assets and Extinguishments of Liabilities.  Additionally, it addresses
FASB Statement No. 91,  Accounting for  Nonrefundable  Fees and Costs Associated
with  Originating or Acquiring  Loans and Initial Direct Costs of Leases,  which
requires  that  discounts be  recognized as an adjustment of yield over a loan's
life.  SOP 03-3 states that an institution  may no longer  display  discounts on
purchased  loans  within the scope of SOP 03-3 on the balance  sheet and may not
carry over the  allowance  for loan losses.  For those loans within the scope of
SOP 03-3,  this statement  clarifies that a buyer cannot carry over the seller's
allowance   for  loan   losses  for  the   acquisition   of  loans  with  credit
deterioration.  Loans acquired with evidence of  deterioration in credit quality
since  origination  will need to be  accounted  for under a new method  using an
income  recognition model. This prohibition also applies to purchases of problem
loans not  included in a purchase  business  combination,  which  would  include
syndicated  loans  purchased  in the  secondary  market  and loans  acquired  in
portfolio  sales.  We are currently  evaluating the  requirements of SOP 03-3 to
determine its impact on our  consolidated  financial  statements  and results of
operations.

         In March 2004,  the SEC issued  Staff  Accounting  Bulletin  No. 105 --
Application  of Accounting  Principles to Loan  Commitments,  or SAB 105,  which
provides  guidance   regarding  the  application  of  U.S.   generally  accepted
accounting   principles  to  loan   commitments   accounted  for  as  derivative
instruments.  Through specific guidance on valuation-recognition model inputs to
measure  loan  commitments  accounted  for at fair  value,  SAB 105  limits  the
opportunity  for  recognition of an asset related to a commitment to originate a
mortgage loan that will be held for sale prior to funding. SAB 105 requires that
the  measurement of fair value include only  differences  between the guaranteed
interest rate in the loan commitment and a market  interest rate,  excluding any
expected  future  cash  flows  related  to the  customer  relationship  or  loan
servicing.  SAB 105 is effective  for all  mortgage  loan  commitments  that are
accounted  for as derivative  instruments  that are entered into after March 31,
2004, and permits  continued use of previously  applied  accounting  policies to
loan commitments  entered into on or before March 31, 2004. On April 1, 2004, we
implemented  SAB 105, which did not have a material  impact on our  consolidated
financial statements or results of operations.

         In July  2004,  the  FASB's  Derivatives  Implementation  Group  issued
guidance on  Statement  of  Financial  Accounting  Standards,  or SFAS,  No. 133
Implementation    Issue    No.    G25,    Cash    Flow    Hedges:    Using   the
First-Payments-Received Technique in Hedging the Variable Interest Payments on a
Group of  Non-Benchmark-Rate-Based  Loans,  or DIG  Issue  G25.  DIG  Issue  G25
clarifies  the  FASB's  position  on  the  ability  of  entities  to  hedge  the
variability in interest  receipts or overall changes in cash flows on a group of
prime-rate-based   loans.   The   new   guidance   permits   the   use   of  the
first-payments-received   technique  in  a  cash  flow  hedge  of  the  variable
prime-rate-based  or other variable  non-benchmark-rate-based  interest payments
for a rolling  portfolio  of  prepayable  interest-bearing  loans,  provided the
hedging  relationship meets all other conditions in SFAS No. 133, Accounting for
Derivative  Instruments and Hedging Activities,  for cash flow hedge accounting.
If a  pre-existing  cash flow hedging  relationship  has  identified  the hedged
transactions  in a manner  inconsistent  with the guidance in DIG Issue G25, the
hedging  relationship  must be  de-designated  at the effective date, as further
discussed  below,  and any  derivative  gains or  losses  in  accumulated  other
comprehensive income related to the de-designated  hedging  relationships should
be accounted for under paragraphs 31 and 32 of SFAS No. 133. We had pre-existing
cash flow hedging  relationships that were inconsistent with the guidance in DIG
Issue G25. As of September 30, 2004, our accumulated other comprehensive  income
included a $4.1 million net gain  attributable to these  pre-existing  cash flow
hedging  relationships.  DIG  Issue  G25 is  effective  for the  fiscal  quarter
beginning   after  August  9,  2004,   and  shall  be  applied  to  all  hedging
relationships  as of the effective  date. On October 1, 2004, we implemented DIG
Issue G25 and de-designated all of our specific cash flow hedging  relationships
that were  inconsistent  with the guidance in DIG Issue G25.  Consequently,  the

<PAGE>

$4.1  million  net gain  associated  with the  de-designated  cash flow  hedging
relationships  is being  amortized  over the remaining  lives of the  respective
hedging relationships, which range from approximately six months to three years.
We elected to  prospectively  re-designate  new cash flow hedging  relationships
based upon minor  revisions  to the  underlying  hedged items as required by the
guidance in DIG Issue G25.  The  implementation  of DIG Issue G25 did not and is
not expected to have a material impact on our consolidated financial statements,
results of operations or our interest rate risk management program.

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  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 61
through 102 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,  who is  our  principal  executive  and
principal financial officer,  has evaluated the effectiveness of our "disclosure
controls and  procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities  Exchange  Act of 1934,  or the Exchange  Act),  as of the end of the
period covered by this report.  Based on such  evaluation,  our Chief  Executive
Officer  has  concluded  that,  as of the end of  such  period,  our  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 2004 that have  materially  effected,
or are  reasonably  likely to  materially  affect,  the  Company's  control over
financial reporting.


<PAGE>


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Board of Directors and Committees of the Board

         We are a  "controlled  company"  as defined in Rule  4350(c)(5)  of the
NASDAQ  Marketplace  Rules  because more than 50% of our voting power is held by
James F.  Dierberg,  our Chairman of the Board,  as more fully  discussed  under
"Item 12 - Security  Ownership of Certain  Beneficial  Owners and Management and
Related  Stockholder  Matters."  Therefore,   we  are  not  subject  to  certain
requirements of Rule 4350.

         Our Board of  Directors  consists  of eight  members,  four of whom the
Board  of  Directors  determined  to  be  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)            67      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 FBA from 1994 until its merger with
                                                   First Banks on December 31, 2002.

Allen H. Blake                   62      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 since
                                                   May 2001;  Chief Operating  Officer of First Banks,  Inc. from 1998
                                                   to July 2002;  Director and  Secretary of First Banks,  Inc.  since
                                                   1988; Director,  Executive Vice President,  Chief Operating Officer
                                                   and  Secretary  of FBA from 1998 until its merger  with First Banks
                                                   on December 31, 2002;  Chief Financial  Officer of FBA from 1994 to
                                                   September 1999 and from May 2001 until December 2002.

Terrance M. McCarthy             50      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 FBA from July 2001 until its merger
                                                   with First Banks on December 31, 2002;  Executive Vice President of
                                                   FBA 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 FB&T from
                                                   April 2000  until its merger  with and into First Bank on March 31,
                                                   2003;  Director of FB Commercial  Finance,  Inc.  since March 2003;
                                                   Chairman of the Members,  President and Chief Executive  Officer of
                                                   SBLS LLC since September 2004.

Steven F. Schepman (1)           32      2004      Director of First Banks,  Inc.  since July 2004;  Director of First
                                                   Bank from April 2001 to  October  2004;  Senior  Vice  President  -
                                                   Private  Banking,  Wealth  Management  and Trust  Services of First
                                                   Bank since  November  2000;  From May 1999, to November  2000,  Mr.
                                                   Schepman   was  employed  in  various   other   senior   management
                                                   capacities with First Banks, Inc.

Gordon A. Gundaker (2)           71      2001      President and Chief Executive  Officer of Coldwell Banker Gundaker,
                                                   a  full-service  real  estate  brokerage  company,  in  St.  Louis,
                                                   Missouri.
<PAGE>

David L. Steward (2)             53      2000      Chairman  of the  Board  of  Directors  of  World  Wide  Technology
                                                   Holding Company,  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, St.
                                                   Louis Science Center, the United Way of Greater St. Louis,  Greater
                                                   St.  Louis Area  Council - Boy Scouts of America  and  Harris-Stowe
                                                   State College African American Business Leadership Council.

Hal J. Upbin (2)                 66      2001      Director  of  Kellwood  Company,  a  manufacturer  and  marketer of
                                                   apparel and related soft goods, in St. Louis,  Missouri since 1995;
                                                   Chairman of the Board of Directors and Chief  Executive  Officer of
                                                   Kellwood  Company  since 1997;  President of Kellwood  Company from
                                                   1997 to December  2003;  President and Chief  Operating  Officer of
                                                   Kellwood  Company  from  1994 to  1997;  Executive  Vice  President
                                                   Corporate  Development from 1992 to 1994; Vice President  Corporate
                                                   Development from 1990 to 1992; Director of Brown Shoe Company.

Douglas H. Yaeger (2)(3)         56      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;  Former
                                                   Chairman  of the  Board  of  Directors  of the St.  Louis  Regional
                                                   Commerce   and  Growth   Association;   Chairman  of  Southern  Gas
                                                   Association,  Trustee of the St. Louis Science Center, President of
                                                   Civic  Progress,  and  Director of Greater St. Louis Area Council -
                                                   Boy Scouts of America,  The Municipal  Theatre  Association  of St.
                                                   Louis and Webster University.
----------------------------------
(1) Mr. Steven F. Schepman is the son-in-law of Mr. James F. Dierberg.
(2) Member of the Audit Committee.
(3) 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

         Four  members of our Board of Directors  serve on the Audit  Committee,
all of whom the Board of Directors  determined to be  independent  as of October
31, 2004;  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 25, 2005 were Mr. Gordon
A. Gundaker,  Mr. David L. Steward,  Mr. Hal J. Upbin and Mr. Douglas H. Yaeger,
who  serves as the  Chairman  of the  Audit  Committee  and the audit  committee
financial  expert.  Mr.  Steward,  Mr.  Upbin  and Mr.  Yaeger  have  served  as
independent  members of the Audit  Committee  since their  respective  committee
appointment dates. Mr. Gundaker currently serves as an independent member of the
Audit  Committee and  previously  served as an  independent  member of the Audit
Committee  from his  committee  appointment  date on July 24,  2001 to August 1,
2003. In 2003,  one of Mr.  Gundaker's  related  business  interests  maintained
commercial  real estate and  development  loans with First Bank that resulted in
interest and fee payments of approximately  $298,000 to First Bank in accordance
with the respective loan terms.  These interest and fee payments  exceeded 5% of
Mr. Gundaker's related business interest's gross revenues, or $204,000, in 2003.
Consequently,  at the time the interest and fee payments exceeded $204,000,  Mr.
Gundaker  was  no  longer  deemed  to be  independent  in  accordance  with  the
then-existing rules of the National  Association of Securities Dealers, or NASD.
The  Board  of  Directors  subsequently  appointed  Mr.  Gundaker  to the  Audit
Committee as a non-independent  member in accordance with the then-existing NASD
rules,  which allowed one director who is not independent,  and is not a current
employee or an immediate  family  member of an employee,  to be appointed to the
Audit Committee.  The Board of Directors  determined,  under the exceptional and

<PAGE>

limited  circumstances  exemption allowed by the then-existing  NASD rules, that
Mr.  Gundaker's  membership on the Audit Committee was desirable by First Banks'
interests  and the  interests  of  First  Banks'  shareholders,  based  upon his
business expertise, his previous contributions to First Banks as a member of the
Audit  Committee and other relevant  considerations.  Furthermore,  the Board of
Directors  took  into  account  that  Mr.  Gundaker  was  expected  to meet  the
newly-enacted audit committee member  independence  requirements of the NASD and
the New York Stock Exchange, or NYSE that would become effective for First Banks
on October 31, 2004.  On October 18, 2004,  the Board of Directors  reviewed Mr.
Gundaker's   independence   under  the  newly-enacted   audit  committee  member
independence  requirements of the NASD and the NYSE and approved Mr.  Gundaker's
appointment as an independent  member of the Audit Committee,  effective October
31, 2004.

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  Independent
Standards Board.

         The  Audit  Committee  discussed  with  our  internal  and  Independent
Registered  Public  Accounting  Firm the  overall  scope  and  plans  for  their
respective  audits.  The Audit  Committee met with the internal 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, 2004 for filing with the SEC.

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

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

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.



<PAGE>


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."                                           -------------------


Executive Officers

         Our  executive  officers,  each of whom was  elected  to the  office(s)
indicated by the Board of Directors, as of March 25, 2005, 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              67   Chairman of the Board of Directors.     See Item 10 -  "Directors and Executive
                                                                            Officers  of the  Registrant - Board of
                                                                            Directors."

Allen H. Blake                 62   President,  Chief Executive  Officer,   See Item 10 - "Directors  and Executive
                                    Chief    Financial     Officer    and   Officers  of the  Registrant - Board of
                                    Director.                               Directors."


Terrance M. McCarthy           50   Senior   Executive   Vice  President,   See Item 10 - "Directors  and  Executive
                                    Chief    Operating     Officer    and   Officers  of the  Registrant  - Board of
                                    Director;  Chairman   of the Board of   Directors."
                                    Directors,   President    and   Chief
                                    Executive Officer of First Bank.

Russell L. Goldammer           48   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               59   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      51   Executive Vice President and Director   Executive Vice President and Director of
                                    of  Sales,  Marketing  and  Products;   Sales, Marketing and  Products  of First
                                    Director of First Bank.                 Banks,   Inc.   since   September  2003;
                                                                            Director  of  First  Bank  since October
                                                                            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               50   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 1999 to March 2003.

</TABLE>

<PAGE>


Item 11.  Executive Compensation

         The   following   table  sets  forth  certain   information   regarding
compensation earned by the named executive officers for the years ended December
31, 2004, 2003 and 2002:
<TABLE>
<CAPTION>

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

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

<S>                                                               <C>      <C>            <C>            <C>
James F. Dierberg                                                 2004     $ 610,000          --         6,200
Chairman of the Board of Directors                                2003       610,000          --         6,000
                                                                  2002       605,000      35,000         5,500

Allen H. Blake                                                    2004       426,000          --         5,200
President, Chief Executive Officer and Chief Financial Officer    2003       397,300          --         6,000
                                                                  2002       360,500      45,000         5,590

Terrance M. McCarthy                                              2004       367,500          --         5,200
Senior Executive Vice President and Chief Operating Officer       2003       323,500          --         6,000
                                                                  2002       269,000      50,000         3,200

Daniel W. Jasper (2)                                              2004       209,500          --         5,200
Executive Vice President and Chief Credit Officer                 2003       152,000      15,000         4,700

F. Christopher McLaughlin (3)                                     2004       180,300      32,500        51,900 (4)
Executive Vice President and Director of Sales, Marketing         2003        55,100          --        29,000 (4)
and Products
-----------------------
(1) All other compensation reported includes matching contributions to our 401(k) Plan for the year indicated.
(2) Mr. Jasper became an Executive Officer of the Company in October 2003.
(3) Mr. McLaughlin became an Executive Officer of the Company in September 2003.
(4) All other compensation  reported for Mr. McLaughlin in 2004 and 2003 includes $46,700 and $29,000, respectively,
    associated with a corporate relocation package. Additionally, for 2004, all other compensation includes matching
    contributions to our 401(K) Plan of $5,000 and a single ownership interest in the amount of $200 granted in Star
    Lane Trust, our unit investment trust.
</TABLE>

Compensation  of Directors.  Only those  directors who are neither our employees
nor employees of any of our subsidiaries receive remuneration for their services
as directors.  Such non-employee  directors (currently Messrs.  Gordon Gundaker,
David Steward,  Hal Upbin and Douglas Yaeger)  received a fee of $3,000 for each
Board meeting  attended and $1,000 for each Audit Committee  meeting attended in
2004.  Messr.  Yaeger also received a fee of $4,000 per calendar quarter for his
service as Chairman of the Audit Committee,  and Messrs.  Gundaker,  Steward and
Upbin also  received a fee of $3,000 per calendar  quarter for their  service as
members  of the Audit  Committee.  The Audit  Committee  is  currently  the only
committee of our Board of Directors. Messrs. Gundaker, Steward, Upbin and Yaeger
received  $31,000,  $27,000,  $26,000 and $35,000,  respectively,  in director's
compensation  in  2004.  Our   non-employee   directors  are  also  eligible  to
participate in our nonqualified deferred compensation plan.

         Our  executive   officers  that  are  also  directors  do  not  receive
remuneration  other  than  salaries  and  bonuses  for  serving  on our Board of
Directors.

Compensation Committee Interlocks and Insider Participation.  Messrs.  Dierberg,
Blake and  McCarthy  serve as  executive  officers  and  members of our Board of
Directors.  First Banks does not have a compensation committee, but its Board of
Directors performs the functions of such a committee.  Except for the foregoing,
none  of  our  executive  officers  served  during  2004  as  a  member  of  the
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 96 and 97 of
this report.



<PAGE>


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

         The  following  table  sets  forth,  as  of  March  25,  2005,  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>
     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  Avenue, 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,
       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, 2004 is 516, which shares are
       not included in the above table.
  (5)  Sole voting and investment power.

</TABLE>

<PAGE>

Item 13.  Certain Relationships and Related 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 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 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 96 and 97 of this report.

Item 14.  Principal Accountant Fees and Services

Fees of Independent Registered Public Accounting Firm

         During  2004 and 2003,  KPMG LLP served as our  Independent  Registered
Public  Accounting Firm and provided  additional  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 in 2004 and
2003:
<TABLE>
<CAPTION>

                                                                                      2004           2003
                                                                                      ----           ----

<S>                                                                                 <C>            <C>
           Audit fees, excluding audit related fees (1).........................    $ 781,550      475,000
           Audit related fees...................................................           --           --
           Tax fees (2).........................................................       87,221       84,957
           All other fees.......................................................           --           --
                                                                                    ---------    ---------
                  Total.........................................................    $ 868,771      559,957
                                                                                    =========    =========
           ------------------------
          (1)  For 2004, audit fees  include  the  audits  of  the  consolidated financial statements of First Banks
               and  Star  Lane  Trust, SBLS LLC  and  Hillside Investors, Ltd. and subsidiaries, 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 additional fees related to work performed
               under FDICIA  requirements  as of December 31, 2003 but  billed  in  2004, and  other  accounting and
               reporting  consultations.  For 2003, audit fees  include  the  audits  of the consolidated  financial
               statements  of  First  Banks  and  Star  Lane  Trust,  as  well  as  services  provided for reporting
               requirements  under  FDICIA and mortgage banking  activities.
          (2)  Tax services include  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 the  independent
auditor.  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 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.


<PAGE>


                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

           (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 (c) below
                     and are incorporated herein by reference.

           (b) Reports on Form 8-K.

                     During the quarter ended December 31, 2004,  we filed three
                     Current Reports on Form 8-K as follows:

                     1.    Current Report on Form 8-K,  filed October 28, 2004 -
                           Item 2.02  of  the  report referenced a press release
                           announcing First  Banks, Inc.'s financial results for
                           the three and nine months ended September 30, 2004. A
                           copy of the press release was included as Exhibit
                           99.1.

                     2.    Current Report on Form 8-K, filed November 29, 2004 -
                           Item 1.01 and Item 2.03 of the  report  described the
                           Company's entry into a material definitive  agreement
                           and  creation   of   a  direct  financial  obligation
                           associated with First Banks, Inc.'s issuance of $41.2
                           million  of  subordinated  debentures  in  a  private
                           placement  transaction  that occurred on November 23,
                           2004.

                     3.    Current Report  on Form 8-K, filed December 1, 2004 -
                           Item 2.01  and  Item 9.01 of the report described the
                           completion  of  the Company's acquisition of Hillside
                           Investors, Ltd.,   and   its   wholly-owned   banking
                           subsidiary,  CIB Bank. A  copy  of  the press release
                           announcing  the  completion  of  the  acquisition  of
                           Hillside Investors, Ltd.  on   November 30, 2004  was
                           included as Exhibit 99.1.

           (c) The index  of required exhibits is included beginning on page 107
               of this Report.


<PAGE>

            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, 2004 and 2003,  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, 2004. 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,  2004 and 2003,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended December 31, 2004, in conformity with U.S. generally  accepted  accounting
principles.

As  discussed  in note 1 to the  consolidated  financial  statements,  effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets."




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




St. Louis, Missouri
March 17, 2005


<PAGE>
<TABLE>
<CAPTION>

                                            CONSOLIDATED BALANCE SHEETS

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

                                                                                                    December 31,
                                                                                            ----------------------------
                                                                                               2004              2003
                                                                                               ----              ----
                                                       ASSETS
                                                       ------
Cash and cash equivalents:
<S>                                                                                        <C>                  <C>
     Cash and due from banks............................................................   $  149,605           179,802
     Short-term investments.............................................................      117,505            33,735
                                                                                           ----------         ---------
          Total cash and cash equivalents...............................................      267,110           213,537
                                                                                           ----------         ---------

Investment securities:
     Available for sale.................................................................    1,788,063         1,038,787
     Held to maturity (fair value of $25,586 and $11,341, respectively).................       25,286            10,927
                                                                                           ----------         ---------
          Total investment securities...................................................    1,813,349         1,049,714
                                                                                           ----------         ---------

Loans:
     Commercial, financial and agricultural.............................................    1,575,232         1,474,908
     Real estate construction and development...........................................    1,318,413         1,063,889
     Real estate mortgage...............................................................    3,061,581         2,582,264
     Consumer and installment...........................................................       54,546            71,652
     Loans held for sale................................................................      133,065           145,746
                                                                                           ----------         ---------
          Total loans...................................................................    6,142,837         5,338,459
     Unearned discount..................................................................       (4,869)          (10,384)
     Allowance for loan losses..........................................................     (150,707)         (116,451)
                                                                                           ----------         ---------
          Net loans.....................................................................    5,987,261         5,211,624
                                                                                           ----------         ---------

Bank premises and equipment, net of accumulated depreciation and amortization...........      144,486           136,739
Goodwill................................................................................      156,849           145,548
Bank-owned life insurance...............................................................      102,239            97,521
Deferred income taxes...................................................................      127,397           102,844
Other assets............................................................................      134,150           149,413
                                                                                           ----------         ---------
          Total assets..................................................................   $8,732,841         7,106,940
                                                                                           ==========         =========

                                                   LIABILITIES
                                                   -----------
Deposits:
     Noninterest-bearing demand.........................................................   $1,194,662         1,034,367
     Interest-bearing demand............................................................      875,489           843,001
     Savings............................................................................    2,249,644         2,128,683
     Time deposits of $100 or more......................................................      807,220           436,439
     Other time deposits................................................................    2,024,955         1,519,125
                                                                                           ----------         ---------
          Total deposits................................................................    7,151,970         5,961,615
Other borrowings........................................................................      594,750           273,479
Note payable............................................................................       15,000            17,000
Subordinated debentures.................................................................      273,300           209,320
Deferred income taxes...................................................................       34,812            41,683
Accrued expenses and other liabilities..................................................       62,116            54,028
                                                                                           ----------         ---------
          Total liabilities.............................................................    8,131,948         6,557,125
                                                                                           ----------         ---------
                                              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..............................................................        5,910             5,910
Retained earnings.......................................................................      577,836           495,714
Accumulated other comprehensive (loss) income...........................................       (1,831)           29,213
                                                                                           ----------         ---------
          Total stockholders' equity....................................................      600,893           549,815
                                                                                           ----------         ---------
          Total liabilities and stockholders' equity....................................   $8,732,841         7,106,940
                                                                                           ==========         =========

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

<PAGE>
<TABLE>
<CAPTION>

                                          CONSOLIDATED STATEMENTS OF INCOME

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

                                                                                     Years Ended December 31,
                                                                                 ---------------------------------
                                                                                   2004         2003        2002
                                                                                   ----         ----        ----
      Interest income:
<S>                                                                              <C>          <C>          <C>
         Interest and fees on loans..........................................   $ 341,479     355,472      390,062
         Investment securities:
           Taxable...........................................................      50,170      32,442       31,845
           Nontaxable........................................................       1,490       1,737        1,865
         Short-term investments..............................................       1,643       1,502        1,949
                                                                                ---------    --------     --------
              Total interest income..........................................     394,782     391,153      425,721
                                                                                ---------    --------     --------
      Interest expense:
         Deposits:
           Interest-bearing demand...........................................       3,472       5,470        7,551
           Savings...........................................................      20,128      23,373       35,668
           Time deposits of $100 or more.....................................      13,762      13,075       19,047
           Other time deposits...............................................      35,705      41,201       66,002
         Other borrowings....................................................       6,102       2,243        3,450
         Note payable........................................................         506         785        1,032
         Subordinated debentures.............................................      15,092      17,879       24,801
                                                                                ---------    --------     --------
              Total interest expense.........................................      94,767     104,026      157,551
                                                                                ---------    --------     --------
              Net interest income............................................     300,015     287,127      268,170
      Provision for loan losses..............................................      25,750      49,000       55,500
                                                                                ---------    --------     --------
              Net interest income after provision for loan losses............     274,265     238,127      212,670
                                                                                ---------    --------     --------
      Noninterest income:
         Service charges on deposit accounts and customer service fees.......      38,230      36,113       30,978
         Gain on loans sold and held for sale................................      18,497      15,645        6,471
         Net gain on sales of available-for-sale investment securities.......         257       8,761           90
         Gain on sales of branches, net of expenses..........................       1,000       3,992           --
         Bank-owned life insurance investment income.........................       5,201       5,469        5,928
         Investment management income........................................       6,870       4,762        4,157
         Other...............................................................      13,431      12,966       19,887
                                                                                ---------    --------     --------
              Total noninterest income.......................................      83,486      87,708       67,511
                                                                                ---------    --------     --------
      Noninterest expense:
         Salaries and employee benefits......................................     117,492      95,441       89,569
         Occupancy, net of rental income.....................................      19,882      20,940       21,030
         Furniture and equipment.............................................      17,017      18,286       17,495
         Postage, printing and supplies......................................       5,010       5,100        5,556
         Information technology fees.........................................      32,019      32,136       32,135
         Legal, examination and professional fees............................       7,412       8,131        9,284
         Amortization of intangibles associated with the
           purchase of subsidiaries..........................................       2,912       2,506        2,012
         Communications......................................................       1,866       2,667        3,166
         Advertising and business development................................       5,493       4,271        5,023
         Charitable contributions............................................         577       5,334          204
         Other...............................................................      19,825      32,257       25,338
                                                                                ---------    --------     --------
              Total noninterest expense......................................     229,505     227,069      210,812
                                                                                ---------    --------     --------
              Income before provision for income taxes and minority
               interest in income of subsidiary..............................     128,246      98,766       69,369
      Provision for income taxes.............................................      45,338      35,955       22,771
                                                                                ---------    --------     --------
               Income before minority interest in income of subsidiary.......      82,908      62,811       46,598
      Minority interest in income of subsidiary..............................          --          --        1,431
                                                                                ---------    --------     --------
              Net income.....................................................      82,908      62,811       45,167
      Preferred stock dividends..............................................         786         786          786
                                                                                ---------    --------     --------
              Net income available to common stockholders....................   $  82,122      62,025       44,381
                                                                                =========    ========     ========

      Basic earnings per common share........................................   $3,470.80    2,621.39     1,875.69
                                                                                =========    ========     ========

      Diluted earnings per common share......................................   $3,421.58    2,588.31     1,853.64
                                                                                =========    ========     ========

      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>
                         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

                                                 Three Years Ended December 31, 2004
                                        (dollars expressed in thousands, except per share data)



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

<S>                                                 <C>        <C>    <C>        <C>     <C>      <C>       <C>        <C>
Consolidated balances, January 1, 2002...........   $12,822    241    5,915      6,074            389,308   34,297     448,657
Year ended December 31, 2002:
    Comprehensive income:
      Net income.................................        --     --       --         --    45,167   45,167       --      45,167
      Other comprehensive income, net of tax:
        Unrealized gains on investment
          securities, net of reclassification
          adjustment (1).........................        --     --       --         --     8,909       --    8,909       8,909
        Derivative instruments:
          Current period transactions............        --     --       --         --    17,258       --   17,258      17,258
                                                                                         -------
      Comprehensive income.......................                                         71,334
                                                                                         =======
    Class A preferred stock dividends,
        $1.20 per share..........................        --     --       --         --               (769)      --        (769)
    Class B preferred stock dividends,
        $0.11 per share..........................        --     --       --         --                (17)      --         (17)
    Effect of capital stock transactions of
      majority-owned subsidiary..................        --     --       --       (164)                --       --        (164)
                                                    -------    ---    -----      -----            -------  -------     -------
Consolidated balances, December 31, 2002.........    12,822    241    5,915      5,910            433,689   60,464     519,041
Year ended December 31, 2003:
    Comprehensive income:
      Net income.................................        --     --       --         --    62,811   62,811       --      62,811
      Other comprehensive loss, net of tax:
        Unrealized losses on
          investment securities, net of
          reclassification adjustment (1)........        --     --       --         --    (9,986)      --   (9,986)     (9,986)
        Derivative instruments:
          Current period transactions............        --     --       --         --   (21,265)      --  (21,265)    (21,265)
                                                                                         -------
      Comprehensive income.......................                                         31,560
                                                                                         =======
    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, 2003.........    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       --      82,908
      Other comprehensive loss, net of tax:
        Unrealized losses on investment
          securities, net of reclassification
          adjustment (1).........................        --     --       --         --    (5,878)      --   (5,878)     (5,878)
        Derivative instruments:
          Current period transactions............        --     --       --         --   (25,166)      --  (25,166)    (25,166)
                                                                                         -------
      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
                                                    =======    ===    =====      =====            =======  =======     =======
<PAGE>

--------------------------------------
(1) Disclosure of reclassification adjustment:
</TABLE>
  <TABLE>
<CAPTION>
                                                                                              Years Ended December 31,
                                                                                            ------------------------------
                                                                                               2004       2003      2002
                                                                                               ----       ----      ----

<S>                                                                                         <C>         <C>         <C>
     Unrealized (losses) gains on investment securities arising during the year..........   $(5,711)    (4,291)     8,968
     Less reclassification adjustment for gains included in net income, net of tax.......       167      5,695         59
                                                                                            -------     ------      -----
     Unrealized (losses) gains on investment securities..................................   $(5,878)    (9,986)     8,909
                                                                                            =======     ======      =====

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


<PAGE>
<TABLE>
<CAPTION>
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                       (dollars expressed in thousands)

                                                                                      Years ended December 31,
                                                                                 ------------------------------------
                                                                                     2004        2003        2002
                                                                                     ----        ----        ----

Cash flows from operating activities:
<S>                                                                              <C>              <C>          <C>
     Net income................................................................. $   82,908       62,811       45,167
     Adjustments to reconcile net income to net cash provided
       by (used in) operating activities:
          Depreciation and amortization of bank premises and equipment..........     18,579       20,068       18,902
          Amortization, net of accretion........................................     17,102       24,996       17,769
          Originations and purchases of loans held for sale..................... (1,152,003)  (2,158,251)  (1,954,346)
          Proceeds from sales of loans held for sale............................  1,038,636    2,003,574    1,602,500
          Provision for loan losses.............................................     25,750       49,000       55,500
          Provision for income taxes............................................     45,338       35,955       22,771
          Payments of income taxes..............................................    (42,701)     (43,632)     (34,287)
          (Increase) decrease in accrued interest receivable....................       (696)       4,614        2,197
          Interest accrued on liabilities.......................................     94,767      104,026      157,551
          Payments of interest on liabilities...................................    (93,406)    (107,295)    (162,825)
          Gain on loans sold and held for sale..................................    (18,497)     (15,645)      (6,471)
          Net gain on sales of available-for-sale investment securities.........       (257)      (8,761)         (90)
          Gain on sales of branches, net of expenses............................     (1,000)      (3,992)          --
          Other operating activities, net.......................................     (8,922)       6,894       (3,319)
          Minority interest in income of subsidiary.............................         --           --        1,431
                                                                                 ----------   ----------   ----------
               Net cash provided by (used in) operating activities..............      5,598      (25,638)    (237,550)
                                                                                 ----------   ----------   ----------

Cash flows from investing activities:
     Cash received for acquired entities, net of
       cash and cash equivalents paid...........................................     21,098       14,870       11,715
     Proceeds from sales of investment securities available for sale............     26,340        6,019       55,130
     Maturities of investment securities available for sale.....................    748,280    1,499,476    1,085,993
     Maturities of investment securities held to maturity.......................      4,632        5,573        6,829
     Purchases of investment securities available for sale...................... (1,029,993)  (1,209,592)  (1,380,165)
     Purchases of investment securities held to maturity........................    (19,031)        (103)      (2,680)
     Proceeds from sales of leases..............................................     35,544           --           --
     Net (increase) decrease in loans...........................................    (78,629)      18,786      199,051
     Recoveries of loans previously charged-off.................................     25,876       23,028       15,933
     Purchases of bank premises and equipment...................................    (10,960)      (4,359)     (15,565)
     Other investing activities, net............................................     15,358        3,357        9,672
                                                                                 ----------   ----------   ----------
               Net cash (used in) provided by investing activities..............   (261,485)     357,055      (14,087)
                                                                                 ----------   ----------   ----------

Cash flows from financing activities:
     Increase in demand and savings deposits....................................     23,355       13,287      450,541
     Decrease in time deposits..................................................    (11,521)    (223,555)    (245,637)
     Decrease in Federal Home Loan Bank advances................................    (29,020)      (8,548)     (16,600)
     Decrease in federal funds purchased........................................         --      (55,000)     (26,000)
     Increase in securities sold under agreements to repurchase.................    286,928       69,835       46,989
     Advances drawn on note payable.............................................     15,000       34,500       43,500
     Repayments of note payable.................................................    (17,000)     (24,500)     (64,000)
     Proceeds from issuance of subordinated debentures..........................     61,857       70,907       25,007
     Payments for redemptions of subordinated debentures........................         --     (136,341)          --
     Cash paid for sales of branches, net of cash and cash equivalents sold.....    (19,353)     (60,930)          --
     Payment of preferred stock dividends.......................................       (786)        (786)        (786)
                                                                                 ----------   ----------   ----------
               Net cash provided by (used in) financing activities..............    309,460     (321,131)     213,014
                                                                                 ----------   ----------   ----------
               Net increase (decrease) in cash and cash equivalents.............     53,573       10,286      (38,623)
Cash and cash equivalents, beginning of year....................................    213,537      203,251      241,874
                                                                                 ----------   ----------   ----------
Cash and cash equivalents, end of year.......................................... $  267,110      213,537      203,251
                                                                                 ==========   ==========   --========

Noncash investing and financing activities:
     Loans transferred to other real estate..................................... $    5,142       13,525        7,607
                                                                                 ==========   ==========   ==========


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


<PAGE>

                   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, net of minority
interest,  as more fully described below. All significant  intercompany accounts
and transactions  have been eliminated.  Certain  reclassifications  of 2003 and
2002 amounts have been made to conform to the 2004 presentation.

         First Banks operates through its  wholly-owned  subsidiary bank holding
company,  The San  Francisco  Company  (SFC),  headquartered  in San  Francisco,
California, and SFC's wholly-owned subsidiary bank, First Bank, headquartered in
St. Louis County, Missouri.

         On December 31, 2002,  First Banks  completed its acquisition of all of
the publicly held  outstanding  capital stock of First Banks America,  Inc., San
Francisco,  California  (FBA), for a price of $40.54 per share, or approximately
$32.4 million.  Prior to  consummation  of this  transaction,  First Banks owned
93.78% of FBA's outstanding stock, with approximately 6.22% or 798,753 shares of
FBA's  outstanding stock held publicly.  As a result,  FBA became a wholly-owned
subsidiary  of First  Banks,  was  merged  with and into  First  Banks and FBA's
subsidiaries,  SFC and First Bank & Trust, became  wholly-owned  subsidiaries of
First  Banks.  On March  31,  2003,  First  Bank & Trust,  headquartered  in San
Francisco,  California  (FB&T),  was  merged  with and into  First Bank to allow
certain  administrative  and  operational  economies not available while the two
subsidiary banks maintained separate charters.

         On December  31, 2003,  First Banks  implemented  Financial  Accounting
Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest
Entities,  an interpretation of ARB No. 51, resulting in the  deconsolidation of
First  Banks'  statutory  and business  trusts,  which were created for the sole
purpose  of issuing  trust  preferred  securities.  The  implementation  of this
Interpretation  had no material effect on the Company's  consolidated  financial
position or results of operations.  The implementation resulted in the Company's
$6.5 million investment in the common equity of the trusts being included in the
consolidated balance sheets as available-for-sale  investment securities and the
interest  income and  interest  expense  received  from and paid to the  trusts,
respectively,  being  included  in the  consolidated  statements  of  income  as
interest  income and  interest  expense.  The  increase to  interest  income and
interest  expense totaled  $696,000 for the year ended December 31, 2003.  Prior
period results were restated to conform to the 2003 presentation.

         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  $102.2  million and $32.5
million  at  December  31,  2004 and 2003,  respectively,  and  interest-bearing
deposits  were $15.3  million and $1.2  million at  December  31, 2004 and 2003,
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 $30.2 million and $34.0
million at December 31, 2004 and 2003, respectively.

         Investment  Securities.  The classification of investment securities as
available  for sale or held to maturity is  determined  at the date of purchase.
First Banks does not engage in the trading of investment securities.

         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.
Amortization  of  premiums  and  accretion  of  discounts  is  computed  on  the
level-yield   method  taking  into   consideration  the  level  of  current  and
anticipated  prepayments.  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 are reversed upon
sale.
<PAGE>

         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 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
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  which  would  warrant
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 or lease 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.

         In  addition,  First Banks  monitors  the fair value of the  underlying
collateral  of its lease  portfolio to identify any  impairment as a result of a
decline in the residual  value of the  underlying  collateral,  which may not be
apparent from the payment performance of the lease.

         Loans Held for Sale.  Loans  held for sale are  carried at the lower of
cost or market  value,  which is determined  on an  individual  loan basis.  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  method.  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 U.S. Small  Business  Administration  (SBA) loans to small business  concerns
that are  originated  by a subsidiary of First Bank 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 periodic  analysis of the loans held for portfolio and
held for sale,  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.  As
adjustments become necessary, they are reflected in the results of operations in
the  periods  in which  they  become  known.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review


<PAGE>

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  activities 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.  First
Banks accounts for derivative  instruments and hedging  activities in accordance
with Statement of Financial  Accounting  Standards  (SFAS) No. 133 -- Accounting
for Derivative  Instruments and Hedging Activities,  as amended,  which requires
all derivative instruments to be recorded in the consolidated balance sheets and
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  formally  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  various
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  attributable  to the
               hedged risk adjusts the carrying amount of the underlying  hedged
               item and is also recognized  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.  In
               the  event  of  early  termination  or  ineffectiveness,  the net
               proceeds   received  or  paid  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.



<PAGE>

         >>    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.

         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  improvement or
term of the lease.  Bank premises and  improvements are depreciated over five to
40 years and equipment over three to seven years.

         Intangibles  Associated With the Purchase of Subsidiaries.  Intangibles
associated with the purchase of subsidiaries  include  goodwill and core deposit
intangibles.

         On January 1, 2002,  First Banks  adopted  SFAS No. 142 -- Goodwill and
Other  Intangible  Assets,  and SFAS No 144 -- Accounting  for the Impairment or
Disposal of Long-Lived Assets. Pursuant to SFAS No. 142, 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
and  goodwill  associated  with the  purchase of branch  offices.  Core  deposit
intangibles are amortized over the estimated periods to be benefited,  which has
been  estimated at seven years,  and  goodwill  associated  with the purchase of
branch  offices is amortized over the estimated  periods to be benefited,  which
has been  estimated  at 15  years.  Goodwill  associated  with the  purchase  of
subsidiaries  is not amortized,  but instead,  is tested annually for impairment
following  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 results of operations 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 range from five to ten years.  The  weighted
average  amortization  period of mortgage servicing rights is approximately five
years.



<PAGE>

         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.  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, however,  recognize fair value
of the mortgage  servicing  rights in excess of the  carrying  value of mortgage
servicing rights for any stratum.

         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 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 nine to 25
years. The weighted average  amortization  period of the SBA servicing rights is
approximately 22 years. The determination of the fair value of the SBA servicing
rights is performed  monthly based upon an  independent  third party  valuation.
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. 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, however,  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 $4.0 million and $11.1 million at
December 31, 2004 and 2003, 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. 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
recognized in the consolidated balance sheets.


<PAGE>

         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.

(2)      ACQUISITIONS, INTEGRATION  COSTS AND OTHER CORPORATE  TRANSACTIONS

         During the three years ended December 31, 2004,  First Banks  completed
the following acquisitions:
<TABLE>
<CAPTION>

                                                                                Total       Purchase
           Entity                                    Date                      Assets         Price       Goodwill
           ------                                    ----                      ------         -----       --------
                                                                                 (dollars expressed in thousands)

   2004
   ----

     Hillside Investors, Ltd.
<S>                                            <C>                         <C>               <C>              <C>
     Hillside, Illinois                        November 30, 2004           $1,196,700        67,400           4,300

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

     Continental Mortgage
     Corporation - Delaware
     Aurora, Illinois                            July 30, 2004                140,700         4,200 (1)       1,500
                                                                           ----------       -------        --------
                                                                           $1,384,500       117,200          11,700
                                                                           ==========       =======        ========
   2003
   ----

     Bank of Ste. Genevieve
     Ste. Genevieve, Missouri                   March 31, 2003             $  115,100        17,900           3,400
                                                                           ==========       =======        ========

   2002
   ----

     Union Planters Bank N.A.
     Denton and Garland, Texas
     branch offices                              June 22, 2002             $   63,700        65,100              --

     Plains Financial Corporation
     Des Plaines, Illinois                     January 15, 2002               256,300        36,500          12,600
                                                                           ----------       -------        --------
                                                                           $  320,000       101,600          12,600
                                                                           ==========       =======        ========
   ---------------
   (1) 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  associated with the acquisitions  included in the table above
is not  deductible  for  tax  purposes,  with  the  exception  of  the  goodwill
associated  with the purchase of assets and  assumption of  liabilities of Small
Business  Loan Source,  Inc. (SBLS),  which is deductible for tax purposes.  For
2004, 2003 and 2002 acquisitions, goodwill in the amounts of $11.7 million, $3.4
million and $12.6 million, respectively, was assigned to First Bank.

         The  aforementioned  transactions were accounted for using the purchase
method of accounting and,  accordingly,  the consolidated  financial  statements
include  the  financial  position  and  results of  operations  for the  periods
subsequent to the  respective  acquisition  dates,  and the assets  acquired and
liabilities  assumed were recorded at fair value at the acquisition dates. These
fair value adjustments for the acquisitions  completed in 2004 represent current
estimates  and are  subject  to further  adjustments  as the  valuation  data is
finalized.   These  acquisitions  were  funded  from  available  cash  reserves,
borrowings  under First Banks'  revolving  credit  agreement,  proceeds from the
issuance of  subordinated  debentures  and proceeds  from  exchanges,  sales and
maturities of available-for-sale investment securities.


<PAGE>

         On March 31, 2003,  First Banks  completed its  acquisition  of Bank of
Ste. Genevieve (BSG), Ste. Genevieve,  Missouri,  from Allegiant Bancorp,  Inc.,
(Allegiant),  in exchange for  approximately  974,150 shares of Allegiant common
stock  previously held. The purpose of the transaction was to further expand the
Midwest  banking  franchise.  At the  time of the  acquisition,  BSG had  $115.1
million in total assets, $43.7 million in loans, net of unearned discount, $47.8
million in investment securities, and $93.7 million in deposits and operated two
locations  in Ste.  Genevieve,  Missouri.  First  Banks  recorded a gain of $6.3
million  on  the  exchange  of  the  Allegiant  common  stock  and  goodwill  of
approximately  $3.4  million.  The  core  deposit  intangibles,  which  are  not
deductible  for tax  purposes,  were  approximately  $3.5  million and are being
amortized over seven years utilizing the  straight-line  method.  BSG was merged
with and into First Bank.  Subsequent to the acquisition,  First Banks continued
to own 231,779  shares,  or  approximately  1.52% of the issued and  outstanding
shares of Allegiant  common  stock.  In October 2003,  the  remaining  shares of
Allegiant common stock were contributed to a previously  established  charitable
foundation.  In  conjunction  with  this  transaction,  charitable  contribution
expense was recorded of $5.1 million,  which was  partially  offset by a gain on
the  contribution  of these  available-for-sale  investment  securities  of $2.3
million,  representing the difference  between the cost basis and the fair value
of the common stock on the date of the contribution.  In addition, a tax benefit
of $2.5 million associated with this transaction. The contribution of this stock
eliminated the Company's investment in Allegiant.

         On July 30, 2004, First Banks completed its acquisition of CMC, and its
wholly-owned banking subsidiary,  Continental  Community Bank and Trust Company,
(CCB), acquiring all of the outstanding common stock of CMC in exchange 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  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 total  assets of $140.7  million,  loans,  net of unearned
discount,  of $73.6 million and total deposits of $104.6  million.  Goodwill was
approximately  $1.5  million  and the core  deposit  intangibles,  which are not
deductible for tax purposes and are being  amortized over seven years  utilizing
the straight-line  method, were approximately $2.0 million.  CMC was merged with
and into SFC and CCB was merged with and into First Bank.

         On August 31, 2004,  Small Business Loan Source LLC (SBLS LLC), a newly
formed  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 United
States Small Business Administration (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  approximately
$5.9 million.  In conjunction with this  transaction,  on August 30, 2004, First
Bank granted to First Capital America,  Inc. (FCA), a corporation owned by First
Banks'  Chairman  and  members of his  immediate  family,  an option to purchase
Membership  Interests  of SBLS LLC.  This  option to  purchase  was  extended on
December 31,  2004.  Upon  exercise of this  option,  SBLS LLC will become 51.0%
owned by First Bank and 49.0% owned by FCA, as further  discussed  in Note 19 to
the Consolidated Financial Statements.

         On November 30, 2004, First Banks completed its acquisition of Hillside
Investors,  Ltd. (Hillside) and its wholly-owned  banking subsidiary,  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, of which $20.0 million was issued on
September 20, 2004 through a newly formed  affiliated  statutory  trust,  and an
additional  $40.0 million was issued on November 23, 2004 through a newly formed
affiliated  statutory trust, as further discussed in Note 12 to the Consolidated
Financial  Statements.  In addition,  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  total  assets  of $1.20
billion,  loans,  net  of  unearned  discount,  of  $683.3  million,  investment
securities of $393.2 million and total  deposits of $1.10  billion.  Preliminary
goodwill was approximately $4.3 million and the core deposit intangibles,  which
are not  deductible  for tax purposes and are being  amortized  over seven years
utilizing the straight-line  method, were approximately $13.4 million.  Hillside
was merged with and into SFC and CIB Bank was merged with and into First Bank.



<PAGE>

         The following table summarizes the estimated fair value of the Hillside
assets  acquired  and  liabilities  assumed  at  the  date  of  acquisition.  As
previously discussed, the fair value adjustments represent current estimates and
are subject to further adjustment as the valuation data is finalized.
<TABLE>
<CAPTION>

                                                                                         November 30, 2004
                                                                                 (dollars expressed in thousands)

<S>                                                                                       <C>
         Cash and cash equivalents......................................................  $     123,829
         Investment securities..........................................................        392,651

         Loans, net of unearned discount................................................        662,588
         Allowance for loan losses......................................................        (26,373)
                                                                                          -------------
              Net loans.................................................................        636,215

         Bank premises and equipment....................................................         11,449
         Goodwill.......................................................................          4,285
         Core deposit intangibles.......................................................         13,395
         Deferred income taxes..........................................................         13,348
         Other assets...................................................................         20,836
                                                                                          -------------
              Total assets acquired.....................................................  $   1,216,008
                                                                                          =============

         Total deposits.................................................................  $   1,102,041
         Other borrowings...............................................................         33,199
         Deferred income taxes..........................................................          1,375
         Accrued expenses and other liabilities.........................................         12,010
                                                                                          -------------
              Total liabilities assumed.................................................      1,148,625
                                                                                          -------------
              Net assets acquired.......................................................  $      67,383
                                                                                          =============
</TABLE>

         The  following   information  presents  unaudited  pro  forma  combined
condensed results of operations of First Banks, combined with the acquisition of
Hillside,  as if First Banks had completed the  transaction  on January 1, 2003.
The pro forma combined  condensed results of operations have been prepared based
on the historical operations of First Banks and Hillside.
<TABLE>
<CAPTION>


                                                                                    Years Ended December 31,
                                                                                    ------------------------
                                                                                       2004          2003
                                                                                       ----          ----
                                                                                (dollars expressed in thousands,
                                                                                except share and per share data)

<S>                                                                                <C>               <C>
         Net interest income....................................................   $  324,095        333,769
                                                                                   ==========     ==========

         Net income (loss)......................................................   $   73,284         (4,260)
                                                                                   ==========     ==========

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

         Earnings (loss) per common share:
             Basic..............................................................   $ 3,064.02        (213.27)
             Diluted............................................................     3,020.01        (213.27)
                                                                                   ==========     ==========
</TABLE>

         The  unaudited  pro forma  combined  condensed  results  of  operations
reflect the  application of the purchase  method of accounting and certain other
assumptions.  Purchase  accounting  adjustments  have been applied to investment
securities,  loans,  net  of  unearned  discount,  allowance  for  loan  losses,
derivative instruments, bank premises and equipment, deferred income tax assets,
goodwill, core deposit intangibles, other real estate, other assets and deferred
income tax  liabilities  to reflect the assets and  liabilities  assumed at fair
value. The resulting  premiums and discounts are amortized or accreted to income
consistent  with the accounting  policies of First Banks.  Due to the immaterial
effect on previously  reported  financial  information,  the pro forma  combined
condensed  results  of  operations  do not  reflect  the  impact  of  the  other
aforementioned transactions completed in 2003 and 2004.



<PAGE>


         In addition, as previously discussed, on December 31, 2002, First Banks
completed its acquisition of all of the outstanding capital stock of FBA that it
did not already  own.  This  transaction  was  accounted  for using the purchase
method of  accounting,  and goodwill in the amount of $14.6 million was recorded
and assigned to First Bank. The goodwill is not deductible for tax purposes.

         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  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  statement of income as incurred.  The
accrued severance balance of $761,000,  as summarized in the following table, is
comprised of contractual obligations under salary continuation agreements to six
individuals with remaining terms ranging from  approximately two to 11 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.

         A  summary  of  the  cumulative   acquisition  and  integration   costs
attributable  to  the  Company's  acquisitions,  which  were  accrued  as of the
consummation  dates  of the  respective  acquisition,  is  listed  below.  These
acquisition  and integration  costs are reflected in accrued  expenses 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, 2001..................      $3,934                153            4,087
       Year Ended December 31, 2002:
         Amounts accrued at acquisition date.........         239                250              489
         Payments....................................      (1,822)              (375)          (2,197)
                                                           ------             ------           ------
       Balance at December 31, 2002..................       2,351                 28            2,379
       Year Ended December 31, 2003:
         Amounts accrued at acquisition date.........         100                350              450
         Reversal to goodwill........................         (39)              (108)            (147)
         Payments....................................      (1,000)              (270)          (1,270)
                                                           ------             ------           ------
       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
                                                           ======             ======           ======
</TABLE>

         On October 17, 2003,  First Bank  completed  its  divestiture  of three
branch offices in the northern and central Illinois market area, and on December
5, 2003,  First Bank completed its  divestiture of one branch office in regional
Missouri.  These branch divestitures resulted in a reduction of the deposit base
of  approximately  $88.3  million,  and a  pre-tax  gain of  approximately  $4.0
million, which is included in noninterest income.

         On February 6, 2004, First Bank completed its divestiture of one branch
office  in  rural  Missouri.  On  April  16,  2004,  First  Bank  completed  its
divestiture of one branch office in southern Illinois. These branch divestitures
resulted in a reduction of the deposit base of approximately $23.4 million,  and
a pre-tax gain of approximately  $1.0 million,  which is included in noninterest
income.



<PAGE>

         During  the year  ended  December  31,  2004,  First  Bank  opened  the
following four de novo branch offices:

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

         On June 30,  2004,  First  Bank  completed  the  sale of a  significant
portion of the leases in its commercial leasing portfolio.  The sale reduced the
Company's  commercial  leasing portfolio by approximately  $33.1 million to $9.6
million at June 30, 2004.  No gain or loss was recorded on the  transaction.  In
conjunction  with  the  transaction,  First  Bank  established  a  $2.0  million
liability  associated with the related  recourse  obligations for certain leases
sold, as further discussed in Note 24 to the Consolidated  Financial Statements.
The  commercial  leasing  portfolio  has  further  declined  to $5.9  million at
December 31, 2004,  reflecting the Company's overall business strategy to reduce
its commercial leasing activities.

(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, 2004 and 2003 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, 2004:
    Carrying value:
<S>                                    <C>             <C>         <C>        <C>     <C>        <C>     <C>      <C>    <C>
       U.S. Treasury.................. $  9,977         --         --         --      9,977      --      (3)      9,974  2.31%
       U.S. Government sponsored
          agencies....................  165,551    486,621     12,556         --    664,728     529  (2,736)    662,521  3.11
       Mortgage-backed securities.....      244     12,435     77,558    941,140  1,031,377   3,661  (6,863)  1,028,175  4.55
       State and political
          subdivisions................    4,467     20,149     13,492      2,479     40,587     650     (10)     41,227  3.63
       Corporate debt securities......    6,218         --         --         --      6,218      26      (1)      6,243  5.40
       Equity investments ............      367         --         --     10,230     10,597     383      --      10,980  6.72
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........   28,943         --         --         --     28,943      --      --      28,943  4.98
                                       --------    -------    -------   --------  ---------  ------  ------   ---------
              Total................... $215,767    519,205    103,606    953,849  1,792,427   5,249  (9,613)  1,788,063  4.01%
                                       ========    =======    =======   ========  =========  ======  ======   =========  ====
    Fair value:
       Debt securities................ $186,472    517,273    103,989    940,406
       Equity securities..............   29,310         --         --     10,613
                                       --------    -------    -------   --------
              Total................... $215,782    517,273    103,989    951,019
                                       ========    =======    =======   ========

    Weighted average yield............     2.82%      3.28%      4.55%      4.61%
                                       ========    =======    =======   ========
 December 31, 2003:
    Carrying value:
       U.S. Government sponsored
          agencies.................... $ 50,048     81,227      1,293         --    132,568   1,288    (533)    133,323  3.13%
       Mortgage-backed securities.....      613      7,913     63,394    743,476    815,396   6,353  (3,725)    818,024  4.55
       State and political
          subdivisions................    3,749     11,293     14,280      1,924     31,246     801     (11)     32,036  3.72
       Corporate debt securities......   17,029      5,772         --         --     22,801     477      --      23,278  5.47
       Equity investments ............      449         --         --      7,457      7,906      78      --       7,984  7.83
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........   24,142         --         --         --     24,142      --      --      24,142  5.31
                                       --------    -------    -------   --------  ---------  ------  -------  ---------
              Total................... $ 96,030    106,205     78,967    752,857  1,034,059   8,997  (4,269)  1,038,787  4.41%
                                       ========    =======    =======   ========  =========  ======  ======   =========  ====
    Fair value:
       Debt securities................ $ 72,247    106,999     80,558    746,857
       Equity securities..............   24,591         --         --      7,535
                                       --------    -------    -------   --------
              Total................... $ 96,838    106,999     80,558    754,392
                                       ========    =======    =======   ========

    Weighted average yield............     4.65%      2.84%      4.51%      4.59%
                                       ========    =======    =======   ========
</TABLE>


<PAGE>



         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, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                        Maturity
                                        ----------------------------------------   Total          Gross
                                                                          After    Amort-      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, 2004:
    Carrying value:
<S>                                     <C>             <C>      <C>      <C>      <C>          <C>      <C>   <C>         <C>
       Mortgage-backed securities.....  $     --         --      7,060    10,288   17,348       96       (1)   17,443      5.01%
       State and political
         subdivisions.................       545      5,150      1,977       266    7,938      211       (6)    8,143      4.52
                                        --------    -------     ------    ------   ------    -----    -----   -------
           Total......................  $    545      5,150      9,037    10,554   25,286      307       (7)   25,586      4.86
                                        ========    =======     ======    ======   ======    =====    =====   =======      ====

    Fair value:
       Debt securities................  $    556      5,340      9,080    10,610
                                        ========    =======     ======    ======

    Weighted average yield............      4.93%      4.13%      5.22%     4.89%
                                        ========    =======     ======    ======

 December 31, 2003:
    Carrying value:
       Mortgage-backed securities.....  $     --         --         --       576      576       26       --       602      6.34%
       State and political
         subdivisions.................     3,098      2,968      4,285        --   10,351      388       --    10,739      4.93
                                        --------    -------     ------    ------   ------    -----    -----    ------
           Total......................  $  3,098      2,968      4,285       576   10,927      414       --    11,341      5.00
                                        ========    =======     ======    ======   ======    =====    =====   =======      ====

    Fair value:
       Debt securities................  $  3,150      3,142      4,447       602
                                        ========    =======     ======    ======

    Weighted average yield............      5.22%      4.46%      5.04%     6.34%
                                        ========    =======     ======    ======
</TABLE>

         Proceeds from sales of  available-for-sale  investment  securities were
$26.3  million,  $6.0 million and $55.1 million for the years ended December 31,
2004, 2003 and 2002, respectively. Gross gains of $257,100, $576,600 and $91,000
were realized on these sales during the years ended December 31, 2004,  2003 and
2002,  respectively.  Gross losses of $1,600 were realized on these sales during
the year ended December 31, 2002.  There were no gross losses  realized on sales
of available-for-sale investment securities in 2004 and 2003.

         In 2003, First Banks also recognized non-cash gains of $6.3 million on
the partial exchange of equity securities for a 100% ownership interest in Bank
of Ste. Genevieve, and a $2.3 million gain on the subsequent contribution of the
remaining shares of equity securities to a charitable foundation. In addition,
First Banks recognized a $431,000 impairment loss due to an other-than-temporary
decline in the fair value of an equity fund investment.

         Proceeds from calls of investment securities were $63.1 million,  $41.5
million and $64.0 million for the years ended December 31, 2004,  2003 and 2002,
respectively.  Gross gains of $11,200 were  realized on these called  securities
during the year ended  December 31, 2003.  There were no gross gains realized on
called  securities  in 2004 and 2002.  Gross  losses of $1,900 were  realized on
these called  securities  during the year ended December 31, 2003. There were no
gross losses realized on called securities in 2004 and 2002.

         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  investments in FHLB of Chicago
stock is maintained at an amount equal to 5% of advances. 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,  2002 plus  4.45% of  advances  plus 0.15% of
outstanding standby letters of credit.

         Investment  securities  with a carrying value of  approximately  $731.8
million and $379.4  million at December  31, 2004 and 2003,  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.


<PAGE>

         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, 2004, were as follows:
<TABLE>
<CAPTION>

                                            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:
<S>                                      <C>                  <C>         <C>           <C>           <C>             <C>
    U.S. Treasury.....................   $    9,974           (3)         --            --            9,974           (3)
    U.S. Government sponsored
       agencies.......................      480,912       (2,736)         --            --          480,912       (2,736)
    Mortgage-backed securities........      657,939       (6,863)         --            --          657,939       (6,863)
    State and political subdivisions..        1,964          (10)         --            --            1,964          (10)
    Corporate debt securities.........          510           (1)         --            --              510           (1)
                                         ----------     --------       -----        ------       ----------    ---------
             Total....................   $1,151,299       (9,613)         --            --        1,151,299       (9,613)
                                         ==========     ========       =====        ======       ==========    =========

 Held to maturity:
    Mortgage-backed securities........   $    3,161           (1)         --            --            3,161           (1)
    State and political subdivisions..          926           (6)         --            --              926           (6)
                                         ----------     --------       -----        ------       ----------    ---------
             Total....................   $    4,087           (7)         --            --            4,087           (7)
                                         ==========     ========       =====        ======       ==========    =========
</TABLE>

         U.S. Treasury,  U.S. Government  sponsored agencies and mortgage-backed
securities - The unrealized losses on investments in mortgage-backed securities,
U.S. Treasury 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.

         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.

(4)      LOANS AND ALLOWANCE FOR LOAN LOSSES

         Changes in the allowance  for loan losses for the years ended  December
31, 2004, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

                                                                                2004         2003         2002
                                                                                ----         ----         ----
                                                                               (dollars expressed in thousands)

<S>                                                                          <C>            <C>         <C>
               Balance, beginning of year.................................   $ 116,451      99,439      97,164
               Acquired allowances for loan losses........................      33,752         757       1,366
               Other adjustments (1)(2)...................................        (479)         --          --
                                                                             ---------    --------     -------
                                                                               149,724     100,196      98,530
                                                                             ---------    --------     -------
               Loans charged-off..........................................     (50,643)    (55,773)    (70,524)
               Recoveries of loans previously charged-off.................      25,876      23,028      15,933
                                                                             ---------    --------     -------
                  Net loans charged-off...................................     (24,767)    (32,745)    (54,591)
                                                                             ---------    --------     -------
               Provision for loan losses..................................      25,750      49,000      55,500
                                                                             ---------    --------     -------
               Balance, end of year.......................................   $ 150,707     116,451      99,439
                                                                             =========    ========     =======
               ---------------
               (1)  In December 2003, First Banks 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. On  January 5, 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.
               (2)  On June 30, 2004, First Banks 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.
</TABLE>


<PAGE>

         At December 31, 2004 and 2003,  First Banks had $85.8 million and $75.4
million of impaired loans, consisting of loans on nonaccrual status. Interest on
nonaccrual loans, which would have been recorded under the original terms of the
loans,  was $4.4  million,  $5.9  million  and $7.1  million for the years ended
December 31, 2004, 2003 and 2002, respectively. Of these amounts, $716,000, $2.6
million and $2.2 million was actually  recorded as interest income on such loans
in 2004, 2003 and 2002, 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  $21.4 million and $17.7
million at  December  31,  2004 and 2003,  respectively.  The  average  recorded
investment in impaired loans was $77.3 million,  $69.6 million and $78.1 million
for the years ended December 31, 2004, 2003 and 2002,  respectively.  The amount
of interest income recognized using a cash basis method of accounting during the
time these loans were  impaired was  $717,000,  $2.6 million and $4.6 million in
2004, 2003 and 2002,  respectively.  At December 31, 2004 and 2003,  First Banks
had $28.7 million and $2.8 million,  respectively,  of loans past due 90 days or
more and still accruing interest. 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.

         First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California.  At December 31, 2004 and 2003,  approximately 90% and 91%
of the total loan  portfolio,  respectively,  and 82% and 80% 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 71% of the loan
portfolio  at December  31, 2004 and 2003,  respectively,  of which 22% and 25%,
respectively,  were made to  consumers  in the form of  residential  real estate
mortgages and home equity lines of credit.

         In general,  First Banks is a secured lender.  At December 31, 2004 and
2003,  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  $31.0 million and $20.0 million at December 31,
2004 and 2003, respectively, as further discussed in Note 19 to the Consolidated
Financial Statements.

(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, 2004 and 2003 are summarized as
follows:
<TABLE>
<CAPTION>

                                                                            December 31,
                                                        ---------------------------------------------------
                                                                 2004                        2003
                                                        ------------------------  -------------------------
                                                          Notional      Credit      Notional      Credit
                                                           Amount      Exposure      Amount      Exposure
                                                           ------      --------      ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                     <C>             <C>        <C>             <C>
         Cash flow hedges.............................. $  500,000      1,233      1,250,000       2,857
         Fair value hedges.............................    276,200      9,609        326,200      12,614
         Interest rate cap agreements..................         --         --        450,000          --
         Interest rate lock commitments................      5,400         --         15,500          --
         Forward commitments to sell
           mortgage-backed securities..................     34,000         --         58,500          --
                                                        ==========     ======     ==========     =======
</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.




<PAGE>

         During 2004, 2003 and 2002, First Banks realized net interest income on
derivative  financial  instruments  of $50.1  million,  $64.6  million and $53.0
million,  respectively.  In  addition,  First  Banks  recorded  a  net  loss  on
derivative  instruments,   which  is  included  in  noninterest  income  in  the
consolidated  statements of income,  of $1.5 million for the year ended December
31, 2004,  in comparison to net gains of $496,000 and $2.2 million for the years
ended December 31, 2003 and 2002, respectively.

         Cash Flow Hedges.  First Banks entered into the following interest rate
swap  agreements,  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 the  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
               entered  into in April 2001,  which  would have  expired in April
               2006, in order to appropriately modify its overall hedge position
               in accordance with its interest rate risk management program. The
               $150.0  million  notional  amount swap agreement that was entered
               into in March  2002  matured  on March  14,  2004 and the  $600.0
               million notional amount swap agreements that were entered into in
               September   2000  matured  on  September  20,  2004.  The  amount
               receivable  under the swap  agreements  was $2.7 million and $3.9
               million at  December  31,  2004 and 2003,  respectively,  and the
               amount  payable  under the swap  agreements  was $1.4 million and
               $1.1 million at December 31, 2004 and 2003, respectively.

         On October 1, 2004,  First Banks  implemented the guidance  required by
the FASB's Derivatives Implementation Group on SFAS No. 133 Implementation Issue
No.  G25,  Cash Flow  Hedges:  Using the  First-Payments-Received  Technique  in
Hedging the Variable  Interest  Payments on a Group of  Non-Benchmark-Rate-Based
Loans, (DIG issue G25) and  de-designated all of the specific  pre-existing cash
flow hedging relationships that were inconsistent with the guidance in DIG Issue
G25.  Consequently,  the $4.1 million net gain associated with the de-designated
cash flow hedging  relationships  at September 30, 2004,  is being  amortized to
interest   income  over  the   remaining   lives  of  the   respective   hedging
relationships,  which ranged from approximately six months to three years at the
date of  implementation.  The Company elected to prospectively  re-designate new
cash flow hedging  relationships  based upon minor  revisions to the  underlying
hedged items as required by the guidance in DIG Issue G25. The implementation of
DIG  Issue  G25 did not and is not  expected  to have a  material  impact on the
consolidated  financial  statements,  results  of  operations  or  First  Banks'
interest rate risk management program.

         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, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

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

         December 31, 2004:
<S>                                                   <C>                   <C>               <C>          <C>
             March 21, 2005........................   $  200,000            2.43%             5.24%        $  1,155
             April 2, 2006.........................      100,000            2.43              5.45            2,678
             July 31, 2007.........................      200,000            2.40              3.08           (2,335)
                                                      ----------                                           --------
                                                      $  500,000            2.42              4.42         $  1,498
                                                      ==========           =====             =====         ========

         December 31, 2003:
             March 14, 2004........................   $  150,000            1.20%             3.93%        $    879
             September 20, 2004....................      600,000            1.30              6.78           23,250
             March 21, 2005........................      200,000            1.18              5.24            8,704
             April 2, 2006.........................      100,000            1.18              5.45            6,881
             July 31, 2007.........................      200,000            1.15              3.08              501
                                                      ----------                                           --------
                                                      $1,250,000            1.24              5.49         $ 40,215
                                                      ==========           =====             =====         ========
</TABLE>




<PAGE>


         Fair Value Hedges. First Banks entered into the following interest rate
swap  agreements,  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 $50.0  million
               notional  amount of three-year  interest rate swap agreements and
               $150.0 million  notional  amount of five-year  interest rate swap
               agreements  that  provide 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. The underlying
               hedged  liabilities  are a portion  of First  Banks'  other  time
               deposits.  The  terms of the swap  agreements  provide  for First
               Banks to pay interest on a quarterly  basis and receive  interest
               on a  semiannual  basis.  The  amount  receivable  under the swap
               agreements was $3.9 million and $5.2 million at December 31, 2004
               and 2003,  respectively,  and the amount  payable  under the swap
               agreements  was  $695,000  and  $537,000 at December 31, 2004 and
               2003,   respectively.   During   September   2003,   First  Banks
               discontinued  hedge  accounting  treatment  on the $50.0  million
               notional  amount of three-year  swap  agreements  entered into in
               January  2001  due to the  loss of the  highly  correlated  hedge
               positions  between the swap agreements and the underlying  hedged
               liabilities.  The related $1.3 million  basis  adjustment  of the
               underlying  hedged  liabilities  was  recorded as a reduction  of
               interest expense over the remaining  weighted average maturity of
               the underlying hedged liabilities of approximately  three months.
               In  addition,  the  effect of the loss of the  highly  correlated
               hedge position on the swap agreements resulted in the recognition
               of a net loss of  $291,000,  which  is  included  in  noninterest
               income.  The $50.0  million  notional swap  agreement  matured on
               January  9,  2004.  As  further  discussed  in  Note  25  to  the
               Consolidated  Financial  Statements,  First Banks  terminated the
               remaining  $150.0  million  notional swap  agreements,  effective
               February 25, 2005.

         >>    During May 2002,  First Banks entered into $55.2 million notional
               amount of interest  rate swap  agreements  that provide 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 plus 2.30%. The underlying hedged liabilities are a
               portion of First Banks' subordinated debentures. The terms of the
               swap  agreements  provide  for  First  Banks  to pay and  receive
               interest on a quarterly basis.  There were no amounts  receivable
               or payable  under the swap  agreements  at December  31, 2004 and
               2003.

         >>    During June 2002,  First  Banks  entered  into $86.3  million and
               $46.0 million  notional  amount,  respectively,  of interest rate
               swap  agreements  that provide 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 plus
               2.75% and 1.97%, respectively.  The underlying hedged liabilities
               were a portion of First Banks' subordinated debentures. The $86.3
               million  notional  amount interest rate swap agreement was called
               by  its   counterparty   in  November  2002  resulting  in  final
               settlement of this interest rate swap agreement in December 2002.
               The $46.0 million  notional  amount  interest rate swap agreement
               was called by its  counterparty  on May 21,  2003,  resulting  in
               final settlement of this interest rate swap agreement on June 30,
               2003.  There  was no gain or loss  recorded  as a result of these
               transactions.

         >>    During March 2003 and April 2003,  First Banks entered into $25.0
               million  and $46.0  million  notional  amount,  respectively,  of
               interest  rate swap  agreements  that  provide 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 plus 2.55% and 2.58%,  respectively.  The underlying  hedged
               liabilities   are  a  portion   of  First   Banks'   subordinated
               debentures.  The terms of the swap  agreements  provide for First
               Banks to pay and receive  interest on a  quarterly  basis.  There
               were no amounts  receivable or payable under the swap  agreements
               at December 31, 2004 or 2003.



<PAGE>


         The maturity dates, notional amounts,  interest rates paid and received
and fair value of First Banks' interest rate swap agreements  designated as fair
value hedges as of December 31, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

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

         December 31, 2004:
<S>                                                       <C>               <C>               <C>         <C>
             January 9, 2006 (1)......................    $150,000          2.06%             5.51%       $  3,610
             December 31, 2031........................      55,200          4.27              9.00           2,171
             March 20, 2033...........................      25,000          4.52              8.10            (929)
             June 30, 2033............................      46,000          4.55              8.15          (1,689)
                                                          --------                                        --------
                                                          $276,200          3.14              6.88        $  3,163
                                                          ========         =====             =====        ========
         December 31, 2003:
             January 9, 2004 (2)......................    $ 50,000          1.15%             5.37%       $     --
             January 9, 2006..........................     150,000          1.15              5.51           9,932
             December 31, 2031........................      55,200          3.44              9.00           2,499
             March 20, 2033...........................      25,000          3.69              8.10          (1,270)
             June 30, 2033............................      46,000          3.72              8.15          (2,008)
                                                          --------                                        --------
                                                          $326,200          2.10              6.65        $  9,153
                                                          ========         =====             =====        ========
                  ----------------------
(1)      The interest  rate swap  agreements  were  terminated  effective  February 25,  2005,  as further  discussed in
         Note 25 to the Consolidated Financial Statements.
(2)      Hedge accounting treatment was discontinued in September 2003 as further discussed above.
</TABLE>

         Interest Rate Cap  Agreements.  In  conjunction  with the interest rate
swap  agreements  designated as cash flow hedges that matured in September 2004,
First  Banks also  entered  into $450.0  million  notional  amount of  four-year
interest rate cap agreements to limit the net interest  expense  associated with
the interest rate swap  agreements in the event of a rising rate  scenario.  The
interest rate cap  agreements  matured on September 20, 2004.  The interest rate
cap agreements  provided for First Banks to receive a quarterly  adjustable rate
of  interest  equivalent  to the  differential  between the  three-month  London
Interbank  Offering Rate and the strike price of 7.50% if the three-month London
Interbank Offering Rate would have exceeded the strike price. The carrying value
of these interest rate cap agreements included in derivative  instruments in the
consolidated balance sheet at December 31, 2003 was zero.

         During  2003 and 2004,  First  Banks  entered  into  five term  reverse
repurchase agreements under master repurchase agreements with unaffiliated third
parties,  as  further  discussed  in  Note  10  to  the  Consolidated  Financial
Statements.  The term reverse  repurchase  agreements were entered into with the
objective of stabilizing  net interest  income over time and further  protecting
net interest  margin against  changes in interest  rates.  The interest rate cap
agreements  included  within the term reverse  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 reverse  repurchase  agreements  and accounted for separately as a
derivative financial instrument. As such, the term reverse 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.


<PAGE>


         The maturity dates,  par amounts,  interest rate paid and interest rate
spread on First Banks' term  reverse  repurchase  agreements  as of December 31,
2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                                     Par         Interest Rate
                     Maturity Date                                 Amount      Minus Spread (1)   Strike Price (1)
                     -------------                                 ------      ----------------   ----------------
                                                                         (dollars expressed in thousands)

         December 31, 2004:
<S>                                                              <C>                    <C>             <C>
              August 15, 2006.................................   $  50,000      LIBOR - 0.5650%         3.00%
              January 12, 2007................................     150,000      LIBOR - 0.8350%         3.50%
              June 14, 2007...................................      50,000      LIBOR - 0.6000%         5.00%
              June 14, 2007...................................      50,000      LIBOR - 0.6100%         5.00%
              August 1, 2007..................................      50,000      LIBOR - 0.6800%         3.50%
                                                                 ---------
                                                                 $ 350,000
                                                                 =========

         December 31, 2003:
              August 15, 2006.................................   $  50,000      LIBOR - 0.5650%         3.00%
              August 1, 2007..................................      50,000      LIBOR - 0.6800%         3.50%
                                                                 ---------
                                                                 $ 100,000
                                                                 =========
         -------------------------
          (1) The interest  rates  paid on the term reverse repurchase agreements are based on the  three-month London
              Interbank  Offering  Rate  reset in arrears minus the spread amount shown above plus a  floating  amount
              equal  to  the  differential between the three-month London Interbank Offering Rate reset in arrears and
              the strike price shown above, if the three-month London Interbank Offering Rate reset in arrears exceeds
              the strike price.
</TABLE>

         Pledged  Collateral.  At December 31, 2004 and 2003,  First Banks had a
$5.0 million letter of credit issued on its behalf to the  counterparty  and had
pledged investment  securities  available for sale with a fair value of $527,000
and  $229,000,   respectively,   in  connection  with  the  interest  rate  swap
agreements.  In addition,  at December 31, 2003, First Banks had pledged cash of
$700,000 as collateral in connection with its interest rate swap agreements.  At
December  31,  2004 and  2003,  First  Banks  had  accepted,  as  collateral  in
connection  with the  interest  rate swap  agreements,  cash of $6.0 million and
$51.3 million, respectively.

         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 commitments to sell mortgage-backed securities. The
carrying  value of these interest rate lock  commitments  included in derivative
instruments  in the  consolidated  balance  sheets was $20,000 and  ($77,000) at
December 31, 2004 and 2003, respectively.

(6)      SERVICING RIGHTS

         Mortgage Banking Activities. At December 31, 2004 and 2003, First Banks
serviced mortgage loans for others amounting to $1.06 billion and $1.22 billion,
respectively.  Borrowers' escrow balances held by First Banks on such loans were
$4.4 million and $4.7 million at December 31, 2004 and 2003, respectively.

         Changes in mortgage  servicing  rights,  net of  amortization,  for the
years  ended  December  31, 2004 and 2003 were as  follows:


<TABLE>
<CAPTION>
                                                                                           2004         2003
                                                                                           ----         ----
                                                                                  (dollars expressed in thousands)

<S>                                                                                    <C>             <C>
              Balance, beginning of year...........................................    $  15,408       14,882
              Servicing rights acquired during the period..........................          155           --
              Originated mortgage servicing rights.................................        1,221        8,062
              Amortization.........................................................       (6,542)      (7,536)
              Impairment valuation allowance.......................................           --         (800)
              Reversal of impairment valuation allowance...........................           --          800
                                                                                       ---------      -------
              Balance, end of year.................................................    $  10,242       15,408
                                                                                       =========      =======
</TABLE>


<PAGE>

         The fair value of mortgage servicing rights was $14.6 million and $18.3
million at December  31, 2004 and 2003,  respectively.  At December 31, 2004 and
2003,  the  excess  of the fair  value of  mortgage  servicing  rights  over the
carrying value was $4.4 million and $2.9 million,  respectively. The predominant
risk  characteristics of the underlying mortgage loans used to stratify mortgage
servicing  rights for purposes of measuring  impairment  include size,  interest
rate,  weighted  average  original  term,  weighted  average  remaining term and
estimated prepayment speeds.  During 2003, First Banks recognized  impairment of
$800,000  through a valuation  allowance  associated  with a decline in the fair
value of an  individual  mortgage  servicing  rights  stratum below its carrying
value, net of the valuation  allowance.  Subsequently,  First Banks reversed the
$800,000 impairment valuation allowance based upon an increase in the fair value
of the mortgage  servicing  rights stratum above the carrying value,  net of the
valuation  allowance.  First  Banks  did not incur any  impairment  of  mortgage
servicing rights during the years ended December 31, 2004 and 2002.

         Amortization of mortgage servicing rights at December 31, 2004 has been
estimated in the following table:

                                                              (dollars expressed
                                                                 in thousands)
           Year ending December 31:
              2005..............................................  $  3,922
              2006..............................................     3,335
              2007..............................................     2,015
              2008..............................................       743
              2009..............................................       227
                                                                  --------
                  Total.........................................  $ 10,242
                                                                  ========

         Other Servicing Activities.  At December 31, 2004, First Banks serviced
SBA loans for others  amounting  to $174.7  million.  Changes  in SBA  servicing
rights,  net of  amortization,  for the year  ended  December  31,  2004 were as
follows:

                                                              (dollars expressed
                                                                 in thousands)

           Balance, beginning of year..........................   $     --
           Servicing rights acquired during the year...........     13,983
           Originated servicing rights.........................        373
           Amortization .......................................       (884)
           Impairment valuation allowance......................       (459)
                                                                  --------
           Balance, end of year................................   $ 13,013
                                                                  ========

         The fair value of SBA  servicing  assets was $13.0  million at December
31, 2004. 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.

         Amortization of SBA servicing rights at December 31, 2004 has been
estimated in the following table:

                                                (dollars expressed in thousands)

          Year ending December 31:
              2005.......................................   $  2,288
              2006.......................................      1,923
              2007.......................................      1,614
              2008.......................................      1,350
              2009.......................................      1,127
              Thereafter.................................      4,711
                                                            --------
                   Total.................................   $ 13,013
                                                            ========





<PAGE>

<TABLE>
<CAPTION>
(7)      BANK PREMISES AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION

         Bank premises and equipment were comprised of the following at December
31, 2004 and 2003:


                                                                                          2004          2003
                                                                                          ----          ----
                                                                                  (dollars expressed in thousands)

<S>                                                                                      <C>          <C>
              Land.................................................................   $  29,566        22,901
              Buildings and improvements...........................................     114,447       103,053
              Furniture, fixtures and equipment....................................     109,756       109,403
              Leasehold improvements...............................................      24,348        24,194
              Construction in progress.............................................       4,074         4,056
                                                                                      ---------     ---------
                  Total............................................................     282,191       263,607
              Less accumulated depreciation and amortization.......................     137,705       126,868
                                                                                      ---------     ---------
                  Bank premises and equipment, net.................................   $ 144,486       136,739
                                                                                      =========     =========
</TABLE>

         Depreciation and amortization  expense for the years ended December 31,
2004,  2003 and 2002 totaled $18.6  million,  $20.1  million and $18.9  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 $13.2 million,  $14.1 million and $13.9 million
for the years ended  December  31,  2004,  2003 and 2002,  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>
                  2005...................................................................   $ 10,024
                  2006...................................................................      8,610
                  2007...................................................................      6,857
                  2008...................................................................      6,129
                  2009...................................................................      4,573
                  Thereafter.............................................................     18,395
                                                                                            --------
                      Total future minimum lease payments................................   $ 54,588
                                                                                            ========
</TABLE>

         First Banks also leases to  unrelated  parties a portion of its banking
facilities.  Total rental income was $5.8 million, $6.1 million and $5.8 million
for the years ended December 31, 2004, 2003 and 2002, respectively.

<TABLE>
<CAPTION>

(8)      INTANGIBLE ASSETS ASSOCIATED WITH THE PURCHASE OF SUBSIDIARIES, NET OF AMORTIZATION

         Intangible assets associated with the purchase of subsidiaries,  net of
amortization, were comprised of the following at December 31, 2004 and 2003:


                                                            2004                           2003
                                                ----------------------------  ----------------------------
                                                  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..............  $  32,823         (7,003)        17,391           (4,233)
         Goodwill associated with
           purchases of branch offices.........      2,210         (1,003)         2,210             (861)
                                                 ---------        -------       --------          -------
              Total............................  $  35,033         (8,006)        19,601           (5,094)
                                                 =========        =======       ========          =======

     Unamortized intangible assets:
         Goodwill associated with the
           purchase of subsidiaries............  $ 155,642                       144,199
                                                 =========                      ========
</TABLE>
<PAGE>

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries and branch offices was $2.9 million,  $2.5 million and $2.0 million
for the years  ended  December  31,  2004,  2003 and 2002,  respectively.  As of
December 31, 2004, the remaining  estimated life of the amortization  period for
goodwill   associated   with  purchases  of  branch  offices  and  core  deposit
intangibles was 10 years and 6 years, respectively.  Amortization of intangibles
associated  with the purchase of  subsidiaries,  including  amortization of core
deposit  intangibles  and branch  office  purchases,  has been  estimated in the
following  table,  and does not take into  consideration  any  potential  future
acquisitions or branch office purchases.

                                           (dollars expressed in thousands)

            Year ending December 31:
                 2005...............................  $   4,836
                 2006...............................      4,836
                 2007...............................      4,836
                 2008...............................      4,836
                 2009...............................      2,933
                 Thereafter.........................      4,750
                                                      ---------
                           Total....................  $  27,027
                                                      =========

         Changes in the carrying amount of goodwill for the years ended December
31, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                                              2004             2003
                                                                              ----             ----
                                                                        (dollars expressed in thousands)

<S>                                                                       <C>                <C>
         Balance, beginning of year....................................   $ 145,548          140,112
         Goodwill acquired during the year.............................      11,665            1,026
         Acquisition-related adjustments...............................        (222)           4,553
         Amortization - purchases of branch offices....................        (142)            (143)
                                                                          ---------          -------
         Balance, end of year..........................................   $ 156,849          145,548
                                                                          =========          =======
</TABLE>

(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, 2004 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>
               2005...............................................     $ 510,686       1,251,280      1,761,966
               2006...............................................       155,244         463,929        619,173
               2007...............................................        76,013         160,664        236,677
               2008...............................................        28,973          83,194        112,167
               2009...............................................        11,905          44,978         56,883
               Thereafter.........................................        24,399          20,910         45,309
                                                                       ---------       ---------      ---------
                  Total...........................................     $ 807,220       2,024,955      2,832,175
                                                                       =========       =========      =========
</TABLE>

(10)     OTHER  BORROWINGS

         Other  borrowings  were comprised of the following at December 31, 2004
and 2003:
<TABLE>
<CAPTION>

                                                                                          2004         2003
                                                                                          ----         ----
                                                                                  (dollars expressed in thousands)

              Securities sold under agreements to repurchase:
<S>                                                                                    <C>           <C>
                Daily..............................................................    $ 209,106     166,479
                Term...............................................................      350,000     100,000
              FHLB advances........................................................       35,644       7,000
                                                                                       ---------    --------
                  Total other borrowings...........................................    $ 594,750     273,479
                                                                                       =========    ========
</TABLE>
<PAGE>


         The average  balance of other  borrowings was $486.0 million and $219.3
million, respectively, and the maximum month-end balance of other borrowings was
$605.6 million and $294.1  million,  respectively,  for the years ended December
31, 2004 and 2003. The average rates paid on other  borrowings  during the years
ended  December  31,  2004,   2003  and  2002  were  1.26%,   1.02%  and  1.78%,
respectively. Interest expense on securities sold under agreements to repurchase
was $5.4 million, $1.6 million and $2.4 million for the years ended December 31,
2004,  2003 and  2002,  respectively.  Interest  expense  on FHLB  advances  was
$716,000,  $535,000 and $1.0 million for the years ended December 31, 2004, 2003
and 2002,  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.  The
assets  underlying the term securities  sold under  agreements to repurchase are
held by other financial institutions under safekeeping agreements.  The interest
rate cap  agreements  included  within the term  reverse  repurchase  agreements
represent embedded derivative instruments, as further discussed in Note 5 to the
Consolidated Financial Statements.

         In conjunction with First Banks' interest rate risk management program,
First Banks entered into the following term reverse  repurchase  agreements with
the objective of stabilizing net interest income over time, as further discussed
in Note 5 to the Consolidated Financial Statements:

         >>    On July  30,  2003,  First  Banks  entered  into a $50.0  million
               four-year reverse repurchase  agreement under a master repurchase
               agreement.  Interest is paid  quarterly  and is equivalent to the
               three-month London Interbank Offering Rate reset in arrears minus
               0.68% plus a floating  amount equal to the  differential  between
               the three-month  London Interbank  Offering Rate reset in arrears
               and  the  strike  price  of  3.50%,  if  the  three-month  London
               Interbank  Offering  Rate reset in  arrears  exceeds  3.50%.  The
               underlying  securities  associated  with the  reverse  repurchase
               agreement are  mortgage-backed  securities  and are held by other
               financial institutions under safekeeping agreements.

         >>    On August 13,  2003,  First Banks  entered  into a $50.0  million
               three-year reverse repurchase agreement under a master repurchase
               agreement.  Interest is paid  quarterly  and is equivalent to the
               three-month London Interbank Offering Rate reset in arrears minus
               0.565% plus a floating amount equal to the  differential  between
               the three-month  London Interbank  Offering Rate reset in arrears
               and  the  strike  price  of  3.00%,  if  the  three-month  London
               Interbank  Offering  Rate reset in  arrears  exceeds  3.00%.  The
               underlying  securities  associated  with the  reverse  repurchase
               agreement are  mortgage-backed  securities  and are held by other
               financial institutions under safekeeping agreements.

          >>   Effective  January 12,  2004,  First Banks  consummated  a $150.0
               million three-year  reverse  repurchase  agreement under a master
               repurchase  agreement  with a single  unaffiliated  third  party.
               Interest is paid  quarterly and is equivalent to the  three-month
               London  Interbank  Offering  Rate reset in arrears  minus 0.8350%
               plus a floating  amount  equal to the  differential  between  the
               three-month  London Interbank  Offering Rate reset in arrears and
               the strike price of 3.50%,  if the three-month  London  Interbank
               Offering  Rate reset in arrears  exceeds  3.50%.  The  underlying
               securities  associated with the reverse repurchase  agreement are
               callable U.S.  Government agency securities and are held by other
               financial   institutions   under   safekeeping   agreements.   In
               conjunction with this  transaction,  First Banks purchased $150.0
               million of callable U.S. Government agency securities.

          >>   Effective  June 14,  2004,  First  Banks  consummated  two  $50.0
               million three-year  reverse repurchase  agreements under a master
               repurchase  agreement  with a single  unaffiliated  third  party.
               Interest is paid  quarterly and is equivalent to the  three-month
               London  Interbank  Offering Rate reset in arrears minus 0.60% and
               0.61%,  respectively,   plus  a  floating  amount  equal  to  the
               differential  between the three-month  London Interbank  Offering
               Rate  reset in  arrears  and the  strike  price of 5.00%,  if the
               three-month  London  Interbank  Offering  Rate  reset in  arrears
               exceeds 5.00%.  The  underlying  securities  associated  with the
               reverse repurchase agreements are callable U.S. Government agency
               securities  and are held by other  financial  institutions  under
               safekeeping  agreements.  In conjunction with these transactions,
               First Banks purchased $100.0 million of callable U.S.  Government
               agency securities.

(11)     NOTE PAYABLE

         On August 12,  2004,  First Banks  entered  into a First  Amendment  to
Secured Credit  Agreement that amended its Secured Credit Agreement dated August
14, 2003 with a group of unaffiliated financial institutions (collectively,  the
Credit Agreement).  The material changes in the Credit Agreement were amendments
to the termination  date and an increase in the revolving credit line and letter
of credit  facility.  The Credit  Agreement  provides a $75.0 million  revolving
credit line and a $25.0 million letter of credit  facility.  Interest is payable

<PAGE>

on  outstanding  loan  balances at a floating  rate equal to either the lender's
prime rate or, at First Banks' option, the London Interbank Offering Rate 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 line are  accruing  at the prime  rate,  interest is paid
monthly.  If the loan balances  outstanding  under the revolving credit line are
accruing at the London Interbank Offering Rate, interest is payable based on the
one, two,  three or six-month  London  Interbank  Offering  Rate, as selected by
First Banks. Amounts may be borrowed under the Credit Agreement until August 11,
2005, at which time the principal and interest outstanding are due and payable.

         The  Credit  Agreement  requires  First  Banks to comply  with  various
covenants,  including  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 prohibits
the payment of dividends on First Banks' common stock.  At December 31, 2004 and
2003,  First Banks and First Bank were in compliance with all  restrictions  and
requirements of the Credit Agreement.

         Loans under the Credit  Agreement are secured by First Banks' ownership
interest in the capital stock of its  subsidiaries.  Under the Credit Agreement,
there were outstanding borrowings of $15.0 million and $17.0 million at December
31, 2004 and 2003, respectively.  Letters of credit issued to unaffiliated third
parties on behalf of First Banks under the Credit  Agreement  were $6.3  million
and $5.4 million at December 31, 2004 and 2003,  respectively,  and had not been
drawn on by the  counterparties.  The  interest  rate for  borrowings  under the
Credit   Agreement   was  3.44%  and  2.19%  at  December  31,  2004  and  2003,
respectively,  and was based on the applicable  London  Interbank  Offering Rate
plus a margin of 87.5 basis points and 100.0 basis points, respectively.

         The  average  balance  and  maximum  month-end  balance  of  borrowings
outstanding  under the Credit Agreement during the years ended December 31, 2004
and 2003 were as follows:

                                                      2004          2003
                                                      ----          ----
                                                (dollars expressed in thousands)

   Average balance................................  $  3,657       15,418
   Maximum month-end balance......................    15,000       34,500
                                                    ========      =======

         The average rates paid on the outstanding  borrowings  during the years
ended  December  31,  2004,  2003  and  2002  were  13.84%,   5.09%  and  5.75%,
respectively.  Interest  expense  recognized  on  borrowings  under  the  Credit
Agreement  includes  commitment,  arrangement and renewal fees. During 2004, the
average rate paid on the outstanding  borrowings  reflects an 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 2003 and 2002.


(12)     SUBORDINATED DEBENTURES

         In February 1997, First Preferred  Capital Trust (First Preferred I), a
newly  formed  Delaware  business  trust,  issued 3.45  million  shares of 9.25%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 106,702 shares of common  securities to First Banks at $25
per share. First Banks owned all of First Preferred I's common  securities.  The
gross proceeds of the offering were used by First  Preferred I to purchase $88.9
million of 9.25% subordinated debentures from First Banks, maturing on March 31,
2027. The maturity date could have been shortened, at the option of First Banks,
to a date not  earlier  than March 31, 2002 or extended to a date not later than
March 31, 2046 if certain conditions were met. The subordinated  debentures were
the sole asset of First  Preferred  I. In  connection  with the  issuance of the
preferred securities,  First Banks made certain guarantees and commitments that,
in the aggregate,  constituted a full and unconditional guarantee by First Banks
of the  obligations of First  Preferred I under the First  Preferred I preferred
securities.  First  Banks'  proceeds  from  the  issuance  of  the  subordinated
debentures to First Preferred I, net of underwriting fees and offering expenses,
were $85.8  million.  On May 5, 2003,  First  Banks  redeemed  in full the $88.9
million of subordinated debentures.  The funds necessary for the redemption were
provided  by the net  proceeds  from the  issuance  of  additional  subordinated
debentures to First Bank Statutory Trust and First Preferred Capital Trust IV of
$25.3 million and $45.6 million,  respectively,  as further discussed below, and
approximately   $18.0  million  of  available   cash   reserves.   First  Banks'
distributions on the subordinated  debentures,  which were payable  quarterly in
arrears,  were $2.9  million and $8.2  million for the years ended  December 31,
2003 and 2002, respectively.

         In July 1998,  First  America  Capital  Trust  (FACT),  a newly  formed
Delaware  business trust,  issued 1.84 million shares of 8.50%  cumulative trust
preferred  securities at $25 per share in an underwritten  public offering,  and


<PAGE>


issued 56,908 shares of common securities to First Banks at $25 per share. First
Banks owned all of FACT's common securities.  The gross proceeds of the offering
were used by FACT to purchase  $47.4  million of 8.50%  subordinated  debentures
from First Banks,  maturing on June 30, 2028.  The maturity date could have been
shortened,  at the option of First  Banks,  to a date not earlier  than June 30,
2003 or extended  to a date not later than June 30,  2037 if certain  conditions
were met. The subordinated debentures were the sole asset of FACT. In connection
with the  issuance of the FACT  preferred  securities,  First Banks made certain
guarantees  and  commitments  that,  in the  aggregate,  constituted  a full and
unconditional guarantee by First Banks of the obligations of FACT under the FACT
preferred   securities.   First  Banks'   proceeds  from  the  issuance  of  the
subordinated debentures to FACT, net of underwriting fees and offering expenses,
were $45.4  million.  On June 30, 2003,  First Banks  redeemed in full the $47.4
million of subordinated debentures.  The funds necessary for the redemption were
provided from  available  cash reserves of $12.9 million and an advance of $34.5
million  on  First  Banks'  note  payable.  First  Banks'  distributions  on the
subordinated  debentures,  which were payable  quarterly  in arrears,  were $2.0
million  and $4.0  million  for the  years  ended  December  31,  2003 and 2002,
respectively.

         In October 2000, First Preferred Capital Trust II (First Preferred II),
a newly formed  Delaware  business  trust,  issued 2.3 million  shares of 10.24%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 71,135  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred II's common  securities.  The
gross proceeds of the offering were used by First Preferred II to purchase $59.3
million  of  10.24%  subordinated  debentures  from  First  Banks,  maturing  on
September 30, 2030.  The maturity date may be shortened,  at the option of First
Banks, to a date not earlier than September 30, 2005, if certain  conditions are
met. The  subordinated  debentures are the sole asset of First  Preferred II. In
connection  with the  issuance  of the  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 First Preferred II
under the First  Preferred II preferred  securities.  First Banks' proceeds from
the  issuance  of the  subordinated  debentures  to First  Preferred  II, net of
underwriting  fees and  offering  expenses,  were $56.9  million.  First  Banks'
distributions on the subordinated debentures issued to First Preferred II, which
are payable quarterly in arrears, were $6.1 million for the years ended December
31, 2004, 2003 and 2002.

         In November 2001,  First Preferred  Capital Trust III (First  Preferred
III), a newly formed Delaware business trust, issued 2.2 million shares of 9.00%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 68,290  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred III's common securities.  The
gross  proceeds of the  offering  were used by First  Preferred  III to purchase
$56.9 million of 9.00%  subordinated  debentures  from First Banks,  maturing on
September 30, 2031.  The maturity date may be shortened,  at the option of First
Banks, to a date not earlier than September 30, 2006, if certain  conditions are
met. The  subordinated  debentures are the sole asset of First Preferred III. In
connection  with the  issuance  of the  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 First Preferred III
under the First Preferred III preferred  securities.  First Banks' proceeds from
the  issuance of the  subordinated  debentures  to First  Preferred  III, net of
underwriting  fees and  offering  expenses,  were $54.6  million.  First  Banks'
distributions  on the  subordinated  debentures  issued to First  Preferred III,
which are payable  quarterly  in arrears,  were $5.1 million for the years ended
December 2004, 2003 and 2002.

         In April 2002, First Bank Capital Trust (FBCT), a newly formed Delaware
business trust, issued 25,000 shares of variable rate cumulative trust preferred
securities at $1,000 per share in a private placement,  and issued 774 shares of
common  securities  to First Banks at $1,000 per share.  First Banks owns all of
the common  securities of FBCT.  The gross proceeds of the offering were used by
FBCT to purchase  $25.8 million of variable rate  subordinated  debentures  from
First Banks,  maturing on April 22, 2032. The maturity date of the  subordinated
debentures may be shortened,  at the option of First Banks to a date not earlier
than April 22, 2007, if certain conditions are met. The subordinated  debentures
are the  sole  asset of  FBCT.  In  connection  with  the  issuance  of the FBCT
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 FBCT under the FBCT preferred  securities.  First Banks'
proceeds  from the  issuance  of the  subordinated  debentures  to FBCT,  net of
offering  expenses,  were  $25.0  million.  The  distribution  rate on the  FBCT
securities is equivalent to the six-month  London  Interbank  Offering Rate plus
387.5  basis  points,  and is payable  semi-annually  in arrears on April 22 and
October 22. First Banks' distributions on the subordinated  debentures issued to
FBCT were $1.4  million for the years ended  December 31, 2004 and 2003 and $1.1
million for the year ended December 31, 2002.


<PAGE>

         In March  2003,  First Bank  Statutory  Trust  (FBST),  a newly  formed
Connecticut  statutory  trust,  issued 25,000 shares of 8.10%  cumulative  trust
preferred securities at $1,000 per share in a private placement,  and issued 774
shares of common securities to First Banks at $1,000 per share. First Banks owns
all of the common  securities of FBST.  The gross  proceeds of the offering were
used by FBST to purchase  $25.8 million of 8.10%  subordinated  debentures  from
First Banks,  maturing on March 20, 2033. The maturity date of the  subordinated
debentures may be shortened, at the option of First Banks, to a date not earlier
than March 20, 2008, if certain conditions are met. The subordinated  debentures
are the  sole  asset of  FBST.  In  connection  with  the  issuance  of the FBST
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 under the FBST preferred  securities.  First Banks'
proceeds  from the  issuance  of the  subordinated  debentures  to FBST,  net of
offering  expenses,  were  $25.3  million.  First  Banks'  distributions  on the
subordinated  debentures issued to FBST, which are payable quarterly in arrears,
were $2.1  million and $1.7  million for the years ended  December  31, 2004 and
2003, respectively.

         In April 2003, First Preferred Capital Trust IV (First Preferred IV), a
newly  formed  Delaware  business  trust,  issued 1.84  million  shares of 8.15%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 56,908  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred IV's common  securities.  The
gross  proceeds  of the  offering  were used by First  Preferred  IV to purchase
approximately  $47.4 million of 8.15% subordinated  debentures from First Banks,
maturing on June 30, 2033. The maturity date may be shortened,  at the option of
First Banks, to a date not earlier than June 30, 2008, if certain conditions are
met. The  subordinated  debentures are the sole asset of First  Preferred IV. In
connection  with the  issuance  of the  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 First Preferred IV
under the First  Preferred IV preferred  securities.  First Banks' proceeds from
the  issuance  of the  subordinated  debentures  to First  Preferred  IV, net of
underwriting fees and offering expenses, were approximately $45.6 million. First
Banks'  distributions on the subordinated  debentures  issued to First Preferred
IV, which are payable  quarterly in arrears,  were $3.9 million and $2.9 million
for the years ended December 31, 2004 and 2003, respectively.

         On September 20, 2004, First Bank Statutory Trust II (FBST II), a newly
formed  Delaware  statutory  trust,  issued 20,000 shares of variable rate trust
preferred securities at $1,000 per share in a private placement,  and issued 619
shares of common securities to First Banks at $1,000 per share. First Banks owns
all of the common securities of FBST II. The gross proceeds of the offering were
used by  FBST  II to  purchase  $20.6  million  of  variable  rate  subordinated
debentures  from First Banks,  maturing on September 20, 2034. The maturity date
of the subordinated  debentures may be shortened,  at the option of First Banks,
to a date not earlier than  September 20, 2009, if certain  conditions  are met.
The  subordinated  debentures are the sole asset of FBST II. In connection  with
the  issuance of the FBST II  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 II under the
FBST II preferred  securities.  Proceeds  from the issuance of the  subordinated
debentures  to FBST II,  net of  offering  expenses,  were  $20.6  million.  The
distribution  rate on the FBST II securities  is  equivalent to the  three-month
London   Interbank   Offering  Rate  plus  205.0  basis  points.   First  Banks'
distributions  on the  subordinated  debentures  issued  to FBST II,  which  are
payable  quarterly in arrears  beginning on December 20, 2004, were $236,000 for
the year ended December 31, 2004.

         On November  23,  2004,  First Bank  Statutory  Trust III (FBST III), a
newly formed  Delaware  statutory  trust,  issued 40,000 shares of variable rate
trust  preferred  securities  at $1,000  per share in a private  placement,  and
issued  1,238  shares of common  securities  to First Banks at $1,000 per share.
First Banks owns all of the common securities of FBST III. The gross proceeds of
the offering  were used by FBST III to purchase  $41.2  million of variable rate
subordinated  debentures  from First Banks,  maturing on December 15, 2034.  The
maturity date of the subordinated  debentures may be shortened, at the option of
First Banks, to a date not earlier than December 15, 2009, if certain conditions
are met.  The  subordinated  debentures  are the  sole  asset  of FBST  III.  In
connection with the issuance of the FBST III 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 III
under the FBST III  preferred  securities.  Proceeds  from the  issuance  of the
subordinated  debentures  to FBST III,  net of  offering  expenses,  were  $41.2
million.  The distribution  rate on the FBST III securities is equivalent to the
three-month London Interbank Offering Rate plus 218.0 basis points. First Banks'
distributions  on the  subordinated  debentures  issued to FBST  III,  which are
payable  quarterly in arrears beginning on March 15, 2005, were $203,000 for the
year ended December 31, 2004.




<PAGE>

         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 amortized on a straight-line basis.

         The  subordinated  debentures were issued to First Banks in conjunction
with the  formation  of various  financing  entities  and the  issuance of trust
preferred securities by the financing entities.  First Banks has seven issues of
trust  preferred  securities as of December 31, 2004. The structure of the trust
preferred  securities  currently  satisfies  the  regulatory   requirements  for
inclusion, subject to certain limitations, in First Banks' capital base.

(13)     INCOME TAXES

         Provision  for income  taxes  attributable  to income  from  continuing
operations for the years ended December 31, 2004, 2003 and 2002 consists of:

<TABLE>
<CAPTION>
                                                                                   2004        2003      2002
                                                                                   ----        ----      ----
                                                                                (dollars expressed in thousands)
              Current provision for taxes:
<S>                                                                               <C>         <C>       <C>
                  Federal....................................................     $36,578     40,194    15,210
                  State......................................................       9,507     12,717     3,510
                                                                                  -------    -------    ------
                                                                                   46,085     52,911    18,720
                                                                                  -------    -------    ------
              Deferred provision for taxes:
                  Federal....................................................         236    (12,463)    4,020
                  State......................................................        (983)    (4,493)       31
                                                                                  -------    -------    ------
                                                                                     (747)   (16,956)    4,051
                                                                                  -------    -------    ------
                      Total..................................................     $45,338     35,955    22,771
                                                                                  =======    =======    ======
</TABLE>

         The  effective  rates of  federal  income  taxes  for the  years  ended
December  31,  2004,  2003 and 2002 differ from the federal  statutory  rates of
taxation as follows:
<TABLE>
<CAPTION>

                                                                              Years Ended December 31,
                                                            -----------------------------------------------------------
                                                                   2004                 2003                2002
                                                            -----------------     ----------------   ------------------
                                                             Amount   Percent     Amount   Percent    Amount    Percent
                                                             ------   -------     ------   -------    ------    -------
                                                                         (dollars expressed in thousands)

         Income before provision for income taxes and
<S>                                                         <C>                  <C>                  <C>
           minority interest in income of subsidiary....    $ 128,246            $98,766              $ 69,369
                                                            =========            =======              ========
         Provision for income taxes calculated
           at federal statutory income tax rates........    $  44,886   35.0%    $34,568     35.0%    $ 24,279    35.0%
         Effects of differences in tax reporting:
           Tax-exempt interest income, net of
               tax preference adjustment................         (791)  (0.6)       (911)    (0.9)        (972)   (1.4)
           State income taxes...........................        5,541    4.3       5,346      5.4        2,302     3.3
           Reduction in prior year contingency reserve..       (2,825)  (2.2)         --       --           --      --
           Bank owned life insurance, net of premium....       (1,670)  (1.3)     (1,762)    (1.8)      (1,957)   (2.8)
           Other, net...................................          197    0.2      (1,286)    (1.3)        (881)   (1.3)
                                                            ---------  -----     -------   ------     --------   -----
                 Provision for income taxes.............    $  45,338   35.4%    $35,955     36.4%    $ 22,771    32.8%
                                                            =========  =====     =======   ======     ========   =====
</TABLE>

         The $2.8 million  reduction in the prior year contingency  reserve is a
result of First  Banks'  participation  in the state of  California's  voluntary
compliance initiative program.  Consequently,  First Banks amended several state
tax returns to report certain  transactions  the California  Franchise Tax Board
might have  challenged.  Voluntary  participation  in this  program  removed the
possible assessment of certain tax penalties associated with these transactions.





<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,
2004 and 2003 are as follows:
<TABLE>
<CAPTION>

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

              Deferred tax assets:
<S>                                                                                   <C>           <C>
                  Net operating loss carryforwards................................    $ 38,786      30,702
                  Deferred built-in loss carryforward.............................       8,988          --
                  Allowance for loan losses.......................................      62,242      49,680
                  Alternative minimum tax credits.................................       2,667       2,667
                  Quasi-reorganization adjustment of bank premises................       1,231       1,076
                  Interest on nonaccrual loans....................................       4,346       2,649
                  Servicing rights................................................       8,366       6,250
                  Deferred compensation...........................................       4,541       2,977
                  Other real estate...............................................         436          24
                  Net fair value adjustment for available-for-sale
                    investment securities.........................................       1,527          --
                  Operating leases................................................       2,606          --
                  Partnership investments.........................................       1,244          --
                  State taxes.....................................................       1,996       5,018
                  Other...........................................................       6,188       1,801
                                                                                      --------    --------
                      Gross deferred tax assets...................................     145,164     102,844
                                                                                      --------    --------
                  Valuation allowance.............................................     (17,767)         --
                                                                                      --------    --------
                      Deferred tax assets, net of valuation allowance.............     127,397     102,844
                                                                                      --------    --------
              Deferred tax liabilities:
                  Depreciation on bank premises and equipment.....................      11,567       9,399
                  Net fair value adjustment for available-for-sale
                    investment securities.........................................          --       1,655
                  Net fair value adjustment for derivative instruments............         524      14,075
                  Unrealized gains on investment securities.......................       3,386       3,156
                  Operating leases................................................          --       1,812
                  Core deposit intangibles........................................       7,859       4,328
                  Discount on loans...............................................       4,412       1,377
                  Equity investments..............................................       6,415       5,405
                  FHLB stock dividends............................................         555         181
                  Other...........................................................          94         295
                                                                                      --------    --------
                      Deferred tax liabilities....................................      34,812      41,683
                                                                                      --------    --------
                      Net deferred tax assets.....................................    $ 92,585      61,161
                                                                                      ========    ========
</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 $92.6 million at December 31,
2004.

         There were no changes in the deferred tax asset valuation allowance for
the years ended  December  31, 2003 and 2002.  Changes in the deferred tax asset
valuation allowance for the year ended December 31, 2004 were as follows:
<TABLE>
<CAPTION>

                                                                                    (dollars expressed in thousands)

<S>                                                                                             <C>
              Balance, beginning of year.........................................               $     --
              Purchase acquisitions..............................................                 17,767
                                                                                                --------
              Balance, end of year...............................................               $ 17,767
                                                                                                ========
</TABLE>



<PAGE>

         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 tax basis) that existed at the date of acquisition, if realized within
the first five years  subsequent to the date of acquisition,  will be disallowed
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 $17.8 million.  Subsequent  reductions in the valuation allowance will
be credited to intangible assets associated with the purchase of subsidiaries.

         At  December  31,  2004 and  2003,  the  accumulation  of prior  years'
earnings  representing tax bad debt deductions was approximately  $30.8 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, 2004 and 2003, for federal income taxes purposes, First
Banks had net operating loss  carryforwards of approximately  $110.8 million and
$87.7  million,  respectively.  At December 31,  2004,  the net  operating  loss
carryforwards for First Banks expire as follows:
<TABLE>
<CAPTION>

                                                                        (dollars expressed in thousands)

                       Year ending December 31:
<S>                                                                                <C>
                           2005.................................................   $   4,442
                           2006.................................................       2,343
                           2007.................................................       4,391
                           2008.................................................      26,730
                           2009 - 2024..........................................      72,912
                                                                                   ---------
                               Total............................................   $ 110,818
                                                                                   =========
</TABLE>

         During 2004, First Banks recognized built-in losses associated with the
acquisition  of CIB Bank.  A  portion  of the  recognized  built-in  losses  was
disallowed  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 recognized  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,  2004,  First Banks had  deferred  built-in  loss
carryforwards  of  approximately  $21.4  million.  Utilization  of the  deferred
built-in  loss  carryforwards  is  allowed  beginning  in the year 2016 and such
losses will expire as follows:
<TABLE>
<CAPTION>

                                                                        (dollars expressed in thousands)

                       Year ending December 31:
<S>                                                                               <C>
                           2005.................................................   $      --
                           2006.................................................          --
                           2007.................................................          --
                           2008.................................................          --
                           2009 - 2024..........................................      21,400
                                                                                   ---------
                               Total............................................   $  21,400
                                                                                   =========

</TABLE>


<PAGE>


(14)     EARNINGS PER COMMON SHARE

         The following is a reconciliation of the basic and diluted earnings per
share computations for the years indicated:
<TABLE>
<CAPTION>
                                                                                                         Per Share
                                                                               Income        Shares        Amount
                                                                               ------        ------        ------
                                                                     (dollars in thousands, except share and per share data)

     Year ended December 31, 2004:
<S>                                                                          <C>             <C>         <C>
         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
                                                                             =========      =======      =========

     Year ended December 31, 2003:
         Basic EPS - income available to common stockholders.............    $  62,025       23,661      $2,621.39
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          769          600         (33.08)
                                                                             ---------      -------      ---------
         Diluted EPS - income available to common stockholders...........    $  62,794       24,261      $2,588.31
                                                                             =========      =======      =========

     Year ended December 31, 2002:
         Basic EPS - income available to common stockholders.............    $  44,381       23,661      $1,875.69
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          769          696         (22.05)
                                                                             ---------      -------      ---------
         Diluted EPS - income available to common stockholders...........    $  45,150       24,357      $1,853.64
                                                                             =========      =======      =========
</TABLE>

(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  discussed  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, 2004 and 2003 were as follows:

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                    -------------------------------
                                                                                            2004         2003
                                                                                            ----         ----
                                                                                    (dollars expressed in thousands)

<S>                                                                                    <C>            <C>
              Commitments to extend credit..........................................   $ 2,311,529    2,269,311
              Commercial and standby letters of credit..............................       180,785      187,789
                                                                                       -----------   ----------
                                                                                       $ 2,492,314    2,457,100
                                                                                       ===========   ==========
</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. The standby letters of credit at December 31,
2004  expire  within 12 years.  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.


<PAGE>

         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.  At December 31, 2003,
First Banks had a $1.0 million  specific  reserve for estimated losses on a $5.3
million letter of credit that was subsequently funded as a loan in early January
2004, as discussed in Note 4 to the Consolidated Financial Statements.

(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 the mortgage
banking operation,  deferred income tax assets,  bank premises and equipment and
intangible assets associated with the purchase of subsidiaries. Further, the tax
ramifications  related to the realization of the unrealized gains and losses can
have a  significant  effect  on the  fair  value  estimates  and  have  not been
considered in any of the estimates.

         The  estimated  fair value of First  Banks'  financial  instruments  at
December 31, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                                        2004                          2003
                                                             --------------------------    -------------------------
                                                              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..........................   $  267,110        267,110       213,537         213,537
       Investment securities:
         Available for sale...............................    1,788,063      1,788,063     1,038,787       1,038,787
         Held to maturity.................................       25,286         25,586        10,927          11,341
       Net loans..........................................    5,987,261      5,986,880     5,211,624       5,229,213
       Derivative instruments.............................        4,681          4,681        49,291          49,291
       Bank-owned life insurance..........................      102,239        102,239        97,521          97,521
       Accrued interest receivable........................       39,776         39,776        32,797          32,797
       Interest rate lock commitments.....................           20             20           (77)            (77)
       Forward commitments to sell
         mortgage-backed securities.......................          (99)           (99)         (636)           (636)
                                                             ==========     ==========    ==========      ==========

     Financial Liabilities:
       Deposits:
         Noninterest-bearing demand.......................   $1,194,662      1,194,662     1,034,367       1,034,367
         Interest-bearing demand..........................      875,489        875,489       843,001         843,001
         Savings .........................................    2,249,644      2,249,644     2,128,683       2,128,683
         Time deposits....................................    2,832,175      2,831,308     1,955,564       1,988,035
       Other borrowings...................................      594,750        594,750       273,479         273,479
       Note payable.......................................       15,000         15,000        17,000          17,000
       Accrued interest payable...........................       14,376         14,376         8,799           8,799
       Subordinated debentures............................      273,300        283,337       209,320         225,227
                                                             ==========     ==========    ==========      ==========

     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  investment  securities
available for sale is the amount  reported in the  consolidated  balance sheets.
The fair value of  investment  securities  held to  maturity  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.


<PAGE>

         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 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 disclosed for 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 disclosed for demand deposits
does not include the benefit that results from the low-cost  funding provided by
deposit  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.

         Other  borrowings,  note  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  are  limited  to $13,000 of gross  compensation  for 2004.  Total
employer  contributions  under  the plan were $2.1  million  for the year  ended
December  31, 2004 and $1.7  million for the years ended  December  31, 2003 and
2002.  The plan assets are held and managed under a trust  agreement  with First
Bank's trust department.

(18)     PREFERRED STOCK

         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 Federal  Reserve Board (the
Board).

         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, 2004, 2003 and 2002.


<PAGE>

(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  and  various  related   services  to  First  Banks,   Inc.  and  its
subsidiaries.  Fees paid under  agreements with First Services,  L.P. were $26.6
million for the year ended  December 31, 2004,  and $26.8  million for the years
ended  December  31, 2003 and 2002.  First  Services,  L.P.  leases  information
technology  and other  equipment  from First Bank.  During 2004,  2003 and 2002,
First  Services,  L.P.  paid  First Bank $4.3  million,  $4.2  million  and $3.9
million, respectively, in rental fees for the use of that equipment.

         First Brokerage  America,  L.L.C., a limited liability company which is
indirectly  owned by First Banks' Chairman and members of his immediate  family,
received approximately $3.3 million, $3.2 million and $3.3 million for the years
ended December 31, 2004,  2003 and 2002,  respectively,  in 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 (First  Title),  a limited  liability  company
established and administered by and for the benefit of First Banks' Chairman and
members of his immediate family, received approximately  $514,000,  $492,000 and
$412,000 for the years ended December 31, 2004, 2003 and 2002, respectively,  in
commissions  for  policies  purchased  by First Banks or customers of First Bank
from  unaffiliated  third-party  insurers.  The insurance  premiums on which the
aforementioned  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.

         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 Robert J.  Dierberg  and members of his
immediate  family.  Robert J. Dierberg is the brother of First Banks'  Chairman.
Total rent expense incurred by First Bank under the lease  obligation  contracts
with Dierbergs Markets,  Inc. was $297,000,  $255,000 and $232,000 for the years
ended December 31, 2004, 2003 and 2002, respectively.

         First  Bank  has had in the  past,  and may  have in the  future,  loan
transactions   in  the  ordinary  course  of  business  with  its  directors  or
affiliates.  These  loan  transactions  have been 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  $31.0  million and $20.0  million at December  31, 2004 and 2003,
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.

         First Banks pays  compensation  to its Chairman and certain  members of
his immediate  family.  Mr. Steven F.  Schepman,  the son-in-law of First Banks'
Chairman,  and Director of First Banks since July 2004 and Senior Vice President
- Private Banking,  Wealth Management and Trust Services of First Bank, received
salary and bonus  compensation of $182,100 for the year ended December 31, 2004.
Mr.  Michael J.  Dierberg,  the son of First Banks'  Chairman,  and Director and
General  Counsel  of First  Banks  until July  2004,  received  salary and bonus
compensation of $62,300 for the year ended December 31, 2004.

         On August 30, 2004, First Bank granted to First Capital  America,  Inc.
(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
newly organized and wholly owned limited  liability  company of First Bank, at a
price of $10,000 per Membership  Interest,  or $7.35  million.  The option could
have been  exercised at any time prior to December 31, 2004 by written notice to
First Bank of the  intention to exercise the option and payment to First Bank of
$7.35  million.  On December 31, 2004,  First Bank  extended the written  option
under the same terms through  March 31, 2005.  First Bank  anticipates  that FCA
will  exercise its option,  upon which SBLS LLC will become 51.0% owned by First
Bank and 49% owned by FCA.
<PAGE>

         During  2003,  First  Banks  contributed  231,779  shares of  Allegiant
Bancorp,  Inc. (Allegiant) common stock with a fair value of $5.1 million to The
Dierberg Foundation,  a charitable trust created by and for the benefit of First
Banks' Chairman and members of his immediate  family.  In conjunction  with this
transaction,  First  Banks  recorded  charitable  contribution  expense  of $5.1
million,  which  was  partially  offset by a gain on the  contribution  of these
available-for-sale  investment  securities  of $2.3  million,  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  recorded a tax benefit of
$2.5 million  associated with this  transaction.  The contribution of the common
stock eliminated First Banks' investment in Allegiant.

         During 2002, FCA received approximately $1.0 million of origination and
servicing fees  associated with  commercial  leases  originated and serviced for
First Bank by the employees of FCA.

(20)     BUSINESS SEGMENT RESULTS

         First Banks'  business  segment is First Bank. The reportable  business
segments are 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
real  estate  loans,  asset-based  loans and trade  financing.  Other  financial
services   include   mortgage   banking,   debit  cards,   brokerage   services,
credit-related insurance, 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 consist primarily of
interest income, generated from the loan and investment security portfolios, and
service charges and fees, generated from the deposit products and services.  The
geographic  areas  include  eastern  Missouri,  Illinois,  southern and northern
California and Houston, Dallas, Irving, McKinney and Denton, Texas. The products
and services are offered to customers  primarily within First Banks'  respective
geographic areas.



<PAGE>
         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.
<TABLE>
<CAPTION>
                                                                               Corporate, Other
                                                                               and Intercompany
                                                  First Bank                 Reclassifications (1)        Consolidated Totals
                                       ------------------------------- ----------------------------  ---------------------------
                                           2004       2003     2002 (2)    2004       2003     2002     2004      2003      2002
                                           ----       ----     ----        ----       ----     ----     ----      ----      ----
                                                                      (dollars expressed in thousands)
Balance sheet information:

<S>                                    <C>         <C>       <C>          <C>       <C>      <C>     <C>        <C>         <C>
Investment securities................  $1,803,454  1,042,809 1,114,479    9,895     6,905    31,191  1,813,349  1,049,714  1,145,670
Loans, net of unearned discount......   6,137,968  5,328,075 5,432,589       --        --        (1) 6,137,968  5,328,075  5,432,588
Goodwill.............................     156,849    145,548   140,112       --        --        --    156,849    145,548    140,112
Total assets.........................   8,720,331  7,097,635 7,357,155   12,510     9,305    (5,978) 8,732,841  7,106,940  7,351,177
Deposits.............................   7,161,636  5,977,042 6,189,928   (9,666)  (15,427)  (17,108) 7,151,970  5,961,615  6,172,820
Note payable.........................          --         --        --   15,000    17,000     7,000     15,000     17,000      7,000
Subordinated debentures..............          --         --        --  273,300   209,320   278,389    273,300    209,320    278,389
Stockholders' equity.................     877,473    766,397   777,548 (276,580) (216,582) (258,507)   600,893    549,815    519,041
                                       ==========  ========= ========= ========  ========  ========  =========  =========  =========
Income statement information:

Interest income......................  $  394,196    390,340   424,358      586       813     1,363    394,782    391,153    425,721
Interest expense.....................      79,260     85,524   132,040   15,507    18,502    25,511     94,767    104,026    157,551
                                       ----------  --------- --------- --------  --------  --------  ---------  ---------  ---------
     Net interest income.............     314,936    304,816   292,318  (14,921)  (17,689)  (24,148)   300,015    287,127    268,170
Provision for loan losses............      25,750     49,000    55,500       --        --        --     25,750     49,000     55,500
                                       ----------  --------- --------- --------  --------  --------  ---------  ---------  ---------
     Net interest income after
       provision for loan losses.....     289,186    255,816   236,818  (14,921)  (17,689)  (24,148)   274,265    238,127    212,670
Noninterest income...................      84,077     79,813    69,355     (591)    7,895    (1,844)    83,486     87,708     67,511
Noninterest expense..................     226,183    216,373   207,576    3,322    10,696     3,236    229,505    227,069    210,812
                                       ----------  --------- --------- --------  --------  --------  ---------  ---------  ---------
     Income before provision for
       income taxes and minority
       interest in income
       of subsidiary.................     147,080    119,256    98,597  (18,834)  (20,490)  (29,228)   128,246     98,766     69,369
Provision for income taxes...........      54,682     44,871    35,332   (9,344)   (8,916)  (12,561)    45,338     35,955     22,771
                                       ----------  --------- --------- --------  --------  --------  ---------  ---------  ---------
     Income before minority
       interest in income
       of subsidiary.................      92,398     74,385    63,265   (9,490)  (11,574)  (16,667)    82,908     62,811     46,598
Minority interest in income
       of subsidiary.................          --         --        --       --        --     1,431         --         --      1,431
                                       ----------  --------- --------- --------  --------  --------  ---------  ---------  ---------
     Net income......................  $   92,398     74,385    63,265   (9,490)  (11,574)  (18,098)    82,908     62,811     45,167
                                       ==========  ========= ========= ========  ========  ========  =========  =========  =========
----------------------------------
(1)  Corporate and other includes $9.8 million, $11.6 million and $16.1 million of interest expense on subordinated debentures,
     after applicable income tax benefit of $5.3 million, $6.3 million and $8.7 million, for the years ended December 31, 2004,
     2003 and 2002, respectively.
(2)  First Bank & Trust was merged with and into First Bank on March 31, 2003. Accordingly, the 2002 amounts have been restated
     to reflect this combination of entities under common control.
</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
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, 2004 and 2003, First Banks and First Bank were each
well capitalized.

         As of December 31, 2004, 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
table below.

<PAGE>

         At December 31, 2004 and 2003,  First Banks' and First Bank's  required
and actual capital ratios were as follows:  To be Well Capitalized  Under Actual
For Capital Prompt Corrective 2004 2003 Adequacy Purposes Action Provisions
<TABLE>
<CAPTION>

                                                                                                         To Be Well
                                                                Actual                                Capitalized Under
                                                          ------------------        For Capital       Prompt Corrective
                                                           2004        2003      Adequacy Purpose     Action Provisions
                                                           ----        ----      ----------------     -----------------

     Total capital (to risk-weighted assets):
<S>                                                       <C>          <C>             <C>                  <C>
              First Banks.............................    10.61%       10.27%          8.0%                 10.0%
              First Bank..............................    10.73        10.41           8.0                  10.0

     Tier 1 capital (to risk-weighted assets):
              First Banks.............................     8.43         8.46           4.0                   6.0
              First Bank..............................     9.47         9.15           4.0                   6.0

     Tier 1 capital (to average assets):
              First Banks.............................     7.89         7.62           3.0                   5.0
              First Bank..............................     8.86         8.22           3.0                   5.0
</TABLE>

         On May 6, 2004,  the Board  requested  public comment on newly proposed
rules  that  would  allow  bank  holding  companies  to retain  trust  preferred
securities in Tier 1 capital,  subject to stricter  quantitative and qualitative
standards. The proposed rules would implement several significant changes to the
current regulatory  capital rules.  Under the proposal,  the aggregate amount of
trust  preferred  securities  and certain other core capital  elements  would be
limited  to 25% of Tier 1 capital,  net of  goodwill.  Additionally,  qualifying
trust preferred  securities and Class C minority  interests in excess of the 25%
limit  would  be  allowable  in  Tier 2  capital,  but  limited,  together  with
subordinated  debt and  limited-life  preferred stock, to 50% of Tier 1 capital.
The proposed  rules also provide that in the last five years before  maturity of
the underlying  subordinated  note, the associated  trust  preferred  securities
would be treated as limited-life  preferred stock, at one-fifth amortization per
year,  and would be excluded from Tier 1 capital and included in Tier 2 capital,
subject, together with subordinated debt and other limited-life preferred stock,
to a limit of 50% of Tier 1  capital.  As  further  described  in Note 25 to the
Consolidated  Financial Statements,  on March 1, 2005, the Board adopted a final
rule that allows the continued limited  inclusion of trust preferred  securities
in Tier 1 capital.  Under the final rule,  trust preferred  securities and other
restricted  core  capital  elements  will be  subject to  stricter  quantitative
limits. The Board's final rule limits restricted core capital elements to 25% of
all 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. The final rule provides a five-year
transition   period,   ending  March  31,  2009,  for  the  application  of  the
quantitative  limits.  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 Board's final rule, as adopted,  will reduce First Banks,
Inc.'s regulatory Tier 1 capital ratios,  however the overall reduction will not
result  in a  situation  where  First  Banks,  Inc.  would  fall  below the well
capitalized  thresholds  under the  regulatory  framework for prompt  corrective
action.  Under the new rule,  First  Banks'  Tier 1  capital  (to  risk-weighted
assets) and Tier 1 capital (to average  assets) ratios would have been 7.72% and
7.22%, respectively, at December 31, 2004.

(22)     DISTRIBUTION OF EARNINGS OF FIRST BANK

         First Bank is restricted by various state and federal  regulations,  as
well  as by the  terms  of the  Credit  Agreement  described  in  Note 11 to the
Consolidated  Financial  Statements,  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 $69.0 million at December 31, 2004, unless prior permission of the
regulatory authorities and/or the lending banks is obtained.



<PAGE>

 (23)    PARENT COMPANY ONLY FINANCIAL INFORMATION

         Following  are  condensed  balance  sheets of First  Banks,  Inc. as of
December 31, 2004 and 2003,  and  condensed  statements of income and cash flows
for the years ended December 31, 2004, 2003 and 2002:
<TABLE>
<CAPTION>

                                           CONDENSED BALANCE SHEETS

                                                                                           December 31,
                                                                                           ------------
                                                                                        2004         2003
                                                                                        ----         ----
                                                                                 (dollars expressed in thousands)
                                          Assets
                                          ------

<S>                                                                                  <C>             <C>
     Cash deposited in subsidiary bank...........................................    $    8,359      15,917
     Investment securities.......................................................         9,895       6,905
     Investment in subsidiaries..................................................       879,316     767,311
     Other assets................................................................         2,665       1,563
                                                                                     ----------    --------
           Total assets..........................................................    $  900,235     791,696
                                                                                     ==========    ========

                            Liabilities and Stockholders' Equity
                            ------------------------------------

     Note payable................................................................    $   15,000      17,000
     Subordinated debentures.....................................................       273,300     209,320
     Accrued expenses and other liabilities......................................        11,042      15,561
                                                                                     ----------    --------
           Total liabilities.....................................................       299,342     241,881
     Stockholders' equity........................................................       600,893     549,815
                                                                                     ----------    --------
           Total liabilities and stockholders' equity............................    $  900,235     791,696
                                                                                     ==========    ========
</TABLE>

<TABLE>
<CAPTION>

                                        CONDENSED STATEMENTS OF INCOME


                                                                                    Years Ended December 31,
                                                                                 -----------------------------
                                                                                  2004        2003        2002
                                                                                  ----        ----        ----
                                                                                (dollars expressed in thousands)

     Income:
<S>                                                                           <C>            <C>         <C>
       Dividends from subsidiaries........................................    $  40,000      67,000      28,000
       Management fees from subsidiaries..................................       27,853      23,992      21,754
       Gain on sale of available-for-sale investment securities...........           --       8,218          97
       Other..............................................................          710       1,301       3,383
                                                                              ---------     -------     -------
           Total income...................................................       68,563     100,511      53,234
                                                                              ---------     -------     -------
     Expense:
       Interest...........................................................       15,597      18,664      21,855
       Salaries and employee benefits.....................................       20,699      19,366      15,726
       Legal, examination and professional fees...........................        2,943       3,903       2,824
       Charitable contributions...........................................           43       5,134          11
       Other..............................................................        8,114       6,852       7,906
                                                                              ---------     -------     -------
           Total expense..................................................       47,396      53,919      48,322
                                                                              ---------     -------     -------
           Income before benefit for income taxes and equity
              in undistributed earnings of subsidiaries...................       21,167      46,592       4,912
     Benefit for income taxes.............................................       (9,344)     (8,891)    (10,502)
                                                                              ---------     -------     -------
           Income before equity in undistributed earnings of subsidiaries.       30,511      55,483      15,414
     Equity in undistributed earnings of subsidiaries.....................       52,397       7,328      29,753
                                                                              ---------     -------     -------
           Net income.....................................................    $  82,908      62,811      45,167
                                                                              =========     =======     =======
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                          CONDENSED STATEMENTS OF CASH FLOWS

                                                                                   Years Ended December 31,
                                                                              ---------------------------------
                                                                              2004          2003           2002
                                                                              ----          ----           ----
                                                                               (dollars expressed in thousands)

     Cash flows from operating activities:
<S>                                                                       <C>              <C>            <C>
       Net income......................................................   $  82,908        62,811         45,167
       Adjustments to reconcile net income to net cash provided by
         operating activities:
           Net income of subsidiaries..................................     (92,397)      (74,328)       (57,753)
           Dividends from subsidiaries.................................      40,000        67,000         28,000
           Other, net..................................................      (3,262)          292          3,366
                                                                          ---------      --------        -------
              Net cash provided by operating activities................      27,249        55,775         18,780
                                                                          ---------      --------        -------

     Cash flows from investing activities:
       (Increase) decrease in investment securities....................        (915)           --            261
       Investment in common securities of FBST, FBST II. FBST III,
         First Preferred IV and FBCT...................................      (1,857)       (2,197)          (774)
       Payments from redemption of investment in common securities
         of First Preferred I and FACT.................................          --         4,090             --
       Acquisitions of subsidiaries....................................     (76,067)           --        (56,334)
       Capital (contributions) reductions (to) from subsidiaries.......     (15,000)       10,000            (70)
       Decrease in advances to subsidiary..............................          --            --         34,000
       Other, net......................................................         (39)           --             (9)
                                                                          ---------      --------        -------
              Net cash (used in) provided by investing activities......     (93,878)       11,893        (22,926)
                                                                          ---------      --------        -------

     Cash flows from financing activities:
       Advances drawn on note payable..................................      15,000        34,500         43,500
       Repayments of note payable......................................     (17,000)      (24,500)       (64,000)
       Proceeds from issuance of subordinated debentures...............      61,857        70,907         25,007
       Payments for redemption of subordinated debentures..............          --      (136,341)            --
       Payment of preferred stock dividends............................        (786)         (786)          (786)
                                                                          ---------      --------        -------
              Net cash provided by (used in) financing activities......      59,071       (56,220)         3,721
                                                                          ---------      --------        -------
              Net (decrease) increase in cash deposited in First Bank..      (7,558)       11,448           (425)
     Cash deposited in First Bank, beginning of year...................      15,917         4,469          4,894
                                                                          ---------      --------        -------
     Cash deposited in First Bank, end of year.........................   $   8,359        15,917          4,469
                                                                          =========      ========        =======

     Noncash investing activities:
       Cash paid for interest..........................................   $  13,527        16,489         21,855
                                                                          =========      ========        =======
</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 Missouri Valley Partners,  Inc. (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 co-existent  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,
2004,  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>


         On June 30, 2004,  as further  discussed in Note 2 to the  Consolidated
Financial  Statements,  First Bank  recorded a  liability  of $2.0  million  for
recourse  obligations  related to the completion of the sale of a portion of its
commercial  leasing  portfolio.  For value  received,  First  Bank,  as  seller,
indemnified  the buyer of certain  leases from any  liability or loss  resulting
from  defaults  subsequent  to the sale.  First Bank's  indemnification  for the
recourse obligations is limited to a specified  percentage,  ranging from 15% to
25%, of the aggregate  lease purchase price of specific pools of leases sold. As
of December 31, 2004, this liability was $1.6 million,  reflecting reductions in
the related lease  balances for the specific  pools of leases sold from borrower
repayments.

         On August 31, 2004, SBLS LLC acquired  substantially  all of the assets
and assumed certain  liabilities of SBLS, as further  discussed in Note 2 to the
Consolidated  Financial  Statements.  The Amended and  Restated  Asset  Purchase
Agreement (Asset Purchase  Agreement)  governing this  transaction  provides for
certain payments to the seller  contingent on future  valuations of specifically
identified  assets,   including  servicing  assets  and  retained  interests  in
securitizations.  As of December 31, 2004, SBLS LLC had not recorded a liability
for the obligations associated with these contingent payments, as the likelihood
that  SBLS LLC will be  required  to make  payments  under  the  Asset  Purchase
Agreement is not ascertainable at the present 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

         On January 10,  2005,  First Banks  executed an  Agreement  and Plan of
Reorganization providing for the acquisition of FBA Bancorp, Inc. and its wholly
owned  subsidiary,  First Bank of the  Americas,  S.S.B.  FBA  Bancorp,  Inc. is
headquartered  in Chicago,  Illinois,  and through  First Bank of the  Americas,
operates three banking offices in the southwestern  Chicago  metropolitan  area.
Under the terms of the agreement, First Banks will acquire FBA Bancorp, Inc. for
approximately  $10.5  million  in cash.  The  transaction,  which is  subject to
regulatory  approvals,  is expected to be completed during the second quarter of
2005. At December 31, 2004, FBA Bancorp,  Inc. reported  consolidated  assets of
$75.0 million,  loans, net of unearned discount,  of $48.6 million,  deposits of
$55.9 million and stockholders' equity of $7.4 million.

         Effective  February 25, 2005,  First Banks  terminated  $150.0  million
notional  amount of its five-year fair value interest rate swap  agreements that
hedged a portion of First Banks' other time  deposits.  The  termination  of the
swap agreements resulted from an increasing level of ineffectiveness  associated
with the highly  correlated 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 related
$3.1 million  basis  adjustment of the  underlying  hedged  liabilities  will be
recorded as interest expense over the remaining weighted average maturity of the
underlying hedged liabilities of approximately ten months.

         On March 1, 2005,  the Board 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,  as  further  discussed  in  Note 21 to the  Consolidated  Financial
Statements.  The Board'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. 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 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
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 Board's final rule, as adopted,  will
reduce  First  Banks,  Inc.'s  regulatory  capital  ratios,  however the overall
reduction  will not result in a situation  where First  Banks,  Inc.  would fall
below the well capitalized  thresholds under the regulatory framework for prompt
corrective action.


<PAGE>

<TABLE>
<CAPTION>
                                   QUARTERLY CONDENSED FINANCIAL DATA - UNAUDITED

                                                                                 2004 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..............................................   $  96,127      96,585        99,461         102,609
Interest expense.............................................      21,474      20,979        23,853          28,461
                                                                ---------    --------       -------        --------
    Net interest income......................................      74,653      75,606        75,608          74,148
Provision for loan losses....................................      12,750       3,000         7,500           2,500
                                                                ---------    --------       -------        --------
    Net interest income after provision for loan losses......      61,903      72,606        68,108          71,648
Noninterest income...........................................      20,559      20,104        21,982          20,841
Noninterest expense..........................................      52,602      55,405        58,391          63,107
                                                                ---------    --------       -------        --------
    Income before provision for income taxes.................      29,860      37,305        31,699          29,382
Provision for income taxes...................................      11,591      11,302        11,951          10,494
                                                                ---------    --------       -------        --------
    Net income...............................................   $  18,269      26,003        19,748          18,888
                                                                =========    ========       =======        ========
Earnings per common share:
    Basic....................................................   $  763.81    1,093.42        826.33          787.25
                                                                =========    ========       =======        ========

    Diluted..................................................   $  753.93    1,074.06        815.20          780.71
                                                                =========    ========       =======        ========


                                                                                 2003 Quarter Ended
                                                                ----------------------------------------------------
                                                                 March 31     June 30    September 30    December 31
                                                                 --------     -------    ------------    -----------
                                                               (dollars expressed in thousands, except per share data)

Interest income..............................................   $  99,814      98,481        96,164          96,694
Interest expense.............................................      30,651      27,468        23,084          22,823
                                                                ---------    --------       -------        --------
    Net interest income......................................      69,163      71,013        73,080          73,871
Provision for loan losses....................................      11,000      10,000        15,000          13,000
                                                                ---------    --------       -------        --------
    Net interest income after provision for loan losses......      58,163      61,013        58,080          60,871
Noninterest income...........................................      25,547      18,925        20,242          22,994
Noninterest expense..........................................      53,587      57,545        54,530          61,407
                                                                ---------    --------       -------        --------
    Income before provision for income taxes.................      30,123      22,393        23,792          22,458
Provision for income taxes...................................      11,092       7,693        10,092           7,078
                                                                ---------    --------       -------        --------
    Net income...............................................   $  19,031      14,700        13,700          15,380
                                                                =========    ========       =======        ========
Earnings per common share:
    Basic....................................................   $  796.04      615.70        570.75          638.90
                                                                =========    ========       =======        ========

    Diluted..................................................   $  784.29      606.04        565.09          634.38
                                                                =========    ========       =======        ========

</TABLE>


<PAGE>

FIRST BANKS, INC. PREFERRED SECURITIES

         The preferred  securities of First Preferred Capital Trust II and First
Preferred Capital Trust III are traded on the Nasdaq National Market System with
the ticker symbols "FBNKN" and "FBNKM,"  respectively.  The preferred securities
of First Preferred  Capital Trust II and First  Preferred  Capital Trust III 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 2004 and 2003 are summarized as follows:
<TABLE>
<CAPTION>

                  FIRST PREFERRED CAPITAL TRUST II (ISSUE DATE - OCTOBER 2000) - FBNKN

                                                                       2004                  2003
                                                                ------------------    -----------------    Dividend
                                                                   High      Low       High       Low      Declared
                                                                   ----      ---       ----       ---      --------
<S>                                                               <C>       <C>        <C>      <C>       <C>
     First quarter............................................    $28.33    26.92      29.00     27.80    $0.640000
     Second quarter...........................................     27.23    26.34      29.25     27.90     0.640000
     Third quarter............................................     27.29    26.11      28.70     27.40     0.640000
     Fourth quarter...........................................     27.24    26.06      28.14     27.25     0.640000
                                                                                                          ---------
                                                                                                          $2.560000
                                                                                                          =========

                  FIRST PREFERRED CAPITAL TRUST III (ISSUE DATE - NOVEMBER 2001) - FBNKM

                                                                       2004                  2003
                                                                ------------------    -----------------    Dividend
                                                                   High      Low       High        Low     Declared
                                                                   ----      ---       ----        ---     --------
     First quarter............................................    $27.95    27.00      27.70     26.55    $0.562500
     Second quarter...........................................     27.00    25.55      28.50     27.00     0.562500
     Third quarter............................................     29.10    26.04      28.55     26.90     0.562500
     Fourth quarter...........................................     27.55    26.55      29.80     27.21     0.562500
                                                                                                          ---------
                                                                                                          $2.250000
                                                                                                          =========
</TABLE>

         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 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 2004 and 2003 are summarized as follows:

<TABLE>
<CAPTION>

                  FIRST PREFERRED CAPITAL TRUST IV (ISSUE DATE - APRIL 2003) - FBSPrA

                                                            2004                  2003          Dividend Declared
                                                       ----------------    ----------------    --------------------
                                                        High      Low       High       Low       2004         2003
                                                        ----      ---       ----       ---       ----         ----
<S>                                                    <C>       <C>           <C>    <C>       <C>              <C>
     First quarter.................................    $28.60    27.35         --        --    $0.509375         --
     Second quarter................................     28.00    25.70      27.80     26.00     0.509375   0.503715
     Third quarter.................................     28.00    25.80      28.20     27.35     0.509375   0.509375
     Fourth quarter................................     28.00    26.81      28.20     27.23     0.509375   0.509375
                                                                                               ---------   --------
                                                                                               $2.037500   1.522465
                                                                                               =========   ========

</TABLE>


<PAGE>
<TABLE>
<CAPTION>


FOR INFORMATION CONCERNING FIRST BANKS, PLEASE CONTACT:

<S>           <C>                                                       <C>
              Allen H. Blake                                            Terrance M. McCarthy
              President, Chief Executive Officer                        Senior Executive Vice President
                and Chief Financial Officer                               and Chief Operating Officer
              600 James S. McDonnell Boulevard                          600 James S. McDonnell Boulevard
              Mail Code - M1-199-014                                    Mail Code - M1-199-071
              Hazelwood, Missouri 63042                                 Hazelwood, Missouri 63042
              Telephone - (314) 592-5000                                Telephone - (314) 592-5000
              www.firstbanks.com                                        www.firstbanks.com


TRANSFER AGENTS:

                       FBNKN and FBNKM                                                FBSPrA
                       ---------------                                                ------

              U. S. Bank Corporate Trust Services                       Computershare Investor Services, LLC
              One Federal Street, Third Floor                           2 North LaSalle Street
              Boston, Massachusetts 02110                               Chicago, Illinois 60602
              Telephone - (800) 934-6802                                Telephone - (312) 588-4990
              www.usbank.com                                            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, Chief Executive Officer and
                                      Chief Financial Officer
                                      (Principal Executive Officer and Principal
                                      Financial and Accounting Officer)

Date:    March 25, 2005

         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.
<TABLE>
<CAPTION>

            Signatures                                          Title                              Date
-------------------------------------------------------------------------------------------------------------------

<S>                                                             <C>                          <C>
       /s/ James F. Dierberg                                    Director                     March 25, 2005
       -------------------------------------
           James F. Dierberg

       /s/ Allen H. Blake                                       Director                     March 25, 2005
       -------------------------------------
           Allen H. Blake

       /s/ Terrance M. McCarthy                                 Director                     March 25, 2005
       -------------------------------------
           Terrance M. McCarthy

       /s/ Steven F. Schepman                                   Director                     March 25, 2005
       -------------------------------------
           Steven F. Schepman

       /s/ Gordon A. Gundaker                                   Director                     March 25, 2005
       -------------------------------------
           Gordon A. Gundaker

       /s/ David L. Steward                                     Director                     March 25, 2005
       -------------------------------------
           David L. Steward

       /s/ Hal J. Upbin                                         Director                     March 25, 2005
       -------------------------------------
           Hal J. Upbin

       /s/ Douglas H. Yaeger                                    Director                     March 25, 2005
       -------------------------------------
           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  dated  October  19,  2000
         (relating to First Preferred  Capital Trust II ("First  Preferred II"))
         (filed as Exhibit 4.8 to the Company's  Registration  Statement on Form
         S-2, File No. 333-46270, dated September 20, 2000).

 4.2     Agreement as to Expenses and Liabilities  between First Banks, Inc. and
         First Preferred Capital Trust III, dated November 15, 2001 (relating to
         First Preferred  Capital Trust III ("First  Preferred  III")) (filed as
         Exhibit 4.8 to the Company's  Registration  Statement on Form S-2, File
         No. 333-71652, dated October 15, 2001).

 4.3     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).

 4.4     Preferred  Securities  Guarantee  Agreement by and between First Banks,
         Inc. and State Street Bank and Trust Company of  Connecticut,  National
         Association,  dated October 19, 2000  (relating to First  Preferred II)
         (filed as Exhibit 4.7 to the Company's  Registration  Statement on Form
         S-2, File No. 333-46270, dated September 20, 2000).

 4.5     Preferred  Securities  Guarantee  Agreement by and between First Banks,
         Inc. and State Street Bank and Trust Company of  Connecticut,  National
         Association,  dated November 15, 2001 (relating to First Preferred III)
         (filed as Exhibit 4.7 to the Company's  Registration  Statement on Form
         S-2, File No. 333-71652, dated October 15, 2001).

 4.6     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).

 4.7     Indenture  between  First  Banks,  Inc. and State Street Bank and Trust
         Company of Connecticut, National Association, as Trustee, dated October
         19, 2000 (relating to First  Preferred II) (filed as Exhibit 4.1 to the
         Company's Registration Statement on Form S-2, File No. 333-46270, dated
         September 20, 2000).

 4.8     Indenture  between  First  Banks,  Inc. and State Street Bank and Trust
         Company  of  Connecticut,   National  Association,  as  Trustee,  dated
         November 15, 2001  (relating to First  Preferred III) (filed as Exhibit
         4.1 to the  Company's  Registration  Statement  on Form  S-2,  File No.
         333-71652, dated October 15, 2001).

 4.9     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).

 4.10    Amended and  Restated  Trust  Agreement  among First  Banks,  Inc.,  as
         Depositor, State Street Bank and Trust Company of Connecticut, National
         Association, as Property Trustee, Wilmington Trust Company, as Delaware
         Trustee,  and the  Administrative  Trustees,  dated  October  19,  2000
         (relating to First Preferred II) (filed as Exhibit 4.5 to the Company's
         Registration Statement on Form S-2, File No. 333-46270, dated September
         20, 2000).

<PAGE>

 4.11    Amended and  Restated  Trust  Agreement  among First  Banks,  Inc.,  as
         Depositor, State Street Bank and Trust Company of Connecticut, National
         Association, as Property Trustee, Wilmington Trust Company, as Delaware
         Trustee,  and the  Administrative  Trustees,  dated  November  15, 2001
         (relating  to  First  Preferred  III)  (filed  as  Exhibit  4.5  to the
         Company's Registration Statement on Form S-2, File No. 333-71652, dated
         October 15, 2001).

 4.12    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).

 4.13    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).

 4.14    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).

 4.15    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).

 4.16    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).

 4.17    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).

 4.18    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).

 4.19    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).

 4.20    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).

 4.21    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).

 4.22    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).

 4.23    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).

 4.24    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).
<PAGE>

 4.25    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).

 4.26    Indenture  between First Banks,  Inc., as Issuer,  and Wilmington Trust
         Company, as Trustee, dated as of September 20, 2004 - filed herewith.

 4.27    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 -
         filed herewith.

 4.28    Guarantee  Agreement by and between  First Banks,  Inc. and  Wilmington
         Trust Company, dated as of September 20, 2004 - filed herewith.

 4.29    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 -
         filed herewith.

 4.30    Floating  Rate Junior  Subordinated  Deferrable  Interest  Debenture of
         First Banks, Inc., dated as of September 20, 2004 - filed herewith.

 4.31    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 - filed herewith.

 4.32    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 - filed herewith.

 4.33    Capital  Securities  Certificate  P-1 of First Bank Statutory Trust II,
         dated September 20, 2004 - filed herewith.

 4.34    Capital  Securities  Certificate  P-2 of First Bank Statutory Trust II,
         dated September 20, 2004 - filed herewith.

 4.35    Indenture  between First Banks,  Inc., as Issuer,  and Wilmington Trust
         Company, as Trustee, dated as of November 23, 2004 - filed herewith.

 4.36    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 -
         filed herewith.

 4.37    Guarantee  Agreement by and between  First Banks,  Inc. and  Wilmington
         Trust Company, dated as of November 23, 2004 - filed herewith.

 4.38    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 -
         filed herewith.

 4.39    Floating  Rate Junior  Subordinated  Deferrable  Interest  Debenture of
         First Banks, Inc., dated as of November 23, 2004 - filed herewith.

 4.40    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 - filed herewith.

 4.41    Capital  Securities  Certificate P-1 of First Bank Statutory Trust III,
         dated November 23, 2004 - 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).
<PAGE>

 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    Secured  Credit  Agreement  ($60,000,000  Revolving  Loan  Facility and
         $20,000,000  Letter of Credit  Facility),  dated as of August 14, 2003,
         among First Banks, Inc. and Wells Fargo Bank, National Association,  as
         Agent, Bank One, 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  10.27 to the Company's  Quarterly  Report on Form 10-Q for the
         quarter ended September 30, 2003).

 10.4    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).

 10.5    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).

 10.6    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).

 10.7    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).

 10.8    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).

 10.9    First Amendment to Secured Credit Agreement ($75,000,000 Revolving Loan
         Facility and $25,000,000 Letter of Credit Facility), dated as of August
         12, 2004, by and among First Banks, Inc. and Wells Fargo Bank, National
         Association,   as  Agent,   Bank  One,  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  10.1 to the  Company's
         Quarterly  Report  on Form 10-Q for the  quarter  ended  September  30,
         2004).

 10.10*  First  Banks,  Inc.    Executive  Incentive  Compensation  Plan - filed
         herewith.

 10.11*  First Banks,  Inc.  Nonqualified   Deferred  Compensation  Plan - filed
         herewith.

 10.12*  First Amendment to First Banks, Inc. Nonqualified Deferred Compensation
         Plan - filed herewith.

 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      Rule 13a-14(a) / 15d -14(a) Certifications - filed herewith.

 32      Section 1350 Certifications - filed herewith.

*    Exhibits  designated  by  an  asterisk  in the Index to Exhibits  relate to
     management contracts and/or compensatory plans or arrangements.
<PAGE>
                                                                    Exhibit 4.26





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


                               FIRST BANKS, INC.,
                                    as Issuer






                                    INDENTURE
                         Dated as of September 20, 2004



                            WILMINGTON TRUST COMPANY,
                                   as Trustee




        FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES


                                    DUE 2034

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


<PAGE>
<TABLE>
<CAPTION>



                                TABLE OF CONTENTS
                                -----------------
                                                                                                                Page
                                                                                                                ----

<S>                                                                                                              <C>
ARTICLE I. DEFINITIONS............................................................................................1

         Section 1.1.      Definitions............................................................................1

ARTICLE II. DEBENTURES............................................................................................8

         Section 2.1.      Authentication and Dating..............................................................8
         Section 2.2.      Form of Trustee's Certificate of Authentication........................................8
         Section 2.3.      Form and Denomination of Debentures....................................................9
         Section 2.4.      Execution of Debentures................................................................9
         Section 2.5.      Exchange and Registration of Transfer of Debentures....................................9
         Section 2.6.      Mutilated, Destroyed, Lost or Stolen Debentures.......................................11
         Section 2.7.      Temporary Debentures..................................................................12
         Section 2.8.      Payment of Interest and Additional Interest...........................................12
         Section 2.9.      Cancellation of Debentures Paid, etc..................................................13
         Section 2.10.     Computation of Interest...............................................................14
         Section 2.11.     Extension of Interest Payment Period..................................................15
         Section 2.12.     CUSIP Numbers.........................................................................16

ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY.................................................................16

         Section 3.1.      Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures........16
         Section 3.2.      Offices for Notices and Payments, etc.................................................17
         Section 3.3.      Appointments to Fill Vacancies in Trustee's Office....................................17
         Section 3.4.      Provision as to Paying Agent..........................................................17
         Section 3.5.      Certificate to Trustee................................................................18
         Section 3.6.      Additional Sums.......................................................................18
         Section 3.7.      Compliance with Consolidation Provisions..............................................19
         Section 3.8.      Limitation on Dividends...............................................................19
         Section 3.9.      Covenants as to the Trust.............................................................19
         Section 3.10.     Additional Junior Indebtedness........................................................20

ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE....................................20

         Section 4.1.      Securityholders' Lists................................................................20
         Section 4.2.      Preservation and Disclosure of Lists..................................................20

ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT..................................21

         Section 5.1.      Events of Default.....................................................................21
         Section 5.2.      Payment of Debentures on Default; Suit Therefor.......................................23
         Section 5.3.      Application of Moneys Collected by Trustee............................................24
         Section 5.4.      Proceedings by Securityholders........................................................24
         Section 5.5.      Proceedings by Trustee................................................................25
         Section 5.6.      Remedies Cumulative and Continuing; Delay or Omission Not a Waiver....................25
         Section 5.7.      Direction of Proceedings and Waiver of Defaults by Majority of Securityholders........25
         Section 5.8.      Notice of Defaults....................................................................26
         Section 5.9.      Undertaking to Pay Costs..............................................................26
<PAGE>

ARTICLE VI. CONCERNING THE TRUSTEE...............................................................................26

         Section 6.1.      Duties and Responsibilities of Trustee................................................26
         Section 6.2.      Reliance on Documents, Opinions, etc..................................................27
         Section 6.3.      No Responsibility for Recitals, etc...................................................28
         Section 6.4.      Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
                           Registrar May Own Debentures........................................................  28
         Section 6.5.      Moneys to be Held in Trust............................................................29
         Section 6.6.      Compensation and Expenses of Trustee..................................................29
         Section 6.7.      Officers' Certificate as Evidence.....................................................29
         Section 6.8.      Eligibility of Trustee................................................................30
         Section 6.9.      Resignation or Removal of Trustee.....................................................30
         Section 6.10.     Acceptance by Successor Trustee.......................................................31
         Section 6.11.     Succession by Merger, etc.............................................................32
         Section 6.12.     Authenticating Agents.................................................................32

ARTICLE VII. CONCERNING THE SECURITYHOLDERS......................................................................33

         Section 7.1.      Action by Securityholders.............................................................33
         Section 7.2.      Proof of Execution by Securityholders.................................................33
         Section 7.3.      Who Are Deemed Absolute Owners........................................................34
         Section 7.4.      Debentures Owned by Company Deemed Not Outstanding....................................34
         Section 7.5.      Revocation of Consents; Future Holders Bound..........................................34

ARTICLE VIII. SECURITYHOLDERS' MEETINGS..........................................................................34

         Section 8.1.      Purposes of Meetings..................................................................34
         Section 8.2.      Call of Meetings by Trustee...........................................................35
         Section 8.3.      Call of Meetings by Company or Securityholders........................................35
         Section 8.4.      Qualifications for Voting.............................................................35
         Section 8.5.      Regulations...........................................................................35
         Section 8.6.      Voting................................................................................36
         Section 8.7.      Quorum; Actions.......................................................................36

ARTICLE IX. SUPPLEMENTAL INDENTURES..............................................................................37

         Section 9.1.      Supplemental Indentures without Consent of Securityholders............................37
         Section 9.2.      Supplemental Indentures with Consent of Securityholders...............................38
         Section 9.3.      Effect of Supplemental Indentures.....................................................39
         Section 9.4.      Notation on Debentures................................................................39
         Section 9.5.      Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee...........39

ARTICLE X. REDEMPTION OF SECURITIES..............................................................................39

         Section 10.1.     Optional Redemption...................................................................39
         Section 10.2.     Special Event Redemption..............................................................39
         Section 10.3.     Notice of Redemption; Selection of Debentures.........................................40
         Section 10.4.     Payment of Debentures Called for Redemption...........................................40
<PAGE>

ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE....................................................40

         Section 11.1.     Company May Consolidate, etc., on Certain Terms.......................................41
         Section 11.2.     Successor Entity to be Substituted....................................................41
         Section 11.3.     Opinion of Counsel to be Given to Trustee.............................................41

ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE.............................................................41

         Section 12.1.     Discharge of Indenture................................................................41
         Section 12.2.     Deposited Moneys to be Held in Trust by Trustee.......................................42
         Section 12.3.     Paying Agent to Repay Moneys Held.....................................................42
         Section 12.4.     Return of Unclaimed Moneys............................................................42

ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................................43

         Section 13.1.     Indenture and Debentures Solely Corporate Obligations.................................43

ARTICLE XIV. MISCELLANEOUS PROVISIONS............................................................................43

         Section 14.1.     Successors............................................................................43
         Section 14.2.     Official Acts by Successor Entity.....................................................43
         Section 14.3.     Surrender of Company Powers...........................................................43
         Section 14.4.     Addresses for Notices, etc............................................................43
         Section 14.5.     Governing Law.........................................................................43
         Section 14.6.     Evidence of Compliance with Conditions Precedent......................................44
         Section 14.7.     Table of Contents, Headings, etc......................................................44
         Section 14.8.     Execution in Counterparts.............................................................44
         Section 14.9.     Separability..........................................................................44
         Section 14.10.    Assignment............................................................................44
         Section 14.11.    Acknowledgment of Rights..............................................................44

ARTICLE XV. SUBORDINATION OF DEBENTURES..........................................................................45

         Section 15.1.     Agreement to Subordinate..............................................................45
         Section 15.2.     Default on Senior Indebtedness........................................................45
         Section 15.3.     Liquidation, Dissolution, Bankruptcy..................................................45
         Section 15.4.     Subrogation...........................................................................46
         Section 15.5.     Trustee to Effectuate Subordination...................................................47
         Section 15.6.     Notice by the Company.................................................................47
         Section 15.7.     Rights of the Trustee; Holders of Senior Indebtedness.................................48
         Section 15.8.     Subordination May Not Be Impaired.....................................................48

Exhibit A         Form of Floating Rate Junior Subordinated Deferrable Interest Debenture
</TABLE>


<PAGE>


         THIS  INDENTURE,  dated as of September 20, 2004,  between First Banks,
Inc., a Missouri  corporation (the "Company"),  and Wilmington Trust Company,  a
                                    -------
Delaware banking corporation, as debenture trustee (the "Trustee").
                                                         -------

                                   WITNESSETH:

         WHEREAS,  for its  lawful  corporate  purposes,  the  Company  has duly
authorized  the issuance of its  Floating  Rate Junior  Subordinated  Deferrable
Interest Debentures due 2034 (the "Debentures") under this Indenture to provide,
                                   ----------
among  other  things,  for  the  execution  and  authentication,   delivery  and
administration  thereof,  and the Company has duly  authorized  the execution of
this Indenture; and

         WHEREAS,  all acts and things  necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;

         NOW, THEREFORE, This Indenture Witnesseth:

         In consideration of the premises, and the purchase of the Debentures by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Debentures as follows:

                                    ARTICLE I.
                                   DEFINITIONS
                                   -----------

         Section 1.1.   Definitions.  The  terms  defined  in  this  Section 1.1
                        -----------
(except  as  herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this  Indenture and of any indenture  supplemental
hereto  shall have the  respective  meanings  specified in this Section 1.1. All
accounting  terms used herein and not expressly  defined shall have the meanings
assigned  to  such  terms  in  accordance  with  generally  accepted  accounting
principles and the term "generally  accepted  accounting  principles" means such
accounting principles as are generally accepted in the United States at the time
of any computation. The words "herein," "hereof" and "hereunder" and other words
of similar  import refer to this  Indenture as a whole and not to any particular
Article, Section or other subdivision.

         "Additional Interest" has the meaning set forth in Section 2.11.
          -------------------

         "Additional Junior  Indebtedness"  means, without duplication and other
          -------------------------------
than  the  Debentures,  any  indebtedness,  liabilities  or  obligations  of the
Company, or any Subsidiary of the Company,  under debt securities (or guarantees
in respect of debt securities) initially issued after the date of this Indenture
to any trust,  or a trustee of a trust,  partnership or other entity  affiliated
with the Company that is, directly or indirectly,  a finance subsidiary (as such
term is defined in Rule 3a-5 under the Investment  Company Act of 1940) or other
financing  vehicle of the Company or any Subsidiary of the Company in connection
with the issuance by that entity of  preferred  securities  or other  securities
that  are  eligible  to  qualify  for  Tier 1  capital  treatment  (or its  then
equivalent)  for  purposes of the  capital  adequacy  guidelines  of the Federal
Reserve,  as then in effect and applicable to the Company (or, if the Company is
not a bank holding  company,  such  guidelines  applied to the Company as if the
Company were subject to such guidelines);  provided, however, that the inability
                                           --------  -------
of the Company to treat all or any portion of the Additional Junior Indebtedness
as Tier 1 capital shall not disqualify it as Additional  Junior  Indebtedness if
such  inability  results from the Company  having  cumulative  preferred  stock,
minority interests in consolidated subsidiaries,  or any other class of security
or interest which the Federal Reserve now or may hereafter accord Tier 1 capital
treatment  (including the  Debentures) in excess of the amount which may qualify
for treatment as Tier 1 capital under applicable capital adequacy guidelines.

         "Additional Sums" has the meaning set forth in Section 3.6.
          ---------------
<PAGE>

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
          ---------
the Securities Act or any successor rule thereunder.

         "Authenticating  Agent" means any agent or agents of the Trustee  which
          ---------------------
at the time shall be appointed and acting pursuant to Section 6.12.

         "Bankruptcy Law" means  Title  11, U.S. Code, or any similar federal or
          --------------
 state law for the relief of debtors.

         "Board of  Directors"  means the board of  directors  or the  executive
          -------------------
committee or any other duly authorized designated officers of the Company.

         "Board  Resolution"  means  a copy  of a  resolution  certified  by the
          -----------------
Secretary or an Assistant  Secretary of the Company to have been duly adopted by
the Board of  Directors  and to be in full  force and effect on the date of such
certification and delivered to the Trustee.

         "Business Day" means any day other than a Saturday, Sunday or any other
          ------------
day on which banking  institutions in New York City or Wilmington,  Delaware are
permitted or required by any applicable law or executive order to close.

         "Capital Securities" means undivided beneficial interests in the assets
          ------------------
of the Trust which rank pari passu with Common  Securities  issued by the Trust;
provided,  however,  that upon the  occurrence  and  continuance  of an Event of
--------   -------
Default  (as defined in the  Declaration),  the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption  and  otherwise  are  subordinated  to the  rights of holders of such
Capital Securities.

         "Capital  Securities  Guarantee" means the guarantee agreement that the
          ------------------------------
Company enters into with  Wilmington  Trust Company,  as guarantee  trustee,  or
other Persons that operates directly or indirectly for the benefit of holders of
Capital Securities of the Trust.

         "Capital  Treatment  Event"  means the  receipt by the  Company and the
          -------------------------
Trust of an opinion of counsel  experienced  in such matters to the effect that,
as a result of the  occurrence  of any amendment  to, or change  (including  any
announced  prospective  change) in, the laws, rules or regulations of the United
States or any political  subdivision thereof or therein, or as the result of any
official or administrative  pronouncement or action or decision  interpreting or
applying such laws, rules or regulations, which amendment or change is effective
or which pronouncement,  action or decision is announced on or after the date of
original  issuance of the Debentures,  there is more than an insubstantial  risk
that the  Company  will  not,  within  90 days of the date of such  opinion,  be
entitled to treat an amount  equal to the  aggregate  liquidation  amount of the
Capital  Securities as "Tier 1 Capital" (or its then equivalent) for purposes of
the capital adequacy  guidelines of the Federal  Reserve,  as then in effect and
applicable to the Company (or if the Company is not a bank holding company, such
guidelines  applied  to the  Company  as if the  Company  were  subject  to such
guidelines);  provided,  however, that the inability of the Company to treat all
              --------   -------
or any portion of the  liquidation  amount of the Capital  Securities  as Tier l
Capital shall not constitute the basis for a Capital  Treatment  Event,  if such
inability results from the Company having cumulative  preferred stock,  minority
interests  in  consolidated  subsidiaries,  or any other  class of  security  or
interest which the Federal  Reserve or OTS, as applicable,  may now or hereafter
accord  Tier 1  Capital  treatment  in  excess  of the  amount  which may now or
hereafter  qualify for  treatment  as Tier 1 Capital  under  applicable  capital
adequacy  guidelines;  provided  further,  however,  that  the  distribution  of
                       --------  -------   -------
Debentures in connection  with the  liquidation of the Trust shall not in and of
itself  constitute a Capital  Treatment Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.
<PAGE>

         "Certificate"  means a  certificate  signed by any one of the principal
          -----------
executive officer,  the principal financial officer or the principal  accounting
officer of the Company.

         "Common Securities" means undivided  beneficial interests in the assets
          -----------------
of the Trust which rank pari passu with Capital  Securities issued by the Trust;
provided,  however,  that upon the  occurrence  and  continuance  of an Event of
--------   -------
Default  (as defined in the  Declaration),  the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption  and  otherwise  are  subordinated  to the  rights of holders of such
Capital Securities.

         "Company" means First Banks, Inc., a Missouri corporation, and, subject
          -------
to the provisions of Article XI, shall include its successors and assigns.

         "Coupon Rate" has the meaning set forth in Section 2.8.
          -----------

         "Debenture" or "Debentures" has the meaning stated in the first recital
          ---------      ----------
of this Indenture.

         "Debenture Register" has the meaning specified in Section 2.5.
          ------------------

         "Declaration"  means the Amended and Restated  Declaration  of Trust of
          -----------
the Trust, as amended or supplemented from time to time.

         "Default"  means any event,  act or condition that with notice or lapse
          -------
of time, or both, would constitute an Event of Default.

         "Defaulted Interest" has the meaning set forth in Section 2.8.
          ------------------

         "Distribution  Period"  means (i) with respect to interest  paid on the
          --------------------
first Interest Payment Date, the period beginning on (and including) the date of
original  issuance and ending on (but  excluding)  the Interest  Payment Date in
December  2004  and (ii)  thereafter,  with  respect  to  interest  paid on each
successive  Interest  Payment Date, the period  beginning on (and including) the
preceding  Interest  Payment  Date and ending on (but  excluding)  such  current
Interest Payment Date.

         "Determination Date" has the meaning set forth in Section 2.10.
          ------------------

         "Event of Default" means any event specified in Section 5.1,  continued
          ----------------
for the  period of time,  if any,  and after the giving of the  notice,  if any,
therein designated.

         "Extension  Event of Default"  means an Event of Default  under Section
          ---------------------------
5.1(a),  (d) or (e), whatever the reason for such Extension Event of Default and
whether it shall be voluntary or  involuntary or be effected by operation of law
or pursuant to any judgment,  decree or order of any court or any order, rule or
regulation of any administrative or governmental body.

         "Extension Period" has the meaning set forth in Section 2.11.
          ----------------

         "Federal  Reserve" means the Board of Governors of the Federal  Reserve
          ----------------
System,  or its  designated  district  bank,  as  applicable,  and any successor
federal  agency that is primarily  responsible  for regulating the activities of
bank holding companies.

         "Indenture" means this instrument as originally executed or, if amended
          ---------
or supplemented as herein provided, as so amended or supplemented, or both.

         "Institutional Trustee" has the meaning set forth in the Declaration.
          ---------------------
<PAGE>

         "Interest  Payment  Date"  means March 20,  June 20,  September  20 and
          -----------------------
December  20 of each year during the term of this  Indenture,  or if such day is
not a  Business  Day,  then the next  succeeding  Business  Day,  commencing  in
December 2004.

         "Interest  Rate" means for the  Distribution  Period  beginning on (and
          --------------
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest  Payment Date in December 2004 the rate per annum of 3.92438%,  and for
each  Distribution  Period  beginning on or after the  Interest  Payment Date in
December 2004, the Coupon Rate for such Distribution Period.

         "Investment  Company  Event"  means the  receipt by the Company and the
          --------------------------
Trust of an opinion of counsel  experienced  in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or written change
(including any announced prospective change) in interpretation or application of
law or  regulation  by any  legislative  body,  court,  governmental  agency  or
regulatory authority, there is more than an insubstantial risk that the Trust is
or, within 90 days of the date of such opinion will be considered an "investment
company" that is required to be registered  under the Investment  Company Act of
1940, as amended which change or prospective  change becomes  effective or would
become  effective,  as the case may be, on or after the date of the  issuance of
the Debentures.

         "Liquidation  Amount"  means the stated  amount of $1,000.00  per Trust
          -------------------
Security.

         "Maturity Date" means September 20, 2034.
          -------------

         "Officers'  Certificate"  means a certificate signed by the Chairman of
          ----------------------
the Board, the Chief Executive Officer,  the Vice Chairman,  the President,  any
Managing  Director or any Vice  President,  and by the  Treasurer,  an Assistant
Treasurer,  the  Comptroller,  an  Assistant  Comptroller,  the  Secretary or an
Assistant  Secretary of the  Company,  and  delivered to the Trustee.  Each such
certificate shall include the statements  provided for in Section 14.6 if and to
the extent required by the provisions of such Section.

         "Opinion  of  Counsel"  means an  opinion  in  writing  signed by legal
          --------------------
counsel,  who may be an employee of or counsel to the  Company,  or may be other
counsel reasonably  satisfactory to the Trustee. Each such opinion shall include
the statements provided for in Section 14.6 if and to the extent required by the
provisions of such Section.

         "OTS" means the Office of Thrift  Supervision and any successor federal
          ---
agency that is primarily  responsible  for  regulating the activities of savings
and loan holding companies.

         The term "outstanding," when used with reference to Debentures,  means,
                   -----------
subject to the  provisions  of  Section  7.4,  as of any  particular  time,  all
Debentures  authenticated  and  delivered  by the Trustee or the  Authenticating
Agent under this Indenture, except:

         (a)   Debentures   theretofore   canceled   by  the   Trustee   or  the
Authenticating Agent or delivered to the Trustee for cancellation;

         (b) Debentures,  or portions thereof,  for the payment or redemption of
which moneys in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and  segregated  in trust by the Company (if the Company  shall act as its
own paying agent);  provided,  however,  that, if such  Debentures,  or portions
                    --------   -------
thereof, are to be redeemed prior to maturity thereof, notice of such redemption
shall have been given as provided in Section 10.3 or provision  satisfactory  to
the Trustee shall have been made for giving such notice; and

         (c)  Debentures  paid  pursuant  to  Section  2.6 or in  lieu  of or in
substitution  for which  other  Debentures  shall  have been  authenticated  and
delivered  pursuant to the terms of Section 2.6 unless proof satisfactory to the
Company and the Trustee is presented  that any such  Debentures are held by bona
fide holders in due course.
<PAGE>

         "Person" means any individual,  corporation, limited liability company,
          ------
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         "Predecessor Security" of any particular Debenture means every previous
          --------------------
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular  Debenture;  and,  for  purposes of this  definition,  any  Debenture
authenticated  and delivered  under Section 2.6 in lieu of a lost,  destroyed or
stolen  Debenture  shall  be  deemed  to  evidence  the same  debt as the  lost,
destroyed or stolen Debenture.

         "Principal  Office of the Trustee," or other  similar  term,  means the
          --------------------------------
office of the  Trustee,  at which at any  particular  time its  corporate  trust
business shall be principally  administered,  which at the time of the execution
of this  Indenture  shall be Rodney  Square  North,  1100 North  Market  Street,
Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.

         "Redemption Date" has the meaning set forth in Section 10.1.
          ---------------

         "Redemption Price" means 100% of the principal amount of the Debentures
          ----------------
being  redeemed,  plus accrued and unpaid  interest  (including  any  Additional
Interest) on such Debentures to the Redemption Date.

         "Responsible  Officer" means, with respect to the Trustee,  any officer
          --------------------
within the Principal Office of the Trustee,  including any  vice-president,  any
assistant vice-president, any secretary, any assistant secretary, the treasurer,
any  assistant  treasurer,  any trust  officer or other officer of the Principal
Trust Office of the Trustee  customarily  performing  functions similar to those
performed by any of the above designated  officers and also means,  with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred  because  of that  officer's  knowledge  of and  familiarity  with  the
particular subject.

         "Securities Act" means the Securities Act of 1933, as amended from time
          --------------
to time or any successor legislation.

         "Securityholder," "holder of Debentures," or other similar terms, means
          --------------
any Person in whose name at the time a particular Debenture is registered on the
register kept by the Company or the Trustee for that purpose in accordance  with
the terms hereof.

         "Senior  Indebtedness"  means,  with  respect to the  Company,  (i) the
          --------------------
principal,  premium,  if any, and interest in respect of (A) indebtedness of the
Company for all borrowed and purchased money and (B)  indebtedness  evidenced by
securities,  debentures, notes, bonds or other similar instruments issued by the
Company;  (ii)  all  capital  lease  obligations  of  the  Company;   (iii)  all
obligations of the Company  issued or assumed as the deferred  purchase price of
property, all conditional sale obligations of the Company and all obligations of
the Company under any title  retention  agreement;  (iv) all  obligations of the
Company for the reimbursement of any letter of credit, any banker's  acceptance,
any security purchase facility, any repurchase agreement or similar arrangement,
any interest rate swap,  any other hedging  arrangement,  any  obligation  under
options or any similar credit or other  transaction;  (v) all obligations of the
Company  associated  with  derivative  products  such as  interest  and  foreign
exchange rate contracts, commodity contracts, and similar arrangements; (vi) all
obligations  of the type  referred  to in clauses (i) through (v) above of other
Persons  for the  payment  of which  the  Company  is  responsible  or liable as
obligor,   guarantor  or  otherwise  including,   without  limitation,   similar
obligations   arising  from  off-balance  sheet  guarantees  and  direct  credit
substitutes;  and (vii) all  obligations  of the type referred to in clauses (i)

<PAGE>

through (vi) above of other Persons secured by any lien on any property or asset
of the  Company  (whether  or not such  obligation  is assumed by the  Company),
whether  incurred  on or  prior  to the  date of this  Indenture  or  thereafter
incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include
(1) any Additional Junior  Indebtedness,  (2) Debentures issued pursuant to this
Indenture  and  guarantees  in respect of such  Debentures,  (3) trade  accounts
payable of the Company  arising in the ordinary  course of business  (such trade
accounts payable being pari passu in right of payment to the Debentures), or (4)
obligations  with respect to which (a) in the instrument  creating or evidencing
the same or pursuant to which the same is outstanding,  it is provided that such
obligations are pari passu, junior or otherwise not superior in right of payment
to the  Debentures  and (b) the  Company,  prior to the  issuance  thereof,  has
notified  (and,  if  then  required  under  the  applicable  guidelines  of  the
regulating  entity,  has  received  approval  from) the Federal  Reserve (if the
Company is a bank  holding  company) or the OTS (if the Company is a savings and
loan  holding  company).   Senior  Indebtedness  shall  continue  to  be  Senior
Indebtedness and be entitled to the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.

         "Special Event" means any of a Capital  Treatment  Event, an Investment
          -------------
Company Event or a Tax Event.

         "Special Redemption Date" has the meaning set forth in Section 10.2.
          -----------------------

         "Special  Redemption  Price" means the price set forth in the following
          --------------------------
table for any Special  Redemption  Date that occurs on the date indicated  below
(or if such day is not a Business Day, then the next  succeeding  Business Day),
expressed as the  percentage of the  principal  amount of the  Debentures  being
redeemed:

----------------------------------------- --------------------------------------
          Month in which Special                 Special Redemption Price
          ----------------------                 ------------------------
          Redemption Date Occurs
          ----------------------
----------------------------------------- --------------------------------------
             December 2004                               104.625%
----------------------------------------- --------------------------------------
               March 2005                                104.300%
----------------------------------------- --------------------------------------
               June 2005                                 104.000%
----------------------------------------- --------------------------------------
             September 2005                              103.650%
----------------------------------------- --------------------------------------
             December 2005                               103.350%
----------------------------------------- --------------------------------------
               March 2006                                103.000%
----------------------------------------- --------------------------------------
               June 2006                                 102.700%
----------------------------------------- --------------------------------------
             September 2006                              102.350%
----------------------------------------- --------------------------------------
             December 2006                               102.050%
----------------------------------------- --------------------------------------
               March 2007                                101.700%
----------------------------------------- --------------------------------------
               June 2007                                 101.400%
----------------------------------------- --------------------------------------
             September 2007                              101.050%
----------------------------------------- --------------------------------------
             December 2007                               100.750%
----------------------------------------- --------------------------------------
               March 2008                                100.450%
----------------------------------------- --------------------------------------
               June 2008                                 100.200%
----------------------------------------- --------------------------------------
     September 2008 and thereafter                       100.000%
----------------------------------------- --------------------------------------

plus,  in each case,  accrued  and unpaid  interest  (including  any  Additional
Interest) on such Debentures to the Special Redemption Date.
<PAGE>
         "Subsidiary"  means with respect to any Person,  (i) any corporation at
          ----------
least a majority of the outstanding voting stock of which is owned,  directly or
indirectly,  by such  Person or by one or more of its  Subsidiaries,  or by such
Person and one or more of its Subsidiaries,  (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar  interests of which shall at the time be owned by such Person, or by one
or  more  of  its  Subsidiaries,  or by  such  Person  and  one or  more  of its
Subsidiaries  and (iii) any limited  partnership  of which such Person or any of
its  Subsidiaries  is a general  partner.  For the purposes of this  definition,
"voting stock" means shares,  interests,  participations or other equivalents in
the equity interest  (however  designated) in such Person having ordinary voting
power for the election of a majority of the  directors  (or the  equivalent)  of
such Person, other than shares,  interests,  participations or other equivalents
having such power only by reason of the occurrence of a contingency.

         "Tax  Event"  means  the  receipt  by the  Company  and the Trust of an
          ----------
opinion of counsel  experienced  in such matters to the effect that, as a result
of any amendment to or change  (including any announced  prospective  change) in
the laws or any  regulations  thereunder  of the United  States or any political
subdivision  or  taxing  authority  thereof  or  therein,  or as a result of any
official  administrative  pronouncement  (including  any private  letter ruling,
technical advice memorandum,  field service advice, regulatory procedure, notice
or  announcement,  including any notice or  announcement of intent to adopt such
procedures or regulations)  (an  "Administrative  Action") or judicial  decision
                                  ----------------------
interpreting  or applying such laws or  regulations,  regardless of whether such
Administrative  Action or judicial decision is issued to or in connection with a
proceeding  involving  the  Company or the Trust and  whether or not  subject to
review or appeal, which amendment, clarification,  change, Administrative Action
or decision is enacted,  promulgated or announced,  in each case on or after the
date of original issuance of the Debentures, there is more than an insubstantial
risk  that:  (i) the  Trust  is,  or will be  within 90 days of the date of such
opinion,  subject to United  States  federal  income tax with  respect to income
received or accrued on the Debentures;  (ii) interest  payable by the Company on
the  Debentures is not, or within 90 days of the date of such opinion,  will not
be,  deductible by the Company,  in whole or in part,  for United States federal
income  tax  purposes;  or (iii)  the Trust is, or will be within 90 days of the
date of such opinion,  subject to more than a de minimis  amount of other taxes,
duties or other governmental charges.

         "3-Month LIBOR" has the meaning set forth in Section 2.10.
          -------------

         "Telerate Page 3750" has the meaning set forth in Section 2.10.
          ------------------

         "Trust" shall mean First Bank Statutory Trust II, a Delaware  statutory
          -----
trust,  or any other similar  trust  created for the purpose of issuing  Capital
Securities in connection  with the issuance of Debentures  under this Indenture,
of which the Company is the sponsor.

         "Trust  Securities" means Common  Securities and Capital  Securities of
the Trust. ----------------

         "Trustee"  means  Wilmington   Trust  Company,   and,  subject  to  the
          -------
provisions of Article VI hereof,  shall also include its  successors and assigns
as Trustee hereunder.
<PAGE>

                                   ARTICLE II.
                                   DEBENTURES
                                   ----------

         Section 2.1.   Authentication   and   Dating. Upon  the  execution  and
                        -----------------------------
delivery of this Indenture,  or from time to time  thereafter,  Debentures in an
aggregate  principal amount not in excess of $20,619,000.00  may be executed and
delivered  by the Company to the Trustee for  authentication,  and the  Trustee,
upon receipt of a written authentication order from the Company, shall thereupon
authenticate  and make  available  for delivery  said  Debentures to or upon the
written order of the Company,  signed by its Chairman of the Board of Directors,
Chief  Executive  Officer,  Vice Chairman,  the  President,  one of its Managing
Directors  or one of its Vice  Presidents  without  any  further  action  by the
Company  hereunder.  Notwithstanding  anything to the contrary contained herein,
the  Trustee  shall be  fully  protected  in  relying  upon  the  aforementioned
authentication  order and written order in  authenticating  and delivering  said
Debentures.  In  authenticating  such  Debentures,  and accepting the additional
responsibilities  under this  Indenture  in  relation  to such  Debentures,  the
Trustee  shall be  entitled to receive,  and  (subject to Section  6.1) shall be
fully protected in relying upon:

         (a) a copy  of any  Board  Resolution  or  Board  Resolutions  relating
thereto and, if applicable,  an appropriate  record of any action taken pursuant
to such  resolution,  in each case  certified  by the  Secretary or an Assistant
Secretary of the Company, as the case may be; and

         (b) an Opinion of Counsel  prepared in  accordance  with  Section  14.6
which shall also state:

               (1) that such Debentures, when authenticated and delivered by the
         Trustee  and  issued by  the  Company  in each case in the  manner  and
         subject  to any conditions  specified in such Opinion of Counsel,  will
         constitute  valid  and  legally  binding  obligations  of the  Company,
         subject   to  or  limited   by   applicable   bankruptcy,   insolvency,
         reorganization,  conservatorship,  receivership,  moratorium and  other
         statutory  or  decisional  laws  relating to  or  affecting  creditors'
         rights or the  reorganization  of  financial  institutions  (including,
         without limitation,  preference  and fraudulent  conveyance or transfer
         laws),  heretofore  or  hereafter  enacted or in effect,  affecting the
         rights of creditors generally; and

               (2) that all laws and  requirements  in respect of the  execution
         and  delivery by the Company of the Debentures  have been complied with
         and  that  authentication and delivery of the Debentures by the Trustee
         will  not violate the terms of this Indenture.

         The Trustee shall have the right to decline to authenticate and deliver
any  Debentures  under this Section if the Trustee,  being advised in writing by
counsel,  determines  that  such  action  may  not  lawfully  be  taken  or if a
Responsible  Officer  of the  Trustee in good faith  shall  determine  that such
action would expose the Trustee to personal liability to existing holders.

         The definitive  Debentures  shall be typed,  printed,  lithographed  or
engraved on steel engraved  borders or may be produced in any other manner,  all
as determined by the officers  executing such Debentures,  as evidenced by their
execution of such Debentures.
<PAGE>

         Section 2.2.   Form  of  Trustee's Certificate  of Authentication.  The
                        ----------------------------------------------------
Trustee's   certificate  of   authentication  on  all  Debentures  shall  be  in
substantially the following form:

         This  is one  of the  Debentures  referred  to in the  within-mentioned
Indenture.

         WILMINGTON TRUST COMPANY, as Trustee

         By
           ---------------------------------------------------
         Authorized Signer

         Section 2.3.   Form  and  Denomination of Debentures.   The  Debentures
                        -------------------------------------
shall be substantially in the form of Exhibit A attached hereto.  The Debentures
shall  be in  registered,  certificated  form  without  coupons  and in  minimum
denominations  of $100,000.00  and any multiple of $1,000.00 in excess  thereof.
Any  attempted  transfer  of the  Debentures  in a  block  having  an  aggregate
principal amount of less than  $100,000.00  shall be deemed to be void and of no
legal effect whatsoever. Any such purported transferee shall be deemed not to be
a holder of such Debentures for any purpose,  including,  but not limited to the
receipt of payments on such Debentures,  and such purported  transferee shall be
deemed to have no interest  whatsoever in such Debentures.  The Debentures shall
be  numbered,  lettered,  or  otherwise  distinguished  in  such  manner  or  in
accordance with such plans as the officers executing the same may determine with
the  approval of the Trustee as evidenced by the  execution  and  authentication
thereof.

         Section 2.4.   Execution of Debentures.  The Debentures shall be signed
                        -----------------------
in the name and on behalf of the Company by the manual or facsimile signature of
its Chairman of the Board of Directors,  Chief Executive Officer, Vice Chairman,
President,  one  of  its  Managing  Directors  or  one  of  its  Executive  Vice
Presidents,  Senior Vice Presidents or Vice Presidents.  Only such Debentures as
shall bear thereon a certificate  of  authentication  substantially  in the form
herein before recited,  executed by the Trustee or the  Authenticating  Agent by
the manual signature of an authorized signer,  shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate by
the  Trustee or the  Authenticating  Agent upon any  Debenture  executed  by the
Company shall be conclusive  evidence  that the Debenture so  authenticated  has
been duly authenticated and delivered  hereunder and that the holder is entitled
to the benefits of this Indenture.

         In case any  officer of the  Company  who shall have  signed any of the
Debentures  shall cease to be such officer before the Debentures so signed shall
have been  authenticated  and  delivered  by the  Trustee or the  Authenticating
Agent,  or disposed  of by the  Company,  such  Debentures  nevertheless  may be
authenticated  and delivered or disposed of as though the Person who signed such
Debentures  had not ceased to be such officer of the Company;  and any Debenture
may be signed on behalf of the Company by such Persons as, at the actual date of
the execution of such  Debenture,  shall be the proper  officers of the Company,
although at the date of the execution of this  Indenture any such person was not
such an officer.

         Every Debenture shall be dated the date of its authentication.

         Section 2.5.   Exchange and Registration of Transfer of Debentures. The
                        ---------------------------------------------------
Company  shall  cause to be kept,  at the  office or agency  maintained  for the
purpose of registration of transfer and for exchange as provided in Section 3.2,
a register (the  "Debenture  Register") for the Debentures  issued  hereunder in
which, subject to such reasonable  regulations as it may prescribe,  the Company
shall  provide for the  registration  and transfer of all  Debentures as in this
Article II provided.  The Debenture  Register shall be in written form or in any
other form  capable of being  converted  into  written  form within a reasonable
time.
<PAGE>

         Debentures to be exchanged may be surrendered  at the Principal  Office
of the  Trustee or at any office or agency to be  maintained  by the Company for
such  purpose as provided in Section  3.2, and the Company  shall  execute,  the
Company or the Trustee  shall  register  and the  Trustee or the  Authenticating
Agent shall  authenticate  and make available for delivery in exchange  therefor
the Debenture or Debentures which the  Securityholder  making the exchange shall
be entitled to receive. Upon due presentment for registration of transfer of any
Debenture at the  Principal  Office of the Trustee or at any office or agency of
the Company  maintained for such purpose as provided in Section 3.2, the Company
shall execute,  the Company or the Trustee shall register and the Trustee or the
Authenticating  Agent shall  authenticate and make available for delivery in the
name of the  transferee or  transferees  a new  Debenture  for a like  aggregate
principal  amount.  Registration or registration of transfer of any Debenture by
the Trustee or by any agent of the Company  appointed  pursuant to Section  3.2,
and delivery of such Debenture,  shall be deemed to complete the registration or
registration of transfer of such Debenture.

         All Debentures  presented for  registration of transfer or for exchange
or  payment  shall  (if  so  required  by the  Company  or  the  Trustee  or the
Authenticating  Agent)  be duly  endorsed  by,  or be  accompanied  by a written
instrument or  instruments of transfer in form  satisfactory  to the Company and
the  Trustee  or the  Authenticating  Agent duly  executed  by the holder or his
attorney duly authorized in writing.

         No service  charge  shall be made for any exchange or  registration  of
transfer of Debentures,  but the Company or the Trustee may require payment of a
sum  sufficient to cover any tax, fee or other  governmental  charge that may be
imposed in connection therewith.

         The  Company  or the  Trustee  shall not be  required  to  exchange  or
register a transfer of any Debenture for a period of 15 days next  preceding the
date of selection of Debentures for redemption.

         Notwithstanding anything herein to the contrary,  Debentures may not be
transferred except in compliance with the restricted securities legend set forth
below,  unless otherwise  determined by the Company,  upon the advice of counsel
expert in securities law, in accordance with applicable law:

         THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE COMPANY,  (B) PURSUANT TO A
REGISTRATION  STATEMENT  THAT HAS BEEN DECLARED  EFFECTIVE  UNDER THE SECURITIES
ACT,  (C) TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED
INSTITUTIONAL  BUYER IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH  RULE  144A,  (D)  TO A  NON-U.S.  PERSON  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH  (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY  FOR  ITS OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF SUCH AN  INSTITUTIONAL
ACCREDITED  INVESTOR,  FOR  INVESTMENT  PURPOSES  AND NOT WITH A VIEW TO, OR FOR
OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY  DISTRIBUTION  IN  VIOLATION  OF THE

<PAGE>

SECURITIES  ACT,  OR (F)  PURSUANT  TO ANY OTHER  AVAILABLE  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION  SATISFACTORY  TO  IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING AN AGGREGATE  PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE  PRINCIPAL  AMOUNT OF LESS THAN  $100,000.00  SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         Section 2.6.   Mutilated, Destroyed, Lost or Stolen Debentures. In case
                        -----------------------------------------------
any  Debenture  shall become  mutilated  or be  destroyed,  lost or stolen,  the
Company  shall  execute,   and  upon  its  written  request  the  Trustee  shall
authenticate and deliver, a new Debenture bearing a number not contemporaneously
outstanding,  in exchange and  substitution for the mutilated  Debenture,  or in
lieu of and in substitution for the Debenture so destroyed,  lost or stolen.  In
every  case the  applicant  for a  substituted  Debenture  shall  furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless,  and, in every case of  destruction,  loss or theft,
the  applicant  shall also  furnish to the Company  and the Trustee  evidence to
their  satisfaction of the  destruction,  loss or theft of such Debenture and of
the ownership thereof.
<PAGE>

         The Trustee may authenticate any such substituted Debenture and deliver
the same  upon the  written  request  or  authorization  of any  officer  of the
Company. Upon the issuance of any substituted Debenture, the Company may require
the payment of a sum  sufficient to cover any tax or other  governmental  charge
that may be  imposed  in  relation  thereto  and any  other  expenses  connected
therewith.  In case any Debenture which has matured or is about to mature or has
been called for redemption in full shall become mutilated or be destroyed,  lost
or stolen,  the Company may, instead of issuing a substitute  Debenture,  pay or
authorize the payment of the same (without  surrender thereof except in the case
of a mutilated Debenture) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless and, in case of destruction,  loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or theft
of such Debenture and of the ownership thereof.

         Every  substituted  Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any such Debenture is destroyed,  lost or
stolen shall  constitute  an additional  contractual  obligation of the Company,
whether or not the  destroyed,  lost or stolen  Debenture  shall be found at any
time,  and shall be entitled to all the benefits of this  Indenture  equally and
proportionately  with any and all other  Debentures duly issued  hereunder.  All
Debentures  shall be held and owned  upon the  express  condition  that,  to the
extent permitted by applicable law, the foregoing  provisions are exclusive with
respect to the  replacement or payment of mutilated,  destroyed,  lost or stolen
Debentures   and  shall   preclude   any  and  all  other   rights  or  remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the  replacement  or payment of negotiable  instruments or other
securities without their surrender.

         Section 2.7.   Temporary Debentures.   Pending   the   preparation   of
                        --------------------
definitive   Debentures,   the  Company  may  execute  and  the  Trustee   shall
authenticate  and make  available  for delivery  temporary  Debentures  that are
typed,  printed or lithographed.  Temporary  Debentures shall be issuable in any
authorized  denomination,  and  substantially  in the  form  of  the  definitive
Debentures in lieu of which they are issued but with such omissions,  insertions
and variations as may be  appropriate  for temporary  Debentures,  all as may be
determined by the Company.  Every such temporary  Debenture shall be executed by
the Company and be  authenticated by the Trustee upon the same conditions and in
substantially  the same  manner,  and with the same  effect,  as the  definitive
Debentures.  Without  unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive  Debentures and thereupon any
or all temporary  Debentures  may be surrendered  in exchange  therefor,  at the
principal  corporate  trust  office of the  Trustee  or at any  office or agency
maintained  by the Company for such  purpose as provided in Section 3.2, and the
Trustee or the  Authenticating  Agent shall  authenticate and make available for
delivery in exchange for such temporary  Debentures a like  aggregate  principal
amount of such definitive Debentures. Such exchange shall be made by the Company
at its own expense and  without any charge  therefor  except that in case of any
such  exchange  involving a  registration  of  transfer  the Company may require
payment of a sum sufficient to cover any tax, fee or other  governmental  charge
that may be imposed in  relation  thereto.  Until so  exchanged,  the  temporary
Debentures  shall in all  respects be entitled to the same  benefits  under this
Indenture as definitive Debentures authenticated and delivered hereunder.

         Section 2.8.   Payment of Interest and Additional Interest. Interest at
                        --------------------------------------------
the Interest Rate and any Additional  Interest on any Debenture that is payable,
and is punctually  paid or duly  provided for, on any Interest  Payment Date for
Debentures  shall be paid to the Person in whose name said  Debenture (or one or
more  Predecessor  Securities)  is  registered  at the close of  business on the
regular record date for such interest  installment  except that interest and any
Additional  Interest payable on the Maturity Date shall be paid to the Person to
whom principal is paid.

         Each  Debenture  shall bear  interest for the period  beginning on (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest  Payment  Date in December  2004 at a rate per annum of  3.92438%,  and
shall bear  interest for each  successive  Distribution  Period  beginning on or
after the Interest  Payment  Date in December  2004 at a rate per annum equal to

<PAGE>

the 3-Month  LIBOR,  determined  as described in Section  2.10,  plus 2.05% (the
"Coupon Rate"),  applied to the principal  amount  thereof,  until the principal
 -----------
thereof becomes due and payable,  and on any overdue principal and to the extent
that  payment of such  interest is  enforceable  under  applicable  law (without
duplication)  on any  overdue  installment  of  interest  (including  Additional
Interest) at the Interest Rate in effect for each applicable  period  compounded
quarterly.  Interest shall be payable (subject to any relevant Extension Period)
quarterly in arrears on each Interest Payment Date with the first installment of
interest to be paid on the Interest Payment Date in December 2004.

         Any interest on any Debenture,  including Additional Interest,  that is
payable,  but is not  punctually  paid or duly  provided  for,  on any  Interest
Payment Date (herein called  "Defaulted  Interest")  shall forthwith cease to be
                              -------------------
payable to the registered  holder on the relevant  regular record date by virtue
of having been such holder;  and such  Defaulted  Interest  shall be paid by the
Company to the  Persons  in whose  names such  Debentures  (or their  respective
Predecessor  Securities)  are  registered  at the close of business on a special
record date for the payment of such Defaulted Interest,  which shall be fixed in
the following  manner:  the Company shall notify the Trustee in writing at least
25 days prior to the date of the  proposed  payment  of the amount of  Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment,  and at the same time the  Company  shall  deposit  with the Trustee an
amount of money equal to the aggregate  amount proposed to be paid in respect of
such Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
for such  deposit  prior to the date of the  proposed  payment,  such money when
deposited  to be held in trust for the benefit of the  Persons  entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such  Defaulted  Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed  payment
and not less than 10 days after the  receipt by the Trustee of the notice of the
proposed payment.  The Trustee shall promptly notify the Company of such special
record  date and,  in the name and at the  expense of the  Company,  shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed,  first class postage prepaid, to each Securityholder
at its address as it appears in the  Debenture  Register,  not less than 10 days
prior to such  special  record  date.  Notice of the  proposed  payment  of such
Defaulted  Interest and the special  record date therefor  having been mailed as
aforesaid,  such Defaulted  Interest shall be paid to the Persons in whose names
such Debentures (or their respective  Predecessor  Securities) are registered on
such special record date and shall be no longer payable.

         The  Company  may  make  payment  of  any  Defaulted  Interest  on  any
Debentures  in any other lawful  manner after notice given by the Company to the
Trustee of the proposed payment method;  provided,  however,  the Trustee in its
                                         --------   -------
sole discretion deems such payment method to be practical.

         Any  interest  (including  Additional  Interest)  scheduled  to  become
payable on an Interest  Payment Date occurring  during an Extension Period shall
not be  Defaulted  Interest  and shall be  payable  on such other date as may be
specified in the terms of such Debentures.

         The term  "regular  record date" as used in this Section shall mean the
close of business on the 5th  Business Day  preceding  the  applicable  Interest
Payment Date.

         Subject to the foregoing  provisions of this  Section,  each  Debenture
delivered  under this Indenture upon  registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid, and to accrue, that were carried by such other Debenture.

         Section 2.9.   Cancellation  of Debentures  Paid,  etc. All  Debentures
                        ----------------------------------------
surrendered for the purpose of payment, redemption,  exchange or registration of
transfer,  shall,  if  surrendered  to the  Company  or  any  paying  agent,  be
surrendered  to the Trustee and promptly  canceled by it, or, if  surrendered to
the Trustee or any  Authenticating  Agent, shall be promptly canceled by it, and

<PAGE>

no Debentures  shall be issued in lieu thereof except as expressly  permitted by
any  of the  provisions  of  this  Indenture.  All  Debentures  canceled  by any
Authenticating  Agent shall be  delivered  to the  Trustee.  The  Trustee  shall
destroy all canceled Debentures unless the Company otherwise directs the Trustee
in writing.  If the Company shall acquire any of the Debentures,  however,  such
acquisition   shall  not  operate  as  a  redemption  or   satisfaction  of  the
indebtedness  represented  by such  Debentures  unless  and  until  the same are
surrendered to the Trustee for cancellation.

         Section 2.10.  Computation of Interest.  The amount of interest payable
                        -----------------------
for each Distribution Period will be calculated by applying the Interest Rate to
the principal amount outstanding at the commencement of the Distribution  Period
on the basis of the actual number of days in the  Distribution  Period concerned
divided  by  360.  All  percentages  resulting  from  any  calculations  on  the
Debentures will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

         (a)   "3-Month LIBOR" means the London  interbank offered interest rate
                -------------
for three-month, U.S. dollar deposits determined by the Trustee in the following
order of priority:

               (1)  the rate (expressed  as a  percentage  per  annum)  for U.S.
          dollar deposits having a three-month maturity that appears on Telerate
          Page 3750 as of 11:00 a.m. (London time) on the related  Determination
          Date (as  defined  below).  "Telerate  Page  3750"  means the  display
          designated  as "Page 3750" on the Dow Jones  Telerate  Service or such
          other  page as may  replace  Page 3750 on that  service  or such other
          service  or  services  as may be  nominated  by the  British  Bankers'
          Association  as the  information  vendor for the purpose of displaying
          London interbank offered rates for U.S. dollar deposits;

               (2)  if  such  rate   cannot  be   identified   on  the   related
         Determination  Date,  the  Trustee  will request the  principal  London
         offices  of four  leading   banks in the  London  interbank  market  to
         provide such banks'  offered  quotations  (expressed as percentages per
         annum) to prime banks in  the London  interbank  market for U.S. dollar
         deposits having  a three-month  maturity as of 11:00 a.m. (London time)
         on such  Determination  Date. If  at least two quotations are provided,
         3-Month LIBOR will be the arithmetic mean of such quotations;

               (3)  if fewer than two such quotations  are provided as requested
         in  clause (2) above, the Trustee will request four major New York City
         banks   to  provide  such  banks'  offered  quotations   (expressed  as
         percentages   per  annum) to leading  European  banks for loans in U.S.
         dollars as  of 11:00 a.m. (London time) on such Determination  Date. If
         at least  two such  quotations are provided,  3-Month LIBOR will be the
         arithmetic mean of such quotations; and

               (4)  if fewer than two such quotations  are provided as requested
         in  clause (3) above,  3-Month LIBOR will be a 3-Month LIBOR determined
         with respect  to the  Distribution  Period  immediately  preceding such
         current Distribution Period.

         If the rate for U.S. dollar deposits having a three-month maturity that
initially  appears on Telerate  Page 3750 as of 11:00 a.m.  (London time) on the
related  Determination  Date  is  superseded  on the  Telerate  Page  3750  by a
corrected rate by 12:00 noon (London time) on such Determination  Date, then the
corrected rate as so  substituted on the applicable  page will be the applicable
3-Month LIBOR for such Determination Date.

         (b)   The Interest Rate for any  Distribution Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.
<PAGE>

         (c)   "Determination Date"  means  the  date that is two London Banking
                ------------------
Days (i.e.,  a business day in which dealings in deposits  in U.S.  dollars  are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.

         (d)   The Trustee  shall  notify the Company, the Institutional Trustee
and any securities exchange or interdealer quotation system on which the Capital
Securities are listed,  of the Coupon Rate and the  Determination  Date for each
Distribution Period, in each case as soon as practicable after the determination
thereof  but in no event  later than the  thirtieth  (30th) day of the  relevant
Distribution Period. Failure to notify the Company, the Institutional Trustee or
any securities  exchange or interdealer  quotation system, or any defect in said
notice,  shall not affect the  obligation  of the Company to make payment on the
Debentures at the applicable  Coupon Rate.  Any error in the  calculation of the
Coupon Rate by the Trustee may be corrected  at any time by notice  delivered as
above provided.  Upon the request of a holder of a Debenture,  the Trustee shall
provide the Coupon Rate then in effect and, if  determined,  the Coupon Rate for
the next Distribution Period.

         (e)   Subject  to  the  corrective   rights   set   forth   above,  all
certificates, communications, opinions, determinations, calculations, quotations
and  decisions  given,  expressed,  made or  obtained  for the  purposes  of the
provisions relating to the payment and calculation of interest on the Debentures
and distributions on the Capital  Securities by the Trustee or the Institutional
Trustee will (in the absence of willful  default,  bad faith and manifest error)
be final,  conclusive  and  binding on the  Trust,  the  Company  and all of the
holders of the Debentures and the Capital Securities, and no liability shall (in
the  absence of willful  default,  bad faith or  manifest  error)  attach to the
Trustee  or the  Institutional  Trustee  in  connection  with  the  exercise  or
non-exercise  by  either  of  them  or  their  respective  powers,   duties  and
discretion.

         Section 2.11.  Extension  of Interest  Payment  Period.  So long as no
                         ---------------------------------------
Extension  Event of Default has occurred and is  continuing,  the Company  shall
have the right,  from time to time, and without causing an Event of Default,  to
defer payments of interest on the  Debentures by extending the interest  payment
period on the  Debentures  at any time and from time to time  during the term of
the Debentures,  for up to 20 consecutive  quarterly periods (each such extended
interest payment period, an "Extension  Period"),  during which Extension Period
                             -----------------
no interest (including Additional Interest) shall be due and payable (except any
Additional Sums that may be due and payable).  No Extension  Period may end on a
date other than an Interest Payment Date. During an Extension  Period,  interest
will continue to accrue on the Debentures, and interest on such accrued interest
will  accrue at an annual  rate  equal to the  Interest  Rate in effect for such
Extension  Period,  compounded  quarterly from the date such interest would have
been payable were it not for the Extension  Period,  to the extent  permitted by
law (such interest referred to herein as "Additional  Interest").  At the end of
                                          --------------------
any such  Extension  Period the Company  shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon);  provided,
                                                                       --------
however,  that no Extension Period may extend beyond the Maturity Date; provided
-------                                                                 --------
further,  however,  that during any such Extension Period, the Company shall not
-------   -------
and shall not permit  any  Affiliate  to (i)  declare  or pay any  dividends  or
distributions on, or redeem,  purchase,  acquire,  or make a liquidation payment
with respect to, any of the Company's or such  Affiliate's  capital stock (other
than  payments  of  dividends  or  distributions  to the  Company)  or make  any
guarantee  payments  with  respect to the  foregoing or (ii) make any payment of
principal of or interest or premium,  if any, on or repay,  repurchase or redeem
any debt  securities of the Company or any Affiliate that rank pari passu in all
respects with or junior in interest to the Debentures  (other than, with respect
to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions
of shares of capital  stock of the  Company in  connection  with any  employment
contract,  benefit plan or other similar  arrangement with or for the benefit of
one or more employees,  officers, directors or consultants, in connection with a
dividend  reinvestment or stockholder  stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities  convertible into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a

<PAGE>

result of any  exchange or  conversion  of any class or series of the  Company's
capital  stock (or any capital  stock of a  subsidiary  of the  Company) for any
class or series of the Company's  capital stock or of any class or series of the
Company's  indebtedness for any class or series of the Company's  capital stock,
(c) the  purchase of  fractional  interests in shares of the  Company's  capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged,  (d) any declaration of a dividend in
connection with any stockholders'  rights plan, or the issuance of rights, stock
or other  property  under any  stockholders'  rights plan, or the  redemption or
repurchase of rights  pursuant  thereto,  (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon  exercise of such  warrants,  options or other  rights is the same stock as
that on which the  dividend  is being paid or ranks pari passu with or junior to
such  stock  and any  cash  payments  in lieu of  fractional  shares  issued  in
connection therewith,  or (f) payments under the Capital Securities  Guarantee).
Prior to the termination of any Extension Period, the Company may further extend
such  period,  provided  that such period  together  with all such  previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension Period shall bear Additional  Interest to the extent permitted by
applicable  law.  The Company  must give the Trustee  notice of its  election to
begin or extend an Extension Period by the close of business at least 5 Business
Days prior to the Interest  Payment  Date with respect to which  interest on the
Debentures  would have been  payable  except for the election to begin or extend
such Extension Period.  The Trustee shall give notice of the Company's  election
to begin a new Extension Period to the Securityholders.

         Section 2.12.  CUSIP Numbers. The Company in issuing the Debentures may
                        -------------
use "CUSIP"  numbers (if then  generally in use),  and, if so, the Trustee shall
use CUSIP numbers in notices of redemption as a convenience to  Securityholders;
provided, however, that any such notice may state that no representation is made
--------  -------
as to the  correctness of such numbers either as printed on the Debentures or as
contained in any notice of a redemption  and that reliance may be placed only on
the  other  identification  numbers  printed  on the  Debentures,  and any  such
redemption  shall not be affected by any defect in or omission of such  numbers.
The  Company  will  promptly  notify the Trustee in writing of any change in the
CUSIP numbers.

                                  ARTICLE III.
                       PARTICULAR COVENANTS OF THE COMPANY
                       -----------------------------------

         Section 3.1.   Payment  of  Principal,  Premium  and  Interest;  Agreed
                        --------------------------------------------------------
Treatment of the Debentures.
---------------------------


         (a) The Company  covenants and agrees that it will duly and  punctually
pay or cause to be paid the  principal of and premium,  if any, and interest and
any Additional  Interest and other  payments on the Debentures at the place,  at
the  respective  times and in the  manner  provided  in this  Indenture  and the
Debentures.  Each  installment  of interest on the Debentures may be paid (i) by
mailing  checks  for  such  interest  payable  to the  order of the  holders  of
Debentures  entitled thereto as they appear on the registry books of the Company
if a request for a wire transfer has not been received by the Company or (ii) by
wire  transfer to any account with a banking  institution  located in the United
States  designated  in writing by such Person to the paying  agent no later than
the related record date. Notwithstanding the foregoing, so long as the holder of
this Debenture is the Institutional Trustee, the payment of the principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Institutional Trustee.
<PAGE>

         (b) The Company  will treat the  Debentures  as  indebtedness,  and the
amounts  payable  in  respect  of the  principal  amount of such  Debentures  as
interest,  for all United States  federal  income tax purposes.  All payments in
respect  of such  Debentures  will be made  free  and  clear  of  United  States
withholding  tax to any  beneficial  owner thereof that has provided an Internal
Revenue Service Form W8 BEN (or any substitute or successor  form)  establishing
its non-United States status for United States federal income tax purposes.

         (c) As of the  date of  this  Indenture,  the  Company  has no  present
intention to exercise its right under Section 2.11 to defer payments of interest
on the Debentures by commencing an Extension Period.

         (d) As of the date of this  Indenture,  the Company  believes  that the
likelihood that it would exercise its right under Section 2.11 to defer payments
of interest on the  Debentures  by  commencing  an Extension  Period at any time
during  which  the  Debentures   are   outstanding  is  remote  because  of  the
restrictions  that would be imposed on the  Company's  ability to declare or pay
dividends  or  distributions  on, or to redeem,  purchase or make a  liquidation
payment  with  respect to, any of its  outstanding  equity and on the  Company's
ability to make any payments of principal  of or interest on, or  repurchase  or
redeem, any of its debt securities that rank pari passu in all respects with (or
junior in interest to) the Debentures.

         Section 3.2.   Offices for Notices and Payments, etc. So long as any of
                        --------------------------------------
the  Debentures  remain  outstanding,  the Company will maintain in  Wilmington,
Delaware, an office or agency where the Debentures may be presented for payment,
an office or agency where the  Debentures may be presented for  registration  of
transfer and for exchange as in this Indenture  provided and an office or agency
where notices and demands to or upon the Company in respect of the Debentures or
of this  Indenture may be served.  The Company will give to the Trustee  written
notice  of the  location  of any such  office  or  agency  and of any  change of
location thereof. Until otherwise designated from time to time by the Company in
a notice to the  Trustee,  or  specified as  contemplated  by Section 2.5,  such
office or agency for all of the above  purposes shall be the office or agency of
the  Trustee.  In case the  Company  shall fail to  maintain  any such office or
agency  in  Wilmington,  Delaware,  or shall  fail to give  such  notice  of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Principal Office of the Trustee.

         In addition to any such office or agency,  the Company may from time to
time  designate one or more offices or agencies  outside  Wilmington,  Delaware,
where the  Debentures  may be  presented  for  registration  of transfer and for
exchange in the manner provided in this Indenture, and the Company may from time
to  time  rescind  such  designation,  as the  Company  may  deem  desirable  or
expedient;  provided,  however,  that no such designation or rescission shall in
            --------   -------
any manner  relieve the Company of its obligation to maintain any such office or
agency in Wilmington,  Delaware,  for the purposes above mentioned.  The Company
will  give to the  Trustee  prompt  written  notice of any such  designation  or
rescission thereof.

         Section 3.3.   Appointments to Fill Vacancies in Trustee's Office.  The
                        ---------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint,  in the manner  provided in Section 6.9, a Trustee,  so that there
shall at all times be a Trustee hereunder.

         Section 3.4.   Provision as to Paying Agent.
                        ----------------------------

         (a) If the Company shall appoint a paying agent other than the Trustee,
it will  cause  such  paying  agent to execute  and  deliver  to the  Trustee an
instrument  in which such agent  shall  agree with the  Trustee,  subject to the
provision of this Section 3.4,

               (1) that it will hold all sums  held by it as such  agent for the
         payment  of the principal of and premium, if any, or interest,  if any,
         on  the  Debentures  (whether  such  sums  have  been paid to it by the
         Company or  by any other  obligor on the  Debentures)  in trust for the
         benefit of the holders of the Debentures;
<PAGE>

               (2) that it will give the Trustee  prompt  written  notice of any
         failure  by the Company (or by any other obligor on the  Debentures) to
         make  any payment of the principal of and premium, if any, or interest,
         if any,  on  the Debentures when the same shall be due and payable; and

               (3) that it will, at any time during the continuance of any Event
         of  Default, upon the written request of the Trustee,  forthwith pay to
         the Trustee all sums so held in trust by such paying agent.

         (b) If the Company  shall act as its own paying  agent,  it will, on or
before each due date of the  principal  of and  premium,  if any, or interest or
other  payments,  if any, on the  Debentures,  set aside,  segregate and hold in
trust for the benefit of the holders of the  Debentures a sum  sufficient to pay
such  principal,  premium,  interest or other  payments so becoming due and will
notify the  Trustee in  writing  of any  failure to take such  action and of any
failure by the Company (or by any other  obligor under the  Debentures)  to make
any  payment of the  principal  of and  premium,  if any,  or  interest or other
payments, if any, on the Debentures when the same shall become due and payable.

         Whenever  the  Company  shall  have one or more  paying  agents for the
Debentures,  it will,  on or prior  to each  due  date of the  principal  of and
premium, if any, or interest,  if any, on the Debentures,  deposit with a paying
agent a sum sufficient to pay the principal, premium, interest or other payments
so  becoming  due,  such sum to be held in trust for the  benefit of the Persons
entitled thereto and (unless such paying agent is the Trustee) the Company shall
promptly notify the Trustee in writing of its action or failure to act.

         (c) Anything in this Section 3.4 to the contrary  notwithstanding,  the
Company  may, at any time,  for the  purpose of  obtaining  a  satisfaction  and
discharge  with  respect to the  Debentures,  or for any other  reason,  pay, or
direct  any  paying  agent to pay to the  Trustee  all sums held in trust by the
Company or any such paying  agent,  such sums to be held by the Trustee upon the
trusts herein contained.

         (d) Anything in this Section 3.4 to the contrary  notwithstanding,  the
agreement  to hold sums in trust as provided  in this  Section 3.4 is subject to
Sections 12.3 and 12.4.

         Section 3.5.   Certificate  to Trustee. The Company will deliver to the
                        -----------------------
Trustee  on or before  120 days after the end of each  fiscal  year,  so long as
Debentures are outstanding  hereunder,  a Certificate stating that in the course
of the  performance  by the  signers of their  duties as officers of the Company
they would normally have knowledge of any default during such fiscal year by the
Company in the performance of any covenants contained herein, stating whether or
not they have  knowledge of any such default  and, if so,  specifying  each such
default of which the signers have knowledge and the nature and status thereof.

         Section 3.6.   Additional  Sums. If and for so long as the Trust is the
                        ----------------
holder of all Debentures  and the Trust is required to pay any additional  taxes
(including withholding taxes), duties, assessments or other governmental charges
as a result  of a Tax  Event,  the  Company  will pay  such  additional  amounts
("Additional  Sums")  on the  Debentures  as shall be  required  so that the net
  ----------------
amounts  received  and  retained  by the Trust  after  paying  taxes  (including
withholding taxes),  duties,  assessments or other governmental  charges will be
equal to the  amounts the Trust  would have  received if no such taxes,  duties,
assessments  or other  governmental  charges had been imposed.  Whenever in this
Indenture or the  Debentures  there is a reference in any context to the payment
of principal of or interest on the  Debentures,  such mention shall be deemed to
include  mention  of  payments  of the  Additional  Sums  provided  for in  this

<PAGE>

paragraph to the extent that,  in such  context,  Additional  Sums are,  were or
would be payable in respect thereof pursuant to the provisions of this paragraph
and express  mention of the payment of Additional  Sums (if  applicable)  in any
provisions  hereof shall not be construed as excluding  Additional Sums in those
provisions  hereof where such express  mention is not made;  provided,  however,
                                                             --------   -------
that the deferral of the payment of interest during an Extension Period pursuant
to Section 2.11 shall not defer the payment of any  Additional  Sums that may be
due and payable.

         Section 3.7.   Compliance  with Consolidation Provisions.  The  Company
                        -----------------------------------------
will not, while any of the Debentures remain  outstanding,  consolidate with, or
merge into, or merge into itself,  or sell or convey all or substantially all of
its property to any other Person unless the  provisions of Article XI hereof are
complied with.

         Section 3.8.   Limitation  on  Dividends.  If Debentures  are initially
                        -------------------------
issued to the Trust or a trustee of such Trust in  connection  with the issuance
of Trust Securities by the Trust (regardless of whether  Debentures  continue to
be held by such Trust) and (i) there shall have  occurred and be  continuing  an
Event of  Default,  (ii) the  Company  shall be in default  with  respect to its
payment of any obligations under the Capital Securities Guarantee,  or (iii) the
Company shall have given notice of its election to defer payments of interest on
the Debentures by extending the interest  payment period as provided  herein and
such period,  or any extension  thereof,  shall be continuing,  then the Company
shall not,  and shall not allow any  Affiliate of the Company to, (x) declare or
pay any dividends or distributions on, or redeem,  purchase,  acquire, or make a
liquidation  payment with respect to, any of the Company's  capital stock or its
Affiliates'  capital stock (other than payments of dividends or distributions to
the Company) or make any guarantee payments with respect to the foregoing or (y)
make any payment of  principal  of or interest or premium,  if any, on or repay,
repurchase or redeem any debt  securities  of the Company or any Affiliate  that
rank pari passu in all  respects  with or junior in interest  to the  Debentures
(other  than,  with  respect to  clauses  (x) and (y)  above,  (1)  repurchases,
redemptions or other  acquisitions  of shares of capital stock of the Company in
connection  with  any  employment  contract,   benefit  plan  or  other  similar
arrangement  with  or  for  the  benefit  of one or  more  employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company (or securities  convertible  into or  exercisable  for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable  Extension  Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary  of the Company) for any class or series of the  Company's
capital  stock or of any class or series of the Company's  indebtedness  for any
class or series of the Company's  capital stock,  (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange  provisions  of such capital stock or the security  being  converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).

         Section 3.9.   Covenants  as to the  Trust.  For so long  as the  Trust
                        ---------------------------
Securities remain outstanding,  the Company shall maintain 100% ownership of the
Common  Securities;  provided,  however,  that any  permitted  successor  of the
                     --------   -------
Company  under this  Indenture  may succeed to the  Company's  ownership of such
Common Securities. The Company, as owner of the Common Securities, shall, except
in  connection  with a  distribution  of  Debentures  to the  holders  of  Trust
Securities  in  liquidation  of the Trust,  the  redemption  of all of the Trust
Securities  or  certain  mergers,  consolidations  or  amalgamations,   each  as
permitted by the  Declaration,  cause the Trust (a) to remain a statutory trust,
(b) to otherwise  continue to be classified as a grantor trust for United States
federal income tax purposes, and (c) to cause each holder of Trust Securities to
be treated as owning an undivided beneficial interest in the Debentures.
<PAGE>

         Section 3.10.  Additional Junior  Indebtedness.  The Company shall not,
                        -------------------------------
and it shall not cause or permit any Subsidiary of the Company to, incur,  issue
or be  obligated  on any  Additional  Junior  Indebtedness,  either  directly or
indirectly, by way of guarantee,  suretyship or otherwise, other than Additional
Junior  Indebtedness  (i) that, by its terms,  is expressly  stated to be either
junior and subordinate or pari passu in all respects to the Debentures, and (ii)
of which the Company has notified  (and, if then required  under the  applicable
guidelines of the  regulating  entity,  has received  approval from) the Federal
Reserve, if the Company is a bank holding company, or the OTS, if the Company is
a savings and loan holding company.

                                  ARTICLE IV.
                       SECURITYHOLDERS' LISTS AND REPORTS
                       ----------------------------------
                         BY THE COMPANY AND THE TRUSTEE
                         ------------------------------

         Section 4.1.   Securityholders' Lists. The Company covenants and agrees
                        ----------------------
that it will furnish or caused to be furnished to the Trustee:

         (a) on each regular  record date for the  Debentures,  a list,  in such
form as the Trustee may  reasonably  require,  of the names and addresses of the
Securityholders of the Debentures as of such record date; and

         (b) at such other times as the  Trustee may request in writing,  within
30 days after the receipt by the Company of any such request,  a list of similar
form and  content as of a date not more than 15 days prior to the time such list
is furnished;

except that no such lists need be  furnished  under this  Section 4.1 so long as
the  Trustee  is in  possession  thereof  by reason of its  acting as  Debenture
registrar.

         Section 4.2.   Preservation and Disclosure of Lists.
                        ------------------------------------

         (a) The Trustee shall  preserve,  in as current a form as is reasonably
practicable,  all  information  as to the names and  addresses of the holders of
Debentures  (1) contained in the most recent list furnished to it as provided in
Section 4.1 or (2) received by it in the capacity of Debentures registrar (if so
acting) hereunder.  The Trustee may destroy any list furnished to it as provided
in Section 4.1 upon receipt of a new list so furnished.

         (b) In case three or more holders of Debentures  (hereinafter  referred
to as  "applicants")  apply in writing to the Trustee and furnish to the Trustee
reasonable  proof that each such applicant has owned a Debenture for a period of
at least 6 months preceding the date of such  application,  and such application
states  that  the  applicants  desire  to  communicate  with  other  holders  of
Debentures  with  respect to their  rights  under this  Indenture  or under such
Debentures  and is  accompanied  by a  copy  of  the  form  of  proxy  or  other
communication which such applicants propose to transmit,  then the Trustee shall
within 5 Business Days after the receipt of such  application,  at its election,
either:

               (1)  afford  such  applicants access to the information preserved
         at the time by  the  Trustee  in  accordance  with  the  provisions  of
         subsection (a) of this Section 4.2, or

               (2)  inform  such  applicants  as to the  approximate  number  of
         holders  of  Debentures  whose  names  and  addresses  appear  in   the
         information  preserved at  the time by the Trustee in  accordance  with
         the  provisions  of  subsection  (a) of this Section 4.2, and as to the
         approximate  cost of mailing to such  Securityholders the form of proxy
         or other communication, if any, specified in such application.
<PAGE>

         If the Trustee shall elect not to afford such applicants access to such
information,  the Trustee shall,  upon the written  request of such  applicants,
mail to each  Securityholder  whose name and address  appear in the  information
preserved  at the time by the  Trustee  in  accordance  with the  provisions  of
subsection  (a) of  this  Section  4.2 a copy  of the  form of  proxy  or  other
communication  which is specified in such  request  with  reasonable  promptness
after a tender to the Trustee of the  material  to be mailed and of payment,  or
provision for the payment, of the reasonable expenses of mailing,  unless within
five days after such tender,  the Trustee shall mail to such applicants and file
with the  Securities  and  Exchange  Commission,  if  permitted  or  required by
applicable  law,  together  with a copy of the material to be mailed,  a written
statement to the effect that, in the opinion of the Trustee,  such mailing would
be contrary to the best interests of the holders of all Debentures,  as the case
may be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If said Commission,  as permitted or required
by applicable law, after opportunity for a hearing upon the objections specified
in the written statement so filed,  shall enter an order refusing to sustain any
of such objections or if, after the entry of an order  sustaining one or more of
such  objections,  said Commission  shall find, after notice and opportunity for
hearing,  that all the  objections so sustained have been met and shall enter an
order so  declaring,  the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal  of  such  tender;  otherwise  the  Trustee  shall  be  relieved  of any
obligation or duty to such applicants respecting their application.

         (c) Each and every holder of  Debentures,  by receiving and holding the
same,  agrees  with  Company and the  Trustee  that  neither the Company nor the
Trustee  nor any  paying  agent  shall  be held  accountable  by  reason  of the
disclosure of any such  information as to the names and addresses of the holders
of  Debentures  in accordance  with the  provisions  of  subsection  (b) of this
Section 4.2,  regardless of the source from which such  information was derived,
and that the  Trustee  shall not be held  accountable  by reason of mailing  any
material pursuant to a request made under said subsection (b).

                                   ARTICLE V.
                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                   -------------------------------------------
                            UPON AN EVENT OF DEFAULT
                            ------------------------

         Section 5.1.   Events of Default.  "Event of  Default,"  wherever  used
                        -----------------
herein,  means any one of the  following  events  (whatever  the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

         (a) the  Company  defaults  in the  payment  of any  interest  upon any
Debenture,  including any Additional Interest in respect thereof,  following the
nonpayment  of any such  interest  for twenty or more  consecutive  Distribution
Periods; or

         (b) the  Company  defaults  in the  payment  of all or any  part of the
principal of (or premium,  if any, on) any Debentures as and when the same shall
become due and payable either at maturity,  upon  redemption,  by declaration of
acceleration or otherwise; or

         (c) the Company defaults in the performance of, or breaches, any of its
covenants or  agreements  in this  Indenture  or in the terms of the  Debentures
established  as  contemplated  in  this  Indenture  (other  than a  covenant  or
agreement a default in whose  performance  or whose  breach is elsewhere in this
Section  specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to the  Company by the  Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the outstanding  Debentures,  a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
<PAGE>

         (d) a court of competent jurisdiction shall enter a decree or order for
relief in respect of the  Company in an  involuntary  case under any  applicable
bankruptcy, insolvency,  reorganization or other similar law now or hereafter in
effect,  or appointing a receiver,  liquidator,  assignee,  custodian,  trustee,
sequestrator (or similar official) of the Company or for any substantial part of
its property,  or ordering the winding-up or liquidation of its affairs and such
decree  or  order  shall  remain  unstayed  and in  effect  for a  period  of 90
consecutive days; or

         (e) the Company shall  commence a voluntary  case under any  applicable
bankruptcy, insolvency,  reorganization or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking  possession
by a receiver, liquidator, assignee, trustee, custodian,  sequestrator (or other
similar official) of the Company or of any substantial part of its property,  or
shall make any general  assignment  for the benefit of creditors,  or shall fail
generally to pay its debts as they become due; or

         (f) the Trust  shall  have  voluntarily  or  involuntarily  liquidated,
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (i) the  distribution of the Debentures to holders of such Trust
Securities in liquidation of their  interests in the Trust,  (ii) the redemption
of  all  of  the  outstanding   Trust   Securities  or  (iii)  certain  mergers,
consolidations or amalgamations, each as permitted by the Declaration.

         If an Event of Default under Section  5.1(a),  (d) or (e) occurs and is
continuing  with  respect to the  Debentures,  then,  and in each and every such
case,  unless the principal of the Debentures  shall have already become due and
payable,  either the  Trustee or the  holders of not less than 25% in  aggregate
principal  amount of the Debentures  then  outstanding  hereunder,  by notice in
writing to the  Company  (and to the Trustee if given by  Securityholders),  may
declare the entire principal of the Debentures and the interest accrued thereon,
if any, to be due and payable  immediately,  and upon any such  declaration  the
same shall  become  immediately  due and payable.  If an Event of Default  under
Section  5.1(b),  (c) or  (f)  occurs  and is  continuing  with  respect  to the
Debentures,  then, and in each and every such case,  unless the principal of the
Debentures shall have already become due and payable,  either the Trustee or the
holders of not less than 25% in  aggregate  principal  amount of the  Debentures
then  outstanding  hereunder,  by notice in writing to the  Company  (and to the
Trustee if given by  Securityholders),  may  proceed  to remedy  the  default or
breach  thereunder by such  appropriate  judicial  proceedings as the Trustee or
such  holders  shall deem most  effectual  to remedy the  defaulted  covenant or
enforce the provisions of this  Indenture so breached,  either by suit in equity
or by action at law, for damages or otherwise.

         The foregoing  provisions,  however,  are subject to the condition that
if,  at any time  after  the  principal  of the  Debentures  shall  have been so
declared due and  payable,  and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided,  (i)
the Company shall pay or shall deposit with the Trustee a sum  sufficient to pay
all matured  installments  of interest upon all the Debentures and the principal
of and premium,  if any, on the Debentures which shall have become due otherwise
than by acceleration (with interest upon such principal and premium, if any, and
Additional  Interest) and such amount as shall be sufficient to cover reasonable
compensation  to the  Trustee and each  predecessor  Trustee,  their  respective
agents, attorneys and counsel, and all other amounts due to the Trustee pursuant
to Section  6.6, if any,  and (ii) all Events of Default  under this  Indenture,
other than the non-payment of the principal of or premium, if any, on Debentures
which shall have become due by  acceleration,  shall have been cured,  waived or
otherwise remedied as provided herein -- then and in every such case the holders
of a majority in aggregate  principal amount of the Debentures then outstanding,

<PAGE>

by written notice to the Company and to the Trustee,  may waive all defaults and
rescind and annul such declaration and its  consequences,  but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent  default
or shall impair any right consequent thereon.

         In case the  Trustee  shall have  proceeded  to enforce any right under
this Indenture and such  proceedings  shall have been  discontinued or abandoned
because of such  rescission  or  annulment or for any other reason or shall have
been  determined  adversely  to the  Trustee,  then and in every  such  case the
Company,  the  Trustee  and the  holders  of the  Debentures  shall be  restored
respectively to their several  positions and rights  hereunder,  and all rights,
remedies  and  powers  of the  Company,  the  Trustee  and  the  holders  of the
Debentures shall continue as though no such proceeding had been taken.

         Section 5.2.   Payment of  Debentures  on Default;  Suit  Therefor. The
                        ---------------------------------------------------
Company  covenants that upon the  occurrence of an Event of Default  pursuant to
Section 5.1(a) or (b) then, upon demand of the Trustee,  the Company will pay to
the Trustee,  for the benefit of the holders of the  Debentures the whole amount
that then shall have become due and payable on all  Debentures for principal and
premium,  if any, or  interest,  or both,  as the case may be,  with  Additional
Interest  accrued on the Debentures (to the extent that payment of such interest
is enforceable under applicable law and, if the Debentures are held by the Trust
or a trustee of such Trust, without duplication of any other amounts paid by the
Trust or a trustee in respect thereof);  and, in addition thereto,  such further
amount as shall be  sufficient  to cover the costs and  expenses of  collection,
including a reasonable  compensation to the Trustee,  its agents,  attorneys and
counsel, and any other amounts due to the Trustee under Section 6.6. In case the
Company shall fail forthwith to pay such amounts upon such demand,  the Trustee,
in its own name and as  trustee  of an  express  trust,  shall be  entitled  and
empowered to institute  any actions or  proceedings  at law or in equity for the
collection  of the sums so due and unpaid,  and may prosecute any such action or
proceeding  to judgment or final  decree,  and may enforce any such  judgment or
final decree  against the Company or any other  obligor on such  Debentures  and
collect in the manner  provided by law out of the property of the Company or any
other  obligor on such  Debentures  wherever  situated  the moneys  adjudged  or
decreed to be payable.

         In case there shall be pending  proceedings  for the  bankruptcy or for
the  reorganization  of the Company or any other obligor on the Debentures under
Bankruptcy  Law, or in case a receiver or trustee shall have been  appointed for
the property of the Company or such other  obligor,  or in the case of any other
similar judicial  proceedings  relative to the Company or other obligor upon the
Debentures,  or to the  creditors  or  property  of the  Company  or such  other
obligor,  the Trustee,  irrespective  of whether the principal of the Debentures
shall  then be due  and  payable  as  therein  expressed  or by  declaration  of
acceleration  or otherwise  and  irrespective  of whether the Trustee shall have
made any  demand  pursuant  to the  provisions  of this  Section  5.2,  shall be
entitled and empowered, by intervention in such proceedings or otherwise,

         (i)   to file and  prove a claim or  claims  for the  whole  amount  of
               principal  and  interest  owing  and  unpaid  in  respect  of the
               Debentures,

         (ii)  in case of any judicial proceedings, to file such proofs of claim
               and other papers or documents as may be necessary or advisable in
               order to have the claims of the Trustee  (including any claim for
               reasonable  compensation  to the  Trustee  and  each  predecessor
               Trustee, and their respective agents,  attorneys and counsel, and
               for  reimbursement  of all other amounts due to the Trustee under
               Section 6.6), and of the Securityholders allowed in such judicial
               proceedings  relative to the Company or any other  obligor on the
               Debentures,  or to the  creditors  or  property of the Company or
               such other  obligor,  unless  prohibited  by  applicable  law and
               regulations,  to vote on behalf of the holders of the  Debentures
               in any election of a trustee or a standby trustee in arrangement,

<PAGE>

               reorganization,  liquidation  or other  bankruptcy  or insolvency
               proceedings or Person performing  similar functions in comparable
               proceedings,

         (iii) to collect and receive  any moneys or other  property  payable or
               deliverable on any such claims, and

         (iv)  to  distribute  the same after the  deduction  of its charges and
               expenses.

Any  receiver,  assignee or trustee in bankruptcy  or  reorganization  is hereby
authorized by each of the  Securityholders to make such payments to the Trustee,
and, in the event that the Trustee  shall consent to the making of such payments
directly to the Securityholders,  to pay to the Trustee such amounts as shall be
sufficient to cover  reasonable  compensation to the Trustee,  each  predecessor
Trustee  and their  respective  agents,  attorneys  and  counsel,  and all other
amounts due to the Trustee under Section 6.6.

         Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any  Securityholder  any
plan of  reorganization,  arrangement,  adjustment or composition  affecting the
Debentures  or the rights of any holder  thereof or to authorize  the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.

         All rights of action and of asserting  claims under this Indenture,  or
under  any of the  Debentures,  may be  enforced  by  the  Trustee  without  the
possession of any of the Debentures,  or the production  thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable  benefit of the holders of the
Debentures.

         In any  proceedings  brought by the Trustee  (and also any  proceedings
involving the  interpretation  of any  provision of this  Indenture to which the
Trustee  shall be a  party),  the  Trustee  shall be held to  represent  all the
holders of the Debentures,  and it shall not be necessary to make any holders of
the Debentures parties to any such proceedings.

         Section 5.3.   Application  of Moneys Collected by Trustee.  Any moneys
                        --------------------------------------------
collected  by the  Trustee  pursuant  to this  Article V shall be applied in the
following  order, at the date or dates fixed by the Trustee for the distribution
of such moneys,  upon presentation of the several Debentures in respect of which
moneys have been collected,  and stamping thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:

         First: To the payment of costs and expenses incurred by, and reasonable
fees of, the  Trustee,  its  agents,  attorneys  and  counsel,  and of all other
amounts due to the Trustee under Section 6.6;

         Second: To the payment of all Senior Indebtedness of the Company if and
to the extent required by Article XV;

         Third:  To  the  payment  of the  amounts  then  due  and  unpaid  upon
Debentures for principal (and premium,  if any), and interest on the Debentures,
in  respect  of which or for the  benefit  of which  money  has been  collected,
ratably,  without  preference or priority of any kind,  according to the amounts
due on such Debentures (including Additional Interest); and

         Fourth: The balance, if any, to the Company.

         Section 5.4.   Proceedings   by   Securityholders.  No  holder  of  any
                        ----------------------------------
Debenture  shall have any right to institute any suit,  action or proceeding for
any remedy  hereunder,  unless  such holder  previously  shall have given to the
Trustee written notice of an Event of Default with respect to the Debentures and


<PAGE>

unless the  holders of not less than 25% in  aggregate  principal  amount of the
Debentures  then  outstanding  shall have given the Trustee a written request to
institute such action,  suit or proceeding and shall have offered to the Trustee
such  reasonable  indemnity  as it may require  against the costs,  expenses and
liabilities  to be  incurred  thereby,  and the  Trustee  for 60 days  after its
receipt of such  notice,  request  and offer of  indemnity  shall have failed to
institute any such action, suit or proceeding.

         Notwithstanding  any other provisions in this Indenture,  however,  the
right of any holder of any  Debenture to receive  payment of the  principal  of,
premium, if any, and interest,  on such Debenture when due, or to institute suit
for the  enforcement  of any such  payment,  shall not be  impaired  or affected
without the consent of such holder and by accepting a Debenture  hereunder it is
expressly  understood,  intended and covenanted by the taker and holder of every
Debenture with every other such taker and holder and the Trustee, that no one or
more  holders of  Debentures  shall have any right in any manner  whatsoever  by
virtue or by  availing  itself of any  provision  of this  Indenture  to affect,
disturb or prejudice  the rights of the holders of any other  Debentures,  or to
obtain or seek to obtain  priority  over or preference to any other such holder,
or to enforce  any right  under  this  Indenture,  except in the  manner  herein
provided  and for the  equal,  ratable  and  common  benefit  of all  holders of
Debentures.  For  the  protection  and  enforcement  of the  provisions  of this
Section, each and every Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.

         Section  5.5.  Proceedings  by Trustee.  In case of an Event of Default
                        -----------------------
hereunder the Trustee may in its  discretion  proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate  judicial  proceedings
as the  Trustee  shall deem most  effectual  to protect  and enforce any of such
rights,  either  by suit in  equity  or by  action  at law or by  proceeding  in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement  contained  in this  Indenture  or in aid of the exercise of any power
granted in this  Indenture,  or to enforce  any other legal or  equitable  right
vested in the Trustee by this Indenture or by law.

         Section 5.6.   Remedies Cumulative and Continuing;  Delay  or  Omission
                        --------------------------------------------------------
Not a Waiver.  Except as otherwise  provided  in  Section  2.6,  all  powers and
------------
remedies given by this Article V to the Trustee or to the Securityholders shall,
to the extent  permitted by law, be deemed  cumulative  and not exclusive of any
other  powers  and  remedies  available  to the  Trustee  or the  holders of the
Debentures,  by judicial proceedings or otherwise, to enforce the performance or
observance  of the  covenants  and  agreements  contained  in this  Indenture or
otherwise  established with respect to the Debentures,  and no delay or omission
of the Trustee or of any holder of any of the  Debentures to exercise any right,
remedy or power  accruing upon any Event of Default  occurring and continuing as
aforesaid shall impair any such right, remedy or power, or shall be construed to
be a waiver of any such default or an acquiescence  therein; and, subject to the
provisions of Section 5.4,  every power and remedy given by this Article V or by
law to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed  expedient,  by the Trustee (in accordance  with
its duties under Section 6.1) or by the Securityholders.

         Section 5.7.   Direction  of  Proceedings  and  Waiver of  Defaults  by
                        --------------------------------------------------------
Majority of  Securityholders.  The holders of a majority in aggregate  principal
----------------------------
amount of the Debentures  affected (voting as one class) at the time outstanding
shall have the right to direct the time,  method,  and place of  conducting  any
proceeding for any remedy  available to the Trustee,  or exercising any trust or
power  conferred  on the  Trustee  with  respect to such  Debentures;  provided,
                                                                       --------
however,  that (subject to the provisions of Section 6.1) the Trustee shall have
-------
the right to decline to follow any such direction if the Trustee shall determine
that the action so  directed  would be unjustly  prejudicial  to the holders not
taking  part in such  direction  or if the  Trustee  being  advised  by  counsel
determines  that the action or  proceeding so directed may not lawfully be taken
or if a Responsible  Officer of the Trustee shall  determine  that the action or
proceedings so directed would involve the Trustee in personal liability.
<PAGE>

         The  holders  of a  majority  in  aggregate  principal  amount  of  the
Debentures  at the time  outstanding  may on behalf of the holders of all of the
Debentures  waive (or modify any previously  granted waiver of) any past default
or Event of Default,  and its consequences,  except a default (a) in the payment
of principal of, premium,  if any, or interest on any of the Debentures,  (b) in
respect of  covenants or  provisions  hereof which cannot be modified or amended
without the consent of the holder of each Debenture affected,  or (c) in respect
of the  covenants  contained  in Section  3.9;  provided,  however,  that if the
                                                --------   -------
Debentures  are held by the Trust or a trustee  of such  trust,  such  waiver or
modification  to such  waiver  shall not be  effective  until the  holders  of a
majority  in  Liquidation  Amount of Trust  Securities  of the Trust  shall have
consented to such waiver or modification to such waiver, provided, further, that
                                                         --------  -------
if the consent of the holder of each  outstanding  Debenture is  required,  such
waiver shall not be effective  until each holder of the Trust  Securities of the
Trust shall have  consented  to such waiver.  Upon any such waiver,  the default
covered  thereby shall be deemed to be cured for all purposes of this  Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any  subsequent  or other  default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as  permitted by this  Section,  said default or Event of
Default shall for all purposes of the Debentures and this Indenture be deemed to
have been cured and to be not continuing.

         Section 5.8.   Notice of  Defaults.  The Trustee shall,  within 90 days
                        -------------------
after the  actual  knowledge  by a  Responsible  Officer  of the  Trustee of the
occurrence  of  a  default  with  respect  to  the   Debentures,   mail  to  all
Securityholders,  as the names and  addresses  of such  holders  appear upon the
Debenture Register,  notice of all defaults with respect to the Debentures known
to the Trustee,  unless such defaults shall have been cured before the giving of
such  notice  (the term  "defaults"  for the  purpose of this  Section 5.8 being
hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section  5.1,  not  including  periods  of grace,  if any,  provided  for
therein);  provided, however, that, except in the case of default in the payment
           --------  -------
of the principal of, premium, if any, or interest on any of the Debentures,  the
Trustee  shall be  protected  in  withholding  such  notice  if and so long as a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders.

         Section 5.9.   Undertaking  to Pay Costs. All parties to this Indenture
                        -------------------------
agree,  and each holder of any  Debenture  by his  acceptance  thereof  shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,  or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party  litigant in such suit of an  undertaking  to pay the costs of such
suit,  and that  such  court  may in its  discretion  assess  reasonable  costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such  suit,  having  due  regard to the  merits  and good faith of the claims or
defenses made by such party litigant;  provided, however, that the provisions of
                                       --------  -------
this Section 5.9 shall not apply to any suit  instituted by the Trustee,  to any
suit instituted by any Securityholder,  or group of Securityholders,  holding in
the aggregate more than 10% in principal  amount of the Debentures  outstanding,
or to any suit  instituted  by any  Securityholder  for the  enforcement  of the
payment of the  principal of (or premium,  if any) or interest on any  Debenture
against the Company on or after the same shall have become due and payable.

                                  ARTICLE VI.
                             CONCERNING THE TRUSTEE
                             ----------------------

         Section 6.1.   Duties and Responsibilities of Trustee.  With respect to
                        ----------------------------------------
the holders of Debentures issued hereunder, the Trustee, prior to the occurrence
of an Event of Default  with respect to the  Debentures  and after the curing or
waiving of all Events of Default  which may have  occurred,  with respect to the
Debentures,  undertakes  to  perform  such  duties  and only such  duties as are
specifically set forth in this Indenture, and no implied covenants shall be read

<PAGE>

into this  Indenture  against  the  Trustee.  In case an Event of  Default  with
respect to the Debentures has occurred (which has not been cured or waived), the
Trustee  shall  exercise  such of the  rights  and  powers  vested in it by this
Indenture,  and use the same  degree of care and skill in their  exercise,  as a
prudent man would exercise or use under the  circumstances in the conduct of his
own affairs.

         No  provision  of this  Indenture  shall be  construed  to relieve  the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct, except that:

         (a)   prior to the occurrence of an Event of  Default  with  respect to
Debentures  and after the curing or  waiving of all Events of Default  which may
have occurred

                    (1) the duties and  obligations  of the Trustee with respect
               to  Debentures   shall  be  determined   solely  by  the  express
               provisions of this Indenture, and the Trustee shall not be liable
               except for the  performance of such duties and  obligations  with
               respect to the Debentures as are  specifically  set forth in this
               Indenture,  and no implied covenants or obligations shall be read
               into this Indenture against the Trustee, and

                    (2) in the absence of bad faith on the part of the  Trustee,
               the  Trustee  may  conclusively  rely,  as to  the  truth  of the
               statements and the correctness of the opinions expressed therein,
               upon any  certificates  or opinions  furnished to the Trustee and
               conforming to the  requirements  of this  Indenture;  but, in the
               case of any such  certificates or opinions which by any provision
               hereof are specifically  required to be furnished to the Trustee,
               the  Trustee  shall  be  under  a duty  to  examine  the  same to
               determine whether or not they conform to the requirements of this
               Indenture;

         (b)   the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee,  unless it shall
be proved that the Trustee was negligent in  ascertaining  the pertinent  facts;
and

         (c)   the Trustee shall not be liable with respect to any action  taken
or omitted to be taken by it in good faith,  in accordance with the direction of
the  Securityholders  pursuant to Section 5.7,  relating to the time, method and
place of conducting any proceeding for any remedy  available to the Trustee,  or
exercising any trust or power conferred upon the Trustee, under this Indenture.

         None of the provisions  contained in this  Indenture  shall require the
Trustee to expend or risk its own funds or otherwise  incur  personal  financial
liability in the  performance  of any of its duties or in the exercise of any of
its rights or powers,  if there is ground for  believing  that the  repayment of
such funds or liability  is not assured to it under the terms of this  Indenture
or indemnity  satisfactory  to the Trustee  against such risk is not  reasonably
assured to it.

         Section 6.2.   Reliance   on   Documents,   Opinions,  etc.  Except  as
                        -------------------------------------------
otherwise provided in Section 6.1:

         (a)   the Trustee may conclusively rely and shall be fully protected in
acting or refraining  from acting upon any resolution,  certificate,  statement,
instrument,  opinion,  report,  notice,  request,  consent,  order,  bond, note,
debenture  or other paper or  document  believed by it to be genuine and to have
been signed or presented by the proper party or parties;

         (b)   any request, direction, order or demand of the Company  mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein  specifically  prescribed);  and any Board
Resolution  may be evidenced  to the Trustee by a copy thereof  certified by the
Secretary or an Assistant Secretary of the Company;
<PAGE>

         (c)   the Trustee may consult  with  counsel of its  selection  and any
advice or  Opinion  of  Counsel  shall be full and  complete  authorization  and
protection in respect of any action  taken,  suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;

         (d)   the Trustee shall be under no obligation  to exercise  any of the
rights  or  powers  vested  in it by this  Indenture  at the  request,  order or
direction  of any of the  Securityholders,  pursuant to the  provisions  of this
Indenture,  unless  such  Securityholders  shall  have  offered  to the  Trustee
reasonable  security or indemnity  against the costs,  expenses and  liabilities
which may be incurred therein or thereby;

         (e)   the  Trustee  shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the discretion
or rights or  powers  conferred  upon it by this  Indenture;  nothing  contained
herein  shall,  however,  relieve  the  Trustee  of  the  obligation,  upon  the
occurrence of an Event of Default with respect to the  Debentures  (that has not
been cured or waived) to exercise with respect to Debentures  such of the rights
and powers  vested in it by this  Indenture,  and to use the same degree of care
and skill in their  exercise,  as a prudent man would  exercise or use under the
circumstances in the conduct of his own affairs;

         (f)   the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution,  certificate,  statement, instrument,
opinion,  report, notice, request,  consent,  order, approval,  bond, debenture,
coupon or other paper or document,  unless  requested in writing to do so by the
holders  of not less  than a  majority  in  aggregate  principal  amount  of the
outstanding Debentures affected thereby; provided,  however, that if the payment
                                         --------   -------
within a reasonable  time to the Trustee of the costs,  expenses or  liabilities
likely  to be  incurred  by it in the  making of such  investigation  is, in the
opinion of the Trustee,  not  reasonably  assured to the Trustee by the security
afforded  to it by  the  terms  of  this  Indenture,  the  Trustee  may  require
reasonable  indemnity  against  such  expense or  liability as a condition to so
proceeding;

         (g)   the Trustee may execute any of the trusts or powers  hereunder or
perform any duties hereunder either directly or by or through agents  (including
any Authenticating Agent) or attorneys, and the Trustee shall not be responsible
for any  misconduct  or  negligence  on the part of any such  agent or  attorney
appointed by it with due care; and

         (h)   with the exceptions of defaults under Sections 5.1(a) or (b), the
Trustee  shall not be charged with  knowledge of any Default or Event of Default
with respect to the Debentures  unless a written notice of such Default or Event
of  Default  shall have been  given to the  Trustee by the  Company or any other
obligor on the Debentures or by any holder of the Debentures.

         Section 6.3.   No  Responsibility  for  Recitals,   etc.  The  recitals
                        ----------------------------------------
contained   herein  and  in  the  Debentures   (except  in  the  certificate  of
authentication of the Trustee or the Authenticating Agent) shall be taken as the
statements of the Company,  and the Trustee and the Authenticating  Agent assume
no  responsibility  for  the  correctness  of the  same.  The  Trustee  and  the
Authenticating  Agent make no  representations as to the validity or sufficiency
of this Indenture or of the Debentures. The Trustee and the Authenticating Agent
shall  not be  accountable  for the use or  application  by the  Company  of any
Debentures or the proceeds of any Debentures  authenticated and delivered by the
Trustee or the  Authenticating  Agent in conformity  with the provisions of this
Indenture.

         Section 6.4.   Trustee,  Authenticating  Agent, Paying Agents, Transfer
                        --------------------------------------------------------
Agents or Registrar May Own Debentures.  The Trustee or any Authenticating Agent
--------------------------------------
or any paying agent or any transfer  agent or any  Debenture  registrar,  in its
individual or any other capacity,  may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, Authenticating Agent,
paying agent, transfer agent or Debenture registrar.
<PAGE>

         Section 6.5.   Moneys to be Held in Trust. Subject to the provisions of
                        --------------------------
Section  12.4,  all moneys  received by the Trustee or any paying  agent  shall,
until used or applied as herein  provided,  be held in trust for the purpose for
which they were received,  but need not be segregated from other funds except to
the extent  required by law.  The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing  with the Company.  So long as no Event of Default  shall have
occurred and be  continuing,  all  interest  allowed on any such moneys shall be
paid from  time to time upon the  written  order of the  Company,  signed by the
Chairman of the Board of Directors,  the Chief Executive Officer, the President,
a Managing Director,  a Vice President,  the Treasurer or an Assistant Treasurer
of the Company.

         Section 6.6.   Compensation  and  Expenses  of  Trustee.   The  Company
                        ----------------------------------------
covenants  and agrees to pay or  reimburse  the Trustee upon its request for all
reasonable expenses,  disbursements and advances incurred or made by the Trustee
in  accordance  with any of the  provisions  of this  Indenture  (including  the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ)  except any such expense,  disbursement
or advance as may arise from its negligence or willful misconduct.  For purposes
of  clarification,  this  Section  6.6 does not  contemplate  the payment by the
Company  of  acceptance  or  annual  administration  fees  owing to the  Trustee
pursuant to the services to be provided by the Trustee  under this  Indenture or
the fees and expenses of the Trustee's counsel in connection with the closing of
the transactions  contemplated by this Indenture.  The Company also covenants to
indemnify  each of the Trustee or any  predecessor  Trustee  (and its  officers,
agents,  directors and employees) for, and to hold it harmless against,  any and
all loss, damage, claim,  liability or expense including taxes (other than taxes
based on the  income of the  Trustee)  incurred  without  negligence  or willful
misconduct on the part of the Trustee and arising out of or in  connection  with
the acceptance or administration of this trust, including the costs and expenses
of defending  itself  against any claim of  liability.  The  obligations  of the
Company  under this Section 6.6 to  compensate  and indemnify the Trustee and to
pay or reimburse  the Trustee for  expenses,  disbursements  and advances  shall
constitute additional indebtedness hereunder. Such additional indebtedness shall
be secured by a lien prior to that of the Debentures upon all property and funds
held or  collected  by the Trustee as such,  except  funds held in trust for the
benefit of the holders of particular Debentures.

         Without  prejudice to any other rights  available to the Trustee  under
applicable  law,  when the  Trustee  incurs  expenses  or  renders  services  in
connection with an Event of Default specified in Section 5.1(d), (e) or (f), the
expenses  (including the reasonable charges and expenses of its counsel) and the
compensation   for  the  services  are  intended  to   constitute   expenses  of
administration  under any applicable federal or state bankruptcy,  insolvency or
other similar law.

         The provisions of this Section shall survive the resignation or removal
of the Trustee and the defeasance or other termination of this Indenture.

         Notwithstanding  anything in this  Indenture  or any  Debenture  to the
contrary,  the Trustee shall have no  obligation  whatsoever to advance funds to
pay any  principal  of or  interest  on or other  amounts  with  respect  to the
Debentures or otherwise advance funds to or on behalf of the Company.

         Section 6.7.   Officers' Certificate  as Evidence.  Except as otherwise
                        ----------------------------------
provided  in  Sections  6.1  and  6.2,  whenever  in the  administration  of the
provisions  of this  Indenture  the Trustee shall deem it necessary or desirable
that a matter be proved or  established  prior to taking or omitting  any action
hereunder,  such matter  (unless  other  evidence  in respect  thereof be herein
specifically prescribed) may, in the absence of negligence or willful misconduct
on the part of the Trustee,  be deemed to be conclusively proved and established
by an Officers' Certificate  delivered to the Trustee, and such certificate,  in
the absence of  negligence  or willful  misconduct  on the part of the  Trustee,
shall be full warrant to the Trustee for any action taken or omitted by it under
the provisions of this Indenture upon the faith thereof.
<PAGE>

         Section 6.8.   Eligibility of Trustee. The  Trustee  hereunder shall at
                        ----------------------
all times be a corporation  organized and doing  business  under the laws of the
United States of America or any state or territory thereof or of the District of
Columbia or a corporation or other Person authorized under such laws to exercise
corporate trust powers,  having (or whose  obligations  under this Indenture are
guaranteed by an affiliate having) a combined capital and surplus of at least 50
million U.S. dollars  ($50,000,000.00) and subject to supervision or examination
by federal,  state,  territorial,  or District  of Columbia  authority.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid  supervising or examining  authority,  then
for the purposes of this  Section 6.8 the  combined  capital and surplus of such
corporation  shall be deemed to be its combined capital and surplus as set forth
in its most recent records of condition so published.

         The  Company  may  not,  nor  may any  Person  directly  or  indirectly
controlling,  controlled by, or under common control with the Company,  serve as
Trustee.

         In  case  at any  time  the  Trustee  shall  cease  to be  eligible  in
accordance  with the  provisions  of this Section 6.8, the Trustee  shall resign
immediately in the manner and with the effect specified in Section 6.9.

         If the Trustee has or shall acquire any  "conflicting  interest" within
the meaning of ss. 310(b) of the Trust  Indenture Act of 1939, the Trustee shall
either  eliminate  such  interest  or  resign,  to the  extent and in the manner
described by this Indenture.

         Section 6.9.   Resignation or Removal of Trustee
                        ---------------------------------

         (a)   The Trustee, or  any trustee or trustees hereafter appointed, may
at any time resign by giving written  notice of such  resignation to the Company
and by mailing notice thereof,  at the Company's expense,  to the holders of the
Debentures at their  addresses as they shall appear on the  Debenture  Register.
Upon receiving such notice of resignation,  the Company shall promptly appoint a
successor trustee or trustees by written instrument,  in duplicate,  executed by
order of its Board of Directors, one copy of which instrument shall be delivered
to the resigning Trustee and one copy to the successor Trustee.  If no successor
Trustee  shall have been so appointed and have  accepted  appointment  within 30
days  after  the  mailing  of  such  notice  of   resignation  to  the  affected
Securityholders,  the  resigning  Trustee may  petition  any court of  competent
jurisdiction for the appointment of a successor  Trustee,  or any Securityholder
who has been a bona fide holder of a Debenture  or  Debentures  for at least six
months may,  subject to the  provisions of Section 5.9, on behalf of himself and
all others similarly situated,  petition any such court for the appointment of a
successor  Trustee.  Such court may thereupon,  after such notice, if any, as it
may deem proper and prescribe, appoint a successor Trustee.

         (b)   In case at any time any of the following shall occur --

               (1) the  Trustee  shall  fail to comply  with the  provisions  of
               Section 6.8 after written  request  therefor by the Company or by
               any Securityholder who has been a bona fide holder of a Debenture
               or Debentures for at least 6 months, or

               (2) the Trustee shall cease to be eligible in accordance with the
               provisions  of Section 6.8 and shall fail to resign after written
               request therefor by the Company or by any such Securityholder, or

               (3) the Trustee  shall become  incapable  of acting,  or shall be
               adjudged as bankrupt or  insolvent,  or a receiver of the Trustee
               or of its  property  shall be  appointed,  or any public  officer
               shall take charge or control of the Trustee or of its property or
               affairs  for  the  purpose  of  rehabilitation,  conservation  or
               liquidation,
<PAGE>

then,  in any such  case,  the  Company  may remove the  Trustee  and  appoint a
successor Trustee by written instrument, in duplicate,  executed by order of the
Board of  Directors,  one copy of which  instrument  shall be  delivered  to the
Trustee so removed and one copy to the  successor  Trustee,  or,  subject to the
provisions of Section 5.9, any Securityholder who has been a bona fide holder of
a Debenture  or  Debentures  for at least 6 months may, on behalf of himself and
all others similarly situated,  petition any court of competent jurisdiction for
the removal of the  Trustee and the  appointment  of a successor  Trustee.  Such
court may  thereupon,  after  such  notice,  if any,  as it may deem  proper and
prescribe, remove the Trustee and appoint successor Trustee.

         (c)   Upon prior written notice to the  Company  and the  Trustee,  the
holders of a majority in aggregate  principal  amount of the  Debentures  at the
time  outstanding  may at any time remove the  Trustee and  nominate a successor
Trustee,  which shall be deemed appointed as successor  Trustee unless within 10
Business Days after such nomination the Company objects thereto,  in which case,
or in the case of a failure by such holders to nominate a successor Trustee, the
Trustee so  removed or any  Securityholder,  upon the terms and  conditions  and
otherwise as in subsection  (a) of this Section 6.9  provided,  may petition any
court of competent jurisdiction for an appointment of a successor.

         (d)   Any resignation or removal of the  Trustee and  appointment  of a
successor Trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor Trustee as provided in
Section 6.10.

         Section 6.10.  Acceptance by Successor  Trustee.  Any successor Trustee
                        --------------------------------
appointed as provided in Section 6.9 shall execute,  acknowledge  and deliver to
the  Company  and  to its  predecessor  Trustee  an  instrument  accepting  such
appointment hereunder,  and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, duties
and  obligations  with respect to the Debentures of its  predecessor  hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless, on
the written  request of the  Company or of the  successor  Trustee,  the Trustee
ceasing to act shall,  upon  payment of any amounts  then due it pursuant to the
provisions  of Section 6.6,  execute and deliver an instrument  transferring  to
such  successor  Trustee  all the rights and powers of the Trustee so ceasing to
act and shall duly assign,  transfer and deliver to such  successor  Trustee all
property and money held by such retiring Trustee thereunder. Upon request of any
such  successor  Trustee,  the Company shall execute any and all  instruments in
writing for more fully and certainly vesting in and confirming to such successor
Trustee  all  such  rights  and  powers.  Any  Trustee  ceasing  to  act  shall,
nevertheless, retain a lien upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the  provisions of Section
6.6.

         If a successor Trustee is appointed,  the Company, the retiring Trustee
and the successor  Trustee  shall execute and deliver an indenture  supplemental
hereto  which shall  contain  such  provisions  as shall be deemed  necessary or
desirable  to  confirm  that all the  rights,  powers,  trusts and duties of the
retiring  Trustee with  respect to the  Debentures  as to which the  predecessor
Trustee is not retiring shall continue to be vested in the predecessor  Trustee,
and shall add to or change any of the  provisions of this  Indenture as shall be
necessary to provide for or facilitate the administration of the Trust hereunder
by more than one Trustee,  it being  understood  that nothing  herein or in such
supplemental  indenture shall  constitute such Trustees  co-trustees of the same
trust and that each such Trustee shall be Trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder  administered by any other
such Trustee.

         No  successor  Trustee  shall  accept  appointment  as provided in this
Section unless at the time of such  acceptance  such successor  Trustee shall be
eligible under the provisions of Section 6.8.

         In no  event  shall a  retiring  Trustee  be  liable  for  the  acts or
omissions of any successor Trustee hereunder.
<PAGE>

         Upon  acceptance of appointment  by a successor  Trustee as provided in
this  Section  6.10,  the Company  shall mail notice of the  succession  of such
Trustee  hereunder to the holders of Debentures at their addresses as they shall
appear on the  Debenture  Register.  If the  Company  fails to mail such  notice
within 10 Business  Days after the  acceptance of  appointment  by the successor
Trustee,  the  successor  Trustee  shall  cause such  notice to be mailed at the
expense of the Company.

         Section 6.11.  Succession by Merger, etc. Any  corporation  into  which
                        -------------------------
the Trustee may be merged or converted or with which it may be consolidated,  or
any corporation resulting from any merger,  conversion or consolidation to which
the  Trustee  shall  be a  party,  or  any  corporation  succeeding  to  all  or
substantially  all of the corporate trust business of the Trustee,  shall be the
successor of the Trustee  hereunder without the execution or filing of any paper
or any  further  act on the part of any of the  parties  hereto;  provided  such
corporation shall be otherwise eligible and qualified under this Article.

         In case at the time such  successor to the Trustee shall succeed to the
trusts  created  by  this  Indenture  any  of the  Debentures  shall  have  been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate  of  authentication  of any  predecessor  Trustee,  and deliver such
Debentures  so  authenticated;  and in case at that  time any of the  Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures  either in the name of any predecessor  hereunder or in the name
of the successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debentures or in this Indenture  provided
that the  certificate  of the Trustee shall have;  provided,  however,  that the
                                                   --------   -------
right to adopt the certificate of authentication  of any predecessor  Trustee or
authenticate  Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.

         Section 6.12.  Authenticating  Agents.  There   may   be  one  or  more
                        ----------------------
Authenticating  Agents  appointed by the Trustee upon the request of the Company
with  power  to  act  on  its  behalf  and  subject  to  its  direction  in  the
authentication  and delivery of Debentures  issued upon exchange or registration
of  transfer  thereof as fully to all  intents  and  purposes as though any such
Authenticating  Agent had been expressly  authorized to authenticate and deliver
Debentures;  provided,  however, that the Trustee shall have no liability to the
             --------   -------
Company for any acts or  omissions of the  Authenticating  Agent with respect to
the authentication  and delivery of Debentures.  Any such  Authenticating  Agent
shall at all times be a corporation  organized and doing business under the laws
of the United States or of any state or territory  thereof or of the District of
Columbia  authorized under such laws to act as  Authenticating  Agent,  having a
combined  capital and surplus of at least  $50,000,000.00  and being  subject to
supervision  or  examination  by  federal,  state,  territorial  or  District of
Columbia authority.  If such corporation publishes reports of condition at least
annually  pursuant to law or the  requirements of such  authority,  then for the
purposes  of  this  Section  6.12  the  combined  capital  and  surplus  of such
corporation  shall be deemed to be its combined capital and surplus as set forth
in its  most  recent  report  of  condition  so  published.  If at any  time  an
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  it shall resign  immediately in the manner and with
the effect herein specified in this Section.

         Any corporation  into which any  Authenticating  Agent may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  consolidation or conversion to which any Authenticating  Agent
shall be a party, or any corporation  succeeding to all or substantially  all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such  Authenticating  Agent  hereunder,  if  such  successor  corporation  is
otherwise  eligible  under this Section 6.12 without the  execution or filing of
any  paper  or any  further  act on the  part  of the  parties  hereto  or  such
Authenticating Agent.

         Any  Authenticating  Agent may at any time  resign  by  giving  written
notice of resignation to the Trustee and to the Company.  The Trustee may at any

<PAGE>

time  terminate  the  agency of any  Authenticating  Agent  with  respect to the
Debentures by giving written notice of termination to such Authenticating  Agent
and to the Company.  Upon  receiving such a notice of resignation or upon such a
termination,  or in case at any time any Authenticating  Agent shall cease to be
eligible  under this Section 6.12,  the Trustee may, and upon the request of the
Company shall, promptly appoint a successor  Authenticating Agent eligible under
this Section 6.12,  shall give written notice of such appointment to the Company
and shall mail notice of such  appointment  to all holders of  Debentures as the
names and  addresses  of such  holders  appear on the  Debenture  Register.  Any
successor  Authenticating  Agent upon  acceptance of its  appointment  hereunder
shall become vested with all rights,  powers,  duties and responsibilities  with
respect to the Debentures of its predecessor  hereunder,  with like effect as if
originally named as Authenticating Agent herein.

         The Company agrees to pay to any Authenticating Agent from time to time
reasonable compensation for its services. Any Authenticating Agent shall have no
responsibility or liability for any action taken by it as such in accordance
with the directions of the Trustee.

                                  ARTICLE VII.
                         CONCERNING THE SECURITYHOLDERS
                         ------------------------------

         Section 7.1.   Action by Securityholders. Whenever in this Indenture it
                        -------------------------
is provided that the holders of a specified  percentage  in aggregate  principal
amount of the Debentures may take any action (including the making of any demand
or  request,  the giving of any  notice,  consent or waiver or the taking of any
other action) the fact that at the time of taking any such action the holders of
such  specified  percentage  have  joined  therein may be  evidenced  (a) by any
instrument  or any number of  instruments  of  similar  tenor  executed  by such
Securityholders  in person or by agent or proxy appointed in writing,  or (b) by
the record of such holders of Debentures  voting in favor thereof at any meeting
of such  Securityholders  duly called and held in accordance with the provisions
of Article VIII, or (c) by a combination of such  instrument or instruments  and
any such  record of such a meeting of such  Securityholders  or (d) by any other
method the Trustee deems satisfactory.

         If the Company  shall  solicit  from the  Securityholders  any request,
demand,  authorization,  direction,  notice,  consent, waiver or other action or
revocation  of the same,  the Company  may, at its option,  as  evidenced  by an
Officers' Certificate,  fix in advance a record date for such Debentures for the
determination  of  Securityholders   entitled  to  give  such  request,  demand,
authorization,  direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization,  direction, notice, consent,
waiver or other  action or  revocation  of the same may be given before or after
the record date, but only the Securityholders of record at the close of business
on the record  date shall be deemed to be  Securityholders  for the  purposes of
determining whether  Securityholders of the requisite  proportion of outstanding
Debentures  have  authorized  or agreed or  consented to such  request,  demand,
authorization,  direction, notice, consent, waiver or other action or revocation
of the same, and for that purpose the outstanding  Debentures  shall be computed
as of the record date; provided, however, that no such authorization,  agreement
                       --------  -------
or consent by such  Securityholders on the record date shall be deemed effective
unless it shall become  effective  pursuant to the  provisions of this Indenture
not later than 6 months after the record date.

         Section 7.2.   Proof of Execution  by  Securityholders.  Subject to the
                        ---------------------------------------
provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument
by a  Securityholder  or his  agent or  proxy  shall  be  sufficient  if made in
accordance  with such  reasonable  rules and regulations as may be prescribed by
the  Trustee or in such  manner as shall be  satisfactory  to the  Trustee.  The
ownership  of  Debentures  shall be proved  by the  Debenture  Register  or by a
certificate of the Debenture registrar.  The Trustee may require such additional
proof of any matter referred to in this Section as it shall deem necessary.
<PAGE>

         The  record  of any  Securityholders'  meeting  shall be  proved in the
manner provided in Section 8.6.

         Section 7.3.   Who Are Deemed Absolute Owners. Prior to due presentment
                        -------------------------------
for  registration of transfer of any Debenture,  the Company,  the Trustee,  any
Authenticating  Agent,  any paying agent,  any transfer  agent and any Debenture
registrar may deem the Person in whose name such  Debenture  shall be registered
upon the Debenture  Register to be, and may treat him as, the absolute  owner of
such Debenture  (whether or not such Debenture shall be overdue) for the purpose
of receiving payment of or on account of the principal of, premium,  if any, and
interest on such Debenture and for all other  purposes;  and neither the Company
nor the  Trustee  nor any  Authenticating  Agent  nor any  paying  agent nor any
transfer  agent nor any Debenture  registrar  shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or upon
his  order  shall  be  valid,  and,  to the  extent  of the sum or sums so paid,
effectual to satisfy and discharge  the  liability  for moneys  payable upon any
such Debenture.

         Section 7.4.   Debentures Owned by Company Deemed Not  Outstanding.  In
                        ---------------------------------------------------
determining  whether the holders of the requisite  aggregate principal amount of
Debentures  have  concurred  in any  direction,  consent  or waiver  under  this
Indenture, Debentures which are owned by the Company or any other obligor on the
Debentures or by any Person directly or indirectly  controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Debentures  shall be disregarded and deemed not to be outstanding for the
purpose of any such determination;  provided,  however, that for the purposes of
                                    --------   -------
determining  whether  the  Trustee  shall be  protected  in  relying on any such
direction, consent or waiver, only Debentures which a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. Debentures so owned
which have been  pledged in good faith may be  regarded as  outstanding  for the
purposes of this Section 7.4 if the pledgee shall establish to the  satisfaction
of the Trustee the pledgee's  right to vote such Debentures and that the pledgee
is not the Company or any such other  obligor or Person  directly or  indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other  obligor.  In the case of a dispute as to such  right,
any  decision  by the  Trustee  taken upon the  advice of counsel  shall be full
protection to the Trustee.

         Section 7.5.   Revocation of Consents;  Future  Holders  Bound.  At any
                        -----------------------------------------------
time prior to (but not after) the  evidencing  to the  Trustee,  as  provided in
Section  7.1,  of the taking of any action by the holders of the  percentage  in
aggregate  principal  amount of the  Debentures  specified in this  Indenture in
connection with such action,  any holder (in cases where no record date has been
set pursuant to Section 7.1) or any holder as of an  applicable  record date (in
cases where a record date has been set  pursuant to Section  7.1) of a Debenture
(or any  Debenture  issued  in  whole  or in part in  exchange  or  substitution
therefor)  the serial number of which is shown by the evidence to be included in
the Debentures the holders of which have consented to such action may, by filing
written notice with the Trustee at the Principal  Office of the Trustee and upon
proof of holding  as  provided  in Section  7.2,  revoke  such  action so far as
concerns such Debenture (or so far as concerns the principal amount  represented
by any exchanged or substituted Debenture).  Except as aforesaid any such action
taken by the holder of any Debenture  shall be conclusive  and binding upon such
holder and upon all future  holders  and  owners of such  Debenture,  and of any
Debenture  issued in exchange or  substitution  therefor or on  registration  of
transfer thereof,  irrespective of whether or not any notation in regard thereto
is made upon such Debenture or any Debenture  issued in exchange or substitution
therefor.

                                 ARTICLE VIII.
                            SECURITYHOLDERS' MEETINGS
                            -------------------------

         Section 8.1.   Purposes of Meetings.  A meeting of Securityholders  may
                        --------------------
be called at any time and from time to time  pursuant to the  provisions of this
Article VIII for any of the following purposes:
<PAGE>

         (a)   to give  any  notice to the Company or to the Trustee, or to give
any  directions  to the  Trustee,  or to consent to the  waiving of any  default
hereunder  and its  consequences,  or to take any other action  authorized to be
taken by Securityholders pursuant to any of the provisions of Article V;

         (b)   to remove the Trustee and nominate a  successor  trustee pursuant
to the provisions of Article VI;

         (c)   to consent  to  the  execution  of  an  indenture  or  indentures
supplemental hereto pursuant to the provisions of Section 9.2; or

         (d)   to take  any other action  authorized to be taken by or on behalf
of the holders of any specified  aggregate  principal  amount of such Debentures
under any other provision of this Indenture or under applicable law.

         Section 8.2.   Call of Meetings by Trustee. The Trustee may at any time
                        ---------------------------
call a meeting of  Securityholders  to take any action specified in Section 8.1,
to be held at such time and at such place as the Trustee shall determine. Notice
of every meeting of the Securityholders, setting forth the time and the place of
such  meeting  and in  general  terms the  action  proposed  to be taken at such
meeting, shall be mailed to holders of Debentures affected at their addresses as
they shall appear on the Debentures Register and, if the Company is not a holder
of Debentures,  to the Company. Such notice shall be mailed not less than 20 nor
more than 180 days prior to the date fixed for the meeting.

         Section 8.3.   Call of Meetings by Company or Securityholders.  In case
                        ----------------------------------------------
at any time the  Company  pursuant to a Board  Resolution,  or the holders of at
least 10% in aggregate  principal amount of the Debentures,  as the case may be,
then  outstanding,  shall  have  requested  the  Trustee  to call a  meeting  of
Securityholders,  by written  request  setting  forth in  reasonable  detail the
action  proposed  to be taken at the  meeting,  and the  Trustee  shall not have
mailed the notice of such meeting  within 20 days after receipt of such request,
then the Company or such  Securityholders  may  determine the time and the place
for such  meeting  and may call such  meeting to take any action  authorized  in
Section 8.1, by mailing notice thereof as provided in Section 8.2.

         Section 8.4.   Qualifications for Voting. To be entitled to vote at any
                        -------------------------
meeting  of  Securityholders  a  Person  shall  (a) be a  holder  of one or more
Debentures  with  respect  to which the  meeting  is being  held or (b) a Person
appointed by an  instrument  in writing as proxy by a holder of one or more such
Debentures.  The only Persons who shall be entitled to be present or to speak at
any meeting of  Securityholders  shall be the  Persons  entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.

         Section 8.5.   Regulations.  Notwithstanding  any  other  provisions of
                        -----------
this Indenture,  the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders,  in regard to proof of the holding
of  Debentures  and  of  the  appointment  of  proxies,  and  in  regard  to the
appointment and duties of inspectors of votes, the submission and examination of
proxies,  certificates  and other  evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.

         The Trustee  shall,  by an instrument  in writing,  appoint a temporary
chairman  of the  meeting,  unless the  meeting  shall  have been  called by the
Company or by  Securityholders  as  provided  in Section  8.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary  chairman.  A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
<PAGE>

         Subject to the provisions of Section 7.4, at any meeting each holder of
Debentures  with respect to which such  meeting is being held or proxy  therefor
shall be entitled to one vote for each $1,000.00  principal amount of Debentures
held or represented  by him;  provided,  however,  that no vote shall be cast or
                              --------   -------
counted at any meeting in respect of any Debenture challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding.  The chairman of
the meeting shall have no right to vote other than by virtue of Debentures  held
by him or instruments in writing as aforesaid duly designating him as the Person
to vote on behalf of other Securityholders.  Any meeting of Securityholders duly
called  pursuant to the  provisions of Section 8.2 or 8.3 may be adjourned  from
time to time by a  majority  of those  present,  whether or not  constituting  a
quorum, and the meeting may be held as so adjourned without further notice.

         Section 8.6.   Voting.  The vote upon any  resolution  submitted to any
                        ------
meeting of holders of  Debentures  with  respect to which such  meeting is being
held shall be by written  ballots on which shall be subscribed the signatures of
such  holders  or of their  representatives  by proxy and the  serial  number or
numbers of the Debentures held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against  any  resolution  and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the  meeting.  A record in duplicate  of the  proceedings  of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and  affidavits by one or more Persons
having  knowledge of the facts setting forth a copy of the notice of the meeting
and showing  that said notice was mailed as provided in Section  8.2. The record
shall show the serial  numbers of the  Debentures  voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent  chairman and secretary of the meeting and one of the duplicates shall
be  delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.

         Any record so signed and verified  shall be conclusive  evidence of the
matters therein stated.

         Section 8.7.   Quorum; Actions. The Persons entitled to vote a majority
                        ---------------
in principal amount of the Debentures then outstanding shall constitute a quorum
for a meeting of Securityholders; provided, however, that if any action is to be
                                  --------  -------
taken at such  meeting  with  respect to a  consent,  waiver,  request,  demand,
notice,  authorization,  direction  or other  action  which  may be given by the
holders  of not less than a  specified  percentage  in  principal  amount of the
Debentures then outstanding,  the Persons holding or representing such specified
percentage  in  principal   amount  of  the  Debentures  then  outstanding  will
constitute  a quorum.  In the absence of a quorum  within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request of
Securityholders,  be  dissolved.  In any other case the meeting may be adjourned
for a period of not less than 10 days as determined by the permanent chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned  meeting,  such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the permanent chairman of
the meeting prior to the  adjournment of such adjourned  meeting.  Notice of the
reconvening of any adjourned  meeting shall be given as provided in Section 8.2,
except  that such  notice  need be given only once not less than 5 days prior to
the date on which the  meeting  is  scheduled  to be  reconvened.  Notice of the
reconvening of an adjourned  meeting shall state  expressly the  percentage,  as
provided above, of the principal amount of the Debentures then outstanding which
shall constitute a quorum.

         Except as limited by the  provisos  in the first  paragraph  of Section
9.2, any resolution  presented to a meeting or adjourned meeting duly reconvened
at which a quorum is present as aforesaid may be adopted by the affirmative vote
of the  holders  of a  majority  in  principal  amount  of the  Debentures  then
outstanding;  provided,  however, that, except as limited by the provisos in the
              --------   -------

<PAGE>

first  paragraph  of Section 9.2,  any  resolution  with respect to any consent,
waiver, request, demand, notice, authorization,  direction or other action which
this Indenture expressly provides may be given by the holders of not less than a
specified  percentage in principal amount of the Debentures then outstanding may
be adopted at a meeting or an adjourned  meeting duly  reconvened and at which a
quorum is present as aforesaid only by the affirmative  vote of the holders of a
not less than such  specified  percentage in principal  amount of the Debentures
then outstanding.

         Any  resolution  passed or decision  taken at any meeting of holders of
Debentures duly held in accordance with this Section shall be binding on all the
Securityholders, whether or not present or represented at the meeting.

                                   ARTICLE IX.
                             SUPPLEMENTAL INDENTURES
                             -----------------------

         Section 9.1.   Supplemental    Indentures     without     Consent    of
                        --------------------------------------------------------
Securityholders.  The Company,  when authorized by a Board  Resolution,  and the
---------------
Trustee  may from  time to time  and at any  time  enter  into an  indenture  or
indentures supplemental hereto, without the consent of the Securityholders,  for
one or more of the following purposes:

         (a)   to evidence the succession of another  Person to the Company,  or
successive  successions,  and the  assumption  by the  successor  Person  of the
covenants,  agreements and  obligations  of the Company,  pursuant to Article XI
hereof;

         (b)   to add to the covenants of the Company  such  further  covenants,
restrictions  or conditions  for the  protection of the holders of Debentures as
the Board of Directors shall consider to be for the protection of the holders of
such Debentures,  and to make the occurrence, or the occurrence and continuance,
of a default in any of such additional  covenants,  restrictions or conditions a
default or an Event of Default  permitting the  enforcement of all or any of the
several  remedies  provided  in this  Indenture  as herein set forth;  provided,
                                                                       --------
however,  that  in  respect  of any  such  additional  covenant  restriction  or
-------
condition  such  supplemental  indenture may provide for a particular  period of
grace after default  (which period may be shorter or longer than that allowed in
the case of other  defaults)  or may provide for an immediate  enforcement  upon
such  default  or may limit the  remedies  available  to the  Trustee  upon such
default;

         (c)   to cure any ambiguity or to correct or supplement  any  provision
contained  herein or in any  supplemental  indenture  which may be  defective or
inconsistent  with any other provision  contained  herein or in any supplemental
indenture,  or to make such other  provisions  in regard to matters or questions
arising under this Indenture; provided that any such action shall not materially
                              --------
adversely affect the interests of the holders of the Debentures;

         (d)   to add to, delete  from,  or  revise  the  terms  of  Debentures,
including,  without  limitation,  any terms relating to the issuance,  exchange,
registration  or  transfer of  Debentures,  including  to provide  for  transfer
procedures and  restrictions  substantially  similar to those  applicable to the
Capital  Securities as required by Section 2.5 (for purposes of assuring that no
registration  of Debentures is required  under the  Securities  Act);  provided,
                                                                       --------
however,  that any such action shall not  adversely  affect the interests of the
-------
holders of the Debentures then outstanding (it being understood, for purposes of
this proviso, that transfer restrictions on Debentures  substantially similar to
those  that  were  applicable  to  Capital  Securities  shall  not be  deemed to
materially adversely affect the holders of the Debentures);

         (e)   to  evidence  and  provide  for  the  acceptance  of  appointment
hereunder by a successor Trustee with respect to the Debentures and to add to or


<PAGE>

change any of the  provisions of this Indenture as shall be necessary to provide
for or facilitate the  administration  of the trusts  hereunder by more than one
Trustee;

         (f)   to make any change  (other  than as  elsewhere  provided  in this
paragraph) that does not adversely  affect the rights of any  Securityholder  in
any material respect; or

         (g)   to provide for the issuance of and establish  the form and  terms
and conditions of the  Debentures,  to establish the form of any  certifications
required  to be  furnished  pursuant  to the  terms  of  this  Indenture  or the
Debentures, or to add to the rights of the holders of Debentures.

         The  Trustee  is  hereby  authorized  to join with the  Company  in the
execution of any such supplemental  indenture,  to make any further  appropriate
agreements  and  stipulations  which may be therein  contained and to accept the
conveyance,  transfer and assignment of any property thereunder, but the Trustee
shall  not be  obligated  to,  but may in its  discretion,  enter  into any such
supplemental  indenture  which  affects  the  Trustee's  own  rights,  duties or
immunities under this Indenture or otherwise.

         Any supplemental indenture authorized by the provisions of this Section
9.1 may be executed  by the  Company and the Trustee  without the consent of the
holders of any of the Debentures at the time outstanding, notwithstanding any of
the provisions of Section 9.2.

         Section 9.2.   Supplemental Indentures with Consent of Securityholders.
                        -------------------------------------------------------
With the consent  (evidenced  as provided in Section  7.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
outstanding  affected by such supplemental  indenture  (voting as a class),  the
Company, when authorized by a Board Resolution, and the Trustee may from time to
time and at any time enter into an indenture or indentures  supplemental  hereto
for the  purpose  of adding  any  provisions  to or  changing  in any  manner or
eliminating  any of the  provisions  of this  Indenture  or of any  supplemental
indenture  or of  modifying  in any  manner  the  rights of the  holders  of the
Debentures; provided, however, that no such supplemental indenture shall without
            --------  -------
the consent of the  holders of each  Debenture  then  outstanding  and  affected
thereby (i) change the fixed maturity of any Debenture,  or reduce the principal
amount thereof or any premium thereon,  or reduce the rate or extend the time of
payment of interest thereon,  or reduce any amount payable on redemption thereof
or make the principal  thereof or any interest or premium thereon payable in any
coin or currency other than that provided in the Debentures, or impair or affect
the right of any  Securityholder to institute suit for payment thereof or impair
the right of repayment,  if any, at the option of the holder, or (ii) reduce the
aforesaid  percentage of Debentures the holders of which are required to consent
to any such  supplemental  indenture;  provided  further,  however,  that if the
                                       --------  -------   -------
Debentures  are held by a trust or a trustee of such  trust,  such  supplemental
indenture  shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such supplemental  indenture;
provided  further,  however,  that if the consent of the  Securityholder of each
--------  -------   -------
outstanding  Debenture is required,  such  supplemental  indenture  shall not be
effective until each holder of the Trust Securities shall have consented to such
supplemental indenture.

         Upon the  request  of the  Company  accompanied  by a Board  Resolution
authorizing  the  execution  of any such  supplemental  indenture,  and upon the
filing  with the  Trustee  of  evidence  of the  consent of  Securityholders  as
aforesaid,  the  Trustee  shall join with the Company in the  execution  of such
supplemental  indenture unless such supplemental indenture affects the Trustee's
own rights,  duties or immunities  under this  Indenture or otherwise,  in which
case the Trustee may in its  discretion,  but shall not be  obligated  to, enter
into such supplemental indenture.

         Promptly  after the  execution  by the  Company  and the Trustee of any
supplemental  indenture pursuant to the provisions of this Section,  the Trustee
shall transmit by mail, first class postage prepaid,  a notice,  prepared by the
Company,  setting  forth in general  terms the  substance  of such  supplemental
indenture,  to the  Securityholders as their names and addresses appear upon the

<PAGE>

Debenture  Register.  Any  failure of the  Trustee to mail such  notice,  or any
defect therein,  shall not, however, in any way impair or affect the validity of
any such supplemental indenture.

         It shall not be necessary for the consent of the Securityholders  under
this Section 9.2 to approve the  particular  form of any  proposed  supplemental
indenture,  but it  shall  be  sufficient  if such  consent  shall  approve  the
substance thereof.

         Section 9.3.   Effect of Supplemental Indentures. Upon the execution of
                        ----------------------------------
any supplemental  indenture  pursuant to the provisions of this Article IX, this
Indenture  shall be and be deemed  to be  modified  and  amended  in  accordance
therewith and the respective rights, limitations of rights, obligations,  duties
and immunities under this Indenture of the Trustee,  the Company and the holders
of Debentures shall thereafter be determined,  exercised and enforced  hereunder
subject in all respects to such  modifications  and amendments and all the terms
and conditions of any such  supplemental  indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

         Section 9.4.   Notation on  Debentures.  Debentures  authenticated  and
                        -----------------------
delivered  after the  execution of any  supplemental  indenture  pursuant to the
provisions of this Article IX may bear a notation as to any matter  provided for
in  such  supplemental  indenture.  If the  Company  or  the  Trustee  shall  so
determine, new Debentures so modified as to conform, in the opinion of the Board
of Directors of the Company,  to any modification of this Indenture contained in
any such  supplemental  indenture  may be prepared  and executed by the Company,
authenticated  by the  Trustee  or the  Authenticating  Agent and  delivered  in
exchange for the Debentures then outstanding.

         Section 9.5.   Evidence of Compliance of  Supplemental  Indenture to be
                        --------------------------------------------------------
Furnished to Trustee. The Trustee, subject to the provisions of Sections 6.1 and
--------------------
6.2,  shall, in addition to the documents  required by Section 14.6,  receive an
Officers'  Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental  indenture  executed pursuant hereto complies with the requirements
of this  Article  IX.  The  Trustee  shall  receive  an  Opinion  of  Counsel as
conclusive  evidence that any supplemental  indenture  executed pursuant to this
Article IX is  authorized  or  permitted  by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee  under the  provisions  of this
Article IX to join in the execution thereof.

                                   ARTICLE X.
                            REDEMPTION OF SECURITIES
                            ------------------------

         Section 10.1.  Optional  Redemption.  The  Company shall have the right
                        --------------------
(subject to the receipt by the Company of prior approval (i) if the Company is a
bank  holding  company,  from  the  Federal  Reserve,  if  then  required  under
applicable  capital guidelines or policies of the Federal Reserve or (ii) if the
Company is a savings and loan holding  company,  from the OTS, if then  required
under  applicable  capital  guidelines  or  policies  of the OTS) to redeem  the
Debentures,  in whole or in part,  but in all cases in a  principal  amount with
integral  multiples of $1,000.00,  on any Interest  Payment Date on or after the
Interest  Payment  Date  in  September  2009  (the  "Redemption  Date"),  at the
                                                     ----------------
Redemption Price.

         Section 10.2.  Special Event Redemption. If a Special Event shall occur
                        ------------------------
and be  continuing,  the Company shall have the right (subject to the receipt by
the Company of prior approval (i) if the Company is a bank holding company, from
the Federal  Reserve,  if then required under applicable  capital  guidelines or
policies  of the  Federal  Reserve or (ii) if the  Company is a savings and loan
holding  company,  from the  OTS,  if then  required  under  applicable  capital
guidelines or policies of the OTS) to redeem the Debentures in whole, but not in
part, at any Interest Payment Date,  within 120 days following the occurrence of
such Special Event (the  "Special  Redemption  Date") at the Special  Redemption
                          -------------------------
Price.
<PAGE>

         Section 10.3.  Notice of Redemption;  Selection of Debentures.  In case
                        ----------------------------------------------
the Company  shall  desire to exercise  the right to redeem all, or, as the case
may be, any part of the Debentures, it shall cause to be mailed a notice of such
redemption at least 30 and not more than 60 days prior to the Redemption Date or
the Special  Redemption Date to the holders of Debentures so to be redeemed as a
whole or in part at their last  addresses  as the same  appear on the  Debenture
Register. Such mailing shall be by first class mail. The notice if mailed in the
manner herein provided shall be  conclusively  presumed to have been duly given,
whether or not the holder  receives  such notice.  In any case,  failure to give
such  notice by mail or any defect in the notice to the holder of any  Debenture
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Debenture.

         Each such notice of redemption shall specify the CUSIP number,  if any,
of the Debentures to be redeemed,  the Redemption Date or the Special Redemption
Date, as applicable,  the Redemption Price or the Special  Redemption  Price, as
applicable,  at which  Debentures  are to be  redeemed,  the  place or places of
payment,  that  payment  will be made upon  presentation  and  surrender of such
Debentures,  that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portions  thereof to be redeemed  will cease to accrue.  If less than all
the  Debentures  are to be redeemed the notice of  redemption  shall specify the
numbers of the  Debentures  to be  redeemed.  In case the  Debentures  are to be
redeemed in part only,  the notice of redemption  shall state the portion of the
principal  amount  thereof to be redeemed  and shall state that on and after the
date fixed for redemption,  upon surrender of such Debenture, a new Debenture or
Debentures in principal  amount equal to the unredeemed  portion thereof will be
issued.

         Prior to  10:00  a.m.  New York  City  time on the  Redemption  Date or
Special  Redemption  Date,  as  applicable,  the Company  will  deposit with the
Trustee  or with one or more  paying  agents an amount  of money  sufficient  to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate  Redemption  Price or
Special Redemption Price.

         If all,  or less than  all,  the  Debentures  are to be  redeemed,  the
Company  will give the  Trustee  notice  not less than 45 nor more than 60 days,
respectively,  prior to the  Redemption  Date or  Special  Redemption  Date,  as
applicable,  as to the aggregate  principal  amount of Debentures to be redeemed
and the Trustee shall select,  in such manner as in its sole discretion it shall
deem  appropriate  and fair,  the  Debentures  or portions  thereof (in integral
multiples of $1,000.00) to be redeemed.

         Section 10.4.  Payment of Debentures Called for Redemption.  If  notice
                        -------------------------------------------
of  redemption  has been given as provided in Section  10.3,  the  Debentures or
portions of  Debentures  with  respect to which such notice has been given shall
become due and payable on the  Redemption  Date or Special  Redemption  Date, as
applicable,  and at the place or places stated in such notice at the  applicable
Redemption Price or Special  Redemption Price and on and after said date (unless
the Company  shall default in the payment of such  Debentures at the  Redemption
Price or Special Redemption Price, as applicable)  interest on the Debentures or
portions  of  Debentures  so called for  redemption  shall  cease to accrue.  On
presentation and surrender of such Debentures at a place of payment specified in
said notice, such Debentures or the specified portions thereof shall be paid and
redeemed by the Company at the applicable Redemption Price or Special Redemption
Price.

         Upon  presentation of any Debenture  redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the  holder  thereof,  at the  expense of the  Company,  a new  Debenture  or
Debentures  of  authorized  denominations,  in  principal  amount  equal  to the
unredeemed portion of the Debenture so presented.
<PAGE>

                                  ARTICLE XI.
                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
                -------------------------------------------------

         Section 11.1.  Company May Consolidate, etc., on Certain Terms. Nothing
                        -----------------------------------------------
contained in this Indenture or in the Debentures shall prevent any consolidation
or  merger  of the  Company  with or  into  any  other  Person  (whether  or not
affiliated  with the Company) or successive  consolidations  or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any sale,  conveyance,  transfer or other disposition of the property or
capital stock of the Company or its  successor or successors as an entirety,  or
substantially  as an entirety,  to any other Person  (whether or not  affiliated
with the Company,  or its  successor or  successors)  authorized  to acquire and
operate the same;  provided,  however,  that the Company  hereby  covenants  and
                   --------   -------
agrees that, upon any such  consolidation,  merger (where the Company is not the
surviving corporation), sale, conveyance, transfer or other disposition, the due
and punctual  payment of the principal of (and premium,  if any) and interest on
all of the Debentures in accordance with their terms,  according to their tenor,
and the due and punctual  performance  and  observance  of all the covenants and
conditions  of this  Indenture to be kept or performed by the Company,  shall be
expressly assumed by supplemental  indenture satisfactory in form to the Trustee
executed  and   delivered   to  the  Trustee  by  the  entity   formed  by  such
consolidation,  or into  which the  Company  shall have been  merged,  or by the
entity which shall have acquired such property or capital stock.

         Section 11.2.  Successor Entity to be Substituted.  In case of any such
                        ----------------------------------
consolidation,  merger, sale, conveyance, transfer or other disposition and upon
the assumption by the successor entity, by supplemental indenture,  executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Debentures and the due and punctual performance and observance of all of the
covenants and  conditions  of this  Indenture to be performed or observed by the
Company,  such  successor  entity shall  succeed to and be  substituted  for the
Company, with the same effect as if it had been named herein as the Company, and
thereupon the predecessor  entity shall be relieved of any further  liability or
obligation hereunder or upon the Debentures. Such successor entity thereupon may
cause to be signed,  and may issue in its own name, any or all of the Debentures
issuable  hereunder which  theretofore shall not have been signed by the Company
and delivered to the Trustee or the Authenticating Agent; and, upon the order of
such  successor  entity  instead of the  Company  and  subject to all the terms,
conditions  and  limitations in this  Indenture  prescribed,  the Trustee or the
Authenticating  Agent  shall  authenticate  and  deliver  any  Debentures  which
previously  shall have been signed and delivered by the officers of the Company,
to  the  Trustee  or  the  Authenticating  Agent  for  authentication,  and  any
Debentures which such successor  entity  thereafter shall cause to be signed and
delivered to the Trustee or the Authenticating  Agent for that purpose.  All the
Debentures  so issued shall in all respects have the same legal rank and benefit
under this  Indenture as the  Debentures  theretofore  or  thereafter  issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof.

         Section 11.3.  Opinion of Counsel to be Given to Trustee.  The Trustee,
                        -----------------------------------------
subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to
the  Opinion  of  Counsel  required  by  Section  9.5,  an Opinion of Counsel as
conclusive evidence that any consolidation,  merger, sale, conveyance,  transfer
or other disposition, and any assumption,  permitted or required by the terms of
this Article XI complies with the provisions of this Article XI.

                                  ARTICLE XII.
                     SATISFACTION AND DISCHARGE OF INDENTURE
                     ---------------------------------------

         Section 12.1.  Discharge of Indenture. When
                        ----------------------

         (a)   the Company  shall  deliver to the Trustee for  cancellation  all
               Debentures  theretofore  authenticated (other than any Debentures
               which shall have been  destroyed,  lost or stolen and which shall
               have been  replaced or paid as  provided in Section  2.6) and not
               theretofore canceled, or
<PAGE>

         (b)   all the Debentures not  theretofore  canceled or delivered to the
               Trustee for  cancellation  shall have become due and payable,  or
               are by their terms to become due and payable within 1 year or are
               to be called  for  redemption  within 1 year  under  arrangements
               satisfactory   to  the  Trustee  for  the  giving  of  notice  of
               redemption,  and the Company shall  deposit with the Trustee,  in
               trust,  funds,  which  shall  be  immediately  due  and  payable,
               sufficient  to pay at  maturity  or  upon  redemption  all of the
               Debentures  (other  than any  Debentures  which  shall  have been
               destroyed,  lost or stolen and which shall have been  replaced or
               paid as  provided  in Section  2.6) not  theretofore  canceled or
               delivered to the Trustee for  cancellation,  including  principal
               and  premium,  if any,  and interest due or to become due to such
               date of  maturity  or  redemption  date,  as the case may be, but
               excluding,  however,  the amount of any moneys for the payment of
               principal of, and premium,  if any, or interest on the Debentures
               (1)  theretofore  repaid to the  Company in  accordance  with the
               provisions  of Section  12.4,  or (2) paid to any state or to the
               District  of  Columbia  pursuant  to its  unclaimed  property  or
               similar laws,

and if in the case of either clause (a) or clause (b) the Company shall also pay
or cause to be paid all other sums payable  hereunder by the Company,  then this
Indenture  shall  cease to be of further  effect  except for the  provisions  of
Sections  2.5,  2.6,  2.8,  3.1,  3.2,  3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall
survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6
and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by
an  Officers'  Certificate  and an Opinion of  Counsel,  each  stating  that all
conditions  precedent  herein  provided  for  relating to the  satisfaction  and
discharge of this Indenture have been complied with, and at the cost and expense
of the Company, shall execute proper instruments  acknowledging  satisfaction of
and discharging this Indenture.  The Company agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
in connection with this Indenture or the Debentures.

         Section 12.2.  Deposited  Moneys  to  be  Held  in  Trust  by  Trustee.
                        -------------------------------------------------------
Subject to the provisions of Section 12.4, all moneys deposited with the Trustee
pursuant  to  Section  12.1  shall be held in trust  in a  non-interest  bearing
account and applied by it to the payment,  either directly or through any paying
agent (including the Company if acting as its own paying agent),  to the holders
of the  particular  Debentures  for the  payment of which such  moneys have been
deposited  with the  Trustee,  of all sums due and to  become  due  thereon  for
principal, and premium, if any, and interest.

         Section 12.3.  Paying Agent to Repay Moneys Held. Upon the satisfaction
                        ---------------------------------
and discharge of this  Indenture all moneys then held by any paying agent of the
Debentures (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee,  and thereupon such paying agent shall be released
from all further liability with respect to such moneys.

         Section 12.4.  Return of Unclaimed Moneys. Any moneys deposited with or
                        --------------------------
paid to the  Trustee or any paying  agent for payment of the  principal  of, and
premium,  if any,  or  interest on  Debentures  and not  applied  but  remaining
unclaimed by the holders of Debentures for 2 years after the date upon which the
principal of, and premium,  if any, or interest on such Debentures,  as the case
may be,  shall  have  become  due and  payable,  shall,  subject  to  applicable
escheatment  laws,  be repaid to the Company by the Trustee or such paying agent
on written demand; and the holder of any of the Debentures shall thereafter look
only to the  Company  for any  payment  which  such  holder may be  entitled  to
collect,  and all  liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
<PAGE>

                                 ARTICLE XIII.
                    IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                    ----------------------------------------
                             OFFICERS AND DIRECTORS
                             ----------------------

         Section 13.1.  Indenture  and  Debentures Solely Corporate Obligations.
                        -------------------------------------------------------
No recourse for the payment of the principal of or premium,  if any, or interest
on any  Debenture,  or for any claim  based  thereon  or  otherwise  in  respect
thereof, and no recourse under or upon any obligation,  covenant or agreement of
the Company in this Indenture or in any supplemental  indenture,  or in any such
Debenture,  or because of the creation of any indebtedness  represented thereby,
shall  be had  against  any  incorporator,  stockholder,  employee,  officer  or
director,  as such, past,  present or future, of the Company or of any successor
Person of the Company,  either  directly or through the Company or any successor
Person of the Company, whether by virtue of any constitution, statute or rule of
law, or by the  enforcement of any assessment or penalty or otherwise,  it being
expressly  understood  that all such  liability is hereby  expressly  waived and
released as a condition  of, and as a  consideration  for, the execution of this
Indenture and the issue of the Debentures.

                                  ARTICLE XIV.
                            MISCELLANEOUS PROVISIONS
                            ------------------------

         Section 14.1.  Successors. All  the covenants,  stipulations,  promises
                        ----------
and agreements of the Company in this Indenture  shall bind its  successors  and
assigns whether so expressed or not.

         Section 14.2.  Official Acts by Successor Entity. Any act or proceeding
                        ---------------------------------
by any  provision  of  this  Indenture  authorized  or  required  to be  done or
performed  by any board,  committee  or officer of the Company  shall and may be
done and  performed  with like  force and effect by the like  board,  committee,
officer or other  authorized  Person of any entity that shall at the time be the
lawful successor of the Company.

         Section 14.3.  Surrender  of  Company Powers. The Company by instrument
                        ---------------------------
in writing executed by  authority  of at least 2/3 (two-thirds)  of its Board of
Directors and delivered to the Trustee may surrender any of the powers  reserved
to the Company and thereupon such power so surrendered  shall  terminate both as
to the Company, and as to any permitted successor.

         Section 14.4.  Addresses  for  Notices,  etc.  Any   notice,   consent,
                        -----------------------------
direction,  request,  authorization,  waiver or demand which by any provision of
this Indenture is required or permitted to be given,  made,  furnished or served
by the  Trustee or by the  Securityholders  on or to the Company may be given or
served in writing by being deposited  postage prepaid by registered or certified
mail in a post office letter box addressed  (until  another  address is filed by
the  Company,  with the Trustee for the  purpose) to the  Company,  600 James S.
McDonnell Boulevard,  Hazelwood,  Missouri 63042, Attention:  Lisa K. Vansickle.
Any notice, consent, direction, request, authorization,  waiver or demand by any
Securityholder  or the  Company to or upon the  Trustee  shall be deemed to have
been sufficiently  given or made, for all purposes,  if given or made in writing
at the office of the Trustee,  addressed to the Trustee,  Rodney  Square  North,
1100 North Market Street, Wilmington, Delaware 19890-1600,  Attention: Corporate
Trust Administration.  Any notice, consent, direction,  request,  authorization,
waiver  or  demand  on or to any  Securityholder  shall be  deemed  to have been
sufficiently given or made, for all purposes, if given or made in writing at the
address set forth in the Debenture Register.

         Section 14.5.  Governing Law.  This  Indenture and each Debenture shall
                        -------------
be deemed to be a contract made under the law of the State of New York,  and for
all purposes  shall be governed by and construed in  accordance  with the law of
said State, without regard to conflict of laws principles thereof.
<PAGE>

         Section 14.6.  Evidence of Compliance with Conditions  Precedent.  Upon
                        -------------------------------------------------
any application or demand by the Company to the Trustee to take any action under
any of the  provisions  of this  Indenture,  the  Company  shall  furnish to the
Trustee an Officers'  Certificate stating that in the opinion of the signers all
conditions  precedent,  if any,  provided for in this Indenture  relating to the
proposed  action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.

         Each  certificate  or  opinion  provided  for  in  this  Indenture  and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this  Indenture  shall  include (1) a statement  that the person
making such  certificate  or opinion has read such covenant or condition;  (2) a
brief statement as to the nature and scope of the  examination or  investigation
upon which the statements or opinions  contained in such  certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination  or  investigation  as is  necessary  to enable  him to  express  an
informed  opinion as to  whether  or not such  covenant  or  condition  has been
complied  with;  and (4) a statement as to whether or not in the opinion of such
person, such condition or covenant has been complied with.

         Section 14.7.  Table of Contents, Headings,  etc. The table of contents
                        ---------------------------------
and the titles and headings of the articles and sections of this  Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof,  and shall in no way modify or restrict  any of the terms or  provisions
hereof.

         Section 14.8.  Execution in Counterparts.   This   Indenture   may   be
                        -------------------------
executed in any number of counterparts,  each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

         Section 14.9.  Separability.  In case any one or more of the provisions
                        ------------
contained in this Indenture or in the Debentures shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or  unenforceability  shall not affect any other provisions of this Indenture or
of such Debentures, but this Indenture and such Debentures shall be construed as
if such invalid or illegal or  unenforceable  provision had never been contained
herein or therein.

         Section 14.10. Assignment. The Company will have the right at all times
                        ----------
to assign any of its rights or  obligations  under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company,  provided that, in the event of
any such  assignment,  the Company will remain liable for all such  obligations.
Subject to the  foregoing,  this  Indenture  is  binding  upon and inures to the
benefit of the parties hereto and their respective  successors and assigns. This
Indenture may not otherwise be assigned by the parties  hereto.

         Section 14.11. Acknowledgment of Rights. The  Company agrees that, with
                        ------------------------
respect to any Debentures held by the Trust or the Institutional  Trustee of the
Trust,  if the  Institutional  Trustee of the Trust  fails to enforce its rights
under  this  Indenture  as the holder of  Debentures  held as the assets of such
Trust  after the  holders of a majority  in  Liquidation  Amount of the  Capital
Securities of such Trust have so directed such  Institutional  Trustee, a holder
of record of such Capital  Securities  may, to the fullest  extent  permitted by
law,  institute legal  proceedings  directly against the Company to enforce such
Institutional  Trustee's rights under this Indenture  without first  instituting
any legal proceedings against such trustee or any other Person.  Notwithstanding
the  foregoing,  if an Event of Default has occurred and is continuing  and such
event is attributable to the failure of the Company to pay interest (or premium,
if any) or principal on the Debentures on the date such interest (or premium, if

<PAGE>

any) or  principal is otherwise  payable (or in the case of  redemption,  on the
redemption  date),  the  Company  agrees  that a holder  of  record  of  Capital
Securities of the Trust may directly  institute a proceeding against the Company
for  enforcement  of payment to such  holder  directly of the  principal  of (or
premium,  if any) or interest on the  Debentures  having an aggregate  principal
amount equal to the aggregate  Liquidation  Amount of the Capital  Securities of
such holder on or after the respective due date specified in the Debentures.

                                  ARTICLE XV.
                           SUBORDINATION OF DEBENTURES
                           ---------------------------

         Section 15.1.  Agreement to  Subordinate.  The  Company  covenants  and
                        -------------------------
agrees,  and each  holder  of  Debentures  by such  Securityholder's  acceptance
thereof  likewise  covenants  and agrees,  that all  Debentures  shall be issued
subject to the  provisions  of this  Article XV; and each holder of a Debenture,
whether upon original issue or upon transfer or assignment thereof,  accepts and
agrees to be bound by such provisions.

         The payment by the Company of the  principal  of, and premium,  if any,
and  interest  on all  Debentures  shall,  to  the  extent  and  in  the  manner
hereinafter  set forth,  be  subordinated  and junior in right of payment to the
prior  payment  in full  of all  Senior  Indebtedness  of the  Company,  whether
outstanding  at the date of this  Indenture or  thereafter  incurred;  provided,
                                                                       --------
however,  that the Debentures shall rank pari passu in right of payment with the
-------
Company's Floating Rate Junior  Subordinated  Deferrable Interest Debentures due
September  26, 2032 issued  pursuant to an Indenture  dated as of September  26,
2002 by and between the Company and State  Street Bank and Trust of  Connecticut
N.A.

         No  provision of this Article XV shall  prevent the  occurrence  of any
default or Event of Default hereunder.

         Section 15.2.  Default on Senior  Indebtedness. In the event and during
                        -------------------------------
the  continuation  of any default by the  Company in the  payment of  principal,
premium,  interest or any other  payment due on any Senior  Indebtedness  of the
Company  following  any grace  period,  or in the event that the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default and
such   acceleration   has  not  been  rescinded  or  canceled  and  such  Senior
Indebtedness  has not been paid in full,  then, in either case, no payment shall
be made by the Company with respect to the principal (including  redemption) of,
or premium, if any, or interest on the Debentures.

         In the event that,  notwithstanding the foregoing, any payment shall be
received  by the  Trustee  when such  payment  is  prohibited  by the  preceding
paragraph of this Section 15.2, such payment shall,  subject to Section 15.7, be
held in trust for the  benefit of, and shall be paid over or  delivered  to, the
holders of Senior  Indebtedness or their respective  representatives,  or to the
trustee or  trustees  under any  indenture  pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the  extent  that the  holders  of the  Senior  Indebtedness  (or  their
representative  or  representatives  or a trustee) notify the Trustee in writing
within 90 days of such  payment of the amounts  then due and owing on the Senior
Indebtedness and only the amounts  specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.

         Section 15.3.  Liquidation, Dissolution, Bankruptcy.  Upon  any payment
                        ------------------------------------
by the  Company  or  distribution  of  assets  of the  Company  of any  kind  or
character,  whether in cash,  property  or  securities,  to  creditors  upon any
dissolution  or  winding-up or  liquidation  or  reorganization  of the Company,
whether voluntary or involuntary or in bankruptcy,  insolvency,  receivership or
other proceedings,  all amounts due upon all Senior  Indebtedness of the Company
shall  first  be paid in  full,  or  payment  thereof  provided  for in money in
accordance with its terms, before any payment is made by the Company, on account
of the principal (and premium,  if any) or interest on the Debentures.  Upon any
such dissolution or winding-up or liquidation or reorganization,  any payment by
the Company,  or distribution of assets of the Company of any kind or character,
whether in cash,  property or securities,  to which the  Securityholders  or the
Trustee would be entitled to receive from the Company, except for the provisions
of this Article XV, shall be paid by the Company, or by any receiver, trustee in


<PAGE>

bankruptcy, liquidating  trustee, agent or other  Person  making such payment or
distribution,  or by the  Securityholders or by the Trustee under this Indenture
if received by them or it, directly to the holders of Senior  Indebtedness  (pro
rata  to  such  holders  on  the  basis  of the  respective  amounts  of  Senior
Indebtedness  held by such  holders,  as  calculated  by the  Company)  or their
representative  or  representatives,  or to the  trustee or  trustees  under any
indenture pursuant to which any instruments  evidencing such Senior Indebtedness
may have been issued,  as their respective  interests may appear,  to the extent
necessary to pay such Senior  Indebtedness  in full, in money or money's  worth,
after giving  effect to any  concurrent  payment or  distribution  to or for the
holders of such Senior Indebtedness,  before any payment or distribution is made
to the Securityholders or to the Trustee.

         In the event  that,  notwithstanding  the  foregoing,  any  payment  or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities,  prohibited by the  foregoing,  shall be received by the
Trustee before all Senior Indebtedness is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the   holders  of  such  Senior   Indebtedness   or  their   representative   or
representatives,  or to the trustee or trustees under any indenture  pursuant to
which any instruments  evidencing such Senior Indebtedness may have been issued,
as their  respective  interests may appear,  as  calculated by the Company,  for
application to the payment of all Senior  Indebtedness,  remaining unpaid to the
extent necessary to pay such Senior  Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the benefit of the holders of such Senior Indebtedness.

         For  purposes  of  this  Article  XV,  the  words  "cash,  property  or
securities"  shall not be deemed to  include  shares of stock of the  Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization  or readjustment,  the payment of which
is  subordinated at least to the extent provided in this Article XV with respect
to the  Debentures  to the payment of all Senior  Indebtedness,  that may at the
time be  outstanding,  provided that (i) such Senior  Indebtedness is assumed by
the  new  corporation,  if  any,  resulting  from  any  such  reorganization  or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not,  without the consent of such  holders,  altered by such  reorganization  or
readjustment.  The  consolidation  of the  Company  with,  or the  merger of the
Company into,  another  corporation  or the  liquidation  or  dissolution of the
Company following the conveyance or transfer of its property as an entirety,  or
substantially  as an  entirety,  to  another  corporation  upon  the  terms  and
conditions  provided for in Article XI of this  Indenture  shall not be deemed a
dissolution,  winding-up, liquidation or reorganization for the purposes of this
Section  if such  other  corporation  shall,  as a part  of such  consolidation,
merger,  conveyance or transfer, comply with the conditions stated in Article XI
of this  Indenture.  Nothing in Section 15.2 or in this  Section  shall apply to
claims of, or payments to, the Trustee  under or pursuant to Section 6.6 of this
Indenture.

         Section 15.4.  Subrogation.  Subject  to  the  payment  in  full of all
                        -----------
Senior  Indebtedness,  the Securityholders  shall be subrogated to the rights of
the holders of such Senior  Indebtedness to receive payments or distributions of
cash,  property  or  securities  of  the  Company,  applicable  to  such  Senior
Indebtedness  until the principal of (and  premium,  if any) and interest on the
Debentures  shall be paid in full.  For the  purposes  of such  subrogation,  no
payments or  distributions  to the holders of such  Senior  Indebtedness  of any
cash,  property or securities to which the  Securityholders or the Trustee would
be entitled  except for the  provisions  of this Article XV, and no payment over
pursuant  to the  provisions  of this  Article  XV to or for the  benefit of the
holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as
between the Company,  its creditors other than holders of Senior Indebtedness of
the  Company,  and the  holders of the  Debentures  be deemed to be a payment or
distribution by the Company to or on account of such Senior Indebtedness.  It is
understood  that the  provisions of this Article XV are and are intended  solely
for  the  purposes  of  defining  the  relative  rights  of the  holders  of the
Securities, on the one hand, and the holders of such Senior Indebtedness, on the
other hand.
<PAGE>

         Nothing  contained in this Article XV or elsewhere in this Indenture or
in the  Debentures is intended to or shall impair,  as between the Company,  its
creditors other than the holders of Senior Indebtedness,  and the holders of the
Debentures,  the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures  the principal of (and premium,  if any)
and interest on the Debentures as and when the same shall become due and payable
in accordance  with their terms,  or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company, other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the  Trustee  or the  holder  of any  Debenture  from  exercising  all  remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the  rights,  if any,  under this  Article XV of the  holders of such  Senior
Indebtedness in respect of cash, property or securities of the Company, received
upon the exercise of any such remedy.

         Upon any payment or distribution  of assets of the Company  referred to
in this Article XV, the Trustee, subject to the provisions of Article VI of this
Indenture,  and the Securityholders  shall be entitled to conclusively rely upon
any order or decree made by any court of  competent  jurisdiction  in which such
dissolution,  winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver,  trustee in bankruptcy,  liquidation  trustee,
agent or other  Person  making such  payment or  distribution,  delivered to the
Trustee or to the Securityholders,  for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior Indebtedness
and other  indebtedness of the Company,  the amount thereof or payable  thereon,
the amount or amounts paid or distributed  thereon and all other facts pertinent
thereto or to this Article XV.

         Section 15.5.  Trustee to Effectuate Subordination. Each Securityholder
                        -----------------------------------
by such  Securityholder's  acceptance thereof authorizes and directs the Trustee
on such  Securityholder's  behalf to take such  action  as may be  necessary  or
appropriate  to  effectuate  the  subordination  provided in this Article XV and
appoints the Trustee such Securityholder's attorney-in-fact for any and all such
purposes.

         Section 15.6.  Notice by the  Company.   The Company  shall give prompt
                        ----------------------
written notice to a Responsible  Officer of the Trustee at the Principal  Office
of the Trustee of any fact known to the Company  that would  prohibit the making
of any  payment of monies to or by the  Trustee  in  respect  of the  Debentures
pursuant to the provisions of this Article XV. Notwithstanding the provisions of
this Article XV or any other provision of this Indenture,  the Trustee shall not
be charged with  knowledge of the existence of any facts that would prohibit the
making  of  any  payment  of  monies  to or by the  Trustee  in  respect  of the
Debentures  pursuant to the  provisions  of this Article XV,  unless and until a
Responsible  Officer of the Trustee at the Principal Office of the Trustee shall
have received  written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor;  and before the receipt of any
such written  notice,  the Trustee,  subject to the  provisions of Article VI of
this  Indenture,  shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
       --------  -------
provided  for in this  Section at least 2  Business  Days prior to the date upon
which  by the  terms  hereof  any  money  may  become  payable  for any  purpose
(including,  without limitation, the payment of the principal of (or premium, if
any) or interest on any  Debenture),  then,  anything  herein  contained  to the
contrary  notwithstanding,  the Trustee  shall have full power and  authority to
receive  such  money and to apply the same to the  purposes  for which they were
received,  and shall not be affected by any notice to the  contrary  that may be
received by it within 2 Business Days prior to such date.

         The Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person  representing  himself to be a holder of Senior  Indebtedness  (or a
trustee or  representative  on behalf of such  holder),  to establish  that such
notice has been given by a holder of such  Senior  Indebtedness  or a trustee or
representative  on behalf of any such holder or  holders.  In the event that the

<PAGE>

Trustee  determines in good faith that further evidence is required with respect
to  the  right  of any  Person  as a  holder  of  such  Senior  Indebtedness  to
participate  in any payment or  distribution  pursuant  to this  Article XV, the
Trustee  may  request  such  Person  to  furnish   evidence  to  the  reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person,  the extent to which such Person is entitled to participate in such
payment or  distribution  and any other  facts  pertinent  to the rights of such
Person  under this  Article  XV, and, if such  evidence  is not  furnished,  the
Trustee may defer any payment to such Person pending  judicial  determination as
to the right of such Person to receive such payment.

         Section 15.7.  Rights of the Trustee;  Holders of Senior  Indebtedness.
                        -------------------------------------------------------
The Trustee in its  individual  capacity shall be entitled to all the rights set
forth in this Article XV in respect of any Senior  Indebtedness at any time held
by it,  to the same  extent as any other  holder  of  Senior  Indebtedness,  and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.

         With  respect  to the  holders  of  Senior  Indebtedness,  the  Trustee
undertakes to perform or to observe only such of its  covenants and  obligations
as are  specifically  set forth in this Article XV, and no implied  covenants or
obligations  with  respect to the holders of such Senior  Indebtedness  shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior  Indebtedness  and, subject
to the  provisions  of Article VI of this  Indenture,  the Trustee  shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior  Indebtedness  shall be entitled by virtue of this Article
XV or otherwise.

         Nothing in this  Article XV shall apply to claims of, or  payments  to,
the Trustee under or pursuant to Section 6.6.

         Section 15.8.  Subordination  May Not Be  Impaired.  No  right  of  any
                        -----------------------------------
present or future holder of any Senior Indebtedness to enforce  subordination as
herein  provided  shall at any time in any way be  prejudiced or impaired by any
act or  failure to act on the part of the  Company,  or by any act or failure to
act, in good faith, by any such holder,  or by any noncompliance by the Company,
with the terms,  provisions and covenants of this  Indenture,  regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.

         Without in any way limiting the generality of the foregoing  paragraph,
the  holders  of  Senior  Indebtedness  may,  at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders,  without
incurring  responsibility  to  the  Securityholders  and  without  impairing  or
releasing  the  subordination  provided  in this  Article XV or the  obligations
hereunder  of the  holders  of the  Debentures  to the  holders  of such  Senior
Indebtedness,  do any one or more of the following: (i) change the manner, place
or terms of payment or extend  the time of payment  of, or renew or alter,  such
Senior Indebtedness,  or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument  evidencing the same or any agreement under which
such  Senior  Indebtedness  is  outstanding;  (ii)  sell,  exchange,  release or
otherwise deal with any property pledged,  mortgaged or otherwise  securing such
Senior  Indebtedness;  (iii)  release  any  Person  liable in any manner for the
collection  of such  Senior  Indebtedness;  and (iv)  exercise  or refrain  from
exercising any rights against the Company, and any other Person.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized,  as of the
day and year first above written.

                                    FIRST BANKS, INC.


                                    By /s/    Allen H. Blake
                                      ------------------------------------------
                                       Name:  Allen H. Blake
                                       Title: President and
                                              Chief Executive Officer


                                    WILMINGTON TRUST COMPANY, as Trustee


                                    By /s/    Christopher J. Monigle
                                      ------------------------------------------
                                       Name:  Christopher J. Monigle
                                       Title: Assistant Vice President


<PAGE>


                                    EXHIBIT A

     FORM OF FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE COMPANY,  (B) PURSUANT TO A
REGISTRATION  STATEMENT  THAT HAS BEEN DECLARED  EFFECTIVE  UNDER THE SECURITIES
ACT,  (C) TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED
INSTITUTIONAL  BUYER IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH  RULE  144A,  (D)  TO A  NON-U.S.  PERSON  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH  (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY  FOR  ITS OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF SUCH AN  INSTITUTIONAL
ACCREDITED  INVESTOR,  FOR  INVESTMENT  PURPOSES  AND NOT WITH A VIEW TO, OR FOR
OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY  DISTRIBUTION  IN  VIOLATION  OF THE
SECURITIES  ACT,  OR (F)  PURSUANT  TO ANY OTHER  AVAILABLE  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION  SATISFACTORY  TO  IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF

<PAGE>

THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING AN AGGREGATE  PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE  PRINCIPAL  AMOUNT OF LESS THAN  $100,000.00  SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED  BY THE  INDENTURE  TO  CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

         Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                First Banks, Inc.

                               September 20, 2004

         First Banks,  Inc., a Missouri  corporation  (the "Company"  which term
includes any successor Person under the Indenture  hereinafter referred to), for
value  received  promises  to  pay  to  Wilmington  Trust  Company,  not  in its
individual capacity but solely as Institutional Trustee for First Bank Statutory
Trust II (the  "Holder") or  registered  assigns,  the  principal  sum of twenty
million six hundred nineteen thousand dollars  ($20,619,000.00) on September 20,
2034, and to pay interest on said principal sum from September 20, 2004, or from
the most recent  Interest  Payment Date (as defined below) to which interest has
been paid or duly  provided  for,  quarterly  (subject  to deferral as set forth
herein) in arrears on March 20, June 20,  September  20 and  December 20 of each
year or if such day is not a Business Day, then the next succeeding Business Day
(each such date, an "Interest  Payment Date") (it being understood that interest
accrues for any such non-Business Day),  commencing on the Interest Payment Date
in  December  2004,  at an  annual  rate  equal to  3.92438%  beginning  on (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest Payment Date in December 2004 and at an annual rate for each successive
period  beginning on (and including) the Interest Payment Date in December 2004,
and each  succeeding  Interest  Payment Date, and ending on (but  excluding) the
next succeeding Interest Payment Date (each a "Distribution  Period"),  equal to
3-Month LIBOR,  determined as described  below,  plus 2.05% (the "Coupon Rate"),
applied to the principal  amount hereof,  until the principal  hereof is paid or
duly provided for or made  available for payment,  and on any overdue  principal
and  (without  duplication  and to the extent that  payment of such  interest is

<PAGE>

enforceable  under  applicable  law)  on any  overdue  installment  of  interest
(including  Additional  Interest)  at the  Interest  Rate  in  effect  for  each
applicable  period,  compounded  quarterly,  from the dates such amounts are due
until  they are paid or made  available  for  payment.  The  amount of  interest
payable for any period  will be  computed  on the basis of the actual  number of
days  in  the  Distribution  Period  concerned  divided  by  360.  The  interest
installment  so  payable,  and  punctually  paid or duly  provided  for,  on any
Interest Payment Date will, as provided in the Indenture,  be paid to the Person
in  whose  name  this  Debenture  (or one or  more  Predecessor  Securities)  is
registered at the close of business on the regular record date for such interest
installment,  which  shall be five days  prior to the day on which the  relevant
Interest  Payment Date occurs.  Any such interest  installment not so punctually
paid or duly provided for shall  forthwith  cease to be payable to the Holder on
such  regular  record  date and may be paid to the  Person  in whose  name  this
Debenture (or one or more Predecessor  Securities) is registered at the close of
business on a special record date.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month U.S. dollar deposits  determined by the Trustee in
the following  order of priority:  (i) the rate  (expressed as a percentage  per
annum) for U.S. dollar  deposits  having a three-month  maturity that appears on
Telerate Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
Date  ("Telerate  Page 3750" means the display  designated as "Page 3750" on the
Dow Jones  Telerate  Service or such other page as may replace Page 3750 on that
service or such other  service or  services as may be  nominated  by the British
Bankers'  Association  as the  information  vendor for the purpose of displaying
London  interbank  offered rates for U.S.  dollar  deposits);  (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the  principal  London  offices of four  leading  banks in the London  interbank
market to provide such banks' offered  quotations  (expressed as percentages per
annum) to prime banks in the London  interbank  market for U.S.  dollar deposits
having  a  three-month   maturity  as  of  11:00  a.m.  (London  time)  on  such
Determination Date. If at least two quotations are provided,  3-Month LIBOR will
be the  arithmetic  mean of such  quotations;  (iii)  if  fewer  than  two  such
quotations  are  provided as  requested  in clause (ii) above,  the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such  Determination  Date. If at least
two such  quotations are provided,  3-Month LIBOR will be the arithmetic mean of
such  quotations;  and (iv) if fewer than two such  quotations  are  provided as
requested  in  clause  (iii)  above,  3-Month  LIBOR  will  be a  3-Month  LIBOR
determined with respect to the Distribution  Period  immediately  preceding such
current  Distribution  Period.  If the rate for U.S.  dollar  deposits  having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such  Determination  Date. As used
herein,  "Determination  Date"  means the date that is two London  Banking  Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All percentages  resulting from any calculations on the Debentures will
be rounded, if necessary,  to the nearest one hundred-thousandth of a percentage
point,  with five  one-millionths  of a percentage  point rounded  upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts  used in or  resulting  from such  calculation  will be  rounded  to the
nearest cent (with one-half cent being rounded upward)).
<PAGE>

         The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained  for that  purpose in any coin or  currency  of the United  States of
America  that at the time of payment is legal  tender for  payment of public and
private debts; provided,  however, that payment of interest may be made by check
               --------   -------
mailed to the registered holder at such address as shall appear in the Debenture
Register if a request for a wire  transfer by such holder has not been  received
by the Company or by wire transfer to an account appropriately designated by the
holder  hereof.  Notwithstanding  the  foregoing,  so long as the holder of this
Debenture  is the  Institutional  Trustee,  the payment of the  principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Trustee.

         So  long  as  no  Extension  Event  of  Default  has  occurred  and  is
continuing,  the Company  shall have the right,  from time to time,  and without
causing an Event of Default,  to defer payments of interest on the Debentures by
extending  the interest  payment  period on the  Debentures at any time and from
time  to  time  during  the  term of the  Debentures,  for up to 20  consecutive
quarterly  periods (each such extended  interest  payment period,  an "Extension
Period"),  during  which  Extension  Period no  interest  (including  Additional
Interest)  shall be due and payable  (except any Additional Sums that may be due
and  payable).  No  Extension  Period may end on a date  other than an  Interest
Payment Date.  During an Extension  Period,  interest will continue to accrue on
the Debentures,  and interest on such accrued  interest will accrue at an annual
rate equal to the Interest Rate in effect for such Extension Period,  compounded
quarterly  from the date such  interest  would have been payable were it not for
the Extension  Period, to the extent permitted by law (such interest referred to
herein as "Additional  Interest").  At the end of any such Extension  Period the
Company  shall pay all  interest  then  accrued  and  unpaid  on the  Debentures
(together  with  Additional  Interest  thereon);   provided,  however,  that  no
                                                   --------   -------
Extension Period may extend beyond the Maturity Date; provided further, however,
                                                      -------- -------  -------
that  during any such  Extension  Period,  the  Company  shall not and shall not
permit  any  Affiliate  to  engage  in  any of the  activities  or  transactions
described  on  the  reverse  side  hereof  and in the  Indenture.  Prior  to the
termination of any Extension Period, the Company may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension Period shall bear Additional Interest.  The Company must give the
Trustee  notice of its  election to begin or extend an  Extension  Period by the
close of business at least 5 Business  Days prior to the  Interest  Payment Date
with respect to which interest on the Debentures  would have been payable except
for the election to begin or extend such Extension Period.

         The indebtedness evidenced by this Debenture is, to the extent provided
in the  Indenture,  subordinate  and  junior  in right of  payment  to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the  provisions of the Indenture  with respect  thereto.  Each holder of this
Debenture,  by  accepting  the  same,  (a)  agrees to and shall be bound by such
provisions,  (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or  appropriate to acknowledge or effectuate the
subordination   so   provided   and  (c)   appoints   the  Trustee  his  or  her
attorney-in-fact  for any and all such purposes.  Each holder hereof,  by his or
her  acceptance  hereof,  hereby  waives  all  notice of the  acceptance  of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness,  whether now outstanding or hereafter incurred,  and waives
reliance by each such holder upon said provisions.

         This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
certificate of  authentication  hereon shall have been signed by or on behalf of
the Trustee.

         The  provisions  of this  Debenture  are  continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.



<PAGE>


         IN WITNESS WHEREOF, the Company has duly executed this certificate.

                                            FIRST BANKS, INC.


                                            By
                                              ----------------------------------
                                                 Name:
                                                 Title:


                          CERTIFICATE OF AUTHENTICATION

         This  is one  of the  Debentures  referred  to in the  within-mentioned
Indenture.

                                            WILMINGTON TRUST COMPANY, as Trustee


                                            By:
                                              ----------------------------------
                                                 Authorized Officer



<PAGE>


                         [FORM OF REVERSE OF DEBENTURE]

         This  Debenture  is  one  of  the  floating  rate  junior  subordinated
deferrable interest debentures of the Company,  all issued or to be issued under
and pursuant to the Indenture dated as of September 20, 2004 (the  "Indenture"),
duly  executed  and  delivered  between the Company  and the  Trustee,  to which
Indenture reference is hereby made for a description of the rights,  limitations
of rights,  obligations,  duties and immunities  thereunder of the Trustee,  the
Company  and the  holders  of the  Debentures.  The  Debentures  are  limited in
aggregate principal amount as specified in the Indenture.

         Upon the  occurrence and  continuation  of a Special Event prior to the
Interest  Payment Date in September  2009,  the Company  shall have the right to
redeem the Debentures in whole,  but not in part, at any Interest  Payment Date,
within 120 days following the  occurrence of such Special Event,  at the Special
Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in  part,  but in all  cases in a  principal  amount  with  integral
multiples of  $1,000.00,  on any Interest  Payment Date on or after the Interest
Payment Date in September 2009, at the Redemption Price.

         Prior to  10:00  a.m.  New York  City  time on the  Redemption  Date or
Special  Redemption  Date,  as  applicable,  the Company  will  deposit with the
Trustee  or with one or more  paying  agents an amount  of money  sufficient  to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate  Redemption  Price or
Special Redemption Price.

         If all,  or less than  all,  the  Debentures  are to be  redeemed,  the
Company  will give the  Trustee  notice  not less than 45 nor more than 60 days,
respectively,  prior to the  Redemption  Date or  Special  Redemption  Date,  as
applicable,  as to the aggregate  principal  amount of Debentures to be redeemed
and the Trustee shall select,  in such manner as in its sole discretion it shall
deem  appropriate  and fair,  the  Debentures  or portions  thereof (in integral
multiples of $1,000.00) to be redeemed.

         Notwithstanding  the  foregoing,  any  redemption  of Debentures by the
Company  shall be subject  to the  receipt  of any and all  required  regulatory
approvals.

         In case an Event of Default described in Section 5.1(a),  (d) or (e) of
the Indenture shall have occurred and be continuing, upon demand of the Trustee,
the  principal  of all of the  Debentures  shall  become due and  payable in the
manner, with the effect and subject to the conditions provided in the Indenture.

         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee,  with the  consent  of the  holders  of not  less  than a  majority  in
aggregate principal amount of the Debentures at the time outstanding, to execute
supplemental  indentures for the purpose of adding any provisions to or changing
in any manner or  eliminating  any of the provisions of this Indenture or of any
supplemental  indenture  or of modifying in any manner the rights of the holders
of the Debentures;  provided, however, that no such supplemental indenture shall
                    --------  ------
without  the  consent of the  holders of each  Debenture  then  outstanding  and
affected  thereby (i) change the fixed maturity of any Debenture,  or reduce the
principal  amount thereof or any premium  thereon,  or reduce the rate or extend
the time of  payment  of  interest  thereon,  or reduce  any  amount  payable on
redemption  thereof or make the  principal  thereof or any  interest  or premium
thereon  payable  in any  coin or  currency  other  than  that  provided  in the
Debentures,  or impair or affect the right of any  Securityholder  to  institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture.
<PAGE>

         The Indenture  also  contains  provisions  permitting  the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
on behalf of the  holders  of all of the  Debentures  to waive  (or  modify  any
previously  granted  waiver of) any past  default or Event of  Default,  and its
consequences,  except a default (a) in the payment of principal of, premium,  if
any,  or  interest  on any of the  Debentures,  (b) in respect of  covenants  or
provisions  hereof or of the  Indenture  which  cannot be  modified  or  amended
without the consent of the holder of each Debenture affected,  or (c) in respect
of the covenants contained in Section 3.9 of the Indenture;  provided,  however,
                                                             --------   -------
that if the  Debentures  are held by the Trust or a trustee of such trust,  such
waiver or  modification  to such waiver shall not be effective until the holders
of a majority in Liquidation  Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
                                                         --------  -------
if the consent of the holder of each  outstanding  Debenture is  required,  such
waiver shall not be effective  until each holder of the Trust  Securities of the
Trust shall have  consented  to such waiver.  Upon any such waiver,  the default
covered  thereby  shall be deemed to be cured for all purposes of the  Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any  subsequent  or other  default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by the  Indenture,  said default or Event of
Default shall for all purposes of the  Debentures and the Indenture be deemed to
have been cured and to be not continuing.

         No reference herein to the Indenture and no provision of this Debenture
or of the Indenture  shall alter or impair the obligation of the Company,  which
is absolute and unconditional,  to pay the principal of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and place
and at the rate and in the money herein prescribed.

         The Company has agreed that if Debentures  are initially  issued to the
Trust or a  trustee  of such  Trust in  connection  with the  issuance  of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such  Trust) and (i) there shall have  occurred  and be  continuing  an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities  Guarantee,  or (iii) the Company shall
have  given  notice  of its  election  to  defer  payments  of  interest  on the
Debentures by extending the interest  payment period as provided herein and such
Extension  Period,  or any  extension  thereof,  shall be  continuing,  then the
Company  shall not,  and shall not allow any  Affiliate  of the  Company to, (x)
declare or pay any dividends or distributions on, or redeem, purchase,  acquire,
or make a  liquidation  payment  with respect to, any of the  Company's  capital
stock or its  Affiliates'  capital  stock  (other than  payments of dividends or
distributions to the Company) or make any guarantee payments with respect to the
foregoing  or (y) make any payment of  principal  of or interest or premium,  if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures  (other  than,  with  respect  to  clauses  (x)  and (y)  above,  (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company  in  connection  with any  employment  contract,  benefit  plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company (or securities  convertible  into or  exercisable  for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable  Extension  Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary  of the Company) for any class or series of the  Company's
capital  stock or of any class or series of the Company's  indebtedness  for any
class or series of the Company's  capital stock,  (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange  provisions  of such capital stock or the security  being  converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or

<PAGE>

other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).

         The  Debentures  are issuable  only in  registered,  certificated  form
without coupons and in minimum  denominations of $100,000.00 and any multiple of
$1,000.00 in excess  thereof.  As provided in the  Indenture  and subject to the
transfer  restrictions  and  limitations as may be contained  herein and therein
from time to time,  this Debenture is  transferable  by the holder hereof on the
Debenture  Register of the Company.  Upon due  presentment  for  registration of
transfer  of any  Debenture  at the  Principal  Office of the  Trustee or at any
office or agency of the  Company  maintained  for such  purpose as  provided  in
Section 3.2 of the  Indenture,  the Company  shall  execute,  the Company or the
Trustee  shall  register  and the  Trustee  or the  Authenticating  Agent  shall
authenticate  and make  available for delivery in the name of the  transferee or
transferees  a  new  Debenture  for  a  like  aggregate  principal  amount.  All
Debentures  presented  for  registration  of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating Agent)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer  in  form   satisfactory  to,  the  Company  and  the  Trustee  or  the
Authenticating Agent duly executed by the holder or his attorney duly authorized
in writing.  No service charge shall be made for any exchange or registration of
transfer of Debentures,  but the Company or the Trustee may require payment of a
sum  sufficient to cover any tax, fee or other  governmental  charge that may be
imposed in connection therewith.

         Prior to due presentment for registration of transfer of any Debenture,
the Company,  the Trustee,  any  Authenticating  Agent,  any paying  agent,  any
transfer  agent and any  Debenture  registrar  may deem the Person in whose name
such Debenture  shall be registered  upon the Debenture  Register to be, and may
treat  him as,  the  absolute  owner  of such  Debenture  (whether  or not  such
Debenture  shall be  overdue)  for the  purpose  of  receiving  payment of or on
account of the principal of, premium, if any, and interest on such Debenture and
for all  other  purposes;  and  neither  the  Company  nor the  Trustee  nor any
Authenticating  Agent  nor any  paying  agent  nor any  transfer  agent  nor any
Debenture  registrar  shall be affected by any notice to the contrary.  All such
payments  so made to any holder  for the time  being or upon his order  shall be
valid,  and, to the extent of the sum or sums so paid,  effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.

         No recourse for the payment of the principal of or premium,  if any, or
interest  on any  Debenture,  or for any claim  based  thereon or  otherwise  in
respect  thereof,  and no  recourse  under or upon any  obligation,  covenant or
agreement of the Company in the Indenture or in any supplemental  indenture,  or
in  any  such  Debenture,  or  because  of  the  creation  of  any  indebtedness
represented  thereby,  shall  be  had  against  any  incorporator,  stockholder,
employee,  officer or director, as such, past, present or future, of the Company
or of any  successor  Person of the  Company,  either  directly  or through  the
Company  or any  successor  Person  of the  Company,  whether  by  virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise,  it being expressly  understood that all such liability is
hereby  expressly  waived and released as a condition of, and as a consideration
for, the execution of the Indenture and the issue of the Debentures.

         Capitalized terms used and not defined in this Debenture shall have the
meanings  assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.

         THE INDENTURE AND THE DEBENTURES  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.

<PAGE>
                                                                    Exhibit 4.27




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


                        AMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  by and among

                            WILMINGTON TRUST COMPANY,
                              as Delaware Trustee,

                            WILMINGTON TRUST COMPANY,
                            as 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


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




<PAGE>

<TABLE>
<CAPTION>



                                TABLE OF CONTENTS
                                -----------------

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                              <C>
ARTICLE I INTERPRETATION AND DEFINITIONS..........................................................................1
         Section 1.1.      Definitions............................................................................1
                           -----------

ARTICLE II ORGANIZATION...........................................................................................7
         Section 2.1.      Name...................................................................................7
                           ----
         Section 2.2.      Office.................................................................................7
                           ------
         Section 2.3.      Purpose................................................................................7
                           -------
         Section 2.4.      Authority..............................................................................8
                           ---------
         Section 2.5.      Title to Property of the Trust.........................................................8
                           ------------------------------
         Section 2.6.      Powers and Duties of the Trustees and the Administrators...............................8
                           --------------------------------------------------------
         Section 2.7.      Prohibition of Actions by the Trust and the Institutional Trustee.....................11
                           -----------------------------------------------------------------
         Section 2.8.      Powers and Duties of the Institutional Trustee........................................12
                           ----------------------------------------------
         Section 2.9.      Certain Duties and Responsibilities of the Trustees and Administrators................13
                           ----------------------------------------------------------------------
         Section 2.10.     Certain Rights of Institutional Trustee...............................................14
                           ---------------------------------------
         Section 2.11.     Delaware Trustee......................................................................16
                           ----------------
         Section 2.12.     Execution of Documents................................................................16
                           ----------------------
         Section 2.13.     Not Responsible for Recitals or Issuance of Securities................................16
                           ------------------------------------------------------
         Section 2.14.     Duration of Trust.....................................................................17
                           -----------------
         Section 2.15.     Mergers...............................................................................17
                           -------

ARTICLE III SPONSOR..............................................................................................18
         Section 3.1.      Sponsor's Purchase of Common Securities...............................................18
                           ---------------------------------------
         Section 3.2.      Responsibilities of the Sponsor.......................................................18
                           -------------------------------
         Section 3.3.      Expenses..............................................................................18
                           --------
         Section 3.4.      Right to Proceed......................................................................19
                           ----------------

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS..............................................................19
         Section 4.1.      Number of Trustees....................................................................19
                           ------------------
         Section 4.2.      Delaware Trustee......................................................................20
                           ----------------
         Section 4.3.      Institutional Trustee; Eligibility....................................................20
                           ----------------------------------
         Section 4.4.      Certain Qualifications of the Delaware Trustee Generally..............................20
                           ---------------------------------------------------------
         Section 4.5.      Administrators........................................................................20
                           --------------
         Section 4.6.      Initial Delaware Trustee..............................................................21
                           ------------------------
         Section 4.7.      Appointment, Removal and Resignation of Trustees and Administrators...................21
                           -------------------------------------------------------------------
         Section 4.8.      Vacancies Among Trustees..............................................................22
                           ------------------------
         Section 4.9.      Effect of Vacancies...................................................................22
                           -------------------
         Section 4.10.     Meetings of the Trustees and the Administrators.......................................22
                           -----------------------------------------------
         Section 4.11.     Delegation of Power...................................................................23
                           -------------------
         Section 4.12.     Conversion, Consolidation or Succession to Business...................................23
                           ---------------------------------------------------

ARTICLE V DISTRIBUTIONS..........................................................................................23
         Section 5.1.      Distributions.........................................................................23
                           -------------
<PAGE>

ARTICLE VI ISSUANCE OF SECURITIES................................................................................24
         Section 6.1.      General Provisions Regarding Securities...............................................24
                           ---------------------------------------
         Section 6.2.      Paying Agent, Transfer Agent and Registrar............................................24
                           ------------------------------------------
         Section 6.3.      Form and Dating.......................................................................25
                           ---------------
         Section 6.4.      Mutilated, Destroyed, Lost or Stolen Certificates.....................................25
                           -------------------------------------------------
         Section 6.5.      Temporary Securities..................................................................25
                           --------------------
         Section 6.6.      Cancellation..........................................................................26
                           ------------
         Section 6.7.      Rights of Holders; Waivers of Past Defaults...........................................26
                           -------------------------------------------

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST.................................................................27
         Section 7.1.      Dissolution and Termination of Trust..................................................27
                           ------------------------------------

ARTICLE VIII TRANSFER OF INTERESTS...............................................................................28
         Section 8.1.      General...............................................................................28
                           -------
         Section 8.2.      Transfer Procedures and Restrictions..................................................29
                           ------------------------------------
         Section 8.3.      Deemed Security Holders...............................................................31
                           -----------------------

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS.....................31
         Section 9.1.      Liability.............................................................................31
                           ---------
         Section 9.2.      Exculpation...........................................................................32
                           -----------
         Section 9.3.      Fiduciary Duty........................................................................32
                           --------------
         Section 9.4.      Indemnification.......................................................................32
                           ---------------
         Section 9.5.      Outside Businesses....................................................................34
                           ------------------
         Section 9.6.      Compensation; Fee.....................................................................35
                           -----------------

ARTICLE X ACCOUNTING.............................................................................................35
         Section 10.1.     Fiscal Year...........................................................................35
                           -----------
         Section 10.2.     Certain Accounting Matters............................................................35
                           --------------------------
         Section 10.3.     Banking...............................................................................36
                           -------
         Section 10.4.     Withholding...........................................................................36
                           -----------

ARTICLE XI AMENDMENTS AND MEETINGS...............................................................................36
         Section 11.1.     Amendments............................................................................36
                           ----------
         Section 11.2.     Meetings of the Holders of Securities; Action by Written Consent......................37
                           ----------------------------------------------------------------

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE....................................39
         Section 12.1.     Representations and Warranties of Institutional Trustee...............................39
                           -------------------------------------------------------
         Section 12.2.     Representations of the Delaware Trustee...............................................39
                           ---------------------------------------

ARTICLE XIII MISCELLANEOUS.......................................................................................40
         Section 13.1.     Notices...............................................................................40
                           -------
         Section 13.2.     Governing Law.........................................................................41
                           -------------
         Section 13.3.     Intention of the Parties..............................................................41
                           ------------------------
         Section 13.4.     Headings..............................................................................41
                           --------
         Section 13.5.     Successors and Assigns................................................................41
                           ----------------------
         Section 13.6.     Partial Enforceability................................................................41
                           ----------------------
         Section 13.7.     Counterparts..........................................................................42
                           ------------

Annex I....................Terms of Securities
Exhibit A-1................Form of Capital Security Certificate
Exhibit A-2................Form of Capital Security Certificate
Exhibit A-3................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement

</TABLE>

<PAGE>


                              AMENDED AND RESTATED

                              DECLARATION OF TRUST

                          FIRST BANK STATUTORY TRUST II

                               September 20, 2004

         AMENDED AND RESTATED  DECLARATION  OF TRUST  ("Declaration")  dated and
                                                        -----------
effective as of September  20, 2004,  by the Trustees (as defined  herein),  the
Administrators  (as defined herein),  the Sponsor (as defined herein) and by the
holders,  from time to time, of undivided  beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;

         WHEREAS,  the Trustees,  the Administrators and the Sponsor established
First  Bank  Statutory  Trust II (the  "Trust"),  a  statutory  trust  under the
                                        -----
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of September 9, 2004 (the "Original Declaration"), and a Certificate of Trust
                              --------------------
filed with the Secretary of State of the State of Delaware on September 9, 2004,
for the sole  purpose of issuing and  selling  certain  securities  representing
undivided  beneficial  interests  in the assets of the Trust and  investing  the
proceeds  thereof in certain  debentures  of the  Debenture  Issuer (as  defined
herein);

         WHEREAS,  as of the date  hereof,  no  interests in the Trust have been
issued; and

         WHEREAS,  the Trustees,  the  Administrators  and the Sponsor,  by this
Declaration, amend and restate each and every term and provision of the Original
Declaration;

         NOW,  THEREFORE,  it being  the  intention  of the  parties  hereto  to
continue the Trust as a statutory  trust under the Statutory  Trust Act and that
this Declaration  constitutes the governing  instrument of such statutory trust,
the Trustees  declare that all assets  contributed  to the Trust will be held in
trust for the  benefit  of the  holders,  from time to time,  of the  securities
representing  undivided  beneficial  interests in the assets of the Trust issued
hereunder,  subject to the  provisions of this  Declaration.  The parties hereto
hereby agree as follows:

                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

     Section  1.1   Definitions.  Unless  the  context  otherwise  requires:
                    -----------

         (a)    Capitalized  terms used  in this  Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;

         (b)    a term defined anywhere in this Declaration has the same meaning
throughout;

         (c)    all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;

         (d)    all references in this Declaration  to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified; and
<PAGE>

         (e)    a reference to the singular includes the plural and vice versa.

         "Additional Interest" has the meaning set forth in the Indenture.
          -------------------

         "Administrative  Action" has the meaning set forth in paragraph 4(a) of
          ----------------------
Annex I.

         "Administrators" means each of Allen H. Blake, Terrance M. McCarthy and
          --------------
Lisa K.  Vansickle,  solely in such Person's  capacity as  Administrator  of the
Trust  created  and  continued  hereunder  and not in such  Person's  individual
capacity, or such Administrator's successor in interest in such capacity, or any
successor appointed as herein provided.

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
          ---------
the Securities Act or any successor rule thereunder.

         "Authorized Officer" of a Person means any Person that is authorized to
          ------------------
bind such Person.

         "Bankruptcy Event" means, with respect to any Person:
          ----------------

         (a)    a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of such Person in an  involuntary  case under any
applicable  bankruptcy,  insolvency  or other  similar law now or  hereafter  in
effect,  or appointing a receiver,  liquidator,  assignee,  custodian,  trustee,
sequestrator (or similar official) of such Person or for any substantial part of
its property,  or ordering the winding-up or liquidation of its affairs and such
decree  or  order  shall  remain  unstayed  and in  effect  for a  period  of 90
consecutive days; or

         (b)    such  Person   shall   commence  a   voluntary  case  under  any
applicable bankruptcy,  insolvency  or  other  similar  law  now or hereafter in
effect,  shall  consent  to the entry of an order for  relief in an  involuntary
case  under any such  law,  or  shall  consent to the  appointment  of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other  similar  official)  of  such  Person of any  substantial  part of its
property,  or shall make any general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due.

         "Business Day" means any day other than  Saturday,  Sunday or any other
          ------------
day on which banking  institutions in New York City or Wilmington,  Delaware are
permitted or required by any applicable law or executive order to close.

         "Capital  Securities"  has the meaning set forth in  paragraph  1(a) of
          -------------------
Annex I.

         "Capital Security Certificate" means a definitive  Certificate in fully
          ----------------------------
registered form  representing a Capital  Security  substantially  in the form of
Exhibits A-1 and A-2.

         "Capital  Treatment  Event" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Certificate" means any certificate evidencing Securities.
          -----------

         "Closing  Date" has the meaning set forth in the  Placement  Agreement.
          -------------

         "Code" means the Internal Revenue Code of 1986, as amended from time to
          ----
time, or any successor legislation.

         "Common  Securities"  has the  meaning set forth in  paragraph  1(b) of
           -----------------
Annex I.

         "Common Security  Certificate" means a definitive  Certificate in fully
          ----------------------------
registered  form  representing a Common  Security  substantially  in the form of
Exhibit A-3.
<PAGE>

         "Company  Indemnified  Person"  means  (a) any  Administrator;  (b) any
          ----------------------------
Affiliate  of any  Administrator;  (c) any  officers,  directors,  shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.

         "Corporate Trust Office" means the office of the Institutional  Trustee
          ---------------------- at which the corporate trust  business  of  the
Institutional   Trustee   shall,   at  any   particular   time,  be  principally
administered,  which  office at the date of  execution  of this  Declaration  is
located at Rodney Square North, 1100 North Market Street,  Wilmington,  Delaware
19890-1600, Attn: Corporate Trust Administration.

         "Coupon  Rate" has the meaning set forth in paragraph  2(a) of Annex I.
          ------------

         "Covered  Person"  means:  (a) any  Administrator,  officer,  director,
          ---------------
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.

         "Creditor" has the meaning set forth in Section 3.3.
          --------

         "Debenture Issuer" means First Banks, Inc., a Missouri corporation,  in
          ----------------
its capacity as issuer of the Debentures under the Indenture.

         "Debenture  Trustee" means Wilmington  Trust Company,  as trustee under
          ------------------
the Indenture until a successor is appointed  thereunder,  and thereafter  means
such successor trustee.

         "Debentures"  means the Floating  Rate Junior  Subordinated  Deferrable
          ----------
Interest  Debentures  due 2034 to be issued by the  Debenture  Issuer  under the
Indenture.

         "Defaulted  Interest"  has the  meaning  set  forth  in the  Indenture.
          ------------------

         "Delaware   Trustee"   has  the  meaning  set  forth  in  Section  4.2.
          ------------------

         "Determination  Date" has the  meaning set forth in  paragraph  4(a) of
          -------------------
Annex I.

         "Direct   Action"  has  the  meaning  set  forth  in  Section   2.8(d).
          ---------------

         "Distribution" means a distribution payable to Holders of Securities in
          ------------
accordance with Section 5.1.

         "Distribution Payment Date" has the meaning set forth in paragraph 2(b)
          -------------------------
of Annex I.

         "Distribution Period" means (i) with respect to the Distribution paid
          -------------------
on the first Distribution  Payment Date, the period beginning on (and including)
the date of original  issuance and ending on (but  excluding)  the  Distribution
Payment  Date  in  December  2004  and  (ii)  thereafter,   with  respect  to  a
Distribution  paid on each  successive  Distribution  Payment  Date,  the period
beginning on (and including) the preceding  Distribution Payment Date and ending
on (but excluding) such current Distribution Payment Date.

         "Distribution Rate" means, for the Distribution Period beginning on
          -----------------
(and including) the date of original  issuance and ending on (but excluding) the
Distribution Payment Date in December 2004, the rate per annum of 3.92438%,  and
for each Distribution Period beginning on or after the Distribution Payment Date
in December 2004, the Coupon Rate for such Distribution Period.
<PAGE>

         "Event of Default" means any one of the following  events (whatever the
          ----------------
reason for such event and whether it shall be  voluntary  or  involuntary  or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order,  rule or regulation of any  administrative  or  governmental
body):

         (a)    the occurrence of an Indenture Event of Default; or

         (b)    default by the Trust in the  payment of any Redemption  Price or
Special Redemption Price of any Security when it becomes due and payable; or

         (c)    default in the performance,  or breach, in any material respect,
of  any  covenant  or  warranty of the Institutional Trustee in this Declaration
(other than those specified in clause (a) or (b) above) and continuation of such
default  or  breach  for a period of 60 days  after  there  has been  given,  by
registered or certified mail to the Institutional  Trustee and to the Sponsor by
the Holders of at least 25% in aggregate  liquidation  amount of the outstanding
Capital  Securities,  a written  notice  specifying  such  default or breach and
requiring  it to be  remedied  and  stating  that such  notice  is a "Notice  of
Default" hereunder; or

         (d)    the occurrence of  a  Bankruptcy  Event   with  respect  to  the
Institutional  Trustee  if  a  successor  Institutional  Trustee  has  not  been
appointed within 90 days thereof.

         "Extension  Event  of  Default"  has  the  meaning  set  forth  in  the
          -----------------------------
Indenture.

         "Extension Period" has the meaning set forth in paragraph 2(b) of Annex
          ----------------
I.

         "Federal  Reserve" has the meaning set forth in paragraph 3 of Annex I.
          ----------------

         "Fiduciary  Indemnified  Person"  shall mean each of the  Institutional
          ------------------------------
Trustee (including in its individual capacity),  the Delaware Trustee (including
in its  individual  capacity),  any  Affiliate of the  Institutional  Trustee or
Delaware Trustee and any officers, directors,  shareholders,  members, partners,
employees, representatives,  custodians, nominees or agents of the Institutional
Trustee or Delaware Trustee.

         "Fiscal Year" has the meaning set forth in Section 10.1.
          -----------

         "Guarantee" means the guarantee agreement to be dated as of the Closing
          ---------
Date, of the Sponsor in respect of the Capital Securities.

         "Holder"  means a Person in whose  name a  Certificate  representing  a
          ------
Security is registered,  such Person being a beneficial owner within the meaning
of the Statutory Trust Act.

         "Indemnified  Person" means a Company Indemnified Person or a Fiduciary
          -------------------
Indemnified Person.

         "Indenture"  means the Indenture dated as of the Closing Date,  between
          ---------
the Debenture Issuer and the Debenture Trustee,  and any indenture  supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental  indenture may be amended,  supplemented or otherwise  modified
from time to time.

         "Indenture  Event of Default" means an "Event of Default" as defined in
          ---------------------------
the Indenture.

         "Institutional  Trustee"  means the  Trustee  meeting  the  eligibility
          ----------------------
requirements set forth in Section 4.3.

         "Interest"  means any  interest  due on the  Debentures  including  any
          --------
Additional Interest and Defaulted Interest.
<PAGE>

         "Investment  Company"  means an  investment  company  as defined in the
          -------------------
Investment Company Act.

         "Investment  Company Act" means the Investment  Company Act of 1940, as
          -----------------------
amended from time to time, or any successor legislation.

         "Investment  Company Event" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Liquidation"  has the  meaning  set forth in  paragraph  3 of Annex I.
          -----------

         "Liquidation  Distribution" has the meaning set forth in paragraph 3 of
          -------------------------
Annex I.

         "Majority in liquidation  amount of the Securities"  means Holder(s) of
          -------------------------------------------------
outstanding  Securities voting together as a single class or, as the context may
require,  Holders of  outstanding  Capital  Securities or Holders of outstanding
Common  Securities  voting  separately as a class,  who are the record owners of
more than 50% of the aggregate  liquidation  amount (including the stated amount
that would be paid on  redemption,  liquidation  or otherwise,  plus accrued and
unpaid  Distributions  to  the  date  upon  which  the  voting  percentages  are
determined) of all outstanding Securities of the relevant class.

         "Maturity Date" has the meaning set forth in paragraph 4(a) of Annex I.
          -------------

         "Officers'   Certificates"   means,  with  respect  to  any  Person,  a
          -----------------------
certificate  signed by two  Authorized  Officers of such Person.  Any  Officers'
Certificate  delivered  with respect to compliance  with a condition or covenant
providing for it in this Declaration shall include:

         (a)    a  statement  that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;

         (b)    a brief statement  of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;

         (c)    a statement that each such officer has made such examination  or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed  opinion as to whether or not such  covenant or condition
has been complied with; and

         (d)    a statement as to whether, in the opinion of each such  officer,
such condition or covenant has been complied with.

         "OTS" has the meaning set forth in paragraph 3 of Annex I.
          ---

         "Paying Agent" has the meaning specified in Section 6.2.
          ------------

         "Person" means a legal person,  including any individual,  corporation,
          ------
estate, partnership,  joint venture,  association,  joint stock company, limited
liability  company,  trust,  unincorporated  association,  or  government or any
agency or political subdivision thereof, or any other entity of whatever nature.

         "Placement  Agreement"  means the Placement  Agreement  relating to the
          --------------------
offering and sale of Capital Securities in the form of Exhibit C.

         "Property  Account"  has the  meaning  set  forth  in  Section  2.8(c).
          -----------------

         "Pro  Rata"  has the  meaning  set  forth  in  paragraph  8 of Annex I.
          ---------
<PAGE>

         "Quorum" means a majority of the  Administrators  or, if there are only
          ------
two Administrators, both of them.

         "Redemption  Date" has the meaning set forth in paragraph 4(a) of Annex
          ----------------
I.

         "Redemption/Distribution Notice" has the meaning set forth in paragraph
          ------------------------------
4(e) of Annex I.

         "Redemption Price" has the meaning set forth in paragraph 4(a) of Annex
          ----------------
I.

         "Registrar" has the meaning set forth in Section 6.2.
          ---------

         "Relevant  Trustee"  has the  meaning  set  forth  in  Section  4.7(a).
          -----------------

         "Responsible Officer" means, with respect to the Institutional Trustee,
          -------------------
any officer  within the  Corporate  Trust Office of the  Institutional  Trustee,
including  any  vice-president,  any  assistant  vice-president,  any  assistant
secretary,  the treasurer,  any assistant treasurer,  any trust officer or other
officer of the Corporate Trust Office of the Institutional  Trustee  customarily
performing  functions  similar to those performed by any of the above designated
officers and also means,  with respect to a particular  corporate  trust matter,
any other  officer to whom such  matter is  referred  because of that  officer's
knowledge of and familiarity with the particular subject.

         "Restricted  Securities  Legend"  has the  meaning set forth in Section
          ------------------------------

         "Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
          ---------

         "Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
          ---------

         "Securities"  means the Common  Securities and the Capital  Securities.
          ----------

         "Securities Act" means the Securities Act of 1933, as amended from time
          --------------
to  time, or any successor legislation.

         "Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
          -------------

         "Special  Redemption  Date" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Special  Redemption Price" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Sponsor"  means First  Banks,  Inc.,  a Missouri  corporation,  or any
          -------
successor entity in a merger, consolidation or amalgamation,  in its capacity as
sponsor of the Trust.

         "Statutory  Trust  Act" means  Chapter  38 of Title 12 of the  Delaware
          -------------------
Code, 12 Del. C. ss.ss. 3801, et seq. as may be amended from time to time.

         "Successor  Entity"  has the  meaning  set  forth in  Section  2.15(b).
          -----------------

         "Successor  Delaware  Trustee"  has the  meaning  set forth in  Section
          ----------------------------
4.7(e).

         "Successor Institutional Trustee" has the meaning set forth in Section
          -------------------------------
4.7(b).

         "Successor Securities" has the meaning set forth in Section 2.15(b).
          --------------------

         "Super Majority"  has  the  meaning  set  forth  in  paragraph  5(b) of
          --------------
 Annex I.
<PAGE>

         "Tax  Event" has the meaning  set forth in  paragraph  4(a) of Annex I.
          ----------

         "10%  in  liquidation   amount  of  the  Securities"   means  Holder(s)
          --------------------------------------------------
of outstanding  Securities  voting together as a single class or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate  liquidation  amount  (including the stated amount that
would be paid on redemption,  liquidation or otherwise,  plus accrued and unpaid
Distributions  to the date upon which the voting  percentages are determined) of
all outstanding Securities of the relevant class.

         "3-Month LIBOR" has the meaning set forth in paragraph 4(a) of Annex I.
          -------------

         "Transfer   Agent"  has  the   meaning   set  forth  in  Section   6.2.
          ----------------

         "Treasury  Regulations"  means the  income tax  regulations,  including
          ---------------------
temporary  and proposed  regulations,  promulgated  under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

         "Trust Property" means (a) the Debentures,  (b) any cash on deposit in,
          --------------
or owing to, the Property  Account and (c) all proceeds and rights in respect of
the  foregoing  and any other  property  and  assets  for the time being held or
deemed to be held by the  Institutional  Trustee  pursuant to the trusts of this
Declaration.

         "Trustee"  or  "Trustees"   means  each  Person  who  has  signed  this
          -----------------------
Declaration  as a trustee,  so long as such Person  shall  continue in office in
accordance  with the terms  hereof,  and all other  Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions  hereof,  and  references  herein to a Trustee or the Trustees  shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

         "U.S.  Person"  means a United  States  Person as  defined  in  Section
          ------------
7701(a)  (30) of the Code.

                                   ARTICLE II

                                  ORGANIZATION

         Section 2.1   Name. The Trust is named "First Bank Statutory Trust II,"
                       ----
as such  name may be modified from time to time by the Administrators  following
written notice to the Holders of the Securities.  The Trust's  activities may be
conducted under the name of the Trust or any other name deemed  advisable by the
Administrators.

         Section 2.2.  Office.  The address of the principal office of the Trust
                       ------
 is c/o Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington,  Delaware 19890-1600. On at least 10 Business Days written notice to
the  Holders  of  the  Securities,  the  Administrators  may  designate  another
principal  office,  which  shall be in a state of the  United  States  or in the
District of Columbia.

         Section 2.3. Purpose. The exclusive purposes and functions of the Trust
                      -------
are (a) to issue  and  sell the  Securities  representing  undivided  beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the  Debentures,  (c) to  facilitate  direct  investment  in the
assets of the Trust through  issuance of the Common  Securities  and the Capital
Securities and (d) except as otherwise  limited herein,  to engage in only those
other  activities  necessary or incidental  thereto.  The Trust shall not borrow
money,  issue debt or reinvest proceeds derived from investments,  pledge any of
its assets,  or otherwise  undertake (or permit to be  undertaken)  any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
<PAGE>

         Section 2.4   Authority.   Except as  specifically   provided  in  this
                       ---------
Declaration,  the  Institutional  Trustee  shall  have  exclusive  and  complete
authority to carry out the  purposes of the Trust.  An action taken by a Trustee
in accordance with its powers shall  constitute the act of and serve to bind the
Trust.  In dealing  with the Trustees  acting on behalf of the Trust,  no Person
shall be  required to inquire  into the  authority  of the  Trustees to bind the
Trust.  Persons dealing with the Trust are entitled to rely  conclusively on the
power  and  authority  of the  Trustees  as set forth in this  Declaration.  The
Administrators  shall have only those  ministerial  duties set forth herein with
respect to  accomplishing  the  purposes of the Trust and are not intended to be
trustees  or  fiduciaries  with  respect  to  the  Trust  or  the  Holders.  The
Institutional Trustee shall have the right, but shall not be obligated except as
provided in Section 2.6, to perform those duties assigned to the Administrators.

         Section 2.5   Title to Property of the Trust.  Except  as  provided  in
                       ------------------------------
Section  2.8 with  respect  to the  Debentures  and the  Property  Account or as
otherwise  provided in this Declaration,  legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided  beneficial  interest in
the assets of the Trust.

         Section 2.6   Powers and Duties of the Trustees and the Administrators.
                       --------------------------------------------------------

         (a)    The Trustees and the Administrators shall conduct the affairs of
the Trust in  accordance  with the  terms of this  Declaration.  Subject  to the
limitations  set forth in paragraph (b) of this Section,  and in accordance with
the following provisions (i) and (ii), the Trustees and the Administrators shall
have the authority to enter into all transactions  and agreements  determined by
the Institutional Trustee to be appropriate in exercising the authority, express
or implied, otherwise granted to the Trustees or the Administrators, as the case
may be, under this Declaration,  and to perform all acts in furtherance thereof,
including without limitation, the following:

               (i)  Each Administrator shall have the power and authority to act
      on behalf of the Trust with respect to the following matters:

                    (A) the issuance and sale of the Securities;

                    (B) to cause the Trust to enter  into,  and to  execute  and
               deliver  on  behalf  of  the  Trust,  such  agreements  as may be
               necessary  or  desirable  in  connection  with the  purposes  and
               function  of the  Trust,  including  agreements  with the  Paying
               Agent;

                    (C) ensuring  compliance with the Securities Act, applicable
               state securities or blue sky laws;

                    (D) the sending of notices  (other than notices of default),
               and other information regarding the Securities and the Debentures
               to the Holders in accordance with this Declaration;

                    (E) the  consent  to  the  appointment  of a  Paying  Agent,
               Transfer Agent and Registrar in accordance with this Declaration,
               which consent shall not be unreasonably withheld or delayed;

                    (F) execution  and delivery of the  Securities in accordance
               with this Declaration;

                    (G) execution and delivery of closing certificates  pursuant
               to the  Placement  Agreement and the  application  for a taxpayer
               identification number;
<PAGE>

                    (H) unless otherwise determined by the Holders of a Majority
               in liquidation  amount of the Securities or as otherwise required
               by the  Statutory  Trust  Act,  to execute on behalf of the Trust
               (either  acting  alone  or  together  with  any  or  all  of  the
               Administrators)  any documents that the  Administrators  have the
               power to execute pursuant to this Declaration;

                    (I) the taking of any action  incidental to the foregoing as
               the  Institutional  Trustee  may from time to time  determine  is
               necessary  or  advisable  to give  effect  to the  terms  of this
               Declaration for the benefit of the Holders (without consideration
               of the effect of any such action on any particular Holder);

                    (J) to  establish a record date with  respect to all actions
               to be taken  hereunder that require a record date be established,
               including   Distributions,   voting   rights,   redemptions   and
               exchanges,  and to  issue  relevant  notices  to the  Holders  of
               Capital  Securities  and Holders of Common  Securities as to such
               actions and applicable record dates; and

                    (K) to duly prepare and file all  applicable tax returns and
               tax  information  reports  that are  required  to be  filed  with
               respect to the Trust on behalf of the Trust.

              (ii)  As   among   the  Trustees  and   the  Administrators,   the
     Institutional Trustee  shall have the power,  duty and  authority to act on
     behalf of the Trust with respect to the following matters:

                    (A) the establishment of the Property Account;

                    (B) the receipt of the Debentures;

                    (C) the  collection  of  interest,  principal  and any other
               payments  made  in  respect  of the  Debentures  in the  Property
               Account;

                    (D) the  distribution  through  the Paying  Agent of amounts
               owed to the Holders in respect of the Securities;

                    (E) the exercise of all of the rights, powers and privileges
               of a holder of the Debentures;

                    (F) the sending of notices of default and other  information
               regarding  the  Securities  and the  Debentures to the Holders in
               accordance with this Declaration;

                    (G) the  distribution  of the Trust  Property in  accordance
               with the terms of this Declaration;

                    (H) to the extent provided in this Declaration,  the winding
               up of  the  affairs  of and  liquidation  of the  Trust  and  the
               preparation,   execution  and  filing  of  the   certificate   of
               cancellation  with  the  Secretary  of  State  of  the  State  of
               Delaware;

                    (I) after any Event of Default  (provided that such Event of
                                                     --------
               Default is not by or with respect to the  Institutional  Trustee)
               the  taking of any  action  incidental  to the  foregoing  as the
               Institutional   Trustee  may  from  time  to  time  determine  is
               necessary  or  advisable  to give  effect  to the  terms  of this
               Declaration  and protect and conserve the Trust  Property for the
               benefit of the Holders  (without  consideration  of the effect of
               any such action on any particular Holder); and
<PAGE>

                    (J) to  take  all  action  that  may be  necessary  for  the
               preservation and the continuation of the Trust's valid existence,
               rights,  franchises and privileges as a statutory trust under the
               laws of the State of Delaware.

               (iii)     The  Institutional  Trustee  shall  have  the power and
     authority to act on behalf of the Trust with respect to any of the  duties,
     liabilities, powers or the authority of  the Administrators  set  forth  in
     Section 2.6(a)(i)(D),  (E) and (F)  herein  but shall not have a duty to do
     any  such act unless  specifically  requested  to  do  so in writing by the
     Sponsor,  and shall then  be  fully  protected  in acting  pursuant to such
     written  request;  and in the event of a conflict between the action of the
     Administrators and the action of the Institutional  Trustee,  the action of
     the Institutional Trustee shall prevail.

         (b)    So long as this Declaration remains in effect, the Trust (or the
Trustees or  Administrators  acting on behalf of the Trust) shall not  undertake
any business,  activities or transaction  except as expressly provided herein or
contemplated hereby. In particular,  neither the Trustees nor the Administrators
may cause the Trust to (i) acquire any  investments  or engage in any activities
not  authorized by this  Declaration,  (ii) sell,  assign,  transfer,  exchange,
mortgage,  pledge,  set-off or otherwise dispose of any of the Trust Property or
interests  therein,  including to Holders,  except as expressly provided herein,
(iii) take any action that would  reasonably  be expected (x) to cause the Trust
to fail or cease to  qualify as a "grantor  trust"  for  United  States  federal
income tax  purposes or (y) to require  the trust to  register as an  Investment
Company  under the  Investment  Company  Act,  (iv) incur any  indebtedness  for
borrowed money or issue any other debt or (v) take or consent to any action that
would  result  in the  placement  of a lien on any of the  Trust  Property.  The
Institutional  Trustee shall, at the sole cost and expense of the Trust,  defend
all claims and  demands of all Persons at any time  claiming  any lien on any of
the Trust Property  adverse to the interest of the Trust or the Holders in their
capacity as Holders.

         (c)    In  connection  with  the  issuance  and  sale  of  the  Capital
Securities, the Sponsor  shall have the right and  responsibility  to assist the
Trust with respect to, or effect on behalf of the Trust, the  following (and any
actions taken by the Sponsor in furtherance  of the following  prior to the date
of this Declaration are hereby ratified and confirmed in all respects):

         (i)    the taking of any action necessary to obtain  an  exemption from
     the Securities Act;

         (ii)   the  determination  of the  States in which to take  appropriate
     action  to  qualify  or  register  for  sale  all or  part  of the  Capital
     Securities  and the  determination  of any and all such  acts,  other  than
     actions which must be taken by or on behalf of the Trust, and the advice to
     the  Administrators  of actions they must take on behalf of the Trust,  and
     the  preparation  for  execution and filing of any documents to be executed
     and  filed by the Trust or on behalf of the  Trust,  as the  Sponsor  deems
     necessary or advisable in order to comply with the  applicable  laws of any
     such States in connection with the sale of the Capital Securities;

         (iii)  the negotiation of  the terms of, and the execution and delivery
     of,  the  Placement  Agreement  providing  for  the  sale  of  the  Capital
     Securities; and

         (iv)   the taking of any other actions  necessary or desirable to carry
     out any of the foregoing activities.

         (d)    Notwithstanding   anything   herein   to   the   contrary,   the
Administrators and the Holders of a Majority in liquidation amount of the Common
Securities are authorized  and  directed to conduct the affairs of the Trust and
to operate  the  Trus t so  that  the  Trust  will  not (i) be  deemed  to be an
Investment Company required to be registered under  the  Investment Company Act,


<PAGE>

and (ii) fail to be  classified as a "grantor  trust" for United States  federal
income tax  purposes.  The  Administrators  and the  Holders  of a  Majority  in
liquidation   amount  of  the  Common  Securities  shall  not  take  any  action
inconsistent  with  the  treatment  of the  Debentures  as  indebtedness  of the
Debenture  Issuer  for  United  States  federal  income  tax  purposes.  In this
connection,  the  Administrators  and the Holders of a Majority  in  liquidation
amount  of the  Common  Securities  are  authorized  to  take  any  action,  not
inconsistent with applicable laws, the Certificate of Trust or this Declaration,
as amended from time to time, that each of the Administrators and the Holders of
a Majority in liquidation  amount of the Common  Securities  determines in their
discretion to be necessary or desirable for such purposes.

         (e)    All  expenses incurred by the  Administrators  or  the  Trustees
pursuant  to this  Section  2.6  shall be  reimbursed  by the  Sponsor,  and the
Trustees and the  Administrators  shall have no obligations with respect to such
expenses.

         (f)    The assets of the Trust shall consist of the Trust Property.

         (g)    Legal title to all Trust  Property  shall be vested at all times
in the Institutional Trustee (in its  capacity  as such)  and  shall be held and
administered by the Institutional Trustee and the Administrators for the benefit
of the Trust in accordance with this Declaration.

         (h)    If the Institutional Trustee or any Holder  has  instituted  any
proceeding  to  enforce  any right or remedy  under  this  Declaration  and such
proceeding  has been  discontinued  or  abandoned  for any  reason,  or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor,  the  Institutional  Trustee and the Holders shall,
subject to any  determination  in such  proceeding,  be restored  severally  and
respectively to their former positions hereunder,  and thereafter all rights and
remedies of the  Institutional  Trustee and the Holders shall continue as though
no such proceeding had been instituted.

         Section 2.7  Prohibition of Actions by the Trust and  the Institutional
                      ----------------------------------------------------------
Trustee.
-------

         (a)    The  Trust shall not, and the Institutional  Trustee shall cause
the Trust not to, engage in any activity other than as required or authorized by
this  Declaration.  In  particular,  the Trust  shall not and the  Institutional
Trustee shall cause the Trust not to:

               (i)    invest any proceeds received by the Trust from holding the
         Debentures,  but  shall  distribute all such proceeds to Holders of the
         Securities  pursuant  to  the  terms  of  this  Declaration  and of the
         Securities;

               (ii)   acquire any   assets  other  than  as  expressly  provided
         herein;

               (iii)  possess Trust Property for other than a Trust purpose;

               (iv)   make any loans or incur any indebtedness other  than loans
         represented by the Debentures;

               (v)    possess any  power  or  otherwise  act in such a way as to
         vary  the  Trust  assets  or  the  terms of the  Securities in any way
         whatsoever other than as expressly provided herein;

               (vi)   issue any  securities  or other  evidences  of  beneficial
         ownership  of, or  beneficial  interest  in, the Trust  other than  the
         Securities;

               (vii)  carry on any "trade or business" as that phrase is used in
         the Code; or
<PAGE>

               (viii) other than  as  provided  in this  Declaration  (including
         Annex I),  (A) direct  the time,  method  and place of  exercising  any
         trust or power  conferred  upon  the Debenture  Trustee with respect to
         the Debentures,  (B) waive any  past default that is waivable under the
         Indenture,  (C) exercise any  right to rescind or annul any declaration
         that the principal of all  the Debentures shall be due and payable,  or
         (D)  consent to any  amendment,  modification  or  termination  of the
         Indenture  or the  Debentures  where  such  consent  shall be  required
         unless the Trust shall have  received  a written  opinion of counsel to
         the effect that such modification  will not cause the Trust to cease to
         be classified as  a "grantor  trust" for United States  federal  income
         tax purposes.

         Section  2.8    Powers and Duties of the Institutional Trustee.
                         ----------------------------------------------

         (a)    The legal title to the Debentures  shall be owned by and held of
record in the name of the Institutional  Trustee in trust for the benefit of the
Trust and the Holders of the  Securities.  The right,  title and interest of the
Institutional  Trustee to the Debentures shall vest automatically in each Person
who may  hereafter be  appointed as  Institutional  Trustee in  accordance  with
Section 4.7. Such vesting and  cessation of title shall be effective  whether or
not conveyancing  documents with regard to the Debentures have been executed and
delivered.

         (b)    The  Institutional  Trustee  shall not transfer its right, title
and interest in the Debentures to the Administrators or to the Delaware Trustee.

         (c)    The Institutional Trustee shall:

               (i)  establish  and  maintain a segregated  non-interest  bearing
          trust account (the "Property Account") in  the  name  of and under the
                              ----------------
         exclusive control of the Institutional  Trustee, and maintained  in the
         Institutional Trustee's trust department,  on behalf of the  Holders of
         the  Securities  and,  upon the  receipt of  payments of  funds made in
         respect of the Debentures held by the  Institutional  Trustee,  deposit
         such funds into the Property  Account and  make payments,  or cause the
         Paying  Agent  to   make  payments,  to  the  Holders  of  the  Capital
         Securities  and   Holders of the Common  Securities  from the  Property
         Account in  accordance with Section 5.1. Funds in the Property  Account
         shall be  held  uninvested  until  disbursed  in  accordance  with this
         Declaration;

              (ii)  engage in such ministerial  activities as shall be necessary
         or appropriate  to effect the redemption of the Capital  Securities and
         the Common  Securities  to the  extent the  Debentures  are redeemed or
         mature; and

              (iii) upon  written  notice  of   distribution   issued  by  the
         Administrators in  accordance with the terms of the Securities,  engage
         in such ministerial activities as shall be necessary or appropriate to
         effect  the  distribution  of the  Debentures  to Holders of Securities
         upon  the occurrence of certain circumstances  pursuant to the terms of
         the  Securities.

         (d)    The Institutional Trustee may  bring or  defend,  pay,  collect,
compromise,  arbitrate,  resort to legal  action with  respect to, or  otherwise
adjust  claims or demands of or  against,  the Trust  which  arises out of or in
connection  with an  Event of  Default  of which a  Responsible  Officer  of the
Institutional  Trustee has actual  knowledge or arises out of the  Institutional
Trustee's duties and obligations under this Declaration; provided, however, that
                                                         --------  -------
if an Event  of  Default  has  occurred  and is  continuing  and  such  event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the  Debentures on the date such  interest or principal is otherwise  payable
(or in the case of  redemption,  on the redemption  date),  then a Holder of the
Capital  Securities  may directly  institute a  proceeding  for  enforcement  of
payment to such Holder of the principal of or interest on the Debentures  having
a principal  amount  equal to the  aggregate  liquidation  amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
                              -------------

<PAGE>

date specified in the  Debentures.  In connection  with such Direct Action,  the
rights of the Holders of the Common  Securities will be subrogated to the rights
of such Holder of the Capital  Securities  to the extent of any payment  made by
the Debenture Issuer to such Holder of the Capital Securities  in  such   Direct
Action;  provided,  however,  that   no   Holder  of  the  Common Securities may
         --------   -------
exercise such right of  subrogation  so long as an Event of Default with respect
to the Capital Securities has occurred and is continuing.

         (e)    The Institutional Trustee shall  continue  to serve as a Trustee
until either:

               (i)  the Trust has been completely liquidated and the proceeds of
         the liquidation  distributed to  the Holders of the Securities pursuant
         to the terms of the Securities and this Declaration; or

               (ii) a Successor Institutional Trustee has been appointed and has
         accepted  that appointment in accordance with Section 4.7.

         (f)    The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a Holder of the Debentures under the
Indenture  and,  if  an  Event  of  Default   occurs  and  is  continuing,   the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the  Debentures  subject  to the  rights of the  Holders
pursuant  to  this  Declaration  (including  Annex  I)  and  the  terms  of  the
Securities.

         The  Institutional  Trustee must  exercise the powers set forth in this
Section 2.8 in a manner that is  consistent  with the purposes and  functions of
the Trust set out in Section 2.3, and the  Institutional  Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 2.3.

         Section  2.9  Certain Duties and Responsibilities of  the  Trustees and
                       ---------------------------------------------------------
Administrators.
--------------

         (a)    The Institutional Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all such  Events of Default  that may
have occurred,  shall undertake to perform only such duties as are  specifically
set forth in this  Declaration and no implied  covenants shall be read into this
Declaration  against the Institutional  Trustee. In case an Event of Default has
occurred  (that has not been  cured or waived  pursuant  to  Section  6.7),  the
Institutional  Trustee shall exercise such of the rights and powers vested in it
by this  Declaration,  and use the  same  degree  of care  and  skill  in  their
exercise,  as a prudent person would exercise or use under the  circumstances in
the conduct of his or her own affairs.

         (b)    The duties  and  responsibilities   of  the   Trustees  and  the
Administrators  shall be as provided by this  Declaration.  Notwithstanding  the
foregoing,  no  provision  of this  Declaration  shall  require  any  Trustee or
Administrators  to  expend  or risk  their  own  funds or  otherwise  incur  any
financial  liability in the performance of any of their duties hereunder,  or in
the  exercise  of any of their  rights  or powers  if it shall  have  reasonable
grounds to believe that repayment of such funds or adequate  protection  against
such risk of liability is not  reasonably  assured to it. Whether or not therein
expressly  so provided,  every  provision  of this  Declaration  relating to the
conduct or affecting the liability of or affording protection to the Trustees or
Administrators  shall be subject to the  provisions of this Article.  Nothing in
this  Declaration  shall be construed to relieve an  Administrator  or a Trustee
from liability for its own negligent  act, its own negligent  failure to act, or
its own willful  misconduct.  To the extent that, at law or in equity, a Trustee
or an Administrator  has duties and liabilities  relating to the Trust or to the
Holders,  such Trustee or such Administrator shall not be liable to the Trust or
to any Holder for such Trustee's or such  Administrator's good faith reliance on
the provisions of this Declaration.  The provisions of this Declaration,  to the
extent that they restrict the duties and  liabilities of the  Administrators  or
the Trustee  otherwise  existing at law or in equity,  are agreed by the Sponsor
and  the  Holders  to  replace  such  other  duties  and   liabilities   of  the
Administrators or the Trustees.
<PAGE>

         (c)    All payments made by the Institutional Trustee or a Paying Agent
in  respect of  the Securities  shall be made only from the revenue and proceeds
from the Trust Property and only to  the extent that there shall  be  sufficient
revenue or proceeds from the Trust Property to enable the Institutional  Trustee
or a  Paying  Agent  to make payments in accordance with the terms hereof.  Each
Holder, by its acceptance of a Security,  agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally  vailable for
distribution   to  it  as  herein   provided  and  that  the  Trustees  and  the
Administrators  are not personally liable to it for any amount  distributable in
respect of any Security or for any other  liability in respect of any  Security.
This Section  2.9(c) does not limit the liability of the Trustees  expressly set
forth elsewhere in this Declaration.

         (d)    The  Institutional  Trustee shall not be liable for its own acts
or omissions hereunder except as a result of its own negligent  action,  its own
negligent failure to act, or its own willful misconduct, except that:

               (i)  the Institutional  Trustee shall not be liable for any error
         of  judgment  made  in  good  faith  by an  Authorized  Officer  of the
         Institutional   Trustee,   unless   it  shall   be   proved   that  the
         Institutional  Trustee was  negligent  in  ascertaining  the  pertinent
         facts;

              (ii)  the Institutional  Trustee shall  not be liable with respect
         to any  action  taken or  omitted  to be taken by  it in good  faith in
         accordance  with the  direction  of the  Holders  of  not  less  than a
         Majority in liquidation amount of the Capital Securities or  the Common
         Securities,  as applicable,  relating to the time, method  and place of
         conducting   any   proceeding   for  any  remedy   available   to   the
         Institutional Trustee, or exercising any trust or power conferred  upon
         the Institutional Trustee under this Declaration;

              (iii) the  Institutional  Trustee's sole duty with respect to  the
         custody,  safekeeping and physical  preservation of the Debentures  and
         the Property  Account shall be to deal with such property in a  similar
         manner as the  Institutional  Trustee deals with  similar  property for
         its  fiduciary  accounts  generally,  subject to  the  protections  and
         limitations on liability  afforded to the  Institutional  Trustee under
         this Declaration;

              (iv)  the  Institutional  Trustee  shall  not be  liable  for  any
         interest on any money received by it except as it  may otherwise  agree
         in  writing  with the  Sponsor;  and money  held by  the  Institutional
         Trustee need not be  segregated  from other funds held  by it except in
         relation  to the  Property  Account  maintained  by  the  Institutional
         Trustee  pursuant  to  Section  2.8(c)(i)  and  except  to  the  extent
         otherwise required by law; and

              (v)   the Institutional  Trustee  shall  not  be  responsible  for
         monitoring  the compliance by the  Administrators  or  the Sponsor with
         their  respective  duties  under   this  Declaration,   nor  shall  the
         Institutional  Trustee be liable for any  default or  misconduct of the
         Administrators or the Sponsor.

         Section  2.10  Certain  Rights of Institutional Trustee. Subject to the
                        ----------------------------------------
provisions of Section 2.9:

         (a)    the Institutional  Trustee may conclusively rely and shall fully
be protected  in  acting  or  refraining  from  acting  in  good  faith upon any
resolution, opinion  of  counsel,  certificate,   written  representation  of  a
Holder or  transferee,  certificate   of  auditors  or  any  other  certificate,
statement, instrument,  opinion, report, notice,  request,  direction,  consent,
order, appraisal, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed,  sent or
presented by the proper party or parties;
<PAGE>

         (b)    if (i) in performing its  duties  under  this  Declaration,  the
Institutional  Trustee is  required  to decide  between  alternative  courses of
action,  (ii) in  construing  any of the  provisions  of this  Declaration,  the
Institutional  Trustee finds the same ambiguous or  inconsistent  with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration,  then, except as to any matter
as to which the  Holders of Capital  Securities  are  entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's written instructions as to the course of action
to be taken and the  Institutional  Trustee  shall take such action,  or refrain
from taking such action,  as the  Institutional  Trustee  shall be instructed in
writing, in which event the Institutional Trustee shall have no liability except
for its own negligence or willful misconduct;

         (c)    any direction or  act  of  the  Sponsor  or  the  Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;

         (d)    whenever in  the  administration   of  this   Declaration,   the
Institutional  Trustee  shall  deem it  desirable  that a matter  be  proved  or
established before undertaking,  suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically  prescribed)
may request and  conclusively  rely upon an Officers'  Certificate as to factual
matters which, upon receipt of such request,  shall be promptly delivered by the
Sponsor or the Administrators;

         (e)    the Institutional Trustee  shall  have  no  duty  to  see to any
recording,  filing or registration of any instrument (including any financing or
continuation  statement  or any  filing  under  tax or  securities  laws) or any
rerecording, refiling or reregistration thereof;

         (f)    the  Institutional  Trustee  may  consult  with  counsel  of its
selection (which counsel may be counsel to the Sponsor or any of its Affiliates)
and the  advice  of  such counsel shall be full and complete  authorization  and
protection in respect of any action  taken, suffered or omitted by it  hereunder
in good faith and in reliance thereon and  in  accordance with such advice;  the
Institutional  Trustee  shall  have the  right at any time to seek  instructions
concerning the  administration  of this  Declaration from any court of competent
jurisdiction;

         (g)    the  Institutional  Trustee  shall  be  under  no  obligation to
exercise  any  of the rights or powers vested in it by this  Declaration  at the
request or direction of any of the Holders pursuant to this Declaration,  unless
such  Holders  shall  have  offered  to the  Institutional  Trustee  security or
indemnity  reasonably  satisfactory  to  it  against  the  costs,  expenses  and
liabilities which  might  be  incurred  by it in compliance with such request or
direction; provided, that nothing  contained in  this  Section  2.10(g) shall be
           --------
taken to relieve the Institutional Trustee, subject to Section 2.9(b),  upon the
occurrence of an Event of Default (that has not been cured or waived pursuant to
Section 6.7), to  exercise  such  of  the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their  exercise,  as a
prudent person would exercise  or use  under  the  circumstances in the  conduct
of his or her  own affairs;

         (h)    the Institutional  Trustee  shall  not  be  bound  to  make  any
investigation  into the facts or matters stated in any resolution,  certificate,
statement,   instrument,  opinion,  report,  notice,  request,  consent,  order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document,  unless  requested in writing to do so by one or more Holders,  but
the  Institutional  Trustee may make such further inquiry or investigation  into
such facts or matters as it may see fit;

         (i)    the  Institutional  Trustee  may  execute  any  of the trusts or
powers  hereunder  or  perform  any  duties  hereunder  either directly or by or
through its  agents  or  attorneys  and the  Institutional  Trustee shall not be
responsible  for  any  misconduct  or  negligence  on  the  part  of  or for the
supervision  of,  any  such  agent  or  attorney  appointed  with due care by it
hereunder;
<PAGE>

         (j)    whenever in  the   administration   of  this   Declaration   the
Institutional  Trustee  shall deem it  desirable  to receive  instructions  with
respect to enforcing  any remedy or right or taking any other  action  hereunder
the Institutional  Trustee (i) may request  instructions from the Holders of the
Capital  Securities  which  instructions may only be given by the Holders of the
same  proportion  in  liquidation  amount of the Capital  Securities as would be
entitled  to direct the  Institutional  Trustee  under the terms of the  Capital
Securities  in respect of such  remedy,  right or action,  (ii) may refrain from
enforcing  such  remedy  or  right  or  taking  such  other  action  until  such
instructions  are  received,  and (iii)  shall be fully  protected  in acting in
accordance with such instructions;

         (k)    except as otherwise expressly provided in this Declaration,  the
Institutional  Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;

         (l)    when  the  Institutional  Trustee  incurs  expenses  or  renders
services in connection  with a Bankruptcy  Event,  such expenses  (including the
fees and expenses of its counsel) and the  compensation for  such  services  are
intended to constitute  expenses of  administration  under any bankruptcy law or
law relating to creditors rights generally;

         (m)    the Institutional Trustee shall not be charged with knowledge of
an Event of Default unless a Responsible  Officer of the  Institutional  Trustee
obtains actual  knowledge of such event or the  Institutional  Trustee  receives
written  notice of such  event from any  Holder,  the  Sponsor or the  Debenture
Trustee;

         (n)    any action taken  by the  Institutional  Trustee  or its  agents
hereunder  shall  bind the  Trust and the  Holders  of the  Securities,  and the
signature of the  Institutional  Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional  Trustee to so act or as to its
compliance  with any of the terms and  provisions of this  Declaration,  both of
which shall be  conclusively  evidenced  by the  Institutional  Trustee's or its
agent's taking such action; and

         (o)    no provision  of  this Declaration shall be deemed to impose any
duty or  obligation on the Institutional Trustee to perform  any  act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be  unqualified  or  incompetent  in accordance  with  applicable  law, to
perform any such act or acts,  or to exercise  any such  right,  power,  duty or
obligation.  No  permissive  power or authority  available to the  Institutional
Trustee shall be construed to be a duty.

         Section 2.11  Delaware  Trustee. Notwithstanding any other provision of
                       -----------------
this  Declaration  other than Section 4.1,  the  Delaware  Trustee  shall not be
entitled to exercise any powers,  nor shall the Delaware Trustee have any of the
duties  and  responsibilities  of  any  of the  Trustees  or the  Administrators
described in this  Declaration  (except as may be required  under the  Statutory
Trust Act).  Except as set forth in Section 4.1, the Delaware Trustee shall be a
Trustee for the sole and limited  purpose of fulfilling the  requirements of ss.
3807 of the Statutory Trust Act.

         Section 2.12  Execution of  Documents.  Unless otherwise determined  in
                       -----------------------
writing by the Institutional  Trustee,  and except as otherwise  required by the
Statutory  Trust  Act,  the  Institutional  Trustee,  or any  one or more of the
Administrators,  as the case may be, is  authorized  to execute on behalf of the
Trust any documents that the Trustees or the Administrators, as the case may be,
have the power and  authority  to  execute  pursuant  to  Section  2.6.

         Section 2.13  Not  Responsible  for Recitals or Issuance of Securities.
                       ---------------------------------------------------------
The recitals  contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for

<PAGE>

their  correctness.  The  Trustees  make no  representations  as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations  as to the  validity or  sufficiency  of this  Declaration,  the
Debentures or the Securities.

         Section 2.14  Duration  of  Trust. The Trust, unless  earlier dissolved
                       -------------------
pursuant to the  provisions of Article VII hereof,  shall be in existence for 35
years from the Closing Date.

         Section 2.15  Mergers.
                       -------

         (a)    The  Trust  may not consolidate, amalgamate, merge with or into,
or be replaced by,  or convey,  transfer  or lease  its  properties  and  assets
substantially  as an  entirety  to any  corporation  or other  body,  except  as
described  in  Section  2.15(b)  and (c)  and  except  in  connection  with  the
liquidation  of the Trust and the  distribution  of the Debentures to Holders of
Securities  pursuant to Section  7.1(a)(iv) of the  Declaration  or Section 4 of
Annex I.

         (b)    The Trust may, with the consent of the Institutional Trustee and
without  the  consent of the  Holders of the  Capital  Securities,  consolidate,
amalgamate,  merge with or into,  or be  replaced by a trust  organized  as such
under the laws of any state; provided that:

          (i)   if  the Trust is not the surviving entity, such successor entity
     (the "Successor Entity") either:
           ----------------

                (A) expressly assumes all of the  obligations of the Trust under
         the Securities; or

                (B) substitutes  for  the  Securities  other  securities  having
         substantially  the  same  terms  as   the  Securities  (the  "Successor
                                                                       ---------
         Securities")  so  that the  Successor  Securities  rank the same as the
         ----------
         Securities  rank  with  respect  to  Distributions  and  payments  upon
         Liquidation, redemption and otherwise;

          (ii)  the Sponsor expressly appoints a trustee of the Successor Entity
     that   possesses   substantially   the  same   powers  and  duties  as  the
     Institutional Trustee as the Holder of the Debentures;

          (iii) such merger, consolidation, amalgamation or replacement does not
     adversely  affect the rights,  preferences and privileges of the Holders of
     the  Securities  (including  any  Successor  Securities)  in  any  material
     respect;

          (iv)  the Institutional  Trustee  receives  written  confirmation from
     Moody's  Investor  Services,  Inc.  and  any  other  nationally  recognized
     statistical rating organization that rates securities issued by the initial
     purchaser of the Capital Securities that it will not reduce or withdraw the
     rating  of  any  such  securities  because  of  such  merger,   conversion,
     consolidation, amalgamation or replacement;

          (v)   such Successor Entity has a purpose  substantially  identical to
     that of the Trust;

          (vi)  prior   to   such    merger,   consolidation,   amalgamation  or
     replacement, the Trust has  received an opinion of a nationally  recognized
     independent  counsel to the Trust experienced in such matters to the effect
     that:

                (A)  such  merger,  consolidation,  amalgamation  or replacement
         does not adversely affectthe rights, preferences and  privileges of the
         Holders  of the Securities  (including any Successor Securities) in any
         material respect;
<PAGE>

                (B) following  such  merger,   consolidation,   amalgamation  or
         replacement,  neither   the  Trust  nor the  Successor  Entity  will be
         required to register as an Investment Company; and

                (C)  following  such  merger,  consolidation,   amalgamation  or
         replacement,  the  Trust (or the Successor  Entity) will continue to be
         classified  as a "grantor  trust" for United States  federal income tax
         purposes;

          (vii)  the Sponsor guarantees the obligations of such Successor Entity
     under the  Successor  Securities  at least to the  extent  provided  by the
     Guarantee;

          (viii) the Sponsor owns 100% of the common securities of any Successor
     Entity; and

          (ix)   prior   to   such   merger,  consolidation,   amalgamation   or
     replacement,  the  Institutional  Trustee shall  have received an Officers'
     Certificate of the Administrators  and an opinion of counsel,  each  to the
     effect  that  all  conditions  precedent under this Section 2.15(b) to such
     transaction  have been satisfied.

    (c)   Notwithstanding Section 2.15(b),  the Trust shall not, except with the
consent of Holders of 100% in aggregate liquidation  amount  of  the Securities,
consolidate,  amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate,  amalgamate,  merge withor  into,  or
replace it if such consolidation,   amalgamation,  merger  or replacement  would
cause  the  Trust  or  Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.

                                   ARTICLE III

                                     SPONSOR

         Section  3.1  Sponsor's Purchase of  Common  Securities. On the Closing
                       -------------------------------------------
Date, the Sponsor will purchase all of the Common Securities issued by the Trust
in an amount at least equal to 3% of the capital of the Trust,  at the same time
as the Capital Securities are sold.

         Section  3.2  Responsibilities of the  Sponsor.  In connection with the
                       ----------------------------------
issue and sale of the Capital  Securities,  the Sponsor shall have the exclusive
right and  responsibility  to engage in, or direct the  Administrators to engage
in, the following activities:

         (a)   to determine the  States in which to take  appropriate  action to
qualify the Trust or to qualify or register  for sale all or part of the Capital
Securities  and to do any and all such acts,  other than  actions  which must be
taken by the Trust,  and advise the Trust of actions it must take,  and  prepare
for execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems  necessary or advisable in order to comply with the applicable
laws of any such States,  to protect the limited liability of the Holders of the
Capital  Securities  or to enable the Trust to effect the  purposes for which it
was created; and

         (b)   to negotiate the terms of and/or  execute on behalf of the Trust,
the Placement  Agreement and other related agreements  providing for the sale of
the Capital Securities.

         Section  3.3 Expenses. In  connection  with   the  offering,  sale  and
                      --------
issuance of the  Debentures to the Trust and in connection  with the sale of the
Securities  by the Trust,  the Sponsor,  in its  capacity as  Debenture  Issuer,
shall:
<PAGE>

         (a)   pay al  reasonable costs  and  expenses  owing  to the  Debenture
Trustee pursuant to Section 6.6 of the Indenture;

         (b)   be responsible for and shall pay all debts and obligations (other
than with  respect to the  Securities)  and all costs and expenses of the Trust,
the  offering,  sale  and  issuance  of the  Securities  (including  fees to the
placement  agents in connection  therewith),  the costs and expenses  (including
reasonable  counsel  fees and  expenses)  of the  Institutional  Trustee and the
Administrators,  the costs and expenses  relating to the operation of the Trust,
including,  without  limitation,  costs and expenses of accountants,  attorneys,
statistical  or  bookkeeping  services,  expenses for printing and engraving and
computing or accounting equipment,  Paying Agents, Registrars,  Transfer Agents,
duplicating,  travel and  telephone  and other  telecommunications  expenses and
costs and expenses incurred in connection with the acquisition,  financing,  and
disposition of Trust assets and the enforcement by the Institutional  Trustee of
the rights of the Holders (for purposes of  clarification,  this Section  3.3(b)
does not  contemplate  the  payment  by the  Sponsor  of  acceptance  or  annual
administration fees owing to the Institutional  Trustee pursuant to the services
to be provided by the  Institutional  Trustee under this Declaration or the fees
and  expenses of the  Institutional  Trustee's  counsel in  connection  with the
closing of the transactions contemplated by this Declaration); and

         (c)   pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.

         The Sponsor's  obligations  under  this  Section 3.3  shall  be for the
benefit  of,  and shall be  enforceable  by,  any  Person  to whom  such  debts,
obligations,

costs,  expenses and taxes are owed (a "Creditor")  whether or not such Creditor
                                        --------
has  received  notice  hereof.  Any such  Creditor  may  enforce  the  Sponsor's
obligations  under this Section 3.3 directly against the Sponsor and the Sponsor
irrevocably  waives any right or remedy to require that any such  Creditor  take
any action against the Trust or any other Person before  proceeding  against the
Sponsor.  The Sponsor  agrees to execute such  additional  agreements  as may be
necessary or desirable  in order to give full effect to the  provisions  of this
Section 3.3.

         Section  3.4  Right to  Proceed. The Sponsor acknowledges the rights of
                       -----------------
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

                                   ARTICLE IV

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

         Section  4.1  Number of Trustees.   The   number   of  Trustees   shall
                       ------------------
initially be two, and;

         (a)   at any  time  before  the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and

         (b)   after the issuance of any  Securities, the number of Trustees may
increased or decreased by vote of the Holder of a Majority in liquidation amount
be of the Common Securities voting as a class at a meeting  of the Holder of the
Common Securities;  provided, however, that there shall be a Delaware Trustee if
                    --------  -------
required by Section  4.2; and there shall always be one Trustee who shall be the
Institutional Trustee, and such Trustee may also serve as Delaware Trustee if it
meets the  applicable  requirements,  in which case  Section  2.11 shall have no
application to such entity in its capacity as Institutional Trustee.
<PAGE>

         Section 4.2  Delaware Trustee. If  required by the Statutory Trust Act,
                      ----------------
one Trustee (the "Delaware Trustee") shall be:
                  ----------------

         (a)    a natural person who is a resident of the State of Delaware; or

         (b)   if not a natural person, an entity which is  organized  under the
laws of the United States or any state thereof or the District of Columbia,  has
its principal  place of business in the State of Delaware,  and otherwise  meets
the  requirements of applicable  law,  including ss. 3807 of the Statutory Trust
Act.

         Section 4.3  Institutional Trustee; Eligibility.
                      ----------------------------------

         (a)    There shall at all times be one Trustee which shall:

                (i)   not be an Affiliate of the Sponsor;

                (ii)  not offer or provide  credit or credit enhancement to the
         Trust;  and

                (iii) be  a banking  corporation or trust  company organized and
         doing  business  under the laws of the United States of America or any
         state thereof or the District of Columbia,  authorized  under such laws
         to exercise  corporate  trust  powers,  having  a combined  capital and
         surplus  of at  least 50 million  U.S.  dollars  ($50,000,000.00),  and
         subject to  supervision or examination by Federal,  state,  or District
         of  Columbia  authority.  If  such  corporation  publishes  reports  of
         condition at least annually, pursuant to  law or to the requirements of
         the supervising or examining authority referred to  above, then for the
         purposes of this Section 4.3(a)(iii), the combined capital  and surplus
         of such  corporation  shall be deemed to be its  combined  capital  and
         surplus  as set  forth in its  most  recent  report  of  condition   so
         published.

         (b)     If  at  any  time  the  Institutional Trustee shall cease to be
eligible  to so  act  under  Section  4.3(a),  the  Institutional  Trustee shall
immediately resign in the manner and with the effect set forth in Section 4.7.

         (c)     If  the  Institutional  Trustee  has   or  shall   acquire  any
"conflicting  interest"  within  the  meaning  of  Section   310(b) of the Trust
Indenture  Act  of  1939, as  amended, the  Institutional  Trustee  shall either
eliminate such interest or resign, to the extent and in the manner provided  by,
and subject to this Declaration.

         (d)     The initial Institutional Trustee  shall  be  Wilmington  Trust
Company.

         Section 4.4  Certain Qualifications of the Delaware Trustee  Generally.
                      ----------------------------------------------------------
The Delaware  Trustee shall be a U.S.  Person and either a natural person who is
at least 21 years of age or a legal  entity  that shall act  through one or more
Authorized Officers.

         Section 4.5  Administrators.   Each  Administrator  shall  be  a   U.S.
                       --------------
Person, 21 years of age or older and authorized to bind the Sponsor. The initial
Administrators  shall  be Allen  H.  Blake,  Terrance  M.  McCarthy  and Lisa K.
Vansickle. There shall at all times be at least one Administrator.  Except where
a requirement for action by a specific number of Administrators is expressly set
forth in this  Declaration  and except with  respect to any action the taking of
which is the subject of a meeting of the Administrators,  any action required or
permitted  to be taken by the  Administrators  may be taken by, and any power of
the  Administrators  may be  exercised  by, or with the consent of, any one such
Administrator.
<PAGE>

         Section 4.6  Initial Delaware Trustee.  The  initial  Delaware  Trustee
                      ------------------------
shall be Wilmington Trust Company.

         Section 4.7  Appointment,  Removal  and  Resignation  of  Trustees  and
                      ----------------------------------------------------------
Administrators.
--------------

         (a)     No  resignation  or  removal  of  any  Trustee  (the  "Relevant
Trustee") and  no  appointment  of a successor  Trustee pursuant to this Article
shall become effective  until the acceptance  of  appointment  by the  successor
Trustee in accordance with the applicable  requirements of this Section 4.7.

         (b)     Subject to Section 4.7(a), a Relevant Trustee may resign at any
time by giving  written  notice  thereof to the Holders of the Securities and by
appointing  a  successor   Relevant   Trustee.   Upon  the  resignation  of  the
Institutional  Trustee,  the Institutional  Trustee shall appoint a successor by
requesting  from at least three  Persons  meeting the  eligibility  requirements
their expenses and charges to serve as the successor  Institutional Trustee on a
form provided by the Administrators,  and selecting the Person who agrees to the
lowest  expense and charges  (the  "Successor  Institutional  Trustee").  If the
instrument  of acceptance by the  successor  Relevant  Trustee  required by this
Section 4.7 shall not have been delivered to the Relevant Trustee within 60 days
after the giving of such notice of  resignation or delivery of the instrument of
removal,  the Relevant  Trustee may petition,  at the expense of the Trust,  any
federal,  state or District of Columbia court of competent  jurisdiction for the
appointment of a successor  Relevant  Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any,  as it may deem  proper,  appoint a Relevant
Trustee. The Institutional  Trustee shall have no liability for the selection of
such successor pursuant to this Section 4.7.

         (c)     Unless  an  Event  of  Default  shall  have   occurred  and  be
continuing, any Trustee may be removed at any time by an act of the Holders of a
Majority in liquidation amount of the Common Securities. If any Trustee shall be
so  removed,  the Holders of the Common  Securities,  by act of the Holders of a
Majority  in  liquidation  amount  of the  Common  Securities  delivered  to the
Relevant Trustee,  shall promptly appoint a successor Relevant Trustee, and such
successor Trustee shall comply with the applicable  requirements of this Section
4.7.  If an  Event  of  Default  shall  have  occurred  and be  continuing,  the
Institutional  Trustee or the Delaware Trustee,  or both of them, may be removed
by the act of the  Holders of a Majority  in  liquidation  amount of the Capital
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). If any Trustee shall be so removed, the Holders of Capital
Securities,  by act of the  Holders of a Majority in  liquidation  amount of the
Capital  Securities then outstanding  delivered to the Relevant  Trustee,  shall
promptly appoint a successor  Relevant  Trustee or Trustees,  and such successor
Trustee shall comply with the applicable requirements of this Section 4.7. If no
successor  Relevant  Trustee  shall have been so  appointed  by the Holders of a
Majority  in  liquidation   amount  of  the  Capital   Securities  and  accepted
appointment  in the manner  required  by this  Section  4.7 within 30 days after
delivery of an instrument of removal, the Relevant Trustee or any Holder who has
been a Holder  of the  Securities  for at least  six  months  may,  on behalf of
himself  and all others  similarly  situated,  petition  any  federal,  state or
District of Columbia court of competent  jurisdiction  for the  appointment of a
successor  Relevant  Trustee.  Such court may thereupon,  after prescribing such
notice, if any, as it may deem proper,  appoint a successor  Relevant Trustee or
Trustees.

         (d)     The Institutional Trustee shall give notice of each resignation
and each remova of a Trustee and each appointment  of a successor Trustee to all
Holders and to the Sponsor.  Each notice shall include the name of the successor
Relevant  Trustee and the  address of its  Corporate  Trust  Office if it is the
Institutional Trustee.

         (e)     Notwithstanding the foregoing or any other  provision  of  this
Declaration,  in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become  incompetent  or  incapacitated,  the vacancy
created  by  such  death,  incompetence  or  incapacity  may  be  filled  by the
Institutional  Trustee  following  the  procedures in this Section 4.7 (with the
successor  being a  Person  who  satisfies  the  eligibility  requirement  for a
Delaware  Trustee  set  forth  in this  Declaration)  (the  "Successor  Delaware
                                                             -------------------
Trustee").
-------
<PAGE>

         (f)     In case of the appointment hereunder  of a  successor  Relevant
Trustee,  the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Securities  shall execute and deliver an amendment hereto wherein
each  successor  Relevant  Trustee shall accept such  appointment  and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm  to, and to vest in,  each  successor  Relevant  Trustee all the rights,
powers,  trusts and duties of the retiring  Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of
this  Declaration  as  shall be  necessary  to  provide  for or  facilitate  the
administration  of the  Trust  by more  than  one  Relevant  Trustee,  it  being
understood  that  nothing  herein or in such  amendment  shall  constitute  such
Relevant  Trustees  co-trustees  and upon the  execution  and  delivery  of such
amendment  the  resignation  or removal of the retiring  Relevant  Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee,  without any further act, deed or conveyance,  shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on  request  of the  Trust or any  successor  Relevant  Trustee,  such  retiring
Relevant  Trustee  shall duly  assign,  transfer  and deliver to such  successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Securities and the Trust
subject to the payment of all unpaid  fees,  expenses  and  indemnities  of such
retiring Relevant Trustee.

         (g)     No  Institutional  Trustee or Delaware  Trustee shall be liable
for  the  acts  or  omissions  to  act of any Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.

         (h)     The  Holders  of  the  Capital Securities will have no right to
vote to appoint,  remove or replace the  Administrators, which voting rights are
vested exclusively in the Holders of the Common Securities.

         (i)     Any successor Delaware Trustee shall file an  amendment  to the
Certificate  of Trust  with the  Secretary  of  State of the  State of  Delaware
identifying the name and principal place of business of such Delaware Trustee in
the State of Delaware.

         Section 4.8  Vacancies Among Trustees. If  a  Trustee  ceases  to  hold
                      ------------------------
office for any reason and the number of  Trustees  is not  reduced  pursuant  to
Section 4.1, a vacancy  shall occur.  A resolution  certifying  the existence of
such  vacancy by the  Trustees or, if there are more than two, a majority of the
Trustees,  shall be conclusive  evidence of the  existence of such vacancy.  The
vacancy shall be filled with a Trustee appointed in accordance with Section 4.7.

         Section 4.9  Effect of  Vacancies.  The death, resignation, retirement,
                      --------------------
removal,  bankruptcy,  dissolution,  liquidation,  incompetence or incapacity to
perform the duties of a Trustee  shall not  operate to  dissolve,  terminate  or
annul the Trust or terminate this Declaration.  Whenever a vacancy in the number
of Trustees  shall occur,  until such vacancy is filled by the  appointment of a
Trustee in accordance with Section 4.7, the Institutional Trustee shall have all
the powers  granted to the Trustees and shall  discharge all the duties  imposed
upon the Trustees by this Declaration.

         Section 4.10 Meetings of the Trustees and the Administrators.  Meetings
                      -----------------------------------------------
of the  Administrators  shall  be held  from  time to time  upon  the call of an
Administrator.  Regular meetings of the  Administrators may be held in person in
the United States or by telephone,  at a place (if applicable) and time fixed by
resolution  of the  Administrators.  Notice  of any  in-person  meetings  of the
Trustees with the Administrators or meetings of the Administrators shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic  meetings of the Trustees with the  Administrators or meetings of
the Administrators or any committee thereof shall be hand delivered or otherwise

<PAGE>

delivered  in writing  (including  by  facsimile,  with a hard copy by overnight
courier) not less than 24 hours before a meeting.  Notices shall contain a brief
statement  of the time,  place and  anticipated  purposes  of the  meeting.  The
presence  (whether in person or by telephone) of a Trustee or an  Administrator,
as the case may be, at a  meeting  shall  constitute  a waiver of notice of such
meeting  except  where  the  Trustee  or an  Administrator,  as the case may be,
attends a meeting for the express purpose of objecting to the transaction of any
activity  on the  grounds  that the  meeting  has not been  lawfully  called  or
convened.  Unless  provided  otherwise  in this  Declaration,  any action of the
Trustees or the Administrators, as the case may be, may be taken at a meeting by
vote of a majority of the  Trustees or the  Administrators  present  (whether in
person or by  telephone)  and  eligible  to vote with  respect  to such  matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Trustees or the Administrators.  Meetings of the Trustees and the
Administrators  together  shall be held  from  time to time upon the call of any
Trustee or an Administrator.

         Section 4.11    Delegation of Power.
                         -------------------

         (a)     Any Administrator may, by  power of  attorney  consistent  with
applicable law,  delegate to any other natural person over the age of 21 that is
a U.S.  Person  his or her power for the  purpose  of  executing  any  documents
contemplated in Section 2.6; and

         (b)     the  Administrators  shall have power to delegate from  time to
time to such of their number the doing of such things and the execution  of such
instruments  either in the name of the Trust or the names of the  Administrators
or  otherwise  as the  Administrators  may deem  expedient,  to the extent  such
delegation is not  prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.

         Section 4.12  Conversion, Consolidation or Succession to  Business. Any
                       ----------------------------------------------------
Person  into which the  Institutional  Trustee or the  Delaware  Trustee  may be
merged  or  converted  or  with  which  it may be  consolidated,  or any  Person
resulting   from  any  merger,   conversion  or   consolidation   to  which  the
Institutional  Trustee or the Delaware  Trustee shall be a party,  or any Person
succeeding  to all or  substantially  all the  corporate  trust  business of the
Institutional  Trustee or the  Delaware  Trustee  shall be the  successor of the
Institutional  Trustee or the Delaware Trustee  hereunder,  provided such Person
shall be  otherwise  qualified  and eligible  under this Article and,  provided,
                                                                       --------
further,  that such Person shall file an amendment to the  Certificate  of Trust
-------
with the Secretary of State of the State of Delaware as  contemplated in Section
4.7(i).

                                   ARTICLE V

                                 DISTRIBUTIONS

         Section 5.1  Distributions.  Holders  shall  receive  Distributions  in
                      -------------
accordance  with the  applicable  terms  of the  relevant  Holder's  Securities.
Distributions  shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their  respective  terms. If and
to the extent  that the  Debenture  Issuer  makes a payment of  Interest  or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee  shall and is  directed,  to the  extent  funds are  available  for that
purpose, to make a distribution (a "Distribution") of such amounts to Holders.
                                    ------------
<PAGE>
                                   ARTICLE VI

                             ISSUANCE OF SECURITIES

         Section 6.1  General Provisions Regarding Securities.
                      ---------------------------------------

         (a)     The  Administrators  shall, on  behalf  of the Trust, issue one
series of capital  securities  substantially in the form of Exhibits A-1 and A-2
representing  undivided  beneficial  interests in the assets of the Trust having
such  terms as are set  forth in Annex I and one  series  of  common  securities
representing  undivided  beneficial  interests in the assets of the Trust having
such terms as are set forth in Annex I. The Trust shall issue no  securities  or
other interests in the assets of the Trust other than the Capital Securities and
the Common  Securities.  The Capital  Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has  occurred and is  continuing,  the rights of Holders of the
Common  Securities  to payment in respect of  Distributions  and  payments  upon
liquidation,  redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.

         (b)     The Certificates  shall be signed on behalf of the Trust by one
or  more  Administrators.  Such  signature  shall  be the  facsimile  or  manual
signature of any Administrator. In case any Administrator of the Trust who shall
have signed any of the Securities  shall cease to be such  Administrator  before
the  Certificates so signed shall be delivered by the Trust,  such  Certificates
nevertheless may be delivered as though the person who signed such  Certificates
had not ceased to be such  Administrator,  and any  Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security,  shall be an Administrator  of the Trust,  although at the date of the
execution  and  delivery  of the  Declaration  any such  person  was not such an
Administrator.  A Capital Security shall not be valid until authenticated by the
facsimile or manual  signature  of an  Authorized  Officer of the  Institutional
Trustee.  Such signature shall be conclusive  evidence that the Capital Security
has been authenticated  under this Declaration.  Upon written order of the Trust
signed by one  Administrator,  the Institutional  Trustee shall authenticate the
Capital Securities for original issue. The Institutional  Trustee may appoint an
authenticating  agent  that  is  a  U.S.  Person  acceptable  to  the  Trust  to
authenticate  the  Capital  Securities.   A  Common  Security  need  not  be  so
authenticated.

         (c)     The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.

         (d)     Upon   issuance  of   the  Securities  as   provided   in  this
Declaration,  the  Securities  so issued  shall be deemed to be validly  issued,
fully paid and,  except as provided in Section 9.1(b) with respect to the Common
Securities, non-assessable.

         (e)     Every Person, by virtue of having become a Holder in accordance
with the terms of this Declaration,  shall be deemed to have expressly  assented
and  agreed to the terms of,  and shall be bound by,  this  Declaration  and the
Guarantee.

         Section 6.2  Paying Agent, Transfer Agent  and  Registrar.   The  Trust
                      --------------------------------------------
shall  maintain in Wilmington,  Delaware,  an office or agency where the Capital
Securities may be presented for payment ("Paying Agent"), and an office or
                                          ------------
agency  where  Securities  may be  presented  for  registration  of  transfer or
exchange  (the  "Transfer  Agent").  The Trust shall keep or cause to be kept at
                 ---------------
such  office or agency a register  for the  purpose of  registering  Securities,
transfers and exchanges of  Securities,  such register to be held by a registrar
(the  "Registrar").  The  Administrators  may  appoint  the  Paying  Agent,  the
       ---------
Registrar and the Transfer Agent and may appoint one or more  additional  Paying
Agents or one or more  co-Registrars,  or one or more co Transfer Agents in such
other  locations as it shall  determine.  The term "Paying  Agent"  includes any
additional paying agent, the term "Registrar"  includes any additional registrar

<PAGE>

or co Registrar and the term "Transfer  Agent" includes any additional  transfer
agent.  The  Administrators  may  change  any Paying  Agent,  Transfer  Agent or
Registrar at any time without  prior  notice to any Holder.  The  Administrators
shall  notify the  Institutional  Trustee of the name and  address of any Paying
Agent,  Transfer  Agent  and  Registrar  not a party  to this  Declaration.  The
Administrators  hereby  initially  appoint the  Institutional  Trustee to act as
Paying Agent,  Transfer  Agent and Registrar for the Capital  Securities and the
Common  Securities.  The  Institutional  Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.

         Section 6.3  Form  and Dating.   The   Capital   Securities   and   the
                      ----------------
Institutional   Trustee's   certificate  of  authentication   thereon  shall  be
substantially  in the form of Exhibits  A-1 and A-2,  and the Common  Securities
shall be  substantially  in the form of  Exhibit  A-3,  each of which is  hereby
incorporated in and expressly made a part of this Declaration.  Certificates may
be typed,  printed,  lithographed  or  engraved  or may be produced in any other
manner  as is  reasonably  acceptable  to the  Administrators,  as  conclusively
evidenced by their execution thereof. The Securities may have letters,  numbers,
notations or other marks of  identification  or designation  and such legends or
endorsements required by law, stock exchange rule, agreements to which the Trust
is  subject  if any,  or  usage  (provided  that any such  notation,  legend  or
endorsement is in a form acceptable to the Sponsor).  The Trust at the direction
of the Sponsor  shall  furnish any such legend not contained in Exhibits A-1 and
A-2 to the  Institutional  Trustee in writing.  Each Capital  Security  shall be
dated on or before the date of its  authentication.  The terms and provisions of
the  Securities  set forth in Annex I and the forms of  Securities  set forth in
Exhibits A-1, A-2 and A-3 are part of the terms of this  Declaration  and to the
extent  applicable,   the  Institutional  Trustee,  the  Delaware  Trustee,  the
Administrators  and  the  Sponsor,  by  their  execution  and  delivery  of this
Declaration,  expressly  agree  to such  terms  and  provisions  and to be bound
thereby.  Capital  Securities  will be  issued  only in  blocks  having a stated
liquidation amount of not less than $100,000.00 and any multiple of $1,000.00 in
excess thereof.

         The Capital Securities are being offered and sold by the Trust pursuant
to the Placement  Agreement in definitive,  registered  form without coupons and
with the Restricted Securities Legend.

         Section 6.4  Mutilated, Destroyed, Lost or Stolen Certificates.
                      -------------------------------------------------

         If:

         (a)     any  mutilated  Certificates  should   be  surrendered  to  the
Registrar, or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and

         (b)     there shall be delivered to the Registrar,  the  Administrators
and the  Institutional  Trustee such security or indemnity as may be required by
them to keep each of them harmless;

then, in the absence of notice that such Certificate shall have been acquired by
a protected  purchaser,  an  Administrator  on behalf of the Trust shall execute
(and in the case of a Capital Security  Certificate,  the Institutional  Trustee
shall  authenticate)  and  deliver,  in  exchange  for or in  lieu  of any  such
mutilated,  destroyed,  lost or stolen  Certificate,  a new  Certificate of like
denomination.  In connection with the issuance of any new Certificate under this
Section 6.4, the  Registrar or the  Administrators  may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection  therewith.  Any  duplicate  Certificate  issued  pursuant to this
Section shall  constitute  conclusive  evidence of an ownership  interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

         Section 6.5  Temporary  Securities.  Until  definitive  Securities  are
                      ---------------------
ready for  delivery,  the  Administrators  may  prepare  and, in the case of the
Capital  Securities,  the Institutional  Trustee shall  authenticate,  temporary
Securities.   Temporary  Securities  shall  be  substantially  in  the  form  of


<PAGE>

definitive  Securities but may have variations that the Administrators  consider
appropriate  for  temporary   Securities.   Without   unreasonable   delay,  the
Administrators  shall  prepare and, in the case of the Capital  Securities,  the
Institutional Trustee shall authenticate,  definitive Securities in exchange for
temporary Securities.

         Section 6.6  Cancellation.  The Administrators at  any time may deliver
                      ------------
Securities to the Institutional  Trustee for  cancellation.  The Registrar shall
forward  to the  Institutional  Trustee  any  Securities  surrendered  to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly  cancel  all  Securities  surrendered  for  registration  of  transfer,
payment,  replacement  or  cancellation  and  shall  dispose  of  such  canceled
Securities as the  Administrators  direct.  The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.

         Section 6.7  Rights of Holders; Waivers of Past Defaults.
                      -------------------------------------------

         (a)     The legal title to the Trust Property is vested  exclusively in
the  Institutional  Trustee (in its capacity as such) in accordance with Section
2.5, and the Holders  shall not have any right or title  therein  other than the
undivided  beneficial  interest  in the assets of the Trust  conferred  by their
Securities and they shall have no right to call for any partition or division of
property,  profits  or rights  of the  Trust  except  as  described  below.  The
Securities  shall be personal  property giving only the rights  specifically set
forth therein and in this  Declaration.  The Securities shall have no preemptive
or similar rights.

         (b)     For  so long as any Capital Securities remain  outstanding,  if
upon an Indenture Event of Default,  the Debenture  Trustee fails or the holders
of not less than 25% in principal  amount of the outstanding  Debentures fail to
declare  the  principal  of all of the  Debentures  to be  immediately  due  and
payable,  the  Holders  of a  Majority  in  liquidation  amount  of the  Capital
Securities then  outstanding  shall have the right to make such declaration by a
notice in writing to the  Institutional  Trustee,  the Sponsor and the Debenture
Trustee.

         At any time after a  declaration  of  acceleration  with respect to the
Debentures  has been made and  before a judgment  or decree  for  payment of the
money  due has  been  obtained  by the  Debenture  Trustee  as  provided  in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default,  the Holders of a Majority
in  liquidation  amount of the  Capital  Securities,  by  written  notice to the
Institutional  Trustee,  the Sponsor and the Debenture Trustee,  may rescind and
annul such declaration and its consequences if:

         (i)   the Debenture  Issuer has paid or  deposited  with the  Debenture
     Trustee a sum sufficient to pay

               (A)  all  overdue   installments   of  interest  on  all  of  the
         Debentures,

               (B) any accrued Additional Interest on all of the Debentures,

               (C) the  principal of (and  premium,  if any, on) any  Debentures
         that  have  become  due  otherwise   than  by   such   declaration   of
         acceleration  and interest and Additional  Interest thereon at the rate
         borne by  the Debentures, and

               (D) all sums paid or advanced by the Debenture  Trustee under the
         Indenture and the reasonable compensation, expenses, disbursements  and
         advances of the Debenture Trustee and the  Institutional Trustee, their
         agents and counsel; and
<PAGE>

         (ii)  all Events of Default with respect to the Debentures,  other than
     the  non-payment  of the  principal of the  Debentures  that has become due
     solely by such  acceleration,  have been  cured or  waived as  provided  in
     Section 5.7 of the Indenture.

         The Holders of at least a Majority in liquidation amount of the Capital
Securities  may, on behalf of the Holders of all the Capital  Securities,  waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest on
the Debentures (unless such default or Indenture Event of Default has been cured
and a sum sufficient to pay all matured  installments  of interest and principal
due  otherwise  than by  acceleration  has been  deposited  with  the  Debenture
Trustee) or a default  under the  Indenture or an Indenture  Event of Default in
respect of a covenant or provision  that under the Indenture  cannot be modified
or amended without the consent of the holder of each outstanding  Debenture.  No
such  rescission  shall  affect  any  subsequent  default  or  impair  any right
consequent thereon.

         Upon receipt by the  Institutional  Trustee of written notice declaring
such an  acceleration,  or rescission and annulment  thereof,  by Holders of any
part  of the  Capital  Securities,  a  record  date  shall  be  established  for
determining  Holders of outstanding  Capital Securities entitled to join in such
notice,  which  record  date  shall be at the close of  business  on the day the
Institutional  Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons,  shall be entitled to join
in such notice,  whether or not such Holders  remain  Holders  after such record
date; provided, that unless such declaration of acceleration,  or rescission and
annulment,  as the case may be,  shall have  become  effective  by virtue of the
requisite  percentage  having  joined in such notice prior to the day that is 90
days after such record date,  such notice of  declaration  of  acceleration,  or
rescission and annulment,  as the case may be, shall  automatically  and without
further  action by any Holder be canceled and of no further  effect.  Nothing in
this  paragraph  shall  prevent a Holder,  or a proxy of a Holder,  from giving,
after  expiration of such 90-day period,  a new written notice of declaration of
acceleration,  or rescission and annulment thereof,  as the case may be, that is
identical to a written notice that has been canceled  pursuant to the proviso to
the preceding  sentence,  in which event a new record date shall be  established
pursuant to the provisions of this Section 6.7.

         (c)     Except as otherwise provided in paragraphs  (a) and (b) of this
Section  6.7,  the Holders of at least a Majority in  liquidation  amount of the
Capital Securities may, on behalf of the Holders of all the Capital  Securities,
waive any past  default  or Event of  Default  and its  consequences.  Upon such
waiver,  any such  default or Event of  Default  shall  cease to exist,  and any
default  or Event of  Default  arising  therefrom  shall be  deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any  subsequent  or other  default  or Event of  Default  or  impair  any  right
consequent thereon.

                                  ARTICLE VII

                      DISSOLUTION AND TERMINATION OF TRUST

     Section 7.1    Dissolution and Termination of Trust.
                    ------------------------------------

         (a)    The Trust shall dissolve on the first to occur of:

                (i)   unless  earlier dissolved,  on  September  20,  2039,  the
         expiration of the term of the Trust;

                (ii)  upon a Bankruptcy Event with respect to the  Sponsor,  the
         Trust or the Debenture Issuer;
<PAGE>

                (iii) upon the filing of a  certificate of  dissolution  or its
         equivalent  with respect to  the Sponsor (other than in connection with
         a merger,  consolidation or  similar  transaction not prohibited by the
         Indenture,  this Declaration  or the Guarantee,  as the case may be) or
         upon the  revocation of the  charter of the Sponsor and the  expiration
         of 90 days  after  the  date  of  revocation  without  a  reinstatement
         thereof;

                (iv)  upon the distribution of the  Debentures to the Holders of
         the  Securities, upon exercise of the right of the Holder of all of the
         outstanding  Common  Securities  to  dissolve  the Trust as provided in
         Annex I hereto;

                (v)   upon the entry of a decree of  judicial dissolution of the
         Holder  of  the  Common  Securities,  the  Sponsor,  the  Trust  or the
         Debenture Issuer;

                (vi)  when all of the  Securities  shall  have  been  called for
         redemption  and the amounts necessary for redemption thereof shall have
         been   paid  to  the  Holders  in  accordance  with  the  terms  of the
         Securities; or

                (vii) before the issuance of any Securities, with the consent of
         all of the Trustees and the Sponsor.

         (b)    As  soon  as  is  practicable  after  the occurrence of an event
referred  to in  Section  7.1(a),  and  after  satisfaction  of  liabilities  to
creditors of the Trust as required by applicable law, including of the Statutory
Trust  Act,  and  subject  to the terms set forth in Annex I, the  Institutional
Trustee shall terminate the Trust by filing a certificate of  cancellation  with
the Secretary of State of the State of Delaware.

         (c)    The  provisions of Section 2.9 and  Article IX shall survive the
termination of the Trust.

                                  ARTICLE VIII

                              TRANSFER OF INTERESTS

         Section 8.1   General.
                       -------

         (a)    Subject  to  Section  8.1(c),  where   Capital   Securities  are
presented  to the  Registrar  or a  co-registrar  with a request  to  register a
transfer  or to  exchange  them  for  an  equal  number  of  Capital  Securities
represented by different certificates, the Registrar shall register the transfer
or make the  exchange  if its  requirements  for such  transactions  are met. To
permit  registrations  of transfer and exchanges,  the Trust shall issue and the
Institutional  Trustee shall authenticate  Capital Securities at the Registrar's
request.

         (b)    Upon  issuance  of  the  Common  Securities,  the  Sponsor shall
acquire and retain  beneficial and record ownership of the Common Securities and
for so long as the  Securities  remain  outstanding,  and to the fullest  extent
permitted by applicable  law, the Sponsor shall  maintain 100%  ownership of the
Common Securities;  provided,  however, that  any  permitted  successor  of  the
                    --------   -------
Sponsor, in  its  capacity  as Debenture Issuer,  under the Indenture that is  a
U.S. Person may succeed to the Sponsor's ownership of the Common Securities.

         (c)    Capital Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities.  To the fullest extent permitted by applicable law,
any transfer or purported  transfer of any Security not made in accordance  with
this  Declaration  shall be null and void and will be  deemed  to be of no legal
effect  whatsoever and any such transferee  shall be deemed not to be the holder
of such Capital  Securities  for any purpose,  including  but not limited to the
receipt of Distributions on such Capital  Securities,  and such transferee shall
be deemed to have no interest whatsoever in such Capital Securities.
<PAGE>

         (d)    The Registrar shall provide for the  registration of  Securities
and of transfers of Securities,  which will be effected  without charge but only
upon payment  (with such  indemnity as the  Registrar may require) in respect of
any tax or other  governmental  charges  that may be imposed in  relation to it.
Upon surrender for  registration  of transfer of any  Securities,  the Registrar
shall  cause one or more new  Securities  of the same  tenor to be issued in the
name of the designated transferee or transferees. Every Security surrendered for
registration  of  transfer  shall be  accompanied  by a  written  instrument  of
transfer in form  satisfactory  to the Registrar  duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.6. A transferee  of a Security  shall be entitled to the rights and
subject  to the  obligations  of a Holder  hereunder  upon the  receipt  by such
transferee of a Security. By acceptance of a Security,  each transferee shall be
deemed to have agreed to be bound by this Declaration.

         (e)    The  Trust  shall  not  be  required (i) to  issue, register the
transfer of, or exchange any Securities during a period beginning at the opening
of  business  five  days  before  the day of any  selection  of  Securities  for
redemption and ending at the close of business on the earliest date on which the
relevant notice of redemption is deemed to have been given to all Holders of the
Securities  to be redeemed,  or (ii) to register the transfer or exchange of any
Security so selected for  redemption in whole or in part,  except the unredeemed
portion of any Security being redeemed in part.

         Section 8.2  Transfer Procedures and Restrictions.
                      ------------------------------------

         (a)    The  Capital  Securities  shall  bear  the Restricted Securities
Legend,  which shall not be removed  unless there is delivered to the Trust such
satisfactory  evidence,  which may include an opinion of counsel satisfactory to
the  Institutional  Trustee,  as may be reasonably  required by the Trust,  that
neither  the legend nor the  restrictions  on  transfer  set forth  therein  are
required to ensure that  transfers  thereof  comply with the  provisions  of the
Securities Act. Upon provision of such satisfactory  evidence, the Institutional
Trustee,  at the written direction of the Trust,  shall authenticate and deliver
Capital Securities that do not bear the legend.

         (b)    Except  as  permitted  by  Section 8.2(a), each Capital Security
shall bear  a  legend  (the "Restricted  Securities  Legend") in   substantially
                        -----------------------------------
the following form and a Capital  Security  shall not be  transferred  except in
compliance with such legend,  unless otherwise  determined by the Sponsor,  upon
the advice of counsel expert in securities  law, in accordance  with  applicable
law:

                THIS  SECURITY  HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933,  AS AMENDED (THE "SECURITIES  ACT"), ANY STATE SECURITIES LAWS
         ANY  OTHER  APPLICABLE  SECURITIES  LAW.  NEITHER THIS SECURITY NOR ANY
         OR INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,  SOLD,  ASSIGNED,
         TRANSFERRED,  PLEDGED,   ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE
         ABSENCE  OF SUCH  REGISTRATION  OR UNLESS  SUCH  TRANSACTION  IS EXEMPT
         FROM,  OR   NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF  THE
         SECURITIES  ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF
         THIS   SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES TO  OFFER,  SELL OR
         OTHERWISE  TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST,
         (B)  PURSUANT  TO  A  REGISTRATION  STATEMENT  THAT HAS  BEEN  DECLARED
         EFFECTIVE  UNDER  THE  SECURITIES  ACT, (C) TO A PERSON WHOM THE SELLER
         REASONABLY   BELIEVES  IS   A  QUALIFIED   INSTITUTIONAL   BUYER  IN  A
         TRANSACTION   MEETING  THE  REQUIREMENTS  OF RULE  144A SO LONG AS THIS
         SECURITY

<PAGE>

         IS ELIGIBLE FOR RESALE  PURSUANT TO  RULE 144A IN ACCORDANCE  WITH RULE
         144A,  (D)  TO  A  NON-U.S.  PERSON   IN  AN  OFFSHORE  TRANSACTION  IN
         ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATION S
         UNDER  THE  SECURITIES  ACT,  (E)   TO  AN  INSTITUTIONAL   "ACCREDITED
         INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF  RULE 501 UNDER THE
         SECURITIES  ACT THAT IS ACQUIRING  THIS  CAPITAL  SECURITY  FOR ITS OWN
         ACCOUNT,  OR FOR  THE  ACCOUNT  OF  SUCH  AN  INSTITUTIONAL  ACCREDITED
         INVESTOR, FOR INVESTMENT PURPOSES  AND NOT WITH A VIEW TO, OR FOR OFFER
         OR SALE IN  CONNECTION   WITH,  ANY  DISTRIBUTION  IN  VIOLATION OF THE
         SECURITIES ACT, OR (F)  PURSUANT TO ANY OTHER AVAILABLE  EXEMPTION FROM
         THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES ACT,  SUBJECT TO THE
         SPONSOR'S  AND THE  TRUST'S   RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR
         TRANSFER   TO   REQUIRE   THE   DELIVERY  OF  AN  OPINION  OF  COUNSEL,
         CERTIFICATION AND/OR OTHER INFORMATION  SATISFACTORY TO EACH OF THEM IN
         ACCORDANCE  WITH THE  DECLARATION  OF  TRUST,  A  COPY OF WHICH  MAY BE
         OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING  TRANSACTIONS INVOLVING
         THIS  SECURITY  MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH  THE
         SECURITIES ACT.

                THE  HOLDER  OF  THIS  SECURITY  BY  ITS ACCEPTANCE  HEREOF ALSO
         AGREES,  REPRESENTS  AND WARRANTS THAT IT  IS NOT AN EMPLOYEE  BENEFIT,
         INDIVIDUAL  RETIREMENT ACCOUNT OR OTHER  PLAN OR ARRANGEMENT SUBJECT TO
         TITLE I OF THE  EMPLOYEE  RETIREMENT  INCOME  SECURITY ACT OF 1974,  AS
         AMENDED  ("ERISA"),  OR SECTION 4975 OF THE  INTERNAL  REVENUE CODE OF
         1986,  AS  AMENDED  (THE  "CODE")  (EACH A "PLAN"),  OR AN ENTITY WHOSE
         UNDERLYING  ASSETS  INCLUDE  "PLAN  ASSETS"  BY  REASON  OF ANY  PLAN'S
         INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN  ASSETS" OF ANY
         PLAN MAY  ACQUIRE  OR HOLD THE  SECURITIES  OR  ANY  INTEREST  THEREIN,
         UNLESS SUCH  PURCHASER  OR  HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF
         AVAILABLE UNDER U.S. DEPARTMENT  OF LABOR PROHIBITED  TRANSACTION CLASS
         EXEMPTION 96-23,  95-60,  91-38,  90-1 OR 84-14 OR  ANOTHER  APPLICABLE
         EXEMPTION  OR  ITS  PURCHASE  AND  HOLDING  OF  THIS  SECURITY  IS  NOT
         PROHIBITED  BY SECTION  406 OF ERISA OR SECTION  4975 OF THE CODE  WITH
         RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER  OF THE
         SECURITIES OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED
         BY ITS  PURCHASE  AND  HOLDING  THEREOF  THAT  EITHER (i) IT IS  NOT AN
         EMPLOYEE  BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR
         A PLAN TO WHICH SECTION 4975 OF THE CODE IS  APPLICABLE,  A TRUSTEE  OR
         OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE  BENEFIT PLAN OR PLAN,  OR
         ANY OTHER PERSON OR ENTITY  USING THE ASSETS OF ANY  EMPLOYEE   BENEFIT
         PLAN OR PLAN TO FINANCE SUCH PURCHASE,  OR (ii) SUCH PURCHASE WILL  NOT
         RESULT  IN A  PROHIBITED  TRANSACTION  UNDER  SECTION  406 OF ERISA  OR
         SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY  OR
         ADMINISTRATIVE EXEMPTION.

                THIS SECURITY WILL BE  ISSUED  AND MAY  BE  TRANSFERRED  ONLY IN
         BLOCKS HAVING A LIQUIDATION  AMOUNT OF NOT LESS  THAN  $100,000.00 (100

<PAGE>

         SECURITIES)  AND   MULTIPLES  OF  $1,000.00  IN  EXCESS  THEREOF.   ANY
         ATTEMPTED  TRANSFER   OF  SECURITIES  IN A BLOCK  HAVING A  LIQUIDATION
         AMOUNT OF LESS  THAN  $100,000.00  SHALL BE DEEMED TO BE VOID AND OF NO
         LEGAL EFFECT WHATSOEVER.

                THE HOLDER OF THIS SECURITY AGREES  THAT IT WILL COMPLY WITH THE
         FOREGOING RESTRICTIONS.

         (c)    To  permit  registrations  of transfers and exchanges, the Trust
shall  execute   and  the   Institutional  Trustee  shall  authenticate  Capital
Securities at the Registrar's request.

         (d)    Registrations of transfers or exchanges will be effected without
charge,  but only upon  payment  (with such  indemnity  as the  Registrar or the
Sponsor may require) in respect of any tax or other governmental charge that may
be imposed in relation to it.

         (e)    All Capital  Securities issued upon any registration of transfer
or exchange pursuant to the terms of this Declaration  shall  evidence  the same
security and shall be entitled to the same benefits  under this  Declaration  as
the  Capital  Securities  surrendered  upon such  registration  of  transfer  or
exchange.

         Section 8.3  Deemed Security Holders.  The  Trust, the  Administrators,
                      -----------------------
the Trustees,  the Paying Agent,  the Transfer  Agent or the Registrar may treat
the Person  in whose  name any  Certificate  shall be  registered  on the  books
and records of the Trust as the  sole  holder  of  such  Certificate  and of the
Securities   represented   by  such   Certificate   for  purposes  of  receiving
Distributions and for all other purposes whatsoever and, accordingly,  shall not
be bound to  recognize  any  equitable  or other  claim to or  interest  in such
Certificate or in the Securities  represented by such Certificate on the part of
any Person,  whether or not the Trust,  the  Administrators,  the Trustees,  the
Paying Agent,  the Transfer  Agent or the  Registrar  shall have actual or other
notice thereof.

                                   ARTICLE IX

                           LIMITATION OF LIABILITY OF
             HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

         Section 9.1  Liability.
                      ---------

         (a)    Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor shall not be:

                (i)   personally liable  for the return  of any  portion  of the
         capital  contributions  (or  any return  thereon) of the Holders of the
         Securities which  shall be made solely from assets of the Trust; or

                (ii)  required to pay  to the  Trust  or to  any  Holder  of the
         Securities any deficit upon dissolution of the Trust or otherwise.

         (b)    The  Holder of the Common  Securities shall be liable for all of
the debts and  obligations   of  the  Trust  (other  than  with respect  to  the
Securities) to the extent not satisfied out of the Trust's assets.

         (c)    Pursuant to the Statutory  Trust Act, the Holders of the Capital
Securities  shall be  entitled  to the same  limitation  of  personal  liability
extended to stockholders of private  corporations for profit organized under the
General Corporation Law of the State of Delaware.

         Section 9.2  Exculpation.
                      -----------

         (a)    No  Indemnified  Person   shall   be   liable,  responsible   or
accountable in  damages  or otherwise to the Trust or any Covered Person for any
loss,  damage or claim incurred by reason of any act or  omission  performed  or
omitted by such Indemnified  Person in good faith on  behalf of the Trust and in
a manner such Indemnified  Person reasonably  believed to be within the scope of
the authority conferred on such  Indemnified  Person by  this Declaration  or by
law, except that  an  Indemnified  Person  shall be  liable  for any such  loss,
damage  or claim incurred  by  reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
<PAGE>

         (b)    An  Indemnified  Person  shall  be fully protected in relying in
good faith  upon the records of the Trust and upon such  information,  opinions,
reports or  statements   presented  to the Trust by any Person as to matters the
Indemnified  Person  reasonably  believes  are   within   such   other  Person's
professional or expert competence  and, if selected by such  Indemnified Person,
has been selected by  such  Indemnified  Person  with  reasonable  care by or on
behalf of the  Trust, including  information,  opinions,  reports or  statements
as  to  the value and amount of the assets, liabilities, profits, losses, or any
other  facts  pertinent  to  the  existence  and  amount  of  assets  from which
Distributions  to Holders of Securities might properly be paid.

         Section 9.3  Fiduciary Duty.
                      --------------

         (a)    To  the extent that, at law or in equity, an Indemnified  Person
has duties (including fiduciary duties) and liabilities relating  thereto to the
Trust or to any other Covered  Person,  an Indemnified  Person acting under this
Declaration  shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified  Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and  liabilities of the  Indemnified
Person.

         (b)    Whenever in this Declaration an Indemnified  Person is permitted
or required to make a decision:

                (i)  in its "discretion" or under a grant of similar  authority,
         the   Indemnified  Person shall be entitled to consider such  interests
         and  factors as it desires, including its own interests, and shall have
         no  duty or obligation to give any  consideration to any interest of or
         factors affecting the Trust or any other Person; or

                (ii) in its "good faith" or under another express  standard, the
         Indemnified Person  shall act under such express standard and shall not
         be  subject  to  any  other  or  different  standard  imposed  by  this
         Declaration or by applicable law.

         Section 9.4  Indemnification.
                      ---------------

         (a)    The  Sponsor shall  indemnify,  to  the full extent permitted by
law, any  Indemnified Person who was or is a party or is threatened to be made a
party  to  any  threatened,  pending  or completed  action,  suit or proceeding,
whether civil, criminal,  administrative  or investigative (other than an action
by  or  in  the right of  the  Trust)  arising out of or in connection  with the
acceptance or administration of this Declaration  by  reason of the fact that he
is  or  was  an  Indemnified  Person  against  expenses  (including   reasonable
attorneys' fees and expenses), judgments, fines and amounts paid  in  settlement
actually  and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he  reasonably believed  to
be in or not opposed to the best  interests of the Trust,  and,  with respect to
any  criminal  action  or  proceeding,  had  no  reasonable cause to believe his


<PAGE>

conduct  was  unlawful. The  termination  of  any  action, suit or proceeding by
judgment,  order, settlement,  conviction, or upon a plea of nolo  contendere or
its equivalent, shall not, of itself,  create a presumption that the Indemnified
Person did not  act in good faith and in a manner which he  reasonably  believed
to be in or not opposed to the best  interests of the Trust,  and,  with respect
to any criminal action or proceeding, had reasonable  cause to believe  that his
conduct was unlawful.

         (b)    The  Sponsor  shall  indemnify,  to the full extent permitted by
law, any  Indemnified Person who was or is a party or is threatened to be made a
party  to any threatened, pending or completed action or suit by or in the right
of the Trust to procure a judgment in its favor arising out of or in  connection
with the acceptance or  administration of this Declaration by reason of the fact
that he is or was an Indemnified Person against expenses  (including  reasonable
attorneys'  fees  and  expenses)  actually  and  reasonably  incurred  by him in
connection  with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust;  provided,  however,  that no such  indemnification
                              --------   -------
shall be made in  respect  of any  claim,  issue  or  matter  as to  which  such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon  application  that,  despite the adjudication of liability but in
view of all the  circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

         (c)    To  the extent that an Indemnified Person shall be successful on
the merits or otherwise  (including  dismissal of an action without prejudice or
the settlement of an action without admission of  liability)  in  defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
9.4,  or in  defense  of any  claim,  issue  or  matter  therein,  he  shall  be
indemnified,  to the full extent permitted by law,  against expenses  (including
attorneys'  fees  and  expenses)  actually  and  reasonably  incurred  by him in
connection therewith.

         (d)    Any indemnification of an Administrator under paragraphs (a) and
(b) of this Section 9.4 (unless ordered by a court) shall be made by the Sponsor
only  as   authorized   in  the  specific   case  upon  a   determination   that
indemnification of the Indemnified Person is proper in the circumstances because
he has met the  applicable  standard of conduct set forth in paragraphs  (a) and
(b). Such  determination  shall be made (i) by the  Administrators by a majority
vote of a Quorum consisting of such  Administrators who were not parties to such
action, suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if
obtainable,  if  a  Quorum  of  disinterested   Administrators  so  directs,  by
independent legal counsel in a written opinion,  or (iii) by the Common Security
Holder of the Trust.

         (e)    To the  fullest extent permitted  by  law,  expenses  (including
reasonable  attorneys' fees and expenses)  incurred by an Indemnified  Person in
defending a civil,  criminal,  administrative or investigative  action,  suit or
proceeding  referred to in  paragraphs  (a) and (b) of this Section 9.4 shall be
paid by the Sponsor in advance of the final disposition of such action,  suit or
proceeding  upon receipt of an undertaking  by or on behalf of such  Indemnified
Person to repay such amount if it shall  ultimately be determined that he is not
entitled to be  indemnified  by the Sponsor as  authorized  in this Section 9.4.
Notwithstanding  the  foregoing,  no advance  shall be made by the  Sponsor if a
determination  is reasonably  and promptly made (i) by the  Administrators  by a
majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum
is not  obtainable,  or,  even  if  obtainable,  if a  quorum  of  disinterested
Administrators so directs,  by independent legal counsel in a written opinion or
(iii) by the Common  Security  Holder of the Trust,  that,  based upon the facts
known to the  Administrators,  counsel or the Common Security Holder at the time
such  determination is made, such Indemnified  Person acted in bad faith or in a
manner that such Indemnified  Person did not believe to be in the best interests
of the Trust, or, with respect to any criminal proceeding, that such Indemnified
Person believed or had reasonable cause to believe his conduct was unlawful.  In
no event  shall any  advance  be made in  instances  where  the  Administrators,
independent  legal counsel or the Common  Security Holder  reasonably  determine
that such Indemnified Person deliberately  breached his duty to the Trust or its
Common or Capital Security Holders.
<PAGE>

         (f)    The  Trustees,  at  the  sole  cost  and expense of the Sponsor,
retain the right to representation by counsel of its own choosing in any action,
suit  or  any  other proceeding for which it is indemnified under paragraphs (a)
and (b) of  this  Section 9.4,  without affecting their right to indemnification
hereunder  or  waiving  any  rights  afforded  to  it  under this Declaration or
applicable law.

         (g)    The indemnification and advancement of expenses  provided by, or
granted  pursuant  to, the other  paragraphs  of this  Section  9.4 shall not be
deemed exclusive of any other rights to which those seeking  indemnification and
advancement  of  expenses  may  be  entitled   under  any  agreement,   vote  of
stockholders  or  disinterested  directors  of the  Sponsor or Capital  Security
Holders of the Trust or  otherwise,  both as to action in his official  capacity
and as to action in another  capacity  while holding such office.  All rights to
indemnification  under  this  Section  9.4 shall be deemed to be  provided  by a
contract  between  the Sponsor  and each  Indemnified  Person who serves in such
capacity  at any time  while  this  Section  9.4 is in  effect.  Any  repeal  or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.

         (h)    The Sponsor or the Trust may purchase and maintain  insurance on
behalf of any Person who is or was an  Indemnified  Person against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Sponsor would have the power to indemnify
him against such liability under the provisions of this Section 9.4.

         (i)    For  purposes  of  this Section 9.4,  references  to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent)  absorbed in a consolidation
or  merger,  so that any Person who is or was a  director,  trustee,  officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity,  shall stand in the same position  under the  provisions of this Section
9.4 with  respect to the  resulting  or  surviving  entity as he would have with
respect to such constituent entity if its separate existence had continued.

         (j)    The indemnification and advancement of expenses  provided by, or
granted  pursuant to, this Section 9.4 shall,  unless  otherwise  provided  when
authorized  or  ratified,  (i)  continue  as to a Person who has ceased to be an
Indemnified  Person and shall inure to the benefit of the heirs,  executors  and
administrators of such a Person;  and (ii) survive the termination or expiration
of this  Declaration  or the earlier  removal or  resignation  of an Indemnified
Person.

         Section 9.5  Outside  Businesses. Any Covered Person, the Sponsor,  the
                      -------------------
Delaware  Trustee  and the  Institutional  Trustee  may  engage in or possess an
interest in other business ventures of any nature or description,  independently
or with others,  similar or  dissimilar  to the  business of the Trust,  and the
Trust  and the  Holders  of  Securities  shall  have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits derived
therefrom,  and the pursuit of any such venture,  even if  competitive  with the
business of the Trust,  shall not be deemed  wrongful or  improper.  None of any
Covered Person, the Sponsor,  the Delaware Trustee or the Institutional  Trustee
shall be obligated to present any particular  investment or other opportunity to
the Trust even if such  opportunity is of a character  that, if presented to the
Trust,  could be taken by the Trust,  and any Covered Person,  the Sponsor,  the
Delaware Trustee and the Institutional  Trustee shall have the right to take for
its own account  (individually  or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity.  Any Covered Person,
the Delaware Trustee and the  Institutional  Trustee may engage or be interested
in any financial or other  transaction  with the Sponsor or any Affiliate of the
Sponsor,  or may act as  depositary  for,  trustee or agent  for,  or act on any
committee or body of holders of,  securities or other obligations of the Sponsor
or its Affiliates.
<PAGE>

         Section 9.6  Compensation; Fee. The Sponsor agrees:
                      -----------------

         (a) to pay to the Trustees from time to time such  compensation for all
services rendered by them hereunder as the parties shall agree from time to time
(which  compensation  shall not be limited by any  provision of law in regard to
the compensation of a trustee of an express trust); and

         (b) except as otherwise  expressly  provided  herein,  to reimburse the
Trustees upon request for all reasonable  expenses,  disbursements  and advances
incurred  or made by the  Trustees  in  accordance  with any  provision  of this
Declaration  (including  the  reasonable   compensation  and  the  expenses  and
disbursements of their respective agents and counsel),  except any such expense,
disbursement or advance as may be  attributable to its negligence,  bad faith or
willful misconduct.

         The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this  Declaration and the removal or resignation of
any Trustee.

         No Trustee may claim any lien or charge on any property of the Trust as
a result of any amount due pursuant to this Section 9.6.

                                    ARTICLE X

                                   ACCOUNTING

         Section 10.1  Fiscal Year. The fiscal year ("Fiscal Year") of the Trust
                       -----------                    -----------
shall be the calendar year, or such other year as is required by the Code.

         Section 10.2  Certain Accounting Matters.
                       --------------------------

         (a)    At  all  times  during  the  existence   of   the   Trust,   the
Administrators  shall  keep, or cause to be kept at the principal office  of the
Trust in the United States, as defined for  purposes  of  Treasury   Regulations
section  301.7701-7,  full  books  of account, records and supporting documents,
which  shall  reflect  in  reasonable  detail each transaction of the Trust. The
books of account shall be  maintained,  at the Sponsor's  expense, in accordance
with generally accepted accounting  principles,  consistently applied. The books
of account and the  records  of the  Trust  shall be  examined  by and  reported
upon  (either  separately  or  as  part  of  the  Sponsor's  regularly  prepared
consolidated financial report) as of the end of each Fiscal Year of the Trust by
a  firm  of   independent  certified   public   accountants  selected   by   the
Administrators.

         (b)    The Administrators shall cause to be duly prepared and delivered
to  each  of  the  Holders  of  Securities Form 1099 or such other annual United
States federal income tax information statement required by the Code, containing
such  information  with  regard  to  the  Securities  held  by each Holder as is
required by the Code and the Treasury  Regulations.  Notwithstanding  any  right
under the Code to deliver any such statement at a later date, the Administrators
shall  endeavor  to deliver all such statements  within 30 days after the end of
each Fiscal Year of the Trust.

         (c)    The Administrators, at the Sponsor's  expense, shall cause to be
duly prepared at the principal  office of the Sponsor in the United  States,  as
`United  States'  is  defined  in  Section  7701(a)(9)  of the  Code  (or at the
principal office of the Trust if the Sponsor has no such principal office in the
United States), and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States  federal  income tax law,
and  any  other  annual  income  tax  returns   required  to  be  filed  by  the
Administrators on behalf of the Trust with any state or local taxing authority.
<PAGE>

         Section 10.3 Banking.  The  Trust  shall maintain in the United States,
                      -------
as defined for purposes of Treasury Regulations section  301.7701-7, one or more
bank  accounts  in the name and for the sole  benefit  of the  Trust;  provided,
                                                                       --------
however,  that all  payments of funds in respect of the  Debentures  held by the
-------
Institutional  Trustee  shall be made  directly to the  Property  Account and no
other funds of the Trust shall be deposited in the  Property  Account.  The sole
signatories  for  such  accounts  (including  the  Property  Account)  shall  be
designated by the Institutional Trustee.

         Section 10.4  Withholding. The Institutional Trustee or any Paying
                       -----------
Agent and the  Administrators  shall  comply with all  withholding  requirements
under United States federal,  state and local law. The Institutional  Trustee or
any  Paying  Agent  shall  request,   and  each  Holder  shall  provide  to  the
Institutional  Trustee or any Paying Agent,  such forms or  certificates  as are
necessary to establish an exemption from withholding with respect to the Holder,
and any  representations  and  forms as shall  reasonably  be  requested  by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling,  its withholding  obligations.  The Administrators  shall
file required forms with applicable  jurisdictions and, unless an exemption from
withholding is properly  established by a Holder,  shall remit amounts  withheld
with respect to the Holder to applicable  jurisdictions.  To the extent that the
Institutional  Trustee or any Paying  Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder,  the amount  withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder.  In the event of any claimed  overwithholding,
Holders shall be limited to an action  against the applicable  jurisdiction.  If
the amount  required to be withheld was not withheld  from actual  Distributions
made,  the  Institutional  Trustee  or any Paying  Agent may  reduce  subsequent
Distributions by the amount of such withholding.

                                   ARTICLE XI

                             AMENDMENTS AND MEETINGS

         Section 11.1  Amendments.
                       ----------

         (a)    Except as otherwise  provided  in  this  Declaration  or by  any
applicable  terms of the Securities,  this  Declaration may only be amended by a
written instrument  approved and executed (i) by the Institutional  Trustee,  or
(ii) if the  amendment  affects  the  rights,  powers,  duties,  obligations  or
immunities of the Delaware Trustee, by the Delaware Trustee.

         (b)    Notwithstanding any other  provision  of  this  Article  XI,  an
amendment  may be made,  and any such  purported  amendment  shall be valid  and
effective only if:

                (i)  the Institutional Trustee shall have first received

                    (A) an Officers'  Certificate from each of the Trust and the
                Sponsor  that  such  amendment is permitted by, and conforms to,
                the terms of  this  Declaration  (including  the  terms  of  the
                Securities); and

                    (B) an opinion of counsel (who may be counsel to the Sponsor
                or the Trust) that such amendment is permitted  by, and conforms
                to, the terms of this  Declaration  (including  the terms of the
                Securities); and

                (ii) the result of such amendment would not be to

                    (A) cause the Trust to cease to be  classified  for purposes
                of United States federal income taxation as a grantor trust; or
<PAGE>

                    (B) cause the Trust to be deemed to be an Investment Company
                required  to be registered under the Investment Company Act.

         (c)    Except as provided in Section 11.1(d), (e) or (h), no  amendment
shall be made, and any such purported  amendment shall be void and  ineffective,
unless the Holders of a Majority in liquidation amount of the Capital Securities
shall have consented to such amendment.

         (d)    In addition to and notwithstanding any other  provision  in this
Declaration,  without the consent of each affected Holder,  this Declaration may
not be amended to (i)  change  the amount or timing of any  Distribution  on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the  Securities  as of a  specified  date or change any
conversion  or exchange  provisions  or (ii)  restrict  the right of a Holder to
institute suit for the enforcement of any such payment on or after such date.

         (e)    Sections 9.1(b) and 9.1(c)  and this  Section  11.1 shall not be
amended without the consent of all of the Holders of the Securities.

         (f)    Article  III  shall  not  be  amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.

         (g)    The  rights  of  the  Holders  of the Capital  Securities  under
Article  IV  to  appoint and remove  Trustees  shall not be amended  without the
consent  of  the  Holders  of  a  Majority  in liquidation amount of the Capital
Securities.

         (h)    This Declaration may be amended by the Institutional Trustee and
the Holders of a Majority in liquidation amount of the Common Securities without
the consent of the Holders of the Capital Securities to:

                (i)   cure any ambiguity;

                (ii)  correct or  supplement  any  provision in this Declaration
         that may be defective or inconsistent with any other provision  of this
         Declaration;

                (iii) add to the  covenants,  restrictions or obligations of the
         Sponsor; or

                (iv)  modify,  eliminate  or  add  to  any   provision  of  this
         Declaration  to  such  extent as may be  necessary  to ensure  that the
         Trust will  be classified for United States federal income tax purposes
         at all  times as a grantor  trust and will not be  required to register
         as an  Investment  Company  (including without limitation to conform to
         any  change in Rule 3a-5, Rule 3a-7 or any other  applicable rule under
         the  Investment  Company Act  or written  change in  interpretation  or
         application thereof by  any legislative body, court,  government agency
         or  regulatory  authority)  which  amendment  does not have  a material
         adverse effect on the rights, preferences or privileges of  the Holders
         of Securities;

         provided, however, that no such modification,  elimination  or addition
         --------  -------
referred to in clauses (i), (ii),  (iii) or (iv) shall  adversely  affect in any
material respect the powers, preferences or special rights of Holders of Capital
Securities.

         Section 11.2.  Meetings of the Holders of Securities; Action by Written
                        --------------------------------------------------------
Consent.
-------

         (a) Meetings of the Holders of any class of Securities may be called at
any time by the  Administrators  (or as provided in the terms of the Securities)


<PAGE>

to consider and act on any matter on which  Holders of such class of  Securities
are  entitled  to act under the  terms of this  Declaration  or the terms of the
Securities. The Administrators shall call a meeting of the Holders of such class
if  directed to do so by the  Holders of at least 10% in  liquidation  amount of
such class of  Securities.  Such  direction  shall be given by delivering to the
Administrators  one or more calls in a writing  stating that the signing Holders
of the Securities  wish to call a meeting and indicating the general or specific
purpose  for which the meeting is to be called.  Any  Holders of the  Securities
calling a meeting shall specify in writing the Certificates  held by the Holders
of the  Securities  exercising  the  right  to call a  meeting  and  only  those
Securities  represented  by such  Certificates  shall be counted for purposes of
determining  whether the required percentage set forth in the second sentence of
this paragraph has been met.

         (b)  Except  to the  extent  otherwise  provided  in the  terms  of the
Securities,  the following  provisions shall apply to meetings of Holders of the
Securities:

              (i) notice of any such meeting  shall be given to all the  Holders
         of  the  Securities  having a right to vote thereat at least 7 days and
         not  more than 60 days  before  the date of such  meeting.  Whenever  a
         vote,   consent  or  approval  of  the  Holders  of the  Securities  is
         permitted  or required under this  Declaration,  such vote,  consent or
         approval  may  be given at a meeting of the Holders of the  Securities.
         Any  action  that  may be  taken at a  meeting  of the  Holders  of the
         Securities  may  be taken  without a meeting  if a consent  in  writing
         setting  forth  the  action so taken is  signed by the  Holders  of the
         Securities  owning  not less than the minimum  amount of  Securities in
         liquidation  amount  that would be  necessary to authorize or take such
         action at a meeting at  which all  Holders of the  Securities  having a
         right to vote thereon  were  present and voting.  Prompt  notice of the
         taking of action  without  a meeting  shall be given to the  Holders of
         the Securities entitled to  vote who have not consented in writing. The
         Administrators  may specify  that any written  ballot  submitted to the
         Holders of the Securities  for the purpose of taking any action without
         a meeting shall be returned to the Trust  within the time  specified by
         the Administrators;

              (ii) each Holder  of a Security  may  authorize  any Person to act
         for  it by proxy on all  matters  in which a Holder  of  Securities  is
         entitled  to participate,  including waiving notice of any meeting,  or
         voting  or  participating  at a meeting.  No proxy shall be valid after
         the  expiration  of  11 months from the date thereof  unless  otherwise
         provided in the  proxy.  Every proxy shall be revocable at the pleasure
         of the Holder of  the  Securities  executing  it.  Except as  otherwise
         provided  herein,  all  matters  relating  to  the  giving,  voting  or
         validity of proxies shall be governed  by the General  Corporation  Law
         of  the  State  of  Delaware   relating   to  proxies,   and   judicial
         interpretations   thereunder,   as  if   the  Trust   were  a  Delaware
         corporation and the Holders of the Securities   were  stockholders of a
         Delaware  corporation;  each meeting of the Holders of  the  Securities
         shall be conducted by the  Administrators or by such  other Person that
         the Administrators may designate; and

               (iii) unless the Statutory  Trust Act, this  Declaration,  or the
         terms  of the Securities  otherwise provides,  the  Administrators,  in
         their  sole discretion,  shall establish all other provisions  relating
         to  meetings of Holders of  Securities,  including  notice of the time,
         place or purpose of any  meeting at which any matter is  to be voted on
         by any Holders of the Securities, waiver  of any such notice, action by
         consent without a meeting,  the  establishment of a record date, quorum
         requirements,  voting in person  or by proxy or any other  matter  with
         respect to the exercise of  any such right to vote; provided,  however,
                                                             --------   -------
         that each meeting shall be conducted in the United States (as that term
         is defined in Treasury Regulations section 301.7701-7).
<PAGE>

                                   ARTICLE XII

        REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE

         Section  12.1. Representations and Warranties of Institutional Trustee.
                        -------------------------------------------------------
The initial  Institutional  Trustee  represents and warrants to the Trust and to
the Sponsor at the date of this  Declaration,  and each Successor  Institutional
Trustee  represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:

         (a)    the Institutional Trustee is a Delaware banking corporation with
trust powers, duly organized and validly existing under the laws of the State of
Delaware with trust power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of, this Declaration;

         (b)    the execution, delivery  and  performance  by the  Institutional
Trustee of this Declaration has been duly authorized by all necessary  corporate
action on the part of the Institutional  Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional  Trustee,  enforceable against
it  in   accordance   with  its  terms,   subject  to   applicable   bankruptcy,
reorganization,   moratorium,  insolvency,  and  other  similar  laws  affecting
creditors' rights generally and to general  principles of equity  (regardless of
whether considered in a proceeding in equity or at law);

         (c)    the execution,  delivery  and performance of this Declaration by
the Institutional Trustee does not conflict with or  constitute  a breach of the
charter or by-laws of the Institutional Trustee; and

         (d)    no  consent,  approval or authorization of, or registration with
or  notice  to,  any  state  or  federal  banking  authority is required for the
execution,  delivery  or  performance  by  the  Institutional  Trustee  of  this
Declaration.

         Section 12.2  Representations of the Delaware Trustee. The Trustee that
                       ---------------------------------------
acts as initial Delaware Trustee represents and warrants to the Trust and to the
Sponsor at the date of this  Declaration,  and each Successor  Delaware  Trustee
represents  and  warrants  to the  Trust  and  the  Sponsor  at the  time of the
Successor Delaware  Trustee's  acceptance of its appointment as Delaware Trustee
that:

         (a)    if it is not a natural person,  the  Delaware  Trustee  is  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware;

         (b)    if it is not a  natural  person,  the  execution,  delivery  and
performance by the Delaware Trustee of this Declaration has been duly authorized
by all  necessary  corporate  action on the part of the Delaware  Trustee.  This
Declaration  has been duly executed and delivered by the Delaware  Trustee,  and
under Delaware law (excluding any securities  laws)  constitutes a legal,  valid
and  binding  obligation  of the  Delaware  Trustee,  enforceable  against it in
accordance  with its terms,  subject to applicable  bankruptcy,  reorganization,
moratorium,  insolvency  and other  similar  laws  affecting  creditors'  rights
generally and to general  principles  of equity and the  discretion of the court
(regardless of whether considered in a proceeding in equity or at law);

         (c)    if it is not a  natural  person,  the  execution,  delivery  and
performance of this  Declaration by the Delaware  Trustee does not conflict with
or constitute a breach of the charter or by-laws of the Delaware Trustee;

         (d)    it has trust power and authority to execute and  deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
<PAGE>

         (e)    no  consent,  approval  or  authorization  of,  or  registration
with or  notice  to, any state or federal banking authority  governing the trust
powers  of  the  Delaware  Trustee  is  required for the execution,  delivery or
performance by the Delaware Trustee of this Declaration; and

         (f)    the  Delaware  Trustee is a natural  person who is a resident of
the State of Delaware  or, if not a natural  person,  it is an entity  which has
its principal  place of  business in the State of Delaware and, in either  case,
a Person that satisfies for the Trust the  requirements  of Section  3807 of the
Statutory Trust Act.

                                  ARTICLE XIII

                                  MISCELLANEOUS

         Section 13.1  Notices. All  notices provided for  in  this  Declaration
                       -------
shall be in writing,  duly signed by the party giving such notice,  and shall be
delivered,  telecopied  (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:

         (a)    if  given  to  the  Trust, in  care of the Administrators at the
Trust's mailing address set forth below (or such other  address as the Trust may
give notice of to the Holders of the Securities):

                  First Bank Statutory Trust II
                  c/o First Banks, Inc.
                  600 James S. McDonnell Blvd.
                  Hazelwood, Missouri 63042
                  Attention:  Lisa K. Vansickle
                  Telecopy:  314-592-6621



         (b)    if given  to  the  Delaware  Trustee,  at the Delaware Trustee's
mailing  address set forth below (or such other address as the Delaware  Trustee
may give notice of to the Holders of the Securities):

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890-1600
                  Attention:  Corporate Trust Administration
                  Telecopy:  302-636-4140

         (c)    if given to the  Institutional  Trustee,  at  the  Institutional
Trustee's  mailing  address  set  forth  below  (or such  other  address  as the
Institutional Trustee may give notice of to the Holders of the Securities):

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890-1600
                  Attention:  Corporate Trust Administration
                  Telecopy:  302-636-4140
<PAGE>

         (d)    if given to the Holder of the Common Securities,  at the mailing
address of the Sponsor  set forth below (or such other  address as the Holder of
the Common Securities may give notice of to the Trust):

                  First Banks, Inc.
                  600 James S. McDonnell Blvd.
                  Hazelwood, Missouri 63042
                  Attention:  Lisa K. Vansickle
                  Telecopy:  314-592-6621

         (e)    if  given  to  any other Holder, at the address set forth on the
books and records of the Trust.

         All such  notices  shall be deemed to have been given when  received in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered  because of a changed  address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

         Section 13.2  Governing Law. This Declaration  and  the  rights  of the
                       -------------
parties  hereunder  shall be governed by and  interpreted in accordance with the
law of the State of Delaware  and all rights and  remedies  shall be governed by
such laws without  regard to the  principles of conflict of laws of the State of
Delaware or any other  jurisdiction  that would call for the  application of the
law of any  jurisdiction  other than the State of Delaware;  provided,  however,
                                                             --------   -------
that  there  shall  not be  applicable  to  the  Trust,  the  Trustees  or  this
Declaration  any  provision  of the laws  (statutory  or common) of the State of
Delaware  pertaining  to  trusts  that  relate  to  or  regulate,  in  a  manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative  requirements  to post  bonds  for  trustees,  officers,  agents  or
employees  of  a  trust,   (c)  the  necessity  for  obtaining  court  or  other
governmental approval concerning the acquisition, holding or disposition of real
or personal  property,  (d) fees or other sums  payable to  trustees,  officers,
agents or employees of a trust,  (e) the allocation of receipts and expenditures
to income or principal,  or (f)  restrictions  or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.

         Section 13.3  Intention of the Parties. It  is  the  intention  of  the
                       ------------------------
parties hereto that the Trust be classified for United States federal income tax
purposes  as a  grantor  trust.  The  provisions  of this  Declaration  shall be
interpreted to further this intention of the parties.

         Section 13.4  Headings.  Headings contained in   this  Declaration  are
                       --------
inserted for convenience of reference only and do not affect the  interpretation
of this Declaration or any provision hereof.

         Section 13.5  Successors and Assigns.  Whenever in this Declaration any
                       -----------------------
of the parties  hereto is named or referred  to, the  successors  and assigns of
such party shall be deemed to be included,  and all covenants and  agreements in
this  Declaration  by the Sponsor and the  Trustees  shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.

         Section 13.6  Partial  Enforceability.   If   any  provision   of  this
                       -----------------------
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration,  or the application of
such provision to persons or circumstances  other than those to which it is held
invalid, shall not be affected thereby.
<PAGE>

         Section 13.7  Counterparts. This Declaration may contain  more than one
                       ------------
counterpart  of the signature page and this  Declaration  may be executed by the
affixing of the signature of each of the Trustees and  Administrators  to any of
such counterpart  signature pages. All of such counterpart signature pages shall
be read as though  one,  and they shall have the same force and effect as though
all of the signers had signed a single signature page.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS  WHEREOF,  the undersigned  have caused these presents to be
executed as of the day and year first above written.

                                          WILMINGTON TRUST COMPANY,
                                          as Delaware Trustee


                                          By./s/    Christopher J. Monigle
                                             --------------------------------
                                             Name:  Christopher J. Monigle
                                             Title: Assistant Vice President


                                          WILMINGTON TRUST COMPANY,
                                          as Institutional Trustee


                                          By./s/    Christopher J. Monigle
                                             --------------------------------
                                             Name:  Christopher J. Monigle
                                             Title: Assistant Vice President


                                          FIRST BANKS, INC. as Sponsor


                                          By./s/    Allen H. Blake
                                             --------------------------------
                                             Name:  Allen H. Blake
                                             Title: President and
                                                    Chief Executive Officer


                                          By./s/    Allen H. Blake
                                             --------------------------------
                                                    Administrator


                                          By./s/    Lisa K. Vansickle
                                             --------------------------------
                                                    Administrator


                                          By./s/    Terrance M. McCarthy
                                             --------------------------------
                                                    Administrator




<PAGE>

                                     ANNEX I

                               TERMS OF SECURITIES

         Pursuant  to Section 6.1 of the Amended  and  Restated  Declaration  of
Trust,  dated as of  September  20,  2004 (as  amended  from  time to time,  the
"Declaration"), the designation, rights, privileges,  restrictions,  preferences
and  other  terms  and  provisions  of the  Capital  Securities  and the  Common
Securities are set out below (each  capitalized term used but not defined herein
has the meaning set forth in the Declaration):

     1.  Designation and Number.
         ----------------------

         (a)    20,000 Floating Rate Capital Securities of First Bank  Statutory
Trust II (the "Trust"), with an aggregate stated liquidation amount with respect
to the  assets of the Trust of twenty  million  dollars  ($20,000,000.00)  and a
stated  liquidation  amount with respect to the assets of the Trust of $1,000.00
per Capital  Security,  are hereby designated for the purposes of identification
only as the "Capital Securities".  The Capital Security Certificates  evidencing
             ------------------
the Capital  Securities  shall be  substantially in the form of Exhibits A-1 and
A-2 to the  Declaration,  with such changes and  additions  thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.

         (b)    619  Floating Rate Common Securities  of the Trust (the  "Common
                                                                          ------
Securities") will be evidenced by Common Security Certificates  substantially in
----------
the form of Exhibit A-3 to the  Declaration,  with such  changes  and  additions
thereto or deletions  therefrom as may be required by ordinary usage,  custom or
practice.

     2.  Distributions.
         -------------

         (a) Distributions will be payable on each Security for the Distribution
Period beginning on (and including) the date of original  issuance and ending on
(but  excluding)  the  Distribution  Payment Date in December 2004 at a rate per
annum of  3.92438%  and shall bear  interest  for each  successive  Distribution
Period  beginning on (and including) the  Distribution  Payment Date in December
2004,  and  each  succeeding  Distribution  Payment  Date,  and  ending  on (but
excluding)  the next  succeeding  Distribution  Payment Date at a rate per annum
equal to the 3-Month  LIBOR,  determined  as  described  below,  plus 2.05% (the
"Coupon Rate"),  applied to the stated  liquidation  amount  thereof,  such rate
 -----------
being  the  rate  of  interest  payable  on the  Debentures  to be  held  by the
Institutional  Trustee.  Distributions  in arrears  will bear  interest  thereon
compounded  quarterly  at  the  applicable  Distribution  Rate  (to  the  extent
permitted by law). Distributions, as used herein, include cash distributions and
any such  compounded  distributions  unless  otherwise  noted. A Distribution is
payable only to the extent that  payments are made in respect of the  Debentures
held by the Institutional  Trustee and to the extent the  Institutional  Trustee
has funds available  therefor.  The amount of the  Distribution  payable for any
Distribution  Period will be calculated by applying the Distribution Rate to the
stated  liquidation  amount  outstanding at the commencement of the Distribution
Period on the basis of the  actual  number  of days in the  Distribution  Period
concerned divided by 360. All percentages resulting from any calculations on the
Capital  Securities  will  be  rounded,   if  necessary,   to  the  nearest  one
hundred-thousandth  of  a  percentage  point,  with  five  one-millionths  of  a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to
9.87655% (or  .0987655),  and all dollar  amounts used in or resulting from such
calculation  will be  rounded to the  nearest  cent  (with  one-half  cent being
rounded upward)).

         (b)    Distributions on the Securities will be cumulative,  will accrue
from the date of original issuance, and will be payable, subject to extension of
distribution payment periods as described herein,  quarterly in arrears on March
20, June 20,  September 20 and December 20 of each year, or if such day is not a
Business  Day,  then the next  succeeding  Business  Day  (each a  "Distribution
                                                                    ------------
Payment Date"),  commencing  on  the Distribution Payment Date in  December 2004
-------------

<PAGE>

when, as and if available for payment.  The Debenture Issuer has the right under
the  Indenture to defer  payments of interest on the  Debentures,  so long as no
Extension  Event of Default has occurred  and is  continuing,  by deferring  the
payment of interest on the Debentures for up to 20 consecutive quarterly periods
(each an "Extension Period") at any time and from time to time, subject  to  the
          ----------------
conditions  described below,  during which Extension Period no interest shall be
due and payable. During any Extension Period, interest will  continue to  accrue
on the Debentures, and interest on such  accrued  interest  will  accrue  at  an
annual rate equal to the Distribution  Rate in effect for  each  such  Extension
Period,  compounded  quarterly from the  date  such  interest  would  have  been
payable  were  it  not for  the  Extension  Period,  to the extent  permitted by
law (such interest  referred to herein as "Additional  Interest").  No Extension
                                           --------------------
Period may end on a date other than a  Distribution  Payment Date. At the end of
any such  Extension  Period,  the  Debenture  Issuer shall pay all interest then
accrued  and  unpaid  on  the  Debentures  (together  with  Additional  Interest
thereon);  provided,  however,  that no Extension  Period may extend  beyond the
           --------   -------
Maturity  Date and provided  further,  however,  that during any such  Extension
                   --------  -------   -------
Period, the Debenture Issuer and its Affiliates shall not (i) declare or pay any
dividends  or  distributions  on,  or  redeem,  purchase,  acquire,  or  make  a
liquidation  payment  with  respect  to, any of the  Debenture  Issuer's  or its
Affiliates'  capital stock (other than payments of dividends or distributions to
the  Debenture  Issuer)  or make any  guarantee  payments  with  respect  to the
foregoing,  or (ii) make any payment of principal of or interest or premium,  if
any, on or repay,  repurchase  or redeem any debt  securities  of the  Debenture
Issuer or any  Affiliate  that rank pari passu in all respects with or junior in
interest to the  Debentures  (other  than,  with respect to clauses (i) and (ii)
above, (a) repurchases,  redemptions or other  acquisitions of shares of capital
stock of the  Debenture  Issuer  in  connection  with any  employment  contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees,  officers,  directors or  consultants,  in connection with a dividend
reinvestment  or  stockholder  stock  purchase  plan or in  connection  with the
issuance of capital stock of the  Debenture  Issuer (or  securities  convertible
into or exercisable for such capital stock) as  consideration  in an acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any  exchange or  conversion  of any class or series of the  Debenture
Issuer's  capital  stock (or any capital  stock of a subsidiary of the Debenture
Issuer) for any class or series of the  Debenture  Issuer's  capital stock or of
any class or  series of the  Debenture  Issuer's  indebtedness  for any class or
series of the Debenture  Issuer's  capital stock, (c) the purchase of fractional
interests in shares of the  Debenture  Issuer's  capital  stock  pursuant to the
conversion or exchange  provisions  of such capital stock or the security  being
converted or exchanged, (d) any declaration of a dividend in connection with any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (e) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(f) payments under the Capital Securities  Guarantee).  Prior to the termination
of any Extension  Period,  the Debenture  Issuer may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional  Interest,  the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements.  No interest or Additional Interest shall
be due and payable during an Extension  Period,  except at the end thereof,  but
each  installment  of interest  that would  otherwise  have been due and payable
during  such  Extension  Period  shall  bear  Additional  Interest.  During  any
Extension Period, Distributions on the Securities shall be deferred for a period
equal to the Extension Period. If Distributions are deferred,  the Distributions
due shall be paid on the date that the related  Extension  Period  terminates to
Holders of the  Securities  as they appear on the books and records of the Trust
on the  record  date  immediately  preceding  such  date.  Distributions  on the
Securities  must  be paid on the  dates  payable  (after  giving  effect  to any
Extension  Period)  to the  extent  that the Trust has funds  available  for the
payment of such  distributions in the Property Account of the Trust. The Trust's
funds  available  for  Distribution  to the  Holders of the  Securities  will be
limited  to  payments  received  from  the  Debenture  Issuer.  The  payment  of
Distributions  out of moneys held by the Trust is  guaranteed  by the  Guarantor
pursuant to the Guarantee.

<PAGE>

         (c)    Distributions on the Securities  will be payable to the  Holders
thereof as they  appear on the books and  records  of the Trust on the  relevant
record dates.  The relevant  record dates shall be five days before the relevant
Distribution Payment Date.  Distributions payable on any Securities that are not
punctually paid on any  Distribution  Payment Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, as the case may be,
when due (taking into account any Extension Period), will cease to be payable to
the Person in whose name such  Securities are registered on the relevant  record
date, and such defaulted  Distribution  will instead be payable to the Person in
whose name such  Securities  are  registered on the special record date or other
specified date determined in accordance with the Indenture.

         (d)    In  the  event that there is any money or other property held by
or for the Trust  that is not  accounted  for  hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.

     3.  Liquidation  Distribution  Upon  Dissolution.  In  the  event   of  the
         --------------------------------------------
voluntary or involuntary liquidation,  dissolution, winding-up or termination of
the Trust (each a  "Liquidation")  other than in connection with a redemption of
                    -----------
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after  satisfaction  of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer),  distributions equal to the aggregate of the
stated  liquidation  amount of $1,000.00  per  Security  plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
                                                                     -----------
Distribution"), unless in connection with such Liquidation, the Debentures in an
------------
aggregate  stated  principal  amount equal to the aggregate  stated  liquidation
amount of such Securities,  with an interest rate equal to the Distribution Rate
of, and bearing  accrued and unpaid  interest in an amount  equal to the accrued
and  unpaid  Distributions  on,  and  having  the  same  record  date  as,  such
Securities,  after paying or making  reasonable  provision to pay all claims and
obligations  of the Trust in accordance  with the Statutory  Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.

         The  Sponsor,  as the Holder of all of the Common  Securities,  has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event),  subject to the receipt by the Debenture  Issuer
of prior approval from the Board of Governors of the Federal Reserve System,  or
its designated  district bank, as applicable,  and any successor  federal agency
that is primarily  responsible for regulating the activities of the Sponsor (the
"Federal Reserve"), if the Sponsor is a bank holding company, or from the Office
 ---------------
of  Thrift  Supervision  and any  successor  federal  agency  that is  primarily
responsible for regulating the activities of Sponsor, (the "OTS") if the Sponsor
                                                            ---
is a savings and loan holding  company,  in either case if then  required  under
applicable  capital  guidelines  or policies  of the Federal  Reserve or OTS, as
applicable,  and, after  satisfaction  of liabilities to creditors of the Trust,
cause the Debentures to be distributed to the Holders of the Securities on a Pro
Rata basis in accordance with the aggregate stated liquidation amount thereof.

         If a Liquidation  of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing,  after  satisfaction  of liabilities to creditors of the Trust, to
the Holders of the Securities,  the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by

<PAGE>

the Institutional Trustee not to be practical,  in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders,  after  satisfaction of liabilities of creditors of the Trust to
the  extent  not  satisfied  by the  Debenture  Issuer,  an amount  equal to the
Liquidation  Distribution.  An early Liquidation of the Trust pursuant to clause
(iv) of  Section  7.1(a) of the  Declaration  shall  occur if the  Institutional
Trustee  determines  that such  Liquidation is possible by  distributing,  after
satisfaction  of  liabilities  to creditors of the Trust,  to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

         If, upon any such Liquidation the Liquidation  Distribution can be paid
only in part because the Trust has insufficient  assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such  Capital  Securities  shall be paid to the  Holders  of the  Trust
Securities on a Pro Rata basis,  except that if an Event of Default has occurred
and is  continuing,  the Capital  Securities  shall have a  preference  over the
Common Securities with regard to such distributions.

         After the date for any  distribution of the Debentures upon dissolution
of the Trust  (i) the  Securities  of the  Trust  will be deemed to be no longer
outstanding,  (ii) upon  surrender of a Holder's  Securities  certificate,  such
Holder of the Securities will receive a certificate  representing the Debentures
to be delivered upon such distribution,  (iii) any certificates representing the
Securities still  outstanding will be deemed to represent  undivided  beneficial
interests in such of the Debentures as have an aggregate  principal amount equal
to the aggregate  stated  liquidation  amount with an interest rate identical to
the  Distribution  Rate of, and  bearing  accrued and unpaid  interest  equal to
accrued and unpaid  distributions on, the Securities until such certificates are
presented to the Debenture  Issuer or its agent for transfer or reissuance  (and
until such certificates are so surrendered, no payments of interest or principal
shall be made to  Holders of  Securities  in  respect  of any  payments  due and
payable under the Debentures;  provided,  however that such failure to pay shall
                               --------   -------
not be deemed to be an Event of Default  and shall not entitle the Holder to the
benefits of the Guarantee),  and (iv) all rights of Holders of Securities  under
the  Declaration  shall  cease,  except  the right of such  Holders  to  receive
Debentures upon surrender of certificates representing such Securities.

     4.  Redemption and Distribution.
         ---------------------------

         (a)    The Debentures will mature on September 20, 2034. The Debentures
may  be  redeemed  by  the  Debenture  Issuer,  in  whole  or in  part,  at  any
Distribution Payment Date on or after the Distribution Payment Date in September
2009, at the Redemption  Price.  In addition,  the Debentures may be redeemed by
the Debenture Issuer at the Special  Redemption Price, in whole but not in part,
at any  Distribution  Payment Date,  upon the occurrence and  continuation  of a
Special Event within 120 days  following the occurrence of such Special Event at
the  Special  Redemption  Price,  upon not less  than 30 nor more  than 60 days'
notice  to  holders  of  such  Debentures  so  long as  such  Special  Event  is
continuing.  In each  case,  the right of the  Debenture  Issuer  to redeem  the
Debentures is subject to the Debenture  Issuer having  received  prior  approval
from the Federal Reserve (if the Debenture  Issuer is a bank holding company) or
prior  approval  from the OTS (if the  Debenture  Issuer is a  savings  and loan
holding  company),  in each  case  if then  required  under  applicable  capital
guidelines or policies of the applicable federal agency.

         "3-Month LIBOR" means the London  interbank  offered  interest rate for
          -------------
three-month,  U.S.  dollar deposits  determined by the Debenture  Trustee in the
following order of priority:

               (1)   the rate (expressed as a  percentage  per  annum)  for U.S.
          dollar deposits having a three-month maturity that appears on Telerate
          Page 3750 as of 11:00 a.m. (London time) on the related  Determination
          Date (as  defined  below).  "Telerate  Page  3750"  means the  display
          designated  as "Page 3750" on the Dow Jones  Telerate  Service or such
          other  page as may  replace  Page 3750 on that  service  or such other
          service  or  services  as may be  nominated  by the  British  Bankers'
          Association  as the  information  vendor for the purpose of displaying
          London interbank offered rates for U.S. dollar deposits;
<PAGE>

               (2)   if such  rate   cannot  be   identified   on  the   related
          Determination  Date, the Debenture  Trustee will request the principal
          London offices of four leading banks in the London interbank market to
          provide such banks' offered  quotations  (expressed as percentages per
          annum) to prime banks in the London  interbank  market for U.S. dollar
          deposits having a three-month  maturity as of 11:00 a.m. (London time)
          on such  Determination  Date. If at least two quotations are provided,
          3-Month LIBOR will be the arithmetic mean of such quotations;

               (3)   if fewer than two such quotations are provided as requested
          in clause (2) above, the Debenture Trustee will request four major New
          York City banks to provide such banks' offered  quotations  (expressed
          as percentages per annum) to leading  European banks for loans in U.S.
          dollars as of 11:00 a.m. (London time) on such Determination  Date. If
          at least two such  quotations are provided,  3-Month LIBOR will be the
          arithmetic mean of such quotations; and

               (4)   if fewer than two such quotations are provided as requested
          in clause (3) above,  3-Month LIBOR will be a 3-Month LIBOR determined
          with respect to the  Distribution  Period  immediately  preceding such
          current Distribution Period.

         If the rate for U.S. dollar deposits having a three-month maturity that
initially  appears on Telerate  Page 3750 as of 11:00 a.m.  (London time) on the
related  Determination  Date  is  superseded  on the  Telerate  Page  3750  by a
corrected rate by 12:00 noon (London time) on such Determination  Date, then the
corrected rate as so  substituted on the applicable  page will be the applicable
3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         "Capital Treatment Event" means the receipt by the Debenture Issuer and
          -----------------------
the Trust of an  opinion of counsel  experienced  in such  matters to the effect
that, as a result of the  occurrence  of any amendment to, or change  (including
any announced  prospective  change) in, the laws,  rules or  regulations  of the
United States or any political  subdivision thereof or therein, or as the result
of  any  official  or   administrative   pronouncement  or  action  or  decision
interpreting  or applying such laws,  rules or  regulations,  which amendment or
change is effective or which  pronouncement,  action or decision is announced on
or after the date of original issuance of the Debentures,  there is more than an
insubstantial risk that the Sponsor will not, within 90 days of the date of such
opinion,  be  entitled  to treat an amount  equal to the  aggregate  liquidation
amount of the Capital  Securities  as "Tier 1 Capital" (or its then  equivalent)
for purposes of the capital adequacy  guidelines of the Federal Reserve, as then
in effect and applicable to the Sponsor (or if the Sponsor is not a bank holding
company,  such guidelines  applied to the Sponsor as if the Sponsor were subject
to such  guidelines);  provided,  however,  that the inability of the Sponsor to
                       --------   -------
treat all or any portion of the liquidation  amount of the Capital Securities as
Tier l Capital shall not constitute the basis for a Capital  Treatment Event, if
such  inability  results from the Sponsor  having  cumulative  preferred  stock,
minority interests in consolidated subsidiaries,  or any other class of security
or  interest  which  the  Federal  Reserve  or OTS,  as  applicable,  may now or
hereafter accord Tier 1 Capital  treatment in excess of the amount which may now
or hereafter  qualify for treatment as Tier 1 Capital under  applicable  capital
adequacy  guidelines;  provided  further,  however,  that  the  distribution  of
                       --------  -------   -------
Debentures in connection  with the  Liquidation of the Trust shall not in and of
itself  constitute a Capital  Treatment Event unless such Liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.

         "Determination  Date"  means the date that is two London  Banking  Days
          -------------------
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.
<PAGE>

         "Investment  Company  Event" means the receipt by the Debenture  Issuer
          --------------------------
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the  occurrence of a change in law or regulation or written
change  (including  any  announced  prospective  change)  in  interpretation  or
application of law or regulation by any legislative  body,  court,  governmental
agency or regulatory  authority,  there is more than an insubstantial  risk that
the Trust is or, within 90 days of the date of such opinion,  will be considered
an  Investment  Company that is required to be registered  under the  Investment
Company Act which change or prospective change becomes effective or would become
effective,  as the case  may be,  on or after  the date of the  issuance  of the
Debentures.

         "Maturity Date" means September 20, 2034.
          -------------
         "Redemption  Date"  shall  mean the date  fixed for the  redemption  of
          ----------------
Capital Securities, which shall be any Distribution Payment Date on or after the
Distribution Payment Date in September 2009.

         "Redemption Price" means 100% of the principal amount of the Debentures
          ----------------
being  redeemed,  plus  accrued and unpaid  Interest on such  Debentures  to the
Redemption Date.

         "Special  Event" means a Tax Event,  an  Investment  Company Event or a
          --------------
Capital Treatment Event.

         "Special  Redemption  Date"  means a date  on  which  a  Special  Event
          -------------------------
redemption occurs, which shall be a Distribution Payment Date.

         "Special  Redemption  Price" means the price set forth in the following
          --------------------------
table for any Special  Redemption  Date that occurs on the date indicated  below
(or if such day is not a Business Day, then the next  succeeding  Business Day),
expressed as the  percentage of the  principal  amount of the  Debentures  being
redeemed:

----------------------------------------- --------------------------------------
         Month in which Special                  Special Redemption Price
         ----------------------                  ------------------------
         Redemption Date Occurs
         ----------------------
----------------------------------------- --------------------------------------
             December 2004                               104.625%
----------------------------------------- --------------------------------------
               March 2005                                104.300%
----------------------------------------- --------------------------------------
               June 2005                                 104.000%
----------------------------------------- --------------------------------------
             September 2005                              103.650%
----------------------------------------- --------------------------------------
             December 2005                               103.350%
----------------------------------------- --------------------------------------
               March 2006                                103.000%
----------------------------------------- --------------------------------------
               June 2006                                 102.700%
----------------------------------------- --------------------------------------
             September 2006                              102.350%
----------------------------------------- --------------------------------------
             December 2006                               102.050%
----------------------------------------- --------------------------------------
               March 2007                                101.700%
----------------------------------------- --------------------------------------
               June 2007                                 101.400%
--------------------------------------------------------------------------------
<PAGE>

----------------------------------------- --------------------------------------
             September 2007                              101.050%
----------------------------------------- --------------------------------------
             December 2007                               100.750%
----------------------------------------- --------------------------------------
               March 2008                                100.450%
----------------------------------------- --------------------------------------
               June 2008                                 100.200%
----------------------------------------- --------------------------------------
     September 2008 and thereafter                       100.000%
----------------------------------------- --------------------------------------

         plus, in each case,  accrued and unpaid  Interest on such Debentures to
the Special Redemption Date.

         "Tax Event" means the receipt by the Debenture  Issuer and the Trust of
          ---------
an opinion of  counsel  experienced  in such  matters to the effect  that,  as a
result  of any  amendment  to or change  (including  any  announced  prospective
change) in the laws or any  regulations  thereunder  of the United States or any
political  subdivision or taxing authority thereof or therein, or as a result of
any official administrative  pronouncement (including any private letter ruling,
technical advice memorandum,  field service advice, regulatory procedure, notice
or  announcement  including any notice or  announcement  of intent to adopt such
procedures or regulations)  (an  "Administrative  Action") or judicial  decision
                                  ----------------------
interpreting  or applying such laws or  regulations,  regardless of whether such
Administrative  Action or judicial decision is issued to or in connection with a
proceeding  involving  the  Debenture  Issuer or the Trust  and  whether  or not
subject  to  review  or  appeal,   which   amendment,   clarification,   change,
Administrative Action or decision is enacted,  promulgated or announced, in each
case on or after the date of original issuance of the Debentures,  there is more
than an insubstantial  risk that: (i) the Trust is, or will be within 90 days of
the date of such  opinion,  subject  to United  States  federal  income tax with
respect to income received or accrued on the Debentures;  (ii) interest  payable
by the Debenture  Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States  federal income tax purposes;  or (iii) the Trust is, or
will be within 90 days of the date of such  opinion,  subject  to more than a de
minimis amount of other taxes, duties or other governmental charges.

                 (b) Upon the repayment in  full  at  maturity or  redemption in
whole or in part of the Debentures (other than following the distribution of the
Debentures to the Holders of the  Securities),  the proceeds from such repayment
or payment shall  concurrently  be applied to redeem Pro Rata at the  applicable
Redemption Price or Special  Redemption Price, as applicable,  Securities having
an aggregate  liquidation amount equal to the aggregate  principal amount of the
Debentures  so repaid or  redeemed;  provided,  however,  that  holders  of such
                                     --------   -------
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption (other than at the scheduled maturity of the Debentures).

                (c) If fewer than all the outstanding Securities  are  to be  so
redeemed,  the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital  Securities  to be redeemed  will be redeemed Pro Rata from
each Holder of Capital Securities.

                (d) The  Trust  may not  redeem  fewer than all the  outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all quarterly  Distribution periods terminating on or
before the date of redemption.
<PAGE>

               (e) Redemption or Distribution Procedures.
                   -------------------------------------

                  (i)    Notice of any redemption of, or notice of  distribution
of the  Debentures in exchange for, the  Securities (a  "Redemption/Distribution
                                                         -----------------------
Notice")  will be given by the Trust by mail to each Holder of  Securities to be
------
redeemed  or  exchanged  not fewer than 30 nor more than 60 days before the date
fixed for  redemption or exchange  thereof  which,  in the case of a redemption,
will be the date fixed for  redemption  of the  Debentures.  For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph 4(e)(i), a  Redemption/Distribution  Notice
shall  be  deemed  to be  given  on the day  such  notice  is  first  mailed  by
first-class  mail,  postage  prepaid,  to  Holders  of  such  Securities.   Each
Redemption/Distribution  Notice  shall  be  addressed  to the  Holders  of  such
Securities at the address of each such Holder appearing on the books and records
of the Trust. No defect in the Redemption/Distribution  Notice or in the mailing
thereof with  respect to any Holder shall affect the validity of the  redemption
or exchange proceedings with respect to any other Holder.

                  (ii)   If the Securities are to be  redeemed  and  the \ Trust
gives a Redemption/  Distribution Notice, which notice may only be issued if the
Debentures  are  redeemed as set out in this  paragraph 4 (which  notice will be
irrevocable),  then,  provided that the  Institutional  Trustee has a sufficient
                      --------
amount of cash in  connection  with the  related  redemption  or maturity of the
Debentures,  the Institutional Trustee will pay the relevant Redemption Price or
Special  Redemption  Price, as applicable,  to the Holders of such Securities by
check  mailed to the  address  of each such  Holder  appearing  on the books and
records of the Trust on the Redemption Date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required then immediately  prior to
the close of business on the date of such  deposit  Distributions  will cease to
accrue on the  Securities so called for  redemption and all rights of Holders of
such  Securities so called for  redemption  will cease,  except the right of the
Holders of such Securities to receive the applicable Redemption Price or Special
Redemption  Price  specified in  paragraph  4(a),  but without  interest on such
Redemption Price or Special Redemption Price. If payment of the Redemption Price
or Special Redemption Price in respect of any Securities is improperly  withheld
or  refused  and not paid  either  by the  Trust or by the  Debenture  Issuer as
guarantor  pursuant to the  Guarantee,  Distributions  on such  Securities  will
continue to accrue at the Distribution Rate from the original Redemption Date to
the  actual  date of  payment,  in which case the  actual  payment  date will be
considered  the date  fixed for  redemption  for  purposes  of  calculating  the
Redemption Price or Special  Redemption Price. In the event of any redemption of
the  Capital  Securities  issued  by the Trust in part,  the Trust  shall not be
required to (i) issue,  register the transfer of or exchange any Security during
a period beginning at the opening of business five days before any selection for
redemption of the Capital  Securities and ending at the close of business on the
earliest date on which the relevant  notice of redemption is deemed to have been
given  to all  Holders  of the  Capital  Securities  to be so  redeemed  or (ii)
register  the  transfer of or exchange  any Capital  Securities  so selected for
redemption,  in whole or in  part,  except  for the  unredeemed  portion  of any
Capital Securities being redeemed in part.

                 (iii)   Redemption/Distribution Notices shall  be  sent by  the
Administrators  on  behalf  of  the  Trust  to  (A) in  respect  of the  Capital
Securities, the Holders thereof and (B) in respect of the Common Securities, the
Holder thereof.

                  (iv)   Subject to the foregoing and applicable law (including,
without  limitation,  United States federal  securities laws), and provided that
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture,  the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
<PAGE>

         5. Voting Rights - Capital Securities.
            ----------------------------------

            (a)     Except  as  provided  under  paragraphs  5(b)  and  7 and as
otherwise  required  by  law  and  the  Declaration,  the Holders of the Capital
Securities will have no voting rights.  The  Administrators are required to call
a meeting of the Holders of the  Capital Securities  if  directed  to  do  so by
Holders of at least 10% in liquidation amount of the Capital Securities.

            (b)     Subject  to the requirements of obtaining  a tax  opinion by
the  Institutional  Trustee  in  certain  circumstances  set  forth  in the last
sentence of this paragraph,  the Holders of a Majority in liquidation  amount of
the Capital Securities, voting separately  as a class,  have the right to direct
the  time,  method,  and  place of conducting  any  proceeding  for  any  remedy
available  to  the  Institutional  Trustee,  or  exercising  any  trust or power
conferred  upon the Institutional  Trustee under the Declaration,  including the
right to direct the  Institutional  Trustee, as holder of the Debentures, to (i)
exercise  the  remedies  available  under the Indenture  as  the  holder  of the
Debentures,  (ii) waive any  past default that is waivable under the  Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be  due and  payable  or (iv)  consent on behalf of all
the  Holders  of  the  Capital  Securities  to  any  amendment, modification  or
termination  of  the  Indenture  or  the  Debentures where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
          --------  -------
would  require  the  consent  or  act  of  the holders of greater  than a simple
majority  in  aggregate   principal  amount of  Debentures  (a "Super Majority")
                                                                --------------
affected thereby, the Institutional  Trustee may only give such consent  or take
such  action at the  written direction of the Holders of at least the proportion
in liquidation amount of the Capital Securities  outstanding  which the relevant
Super Majority represents  of  the  aggregate principal amount of the Debentures
outstanding. If the Institutional Trustee fails to enforce its rights under  the
Debentures after the Holders of a Majority in liquidation amount of such Capital
Securities have so directed the Institutional  Trustee,  to  the fullest  extent
permitted by law, a Holder of  the Capital  Securities  may  institute  a  legal
proceeding  directly  against the Debenture Issuer  to enforce the Institutional
Trustee's  rights  under the Debentures  without  first  instituting  any  legal
proceeding  against  the Institutional  Trustee  or any  other person or entity.
Notwithstanding  the  foregoing,  if  an  Event  of  Default has occurred and is
continuing  and  such  event is  attributable  to the  failure of the  Debenture
Issuer to pay  interest or  principal on the Debentures on the date the interest
or principal is payable (or in the case of redemption,  the  Redemption  Date or
the Special  Redemption Date, as applicable),  then  a  Holder of record of  the
Capital  Securities  may  directly  institute  a proceeding for  enforcement  of
payment,  on or after the respective due dates specified in the Debentures,   to
such Holder directly of the principal of or interest on  the  Debentures  having
an aggregate  principal amount equal to the aggregate  liquidation amount of the
Capital Securities of such Holder. The Institutional  Trustee shall  notify  all
Holders  of  the  Capital  Securities  of any  default  actually  known  to  the
Institutional  Trustee  with  respect to the Debentures  unless (x) such default
has been cured prior to the  giving  of  such  notice  or (y) the  Institutional
Trustee  determines  in good  faith  that the withholding  of such notice is  in
the interest of the Holders of such Capital Securities, except where the default
relates  to  the  payment of principal of or interest on any of the  Debentures.
Such notice shall state that such Indenture Event of Default also constitutes an
Event of Default  hereunder.  Except with  respect to directing the time, method
and place  of  conducting  a  proceeding for a remedy, the Institutional Trustee
shall not take any of the actions described in  clauses (i), (ii) or (iii) above
unless the  Institutional  Trustee has obtained an opinion of tax counsel to the
effect that,  as a result of such  action,  the Trust will not be  classified as
other than a grant or trust for United States federal income tax purposes.
<PAGE>

         In the event the consent of the Institutional Trustee, as the holder of
the  Debentures,  is required under the Indenture with respect to any amendment,
modification or termination of the Indenture,  the  Institutional  Trustee shall
request the  direction  of the Holders of the  Securities  with  respect to such
amendment,  modification  or  termination  and shall  vote with  respect to such
amendment,  modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class;  provided,  however,
                                                             --------   -------
that  where a  consent  under the  Indenture  would  require  the  consent  of a
Super-Majority,  the  Institutional  Trustee  may only give such  consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities  outstanding  which the  relevant  Super-Majority  represents  of the
aggregate  principal  amount of the Debentures  outstanding.  The  Institutional
Trustee shall not take any such action in accordance  with the directions of the
Holders of the  Securities  unless the  Institutional  Trustee  has  obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified  as other than a grantor trust for United States  federal
income tax purposes.

         A waiver of an Indenture  Event of Default will  constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of  Holders of the  Capital  Securities  may be given at a  separate  meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the  Securities  in the Trust or pursuant to written  consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital  Securities are entitled to vote, or of any matter upon which action
by written  consent of such Holders is to be taken,  to be mailed to each Holder
of record of the Capital  Securities.  Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which  such  action  is to be taken,  (ii) a  description  of any  resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which  written  consent is sought and (iii)  instructions
for the  delivery of proxies or  consents.  No vote or consent of the Holders of
the  Capital  Securities  will be  required  for the Trust to redeem  and cancel
Capital  Securities or to  distribute  the  Debentures  in  accordance  with the
Declaration and the terms of the Securities.

         Notwithstanding  that Holders of the Capital Securities are entitled to
vote or  consent  under any of the  circumstances  described  above,  any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall,  for purposes
of such vote or  consent,  be treated  as if such  Capital  Securities  were not
outstanding.

         In no event will  Holders of the Capital  Securities  have the right to
vote to appoint,  remove or replace the Administrators,  which voting rights are
vested  exclusively in the Sponsor as the Holder of all of the Common Securities
of the  Trust.  Under  certain  circumstances  as more  fully  described  in the
Declaration,  Holders of Capital  Securities  have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.

         6. Voting Rights - Common Securities.
            ---------------------------------

            (a)     Except as provided under paragraphs 6(b), 6(c)  and 7 and as
otherwise  required by law and the Declaration,  the Common Securities will have
no voting rights.

            (b)     The  Holders  of  the  Common  Securities  are  entitled, in
accordance with Article IV of the  Declaration,  to vote to appoint,  remove  or
replace any Administrators.

            (c)     Subject  to  Section 6.7 of the Declaration and  only  after
each Event of Default (if any) with respect to  the  Capital Securities has been
cured, waived, or otherwise eliminated  and  subject to  the requirements of the
second to  last  sentence  of  this  paragraph, the  Holders  of  a  Majority in
liquidation amount of the Common Securities, voting  separately as a class,  may
direct the time, method,  and place of conducting any proceeding for any  remedy
available  to  the  Institutional  Trustee,  or  exercising  any  trust or power
conferred  upon the Institutional  Trustee under the Declaration,  including (i)
directing the time, method,  place of  conducting any  proceeding for any remedy
available to the Debenture  Trustee,  or exercising any trust or power conferred
on the Debenture Trustee  with respect to the  Debentures, (ii) waiving any past
 default  and its  consequences  that  is waivable under the Indenture, or (iii)

<PAGE>

exercising any right to rescind or annul a declaration that the principal of all
the  Debentures  shall be due and  payable;  provided,  however,  that,  where a
                                             --------   -------
consent  or action  under the  Indenture  would  require a Super  Majority,  the
Institutional  Trustee  may only give such  consent  or take such  action at the
written  direction  of the  Holders of at least the  proportion  in  liquidation
amount of the Common Securities which the relevant Super Majority  represents of
the aggregate  principal amount of the Debentures  outstanding.  Notwithstanding
this  paragraph  6(c),  the  Institutional  Trustee  shall not revoke any action
previously  authorized  or  approved  by a vote or consent of the Holders of the
Capital  Securities.  Other than with respect to directing the time,  method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the  Institutional  Trustee
shall not take any action  described  in (i),  (ii) or (iii)  above,  unless the
Institutional  Trustee has obtained an opinion of tax counsel to the effect that
for the  purposes  of United  States  federal  income  tax the Trust will not be
classified  as other  than a grantor  trust on account  of such  action.  If the
Institutional  Trustee  fails to  enforce  its  rights,  to the  fullest  extent
permitted by law, under the Declaration, any Holder of the Common Securities may
institute  a legal  proceeding  directly  against  any  Person  to  enforce  the
Institutional Trustee's rights under the Declaration,  without first instituting
a legal proceeding against the Institutional Trustee or any other Person.

         Any approval or direction  of Holders of the Common  Securities  may be
given at a separate  meeting of Holders of the Common  Securities  convened  for
such purpose,  at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent.  The  Administrators  will cause a notice of any
meeting at which  Holders of the Common  Securities  are entitled to vote, or of
any matter upon which action by written  consent of such Holders is to be taken,
to be mailed to each  Holder of the Common  Securities.  Each such  notice  will
include a statement  setting  forth (i) the date of such  meeting or the date by
which such action is to be taken, (ii) a description of any resolution  proposed
for  adoption at such  meeting on which such  Holders are entitled to vote or of
such matter upon which written consent is sought and (iii)  instructions for the
delivery of proxies or consents.

         No vote or consent of the  Holders  of the  Common  Securities  will be
required for the Trust to redeem and cancel  Common  Securities or to distribute
the  Debentures  in  accordance  with  the  Declaration  and  the  terms  of the
Securities.

         7. Amendments to Declaration and Indenture.
            ---------------------------------------

            (a)     In addition to any  requirements under Section 11.1  of  the
Declaration,  if any proposed amendment to the Declaration  provides for, or the
Trustees,  Sponsor or Administrators otherwise propose to effect, (i) any action
that would  adversely  affect the powers,  preferences  or special rights of the
Securities, whether by way of amendment to the Declaration or otherwise, or (ii)
the  Liquidation  of the Trust,  other than as  described  in Section 7.1 of the
Declaration,  then the Holders of outstanding  Securities,  voting together as a
single  class,  will be entitled to vote on such  amendment or proposal and such
amendment  or proposal  shall not be  effective  except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities, affected
thereby;  provided,  however, if any amendment or proposal referred to in clause
          --------   -------
(i) above would adversely affect only the Capital  Securities or only the Common
Securities,  then  only the  affected  class  will be  entitled  to vote on such
amendment  or proposal  and such  amendment  or proposal  shall not be effective
except with the  approval of a Majority in  liquidation  amount of such class of
Securities.

            (b)     In the event the  consent  of  the Institutional Trustee  as
the holder of the Debentures is required under the Indenture with respect to any
amendment,  modification or termination of the Indenture or the Debentures,  the
Institutional  Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by

<PAGE>

a Majority in liquidation  amount of the Securities  voting together as a single
class; provided, however, that where a consent under the Indenture would require
       --------  -------
a Super Majority,  the  Institutional  Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities  which  the  relevant  Super  Majority  represents  of the  aggregate
principal amount of the Debentures outstanding.

            (c)     Notwithstanding the foregoing,  no amendment or modification
may be made to the Declaration if such amendment or modification would (i) cause
the Trust to be classified for purposes of United States federal income taxation
as other  than  a grant or  trust, (ii) reduce or otherwise adversely affect the
powers  of  the  Institutional  Trustee or (iii) cause the Trust to be deemed an
Investment  Company  which  is  required  to  be registered under the Investment
Company Act.

            (d)     Notwithstanding any  provision of the Declaration, the right
of any Holder of the Capital  Securities to receive payment of distributions and
other payments upon  redemption or otherwise,  on or after their  respective due
dates,  or to  institute a suit for the  enforcement  of any such  payment on or
after such  respective  dates,  shall not be impaired  or  affected  without the
consent of such Holder.  For the  protection  and  enforcement  of the foregoing
provision,  each and every Holder of the Capital Securities shall be entitled to
such relief as can be given either at law or equity.

         8.  Pro  Rata.  A  reference  in these terms of the  Securities  to any
             ---------
payment,  distribution  or  treatment as being "Pro Rata" shall mean pro rata to
                                                --------
each Holder of the Securities  according to the aggregate  liquidation amount of
the  Securities  held  by the  relevant  Holder  in  relation  to the  aggregate
liquidation  amount of all Securities then outstanding  unless, in relation to a
payment,  an Event of Default has occurred and is continuing,  in which case any
funds  available to make such payment  shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital  Securities  held  by the  relevant  Holder  relative  to the  aggregate
liquidation  amount  of all  Capital  Securities  outstanding,  and  only  after
satisfaction  of all amounts owed to the Holders of the Capital  Securities,  to
each  Holder  of the  Common  Securities  Pro Rata  according  to the  aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.

         9.  Ranking. The  Capital  Securities  rank pari passu with and payment
             -------
thereon shall be made Pro Rata with the Common  Securities except that, where an
Event of Default has  occurred and is  continuing,  the rights of Holders of the
Common  Securities  to  receive  payment  of  Distributions  and  payments  upon
liquidation,  redemption  and  otherwise are  subordinated  to the rights of the
Holders  of the  Capital  Securities  with the  result  that no  payment  of any
Distribution  on, or  Redemption  Price (or  Special  Redemption  Price) of, any
Common Security,  and no other payment on account of redemption,  liquidation or
other acquisition of Common Securities,  shall be made unless payment in full in
cash of all accumulated  and unpaid  Distributions  on all  outstanding  Capital
Securities for all distribution  periods  terminating on or prior thereto, or in
the case of payment of the Redemption  Price (or Special  Redemption  Price) the
full  amount of such  Redemption  Price  (or  Special  Redemption  Price) on all
outstanding Capital Securities then called for redemption,  shall have been made
or  provided  for,  and all funds  immediately  available  to the  Institutional
Trustee  shall  first  be  applied  to  the  payment  in  full  in  cash  of all
Distributions on, or the Redemption Price (or Special  Redemption Price) of, the
Capital Securities then due and payable.

         10. Acceptance of Guarantee and Indenture.  Each  Holder of the Capital
             -------------------------------------
Securities  and the Common  Securities,  by the  acceptance of such  Securities,
agrees  to  the  provisions  of  the  Guarantee,   including  the  subordination
provisions therein and to the provisions of the Indenture.

         11. No Preemptive  Rights.  The Holders of the Securities shall have no
             ---------------------
preemptive or similar rights to subscribe for any additional securities.

         12. Miscellaneous.  These terms  constitute a part of the  Declaration.
             -------------
The Sponsor  will  provide a copy of the  Declaration,  the  Guarantee,  and the
Indenture to a Holder  without  charge on written  request to the Sponsor at its
principal place of business.



<PAGE>

                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR INVESTMENT  PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE  OBTAINED  FROM THE SPONSOR OR THE TRUST.  HEDGING  TRANSACTIONS
INVOLVING  THIS  SECURITY MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH THE
SECURITIES ACT.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00  (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED  TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.
<PAGE>

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED BY THE  DECLARATION  TO CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

         Certificate Number P-1                      17,850  Capital  Securities
         [CUSIP  NO. [_______] **To be inserted at the request of the Holder]

                               September 20, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                          First Bank Statutory Trust II

               (liquidation amount $1,000.00 per Capital Security)

         First Bank Statutory Trust II, a statutory trust created under the laws
of the State of Delaware (the  "Trust"),  hereby  certifies that Hare & Co. (the
"Holder"),  as the nominee of The Bank of New York,  indenture trustee under the
Indenture  dated as of September 20, 2004 among  Preferred  Term  Securities XV,
Ltd.,  Preferred  Term  Securities  XV,  Inc.  and The Bank of New York,  is the
registered  owner of  capital  securities  of the Trust  representing  undivided
beneficial  interests in the assets of the Trust,  (liquidation amount $1,000.00
per capital security) (the "Capital Securities"). Subject to the Declaration (as
defined below), the Capital Securities are transferable on the books and records
of the Trust in person or by a duly authorized attorney,  upon surrender of this
Certificate  duly  endorsed  and  in  proper  form  for  transfer.  The  Capital
Securities  represented  hereby are  issued  pursuant  to, and the  designation,
rights, privileges, restrictions,  preferences and other terms and provisions of
the Capital  Securities  shall in all respects be subject to, the  provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of September
20, 2004, among Allen H. Blake,  Terrance M. McCarthy and Lisa K. Vansickle,  as
Administrators,  Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company,  as  Institutional  Trustee,  First Banks,  Inc.,  as Sponsor,  and the
holders from time to time of undivided beneficial interests in the assets of the
Trust,  including the designation of the terms of the Capital  Securities as set
forth in Annex I to such  amended and  restated  declaration  as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.  The Holder is
entitled to the benefits of the Guarantee to the extent  provided  therein.  The
Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture
to the  Holder  without  charge  upon  written  request  to the  Sponsor  at its
principal place of business.
<PAGE>

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.

                       Signatures appear on following page



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                            FIRST BANK STATUTORY TRUST II



                                            By:
                                               ---------------------------------
                                                 Name:
                                                 Title:  Administrator


                          CERTIFICATE OF AUTHENTICATION

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.


                                            WILMINGTON TRUST COMPANY,
                                            as the Institutional Trustee


                                            By:
                                               ---------------------------------
                                                         Authorized Officer



<PAGE>


                      [FORM OF REVERSE OF CAPITAL SECURITY]

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 3.92438%  beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in December
2004  and at an  annual  rate  for  each  successive  period  beginning  on (and
including) the  Distribution  Payment Date in December 2004, and each succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.05% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.
<PAGE>

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 20, June 20, September 20 and
December 20 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing  on the  Distribution  Payment Date in December  2004.  The Debenture
Issuer has the right under the  Indenture  to defer  payments of interest on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
                               --------   -------
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

         The  Capital   Securities  shall  be  redeemable  as  provided  in  the
Declaration.



<PAGE>


                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital
Security Certificate to:

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

         (Insert  assignee's  social  security  or  tax  identification  number)

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

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



         (Insert address and zip code of assignee) and irrevocably appoints

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



         agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.

         Date:
              ---------------------------------------

         Signature:
                   ----------------------------------

                   (Sign exactly as your name  appears on the other side of this
Capital Security Certificate)

         Signature Guarantee:1




----------------------
1 Signature must be guaranteed by an "eligible guarantor institution" that is  a
bank,  stockbroker,  savings and loan  association  or credit union  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.


<PAGE>

                                   EXHIBIT A-2

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR INVESTMENT  PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE  OBTAINED  FROM THE SPONSOR OR THE TRUST.  HEDGING  TRANSACTIONS
INVOLVING  THIS  SECURITY MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH THE
SECURITIES ACT.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN

<PAGE>

WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00  (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED  TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED BY THE  DECLARATION  TO CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

         Certificate Number P-2                         2,150 Capital Securities
         [CUSIP NO. [____] **To be inserted at the request of the Holder]

                               September 20, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                          First Bank Statutory Trust II

               (liquidation amount $1,000.00 per Capital Security)

         First Bank Statutory Trust II, a statutory trust created under the laws
of the State of Delaware (the "Trust"),  hereby  certifies that First  Tennessee
Bank National  Association is the registered owner of capital  securities of the
Trust representing  undivided  beneficial  interests in the assets of the Trust,
(liquidation amount $1,000.00 per capital security) (the "Capital  Securities").
Subject to the  Declaration  (as  defined  below),  the Capital  Securities  are
transferable  on the  books  and  records  of the  Trust in  person or by a duly
authorized  attorney,  upon surrender of this  Certificate  duly endorsed and in
proper form for transfer.  The Capital Securities  represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Capital  Securities  shall in all respects
be subject to, the  provisions of the Amended and Restated  Declaration of Trust
of the Trust dated as of September 20, 2004,  among Allen H. Blake,  Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators,  Wilmington Trust Company, as
Delaware  Trustee,  Wilmington Trust Company,  as Institutional  Trustee,  First
Banks,  Inc.,  as  Sponsor,  and the  holders  from  time  to time of  undivided
beneficial  interests in the assets of the Trust,  including the  designation of
the terms of the Capital  Securities as set forth in Annex I to such amended and
restated  declaration  as the  same  may be  amended  from  time  to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration,  the Guarantee,  and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.
<PAGE>

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.

                       Signatures appear on following page



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                           FIRST BANK STATUTORY TRUST II



                                           By:
                                              ----------------------------------
                                                Name:
                                                Title:  Administrator


                          CERTIFICATE OF AUTHENTICATION

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.


                                           WILMINGTON TRUST COMPANY,
                                           as the Institutional Trustee


                                           By:
                                              ----------------------------------
                                                        Authorized Officer



<PAGE>


                      [FORM OF REVERSE OF CAPITAL SECURITY]

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 3.92438%  beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in December
2004  and at an  annual  rate  for  each  successive  period  beginning  on (and
including) the  Distribution  Payment Date in December 2004, and each succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.05% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).
<PAGE>

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 20, June 20, September 20 and
December 20 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing  on the  Distribution  Payment Date in December  2004.  The Debenture
Issuer has the right under the  Indenture  to defer  payments of interest on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
                               --------   -------
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

         The  Capital   Securities  shall  be  redeemable  as  provided  in  the
Declaration.



<PAGE>


                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital
Security Certificate to:

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

         (Insert  assignee's  social  security  or  tax  identification  number)

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


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




         (Insert address and zip code of assignee) and irrevocably appoints

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


agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.

         Date:
              ---------------------------------------

         Signature:
                   ----------------------------------

                            (Sign exactly as your name appears on the other side
of  this  Capital  Security Certificate)

         Signature Guarantee:2






-------------------------
2 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association  or credit union  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended




<PAGE>


                                   EXHIBIT A-3

                       FORM OF COMMON SECURITY CERTIFICATE

         THIS COMMON SECURITY HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT
OF  1933,  AS  AMENDED,  AND MAY NOT BE  OFFERED,  SOLD,  PLEDGED  OR  OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

         THIS CERTIFICATE IS NOT TRANSFERABLE  EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION.

                               September 20, 2004

             Certificate Evidencing Floating Rate Common Securities

                                       of

                          First Bank Statutory Trust II

         First Bank Statutory Trust II, a statutory trust created under the laws
of the State of Delaware (the "Trust"),  hereby certifies that First Banks, Inc.
(the  "Holder")  is the  registered  owner of  common  securities  of the  Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common  Securities").  The  Common  Securities  represented  hereby  are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the  provisions of the Amended and Restated  Declaration of Trust of
the Trust dated as of  September  20,  2004,  among Allen H. Blake,  Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators,  Wilmington Trust Company, as
Delaware  Trustee,  Wilmington Trust Company,  as Institutional  Trustee,  First
Banks,  Inc.,  as  Sponsor,  and the  holders  from  time  to time of  undivided
beneficial  interest in the assets of the Trust including the designation of the
terms of the  Common  Securities  as set  forth in Annex I to such  amended  and
restated  declaration,  as the  same  may be  amended  from  time to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the  Declaration,  the Guarantee and the Indenture to the Holder  without charge
upon written request to the Sponsor at its principal place of business.

         As set forth in the Declaration,  when an Event of Default has occurred
and is  continuing,  the rights of Holders  of Common  Securities  to payment in
respect of Distributions and payments upon Liquidation,  redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.

         Upon  receipt  of  this  Certificate,   the  Holder  is  bound  by  the
Declaration and is entitled to the benefits thereunder.

         By acceptance  of this  Certificate,  the Holder  agrees to treat,  for
United States federal income tax purposes,  the Debentures as  indebtedness  and
the Common  Securities  as evidence of  undivided  beneficial  ownership  in the
Debentures.

         This Common Security is governed by, and construed in accordance  with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                               FIRST BANK STATUTORY TRUST II


                                               By:
                                                  ------------------------------
                                                    Name:
                                                    Title: Administrator


<PAGE>


                      [FORM OF REVERSE OF COMMON SECURITY]

         Distributions  payable on each  Common  Security  will be payable at an
annual rate equal to 3.92438%  beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in December
2004  and at an  annual  rate  for  each  successive  period  beginning  on (and
including) the  Distribution  Payment Date in December 2004, and each succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.05% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Common Security,  such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any   calculations  on  the  Common
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).
<PAGE>

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 20, June 20, September 20 and
December 20 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing  on the  Distribution  Payment Date in December  2004.  The Debenture
Issuer has the right under the  Indenture  to defer  payments of interest on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
                               --------   -------
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional  Interest.  During any Extension Period,  Distributions on the Common
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture Issuer.

         The  Common   Securities   shall  be  redeemable  as  provided  in  the
Declaration.



<PAGE>


                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned  assigns and transfers this Common
Security Certificate to:

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

         (Insert assignee's social security or tax identification number)

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

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

         (Insert address and zip code of assignee) and irrevocably appoints

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


                                                                           agent
                      ----------------------------------------------------------
                      to transfer this Common Security  Certificate on the books
                      of the Trust. The agent  may substitute another to act for
                      him or her.

                      Date:
                           -----------------------------

                      Signature:
                                ------------------------

         (Sign exactly as your name appears  on the other side  of  this  Common
         Security Certificate)

         Signature:
                   -------------------------------------------

         (Sign exactly as your name appears on the  other side  of  this  Common
         Security Certificate)

Signature Guarantee3







-------------------------
3 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association or credit union,  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

                              (See Document No. 16)



<PAGE>


                                    EXHIBIT C

                               PLACEMENT AGREEMENT

                              (See Document No. 1)









<PAGE>
                                                                    Exhibit 4.28















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




                               GUARANTEE AGREEMENT

                                 by and between

                                FIRST BANKS, INC.

                                       and

                            WILMINGTON TRUST COMPANY

                         Dated as of September 20, 2004



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


<PAGE>



                               GUARANTEE AGREEMENT
                               -------------------

     This  GUARANTEE  AGREEMENT  (this  "Guarantee"),  dated as of September 20,
2004,  is executed and  delivered by First Banks,  Inc., a Missouri  corporation
(the "Guarantor"), and Wilmington Trust Company, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of First
Bank Statutory Trust II, a Delaware statutory trust (the "Issuer").

     WHEREAS,  pursuant to an Amended  and  Restated  Declaration  of Trust (the
"Declaration"),  dated as of the date hereof among Wilmington Trust Company, not
in  its  individual   capacity  but  solely  as   institutional   trustee,   the
administrators of the Issuer named therein,  the Guarantor,  as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer,  the Issuer is issuing on the date  hereof  those  undivided  beneficial
interests,  having  an  aggregate  liquidation  amount  of  $20,000,000.00  (the
"Capital Securities"); and

     WHEREAS,  as incentive for the Holders to purchase the Capital  Securities,
the Guarantor desires  irrevocably and  unconditionally  to agree, to the extent
set forth in this  Guarantee,  to pay to the Holders of Capital  Securities  the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein;

     NOW,  THEREFORE,  in  consideration  of the  purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     Section 1.1.  Definitions and Interpretation. In this Guarantee, unless the
                   ------------------------------
context otherwise requires:

     (a) capitalized  terms  used in  this  Guarantee  but  not  defined  in the
preamble  above have the  respective  meanings  assigned to them in this Section
1.1;

     (b) a term  defined  anywhere  in  this  Guarantee  has  the  same  meaning
throughout;

     (c) all  references  to "the  Guarantee"  or "this  Guarantee"  are to this
Guarantee as modified, supplemented or amended from time to time;

     (d) all  references in this  Guarantee to  "Articles" or "Sections"  are to
Articles or Sections of this Guarantee, unless otherwise specified;

     (e) terms  defined in the  Declaration  as at the date of execution of this
Guarantee have the same meanings when used in this Guarantee,  unless  otherwise
defined in this Guarantee or unless the context otherwise requires; and

     (f) a reference to the singular includes the plural and vice versa.

     "Affiliate"  has the same  meaning as given to that term in Rule 405 of the
      ---------
Securities Act of 1933, as amended, or any successor rule thereunder.

     "Beneficiaries" means any Person to whom the Issuer is or hereafter becomes
      -------------
indebted or liable.
<PAGE>

     "Capital  Securities"  has the  meaning  set forth in the  recitals to this
      -------------------
Guarantee.

     "Common Securities" means the common securities issued by the Issuer to the
      -----------------
Guarantor pursuant to the Declaration.

     "Corporate Trust Office" means the office of the Guarantee Trustee at which
      ----------------------
the corporate  trust business of the Guarantee  Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Guarantee  is  located  at  Rodney  Square  North,  1100  North  Market  Street,
Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.

     "Covered Person" means any Holder of Capital Securities.
      --------------

     "Debentures"  means the debt  securities  of the Guarantor  designated  the
      ----------
Floating Rate Junior  Subordinated  Deferrable Interest Debentures due 2034 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

     "Declaration  Event of  Default"  means an "Event of Default" as defined in
      ------------------------------
the Declaration.

     "Event of Default" has the meaning set forth in Section 2.4(a).
      ----------------

     "Guarantee Payments" means the following payments or distributions, without
      ------------------
duplication,  with respect to the Capital Securities,  to the extent not paid or
made by the Issuer: (i) any accrued and unpaid  Distributions (as defined in the
Declaration)  which are  required to be paid on such Capital  Securities  to the
extent the Issuer shall have funds available therefor, (ii) the Redemption Price
to the  extent  the Issuer has funds  available  therefor,  with  respect to any
Capital  Securities  called for  redemption  by the  Issuer,  (iii) the  Special
Redemption  Price to the extent the Issuer has funds  available  therefor,  with
respect to Capital  Securities  redeemed upon the occurrence of a Special Event,
and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination  of the Issuer (other than in connection  with the  distribution  of
Debentures  to the Holders of the  Capital  Securities  in exchange  therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment,  to the extent the Issuer shall have funds available  therefor,
and (b) the amount of assets of the Issuer remaining  available for distribution
to Holders in  liquidation  of the Issuer  (in  either  case,  the  "Liquidation
Distribution").

     "Guarantee  Trustee"  means  Wilmington  Trust  Company,  until a Successor
      ------------------
Guarantee Trustee has been appointed and has accepted such appointment  pursuant
to the  terms  of this  Guarantee  and  thereafter  means  each  such  Successor
Guarantee Trustee.

     "Guarantor" means First Banks, Inc. and each of its successors and assigns.
      ---------

     "Holder"  means any holder,  as  registered on the books and records of the
      ------
Issuer,  of any Capital  Securities;  provided,  however,  that, in  determining
                                      --------   -------
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

     "Indemnified  Person"  means the  Guarantee  Trustee,  any Affiliate of the
      -------------------
Guarantee Trustee, or any officers, directors, shareholders,  members, partners,
employees,  representatives,  nominees,  custodians  or agents of the  Guarantee
Trustee.

     "Indenture"  means the  Indenture  dated as of the date hereof  between the
      ---------
Guarantor and  Wilmington  Trust  Company,  not in its  individual  capacity but
solely as trustee, and any indenture  supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.
<PAGE>

     "Issuer"  has the  meaning  set  forth  in the  opening  paragraph  to this
      ------
Guarantee.

     "Liquidation  Distribution"  has the meaning set forth in the definition of
      -------------------------
"Guarantee Payments" herein.

     "Majority in liquidation amount of the Capital  Securities" means Holder(s)
      ---------------------------------------------------------
of outstanding  Capital  Securities,  voting together as a class, but separately
from the  holders  of  Common  Securities,  of more  than  50% of the  aggregate
liquidation   amount  (including  the  stated  amount  that  would  be  paid  on
redemption,  liquidation or otherwise,  plus accrued and unpaid Distributions to
the date upon  which the  voting  percentages  are  determined)  of all  Capital
Securities then outstanding.

     "Obligations"  means any costs,  expenses or liabilities (but not including
      -----------
liabilities related to taxes) of the Issuer other than obligations of the Issuer
to pay to holders of any Trust  Securities the amounts due such holders pursuant
to the terms of the Trust Securities.

     "Officer's  Certificate"  means,  with respect to any Person, a certificate
      ----------------------
signed by one  Authorized  Officer of such  Person.  Any  Officer's  Certificate
delivered with respect to compliance  with a condition or covenant  provided for
in this Guarantee shall include:

          (a) a statement that the officer signing the Officer's Certificate has
     read the covenant or condition and the definitions relating thereto;

          (b) a brief  statement of the nature and scope of the  examination  or
     investigation   undertaken  by  the  officer  in  rendering  the  Officer's
     Certificate;

          (c) a  statement  that  the  officer  has  made  such  examination  or
     investigation  as, in such officer's  opinion,  is necessary to enable such
     officer to express an informed  opinion as to whether or not such  covenant
     or condition has been complied with; and

          (d) a statement  as to whether,  in the opinion of the  officer,  such
     condition or covenant has been complied with.

     "Person"  means a legal  person,  including  any  individual,  corporation,
      ------
estate, partnership,  joint venture,  association,  joint stock company, limited
liability  company,  trust,  unincorporated  association,  or  government or any
agency or political subdivision thereof, or any other entity of whatever nature.

     "Redemption Price" has the meaning set forth in the Indenture.
      ----------------

     "Responsible  Officer" means,  with respect to the Guarantee  Trustee,  any
      --------------------
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President,  Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily  performing functions similar
to those  performed  by any of the above  designated  officers  and  also,  with
respect to a particular  corporate trust matter,  any other officer to whom such
matter is referred  because of that officer's  knowledge of and familiarity with
the particular subject.

     "Special Event" has the meaning set forth in the Indenture.
      -------------

     "Special Redemption Price" has the meaning set forth in the Indenture.
      ------------------------
<PAGE>

     "Successor   Guarantee   Trustee"  means  a  successor   Guarantee  Trustee
      -------------------------------
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

     "Trust Securities" means the Common Securities and the Capital  Securities.
      ----------------

                                   ARTICLE II

                          POWERS, DUTIES AND RIGHTS OF
                                GUARANTEE TRUSTEE

     Section 2.1. Powers and Duties of the Guarantee Trustee.
                  ------------------------------------------

     (a) This Guarantee  shall be held by the Guarantee  Trustee for the benefit
of the Holders of the Capital  Securities,  and the Guarantee  Trustee shall not
transfer  this  Guarantee  to any Person  except a Holder of Capital  Securities
exercising  his or her  rights  pursuant  to  Section  4.4(b) or to a  Successor
Guarantee  Trustee on  acceptance  by such  Successor  Guarantee  Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and interest
of the Guarantee  Trustee shall  automatically  vest in any Successor  Guarantee
Trustee,  and such vesting and cessation of title shall be effective  whether or
not  conveyancing  documents  have been executed and  delivered  pursuant to the
appointment of such Successor Guarantee Trustee.

     (b) If an Event of Default  actually known to a Responsible  Officer of the
Guarantee  Trustee has occurred and is continuing,  the Guarantee  Trustee shall
enforce this Guarantee for the benefit of the Holders of the Capital Securities.

     (c) The Guarantee  Trustee,  before the  occurrence of any Event of Default
and after curing all Events of Default that may have occurred,  shall  undertake
to perform only such duties as are specifically set forth in this Guarantee, and
no implied  covenants  shall be read into this  Guarantee  against the Guarantee
Trustee.  In case an Event of Default  has  occurred  (that has not been  waived
pursuant to Section 2.4) and is actually  known to a Responsible  Officer of the
Guarantee  Trustee,  the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee, and use the same degree of care and skill
in its exercise  thereof,  as a prudent  person would  exercise or use under the
circumstances in the conduct of his or her own affairs.

     (d) No  provision  of this  Guarantee  shall be  construed  to relieve  the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

         (i)   prior to the  occurrence  of any Event of  Default  and after the
     curing or waiving of all such Events of Default that may have occurred:

               (A) the duties and obligations of the Guarantee  Trustee shall be
         determined  solely by the express provisions of this Guarantee, and the
         Guarantee  Trustee shall  not be liable except for the  performance  of
         such  duties  and  obligations  as are  specifically  set forth in this
         Guarantee,  and  no implied covenants or obligations shall be read into
         this Guarantee against the Guarantee Trustee; and

               (B) in the  absence  of bad  faith on the  part of the  Guarantee
         Trustee,  the Guarantee Trustee may  conclusively rely, as to the truth
         of the  statements  and  the  correctness  of  the  opinions  expressed
         therein,  upon  any certificates or opinions furnished to the Guarantee
         Trustee  and conforming to the  requirements of this Guarantee;  but in

<PAGE>

         the case of any such  certificates  or opinions  that  by any provision
         hereof are  specifically  required to  be  furnished  to the  Guarantee
         Trustee,  the  Guarantee  Trustee  shall be under a duty to examine the
         same to determine  whether or  not they conform to the  requirements of
         this Guarantee;

         (ii)  the  Guarantee  Trustee  shall  not be  liable  for any  error of
     judgment  made in good  faith by a  Responsible  Officer  of the  Guarantee
     Trustee,  unless it shall be proved  that such  Responsible  Officer of the
     Guarantee  Trustee or the Guarantee  Trustee was negligent in  ascertaining
     the pertinent facts upon which such judgment was made;

         (iii)  the  Guarantee  Trustee  shall not be liable with respect to any
     action taken or omitted to be taken by it in good faith in accordance  with
     the  written  direction  of the  Holders  of not less  than a  Majority  in
     liquidation amount of the Capital  Securities  relating to the time, method
     and place of  conducting  any  proceeding  for any remedy  available to the
     Guarantee  Trustee,  or  relating  to the  exercise  of any  trust or power
     conferred upon the Guarantee Trustee under this Guarantee; and

         (iv)  no  provision  of this  Guarantee  shall  require  the  Guarantee
     Trustee  to  expend  or risk its own  funds  or  otherwise  incur  personal
     financial  liability  in the  performance  of any of its  duties  or in the
     exercise of any of its rights or powers,  if the  Guarantee  Trustee  shall
     have  reasonable  grounds for believing that the repayment of such funds is
     not reasonably  assured to it under the terms of this Guarantee or security
     and indemnity,  reasonably  satisfactory to the Guarantee Trustee,  against
     such risk or liability is not reasonably assured to it.

     Section 2.2. Certain Rights of Guarantee Trustee.
                  -----------------------------------

     (a) Subject to the provisions of Section 2.1:

         (i)     The Guarantee Trustee may conclusively rely, and shall be fully
     protected  in  acting or  refraining  from  acting  upon,  any  resolution,
     certificate,  statement,  instrument,  opinion,  report,  notice,  request,
     direction,  consent,  order,  bond,  debenture,  note,  other  evidence  of
     indebtedness or other paper or document believed by it to be genuine and to
     have been signed, sent or presented by the proper party or parties.

         (ii)    Any direction or  act of the  Guarantor  contemplated  by  this
     Guarantee shall be sufficiently evidenced by an Officer's Certificate.

         (iii)   Whenever,  in   the   administration  of  this  Guarantee,  the
     Guarantee  Trustee  shall  deem it  desirable  that a matter  be  proved or
     established before taking,  suffering or omitting any action hereunder, the
     Guarantee Trustee (unless other evidence is herein specifically prescribed)
     may, in the absence of bad faith on its part, request and conclusively rely
     upon an Officer's  Certificate of the Guarantor which, upon receipt of such
     request, shall be promptly delivered by the Guarantor.

         (iv)    The Guarantee  Trustee  shall  have  no  duty  to  see  to  any
     recording,  filing or registration of any instrument (or any  re-recording,
     refiling or re-registration thereof).

         (v)     The  Guarantee  Trustee  may  consult  with  counsel   of   its
     selection, and the advice or opinion of such counsel with  respect to legal
     matters shall be full and complete  authorization and protection in respect
     of any action taken, suffered or omitted by it hereunder  in good faith and
     in accordance with such advice or opinion.  Such counsel  may be counsel to

<PAGE>

     the  Guarantor  or  any  of  its  Affiliates  and  may  include  any of its
     employees.  The Guarantee  Trustee shall have the right at any time to seek
     instructions concerning the administration of this Guarantee from any court
     of competent jurisdiction.

         (vi)    The Guarantee Trustee  shall be under no obligation to exercise
     any of the rights or powers  vested in it by this  Guarantee at the request
     or direction of any Holder,  unless such Holder shall have  provided to the
     Guarantee Trustee such security and indemnity,  reasonably  satisfactory to
     the Guarantee Trustee,  against the costs,  expenses (including  attorneys'
     fees and  expenses  and the  expenses of the  Guarantee  Trustee's  agents,
     nominees or  custodians)  and  liabilities  that might be incurred by it in
     complying  with  such  request  or  direction,  including  such  reasonable
     advances as may be requested by the Guarantee Trustee;  provided,  however,
     that  nothing  contained  in this  Section  2.2(a)(vi)  shall  relieve  the
     Guarantee  Trustee,  upon the  occurrence  of an Event of  Default,  of its
     obligation  to  exercise  the  rights  and  powers  vested  in it  by  this
     Guarantee.

         (vii)   The  Guarantee   Trustee  shall  not  be  bound  to   make  any
     investigation   into  the  facts  or  matters  stated  in  any  resolution,
     certificate,  statement,  instrument,  opinion,  report,  notice,  request,
     direction,  consent,  order,  bond,  debenture,  note,  other  evidence  of
     indebtedness or other paper or document,  but the Guarantee Trustee, in its
     discretion,  may make such further inquiry or investigation into such facts
     or matters as it may see fit.

         (viii)  The  Guarantee  Trustee may execute any of the trusts or powers
     hereunder or perform any duties  hereunder either directly or by or through
     agents, nominees,  custodians or attorneys, and the Guarantee Trustee shall
     not be  responsible  for any  misconduct  or  negligence on the part of any
     agent or attorney appointed with due care by it hereunder.

         ix)     Any   action   taken   by  the  Guarantee Trustee or its agents
     hereunder  shall  bind  the  Holders  of the  Capital  Securities,  and the
     signature of the Guarantee  Trustee or its agents alone shall be sufficient
     and effective to perform any such action.  No third party shall be required
     to inquire as to the authority of the Guarantee  Trustee to so act or as to
     its compliance with any of the terms and provisions of this Guarantee, both
     of which shall be conclusively  evidenced by the Guarantee Trustee's or its
     agent's taking such action.

         (x)     Whenever in the administration of this Guarantee  the Guarantee
     Trustee  shall deem it  desirable to receive  instructions  with respect to
     enforcing  any remedy or right or taking any other  action  hereunder,  the
     Guarantee  Trustee  (i) may  request  instructions  from the  Holders  of a
     Majority in liquidation amount of the Capital Securities,  (ii) may refrain
     from  enforcing such remedy or right or taking such other action until such
     instructions  are  received,  and (iii) shall be protected in  conclusively
     relying on or acting in accordance with such instructions.

         (xi)    The Guarantee Trustee shall not be liable for any action taken,
     suffered,  or omitted to be taken by it in good faith,  without negligence,
     and reasonably  believed by it to be authorized or within the discretion or
     rights or powers conferred upon it by this Guarantee.

     (b) No  provision of this  Guarantee  shall be deemed to impose any duty or
obligation on the  Guarantee  Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it  shall  be  illegal  or in  which  the  Guarantee  Trustee  shall be
unqualified or incompetent in accordance with applicable law to perform any such
act or acts or to  exercise  any  such  right,  power,  duty or  obligation.  No
permissive  power or  authority  available  to the  Guarantee  Trustee  shall be
construed to be a duty.
<PAGE>

     Section 2.3. Not  Responsible  for Recitals or Issuance of  Guarantee.  The
                  --------------------------------------------------------
recitals  contained in this  Guarantee  shall be taken as the  statements of the
Guarantor,  and the  Guarantee  Trustee does not assume any  responsibility  for
their  correctness.  The  Guarantee  Trustee makes no  representation  as to the
validity or sufficiency of this Guarantee.

     Section 2.4. Events of Default; Waiver.
                  -------------------------

     (a) An Event of Default under this Guarantee will occur upon the failure of
the Guarantor to perform any of its payment or other obligations hereunder.

     (b) The  Holders  of  a  Majority  in  liquidation  amount  of the  Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver,  any such Event of Default shall cease to exist,  and shall be
deemed to have been  cured,  for every  purpose of this  Guarantee,  but no such
waiver shall extend to any  subsequent  or other  default or Event of Default or
impair any right consequent thereon.

     Section 2.5. Events of Default; Notice.
                  -------------------------

     (a) The Guarantee Trustee shall,  within 90 days after the occurrence of an
Event of Default,  transmit by mail, first class postage prepaid, to the Holders
of the Capital  Securities and the  Guarantor,  notices of all Events of Default
actually known to a Responsible  Officer of the Guarantee  Trustee,  unless such
defaults  have been cured before the giving of such notice,  provided,  however,
                                                             --------   -------
that the Guarantee  Trustee shall be protected in withholding such notice if and
so long  as a  Responsible  Officer  of the  Guarantee  Trustee  in  good  faith
determines  that the  withholding  of such  notice  is in the  interests  of the
Holders of the Capital Securities.

     (b) The  Guarantee  Trustee  shall not be deemed to have  knowledge  of any
Event of Default unless the Guarantee Trustee shall have received written notice
from the Guarantor or a Holder of the Capital  Securities (except in the case of
a payment  default),  or a Responsible  Officer of the Guarantee Trustee charged
with the  administration  of this Guarantee shall have obtained actual knowledge
thereof.

                                  ARTICLE III

                                GUARANTEE TRUSTEE

     Section 3.1. Guarantee Trustee; Eligibility.
                  ------------------------------

     (a) There shall at all times be a Guarantee Trustee which shall:

         (i)     not be an Affiliate of the Guarantor, and

         (ii)    be a corporation organized and doing business under the laws of
     the United  States of America or any State or  Territory  thereof or of the
     District  of  Columbia,  or Person  authorized  under such laws to exercise
     corporate trust powers,  having a combined  capital and surplus of at least
     50 million  U.S.  dollars  ($50,000,000),  and  subject to  supervision  or
     examination  by  Federal,  State,   Territorial  or  District  of  Columbia
     authority.  If such  corporation  publishes  reports of  condition at least
     annually,  pursuant to law or to the  requirements  of the  supervising  or
     examining  authority  referred  to above,  then,  for the  purposes of this
     Section  3.1(a)(ii),  the combined  capital and surplus of such corporation
     shall be deemed to be its combined  capital and surplus as set forth in its
     most recent report of condition so published.
<PAGE>

     (b) If at any time the  Guarantee  Trustee shall cease to be eligible to so
act under Section 3.1(a),  the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 3.2(c).

     (c) If  the  Guarantee  Trustee  has  or  shall  acquire  any  "conflicting
interest"  within the meaning of Section 310(b) of the Trust  Indenture Act, the
Guarantee  Trustee shall either  eliminate such interest or resign to the extent
and in the manner provided by, and subject to this Guarantee.

     Section 3.2. Appointment, Removal and Resignation of Guarantee Trustee.
                  ---------------------------------------------------------

     (a) Subject to Section  3.2(b),  the Guarantee  Trustee may be appointed or
removed  without  cause at any time by the  Guarantor  except during an Event of
Default.

     (b) The Guarantee  Trustee shall not be removed in accordance  with Section
3.2(a) until a Successor  Guarantee  Trustee has been appointed and has accepted
such  appointment by written  instrument  executed by such  Successor  Guarantee
Trustee and delivered to the Guarantor.

     (c) The  Guarantee  Trustee  appointed  to office shall hold office until a
Successor  Guarantee  Trustee shall have been  appointed or until its removal or
resignation.  The  Guarantee  Trustee may resign from office  (without  need for
prior or subsequent  accounting)  by an  instrument  in writing  executed by the
Guarantee  Trustee and delivered to the Guarantor,  which  resignation shall not
take effect  until a Successor  Guarantee  Trustee  has been  appointed  and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee  Trustee and delivered to the  Guarantor  and the resigning  Guarantee
Trustee.

     (d) If no  Successor  Guarantee  Trustee  shall  have  been  appointed  and
accepted  appointment  as  provided  in this  Section  3.2  within 60 days after
delivery of an  instrument  of removal or  resignation,  the  Guarantee  Trustee
resigning or being removed may petition any court of competent  jurisdiction for
appointment of a Successor  Guarantee Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any, as it may deem  proper,  appoint a Successor
Guarantee Trustee.

     (e) No Guarantee  Trustee  shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.

     (f) Upon  termination  of this  Guarantee or removal or  resignation of the
Guarantee  Trustee  pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee  Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV

                                    GUARANTEE

     Section 4.1. Guarantee.
                  ---------

     (a) The Guarantor irrevocably and unconditionally  agrees to pay in full to
the Holders the Guarantee Payments (without  duplication of amounts  theretofore
paid by the  Issuer),  as and when due,  regardless  of any defense  (except the
defense of payment by the  Issuer),  right of set-off or  counterclaim  that the
Issuer  may have or  assert.  The  Guarantor's  obligation  to make a  Guarantee
Payment  may be  satisfied  by direct  payment  of the  required  amounts by the
Guarantor  to the  Holders or by causing  the Issuer to pay such  amounts to the
Holders.
<PAGE>

     (b) The Guarantor  hereby also agrees to assume any and all  Obligations of
the Issuer and in the event any such  Obligation  is not so assumed,  subject to
the  terms  and  conditions   hereof,   the  Guarantor  hereby  irrevocably  and
unconditionally  guarantees to each  Beneficiary  the full payment,  when and as
due,  of any and  all  Obligations  to such  Beneficiaries.  This  Guarantee  is
intended  to be  for  the  benefit  of,  and  to be  enforceable  by,  all  such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.

     Section  4.2.  Waiver of Notice and Demand.  The  Guarantor  hereby  waives
                    ---------------------------
notice of acceptance of this  Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first  against  the Issuer or any other  Person  before  proceeding  against the
Guarantor,  protest,  notice  of  nonpayment,  notice  of  dishonor,  notice  of
redemption and all other notices and demands.

     Section  4.3.  Obligations  Not  Affected.   The  obligations,   covenants,
                    --------------------------
agreements and duties of the Guarantor  under this Guarantee  shall in no way be
affected or impaired by reason of the happening  from time to time of any of the
following:

     (a) the  release  or  waiver,  by  operation  of law or  otherwise,  of the
performance  or  observance  by the Issuer of any express or implied  agreement,
covenant,  term or condition  relating to the Capital Securities to be performed
or observed by the Issuer;

     (b) the  extension  of time for the  payment  by the  Issuer  of all or any
portion  of the  Distributions,  Redemption  Price,  Special  Redemption  Price,
Liquidation  Distribution  or any  other  sums  payable  under  the terms of the
Capital  Securities  or the extension of time for the  performance  of any other
obligation under,  arising out of or in connection with, the Capital  Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Special  Redemption  Price,  Liquidation  Distribution or other sum payable that
results from the extension of any interest  payment  period on the Debentures or
any  extension  of  the  maturity  date  of  the  Debentures  permitted  by  the
Indenture);

     (c) any  failure,  omission,  delay or lack of diligence on the part of the
Holders to enforce,  assert or exercise  any right,  privilege,  power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

     (d) the  voluntary or  involuntary  liquidation,  dissolution,  sale of any
collateral, receivership,  insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization,  arrangement, composition or readjustment of debt of,
or other similar proceedings  affecting,  the Issuer or any of the assets of the
Issuer;
<PAGE>

     (e) any invalidity of, or defect or deficiency in, the Capital Securities;

     (f) the  settlement or compromise of any  obligation  guaranteed  hereby or
hereby incurred; or

     (g) any other  circumstance  whatsoever that might  otherwise  constitute a
legal or equitable  discharge or defense of a guarantor,  it being the intent of
this  Section  4.3 that the  obligations  of the  Guarantor  hereunder  shall be
absolute and unconditional  under any and all  circumstances.  There shall be no
obligation of the Holders to give notice to, or obtain consent of, the Guarantor
with respect to the happening of any of the foregoing.

     Section 4.4. Rights of Holders.
                  -----------------

     (a) The  Holders  of  a  Majority  in  liquidation  amount  of the  Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee  Trustee in respect of this
Guarantee  or to direct the  exercise of any trust or power  conferred  upon the
Guarantee  Trustee under this  Guarantee;  provided,  however,  that (subject to
                                           --------   -------
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the  action  or  proceeding  so  directed  may not  lawfully  be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees  or a trust  committee of directors  or trustees  and/or  Responsible
Officers  shall  determine  that the action or  proceedings  so  directed  would
involve the Guarantee Trustee in personal liability.

     (b) Any Holder of  Capital  Securities  may  institute  a legal  proceeding
directly  against the Guarantor to enforce the Guarantee  Trustee's rights under
this Guarantee, without first instituting a legal proceeding against the Issuer,
the  Guarantee  Trustee or any other Person.  The Guarantor  waives any right or
remedy to require that any such action be brought first against the Issuer,  the
Guarantee Trustee or any other Person before so proceeding  directly against the
Guarantor.

     Section 4.5.  Guarantee of Payment.  This Guarantee  creates a guarantee of
                   --------------------
payment and not of collection.

     Section 4.6. Subrogation. The Guarantor shall be subrogated to all (if any)
                  -----------
rights of the Holders of Capital Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor  under this  Guarantee;  provided,
                                                                       --------
however,  that the  Guarantor  shall  not  (except  to the  extent  required  by
-------
mandatory  provisions  of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any  indemnity,  reimbursement  or other
agreement,  in all cases as a result of payment under this Guarantee,  if, after
giving  effect to any such  payment,  any amounts are due and unpaid  under this
Guarantee.  If any amount  shall be paid to the  Guarantor  in  violation of the
preceding  sentence,  the Guarantor  agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

     Section 4.7. Independent  Obligations.  The Guarantor acknowledges that its
                  ------------------------
obligations  hereunder are  independent  of the  obligations  of the Issuer with
respect to the  Capital  Securities  and that the  Guarantor  shall be liable as
principal and as debtor  hereunder to make  Guarantee  Payments  pursuant to the
terms of this Guarantee  notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 4.3 hereof.

     Section 4.8.  Enforcement by a Beneficiary.  A Beneficiary  may enforce the
                   ----------------------------
obligations of the Guarantor  contained in Section 4.1(b)  directly  against the
Guarantor  and the  Guarantor  waives  any right or remedy to  require  that any
action be  brought  against  the  Issuer or any  other  person or entity  before

<PAGE>

proceeding  against the  Guarantor.  The  Guarantor  shall be  subrogated to all
rights (if any) of any Beneficiary  against the Issuer in respect of any amounts
paid to the  Beneficiaries  by the  Guarantor  under this  Guarantee;  provided,
                                                                       --------
however,  that the  Guarantor  shall  not  (except  to the  extent  required  by
-------
mandatory  provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any  indemnity,  reimbursement  or other
agreement,  in all cases as a result of payment under this Guarantee,  if at the
time of any such payment,  and after giving effect to such payment,  any amounts
are due and unpaid under this Guarantee.

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

     Section 5.1. Limitation of Transactions.  So long as any Capital Securities
                  --------------------------
remain outstanding,  if (a) there shall have occurred and be continuing an Event
of Default or a  Declaration  Event of Default or (b) the  Guarantor  shall have
selected an Extension Period as provided in the Declaration and such period,  or
any  extension  thereof,  shall  have  commenced  and be  continuing,  then  the
Guarantor shall not and shall not permit any Affiliate to (x) declare or pay any
dividends  or  distributions  on,  or  redeem,  purchase,  acquire,  or  make  a
liquidation  payment with respect to, any of the Guarantor's or such Affiliate's
capital  stock  (other  than  payments  of  dividends  or  distributions  to the
Guarantor) or make any  guarantee  payments with respect to the foregoing or (y)
make any payment of  principal  of or interest or premium,  if any, on or repay,
repurchase or redeem any debt  securities of the Guarantor or any Affiliate that
rank pari passu in all  respects  with or junior in interest  to the  Debentures
(other  than,  with  respect to  clauses  (x) and (y)  above,  (i)  repurchases,
redemptions or other acquisitions of shares of capital stock of the Guarantor in
connection  with  any  employment  contract,   benefit  plan  or  other  similar
arrangement  with  or  for  the  benefit  of one or  more  employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Guarantor (or securities  convertible  into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the  occurrence  of the Event of  Default,  Declaration  Event of  Default or
Extension Period, as applicable,  (ii) as a result of any exchange or conversion
of any class or series of the Guarantor's capital stock (or any capital stock of
a  subsidiary  of the  Guarantor)  for any class or  series  of the  Guarantor's
capital stock or of any class or series of the Guarantor's  indebtedness for any
class or  series  of the  Guarantor's  capital  stock,  (iii)  the  purchase  of
fractional  interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange  provisions  of such capital stock or the security  being
converted or exchanged,  (iv) any  declaration of a dividend in connection  with
any  stockholders'  rights  plan,  or the  issuance  of  rights,  stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights  pursuant  thereto,  (v) any  dividend  in the form of  stock,  warrants,
options or other  rights  where the dividend  stock or the stock  issuable  upon
exercise of such warrants,  options or other rights is the same stock as that on
which the  dividend  is being  paid or ranks  pari  passu with or junior to such
stock and any cash  payments in lieu of  fractional  shares issued in connection
therewith, or (vi) payments under this Guarantee).

     Section  5.2.   Ranking.   This  Guarantee  will  constitute  an  unsecured
                     -------
obligation  of the Guarantor  and will rank  subordinate  and junior in right of
payment  to all  present  and  future  Senior  Indebtedness  (as  defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities  agrees to the foregoing  provisions of this  Guarantee and the other
terms set forth herein.

     The right of the Guarantor to participate in any  distribution of assets of
any of its subsidiaries upon any such subsidiary's liquidation or reorganization
or otherwise  is subject to the prior  claims of  creditors of that  subsidiary,
except to the extent the  Guarantor  may itself be  recognized  as a creditor of
that subsidiary.  Accordingly,  the Guarantor's obligations under this Guarantee
will be effectively  subordinated to all existing and future  liabilities of the
Guarantor's  subsidiaries,  and claimants  should look only to the assets of the

<PAGE>

Guarantor for payments  hereunder.  This Guarantee does not limit the incurrence
or issuance  of other  secured or  unsecured  debt of the  Guarantor,  including
Senior Indebtedness of the Guarantor, under any indenture that the Guarantor may
enter into in the future or otherwise.

                                   ARTICLE VI

                                   TERMINATION

     Section 6.1. Termination.  This Guarantee shall terminate as to the Capital
                  -----------
Securities (i) upon full payment of the Redemption  Price or Special  Redemption
Price of all Capital Securities then outstanding,  (ii) upon the distribution of
all of the  Debentures to the Holders of all of the Capital  Securities or (iii)
upon full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer.  This Guarantee will continue to be effective or will
be  reinstated,  as the  case  may be,  if at any time  any  Holder  of  Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Guarantee.

                                  ARTICLE VII

                                 INDEMNIFICATION

     Section 7.1. Exculpation.
                  -----------

     (a) No  Indemnified  Person shall be liable,  responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission  performed or omitted by such
Indemnified  Person in good faith in  accordance  with this  Guarantee  and in a
manner that such Indemnified  Person reasonably  believed to be within the scope
of the authority  conferred on such  Indemnified  Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified  Person's  negligence or willful
misconduct with respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the  records  of the  Issuer or the  Guarantor  and upon such  information,
opinions,  reports or statements presented to the Issuer or the Guarantor by any
Person as to matters the Indemnified Person reasonably  believes are within such
other Person's  professional  or expert  competence and who, if selected by such
Indemnified  Person,  has been selected with reasonable care by such Indemnified
Person, including information,  opinions,  reports or statements as to the value
and amount of the  assets,  liabilities,  profits,  losses,  or any other  facts
pertinent  to the  existence  and amount of assets from which  Distributions  to
Holders of Capital Securities might properly be paid.

     Section 7.2. Indemnification.
                  ---------------

     (a) The Guarantor agrees to indemnify each  Indemnified  Person for, and to
hold each  Indemnified  Person harmless  against,  any and all loss,  liability,
damage,  claim or expense incurred without  negligence or willful  misconduct on
the part of the  Indemnified  Person,  arising out of or in connection  with the
acceptance or administration of the trust or trusts  hereunder,  including,  but
not  limited to, the costs and  expenses  (including  reasonable  legal fees and
expenses) of the Indemnified Person defending itself against,  or investigating,
any claim or liability in connection  with the exercise or performance of any of
the Indemnified Person's powers or duties hereunder. The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

     (b) Promptly after receipt by an Indemnified  Person under this Section 7.2
of notice of the commencement of any action,  such Indemnified Person will, if a
claim in respect  thereof is to be made against the Guarantor under this Section
7.2,  notify  the  Guarantor  in writing of the  commencement  thereof;  but the
failure so to notify the  Guarantor  (i) will not  relieve  the  Guarantor  from
liability  under paragraph (a) above unless and to the extent that the Guarantor
did  not  otherwise  learn  of such  action  and  such  failure  results  in the
forfeiture  by the  Guarantor of  substantial  rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person  other than the  indemnification  obligation  provided in  paragraph  (a)
above.  The Guarantor  shall be entitled to appoint  counsel of the  Guarantor's
choice at the  Guarantor's  expense to represent the  Indemnified  Person in any
action for which  indemnification  is sought (in which case the Guarantor  shall
not thereafter be responsible for the fees and expenses of any separate  counsel
retained  by the  Indemnified  Person or  Persons  except  as set forth  below);
provided,  however,  that such counsel shall be reasonably  satisfactory  to the
--------   -------

<PAGE>

Indemnified Person.  Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action,  the Indemnified  Person shall have the
right to employ separate counsel  (including  local counsel),  and the Guarantor
shall bear the reasonable  fees,  costs and expenses of such separate counsel if
(i) the use of counsel  chosen by the  Guarantor  to represent  the  Indemnified
Person would  present such counsel with a conflict of interest,  (ii) the actual
or  potential  defendants  in, or targets of, any such action  include  both the
Indemnified  Person and the  Guarantor  and the  Indemnified  Person  shall have
reasonably  concluded  that there may be legal  defenses  available to it and/or
other  Indemnified  Person(s)  which are  different  from or additional to those
available to the Guarantor,  (iii) the Guarantor shall not have employed counsel
satisfactory  to the  Indemnified  Person to represent  the  Indemnified  Person
within a reasonable  time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified  Person to employ separate counsel
at the  expense of the  Guarantor.  The  Guarantor  will not,  without the prior
written consent of the Indemnified  Persons,  settle or compromise or consent to
the entry of any  judgment  with  respect to any  pending or  threatened  claim,
action,  suit or proceeding in respect of which  indemnification or contribution
may be sought  hereunder  (whether or not the Indemnified  Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent  includes an unconditional  release of each Indemnified  Person from all
liability arising out of such claim, action, suit or proceeding.

     Section 7.3. Compensation; Reimbursement of Expenses. The Guarantor agrees:
                  ---------------------------------------

     (a) to pay to the Guarantee Trustee from time to time such compensation for
all services rendered by it hereunder as the parties shall agree to from time to
time (which  compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and

     (b) except  as  otherwise  expressly  provided  herein,  to  reimburse  the
Guarantee  Trustee upon request for all reasonable  expenses,  disbursements and
advances  incurred  or made  by it in  accordance  with  any  provision  of this
Guarantee   (including  the  reasonable   compensation   and  the  expenses  and
disbursements of its agents and counsel), except any such expense,  disbursement
or advance as may be attributable to its negligence or willful misconduct.

     For purposes of  clarification,  this Section 7.3 does not  contemplate the
payment by the Guarantor of acceptance  or annual  administration  fees owing to
the Guarantee Trustee for services to be provided by the Guarantee Trustee under
this  Guarantee or the fees and expenses of the Guarantee  Trustee's  counsel in
connection with the closing of the transactions  contemplated by this Guarantee.
The  provisions of this Section 7.3 shall survive the  resignation or removal of
the Guarantee Trustee and the termination of this Guarantee.
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

     Section  8.1.  Successors  and  Assigns.   All  guarantees  and  agreements
                    ------------------------
contained  in this  Guarantee  shall bind the  successors,  assigns,  receivers,
trustees and  representatives of the Guarantor and shall inure to the benefit of
the Holders of the Capital  Securities  then  outstanding.  Except in connection
with any merger or consolidation of the Guarantor with or into another entity or
any sale, transfer or lease of the Guarantor's assets to another entity, in each
case, to the extent permitted under the Indenture,  the Guarantor may not assign
its rights or delegate its  obligations  under this Guarantee  without the prior
approval  of the  Holders of at least a Majority  in  liquidation  amount of the
Capital Securities.

     Section  8.2.  Amendments.  Except with  respect to any changes that do not
                    ----------
adversely affect the rights of Holders of the Capital Securities in any material
respect (in which case no consent of Holders will be required),  this  Guarantee
may be amended  only with the prior  approval  of the Holders of not less than a
Majority in liquidation amount of the Capital Securities.  The provisions of the
Declaration  with  respect  to  amendments  thereof  apply to the giving of such
approval.

     Section 8.3.  Notices.  All notices provided for in this Guarantee shall be
                   -------
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:

     (a) If given to the Guarantee Trustee,  at the Guarantee  Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Capital Securities and the Guarantor):

         Wilmington Trust Company
         Rodney Square North
         1100 North Market Street
         Wilmington, Delaware  19890-1600
         Attention:  Corporate Trust Administration
         Telecopy:  302-636-4140

     (b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other  address as the Guarantor may give notice of to the Holders
of the Capital Securities and to the Guarantee Trustee):

         First Banks, Inc.
         600 James S. McDonnell Blvd.
         Hazelwood, Missouri 63042
         Attention:  Lisa K. Vansickle
         Telecopy:  314-592-6621

     (c) If given to any Holder of the  Capital  Securities,  at the address set
forth on the books and records of the Issuer.

     All such  notices  shall be deemed  to have been  given  when  received  in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage  prepaid,  except that if a notice or other document is refused delivery
or cannot be  delivered  because  of a changed  address  of which no notice  was
given,  such notice or other  document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
<PAGE>

     Section  8.4.  Benefit.  This  Guarantee  is solely for the  benefit of the
                    -------
Beneficiaries  and,  subject to Section 2.1(a),  is not separately  transferable
from the Capital Securities.

     Section  8.5.  Governing  Law.  THIS  GUARANTEE  SHALL BE GOVERNED  BY, AND
                    --------------
CONSTRUED AND INTERPRETED IN ACCORDANCE  WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     Section 8.6.  Counterparts.  This  Guarantee may be executed in one or more
                   ------------
counterparts,  each of  which  shall  be an  original,  but all of  which  taken
together shall constitute one and the same instrument.

     Section 8.7 Separability.  In case one or more of the provisions  contained
                 ------------
in this  Guarantee  shall  for any  reason  be held to be  invalid,  illegal  or
unenforceable in any respect,  such invalidity,  illegality or  unenforceability
shall not affect any other  provisions  of this  Guarantee,  but this  Guarantee
shall be construed as if such invalid or illegal or unenforceable  provision had
never been contained herein.



                     Signatures appear on the following page



<PAGE>


     THIS GUARANTEE is executed as of the day and year first above written.



                                  FIRST BANK, INC., Guarantor

                                  By: /s/    Allen H. Blake
                                     -------------------------------------------
                                     Name:   Allen H. Blake
                                     Title:  President and
                                             Chief Executive Officer



                                  WILMINGTON TRUST COMPANY, as Guarantee Trustee

                                  By: /s/    Christopher J. Monigle
                                     -------------------------------------------
                                     Name:   Christopher J. Monigle
                                     Title:  Assistant Vice President


<PAGE>

                                                                    Exhibit 4.29
                                FIRST BANK, INC.

                            20,000 Capital Securities


                        Floating Rate Capital Securities
               (Liquidation Amount $1,000.00 per Capital Security)


                               PLACEMENT AGREEMENT

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

                                                              September 10, 2004


FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117

Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York  10019

Ladies and Gentlemen:

         First Banks,  Inc., a Missouri  corporation  (the  "Company"),  and its
financing subsidiary,  First Bank Statutory Trust II, a Delaware statutory trust
(the "Trust," and hereinafter together with the Company, the "Offerors"), hereby
confirm their agreement  (this  "Agreement")  with you as placement  agents (the
"Placement Agents"), as follows:

Section  1.    Issuance and Sale of Securities.
               -------------------------------

         1.1.  Introduction.  The  Offerors  propose  to  issue  and sell at the
               ------------
Closing (as defined in Section 2.3.1 hereof) 20,000 of the Trust's Floating Rate
Capital Securities,  with a liquidation amount of $1,000.00 per capital security
(the "Capital  Securities"),  to First  Tennessee Bank National  Association,  a
national  banking  association  organized under the laws of the United States of
America and Preferred Term Securities XV, Ltd., a company with limited liability
established under the laws of the Cayman Islands (the "Purchasers")  pursuant to
the terms of Subscription  Agreements  entered into, or to be entered into on or
prior to the Closing  Date (as  defined in Section  2.3.1  hereof),  between the
Offerors and the Purchasers (the "Subscription Agreements"),  the forms of which
are attached  hereto as Exhibit A-1 and Exhibit A-2 and  incorporated  herein by
                        -----------     -----------
this reference.

         1.2.  Operative  Agreements.  The Capital Securities shall be fully and
               ---------------------
unconditionally  guaranteed on a subordinated  basis by the Company with respect
to distributions and amounts payable upon  liquidation,  redemption or repayment
(the  "Guarantee")   pursuant  and  subject  to  the  Guarantee  Agreement  (the
"Guarantee  Agreement"),  to be dated as of the Closing  Date and  executed  and
delivered by the Company and Wilmington Trust Company  ("WTC"),  as trustee (the
"Guarantee  Trustee"),  for the benefit  from time to time of the holders of the
Capital  Securities.  The  entire  proceeds  from the  sale by the  Trust to the
holders of the Capital  Securities  shall be combined  with the entire  proceeds

<PAGE>

from the sale by the Trust to the Company of its common  securities (the "Common
Securities"),  and  shall be used by the  Trust to  purchase  $20,619,000.00  in
principal amount of the Floating Rate Junior  Subordinated  Deferrable  Interest
Debentures (the  "Debentures")  of the Company.  The Capital  Securities and the
Common  Securities  for the Trust  shall be issued  pursuant  to an Amended  and
Restated  Declaration  of Trust among WTC, as Delaware  trustee  (the  "Delaware
Trustee"),  WTC, as institutional  trustee (the  "Institutional  Trustee"),  the
Administrators  named  therein,  and the Company,  to be dated as of the Closing
Date and in substantially the form heretofore  delivered to the Placement Agents
(the "Trust Agreement"). The Debentures shall be issued pursuant to an Indenture
(the  "Indenture"),  to be dated as of the Closing Date, between the Company and
WTC, as indenture trustee (the "Indenture Trustee"). The documents identified in
this  Section  1.2 and in Section 1.1 are  referred to herein as the  "Operative
Documents."

         1.3.  Rights of Purchasers. The Capital Securities shall be offered and
               --------------------
sold by the Trust directly to the Purchasers without  registration of any of the
Capital Securities,  the Debentures or the Guarantee under the Securities Act of
1933, as amended (the "Securities Act"), or any other applicable securities laws
in reliance upon exemptions from the registration requirements of the Securities
Act and other applicable securities laws. The Offerors agree that this Agreement
shall be  incorporated  by reference  into the  Subscription  Agreements and the
Purchasers shall be entitled to each of the benefits of the Placement Agents and
the Purchasers under this Agreement and shall be entitled to enforce obligations
of the Offerors under this Agreement as fully as if the Purchasers  were parties
to this Agreement.  The Offerors and the Placement Agents have entered into this
Agreement to set forth their  understanding  as to their  relationship and their
respective rights, duties and obligations.

         1.4.  Legends.  Upon original issuance thereof,  and until such time as
               -------
the  same  is no  longer  required  under  the  applicable  requirements  of the
Securities Act, the Capital  Securities and Debentures  certificates  shall each
contain a legend as required pursuant to any of the Operative Documents.

Section 2.     Purchase of Capital Securities.
               ------------------------------

         2.1.  Exclusive Rights;  Purchase Price. From the date hereof until the
               ---------------------------------
Closing Date (which date may be extended by mutual agreement of the Offerors and
the Placement  Agents),  the Offerors  hereby grant to the Placement  Agents the
exclusive  right  to  arrange  for the  sale of the  Capital  Securities  to the
Purchasers at a purchase price of $1,000.00 per Capital Security.

         2.2.  Subscription  Agreements.  The Offerors  hereby agree to evidence
               ------------------------
their  acceptance of the  subscription by  countersigning  a copy of each of the
Subscription Agreements and returning the same to the Placement Agents.

         2.3.  Closing and Delivery of Payment.
               -------------------------------

               2.3.1. Closing; Closing Date.  The   sale  and  purchase  of  the
                      ---------------------
Capital Securities by  the  Offerors  to  the  Purchasers  shall take place at a
closing (the "Closing") at the offices of Lewis, Rice & Fingersh, L.C., at 10:00
a.m. (St. Louis time) on September 20, 2004,  or such other  business day as may
be agreed upon by the Offerors and the Placement  Agents  (the "Closing  Date");
provided,  however,  that  in  no  event shall the Closing Date occur later than
--------   -------
September 30, 2004  unless  consented  to  by  the  Purchasers.  Payment by  the
Purchasers  shall  be  payable  in  the  manner  set  forth  in the Subscription
Agreements and shall be made prior to or on the Closing Date.

               2.3.2. Delivery.  The  certificates  for  the  Capital Securities
                      --------
shall  be  in  definitive  form, each  registered  in the name of the applicable
Purchaser, or Purchaser  designee,  and in the aggregate  amount of  the Capital
Securities purchased by the Purchaser.
<PAGE>

               2.3.3. Transfer Agent.   The    Offerors    shall   deposit   the
                      --------------
certificates representing  the Capital Securities with the Institutional Trustee
or other appropriate party prior to the Closing Date.

         2.4.  Costs and Expenses. Whether  or  not this Agreement is terminated
               ------------------
or the  sale  of  the  Capital  Securities  is  consummated,  the Company hereby
covenants  and  agrees  that it shall  pay or cause to be paid  (directly  or by
reimbursement)  all reasonable costs and expenses incident to the performance of
the  obligations  of the  Offerors  under this  Agreement,  including  all fees,
expenses and  disbursements  of counsel and  accountants  for the Offerors;  all
reasonable  expenses  incurred  by the  Offerors  incident  to the  preparation,
execution and delivery of the Trust Agreement, the Indenture, and the Guarantee;
and all other reasonable  costs and expenses  incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement.

         2.5.  Failure  to  Close.  If  any  of the  conditions  to the  Closing
               ------------------
specified in this Agreement shall not have been fulfilled to the satisfaction of
the  Placement  Agents or if the  Closing  shall not have  occurred on or before
10:00 a.m.  (St.  Louis time) on  September  30, 2004,  then each party  hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further  obligations under this Agreement without thereby waiving any rights
it may have by reason of such nonfulfillment or failure; provided, however, that
                                                         --------  -------
the  obligations  of the parties  under  Sections 2.4, 7.5 and 9 shall not be so
relieved and shall continue in full force and effect.

Section  3.    Closing  Conditions.  The  obligations  of the Purchasers and the
               -------------------
Placement Agents on the Closing Date shall be subject to the accuracy, at and as
of the Closing  Date,  of the  representations  and  warranties  of the Offerors
contained in this Agreement,  to the accuracy, at and as of the Closing Date, of
the  statements  of the  Offerors  made  in any  certificates  pursuant  to this
Agreement,  to the performance by the Offerors of their  respective  obligations
under this  Agreement,  to  compliance,  at and as of the Closing  Date,  by the
Offerors with their respective agreements herein contained, and to the following
further conditions:

         3.1.  Opinions of Counsel.  On the Closing Date,  the Placement  Agents
               -------------------
shall have  received  the  following  favorable  opinions,  each dated as of the
Closing Date: (a) from Stinson Morrison Hecker LLP, counsel for the Offerors and
addressed to the Purchasers and the Placement Agents in  substantially  the form
set  forth on  Exhibit  B-1  attached  hereto  and  incorporated  herein by this
               ------------
reference, (b) from Richards, Layton & Finger, P.A., special Delaware counsel to
the  Offerors and  addressed to the  Purchasers,  the  Placement  Agents and the
Offerors, in substantially the form set forth on Exhibit B-2 attached hereto and
                                                 -----------
incorporated herein by this reference and (c) from Lewis, Rice & Fingersh, L.C.,
special tax counsel to the Offerors,  and addressed to the Placement  Agents and
the Offerors, in substantially the form set forth on Exhibit B-3 attached hereto
                                                     -----------
and incorporated herein by this reference, subject to the receipt by Lewis, Rice
&  Fingersh,  L.C. of a  representation  letter from the Company in the form set
forth in Exhibit B-3  completed in a manner  reasonably  satisfactory  to Lewis,
         -----------
Rice & Fingersh,  L.C.  (collectively,  the "Offerors'  Counsel  Opinions").  In
rendering the Offerors' Counsel Opinions, counsel to the Offerors may rely as to
factual  matters upon  certificates  or other  documents  furnished by officers,
directors  and trustees of the  Offerors  (copies of which shall be delivered to
the Placement Agents and the Purchasers) and by government  officials,  and upon
such other  documents  as  counsel  to the  Offerors  may,  in their  reasonable
opinion, deem appropriate as a basis for the Offerors' Counsel Opinions. Counsel
to the  Offerors  may specify the  jurisdictions  in which they are  admitted to
practice  and that they are not  admitted to practice in any other  jurisdiction
and are not  experts  in the law of any  other  jurisdiction.  If the  Offerors'
counsel is not  admitted to  practice  in the State of New York,  the opinion of
Offerors' counsel may assume, for purposes of the opinion,  that the laws of the
State of New York are substantively  identical,  in all respects material to the
opinion,  to the internal laws of the state in which such counsel is admitted to
practice.  Such Offerors'  Counsel  Opinions shall not state that they are to be
governed or qualified by, or that they are  otherwise  subject to, any treatise,
written policy or other document relating to legal opinions,  including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
<PAGE>

         3.2.  Officer's Certificate.  At  the  Closing Date, the Purchasers and
               ---------------------
the Placement Agents shall have received certificates from an authorized officer
of  the  Company,   dated  as  of  the  Closing  Date,   stating  that  (i)  the
representations and warranties of the Offerors set forth in Section 5 hereof are
true and correct as of the Closing Date and that the Offerors have complied with
all  agreements  and satisfied  all  conditions on their part to be performed or
satisfied at or prior to the Closing Date, (ii) since the date of this Agreement
the  Offerors  have  not  incurred  any  liability  or  obligation,   direct  or
contingent,  or  entered  into  any  material  transactions,  other  than in the
ordinary  course of  business,  which is  material  to the  Offerors,  and (iii)
covering such other matters as the Placement Agents may reasonably request.

         3.3.  Administrator's  Certificate. At the Closing Date, the Purchasers
               ----------------------------
and the  Placement  Agents  shall  have  received a  certificate  of one or more
Administrators  of the Trust,  dated as of the Closing  Date,  stating  that the
representations  and warranties of the Trust set forth in Section 5 are true and
correct  as of the  Closing  Date and  that  the  Trust  has  complied  with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.

         3.4.  Purchase  Permitted by Applicable  Laws;  Legal  Investment.  The
               -----------------------------------------------------------
purchase  of and  payment  for  the  Capital  Securities  as  described  in this
Agreement  and  pursuant  to  the  Subscription  Agreements  shall  (a)  not  be
prohibited by any applicable law or governmental regulation, (b) not subject the
Purchasers or the Placement Agents to any penalty or, in the reasonable judgment
of the Purchasers and the Placement  Agents,  other onerous  conditions under or
pursuant to any applicable law or governmental regulation,  and (c) be permitted
by the laws and regulations of the jurisdictions to which the Purchasers and the
Placement Agents are subject.

         3.5.  Consents  and  Permits.  The  Company  and the Trust  shall  have
               ----------------------
received  all  consents,  permits  and other  authorizations,  and made all such
filings and declarations,  as may be required from any person or entity pursuant
to any law, statute,  regulation or rule (federal, state, local and foreign), or
pursuant to any agreement,  order or decree to which the Company or the Trust is
a party or to which  either is  subject,  in  connection  with the  transactions
contemplated by this Agreement.

         3.6.  Sale of Purchaser Securities.  Preferred Term Securities XV, Ltd.
               ----------------------------
shall have sold securities  issued by it in an amount such that the net proceeds
of such sale shall be (i)  available  on the Closing  Date and (ii) in an amount
sufficient to purchase  that portion of the Capital  Securities  Preferred  Term
Securities XV, Ltd. agrees to purchase pursuant to the Subscription Agreement to
be entered into by it and all other capital or similar  securities  contemplated
to be purchased by Preferred Term  Securities XV, Ltd. in agreements  similar to
this Agreement and the Subscription Agreement to be entered into by it.

         3.7.  Information.  Prior to or on the Closing Date, the Offerors shall
               -----------
have furnished to the Placement Agents such further  information,  certificates,
opinions and documents  addressed to the  Purchasers  and the Placement  Agents,
which  the  Placement  Agents  may  reasonably   request,   including,   without
limitation,  a complete set of the Operative Documents or any other documents or
certificates  required  by this  Section  3;  and all  proceedings  taken by the
Offerors  in  connection  with  the  issuance,  offer  and  sale of the  Capital
Securities as herein  contemplated shall be reasonably  satisfactory in form and
substance to the Placement Agents.

         If any  condition  specified  in this  Section  3 shall  not have  been
fulfilled when and as required in this  Agreement,  or if any of the opinions or
certificates  mentioned  above  or  elsewhere  in this  Agreement  shall  not be
reasonably  satisfactory  in form and  substance to the Placement  Agents,  this
Agreement may be terminated by the Placement Agents by notice to the Offerors at
any time at or prior to the Closing Date.  Notice of such  termination  shall be
given to the  Offerors in writing or by  telephone  or  facsimile  confirmed  in
writing.
<PAGE>

Section  4.    Conditions to the Offerors' Obligations.  The  obligations of the
               ---------------------------------------
Offerors to sell the Capital  Securities to the  Purchasers  and  consummate the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and  as of the  Closing  Date,  of the  representations  and  warranties  of the
Placement  Agents  contained  in this  Agreement  and to the  following  further
conditions:

         4.1.  Executed  Agreement.  The Offerors  shall have  received from the
               -------------------
Placement Agents an executed copy of this Agreement.

         4.2.  Fulfillment of Other Obligations. The Placement Agents shall have
               --------------------------------
fulfilled  all of their other  obligations  and duties  required to be fulfilled
under this Agreement prior to or at the Closing.

Section  5.    Representations and Warranties of the Offerors.   Except  as  set
               ----------------------------------------------
forth on the Disclosure  Schedule (as defined in Section 11.1) attached  hereto,
if any,  the  Offerors  jointly  and  severally  represent  and  warrant  to the
Placement  Agents and the Purchasers as of the date hereof and as of the Closing
Date as follows:

         5.1.  Securities Law Matters.
               ----------------------

               (a)  Neither the  Company  nor  the  Trust,   nor  any  of  their
"Affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor any person acting on any of their behalf has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security,  under  circumstances  that would require the  registration  under the
Securities Act of any of the Capital Securities, the Guarantee or the Debentures
(collectively,  the "Securities") or any other securities to be issued, or which
may be issued, by Preferred Term Securities XV, Ltd.

               (b) Neither  the  Company  nor  the  Trust,   nor  any  of  their
Affiliates,  nor any person acting on its or their behalf has (i) other than the
Placement  Agents,  offered  for  sale  or  solicited  offers  to  purchase  the
Securities,  (ii)  engaged  in any form of  offering,  general  solicitation  or
general  advertising (within the meaning of Regulation D) in connection with any
offer or sale of any of the  Securities,  or (iii) engaged or will engage in any
"directed  selling efforts" within the meaning of Regulation S of the Securities
Act ("Regulation S") with respect to the Securities.

               (c) The Securities satisfy the  eligibility  requirements of Rule
144A(d)(3) under the Securities Act.

               (d) Neither the Company nor the Trust is or, after giving  effect
to the offering and sale of the Capital  Securities and the  consummation of the
transactions described in this Agreement,  will be an "investment company" or an
entity "controlled" by an "investment  company," in each case within the meaning
of  Section  3(a)  of the  Investment  Company  Act of  1940,  as  amended  (the
"Investment  Company  Act"),  without  regard to Section 3(c) of the  Investment
Company Act.

               (e) Neither  the  Company nor the Trust has paid or agreed to pay
to any person or entity (other than the  Placement Agents) any compensation  for
soliciting another to purchase any of the Securities.

         5.2.  Organization,  Standing and Qualification of the Trust. The Trust
               ------------------------------------------------------
has been duly  created and is validly  existing in good  standing as a statutory
trust under the Delaware  Statutory Trust Act (the  "Statutory  Trust Act") with
the power and authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its obligations under the
Operative  Documents.  The Trust is duly  qualified  to  transact  business as a

<PAGE>

foreign  entity  and is in good  standing  in each  jurisdiction  in which  such
qualification is necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust. The Trust is not
a party  to or  otherwise  bound  by any  agreement  other  than  the  Operative
Documents.  The Trust is and will,  under current law, be classified for federal
income tax purposes as a grantor  trust and not as an  association  taxable as a
corporation.

         5.3.  Trust Agreement.  The Trust Agreement has been duly authorized by
               ---------------
the Company and, on the Closing Date, will have been duly executed and delivered
by  the  Company  and  the  Administrators  of  the  Trust,  and,  assuming  due
authorization,   execution  and  delivery  by  the  Delaware   Trustee  and  the
Institutional Trustee, will be a valid and binding obligation of the Company and
such  Administrators,  enforceable  against them in  accordance  with its terms,
subject to (a)  applicable  bankruptcy,  insolvency,  moratorium,  receivership,
reorganization,  liquidation and other laws relating to or affecting  creditors'
rights generally,  and (b) general  principles of equity  (regardless of whether
considered  and applied in a proceeding  in equity or at law)  ("Bankruptcy  and
Equity").  Each of the  Administrators of the Trust is an employee or a director
of the Company or of a financial  institution  subsidiary of the Company and has
been duly authorized by the Company to execute and deliver the Trust Agreement.

         5.4.  Guarantee Agreement and the Indenture.  Each of the Guarantee and
               -------------------------------------
the Indenture has been duly  authorized by the Company and, on the Closing Date,
will have been duly  executed and  delivered by the Company,  and,  assuming due
authorization,  execution and delivery by the Guarantee Trustee,  in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture,  will
be a valid and  binding  obligation  of the  Company  enforceable  against it in
accordance with its terms, subject to Bankruptcy and Equity.

         5.5.  Capital Securities and Common Securities.  The Capital Securities
               ----------------------------------------
and the Common  Securities have been duly authorized by the Trust Agreement and,
when issued and delivered  against  payment  therefor on the Closing Date to the
Purchasers,  in the case of the Capital  Securities,  and to the Company, in the
case of the Common  Securities,  will be validly issued and represent  undivided
beneficial  interests in the assets of the Trust. None of the Capital Securities
or the Common  Securities is subject to preemptive or other similar  rights.  On
the Closing Date, all of the issued and  outstanding  Common  Securities will be
directly owned by the Company free and clear of any pledge,  security  interest,
claim, lien or other encumbrance.

         5.6.  Debentures.  The  Debentures  have  been duly  authorized  by the
               ----------
Company and, at the Closing Date,  will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture,  and,
when  authenticated  in the manner  provided for in the  Indenture and delivered
against  payment  therefor  by the  Trust,  will  constitute  valid and  binding
obligations of the Company entitled to the benefits of the Indenture enforceable
against the Company in accordance  with their terms,  subject to Bankruptcy  and
Equity.

         5.7.  Power and  Authority.  This  Agreement has been duly  authorized,
               --------------------
executed and  delivered by the Company and the Trust and  constitutes  the valid
and binding  obligation  of the Company and the Trust,  enforceable  against the
Company and the Trust in accordance  with its terms,  subject to Bankruptcy  and
Equity.

         5.8.  No Defaults. The Trust is not in violation of the Trust Agreement
               -----------
or, to the knowledge of the Administrators, any provision of the Statutory Trust
Act. The execution, delivery and performance by the Company or the Trust of this
Agreement  or  the  Operative  Documents  to  which  it  is  a  party,  and  the
consummation of the transactions  contemplated  herein or therein and the use of
the proceeds  therefrom,  will not conflict with or constitute a breach of, or a
default  under,  or result in the creation or imposition of any lien,  charge or
other  encumbrance  upon any property or assets of the Trust, the Company or any
of the Company's  Subsidiaries  (as defined in Section 5.11 hereof)  pursuant to
any  contract,  indenture,  mortgage,  loan  agreement,  note,  lease  or  other
instrument to which the Trust, the Company or any of its Subsidiaries is a party
or by which it or any of them may be bound,  or to which any of the  property or
assets of any of them is subject, except for a conflict,  breach, default, lien,
charge or encumbrance which could not, singly or in the aggregate, reasonably be

<PAGE>

expected to have a Material  Adverse  Effect nor will such action  result in any
violation  of the Trust  Agreement  or the  Statutory  Trust Act or require  the
consent, approval, authorization or order of any court or governmental agency or
body. As used herein,  the term "Material  Adverse Effect" means any one or more
effects that  individually  or in the  aggregate are material and adverse to the
Offerors' ability to consummate the transactions  contemplated  herein or in the
Operative  Documents  or any one or more  effects  that  individually  or in the
aggregate  are material and adverse to the condition  (financial or  otherwise),
earnings,  affairs, business,  prospects or results of operations of the Company
and its  Subsidiaries  taken as whole,  whether or not occurring in the ordinary
course of business.

         5.9.  Organization,  Standing and  Qualification  of the  Company.  The
               -----------------------------------------------------------
Company has been duly  incorporated  and is validly existing as a corporation in
good standing under the laws of Missouri, with all requisite corporate power and
authority  to own its  properties  and conduct the  business  it  transacts  and
proposes to transact,  and is duly qualified to transact business and is in good
standing as a foreign  corporation in each jurisdiction  where the nature of its
activities requires such qualification,  except where the failure of the Company
to be so  qualified  would  not,  singly or in the  aggregate,  have a  Material
Adverse Effect.

         5.10. Subsidiaries of the Company.  Each  of the Company's  significant
               ---------------------------
subsidiaries  (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the "Significant Subsidiaries")) is listed in Exhibit C attached hereto and
                                                   ---------
incorporated herein by this reference. Each Significant Subsidiary has been duly
organized  and is validly  existing and in good  standing  under the laws of the
jurisdiction in which it is chartered or organized, with all requisite power and
authority  to own its  properties  and conduct the  business  it  transacts  and
proposes to transact,  and is duly qualified to transact business and is in good
standing  as a foreign  entity  in each  jurisdiction  where  the  nature of its
activities  requires  such  qualification,  except where the failure of any such
Significant Subsidiary to be so qualified would not, singly or in the aggregate,
have a Material  Adverse  Effect.  All of the issued and  outstanding  shares of
capital stock of the Significant  Subsidiaries (a) have been duly authorized and
are validly  issued,  (b) are fully paid and  nonassessable,  and (c) are wholly
owned,  directly or  indirectly,  by the Company  free and clear of any security
interest,  mortgage,  pledge,  lien,  encumbrance,  restriction  upon  voting or
transfer, preemptive rights, claim, equity or other defect.

         5.11. Permits.  The Company and each of its subsidiaries (as defined in
               -------
Section  1-02(x) of Regulation S-X to the Securities  Act) (the  "Subsidiaries")
have all  requisite  power  and  authority,  and all  necessary  authorizations,
approvals, orders, licenses,  certificates and permits of and from regulatory or
governmental  officials,  bodies and tribunals, to own or lease their respective
properties and to conduct their  respective  businesses as now being  conducted,
except  such  authorizations,  approvals,  orders,  licenses,  certificates  and
permits  which,  if not obtained  and  maintained,  would not,  singly or in the
aggregate,  have a Material  Adverse Effect,  and neither the Company nor any of
its  Subsidiaries  has  received  any  notice  of  proceedings  relating  to the
revocation  or  modification  of any  such  authorizations,  approvals,  orders,
licenses,  certificates  or permits which,  singly or in the  aggregate,  if the
failure to be so licensed or approved is the subject of an unfavorable decision,
ruling or finding,  would,  singly or in the aggregate,  have a Material Adverse
Effect;  and the  Company  and  its  Subsidiaries  are in  compliance  with  all
applicable laws,  rules,  regulations and orders and consents,  the violation of
which would, singly or in the aggregate, have a Material Adverse Effect.
<PAGE>

         5.12. Conflicts,  Authorizations and Approvals. Neither the Company nor
               ----------------------------------------
any  of  its  Subsidiaries  is  in  violation  of  its  respective  articles  or
certificate  of  incorporation,  charter or  by-laws  or similar  organizational
documents or in default in the  performance  or  observance  of any  obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which either the
Company or any of its Subsidiaries is a party, or by which it or any of them may
be bound or to which any of the  property or assets of the Company or any of its
Subsidiaries is subject, the effect of which violation or default in performance
or observance would have, singly or in the aggregate, a Material Adverse Effect.

         5.13. Holding Company  Registration and Deposit Insurance.  The Company
               ---------------------------------------------------
is duly  registered (i) as a bank holding  company or financial  holding company
under the Bank Holding  Company Act of 1956, as amended,  and the regulations of
the Board of Governors of the Federal Reserve System (the "Federal  Reserve") or
(ii) as a savings and loan  holding  company  under the Home Owners' Loan Act of
1933, as amended,  and the regulations of the Office of Thrift  Supervision (the
"OTS"),  and  the  deposit  accounts  of  the  Company's  Subsidiary  depository
institutions are insured by the Federal Deposit Insurance  Corporation  ("FDIC")
to the fullest  extent  permitted  by law and the rules and  regulations  of the
FDIC,  and no proceedings  for the  termination of such insurance are pending or
threatened.

         5.14. Financial Statements.
               --------------------

               (a) The consolidated balance sheets of the Company and all of its
Subsidiaries  as of  December  31,  2003  and  December  31,  2002  and  related
consolidated income statements and statements of changes in shareholders' equity
for the 3 years ended December 31, 2003 together with the notes thereto, and the
consolidated  balance  sheets of the Company and all of its  Subsidiaries  as of
June 30, 2004 and the related  consolidated  income statements and statements of
changes in shareholders'  equity for the 6 months then ended,  copies of each of
which have been  provided to the  Placement  Agents  (together,  the  "Financial
Statements"),   have  been  prepared  in  accordance  with  generally   accepted
accounting  principles applied on a consistent basis (except as may be disclosed
therein) and fairly present in all material respects the financial  position and
the results of operations and changes in shareholders' equity of the Company and
all of its Subsidiaries as of the dates and for the periods indicated  (subject,
in the case of  interim  financial  statements,  to  normal  recurring  year-end
adjustments,  none of which  shall be  material).  The books and  records of the
Company and all of its Subsidiaries have been, and are being,  maintained in all
material respects in accordance with generally  accepted  accounting  principles
and any other  applicable  legal and  accounting  requirements  and reflect only
actual transactions.

               (b) The information  in the Company's  most recently filed (i) FR
Y-9C filed with the Federal  Reserve if the Company is a bank  holding  company,
(ii) FR Y-9SP  filed with the  Federal  Reserve  if the  Company is a small bank
holding  company or (iii) H-(b)11 filed with the OTS if the Company is a savings
and loan holding company (the "Regulatory  Report"),  previously provided to the
Placement Agents fairly presents in all material respects the financial position
of the Company and, where  applicable,  all of its Subsidiaries as of the end of
the period represented by such Regulatory Report.

               (c) Since  the  respective dates  of the Financial Statements and
the Regulatory Report,  there has been no material adverse change or development
with  respect to the  financial  condition or earnings of the Company and all of
its Subsidiaries, taken as a whole.

               (d) The  accountants of the Company who  certified  the Financial
Statements  are   independent   public   accountants  of  the  Company  and  its
Subsidiaries  within  the  meaning  of the  Securities  Act  and the  rules  and
regulations thereunder.

         5.15. Exchange Act Reporting. The reports filed with the Securities and
               ----------------------
Exchange  Commission  (the  "Commission")  by the Company  under the  Securities

<PAGE>

Exchange Act of 1934, as amended (the "1934 Act") and the regulations thereunder
at the time they  were  filed  with the  Commission  complied  as to form in all
material respects with the requirements of the 1934 Act and such reports did not
contain an untrue  statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  in which they were made, not misleading,  except to
the extent  superseded  by a  subsequent  report  filed by the Company  with the
Commission.

         5.16. Regulatory  Enforcement Matters.  Neither the Company nor any  of
               -------------------------------
its Subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation  with respect
to, any  cease-and-desist  order,  agreement,  consent agreement,  memorandum of
understanding or other regulatory  enforcement action,  proceeding or order with
or by, or is a party to any commitment  letter or similar  undertaking to, or is
subject to any  directive  by, or has been since January 1, 2001, a recipient of
any  supervisory  letter from, or since  January 1, 2001,  has adopted any board
resolutions  at the request of, any  Regulatory  Agency (as defined  below) that
currently  restricts  in any material  respect the conduct of their  business or
that in any material  manner  relates to their  capital  adequacy,  their credit
policies,  their ability or authority to pay dividends or make  distributions to
their  shareholders  or make  payments  of  principal  or interest on their debt
obligations,   their   management  or  their   business   (each,  a  "Regulatory
Agreement"),  nor has the Company or any of its Subsidiaries  been advised since
January 1, 2001,  by any  Regulatory  Agency that it is  considering  issuing or
requesting  any  such  Regulatory  Agreement.  There is no  material  unresolved
violation,  criticism or exception by any Regulatory  Agency with respect to any
report or statement  relating to any  examinations  of the Company or any of its
Subsidiaries.  As used herein, the term "Regulatory Agency" means any federal or
state  agency   charged  with  the   supervision  or  regulation  of  depository
institutions,  bank, financial or savings and loan holding companies, or engaged
in  the   insurance  of   depository   institution   deposits,   or  any  court,
administrative  agency or commission or other governmental agency,  authority or
instrumentality  having supervisory or regulatory  authority with respect to the
Company  or  any  of  its  Subsidiaries.  Neither  the  Company  nor  any of the
Subsidiaries is currently  unable to pay dividends or make  distributions to its
shareholders with respect to any class of its equity  securities,  or prohibited
from paying principal or interest on its debt obligations,  due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the reasonable
judgment  of the  Company's  management,  neither  the  Company  nor  any of the
Subsidiaries  will be unable in the foreseeable  future to pay dividends or make
distributions with respect to any class of equity  securities,  or be prohibited
from paying principal or interest on its debt obligations,  due to a restriction
or limitation, whether by statute, contract or otherwise.

         5.17. No Material  Change.  Since December 31, 2003,  there has been no
               -------------------
material adverse change or development with respect to the condition  (financial
or otherwise),  earnings, affairs, business,  prospects or results of operations
of the  Company or its  Subsidiaries  on a  consolidated  basis,  whether or not
arising in the ordinary course of business.

         5.18. No  Undisclosed  Liabilities.  Neither the Company nor any of its
               ----------------------------
Subsidiaries  has any  material  liability,  whether  known or unknown,  whether
asserted or  unasserted,  whether  absolute or  contingent,  whether  accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including  any  liability  for  taxes  (and  there is no past or  present  fact,
situation,  circumstance,  condition  or other  basis for any  present or future
action, suit, proceeding,  hearing, charge,  complaint,  claim or demand against
the Company or its Subsidiaries  giving rise to any such liability),  except (i)
for  liabilities  set  forth  in  the  Financial   Statements  and  (ii)  normal
fluctuation  in the amount of the  liabilities  referred  to in clause (i) above
occurring  in the  ordinary  course of  business  of the  Company and all of its
Subsidiaries  since the date of the most recent  balance  sheet  included in the
Financial Statements.

         5.19. Litigation. No charge, investigation,  action, suit or proceeding
               ----------
is  pending  or,  to the  knowledge  of the  Offerors,  threatened,  against  or
affecting the Company or its Subsidiaries or any of their respective  properties

<PAGE>

before  or by any  courts  or any  regulatory,  administrative  or  governmental
official,  commission,  board,  agency  or  other  authority  or  body,  or  any
arbitrator,  wherein an  unfavorable  decision,  ruling or finding  could  have,
singly or in the aggregate, a Material Adverse Effect.

         5.20. Deferral of Interest Payments on Debentures.  The  Company has no
               -------------------------------------------
present  intention to exercise  its option to defer  payments of interest on the
Debentures  as  provided  in  the  Indenture.  The  Company  believes  that  the
likelihood that it would exercise its right to defer payments of interest on the
Debentures as provided in the Indenture at any time during which the  Debentures
are outstanding is remote because of the  restrictions  that would be imposed on
the  Company's  ability to declare or pay dividends or  distributions  on, or to
redeem, purchase,  acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal,  interest or premium on, or repay,  repurchase or redeem,  any of its
debt securities that rank pari passu in all respects with, or junior in interest
to, the Debentures.

Section  6.    Representations and Warranties  of  the  Placement  Agents.  Each
               ----------------------------------------------------------
Placement Agent represents and warrants to the Offerors as to itself (but not as
to the other Placement Agent) as follows:

         6.1. Organization, Standing and Qualification.
              ----------------------------------------

               (a) FTN   Financial  Capital  Markets  is  a  division  of  First
Tennessee  Bank  National  Association,  a  national  banking  association  duly
organized,  validly  existing and in good standing  under the laws of the United
States,  with full power and authority to own,  lease and operate its properties
and conduct its business as currently  being  conducted.  FTN Financial  Capital
Markets is duly qualified to transact  business as a foreign  corporation and is
in good standing in each other  jurisdiction in which it owns or leases property
or conducts its business so as to require  such  qualification  and in which the
failure to so qualify would,  individually or in the aggregate,  have a material
adverse effect on the condition  (financial or otherwise),  earnings,  business,
prospects or results of operations of FTN Financial Capital Markets.

               (b) Keefe,   Bruyette  &  Woods,  Inc.   is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
New York, with full power and authority to own, lease and operate its properties
and conduct its business as currently being conducted.  Keefe, Bruyette & Woods,
Inc. is duly qualified to transact  business as a foreign  corporation and is in
good standing in each other  jurisdiction in which it owns or leases property or
conducts  its  business  so as to require  such  qualification  and in which the
failure to so qualify would,  individually or in the aggregate,  have a material
adverse effect on the condition  (financial or otherwise),  earnings,  business,
prospects or results of operations of Keefe, Bruyette & Woods, Inc.

         6.2.  Power and Authority.  The Placement Agent has all requisite power
               -------------------
and authority to enter into this Agreement, and this Agreement has been duly and
validly   authorized,   executed  and  delivered  by  the  Placement  Agent  and
constitutes  the legal,  valid and binding  agreement  of the  Placement  Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
Bankruptcy  and  Equity  and  except  as  any  indemnification  or  contribution
provisions thereof may be limited under applicable securities laws.

         6.3.  General  Solicitation.  In the case of the  offer and sale of the
               ---------------------
Capital Securities,  no form of general  solicitation or general advertising was
used by the Placement Agent or its  representatives  including,  but not limited
to, advertisements,  articles,  notices or other communications published in any
newspaper,  magazine or similar medium or broadcast over  television or radio or
any  seminar  or  meeting  whose  attendees  have been  invited  by any  general
solicitation or general advertising.
<PAGE>

         6.4.  Purchasers.  The Placement Agent has made such reasonable inquiry
               ----------
as is  necessary  to determine  that each  Purchaser  is  acquiring  the Capital
Securities for its own account,  except as  contemplated  in Section 7.8 hereto,
and that the  Purchasers do not intend to distribute  the Capital  Securities in
contravention of the Securities Act or any other applicable securities laws.

         6.5.  Qualified Purchasers. The Placement Agent has not offered or sold
               --------------------
and will not arrange for the offer or sale of the Capital  Securities except (i)
to those the Placement Agent reasonably believes are "accredited  investors" (as
defined in Rule 501 of Regulation D), (ii) in an offshore transaction  complying
with  Rule 903 of  Regulation  S, or (iii) in any  other  manner  that  does not
require  registration  of the Capital  Securities  under the Securities  Act. In
connection  with  each such  sale,  the  Placement  Agent has taken or will take
reasonable  steps to ensure that the  purchasers  is aware that (a) such sale is
being made in reliance on an exemption  under the  Securities Act and (b) future
transfers of the Capital  Securities  will not be made except in compliance with
applicable securities laws.

         6.6.  Offering   Circulars.   Neither  the  Placement  Agent  nor   its
               --------------------
representatives  will include any non-public  information about the Company, the
Trust or any of their  affiliates  in any  registration  statement,  prospectus,
offering  circular or private  placement  memorandum used in connection with any
purchase of Capital  Securities  without the prior written  consent of the Trust
and the Company.

Section  7.    Covenants of the Offerors.  The Offerors  covenant and agree with
               -------------------------
the Placement Agents and the Purchasers as follows:

         7.1.  Compliance with Representations and Warranties. During the period
               ----------------------------------------------
from the date of this  Agreement to the Closing  Date,  the  Offerors  shall use
their best efforts and take all action  necessary or  appropriate to cause their
representations  and  warranties  contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the  transactions  contemplated by this
Agreement, as if made on and as of the Closing Date.

         7.2.  Sale and  Registration  of  Securities.  The  Offerors  and their
               --------------------------------------
Affiliates  shall not nor shall any of them  permit any  person  acting on their
behalf (other than the Placement  Agents),  to directly or indirectly  (i) sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the  Securities  Act) that would or could be  integrated
with the sale of the  Capital  Securities  in a manner  that would  require  the
registration  under the  Securities Act of the Securities or (ii) make offers or
sales of any such Security,  or solicit  offers to buy any such Security,  under
circumstances  that would  require the  registration  of any of such  Securities
under the Securities Act.

         7.3.  Use of Proceeds.  The  Trust shall use the proceeds from the sale
               ---------------
of  the  Capital Securities and the Common Securities to purchase the Debentures
from the Company.

         7.4.  Investment  Company. The Offerors shall not engage, or permit any
               -------------------
Subsidiary to engage,  in any activity which would cause it or any Subsidiary to
be an "investment company" under the provisions of the Investment Company Act.

         7.5.  Reimbursement of Expenses.  If the sale of the Capital Securities
               -------------------------
provided for herein is not  consummated  (i) because any  condition set forth in
Section 3 hereof is not satisfied, or (ii) because of any refusal,  inability or
failure on the part of the Company or the Trust to perform any agreement  herein
or comply  with any  provision  hereof  other  than by reason of a breach by the
Placement  Agents,  the Company shall reimburse the Placement Agents upon demand
for all of their pro rata share of out-of-pocket  expenses (including reasonable
fees and  disbursements  of counsel) in an amount not to exceed  $50,000.00 that
shall have been  incurred by them in connection  with the proposed  purchase and
sale of the Capital Securities. Notwithstanding the foregoing, the Company shall
have no obligation to reimburse  the  Placement  Agents for their  out-of-pocket
expenses  if the sale of the  Capital  Securities  fails to  occur  because  the
Placement Agents fail to fulfill a condition set forth in Section 4.
<PAGE>

         7.6.  Directed  Selling  Efforts,   Solicitation  and  Advertising.  In
               ------------------------------------------------------------
connection with any offer or sale of any of the  Securities,  the Offerors shall
not,  nor shall  either of them  permit  any of their  Affiliates  or any person
acting on their behalf,  other than the Placement  Agents,  to (i) engage in any
"directed selling efforts" within the meaning of Regulation S, or (ii) engage in
any  form  of  general  solicitation  or  general  advertising  (as  defined  in
Regulation D).

         7.7.  Compliance with Rule 144A(d)(4) under the Securities Act. So long
               --------------------------------------------------------
as any of the Securities are outstanding and are "restricted  securities" within
the meaning of Rule  144(a)(3)  under the  Securities  Act, the  Offerors  will,
during  any  period in which  they are not  subject  to and in  compliance  with
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange Act"), or the Offerors are not exempt from such reporting requirements
pursuant  to and in  compliance  with Rule  12g3-2(b)  under the  Exchange  Act,
provide to each holder of such  restricted  securities  and to each  prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective  purchaser in connection with any proposed
transfer,  any information  required to be provided by Rule 144A(d)(4) under the
Securities  Act, if applicable.  This covenant is intended to be for the benefit
of the holders, and the prospective  purchasers designated by such holders, from
time to time of such  restricted  securities.  The  information  provided by the
Offerors pursuant to this Section 7.7 will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

         7.8.  Transfer  Notice.  The Offerors  acknowledge that First Tennessee
               ----------------
Bank  National   Association   ("First  Tennessee")  may  transfer  the  Capital
Securities that it is purchasing, in whole or in part, at any time and from time
to time  following  the Closing  Date by  delivering  the notice (the  "Transfer
Notice") attached as Exhibit B to the Master Custodian Agreement,  dated May 27,
                     ---------
2004 and  attached  as Exhibit A to the  Subscription  Agreement  to which First
                       ---------
Tennessee is a party.  In order to facilitate  such transfer,  the Company shall
execute  in  blank  five  additional  Capital  Securities  certificates,  to  be
delivered at Closing,  such  certificates  to be completed  with the name of the
transferee(s)  to which the  Capital  Securities,  in whole or in part,  will be
transferred  upon the  receipt of a Transfer  Notice  and  authenticated  by the
Institutional Trustee at the time of each such transfer.

         7.9.  Quarterly Reports. Within  50  days  of  the end of each calendar
               -----------------
year quarter and within 100 days of the end of each calendar  year during  which
the Debentures are issued and outstanding, the Offerors shall submit to The Bank
of  New  York   a  completed  quarterly  report in  the  form attached hereto as
Exhibit D, with a copy provided to First  Tennessee  during the  period when  it
---------
holds any of the Capital  Securities.  If First Tennessee  transfers the Capital
Securities  as  contemplated  by  Section  7.8,  in  addition  to the  reporting
obligations of the Offerors to The Bank of New York and First Tennessee provided
for in this Section 7.9, the Offerors shall submit to the trustee  designated in
the Transfer Notice such periodic  reports as may be required by such trustee in
the form and at such times as such trustee may require. The Offerors acknowledge
and  agree  that  The  Bank of New York  and  such  designated  trustee  and its
successors and assigns are third party beneficiaries of this Section 7.9.

Section  8.    Covenants of the Placement Agents.  The Placement Agents covenant
               ---------------------------------
and  agree  with  the Offerors  that,  during  the  period from the date of this
Agreement to the Closing Date, the Placement Agents shall use their best efforts
and take all action necessary or appropriate to cause their  representations and
warranties  contained in Section 6 to be true as of Closing  Date,  after giving
effect to the transactions  contemplated by this Agreement, as if made on and as
of the Closing Date.  The  Placement  Agents  further  covenant and agree not to
engage in hedging  transactions  with respect to the Capital  Securities  unless
such transactions are conducted in compliance with the Securities Act.
<PAGE>

Section  9.    Indemnification.
               ---------------

         9.1.  Indemnification   Obligation.  The  Offerors  shall  jointly  and
               ----------------------------
severally  indemnify and hold harmless the Placement  Agents and the  Purchasers
and each of their respective agents, employees,  officers and directors and each
person that controls either of the Placement Agents or the Purchasers within the
meaning of Section 15 of the  Securities  Act or Section 20 of the Exchange Act,
and agents, employees,  officers and directors or any such controlling person of
either of the Placement Agents or the Purchasers (each such person or entity, an
"Indemnified  Party")  from and  against any and all  losses,  claims,  damages,
judgments,  liabilities or expenses, joint or several, to which such Indemnified
Party may become  subject  under the  Securities  Act, the Exchange Act or other
federal or state  statutory  law or  regulation,  or at common law or  otherwise
(including in settlement of any litigation,  if such settlement is effected with
the written consent of the Offerors),  insofar as such losses, claims,  damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon, or relate to, in whole or in part,  (a) any untrue  statement
or alleged  untrue  statement of a material  fact  contained in any  information
(whether  written or oral) or documents  executed in favor of, furnished or made
available to the Placement Agents or the Purchasers by the Offerors,  or (b) any
omission or alleged  omission to state in any  information  (whether  written or
oral) or  documents  executed in favor of,  furnished  or made  available to the
Placement  Agents or the  Purchasers by the Offerors a material fact required to
be stated  therein or necessary to make the statements  therein not  misleading,
and shall reimburse each  Indemnified  Party for any legal and other expenses as
such expenses are reasonably  incurred by such  Indemnified  Party in connection
with investigating,  defending, settling,  compromising or paying any such loss,
claim, damage, judgments, liability, expense or action described in this Section
9.1. In addition to their other  obligations  under this Section 9, the Offerors
hereby  agree  that,  as an interim  measure  during the  pendency of any claim,
action,  investigation,  inquiry or other  proceeding  arising  out of, or based
upon, or related to the matters  described above in this Section 9.1, they shall
reimburse each  Indemnified  Party on a quarterly basis for all reasonable legal
or other expenses  incurred in connection  with  investigating  or defending any
such claim, action, investigation, inquiry or other proceeding,  notwithstanding
the absence of a judicial  determination as to the propriety and  enforceability
of the possibility  that such payments might later be held to have been improper
by a court of  competent  jurisdiction.  To the  extent  that  any such  interim
reimbursement  payment is so held to have been improper,  each Indemnified Party
shall  promptly  return such amounts to the  Offerors  together  with  interest,
determined on the basis of the prime rate (or other commercial  lending rate for
borrowers of the highest credit  standing)  announced from time to time by First
Tennessee  Bank  National  Association  (the  "Prime  Rate").  Any such  interim
reimbursement payments which are not made to an Indemnified Party within 30 days
of a request for  reimbursement  shall bear  interest at the Prime Rate from the
date of such request.

         9.2.  Conduct of Indemnification Proceedings. Promptly after receipt by
               --------------------------------------
an Indemnified  Party under this Section 9 of notice of the  commencement of any
action,  such  Indemnified  Party shall,  if a claim in respect thereof is to be
made against the  Offerors  under this Section 9, notify the Offerors in writing
of the  commencement  thereof;  but,  subject to Section 9.4, the omission to so
notify the  Offerors  shall not  relieve  them from any  liability  pursuant  to
Section 9.1 which the Offerors may have to any  Indemnified  Party unless and to
the extent that the  Offerors  did not  otherwise  learn of such action and such
failure by the  Indemnified  Party results in the  forfeiture by the Offerors of
substantial rights and defenses.  In case any such action is brought against any
Indemnified  Party and such Indemnified Party seeks or intends to seek indemnity
from the Offerors, the Offerors shall be entitled to participate in, and, to the
extent that they may wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party; provided,  however, if the defendants in
                                        --------   -------
any such action  include  both the  Indemnified  Party and the  Offerors and the
Indemnified  Party shall have reasonably  concluded that there may be a conflict

<PAGE>

between the  positions of the Offerors and the  Indemnified  Party in conducting
the defense of any such action or that there may be legal defenses  available to
it and/or other  Indemnified  Parties which are different  from or additional to
those available to the Offerors,  the Indemnified  Party shall have the right to
select  separate  counsel  to  assume  such  legal  defenses  and  to  otherwise
participate in the defense of such action on behalf of such  Indemnified  Party.
Upon  receipt of notice  from the  Offerors to such  Indemnified  Party of their
election to so assume the defense of such action and approval by the Indemnified
Party of counsel,  the Offerors  shall not be liable to such  Indemnified  Party
under this Section 9 for any legal or other  expenses  subsequently  incurred by
such  Indemnified  Party in connection  with the defense  thereof unless (i) the
Indemnified  Party  shall have  employed  such  counsel in  connection  with the
assumption  of legal  defenses in  accordance  with the proviso in the preceding
sentence (it being  understood,  however,  that the Offerors shall not be liable
for the expenses of more than one separate counsel  representing the Indemnified
Parties who are parties to such  action),  or (ii) the  Offerors  shall not have
employed counsel  reasonably  satisfactory to the Indemnified Party to represent
the  Indemnified  Party within a reasonable time after notice of commencement of
the  action,  in each of which  cases the fees and  expenses  of counsel of such
Indemnified Party shall be at the expense of the Offerors.

         9.3.  Contribution. If the indemnification provided for in this Section
               ------------
9 is required by its terms,  but is for any reason held to be  unavailable to or
otherwise  insufficient to hold harmless an Indemnified  Party under Section 9.1
in respect of any losses, claims,  damages,  liabilities or expenses referred to
herein or therein,  then the  Offerors  shall  contribute  to the amount paid or
payable by such Indemnified  Party as a result of any losses,  claims,  damages,
judgments,  liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the  Indemnified  Party,  on the other hand,  from the offering of
such Capital Securities,  or (ii) if the allocation provided by clause (i) above
is not permitted by applicable  law, in such  proportion  as is  appropriate  to
reflect not only the relative  benefits referred to in clause (i) above but also
the relative fault of the Offerors,  on the one hand, and the Placement  Agents,
on  the  other  hand,  in  connection   with  the  statements  or  omissions  or
inaccuracies  in the  representations  and  warranties  herein or other breaches
which  resulted in such  losses,  claims,  damages,  judgments,  liabilities  or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits  received by the Offerors,  on the one hand, and the Placement
Agents, on the other hand, shall be deemed to be in the same proportion,  in the
case of the  Offerors,  as the total price paid to the  Offerors for the Capital
Securities sold by the Offerors to the Purchasers (net of the compensation  paid
to the Placement Agents hereunder,  but before deducting  expenses),  and in the
case of the Placement Agents, as the compensation received by them, bears to the
total of such amounts paid to the Offerors and received by the Placement  Agents
as  compensation.  The relative  fault of the Offerors and the Placement  Agents
shall be  determined  by reference  to, among other  things,  whether the untrue
statement  or alleged  untrue  statement  of a material  fact or the omission or
alleged omission of a material fact or the inaccurate or the alleged  inaccurate
representation  and/or warranty relates to information  supplied by the Offerors
or the Placement Agents and the parties' relative intent,  knowledge,  access to
information  and  opportunity  to correct or prevent such statement or omission.
The provisions  set forth in Section 9.2 with respect to notice of  commencement
of any action shall apply if a claim for contribution is made under this Section
9.3; provided, however, that no additional notice shall be required with respect
     --------  -------
to any action for which notice has been given under  Section 9.2 for purposes of
indemnification.  The Offerors and the Placement  Agents agree that it would not
be just  and  equitable  if  contribution  pursuant  to this  Section  9.3  were
determined by pro rata allocation or by any other method of allocation that does
not take  account of the  equitable  considerations  referred to in this Section
9.3.  The  amount  paid or payable  by an  Indemnified  Party as a result of the
losses, claims, damages, judgments,  liabilities or expenses referred to in this
Section 9.3 shall be deemed to  include,  subject to the  limitations  set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection  with  investigating  or defending any such action or claim. In no
event shall the liability of the Placement Agents hereunder be greater in amount
than the dollar  amount of the  compensation  (net of  payment of all  expenses)

<PAGE>

received by the Placement Agents upon the sale of the Capital  Securities giving
rise to such obligation. No person found guilty of fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  from  any  person  who was not  found  guilty  of such  fraudulent
misrepresentation.

         9.4.  Additional  Remedies.  The indemnity and contribution  agreements
               --------------------
contained in this Section 9 are in addition to any  liability  that the Offerors
may otherwise have to any Indemnified Party.

         9.5.  Additional  Indemnification. The Company shall indemnify and hold
               ---------------------------
harmless  the Trust  against  all loss,  liability,  claim,  damage and  expense
whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.

Section  10.   Rights and Responsibilities of Placement Agents.
               -----------------------------------------------

         10.1. Reliance.  In performing their duties under this Agreement,  the
               --------
Placement Agents shall be entitled to rely upon any notice, signature or writing
which  they  shall in good  faith  believe  to be  genuine  and to be  signed or
presented by a proper party or parties.  The Placement  Agents may rely upon any
opinions or certificates  or other documents  delivered by the Offerors or their
counsel or designees to either the Placement Agents or the Purchasers.

         10.2. Rights of Placement Agents. In connection with the performance of
               --------------------------
their duties under this Agreement,  the Placement Agents shall not be liable for
any error of  judgment  or any action  taken or  omitted to be taken  unless the
Placement  Agents were  grossly  negligent or engaged in willful  misconduct  in
connection  with such  performance  or  non-performance.  No  provision  of this
Agreement  shall require the Placement  Agents to expend or risk their own funds
or  otherwise  incur any  financial  liability  on behalf of the  Purchasers  in
connection with the performance of any of their duties hereunder.  The Placement
Agents  shall be under no  obligation  to  exercise  any of the rights or powers
vested in them by this Agreement.

Section  11.   Miscellaneous.
               -------------

         11.1. Disclosure  Schedule.  The  term  "Disclosure  Schedule," as used
               --------------------
herein,  means the schedule,  if any, attached to this Agreement that sets forth
items the disclosure of which is necessary or appropriate as an exception to one
or more representations or warranties  contained in Section 5 hereof;  provided,
that  any item  set  forth  in the  Disclosure  Schedule  as an  exception  to a
representation  or warranty  shall be deemed an admission  by the Offerors  that
such  item  represents  an  exception,  fact,  event  or  circumstance  that  is
reasonably  likely  to result  in a  Material  Adverse  Effect.  The  Disclosure
Schedule shall be arranged in paragraphs  corresponding  to the section  numbers
contained  in Section  5.  Nothing in the  Disclosure  Schedule  shall be deemed
adequate to disclose an exception to a  representation  or warranty  made herein
unless  the  Disclosure   Schedule  identifies  the  exception  with  reasonable
particularity  and describes the relevant  facts in reasonable  detail.  Without
limiting the generality of the immediately preceding sentence,  the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure  Schedule
shall not be deemed  adequate to disclose an  exception to a  representation  or
warranty  made herein unless the  representation  or warranty has to do with the
existence  of the  document or other item  itself.  Information  provided by the
Company in response to any due diligence  questionnaire shall not be deemed part
of the Disclosure  Schedule and shall not be deemed to be an exception to one or
more  representations  or  warranties  contained in Section 5 hereof unless such
information is  specifically  included on the Disclosure  Schedule in accordance
with the provisions of this Section 11.1.

         11.2. Legal Expenses.  At Closing, the Placement Agents shall provide a
               --------------
credit for the  Offerors'  transaction-related  legal  expenses in the amount of
$10,000.00.
<PAGE>

         11.3. Non-Disclosure.  Except  as required by applicable law, including
               --------------
without limitation securities laws and regulations promulgated  thereunder,  (i)
the Offerors  shall not, and will cause their advisors and  representatives  not
to, issue any press release or other public statement regarding the transactions
contemplated  by this  Agreement or the Operative  Documents  prior to or on the
Closing Date and (ii) following the Closing Date, the Offerors shall not include
in any press release,  other public statement or other  communication  regarding
the transactions  contemplated by this Agreement or the Operative Documents, any
reference to the Placement Agents,  WTC, the Purchaser,  the term "PreTS" or any
derivations thereof.  Notwithstanding anything to the contrary, the Offerors may
(1) consult any tax advisor  regarding U.S.  federal income tax treatment or tax
structure of the transaction contemplated under this Agreement and the Operative
Documents  and (2) disclose to any and all persons,  without  limitation  of any
kind, the U.S. Federal income tax structure (in each case, within the meaning of
Treasury  Regulation ss.  1.6011-4) of the transaction  contemplated  under this
Agreement and the Operative  Documents and all materials of any kind  (including
opinions or other tax  analyses)  that are  provided to you relating to such tax
treatment and tax structure. For this purpose, "tax structure" is limited to any
facts relevant to the U.S.  federal income tax treatment of the  transaction and
does not include information relating to identity of the parties.

         11.4. Notices.  Prior  to the Closing,  and thereafter  with respect to
               -------
matters pertaining to this Agreement only, all notices and other  communications
provided for or permitted  hereunder shall be made in writing by  hand-delivery,
first-class mail, telex,  telecopier or overnight air courier  guaranteeing next
day delivery:

         if to the Placement Agents, to:

                                  FTN Financial Capital Markets
                                  845 Crossover Lane, Suite 150
                                  Memphis, Tennessee  38117
                                  Telecopier:  901-435-4706
                                  Telephone:  800-456-5460
                                  Attention:  James D. Wingett

                                          and

                                  Keefe, Bruyette & Woods, Inc.
                                  787 7th Avenue
                                  4th Floor
                                  New York, New York  10019
                                  Telecopier:  212-403-2000
                                  Telephone:  212-403-1004
                                  Attention:  Mitchell Kleinman, General Counsel

         with a copy to:

                                  Lewis, Rice & Fingersh, L.C.
                                  500 North Broadway, Suite 2000
                                  St. Louis, Missouri  63102
                                  Telecopier:  314-241-6056
                                  Telephone:  314-444-7600
                                  Attention:  Thomas C. Erb, Esq.

                                          and


<PAGE>

                                  Sidley Austin Brown & Wood LLP
                                  787 7th Avenue
                                  New York, New York  10019
                                  Telecopier:  212-839-5599
                                  Telephone:  212-839-5300
                                  Attention:  Renwick Martin, Esq.

         if to the Offerors, to:

                                  First Banks, Inc.
                                  135 North Meramec Avenue
                                  Clayton, Missouri  63105
                                  Telecopier:  314-592-6621
                                  Telephone:  314-592-6603
                                  Attention:  Lisa K. Vansickle

         with a copy to:

                                  Stinson Morrison Hecker LLP
                                  1201 Walnut Street
                                  Kansas City, Missouri  64106
                                  Telecopier:  816-474-4208
                                  Telephone:  816-691-3351
                                  Attention:  C. Robert Monroe, Esq.

         All such notices and  communications  shall be deemed to have been duly
given (i) at the time  delivered by hand,  if  personally  delivered,  (ii) five
business days after being  deposited in the mail,  postage  prepaid,  if mailed,
(iii) when  answered  back,  if telexed,  (iv) the next business day after being
telecopied,  or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing,  the  foregoing  notice  provisions  shall be  superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Offerors,  and their respective counsel, may change their respective
notice  addresses  from time to time by written  notice to all of the  foregoing
persons.

         11.5. Parties in Interest,  Successors and Assigns. Except as expressly
               --------------------------------------------
set forth herein, this Agreement is made solely for the benefit of the Placement
Agents, the Purchasers and the Offerors and any person controlling the Placement
Agents,  the  Purchasers  or the Offerors and their  respective  successors  and
assigns;  and no other person shall acquire or have any right under or by virtue
of this  Agreement.  This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties.

         11.6. Counterparts.  This  Agreement  may  be  executed  by the parties
               ------------
hereto in separate counterparts,  each of which when so executed shall be deemed
to be an original and all of which taken together  shall  constitute one and the
same agreement.

         11.7. Headings.  The  headings in this Agreement are for convenience of
               --------
reference only and shall not limit or otherwise affect the meaning hereof.

         11.8. Governing Law. THIS  AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
               -------------
IN ACCORDANCE  WITH THE INTERNAL LAWS (AND NOT THE LAWS  PERTAINING TO CONFLICTS
OF LAWS) OF THE STATE OF NEW YORK.
<PAGE>

         11.9. Entire  Agreement.  This  Agreement,  together with the Operative
               -----------------
Documents and the other documents  delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive  statement of the
agreement  and  understanding  of the  parties  hereto in respect of the subject
matter  contained  herein  and  therein.  There are no  restrictions,  promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This  Agreement,  together with the Operative  Documents and the other
documents  delivered in connection  with the  transaction  contemplated  by this
Agreement,  supersedes  all prior  agreements  and  understandings  between  the
parties with respect to such subject matter.

        11.10. Severability.  In   the   event  that  any  one  or  more  of the
               ------------
provisions contained herein, or the application thereof in any circumstances, is
held  invalid,  illegal or  unenforceable  in any respect  for any  reason,  the
validity,  legality  and  enforceability  of any such  provision  in every other
respect and of the remaining  provisions hereof shall not be in any way impaired
or  affected,  it being  intended  that  all of the  Placement  Agents'  and the
Purchasers'  rights and  privileges  shall be  enforceable to the fullest extent
permitted by law.

        11.11. Survival.  The Placement  Agents and the Offerors,  respectively,
               --------
agree that the  representations,  warranties and agreements made by each of them
in this Agreement and in any certificate or other instrument  delivered pursuant
hereto shall remain in full force and effect and shall  survive the delivery of,
and payment for, the Capital Securities.

                     Signatures appear on the following page



<PAGE>


         If this Agreement is satisfactory to you, please so indicate by signing
the  acceptance of this  Agreement and deliver such  counterpart to the Offerors
whereupon this Agreement will become binding  between us in accordance  with its
terms.

                                              Very truly yours,

                                              FIRST BANK, INC.


                                              By: /s/  Allen H. Blake
                                                 -------------------------------
                                              Name:    Allen H. Blake
                                                   -----------------------------
                                              Title:   President and
                                                       Chief Executive Officer
                                                   ----------------------------


                                              FIRST BANK STATUTORY TRUST II


                                              By: /s/  Allen H. Blake
                                                 -------------------------------
                                              Name:    Allen H. Blake
                                                   -----------------------------
                                              Title:   Administrator



CONFIRMED AND ACCEPTED,
as of the date first set forth above

FTN FINANCIAL CAPITAL MARKETS,
a division of First Tennessee Bank National Association,
as a Placement Agent


By: /s/    James D. Wingett
   ----------------------------------------------------
Name:      James D. Wingett
     --------------------------------------------------
Title:     Senior Vice President
      -------------------------------------------------


KEEFE, BRUYETTE & WOODS, INC.,
a New York corporation, as a Placement Agent


By:  /s/   Peter J. Wirth
    ---------------------------------------------------
Name:      Peter J. Wirth
     --------------------------------------------------
Title:     Managing Director
      -------------------------------------------------


<PAGE>


                                   EXHIBIT A-1
                                   -----------
                         FORM OF SUBSCRIPTION AGREEMENT
                         ------------------------------
                          FIRST BANK STATUTORY TRUST II
                                FIRST  BANKS, INC.

                             SUBSCRIPTION AGREEMENT

                               September 20, 2004

         THIS  SUBSCRIPTION  AGREEMENT (this  "Agreement") made among First Bank
Statutory  Trust II (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  et seq.),  First Banks,  Inc., a Missouri  corporation,  with its
principal offices located at 135 North Meramec Avenue,  Clayton,  Missouri 63105
(the "Company" and,  collectively  with the Trust,  the  "Offerors"),  and First
Tennessee Bank National Association (the "Purchaser").

                                    RECITALS:

         A.    The Trust desires to issue 20,000 of its  Floating  Rate  Capital
Securities (the "Capital Securities"),  liquidation amount $1,000.00 per Capital
Security,  representing  an undivided  beneficial  interest in the assets of the
Trust  (the  "Offering"),  to be issued  pursuant  to an  Amended  and  Restated
Declaration of Trust (the  "Declaration")  by and among the Company,  Wilmington
Trust Company ("WTC"),  the  administrators  named therein,  and the holders (as
defined therein),  which Capital  Securities are to be guaranteed by the Company
with respect to  distributions  and payments upon  liquidation,  redemption  and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and

         B.    The proceeds from  the  sale of the  Capital  Securities  will be
combined  with the  proceeds  from the sale by the Trust to the  Company  of its
common  securities,  and will be used by the  Trust to  purchase  an  equivalent
amount of Floating Rate Junior  Subordinated  Deferrable  Interest Debentures of
the  Company  (the  "Debentures")  to be issued by the  Company  pursuant  to an
indenture to be executed by the Company and WTC, as trustee  (the  "Indenture");
and

         C.    In consideration of the premises and  the  mutual representations
and covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

         1.1.  Upon the execution of this Agreement, the Purchaser hereby agrees
to  purchase  from  the  Trust  2,150  Capital  Securities  at a price  equal to
$1,000.00 per Capital  Security (the  "Purchase  Price") and the Trust agrees to
sell such Capital  Securities  to the Purchaser  for said  Purchase  Price.  The
rights  and  preferences  of  the  Capital  Securities  are  set  forth  in  the
Declaration.  The Purchase  Price is payable in immediately  available  funds on
September  20,  2004,  or such other  business day as may be  designated  by the
Purchaser,  but in no event later than September 30, 2004 (the "Closing  Date").
The Offerors  shall provide the Purchaser  wire transfer  instructions  no later
than 1 day following the date hereof.

         1.2.  As a  condition  to  its  purchase  of  the  Capital  Securities,
Purchaser  shall  enter  into the  Joinder  Agreement  to the  Master  Custodian
Agreement,  the form of which is  attached  hereto as Exhibit A (the  "Custodian

<PAGE>

Agreement")  and,  in  accordance  therewith,  the  certificate  for the Capital
Securities  shall be delivered by the Trust on the Closing Date to the custodian
in accordance  with the Custodian  Agreement.  Purchaser  shall not transfer the
Capital  Securities to any person or entity except in accordance  with the terms
of the Custodian Agreement.

         1.3.  The Placement Agreement, dated September 10, 2004 (the "Placement
Agreement"), among the Offerors and the placement agents identified therein (the
"Placement Agents") includes certain  representations and warranties,  covenants
and conditions to closing and certain other matters governing the Offering.  The
Placement  Agreement is hereby incorporated by reference into this Agreement and
the Purchaser shall be entitled to each of the benefits of the Placement  Agents
and the Purchaser under the Placement Agreement and shall be entitled to enforce
the  obligations of the Offerors  under such Placement  Agreement as fully as if
the Purchaser were a party to such Placement Agreement.

         1.4.  Anything  herein  or  in the Placement Agreement notwithstanding,
the Offerors  acknowledge and agree that, so long as Purchaser holds some or all
of the Capital Securities, the Purchaser may in its discretion from time to time
transfer or sell,  or sell or grant  participation  interests in, some or all of
such  Capital  Securities  to  one or  more  parties,  provided  that  any  such
transaction complies, as applicable,  with the registration  requirements of the
Securities  Act of  1933,  as  amended  (the  "Securities  Act")  and any  other
applicable  securities  laws,  is  pursuant  to an  exemption  therefrom,  or is
otherwise not subject thereto.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         2.1.  The  Purchaser  understands  and  acknowledges  that  none of the
Capital Securities,  the Debentures nor the Guarantee have been registered under
the Securities Act or any other applicable securities law, are being offered for
sale  by  the  Trust  in  transactions  not  requiring  registration  under  the
Securities Act, and may not be offered,  sold, pledged or otherwise  transferred
by the Purchaser except in compliance with the registration  requirements of the
Securities Act or any other applicable securities laws, pursuant to an exemption
therefrom or in a transaction not subject thereto.

         2.2.  The  Purchaser  represents   and   warrants   that,   except   as
contemplated  under Section 1.4 hereof, it is purchasing the Capital  Securities
for its own  account,  for  investment,  and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of the Securities
Act or other applicable  securities laws, subject to any requirement of law that
the  disposition  of its property be at all times within its control and subject
to its  ability to resell  such  Capital  Securities  pursuant  to an  effective
registration  statement under the Securities Act or under Rule 144A or any other
exemption  from  registration  available  under the  Securities Act or any other
applicable securities law.

         2.3.  The Purchaser  represents  and warrants that neither the Offerors
nor the  Placement  Agents are acting as a fiduciary or financial or  investment
adviser for the Purchaser.

         2.4.  The Purchaser represents and warrants that it is not relying (for
purposes  of making any  investment  decision  or  otherwise)  upon any  advice,
counsel or  representations  (whether written or oral) of the Offerors or of the
Placement Agents.

         2.5.  The Purchaser  represents  and warrants that (a) it has consulted
with  its own  legal,  regulatory,  tax,  business,  investment,  financial  and
accounting  advisers  in  connection  herewith  to  the  extent  it  has  deemed
necessary,  (b) it has had a  reasonable  opportunity  to ask  questions  of and
receive  answers from officers and  representatives  of the Offerors  concerning
their respective  financial condition and results of operations and the purchase
of the Capital  Securities,  and any such  questions  have been  answered to its
satisfaction,  (c) it has had the  opportunity to review all publicly  available

<PAGE>

records and filings  concerning the Offerors and it has carefully  reviewed such
records and filings that it considers relevant to making an investment decision,
and (d) it has made its own  investment  decisions  based upon its own judgment,
due diligence  and advice from such advisers as it has deemed  necessary and not
upon any view expressed by the Offerors or the Placement Agents.

         2.6.  The Purchaser  represents  and  warrants  that it is a "qualified
institutional buyer" as defined under Rule 144A under the Securities Act. If the
Purchaser is a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A
under the Securities Act, it owns and invests on a discretionary  basis not less
than U.S.  $25,000,000.00  in securities of issuers that are not affiliated with
it. The Purchaser is not a participant-directed  employee plan, such as a 401(k)
plan,  or any  other  type of plan  referred  to in  paragraph  (a)(1)(i)(D)  or
(a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F)
of Rule 144A that holds the assets of such a plan, unless  investment  decisions
with respect to the plan are made solely by the fiduciary, trustee or sponsor of
such plan.

         2.7.  The Purchaser  represents  and warrants that on each day from the
date on which it acquires the Capital  Securities through and including the date
on which it disposes of its interests in the Capital  Securities,  either (i) it
is not (a) an "employee  benefit plan" (as defined in Section 3(3) of the United
States Employee  Retirement  Income Security Act of 1974, as amended  ("ERISA"))
                                                                        -----
which is subject to the  provisions of Part 4 of Subtitle B of Title I of ERISA,
or any entity whose  underlying  assets  include the assets of any such plan (an
"ERISA  Plan"),  (b) any other "plan" (as defined in Section  4975(e)(1)  of the
 -----------
United States  Internal  Revenue Code of 1986, as amended (the "Code")) which is
                                                                ----
subject  to the  provisions  of  Section  4975 of the Code or any  entity  whose
underlying assets include the assets of any such plan (a "Plan"),  (c) an entity
                                                          ----
whose underlying  assets include the assets of any such ERISA Plan or other Plan
by reason of Department of Labor regulation section 2510.3-101 or otherwise,  or
(d) a governmental or church plan that is subject to any federal, state or local
law which is substantially  similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code (a "Similar  Law");  or (ii) the purchase,  holding and
                             ------------
disposition of the Capital  Securities by it will satisfy the  requirements  for
exemptive relief under Prohibited  Transaction  Class Exemption  ("PTCE") 84-14,
                                                                   ----
PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar exemption, or, in the
case of a plan  subject  to a  Similar  Law,  will not  result  in a  non-exempt
violation of such Similar Law.

         2.8.  The Purchaser  represents  and warrants  that it is acquiring the
Capital  Securities as principal for its own account for investment  and, except
as  contemplated  under Section 1.4 hereof,  not for sale in connection with any
distribution  thereof.  It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were not
specifically  solicited  from any person owning a beneficial  interest in it for
the purpose of enabling it to purchase any Capital Securities.  The Purchaser is
not a (i) partnership,  (ii) common trust fund or (iii) special trust,  pension,
profit  sharing or other  retirement  trust fund or plan in which the  partners,
beneficiaries  or  participants,  as  applicable,  may designate the  particular
investments to be made or the allocation of any investment  among such partners,
beneficiaries  or  participants,  and except as  contemplated  under Section 1.4
hereof, it agrees that it shall not hold the Capital  Securities for the benefit
of any other  person  and shall be the sole  beneficial  owner  thereof  for all
purposes  and that it shall  not sell  participation  interests  in the  Capital
Securities  or enter  into any  other  arrangement  pursuant  to which any other
person shall be entitled to a  beneficial  interest in the  distribution  on the
Capital Securities.  The Capital Securities  purchased directly or indirectly by
the Purchaser  constitute  an investment of no more than 40% of its assets.  The
Purchaser  understands  and agrees  that any  purported  transfer of the Capital
Securities to a purchaser which would cause the  representations  and warranties
of Section 2.6 and this Section 2.8 to be  inaccurate  shall be null and void ab
initio and the Offerors  retain the right to resell any Capital  Securities sold
to non-permitted transferees.
<PAGE>

         2.9.  The Purchaser represents  and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties  specified  herein,  and to consummate the transactions  contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.

         2.10. The  Purchaser  represents  and  warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.

         2.11. The  Purchaser  represents  and warrants that this  Agreement has
been duly authorized, executed and delivered by the Purchaser.

         2.12. The Purchaser  understands and acknowledges that the Company will
rely  upon  the   truth  and   accuracy   of  the   foregoing   acknowledgments,
representations,  warranties  and  agreements  and  agrees  that,  if any of the
acknowledgments,  representations,  warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate,  it
shall promptly notify the Company.

         2.13. The Purchaser understands that no public market exists for any of
the Capital  Securities,  and that it is unlikely that a public market will ever
exist for the Capital Securities.

                                  ARTICLE III

                                 MISCELLANEOUS

         3.1.  Any notice or other communication given hereunder shall be deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

            To the Offerors:          First Banks, Inc.
                                      135 North Meramec Avenue
                                      Clayton, Missouri  63105
                                      Attention:  Lisa K. Vansickle
                                      Fax:  314-592-6621

            To the Purchaser:         First Tennessee Bank National Association
                                      845 Crossover Lane, Suite 150
                                      Memphis, Tennessee  38117
                                      Attention:  David Work
                                      Fax:  901-435-7983

         Unless otherwise expressly provided herein,  notices shall be deemed to
have been  given on the date of  mailing,  except  notice of change of  address,
which shall be deemed to have been given when received.

         3.2.  This Agreement shall not be changed,  modified  or amended except
by a writing signed by the parties to be charged,  and this Agreement may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.
<PAGE>

         3.3.  Upon  the  execution  and  delivery  of  this  Agreement  by  the
Purchaser,  this  Agreement  shall become a binding  obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.

         3.4.  NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES  HERETO,  THE PARTIES  EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

         3.5.  The  parties  agree to  execute  and  deliver  all  such  further
documents,  agreements and instruments and take such other and further action as
may be  necessary  or  appropriate  to carry out the purposes and intent of this
Agreement.

         3.6.  This  Agreement  may be executed in one or more counterparts each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

         3.7.  In the  event  that any one or more of the  provisions  contained
herein,  or the  application  thereof  in any  circumstances,  is held  invalid,
illegal or unenforceable in any respect for any reason,  the validity,  legality
and  enforceability  of any such  provision  in every  other  respect and of the
remaining  provisions  hereof shall not be in any way  impaired or affected,  it
being  intended  that  all of the  Offerors'  and  the  Purchaser's  rights  and
privileges shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF,  this Agreement is agreed to and accepted as of the
day and year first written above.


FIRST TENNESSEE BANK NATIONAL ASSOCIATION


By:
   --------------------------------------
Print Name:
           ------------------------------
Title:
      -----------------------------------

                                         FIRST BANK, INC.

                                         By:
                                            ------------------------------------

                                         Name:
                                              ----------------------------------

                                         Title:
                                               ---------------------------------


                                         FIRST BANK STATUTORY TRUST II

                                         By:
                                            ------------------------------------

                                         Name:
                                              ----------------------------------

                                         Title:  Administrator





<PAGE>


                       EXHIBIT A TO SUBSCRIPTION AGREEMENT
                       -----------------------------------

                       FORM OF MASTER CUSTODIAN AGREEMENT

         This Master Custodian  Agreement (this "Agreement") is made and entered
into as of May 27,  2004 by and among each  purchaser  (each a  "Purchaser"  and
collectively the  "Purchasers")  that enters into a Joinder  Agreement  attached
hereto as Exhibit A (the  "Joinder  Agreement"),  Wilmington  Trust  Company,  a
Delaware banking  corporation (the  "Custodian") and each financial  institution
(each an "Issuer" and  collectively  the  "Issuers")  that enters into a Joinder
Agreement.  The Purchasers  and the Issuers are sometimes  referred to herein as
the "Interested Parties".

                                    RECITALS

         A.    The Purchasers intend  to  purchase  from  the  Issuers  or their
respective  statutory  business  trust  subsidiaries  Securities  issued by such
Issuers (the "Securities").

         B.    In order to facilitate any future  transfer of all or any portion
of the Securities by the  Purchasers,  the Interested  Parties intend to provide
for the custody of the Securities and certain other  securities on the terms set
forth herein.

         C.    The Custodian is willing to hold and  administer  such securities
and to distribute the securities  held by it in accordance with the agreement of
the  Interested  Parties and/or  arbitral or judicial  orders and decrees as set
forth in this Agreement.

         NOW,  THEREFORE,  in  consideration  of  the  foregoing,   the   mutual
covenants  herein  contained  and other  good and  valuable  consideration  (the
receipt,  adequacy  and  sufficiency  of which are  hereby  acknowledged  by the
parties by their execution hereof), the parties agree as follows:

1.  Joinder  Agreement.  On or  before  the  delivery  to the  Custodian  of any
    ------------------
Securities  issued by an Issuer,  such Issuer and the  applicable  Purchaser  or
Purchasers  shall enter into a Joinder  Agreement  substantially  in the form of
Exhibit A attached  hereto,  with such  additional  provisions as the Interested
Parties may wish to add from time to time. An executed copy of each such Joinder
Agreement  shall be  delivered  to the  Custodian on or before the date on which
such Issuer's  Securities are issued.  This Agreement and each Joinder Agreement
constitute the entire agreement among the Purchasers,  Issuers and the Custodian
pertaining to the subject matter hereof.

2.  Delivery of Securities. On  or  before  each  date on which an Issuer enters
    ----------------------
into a Joinder Agreement:

         (a) The  applicable  Issuer shall  deliver to  the  Custodian a signed,
         authenticated  certificate  representing  a beneficial interest in such
         Issuer's  Securities,  with  the Purchaser  designated as owner thereof
         (the   "Original   Securities").   The   Custodian   shall   have    no
         responsibility  for the genuineness,  validity,  market value, title or
         sufficiency for any intended purpose of the Original Securities.

         (b) The  applicable  Issuer shall deliver to the Custodian five signed,
         unauthenticated  and  undated  certificates with no holder  designated,
         each of which  when  completed  representing  a beneficial  interest in
         such Issuer's  Securities (the "Replacement Securities"). The Custodian
         shall have  no  responsibility  for the genuineness,  validity,  market
         value,   title  or  sufficiency  for   any  intended   purpose  of  the
         Replacement Securities.
<PAGE>

3.  Timing of Release from Custody. Upon receipt of a signed  transfer notice in
    ------------------------------
the form of  Exhibit  B to be  delivered  in  connection  with  the  Purchaser's
transfer of all or any portion of an Issuer's Securities,  on the effective date
set forth in such transfer notice, the Custodian shall:

         (a) Deliver the Original Securities  certificate  corresponding to the
         Issuer  identified in the transfer notice to Wilmington Trust Company,
         as Institutional Trustee under the Amended and Restated Declaration of
         Trust, dated as of the date of the applicable Joinder Agreement, among
         the Institutional  Trustee,  the Company and the administrators  named
         therein (the  "Declaration") or as Trustee under the Indenture,  dated
         as of the  date  of the  applicable  Joinder  Agreement,  between  the
         Company and the Trustee  (the  "Indenture"),  as  applicable,  for the
         purpose of canceling the applicable Original Securities certificate in
         accordance  with  the  terms  of the  Issuer's  Amended  and  Restated
         Declaration of Trust or Indenture, as applicable; and

         (b) Deliver the Replacement Securities  certificate(s) corresponding to
         the Issuer  identified in the transfer notice in  the amount designated
         in and in  accordance  with the  transfer  notice  for  the  purpose of
         completing and  authenticating the  applicable  Replacement  Securities
         certificate(s)   in   accordance   with  the   terms  of  the  Issuer's
         Declaration or Indenture, as applicable.

         The initial  term of this  Agreement  shall be  one year (the  "Initial
         Term").  Unless FTN  Financial  Capital  Markets  or Keefe,  Bruyette &
         Woods,  Inc.  shall  otherwise  notify  the Custodian in writing,  upon
         expiration of the  Initial Term,  this  Agreement  shall  automatically
         renew  for  an  additional   one-year  term   and  shall   continue  to
         automatically  renew  for succeeding  one-year terms until  terminated.
         Upon  termination  of this Agreement,  the Custodian and the Interested
         Parties  shall be released from all obligations  hereunder,  except for
         the  indemnification  obligations set forth in paragraphs 5(b) and 5(c)
         hereof.

4.  Concerning the Custodian.
    ------------------------

         (a) Each Interested  Party  acknowledges and agrees that  the Custodian
         (i) shall not be responsible for any of the agreements  referred  to or
         described    herein   (including   without   limitation   any  Issuer's
         Declaration  or Indenture relating to such Issuer's Securities), or for
         determining  or  compelling  compliance   therewith,   and  shall   not
         otherwise  be bound  thereby,  (ii)  shall be  obligated  only for  the
         performance of such duties as are expressly and specifically set  forth
         in this  Agreement  on its part to be  performed,  each of  which   are
         ministerial  (and shall not be construed to be  fiduciary)  in  nature,
         and no implied  duties or  obligations  of any kind shall be  read into
         this Agreement  against or on the part of  the  Custodian,  (iii) shall
         not be  obligated to take any legal or  other  action  hereunder  which
         might in its  judgment  involve  or  cause it to incur any  expense  or
         liability   unless  it  shall  have   been  furnished  with  acceptable
         indemnification,  (iv) may rely on  and shall be protected in acting or
         refraining   from  acting  upon   any  written   notice,   instruction,
         instrument,   statement,   certificate,   request  or  other   document
         furnished to it hereunder and believed by it to be genuine and  to have
         been  signed or  presented  by the  proper  person,  and shall  have no
         responsibility  for  determining  the  accuracy  thereof,   and (v) may
         consult counsel  satisfactory to  it, including  in-house counsel,  and
         the opinion or advice of such  counsel  in any  instance  shall be full
         and complete  authorization  and  protection  in  respect of any action
         taken,  suffered  or  omitted  by it  hereunder  in  good  faith and in
         accordance with the opinion or advice of such counsel.

         (b) The  Custodian  shall not be liable to anyone for any  action taken
         or  omitted  to be taken  by it  hereunder  except  in  the case of the
         Custodian's negligence or willful misconduct in breach of  the terms of
         this  Agreement.  In  no  event  shall  the  Custodian  be  liable  for
         indirect, punitive, special  or consequential damage or loss (including
         but not limited to  lost profits) whatsoever, even if the Custodian has
         been informed of  the  likelihood of such loss or damage and regardless
         of the form of action.
<PAGE>

         (c) The  Custodian  shall  have  no  more  or  less  responsibility  or
         liability  on  account  of any  action or  omission  of any  book-entry
         depository,  securities  intermediary or other subcustodian employed by
         the  Custodian  than   any  such  book-entry   depository,   securities
         intermediary or other  subcustodian has to the Custodian, except to the
         extent  that such  action or  omission  of any  book-entry  depository,
         securities  intermediary  or  other  subcustodian  was  caused  by  the
         Custodian's own negligence,  bad faith or willful misconduct in  breach
         of this Agreement.

         (d) The  recitals  contained herein shall be taken as the statements of
         each of  the Issuers and the  Purchaser,  and the Custodian  assumes no
         responsibility for  the correctness of the same. The Custodian makes no
         representations as  to the validity or sufficiency of this Agreement or
         the Securities.  The  Custodian shall not be accountable for the use or
         application  by any of  the Issuers or the Purchaser of any  Securities
         or the proceeds of any Securities.

5.  Compensation, Expense Reimbursement and Indemnification.
    -------------------------------------------------------

         (a) The  Custodian  shall be  compensated  pursuant to  a separate  fee
         agreement.

         (b) Each of the Interested Parties agrees,  jointly  and severally,  to
         reimburse the Custodian on demand for all costs and  expenses  incurred
         in  connection  with  the  administration  of  this  Agreement  or  the
         performance or observance of its duties  hereunder which are in  excess
         of its customary compensation for normal services hereunder,  including
         without limitation, payment of any legal fees and expenses  incurred by
         the Custodian in connection  with resolution of any claim by  any party
         hereunder.

         (c) Each of the Interested  Parties covenants and agrees,  jointly  and
         severally, to indemnify  the Custodian (and its directors, officers and
         employees)  and  hold it (and such  directors,  officers and employees)
         harmless  from  and  against  any  loss,  liability,  damage,  cost and
         expense of any  nature  incurred by the Custodian  arising out of or in
         connection  with  this  Agreement  or  with the  administration  of its
         duties  hereunder,  including but not  limited to  attorney's  fees and
         other costs and expenses of  defending or  preparing to defend  against
         any claim of  liability  unless and  except  to the  extent  such loss,
         liability, damage, cost and expense shall be caused by  the Custodian's
         negligence,  bad faith, or willful misconduct.  The  provisions in this
         paragraph 5 shall  survive the  expiration  of  this  Agreement and the
         resignation or removal of the Custodian.

6. Voting  Rights.  The  Custodian  shall be under no  obligation  to  preserve,
   --------------
protect or exercise rights in the Original Securities,  and shall be responsible
only for reasonable measures to maintain the physical  safekeeping  thereof, and
otherwise  to perform and observe such duties on its part as are  expressly  set
forth in this  Agreement.  The Custodian shall not be responsible for forwarding
to any  Interested  Party,  notifying any  Interested  Party with respect to, or
taking any action with respect to, any notice, solicitation or other document or
information,  written or otherwise, received from an issuer or other person with
respect  to the  Original  Securities,  including  but  not  limited  to,  proxy
material,  tenders, options, the pendency of calls and maturities and expiration
of rights.

7. Resignation.  The Custodian may at any time resign as Custodian  hereunder by
   -----------
giving  thirty (30) days' prior  written  notice of  resignation  to each of the
Interested Parties.  Prior to the effective date of the resignation as specified
in such notice,  the  Interested  Parties will issue to the  Custodian a written
instruction   authorizing   redelivery  of  the  Original   Securities  and  the
Replacement  Securities to a bank or trust company that they select as successor
to the Custodian  hereunder.  If, however,  the Interested Parties shall fail to
name  such a  successor  custodian  within  twenty  days  after  the  notice  of
resignation  from the Custodian,  the Purchasers  shall be entitled to name such
successor  custodian.  If no  successor  custodian  is named  by the  Interested
Parties  or the  Purchasers,  the  Custodian  may apply to a court of  competent
jurisdiction for appointment of a successor custodian.
<PAGE>

8. Dispute Resolution. It is understood and agreed that should any dispute arise
   ------------------
with respect to the delivery, ownership, right of possession, and/or disposition
of the Original Securities or the Replacement Securities, or should any claim be
made upon the Custodian,  the Original Securities or the Replacement  Securities
by a third party,  the Custodian upon receipt of notice of such dispute or claim
is authorized  and shall be entitled (at its sole option and election) to retain
in its  possession  without  liability  to anyone,  all or any of said  Original
Securities and Replacement Securities until such dispute shall have been settled
either by the mutual  written  agreement  of the parties  involved or by a final
order,  decree or judgment of a court in the United States of America,  the time
for perfection of an appeal of such order,  decree or judgment  having  expired.
The Custodian may, but shall be under no duty whatsoever to, institute or defend
any legal  proceedings  which relate to the Original  Securities and Replacement
Securities.

9.  Consent to Jurisdiction and Service.  Each of the Interested  Parties hereby
    ------------------------------------
absolutely  and  irrevocably  consents  and submits to the  jurisdiction  of the
courts in the State of Delaware and of any Federal  court  located in said State
in  connection  with any  actions  or  proceedings  brought  against  any of the
Interested Parties (or each of them) by the Custodian arising out of or relating
to this Agreement. In any such action or proceeding, the Interested Parties each
hereby  absolutely and  irrevocably  (i) waives any objection to jurisdiction or
venue,  (ii) waives personal service of any summons,  complaint,  declaration or
other  process,  and  (iii)  agrees  that  the  service  thereof  may be made by
certified or registered first-class mail directed to such party, as the case may
be, at their respective addresses in accordance with paragraph 10 hereof.

10. Force Majeure. The Custodian shall not be responsible for delays or failures
    -------------
in performance  resulting from acts beyond its control.  Such acts shall include
but  not be  limited  to acts of God,  strikes,  lockouts,  riots,  acts of war,
epidemics,   governmental   regulations   superimposed  after  the  fact,  fire,
communication line failures,  computer viruses,  power failures,  earthquakes or
other disasters.

11. Notices.
    -------

         (a) Any  notice  permitted or required  hereunder  shall be in writing,
         and  shall  be  sent by  personal  delivery,  overnight  delivery  by a
         recognized  courier  or  delivery  service,  mailed  by  registered  or
         certified  mail,  return receipt  requested,  postage  prepaid,  or  by
         confirmed facsimile accompanied by mailing of the  original on the same
         day by first class mail, postage prepaid,  in  each case the parties at
         their  address set forth  below (or to  such other  address as any such
         party may hereafter designate by written notice  to the other parties).

         If to an Issuer,  to the address  appearing on  such  Issuer's  Joinder
         Agreement

         If to the  Purchaser,  to the address  appearing  on  such  Purchaser's
         Joinder Agreement

         If to the Custodian:

         Wilmington Trust Company
         Rodney Square North
         1100 North Market Street
         Wilmington, Delaware  19890-1600
         Attention:  Chris Slaybaugh - Corporate Trust Administration
         Fax:  302-636-4140
<PAGE>

12. Miscellaneous.
    -------------

         (a)  Binding  Effect.   This  Agreement  shall  be  binding  upon  the
              ---------------
         respective parties hereto and their heirs,  executors,  successors and
         assigns.

         (b)  Modifications.  This  Agreement  may not be altered  or  modified
              -------------
         without the express written  consent of the parties  hereto.  No course
         of  conduct  shall  constitute  a  waiver  of  any  of  the  terms  and
         conditions  of  this  Agreement,  unless  such waiver is  specified  in
         writing, and then only to  the extent so specified.  A waiver of any of
         the terms and  conditions of  this  Agreement on one occasion shall not
         constitute a waiver of the other terms  of this  Agreement,  or of such
         terms and conditions on any other occasion.

         (c) Governing Law. This  Agreement  shall  be governed by and construed
             -------------
         in accordance with the internal laws of the State of Delaware.

         (d)  Reproduction  of  Documents.  This  Agreement  and  all  documents
              ---------------------------
         relating thereto, including, without  limitation, (a) consents, waivers
         and   modifications   which  may   hereafter   be  executed,   and  (b)
         certificates and other information  previously  or hereafter furnished,
         may be reproduced by any photographic,  photostatic, microfilm, optical
         disk, micro-card, miniature photographic  or other similar process. The
         parties  agree  that  any such  reproduction  shall  be  admissible  in
         evidence as  the  original  itself in any  judicial  or  administrative
         proceeding, whether or not the  original is in existence and whether or
         not such  reproduction  was  made by a party in the  regular  course of
         business, and that any  enlargement,  facsimile or further reproduction
         of such reproduction shall likewise be admissible in evidence.

         (e)   Counterparts.   This   Agreement  may   be  executed  in  several
               ------------
         counterparts,  each of which shall be deemed  an  original,  but all of
         which together shall constitute one and the same instrument.




                     signatures appear on the following page


<PAGE>



         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day first above written.


                            WILMINGTON TRUST COMPANY


                        By:
                            ----------------------------
                        Print Name:
                                   ------------------------
                        Title:
                               --------------------------




<PAGE>


                     EXHIBIT A TO MASTER CUSTODIAN AGREEMENT
                     ---------------------------------------

                            FORM OF JOINDER AGREEMENT
                            -------------------------

                               September 20, 2004

         This  Joinder  Agreement  (this  "Agreement")  is  entered  into  as of
September  20,  2004  by  First   Tennessee  Bank  National   Association   (the
"Purchaser") and First Banks, Inc. (the "Issuer").

                                    RECITALS

         A.    Wilmington  Trust  Company (the  "Custodian") is  party  to  that
certain  Master  Custodian  Agreement  dated as of May 27, 2004 (the  "Custodian
Agreement").

         B.    The   Custodian  Agreement  provides   that   certain   financial
institutions that have issued securities (or whose statutory trust  subsidiaries
have issued  securities) and the Purchaser of such securities will join into the
Custodian Agreement pursuant to the terms of a joinder agreement.

         C.    On the date hereof, Issuer is issuing securities to the Purchaser
and the  Issuer  and the  Purchaser  desire  to enter  into  this  Agreement  to
facilitate the subsequent transfer of the Issuer's securities by the Custodian.

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
herein  contained  and  other  good and  valuable  consideration  (the  receipt,
adequacy and  sufficiency of which are hereby  acknowledged by the Issuer by its
execution hereof), the Issuer agrees as follows:

         1.    Joinder. The Issuer and Purchaser  hereby  join in the  Custodian
               -------
Agreement and agree to be subject to, and bound by, the terms and  provisions of
the  Custodian  Agreement  that  are  ascribed  to  "Issuers"  and  "Purchasers"
respectively  therein  to the same  extent as if the Issuer  and  Purchaser  had
signed the Custodian Agreement as an original party thereto.

         2.    Notice.  Any notice permitted or required to be sent to an Issuer
               ------
under the Custodian Agreement shall be sent to the following address:

                            First Banks, Inc.
                            135 North Meramec Avenue
                            Clayton, Missouri 63105
                            Attention:  Lisa K. Vansickle

         Any notice  permitted  or required to be sent to a Purchaser  under the
Custodian Agreement shall be sent to the following address:

                            First Tennessee Bank National Association
                            845 Crossover Lane, Suite 150
                            Memphis, Tennessee  38117
                            Attention:  David Work

         3.    Termination.  This Agreement  and  the Purchaser's  and  Issuer's
               -----------
respective rights and obligations under the Custodian  Agreement shall terminate
upon the  transfer  of all of  Issuer's  securities  pursuant  to the  Custodian
Agreement.
<PAGE>

         4.    Entire  Agreement.  This Agreement and  the  Custodian  Agreement
               -----------------
constitute the entire  agreement  among the Purchaser,  Issuer and the Custodian
pertaining to the subject matter hereof.

         IN WITNESS WHEREOF, the Issuer and Purchaser have executed this
Agreement as of the day first above written.

                                  FIRST BANK, INC.



                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  FIRST TENNESSEE BANK NATIONAL ASSOCIATION



                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



<PAGE>


                     EXHIBIT B TO MASTER CUSTODIAN AGREEMENT
                     ---------------------------------------

                             FORM OF TRANSFER NOTICE

                                     [DATE]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-1600
Attention:  Corporate Trust Administration

Dear Sir or Madam:

         The  undersigned  hereby  notifies you of the transfer of [________] of
the Capital  Securities  of First Bank  Statutory  Trust II, such transfer to be
effective on [DATE OF TRANSFER]. In accordance with Section 7.9 of the Placement
Agreement dated September 10, 2004 between the Offerors and the placement agents
named therein (the "Placement  Agreement"),  periodic reports shall be delivered
to  [_______________]  on each March 20, June 20,  September  20 and December 20
during the term of the Capital Securities, commencing [___________], in the form
attached  thereto.  Capitalized  terms  used in this  notice  and not  otherwise
defined  shall  have  the  meanings  ascribed  to such  terms  in the  Placement
Agreement.

         The  undersigned  hereby  instructs  you as  Custodian  to deliver  the
Original  Securities  certificate to Wilmington Trust Company,  as Institutional
Trustee (the  "Trustee")  under the Amended and Restated Trust  Agreement  dated
September 20, 2004 among the Trustee,  First Banks, Inc. and the  administrative
trustees named therein (the "Trust  Agreement")  for  cancellation in accordance
with the terms of the Trust Agreement and to deliver the Replacement  Securities
certificate to the Trustee for  authentication  in accordance  with the terms of
the Trust Agreement.

         By copy of this notice, the Institutional  Trustee is hereby instructed
to make the Replacement  Securities certificate registered to [NAME, ADDRESS AND
IDENTITY OF TRANSFEREE] in the liquidation amount of [_________] and bearing the
identification  number "CUSIP NO.  [__________]" and to authenticate and deliver
the Replacement Securities certificate to [_____________].

                              FIRST TENNESSEE BANK NATIONAL ASSOCIATION


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------




cc:      First Banks, Inc.
         Wilmington Trust Company, as Trustee



<PAGE>

                                   EXHIBIT A-2
                                   -----------

                         FORM OF SUBSCRIPTION AGREEMENT
                         ------------------------------

                          FIRST BANK STATUTORY TRUST II
                                FIRST BANKS, INC.

                             SUBSCRIPTION AGREEMENT

                               September 20, 2004

         THIS  SUBSCRIPTION  AGREEMENT (this  "Agreement") made among First Bank
Statutory  Trust II (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  et seq.),  First Banks,  Inc., a Missouri  corporation,  with its
principal offices located at 135 North Meramec Avenue,  Clayton,  Missouri 63105
(the "Company" and, collectively with the Trust, the "Offerors"),  and Preferred
Term Securities XV, Ltd. (the "Purchaser").

                                    RECITALS:

         A.    The Trust desires to issue 20,000 of its  Floating  Rate  Capital
Securities (the "Capital Securities"),  liquidation amount $1,000.00 per Capital
Security,  representing  an undivided  beneficial  interest in the assets of the
Trust  (the  "Offering"),  to be issued  pursuant  to an  Amended  and  Restated
Declaration of Trust (the  "Declaration")  by and among the Company,  Wilmington
Trust Company ("WTC"),  the  administrators  named therein,  and the holders (as
defined therein),  which Capital  Securities are to be guaranteed by the Company
with respect to  distributions  and payments upon  liquidation,  redemption  and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and

         B.    The proceeds from  the  sale of the  Capital  Securities  will be
combined  with the  proceeds  from the sale by the Trust to the  Company  of its
common  securities,  and will be used by the  Trust to  purchase  an  equivalent
amount of Floating Rate Junior  Subordinated  Deferrable  Interest Debentures of
the  Company  (the  "Debentures")  to be issued by the  Company  pursuant  to an
indenture to be executed by the Company and WTC, as trustee  (the  "Indenture");
and

         C.    In  consideration of the premises and the mutual  representations
and covenants hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

         1.1.  Upon the execution of this Agreement, the Purchaser hereby agrees
to  purchase  from the  Trust  17,850  Capital  Securities  at a price  equal to
$1,000.00 per Capital  Security (the  "Purchase  Price") and the Trust agrees to
sell such Capital  Securities  to the Purchaser  for said  Purchase  Price.  The
rights  and  preferences  of  the  Capital  Securities  are  set  forth  in  the
Declaration.  The Purchase  Price is payable in immediately  available  funds on
September  20,  2004,  or such other  business day as may be  designated  by the
Purchaser,  but in no event later than September 30, 2004 (the "Closing  Date").
The Offerors  shall provide the Purchaser  wire transfer  instructions  no later
than 3 days prior to the Closing Date.

         1.2.  The certificate for the Capital  Securities shall be delivered by
the Trust on the Closing Date to the Purchaser or its designee.
<PAGE>

         1.3.  The Placement Agreement, dated September 10, 2004 (the "Placement
Agreement"),  among the Offerors and the  Placement  Agents  identified  therein
includes  certain  representations  and warranties,  covenants and conditions to
closing  and  certain  other  matters  governing  the  Offering.  The  Placement
Agreement  is hereby  incorporated  by  reference  into this  Agreement  and the
Purchaser shall be entitled to each of the benefits of the Placement  Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors  under such  Placement  Agreement as fully as if the
Purchaser were a party to such Placement Agreement.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         2.1.  The  Purchaser  understands  and  acknowledges  that  neither the
Capital Securities,  the Debentures nor the Guarantee have been registered under
the  Securities  Act of 1933, as amended (the  "Securities  Act"),  or any other
applicable  securities  law,  are  being  offered  for  sale  by  the  Trust  in
transactions not requiring registration under the Securities Act, and may not be
offered,  sold,  pledged or otherwise  transferred  by the  Purchaser  except in
compliance with the registration requirements of the Securities Act or any other
applicable  securities  laws,  pursuant  to  an  exemption  therefrom  or  in  a
transaction not subject thereto.

         2.2.  The Purchaser represents,  warrants and certifies  that (i) it is
not a "U.S.  person" as such term is  defined  in Rule 902 under the  Securities
Act, (ii) it is not acquiring the Capital  Securities for the account or benefit
of any such U.S. person,  (iii) the offer and sale of Capital  Securities to the
Purchaser  constitutes  an  "offshore  transaction"  under  Regulation  S of the
Securities Act, and (iv) it will not engage in hedging  transactions with regard
to the Capital  Securities  unless such transactions are conducted in compliance
with the  Securities  Act and the  Purchaser  agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.

         2.3.  The Purchaser represents  and warrants that it is purchasing  the
Capital Securities for its own account, for investment,  and not with a view to,
or for offer or sale in connection with, any  distribution  thereof in violation
of the  Securities  Act or other  applicable  securities  laws,  subject  to any
requirement  of law that the  disposition of its property be at all times within
its  control  and  subject to its  ability  to resell  such  Capital  Securities
pursuant to an effective  registration  statement  under the  Securities  Act or
under Rule 144A or any other  exemption from  registration  available  under the
Securities Act or any other applicable Securities law.

         2.4.  The Purchaser represents  and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties  specified  herein,  and to consummate the transactions  contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.

         2.5.  The Purchaser, a Cayman Islands  Company whose business  includes
issuance of certain notes and acquiring the Capital Securities and other similar
securities, represents and warrants that it has such knowledge and experience in
financial and business  matters that it is capable of evaluating  the merits and
risks of  purchasing  the Capital  Securities,  has had the  opportunity  to ask
questions of, and receive answers and request  additional  information from, the
Offerors  and is aware that it may be required to bear the  economic  risk of an
investment in the Capital Securities.

         2.6.  The Purchaser  represents  and warrants  that no filing with,  or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.
<PAGE>

         2.7.  The  Purchaser  represents  and  warrants that this Agreement has
been duly authorized, executed and delivered by the Purchaser.

         2.8.  The Purchaser  represents  and warrants that (i) the Purchaser is
not in  violation or default of any term of its  Memorandum  of  Association  or
Articles of Association, of any provision of any mortgage, indenture,  contract,
agreement, instrument or contract to which it is a party or by which it is bound
or of any judgment,  decree, order, writ or, to its knowledge, any statute, rule
or regulation applicable to the Purchaser which would prevent the Purchaser from
performing  any material  obligation set forth in this  Agreement;  and (ii) the
execution,  delivery and performance of and compliance with this Agreement,  and
the  consummation of the  transactions  contemplated  herein,  will not, with or
without  the  passage of time or giving of notice,  result in any such  material
violation,  or be in conflict  with or constitute a default under any such term,
or the  suspension,  revocation,  impairment,  forfeiture or  non-renewal of any
permit,  license,  authorization  or approval  applicable to the Purchaser,  its
business or operations  or any of its assets or  properties  which would prevent
the  Purchaser  from  performing  any  material  obligations  set  forth in this
Agreement.

         2.9.  The Purchaser  represents  and warrants  that the Purchaser is an
exempted company with limited liability duly incorporated,  validly existing and
in good standing under the laws of the jurisdiction where it is organized,  with
full power and authority to perform its obligations under this Agreement.

         2.10. The Purchaser  understands and acknowledges that the Company will
rely  upon  the   truth  and   accuracy   of  the   foregoing   acknowledgments,
representations,  warranties  and  agreements  and  agrees  that,  if any of the
acknowledgments,  representations,  warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate,  it
shall promptly notify the Company.

         2.11. The Purchaser understands that no public market exists for any of
the Capital  Securities,  and that it is unlikely that a public market will ever
exist for the Capital Securities.

                                   ARTICLE III

                                  MISCELLANEOUS

         3.1.  Any notice or other communication given hereunder shall be deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

                  To the Offerors:          First Banks, Inc.
                                            135 North Meramec Avenue
                                            Clayton, Missouri  63105
                                            Attention:  Lisa K. Vansickle
                                            Fax:  314-592-6621

                  To the Purchaser:         Preferred Term Securities XV, Ltd.
                                            c/o Maples Finance Limited
                                            P.O. Box 1093 GT
                                            Queensgate House
                                            South Church Street
                                            George Town, Grand Cayman
                                            Cayman Islands
                                            Attention:  The Directors
                                            Fax:  345-945-7100
<PAGE>

         Unless otherwise expressly provided herein,  notices shall be deemed to
have been  given on the date of  mailing,  except  notice of change of  address,
which shall be deemed to have been given when received.

         3.2.  This  Agreement  shall not be changed, modified or amended except
by a writing signed by the parties to be charged,  and this Agreement may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.

         3.3.  Upon  the  execution  and  delivery  of  this  Agreement  by  the
Purchaser,  this  Agreement  shall become a binding  obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.

         3.4.  NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES  HERETO,  THE PARTIES  EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

         3.5.  The  parties  agree to  execute  and  deliver  all  such  further
documents,  agreements and instruments and take such other and further action as
may be  necessary  or  appropriate  to carry out the purposes and intent of this
Agreement.

         3.6.  This  Agreement  may be executed in one or more counterparts each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

         3.7.  In the  event  that any one or more of the  provisions  contained
herein,  or the  application  thereof  in any  circumstances,  is held  invalid,
illegal or unenforceable in any respect for any reason,  the validity,  legality
and  enforceability  of any such  provision  in every  other  respect and of the
remaining  provisions  hereof shall not be in any way  impaired or affected,  it
being  intended  that  all of the  Offerors'  and  the  Purchaser's  rights  and
privileges shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS  WHEREOF,  I have set my hand the day and year first written
above.



PREFERRED TERM SECURITIES XV, LTD.


By:
   --------------------------------------------------
Print Name:
           ------------------------------------------
Title:
      -----------------------------------------------

         IN WITNESS WHEREOF, this Subscription Agreement is agreed to and
accepted as of the day and year first written above.


                          FIRST BANK, INC.


                          By:
                             ---------------------------------------------------

                          Name:
                               -------------------------------------------------

                          Title:
                                ------------------------------------------------



                          FIRST BANK STATUTORY TRUST II


                          By:
                             ---------------------------------------------------

                          Name:
                               -------------------------------------------------

                          Title:  Administrator




<PAGE>


                                   EXHIBIT B-1
                                   -----------

                         FORM OF COMPANY COUNSEL OPINION
                         -------------------------------

                               September 20, 2004

First Tennessee Bank National Association       FTN Financial Capital Markets
845 Crossover Lane, Suite 150                   845 Crossover Lane, Suite 150
Memphis, Tennessee  38117                       Memphis, Tennessee  38117

Preferred Term Securities XV, Ltd.              Keefe, Bruyette & Woods, Inc.
c/o Maples Finance Limited                      787 7th Avenue, 4th Floor
P. O. Box 1093 GT                               New York, New York  10019
Queensgate House
South Church Street                             Wilmington Trust Company
George Town, Grand Cayman                       Rodney Square North
Cayman Islands                                  1100 North Market Street
                                                Wilmington, Delaware  19890-1600

Ladies and Gentlemen:

         We have  acted as counsel  to First  Banks,  Inc.  (the  "Company"),  a
Missouri  corporation in connection with a certain  Placement  Agreement,  dated
September 10, 2004, (the "Placement  Agreement"),  between the Company and First
Bank Statutory  Trust II (the "Trust"),  on one hand, and FTN Financial  Capital
Markets and Keefe, Bruyette & Woods, Inc. (the "Placement Agents"), on the other
hand.  Pursuant  to the  Placement  Agreement,  and  subject  to the  terms  and
conditions stated therein, the Trust will issue and sell to First Tennessee Bank
National  Association and Preferred Term Securities XV, Ltd. (the "Purchasers"),
$20,000,000.00  aggregate  principal amount of Floating Rate Capital  Securities
(liquidation amount $1,000.00 per capital security) (the "Capital Securities").

         Capitalized  terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.

         The law covered by the opinions  expressed herein is limited to the law
of the United States of America and of the State of Missouri.

         We have  made such  investigations  of law as,  in our  judgment,  were
necessary  to render  the  following  opinions.  We have also  reviewed  (a) the
Company's Articles of Incorporation,  as amended,  and its By-Laws,  as amended;
and (b) such corporate documents,  records,  information and certificates of the
Company and the  Subsidiaries,  certificates  of public  officials or government
authorities and other documents as we have deemed  necessary or appropriate as a
basis for the opinions  hereinafter  expressed.  As to certain facts material to
our  opinions,   we  have  relied,   with  your  permission,   upon  statements,
certificates or representations, including those delivered or made in connection
with the above-referenced  transaction, of officers and other representatives of
the Company and the Subsidiaries and the Trust.

         As used herein, the phrases "to the best of our knowledge" or "known to
us" or other similar phrases mean the actual knowledge of the attorneys who have
had active involvement in the transactions  described above or who have prepared
or signed  this  opinion  letter,  or who  otherwise  have  devoted  substantial
attention to legal matters for the Company.
<PAGE>

         Based upon and subject to the foregoing and the further  qualifications
set forth below, we are of the opinion as of the date hereof that:

         1.    The Company is validly  existing and  in  good standing under the
laws of the State of Missouri and is duly  registered as a bank holding  company
under the Bank Holding Company Act of 1956, as amended.  Each of the Significant
Subsidiaries  is validly  existing  and in good  standing  under the laws of its
jurisdiction  of   organization.   Each  of  the  Company  and  the  Significant
Subsidiaries  has  full  corporate  power  and  authority  to own or  lease  its
properties  and to conduct its business as such business is currently  conducted
in all material respects.  To the best of our knowledge,  all outstanding shares
of capital stock of the Significant  Subsidiaries  have been duly authorized and
validly issued,  and are fully paid and nonassessable  except to the extent such
shares  may be  deemed  assessable  under 12 U.S.C.  Section  1831o or 12 U.S.C.
Section 55, and are owned of record and beneficially, directly or indirectly, by
the Company.

         2.    The issuance, sale  and  delivery of the Debentures in accordance
with the terms and  conditions  of the  Placement  Agreement  and the  Operative
Documents have been duly authorized by all necessary actions of the Company. The
issuance,  sale and delivery of the  Debentures by the Company and the issuance,
sale and delivery of the Capital  Securities  and the Common  Securities  by the
Trust do not give rise to any  preemptive or other rights to subscribe for or to
purchase any shares of capital stock or equity  securities of the Company or the
Significant  Subsidiaries pursuant to the corporate Articles of Incorporation or
Charter,  By-Laws or other governing documents of the Company or the Significant
Subsidiaries,  or,  to the  best  of  our  knowledge,  any  agreement  or  other
instrument  to which  either the  Company or the  Subsidiaries  is a party or by
which the Company or the Significant Subsidiaries may be bound.

         3.   The Company has all  requisite  corporate  power to enter into and
perform its  obligations  under the  Placement  Agreement  and the  Subscription
Agreements,  and the Placement  Agreement and the  Subscription  Agreements have
been duly and validly  authorized,  executed  and  delivered  by the Company and
constitute the legal, valid and binding  obligations of the Company  enforceable
in accordance with their terms, except as the enforcement thereof may be limited
by general  principles  of equity  and by  bankruptcy  or other  laws  affecting
creditors' rights generally,  and except as the indemnification and contribution
provisions thereof may be limited under applicable laws and certain remedies may
not be available in the case of a non-material breach.

         4.    Each of the  Indenture, the Trust  Agreement  and  the  Guarantee
Agreement has been duly authorized,  executed and delivered by the Company,  and
is a  valid  and  legally  binding  obligation  of the  Company  enforceable  in
accordance  with its terms,  subject to the  effect of  bankruptcy,  insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

         5.    The Debentures have been duly authorized,  executed and delivered
by the Company,  are entitled to the  benefits of the  Indenture  and are legal,
valid and binding  obligations of the Company enforceable against the Company in
accordance  with their terms,  subject to the effect of bankruptcy,  insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

         6.    To the best of our knowledge, neither the Company, the Trust, nor
any of the Subsidiaries is in breach or violation of, or default under,  with or
without  notice  or lapse of time or both,  its  Articles  of  Incorporation  or
Charter, By-Laws or other governing documents (including without limitation, the
Trust  Agreement).  The  execution,  delivery and  performance  of the Placement
Agreement and the Operative  Documents and the  consummation of the transactions
contemplated by the Placement  Agreement and the Operative  Documents do not and
will not (i) result in the creation or imposition of any material  lien,  claim,

<PAGE>

charge, encumbrance or restriction upon any property or assets of the Company or
the  Subsidiaries,  or (ii)  conflict  with,  constitute  a  material  breach or
violation of, or constitute a material default under,  with or without notice or
lapse of time or both,  any of the terms,  provisions  or  conditions of (A) the
Articles of  Incorporation or Charter,  By-Laws or other governing  documents of
the  Company  or the  Subsidiaries,  or (B) to the  best of our  knowledge,  any
material contract, indenture, mortgage, deed of trust, loan or credit agreement,
note,  lease,  franchise,  license or any other agreement or instrument to which
the  Company  or the  Subsidiaries  is a party or by which any of them or any of
their  respective  properties may be bound or (C) any order,  decree,  judgment,
franchise,  license,  permit,  rule  or  regulation  of any  court,  arbitrator,
government,  or  governmental  agency or  instrumentality,  domestic or foreign,
known to us having  jurisdiction  over the Company or the Subsidiaries or any of
their respective  properties which, in the case of each of (i) or (ii) above, is
material to the Company and the Subsidiaries on a consolidated basis.

         7.    Except for filings, registrations or  qualifications  that may be
required by applicable securities laws, no authorization,  approval,  consent or
order of, or filing,  registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required under
the  laws  of  the  State  of  Missouri  in  connection  with  the  transactions
contemplated  by  the  Placement   Agreement  and  the  Operative  Documents  in
connection with the offer and sale of the Capital  Securities as contemplated by
the Placement Agreement and the Operative Documents.

         8.    To the best of our knowledge (i) no action, suit or proceeding at
law or in equity is pending or threatened to which the Company, the Trust or the
Subsidiaries  are or may be a party,  and (ii) no action,  suit or proceeding is
pending  or  threatened  against  or  affecting  the  Company,  the Trust or the
Subsidiaries or any of their properties,  before or by any court or governmental
official,  commission,  board or other administrative agency, authority or body,
or any  arbitrator,  wherein an  unfavorable  decision,  ruling or finding could
reasonably be expected to have a material  adverse effect on the consummation of
the  transactions  contemplated  by the  Placement  Agreement  and the Operative
Documents  or the issuance and sale of the Capital  Securities  as  contemplated
therein or the condition (financial or otherwise),  earnings, affairs, business,
or results of operations  of the Company,  the Trust and the  Subsidiaries  on a
consolidated basis.

         9.    Assuming the truth  and  accuracy  of  the   representations  and
warranties of the Placement Agents in the Placement Agreement and the Purchasers
in the  Subscription  Agreements,  it is not  necessary in  connection  with the
offering,  sale and delivery of the Capital  Securities,  the Debentures and the
Guarantee Agreement (or the Guarantee) to register the same under the Securities
Act of 1933, as amended,  under the circumstances  contemplated in the Placement
Agreement and the Subscription Agreements.

         10.   Neither  the  Company  nor the Trust is or after giving effect to
the  offering and sale of the Capital  Securities  and the  consummation  of the
transactions  described  in the  Placement  Agreement  will be,  an  "investment
company" or an entity  "controlled"  by an  "investment  company,"  in each case
within the meaning of the  Investment  Company Act of 1940, as amended,  without
regard to Section 3(c) of such Act.

         The opinion expressed in the first two sentences of numbered  paragraph
1 of this opinion is based solely upon certain  certificates  and  confirmations
issued by the applicable  governmental officer or authority with respect to each
of the Company and the Significant Subsidiaries.

         With respect to the foregoing opinions, since no member of this firm is
actively  engaged in the  practice of law in the States of Delaware or New York,
we do not  express  any  opinions  as to the  laws of such  states  and have (i)
relied, with your approval, upon the opinion of Richards,  Layton & Finger, P.A.
with respect to matters of Delaware law and (ii) assumed, with your approval and
without rendering any opinion to such effect,  that the laws of the State of New
York, in all respects material to this opinion,  are substantively  identical to
the laws of the State of Missouri, without regard to conflict of law provisions.

         The opinions  expressed  herein are rendered to you solely  pursuant to
Section 3.1(a) of the Placement  Agreement.  As such, they may be relied upon by
you only and may not be used or relied upon by any other  person for any purpose
whatsoever without our prior written consent.

                                           Very truly yours,


<PAGE>


                                   EXHIBIT B-2
                                   -----------

                        FORM OF DELAWARE COUNSEL OPINION
                        --------------------------------

To Each of the Persons
Listed on Schedule A Hereto

               Re: First Bank Statutory Trust II
                   -----------------------------

Ladies and Gentlemen:

               We  have  acted  as  special  Delaware  counsel  for  First  Bank
Statutory Trust II, a Delaware statutory trust (the "Trust"), in connection with
the matters set forth herein.  At your request,  this opinion is being furnished
to you.

               For purposes of giving the  opinions  hereinafter  set forth, our
examination  of documents  has been limited to the  examination  of originals or
copies of the following:

               (a) The Certificate  of Trust of the Trust (the  "Certificate  of
Trust"),  as filed  in the  office  of the  Secretary  of State of the  State of
Delaware (the "Secretary of State") on September 9, 2004;

               (b) The  Declaration  of  Trust,  dated  as of September 9, 2004,
among First Banks,  Inc., a Missouri  corporation  (the  "Company"),  Wilmington
Trust  Company,  a Delaware  banking  corporation  ("WTC"),  as trustee  and the
administrators named therein (the "Administrators");

               (c) The Amended and Restated  Declaration  of Trust of the Trust,
dated  as of  September  20,  2004  (including  the form of  Capital  Securities
Certificate  attached  thereto  as  Exhibits  A-1 and A-2 and the  terms  of the
Capital Securities attached as Annex I) (the "Declaration of Trust"),  among the
Company,  as sponsor,  WTC, as Delaware  trustee (the  "Delaware  Trustee")  and
institutional trustee (the "Institutional  Trustee"), the Administrators and the
holders,  from time to time, of undivided  beneficial interests in the assets of
the Trust;

               (d)  The Placement  Agreement,  dated  September  10,  2004  (the
"Placement Agreement"),  among the Company, the Trust, and FTN Financial Capital
Markets and Keefe, Bruyette & Woods, Inc., as placement agents;

               (e) The  Subscription  Agreements,  dated September 20, 2004 (the
"Subscription Agreements"),  among (i) the Trust, the Company and Preferred Term
Securities  XV, Ltd. and (ii) the Trust,  the Company and First  Tennessee  Bank
National  Association  (the documents  identified in items (c) through (e) being
collectively referred to as the "Operative Documents");

               (f) The Capital  Securities  being issued on the date hereof (the
"Capital Securities");

               (g) The Common Securities  being  issued on the date  hereof (the
"Common  Securities")  (the  documents  identified  in items  (f) and (g)  being
collectively referred to as the "Trust Securities"); and

               (h) A Certificate of Good Standing for the Trust, dated September
17, 2004, obtained from the Secretary of State.
<PAGE>

               Capitalized terms used herein and not otherwise  defined are used
as defined in the  Declaration  of Trust,  except that  reference  herein to any
document shall mean such document as in effect on the date hereof.  This opinion
is being delivered pursuant to Section 3.1 of the Placement Agreement.

               For purposes of this opinion,  we have not reviewed any documents
other  than the  documents  listed in  paragraphs  (a)  through  (h)  above.  In
particular,  we have not reviewed any document (other than the documents  listed
in paragraphs (a) through (h) above) that is referred to in or  incorporated  by
reference  into the documents  reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the  opinions   stated  herein.   We  have  conducted  no  independent   factual
investigation  of our own but  rather  have  relied  solely  upon the  foregoing
documents,  the statements and  information set forth therein and the additional
matters  recited or  assumed  herein,  all of which we have  assumed to be true,
complete and accurate in all material respects.

               With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic  originals,  (ii)
the conformity with the originals of all documents  submitted to us as copies or
forms, and (iii) the genuineness of all signatures.

               For purposes  of this  opinion,  we have  assumed  (i)  that  the
Declaration of Trust  constitutes the entire agreement among the parties thereto
with  respect to the  subject  matter  thereof,  including  with  respect to the
creation,  operation,  and termination of the Trust, and that the Declaration of
Trust and the  Certificate  of Trust are in full  force and  effect and have not
been  amended   further,   (ii)  that  there  are  no  proceedings   pending  or
contemplated,  for  the  merger,  consolidation,   liquidation,  dissolution  or
termination  of the Trust,  (iii)  except to the extent  provided in paragraph 1
below, the due creation, due formation or due organization,  as the case may be,
and valid existence in good standing of each party to the documents  examined by
us under the laws of the  jurisdiction  governing  its  creation,  formation  or
organization,  (iv) that each party to the documents examined by us is qualified
to do  business  in each  jurisdiction  where  such  qualification  is  required
generally  or  necessary in order for such party to enforce its rights under the
documents examined by us, (v) the legal capacity of each natural person who is a
party to the  documents  examined  by us, (vi) except to the extent set forth in
paragraph 2 below, that each of the parties to the documents  examined by us has
the power and authority to execute and deliver,  and to perform its  obligations
under, such documents, (vii) except to the extent provided in paragraph 3 below,
that each of the parties to the  documents  examined by us has duly  authorized,
executed and delivered such documents, (viii) the receipt by each Person to whom
a Capital Security is to be issued by the Trust (the "Capital Security Holders")
of a Capital  Security  Certificate for the Capital Security and the payment for
the Capital  Securities  acquired by it, in accordance  with the  Declaration of
Trust and the  Subscription  Agreements,  (ix) that the Capital  Securities  are
issued and sold to the Holders of the Capital  Securities in accordance with the
Declaration  of Trust and the  Subscription  Agreements,  (x) the receipt by the
Person (the "Common  Securityholder") to whom the common securities of the Trust
representing  common undivided  beneficial  interests in the assets of the Trust
(the "Common Securities" and, together with the Capital  Securities,  the "Trust
Securities") are to be issued by the Trust of a Common Security  Certificate for
the Common Securities and the payment for the Common Securities  acquired by it,
in accordance with the Declaration of Trust, (xi) that the Common Securities are
issued and sold to the Common  Securityholder in accordance with the Declaration
of Trust,  (xii) that each of the  parties to the  documents  reviewed by us has
agreed to and  received  the  stated  consideration  for the  incurrence  of its
obligations under such documents and (xiii) that each of the documents  reviewed
by us (other  than the  Declaration  of Trust) is a legal,  valid,  binding  and
enforceable  obligation  of the  parties  thereto in  accordance  with the terms
thereof.  We have not participated in the preparation of any offering  materials
with  respect  to the Trust  Securities  and  assume no  responsibility  for its
contents.
<PAGE>

               This opinion  is  limited  to the laws of the  State of  Delaware
(excluding  the  securities  laws of the  State  of  Delaware),  and we have not
considered  and  express  no  opinion  on the  laws of any  other  jurisdiction,
including federal laws and rules and regulations  relating thereto. Our opinions
are  rendered  only with  respect to Delaware  laws and rules,  regulations  and
orders thereunder that are currently in effect.

               We  express  no  opinion  as  to  (i)  the  effect  of suretyship
defenses,  or defenses in the nature thereof, with respect to the obligations of
any applicable guarantor,  joint obligor, surety,  accommodation party, or other
secondary  obligor or any  provisions  of the Trust  Agreement  with  respect to
indemnification  or  contribution  and (ii) the accuracy or  completeness of any
exhibits or schedules to the Operative Documents.  No opinion is given herein as
to the  choice  of law or  internal  substantive  rules of law that any court or
other  tribunal  may apply to the  transactions  contemplated  by the  Operative
Documents.

               We express no opinion as to the enforceability  of any particular
provision of the Trust  Agreement or the other Operative  Documents  relating to
remedies after default.

               We express no opinion as to the enforceability  of any particular
provision of any of the Operative Documents relating to (i) waivers of rights to
object to jurisdiction  or venue,  or consents to  jurisdiction  or venue,  (ii)
waivers of rights to (or methods  of) service of process,  or rights to trial by
jury, or other rights or benefits bestowed by operation of law, (iii) waivers of
any applicable defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
variations of provisions  which are not capable of waiver or variation under the
Uniform  Commercial  Code  ("UCC")  of the  State,  (v) the  grant of  powers of
attorney to any person or entity,  or (vi)  exculpation or exoneration  clauses,
indemnity  clauses,  and clauses  relating  to releases or waivers of  unmatured
claims or rights.

               We have made no examination of, and no opinion is given herein as
to the  Trustee's or the Trust's title to or other  ownership  rights in, or the
existence of any liens,  charges or encumbrances  on, or adverse claims against,
any asset or property held by the Institutional Trustee or the Trust. We express
no opinion as to the creation, validity,  attachment,  perfection or priority of
any  mortgage,  security  interest or lien in any asset or property  held by the
Institutional Trustee or the Trust.

               We express  no  opinion  as to the  effect of  events  occurring,
circumstances arising, or changes of law becoming effective or occurring,  after
the date hereof on the matters  addressed in this opinion letter,  and we assume
no  responsibility  to inform you of additional or changed facts,  or changes in
law, of which we may become aware.

               We express no opinion as to any requirement that any party to the
Operative  Documents (or any other persons or entities  purportedly  entitled to
the benefits  thereof) qualify or register to do business in any jurisdiction in
order to be able to  enforce  its  rights  thereunder  or  obtain  the  benefits
thereof.

               Based upon  the  foregoing,  and  upon  our  examination  of such
questions  of law and  statutes of the State of  Delaware as we have  considered
necessary  or  appropriate,  and  subject  to the  assumptions,  qualifications,
limitations and exceptions set forth herein, we are of the opinion that:

               1. The  Trust  has  been  duly created and is validly existing in
good  standing  as  a  statutory  trust  under  the Delaware Statutory Trust Act
(12 Del. C. ss. 3801, et seq.) (the "Act"). All  filings required under the laws
    ------            ------
of the State of Delaware with respect to the creation and valid existence of the
Trust as a statutory trust have been made.
<PAGE>

               2. Under the  Declaration of Trust and the Act, the Trust has the
trust power and  authority to (A) execute and deliver the  Operative  Documents,
(B) perform its  obligations  under such  Operative  Documents and (C) issue the
Trust Securities.

               3. The execution  and  delivery  by the  Trust  of the  Operative
Documents, and the performance by the Trust of its obligations thereunder,  have
been duly authorized by all necessary trust action on the part of the Trust.

               4. The  Declaration  of  Trust  constitutes  a  legal,  valid and
binding obligation of the Company,  the Trustees and the Administrators,  and is
enforceable  against  the  Company,  the  Trustees  and the  Administrators,  in
accordance with its terms.

               5. Each of the Operative Documents constitutes a legal, valid and
binding  obligation of the Trust,  enforceable  against the Trust, in accordance
with its terms.

               6. The Capital Securities  have been duly authorized for issuance
by the  Declaration of Trust,  and, when duly executed and delivered to and paid
for by the purchasers  thereof in accordance with the Declaration of Trust,  the
Subscription Agreements and the Placement Agreement, the Capital Securities will
be validly issued,  fully paid and, subject to the  qualifications  set forth in
paragraph 8 below, nonassessable undivided beneficial interests in the assets of
the Trust and will entitle the Capital Securities Holders to the benefits of the
Declaration of Trust.  The issuance of the Capital  Securities is not subject to
preemptive or other similar rights under the Act or the Declaration of Trust.

               7. The  Common  Securities have been duly authorized for issuance
by the Declaration of Trust and, when duly executed and delivered to the Company
as Common Security  Holder in accordance with the Declaration of Trust,  will be
validly issued,  fully paid and, subject to paragraph 8 below and Section 9.1(b)
of the  Declaration  of Trust  (which  provides  that the  Holder of the  Common
Securities  are  liable  for  debts and  obligations  of  Trust),  nonassessable
undivided  beneficial  interests in the assets of the Trust and will entitle the
Common Security Holder to the benefits of the Declaration of Trust. The issuance
of the Common  Securities is not subject to  preemptive or other similar  rights
under the Act or the Declaration of Trust.

               8. Under the Declaration of Trust and the Act, the Holders of the
Capital  Securities,  as beneficial owners of the Trust, will be entitled to the
same  limitation  of  personal  liability  extended to  stockholders  of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.  We note that the Holders of the Capital  Securities and the Holder
of the Common Securities may be obligated, pursuant to the Declaration of Trust,
(A) to provide  indemnity  and/or  security in connection  with and pay taxes or
governmental  charges  arising from  transfers or exchanges of Capital  Security
Certificates and the issuance of replacement Capital Security Certificates,  and
(B)  to  provide  security  or  indemnity  in  connection  with  requests  of or
directions to the Institutional  Trustee to exercise its rights and powers under
the Declaration of Trust.

               9. Neither  the  execution, delivery and performance by the Trust
of the  Operative  Documents,  nor the  consummation  by the Trust of any of the
transactions  contemplated  thereby,  requires  the consent or approval  of, the
authorization  of, the  withholding  of  objection on the part of, the giving of
notice to, the filing,  registration or qualification with, or the taking of any
other action in respect of, any governmental authority or agency of the State of
Delaware,  other than the filing of the  Certificate of Trust with the Secretary
of State (which Certificate of Trust has been duly filed).

               10. Neither the execution,  delivery and performance by the Trust
of the Trust  Documents,  nor the  consummation by the Trust of the transactions
contemplated  thereby, (i) is in violation of the Trust Agreement or of any law,

<PAGE>

rule or regulation  of the State of Delaware  applicable to the Trust or (ii) to
the  best  of  our  knowledge,  without  independent  investigation,   violates,
contravenes or constitutes a default under,  or results in a breach of or in the
creation of any lien (other than as permitted by the Operative  Documents)  upon
any property of the Trust under any indenture,  mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement,  license or
other  agreement or  instrument  to which the Trust is a party or by which it is
bound.

               11. Assuming  that the Trust will not be taxable as a corporation
for federal income tax purposes, but rather will be classified for such purposes
as a grantor  trust  under  Subpart E, Part I of  Subchapter  J of the  Internal
Revenue Code of 1986, as amended,  the Trust will not be subject to any tax, fee
or governmental charge under the laws of the State of Delaware.

               The opinions  expressed  in  paragraph 4, 5, 6, 7 and 8 above are
subject,  as to enforcement,  to the effect upon the Declaration of Trust of (i)
bankruptcy, insolvency, moratorium, receivership,  reorganization,  liquidation,
fraudulent  conveyance  and  transfer,  and other  similar  laws  relating to or
affecting  the rights and remedies of creditors  generally,  (ii)  principles of
equity,  including  applicable law relating to fiduciary  duties  (regardless of
whether  considered  and applied in a proceeding in equity or at law), and (iii)
the effect of  applicable  public  policy on the  enforceability  of  provisions
relating to indemnification or contribution.

               We  consent  to  your  relying as to matters of Delaware law upon
this opinion in  connection  with the  Placement  Agreement.  We also consent to
Lewis,  Rice & Fingersh,  L.C.'s and Stinson Morrison Hecker LLP's relying as to
matters of Delaware  law upon this  opinion in  connection  with  opinions to be
rendered by them on the date hereof pursuant to the Placement Agreement.

               Except as stated above, without our prior written  consent,  this
opinion may not be  furnished  or quoted to, or relied upon by, any other Person
for any purpose.

                                             Very truly yours,



<PAGE>


                                   SCHEDULE A
                                   ----------

Wilmington Trust Company

FTN Financial Capital Markets

Keefe, Bruyette & Woods, Inc.

First Tennessee Bank National Association

Preferred Term Securities XV, Ltd.

Preferred Term Securities XV, Inc.

First Banks, Inc.







<PAGE>



                                   EXHIBIT B-3
                                   -----------

                           FORM OF TAX COUNSEL OPINION
                           ---------------------------


First Banks, Inc.
135 North Meramec Avenue
Clayton, Missouri  63105

First Bank Statutory Trust II
c/o First Banks, Inc.
135 North Meramec Avenue
Clayton, Missouri  63105

FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117

Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York 10019

Ladies and Gentlemen:

         We have acted as special tax counsel to First Banks,  Inc. and to First
Bank Statutory Trust II in connection with the proposed issuance of (i) Floating
Rate Capital Securities,  liquidation amount $1,000.00 per Capital Security (the
"Capital  Securities")  of First Bank Statutory  Trust II, a statutory  business
trust created under the laws of Delaware (the "Trust"), pursuant to the terms of
the Amended  and  Restated  Declaration  of Trust dated as of the date hereof by
First Banks,  Inc., a Missouri  corporation  (the  "Company"),  Wilmington Trust
Company,  as  Delaware  trustee,  Wilmington  Trust  Company,  as  institutional
trustee,  and Allen H. Blake,  Terrance M.  McCarthy and Lisa K.  Vansickle,  as
Administrators  (the "Trust  Agreement"),  (ii) Junior  Subordinated  Deferrable
Interest  Debentures  (the  "Corresponding  Debentures")  of the Company  issued
pursuant  to the  terms of an  Indenture  dated as of the date  hereof  from the
Company to  Wilmington  Trust  Company,  as  trustee  (the  "Indenture"),  which
Debentures  are to be sold by the Company to the Trust,  and (iii) the Guarantee
Agreement of the Company with respect to the Capital  Securities dated as of the
date hereof (the "Guarantee")  between the Company and Wilmington Trust Company,
as  guarantee   trustee.   The  portion  of  the  Capital   Securities  and  the
Corresponding  Debentures to be purchased by Preferred Term  Securities XV, Ltd.
are to be  issued  as  contemplated  by the  Offering  Circular  (the  "Offering
Circular")  dated  September 10, 2004 prepared by Preferred Term  Securities XV,
Ltd.,  an entity  formed  under the  Companies  Law of the Cayman  Islands,  and
Preferred Term Securities XV, Inc., a Delaware corporation.

         We have examined originals or copies, certified or otherwise identified
to our satisfaction, of documents, corporate records and other instruments as we
have deemed necessary or appropriate for purposes of this opinion  including (i)
the Offering Circular,  (ii) the Indenture,  (iii) the form of the Corresponding
Debentures  attached as an exhibit to the Indenture,  (iv) the Trust  Agreement,
(v) the Guarantee,  and (vi) the form of Capital Securities Certificate attached
as  an  exhibit  to  the  Trust  Agreement   (collectively   the   "Documents").
Furthermore, we have relied upon certain representations made by the Company and
upon the opinion of  Richards,  Layton & Finger,  P.A. as to certain  matters of

<PAGE>

Delaware  law. In such  examination,  we have  assumed the  authenticity  of all
documents submitted to us as originals,  the conformity to original documents of
all  documents   submitted  to  us  as  certified  or  photostatic  copies,  the
authenticity of the originals of such latter  documents,  the genuineness of all
signatures and the  correctness  of all  representations  made therein.  We have
further  assumed that there are no  agreements  or  understandings  contemplated
therein other than those contained in the Documents.

         Based upon the  foregoing,  and assuming  (i) that the final  Documents
will be substantially identical to the forms examined, (ii) full compliance with
all the terms of the final Documents,  and (iii) the accuracy of representations
made by the Company and delivered to us, we are of the opinion that:

         (a)   The  Corresponding  Debentures will be classified as indebtedness
               of the Company for U.S. federal income tax purposes.

         (b)   The Trust will be  characterized as a grantor trust and not as an
               association  taxable as a corporation for U.S. federal income tax
               purposes.

         The opinions  expressed  above are based on existing  provisions of the
Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  existing  Treasury
regulations,  published  interpretations  by the Internal Revenue Service of the
Code and such Treasury regulations,  and existing court decisions,  any of which
could be changed at any time.  Any such changes may or may not be  retroactively
applied,  and may result in federal  income tax  consequences  that  differ from
those  reflected  in the  opinions  set forth  above.  We note that  there is no
authority  directly  on  point  dealing  with  securities  such  as the  Capital
Securities  or with  transactions  of the type  described  herein,  and that the
authorities   on  which   this   opinion   is  based  are   subject  to  various
interpretations.  Further,  you should be aware that opinions of counsel have no
official  status and are not  binding  on the  Internal  Revenue  Service or the
courts.  Accordingly, we can provide no assurance that the interpretation of the
federal  income tax laws set forth in our opinions will prevail if challenged by
the IRS in an administrative or judicial proceeding.

         We have also assumed that each transaction  contemplated herein will be
carried out strictly in accordance with the Documents. Any variance in the facts
may result in Federal income tax  consequences  that differ from those reflected
in the opinions set forth above.

         Additionally,  we undertake no obligation to update this opinion in the
event there is either a change in the legal authorities, in the facts (including
the taking of any action by any party to any of the  transactions  described  in
the Documents  relating to such  transactions) or in the Documents on which this
opinion is based, or an inaccuracy in any of the  representations  upon which we
have relied in rendering this opinion.

         We  express  no opinion  with  respect  to any matter not  specifically
addressed by the foregoing opinions,  including state or local tax consequences,
or any federal, state, or local issue not specifically referred to and discussed
above including,  without limitation,  the effect on the matters covered by this
opinion of the laws of any other jurisdiction.

         This letter is delivered  for the benefit of the  specified  addressees
and may not be relied upon by any other person. No portion of this letter may be
quoted or otherwise referred to in any document or delivered to any other person
or entity without the express  written consent of Lewis,  Rice & Fingersh,  L.C.
This opinion letter is rendered as of the date set forth above.

                          Very truly yours,

                          LEWIS, RICE & FINGERSH, L.C.



<PAGE>


Lewis, Rice & Fingersh, L.C.
500 N. Broadway, Suite 2000
St. Louis, Missouri  63102
Attention:  Lawrence H. Weltman, Esq.


         Re:   Representations  Concerning  the Issuance of Junior  Subordinated
               Deferrable  Interest  Debentures (the "Debentures") to First Bank
               Statutory  Trust II (the  "Trust")  and Sale of Trust  Securities
               (the "Trust Securities") of the Trust

Ladies and Gentlemen:

         In accordance  with your  request,  First Banks,  Inc. (the  "Company")
hereby makes the following representations in connection with the preparation of
your opinion letter as to the United States federal income tax  consequences  of
the issuance by the Company of the  Debentures  to the Trust and the sale of the
Trust Securities.

         Company hereby represents that:

         1. The sole assets of the Trust will be the  Debentures,  any  interest
paid  on  the  Debentures  to  the  extent  not  distributed,  proceeds  of  the
Debentures, or any of the foregoing.

         2. The  Company  intends to use the net  proceeds  from the sale of the
Debentures for general corporate purposes.

         3. The Trust was not formed to conduct any trade or business and is not
authorized to conduct any trade or business.  The Trust exists for the exclusive
purposes  of (i)  issuing  and  selling  the Trust  Securities,  (ii)  using the
proceeds from the sale of Trust Securities to acquire the Debentures,  and (iii)
engaging only in activities necessary or incidental thereto.

         4. The Trust was formed to facilitate  direct  investment in the assets
of the Trust,  and the existence of multiple  classes of ownership is incidental
to that purpose.  There is no intent to provide holders of such interests in the
Trust with diverse interests in the assets of the Trust.

         5. The Company intends to create a debtor-creditor relationship between
the Company, as debtor, and the Trust, as a creditor, upon the issuance and sale
of the  Debentures to the Trust by the Company.  The Company will (i) record and
at all times continue to reflect the Debentures as  indebtedness on its separate
books  and  records  for  financial  accounting  purposes,  and (ii)  treat  the
Debentures as indebtedness for all United States tax purposes.

         6. During each year, the Trust's income will consist solely of payments
made by the Company with respect to the  Debentures.  Such  payments will not be
derived from the active conduct of a financial  business by the Trust.  Both the
Company's  obligation to make such payments and the  measurement  of the amounts
payable by the Company are defined by the terms of the  Debentures.  Neither the
Company's  obligation to make such payments nor the  measurement  of the amounts
payable  by the  Company  is  dependent  on income or  profits of Company or any
affiliate of the Company.

         7. The  Company  expects  that it will be able to make,  and will make,
timely payment of amounts identified by the Debentures as principal and interest
in  accordance  with the  terms of the  Debentures  with  available  capital  or
accumulated earnings.
<PAGE>

         8. The Company presently has no intention to defer interest payments on
the Debentures,  and it considers the likelihood of such a deferral to be remote
because,  if it were to exercise  its right to defer  payments of interest  with
respect  to the  Debentures,  it would not be  permitted  to  declare or pay any
dividends  or  distributions  on,  or  redeem,  purchase,  acquire,  or  make  a
liquidation  payment  with  respect to, any capital  stock of the Company or any
affiliate of the Company (other than payments of dividends or  distributions  to
the Company) or make any payment of principal of or interest or premium, if any,
on or repay,  repurchase,  or redeem any debt  securities  of the Company or any
affiliate of the Company that rank pari passu in all respects  with or junior in
interest to the Debentures, in each case subject to limited exceptions stated in
Section 2.11 of the Indenture to be entered into in connection with the issuance
of the Debentures.

         9. Immediately after the issuance of the Debentures, the debt-to-equity
ratio of the Company (as  determined  for  financial  accounting  purposes,  but
excluding  deposit  liabilities from the Company's debt) will be within standard
depository  institution industry norms and, in any event, will be no higher than
four to one (4 : 1).

         10.  To  the  best  of our  knowledge,  the  Company  is  currently  in
compliance with all federal,  state, and local capital  requirements,  except to
the extent that  failure to comply with any such  requirements  would not have a
material adverse effect on the Company and its affiliates.

         11. The Company  will not issue any class of common  stock or preferred
stock senior to the Debentures during their term.

         12. The  Internal  Revenue  Service  has not  challenged  the  interest
deduction on any class of the Company's  subordinated  debt in the last ten (10)
years on the basis  that such debt  constitutes  equity for  federal  income tax
purposes.

         The above  representations  are  accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise  notified by us in writing.  The undersigned  understands that you
will rely on the foregoing in connection with rendering  certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company.

                                                 Very truly yours,

                                                 FIRST BANK, INC.


Date: September 13, 2004                         By:____________________________

                                                 Title:_________________________



<PAGE>


                                    EXHIBIT C
                                    ---------

                            SIGNIFICANT SUBSIDIARIES
                            ------------------------

The San Francisco Company

First Bank




<PAGE>


                                    EXHIBIT D
                                    ---------

                            FORM OF QUARTERLY REPORT
                            ------------------------


The Bank of New York
Collateralized Debt Obligation Group
101 Barclay Street, 8E
New York, New York  10286
Attention:  Franco B. Talavera
CDO Relationship Manager
<TABLE>
<CAPTION>

BANK HOLDING COMPANY
As of [March 31, June 30, September 30 or December 31], 20__

<S>                                                                           <C>
Tier 1 to Risk Weighted Assets                                                _________%

Ratio of Double Leverage                                                      _________%

Non-Performing Assets to Loans and OREO                                       _________%

Ratio of Reserves to Non-Performing Loans                                     _________%

Ratio of Net Charge-Offs to Loans                                             _________%

Return on Average Assets (annualized)**                                       _________%

Net Interest Margin (annualized)**                                            _________%

Efficiency Ratio                                                              _________%

Ratio of Loans to Assets                                                      _________%

Ratio of Loans to Deposits                                                    _________%

Total Assets                                                                 $__________

Year to Date Income                                                          $__________

-------------------
*A table describing the quarterly report calculation procedures is provided on page D-2

** To annualize Return on Average Assets and Net Interest Margin do the following:
1st Quarter-multiply income statement item by 4, then  divide by balance sheet item(s)
2nd Quarter-multiply income statement item by 2, then divide by  balance sheet item(s)
3rd Quarter-divide income statement item by 3, then multiply by 4, then  divide by balance sheet item(s)
4th Quarter-should  already be  an annual number
NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                              Financial Definitions


----------------------- -------------------------------------------------- ---------------------------------------------------
Report Item             Corresponding  FRY-9C or LP Line  Items with Line
                        Item corresponding Schedules                       Description of Calculation
----------------------- -------------------------------------------------- ---------------------------------------------------
<S>                     <C>                                                <C>
"Tier  1  Capital"  to  BHCK7206                                           Tier  1  Risk   Ratio:   Core  Capital   (Tier  1)/
Risk Weighted Assets    Schedule HC-R                                      Risk-Adjusted Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio    of     Double  (BHCP0365)/(BHCP3210)                              Total  equity  investments in subsidiaries  divided
Leverage                Schedule PC  in the LP                             by  the   total  equity  capital.   This  field  is
                                                                           calculated    at   the   parent    company   level.
                                                                           "Subsidiaries"    include    bank,   bank   holding
                                                                           company, and nonbank subsidiaries.
----------------------- -------------------------------------------------- ---------------------------------------------------
Non-Performing  Assets  (BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/    Total+Nonperforming  Assets  (NPLs+Foreclosed  Real
to Loans and OREO       (BHCK2122+BHCK2774)Schedules HC-C, HC-M & HC-N     Estate+Other  Nonaccrual  &  Repossessed   Assets)/
                                                                           Total Loans + Foreclosed Real Estate
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of  Reserves  to  (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-   Total  Loan   Loss  and  Allocated   Transfer  Risk
Non-Performing Loans    BHCK3507) Schedules HC & HC-N                       Reserves/ Total  Nonperforming  Loans (Nonaccrual +
                                                                           Restructured)
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio      of      Net  (BHCK4635-BHCK4605)/(BHCK3516)                     Net charge offs for the period as  a percentage  of
Charge-Offs to Loans    Schedules HI-B & HC-K                              average loans.
----------------------- -------------------------------------------------- ---------------------------------------------------
Return on Assets        (BHCK4340/BHCK3368)                                Net Income as a percentage of Assets.
                         Schedules HI & HC-K
----------------------- -------------------------------------------------- ---------------------------------------------------
Net Interest Margin     (BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401    (Net Interest Income Fully Taxable  Equivalent,  if
                         +BHCK985) Schedules HI Memorandum and HC-K        available / Average Earning Assets)
----------------------- -------------------------------------------------- ---------------------------------------------------
Efficiency Ratio        (BHCK4093)/(BHCK4519+BHCK4079)                     (Noninterest    Expense)/   (Net  Interest   Income
                        Schedule HI                                        Fully   Taxable  Equivalent,   if  available,  plus
                                                                           Noninterest Income)
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio   of   Loans  to  (BHCKB528+BHCK5369)/BHCK2170)                      Total  Loans & Leases  (Net  of  Unearned  Income &
Assets                  Schedule HC                                        Gross of Reserve)/ Total Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio   of   Loans  to  (BHCKB528+BHCK5369)/(BHDM6631+BHD                  Total Loans  &  Leases  (Net of  Unearned  Income &
                        M6636+BHFN6631+BHFN6636)                           Gross  of   Reserve)/   Total  Deposits   (Includes
Deposits                Schedule HC                                        Domestic and Foreign Deposits)
----------------------- -------------------------------------------------- ---------------------------------------------------
Total Assets            (BHCK2170)                                         The  sum  of  total  assets.   Includes  cash   and
                        Schedule HC                                        balances   due    from   depository   institutions;
                                                                           securities;  federal  funds  sold   and  securities
                                                                           purchased   under  agreements  to resell; loans and
                                                                           lease   financing   receivables;  trading   assets;
                                                                           premises and fixed assets; other real estate owned;
                                                                           investments   in  unconsolidated  subsidiaries  and
                                                                           associated  companies;   customer's  liability   on
                                                                           acceptances   outstanding;  intangible  assets; and
                                                                           other assets.
----------------------- -------------------------------------------------- ---------------------------------------------------
Net Income              (BHCK4300)                                         The  sum  of  income  (loss)  before  extraordinary
                        Schedule HI                                        items   and  other  adjustments  and  extraordinary
                                                                           items;   and  other  adjustments,   net  of  income
                                                                           taxes.
----------------------- -------------------------------------------------- ---------------------------------------------------

</TABLE>



<PAGE>




                                First Banks, Inc.
                               Disclosure Schedule
                                     to the
                               Placement Agreement


Section 5.10  Subsidiaries  of the Company - All issued and  outstanding  common
              ----------------------------
stock of The San Francisco  Company,  a wholly owned  subsidiary of the Company,
and First Bank, a wholly owned subsidiary of The San Francisco Company, has been
pledged to Wells Fargo Bank,  National  Association as the Agent for the ratable
benefit of certain lenders  pursuant to the terms of that certain Secured Credit
Agreement dated as of August 14, 2003 among the Company,  the Lenders  signatory
thereto and the Agent,  as amended by that  certain  First  Amendment to Secured
Credit Agreement dated as of August 12, 2004 (the "Credit Agreement").


Section  5.16  Regulatory  Enforcement  Matters -  Pursuant  to the terms of the
               --------------------------------
Credit Agreement,  the Company has agreed not to pay any dividends on its common
stock and is  limited  as to the amount of any  dividend  paid on its  preferred
stock during any 12 month period.



<PAGE>
                                                                    Exhibit 4.30

         FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

         THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE COMPANY,  (B) PURSUANT TO A
REGISTRATION  STATEMENT  THAT HAS BEEN DECLARED  EFFECTIVE  UNDER THE SECURITIES
ACT,  (C) TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED
INSTITUTIONAL  BUYER IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH  RULE  144A,  (D)  TO A  NON-U.S.  PERSON  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH  (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY  FOR  ITS OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF SUCH AN  INSTITUTIONAL
ACCREDITED  INVESTOR,  FOR  INVESTMENT  PURPOSES  AND NOT WITH A VIEW TO, OR FOR
OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY  DISTRIBUTION  IN  VIOLATION  OF THE
SECURITIES  ACT,  OR (F)  PURSUANT  TO ANY OTHER  AVAILABLE  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION  SATISFACTORY  TO  IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF

<PAGE>

THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING AN AGGREGATE  PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE  PRINCIPAL  AMOUNT OF LESS THAN  $100,000.00  SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED  BY THE  INDENTURE  TO  CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

         Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                First Banks, Inc.

                               September 20, 2004

         First Banks,  Inc., a Missouri  corporation  (the "Company"  which term
includes any successor Person under the Indenture  hereinafter referred to), for
value  received  promises  to  pay  to  Wilmington  Trust  Company,  not  in its
individual capacity but solely as Institutional Trustee for First Bank Statutory
Trust II (the  "Holder") or  registered  assigns,  the  principal  sum of twenty
million six hundred nineteen thousand dollars  ($20,619,000.00) on September 20,
2034, and to pay interest on said principal sum from September 20, 2004, or from
the most recent  Interest  Payment Date (as defined below) to which interest has
been paid or duly  provided  for,  quarterly  (subject  to deferral as set forth
herein) in arrears on March 20, June 20,  September  20 and  December 20 of each
year or if such day is not a Business Day, then the next succeeding Business Day
(each such date, an "Interest  Payment Date") (it being understood that interest
accrues for any such non-Business Day),  commencing on the Interest Payment Date
in  December  2004,  at an  annual  rate  equal to  3.92438%  beginning  on (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest Payment Date in December 2004 and at an annual rate for each successive
period  beginning on (and including) the Interest Payment Date in December 2004,
and each  succeeding  Interest  Payment Date, and ending on (but  excluding) the
next succeeding Interest Payment Date (each a "Distribution  Period"),  equal to
3-Month LIBOR,  determined as described  below,  plus 2.05% (the "Coupon Rate"),
applied to the principal  amount hereof,  until the principal  hereof is paid or
duly provided for or made  available for payment,  and on any overdue  principal
and  (without  duplication  and to the extent that  payment of such  interest is
enforceable  under  applicable  law)  on any  overdue  installment  of  interest
(including  Additional  Interest)  at the  Interest  Rate  in  effect  for  each
applicable  period,  compounded  quarterly,  from the dates such amounts are due
until  they are paid or made  available  for  payment.  The  amount of  interest
payable for any period  will be  computed  on the basis of the actual  number of
days  in  the  Distribution  Period  concerned  divided  by  360.  The  interest
installment  so  payable,  and  punctually  paid or duly  provided  for,  on any
Interest Payment Date will, as provided in the Indenture,  be paid to the Person

<PAGE>

in  whose  name  this  Debenture  (or one or  more  Predecessor  Securities)  is
registered at the close of business on the regular record date for such interest
installment,  which  shall be five days  prior to the day on which the  relevant
Interest  Payment Date occurs.  Any such interest  installment not so punctually
paid or duly provided for shall  forthwith  cease to be payable to the Holder on
such  regular  record  date and may be paid to the  Person  in whose  name  this
Debenture (or one or more Predecessor  Securities) is registered at the close of
business on a special record date.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month U.S. dollar deposits  determined by the Trustee in
the following  order of priority:  (i) the rate  (expressed as a percentage  per
annum) for U.S. dollar  deposits  having a three-month  maturity that appears on
Telerate Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
Date  ("Telerate  Page 3750" means the display  designated as "Page 3750" on the
Dow Jones  Telerate  Service or such other page as may replace Page 3750 on that
service or such other  service or  services as may be  nominated  by the British
Bankers'  Association  as the  information  vendor for the purpose of displaying
London  interbank  offered rates for U.S.  dollar  deposits);  (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the  principal  London  offices of four  leading  banks in the London  interbank
market to provide such banks' offered  quotations  (expressed as percentages per
annum) to prime banks in the London  interbank  market for U.S.  dollar deposits
having  a  three-month   maturity  as  of  11:00  a.m.  (London  time)  on  such
Determination Date. If at least two quotations are provided,  3-Month LIBOR will
be the  arithmetic  mean of such  quotations;  (iii)  if  fewer  than  two  such
quotations  are  provided as  requested  in clause (ii) above,  the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such  Determination  Date. If at least
two such  quotations are provided,  3-Month LIBOR will be the arithmetic mean of
such  quotations;  and (iv) if fewer than two such  quotations  are  provided as
requested  in  clause  (iii)  above,  3-Month  LIBOR  will  be a  3-Month  LIBOR
determined with respect to the Distribution  Period  immediately  preceding such
current  Distribution  Period.  If the rate for U.S.  dollar  deposits  having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such  Determination  Date. As used
herein,  "Determination  Date"  means the date that is two London  Banking  Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All percentages  resulting from any calculations on the Debentures will
be rounded, if necessary,  to the nearest one hundred-thousandth of a percentage
point,  with five  one-millionths  of a percentage  point rounded  upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts  used in or  resulting  from such  calculation  will be  rounded  to the
nearest cent (with one-half cent being rounded upward)).

         The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained  for that  purpose in any coin or  currency  of the United  States of
America  that at the time of payment is legal  tender for  payment of public and
private debts; provided,  however, that payment of interest may be made by check
               --------   -------
mailed to the registered holder at such address as shall appear in the Debenture
Register if a request for a wire  transfer by such holder has not been  received
by the Company or by wire transfer to an account appropriately designated by the
holder  hereof.  Notwithstanding  the  foregoing,  so long as the holder of this

<PAGE>

Debenture  is the  Institutional  Trustee,  the payment of the  principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Trustee.

         So  long  as  no  Extension  Event  of  Default  has  occurred  and  is
continuing,  the Company  shall have the right,  from time to time,  and without
causing an Event of Default,  to defer payments of interest on the Debentures by
extending  the interest  payment  period on the  Debentures at any time and from
time  to  time  during  the  term of the  Debentures,  for up to 20  consecutive
quarterly  periods (each such extended  interest  payment period,  an "Extension
Period"),  during  which  Extension  Period no  interest  (including  Additional
Interest)  shall be due and payable  (except any Additional Sums that may be due
and  payable).  No  Extension  Period may end on a date  other than an  Interest
Payment Date.  During an Extension  Period,  interest will continue to accrue on
the Debentures,  and interest on such accrued  interest will accrue at an annual
rate equal to the Interest Rate in effect for such Extension Period,  compounded
quarterly  from the date such  interest  would have been payable were it not for
the Extension  Period, to the extent permitted by law (such interest referred to
herein as "Additional  Interest").  At the end of any such Extension  Period the
Company  shall pay all  interest  then  accrued  and  unpaid  on the  Debentures
(together  with  Additional  Interest  thereon);   provided,  however,  that  no
                                                   --------   -------
Extension Period may extend beyond the Maturity Date; provided further, however,
                                                      -------- -------  -------
that  during any such  Extension  Period,  the  Company  shall not and shall not
permit  any  Affiliate  to  engage  in  any of the  activities  or  transactions
described  on  the  reverse  side  hereof  and in the  Indenture.  Prior  to the
termination of any Extension Period, the Company may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension Period shall bear Additional Interest.  The Company must give the
Trustee  notice of its  election to begin or extend an  Extension  Period by the
close of business at least 5 Business  Days prior to the  Interest  Payment Date
with respect to which interest on the Debentures  would have been payable except
for the election to begin or extend such Extension Period.

         The indebtedness evidenced by this Debenture is, to the extent provided
in the  Indenture,  subordinate  and  junior  in right of  payment  to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the  provisions of the Indenture  with respect  thereto.  Each holder of this
Debenture,  by  accepting  the  same,  (a)  agrees to and shall be bound by such
provisions,  (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or  appropriate to acknowledge or effectuate the
subordination   so   provided   and  (c)   appoints   the  Trustee  his  or  her
attorney-in-fact  for any and all such purposes.  Each holder hereof,  by his or
her  acceptance  hereof,  hereby  waives  all  notice of the  acceptance  of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness,  whether now outstanding or hereafter incurred,  and waives
reliance by each such holder upon said provisions.

         This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
certificate of  authentication  hereon shall have been signed by or on behalf of
the Trustee.

         The  provisions  of this  Debenture  are  continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF, the Company has duly executed this certificate.

                                            FIRST BANKS, INC.


                                            By: /s/   Allen H. Blake
                                               ---------------------------------
                                               Name:  Allen H. Blake
                                               Title: President and
                                                      Chief Executive Officer


                          CERTIFICATE OF AUTHENTICATION

         This  is one  of the  Debentures  referred  to in the  within-mentioned
Indenture.

                                            WILMINGTON TRUST COMPANY, as Trustee


                                            By: /s/   Christopher J. Monigle
                                               ---------------------------------
                                                      Authorized Officer



<PAGE>
                              REVERSE OF DEBENTURE
         This  Debenture  is  one  of  the  floating  rate  junior  subordinated
deferrable interest debentures of the Company,  all issued or to be issued under
and pursuant to the Indenture dated as of September 20, 2004 (the  "Indenture"),
duly  executed  and  delivered  between the Company  and the  Trustee,  to which
Indenture reference is hereby made for a description of the rights,  limitations
of rights,  obligations,  duties and immunities  thereunder of the Trustee,  the
Company  and the  holders  of the  Debentures.  The  Debentures  are  limited in
aggregate principal amount as specified in the Indenture.

         Upon the  occurrence and  continuation  of a Special Event prior to the
Interest  Payment Date in September  2009,  the Company  shall have the right to
redeem the Debentures in whole,  but not in part, at any Interest  Payment Date,
within 120 days following the  occurrence of such Special Event,  at the Special
Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in  part,  but in all  cases in a  principal  amount  with  integral
multiples of  $1,000.00,  on any Interest  Payment Date on or after the Interest
Payment Date in September 2009, at the Redemption Price.

         Prior to  10:00  a.m.  New York  City  time on the  Redemption  Date or
Special  Redemption  Date,  as  applicable,  the Company  will  deposit with the
Trustee  or with one or more  paying  agents an amount  of money  sufficient  to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate  Redemption  Price or
Special Redemption Price.

         If all,  or less than  all,  the  Debentures  are to be  redeemed,  the
Company  will give the  Trustee  notice  not less than 45 nor more than 60 days,
respectively,  prior to the  Redemption  Date or  Special  Redemption  Date,  as
applicable,  as to the aggregate  principal  amount of Debentures to be redeemed
and the Trustee shall select,  in such manner as in its sole discretion it shall
deem  appropriate  and fair,  the  Debentures  or portions  thereof (in integral
multiples of $1,000.00) to be redeemed.

         Notwithstanding  the  foregoing,  any  redemption  of Debentures by the
Company  shall be subject  to the  receipt  of any and all  required  regulatory
approvals.

         In case an Event of Default described in Section 5.1(a),  (d) or (e) of
the Indenture shall have occurred and be continuing, upon demand of the Trustee,
the  principal  of all of the  Debentures  shall  become due and  payable in the
manner, with the effect and subject to the conditions provided in the Indenture.

         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee,  with the  consent  of the  holders  of not  less  than a  majority  in
aggregate principal amount of the Debentures at the time outstanding, to execute
supplemental  indentures for the purpose of adding any provisions to or changing
in any manner or  eliminating  any of the provisions of this Indenture or of any
supplemental  indenture  or of modifying in any manner the rights of the holders
of the Debentures;  provided, however, that no such supplemental indenture shall
                    --------  -------
without  the  consent of the  holders of each  Debenture  then  outstanding  and
affected  thereby (i) change the fixed maturity of any Debenture,  or reduce the
principal  amount thereof or any premium  thereon,  or reduce the rate or extend
the time of  payment  of  interest  thereon,  or reduce  any  amount  payable on
redemption  thereof or make the  principal  thereof or any  interest  or premium
thereon  payable  in any  coin or  currency  other  than  that  provided  in the
Debentures,  or impair or affect the right of any  Securityholder  to  institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture.
<PAGE>

         The Indenture  also  contains  provisions  permitting  the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
on behalf of the  holders  of all of the  Debentures  to waive  (or  modify  any
previously  granted  waiver of) any past  default or Event of  Default,  and its
consequences,  except a default (a) in the payment of principal of, premium,  if
any,  or  interest  on any of the  Debentures,  (b) in respect of  covenants  or
provisions  hereof or of the  Indenture  which  cannot be  modified  or  amended
without the consent of the holder of each Debenture affected,  or (c) in respect
of the covenants contained in Section 3.9 of the Indenture;  provided,  however,
                                                             --------   -------
that if the  Debentures  are held by the Trust or a trustee of such trust,  such
waiver or  modification  to such waiver shall not be effective until the holders
of a majority in Liquidation  Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
                                                         --------  -------
if the consent of the holder of each  outstanding  Debenture is  required,  such
waiver shall not be effective  until each holder of the Trust  Securities of the
Trust shall have  consented  to such waiver.  Upon any such waiver,  the default
covered  thereby  shall be deemed to be cured for all purposes of the  Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any  subsequent  or other  default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by the  Indenture,  said default or Event of
Default shall for all purposes of the  Debentures and the Indenture be deemed to
have been cured and to be not continuing.

         No reference herein to the Indenture and no provision of this Debenture
or of the Indenture  shall alter or impair the obligation of the Company,  which
is absolute and unconditional,  to pay the principal of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and place
and at the rate and in the money herein prescribed.

         The Company has agreed that if Debentures  are initially  issued to the
Trust or a  trustee  of such  Trust in  connection  with the  issuance  of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such  Trust) and (i) there shall have  occurred  and be  continuing  an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities  Guarantee,  or (iii) the Company shall
have  given  notice  of its  election  to  defer  payments  of  interest  on the
Debentures by extending the interest  payment period as provided herein and such
Extension  Period,  or any  extension  thereof,  shall be  continuing,  then the
Company  shall not,  and shall not allow any  Affiliate  of the  Company to, (x)
declare or pay any dividends or distributions on, or redeem, purchase,  acquire,
or make a  liquidation  payment  with respect to, any of the  Company's  capital
stock or its  Affiliates'  capital  stock  (other than  payments of dividends or
distributions to the Company) or make any guarantee payments with respect to the
foregoing  or (y) make any payment of  principal  of or interest or premium,  if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures  (other  than,  with  respect  to  clauses  (x)  and (y)  above,  (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company  in  connection  with any  employment  contract,  benefit  plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company (or securities  convertible  into or  exercisable  for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable  Extension  Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary  of the Company) for any class or series of the  Company's
capital  stock or of any class or series of the Company's  indebtedness  for any
class or series of the Company's  capital stock,  (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange  provisions  of such capital stock or the security  being  converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).
<PAGE>

         The  Debentures  are issuable  only in  registered,  certificated  form
without coupons and in minimum  denominations of $100,000.00 and any multiple of
$1,000.00 in excess  thereof.  As provided in the  Indenture  and subject to the
transfer  restrictions  and  limitations as may be contained  herein and therein
from time to time,  this Debenture is  transferable  by the holder hereof on the
Debenture  Register of the Company.  Upon due  presentment  for  registration of
transfer  of any  Debenture  at the  Principal  Office of the  Trustee or at any
office or agency of the  Company  maintained  for such  purpose as  provided  in
Section 3.2 of the  Indenture,  the Company  shall  execute,  the Company or the
Trustee  shall  register  and the  Trustee  or the  Authenticating  Agent  shall
authenticate  and make  available for delivery in the name of the  transferee or
transferees  a  new  Debenture  for  a  like  aggregate  principal  amount.  All
Debentures  presented  for  registration  of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating Agent)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer  in  form   satisfactory  to,  the  Company  and  the  Trustee  or  the
Authenticating Agent duly executed by the holder or his attorney duly authorized
in writing.  No service charge shall be made for any exchange or registration of
transfer of Debentures,  but the Company or the Trustee may require payment of a
sum  sufficient to cover any tax, fee or other  governmental  charge that may be
imposed in connection therewith.

         Prior to due presentment for registration of transfer of any Debenture,
the Company,  the Trustee,  any  Authenticating  Agent,  any paying  agent,  any
transfer  agent and any  Debenture  registrar  may deem the Person in whose name
such Debenture  shall be registered  upon the Debenture  Register to be, and may
treat  him as,  the  absolute  owner  of such  Debenture  (whether  or not  such
Debenture  shall be  overdue)  for the  purpose  of  receiving  payment of or on
account of the principal of, premium, if any, and interest on such Debenture and
for all  other  purposes;  and  neither  the  Company  nor the  Trustee  nor any
Authenticating  Agent  nor any  paying  agent  nor any  transfer  agent  nor any
Debenture  registrar  shall be affected by any notice to the contrary.  All such
payments  so made to any holder  for the time  being or upon his order  shall be
valid,  and, to the extent of the sum or sums so paid,  effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.

         No recourse for the payment of the principal of or premium,  if any, or
interest  on any  Debenture,  or for any claim  based  thereon or  otherwise  in
respect  thereof,  and no  recourse  under or upon any  obligation,  covenant or
agreement of the Company in the Indenture or in any supplemental  indenture,  or
in  any  such  Debenture,  or  because  of  the  creation  of  any  indebtedness
represented  thereby,  shall  be  had  against  any  incorporator,  stockholder,
employee,  officer or director, as such, past, present or future, of the Company
or of any  successor  Person of the  Company,  either  directly  or through  the
Company  or any  successor  Person  of the  Company,  whether  by  virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise,  it being expressly  understood that all such liability is
hereby  expressly  waived and released as a condition of, and as a consideration
for, the execution of the Indenture and the issue of the Debentures.

         Capitalized terms used and not defined in this Debenture shall have the
meanings  assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.

         THE INDENTURE AND THE DEBENTURES  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.

<PAGE>
                                                                    Exhibit 4.31
                          FIRST BANK STATUTORY TRUST II
                                FIRST BANKS, INC.

                             SUBSCRIPTION AGREEMENT

                               September 20, 2004

         THIS  SUBSCRIPTION  AGREEMENT (this  "Agreement") made among First Bank
Statutory  Trust II (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  et seq.),  First Banks,  Inc., a Missouri  corporation,  with its
principal  offices  located  at 600  James S.  McDonnell  Boulevard,  Hazelwood,
Missouri 63042 (the "Company" and, collectively with the Trust, the "Offerors"),
and First Tennessee Bank National Association (the "Purchaser").

                                    RECITALS:

         A.   The Trust desires  to issue 20,000 of its  Floating  Rate  Capital
Securities (the "Capital Securities"),  liquidation amount $1,000.00 per Capital
Security,  representing  an undivided  beneficial  interest in the assets of the
Trust  (the  "Offering"),  to be issued  pursuant  to an  Amended  and  Restated
Declaration of Trust (the  "Declaration")  by and among the Company,  Wilmington
Trust Company ("WTC"),  the  administrators  named therein,  and the holders (as
defined therein),  which Capital  Securities are to be guaranteed by the Company
with respect to  distributions  and payments upon  liquidation,  redemption  and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and

         B.   The proceeds from  the  sale of the  Capital  Securities  will  be
combined  with the  proceeds  from the sale by the Trust to the  Company  of its
common  securities,  and will be used by the  Trust to  purchase  an  equivalent
amount of Floating Rate Junior  Subordinated  Deferrable  Interest Debentures of
the  Company  (the  "Debentures")  to be issued by the  Company  pursuant  to an
indenture to be executed by the Company and WTC, as trustee  (the  "Indenture");
and

         C.   In consideration of the premises and  the  mutual  representations
and covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

         1.1. Upon the execution of this Agreement,  the Purchaser hereby agrees
to  purchase  from  the  Trust  2,150  Capital  Securities  at a price  equal to
$1,000.00 per Capital  Security (the  "Purchase  Price") and the Trust agrees to
sell such Capital  Securities  to the Purchaser  for said  Purchase  Price.  The
rights  and  preferences  of  the  Capital  Securities  are  set  forth  in  the
Declaration.  The Purchase  Price is payable in immediately  available  funds on
September  20,  2004,  or such other  business day as may be  designated  by the
Purchaser,  but in no event later than September 30, 2004 (the "Closing  Date").
The Offerors  shall provide the Purchaser  wire transfer  instructions  no later
than 1 day following the date hereof.

         1.2. As a  condition  to  its  purchase  of  the  Capital  Securities,
Purchaser  shall  enter  into the  Joinder  Agreement  to the  Master  Custodian
Agreement,  the form of which is  attached  hereto as Exhibit A (the  "Custodian
Agreement")  and,  in  accordance  therewith,  the  certificate  for the Capital
Securities  shall be delivered by the Trust on the Closing Date to the custodian
in accordance  with the Custodian  Agreement.  Purchaser  shall not transfer the
Capital  Securities to any person or entity except in accordance  with the terms
of the Custodian Agreement.
<PAGE>

         1.3. The Placement Agreement,  dated September 10, 2004 (the "Placement
Agreement"), among the Offerors and the placement agents identified therein (the
"Placement Agents") includes certain  representations and warranties,  covenants
and conditions to closing and certain other matters governing the Offering.  The
Placement  Agreement is hereby incorporated by reference into this Agreement and
the Purchaser shall be entitled to each of the benefits of the Placement  Agents
and the Purchaser under the Placement Agreement and shall be entitled to enforce
the  obligations of the Offerors  under such Placement  Agreement as fully as if
the Purchaser were a party to such Placement Agreement.

         1.4. Anything herein or in the Placement Agreement notwithstanding, the
Offerors  acknowledge  and agree that, so long as Purchaser holds some or all of
the Capital  Securities,  the Purchaser may in its discretion  from time to time
transfer or sell,  or sell or grant  participation  interests in, some or all of
such  Capital  Securities  to  one or  more  parties,  provided  that  any  such
transaction complies, as applicable,  with the registration  requirements of the
Securities  Act of  1933,  as  amended  (the  "Securities  Act")  and any  other
applicable  securities  laws,  is  pursuant  to an  exemption  therefrom,  or is
otherwise not subject thereto.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         2.1. The  Purchaser  understands  and  acknowledges  that  none of  the
Capital  Securities,  the Debentures or the Guarantee have been registered under
the Securities Act or any other applicable securities law, are being offered for
sale  by  the  Trust  in  transactions  not  requiring  registration  under  the
Securities Act, and may not be offered,  sold, pledged or otherwise  transferred
by the Purchaser except in compliance with the registration  requirements of the
Securities Act or any other applicable securities laws, pursuant to an exemption
therefrom or in a transaction not subject thereto.

         2.2. The Purchaser represents and warrants that, except as contemplated
under Section 1.4 hereof,  it is purchasing  the Capital  Securities for its own
account,  for  investment,  and not  with a view  to,  or for  offer  or sale in
connection with, any distribution  thereof in violation of the Securities Act or
other  applicable  securities  laws,  subject to any requirement of law that the
disposition  of its  property be at all times  within its control and subject to
its  ability  to  resell  such  Capital  Securities  pursuant  to  an  effective
registration  statement under the Securities Act or under Rule 144A or any other
exemption  from  registration  available  under the  Securities Act or any other
applicable securities law.

         2.3. The  Purchaser  represents  and warrants that neither the Offerors
nor the  Placement  Agents are acting as a fiduciary or financial or  investment
adviser for the Purchaser.

         2.4. The Purchaser  represents and warrants that it is not relying (for
purposes  of making any  investment  decision  or  otherwise)  upon any  advice,
counsel or  representations  (whether written or oral) of the Offerors or of the
Placement Agents.

         2.5. The  Purchaser  represents  and warrants that (a) it has consulted
with  its own  legal,  regulatory,  tax,  business,  investment,  financial  and
accounting  advisers  in  connection  herewith  to  the  extent  it  has  deemed
necessary,  (b) it has had a  reasonable  opportunity  to ask  questions  of and
receive  answers from officers and  representatives  of the Offerors  concerning
their respective  financial condition and results of operations and the purchase
of the Capital  Securities,  and any such  questions  have been  answered to its
satisfaction,  (c) it has had the  opportunity to review all publicly  available
records and filings  concerning the Offerors and it has carefully  reviewed such
records and filings that it considers relevant to making an investment decision,
and (d) it has made its own  investment  decisions  based upon its own judgment,
due diligence  and advice from such advisers as it has deemed  necessary and not
upon any view expressed by the Offerors or the Placement Agents.
<PAGE>

         2.6. The  Purchaser  represents  and  warrants  that it is a "qualified
institutional buyer" as defined under Rule 144A under the Securities Act. If the
Purchaser is a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A
under the Securities Act, it owns and invests on a discretionary  basis not less
than U.S.  $25,000,000.00  in securities of issuers that are not affiliated with
it. The Purchaser is not a participant-directed  employee plan, such as a 401(k)
plan,  or any  other  type of plan  referred  to in  paragraph  (a)(1)(i)(D)  or
(a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F)
of Rule 144A that holds the assets of such a plan, unless  investment  decisions
with respect to the plan are made solely by the fiduciary, trustee or sponsor of
such plan.

         2.7. The  Purchaser  represents  and warrants that on each day from the
date on which it acquires the Capita  Securities through and  including the date
on which it disposes of its interests in the Capital  Securities,  either (i) it
is not (a) an "employee benefit plan" (as defined in Section  3(3) of the United
States Employee  Retirement  Income Security Act of 1974, as amended  ("ERISA"))
                                                                        -----
which is subject to the  provisions of Part 4 of Subtitle B of Title I of ERISA,
or any entity whose  underlying  assets  include the assets of any such plan (an
"ERISA  Plan"),  (b) any other "plan" (as defined in Section  4975(e)(1)  of the
 -----------
United States  Internal  Revenue Code of 1986, as amended (the "Code")) which is
                                                                ----
underlying assets include the assets of any such plan (a "Plan"),  (c) an entity
                                                          ----
whose underlying  assets include the assets of any such ERISA Plan or other Plan
by reason of Department of Labor regulation section 2510.3-101 or otherwise,  or
(d) a governmental or church plan that is subject to any federal, state or local
law which is substantially  similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code (a "Similar  Law");  or (ii) the purchase,  holding and
                             ------------
disposition of the Capital  Securities by it will satisfy the  requirements  for
exemptive relief under Prohibited  Transaction  Class Exemption  ("PTCE") 84-14,
                                                                   ----
PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar exemption, or, in the
case of a plan  subject  to a  Similar  Law,  will not  result  in a  non-exempt
violation of such Similar Law.

         2.8. The  Purchaser  represents  and warrants  that it is acquiring the
Capital  Securities as principal for its own account for investment  and, except
as  contemplated  under Section 1.4 hereof,  not for sale in connection with any
distribution  thereof.  It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were not
specifically  solicited  from any person owning a beneficial  interest in it for
the purpose of enabling it to purchase any Capital Securities.  The Purchaser is
not a (i) partnership,  (ii) common trust fund or (iii) special trust,  pension,
profit  sharing or other  retirement  trust fund or plan in which the  partners,
beneficiaries  or  participants,  as  applicable,  may designate the  particular
investments to be made or the allocation of any investment  among such partners,
beneficiaries  or  participants,  and except as  contemplated  under Section 1.4
hereof, it agrees that it shall not hold the Capital  Securities for the benefit
of any other  person  and shall be the sole  beneficial  owner  thereof  for all
purposes  and that it shall  not sell  participation  interests  in the  Capital
Securities  or enter  into any  other  arrangement  pursuant  to which any other
person shall be entitled to a  beneficial  interest in the  distribution  on the
Capital Securities.  The Capital Securities  purchased directly or indirectly by
the Purchaser  constitute  an investment of no more than 40% of its assets.  The
Purchaser  understands  and agrees  that any  purported  transfer of the Capital
Securities to a purchaser which would cause the  representations  and warranties
of Section 2.6 and this Section 2.8 to be  inaccurate  shall be null and void ab
initio and the Offerors  retain the right to resell any Capital  Securities sold
to non-permitted transferees.

         2.9. The Purchaser  represents  and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties  specified  herein,  and to consummate the transactions  contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.
<PAGE>

        2.10. The  Purchaser  represents  and warrants  that  no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.

        2.11. The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.

        2.12. The Purchaser  understands and  acknowledges that the Company will
rely  upon  the   truth  and   accuracy   of  the   foregoing   acknowledgments,
representations,  warranties  and  agreements  and  agrees  that,  if any of the
acknowledgments,  representations,  warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate,  it
shall promptly notify the Company.

       2.13.  The Purchaser understands that no public market exists for any  of
the Capital  Securities,  and that it is unlikely that a public market will ever
exist for the Capital Securities.

                                   ARTICLE III

                                  MISCELLANEOUS

         3.1. Any notice or other  communication given hereunder shall be deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

         To the Offerors:   First Banks, Inc.
                            600 James S. McDonnell Boulevard
                            Hazelwood, Missouri 63042
                            Attention: Lisa K. Vansickle
                            Fax:  314-592-6621

         To the Purchaser:  First Tennessee Bank National Association
                            845 Crossover Lane, Suite 150
                            Memphis, Tennessee 38117
                            Attention: David Work
                            Fax:  901-435-7983

         Unless otherwise expressly provided herein,  notices shall be deemed to
have been  given on the date of  mailing,  except  notice of change of  address,
which shall be deemed to have been given when received.

         3.2. This Agreement shall not be changed, modified or amended except by
a writing  signed by the parties to be charged,  and this  Agreement  may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.

         3.3. Upon  the  execution  and  delivery  of  this  Agreement  by   the
Purchaser,  this  Agreement  shall become a binding  obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.
<PAGE>

         3.4. NOTWITHSTANDING  THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES  HERETO,  THE PARTIES  EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

         3.5. The  parties  agree  to  execute  and  deliver  all  such  further
documents,  agreements and instruments and take such other and further action as
may be  necessary  or  appropriate  to carry out the purposes and intent of this
Agreement.

         3.6. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original,  but all of which shall  together  constitute
one and the same instrument.

         3.7. In  the  event  that any one or more of the  provisions  contained
herein,  or the  application  thereof  in any  circumstances,  is held  invalid,
illegal or unenforceable in any respect for any reason,  the validity,  legality
and  enforceability  of any such  provision  in every  other  respect and of the
remaining  provisions  hereof shall not be in any way  impaired or affected,  it
being  intended  that  all of the  Offerors'  and  the  Purchaser's  rights  and
privileges shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF,  this Agreement is agreed to and accepted as of the
day and year first written above.


FIRST TENNESSEE BANK NATIONAL ASSOCIATION


By:/s/       David S. Work
   ----------------------------------------
Print Name:  David S. Work
           --------------------------------
Title:       Executive Vice President
      -------------------------------------

                                           FIRST BANKS, INC.


                                           By:/s/  Allen H. Blake
                                              ----------------------------------

                                           Name:   Allen H. Blake
                                                --------------------------------

                                           Title:  President and
                                                   Chief Executive Officer
                                                 -------------------------------

                                           FIRST BANK STATUTORY TRUST II


                                           By:/s/  Allen H. Blake
                                              ----------------------------------

                                           Name:   Allen H. Blake
                                                --------------------------------

                                           Title:  Administrator




<PAGE>

                       EXHIBIT A TO SUBSCRIPTION AGREEMENT
                       -----------------------------------

                       FORM OF MASTER CUSTODIAN AGREEMENT

        This  Master Custodian  Agreement (this "Agreement") is made and entered
into as of May 27,  2004 by and among each  purchaser  (each a  "Purchaser"  and
collectively the  "Purchasers")  that enters into a Joinder  Agreement  attached
hereto as Exhibit A (the  "Joinder  Agreement"),  Wilmington  Trust  Company,  a
Delaware banking  corporation (the  "Custodian") and each financial  institution
(each an "Issuer" and  collectively  the  "Issuers")  that enters into a Joinder
Agreement.  The Purchasers  and the Issuers are sometimes  referred to herein as
the "Interested Parties".

                                    RECITALS

        A.  The  Purchasers  intend  to  purchase  from  the  Issuers  or  their
respective  statutory  business  trust  subsidiaries  Securities  issued by such
Issuers (the "Securities").

        B. In order to facilitate  any future  transfer of all or any portion of
the Securities by the Purchasers,  the Interested  Parties intend to provide for
the custody of the  Securities  and certain  other  securities  on the terms set
forth herein.

        C. The Custodian is willing to hold and administer  such  securities and
to distribute the securities  held by it in accordance with the agreement of the
Interested  Parties and/or  arbitral or judicial orders and decrees as set forth
in this Agreement.

        NOW, THEREFORE, in consideration of the foregoing,  the mutual covenants
herein  contained  and  other  good and  valuable  consideration  (the  receipt,
adequacy  and  sufficiency  of which are hereby  acknowledged  by the parties by
their execution hereof), the parties agree as follows:

1.   Joinder  Agreement.  On or before  the  delivery  to the  Custodian  of any
     ------------------
Securities  issued by an Issuer,  such Issuer and the  applicable  Purchaser  or
Purchasers  shall enter into a Joinder  Agreement  substantially  in the form of
Exhibit A attached  hereto,  with such  additional  provisions as the Interested
Parties may wish to add from time to time. An executed copy of each such Joinder
Agreement  shall be  delivered  to the  Custodian on or before the date on which
such Issuer's  Securities are issued.  This Agreement and each Joinder Agreement
constitute the entire agreement among the Purchasers,  Issuers and the Custodian
pertaining to the subject matter hereof.

2.   Delivery of  Securities.  On or before each date on which an Issuer  enters
     -----------------------
into a Joinder Agreement:

          (a) The  applicable  Issuer shall  deliver to the  Custodian a signed,
          authenticated  certificate  representing a beneficial interest in such
          Issuer's  Securities,  with the Purchaser  designated as owner thereof
          (the   "Original   Securities").   The   Custodian   shall   have   no
          responsibility for the genuineness,  validity,  market value, title or
          sufficiency for any intended purpose of the Original Securities.

          (b) The applicable  Issuer shall deliver to the Custodian five signed,
          unauthenticated  and undated  certificates with no holder  designated,
          each of which when  completed  representing  a beneficial  interest in
          such Issuer's Securities (the "Replacement Securities"). The Custodian
          shall have no  responsibility  for the genuineness,  validity,  market
          value,   title  or  sufficiency  for  any  intended   purpose  of  the
          Replacement Securities.
<PAGE>

3.   Timing of Release from Custody. Upon receipt of a signed transfer notice in
     ------------------------------
the form of  Exhibit  B to be  delivered  in  connection  with  the  Purchaser's
transfer of all or any portion of an Issuer's Securities,  on the effective date
set forth in such transfer notice, the Custodian shall:

          (a) Deliver the Original Securities  certificate  corresponding to the
          Issuer  identified in the transfer notice to Wilmington Trust Company,
          as Institutional Trustee under the Amended and Restated Declaration of
          Trust, dated as of the date of the applicable Joinder Agreement, among
          the Institutional  Trustee,  the Company and the administrators  named
          therein (the  "Declaration") or as Trustee under the Indenture,  dated
          as of the  date  of the  applicable  Joinder  Agreement,  between  the
          Company and the Trustee  (the  "Indenture"),  as  applicable,  for the
          purpose of canceling the applicable Original Securities certificate in
          accordance  with  the  terms  of the  Issuer's  Amended  and  Restated
          Declaration of Trust or Indenture, as applicable; and

          (b) Deliver the Replacement Securities certificate(s) corresponding to
          the Issuer  identified in the transfer notice in the amount designated
          in and in  accordance  with the  transfer  notice  for the  purpose of
          completing and  authenticating the applicable  Replacement  Securities
          certificate(s)   in   accordance   with  the  terms  of  the  Issuer's
          Declaration or Indenture, as applicable.

          The initial  term of this  Agreement  shall be one year (the  "Initial
          Term").  Unless FTN  Financial  Capital  Markets or Keefe,  Bruyette &
          Woods,  Inc.  shall  otherwise  notify the Custodian in writing,  upon
          expiration of the Initial Term,  this  Agreement  shall  automatically
          renew  for  an  additional   one-year  term  and  shall   continue  to
          automatically  renew for succeeding  one-year terms until  terminated.
          Upon  termination of this Agreement,  the Custodian and the Interested
          Parties shall be released from all obligations  hereunder,  except for
          the indemnification  obligations set forth in paragraphs 5(b) and 5(c)
          hereof.

4.   Concerning the Custodian.
     ------------------------

          (a) Each Interested  Party  acknowledges and agrees that the Custodian
          (i) shall not be responsible for any of the agreements  referred to or
          described   herein   (including   without   limitation   any  Issuer's
          Declaration or Indenture relating to such Issuer's Securities), or for
          determining  or  compelling  compliance   therewith,   and  shall  not
          otherwise  be bound  thereby,  (ii)  shall be  obligated  only for the
          performance of such duties as are expressly and specifically set forth
          in this  Agreement  on its part to be  performed,  each of  which  are
          ministerial  (and shall not be construed to be  fiduciary)  in nature,
          and no implied  duties or  obligations  of any kind shall be read into
          this Agreement  against or on the part of the  Custodian,  (iii) shall
          not be  obligated to take any legal or other  action  hereunder  which
          might in its  judgment  involve  or cause it to incur any  expense  or
          liability   unless  it  shall  have  been  furnished  with  acceptable
          indemnification,  (iv) may rely on and shall be protected in acting or
          refraining   from  acting  upon  any  written   notice,   instruction,
          instrument,   statement,   certificate,   request  or  other  document
          furnished to it hereunder and believed by it to be genuine and to have
          been  signed or  presented  by the  proper  person,  and shall have no
          responsibility  for  determining  the  accuracy  thereof,  and (v) may
          consult counsel  satisfactory to it, including  in-house counsel,  and
          the opinion or advice of such  counsel in any  instance  shall be full
          and complete  authorization  and  protection  in respect of any action
          taken,  suffered  or  omitted  by it  hereunder  in good  faith and in
          accordance with the opinion or advice of such counsel.

          (b) The  Custodian  shall not be liable to anyone for any action taken
          or  omitted  to be taken  by it  hereunder  except  in the case of the
          Custodian's negligence or willful misconduct in breach of the terms of
          this  Agreement.  In no  event  shall  the  Custodian  be  liable  for
          indirect, punitive, special or consequential damage or loss (including
          but not limited to lost profits) whatsoever, even if the Custodian has
          been informed of the  likelihood of such loss or damage and regardless
          of the form of action.
<PAGE>

          (c) The  Custodian  shall  have no  more  or  less  responsibility  or
          liability  on  account  of any action or  omission  of any  book-entry
          depository,  securities intermediary or other subcustodian employed by
          the  Custodian  than  any  such  book-entry   depository,   securities
          intermediary or other subcustodian has to the Custodian, except to the
          extent  that such action or  omission  of any  book-entry  depository,
          securities  intermediary  or  other  subcustodian  was  caused  by the
          Custodian's own negligence,  bad faith or willful misconduct in breach
          of this Agreement.

          (d) The recitals  contained herein shall be taken as the statements of
          each of the Issuers and the  Purchaser,  and the Custodian  assumes no
          responsibility for the correctness of the same. The Custodian makes no
          representations as to the validity or sufficiency of this Agreement or
          the Securities.  The Custodian shall not be accountable for the use or
          application  by any of the Issuers or the Purchaser of any  Securities
          or the proceeds of any Securities.

5. Compensation, Expense Reimbursement and Indemnification.
   -------------------------------------------------------

          (a) The  Custodian  shall be  compensated  pursuant to a separate  fee
          agreement.

          (b) Each of the Interested Parties agrees,  jointly and severally,  to
          reimburse the Custodian on demand for all costs and expenses  incurred
          in  connection  with  the  administration  of  this  Agreement  or the
          performance or observance of its duties  hereunder which are in excess
          of its customary compensation for normal services hereunder, including
          without limitation, payment of any legal fees and expenses incurred by
          the Custodian in connection  with resolution of any claim by any party
          hereunder.

          (c) Each of the Interested  Parties covenants and agrees,  jointly and
          severally, to indemnify the Custodian (and its directors, officers and
          employees)  and hold it (and such  directors,  officers and employees)
          harmless  from and  against  any  loss,  liability,  damage,  cost and
          expense of any nature  incurred by the Custodian  arising out of or in
          connection  with  this  Agreement  or with the  administration  of its
          duties  hereunder,  including but not limited to  attorney's  fees and
          other costs and expenses of  defending or preparing to defend  against
          any claim of  liability  unless and  except to the  extent  such loss,
          liability, damage, cost and expense shall be caused by the Custodian's
          negligence,  bad faith, or willful misconduct.  The provisions in this
          paragraph 5 shall  survive the  expiration  of this  Agreement and the
          resignation or removal of the Custodian.

6. Voting  Rights.  The  Custodian  shall be under no  obligation  to  preserve,
   --------------
protect or exercise rights in the Original Securities,  and shall be responsible
only for reasonable measures to maintain the physical  safekeeping  thereof, and
otherwise  to perform and observe such duties on its part as are  expressly  set
forth in this  Agreement.  The Custodian shall not be responsible for forwarding
to any  Interested  Party,  notifying any  Interested  Party with respect to, or
taking any action with respect to, any notice, solicitation or other document or
information,  written or otherwise, received from an issuer or other person with
respect  to the  Original  Securities,  including  but  not  limited  to,  proxy
material,  tenders, options, the pendency of calls and maturities and expiration
of rights.

7. Resignation.  The Custodian may at any time resign as Custodian  hereunder by
   -----------
giving  thirty (30) days' prior  written  notice of  resignation  to each of the
Interested Parties.  Prior to the effective date of the resignation as specified
in such notice,  the  Interested  Parties will issue to the  Custodian a written
instruction   authorizing   redelivery  of  the  Original   Securities  and  the
Replacement  Securities to a bank or trust company that they select as successor
to the Custodian  hereunder.  If, however,  the Interested Parties shall fail to
name  such a  successor  custodian  within  twenty  days  after  the  notice  of
resignation  from the Custodian,  the Purchasers  shall be entitled to name such
successor  custodian.  If no  successor  custodian  is named  by the  Interested
Parties  or the  Purchasers,  the  Custodian  may apply to a court of  competent
jurisdiction for appointment of a successor custodian.
<PAGE>

8. Dispute Resolution. It is understood and agreed that should any dispute arise
   ------------------
with respect to the delivery, ownership, right of possession, and/or disposition
of the Original Securities or the Replacement Securities, or should any claim be
made upon the Custodian,  the Original Securities or the Replacement  Securities
by a third party,  the Custodian upon receipt of notice of such dispute or claim
is authorized  and shall be entitled (at its sole option and election) to retain
in its  possession  without  liability  to anyone,  all or any of said  Original
Securities and Replacement Securities until such dispute shall have been settled
either by the mutual  written  agreement  of the parties  involved or by a final
order,  decree or judgment of a court in the United States of America,  the time
for perfection of an appeal of such order,  decree or judgment  having  expired.
The Custodian may, but shall be under no duty whatsoever to, institute or defend
any legal  proceedings  which relate to the Original  Securities and Replacement
Securities.

9. Consent to Jurisdiction  and Service.  Each of the Interested  Parties hereby
   ------------------------------------
absolutely  and  irrevocably  consents  and submits to the  jurisdiction  of the
courts in the State of Delaware and of any Federal  court  located in said State
in  connection  with any  actions  or  proceedings  brought  against  any of the
Interested Parties (or each of them) by the Custodian arising out of or relating
to this Agreement. In any such action or proceeding, the Interested Parties each
hereby  absolutely and  irrevocably  (i) waives any objection to jurisdiction or
venue,  (ii) waives personal service of any summons,  complaint,  declaration or
other  process,  and  (iii)  agrees  that  the  service  thereof  may be made by
certified or registered first-class mail directed to such party, as the case may
be, at their respective addresses in accordance with paragraph 10 hereof.

10. Force Majeure. The Custodian shall not be responsible for delays or failures
    -------------
in performance  resulting from acts beyond its control.  Such acts shall include
but  not be  limited  to acts of God,  strikes,  lockouts,  riots,  acts of war,
epidemics,   governmental   regulations   superimposed  after  the  fact,  fire,
communication line failures,  computer viruses,  power failures,  earthquakes or
other disasters.

11. Notices.
    -------

          (a) Any notice  permitted or required  hereunder  shall be in writing,
          and  shall  be sent by  personal  delivery,  overnight  delivery  by a
          recognized  courier  or  delivery  service,  mailed by  registered  or
          certified  mail,  return receipt  requested,  postage  prepaid,  or by
          confirmed facsimile accompanied by mailing of the original on the same
          day by first class mail, postage prepaid,  in each case the parties at
          their  address set forth  below (or to such other  address as any such
          party may hereafter designate by written notice to the other parties).

          If to an Issuer,  to the address  appearing on such  Issuer's  Joinder
          Agreement

          If to the  Purchaser,  to the address  appearing  on such  Purchaser's
          Joinder Agreement

          If to the Custodian:

          Wilmington Trust Company
          Rodney Square North
          1100 North Market Street
          Wilmington, Delaware  19890-1600
          Attention:  Chris Slaybaugh - Corporate Trust Administration
          Fax:  302-636-4140
<PAGE>

12. Miscellaneous.
    -------------

          (a)  Binding  Effect.   This  Agreement  shall  be  binding  upon  the
               ---------------
          respective parties hereto and  their heirs, executors, successors  and
          assigns.

          (b)  Modifications.  This  Agreement  may not be altered  or  modified
               -------------
          without the express written  consent of the parties hereto.  No course
          of  conduct  shall  constitute  a  waiver  of  any of  the  terms  and
          conditions  of this  Agreement,  unless  such waiver is  specified  in
          writing, and then only to the extent so specified.  A waiver of any of
          the terms and  conditions of this  Agreement on one occasion shall not
          constitute a waiver of the other terms of this  Agreement,  or of such
          terms and conditions on any other occasion.

          (c) Governing Law. This  Agreement  shall be governed by and construed
              -------------
          in accordance with the internal laws of the State of Delaware.

          (d)  Reproduction of Documents.  This  Agreement  and   all  documents
               -------------------------
          relating thereto, including, without limitation, (a) consents, waivers
          and   modifications   which  may   hereafter  be  executed,   and  (b)
          certificates and other information  previously or hereafter furnished,
          may be reproduced by any photographic, photostatic, microfilm, optical
          disk, micro-card, miniature photographic or other similar process. The
          parties  agree  that any such  reproduction  shall  be  admissible  in
          evidence as the  original  itself in any  judicial  or  administrative
          proceeding, whether or not the original is in existence and whether or
          not such  reproduction  was made by a party in the  regular  course of
          business, and that any enlargement,  facsimile or further reproduction
          of such reproduction shall likewise be admissible in evidence.

         (e)  Counterparts.  This  Agreement   may   be   executed   in  several
              ------------
          counterparts,  each of which shall be deemed an  original,  but all of
          which together shall constitute one and the same instrument.




                     signatures appear on the following page


<PAGE>



     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the day
first above written.


                                     WILMINGTON TRUST COMPANY



                                     By:
                                        ----------------------------------------
                                     Print Name:
                                                --------------------------------
                                     Title:
                                           -------------------------------------




<PAGE>


                     EXHIBIT A TO MASTER CUSTODIAN AGREEMENT
                     ---------------------------------------

                            FORM OF JOINDER AGREEMENT
                            -------------------------

                               September 20, 2004

         This  Joinder  Agreement  (this  "Agreement")  is  entered  into  as of
September  20,  2004  by  First   Tennessee  Bank  National   Association   (the
"Purchaser") and First Banks, Inc. (the "Issuer").

                                    RECITALS

         A. Wilmington Trust Company (the  "Custodian") is party to that certain
Master Custodian Agreement dated as of May 27, 2004 (the "Custodian Agreement").

         B. The Custodian Agreement provides that certain financial institutions
that have issued  securities (or whose statutory trust  subsidiaries have issued
securities)  and the Purchaser of such  securities  will join into the Custodian
Agreement pursuant to the terms of a joinder agreement.

         C. On the date hereof,  Issuer is issuing  securities  to the Purchaser
and the  Issuer  and the  Purchaser  desire  to enter  into  this  Agreement  to
facilitate the subsequent transfer of the Issuer's securities by the Custodian.

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
herein  contained  and  other  good and  valuable  consideration  (the  receipt,
adequacy and  sufficiency of which are hereby  acknowledged by the Issuer by its
execution hereof), the Issuer agrees as follows:

         1.  Joinder.  The Issuer and  Purchaser  hereby  join in the  Custodian
             -------
Agreement and agree to be subject to, and bound by, the terms and  provisions of
the  Custodian  Agreement  that  are  ascribed  to  "Issuers"  and  "Purchasers"
respectively  therein  to the same  extent as if the Issuer  and  Purchaser  had
signed the Custodian Agreement as an original party thereto.

         2.  Notice.  Any notice  permitted  or required to be sent to an Issuer
             ------
under the Custodian Agreement shall be sent to the following address:

                                    First Banks, Inc.
                                    600 James S. McDonnell Blvd.
                                    Hazelwood, Missouri 63042
                                    Attention:  Lisa K. Vansickle

         Any notice  permitted  or required to be sent to a Purchaser  under the
Custodian Agreement shall be sent to the following address:

                                    First Tennessee Bank National Association
                                    845 Crossover Lane, Suite 150
                                    Memphis, Tennessee  38117
                                    Attention:  David Work

         3.  Termination.  This  Agreement  and  the  Purchaser's  and  Issuer's
             -----------
respective rights and obligations under the Custodian  Agreement shall terminate
upon the  transfer  of all of  Issuer's  securities  pursuant  to the  Custodian
Agreement.
<PAGE>

         4.  Entire  Agreement.  This  Agreement  and  the  Custodian  Agreement
             -----------------
constitute the entire  agreement  among the Purchaser,  Issuer and the Custodian
pertaining to the subject matter hereof.

         IN WITNESS  WHEREOF,  the  Issuer  and  Purchaser  have  executed  this
Agreement as of the day first above written.


                                 FIRST BANKS, INC.



                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 FIRST TENNESSEE BANK NATIONAL ASSOCIATION



                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------



<PAGE>

                     EXHIBIT B TO MASTER CUSTODIAN AGREEMENT
                     ---------------------------------------
                             FORM OF TRANSFER NOTICE

                                     [DATE]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-1600
Attention:  Corporate Trust Administration

Dear Sir or Madam:

         The  undersigned  hereby  notifies you of the transfer of [________] of
the Capital  Securities  of First Bank  Statutory  Trust II, such transfer to be
effective on [DATE OF TRANSFER]. In accordance with Section 7.9 of the Placement
Agreement dated September 10, 2004 between the Offerors and the placement agents
named therein (the "Placement  Agreement"),  periodic reports shall be delivered
to  [_______________]  on each March 17, June 17,  September  17 and December 17
during the term of the Capital Securities, commencing [___________], in the form
attached  thereto.  Capitalized  terms  used in this  notice  and not  otherwise
defined  shall  have  the  meanings  ascribed  to such  terms  in the  Placement
Agreement.

         The  undersigned  hereby  instructs  you as  Custodian  to deliver  the
Original  Securities  certificate to Wilmington Trust Company,  as Institutional
Trustee (the  "Trustee")  under the Amended and Restated Trust  Agreement  dated
September 20, 2004 among the Trustee,  First Banks, Inc. and the  administrative
trustees named therein (the "Trust  Agreement")  for  cancellation in accordance
with the terms of the Trust Agreement and to deliver the Replacement  Securities
certificate to the Trustee for  authentication  in accordance  with the terms of
the Trust Agreement.

         By copy of this notice, the Institutional  Trustee is hereby instructed
to make the Replacement  Securities certificate registered to [NAME, ADDRESS AND
IDENTITY OF TRANSFEREE] in the liquidation amount of [_________] and bearing the
identification  number "CUSIP NO.  [__________]" and to authenticate and deliver
the Replacement Securities certificate to [_____________].

                              FIRST TENNESSEE BANK NATIONAL ASSOCIATION


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------




cc:      First Banks, Inc.
         Wilmington Trust Company, as Trustee


<PAGE>
                                                                    Exhibit 4.32
                         FIRST BANKS STATUTORY TRUST II
                                FIRST BANKS, INC.

                             SUBSCRIPTION AGREEMENT

                               September 20, 2004

     THIS  SUBSCRIPTION  AGREEMENT  (this  "Agreement")  made  among  First Bank
Statutory  Trust II (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  et seq.),  First Banks,  Inc., a Missouri  corporation,  with its
principal  offices  located  at 600  James S.  McDonnell  Boulevard,  Hazelwood,
Missouri 63042 (the "Company" and, collectively with the Trust, the "Offerors"),
and Preferred Term Securities XV, Ltd. (the "Purchaser").

                                    RECITALS:

     A.   The Trust  desires  to  issue  20,000  of its  Floating  Rate  Capital
Securities (the "Capital Securities"),  liquidation amount $1,000.00 per Capital
Security,  representing  an undivided  beneficial  interest in the assets of the
Trust  (the  "Offering"),  to be issued  pursuant  to an  Amended  and  Restated
Declaration of Trust (the  "Declaration")  by and among the Company,  Wilmington
Trust Company ("WTC"),  the  administrators  named therein,  and the holders (as
defined therein),  which Capital  Securities are to be guaranteed by the Company
with respect to  distributions  and payments upon  liquidation,  redemption  and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and

     B.   The proceeds from the sale of the Capital  Securities will be combined
with the  proceeds  from the sale by the  Trust  to the  Company  of its  common
securities,  and will be used by the Trust to purchase an  equivalent  amount of
Floating Rate Junior Subordinated  Deferrable Interest Debentures of the Company
(the  "Debentures")  to be issued by the Company  pursuant to an indenture to be
executed by the Company and WTC, as trustee (the "Indenture"); and

     C.   In consideration of the  premises and the mutual  representations  and
covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

     1.1.  Upon the execution of this Agreement,  the Purchaser hereby agrees to
purchase from the Trust 17,850 Capital  Securities at a price equal to $1,000.00
per Capital  Security (the  "Purchase  Price") and the Trust agrees to sell such
Capital  Securities to the Purchaser  for said  Purchase  Price.  The rights and
preferences  of the Capital  Securities  are set forth in the  Declaration.  The
Purchase Price is payable in immediately  available funds on September 20, 2004,
or such other  business day as may be  designated  by the  Purchaser,  but in no
event later than  September 30, 2004 (the "Closing  Date").  The Offerors  shall
provide the Purchaser wire transfer  instructions  no later than 1 day following
the date hereof.

     1.2.  The certificate for the Capital Securities  shall be delivered by the
Trust on the Closing Date to the Purchaser or its designee.

     1.3.  The Placement Agreement,  dated  September  10, 2004 (the  "Placement
Agreement"),  among the Offerors and the  Placement  Agents  identified  therein
includes  certain  representations  and warranties,  covenants and conditions to
closing  and  certain  other  matters  governing  the  Offering.  The  Placement
Agreement  is hereby  incorporated  by  reference  into this  Agreement  and the
Purchaser shall be entitled to each of the benefits of the Placement  Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors  under such  Placement  Agreement as fully as if the
Purchaser were a party to such Placement Agreement.
<PAGE>

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     2.1.  The Purchaser understands and  acknowledges  that neither the Capital
Securities,  the  Debentures nor the Guarantee  have been  registered  under the
Securities  Act of  1933,  as  amended  (the  "Securities  Act"),  or any  other
applicable  securities  law,  are  being  offered  for  sale  by  the  Trust  in
transactions not requiring registration under the Securities Act, and may not be
offered,  sold,  pledged or otherwise  transferred  by the  Purchaser  except in
compliance with the registration requirements of the Securities Act or any other
applicable  securities  laws,  pursuant  to  an  exemption  therefrom  or  in  a
transaction not subject thereto.

     2.2.  The Purchaser represents, warrants and certifies that (i) it is not a
"U.S. person" as such term is defined in Rule 902 under the Securities Act, (ii)
it is not  acquiring  the Capital  Securities  for the account or benefit of any
such  U.S.  person,  (iii)  the  offer  and sale of  Capital  Securities  to the
Purchaser  constitutes  an  "offshore  transaction"  under  Regulation  S of the
Securities Act, and (iv) it will not engage in hedging  transactions with regard
to the Capital  Securities  unless such transactions are conducted in compliance
with the  Securities  Act and the  Purchaser  agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.

     2.3.  The Purchaser  represents  and  warrants  that it is  purchasing  the
Capital Securities for its own account, for investment,  and not with a view to,
or for offer or sale in connection with, any  distribution  thereof in violation
of the  Securities  Act or other  applicable  securities  laws,  subject  to any
requirement  of law that the  disposition of its property be at all times within
its  control  and  subject to its  ability  to resell  such  Capital  Securities
pursuant to an effective  registration  statement  under the  Securities  Act or
under Rule 144A or any other  exemption from  registration  available  under the
Securities Act or any other applicable Securities law.

     2.4.  The Purchaser  represents  and  warrants  that  it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties  specified  herein,  and to consummate the transactions  contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.

     2.5.  The Purchaser,  a Cayman  Islands  Company  whose  business  includes
issuance of certain notes and acquiring the Capital Securities and other similar
securities, represents and warrants that it has such knowledge and experience in
financial and business  matters that it is capable of evaluating  the merits and
risks of  purchasing  the Capital  Securities,  has had the  opportunity  to ask
questions of, and receive answers and request  additional  information from, the
Offerors  and is aware that it may be required to bear the  economic  risk of an
investment in the Capital Securities.

     2.6.  The Purchaser  represents  and  warrants  that  no  filing  with,  or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.
<PAGE>

     2.7.  The Purchaser represents  and warrants  that this  Agreement has been
duly authorized, executed and delivered by the Purchaser.

     2.8. The Purchaser represents and warrants that (i) the Purchaser is not in
violation or default of any term of its Memorandum of Association or Articles of
Association, of any provision of any mortgage,  indenture,  contract, agreement,
instrument  or contract to which it is a party or by which it is bound or of any
judgment,  decree,  order,  writ or,  to its  knowledge,  any  statute,  rule or
regulation  applicable to the Purchaser  which would prevent the Purchaser  from
performing  any material  obligation set forth in this  Agreement;  and (ii) the
execution,  delivery and performance of and compliance with this Agreement,  and
the  consummation of the  transactions  contemplated  herein,  will not, with or
without  the  passage of time or giving of notice,  result in any such  material
violation,  or be in conflict  with or constitute a default under any such term,
or the  suspension,  revocation,  impairment,  forfeiture or  non-renewal of any
permit,  license,  authorization  or approval  applicable to the Purchaser,  its
business or operations  or any of its assets or  properties  which would prevent
the  Purchaser  from  performing  any  material  obligations  set  forth in this
Agreement.

     2.9.  The Purchaser  represents  and  warrants  that  the  Purchaser  is an
exempted company with limited liability duly incorporated,  validly existing and
in good standing under the laws of the jurisdiction where it is organized,  with
full power and authority to perform its obligations under this Agreement.

     2.10. The Purchaser understands and acknowledges that the Company will rely
upon the truth and accuracy of the foregoing  acknowledgments,  representations,
warranties  and  agreements  and  agrees  that,  if any of the  acknowledgments,
representations,  warranties or agreements deemed to have been made by it by its
purchase of the Capital  Securities  are no longer  accurate,  it shall promptly
notify the Company.

    2.11.  The Purchaser understands that no public market exists for any of the
Capital Securities, and that it is unlikely that a public market will ever exist
for the Capital Securities.

                                   ARTICLE III

                                  MISCELLANEOUS

     3.1.  Any notice or other  communication  given  hereunder  shall be deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

           To the Offerors:          First Banks, Inc.
                                     600 James S. McDonnell Boulevard
                                     Hazelwood, Missouri  63042
                                     Attention:  Lisa K. Vansickle
                                     Fax:  314-592-6621

           To the Purchaser:         Preferred Term Securities XV, Ltd.
                                     c/o Maples Finance Limited
                                     P.O. Box 1093 GT
                                     Queensgate House
                                     South Church Street
                                     George Town, Grand Cayman
                                     Cayman Islands
                                     Attention:  The Directors
                                     Fax:  345-945-7100
<PAGE>

           Unless otherwise expressly provided herein,  notices shall be  deemed
to have been given on the date of mailing,  except  notice of change of address,
which shall be deemed to have been given when received.

     3.2.  This Agreement shall not be changed,  modified or amended except by a
writing  signed by the  parties to be  charged,  and this  Agreement  may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.

     3.3.  Upon the execution and delivery of this  Agreement by the  Purchaser,
this Agreement  shall become a binding  obligation of the Purchaser with respect
to the purchase of Capital Securities as herein provided.

     3.4.   NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY  BE  EXECUTED  BY
ANY OF THE PARTIES HERETO, THE PARTIES  EXPRESSLY  AGREE  THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

     3.5.  The parties agree to execute and deliver all such further  documents,
agreements  and  instruments  and take such other and  further  action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

     3.6.  This Agreement may  be executed in one or more  counterparts  each of
which shall be deemed an original,  but all of which shall  together  constitute
one and the same instrument.

     3.7.  In the event that any one or more of the provisions contained herein,
or the application  thereof in any  circumstances,  is held invalid,  illegal or
unenforceable  in any  respect  for  any  reason,  the  validity,  legality  and
enforceability of any such provision in every other respect and of the remaining
provisions  hereof  shall  not be in any way  impaired  or  affected,  it  being
intended  that all of the Offerors' and the  Purchaser's  rights and  privileges
shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page



<PAGE>


     IN  WITNESS  WHEREOF,  I  have  set  my hand the day and year first written
 above.



PREFERRED TERM SECURITIES XV, LTD.


By: /s/       Carrie Bunton
   --------------------------------------------------
Print Name:   Carrie Bunton
           ------------------------------------------
Title:        Director
      -----------------------------------------------

     IN WITNESS WHEREOF,  this Agreement is agreed to and accepted as of the day
and year first written above.


                           FIRST BANKS, INC.


                           By: /s/    Allen H. Blake
                              --------------------------------------------------

                           Name:      Allen H. Blake
                                ------------------------------------------------

                           Title:     President and Chief Executive Officer
                                 -----------------------------------------------



                           FIRST BANK STATUTORY TRUST II


                           By: /s/    Allen H. Blake
                              --------------------------------------------------

                           Name:      Allen H. Blake
                                ------------------------------------------------

                           Title:     Administrator



<PAGE>
                                                                    Exhibit 4.33
Certificate Number P-1                                 17,850 Capital Securities
         CUSIP NO. 31928B9Z4

THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED  (THE  "SECURITIES  ACT"),  ANY  STATE  SECURITIES  LAWS  OR  ANY  OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY  DISTRIBUTION  IN VIOLATION OF
THE SECURITIES  ACT, OR (F) PURSUANT TO ANY OTHER  AVAILABLE  EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE  OBTAINED  FROM THE SPONSOR OR THE TRUST.  HEDGING  TRANSACTIONS
INVOLVING  THIS  SECURITY MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH THE
SECURITIES ACT.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,  INDIVIDUAL  RETIREMENT  ACCOUNT OR
OTHER PLAN OR ARRANGEMENT  SUBJECT TO TITLE I OF THE EMPLOYEE  RETIREMENT INCOME
SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR SECTION  4975 OF THE INTERNAL
REVENUE  CODE OF 1986,  AS AMENDED (THE  "CODE")  (EACH A "PLAN"),  OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT
IN THE ENTITY,  AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR
HOLD THE SECURITIES OR ANY INTEREST THEREIN,  UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER  U.S.   DEPARTMENT  OF  LABOR
PROHIBITED  TRANSACTION  CLASS EXEMPTION 96-23,  95-60,  91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED  BY SECTION 406 OF ERISA OR SECTION  4975 OF THE CODE WITH RESPECT TO
SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER  OR HOLDER OF THE  SECURITIES  OR ANY
INTEREST  THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
SECTION  3(3)  OF  ERISA,  OR A PLAN  TO  WHICH  SECTION  4975  OF THE  CODE  IS
APPLICABLE,  A TRUSTEE OR OTHER PERSON  ACTING ON BEHALF OF AN EMPLOYEE  BENEFIT
PLAN OR PLAN,  OR ANY OTHER  PERSON OR ENTITY  USING THE ASSETS OF ANY  EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH  PURCHASE,  OR (II) SUCH  PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THIS  SECURITY  WILL BE ISSUED AND MAY BE  TRANSFERRED  ONLY IN BLOCKS  HAVING A
LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00 (100 SECURITIES) AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK
HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER.

THE  HOLDER OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH THE  FOREGOING
RESTRICTIONS.

IN CONNECTION  WITH ANY  TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE
DECLARATION   TO  CONFIRM  THAT  THE  TRANSFER   COMPLIES   WITH  THE  FOREGOING
RESTRICTIONS.

                               September 20, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                          First Bank Statutory Trust II

                (liquidation amount $1,000 per Capital Security)
<PAGE>

         First Bank Statutory Trust II, a statutory trust created under the laws
of the State of Delaware (the  "Trust"),  hereby  certifies that Hare & Co. (the
"Holder"),  as the nominee of The Bank of New York,  indenture trustee under the
Indenture  dated as of September 20, 2004 among  Preferred  Term  Securities XV,
Ltd.,  Preferred  Term  Securities  XV,  Inc.  and The Bank of New York,  is the
registered  owner of  capital  securities  of the Trust  representing  undivided
beneficial interests in the assets of the Trust,  (liquidation amount $1,000 per
capital  security) (the "Capital  Securities").  Subject to the  Declaration (as
defined below), the Capital Securities are transferable on the books and records
of the Trust in person or by a duly authorized attorney,  upon surrender of this
Certificate  duly  endorsed  and  in  proper  form  for  transfer.  The  Capital
Securities  represented  hereby are  issued  pursuant  to, and the  designation,
rights, privileges, restrictions,  preferences and other terms and provisions of
the Capital  Securities  shall in all respects be subject to, the  provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of September
20, 2004, among Allen H. Blake,  Terrance M. McCarthy and Lisa K. Vansickle,  as
Administrators,  Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company,  as  Institutional  Trustee,  First Banks,  Inc.,  as Sponsor,  and the
holders from time to time of undivided beneficial interests in the assets of the
Trust,  including the designation of the terms of the Capital  Securities as set
forth in Annex I to such  amended and  restated  declaration  as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.  The Holder is
entitled to the benefits of the Guarantee to the extent  provided  therein.  The
Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture
to the  Holder  without  charge  upon  written  request  to the  Sponsor  at its
principal place of business.

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.

                       Signature appears on following page



<PAGE>


        IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                         First Bank Statutory Trust II


                                         By: /s/    Allen H. Blake
                                            ------------------------------------
                                             Name:  Allen H. Blake
                                             Title: Administrator



<PAGE>


                          CERTIFICATE OF AUTHENTICATION

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.


                                         WILMINGTON TRUST COMPANY,
                                         as the Institutional Trustee


                                         By: /s/ Christopher J. Monigle
                                             -----------------------------------
                                                 Authorized Officer



<PAGE>


                           REVERSE OF CAPITAL SECURITY

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 3.92438%  beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in December
2004  and at an  annual  rate  for  each  successive  period  beginning  on (and
including) the  Distribution  Payment Date in December 2004, and each succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.05% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).
<PAGE>

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 20, June 20, September 20 and
December 20 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing  on the  Distribution  Payment Date in December  2004.  The Debenture
Issuer has the right under the  Indenture  to defer  payments of interest on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

         The  Capital   Securities  shall  be  redeemable  as  provided  in  the
Declaration.



<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital Security
Certificate to:

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

(Insert assignee's social security or tax identification number)
                                                                ----------------

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

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



(Insert address and zip code of assignee) and irrevocably appoints

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



agent to transfer this Capital  Security  Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:
     ---------------------------------------

Signature:
          ----------------------------------

         (Sign  exactly as your name  appears on the other side of this  Capital
Security Certificate)

Signature Guarantee:1










-----------------------
1 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association  or credit union  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

<PAGE>

                                                                    Exhibit 4.34
Certificate Number P-2                                  2,150 Capital Securities


THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED  (THE  "SECURITIES  ACT"),  ANY  STATE  SECURITIES  LAWS  OR  ANY  OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY  DISTRIBUTION  IN VIOLATION OF
THE SECURITIES  ACT, OR (F) PURSUANT TO ANY OTHER  AVAILABLE  EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE  OBTAINED  FROM THE SPONSOR OR THE TRUST.  HEDGING  TRANSACTIONS
INVOLVING  THIS  SECURITY MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH THE
SECURITIES ACT.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,  INDIVIDUAL  RETIREMENT  ACCOUNT OR
OTHER PLAN OR ARRANGEMENT  SUBJECT TO TITLE I OF THE EMPLOYEE  RETIREMENT INCOME
SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR SECTION  4975 OF THE INTERNAL
REVENUE  CODE OF 1986,  AS AMENDED (THE  "CODE")  (EACH A "PLAN"),  OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT
IN THE ENTITY,  AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR
HOLD THE SECURITIES OR ANY INTEREST THEREIN,  UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER  U.S.   DEPARTMENT  OF  LABOR
PROHIBITED  TRANSACTION  CLASS EXEMPTION 96-23,  95-60,  91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED  BY SECTION 406 OF ERISA OR SECTION  4975 OF THE CODE WITH RESPECT TO
SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER  OR HOLDER OF THE  SECURITIES  OR ANY
INTEREST  THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
SECTION  3(3)  OF  ERISA,  OR A PLAN  TO  WHICH  SECTION  4975  OF THE  CODE  IS
APPLICABLE,  A TRUSTEE OR OTHER PERSON  ACTING ON BEHALF OF AN EMPLOYEE  BENEFIT
PLAN OR PLAN,  OR ANY OTHER  PERSON OR ENTITY  USING THE ASSETS OF ANY  EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH  PURCHASE,  OR (II) SUCH  PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THIS  SECURITY  WILL BE ISSUED AND MAY BE  TRANSFERRED  ONLY IN BLOCKS  HAVING A
LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00 (100 SECURITIES) AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK
HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER.

THE  HOLDER OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH THE  FOREGOING
RESTRICTIONS.

IN CONNECTION  WITH ANY  TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE
DECLARATION   TO  CONFIRM  THAT  THE  TRANSFER   COMPLIES   WITH  THE  FOREGOING
RESTRICTIONS.

                               September 20, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                          First Bank Statutory Trust II

                (liquidation amount $1,000 per Capital Security)
<PAGE>

         First Bank Statutory Trust II, a statutory trust created under the laws
of the State of Delaware (the "Trust"),  hereby  certifies that First  Tennessee
Bank National  Association is the registered owner of capital  securities of the
Trust representing  undivided  beneficial  interests in the assets of the Trust,
(liquidation  amount $1,000 per capital  security)  (the "Capital  Securities").
Subject to the  Declaration  (as  defined  below),  the Capital  Securities  are
transferable  on the  books  and  records  of the  Trust in  person or by a duly
authorized  attorney,  upon surrender of this  Certificate  duly endorsed and in
proper form for transfer.  The Capital Securities  represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Capital  Securities  shall in all respects
be subject to, the  provisions of the Amended and Restated  Declaration of Trust
of the Trust dated as of September 20, 2004,  among Allen H. Blake,  Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators,  Wilmington Trust Company, as
Delaware  Trustee,  Wilmington Trust Company,  as Institutional  Trustee,  First
Banks,  Inc.,  as  Sponsor,  and the  holders  from  time  to time of  undivided
beneficial  interests in the assets of the Trust,  including the  designation of
the terms of the Capital  Securities as set forth in Annex I to such amended and
restated  declaration  as the  same  may be  amended  from  time  to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration,  the Guarantee,  and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.

                       Signature appears on following page



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                         First Bank Statutory Trust II



                                         By: /s/     Allen H. Blake
                                            ------------------------------------
                                             Name:   Allen H. Blake
                                             Title:  Administrator



<PAGE>


                          CERTIFICATE OF AUTHENTICATION

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.


                                         WILMINGTON TRUST COMPANY,
                                         as the Institutional Trustee


                                         By: /s/ Christopher J. Monigle
                                            ------------------------------------
                                                 Authorized Officer



<PAGE>


                           REVERSE OF CAPITAL SECURITY

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 3.92438%  beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in December
2004  and at an  annual  rate  for  each  successive  period  beginning  on (and
including) the  Distribution  Payment Date in December 2004, and each succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.05% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).
<PAGE>

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing  on the  Distribution  Payment Date in December  2004.  The Debenture
Issuer has the right under the  Indenture  to defer  payments of interest on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

         The Capital Securities shall be redeemable as provided in the
Declaration.



<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital Security
Certificate to:

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

(Insert assignee's social security or tax identification number)
                                                                ----------------

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

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



(Insert address and zip code of assignee) and irrevocably appoints

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



agent to transfer this Capital  Security  Certificate on the books of the Trust.
The agent may substitute another to act for him or her.


Date:
     ---------------------------------------

Signature:
          ----------------------------------

               (Sign  exactly  as your name  appears  on the other  side of this
               Capital Security Certificate)

Signature Guarantee:1










------------------------------------
1 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association  or credit union  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

<PAGE>
                                                                    Exhibit 4.35







                ==================================================

                               FIRST BANKS, INC.,
                                    as Issuer






                                    INDENTURE

                          Dated as of November 23, 2004



                            WILMINGTON TRUST COMPANY,
                                   as Trustee




        FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES


                                    DUE 2034

                ==================================================

<PAGE>

<TABLE>
<CAPTION>


                                TABLE OF CONTENTS
                                -----------------
                                                                                                                Page
                                                                                                                ----


<S>                                                                                                              <C>
ARTICLE I. DEFINITIONS............................................................................................1

         Section 1.1.      Definitions............................................................................1

ARTICLE II. DEBENTURES............................................................................................8

         Section 2.1.      Authentication and Dating..............................................................8
         Section 2.2.      Form of Trustee's Certificate of Authentication........................................9
         Section 2.3.      Form and Denomination of Debentures....................................................9
         Section 2.4.      Execution of Debentures................................................................9
         Section 2.5.      Exchange and Registration of Transfer of Debentures...................................10
         Section 2.6.      Mutilated, Destroyed, Lost or Stolen Debentures.......................................12
         Section 2.7.      Temporary Debentures..................................................................12
         Section 2.8.      Payment of Interest and Additional Interest...........................................13
         Section 2.9.      Cancellation of Debentures Paid, etc..................................................14
         Section 2.10.     Computation of Interest...............................................................14
         Section 2.11.     Extension of Interest Payment Period..................................................15
         Section 2.12.     CUSIP Numbers.........................................................................16
         Section 2.13.     Global Debentures.....................................................................17

ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY.................................................................18

         Section 3.1.      Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures........18
         Section 3.2.      Offices for Notices and Payments, etc.................................................19
         Section 3.3.      Appointments to Fill Vacancies in Trustee's Office....................................19
         Section 3.4.      Provision as to Paying Agent..........................................................19
         Section 3.5.      Certificate to Trustee................................................................20
         Section 3.6.      Additional Sums.......................................................................20
         Section 3.7.      Compliance with Consolidation Provisions..............................................21
         Section 3.8.      Limitation on Dividends...............................................................21
         Section 3.9.      Covenants as to the Trust.............................................................21
         Section 3.10.     Additional Junior Indebtedness........................................................22

ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE....................................22

         Section 4.1.      Securityholders' Lists................................................................22
         Section 4.2.      Preservation and Disclosure of Lists..................................................22

ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT..................................23

         Section 5.1.      Events of Default.....................................................................23
         Section 5.2.      Payment of Debentures on Default; Suit Therefor.......................................25
         Section 5.3.      Application of Moneys Collected by Trustee............................................26
         Section 5.4.      Proceedings by Securityholders........................................................26
         Section 5.5.      Proceedings by Trustee................................................................27
         Section 5.6.      Remedies Cumulative and Continuing; Delay or Omission Not a Waiver....................27
         Section 5.7.      Direction of Proceedings and Waiver of Defaults by Majority of Securityholders........27
         Section 5.8.      Notice of Defaults....................................................................28
         Section 5.9.      Undertaking to Pay Costs..............................................................28
<PAGE>

ARTICLE VI. CONCERNING THE TRUSTEE...............................................................................28

         Section 6.1.      Duties and Responsibilities of Trustee................................................28
         Section 6.2.      Reliance on Documents, Opinions, etc..................................................29
         Section 6.3.      No Responsibility for Recitals, etc...................................................30
         Section 6.4.      Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar
                           May Own Debentures....................................................................30
         Section 6.5.      Moneys to be Held in Trust............................................................31
         Section 6.6.      Compensation and Expenses of Trustee..................................................31
         Section 6.7.      Officers' Certificate as Evidence.....................................................31
         Section 6.8.      Eligibility of Trustee................................................................32
         Section 6.9.      Resignation or Removal of Trustee.....................................................32
         Section 6.10.     Acceptance by Successor Trustee.......................................................33
         Section 6.11.     Succession by Merger, etc.............................................................34
         Section 6.12.     Authenticating Agents.................................................................34

ARTICLE VII. CONCERNING THE SECURITYHOLDERS......................................................................35

         Section 7.1.      Action by Securityholders.............................................................35
         Section 7.2.      Proof of Execution by Securityholders.................................................35
         Section 7.3.      Who Are Deemed Absolute Owners........................................................36
         Section 7.4.      Debentures Owned by Company Deemed Not Outstanding....................................36
         Section 7.5.      Revocation of Consents; Future Holders Bound..........................................36

ARTICLE VIII. SECURITYHOLDERS' MEETINGS..........................................................................37

         Section 8.1.      Purposes of Meetings..................................................................37
         Section 8.2.      Call of Meetings by Trustee...........................................................37
         Section 8.3.      Call of Meetings by Company or Securityholders........................................37
         Section 8.4.      Qualifications for Voting.............................................................37
         Section 8.5.      Regulations...........................................................................37
         Section 8.6.      Voting................................................................................38
         Section 8.7.      Quorum; Actions.......................................................................38

ARTICLE IX. SUPPLEMENTAL INDENTURES..............................................................................39

         Section 9.1.      Supplemental Indentures without Consent of Securityholders............................39
         Section 9.2.      Supplemental Indentures with Consent of Securityholders...............................40
         Section 9.3.      Effect of Supplemental Indentures.....................................................41
         Section 9.4.      Notation on Debentures................................................................41
         Section 9.5.      Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee...........41
<PAGE>

ARTICLE X. REDEMPTION OF SECURITIES..............................................................................41

         Section 10.1.     Optional Redemption...................................................................41
         Section 10.2.     Special Event Redemption..............................................................41
         Section 10.3.     Notice of Redemption; Selection of Debentures.........................................42
         Section 10.4.     Payment of Debentures Called for Redemption...........................................42

ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE....................................................43

         Section 11.1.     Company May Consolidate, etc., on Certain Terms.......................................43
         Section 11.2.     Successor Entity to be Substituted....................................................43
         Section 11.3.     Opinion of Counsel to be Given to Trustee.............................................43

ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE.............................................................44

         Section 12.1.     Discharge of Indenture................................................................44
         Section 12.2.     Deposited Moneys to be Held in Trust by Trustee.......................................44
         Section 12.3.     Paying Agent to Repay Moneys Held.....................................................44
         Section 12.4.     Return of Unclaimed Moneys............................................................44

ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................................45

         Section 13.1.     Indenture and Debentures Solely Corporate Obligations.................................45

ARTICLE XIV. MISCELLANEOUS PROVISIONS............................................................................45

         Section 14.1.     Successors............................................................................45
         Section 14.2.     Official Acts by Successor Entity.....................................................45
         Section 14.3.     Surrender of Company Powers...........................................................45
         Section 14.4.     Addresses for Notices, etc............................................................45
         Section 14.5.     Governing Law.........................................................................46
         Section 14.6.     Evidence of Compliance with Conditions Precedent......................................46
         Section 14.7.     Table of Contents, Headings, etc......................................................46
         Section 14.8.     Execution in Counterparts.............................................................46
         Section 14.9.     Separability..........................................................................46
         Section 14.10.    Assignment............................................................................46
         Section 14.11.    Acknowledgment of Rights..............................................................46

ARTICLE XV. SUBORDINATION OF DEBENTURES..........................................................................47

         Section 15.1.     Agreement to Subordinate..............................................................47
         Section 15.2.     Default on Senior Indebtedness........................................................47
         Section 15.3.     Liquidation, Dissolution, Bankruptcy..................................................47
         Section 15.4.     Subrogation...........................................................................48
         Section 15.5.     Trustee to Effectuate Subordination...................................................49
         Section 15.6.     Notice by the Company.................................................................49
         Section 15.7.     Rights of the Trustee; Holders of Senior Indebtedness.................................50
         Section 15.8.     Subordination May Not Be Impaired.....................................................50

Exhibit A         Form of Floating Rate Junior Subordinated Deferrable Interest Debenture
</TABLE>


<PAGE>

         THIS  INDENTURE,  dated as of November 23, 2004,  between  First Banks,
Inc., a Missouri  corporation (the "Company"),  and Wilmington Trust Company,  a
                                    -------
Delaware banking corporation, as debenture trustee (the "Trustee").
                                                         -------

                                   WITNESSETH:

         WHEREAS,  for its  lawful  corporate  purposes,  the  Company  has duly
authorized  the issuance of its  Floating  Rate Junior  Subordinated  Deferrable
Interest Debentures due 2034 (the "Debentures") under this Indenture to provide,
                                   ----------
among  other  things,  for  the  execution  and  authentication,   delivery  and
administration  thereof,  and the Company has duly  authorized  the execution of
this Indenture; and

         WHEREAS,  all acts and things  necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;

         NOW, THEREFORE, This Indenture Witnesseth:

         In consideration of the premises, and the purchase of the Debentures by
the holders thereof,  the Company  covenants and agrees with the Trustee for the
equal and proportionate  benefit of the respective  holders from time to time of
the Debentures as follows:

                                   ARTICLE I.
                                  DEFINITIONS
                                  -----------

         Section 1.1.    Definitions. The  terms  defined  in  this  Section 1.1
                         -----------
(except as herein otherwise  expressly  provided or unless the context otherwise
requires) for all purposes of this  Indenture and of any indenture  supplemental
hereto  shall have the  respective  meanings  specified in this Section 1.1. All
accounting  terms used herein and not expressly  defined shall have the meanings
assigned  to  such  terms  in  accordance  with  generally  accepted  accounting
principles and the term "generally  accepted  accounting  principles" means such
accounting principles as are generally accepted in the United States at the time
of any computation. The words "herein," "hereof" and "hereunder" and other words
of similar  import refer to this  Indenture as a whole and not to any particular
Article, Section or other subdivision.

         "Additional Interest" has the meaning set forth in Section 2.11.
          -------------------

         "Additional Junior  Indebtedness"  means, without duplication and other
          -------------------------------
than  the  Debentures,  any  indebtedness,  liabilities  or  obligations  of the
Company, or any Subsidiary of the Company,  under debt securities (or guarantees
in respect of debt securities) initially issued after the date of this Indenture
to any trust,  or a trustee of a trust,  partnership or other entity  affiliated
with the Company that is, directly or indirectly,  a finance subsidiary (as such
term is defined in Rule 3a-5 under the Investment  Company Act of 1940) or other
financing  vehicle of the Company or any Subsidiary of the Company in connection
with the issuance by that entity of  preferred  securities  or other  securities
that  are  eligible  to  qualify  for  Tier 1  capital  treatment  (or its  then
equivalent)  for  purposes of the  capital  adequacy  guidelines  of the Federal
Reserve,  as then in effect and applicable to the Company (or, if the Company is
not a bank holding  company,  such  guidelines  applied to the Company as if the
Company were subject to such guidelines);  provided, however, that the inability
                                           --------  -------
of the Company to treat all or any portion of the Additional Junior Indebtedness
as Tier 1 capital shall not disqualify it as Additional  Junior  Indebtedness if
such  inability  results from the Company  having  cumulative  preferred  stock,
minority interests in consolidated subsidiaries,  or any other class of security
or interest which the Federal Reserve now or may hereafter accord Tier 1 capital
treatment  (including the  Debentures) in excess of the amount which may qualify
for treatment as Tier 1 capital under applicable capital adequacy guidelines.
<PAGE>

         "Additional Sums" has the meaning set forth in Section 3.6.
          ---------------

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
          ---------
the Securities Act or any successor rule thereunder.

         "Applicable  Depositary Procedures" means, with respect to any transfer
          ---------------------------------
or transaction  involving a Global Debenture or beneficial interest therein, the
rules and procedures of the Depositary for such  Debenture,  in each case to the
extent applicable to such transaction and as in effect from time to time.

         "Authenticating  Agent" means any agent or agents of the Trustee  which
          ---------------------
at the time shall be appointed and acting pursuant to Section 6.12.

         "Bankruptcy Law"  means  Title 11, U.S. Code, or any similar federal or
          --------------
state law for the relief of debtors.

         "Board of  Directors"  means the board of  directors  or the  executive
          -------------------
committee or any other duly authorized designated officers of the Company.

         "Board  Resolution"  means  a copy  of a  resolution  certified  by the
          -----------------
Secretary or an Assistant  Secretary of the Company to have been duly adopted by
the Board of  Directors  and to be in full  force and effect on the date of such
certification and delivered to the Trustee.

         "Business Day" means any day other than a Saturday, Sunday or any other
          ------------
day on which banking  institutions in New York City or Wilmington,  Delaware are
permitted or required by any applicable law or executive order to close.

         "Capital Securities" means undivided beneficial interests in the assets
          ------------------
of the Trust which rank pari passu with Common  Securities  issued by the Trust;
provided,  however,  that upon the  occurrence  and  continuance  of an Event of
--------   -------
Default  (as defined in the  Declaration),  the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption  and  otherwise  are  subordinated  to the  rights of holders of such
Capital Securities.

         "Capital  Securities  Guarantee" means the guarantee agreement that the
          ------------------------------
Company enters into with  Wilmington  Trust Company,  as guarantee  trustee,  or
other Persons that operates directly or indirectly for the benefit of holders of
Capital Securities of the Trust.

         "Capital  Treatment  Event"  means the  receipt by the  Company and the
          -------------------------
Trust of an opinion of counsel  experienced  in such matters to the effect that,
as a result of the  occurrence  of any amendment  to, or change  (including  any
announced  prospective  change) in, the laws, rules or regulations of the United
States or any political  subdivision thereof or therein, or as the result of any
official or administrative  pronouncement or action or decision  interpreting or
applying such laws, rules or regulations, which amendment or change is effective
or which pronouncement,  action or decision is announced on or after the date of
original  issuance of the Debentures,  there is more than an insubstantial  risk
that the  Company  will  not,  within  90 days of the date of such  opinion,  be
entitled to treat an amount  equal to the  aggregate  liquidation  amount of the
Capital  Securities as "Tier 1 Capital" (or its then equivalent) for purposes of
the capital adequacy  guidelines of the Federal  Reserve,  as then in effect and
applicable to the Company (or if the Company is not a bank holding company, such
guidelines  applied  to the  Company  as if the  Company  were  subject  to such
guidelines);  provided,  however, that the inability of the Company to treat all
              --------   -------
or any portion of the  liquidation  amount of the Capital  Securities  as Tier l
Capital shall not constitute the basis for a Capital  Treatment  Event,  if such
inability results from the Company having cumulative  preferred stock,  minority
interests  in  consolidated  subsidiaries,  or any other  class of  security  or
interest which the Federal  Reserve or OTS, as applicable,  may now or hereafter
accord  Tier 1  Capital  treatment  in  excess  of the  amount  which may now or
hereafter  qualify for  treatment  as Tier 1 Capital  under  applicable  capital
adequacy  guidelines;  provided  further,  however,  that  the  distribution  of
                       --------  -------   -------
<PAGE>

Debentures in connection  with the  liquidation of the Trust shall not in and of
itself  constitute a Capital  Treatment Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.

         "Certificate"  means a  certificate  signed by any one of the principal
          -----------
executive officer,  the principal financial officer or the principal  accounting
officer of the Company.

         "Common Securities" means undivided  beneficial interests in the assets
          -----------------
of the Trust which rank pari passu with Capital  Securities issued by the Trust;
provided,  however,  that upon the  occurrence  and  continuance  of an Event of
--------   -------
Default  (as defined in the  Declaration),  the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption  and  otherwise  are  subordinated  to the  rights of holders of such
Capital Securities.

         "Company" means First Banks, Inc., a Missouri corporation, and, subject
          -------
to the provisions of Article XI, shall include its successors and assigns.

         "Coupon Rate" has the meaning set forth in Section 2.8.
          -----------

         "Debenture" or "Debentures" has the meaning stated in the first recital
          ---------      ----------
of this Indenture.

         "Debenture Register" has the meaning specified in Section 2.5.
          ------------------

         "Declaration"  means the Amended and Restated  Declaration  of Trust of
          -----------
the Trust, as amended or supplemented from time to time.

         "Default"  means any event,  act or condition that with notice or lapse
          -------
of time, or both, would constitute an Event of Default.

         "Defaulted Interest" has the meaning set forth in Section 2.8.
          ------------------

         "Depositary"  means an  organization  registered  as a clearing  agency
          ----------
under the Exchange Act that is  designated  as  Depositary by the Company or any
successor thereto. The initial Depositary will be DTC.

         "Depositary  Participant" means a broker, dealer, bank, other financial
          -----------------------
institution  or other  Person  for whom from time to time a  Depositary  effects
book-entry transfers and pledges of securities deposited with the Depositary.

         "Distribution  Period"  means (i) with respect to interest  paid on the
          --------------------
first Interest Payment Date, the period beginning on (and including) the date of
original  issuance and ending on (but  excluding)  the Interest  Payment Date in
March 2005 and (ii) thereafter, with respect to interest paid on each successive
Interest  Payment Date,  the period  beginning on (and  including) the preceding
Interest  Payment  Date and  ending on (but  excluding)  such  current  Interest
Payment Date.

         "Determination Date" has the meaning set forth in Section 2.10.
          ------------------

         "DTC" means the Depository Trust Company, a New York corporation.
          ---

         "Event of Default" means any event specified in Section 5.1,  continued
          ----------------
for the  period of time,  if any,  and after the giving of the  notice,  if any,
therein designated.

         "Extension  Event of Default"  means an Event of Default  under Section
          ---------------------------
5.1(a),  (d) or (e), whatever the reason for such Extension Event of Default and
whether it shall be voluntary or  involuntary or be effected by operation of law
or pursuant to any judgment,  decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
<PAGE>

         "Extension Period" has the meaning set forth in Section 2.11.
          ----------------

         "Federal  Reserve" means the Board of Governors of the Federal  Reserve
          ----------------
System,  or its  designated  district  bank,  as  applicable,  and any successor
federal  agency that is primarily  responsible  for regulating the activities of
bank holding companies.

         "Global  Debenture"  means a security that evidences all or part of the
          -----------------
Debentures,  the  ownership  and  transfers  of which shall be made through book
entries by a Depositary.

         "Indenture" means this instrument as originally executed or, if amended
          ---------
or supplemented as herein provided, as so amended or supplemented, or both.

         "Institutional Trustee" has the meaning set forth in the Declaration.
          ---------------------

         "Interest  Payment  Date"  means March 15,  June 15,  September  15 and
          -----------------------
December  15 of each year during the term of this  Indenture,  or if such day is
not a Business Day, then the next succeeding  Business Day,  commencing in March
2005.

         "Interest  Rate" means for the  Distribution  Period  beginning on (and
          --------------
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest  Payment  Date in March 2005 the rate per annum of 4.54%,  and for each
Distribution  Period  beginning on or after the  Interest  Payment Date in March
2005, the Coupon Rate for such Distribution Period.

         "Investment  Company  Event"  means the  receipt by the Company and the
          --------------------------
Trust of an opinion of counsel  experienced  in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or written change
(including any announced prospective change) in interpretation or application of
law or  regulation  by any  legislative  body,  court,  governmental  agency  or
regulatory authority, there is more than an insubstantial risk that the Trust is
or, within 90 days of the date of such opinion will be considered an "investment
company" that is required to be registered  under the Investment  Company Act of
1940, as amended which change or prospective  change becomes  effective or would
become  effective,  as the case may be, on or after the date of the  issuance of
the Debentures.

         "Liquidation  Amount"  means the stated  amount of $1,000.00  per Trust
          -------------------
Security.

         "Maturity Date" means December 15, 2034.
          -------------

         "Officers'  Certificate"  means a certificate signed by the Chairman of
          ----------------------
the Board, the Chief Executive Officer,  the Vice Chairman,  the President,  any
Managing  Director or any Vice  President,  and by the  Treasurer,  an Assistant
Treasurer,  the  Comptroller,  an  Assistant  Comptroller,  the  Secretary or an
Assistant  Secretary of the  Company,  and  delivered to the Trustee.  Each such
certificate shall include the statements  provided for in Section 14.6 if and to
the extent required by the provisions of such Section.

         "Opinion  of  Counsel"  means an  opinion  in  writing  signed by legal
          --------------------
counsel,  who may be an employee of or counsel to the  Company,  or may be other
counsel reasonably  satisfactory to the Trustee. Each such opinion shall include
the statements provided for in Section 14.6 if and to the extent required by the
provisions of such Section.

         "OTS" means the Office of Thrift  Supervision and any successor federal
          ---
agency that is primarily  responsible  for  regulating the activities of savings
and loan holding companies.
<PAGE>

         The term "outstanding," when used with reference to Debentures,  means,
                   -----------
subject to the  provisions  of  Section  7.4,  as of any  particular  time,  all
Debentures  authenticated  and  delivered  by the Trustee or the  Authenticating
Agent under this Indenture, except:

         (a)     Debentures  theretofore   canceled   by  the   Trustee  or  the
Authenticating Agent or delivered to the Trustee for cancellation;

         (b)     Debentures, or portions thereof,  for the payment or redemption
of which moneys in the necessary  amount shall have been deposited in trust with
the Trustee or with any paying agent (other than the Company) or shall have been
set aside and  segregated  in trust by the Company (if the Company  shall act as
its own paying agent); provided,  however, that, if such Debentures, or portions
                       --------   -------
thereof, are to be redeemed prior to maturity thereof, notice of such redemption
shall have been given as provided in Section 10.3 or provision  satisfactory  to
the Trustee shall have been made for giving such notice; and

         (c)     Debentures  paid  pursuant  to  Section  2.6 or in  lieu  of or
in substitution  for which other Debentures  shall have been  authenticated  and
delivered  pursuant to the terms of Section 2.6 unless proof satisfactory to the
Company and the Trustee is presented  that any such  Debentures are held by bona
fide holders in due course.

         "Person" means any individual,  corporation, limited liability company,
          ------
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         "Predecessor Security" of any particular Debenture means every previous
          --------------------
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular  Debenture;  and,  for  purposes of this  definition,  any  Debenture
authenticated  and delivered  under Section 2.6 in lieu of a lost,  destroyed or
stolen  Debenture  shall  be  deemed  to  evidence  the same  debt as the  lost,
destroyed or stolen Debenture.

         "Principal  Office of the Trustee," or other  similar  term,  means the
          --------------------------------
office of the  Trustee,  at which at any  particular  time its  corporate  trust
business shall be principally  administered,  which at the time of the execution
of this  Indenture  shall be Rodney  Square  North,  1100 North  Market  Street,
Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.

         "Redemption Date" has the meaning set forth in Section 10.1.
          ---------------

         "Redemption Price" means 100% of the principal amount of the Debentures
          ----------------
being  redeemed,  plus accrued and unpaid  interest  (including  any  Additional
Interest) on such Debentures to the Redemption Date.

         "Responsible  Officer" means, with respect to the Trustee,  any officer
          --------------------
within the Principal Office of the Trustee,  including any  vice-president,  any
assistant vice-president, any secretary, any assistant secretary, the treasurer,
any  assistant  treasurer,  any trust  officer or other officer of the Principal
Trust Office of the Trustee  customarily  performing  functions similar to those
performed by any of the above designated  officers and also means,  with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred  because  of that  officer's  knowledge  of and  familiarity  with  the
particular subject.

         "Securities Act" means the Securities Act of 1933, as amended from time
          --------------
to time or any successor legislation.
<PAGE>

         "Securityholder," "holder of Debentures," or other similar terms, means
          --------------
any Person in whose name at the time a particular Debenture is registered on the
register kept by the Company or the Trustee for that purpose in accordance  with
the terms hereof.

         "Senior  Indebtedness"  means,  with  respect to the  Company,  (i) the
          --------------------
principal,  premium,  if any, and interest in respect of (A) indebtedness of the
Company for all borrowed and purchased money and (B)  indebtedness  evidenced by
securities,  debentures, notes, bonds or other similar instruments issued by the
Company;  (ii)  all  capital  lease  obligations  of  the  Company;   (iii)  all
obligations of the Company  issued or assumed as the deferred  purchase price of
property, all conditional sale obligations of the Company and all obligations of
the Company under any title  retention  agreement;  (iv) all  obligations of the
Company for the reimbursement of any letter of credit, any banker's  acceptance,
any security purchase facility, any repurchase agreement or similar arrangement,
any interest rate swap,  any other hedging  arrangement,  any  obligation  under
options or any similar credit or other  transaction;  (v) all obligations of the
Company  associated  with  derivative  products  such as  interest  and  foreign
exchange rate contracts, commodity contracts, and similar arrangements; (vi) all
obligations  of the type  referred  to in clauses (i) through (v) above of other
Persons  for the  payment  of which  the  Company  is  responsible  or liable as
obligor,   guarantor  or  otherwise  including,   without  limitation,   similar
obligations   arising  from  off-balance  sheet  guarantees  and  direct  credit
substitutes;  and (vii) all  obligations  of the type referred to in clauses (i)
through (vi) above of other Persons secured by any lien on any property or asset
of the  Company  (whether  or not such  obligation  is assumed by the  Company),
whether  incurred  on or  prior  to the  date of this  Indenture  or  thereafter
incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include
(1) any Additional Junior  Indebtedness,  (2) Debentures issued pursuant to this
Indenture  and  guarantees  in respect of such  Debentures,  (3) trade  accounts
payable of the Company  arising in the ordinary  course of business  (such trade
accounts payable being pari passu in right of payment to the Debentures), or (4)
obligations  with respect to which (a) in the instrument  creating or evidencing
the same or pursuant to which the same is outstanding,  it is provided that such
obligations are pari passu, junior or otherwise not superior in right of payment
to the  Debentures  and (b) the  Company,  prior to the  issuance  thereof,  has
notified  (and,  if  then  required  under  the  applicable  guidelines  of  the
regulating  entity,  has  received  approval  from) the Federal  Reserve (if the
Company is a bank  holding  company) or the OTS (if the Company is a savings and
loan  holding  company).   Senior  Indebtedness  shall  continue  to  be  Senior
Indebtedness and be entitled to the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.

         "Special Event" means any of a Capital  Treatment  Event, an Investment
          -------------
Company Event or a Tax Event.

         "Special Redemption Date" has the meaning set forth in Section 10.2.
          -----------------------

         "Special  Redemption  Price" means the price set forth in the following
          --------------------------
table for any Special  Redemption  Date that occurs on the date indicated  below
(or if such day is not a Business Day, then the next  succeeding  Business Day),
expressed as the  percentage of the  principal  amount of the  Debentures  being
redeemed:

----------------------------------------- --------------------------------------
          Month in which Special                  Special Redemption Price
          ----------------------                  ------------------------
          Redemption Date Occurs
          ----------------------
----------------------------------------- --------------------------------------
               March 2005                                104.625%
----------------------------------------- --------------------------------------
               June 2005                                 104.300%
----------------------------------------- --------------------------------------
             September 2005                              104.000%
----------------------------------------- --------------------------------------

<PAGE>
----------------------------------------- --------------------------------------
             December 2005                               103.650%
----------------------------------------- --------------------------------------
               March 2006                                103.350%
----------------------------------------- --------------------------------------
               June 2006                                 103.000%
----------------------------------------- --------------------------------------
             September 2006                              102.700%
----------------------------------------- --------------------------------------
             December 2006                               102.350%
----------------------------------------- --------------------------------------
               March 2007                                102.050%
----------------------------------------- --------------------------------------
               June 2007                                 101.700%
----------------------------------------- --------------------------------------
             September 2007                              101.400%
----------------------------------------- --------------------------------------
             December 2007                               101.050%
----------------------------------------- --------------------------------------
               March 2008                                100.750%
----------------------------------------- --------------------------------------
               June 2008                                 100.450%
----------------------------------------- --------------------------------------
             September 2008                              100.200%
----------------------------------------- --------------------------------------
      December 2008 and thereafter                       100.000%
----------------------------------------- --------------------------------------


         plus,  in  each  case,  accrued  and  unpaid  interest  (including  any
Additional Interest) on such Debentures to the Special Redemption Date.

         "Subsidiary"  means with respect to any Person,  (i) any corporation at
          ----------
least a majority of the outstanding voting stock of which is owned,  directly or
indirectly,  by such  Person or by one or more of its  Subsidiaries,  or by such
Person and one or more of its Subsidiaries,  (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar  interests of which shall at the time be owned by such Person, or by one
or  more  of  its  Subsidiaries,  or by  such  Person  and  one or  more  of its
Subsidiaries  and (iii) any limited  partnership  of which such Person or any of
its  Subsidiaries  is a general  partner.  For the purposes of this  definition,
"voting stock" means shares,  interests,  participations or other equivalents in
the equity interest  (however  designated) in such Person having ordinary voting
power for the election of a majority of the  directors  (or the  equivalent)  of
such Person, other than shares,  interests,  participations or other equivalents
having such power only by reason of the occurrence of a contingency.

         "Tax  Event"  means  the  receipt  by the  Company  and the Trust of an
          ----------
opinion of counsel  experienced  in such matters to the effect that, as a result
of any amendment to or change  (including any announced  prospective  change) in
the laws or any  regulations  thereunder  of the United  States or any political
subdivision  or  taxing  authority  thereof  or  therein,  or as a result of any
official  administrative  pronouncement  (including  any private  letter ruling,
technical advice memorandum,  field service advice, regulatory procedure, notice
or  announcement,  including any notice or  announcement of intent to adopt such
procedures or regulations)  (an  "Administrative  Action") or judicial  decision
                                  ----------------------
interpreting  or applying such laws or  regulations,  regardless of whether such
Administrative  Action or judicial decision is issued to or in connection with a
proceeding  involving  the  Company or the Trust and  whether or not  subject to

<PAGE>

review or appeal, which amendment, clarification,  change, Administrative Action
or decision is enacted,  promulgated or announced,  in each case on or after the
date of original issuance of the Debentures, there is more than an insubstantial
risk  that:  (i) the  Trust  is,  or will be  within 90 days of the date of such
opinion,  subject to United  States  federal  income tax with  respect to income
received or accrued on the Debentures;  (ii) interest  payable by the Company on
the  Debentures is not, or within 90 days of the date of such opinion,  will not
be,  deductible by the Company,  in whole or in part,  for United States federal
income  tax  purposes;  or (iii)  the Trust is, or will be within 90 days of the
date of such opinion,  subject to more than a de minimis  amount of other taxes,
duties or other governmental charges.

         "3-Month LIBOR" has the meaning set forth in Section 2.10.
          -------------

         "Telerate Page 3750" has the meaning set forth in Section 2.10.
          ------------------

         "Trust" shall mean First Bank Statutory Trust III, a Delaware statutory
          -----
trust,  or any other similar  trust  created for the purpose of issuing  Capital
Securities in connection  with the issuance of Debentures  under this Indenture,
of which the Company is the sponsor.

         "Trust Securities"  means  Common  Securities and Capital Securities of
          ----------------
the Trust.

         "Trustee"  means  Wilmington   Trust  Company,   and,  subject  to  the
          -------
provisions of Article VI hereof,  shall also include its  successors and assigns
as Trustee hereunder.

                                  ARTICLE II.
                                  DEBENTURES
                                  ----------

         Section 2.1.    Authentication and Dating.  Upon   the   execution  and
                         -------------------------
delivery of this Indenture,  or from time to time  thereafter,  Debentures in an
aggregate  principal amount not in excess of $41,238,000.00  may be executed and
delivered  by the Company to the Trustee for  authentication,  and the  Trustee,
upon receipt of a written authentication order from the Company, shall thereupon
authenticate  and make  available  for delivery  said  Debentures to or upon the
written order of the Company,  signed by its Chairman of the Board of Directors,
Chief  Executive  Officer,  Vice Chairman,  the  President,  one of its Managing
Directors  or one of its Vice  Presidents  without  any  further  action  by the
Company  hereunder.  Notwithstanding  anything to the contrary contained herein,
the  Trustee  shall be  fully  protected  in  relying  upon  the  aforementioned
authentication  order and written order in  authenticating  and delivering  said
Debentures.  In  authenticating  such  Debentures,  and accepting the additional
responsibilities  under this  Indenture  in  relation  to such  Debentures,  the
Trustee  shall be  entitled to receive,  and  (subject to Section  6.1) shall be
fully protected in relying upon:

         (a)   a copy of any  Board  Resolution  or Board  Resolutions  relating
               thereto and, if applicable,  an appropriate  record of any action
               taken pursuant to such resolution,  in each case certified by the
               Secretary or an Assistant  Secretary of the Company,  as the case
               may be; and

         (b)   an Opinion of Counsel  prepared in  accordance  with Section 14.6
               which shall also state:

                    (1) that such Debentures,  when  authenticated and delivered
               by the  Trustee  and  issued by the  Company  in each case in the
               manner and subject to any conditions specified in such Opinion of
               Counsel, will constitute valid and legally binding obligations of
               the  Company,  subject to or limited  by  applicable  bankruptcy,
               insolvency,   reorganization,    conservatorship,   receivership,
               moratorium and other  statutory or decisional laws relating to or
               affecting  creditors'  rights or the  reorganization of financial
               institutions  (including,  without  limitation,   preference  and
               fraudulent conveyance or transfer laws),  heretofore or hereafter
               enacted  or  in  effect,   affecting   the  rights  of  creditors
               generally; and
<PAGE>

                    (2)  that  all  laws  and  requirements  in  respect  of the
               execution and delivery by the Company of the Debentures have been
               complied  with  and  that  authentication  and  delivery  of  the
               Debentures  by the  Trustee  will not  violate  the terms of this
               Indenture.

         The Trustee shall have the right to decline to authenticate and deliver
any  Debentures  under this Section if the Trustee,  being advised in writing by
counsel,  determines  that  such  action  may  not  lawfully  be  taken  or if a
Responsible  Officer  of the  Trustee in good faith  shall  determine  that such
action would expose the Trustee to personal liability to existing holders.

         The definitive  Debentures  shall be typed,  printed,  lithographed  or
engraved on steel engraved  borders or may be produced in any other manner,  all
as determined by the officers  executing such Debentures,  as evidenced by their
execution of such Debentures.

         Section  2.2.   Form of Trustee's  Certificate  of Authentication.  The
                         -------------------------------------------------
Trustee's   certificate  of   authentication  on  all  Debentures  shall  be  in
substantially the following form:

         This is one of the Debentures referred to in the within-mentioned
Indenture.

         WILMINGTON TRUST COMPANY, as Trustee

         By
           ----------------------------------
         Authorized Signer

         Section 2.3.    Form and Denomination of Debentures.   The   Debentures
                         -----------------------------------
shall be substantially in the form of Exhibit A attached hereto.  The Debentures
shall  be in  registered,  certificated  form  without  coupons  and in  minimum
denominations  of $100,000.00  and any multiple of $1,000.00 in excess  thereof.
Any  attempted  transfer  of the  Debentures  in a  block  having  an  aggregate
principal amount of less than  $100,000.00  shall be deemed to be void and of no
legal effect whatsoever. Any such purported transferee shall be deemed not to be
a holder of such Debentures for any purpose,  including,  but not limited to the
receipt of payments on such Debentures,  and such purported  transferee shall be
deemed to have no interest  whatsoever in such Debentures.  The Debentures shall
be  numbered,  lettered,  or  otherwise  distinguished  in  such  manner  or  in
accordance with such plans as the officers executing the same may determine with
the  approval of the Trustee as evidenced by the  execution  and  authentication
thereof.

         Section 2.4.    Execution of Debentures. The Debentures shall be signed
                         -----------------------
in the name and on behalf of the Company by the manual or facsimile signature of
its Chairman of the Board of Directors,  Chief Executive Officer, Vice Chairman,
President,  one  of  its  Managing  Directors  or  one  of  its  Executive  Vice
Presidents,  Senior Vice Presidents or Vice Presidents.  Only such Debentures as
shall bear thereon a certificate  of  authentication  substantially  in the form
herein before recited,  executed by the Trustee or the  Authenticating  Agent by
the manual signature of an authorized signer,  shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate by
the  Trustee or the  Authenticating  Agent upon any  Debenture  executed  by the
Company shall be conclusive  evidence  that the Debenture so  authenticated  has
been duly authenticated and delivered  hereunder and that the holder is entitled
to the benefits of this Indenture.

         In case any  officer of the  Company  who shall have  signed any of the
Debentures  shall cease to be such officer before the Debentures so signed shall
have been  authenticated  and  delivered  by the  Trustee or the  Authenticating
Agent,  or disposed  of by the  Company,  such  Debentures  nevertheless  may be
authenticated  and delivered or disposed of as though the Person who signed such
Debentures  had not ceased to be such officer of the Company;  and any Debenture

<PAGE>

may be signed on behalf of the Company by such Persons as, at the actual date of
the execution of such  Debenture,  shall be the proper  officers of the Company,
although at the date of the execution of this  Indenture any such person was not
such an officer.

         Every Debenture shall be dated the date of its authentication.

         Section 2.5     Exchange  and  Registration  of Transfer of Debentures.
                         ------------------------------------------------------
The Company shall cause to be kept, at the office or agency  maintained  for the
purpose of registration of transfer and for exchange as provided in Section 3.2,
a register (the  "Debenture  Register") for the Debentures  issued  hereunder in
                  -------------------
which, subject to such reasonable  regulations as it may prescribe,  the Company
shall  provide for the  registration  and transfer of all  Debentures as in this
Article II provided.  The Debenture  Register shall be in written form or in any
other form  capable of being  converted  into  written  form within a reasonable
time.

         Debentures to be exchanged may be surrendered  at the Principal  Office
of the  Trustee or at any office or agency to be  maintained  by the Company for
such  purpose as provided in Section  3.2, and the Company  shall  execute,  the
Company or the Trustee  shall  register  and the  Trustee or the  Authenticating
Agent shall  authenticate  and make available for delivery in exchange  therefor
the Debenture or Debentures which the  Securityholder  making the exchange shall
be entitled to receive. Upon due presentment for registration of transfer of any
Debenture at the  Principal  Office of the Trustee or at any office or agency of
the Company  maintained for such purpose as provided in Section 3.2, the Company
shall execute,  the Company or the Trustee shall register and the Trustee or the
Authenticating  Agent shall  authenticate and make available for delivery in the
name of the  transferee or  transferees  a new  Debenture  for a like  aggregate
principal  amount.  Registration or registration of transfer of any Debenture by
the Trustee or by any agent of the Company  appointed  pursuant to Section  3.2,
and delivery of such Debenture,  shall be deemed to complete the registration or
registration of transfer of such Debenture.

         All Debentures  presented for  registration of transfer or for exchange
or  payment  shall  (if  so  required  by the  Company  or  the  Trustee  or the
Authenticating  Agent)  be duly  endorsed  by,  or be  accompanied  by a written
instrument or  instruments of transfer in form  satisfactory  to the Company and
the  Trustee  or the  Authenticating  Agent duly  executed  by the holder or his
attorney duly authorized in writing.

         No service  charge  shall be made for any exchange or  registration  of
transfer of Debentures,  but the Company or the Trustee may require payment of a
sum  sufficient to cover any tax, fee or other  governmental  charge that may be
imposed in connection therewith.

         The  Company  or the  Trustee  shall not be  required  to  exchange  or
register a transfer of any Debenture for a period of 15 days next  preceding the
date of selection of Debentures for redemption.

         Notwithstanding anything herein to the contrary,  Debentures may not be
transferred except in compliance with the restricted securities legend set forth
below,  unless otherwise  determined by the Company,  upon the advice of counsel
expert in securities law, in accordance with applicable law:

         THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR

<PAGE>

PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE COMPANY,  (B) PURSUANT TO A
REGISTRATION  STATEMENT  THAT HAS BEEN DECLARED  EFFECTIVE  UNDER THE SECURITIES
ACT,  (C) TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED
INSTITUTIONAL  BUYER IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH  RULE  144A,  (D)  TO A  NON-U.S.  PERSON  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH  (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY  FOR  ITS OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF SUCH AN  INSTITUTIONAL
ACCREDITED  INVESTOR,  FOR  INVESTMENT  PURPOSES  AND NOT WITH A VIEW TO, OR FOR
OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY  DISTRIBUTION  IN  VIOLATION  OF THE
SECURITIES  ACT,  OR (F)  PURSUANT  TO ANY OTHER  AVAILABLE  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION  SATISFACTORY  TO  IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING AN AGGREGATE  PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE  PRINCIPAL  AMOUNT OF LESS THAN  $100,000.00  SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.
<PAGE>

         Section 2.6.    Mutilated,  Destroyed,  Lost  or  Stolen Debentures. In
                         ---------------------------------------------------
case any Debenture shall become mutilated or be destroyed,  lost or stolen,  the
Company  shall  execute,   and  upon  its  written  request  the  Trustee  shall
authenticate and deliver, a new Debenture bearing a number not contemporaneously
outstanding,  in exchange and  substitution for the mutilated  Debenture,  or in
lieu of and in substitution for the Debenture so destroyed,  lost or stolen.  In
every  case the  applicant  for a  substituted  Debenture  shall  furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless,  and, in every case of  destruction,  loss or theft,
the  applicant  shall also  furnish to the Company  and the Trustee  evidence to
their  satisfaction of the  destruction,  loss or theft of such Debenture and of
the ownership thereof.

         The Trustee may authenticate any such substituted Debenture and deliver
the same  upon the  written  request  or  authorization  of any  officer  of the
Company. Upon the issuance of any substituted Debenture, the Company may require
the payment of a sum  sufficient to cover any tax or other  governmental  charge
that may be  imposed  in  relation  thereto  and any  other  expenses  connected
therewith.  In case any Debenture which has matured or is about to mature or has
been called for redemption in full shall become mutilated or be destroyed,  lost
or stolen,  the Company may, instead of issuing a substitute  Debenture,  pay or
authorize the payment of the same (without  surrender thereof except in the case
of a mutilated Debenture) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless and, in case of destruction,  loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or theft
of such Debenture and of the ownership thereof.

         Every  substituted  Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any such Debenture is destroyed,  lost or
stolen shall  constitute  an additional  contractual  obligation of the Company,
whether or not the  destroyed,  lost or stolen  Debenture  shall be found at any
time,  and shall be entitled to all the benefits of this  Indenture  equally and
proportionately  with any and all other  Debentures duly issued  hereunder.  All
Debentures  shall be held and owned  upon the  express  condition  that,  to the
extent permitted by applicable law, the foregoing  provisions are exclusive with
respect to the  replacement or payment of mutilated,  destroyed,  lost or stolen
Debentures   and  shall   preclude   any  and  all  other   rights  or  remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the  replacement  or payment of negotiable  instruments or other
securities without their surrender.

         Section  2.7.   Temporary   Debentures.   Pending  the  preparation  of
                         ----------------------
definitive   Debentures,   the  Company  may  execute  and  the  Trustee   shall
authenticate  and make  available  for delivery  temporary  Debentures  that are
typed,  printed or lithographed.  Temporary  Debentures shall be issuable in any
authorized  denomination,  and  substantially  in the  form  of  the  definitive
Debentures in lieu of which they are issued but with such omissions,  insertions
and variations as may be  appropriate  for temporary  Debentures,  all as may be
determined by the Company.  Every such temporary  Debenture shall be executed by
the Company and be  authenticated by the Trustee upon the same conditions and in
substantially  the same  manner,  and with the same  effect,  as the  definitive
Debentures.  Without  unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive  Debentures and thereupon any
or all temporary  Debentures  may be surrendered  in exchange  therefor,  at the
principal  corporate  trust  office of the  Trustee  or at any  office or agency
maintained  by the Company for such  purpose as provided in Section 3.2, and the

<PAGE>

Trustee or the  Authenticating  Agent shall  authenticate and make available for
delivery in exchange for such temporary  Debentures a like  aggregate  principal
amount of such definitive Debentures. Such exchange shall be made by the Company
at its own expense and  without any charge  therefor  except that in case of any
such  exchange  involving a  registration  of  transfer  the Company may require
payment of a sum sufficient to cover any tax, fee or other  governmental  charge
that may be imposed in  relation  thereto.  Until so  exchanged,  the  temporary
Debentures  shall in all  respects be entitled to the same  benefits  under this
Indenture as definitive Debentures authenticated and delivered hereunder.

         Section 2.8.    Payment of Interest and Additional  Interest.  Interest
                         --------------------------------------------
at the  Interest  Rate and any  Additional  Interest  on any  Debenture  that is
payable,  and is punctually  paid or duly provided for, on any Interest  Payment
Date for Debentures shall be paid to the Person in whose name said Debenture (or
one or more  Predecessor  Securities)  is registered at the close of business on
the regular record date for such interest  installment  except that interest and
any Additional Interest payable on the Maturity Date shall be paid to the Person
to whom principal is paid.

         Each  Debenture  shall bear  interest for the period  beginning on (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest Payment Date in March 2005 at a rate per annum of 4.54%, and shall bear
interest  for each  successive  Distribution  Period  beginning  on or after the
Interest  Payment  Date in March 2005 at a rate per annum  equal to the  3-Month
LIBOR,  determined as described in Section 2.10, plus 2.18% (the "Coupon Rate"),
                                                                  -----------
applied to the principal amount thereof, until the principal thereof becomes due
and payable, and on any overdue principal and to the extent that payment of such
interest is  enforceable  under  applicable  law  (without  duplication)  on any
overdue installment of interest (including  Additional Interest) at the Interest
Rate in effect for each applicable period compounded  quarterly.  Interest shall
be payable (subject to any relevant  Extension  Period)  quarterly in arrears on
each Interest Payment Date with the first  installment of interest to be paid on
the Interest Payment Date in March 2005.

         Any interest on any Debenture,  including Additional Interest,  that is
payable,  but is not  punctually  paid or duly  provided  for,  on any  Interest
Payment Date (herein called  "Defaulted  Interest")  shall forthwith cease to be
                              -------------------
payable to the registered  holder on the relevant  regular record date by virtue
of having been such holder;  and such  Defaulted  Interest  shall be paid by the
Company to the  Persons  in whose  names such  Debentures  (or their  respective
Predecessor  Securities)  are  registered  at the close of business on a special
record date for the payment of such Defaulted Interest,  which shall be fixed in
the following  manner:  the Company shall notify the Trustee in writing at least
25 days prior to the date of the  proposed  payment  of the amount of  Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment,  and at the same time the  Company  shall  deposit  with the Trustee an
amount of money equal to the aggregate  amount proposed to be paid in respect of
such Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
for such  deposit  prior to the date of the  proposed  payment,  such money when
deposited  to be held in trust for the benefit of the  Persons  entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such  Defaulted  Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed  payment
and not less than 10 days after the  receipt by the Trustee of the notice of the
proposed payment.  The Trustee shall promptly notify the Company of such special
record  date and,  in the name and at the  expense of the  Company,  shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed,  first class postage prepaid, to each Securityholder
at its address as it appears in the  Debenture  Register,  not less than 10 days
prior to such  special  record  date.  Notice of the  proposed  payment  of such
Defaulted  Interest and the special  record date therefor  having been mailed as
aforesaid,  such Defaulted  Interest shall be paid to the Persons in whose names
such Debentures (or their respective  Predecessor  Securities) are registered on
such special record date and shall be no longer payable.
<PAGE>

         The  Company  may  make  payment  of  any  Defaulted  Interest  on  any
Debentures  in any other lawful  manner after notice given by the Company to the
Trustee of the proposed payment method;  provided,  however,  the Trustee in its
                                         --------   -------
sole discretion deems such payment method to be practical.

         Any  interest  (including  Additional  Interest)  scheduled  to  become
payable on an Interest  Payment Date occurring  during an Extension Period shall
not be  Defaulted  Interest  and shall be  payable  on such other date as may be
specified in the terms of such Debentures.

         The term  "regular  record date" as used in this Section shall mean the
close of business on the 5th  Business Day  preceding  the  applicable  Interest
Payment Date.

         Subject to the foregoing  provisions of this  Section,  each  Debenture
delivered  under this Indenture upon  registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid, and to accrue, that were carried by such other Debenture.

         Section 2.9.    Cancellation of Debentures  Paid,  etc. All  Debentures
                         --------------------------------------
surrendered for the purpose of payment, redemption,  exchange or registration of
transfer,  shall,  if  surrendered  to the  Company  or  any  paying  agent,  be
surrendered  to the Trustee and promptly  canceled by it, or, if  surrendered to
the Trustee or any  Authenticating  Agent, shall be promptly canceled by it, and
no Debentures  shall be issued in lieu thereof except as expressly  permitted by
any  of the  provisions  of  this  Indenture.  All  Debentures  canceled  by any
Authenticating  Agent shall be  delivered  to the  Trustee.  The  Trustee  shall
destroy all canceled Debentures unless the Company otherwise directs the Trustee
in writing.  If the Company shall acquire any of the Debentures,  however,  such
acquisition   shall  not  operate  as  a  redemption  or   satisfaction  of  the
indebtedness  represented  by such  Debentures  unless  and  until  the same are
surrendered to the Trustee for cancellation.

         Section 2.10.   Computation of Interest. The amount of interest payable
                         -----------------------
for each Distribution Period will be calculated by applying the Interest Rate to
the principal amount outstanding at the commencement of the Distribution  Period
on the basis of the actual number of days in the  Distribution  Period concerned
divided  by  360.  All  percentages  resulting  from  any  calculations  on  the
Debentures will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

        (a)      "3-Month LIBOR"  means  the  London  interbank offered interest
                  -------------
rate for  three-month,  U.S.  dollar  deposits  determined by the Trustee in the
following order of priority:

                 (1) the rate (expressed  as a percentage  per  annum)  for U.S.
          dollar deposits having a three-month maturity that appears on Telerate
          Page 3750 as of 11:00 a.m. (London time) on the related  Determination
          Date (as  defined  below).  "Telerate  Page  3750"  means the  display
          designated  as "Page 3750" on the Dow Jones  Telerate  Service or such
          other  page as may  replace  Page 3750 on that  service  or such other
          service  or  services  as may be  nominated  by the  British  Bankers'
          Association  as the  information  vendor for the purpose of displaying
          London interbank offered rates for U.S. dollar deposits;

                 (2) if such  rate   cannot  be   identified   on  the   related
          Determination  Date,  the Trustee  will request the  principal  London
          offices  of four  leading  banks in the  London  interbank  market  to
          provide such banks' offered  quotations  (expressed as percentages per
          annum) to prime banks in the London  interbank  market for U.S. dollar
          deposits having a three-month  maturity as of 11:00 a.m. (London time)
          on such  Determination  Date. If at least two quotations are provided,
          3-Month LIBOR will be the arithmetic mean of such quotations;


<PAGE>

                 (3) if fewer than two such quotations are provided as requested
          in clause (2) above, the Trustee will request four major New York City
          banks  to  provide  such  banks'  offered  quotations   (expressed  as
          percentages  per  annum) to leading  European  banks for loans in U.S.
          dollars as of 11:00 a.m. (London time) on such Determination  Date. If
          at least two such  quotations are provided,  3-Month LIBOR will be the
          arithmetic mean of such quotations; and

                 (4) if fewer than two such quotations are provided as requested
          in clause (3) above,  3-Month LIBOR will be a 3-Month LIBOR determined
          with respect to the  Distribution  Period  immediately  preceding such
          current Distribution Period.

          If the rate for U.S.  dollar  deposits  having a three-month  maturity
that initially  appears on Telerate Page 3750 as of 11:00 a.m.  (London time) on
the related  Determination  Date is  superseded  on the Telerate  Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination  Date, then the
corrected rate as so  substituted on the applicable  page will be the applicable
3-Month LIBOR for such Determination Date.

          (b)    The Interest Rate for any  Distribution  Period will at no time
be higher than the maximum  rate then  permitted by New York law as the same may
be modified by United States law.

          (c)    "Determination Date" means the date that is two London  Banking
                  ------------------
Days (i.e.,  a business  day in which  dealings in deposits in U.S.  dollars are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.

          (d)    The Trustee shall notify the Company, the Institutional Trustee
and any securities exchange or interdealer quotation system on which the Capital
Securities are listed,  of the Coupon Rate and the  Determination  Date for each
Distribution Period, in each case as soon as practicable after the determination
thereof  but in no event  later than the  thirtieth  (30th) day of the  relevant
Distribution Period. Failure to notify the Company, the Institutional Trustee or
any securities  exchange or interdealer  quotation system, or any defect in said
notice,  shall not affect the  obligation  of the Company to make payment on the
Debentures at the applicable  Coupon Rate.  Any error in the  calculation of the
Coupon Rate by the Trustee may be corrected  at any time by notice  delivered as
above provided.  Upon the request of a holder of a Debenture,  the Trustee shall
provide the Coupon Rate then in effect and, if  determined,  the Coupon Rate for
the next Distribution Period.

          (e)    Subject  to  the  corrective  rights  set  forth   above,   all
certificates, communications, opinions, determinations, calculations, quotations
and  decisions  given,  expressed,  made or  obtained  for the  purposes  of the
provisions relating to the payment and calculation of interest on the Debentures
and distributions on the Capital  Securities by the Trustee or the Institutional
Trustee will (in the absence of willful  default,  bad faith and manifest error)
be final,  conclusive  and  binding on the  Trust,  the  Company  and all of the
holders of the Debentures and the Capital Securities, and no liability shall (in
the  absence of willful  default,  bad faith or  manifest  error)  attach to the
Trustee  or the  Institutional  Trustee  in  connection  with  the  exercise  or
non-exercise  by  either  of  them  or  their  respective  powers,   duties  and
discretion.

          Section  2.11. Extension  of Interest  Payment  Period.  So long as no
                         ---------------------------------------
Extension  Event of Default has occurred and is  continuing,  the Company  shall
have the right,  from time to time, and without causing an Event of Default,  to
defer payments of interest on the  Debentures by extending the interest  payment
period on the  Debentures  at any time and from time to time  during the term of
the Debentures,  for up to 20 consecutive  quarterly periods (each such extended
interest payment period, an "Extension  Period"),  during which Extension Period
no interest (including Additional Interest) shall be due and payable (except any
Additional Sums that may be due and payable).  No Extension  Period may end on a
date other than an Interest Payment Date. During an Extension  Period,  interest
will continue to accrue on the Debentures, and interest on such accrued interest

<PAGE>

will  accrue at an annual  rate  equal to the  Interest  Rate in effect for such
Extension  Period,  compounded  quarterly from the date such interest would have
been payable were it not for the Extension  Period,  to the extent  permitted by
law (such interest referred to herein as "Additional  Interest").  At the end of
                                          --------------------
any such  Extension  Period the Company  shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon);  provided,
                                                                       --------
however,  that no Extension Period may extend beyond the Maturity Date; provided
-------                                                                 --------
further,  however,  that during any such Extension Period, the Company shall not
-------   -------
and shall not permit  any  Affiliate  to (i)  declare  or pay any  dividends  or
distributions on, or redeem,  purchase,  acquire,  or make a liquidation payment
with respect to, any of the Company's or such  Affiliate's  capital stock (other
than  payments  of  dividends  or  distributions  to the  Company)  or make  any
guarantee  payments  with  respect to the  foregoing or (ii) make any payment of
principal of or interest or premium,  if any, on or repay,  repurchase or redeem
any debt  securities of the Company or any Affiliate that rank pari passu in all
respects with or junior in interest to the Debentures  (other than, with respect
to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions
of shares of capital  stock of the  Company in  connection  with any  employment
contract,  benefit plan or other similar  arrangement with or for the benefit of
one or more employees,  officers, directors or consultants, in connection with a
dividend  reinvestment or stockholder  stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities  convertible into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any  exchange or  conversion  of any class or series of the  Company's
capital  stock (or any capital  stock of a  subsidiary  of the  Company) for any
class or series of the Company's  capital stock or of any class or series of the
Company's  indebtedness for any class or series of the Company's  capital stock,
(c) the  purchase of  fractional  interests in shares of the  Company's  capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged,  (d) any declaration of a dividend in
connection with any stockholders'  rights plan, or the issuance of rights, stock
or other  property  under any  stockholders'  rights plan, or the  redemption or
repurchase of rights  pursuant  thereto,  (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon  exercise of such  warrants,  options or other  rights is the same stock as
that on which the  dividend  is being paid or ranks pari passu with or junior to
such  stock  and any  cash  payments  in lieu of  fractional  shares  issued  in
connection therewith,  or (f) payments under the Capital Securities  Guarantee).
Prior to the termination of any Extension Period, the Company may further extend
such  period,  provided  that such period  together  with all such  previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension Period shall bear Additional  Interest to the extent permitted by
applicable  law.  The Company  must give the Trustee  notice of its  election to
begin or extend an Extension Period by the close of business at least 5 Business
Days prior to the Interest  Payment  Date with respect to which  interest on the
Debentures  would have been  payable  except for the election to begin or extend
such Extension Period.  The Trustee shall give notice of the Company's  election
to begin a new Extension Period to the Securityholders.

          Section 2.12.  CUSIP Numbers. The  Company  in  issuing the Debentures
                         -------------
may use "CUSIP"  numbers  (if then  generally  in use),  and, if so, the Trustee
shall  use  CUSIP  numbers  in  notices  of  redemption  as  a  convenience   to
Securityholders;  provided,  however,  that any such  notice  may state  that no
representation  is made as to the  correctness of such numbers either as printed
on the  Debentures  or as  contained  in any  notice  of a  redemption  and that
reliance may be placed only on the other  identification  numbers printed on the
Debentures,  and any such  redemption  shall not be affected by any defect in or
omission  of such  numbers.  The  Company  will  promptly  notify the Trustee in
writing of any change in the CUSIP numbers.
<PAGE>

          Section 2.13.  Global  Debentures. (a) Upon the election of the holder
                         ------------------
of outstanding Debentures, which election need not be in writing, the Debentures
owned  by such  holder  shall  be  issued  in the  form  of one or  more  Global
Debentures  registered in the name of the Depositary or its nominee. Each Global
Debenture  issued under this  Indenture  shall be  registered in the name of the
Depositary  designated  by the Company for such  Global  Debenture  or a nominee
thereof, delivered to such Depositary or a nominee thereof or custodian therefor
and shall  contain  such legends as may be required by the  Depositary  and each
such Global  Debenture shall  constitute a single  Debenture for all purposes of
this Indenture.

          (b)    Notwithstanding  any  other  provision  in  this Indenture,  no
Global Debenture may be exchanged in whole or in part for Debentures registered,
and no transfer of a Global Debenture in whole or in part may be registered,  in
the name of any Person other than the Depositary for such Global  Debenture or a
nominee thereof unless (i) such  Depositary  advises the Trustee and the Company
in  writing  that such  Depositary  is no  longer  willing  or able to  properly
discharge  its  responsibilities  as  Depositary  with  respect  to such  Global
Debenture,  and no qualified successor is appointed by the Company within ninety
(90) days of receipt by the Company of such notice,  (ii) such Depositary ceases
to be a clearing  agency  registered  under the Exchange Act and no successor is
appointed by the Company  within ninety (90) days after  obtaining  knowledge of
such event,  (iii) the Company  executes  and  delivers to the Trustee a Company
order stating that the Company elects to terminate the book-entry system through
the  Depositary  or  (iv)  an  Event  of  Default  shall  have  occurred  and be
continuing.  Upon the  occurrence  of any event  specified in clause (i),  (ii),
(iii) or (iv) above,  the Trustee shall notify the  Depositary  and instruct the
Depositary to notify all owners of beneficial interests in such Global Debenture
of the  occurrence of such event and of the  availability  of Debentures to such
owners of beneficial  interests  requesting the same.  Upon the issuance of such
Debentures and the registration in the Debenture  Register of such Debentures in
the names of the holders of the beneficial  interests therein, the Trustee shall
recognize such holders of beneficial interests as holders.

          (c)    If any Global Debenture is to be exchanged for other Debentures
or canceled in part,  or if another  Debenture is to be exchanged in whole or in
part for a  beneficial  interest in any Global  Debenture,  then either (i) such
Global  Debenture  shall be so  surrendered  for  exchange  or  cancellation  as
provided  in this  Article  II or (ii) the  principal  amount  thereof  shall be
reduced  or  increased  by an  amount  equal  to the  portion  thereof  to be so
exchanged or canceled, or equal to the principal amount of such other Debentures
to be so exchanged  for a beneficial  interest  therein,  as the case may be, by
means  of an  appropriate  adjustment  made  on the  records  of  the  Debenture
registrar,  whereupon the Trustee, in accordance with the Applicable  Depositary
Procedures,  shall instruct the Depositary or its authorized  representative  to
make a  corresponding  adjustment  to its  records.  Upon any such  surrender or
adjustment of a Global Debenture by the Depositary,  accompanied by registration
instructions,  the Company shall execute and the Trustee shall  authenticate and
deliver any  Debentures  issuable in exchange for such Global  Debenture (or any
portion  thereof) in accordance with the  instructions  of the  Depositary.  The
Trustee shall not be liable for any delay in delivery of such  instructions  and
may  conclusively  rely on, and shall be fully  protected  in relying  on,  such
instructions.

          (d)    Every Debenture  authenticated  and delivered upon registration
of transfer  of, or in  exchange  for or in lieu of, a Global  Debenture  or any
portion thereof shall be  authenticated  and delivered in the form of, and shall
be, a Global  Debenture,  unless such  Debenture is  registered in the name of a
Person other than the Depositary for such Global Debenture or a nominee thereof.

          (e)    Debentures   distributed   to  holders  of  Book-Entry  Capital
Securities  (as defined in the  Declaration)  upon the  dissolution of the Trust
shall be distributed in the form of one or more Global Debentures  registered in
the name of a  Depositary  or its nominee,  and  deposited  with the  Debentures
registrar, as custodian for such Depositary, or with such Depositary, for credit
by the  Depositary to the respective  accounts of the  beneficial  owners of the
Debentures  represented  thereby (or such other  accounts  as they may  direct).

<PAGE>

Debentures  distributed to holders of Capital  Securities  other than Book-Entry
Capital  Securities upon the dissolution of the Trust shall not be issued in the
form of a Global  Debenture or any other form intended to facilitate  book-entry
trading in beneficial interests in such Debentures.

          (f)    The  Depositary or  its  nominee,  as the registered owner of a
Global Debenture,  shall be the holder of such Global Debenture for all purposes
under this Indenture and the Debentures, and owners of beneficial interests in a
Global Debenture shall hold such interests pursuant to the Applicable Depositary
Procedures.  Accordingly,  any  such  owner's  beneficial  interest  in a Global
Debenture  shall be shown only on, and the  transfer of such  interest  shall be
effected only through,  records  maintained by the  Depositary or its nominee or
its Depositary  Participants.  The Debentures registrar and the Trustee shall be
entitled  to deal with the  Depositary  for all  purposes  under this  Indenture
relating to a Global Debenture  (including the payment of principal and interest
thereon and the giving of  instructions  or  directions  by owners of beneficial
interests therein and the giving of notices) as the sole holder of the Debenture
and shall have no  obligations  to the owners of beneficial  interests  therein.
Neither the Trustee nor the  Debentures  registrar  shall have any  liability in
respect of any transfers effected by the Depositary.

          (g)    The  rights  of  owners  of  beneficial  interests  in a Global
Debenture shall be exercised only through the Depositary and shall be limited to
those  established by law and agreements  between such owners and the Depositary
and/or its Depositary Participants.

          (h)    No  holder  of any beneficial  interest in any Global Debenture
held on its behalf by a Depositary  shall have any rights  under this  Indenture
with respect to such Global Debenture, and such Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner of
such Global  Debenture  for all purposes  whatsoever.  None of the Company,  the
Trustee nor any agent of the Company or the Trustee will have any responsibility
or  liability  for any aspect of the records  relating  to or  payments  made on
account of beneficial  ownership interests of a Global Debenture or maintaining,
supervising  or  reviewing  any records  relating to such  beneficial  ownership
interests.  Notwithstanding  the  foregoing,  nothing  herein shall  prevent the
Company,  the  Trustee or any agent of the  Company or the  Trustee  from giving
effect to any written certification, proxy or other authorization furnished by a
Depositary  or impair,  as between a Depositary  and such holders of  beneficial
interests,  the operation of customary  practices  governing the exercise of the
rights of the Depositary (or its nominee) as holder of any Debenture.

                                  ARTICLE III.
                       PARTICULAR COVENANTS OF THE COMPANY
                       -----------------------------------

          Section  3.1.  Payment of  Principal,  Premium  and  Interest;  Agreed
                         -------------------------------------------------------
Treatment of the Debentures.
---------------------------

          (a)    The  Company  covenants  and  agrees  that  it  will  duly  and
punctually  pay or cause to be paid the  principal of and  premium,  if any, and
interest and any Additional Interest and other payments on the Debentures at the
place, at the respective  times and in the manner provided in this Indenture and
the Debentures.  Each  installment of interest on the Debentures may be paid (i)
by mailing  checks  for such  interest  payable  to the order of the  holders of
Debentures  entitled thereto as they appear on the registry books of the Company
if a request for a wire transfer has not been received by the Company or (ii) by
wire  transfer to any account with a banking  institution  located in the United
States  designated  in writing by such Person to the paying  agent no later than
the related record date. Notwithstanding the foregoing, so long as the holder of
this Debenture is the Institutional Trustee, the payment of the principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Institutional Trustee.
<PAGE>

          (b)    The Company will treat the  Debentures as indebtedness, and the
amounts  payable  in  respect  of the  principal  amount of such  Debentures  as
interest,  for all United States  federal  income tax purposes.  All payments in
respect  of such  Debentures  will be made  free  and  clear  of  United  States
withholding  tax to any  beneficial  owner thereof that has provided an Internal
Revenue Service Form W8 BEN (or any substitute or successor  form)  establishing
its non-United States status for United States federal income tax purposes.

          (c)    As of the  date of this  Indenture, the Company has no  present
intention to exercise its right under Section 2.11 to defer payments of interest
on the Debentures by commencing an Extension Period.

          (d)    As of the date of this Indenture, the Company believes that the
likelihood that it would exercise its right under Section 2.11 to defer payments
of interest on the  Debentures  by  commencing  an Extension  Period at any time
during  which  the  Debentures   are   outstanding  is  remote  because  of  the
restrictions  that would be imposed on the  Company's  ability to declare or pay
dividends  or  distributions  on, or to redeem,  purchase or make a  liquidation
payment  with  respect to, any of its  outstanding  equity and on the  Company's
ability to make any payments of principal  of or interest on, or  repurchase  or
redeem, any of its debt securities that rank pari passu in all respects with (or
junior in interest to) the Debentures.

          Section 3.2.   Offices for Notices and Payments,  etc.  So long as any
                         --------------------------------------
of the Debentures remain  outstanding,  the Company will maintain in Wilmington,
Delaware, an office or agency where the Debentures may be presented for payment,
an office or agency where the  Debentures may be presented for  registration  of
transfer and for exchange as in this Indenture  provided and an office or agency
where notices and demands to or upon the Company in respect of the Debentures or
of this  Indenture may be served.  The Company will give to the Trustee  written
notice  of the  location  of any such  office  or  agency  and of any  change of
location thereof. Until otherwise designated from time to time by the Company in
a notice to the  Trustee,  or  specified as  contemplated  by Section 2.5,  such
office or agency for all of the above  purposes shall be the office or agency of
the  Trustee.  In case the  Company  shall fail to  maintain  any such office or
agency  in  Wilmington,  Delaware,  or shall  fail to give  such  notice  of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Principal Office of the Trustee.

          In addition to any such office or agency, the Company may from time to
time  designate one or more offices or agencies  outside  Wilmington,  Delaware,
where the  Debentures  may be  presented  for  registration  of transfer and for
exchange in the manner provided in this Indenture, and the Company may from time
to  time  rescind  such  designation,  as the  Company  may  deem  desirable  or
expedient;  provided,  however,  that no such designation or rescission shall in
            --------   -------
any manner  relieve the Company of its obligation to maintain any such office or
agency in Wilmington,  Delaware,  for the purposes above mentioned.  The Company
will  give to the  Trustee  prompt  written  notice of any such  designation  or
rescission thereof.

          Section 3.3.   Appointments to Fill Vacancies in Trustee's Office. The
                         --------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint,  in the manner  provided in Section 6.9, a Trustee,  so that there
shall at all times be a Trustee hereunder.

          Section 3.4.   Provision as to Paying Agent.
                         ----------------------------

          (a)    If the Company shall appoint  a  paying  agent  other  than the
Trustee,  it will cause such paying  agent to execute and deliver to the Trustee
an instrument  in which such agent shall agree with the Trustee,  subject to the
provision of this Section 3.4,

                 (1)     that it will hold all sums held by it as such agent for
          the payment of  the principal of and premium, if any, or interest,  if
          any, on the Debentures (whether such sums have  been paid to it by the
          Company or by any other  obligor on the  Debentures)  in trust for the
          benefit of the holders of the Debentures;
<PAGE>

                 (2)     that  it will give the Trustee  prompt  written  notice
          of  any  failure  by  the  Company  (or  by  any  other obligor on the
          Debentures)  to  make  any payment of the principal of and premium, if
          any, or interest, if any, on the Debentures when the same shall be due
          and payable; and

                 (3)     that it will, at any time during the continuance of any
          Event  of Default, upon the written request of the Trustee,  forthwith
          pay to the Trustee all sums so held in trust by such paying agent.

          (b)    If the Company shall act as its own paying  agent,  it will, on
or before each due date of the principal of and premium,  if any, or interest or
other  payments,  if any, on the  Debentures,  set aside,  segregate and hold in
trust for the benefit of the holders of the  Debentures a sum  sufficient to pay
such  principal,  premium,  interest or other  payments so becoming due and will
notify the  Trustee in  writing  of any  failure to take such  action and of any
failure by the Company (or by any other  obligor under the  Debentures)  to make
any  payment of the  principal  of and  premium,  if any,  or  interest or other
payments, if any, on the Debentures when the same shall become due and payable.

          Whenever  the  Company  shall have one or more  paying  agents for the
Debentures,  it will,  on or prior  to each  due  date of the  principal  of and
premium, if any, or interest,  if any, on the Debentures,  deposit with a paying
agent a sum sufficient to pay the principal, premium, interest or other payments
so  becoming  due,  such sum to be held in trust for the  benefit of the Persons
entitled thereto and (unless such paying agent is the Trustee) the Company shall
promptly notify the Trustee in writing of its action or failure to act.

          (c)    Anything  in  this Section 3.4 to the contrary notwithstanding,
the Company may, at any time,  for the purpose of obtaining a  satisfaction  and
discharge  with  respect to the  Debentures,  or for any other  reason,  pay, or
direct  any  paying  agent to pay to the  Trustee  all sums held in trust by the
Company or any such paying  agent,  such sums to be held by the Trustee upon the
trusts herein contained.

          (d)    Anything  in  this Section 3.4 to the contrary notwithstanding,
the  agreement  to hold sums in trust as provided in this Section 3.4 is subject
to Sections 12.3 and 12.4.

          Section 3.5.   Certificate to Trustee. The Company will deliver to the
                         ----------------------
Trustee  on or before  120 days after the end of each  fiscal  year,  so long as
Debentures are outstanding  hereunder,  a Certificate stating that in the course
of the  performance  by the  signers of their  duties as officers of the Company
they would normally have knowledge of any default during such fiscal year by the
Company in the performance of any covenants contained herein, stating whether or
not they have  knowledge of any such default  and, if so,  specifying  each such
default of which the signers have knowledge and the nature and status thereof.

          Section 3.6.   Additional Sums. If and for so long as the Trust is the
                         ---------------
holder of all Debentures  and the Trust is required to pay any additional  taxes
(including withholding taxes), duties, assessments or other governmental charges
as a result  of a Tax  Event,  the  Company  will pay  such  additional  amounts
("Additional  Sums")  on the  Debentures  as shall be  required  so that the net
  ----------------
amounts  received  and  retained  by the Trust  after  paying  taxes  (including
withholding taxes),  duties,  assessments or other governmental  charges will be
equal to the  amounts the Trust  would have  received if no such taxes,  duties,
assessments  or other  governmental  charges had been imposed.  Whenever in this
Indenture or the  Debentures  there is a reference in any context to the payment
of principal of or interest on the  Debentures,  such mention shall be deemed to
include  mention  of  payments  of the  Additional  Sums  provided  for in  this
paragraph to the extent that,  in such  context,  Additional  Sums are,  were or

<PAGE>

would be payable in respect thereof pursuant to the provisions of this paragraph
and express  mention of the payment of Additional  Sums (if  applicable)  in any
provisions  hereof shall not be construed as excluding  Additional Sums in those
provisions  hereof where such express  mention is not made;  provided,  however,
                                                             --------   -------
that the deferral of the payment of interest during an Extension Period pursuant
to Section 2.11 shall not defer the payment of any  Additional  Sums that may be
due and payable.

          Section 3.7.   Compliance with Consolidation  Provisions.  The Company
                         -----------------------------------------
will not, while any of the Debentures remain  outstanding,  consolidate with, or
merge into, or merge into itself,  or sell or convey all or substantially all of
its property to any other Person unless the  provisions of Article XI hereof are
complied with.

          Section 3.8.   Limitation on Dividends.  If  Debentures  are initially
                         -----------------------
issued to the Trust or a trustee of such Trust in  connection  with the issuance
of Trust Securities by the Trust (regardless of whether  Debentures  continue to
be held by such Trust) and (i) there shall have  occurred and be  continuing  an
Event of  Default,  (ii) the  Company  shall be in default  with  respect to its
payment of any obligations under the Capital Securities Guarantee,  or (iii) the
Company shall have given notice of its election to defer payments of interest on
the Debentures by extending the interest  payment period as provided  herein and
such period,  or any extension  thereof,  shall be continuing,  then the Company
shall not,  and shall not allow any  Affiliate of the Company to, (x) declare or
pay any dividends or distributions on, or redeem,  purchase,  acquire, or make a
liquidation  payment with respect to, any of the Company's  capital stock or its
Affiliates'  capital stock (other than payments of dividends or distributions to
the Company) or make any guarantee payments with respect to the foregoing or (y)
make any payment of  principal  of or interest or premium,  if any, on or repay,
repurchase or redeem any debt  securities  of the Company or any Affiliate  that
rank pari passu in all  respects  with or junior in interest  to the  Debentures
(other  than,  with  respect to  clauses  (x) and (y)  above,  (1)  repurchases,
redemptions or other  acquisitions  of shares of capital stock of the Company in
connection  with  any  employment  contract,   benefit  plan  or  other  similar
arrangement  with  or  for  the  benefit  of one or  more  employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company (or securities  convertible  into or  exercisable  for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable  Extension  Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary  of the Company) for any class or series of the  Company's
capital  stock or of any class or series of the Company's  indebtedness  for any
class or series of the Company's  capital stock,  (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange  provisions  of such capital stock or the security  being  converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).

          Section  3.9.  Covenants  as to the  Trust.  For so long as the  Trust
                         ---------------------------
Securities remain outstanding,  the Company shall maintain 100% ownership of the
Common  Securities;  provided,  however,  that any  permitted  successor  of the
                     --------   -------
Company  under this  Indenture  may succeed to the  Company's  ownership of such
Common Securities. The Company, as owner of the Common Securities, shall, except
in  connection  with a  distribution  of  Debentures  to the  holders  of  Trust
Securities  in  liquidation  of the Trust,  the  redemption  of all of the Trust
Securities  or  certain  mergers,  consolidations  or  amalgamations,   each  as
permitted by the  Declaration,  cause the Trust (a) to remain a statutory trust,
(b) to otherwise  continue to be classified as a grantor trust for United States
federal income tax purposes, and (c) to cause each holder of Trust Securities to
be treated as owning an undivided beneficial interest in the Debentures.
<PAGE>

          Section 3.10.  Additional Junior Indebtedness.  The Company shall not,
                         ------------------------------
and it shall not cause or permit any Subsidiary of the Company to, incur,  issue
or be  obligated  on any  Additional  Junior  Indebtedness,  either  directly or
indirectly, by way of guarantee,  suretyship or otherwise, other than Additional
Junior  Indebtedness  (i) that, by its terms,  is expressly  stated to be either
junior and subordinate or pari passu in all respects to the Debentures, and (ii)
of which the Company has notified  (and, if then required  under the  applicable
guidelines of the  regulating  entity,  has received  approval from) the Federal
Reserve, if the Company is a bank holding company, or the OTS, if the Company is
a savings and loan holding company.

                                  ARTICLE IV.
                       SECURITYHOLDERS' LISTS AND REPORTS
                       ----------------------------------
                         BY THE COMPANY AND THE TRUSTEE
                         ------------------------------

          Section 4.1.   Securityholders' Lists.  The   Company  covenants   and
                         ----------------------
agrees that it will furnish or caused to be furnished to the Trustee:

          (a)    on each regular record date for the Debentures, a list, in such
form as the Trustee may  reasonably  require,  of the names and addresses of the
Securityholders of the Debentures as of such record date; and

          (b)    at  such  other  times  as  the Trustee may request in writing,
within 30 days after the receipt by the Company of any such  request,  a list of
similar  form and  content  as of a date not more than 15 days prior to the time
such list is furnished;

except that no such lists need be  furnished  under this  Section 4.1 so long as
the  Trustee  is in  possession  thereof  by reason of its  acting as  Debenture
registrar.

          Section 4.2.   Preservation and Disclosure of Lists.
                         ------------------------------------

          (a)    The   Trustee   shall   preserve,  in  as  current a form as is
reasonably  practicable,  all  information  as to the names and addresses of the
holders of Debentures  (1) contained in the most recent list  furnished to it as
provided in Section  4.1 or (2)  received  by it in the  capacity of  Debentures
registrar (if so acting)  hereunder.  The Trustee may destroy any list furnished
to it as provided in Section 4.1 upon receipt of a new list so furnished.

          (b)    In  case  three  or  more  holders  of Debentures  (hereinafter
referred to as "applicants")  apply in writing to the Trustee and furnish to the
Trustee  reasonable  proof that each such  applicant has owned a Debenture for a
period of at least 6 months  preceding  the date of such  application,  and such
application  states that the applicants desire to communicate with other holders
of  Debentures  with respect to their rights under this  Indenture or under such
Debentures  and is  accompanied  by a  copy  of  the  form  of  proxy  or  other
communication which such applicants propose to transmit,  then the Trustee shall
within 5 Business Days after the receipt of such  application,  at its election,
either:

                 (1)     afford  such  applicants  access  to  the   information
                 preserved  at  the  time  by the Trustee in accordance with the
                 provisions of subsection (a) of this Section 4.2, or

                 (2)     inform such applicants as to the approximate number  of
                 holders  of  Debentures   whose names and  addresses  appear in
                 the  information  preserved  at  the  time  by the  Trustee  in
                 accordance   with  the  provisions of   subsection  (a) of this
                 Section  4.2,  and  as  to the  approximate  cost of mailing to
                 such    Securityholders    the    form  of   proxy   or   other
                 communication, if any, specified in such application.
<PAGE>

          If the Trustee  shall elect not to afford  such  applicants  access to
such  information,   the  Trustee  shall,  upon  the  written  request  of  such
applicants,  mail to each  Securityholder  whose name and address  appear in the
information  preserved  at the  time  by the  Trustee  in  accordance  with  the
provisions of subsection  (a) of this Section 4.2 a copy of the form of proxy or
other   communication  which  is  specified  in  such  request  with  reasonable
promptness  after a tender to the  Trustee of the  material  to be mailed and of
payment,  or provision for the payment,  of the reasonable  expenses of mailing,
unless  within  five days  after such  tender,  the  Trustee  shall mail to such
applicants and file with the Securities and Exchange Commission, if permitted or
required by applicable law, together with a copy of the material to be mailed, a
written  statement  to the effect  that,  in the  opinion of the  Trustee,  such
mailing  would  be  contrary  to  the  best  interests  of  the  holders  of all
Debentures, as the case may be, or would be in violation of applicable law. Such
written  statement shall specify the basis of such opinion.  If said Commission,
as permitted or required by applicable law, after opportunity for a hearing upon
the objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such  objections  or if,  after the entry of an order
sustaining one or more of such  objections,  said Commission  shall find,  after
notice and  opportunity  for hearing,  that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Securityholders  with reasonable  promptness after the
entry of such order and the renewal of such tender;  otherwise the Trustee shall
be  relieved  of any  obligation  or duty to such  applicants  respecting  their
application.

          (c)    Each and every holder of Debentures,  by  receiving and holding
the same,  agrees with  Company and the Trustee that neither the Company nor the
Trustee  nor any  paying  agent  shall  be held  accountable  by  reason  of the
disclosure of any such  information as to the names and addresses of the holders
of  Debentures  in accordance  with the  provisions  of  subsection  (b) of this
Section 4.2,  regardless of the source from which such  information was derived,
and that the  Trustee  shall not be held  accountable  by reason of mailing  any
material pursuant to a request made under said subsection (b).

                                   ARTICLE V.
                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                   -------------------------------------------
                            UPON AN EVENT OF DEFAULT
                            ------------------------

          Section  5.1.  Events of Default.  "Event of Default,"  wherever  used
                         -----------------
herein,  means any one of the  following  events  (whatever  the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

          (a)    the Company defaults in the  payment of any  interest  upon any
Debenture,  including any Additional Interest in respect thereof,  following the
nonpayment  of any such  interest  for twenty or more  consecutive  Distribution
Periods; or

          (b)    the Company defaults in the  payment  of all or any part of the
principal of (or premium,  if any, on) any Debentures as and when the same shall
become due and payable either at maturity,  upon  redemption,  by declaration of
acceleration or otherwise; or

          (c)    the Company defaults in the performance of, or breaches, any of
its covenants or agreements in this  Indenture or in the terms of the Debentures
established  as  contemplated  in  this  Indenture  (other  than a  covenant  or
agreement a default in whose  performance  or whose  breach is elsewhere in this
Section  specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to the  Company by the  Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the outstanding  Debentures,  a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
<PAGE>

          (d)    a court of competent jurisdiction shall enter a decree or order
for relief in respect of the Company in an involuntary case under any applicable
bankruptcy, insolvency,  reorganization or other similar law now or hereafter in
effect,  or appointing a receiver,  liquidator,  assignee,  custodian,  trustee,
sequestrator (or similar official) of the Company or for any substantial part of
its property,  or ordering the winding-up or liquidation of its affairs and such
decree  or  order  shall  remain  unstayed  and in  effect  for a  period  of 90
consecutive days; or

          (e)    the   Company   shall  commence  a  voluntary  case  under  any
applicable  bankruptcy,  insolvency,  reorganization or other similar law now or
hereafter  in  effect,  shall  consent to the entry of an order for relief in an
involuntary  case under any such law, or shall consent to the  appointment of or
taking  possession  by a receiver,  liquidator,  assignee,  trustee,  custodian,
sequestrator  (or other similar  official) of the Company or of any  substantial
part of its property,  or shall make any general  assignment  for the benefit of
creditors, or shall fail generally to pay its debts as they become due; or

          (f)    the Trust shall have voluntarily or  involuntarily  liquidated,
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (i) the  distribution of the Debentures to holders of such Trust
Securities in liquidation of their  interests in the Trust,  (ii) the redemption
of  all  of  the  outstanding   Trust   Securities  or  (iii)  certain  mergers,
consolidations or amalgamations, each as permitted by the Declaration.

          If an Event of Default under Section 5.1(a),  (d) or (e) occurs and is
continuing  with  respect to the  Debentures,  then,  and in each and every such
case,  unless the principal of the Debentures  shall have already become due and
payable,  either the  Trustee or the  holders of not less than 25% in  aggregate
principal  amount of the Debentures  then  outstanding  hereunder,  by notice in
writing to the  Company  (and to the Trustee if given by  Securityholders),  may
declare the entire principal of the Debentures and the interest accrued thereon,
if any, to be due and payable  immediately,  and upon any such  declaration  the
same shall  become  immediately  due and payable.  If an Event of Default  under
Section  5.1(b),  (c) or  (f)  occurs  and is  continuing  with  respect  to the
Debentures,  then, and in each and every such case,  unless the principal of the
Debentures shall have already become due and payable,  either the Trustee or the
holders of not less than 25% in  aggregate  principal  amount of the  Debentures
then  outstanding  hereunder,  by notice in writing to the  Company  (and to the
Trustee if given by  Securityholders),  may  proceed  to remedy  the  default or
breach  thereunder by such  appropriate  judicial  proceedings as the Trustee or
such  holders  shall deem most  effectual  to remedy the  defaulted  covenant or
enforce the provisions of this  Indenture so breached,  either by suit in equity
or by action at law, for damages or otherwise.

          The foregoing  provisions,  however, are subject to the condition that
if,  at any time  after  the  principal  of the  Debentures  shall  have been so
declared due and  payable,  and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided,  (i)
the Company shall pay or shall deposit with the Trustee a sum  sufficient to pay
all matured  installments  of interest upon all the Debentures and the principal
of and premium,  if any, on the Debentures which shall have become due otherwise
than by acceleration (with interest upon such principal and premium, if any, and
Additional  Interest) and such amount as shall be sufficient to cover reasonable
compensation  to the  Trustee and each  predecessor  Trustee,  their  respective
agents, attorneys and counsel, and all other amounts due to the Trustee pursuant
to Section  6.6, if any,  and (ii) all Events of Default  under this  Indenture,
other than the non-payment of the principal of or premium, if any, on Debentures
which shall have become due by  acceleration,  shall have been cured,  waived or
otherwise remedied as provided herein -- then and in every such case the holders
of a majority in aggregate  principal amount of the Debentures then outstanding,

<PAGE>

by written notice to the Company and to the Trustee,  may waive all defaults and
rescind and annul such declaration and its  consequences,  but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent  default
or shall impair any right consequent thereon.

          In case the Trustee  shall have  proceeded  to enforce any right under
this Indenture and such  proceedings  shall have been  discontinued or abandoned
because of such  rescission  or  annulment or for any other reason or shall have
been  determined  adversely  to the  Trustee,  then and in every  such  case the
Company,  the  Trustee  and the  holders  of the  Debentures  shall be  restored
respectively to their several  positions and rights  hereunder,  and all rights,
remedies  and  powers  of the  Company,  the  Trustee  and  the  holders  of the
Debentures shall continue as though no such proceeding had been taken.

          Section 5.2.   Payment of Debentures on Default;  Suit  Therefor.  The
                         -------------------------------------------------
Company  covenants that upon the  occurrence of an Event of Default  pursuant to
Section 5.1(a) or (b) then, upon demand of the Trustee,  the Company will pay to
the Trustee,  for the benefit of the holders of the  Debentures the whole amount
that then shall have become due and payable on all  Debentures for principal and
premium,  if any, or  interest,  or both,  as the case may be,  with  Additional
Interest  accrued on the Debentures (to the extent that payment of such interest
is enforceable under applicable law and, if the Debentures are held by the Trust
or a trustee of such Trust, without duplication of any other amounts paid by the
Trust or a trustee in respect thereof);  and, in addition thereto,  such further
amount as shall be  sufficient  to cover the costs and  expenses of  collection,
including a reasonable  compensation to the Trustee,  its agents,  attorneys and
counsel, and any other amounts due to the Trustee under Section 6.6. In case the
Company shall fail forthwith to pay such amounts upon such demand,  the Trustee,
in its own name and as  trustee  of an  express  trust,  shall be  entitled  and
empowered to institute  any actions or  proceedings  at law or in equity for the
collection  of the sums so due and unpaid,  and may prosecute any such action or
proceeding  to judgment or final  decree,  and may enforce any such  judgment or
final decree  against the Company or any other  obligor on such  Debentures  and
collect in the manner  provided by law out of the property of the Company or any
other  obligor on such  Debentures  wherever  situated  the moneys  adjudged  or
decreed to be payable.

          In case there shall be pending  proceedings  for the bankruptcy or for
the  reorganization  of the Company or any other obligor on the Debentures under
Bankruptcy  Law, or in case a receiver or trustee shall have been  appointed for
the property of the Company or such other  obligor,  or in the case of any other
similar judicial  proceedings  relative to the Company or other obligor upon the
Debentures,  or to the  creditors  or  property  of the  Company  or such  other
obligor,  the Trustee,  irrespective  of whether the principal of the Debentures
shall  then be due  and  payable  as  therein  expressed  or by  declaration  of
acceleration  or otherwise  and  irrespective  of whether the Trustee shall have
made any  demand  pursuant  to the  provisions  of this  Section  5.2,  shall be
entitled and empowered, by intervention in such proceedings or otherwise,

          (i)    to file and prove a claim or claims  for the  whole  amount  of
                 principal and interest  owing  and  unpaid  in  respect  of the
                 Debentures,

          (ii)   in  case  of  any  judicial proceedings, to file such proofs of
                 claim  and  other  papers  or documents  as may be necessary or
                 advisable   in   order  to  have  the  claims  of  the  Trustee
                 (including  any   claim   for  reasonable  compensation  to the
                 Trustee  and  each  predecessor  Trustee, and  their respective
                 agents,  attorneys and counsel, and for  reimbursement  of  all
                 other amounts due to the Trustee under Section 6.6), and of the
                 Securityholders allowed in such judicial  proceedings  relative
                 to the Company or any other  obligor on the Debentures,  or  to
                 the creditors or property of the Company or such other obligor,
                 unless prohibited by  applicable  law and regulations,  to vote
                 on behalf of the holders of the Debentures in any election of a
                 trustee or a standby trustee  in  arrangement,  reorganization,
                 liquidation or other  bankruptcy  or insolvency proceedings  or
                 Person  performing similar functions in comparable proceedings,
<PAGE>

          (iii)  to collect and receive  any moneys or other property payable or
                 deliverable on any such claims, and

          (iv)   to distribute the same after the deduction  of  its charges and
                 expenses.

Any  receiver,  assignee or trustee in bankruptcy  or  reorganization  is hereby
authorized by each of the  Securityholders to make such payments to the Trustee,
and, in the event that the Trustee  shall consent to the making of such payments
directly to the Securityholders,  to pay to the Trustee such amounts as shall be
sufficient to cover  reasonable  compensation to the Trustee,  each  predecessor
Trustee  and their  respective  agents,  attorneys  and  counsel,  and all other
amounts due to the Trustee under Section 6.6.

          Nothing herein  contained  shall be construed to authorize the Trustee
to  authorize  or consent to or accept or adopt on behalf of any  Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Debentures  or the rights of any holder  thereof or to authorize  the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.

          All rights of action and of asserting claims under this Indenture,  or
under  any of the  Debentures,  may be  enforced  by  the  Trustee  without  the
possession of any of the Debentures,  or the production  thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable  benefit of the holders of the
Debentures.

          In any  proceedings  brought by the Trustee (and also any  proceedings
involving the  interpretation  of any  provision of this  Indenture to which the
Trustee  shall be a  party),  the  Trustee  shall be held to  represent  all the
holders of the Debentures,  and it shall not be necessary to make any holders of
the Debentures parties to any such proceedings.

          Section 5.3.   Application of Moneys Collected by Trustee.  Any moneys
                         ------------------------------------------
collected  by the  Trustee  pursuant  to this  Article V shall be applied in the
following  order, at the date or dates fixed by the Trustee for the distribution
of such moneys,  upon presentation of the several Debentures in respect of which
moneys have been collected,  and stamping thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:

          First:  To  the  payment  of  costs  and  expenses  incurred  by,  and
reasonable fees of, the Trustee,  its agents,  attorneys and counsel, and of all
other amounts due to the Trustee under Section 6.6;

          Second: To the payment of  all Senior  Indebtedness  of the Company if
and to the extent required by Article XV;

          Third:  To the payment  of  the  amounts  then  due  and  unpaid  upon
Debentures for principal (and premium,  if any), and interest on the Debentures,
in  respect  of which or for the  benefit  of which  money  has been  collected,
ratably,  without  preference or priority of any kind,  according to the amounts
due on such Debentures (including Additional Interest); and

          Fourth: The balance, if any, to the Company.

          Section  5.4.  Proceedings  by  Securityholders.   No  holder  of  any
                         --------------------------------
Debenture  shall have any right to institute any suit,  action or proceeding for
any remedy  hereunder,  unless  such holder  previously  shall have given to the
Trustee written notice of an Event of Default with respect to the Debentures and
unless the  holders of not less than 25% in  aggregate  principal  amount of the

<PAGE>

Debentures  then  outstanding  shall have given the Trustee a written request to
institute such action,  suit or proceeding and shall have offered to the Trustee
such  reasonable  indemnity  as it may require  against the costs,  expenses and
liabilities  to be  incurred  thereby,  and the  Trustee  for 60 days  after its
receipt of such  notice,  request  and offer of  indemnity  shall have failed to
institute any such action, suit or proceeding.

          Notwithstanding any other provisions in this Indenture,  however,  the
right of any holder of any  Debenture to receive  payment of the  principal  of,
premium, if any, and interest,  on such Debenture when due, or to institute suit
for the  enforcement  of any such  payment,  shall not be  impaired  or affected
without the consent of such holder and by accepting a Debenture  hereunder it is
expressly  understood,  intended and covenanted by the taker and holder of every
Debenture with every other such taker and holder and the Trustee, that no one or
more  holders of  Debentures  shall have any right in any manner  whatsoever  by
virtue or by  availing  itself of any  provision  of this  Indenture  to affect,
disturb or prejudice  the rights of the holders of any other  Debentures,  or to
obtain or seek to obtain  priority  over or preference to any other such holder,
or to enforce  any right  under  this  Indenture,  except in the  manner  herein
provided  and for the  equal,  ratable  and  common  benefit  of all  holders of
Debentures.  For  the  protection  and  enforcement  of the  provisions  of this
Section, each and every Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.

          Section 5.5.   Proceedings by Trustee.  In case of an Event of Default
                         ----------------------
hereunder the Trustee may in its  discretion  proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate  judicial  proceedings
as the  Trustee  shall deem most  effectual  to protect  and enforce any of such
rights,  either  by suit in  equity  or by  action  at law or by  proceeding  in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement  contained  in this  Indenture  or in aid of the exercise of any power
granted in this  Indenture,  or to enforce  any other legal or  equitable  right
vested in the Trustee by this Indenture or by law.

          Section 5.6.   Remedies  Cumulative  and Continuing; Delay or Omission
                         -------------------------------------------------------
Not a Waiver.  Except as  otherwise  provided  in  Section  2.6,  all powers and
------------
remedies given by this Article V to the Trustee or to the Securityholders shall,
to the extent  permitted by law, be deemed  cumulative  and not exclusive of any
other  powers  and  remedies  available  to the  Trustee  or the  holders of the
Debentures,  by judicial proceedings or otherwise, to enforce the performance or
observance  of the  covenants  and  agreements  contained  in this  Indenture or
otherwise  established with respect to the Debentures,  and no delay or omission
of the Trustee or of any holder of any of the  Debentures to exercise any right,
remedy or power  accruing upon any Event of Default  occurring and continuing as
aforesaid shall impair any such right, remedy or power, or shall be construed to
be a waiver of any such default or an acquiescence  therein; and, subject to the
provisions of Section 5.4,  every power and remedy given by this Article V or by
law to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed  expedient,  by the Trustee (in accordance  with
its duties under Section 6.1) or by the Securityholders.

          Section  5.7.  Direction  of  Proceedings  and Waiver of  Defaults  by
                         -------------------------------------------------------
Majority of  Securityholders.  The holders of a majority in aggregate  principal
----------------------------
amount of the Debentures  affected (voting as one class) at the time outstanding
shall have the right to direct the time,  method,  and place of  conducting  any
proceeding for any remedy  available to the Trustee,  or exercising any trust or
power  conferred  on the  Trustee  with  respect to such  Debentures;  provided,
                                                                       --------
however,  that (subject to the provisions of Section 6.1) the Trustee shall have
-------
the right to decline to follow any such direction if the Trustee shall determine
that the action so  directed  would be unjustly  prejudicial  to the holders not
taking  part in such  direction  or if the  Trustee  being  advised  by  counsel
determines  that the action or  proceeding so directed may not lawfully be taken
or if a Responsible  Officer of the Trustee shall  determine  that the action or
proceedings so directed would involve the Trustee in personal liability.
<PAGE>

          The  holders  of a  majority  in  aggregate  principal  amount  of the
Debentures  at the time  outstanding  may on behalf of the holders of all of the
Debentures  waive (or modify any previously  granted waiver of) any past default
or Event of Default,  and its consequences,  except a default (a) in the payment
of principal of, premium,  if any, or interest on any of the Debentures,  (b) in
respect of  covenants or  provisions  hereof which cannot be modified or amended
without the consent of the holder of each Debenture affected,  or (c) in respect
of the  covenants  contained  in Section  3.9;  provided,  however,  that if the
                                                --------   -------
Debentures  are held by the Trust or a trustee  of such  trust,  such  waiver or
modification  to such  waiver  shall not be  effective  until the  holders  of a
majority  in  Liquidation  Amount of Trust  Securities  of the Trust  shall have
consented to such waiver or modification to such waiver, provided, further, that
                                                         --------  -------
if the consent of the holder of each  outstanding  Debenture is  required,  such
waiver shall not be effective  until each holder of the Trust  Securities of the
Trust shall have  consented  to such waiver.  Upon any such waiver,  the default
covered  thereby shall be deemed to be cured for all purposes of this  Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any  subsequent  or other  default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as  permitted by this  Section,  said default or Event of
Default shall for all purposes of the Debentures and this Indenture be deemed to
have been cured and to be not continuing.

          Section 5.8.   Notice of Defaults.  The Trustee  shall, within 90 days
                         ------------------
after the  actual  knowledge  by a  Responsible  Officer  of the  Trustee of the
occurrence  of  a  default  with  respect  to  the   Debentures,   mail  to  all
Securityholders,  as the names and  addresses  of such  holders  appear upon the
Debenture Register,  notice of all defaults with respect to the Debentures known
to the Trustee,  unless such defaults shall have been cured before the giving of
such  notice  (the term  "defaults"  for the  purpose of this  Section 5.8 being
hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section  5.1,  not  including  periods  of grace,  if any,  provided  for
therein);  provided, however, that, except in the case of default in the payment
           --------  -------
of the principal of, premium, if any, or interest on any of the Debentures,  the
Trustee  shall be  protected  in  withholding  such  notice  if and so long as a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders.

          Section 5.9.   Undertaking to Pay Costs. All parties to this Indenture
                         ------------------------
agree,  and each holder of any  Debenture  by his  acceptance  thereof  shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,  or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party  litigant in such suit of an  undertaking  to pay the costs of such
suit,  and that  such  court  may in its  discretion  assess  reasonable  costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such  suit,  having  due  regard to the  merits  and good faith of the claims or
defenses made by such party litigant;  provided, however, that the provisions of
                                       --------  -------
this Section 5.9 shall not apply to any suit  instituted by the Trustee,  to any
suit instituted by any Securityholder,  or group of Securityholders,  holding in
the aggregate more than 10% in principal  amount of the Debentures  outstanding,
or to any suit  instituted  by any  Securityholder  for the  enforcement  of the
payment of the  principal of (or premium,  if any) or interest on any  Debenture
against the Company on or after the same shall have become due and payable.

                                  ARTICLE VI.
                             CONCERNING THE TRUSTEE
                             ----------------------

          Section 6.1.   Duties and Responsibilities of Trustee. With respect to
                         --------------------------------------
the holders of Debentures issued hereunder, the Trustee, prior to the occurrence
of an Event of Default  with respect to the  Debentures  and after the curing or
waiving of all Events of Default  which may have  occurred,  with respect to the
Debentures,  undertakes  to  perform  such  duties  and only such  duties as are
specifically set forth in this Indenture, and no implied covenants shall be read

<PAGE>

into this  Indenture  against  the  Trustee.  In case an Event of  Default  with
respect to the Debentures has occurred (which has not been cured or waived), the
Trustee  shall  exercise  such of the  rights  and  powers  vested in it by this
Indenture,  and use the same  degree of care and skill in their  exercise,  as a
prudent man would exercise or use under the  circumstances in the conduct of his
own affairs.

          No  provision  of this  Indenture  shall be  construed  to relieve the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct, except that:

          (a)    prior to the occurrence of an Event of Default with  respect to
Debentures  and after the curing or  waiving of all Events of Default  which may
have occurred

                 (1)     the  duties and obligations of the Trustee with respect
                 to  Debentures  shall be  determined   solely  by  the  express
                 provisions  of  this  Indenture, and  the Trustee shall not  be
                 liable   except  for   the   performance   of  such  duties and
                 obligations with  respect to the Debentures as are specifically
                 set  forth  in  this  Indenture,  and  no  implied covenants or
                 obligations  shall  be  read  into  this  Indenture against the
                 Trustee, and

                 (2)     in the absence of bad faith on the part of the Trustee,
                 the Trustee may  conclusively  rely,  as to  the  truth  of the
                 statements  and  the  correctness  of  the  opinions  expressed
                 therein,  upon any  certificates  or opinions  furnished to the
                 Trustee and conforming to the requirements  of this  Indenture;
                 but, in the case of any such  certificates or opinions which by
                 any provision hereof are specifically  required to be furnished
                 to the Trustee, the Trustee shall be under  a duty  to  examine
                 the  same  to  determine  whether  or  not  they conform to the
                 requirements of this Indenture;

          (b)    the Trustee  shall not be liable for any error of judgment made
in good faith by a  Responsible  Officer or Officers of the  Trustee,  unless it
shall be proved that the Trustee was  negligent in  ascertaining  the  pertinent
facts; and

          (c) the Trustee  shall not be liable with  respect to any action taken
or omitted to be taken by it in good faith,  in accordance with the direction of
the  Securityholders  pursuant to Section 5.7,  relating to the time, method and
place of conducting any proceeding for any remedy  available to the Trustee,  or
exercising any trust or power conferred upon the Trustee, under this Indenture.

          None of the provisions  contained in this Indenture  shall require the
Trustee to expend or risk its own funds or otherwise  incur  personal  financial
liability in the  performance  of any of its duties or in the exercise of any of
its rights or powers,  if there is ground for  believing  that the  repayment of
such funds or liability  is not assured to it under the terms of this  Indenture
or indemnity  satisfactory  to the Trustee  against such risk is not  reasonably
assured to it.

          Section 6.2. Reliance on Documents, Opinions, etc. Except as otherwise
                       ------------------------------------
provided in Section 6.1:

          (a)    the Trustee may conclusively  rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate, statement,
instrument,  opinion,  report,  notice,  request,  consent,  order,  bond, note,
debenture  or other paper or  document  believed by it to be genuine and to have
been signed or presented by the proper party or parties;

          (b)    any  request,  direction,  order or  demand   of   the  Company
mentioned  herein shall be  sufficiently  evidenced by an Officers'  Certificate
(unless other evidence in respect  thereof be herein  specifically  prescribed);
and any Board  Resolution  may be  evidenced  to the  Trustee by a copy  thereof
certified by the Secretary or an Assistant Secretary of the Company;
<PAGE>

          (c)    the Trustee may consult with counsel of its  selection  and any
advice or  Opinion  of  Counsel  shall be full and  complete  authorization  and
protection in respect of any action  taken,  suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;

          (d)    the Trustee shall be under no obligation to exercise any of the
rights  or  powers  vested  in it by this  Indenture  at the  request,  order or
direction  of any of the  Securityholders,  pursuant to the  provisions  of this
Indenture,  unless  such  Securityholders  shall  have  offered  to the  Trustee
reasonable  security or indemnity  against the costs,  expenses and  liabilities
which may be incurred therein or thereby;

          (e)    the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the discretion
or rights or  powers  conferred  upon it by this  Indenture;  nothing  contained
herein  shall,  however,  relieve  the  Trustee  of  the  obligation,  upon  the
occurrence of an Event of Default with respect to the  Debentures  (that has not
been cured or waived) to exercise with respect to Debentures  such of the rights
and powers  vested in it by this  Indenture,  and to use the same degree of care
and skill in their  exercise,  as a prudent man would  exercise or use under the
circumstances in the conduct of his own affairs;

          (f)    the  Trustee shall not be bound to make any investigation  into
the  facts  or  matters  stated  in  any  resolution,   certificate,  statement,
instrument,  opinion,  report, notice, request,  consent, order, approval, bond,
debenture,  coupon or other paper or document, unless requested in writing to do
so by the holders of not less than a majority in aggregate  principal  amount of
the outstanding  Debentures  affected thereby;  provided,  however,  that if the
                                                --------   -------
payment  within a  reasonable  time to the  Trustee  of the costs,  expenses  or
liabilities  likely to be incurred by it in the making of such investigation is,
in the  opinion of the  Trustee,  not  reasonably  assured to the Trustee by the
security afforded to it by the terms of this Indenture,  the Trustee may require
reasonable  indemnity  against  such  expense or  liability as a condition to so
proceeding;

          (g)    the Trustee may execute any of the trusts or powers   hereunder
or  perform  any  duties  hereunder  either  directly  or by or  through  agents
(including any Authenticating Agent) or attorneys,  and the Trustee shall not be
responsible  for any  misconduct  or negligence on the part of any such agent or
attorney appointed by it with due care; and

          (h)    with  the exceptions of defaults under Sections  5.1(a) or (b),
the  Trustee  shall not be charged  with  knowledge  of any  Default or Event of
Default with respect to the  Debentures  unless a written notice of such Default
or Event of Default  shall have been given to the  Trustee by the Company or any
other obligor on the Debentures or by any holder of the Debentures.

          Section  6.3.  No  Responsibility  for  Recitals,  etc.  The  recitals
                         ---------------------------------------
contained   herein  and  in  the  Debentures   (except  in  the  certificate  of
authentication of the Trustee or the Authenticating Agent) shall be taken as the
statements of the Company,  and the Trustee and the Authenticating  Agent assume
no  responsibility  for  the  correctness  of the  same.  The  Trustee  and  the
Authenticating  Agent make no  representations as to the validity or sufficiency
of this Indenture or of the Debentures. The Trustee and the Authenticating Agent
shall  not be  accountable  for the use or  application  by the  Company  of any
Debentures or the proceeds of any Debentures  authenticated and delivered by the
Trustee or the  Authenticating  Agent in conformity  with the provisions of this
Indenture.

          Section 6.4.   Trustee, Authenticating  Agent, Paying Agents, Transfer
                         -------------------------------------------------------
Agents or Registrar May Own Debentures.  The Trustee or any Authenticating Agent
--------------------------------------
or any paying agent or any transfer  agent or any  Debenture  registrar,  in its
individual or any other capacity,  may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, Authenticating Agent,
paying agent, transfer agent or Debenture registrar.
<PAGE>

          Section 6.5.   Moneys to  be Held in Trust.  Subject to the provisions
                         ---------------------------
of Section 12.4,  all moneys  received by the Trustee or any paying agent shall,
until used or applied as herein  provided,  be held in trust for the purpose for
which they were received,  but need not be segregated from other funds except to
the extent  required by law.  The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing  with the Company.  So long as no Event of Default  shall have
occurred and be  continuing,  all  interest  allowed on any such moneys shall be
paid from  time to time upon the  written  order of the  Company,  signed by the
Chairman of the Board of Directors,  the Chief Executive Officer, the President,
a Managing Director,  a Vice President,  the Treasurer or an Assistant Treasurer
of the Company.

          Section  6.6.  Compensation  and  Expenses  of  Trustee.  The  Company
                         ----------------------------------------
covenants  and agrees to pay or  reimburse  the Trustee upon its request for all
reasonable expenses,  disbursements and advances incurred or made by the Trustee
in  accordance  with any of the  provisions  of this  Indenture  (including  the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ)  except any such expense,  disbursement
or advance as may arise from its negligence or willful misconduct.  For purposes
of  clarification,  this  Section  6.6 does not  contemplate  the payment by the
Company  of  acceptance  or  annual  administration  fees  owing to the  Trustee
pursuant to the services to be provided by the Trustee  under this  Indenture or
the fees and expenses of the Trustee's counsel in connection with the closing of
the transactions  contemplated by this Indenture.  The Company also covenants to
indemnify  each of the Trustee or any  predecessor  Trustee  (and its  officers,
agents,  directors and employees) for, and to hold it harmless against,  any and
all loss, damage, claim,  liability or expense including taxes (other than taxes
based on the  income of the  Trustee)  incurred  without  negligence  or willful
misconduct on the part of the Trustee and arising out of or in  connection  with
the acceptance or administration of this trust, including the costs and expenses
of defending  itself  against any claim of  liability.  The  obligations  of the
Company  under this Section 6.6 to  compensate  and indemnify the Trustee and to
pay or reimburse  the Trustee for  expenses,  disbursements  and advances  shall
constitute additional indebtedness hereunder. Such additional indebtedness shall
be secured by a lien prior to that of the Debentures upon all property and funds
held or  collected  by the Trustee as such,  except  funds held in trust for the
benefit of the holders of particular Debentures.

          Without  prejudice to any other rights  available to the Trustee under
applicable  law,  when the  Trustee  incurs  expenses  or  renders  services  in
connection with an Event of Default specified in Section 5.1(d), (e) or (f), the
expenses  (including the reasonable charges and expenses of its counsel) and the
compensation   for  the  services  are  intended  to   constitute   expenses  of
administration  under any applicable federal or state bankruptcy,  insolvency or
other similar law.

          The  provisions  of this  Section  shall  survive the  resignation  or
removal  of the  Trustee  and  the  defeasance  or  other  termination  of  this
Indenture.

          Notwithstanding  anything in this  Indenture  or any  Debenture to the
contrary,  the Trustee shall have no  obligation  whatsoever to advance funds to
pay any  principal  of or  interest  on or other  amounts  with  respect  to the
Debentures or otherwise advance funds to or on behalf of the Company.

          Section 6.7.   Officers' Certificate as Evidence.  Except as otherwise
                         ---------------------------------
provided  in  Sections  6.1  and  6.2,  whenever  in the  administration  of the
provisions  of this  Indenture  the Trustee shall deem it necessary or desirable
that a matter be proved or  established  prior to taking or omitting  any action
hereunder,  such matter  (unless  other  evidence  in respect  thereof be herein
specifically prescribed) may, in the absence of negligence or willful misconduct
on the part of the Trustee,  be deemed to be conclusively proved and established
by an Officers' Certificate  delivered to the Trustee, and such certificate,  in
the absence of  negligence  or willful  misconduct  on the part of the  Trustee,
shall be full warrant to the Trustee for any action taken or omitted by it under
the provisions of this Indenture upon the faith thereof.
<PAGE>

          Section 6.8.   Eligibility of Trustee.  The Trustee hereunder shall at
                         ----------------------
all times be a corporation  organized and doing  business  under the laws of the
United States of America or any state or territory thereof or of the District of
Columbia or a corporation or other Person authorized under such laws to exercise
corporate trust powers,  having (or whose  obligations  under this Indenture are
guaranteed by an affiliate having) a combined capital and surplus of at least 50
million U.S. dollars  ($50,000,000.00) and subject to supervision or examination
by federal,  state,  territorial,  or District  of Columbia  authority.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid  supervising or examining  authority,  then
for the purposes of this  Section 6.8 the  combined  capital and surplus of such
corporation  shall be deemed to be its combined capital and surplus as set forth
in its most recent records of condition so published.

          The  Company  may  not,  nor may any  Person  directly  or  indirectly
controlling,  controlled by, or under common control with the Company,  serve as
Trustee.

          In  case at any  time  the  Trustee  shall  cease  to be  eligible  in
accordance  with the  provisions  of this Section 6.8, the Trustee  shall resign
immediately in the manner and with the effect specified in Section 6.9.

          If the Trustee has or shall acquire any "conflicting  interest" within
the meaning of ss. 310(b) of the Trust  Indenture Act of 1939, the Trustee shall
either  eliminate  such  interest  or  resign,  to the  extent and in the manner
described by this Indenture.

          Section 6.9.   Resignation or Removal of Trustee
                         ---------------------------------

          (a)    The  Trustee, or  any trustee or trustees hereafter  appointed,
may at any time  resign by giving  written  notice  of such  resignation  to the
Company and by mailing notice thereof,  at the Company's expense, to the holders
of the  Debentures  at their  addresses  as they shall  appear on the  Debenture
Register. Upon receiving such notice of resignation,  the Company shall promptly
appoint a successor  trustee or trustees by written  instrument,  in  duplicate,
executed by order of its Board of Directors,  one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor Trustee.  If
no successor Trustee shall have been so appointed and have accepted  appointment
within 30 days after the mailing of such notice of  resignation  to the affected
Securityholders,  the  resigning  Trustee may  petition  any court of  competent
jurisdiction for the appointment of a successor  Trustee,  or any Securityholder
who has been a bona fide holder of a Debenture  or  Debentures  for at least six
months may,  subject to the  provisions of Section 5.9, on behalf of himself and
all others similarly situated,  petition any such court for the appointment of a
successor  Trustee.  Such court may thereupon,  after such notice, if any, as it
may deem proper and prescribe, appoint a successor Trustee.

          (b)    In case at any time any of the following shall occur --

                 (1)     the  Trustee  shall fail to comply with the  provisions
                 of Section 6.8 after written request therefor by the Company or
                 by  any  Securityholder  who  has  been a bona fide holder of a
                 Debenture or Debentures for at least 6 months, or

                 (2)     the  Trustee  shall  cease to be eligible in accordance
                 with the provisions  of  Section  6.8 and shall  fail to resign
                 after  written  request therefor by the Company or by  any such
                 Securityholder, or

                 (3)     the Trustee shall become  incapable of acting, or shall
                 be adjudged  as bankrupt  or  insolvent,  or a receiver  of the
                 Trustee or of its property  shall be  appointed,  or any public
                 officer shall take charge or  control of the  Trustee or of its
                 property  or  affairs  for  the   purpose  of   rehabilitation,
                 conservation or liquidation,
<PAGE>

                 then,  in any such case, the Company may remove the Trustee and
                 appoint   a   successor  Trustee  by  written  instrument,   in
                 duplicate,  executed  by  order  of the Board of Directors, one
                 copy of  which instrument shall  be delivered to the Trustee so
                 removed  and one copy to the  successor Trustee, or, subject to
                 the provisions of Section 5.9, any  Securityholder who has been
                 a bona fide holder of a Debenture or  Debentures for at least 6
                 months  may, on  behalf  of  himself  and  all others similarly
                 situated, petition any court of competent jurisdiction  for the
                 removal  of  the  Trustee  and  the  appointment of a successor
                 Trustee. Such  court  may thereupon, after such notice, if any,
                 as  it  may  deem  proper and prescribe, remove the Trustee and
                 appoint successor Trustee.

          (c)    Upon prior written notice to the Company and the  Trustee,  the
holders of a majority in aggregate  principal  amount of the  Debentures  at the
time  outstanding  may at any time remove the  Trustee and  nominate a successor
Trustee,  which shall be deemed appointed as successor  Trustee unless within 10
Business Days after such nomination the Company objects thereto,  in which case,
or in the case of a failure by such holders to nominate a successor Trustee, the
Trustee so  removed or any  Securityholder,  upon the terms and  conditions  and
otherwise as in subsection  (a) of this Section 6.9  provided,  may petition any
court of competent jurisdiction for an appointment of a successor.

          (d)    Any resignation or removal of the Trustee and appointment  of a
successor Trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor Trustee as provided in
Section 6.10.

          Section 6.10.  Acceptance by Successor Trustee.  Any successor Trustee
                         -------------------------------
appointed as provided in Section 6.9 shall execute,  acknowledge  and deliver to
the  Company  and  to its  predecessor  Trustee  an  instrument  accepting  such
appointment hereunder,  and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, duties
and  obligations  with respect to the Debentures of its  predecessor  hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless, on
the written  request of the  Company or of the  successor  Trustee,  the Trustee
ceasing to act shall,  upon  payment of any amounts  then due it pursuant to the
provisions  of Section 6.6,  execute and deliver an instrument  transferring  to
such  successor  Trustee  all the rights and powers of the Trustee so ceasing to
act and shall duly assign,  transfer and deliver to such  successor  Trustee all
property and money held by such retiring Trustee thereunder. Upon request of any
such  successor  Trustee,  the Company shall execute any and all  instruments in
writing for more fully and certainly vesting in and confirming to such successor
Trustee  all  such  rights  and  powers.  Any  Trustee  ceasing  to  act  shall,
nevertheless, retain a lien upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the  provisions of Section
6.6.

          If a successor Trustee is appointed, the Company, the retiring Trustee
and the successor  Trustee  shall execute and deliver an indenture  supplemental
hereto  which shall  contain  such  provisions  as shall be deemed  necessary or
desirable  to  confirm  that all the  rights,  powers,  trusts and duties of the
retiring  Trustee with  respect to the  Debentures  as to which the  predecessor
Trustee is not retiring shall continue to be vested in the predecessor  Trustee,
and shall add to or change any of the  provisions of this  Indenture as shall be
necessary to provide for or facilitate the administration of the Trust hereunder
by more than one Trustee,  it being  understood  that nothing  herein or in such
supplemental  indenture shall  constitute such Trustees  co-trustees of the same
trust and that each such Trustee shall be Trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder  administered by any other
such Trustee.

          No  successor  Trustee  shall accept  appointment  as provided in this
Section unless at the time of such  acceptance  such successor  Trustee shall be
eligible under the provisions of Section 6.8.
<PAGE>

          In no  event  shall a  retiring  Trustee  be  liable  for the  acts or
omissions of any successor Trustee hereunder.

          Upon  acceptance of appointment by a successor  Trustee as provided in
this  Section  6.10,  the Company  shall mail notice of the  succession  of such
Trustee  hereunder to the holders of Debentures at their addresses as they shall
appear on the  Debenture  Register.  If the  Company  fails to mail such  notice
within 10 Business  Days after the  acceptance of  appointment  by the successor
Trustee,  the  successor  Trustee  shall  cause such  notice to be mailed at the
expense of the Company.

          Section 6.11.  Succession by Merger,  etc. Any corporation  into which
                         --------------------------
the Trustee may be merged or converted or with which it may be consolidated,  or
any corporation resulting from any merger,  conversion or consolidation to which
the  Trustee  shall  be a  party,  or  any  corporation  succeeding  to  all  or
substantially  all of the corporate trust business of the Trustee,  shall be the
successor of the Trustee  hereunder without the execution or filing of any paper
or any  further  act on the part of any of the  parties  hereto;  provided  such
                                                                  --------
corporation shall be otherwise eligible and qualified under this Article.

          In case at the time such successor to the Trustee shall succeed to the
trusts  created  by  this  Indenture  any  of the  Debentures  shall  have  been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate  of  authentication  of any  predecessor  Trustee,  and deliver such
Debentures  so  authenticated;  and in case at that  time any of the  Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures  either in the name of any predecessor  hereunder or in the name
of the successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debentures or in this Indenture  provided
that the  certificate  of the Trustee shall have;  provided,  however,  that the
                                                   --------   -------
right to adopt the certificate of authentication  of any predecessor  Trustee or
authenticate  Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.

          Section  6.12. Authenticating  Agents.  There  may  be  one  or   more
                         ----------------------
Authenticating  Agents  appointed by the Trustee upon the request of the Company
with  power  to  act  on  its  behalf  and  subject  to  its  direction  in  the
authentication  and delivery of Debentures  issued upon exchange or registration
of  transfer  thereof as fully to all  intents  and  purposes as though any such
Authenticating  Agent had been expressly  authorized to authenticate and deliver
Debentures;  provided,  however, that the Trustee shall have no liability to the
             --------   -------
Company for any acts or  omissions of the  Authenticating  Agent with respect to
the authentication  and delivery of Debentures.  Any such  Authenticating  Agent
shall at all times be a corporation  organized and doing business under the laws
of the United States or of any state or territory  thereof or of the District of
Columbia  authorized under such laws to act as  Authenticating  Agent,  having a
combined  capital and surplus of at least  $50,000,000.00  and being  subject to
supervision  or  examination  by  federal,  state,  territorial  or  District of
Columbia authority.  If such corporation publishes reports of condition at least
annually  pursuant to law or the  requirements of such  authority,  then for the
purposes  of  this  Section  6.12  the  combined  capital  and  surplus  of such
corporation  shall be deemed to be its combined capital and surplus as set forth
in its  most  recent  report  of  condition  so  published.  If at any  time  an
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  it shall resign  immediately in the manner and with
the effect herein specified in this Section.

          Any corporation into which any  Authenticating  Agent may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  consolidation or conversion to which any Authenticating  Agent
shall be a party, or any corporation  succeeding to all or substantially  all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such  Authenticating  Agent  hereunder,  if  such  successor  corporation  is
otherwise  eligible  under this Section 6.12 without the  execution or filing of
any  paper  or any  further  act on the  part  of the  parties  hereto  or  such
Authenticating Agent.
<PAGE>

          Any  Authenticating  Agent may at any time  resign  by giving  written
notice of resignation to the Trustee and to the Company.  The Trustee may at any
time  terminate  the  agency of any  Authenticating  Agent  with  respect to the
Debentures by giving written notice of termination to such Authenticating  Agent
and to the Company.  Upon  receiving such a notice of resignation or upon such a
termination,  or in case at any time any Authenticating  Agent shall cease to be
eligible  under this Section 6.12,  the Trustee may, and upon the request of the
Company shall, promptly appoint a successor  Authenticating Agent eligible under
this Section 6.12,  shall give written notice of such appointment to the Company
and shall mail notice of such  appointment  to all holders of  Debentures as the
names and  addresses  of such  holders  appear on the  Debenture  Register.  Any
successor  Authenticating  Agent upon  acceptance of its  appointment  hereunder
shall become vested with all rights,  powers,  duties and responsibilities  with
respect to the Debentures of its predecessor  hereunder,  with like effect as if
originally named as Authenticating Agent herein.

          The  Company  agrees to pay to any  Authenticating  Agent from time to
time reasonable  compensation for its services.  Any Authenticating  Agent shall
have no  responsibility  or  liability  for any  action  taken  by it as such in
accordance with the directions of the Trustee.

                                  ARTICLE VII.
                         CONCERNING THE SECURITYHOLDERS
                         ------------------------------

          Section 7.1.   Action by Securityholders.  Whenever in  this Indenture
                         -------------------------
it is provided that the holders of a specified percentage in aggregate principal
amount of the Debentures may take any action (including the making of any demand
or  request,  the giving of any  notice,  consent or waiver or the taking of any
other action) the fact that at the time of taking any such action the holders of
such  specified  percentage  have  joined  therein may be  evidenced  (a) by any
instrument  or any number of  instruments  of  similar  tenor  executed  by such
Securityholders  in person or by agent or proxy appointed in writing,  or (b) by
the record of such holders of Debentures  voting in favor thereof at any meeting
of such  Securityholders  duly called and held in accordance with the provisions
of Article VIII, or (c) by a combination of such  instrument or instruments  and
any such  record of such a meeting of such  Securityholders  or (d) by any other
method the Trustee deems satisfactory.

          If the Company  shall  solicit from the  Securityholders  any request,
demand,  authorization,  direction,  notice,  consent, waiver or other action or
revocation  of the same,  the Company  may, at its option,  as  evidenced  by an
Officers' Certificate,  fix in advance a record date for such Debentures for the
determination  of  Securityholders   entitled  to  give  such  request,  demand,
authorization,  direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization,  direction, notice, consent,
waiver or other  action or  revocation  of the same may be given before or after
the record date, but only the Securityholders of record at the close of business
on the record  date shall be deemed to be  Securityholders  for the  purposes of
determining whether  Securityholders of the requisite  proportion of outstanding
Debentures  have  authorized  or agreed or  consented to such  request,  demand,
authorization,  direction, notice, consent, waiver or other action or revocation
of the same, and for that purpose the outstanding  Debentures  shall be computed
as of the record date; provided, however, that no such authorization,  agreement
                       --------  -------
or consent by such  Securityholders on the record date shall be deemed effective
unless it shall become  effective  pursuant to the  provisions of this Indenture
not later than 6 months after the record date.

          Section 7.2.   Proof of Execution  by Securityholders.  Subject to the
                         --------------------------------------
provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument
by a  Securityholder  or his  agent or  proxy  shall  be  sufficient  if made in
accordance  with such  reasonable  rules and regulations as may be prescribed by
the  Trustee or in such  manner as shall be  satisfactory  to the  Trustee.  The
ownership  of  Debentures  shall be proved  by the  Debenture  Register  or by a
certificate of the Debenture registrar.  The Trustee may require such additional
proof of any matter referred to in this Section as it shall deem necessary.
<PAGE>

          The  record  of any  Securityholders'  meeting  shall be proved in the
manner provided in Section 8.6.

          Section 7.3.   Who  Are  Deemed  Absolute  Owners.    Prior   to   due
                         ----------------------------------
presentment  for  registration  of transfer of any Debenture,  the Company,  the
Trustee, any Authenticating  Agent, any paying agent, any transfer agent and any
Debenture  registrar may deem the Person in whose name such  Debenture  shall be
registered upon the Debenture Register to be, and may treat him as, the absolute
owner of such Debenture (whether or not such Debenture shall be overdue) for the
purpose of receiving  payment of or on account of the principal of, premium,  if
any, and interest on such Debenture and for all other purposes;  and neither the
Company nor the Trustee nor any  Authenticating  Agent nor any paying  agent nor
any transfer agent nor any Debenture  registrar  shall be affected by any notice
to the  contrary.  All such payments so made to any holder for the time being or
upon his order  shall be valid,  and,  to the extent of the sum or sums so paid,
effectual to satisfy and discharge  the  liability  for moneys  payable upon any
such Debenture.

          Section 7.4.   Debentures Owned by Company Deemed Not Outstanding.  In
                         --------------------------------------------------
determining  whether the holders of the requisite  aggregate principal amount of
Debentures  have  concurred  in any  direction,  consent  or waiver  under  this
Indenture, Debentures which are owned by the Company or any other obligor on the
Debentures or by any Person directly or indirectly  controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Debentures  shall be disregarded and deemed not to be outstanding for the
purpose of any such determination;  provided,  however, that for the purposes of
                                    --------   -------
determining  whether  the  Trustee  shall be  protected  in  relying on any such
direction, consent or waiver, only Debentures which a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. Debentures so owned
which have been  pledged in good faith may be  regarded as  outstanding  for the
purposes of this Section 7.4 if the pledgee shall establish to the  satisfaction
of the Trustee the pledgee's  right to vote such Debentures and that the pledgee
is not the Company or any such other  obligor or Person  directly or  indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other  obligor.  In the case of a dispute as to such  right,
any  decision  by the  Trustee  taken upon the  advice of counsel  shall be full
protection to the Trustee.

          Section 7.5.   Revocation of Consents; Future Holders Bound.   At  any
                         --------------------------------------------
time prior to (but not after) the  evidencing  to the  Trustee,  as  provided in
Section  7.1,  of the taking of any action by the holders of the  percentage  in
aggregate  principal  amount of the  Debentures  specified in this  Indenture in
connection with such action,  any holder (in cases where no record date has been
set pursuant to Section 7.1) or any holder as of an  applicable  record date (in
cases where a record date has been set  pursuant to Section  7.1) of a Debenture
(or any  Debenture  issued  in  whole  or in part in  exchange  or  substitution
therefor)  the serial number of which is shown by the evidence to be included in
the Debentures the holders of which have consented to such action may, by filing
written notice with the Trustee at the Principal  Office of the Trustee and upon
proof of holding  as  provided  in Section  7.2,  revoke  such  action so far as
concerns such Debenture (or so far as concerns the principal amount  represented
by any exchanged or substituted Debenture).  Except as aforesaid any such action
taken by the holder of any Debenture  shall be conclusive  and binding upon such
holder and upon all future  holders  and  owners of such  Debenture,  and of any
Debenture  issued in exchange or  substitution  therefor or on  registration  of
transfer thereof,  irrespective of whether or not any notation in regard thereto
is made upon such Debenture or any Debenture  issued in exchange or substitution
therefor.
<PAGE>

                                 ARTICLE VIII.
                            SECURITYHOLDERS' MEETINGS
                            -------------------------

          Section 8.1.   Purposes of Meetings. A  meeting of Securityholders may
                         --------------------
be called at any time and from time to time  pursuant to the  provisions of this
Article VIII for any of the following purposes:

          (a)    to give any notice to the Company or to the Trustee, or to give
any  directions  to the  Trustee,  or to consent to the  waiving of any  default
hereunder  and its  consequences,  or to take any other action  authorized to be
taken by Securityholders pursuant to any of the provisions of Article V;

          (b)    to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VI;

          (c)    to consent to  the  execution  of an  indenture  or  indentures
supplemental hereto pursuant to the provisions of Section 9.2; or

          (d)    to take any other action authorized to be taken by or on behalf
of the holders of any specified  aggregate  principal  amount of such Debentures
under any other provision of this Indenture or under applicable law.

          Section 8.2.   Call of Meetings by Trustee.  The  Trustee  may  at any
                         ---------------------------
time call a meeting of  Securityholders  to take any action specified in Section
8.1, to be held at such time and at such place as the Trustee  shall  determine.
Notice of every meeting of the  Securityholders,  setting forth the time and the
place of such  meeting and in general  terms the action  proposed to be taken at
such  meeting,  shall be mailed  to  holders  of  Debentures  affected  at their
addresses as they shall appear on the Debentures Register and, if the Company is
not a holder of Debentures, to the Company. Such notice shall be mailed not less
than 20 nor more than 180 days prior to the date fixed for the meeting.

          Section 8.3.   Call of Meetings by Company or Securityholders. In case
                         ----------------------------------------------
at any time the  Company  pursuant to a Board  Resolution,  or the holders of at
least 10% in aggregate  principal amount of the Debentures,  as the case may be,
then  outstanding,  shall  have  requested  the  Trustee  to call a  meeting  of
Securityholders,  by written  request  setting  forth in  reasonable  detail the
action  proposed  to be taken at the  meeting,  and the  Trustee  shall not have
mailed the notice of such meeting  within 20 days after receipt of such request,
then the Company or such  Securityholders  may  determine the time and the place
for such  meeting  and may call such  meeting to take any action  authorized  in
Section 8.1, by mailing notice thereof as provided in Section 8.2.

          Section 8.4.   Qualifications  for  Voting.  To be entitled to vote at
                         ---------------------------
any  meeting of  Securityholders  a Person  shall (a) be a holder of one or more
Debentures  with  respect  to which the  meeting  is being  held or (b) a Person
appointed by an  instrument  in writing as proxy by a holder of one or more such
Debentures.  The only Persons who shall be entitled to be present or to speak at
any meeting of  Securityholders  shall be the  Persons  entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.

          Section 8.5.   Regulations. Notwithstanding  any  other  provisions of
                         -----------
this Indenture,  the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders,  in regard to proof of the holding
of  Debentures  and  of  the  appointment  of  proxies,  and  in  regard  to the
appointment and duties of inspectors of votes, the submission and examination of
proxies,  certificates  and other  evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
<PAGE>

          The Trustee  shall,  by an instrument in writing,  appoint a temporary
chairman  of the  meeting,  unless the  meeting  shall  have been  called by the
Company or by  Securityholders  as  provided  in Section  8.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary  chairman.  A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.

          Subject to the  provisions  of Section 7.4, at any meeting each holder
of Debentures with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000.00  principal amount of Debentures
held or represented  by him;  provided,  however,  that no vote shall be cast or
                              --------   -------
counted at any meeting in respect of any Debenture challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding.  The chairman of
the meeting shall have no right to vote other than by virtue of Debentures  held
by him or instruments in writing as aforesaid duly designating him as the Person
to vote on behalf of other Securityholders.  Any meeting of Securityholders duly
called  pursuant to the  provisions of Section 8.2 or 8.3 may be adjourned  from
time to time by a  majority  of those  present,  whether or not  constituting  a
quorum, and the meeting may be held as so adjourned without further notice.

          Section 8.6.   Voting.  The vote upon any  resolution submitted to any
                         ------
meeting of holders of  Debentures  with  respect to which such  meeting is being
held shall be by written  ballots on which shall be subscribed the signatures of
such  holders  or of their  representatives  by proxy and the  serial  number or
numbers of the Debentures held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against  any  resolution  and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the  meeting.  A record in duplicate  of the  proceedings  of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and  affidavits by one or more Persons
having  knowledge of the facts setting forth a copy of the notice of the meeting
and showing  that said notice was mailed as provided in Section  8.2. The record
shall show the serial  numbers of the  Debentures  voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent  chairman and secretary of the meeting and one of the duplicates shall
be  delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.

          Any record so signed and verified shall be conclusive  evidence of the
matters therein stated.

          Section 8.7.   Quorum;  Actions.  The   Persons   entitled  to  vote a
                         ----------------
majority in principal amount of the Debentures then outstanding shall constitute
a quorum for a meeting of Securityholders; provided, however, that if any action
                                           --------  -------
is to be taken at such  meeting  with  respect  to a consent,  waiver,  request,
demand, notice,  authorization,  direction or other action which may be given by
the holders of not less than a specified  percentage in principal  amount of the
Debentures then outstanding,  the Persons holding or representing such specified
percentage  in  principal   amount  of  the  Debentures  then  outstanding  will
constitute  a quorum.  In the absence of a quorum  within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request of
Securityholders,  be  dissolved.  In any other case the meeting may be adjourned
for a period of not less than 10 days as determined by the permanent chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned  meeting,  such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the permanent chairman of
the meeting prior to the  adjournment of such adjourned  meeting.  Notice of the
reconvening of any adjourned  meeting shall be given as provided in Section 8.2,
except  that such  notice  need be given only once not less than 5 days prior to
the date on which the  meeting  is  scheduled  to be  reconvened.  Notice of the
reconvening of an adjourned  meeting shall state  expressly the  percentage,  as
provided above, of the principal amount of the Debentures then outstanding which
shall constitute a quorum.
<PAGE>

          Except as limited by the  provisos in the first  paragraph  of Section
9.2, any resolution  presented to a meeting or adjourned meeting duly reconvened
at which a quorum is present as aforesaid may be adopted by the affirmative vote
of the  holders  of a  majority  in  principal  amount  of the  Debentures  then
outstanding;  provided,  however, that, except as limited by the provisos in the
              --------   -------
first  paragraph  of Section 9.2,  any  resolution  with respect to any consent,
waiver, request, demand, notice, authorization,  direction or other action which
this Indenture expressly provides may be given by the holders of not less than a
specified  percentage in principal amount of the Debentures then outstanding may
be adopted at a meeting or an adjourned  meeting duly  reconvened and at which a
quorum is present as aforesaid only by the affirmative  vote of the holders of a
not less than such  specified  percentage in principal  amount of the Debentures
then outstanding.

          Any  resolution  passed or decision taken at any meeting of holders of
Debentures duly held in accordance with this Section shall be binding on all the
Securityholders, whether or not present or represented at the meeting.

                                  ARTICLE IX.
                             SUPPLEMENTAL INDENTURES
                             -----------------------

          Section 9.1.   Supplemental     Indentures    without    Consent    of
                         -------------------------------------------------------
Securityholders.  The Company,  when authorized by a Board  Resolution,  and the
---------------
Trustee  may from  time to time  and at any  time  enter  into an  indenture  or
indentures supplemental hereto, without the consent of the Securityholders,  for
one or more of the following purposes:

          (a)    to  evidence  the  succession of another Person to the Company,
or successive  successions,  and the  assumption by the successor  Person of the
covenants,  agreements and  obligations  of the Company,  pursuant to Article XI
hereof;

          (b)    to add to the covenants of the Company such further  covenants,
restrictions  or conditions  for the  protection of the holders of Debentures as
the Board of Directors shall consider to be for the protection of the holders of
such Debentures,  and to make the occurrence, or the occurrence and continuance,
of a default in any of such additional  covenants,  restrictions or conditions a
default or an Event of Default  permitting the  enforcement of all or any of the
several  remedies  provided  in this  Indenture  as herein set forth;  provided,
                                                                       --------
however,  that  in  respect  of any  such  additional  covenant  restriction  or
-------
condition  such  supplemental  indenture may provide for a particular  period of
grace after default  (which period may be shorter or longer than that allowed in
the case of other  defaults)  or may provide for an immediate  enforcement  upon
such  default  or may limit the  remedies  available  to the  Trustee  upon such
default;

          (c)    to cure any ambiguity or to correct or supplement any provision
contained  herein or in any  supplemental  indenture  which may be  defective or
inconsistent  with any other provision  contained  herein or in any supplemental
indenture,  or to make such other  provisions  in regard to matters or questions
arising under this Indenture; provided that any such action shall not materially
                              --------
adversely affect the interests of the holders of the Debentures;

          (d)    to add to, delete from, or  revise  the  terms  of  Debentures,
including,  without  limitation,  any terms relating to the issuance,  exchange,
registration  or  transfer of  Debentures,  including  to provide  for  transfer
procedures and  restrictions  substantially  similar to those  applicable to the
Capital  Securities as required by Section 2.5 (for purposes of assuring that no
registration  of Debentures is required  under the  Securities  Act);  provided,
                                                                       --------
however,  that any such action shall not  adversely  affect the interests of the
-------

<PAGE>

holders of the Debentures then outstanding (it being understood, for purposes of
this proviso, that transfer restrictions on Debentures  substantially similar to
those  that  were  applicable  to  Capital  Securities  shall  not be  deemed to
materially adversely affect the holders of the Debentures);

          (e)    to evidence and  provide  for  the  acceptance  of  appointment
hereunder by a successor Trustee with respect to the Debentures and to add to or
change any of the  provisions of this Indenture as shall be necessary to provide
for or facilitate the  administration  of the trusts  hereunder by more than one
Trustee;

          (f)    to make any change (other than as  elsewhere  provided  in this
paragraph) that does not adversely  affect the rights of any  Securityholder  in
any material respect; or

          (g)    to provide for the issuance of and establish the form and terms
and conditions of the  Debentures,  to establish the form of any  certifications
required  to be  furnished  pursuant  to the  terms  of  this  Indenture  or the
Debentures, or to add to the rights of the holders of Debentures.

          The  Trustee  is hereby  authorized  to join with the  Company  in the
execution of any such supplemental  indenture,  to make any further  appropriate
agreements  and  stipulations  which may be therein  contained and to accept the
conveyance,  transfer and assignment of any property thereunder, but the Trustee
shall  not be  obligated  to,  but may in its  discretion,  enter  into any such
supplemental  indenture  which  affects  the  Trustee's  own  rights,  duties or
immunities under this Indenture or otherwise.

          Any  supplemental  indenture  authorized  by the  provisions  of  this
Section 9.1 may be  executed by the Company and the Trustee  without the consent
of the holders of any of the Debentures at the time outstanding, notwithstanding
any of the provisions of Section 9.2.

          Section 9.2.   Supplemental     Indentures     with     Consent     of
                         -------------------------------------------------------
Securityholders.  With the consent (evidenced as provided in Section 7.1) of the
---------------
holders  of not less  than a  majority  in  aggregate  principal  amount  of the
Debentures  at the time  outstanding  affected  by such  supplemental  indenture
(voting as a class), the Company, when authorized by a Board Resolution, and the
Trustee  may from  time to time  and at any  time  enter  into an  indenture  or
indentures  supplemental  hereto for the purpose of adding any  provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any  supplemental  indenture  or of modifying in any manner the rights of the
holders  of  the  Debentures;  provided,  however,  that  no  such  supplemental
                               --------   -------
indenture  shall  without  the  consent of the  holders of each  Debenture  then
outstanding and affected thereby (i) change the fixed maturity of any Debenture,
or reduce the principal  amount  thereof or any premium  thereon,  or reduce the
rate or extend  the time of payment of  interest  thereon,  or reduce any amount
payable on redemption  thereof or make the principal  thereof or any interest or
premium  thereon payable in any coin or currency other than that provided in the
Debentures,  or impair or affect the right of any  Securityholder  to  institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such  supplemental  indenture;  provided
                                                                        --------
further,  however,  that if the  Debentures  are held by a trust or a trustee of
-------   -------
such trust, such supplemental indenture shall not be effective until the holders
of a majority in Liquidation  Amount of Trust Securities shall have consented to
such supplemental indenture;  provided further,  however, that if the consent of
                              -------- -------   -------
the Securityholder of each outstanding Debenture is required,  such supplemental
indenture shall not be effective until each holder of the Trust Securities shall
have consented to such supplemental indenture.

          Upon the  request of the  Company  accompanied  by a Board  Resolution
authorizing  the  execution  of any such  supplemental  indenture,  and upon the
filing  with the  Trustee  of  evidence  of the  consent of  Securityholders  as
aforesaid,  the  Trustee  shall join with the Company in the  execution  of such
supplemental  indenture unless such supplemental indenture affects the Trustee's
own rights,  duties or immunities  under this  Indenture or otherwise,  in which
case the Trustee may in its  discretion,  but shall not be  obligated  to, enter
into such supplemental indenture.
<PAGE>

          Promptly  after the  execution  by the  Company and the Trustee of any
supplemental  indenture pursuant to the provisions of this Section,  the Trustee
shall transmit by mail, first class postage prepaid,  a notice,  prepared by the
Company,  setting  forth in general  terms the  substance  of such  supplemental
indenture,  to the  Securityholders as their names and addresses appear upon the
Debenture  Register.  Any  failure of the  Trustee to mail such  notice,  or any
defect therein,  shall not, however, in any way impair or affect the validity of
any such supplemental indenture.

          It shall not be necessary for the consent of the Securityholders under
this Section 9.2 to approve the  particular  form of any  proposed  supplemental
indenture,  but it  shall  be  sufficient  if such  consent  shall  approve  the
substance thereof.

          Section 9.3.   Effect of Supplemental Indentures.  Upon  the execution
                         ---------------------------------
of any  supplemental  indenture  pursuant to the  provisions of this Article IX,
this  Indenture  shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,  duties
and immunities under this Indenture of the Trustee,  the Company and the holders
of Debentures shall thereafter be determined,  exercised and enforced  hereunder
subject in all respects to such  modifications  and amendments and all the terms
and conditions of any such  supplemental  indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

          Section 9.4.   Notation on  Debentures.  Debentures  authenticated and
                         -----------------------
delivered  after the  execution of any  supplemental  indenture  pursuant to the
provisions of this Article IX may bear a notation as to any matter  provided for
in  such  supplemental  indenture.  If the  Company  or  the  Trustee  shall  so
determine, new Debentures so modified as to conform, in the opinion of the Board
of Directors of the Company,  to any modification of this Indenture contained in
any such  supplemental  indenture  may be prepared  and executed by the Company,
authenticated  by the  Trustee  or the  Authenticating  Agent and  delivered  in
exchange for the Debentures then outstanding.

          Section 9.5.   Evidence of Compliance of  Supplemental Indenture to be
                         -------------------------------------------------------
Furnished to Trustee. The Trustee, subject to the provisions of Sections 6.1 and
--------------------
6.2,  shall, in addition to the documents  required by Section 14.6,  receive an
Officers'  Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental  indenture  executed pursuant hereto complies with the requirements
of this  Article  IX.  The  Trustee  shall  receive  an  Opinion  of  Counsel as
conclusive  evidence that any supplemental  indenture  executed pursuant to this
Article IX is  authorized  or  permitted  by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee  under the  provisions  of this
Article IX to join in the execution thereof.

                                   ARTICLE X.
                            REDEMPTION OF SECURITIES
                            ------------------------

          Section 10.1.  Optional  Redemption.  The Company shall have the right
                         --------------------
(subject to the receipt by the Company of prior approval (i) if the Company is a
bank  holding  company,  from  the  Federal  Reserve,  if  then  required  under
applicable  capital guidelines or policies of the Federal Reserve or (ii) if the
Company is a savings and loan holding  company,  from the OTS, if then  required
under  applicable  capital  guidelines  or  policies  of the OTS) to redeem  the
Debentures,  in whole or in part,  but in all cases in a  principal  amount with
integral  multiples of $1,000.00,  on any Interest  Payment Date on or after the
Interest  Payment  Date  in  December  2009  (the  "Redemption  Date"),  at  the
                                                    ----------------
Redemption Price.
<PAGE>

          Section 10.2.  Special Event Redemption.  If  a  Special  Event  shall
                         ------------------------
occur and be  continuing,  the  Company  shall  have the right  (subject  to the
receipt by the Company of prior  approval  (i) if the Company is a bank  holding
company,  from the Federal Reserve,  if then required under  applicable  capital
guidelines  or  policies  of the  Federal  Reserve  or (ii) if the  Company is a
savings  and  loan  holding  company,  from  the  OTS,  if then  required  under
applicable  capital  guidelines or policies of the OTS) to redeem the Debentures
in  whole,  but not in part,  at any  Interest  Payment  Date,  within  120 days
following the occurrence of such Special Event (the "Special  Redemption  Date")
                                                     -------------------------
at the Special Redemption Price.

          Section 10.3.  Notice of Redemption; Selection of Debentures.  In case
                         ---------------------------------------------
the Company  shall  desire to exercise  the right to redeem all, or, as the case
may be, any part of the Debentures, it shall cause to be mailed a notice of such
redemption at least 30 and not more than 60 days prior to the Redemption Date or
the Special  Redemption Date to the holders of Debentures so to be redeemed as a
whole or in part at their last  addresses  as the same  appear on the  Debenture
Register. Such mailing shall be by first class mail. The notice if mailed in the
manner herein provided shall be  conclusively  presumed to have been duly given,
whether or not the holder  receives  such notice.  In any case,  failure to give
such  notice by mail or any defect in the notice to the holder of any  Debenture
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Debenture.

          Each such notice of redemption shall specify the CUSIP number, if any,
of the Debentures to be redeemed,  the Redemption Date or the Special Redemption
Date, as applicable,  the Redemption Price or the Special  Redemption  Price, as
applicable,  at which  Debentures  are to be  redeemed,  the  place or places of
payment,  that  payment  will be made upon  presentation  and  surrender of such
Debentures,  that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portions  thereof to be redeemed  will cease to accrue.  If less than all
the  Debentures  are to be redeemed the notice of  redemption  shall specify the
numbers of the  Debentures  to be  redeemed.  In case the  Debentures  are to be
redeemed in part only,  the notice of redemption  shall state the portion of the
principal  amount  thereof to be redeemed  and shall state that on and after the
date fixed for redemption,  upon surrender of such Debenture, a new Debenture or
Debentures in principal  amount equal to the unredeemed  portion thereof will be
issued.

          Prior to 10:00  a.m.  New York  City  time on the  Redemption  Date or
Special  Redemption  Date,  as  applicable,  the Company  will  deposit with the
Trustee  or with one or more  paying  agents an amount  of money  sufficient  to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate  Redemption  Price or
Special Redemption Price.

          If all,  or less than all,  the  Debentures  are to be  redeemed,  the
Company  will give the  Trustee  notice  not less than 45 nor more than 60 days,
respectively,  prior to the  Redemption  Date or  Special  Redemption  Date,  as
applicable,  as to the aggregate  principal  amount of Debentures to be redeemed
and the Trustee shall select,  in such manner as in its sole discretion it shall
deem  appropriate  and fair,  the  Debentures  or portions  thereof (in integral
multiples of $1,000.00) to be redeemed.

          Section 10.4.  Payment of Debentures Called for Redemption.  If notice
                         -------------------------------------------
of  redemption  has been given as provided in Section  10.3,  the  Debentures or
portions of  Debentures  with  respect to which such notice has been given shall
become due and payable on the  Redemption  Date or Special  Redemption  Date, as
applicable,  and at the place or places stated in such notice at the  applicable
Redemption Price or Special  Redemption Price and on and after said date (unless
the Company  shall default in the payment of such  Debentures at the  Redemption
Price or Special Redemption Price, as applicable)  interest on the Debentures or
portions  of  Debentures  so called for  redemption  shall  cease to accrue.  On
presentation and surrender of such Debentures at a place of payment specified in
said notice, such Debentures or the specified portions thereof shall be paid and
redeemed by the Company at the applicable Redemption Price or Special Redemption
Price.
<PAGE>

          Upon presentation of any Debenture  redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the  holder  thereof,  at the  expense of the  Company,  a new  Debenture  or
Debentures  of  authorized  denominations,  in  principal  amount  equal  to the
unredeemed portion of the Debenture so presented.

                                  ARTICLE XI.
                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
                -------------------------------------------------

          Section 11.1.  Company  May  Consolidate,  etc.,  on  Certain   Terms.
                         -------------------------------------------------------
Nothing  contained in this  Indenture  or in the  Debentures  shall  prevent any
consolidation or merger of the Company with or into any other Person (whether or
not  affiliated  with the Company) or  successive  consolidations  or mergers in
which the Company or its successor or successors shall be a party or parties, or
shall  prevent  any  sale,  conveyance,  transfer  or other  disposition  of the
property  of the Company or its  successor  or  successors  as an  entirety,  or
substantially  as an entirety,  to any other Person  (whether or not  affiliated
with the Company,  or its  successor or  successors)  authorized  to acquire and
operate the same;  provided,  however,  that the Company  hereby  covenants  and
                   --------   -------
agrees that, upon any such  consolidation,  merger (where the Company is not the
surviving corporation), sale, conveyance, transfer or other disposition, the due
and punctual  payment of the principal of (and premium,  if any) and interest on
all of the Debentures in accordance with their terms,  according to their tenor,
and the due and punctual  performance  and  observance  of all the covenants and
conditions  of this  Indenture to be kept or performed by the Company,  shall be
expressly assumed by supplemental  indenture satisfactory in form to the Trustee
executed  and   delivered   to  the  Trustee  by  the  entity   formed  by  such
consolidation,  or into  which the  Company  shall have been  merged,  or by the
entity which shall have acquired such property.

          Section 11.2.  Successor Entity to be Substituted. In case of any such
                         ----------------------------------
consolidation,  merger, sale, conveyance, transfer or other disposition and upon
the assumption by the successor entity, by supplemental indenture,  executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Debentures and the due and punctual performance and observance of all of the
covenants and  conditions  of this  Indenture to be performed or observed by the
Company,  such  successor  entity shall  succeed to and be  substituted  for the
Company, with the same effect as if it had been named herein as the Company, and
thereupon the predecessor  entity shall be relieved of any further  liability or
obligation hereunder or upon the Debentures. Such successor entity thereupon may
cause to be signed,  and may issue in its own name, any or all of the Debentures
issuable  hereunder which  theretofore shall not have been signed by the Company
and delivered to the Trustee or the Authenticating Agent; and, upon the order of
such  successor  entity  instead of the  Company  and  subject to all the terms,
conditions  and  limitations in this  Indenture  prescribed,  the Trustee or the
Authenticating  Agent  shall  authenticate  and  deliver  any  Debentures  which
previously  shall have been signed and delivered by the officers of the Company,
to  the  Trustee  or  the  Authenticating  Agent  for  authentication,  and  any
Debentures which such successor  entity  thereafter shall cause to be signed and
delivered to the Trustee or the Authenticating  Agent for that purpose.  All the
Debentures  so issued shall in all respects have the same legal rank and benefit
under this  Indenture as the  Debentures  theretofore  or  thereafter  issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof.

          Section 11.3.  Opinion of Counsel to be Given to Trustee. The Trustee,
                         -----------------------------------------
subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to
the  Opinion  of  Counsel  required  by  Section  9.5,  an Opinion of Counsel as
conclusive evidence that any consolidation,  merger, sale, conveyance,  transfer
or other disposition, and any assumption,  permitted or required by the terms of
this Article XI complies with the provisions of this Article XI.
<PAGE>

                                  ARTICLE XII.
                     SATISFACTION AND DISCHARGE OF INDENTURE
                     ---------------------------------------

          Section 12.1.  Discharge of Indenture. When
                         ----------------------

          (a)    the Company shall  deliver  to the Trustee for cancellation all
                 Debentures theretofore authenticated (other than any Debentures
                 which shall have been destroyed, lost or stolen and which shall
                 have been replaced or paid as provided in Section  2.6) and not
                 theretofore canceled, or

          (b)    all the Debentures not theretofore canceled or delivered to the
                 Trustee for cancellation shall have become due and  payable, or
                 are  by  their terms to become due and payable within 1 year or
                 are  to  be  called   for   redemption   within 1   year  under
                 arrangements  satisfactory  to the Trustee for  the  giving  of
                 notice of redemption,  and the  Company shall  deposit with the
                 Trustee, in  trust, funds,  which  shall be immediately due and
                 payable,  sufficient to pay at maturity  or upon redemption all
                 of the  Debentures  (other than any Debentures which shall have
                 been destroyed,  lost  or  stolen  and  which  shall  have been
                 replaced  or  paid as provided in Section 2.6)  not theretofore
                 canceled   or   delivered  to  the  Trustee  for  cancellation,
                 including principal and premium, if any, and interest due or to
                 become due to such date of  maturity or redemption date, as the
                 case may be, but excluding,  however, the amount of any  moneys
                 for  the  payment  of  principal  of,  and  premium, if any, or
                 interest  on  the  Debentures  (1)  theretofore  repaid  to the
                 Company in accordance with the provisions of  Section 12.4,  or
                 (2) paid to any state or to the  District  of Columbia pursuant
                 to its unclaimed property or similar laws,

and if in the case of either clause (a) or clause (b) the Company shall also pay
or cause to be paid all other sums payable  hereunder by the Company,  then this
Indenture  shall  cease to be of further  effect  except for the  provisions  of
Sections  2.5,  2.6,  2.8,  3.1,  3.2,  3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall
survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6
and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by
an  Officers'  Certificate  and an Opinion of  Counsel,  each  stating  that all
conditions  precedent  herein  provided  for  relating to the  satisfaction  and
discharge of this Indenture have been complied with, and at the cost and expense
of the Company, shall execute proper instruments  acknowledging  satisfaction of
and discharging this Indenture.  The Company agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
in connection with this Indenture or the Debentures.

          Section 12.2.  Deposited  Moneys  to  be  Held  in  Trust  by Trustee.
                         -------------------------------------------------------
Subject to the provisions of Section 12.4, all moneys deposited with the Trustee
pursuant  to  Section  12.1  shall be held in trust  in a  non-interest  bearing
account and applied by it to the payment,  either directly or through any paying
agent (including the Company if acting as its own paying agent),  to the holders
of the  particular  Debentures  for the  payment of which such  moneys have been
deposited  with the  Trustee,  of all sums due and to  become  due  thereon  for
principal, and premium, if any, and interest.

          Section 12.3.  Paying    Agent    to  Repay   Moneys  Held.  Upon  the
                         -------------------------------------------
satisfaction  and discharge of this Indenture all moneys then held by any paying
agent of the  Debentures  (other  than the  Trustee)  shall,  upon demand of the
Company, be repaid to it or paid to the Trustee, and thereupon such paying agent
shall be released from all further liability with respect to such moneys.

          Section 12.4.  Return of Unclaimed Moneys.  Any  moneys deposited with
                         --------------------------
or paid to the Trustee or any paying agent for payment of the  principal of, and
premium,  if any,  or  interest on  Debentures  and not  applied  but  remaining
unclaimed by the holders of Debentures for 2 years after the date upon which the
principal of, and premium,  if any, or interest on such Debentures,  as the case
may be,  shall  have  become  due and  payable,  shall,  subject  to  applicable
escheatment  laws,  be repaid to the Company by the Trustee or such paying agent

<PAGE>

on written demand; and the holder of any of the Debentures shall thereafter look
only to the  Company  for any  payment  which  such  holder may be  entitled  to
collect,  and all  liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.

                                 ARTICLE XIII.
                    IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                    ----------------------------------------
                             OFFICERS AND DIRECTORS
                             ----------------------

         Section 13.1.   Indenture  and Debentures Solely Corporate Obligations.
                         ------------------------------------------------------
No recourse for the payment of the principal of or premium,  if any, or interest
on any  Debenture,  or for any claim  based  thereon  or  otherwise  in  respect
thereof, and no recourse under or upon any obligation,  covenant or agreement of
the Company in this Indenture or in any supplemental  indenture,  or in any such
Debenture,  or because of the creation of any indebtedness  represented thereby,
shall  be had  against  any  incorporator,  stockholder,  employee,  officer  or
director,  as such, past,  present or future, of the Company or of any successor
Person of the Company,  either  directly or through the Company or any successor
Person of the Company, whether by virtue of any constitution, statute or rule of
law, or by the  enforcement of any assessment or penalty or otherwise,  it being
expressly  understood  that all such  liability is hereby  expressly  waived and
released as a condition  of, and as a  consideration  for, the execution of this
Indenture and the issue of the Debentures.

                                  ARTICLE XIV.
                            MISCELLANEOUS PROVISIONS
                            ------------------------

         Section 14.1.   Successors. All  the  covenants, stipulations, promises
                         ----------
and  agreements of the Company in this  Indenture  shall bind its successors and
assigns whether so expressed or not.

         Section 14.2.   Official  Acts  by  Successor  Entity.   Any   act   or
                         -------------------------------------
proceeding by any provision of this Indenture  authorized or required to be done
or performed by any board,  committee or officer of the Company shall and may be
done and  performed  with like  force and effect by the like  board,  committee,
officer or other  authorized  Person of any entity that shall at the time be the
lawful successor of the Company.

         Section 14.3.   Surrender of Company Powers.  The Company by instrument
                         ---------------------------
in writing  executed by authority of at least 2/3  (two-thirds)  of its Board of
Directors and delivered to the Trustee may surrender any of the powers  reserved
to the Company and thereupon such power so surrendered  shall  terminate both as
to the Company, and as to any permitted successor.

         Section  14.4.  Addresses  for  Notices,  etc.  Any  notice,   consent,
                         -----------------------------
direction,  request,  authorization,  waiver or demand which by any provision of
this Indenture is required or permitted to be given,  made,  furnished or served
by the  Trustee or by the  Securityholders  on or to the Company may be given or
served in writing by being deposited  postage prepaid by registered or certified
mail in a post office letter box addressed  (until  another  address is filed by
the  Company,  with the Trustee for the  purpose) to the  Company,  600 James S.
McDonnell Boulevard,  Hazelwood,  Missouri 63042, Attention:  Lisa K. Vansickle.
Any notice, consent, direction, request, authorization,  waiver or demand by any
Securityholder  or the  Company to or upon the  Trustee  shall be deemed to have
been sufficiently  given or made, for all purposes,  if given or made in writing
at the office of the Trustee,  addressed to the Trustee,  Rodney  Square  North,
1100 North Market Street, Wilmington, Delaware 19890-1600,  Attention: Corporate
Trust Administration.  Any notice, consent, direction,  request,  authorization,
waiver  or  demand  on or to any  Securityholder  shall be  deemed  to have been
sufficiently given or made, for all purposes, if given or made in writing at the
address set forth in the Debenture Register.
<PAGE>

         Section 14.5.   Governing Law.  This Indenture and each Debenture shall
                         -------------
be deemed to be a contract made under the law of the State of New York,  and for
all purposes  shall be governed by and construed in  accordance  with the law of
said State, without regard to conflict of laws principles thereof.

         Section 14.6.   Evidence of Compliance with Conditions Precedent.  Upon
                         ------------------------------------------------
any application or demand by the Company to the Trustee to take any action under
any of the  provisions  of this  Indenture,  the  Company  shall  furnish to the
Trustee an Officers'  Certificate stating that in the opinion of the signers all
conditions  precedent,  if any,  provided for in this Indenture  relating to the
proposed  action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.

         Each  certificate  or  opinion  provided  for  in  this  Indenture  and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this  Indenture  shall  include (1) a statement  that the person
making such  certificate  or opinion has read such covenant or condition;  (2) a
brief statement as to the nature and scope of the  examination or  investigation
upon which the statements or opinions  contained in such  certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination  or  investigation  as is  necessary  to enable  him to  express  an
informed  opinion as to  whether  or not such  covenant  or  condition  has been
complied  with;  and (4) a statement as to whether or not in the opinion of such
person, such condition or covenant has been complied with.

         Section 14.7.   Table of Contents, Headings, etc. The table of contents
                         --------------------------------
and the titles and headings of the articles and sections of this  Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof,  and shall in no way modify or restrict  any of the terms or  provisions
hereof.

         Section 14.8.   Execution  in  Counterparts.   This  Indenture  may  be
                         ---------------------------
executed in any number of counterparts,  each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

         Section 14.9.   Separability. In case any one or more of the provisions
                         ------------
contained in this Indenture or in the Debentures shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or  unenforceability  shall not affect any other provisions of this Indenture or
of such Debentures, but this Indenture and such Debentures shall be construed as
if such invalid or illegal or  unenforceable  provision had never been contained
herein or therein.

         Section 14.10.  Assignment. The  Company  will  have  the  right at all
                         ----------
times to assign  any of its rights or  obligations  under  this  Indenture  to a
direct or indirect wholly owned Subsidiary of the Company, provided that, in the
event of any such  assignment,  the  Company  will  remain  liable  for all such
obligations. Subject to the foregoing, this Indenture is binding upon and inures
to the  benefit  of the  parties  hereto  and their  respective  successors  and
assigns. This Indenture may not otherwise be assigned by the parties hereto.

         Section 14.11.  Acknowledgment of Rights. The Company agrees that, with
                         ------------------------
respect to any Debentures held by the Trust or the Institutional  Trustee of the
Trust,  if the  Institutional  Trustee of the Trust  fails to enforce its rights
under  this  Indenture  as the holder of  Debentures  held as the assets of such
Trust  after the  holders of a majority  in  Liquidation  Amount of the  Capital
Securities of such Trust have so directed such  Institutional  Trustee, a holder
of record of such Capital  Securities  may, to the fullest  extent  permitted by
law,  institute legal  proceedings  directly against the Company to enforce such
Institutional  Trustee's rights under this Indenture  without first  instituting
any legal proceedings against such trustee or any other Person.  Notwithstanding
the  foregoing,  if an Event of Default has occurred and is continuing  and such
event is attributable to the failure of the Company to pay interest (or premium,

<PAGE>

if any) or principal on the Debentures on the date such interest (or premium, if
any) or  principal is otherwise  payable (or in the case of  redemption,  on the
redemption  date),  the  Company  agrees  that a holder  of  record  of  Capital
Securities of the Trust may directly  institute a proceeding against the Company
for  enforcement  of payment to such  holder  directly of the  principal  of (or
premium,  if any) or interest on the  Debentures  having an aggregate  principal
amount equal to the aggregate  Liquidation  Amount of the Capital  Securities of
such holder on or after the respective due date specified in the Debentures.

                                  ARTICLE XV.
                          SUBORDINATION OF DEBENTURES
                          ---------------------------

         Section  15.1.  Agreement to  Subordinate.  The Company  covenants  and
                         -------------------------
agrees,  and each  holder  of  Debentures  by such  Securityholder's  acceptance
thereof  likewise  covenants  and agrees,  that all  Debentures  shall be issued
subject to the  provisions  of this  Article XV; and each holder of a Debenture,
whether upon original issue or upon transfer or assignment thereof,  accepts and
agrees to be bound by such provisions.

         The payment by the Company of the  principal  of, and premium,  if any,
and  interest  on all  Debentures  shall,  to  the  extent  and  in  the  manner
hereinafter  set forth,  be  subordinated  and junior in right of payment to the
prior  payment  in full  of all  Senior  Indebtedness  of the  Company,  whether
outstanding  at the date of this  Indenture or  thereafter  incurred;  provided,
                                                                       --------
however,  that the Debentures shall rank pari passu in right of payment with the
-------
Company's Floating Rate Junior  Subordinated  Deferrable Interest Debentures due
April 2032 issued pursuant to an Indenture dated as of April 2002 by and between
the  Company  and  State  Street  Bank and  Trust of  Connecticut  N.A.  and the
Company's Floating Rate Junior  Subordinated  Deferrable Interest Debentures due
September  20, 2034 issued  pursuant to an Indenture  dated as of September  20,
2004 by and between the Company and Wilmington Trust Company.

         No  provision of this Article XV shall  prevent the  occurrence  of any
default or Event of Default hereunder.

         Section 15.2.   Default on Senior Indebtedness. In the event and during
                         ------------------------------
the  continuation  of any default by the  Company in the  payment of  principal,
premium,  interest or any other  payment due on any Senior  Indebtedness  of the
Company  following  any grace  period,  or in the event that the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default and
such   acceleration   has  not  been  rescinded  or  canceled  and  such  Senior
Indebtedness  has not been paid in full,  then, in either case, no payment shall
be made by the Company with respect to the principal (including  redemption) of,
or premium, if any, or interest on the Debentures.

         In the event that,  notwithstanding the foregoing, any payment shall be
received  by the  Trustee  when such  payment  is  prohibited  by the  preceding
paragraph of this Section 15.2, such payment shall,  subject to Section 15.7, be
held in trust for the  benefit of, and shall be paid over or  delivered  to, the
holders of Senior  Indebtedness or their respective  representatives,  or to the
trustee or  trustees  under any  indenture  pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the  extent  that the  holders  of the  Senior  Indebtedness  (or  their
representative  or  representatives  or a trustee) notify the Trustee in writing
within 90 days of such  payment of the amounts  then due and owing on the Senior
Indebtedness and only the amounts  specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.

         Section 15.3.   Liquidation, Dissolution, Bankruptcy. Upon any  payment
                         ------------------------------------
by the  Company  or  distribution  of  assets  of the  Company  of any  kind  or
character,  whether in cash,  property  or  securities,  to  creditors  upon any
dissolution  or  winding-up or  liquidation  or  reorganization  of the Company,
whether voluntary or involuntary or in bankruptcy,  insolvency,  receivership or
other proceedings,  all amounts due upon all Senior  Indebtedness of the Company
shall  first  be paid in  full,  or  payment  thereof  provided  for in money in

<PAGE>

accordance with its terms, before any payment is made by the Company, on account
of the principal (and premium,  if any) or interest on the Debentures.  Upon any
such dissolution or winding-up or liquidation or reorganization,  any payment by
the Company,  or distribution of assets of the Company of any kind or character,
whether in cash,  property or securities,  to which the  Securityholders  or the
Trustee would be entitled to receive from the Company, except for the provisions
of this Article XV, shall be paid by the Company, or by any receiver, trustee in
bankruptcy,  liquidating  trustee,  agent or other Person making such payment or
distribution,  or by the  Securityholders or by the Trustee under this Indenture
if received by them or it, directly to the holders of Senior  Indebtedness  (pro
rata  to  such  holders  on  the  basis  of the  respective  amounts  of  Senior
Indebtedness  held by such  holders,  as  calculated  by the  Company)  or their
representative  or  representatives,  or to the  trustee or  trustees  under any
indenture pursuant to which any instruments  evidencing such Senior Indebtedness
may have been issued,  as their respective  interests may appear,  to the extent
necessary to pay such Senior  Indebtedness  in full, in money or money's  worth,
after giving  effect to any  concurrent  payment or  distribution  to or for the
holders of such Senior Indebtedness,  before any payment or distribution is made
to the Securityholders or to the Trustee.

         In the event  that,  notwithstanding  the  foregoing,  any  payment  or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities,  prohibited by the  foregoing,  shall be received by the
Trustee before all Senior Indebtedness is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the   holders  of  such  Senior   Indebtedness   or  their   representative   or
representatives,  or to the trustee or trustees under any indenture  pursuant to
which any instruments  evidencing such Senior Indebtedness may have been issued,
as their  respective  interests may appear,  as  calculated by the Company,  for
application to the payment of all Senior  Indebtedness,  remaining unpaid to the
extent necessary to pay such Senior  Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the benefit of the holders of such Senior Indebtedness.

         For  purposes  of  this  Article  XV,  the  words  "cash,  property  or
securities"  shall not be deemed to  include  shares of stock of the  Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization  or readjustment,  the payment of which
is  subordinated at least to the extent provided in this Article XV with respect
to the  Debentures  to the payment of all Senior  Indebtedness,  that may at the
time be  outstanding,  provided that (i) such Senior  Indebtedness is assumed by
the  new  corporation,  if  any,  resulting  from  any  such  reorganization  or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not,  without the consent of such  holders,  altered by such  reorganization  or
readjustment.  The  consolidation  of the  Company  with,  or the  merger of the
Company into,  another  corporation  or the  liquidation  or  dissolution of the
Company following the conveyance or transfer of its property as an entirety,  or
substantially  as an  entirety,  to  another  corporation  upon  the  terms  and
conditions  provided for in Article XI of this  Indenture  shall not be deemed a
dissolution,  winding-up, liquidation or reorganization for the purposes of this
Section  if such  other  corporation  shall,  as a part  of such  consolidation,
merger,  conveyance or transfer, comply with the conditions stated in Article XI
of this  Indenture.  Nothing in Section 15.2 or in this  Section  shall apply to
claims of, or payments to, the Trustee  under or pursuant to Section 6.6 of this
Indenture.

         Section 15.4.   Subrogation. Subject  to  the  payment  in full of  all
                         -----------
Senior  Indebtedness,  the Securityholders  shall be subrogated to the rights of
the holders of such Senior  Indebtedness to receive payments or distributions of
cash,  property  or  securities  of  the  Company,  applicable  to  such  Senior
Indebtedness  until the principal of (and  premium,  if any) and interest on the
Debentures  shall be paid in full.  For the  purposes  of such  subrogation,  no
payments or  distributions  to the holders of such  Senior  Indebtedness  of any
cash,  property or securities to which the  Securityholders or the Trustee would
be entitled  except for the  provisions  of this Article XV, and no payment over
pursuant  to the  provisions  of this  Article  XV to or for the  benefit of the

<PAGE>

holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as
between the Company,  its creditors other than holders of Senior Indebtedness of
the  Company,  and the  holders of the  Debentures  be deemed to be a payment or
distribution by the Company to or on account of such Senior Indebtedness.  It is
understood  that the  provisions of this Article XV are and are intended  solely
for  the  purposes  of  defining  the  relative  rights  of the  holders  of the
Securities, on the one hand, and the holders of such Senior Indebtedness, on the
other hand.

         Nothing  contained in this Article XV or elsewhere in this Indenture or
in the  Debentures is intended to or shall impair,  as between the Company,  its
creditors other than the holders of Senior Indebtedness,  and the holders of the
Debentures,  the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures  the principal of (and premium,  if any)
and interest on the Debentures as and when the same shall become due and payable
in accordance  with their terms,  or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company, other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the  Trustee  or the  holder  of any  Debenture  from  exercising  all  remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the  rights,  if any,  under this  Article XV of the  holders of such  Senior
Indebtedness in respect of cash, property or securities of the Company, received
upon the exercise of any such remedy.

         Upon any payment or distribution  of assets of the Company  referred to
in this Article XV, the Trustee, subject to the provisions of Article VI of this
Indenture,  and the Securityholders  shall be entitled to conclusively rely upon
any order or decree made by any court of  competent  jurisdiction  in which such
dissolution,  winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver,  trustee in bankruptcy,  liquidation  trustee,
agent or other  Person  making such  payment or  distribution,  delivered to the
Trustee or to the Securityholders,  for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior Indebtedness
and other  indebtedness of the Company,  the amount thereof or payable  thereon,
the amount or amounts paid or distributed  thereon and all other facts pertinent
thereto or to this Article XV.

         Section 15.5.   Trustee    to     Effectuate    Subordination.     Each
                         ---------------------------------------------
Securityholder  by  such  Securityholder's  acceptance  thereof  authorizes  and
directs the Trustee on such  Securityholder's  behalf to take such action as may
be necessary or  appropriate to effectuate  the  subordination  provided in this
Article XV and appoints the Trustee such  Securityholder's  attorney-in-fact for
any and all such purposes.

         Section  15.6.  Notice by the  Company.  The Company  shall give prompt
                         ----------------------
written notice to a Responsible  Officer of the Trustee at the Principal  Office
of the Trustee of any fact known to the Company  that would  prohibit the making
of any  payment of monies to or by the  Trustee  in  respect  of the  Debentures
pursuant to the provisions of this Article XV. Notwithstanding the provisions of
this Article XV or any other provision of this Indenture,  the Trustee shall not
be charged with  knowledge of the existence of any facts that would prohibit the
making  of  any  payment  of  monies  to or by the  Trustee  in  respect  of the
Debentures  pursuant to the  provisions  of this Article XV,  unless and until a
Responsible  Officer of the Trustee at the Principal Office of the Trustee shall
have received  written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor;  and before the receipt of any
such written  notice,  the Trustee,  subject to the  provisions of Article VI of
this  Indenture,  shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
       --------  -------
provided  for in this  Section at least 2  Business  Days prior to the date upon
which  by the  terms  hereof  any  money  may  become  payable  for any  purpose
(including,  without limitation, the payment of the principal of (or premium, if
any) or interest on any  Debenture),  then,  anything  herein  contained  to the
contrary  notwithstanding,  the Trustee  shall have full power and  authority to
receive  such  money and to apply the same to the  purposes  for which they were
received,  and shall not be affected by any notice to the  contrary  that may be
received by it within 2 Business Days prior to such date.
<PAGE>

         The Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person  representing  himself to be a holder of Senior  Indebtedness  (or a
trustee or  representative  on behalf of such  holder),  to establish  that such
notice has been given by a holder of such  Senior  Indebtedness  or a trustee or
representative  on behalf of any such holder or  holders.  In the event that the
Trustee  determines in good faith that further evidence is required with respect
to  the  right  of any  Person  as a  holder  of  such  Senior  Indebtedness  to
participate  in any payment or  distribution  pursuant  to this  Article XV, the
Trustee  may  request  such  Person  to  furnish   evidence  to  the  reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person,  the extent to which such Person is entitled to participate in such
payment or  distribution  and any other  facts  pertinent  to the rights of such
Person  under this  Article  XV, and, if such  evidence  is not  furnished,  the
Trustee may defer any payment to such Person pending  judicial  determination as
to the right of such Person to receive such payment.

         Section 15.7.   Rights of the Trustee;  Holders of Senior Indebtedness.
                         ------------------------------------------------------
The Trustee in its  individual  capacity shall be entitled to all the rights set
forth in this Article XV in respect of any Senior  Indebtedness at any time held
by it,  to the same  extent as any other  holder  of  Senior  Indebtedness,  and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.

         With  respect  to the  holders  of  Senior  Indebtedness,  the  Trustee
undertakes to perform or to observe only such of its  covenants and  obligations
as are  specifically  set forth in this Article XV, and no implied  covenants or
obligations  with  respect to the holders of such Senior  Indebtedness  shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior  Indebtedness  and, subject
to the  provisions  of Article VI of this  Indenture,  the Trustee  shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior  Indebtedness  shall be entitled by virtue of this Article
XV or otherwise.

         Nothing in this  Article XV shall apply to claims of, or  payments  to,
the Trustee under or pursuant to Section 6.6.

         Section  15.8.  Subordination  May Not Be  Impaired.  No  right  of any
                         -----------------------------------
present or future holder of any Senior Indebtedness to enforce  subordination as
herein  provided  shall at any time in any way be  prejudiced or impaired by any
act or  failure to act on the part of the  Company,  or by any act or failure to
act, in good faith, by any such holder,  or by any noncompliance by the Company,
with the terms,  provisions and covenants of this  Indenture,  regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.

         Without in any way limiting the generality of the foregoing  paragraph,
the  holders  of  Senior  Indebtedness  may,  at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders,  without
incurring  responsibility  to  the  Securityholders  and  without  impairing  or
releasing  the  subordination  provided  in this  Article XV or the  obligations
hereunder  of the  holders  of the  Debentures  to the  holders  of such  Senior
Indebtedness,  do any one or more of the following: (i) change the manner, place
or terms of payment or extend  the time of payment  of, or renew or alter,  such
Senior Indebtedness,  or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument  evidencing the same or any agreement under which
such  Senior  Indebtedness  is  outstanding;  (ii)  sell,  exchange,  release or
otherwise deal with any property pledged,  mortgaged or otherwise  securing such
Senior  Indebtedness;  (iii)  release  any  Person  liable in any manner for the
collection  of such  Senior  Indebtedness;  and (iv)  exercise  or refrain  from
exercising any rights against the Company, and any other Person.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.

                                          FIRST BANKS, INC.


                                          By /s/   Allen H. Blake
                                            ------------------------------------
                                            Name:  Allen H. Blake
                                            Title: President and
                                                   Chief Executive Officer


                                          WILMINGTON TRUST COMPANY, as Trustee


                                          By /s/   Christopher J. Monigle
                                            ------------------------------------
                                            Name:  Christopher J. Monigle
                                            Title: Asssistant Vice President


<PAGE>

                                    EXHIBIT A

     FORM OF FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE COMPANY,  (B) PURSUANT TO A
REGISTRATION  STATEMENT  THAT HAS BEEN DECLARED  EFFECTIVE  UNDER THE SECURITIES
ACT,  (C) TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED
INSTITUTIONAL  BUYER IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH  RULE  144A,  (D)  TO A  NON-U.S.  PERSON  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATIONS UNDER  THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH  (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY  FOR  ITS OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF SUCH AN  INSTITUTIONAL
ACCREDITED  INVESTOR,  FOR  INVESTMENT  PURPOSES  AND NOT WITH A VIEW TO, OR FOR
OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY  DISTRIBUTION  IN  VIOLATION  OF THE
SECURITIES  ACT,  OR (F)  PURSUANT  TO ANY OTHER  AVAILABLE  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION  SATISFACTORY  TO  IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF

<PAGE>

THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING AN AGGREGATE  PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE  PRINCIPAL  AMOUNT OF LESS THAN  $100,000.00  SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED  BY THE  INDENTURE  TO  CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

         Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                First Banks, Inc.

                                November 23, 2004

         First Banks,  Inc., a Missouri  corporation  (the "Company"  which term
includes any successor Person under the Indenture  hereinafter referred to), for
value  received  promises  to  pay  to  Wilmington  Trust  Company,  not  in its
individual capacity but solely as Institutional Trustee for First Bank Statutory
Trust III (the "Holder") or registered  assigns,  the principal sum of forty-one
million two hundred thirty-eight  thousand dollars  ($41,238,000.00) on December
15, 2034,  and to pay interest on said  principal sum from November 23, 2004, or
from the most recent Interest  Payment Date (as defined below) to which interest
has been paid or duly provided for,  quarterly (subject to deferral as set forth
herein) in arrears on March 15, June 15,  September  15 and  December 15 of each
year or if such day is not a Business Day, then the next succeeding Business Day
(each such date, an "Interest  Payment Date") (it being understood that interest
accrues for any such non-Business Day),  commencing on the Interest Payment Date
in March 2005, at an annual rate equal to 4.54% beginning on (and including) the
date of original  issuance and ending on (but  excluding)  the Interest  Payment
Date in March 2005 and at an annual rate for each successive period beginning on
(and  including) the Interest  Payment Date in March 2005,  and each  succeeding
Interest  Payment  Date,  and  ending  on (but  excluding)  the next  succeeding
Interest  Payment Date (each a "Distribution  Period"),  equal to 3-Month LIBOR,
determined as described  below,  plus 2.18% (the "Coupon Rate"),  applied to the
principal amount hereof, until the principal hereof is paid or duly provided for
or made  available  for  payment,  and on any  overdue  principal  and  (without

<PAGE>

duplication and to the extent that payment of such interest is enforceable under
applicable  law) on any overdue  installment of interest  (including  Additional
Interest) at the Interest Rate in effect for each applicable period,  compounded
quarterly,  from the dates  such  amounts  are due  until  they are paid or made
available  for  payment.  The amount of interest  payable for any period will be
computed on the basis of the actual  number of days in the  Distribution  Period
concerned  divided by 360. The interest  installment so payable,  and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture,  be paid to the Person in whose name this  Debenture  (or one or more
Predecessor  Securities)  is  registered at the close of business on the regular
record date for such  interest  installment,  which shall be five  Business Days
prior to the day on which the relevant  Interest  Payment Date occurs.  Any such
interest installment not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such regular record date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor  Securities)
is registered at the close of business on a special record date.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month U.S. dollar deposits  determined by the Trustee in
the following  order of priority:  (i) the rate  (expressed as a percentage  per
annum) for U.S. dollar  deposits  having a three-month  maturity that appears on
Telerate Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
Date  ("Telerate  Page 3750" means the display  designated as "Page 3750" on the
Dow Jones  Telerate  Service or such other page as may replace Page 3750 on that
service or such other  service or  services as may be  nominated  by the British
Bankers'  Association  as the  information  vendor for the purpose of displaying
London  interbank  offered rates for U.S.  dollar  deposits);  (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the  principal  London  offices of four  leading  banks in the London  interbank
market to provide such banks' offered  quotations  (expressed as percentages per
annum) to prime banks in the London  interbank  market for U.S.  dollar deposits
having  a  three-month   maturity  as  of  11:00  a.m.  (London  time)  on  such
Determination Date. If at least two quotations are provided,  3-Month LIBOR will
be the  arithmetic  mean of such  quotations;  (iii)  if  fewer  than  two  such
quotations  are  provided as  requested  in clause (ii) above,  the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such  Determination  Date. If at least
two such  quotations are provided,  3-Month LIBOR will be the arithmetic mean of
such  quotations;  and (iv) if fewer than two such  quotations  are  provided as
requested  in  clause  (iii)  above,  3-Month  LIBOR  will  be a  3-Month  LIBOR
determined with respect to the Distribution  Period  immediately  preceding such
current  Distribution  Period.  If the rate for U.S.  dollar  deposits  having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such  Determination  Date. As used
herein,  "Determination  Date"  means the date that is two London  Banking  Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All percentages  resulting from any calculations on the Debentures will
be rounded, if necessary,  to the nearest one hundred-thousandth of a percentage
point,  with five  one-millionths  of a percentage  point rounded  upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts  used in or  resulting  from such  calculation  will be  rounded  to the
nearest cent (with one-half cent being rounded upward)).
<PAGE>

         The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained  for that  purpose in any coin or  currency  of the United  States of
America  that at the time of payment is legal  tender for  payment of public and
private debts; provided,  however, that payment of interest may be made by check
               --------   -------
mailed to the registered holder at such address as shall appear in the Debenture
Register if a request for a wire  transfer by such holder has not been  received
by the Company or by wire transfer to an account appropriately designated by the
holder  hereof.  Notwithstanding  the  foregoing,  so long as the holder of this
Debenture  is the  Institutional  Trustee,  the payment of the  principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Trustee.

         So  long  as  no  Extension  Event  of  Default  has  occurred  and  is
continuing,  the Company  shall have the right,  from time to time,  and without
causing an Event of Default,  to defer payments of interest on the Debentures by
extending  the interest  payment  period on the  Debentures at any time and from
time  to  time  during  the  term of the  Debentures,  for up to 20  consecutive
quarterly  periods (each such extended  interest  payment period,  an "Extension
Period"),  during  which  Extension  Period no  interest  (including  Additional
Interest)  shall be due and payable  (except any Additional Sums that may be due
and  payable).  No  Extension  Period may end on a date  other than an  Interest
Payment Date.  During an Extension  Period,  interest will continue to accrue on
the Debentures,  and interest on such accrued  interest will accrue at an annual
rate equal to the Interest Rate in effect for such Extension Period,  compounded
quarterly  from the date such  interest  would have been payable were it not for
the Extension  Period, to the extent permitted by law (such interest referred to
herein as "Additional  Interest").  At the end of any such Extension  Period the
Company  shall pay all  interest  then  accrued  and  unpaid  on the  Debentures
(together  with  Additional  Interest  thereon);   provided,  however,  that  no
                                                   --------   -------
Extension Period may extend beyond the Maturity Date; provided further, however,
                                                      -------- -------  -------
that  during any such  Extension  Period,  the  Company  shall not and shall not
permit  any  Affiliate  to  engage  in  any of the  activities  or  transactions
described  on  the  reverse  side  hereof  and in the  Indenture.  Prior  to the
termination of any Extension Period, the Company may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension Period shall bear Additional Interest.  The Company must give the
Trustee  notice of its  election to begin or extend an  Extension  Period by the
close of business at least 5 Business  Days prior to the  Interest  Payment Date
with respect to which interest on the Debentures  would have been payable except
for the election to begin or extend such Extension Period.

         The indebtedness evidenced by this Debenture is, to the extent provided
in the  Indenture,  subordinate  and  junior  in right of  payment  to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the  provisions of the Indenture  with respect  thereto.  Each holder of this
Debenture,  by  accepting  the  same,  (a)  agrees to and shall be bound by such
provisions,  (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or  appropriate to acknowledge or effectuate the
subordination   so   provided   and  (c)   appoints   the  Trustee  his  or  her
attorney-in-fact  for any and all such purposes.  Each holder hereof,  by his or
her  acceptance  hereof,  hereby  waives  all  notice of the  acceptance  of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness,  whether now outstanding or hereafter incurred,  and waives
reliance by each such holder upon said provisions.

         This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
certificate of  authentication  hereon shall have been signed by or on behalf of
the Trustee.

         The  provisions  of this  Debenture  are  continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.



<PAGE>


         IN WITNESS WHEREOF, the Company has duly executed this certificate.

                                         FIRST BANKS, INC.


                                         By
                                           -------------------------------------
                                             Name:
                                             Title:


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This  is one  of the  Debentures  referred  to in the  within-mentioned
Indenture.

                                         WILMINGTON TRUST COMPANY, as Trustee


                                         By:
                                            ------------------------------------
                                            Authorized Officer



<PAGE>


                         [FORM OF REVERSE OF DEBENTURE]

         This  Debenture  is  one  of  the  floating  rate  junior  subordinated
deferrable interest debentures of the Company,  all issued or to be issued under
and pursuant to the Indenture  dated as of November 23, 2004 (the  "Indenture"),
duly  executed  and  delivered  between the Company  and the  Trustee,  to which
Indenture reference is hereby made for a description of the rights,  limitations
of rights,  obligations,  duties and immunities  thereunder of the Trustee,  the
Company  and the  holders  of the  Debentures.  The  Debentures  are  limited in
aggregate principal amount as specified in the Indenture.

         Upon the  occurrence and  continuation  of a Special Event prior to the
Interest  Payment  Date in December  2009,  the Company  shall have the right to
redeem the Debentures in whole,  but not in part, at any Interest  Payment Date,
within 120 days following the  occurrence of such Special Event,  at the Special
Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in  part,  but in all  cases in a  principal  amount  with  integral
multiples of  $1,000.00,  on any Interest  Payment Date on or after the Interest
Payment Date in December 2009, at the Redemption Price.

         Prior to  10:00  a.m.  New York  City  time on the  Redemption  Date or
Special  Redemption  Date,  as  applicable,  the Company  will  deposit with the
Trustee  or with one or more  paying  agents an amount  of money  sufficient  to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate  Redemption  Price or
Special Redemption Price.

         If all,  or less than  all,  the  Debentures  are to be  redeemed,  the
Company  will give the  Trustee  notice  not less than 45 nor more than 60 days,
respectively,  prior to the  Redemption  Date or  Special  Redemption  Date,  as
applicable,  as to the aggregate  principal  amount of Debentures to be redeemed
and the Trustee shall select,  in such manner as in its sole discretion it shall
deem  appropriate  and fair,  the  Debentures  or portions  thereof (in integral
multiples of $1,000.00) to be redeemed.

         Notwithstanding  the  foregoing,  any  redemption  of Debentures by the
Company  shall be subject  to the  receipt  of any and all  required  regulatory
approvals.

         In case an Event of Default described in Section 5.1(a),  (d) or (e) of
the Indenture shall have occurred and be continuing, upon demand of the Trustee,
the  principal  of all of the  Debentures  shall  become due and  payable in the
manner, with the effect and subject to the conditions provided in the Indenture.

         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee,  with the  consent  of the  holders  of not  less  than a  majority  in
aggregate principal amount of the Debentures at the time outstanding, to execute
supplemental  indentures for the purpose of adding any provisions to or changing
in any manner or  eliminating  any of the provisions of this Indenture or of any
supplemental  indenture  or of modifying in any manner the rights of the holders
of the Debentures;  provided, however, that no such supplemental indenture shall
                    --------  -------
without  the  consent of the  holders of each  Debenture  then  outstanding  and
affected  thereby (i) change the fixed maturity of any Debenture,  or reduce the
principal  amount thereof or any premium  thereon,  or reduce the rate or extend
the time of  payment  of  interest  thereon,  or reduce  any  amount  payable on
redemption  thereof or make the  principal  thereof or any  interest  or premium
thereon  payable  in any  coin or  currency  other  than  that  provided  in the
Debentures,  or impair or affect the right of any  Securityholder  to  institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture.
<PAGE>

         The Indenture  also  contains  provisions  permitting  the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
on behalf of the  holders  of all of the  Debentures  to waive  (or  modify  any
previously  granted  waiver of) any past  default or Event of  Default,  and its
consequences,  except a default (a) in the payment of principal of, premium,  if
any,  or  interest  on any of the  Debentures,  (b) in respect of  covenants  or
provisions  hereof or of the  Indenture  which  cannot be  modified  or  amended
without the consent of the holder of each Debenture affected,  or (c) in respect
of the covenants contained in Section 3.9 of the Indenture;  provided,  however,
                                                             --------   -------
that if the  Debentures  are held by the Trust or a trustee of such trust,  such
waiver or  modification  to such waiver shall not be effective until the holders
of a majority in Liquidation  Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
                                                         --------  -------
if the consent of the holder of each  outstanding  Debenture is  required,  such
waiver shall not be effective  until each holder of the Trust  Securities of the
Trust shall have  consented  to such waiver.  Upon any such waiver,  the default
covered  thereby  shall be deemed to be cured for all purposes of the  Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any  subsequent  or other  default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by the  Indenture,  said default or Event of
Default shall for all purposes of the  Debentures and the Indenture be deemed to
have been cured and to be not continuing.

         No reference herein to the Indenture and no provision of this Debenture
or of the Indenture  shall alter or impair the obligation of the Company,  which
is absolute and unconditional,  to pay the principal of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and place
and at the rate and in the money herein prescribed.

         The Company has agreed that if Debentures  are initially  issued to the
Trust or a  trustee  of such  Trust in  connection  with the  issuance  of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such  Trust) and (i) there shall have  occurred  and be  continuing  an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities  Guarantee,  or (iii) the Company shall
have  given  notice  of its  election  to  defer  payments  of  interest  on the
Debentures by extending the interest  payment period as provided herein and such
Extension  Period,  or any  extension  thereof,  shall be  continuing,  then the
Company  shall not,  and shall not allow any  Affiliate  of the  Company to, (x)
declare or pay any dividends or distributions on, or redeem, purchase,  acquire,
or make a  liquidation  payment  with respect to, any of the  Company's  capital
stock or its  Affiliates'  capital  stock  (other than  payments of dividends or
distributions to the Company) or make any guarantee payments with respect to the
foregoing  or (y) make any payment of  principal  of or interest or premium,  if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures  (other  than,  with  respect  to  clauses  (x)  and (y)  above,  (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company  in  connection  with any  employment  contract,  benefit  plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company (or securities  convertible  into or  exercisable  for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable  Extension  Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary  of the Company) for any class or series of the  Company's
capital  stock or of any class or series of the Company's  indebtedness  for any
class or series of the Company's  capital stock,  (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange  provisions  of such capital stock or the security  being  converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or

<PAGE>

other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).

         The  Debentures  are issuable  only in  registered,  certificated  form
without coupons and in minimum  denominations of $100,000.00 and any multiple of
$1,000.00 in excess  thereof.  As provided in the  Indenture  and subject to the
transfer  restrictions  and  limitations as may be contained  herein and therein
from time to time,  this Debenture is  transferable  by the holder hereof on the
Debenture  Register of the Company.  Upon due  presentment  for  registration of
transfer  of any  Debenture  at the  Principal  Office of the  Trustee or at any
office or agency of the  Company  maintained  for such  purpose as  provided  in
Section 3.2 of the  Indenture,  the Company  shall  execute,  the Company or the
Trustee  shall  register  and the  Trustee  or the  Authenticating  Agent  shall
authenticate  and make  available for delivery in the name of the  transferee or
transferees  a  new  Debenture  for  a  like  aggregate  principal  amount.  All
Debentures  presented  for  registration  of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating Agent)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer  in  form   satisfactory  to,  the  Company  and  the  Trustee  or  the
Authenticating Agent duly executed by the holder or his attorney duly authorized
in writing.  No service charge shall be made for any exchange or registration of
transfer of Debentures,  but the Company or the Trustee may require payment of a
sum  sufficient to cover any tax, fee or other  governmental  charge that may be
imposed in connection therewith.

         Prior to due presentment for registration of transfer of any Debenture,
the Company,  the Trustee,  any  Authenticating  Agent,  any paying  agent,  any
transfer  agent and any  Debenture  registrar  may deem the Person in whose name
such Debenture  shall be registered  upon the Debenture  Register to be, and may
treat  him as,  the  absolute  owner  of such  Debenture  (whether  or not  such
Debenture  shall be  overdue)  for the  purpose  of  receiving  payment of or on
account of the principal of, premium, if any, and interest on such Debenture and
for all  other  purposes;  and  neither  the  Company  nor the  Trustee  nor any
Authenticating  Agent  nor any  paying  agent  nor any  transfer  agent  nor any
Debenture  registrar  shall be affected by any notice to the contrary.  All such
payments  so made to any holder  for the time  being or upon his order  shall be
valid,  and, to the extent of the sum or sums so paid,  effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.

         No recourse for the payment of the principal of or premium,  if any, or
interest  on any  Debenture,  or for any claim  based  thereon or  otherwise  in
respect  thereof,  and no  recourse  under or upon any  obligation,  covenant or
agreement of the Company in the Indenture or in any supplemental  indenture,  or
in  any  such  Debenture,  or  because  of  the  creation  of  any  indebtedness
represented  thereby,  shall  be  had  against  any  incorporator,  stockholder,
employee,  officer or director, as such, past, present or future, of the Company
or of any  successor  Person of the  Company,  either  directly  or through  the
Company  or any  successor  Person  of the  Company,  whether  by  virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise,  it being expressly  understood that all such liability is
hereby  expressly  waived and released as a condition of, and as a consideration
for, the execution of the Indenture and the issue of the Debentures.

         Capitalized terms used and not defined in this Debenture shall have the
meanings  assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.

         THE INDENTURE AND THE DEBENTURES  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.

<PAGE>

                                                                    Exhibit 4.36








                    =========================================



                        AMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  by and among

                            WILMINGTON TRUST COMPANY,
                              as Delaware Trustee,

                            WILMINGTON TRUST COMPANY,
                            as Institutional Trustee,

                               FIRST BANKS, INC.
                                   as Sponsor,

                                       and

                    PETER D. WIMMER, TERRANCE M. MCCARTHY and
                               LISA K. VANSICKLE,
                               as Administrators,

                          Dated as of November 23, 2004



                    =========================================




<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                -----------------
                                                                                                                Page
                                                                                                                ----

<S>                                                                                                              <C>
ARTICLE I INTERPRETATION AND DEFINITIONS..........................................................................1
         Section 1.1.      Definitions............................................................................1

ARTICLE II ORGANIZATION...........................................................................................8
         Section 2.1.      Name...................................................................................8
         Section 2.2.      Office.................................................................................8
         Section 2.3.      Purpose................................................................................8
         Section 2.4.      Authority..............................................................................8
         Section 2.5.      Title to Property of the Trust.........................................................8
         Section 2.6.      Powers and Duties of the Trustees and the Administrators...............................9
         Section 2.7.      Prohibition of Actions by the Trust and the Institutional Trustee.....................12
         Section 2.8.      Powers and Duties of the Institutional Trustee........................................13
         Section 2.9.      Certain Duties and Responsibilities of the Trustees and Administrators................14
         Section 2.10.     Certain Rights of Institutional Trustee...............................................15
         Section 2.11.     Delaware Trustee......................................................................17
         Section 2.12.     Execution of Documents................................................................17
         Section 2.13.     Not Responsible for Recitals or Issuance of Securities................................17
         Section 2.14.     Duration of Trust.....................................................................17
         Section 2.15.     Mergers...............................................................................18

ARTICLE III SPONSOR..............................................................................................19
         Section 3.1.      Sponsor's Purchase of Common Securities...............................................19
         Section 3.2.      Responsibilities of the Sponsor.......................................................19
         Section 3.3.      Expenses..............................................................................19
         Section 3.4.      Right to Proceed......................................................................20

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS..............................................................20
         Section 4.1.      Number of Trustees....................................................................20
         Section 4.2.      Delaware Trustee; Eligibility.........................................................20
         Section 4.3.      Institutional Trustee; Eligibility....................................................21
         Section 4.4.      Administrators........................................................................21
         Section 4.5.      Appointment, Removal and Resignation of Trustees and Administrators...................21
         Section 4.6.      Vacancies Among Trustees..............................................................23
         Section 4.7.      Effect of Vacancies...................................................................23
         Section 4.8.      Meetings of the Trustees and the Administrators.......................................23
         Section 4.9.      Delegation of Power...................................................................24
         Section 4.10.     Conversion, Consolidation or Succession to Business...................................24

ARTICLE V DISTRIBUTIONS..........................................................................................24
         Section 5.1.      Distributions.........................................................................24

ARTICLE VI ISSUANCE OF SECURITIES................................................................................24
         Section 6.1.      General Provisions Regarding Securities...............................................24
         Section 6.2.      Paying Agent, Transfer Agent and Registrar............................................25
         Section 6.3.      Form and Dating.......................................................................25
         Section 6.4.      Book-Entry Capital Securities.........................................................26
         Section 6.5.      Mutilated, Destroyed, Lost or Stolen Certificates.....................................27
         Section 6.6.      Temporary Securities..................................................................28
         Section 6.7.      Cancellation..........................................................................28
         Section 6.8.      CUSIP Numbers.........................................................................28
         Section 6.9.      Rights of Holders; Waivers of Past Defaults...........................................28
<PAGE>

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST.................................................................30
         Section 7.1.      Dissolution and Termination of Trust..................................................30

ARTICLE VIII TRANSFER OF INTERESTS...............................................................................31
         Section 8.1.      General...............................................................................31
         Section 8.2.      Transfer Procedures and Restrictions..................................................31
         Section 8.3.      Deemed Security Holders...............................................................34

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS.....................34
         Section 9.1.      Liability.............................................................................34
         Section 9.2.      Exculpation...........................................................................35
         Section 9.3.      Fiduciary Duty........................................................................35
         Section 9.4.      Indemnification.......................................................................35
         Section 9.5.      Outside Businesses....................................................................37
         Section 9.6.      Compensation; Fee.....................................................................38

ARTICLE X ACCOUNTING.............................................................................................38
         Section 10.1.     Fiscal Year...........................................................................38
         Section 10.2.     Certain Accounting Matters............................................................38
         Section 10.3.     Banking...............................................................................39
         Section 10.4.     Withholding...........................................................................39

ARTICLE XI AMENDMENTS AND MEETINGS...............................................................................39
         Section 11.1.     Amendments............................................................................39
         Section 11.2.     Meetings of the Holders of Securities; Action by Written Consent......................41

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE....................................42
         Section 12.1.     Representations and Warranties of Institutional Trustee...............................42
         Section 12.2.     Representations of the Delaware Trustee...............................................42

ARTICLE XIII MISCELLANEOUS.......................................................................................43
         Section 13.1.     Notices...............................................................................43
         Section 13.2.     Governing Law.........................................................................44
         Section 13.3.     Intention of the Parties..............................................................44
         Section 13.4.     Headings..............................................................................44
         Section 13.5.     Successors and Assigns................................................................44
         Section 13.6.     Partial Enforceability................................................................44
         Section 13.7.     Counterparts..........................................................................45


Annex I....................Terms of Securities
Exhibit A-1................Form of Global Capital Security Certificate
Exhibit A-2................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement

</TABLE>

<PAGE>

                              AMENDED AND RESTATED

                              DECLARATION OF TRUST
                                       OF
                         FIRST BANK STATUTORY TRUST III

                                November 23, 2004

         AMENDED AND RESTATED  DECLARATION  OF TRUST  ("Declaration")  dated and
                                                        -----------
effective  as of November 23, 2004,  by the  Trustees (as defined  herein),  the
Administrators  (as defined herein),  the Sponsor (as defined herein) and by the
holders,  from time to time, of undivided  beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;

         WHEREAS,  the Trustees,  the Administrators and the Sponsor established
First Bank  Statutory  Trust III (the  "Trust"),  a  statutory  trust  under the
                                        -----
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of November 4, 2004 (the "Original Declaration"),  and a Certificate of Trust
                             --------------------
filed with the  Secretary of State of the State of Delaware on November 4, 2004,
for the sole  purpose of issuing and  selling  certain  securities  representing
undivided  beneficial  interests  in the assets of the Trust and  investing  the
proceeds  thereof in certain  debentures  of the  Debenture  Issuer (as  defined
herein);

         WHEREAS,  as of the date  hereof,  no  interests in the Trust have been
issued; and

         WHEREAS,  the Trustees,  the  Administrators  and the Sponsor,  by this
Declaration, amend and restate each and every term and provision of the Original
Declaration;

         NOW,  THEREFORE,  it being  the  intention  of the  parties  hereto  to
continue the Trust as a statutory  trust under the Statutory  Trust Act and that
this Declaration  constitutes the governing  instrument of such statutory trust,
the Trustees  declare that all assets  contributed  to the Trust will be held in
trust for the  benefit  of the  holders,  from time to time,  of the  securities
representing  undivided  beneficial  interests in the assets of the Trust issued
hereunder,  subject to the  provisions of this  Declaration.  The parties hereto
hereby agree as follows:

                                   ARTICLE I

                         INTERPRETATION AND DEFINITIONS

         Section 1.1.    Definitions.
                         -----------

         Unless the context otherwise requires:

         (a)      Capitalized  terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;

         (b)      a  term  defined  anywhere in  this  Declaration  has the same
meaning throughout;

         (c)      all  references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;

         (d)      all  references  in  this Declaration to Articles and Sections
and  Annexes  and  Exhibits  are to  Articles  and  Sections  of and Annexes and
Exhibits to this Declaration unless otherwise specified; and
<PAGE>

         (e)      a  reference  to  the  singular  includes  the plural and vice
versa.

         "Additional Interest" has the meaning set forth in the Indenture.
          -------------------

         "Administrative  Action" has the meaning set forth in paragraph 4(a) of
          ----------------------
Annex I.

         "Administrators"  means each of Peter D. Wimmer,  Terrance M.  McCarthy
          --------------
and Lisa K. Vansickle,  solely in such Person's capacity as Administrator of the
Trust  created  and  continued  hereunder  and not in such  Person's  individual
capacity, or such Administrator's successor in interest in such capacity, or any
successor appointed as herein provided.

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
          ---------
the Securities Act or any successor rule thereunder.

         "Applicable  Depositary Procedures" means, with respect to any transfer
          ---------------------------------
or transaction involving a Book-Entry Capital Security, the rules and procedures
of the  Depositary for such  Book-Entry  Capital  Security,  in each case to the
extent applicable to such transaction and as in effect from time to time.

         "Authorized Officer" of a Person means any Person that is authorized to
          ------------------
bind such Person.

         "Bankruptcy Event" means, with respect to any Person:
          ----------------

         (a)      a  court  having  jurisdiction  in  the premises shall enter a
decree or order for  relief in  respect of such  Person in an  involuntary  case
under  any  applicable  bankruptcy,  insolvency  or  other  similar  law  now or
hereafter in effect, or appointing a receiver, liquidator,  assignee, custodian,
trustee,   sequestrator  (or  similar  official)  of  such  Person  or  for  any
substantial  part of its property,  or ordering the winding-up or liquidation of
its affairs and such decree or order shall  remain  unstayed and in effect for a
period of 90 consecutive days; or

         (b)      such  Person  shall  commence  a  voluntary   case  under  any
applicable  bankruptcy,  insolvency  or other  similar law now or  hereafter  in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking  possession
by a receiver, liquidator, assignee, trustee, custodian,  sequestrator (or other
similar  official) of such Person of any  substantial  part of its property,  or
shall make any general  assignment  for the benefit of creditors,  or shall fail
generally to pay its debts as they become due.

         "Book-Entry Capital Securities" means a Capital Security, the ownership
          -----------------------------
and transfer of which shall be made through book entries by a Depositary.

         "Business Day" means any day other than  Saturday,  Sunday or any other
          ------------
day on which banking  institutions in New York City or Wilmington,  Delaware are
permitted or required by any applicable law or executive order to close.

         "Capital  Securities"  has the meaning set forth in  paragraph  1(a) of
          -------------------
Annex I.

         "Capital Security Certificate" means a definitive  Certificate in fully
          ----------------------------
registered form  representing a Capital  Security  substantially  in the form of
Exhibit A-1.

         "Capital  Treatment  Event" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Certificate" means any certificate evidencing Securities.
          -----------

         "Closing Date" has the meaning set forth in the Placement Agreement.
          ------------
<PAGE>

         "Code" means the Internal Revenue Code of 1986, as amended from time to
          ----
time, or any successor legislation.

         "Common Securities"  has  the  meaning  set  forth in paragraph 1(b) of
          -----------------
Annex I.

         "Common Security Certificate" means  a  definitive Certificate in fully
          ---------------------------
registered  form  representing  a  Common  Security substantially in the form of
Exhibit A-2.

         "Company  Indemnified  Person"  means  (a) any  Administrator;  (b) any
          ----------------------------
Affiliate  of any  Administrator;  (c) any  officers,  directors,  shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.

         "Corporate Trust Office" means the office of the Institutional  Trustee
          ----------------------
at which the corporate trust business of the Institutional Trustee shall, at any
particular  time,  be  principally  administered,  which  office  at the date of
execution of this  Declaration  is located at Rodney  Square  North,  1100 North
Market  Street,   Wilmington,   Delaware   19890-1600,   Attn:  Corporate  Trust
Administration.

         "Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
          -----------

         "Covered  Person"  means:  (a) any  Administrator,  officer,  director,
          ---------------
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.

         "Creditor" has the meaning set forth in Section 3.3.
          --------

         "Debenture  Issuer" means First Banks, Inc., a Missouri corporation, in
          -----------------
its capacity as issuer of the Debentures  under the Indenture.

         "Debenture  Trustee" means Wilmington  Trust Company,  as trustee under
          ------------------
the Indenture until a successor is appointed  thereunder,  and thereafter  means
such successor trustee.

         "Debentures"  means the Floating  Rate Junior  Subordinated  Deferrable
          ----------
Interest  Debentures  due 2034 to be issued by the  Debenture  Issuer  under the
Indenture.

         "Defaulted Interest" has the meaning set forth in the Indenture.
          ------------------

         "Definitive  Capital Securities  Certificates" means Capital Securities
          --------------------------------------------
issued  in  certificated,  fully  registered  form that are not  Global  Capital
Securities.

         "Depositary"  means an  organization  registered  as a clearing  agency
          ----------
under the Exchange Act that is designated as Depositary by the Administrators or
any successor thereto. DTC will be the initial Depositary.

         "Depositary  Participant" means a broker, dealer, bank, other financial
          -----------------------
institution  or other Person for whom from time to time the  Depositary  effects
book-entry transfers and pledges of securities deposited with the Depositary.

         "Delaware Trustee" has the meaning set forth in Section 4.2.
          ----------------

         "Determination  Date" has the  meaning set forth in  paragraph  4(a) of
          -------------------
Annex I.

         "Direct Action" has the meaning set forth in Section 2.8(d).
          -------------
<PAGE>

         "Distribution" means a distribution payable to Holders of Securities in
          ------------
accordance with Section 5.1.

         "Distribution Payment Date" has the meaning set forth in paragraph 2(b)
          -------------------------
of Annex I.

         "Distribution  Period" means (i) with respect to the Distribution  paid
          --------------------
on the first Distribution  Payment Date, the period beginning on (and including)
the date of original  issuance and ending on (but  excluding)  the  Distribution
Payment Date in March 2005 and (ii)  thereafter,  with respect to a Distribution
paid on each successive  Distribution Payment Date, the period beginning on (and
including) the preceding Distribution Payment Date and ending on (but excluding)
such current Distribution Payment Date.

         "Distribution  Rate" means,  for the  Distribution  Period beginning on
          ------------------
(and including) the date of original  issuance and ending on (but excluding) the
Distribution  Payment Date in March 2005,  the rate per annum of 4.54%,  and for
each Distribution Period beginning on or after the Distribution  Payment Date in
March 2005, the Coupon Rate for such Distribution Period.

         "DTC" means The Depository Trust Company or any successor thereto.
          ---

         "Event of Default" means any one of the following  events (whatever the
          ----------------
reason for such event and whether it shall be  voluntary  or  involuntary  or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order,  rule or regulation of any  administrative  or  governmental
body):

         (a)      the occurrence of an Indenture Event of Default; or

         (b)      default by the Trust in the payment of any Redemption Price or
Special Redemption Price of any Security when it becomes due and payable; or

         (c)      default   in   the   performance,  or  breach, in any material
respect,  of any  covenant  or  warranty  of the  Institutional  Trustee in this
Declaration  (other  than  those  specified  in  clause  (a) or (b)  above)  and
continuation  of such  default or breach for a period of 60 days after there has
been given, by registered or certified mail to the Institutional  Trustee and to
the Sponsor by the Holders of at least 25% in  aggregate  liquidation  amount of
the outstanding Capital Securities,  a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or

         (d)      the  occurrence of  a  Bankruptcy  Event with  respect to  the
Institutional  Trustee  if  a  successor  Institutional  Trustee  has  not  been
appointed within 90 days thereof.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
          -------------
from time to time, or any successor legislation.

         "Extension  Event  of  Default"  has  the  meaning  set  forth  in  the
          -----------------------------
Indenture.

         "Extension Period" has the meaning set forth in paragraph 2(b) of Annex
          ----------------
I.

         "Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.
          ---------------

         "Fiduciary  Indemnified  Person"  shall mean each of the  Institutional
          ------------------------------
Trustee (including in its individual capacity),  the Delaware Trustee (including
in its  individual  capacity),  any  Affiliate of the  Institutional  Trustee or
Delaware Trustee and any officers, directors,  shareholders,  members, partners,
employees, representatives,  custodians, nominees or agents of the Institutional
Trustee or Delaware Trustee.
<PAGE>

         "Fiscal Year" has the meaning set forth in Section 10.1.
          -----------

         "Global  Capital  Security"  means  a  Capital  Securities  Certificate
          -------------------------
evidencing ownership of Book-Entry Capital Securities.

         "Guarantee" means the guarantee agreement to be dated as of the Closing
          ---------
Date, of the Sponsor in respect of the Capital Securities.

         "Holder"  means a Person in whose  name a  Certificate  representing  a
          ------
Security is registered,  such Person being a beneficial owner within the meaning
of the Statutory Trust Act.

         "Indemnified Person" means  a Company Indemnified Person or a Fiduciary
          ------------------
Indemnified Person.

         "Indenture"  means the Indenture dated as of the Closing Date,  between
          ---------
the Debenture Issuer and the Debenture Trustee,  and any indenture  supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental  indenture may be amended,  supplemented or otherwise  modified
from time to time.

         "Indenture  Event of Default" means an "Event of Default" as defined in
          ---------------------------
the Indenture.

         "Institutional  Trustee"  means the  Trustee  meeting  the  eligibility
          ----------------------
requirements set forth in Section 4.3.

         "Interest"  means any  interest  due on the  Debentures  including  any
          --------
Additional Interest and Defaulted Interest.

         "Investment  Company"  means an  investment  company  as defined in the
          -------------------
Investment Company Act.

         "Investment  Company Act" means the Investment  Company Act of 1940, as
          -----------------------
amended from time to time, or any successor legislation.

         "Investment  Company Event" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Liquidation" has the meaning set forth in paragraph 3 of Annex I.
          -----------

         "Liquidation  Distribution" has the meaning set forth in paragraph 3 of
          -------------------------
Annex I.

         "Majority in liquidation  amount of the Securities"  means Holder(s) of
          -------------------------------------------------
outstanding  Securities voting together as a single class or, as the context may
require,  Holders of  outstanding  Capital  Securities or Holders of outstanding
Common  Securities  voting  separately as a class,  who are the record owners of
more than 50% of the aggregate  liquidation  amount (including the stated amount
that would be paid on  redemption,  liquidation  or otherwise,  plus accrued and
unpaid  Distributions  to  the  date  upon  which  the  voting  percentages  are
determined) of all outstanding Securities of the relevant class.

         "Maturity Date" has the meaning set forth in paragraph 4(a) of Annex I.
          -------------

         "Officers'  Certificates"  means,  with   respect  to   any  Person,  a
          -----------------------
certificate  signed by two  Authorized  Officers of such Person.  Any  Officers'
Certificate  delivered  with respect to compliance  with a condition or covenant
providing for it in this Declaration shall include:
<PAGE>

         (a)      a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;

         (b       a brief statement of the nature  and scope of  the examination
or investigation undertaken by each officer in rendering the Certificate;

         (c)      a  statement  that each such officer has made such examination
or investigation  as, in  such  officer's  opinion,  is necessary to enable such
officer to express an informed  opinion  as  to  whether or not such covenant or
condition has been complied with; and

         (d)      a  statement  as  to  whether,  in  the  opinion  of each such
officer, such condition or covenant has been complied with.

         "OTS" has the meaning set forth in paragraph 3 of Annex I.
          ---

         "Owner"  means each Person who is the  beneficial  owner of  Book-Entry
          -----
Capital  Securities  as  reflected  in the  records of the  Depositary  or, if a
Depositary Participant is not the beneficial owner, then the beneficial owner as
reflected in the records of the Depositary Participant.

         "Paying Agent" has the meaning specified in Section 6.2.
          ------------

         "Person" means  a  legal person, including any individual, corporation,
          ------
estate, partnership,  joint venture,  association,  joint stock company, limited
liability  company,  trust,  unincorporated  association,  or  government or any
agency or political subdivision thereof, or any other entity of whatever nature.

         "Placement Agreement" means  the  Placement  Agreement relating  to the
          -------------------

offering and sale of Capital Securities in the form of Exhibit C.

         "Property Account" has the meaning set forth in Section 2.8(c).
          ----------------

         "Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
          --------

         "QIB" means a "qualified institutional buyer" as  defined  in Rule 144A
          ---
under the Securities Act.

         "Quorum" means a majority of the  Administrators  or, if there are only
          ------
two Administrators, both of them.

         "Redemption  Date" has the meaning set forth in paragraph 4(a) of Annex
          ----------------
I.

         "Redemption/Distribution Notice" has the meaning set forth in paragraph
          ------------------------------
4(e) of Annex I.

         "Redemption Price" has the meaning set forth in paragraph 4(a) of Annex
          ----------------
I.

         "Registrar" has the meaning set forth in Section 6.2.
          ---------

         "Relevant Trustee" has the meaning set forth in Section 4.5(a).
          ----------------

         "Responsible Officer" means, with respect to the Institutional Trustee,
          -------------------
any officer  within the  Corporate  Trust Office of the  Institutional  Trustee,
including  any  vice-president,  any  assistant  vice-president,  any  assistant
secretary,  the treasurer,  any assistant treasurer,  any trust officer or other
officer of the Corporate Trust Office of the Institutional  Trustee  customarily
performing  functions  similar to those performed by any of the above designated
officers and also means,  with respect to a particular  corporate  trust matter,
any other  officer to whom such  matter is  referred  because of that  officer's
knowledge of and familiarity with the particular subject.
<PAGE>

         "Restricted  Securities  Legend"  has the  meaning set forth in Section
          ------------------------------
8.2(b).

         "Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
          ---------

         "Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
          ---------

         "Securities" means the Common Securities and the Capital Securities.
          ----------

         "Securities Act" means the Securities Act of 1933, as amended from time
          --------------
to time, or any successor legislation.

         "Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
          -------------

         "Special  Redemption  Date" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Special  Redemption Price" has the meaning set forth in paragraph 4(a)
          -------------------------
of Annex I.

         "Sponsor"  means First  Banks,  Inc.,  a Missouri  corporation,  or any
          -------
successor entity in a merger, consolidation or amalgamation,  in its capacity as
sponsor of the Trust.

         "Statutory  Trust Act"  means  Chapter  38  of Title 12 of the Delaware
          --------------------
Code, 12 Del. C. ss.ss. 3801, et seq. as may be amended from time to time.

         "Successor Entity" has the meaning set forth in Section 2.15(b).
          ----------------

         "Successor  Delaware  Trustee"  has the  meaning  set forth in  Section
          ----------------------------
4.5(e).

         "Successor Institutional Trustee" has the meaning set forth  in Section
          -------------------------------
4.5(b).

         "Successor Securities" has the meaning set forth in Section 2.15(b).
          --------------------

         "Super Majority" has  the  meaning set forth in paragraph 5(b) of Annex
          --------------
I.

         "Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
          ---------

         "10% in  liquidation  amount  of the  Securities"  means  Holder(s)  of
          -----------------------------------------------
outstanding  Securities voting together as a single class or, as the context may
require,  Holders of  outstanding  Capital  Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate  liquidation  amount  (including the stated amount that
would be paid on redemption,  liquidation or otherwise,  plus accrued and unpaid
Distributions  to the date upon which the voting  percentages are determined) of
all outstanding Securities of the relevant class.

         "3-Month LIBOR" has the meaning set forth in paragraph 4(a) of Annex I.
          -------------

         "Transfer Agent" has the meaning set forth in Section 6.2.
          --------------

         "Treasury  Regulations"  means the  income tax  regulations,  including
          ---------------------
temporary  and proposed  regulations,  promulgated  under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
<PAGE>

         "Trust Property" means (a) the Debentures,  (b) any cash on deposit in,
          --------------
or owing to, the Property  Account and (c) all proceeds and rights in respect of
the  foregoing  and any other  property  and  assets  for the time being held or
deemed to be held by the  Institutional  Trustee  pursuant to the trusts of this
Declaration.

         "Trustee"  or  "Trustees"   means  each  Person  who  has  signed  this
          -------        --------
Declaration  as a trustee,  so long as such Person  shall  continue in office in
accordance  with the terms  hereof,  and all other  Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions  hereof,  and  references  herein to a Trustee or the Trustees  shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

         "U.S.  Person"  means a United  States  Person as  defined  in  Section
          ------------
7701(a)(30) of the Code.

                                   ARTICLE II

                                  ORGANIZATION

         Section 2.1.    Name.  The  Trust  is named "First Bank Statutory Trust
                         ----
III,"  as such  name may be  modified  from  time to time by the  Administrators
following  written  notice  to  the  Holders  of  the  Securities.  The  Trust's
activities may be conducted under the name of the Trust or any other name deemed
advisable by the Administrators.

         Section 2.2.    Office. The  address  of  the  principal  office of the
                         ------
Trust is c/o Wilmington  Trust Company,  Rodney Square North,  1100 North Market
Street,  Wilmington,  Delaware 19890-1600.  On at least 10 Business Days written
notice to the  Holders  of the  Securities,  the  Administrators  may  designate
another principal  office,  which shall be in a state of the United States or in
the District of Columbia.

         Section 2.3.    Purpose.  The  exclusive  purposes and functions of the
                         -------
Trust are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the  Debentures,  (c) to  facilitate  direct  investment  in the
assets of the Trust through  issuance of the Common  Securities  and the Capital
Securities and (d) except as otherwise  limited herein,  to engage in only those
other  activities  necessary or incidental  thereto.  The Trust shall not borrow
money,  issue debt or reinvest proceeds derived from investments,  pledge any of
its assets,  or otherwise  undertake (or permit to be  undertaken)  any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.

         Section 2.4.    Authority. Except  as  specifically  provided  in  this
                         ---------
Declaration,  the  Institutional  Trustee  shall  have  exclusive  and  complete
authority to carry out the  purposes of the Trust.  An action taken by a Trustee
in accordance with its powers shall  constitute the act of and serve to bind the
Trust.  In dealing  with the Trustees  acting on behalf of the Trust,  no Person
shall be  required to inquire  into the  authority  of the  Trustees to bind the
Trust.  Persons dealing with the Trust are entitled to rely  conclusively on the
power  and  authority  of the  Trustees  as set forth in this  Declaration.  The
Administrators  shall have only those  ministerial  duties set forth herein with
respect to  accomplishing  the  purposes of the Trust and are not intended to be
trustees  or  fiduciaries  with  respect  to  the  Trust  or  the  Holders.  The
Institutional Trustee shall have the right, but shall not be obligated except as
provided in Section 2.6, to perform those duties assigned to the Administrators.

         Section 2.5.    Title  to  Property of the Trust. Except as provided in
                         --------------------------------
Section  2.8 with  respect  to the  Debentures  and the  Property  Account or as
otherwise  provided in this Declaration,  legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided  beneficial  interest in
the assets of the Trust.
<PAGE>

         Section  2.6.   Powers    and   Duties   of   the   Trustees   and  the
                         -------------------------------------------------------
Administrators.
--------------

         (a)      The Trustees and  the Administrators shall conduct the affairs
of the Trust in accordance  with the terms of this  Declaration.  Subject to the
limitations  set forth in paragraph (b) of this Section,  and in accordance with
the following provisions (i) and (ii), the Trustees and the Administrators shall
have the authority to enter into all transactions  and agreements  determined by
the Institutional Trustee to be appropriate in exercising the authority, express
or implied, otherwise granted to the Trustees or the Administrators, as the case
may be, under this Declaration,  and to perform all acts in furtherance thereof,
including without limitation, the following:

                  (i)    Each Administrator shall have the  power  and authority
                  to  act  on behalf of the Trust with respect to  the following
                  matters:

                         (A)  the issuance and sale of the Securities;

                         (B)  to cause the Trust to enter  into, and to  execute
                  and deliver on  behalf  of  the Trust, such  agreements as may
                  be  necessary  or desirable in  connection  with  the purposes
                  and  function of  the  Trust, including  agreements  with  the
                  Paying Agent;

                         (C)  ensuring   compliance  with  the  Securities  Act,
                  applicable state securities or blue sky laws;

                         (D)  the  sending  of   notices  (other   than  notices
                  of default),  and other information  regarding  the Securities
                  and the Debentures to the  Holders  in  accordance  with  this
                  Declaration;

                         (E)  the consent to the appointment of a Paying  Agent,
                  Transfer   Agent   and   Registrar  in  accordance  with  this
                  Declaration,  which consent shall not be unreasonably withheld
                  or delayed;

                         (F)  execution  and   delivery  of  the  Securities  in
                  accordance with this Declaration;

                         (G)  execution  and  delivery  of  closing certificates
                  pursuant to the Placement Agreement and the application  for a
                  taxpayer identification number;

                         (H)  unless otherwise determined  by the  Holders of  a
                  Majority  in  liquidation  amount  of  the  Securities  or  as
                  otherwise required by the  Statutory  Trust Act, to execute on
                  behalf of the Trust  (either  acting  alone or  together  with
                  any  or  all of  the  Administrators)  any documents  that the
                  Administrators   have  the  power  to execute pursuant to this
                  Declaration;

                         (I)  the   taking  of  any  action  incidental  to  the
                  foregoing as the Institutional Trustee  may from  time to time
                  determine is necessary or  advisable  to  give  effect  to the
                  terms  of  this  Declaration  for  the  benefit of the Holders
                  (without consideration of the effect of any such action on any
                  particular Holder);

                         (J)  to  establish  a  record  date with respect to all
                  actions  to  be taken  hereunder that require a record date be
                  established,   including    Distributions,    voting   rights,
                  redemptions and exchanges, and to issue  relevant  notices  to
                  the  Holders  of  Capital  Securities  and  Holders  of Common
                  Securities as to such actions and applicable record dates; and
<PAGE>

                         (K)  to  duly  prepare  and  file  all  applicable  tax
                  returns  and  tax information reports  that are required to be
                  filed with respect to the Trust on behalf of the Trust.

                  (ii)   As  among  the  Trustees  and  the  Administrators, the
         Institutional Trustee  shall  have the power, duty and authority to act
         on behalf of the Trust with respect to the following matters:

                         (A)  the establishment of the Property Account;

                         (B)  the receipt of the Debentures;

                         (C)  the  collection  of  interest,  principal and  any
                  other  payments  made  in  respect of  the  Debentures in  the
                  Property Account;

                         (D)  the  distribution  through  the  Paying  Agent  of
                  amounts owed to the Holders in respect of the Securities;

                         (E)  the exercise of all of  the  rights,   powers  and
                  privileges of a holder of the Debentures;

                         (F)  the   sending  of  notices of  default  and  other
                  information regarding the Securities and the Debentures to the
                  Holders in accordance with this Declaration;

                         (G)  the   distribution  of    the  Trust  Property  in
                  accordance with the terms of this Declaration;

                         (H)  to  the  extent  provided in this Declaration, the
                  winding up of  the affairs of  and liquidation  of  the  Trust
                  and the preparation, execution and filing of  the  certificate
                  of  cancellation  with  the Secretary of State of the State of
                  Delaware;

                         (I)  after  any  Event of  Default (provided  that such
                  Event   of   Default   is  not  by  or  with  respect  to  the
                  Institutional  Trustee) the  taking of any  action  incidental
                  to the foregoing as the Institutional Trustee may from time to
                  time determine is necessary or advisable to give effect to the
                  terms of this Declaration and protect and  conserve  the Trust
                  Property for the benefit of the Holders (without consideration
                  of  the  effect of  any such action on any particular Holder);
                  and

                         (J)  to take all action that  may be  necessary for the
                  preservation  and   the  continuation  of  the  Trust's  valid
                  existence,  rights,  franchises  and privileges as a statutory
                  trust under the laws of the State of Delaware.

                  (iii)  The  Institutional  Trustee  shall  have  the power and
         authority to act on behalf of the Trust  with  respect to  any  of  the
         duties,  liabilities, powers  or the  authority  of the  Administrators
         set  forth in  Section   2.6(a)(i)(D), (E) and (F) herein but shall not
         have a duty to do  any such  act unless specifically requested to do so
         in writing by the Sponsor, and  shall then be fully protected in acting
         pursuant  to  such  written  request;  and  in  the event of a conflict
         between  the  action  of  the  Administrators and  the  action  of  the
         Institutional Trustee, the  action  of  the Institutional Trustee shall
         prevail.

         (b)      So long as this  Declaration remains in effect,  the Trust (or
the  Trustees  or  Administrators  acting  on  behalf  of the  Trust)  shall not
undertake any business,  activities or transaction  except as expressly provided
herein or  contemplated  hereby.  In  particular,  neither the  Trustees nor the

<PAGE>

Administrators  may cause the Trust to (i) acquire any  investments or engage in
any activities not authorized by this Declaration,  (ii) sell, assign, transfer,
exchange,  mortgage,  pledge,  set-off or otherwise  dispose of any of the Trust
Property  or  interests  therein,  including  to  Holders,  except as  expressly
provided herein,  (iii) take any action that would reasonably be expected (x) to
cause the Trust to fail or cease to  qualify  as a  "grantor  trust"  for United
States federal income tax purposes or (y) to require the trust to register as an
Investment Company under the Investment Company Act, (iv) incur any indebtedness
for borrowed  money or issue any other debt or (v) take or consent to any action
that would result in the placement of a lien on any of the Trust  Property.  The
Institutional  Trustee shall, at the sole cost and expense of the Trust,  defend
all claims and  demands of all Persons at any time  claiming  any lien on any of
the Trust Property  adverse to the interest of the Trust or the Holders in their
capacity as Holders.

         (c)      In  connection  with  the  issuance  and  sale  of the Capital
Securities,  the Sponsor shall have the right and  responsibility  to assist the
Trust with respect to, or effect on behalf of the Trust,  the following (and any
actions taken by the Sponsor in furtherance  of the following  prior to the date
of this Declaration are hereby ratified and confirmed in all respects):

                  (i)    the  taking  of  any  action  necessary  to  obtain  an
         exemption from the Securities Act;

                  (ii)   the  determination  of  the  States  in  which  to take
         appropriate action to qualify or register for  sale  all or part of the
         Capital   Securities  and the  determination  of any and all such acts,
         other  than  actions  which must be taken by or on behalf of the Trust,
         and  the  advice  to  the  Administrators  of actions they must take on
         behalf of the Trust, and the  preparation for  execution  and filing of
         any documents to be executed and filed by the Trust or on behalf of the
         Trust, as the Sponsor  deems  necessary or advisable in order to comply
         with the applicable laws of any such States in connection with the sale
         of the Capital Securities;

                  (iii)  the negotiation of the terms of, and the execution  and
         delivery  of,  the  Placement  Agreement providing for the  sale of the
         Capital Securities; and

                  (iv)   the   taking   of   any   other  actions  necessary  or
         desirable to carry out any of the foregoing activities.

         (d)      Notwithstanding   anything   herein   to   the  contrary,  the
Administrators and the Holders of a Majority in liquidation amount of the Common
Securities  are  authorized and directed to conduct the affairs of the Trust and
to  operate  the  Trust  so that  the  Trust  will  not (i) be  deemed  to be an
Investment  Company required to be registered under the Investment  Company Act,
and (ii) fail to be  classified as a "grantor  trust" for United States  federal
income tax  purposes.  The  Administrators  and the  Holders  of a  Majority  in
liquidation   amount  of  the  Common  Securities  shall  not  take  any  action
inconsistent  with  the  treatment  of the  Debentures  as  indebtedness  of the
Debenture  Issuer  for  United  States  federal  income  tax  purposes.  In this
connection,  the  Administrators  and the Holders of a Majority  in  liquidation
amount  of the  Common  Securities  are  authorized  to  take  any  action,  not
inconsistent with applicable laws, the Certificate of Trust or this Declaration,
as amended from time to time, that each of the Administrators and the Holders of
a Majority in liquidation  amount of the Common  Securities  determines in their
discretion to be necessary or desirable for such purposes.

         (e)      All expenses incurred by the Administrators  or  the  Trustees
pursuant  to this  Section  2.6  shall be  reimbursed  by the  Sponsor,  and the
Trustees and the  Administrators  shall have no obligations with respect to such
expenses  (for  purposes  of   clarification,   this  Section  2.6(e)  does  not
contemplate  the payment by the Sponsor of acceptance  or annual  administration
fees owing to the Trustees  under this  Declaration  or the fees and expenses of
the  Trustees'  counsel  in  connection  with the  closing  of the  transactions
contemplated by this Declaration).
<PAGE>

         (f)      The assets of the Trust shall consist of the Trust Property.

         (g)      Legal title to all Trust Property shall be vested at all times
in the Institutional Trustee (in its  capacity  as such)  and  shall be held and
administered by the Institutional Trustee and the Administrators for the benefit
of the Trust in accordance with this Declaration.

         (h)      If the Institutional Trustee or any Holder has instituted  any
proceeding  to  enforce  any right or remedy  under  this  Declaration  and such
proceeding  has been  discontinued  or  abandoned  for any  reason,  or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor,  the  Institutional  Trustee and the Holders shall,
subject to any  determination  in such  proceeding,  be restored  severally  and
respectively to their former positions hereunder,  and thereafter all rights and
remedies of the  Institutional  Trustee and the Holders shall continue as though
no such proceeding had been instituted.

         Section 2.7.    Prohibition   of   Actions   by   the   Trust  and  the
                         -------------------------------------------------------
Institutional Trustee.
---------------------

         (a)      The Trust shall not, and the Institutional Trustee shall cause
the Trust not to, engage in any activity other than as required or authorized by
this  Declaration.  In  particular,  the Trust  shall not and the  Institutional
Trustee shall cause the Trust not to:

                  (i)    invest any proceeds received by the Trust from  holding
         the  Debentures, but shall distribute all such  proceeds  to Holders of
         the Securities pursuant to the terms of this  Declaration  and  of  the
         Securities;

                  (ii)   acquire  any  assets  other  than as expressly provided
         herein;

                  (iii)  possess Trust Property for other than a Trust purpose;

                  (iv)   make  any loans or incur any  indebtedness  other  than
         loans represented by the Debentures;

                  (v)    possess any power or otherwise  act in such a way as to
         vary  the  Trust  assets  or  the  terms of the  Securities  in any way
         whatsoever other than as expressly provided herein;

                  (vi)   issue any securities or other evidences  of  beneficial
         ownership of, or  beneficial  interest  in,  the Trust  other  than the
         Securities;

                  (vii)  carry on any "trade or business" as that phrase is used
         in the Code; or

                  (viii) other  than as provided in  this Declaration (including
         Annex I),  (A) direct the  time,  method  and place of  exercising  any
         trust or power conferred upon the Debenture Trustee with respect to the
         Debentures,  (B) waive any past  default  that is  waivable  under  the
         Indenture, (C)  exercise any right to rescind or annul any  declaration
         that the principal of all the Debentures shall be due  and  payable, or
         (D)  consent  to  any  amendment,  modification  or  termination of the
         Indenture or the Debentures where such consent shall be required unless
         the Trust  shall  have  received  a  written  opinion of counsel to the
         effect that such modification will not  cause the  Trust to cease to be
         classified  as a "grantor trust" for  United  States federal income tax
         purposes.
<PAGE>

         Section 2.8.    Powers and Duties of the Institutional Trustee.
                         ----------------------------------------------

         (a)      The legal title to the  Debentures  shall be owned by and held
of record in the name of the  Institutional  Trustee in trust for the benefit of
the Trust and the Holders of the  Securities.  The right,  title and interest of
the  Institutional  Trustee to the Debentures  shall vest  automatically in each
Person who may  hereafter be appointed as  Institutional  Trustee in  accordance
with Section 4.5. Such vesting and cessation of title shall be effective whether
or not  conveyancing  documents with regard to the Debentures have been executed
and delivered.

         (b)      The Institutional Trustee shall not transfer its right,  title
and interest in the Debentures to the Administrators or to the Delaware Trustee.

         (c)      The Institutional Trustee shall:

                  (i)    establish   and   maintain  a  segregated  non-interest
         bearing trust account (the "Property Account") in the name of and under
                                     ----------------
         the exclusive  control of the Institutional Trustee, and  maintained in
         the Institutional Trustee's trust department,  on behalf of the Holders
         of the Securities and, upon the receipt of  payments  of funds  made in
         respect of  the  Debentures held  by the Institutional Trustee, deposit
         such funds into the Property  Account and make  payments,  or cause the
         Paying Agent to make payments, to the Holders of the Capital Securities
         and Holders of  the Common  Securities  from  the  Property  Account in
         accordance with Section 5.1. Funds in the  Property  Account  shall  be
         held  uninvested  until disbursed in accordance with this Declaration;

                  (ii)   engage in  such  ministerial  activities  as  shall  be
         necessary  or  appropriate  to  effect  the  redemption  of the Capital
         Securities and the  Common  Securities to the extent the Debentures are
         redeemed or mature; and

                  (iii)  upon written  notice of  distribution   issued  by  the
         Administrators  in  accordance with the terms of the Securities, engage
         in such ministerial activities as shall be necessary or appropriate  to
         effect the distribution of the Debentures to Holders of Securities upon
         the occurrence of certain  circumstances  pursuant  to the terms of the
         Securities.

         (d)      The Institutional Trustee may  bring or defend, pay,  collect,
compromise,  arbitrate,  resort to legal  action with  respect to, or  otherwise
adjust  claims or demands of or  against,  the Trust  which  arises out of or in
connection  with an  Event of  Default  of which a  Responsible  Officer  of the
Institutional  Trustee has actual  knowledge or arises out of the  Institutional
Trustee's duties and obligations under this Declaration; provided, however, that
                                                         --------  -------
if an Event  of  Default  has  occurred  and is  continuing  and  such  event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the  Debentures on the date such  interest or principal is otherwise  payable
(or in the case of  redemption,  on the redemption  date),  then a Holder of the
Capital  Securities  may directly  institute a  proceeding  for  enforcement  of
payment to such Holder of the principal of or interest on the Debentures  having
a principal  amount  equal to the  aggregate  liquidation  amount of the Capital
Securities  of such Holder (a "Direct  Action") on or after the  respective  due
                               --------------
date specified in the  Debentures.  In connection  with such Direct Action,  the
rights of the Holders of the Common  Securities will be subrogated to the rights
of such Holder of the Capital  Securities  to the extent of any payment  made by
the  Debenture  Issuer to such Holder of the Capital  Securities  in such Direct
Action; provided,  however, that no Holder of the Common Securities may exercise
        --------   -------
such right of  subrogation  so long as an Event of Default  with  respect to the
Capital Securities has occurred and is continuing.

         (e)      The Institutional Trustee shall continue to serve as a Trustee
until either:
<PAGE>

                  (i)    the  Trust  has  been  completely  liquidated  and  the
         proceeds   of  the  liquidation  distributed  to  the  Holders  of  the
         Securities   pursuant   to   the  terms  of  the  Securities  and  this
         Declaration; or

                  (ii)   a  Successor  Institutional Trustee  has been appointed
         and has accepted that appointment in accordance with Section 4.5.

         (f)      The  Institutional  Trustee  shall  have  the  legal  power to
exercise all of the rights,  powers and privileges of a Holder of the Debentures
under the Indenture and, if an Event of Default  occurs and is  continuing,  the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the  Debentures  subject  to the  rights of the  Holders
pursuant  to  this  Declaration  (including  Annex  I)  and  the  terms  of  the
Securities.

         The  Institutional  Trustee must  exercise the powers set forth in this
Section 2.8 in a manner that is  consistent  with the purposes and  functions of
the Trust set out in Section 2.3, and the  Institutional  Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 2.3.

         Section 2.9.    Certain Duties and Responsibilities of the Trustees and
                         -------------------------------------------------------
 Administrators.
----------------

         (a)      The Institutional Trustee,  before the occurrence of any Event
of Default  and after the curing or waiving of all such  Events of Default  that
may  have  occurred,  shall  undertake  to  perform  only  such  duties  as  are
specifically  set forth in this  Declaration  and no implied  covenants shall be
read into this Declaration  against the Institutional  Trustee. In case an Event
of Default has occurred  (that has not been cured or waived  pursuant to Section
6.9),  the  Institutional  Trustee shall  exercise such of the rights and powers
vested in it by this  Declaration,  and use the same degree of care and skill in
their   exercise,   as  a  prudent  person  would  exercise  or  use  under  the
circumstances in the conduct of his or her own affairs.

         (b)      The duties and  responsibilities  of  the   Trustees  and  the
Administrators  shall be as provided by this  Declaration.  Notwithstanding  the
foregoing,  no  provision  of this  Declaration  shall  require  any  Trustee or
Administrator to expend or risk their own funds or otherwise incur any financial
liability  in the  performance  of  any of  their  duties  hereunder,  or in the
exercise of any of their rights or powers if it shall have reasonable grounds to
believe that repayment of such funds or adequate protection against such risk of
liability is not reasonably  assured to it. Whether or not therein  expressly so
provided,  every  provision  of this  Declaration  relating  to the  conduct  or
affecting  the  liability  of  or  affording   protection  to  the  Trustees  or
Administrators  shall be subject to the  provisions of this Article.  Nothing in
this  Declaration  shall be construed to relieve an  Administrator  or a Trustee
from liability for its own negligent  act, its own negligent  failure to act, or
its own willful  misconduct.  To the extent that, at law or in equity, a Trustee
or an Administrator  has duties and liabilities  relating to the Trust or to the
Holders,  such Trustee or such Administrator shall not be liable to the Trust or
to any Holder for such Trustee's or such  Administrator's good faith reliance on
the provisions of this Declaration.  The provisions of this Declaration,  to the
extent that they restrict the duties and  liabilities of the  Administrators  or
the Trustee  otherwise  existing at law or in equity,  are agreed by the Sponsor
and  the  Holders  to  replace  such  other  duties  and   liabilities   of  the
Administrators or the Trustees.

         (c)      All  payments  made  by  the Institutional Trustee or a Paying
Agent in  respect  of the  Securities  shall be made only from the  revenue  and
proceeds  from the Trust  Property  and only to the extent  that there  shall be
sufficient   revenue  or  proceeds  from  the  Trust   Property  to  enable  the
Institutional  Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Holder, by its acceptance of a Security,  agrees that it will
look solely to the revenue and  proceeds  from the Trust  Property to the extent
legally  available  for  distribution  to it as  herein  provided  and  that the
Trustees and the  Administrators  are not personally liable to it for any amount
distributable  in respect of any Security or for any other  liability in respect
of any  Security.  This  Section  2.9(c)  does not  limit the  liability  of the
Trustees expressly set forth elsewhere in this Declaration.
<PAGE>

         (d)      The Institutional Trustee shall not be liable for its own acts
or omissions  hereunder except as a result of its own negligent action,  its own
negligent failure to act, or its own willful misconduct, except that:

                  (i)    the Institutional Trustee  shall  not be liable for any
         error  of  judgment  made in good faith by an Authorized Officer of the
         Institutional Trustee, unless it shall be proved that the Institutional
         Trustee was negligent in ascertaining the pertinent facts;

                  (ii)   the Institutional Trustee  shall  not  be  liable  with
         respect to  any action taken or omitted to be taken by it in good faith
         in accordance with  the  direction  of the  Holders  of not  less  than
         a  Majority  in  liquidation  amount  of  the Capital Securities or the
         Common Securities,  as  applicable,  relating  to the time,  method and
         place  of  conducting  any proceeding  for any remedy  available to the
         Institutional Trustee, or exercising any trust or power  conferred upon
         the  Institutional Trustee under this Declaration;

                  (iii)  the Institutional  Trustee's  sole duty with respect to
         the  custody,  safekeeping  and physical preservation of the Debentures
         and  the  Property  Account  shall  be  to deal with such property in a
         similar  manner  as  the  Institutional  Trustee  deals   with  similar
         property   for  its  fiduciary  accounts  generally,   subject  to  the
         protections   and   limitations   on   liability    afforded   to   the
         Institutional Trustee under this Declaration;

                  (iv)   the  Institutional Trustee shall not be liable  for any
         interest on any money received by it except as it  may otherwise  agree
         in  writing  with  the  Sponsor;  and  money held by the  Institutional
         Trustee   need not be segregated  from other funds held by it except in
         relation  to  the  Property  Account  maintained  by  the Institutional
         Trustee   pursuant  to  Section 2.8(c)(i)  and  except  to  the  extent
         otherwise required by law; and

                  (v)    the Institutional Trustee shall not be responsible  for
         monitoring  the  compliance  by  the Administrators or the Sponsor with
         their  respective   duties  under  this  Declaration,   nor  shall  the
         Institutional  Trustee  be  liable for any default or misconduct of the
         Administrators or the Sponsor.

         Section  2.10.  Certain Rights of Institutional Trustee. Subject to the
                         ---------------------------------------
provisions of Section 2.9:

         (a)      the Institutional  Trustee  may  conclusively  rely  and shall
fully be  protected in acting or  refraining  from acting in good faith upon any
resolution, opinion of counsel, certificate,  written representation of a Holder
or  transferee,  certificate  of auditors or any other  certificate,  statement,
instrument,   opinion,  report,  notice,  request,  direction,  consent,  order,
appraisal,  bond, debenture, note, other evidence of indebtedness or other paper
or  document  believed  by it to be  genuine  and to have been  signed,  sent or
presented by the proper party or parties;

         (b)      if  (i) in performing its duties under  this Declaration,  the
Institutional  Trustee is  required  to decide  between  alternative  courses of
action,  (ii) in  construing  any of the  provisions  of this  Declaration,  the
Institutional  Trustee finds the same ambiguous or  inconsistent  with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration,  then, except as to any matter
as to which the  Holders of Capital  Securities  are  entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's written instructions as to the course of action
to be taken and the  Institutional  Trustee  shall take such action,  or refrain
from taking such action,  as the  Institutional  Trustee  shall be instructed in
writing, in which event the Institutional Trustee shall have no liability except
for its own negligence or willful misconduct;
<PAGE>

         (c)      any direction or act of  the  Sponsor  or  the  Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;

         (d)      whenever in  the administration  of  this   Declaration,   the
Institutional  Trustee  shall  deem it  desirable  that a matter  be  proved  or
established before undertaking,  suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically  prescribed)
may request and  conclusively  rely upon an Officers'  Certificate as to factual
matters which, upon receipt of such request,  shall be promptly delivered by the
Sponsor or the Administrators;

         (e)      the Institutional Trustee shall have  no  duty  to  see to any
recording,  filing or registration of any instrument (including any financing or
continuation  statement  or any  filing  under  tax or  securities  laws) or any
rerecording, refiling or reregistration thereof;

         (f)      the  Institutional  Trustee  may  consult  with counsel of its
selection (which counsel may be counsel to the Sponsor or any of its Affiliates)
and the advice of such  counsel  shall be full and  complete  authorization  and
protection in respect of any action  taken,  suffered or omitted by it hereunder
in good faith and in reliance  thereon and in accordance  with such advice;  the
Institutional  Trustee  shall  have the  right at any time to seek  instructions
concerning the  administration  of this  Declaration from any court of competent
jurisdiction;

         (g)      the  Institutional  Trustee  shall  be  under no obligation to
exercise  any of the rights or powers  vested in it by this  Declaration  at the
request or direction of any of the Holders pursuant to this Declaration,  unless
such  Holders  shall  have  offered to the  Institutional  Trustee  security  or
indemnity  reasonably  satisfactory  to  it  against  the  costs,  expenses  and
liabilities  which might be incurred by it in  compliance  with such  request or
direction;  provided,  that nothing  contained in this Section  2.10(g) shall be
taken to relieve the Institutional Trustee,  subject to Section 2.9(b), upon the
occurrence of an Event of Default (that has not been cured or waived pursuant to
Section  6.7),  to exercise  such of the rights and powers  vested in it by this
Declaration,  and use the same degree of care and skill in their exercise,  as a
prudent person would exercise or use under the  circumstances  in the conduct of
his or her own affairs;

         (h)      the Institutional Trustee shall  not  be  bound  to  make  any
investigation  into the facts or matters stated in any resolution,  certificate,
statement,   instrument,  opinion,  report,  notice,  request,  consent,  order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document,  unless  requested in writing to do so by one or more Holders,  but
the  Institutional  Trustee may make such further inquiry or investigation  into
such facts or matters as it may see fit;

         (i)      the  Institutional  Trustee  may  execute any of the trusts or
powers  hereunder  or perform  any duties  hereunder  either  directly  or by or
through  its agents or  attorneys  and the  Institutional  Trustee  shall not be
responsible  for  any  misconduct  or  negligence  on the  part  of or  for  the
supervision  of,  any  such  agent  or  attorney  appointed  with due care by it
hereunder;

         (j)      whenever  in  the  administration  of  this  Declaration   the
Institutional  Trustee  shall deem it  desirable  to receive  instructions  with
respect to enforcing  any remedy or right or taking any other  action  hereunder
the Institutional  Trustee (i) may request  instructions from the Holders of the
Capital  Securities  which  instructions may only be given by the Holders of the
same  proportion  in  liquidation  amount of the Capital  Securities as would be
entitled  to direct the  Institutional  Trustee  under the terms of the  Capital
Securities  in respect of such  remedy,  right or action,  (ii) may refrain from
enforcing  such  remedy  or  right  or  taking  such  other  action  until  such
instructions  are  received,  and (iii)  shall be fully  protected  in acting in
accordance with such instructions;
<PAGE>

         (k)      except  as otherwise expressly  provided in this  Declaration,
the  Institutional  Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration;

         (l)      when  the  Institutional  Trustee  incurs  expenses or renders
services in connection  with a Bankruptcy  Event,  such expenses  (including the
fees and  expenses of its counsel) and the  compensation  for such  services are
intended to constitute  expenses of  administration  under any bankruptcy law or
law relating to creditors rights generally;

         (m)      the Institutional Trustee shall  not be charged with knowledge
of an Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual  knowledge of such event or the  Institutional  Trustee  receives
written  notice of such  event from any  Holder,  the  Sponsor or the  Debenture
Trustee;

         (n)      any action taken by the Institutional  Trustee  or its  agents
hereunder  shall  bind the  Trust and the  Holders  of the  Securities,  and the
signature of the  Institutional  Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional  Trustee to so act or as to its
compliance  with any of the terms and  provisions of this  Declaration,  both of
which shall be  conclusively  evidenced  by the  Institutional  Trustee's or its
agent's taking such action; and

         (o)      no provision of this Declaration shall be deemed to impose any
duty or  obligation on the  Institutional  Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be  unqualified  or  incompetent  in accordance  with  applicable  law, to
perform any such act or acts,  or to exercise  any such  right,  power,  duty or
obligation.  No  permissive  power or authority  available to the  Institutional
Trustee shall be construed to be a duty.

         Section  2.11.  Delaware Trustee. Notwithstanding  any  other provision
                         ----------------
of this  Declaration  other than Section 4.1, the Delaware  Trustee shall not be
entitled to exercise any powers,  nor shall the Delaware Trustee have any of the
duties  and  responsibilities  of  any  of the  Trustees  or the  Administrators
described in this  Declaration  (except as may be required  under the  Statutory
Trust Act).  Except as set forth in Section 4.1, the Delaware Trustee shall be a
Trustee for the sole and limited  purpose of fulfilling the  requirements of ss.
3807 of the Statutory Trust Act.

         Section  2.12.  Execution of Documents.  Unless   otherwise  determined
                         ----------------------
in writing by the Institutional Trustee, and except as otherwise required by the
Statutory  Trust  Act,  the  Institutional  Trustee,  or any  one or more of the
Administrators,  as the case may be, is  authorized  to execute on behalf of the
Trust any documents that the Trustees or the Administrators, as the case may be,
have the power and authority to execute pursuant to Section 2.6.

         Section  2.13.  Not Responsible for Recitals or Issuance of Securities.
                         ------------------------------------------------------
The recitals  contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their  correctness.  The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations  as to the  validity or  sufficiency  of this  Declaration,  the
Debentures or the Securities.

         Section  2.14.  Duration   of  Trust.   The    Trust,  unless   earlier
                         --------------------
dissolved  pursuant  to the  provisions  of  Article  VII  hereof,  shall  be in
existence for 35 years from the Closing Date.


<PAGE>

         Section  2.15.  Mergers.
                         -------

         (a)      The Trust may not consolidate, amalgamate, merge with or into,
or be  replaced  by, or  convey,  transfer  or lease its  properties  and assets
substantially  as an  entirety  to any  corporation  or other  body,  except  as
described  in  Section  2.15(b)  and (c)  and  except  in  connection  with  the
liquidation  of the Trust and the  distribution  of the Debentures to Holders of
Securities  pursuant to Section  7.1(a)(iv) of the  Declaration  or Section 4 of
Annex I.

         (b)      The Trust may, with the consent of the  Institutional  Trustee
and without the consent of the Holders of the Capital  Securities,  consolidate,
amalgamate,  merge with or into,  or be  replaced by a trust  organized  as such
under the laws of any state; provided that:

                  (i)    if  the  Trust  is  not  the  surviving  entity,   such
         successor entity (the "Successor Entity") either:
                                ----------------

                         (A)  expressly  assumes  all of the  obligations of the
                  Trust under the Securities; or

                         (B)  substitutes for the  Securities  other  securities
                  having  substantially  the same terms as the  Securities  (the
                  "Successor  Securities") so that the Successor Securities rank
                   ----------------------
                  the same as the Securities  rank with respect to Distributions
                  and payments upon Liquidation, redemption and otherwise;

                  (ii)   the   Sponsor  expressly  appoints  a  trustee  of  the
         Successor   Entity  that  possesses  substantially  the same powers and
         duties as the Institutional Trustee as the Holder of the Debentures;

                  (iii)  such merger, consolidation, amalgamation or replacement
         does not adversely affect the rights, preferences and privileges of the
         Holders of the Securities (including  any Successor  Securities) in any
         material respect;

                  (iv)   the Institutional Trustee receives written confirmation
         from   Moody's  Investor  Services,  Inc.  and  any  other   nationally
         recognized   statistical  rating  organization  that  rates  securities
         issued by the initial purchaser of the Capital  Securities that it will
         not reduce or withdraw the rating  of any such  securities  because  of
         such  merger, conversion, consolidation, amalgamation or replacement;

                  (v)    such  Successor  Entity  has  a  purpose  substantially
         identical to that of the Trust;

                  (vi)   prior  to such merger,  consolidation,  amalgamation or
         replacement,  the  Trust  has  received  an  opinion  of  a  nationally
         recognized independent counsel to the Trust experienced in such matters
         to the effect that:

                         (A)  such   merger,   consolidation,   amalgamation  or
                  replacement does not adversely  affect the rights, preferences
                  and privileges of the Holders of the Securities (including any
                  Successor Securities) in any material respect;

                         (B)  following such merger, consolidation, amalgamation
                  or  replacement,  neither the Trust nor the  Successor  Entity
                  will be required to register as an Investment Company; and
<PAGE>

                         (C)  following such merger, consolidation, amalgamation
                  or  replacement,  the  Trust (or  the  Successor  Entity) will
                  continue to  be  classified  as a "grantor  trust" for  United
                  States  federal income tax purposes;

                  (vii)  the   Sponsor   guarantees   the  obligations  of  such
         Successor Entity under the Successor  Securities at least to the extent
         provided by the Guarantee;

                  (viii) the Sponsor owns 100% of the  common securities  of any
        Successor Entity; and

                  (ix)   prior  to such  merger, consolidation,  amalgamation or
       replacement,  the Institutional  Trustee shall have received an Officers'
       Certificate of the Administrators and an opinion of counsel,  each to the
       effect that all conditions  precedent  under this Section 2.15(b) to such
       transaction have been satisfied.

         (c)      Notwithstanding  Section 2.15(b),  the Trust shall not, except
with the  consent  of  Holders of 100% in  aggregate  liquidation  amount of the
Securities,  consolidate,  amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate,  amalgamate,  merge with
or  into,  or  replace  it  if  such  consolidation,   amalgamation,  merger  or
replacement  would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.

                                  ARTICLE III

                                    SPONSOR

         Section  3.1.   Sponsor's Purchase of Common Securities. On the Closing
                         ---------------------------------------
Date, the Sponsor will purchase all of the Common Securities issued by the Trust
in an amount at least equal to 3% of the capital of the Trust,  at the same time
as the Capital Securities are sold.

         Section  3.2.   Responsibilities  of  the  Sponsor. In  connection with
                         ----------------------------------
the  issue  and sale of the  Capital  Securities,  the  Sponsor  shall  have the
exclusive right and responsibility to engage in, or direct the Administrators to
engage in, the following activities:

         (a)      to determine the States in which to take appropriate action to
qualify the Trust or to qualify or register  for sale all or part of the Capital
Securities  and to do any and all such acts,  other than  actions  which must be
taken by the Trust,  and advise the Trust of actions it must take,  and  prepare
for execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems  necessary or advisable in order to comply with the applicable
laws of any such States,  to protect the limited liability of the Holders of the
Capital  Securities  or to enable the Trust to effect the  purposes for which it
was created; and

         (b)      to  negotiate  the terms of and/or  execute on behalf  of  the
Trust, the Placement  Agreement and other related  agreements  providing for the
sale of the Capital Securities.

         Section  3.3.   Expenses.  In  connection  with  the offering, sale and
                         --------
issuance of the  Debentures to the Trust and in connection  with the sale of the
Securities  by the Trust,  the Sponsor,  in its  capacity as  Debenture  Issuer,
shall:

         (a)      pay all reasonable costs and expenses owing  to the  Debenture
Trustee pursuant to Section 6.6 of the Indenture;
<PAGE>

         (b)      be responsible for and  shall pay all  debts and   obligations
(other than with  respect to the  Securities)  and all costs and expenses of the
Trust, the offering,  sale and issuance of the Securities (including fees to the
placement  agents in connection  therewith),  the costs and expenses  (including
reasonable  counsel  fees and  expenses)  of the  Institutional  Trustee and the
Administrators,  the costs and expenses  relating to the operation of the Trust,
including,  without  limitation,  costs and expenses of accountants,  attorneys,
statistical  or  bookkeeping  services,  expenses for printing and engraving and
computing or accounting equipment,  Paying Agents, Registrars,  Transfer Agents,
duplicating,  travel and  telephone  and other  telecommunications  expenses and
costs and expenses incurred in connection with the acquisition,  financing,  and
disposition of Trust assets and the enforcement by the Institutional  Trustee of
the rights of the Holders (for purposes of  clarification,  this Section  3.3(b)
does not  contemplate  the  payment  by the  Sponsor  of  acceptance  or  annual
administration  fees  owing  to the  Trustees  pursuant  to the  services  to be
provided by the Trustees under this  Declaration or the fees and expenses of the
Trustees'   counsel  in  connection   with  the  closing  of  the   transactions
contemplated by this Declaration); and

         (c)      pay  any  and all taxes (other than United States  withholding
taxes  attributable to the Trust or its assets) and all  liabilities,  costs and
expenses with respect to such taxes of the Trust.

         The  Sponsor's  obligations  under  this  Section  3.3 shall be for the
benefit  of,  and shall be  enforceable  by,  any  Person  to whom  such  debts,
obligations,  costs,  expenses and taxes are owed (a "Creditor")  whether or not
                                                      --------
such  Creditor has received  notice  hereof.  Any such  Creditor may enforce the
Sponsor's  obligations  under this Section 3.3 directly  against the Sponsor and
the  Sponsor  irrevocably  waives any right or remedy to  require  that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the  provisions of
this Section 3.3.

         Section 3.4     Right to Proceed. The  Sponsor  acknowledges the rights
                         ----------------
of Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

                                   ARTICLE IV

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

         Section  4.1.   Number  of  Trustees.  The  number  of  Trustees  shall
                         --------------------
initially be two, and;

         (a)      at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and

         (b)      after the issuance of any  Securities,  the number of Trustees
may be increased or decreased by vote of the Holder of a Majority in liquidation
amount of the  Common  Securities  voting as a class at a meeting  of the Holder
of the  Common Securities;  provided, however, that there shall  be  a  Delaware
                            --------  -------
Trustee if required by Section  4.2;  and there shall  always be one Trustee who
shall be the Institutional  Trustee, and such Trustee may also serve as Delaware
Trustee if it meets the  applicable  requirements,  in which case  Section  2.11
shall  have no  application  to such  entity in its  capacity  as  Institutional
Trustee.

         Section 4.2.    Delaware Trustee; Eligibility.
                         -----------------------------

         (a)      If  required  by  the  Statutory  Trust  Act, one Trustee (the
"Delaware Trustee") shall be:

                  (i)    a  natural  person  at  least  21 years of age who is a
         resident of the State of Delaware; or
<PAGE>

                  (ii)   if not a natural  person,  an entity which is organized
         under the  laws  of  the  United  States or  any  state  thereof or the
         District of Columbia, has its principal  place of business in the State
         of Delaware, and otherwise meets the  requirements  of applicable  law,
         including ss. 3807 of the Statutory Trust Act.

         (b)      the   initial  Delaware  Trustee  shall  be  Wilmington  Trust
Company.

         Section 4.3.    Institutional Trustee; Eligibility.
                         ----------------------------------

         (a)      There shall at all times be one Trustee which shall:

                  (i)    not be an Affiliate of the Sponsor;

                  (ii)   not offer or provide credit or  credit  enhancement  to
         the Trust; and

                  (iii)  be a banking  corporation  or trust  company  organized
         and doing  business under the laws of the United  States of  America or
         any  state  thereof or the District of Columbia,  authorized under such
         laws to  exercise corporate trust powers, having a combined capital and
         surplus of at least  50  million  U.S.  dollars  ($50,000,000.00),  and
         subject  to supervision  or examination by Federal,  state, or District
         of  Columbia  authority.  If  such  corporation  publishes  reports  of
         condition at  least  annually,  pursuant to law or to the  requirements
         of the supervising or examining authority referred  to above,  then for
         the  purposes  of  this  Section 4.3(a)(iii), the combined  capital and
         surplus of such corporation shall be deemed to be its  combined capital
         and  surplus  as  set  forth  in its most recent report of condition so
         published.

         (b)      If  at  any  time the Institutional  Trustee shall cease to be
eligible  to so act  under  Section  4.3(a),  the  Institutional  Trustee  shall
immediately resign in the manner and with the effect set forth in Section 4.5.

         (c)      If  the  Institutional  Trustee  has   or  shall  acquire  any
"conflicting  interest"  within  the  meaning  of  Section  310(b)  of the Trust
Indenture  Act of 1939,  as amended,  the  Institutional  Trustee  shall  either
eliminate such interest or resign,  to the extent and in the manner provided by,
and subject to this Declaration.

         (d)      The initial Institutional Trustee shall  be  Wilmington  Trust
Company.

         Section 4.4.    Administrators.  Each  Administrator  shall  be  a U.S.
                         --------------
Person, 21 years of age or older and authorized to bind the Sponsor. The initial
Administrators  shall be Peter  D.  Wimmer,  Terrance  M.  McCarthy  and Lisa K.
Vansickle. There shall at all times be at least one Administrator.  Except where
a requirement for action by a specific number of Administrators is expressly set
forth in this  Declaration  and except with  respect to any action the taking of
which is the subject of a meeting of the Administrators,  any action required or
permitted  to be taken by the  Administrators  may be taken by, and any power of
the  Administrators  may be  exercised  by, or with the consent of, any one such
Administrator.

         Section  4.5.   Appointment, Removal and  Resignation  of Trustees  and
                         -------------------------------------------------------
Administrators.
--------------

         (a)      No  resignation  or  removal  of  any  Trustee  (the "Relevant
Trustee") and no  appointment  of a successor  Trustee  pursuant to this Article
shall become  effective  until the  acceptance of  appointment  by the successor
Trustee in accordance with the applicable requirements of this Section 4.5.

         (b)      Subject  to Section 4.5(a),  a Relevant  Trustee may resign at
any time by giving  written  notice thereof to the Holders of the Securities and
by  appointing  a  successor  Relevant  Trustee.  Upon  the  resignation  of the

<PAGE>

Institutional  Trustee,  the Institutional  Trustee shall appoint a successor by
requesting  from at least three  Persons  meeting the  eligibility  requirements
their expenses and charges to serve as the successor  Institutional Trustee on a
form provided by the Administrators,  and selecting the Person who agrees to the
lowest  expense and charges  (the  "Successor  Institutional  Trustee").  If the
instrument  of acceptance by the  successor  Relevant  Trustee  required by this
Section 4.5 shall not have been delivered to the Relevant Trustee within 60 days
after the giving of such notice of  resignation or delivery of the instrument of
removal,  the Relevant  Trustee may petition,  at the expense of the Trust,  any
federal,  state or District of Columbia court of competent  jurisdiction for the
appointment of a successor  Relevant  Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any,  as it may deem  proper,  appoint a Relevant
Trustee. The Institutional  Trustee shall have no liability for the selection of
such successor pursuant to this Section 4.5.

         (c)      Unless  an   Event of  Default  shall  have  occurred  and  be
continuing, any Trustee may be removed at any time by an act of the Holders of a
Majority in liquidation amount of the Common Securities. If any Trustee shall be
so  removed,  the Holders of the Common  Securities,  by act of the Holders of a
Majority  in  liquidation  amount  of the  Common  Securities  delivered  to the
Relevant Trustee,  shall promptly appoint a successor Relevant Trustee, and such
successor Trustee shall comply with the applicable  requirements of this Section
4.5.  If an  Event  of  Default  shall  have  occurred  and be  continuing,  the
Institutional  Trustee or the Delaware Trustee,  or both of them, may be removed
by the act of the  Holders of a Majority  in  liquidation  amount of the Capital
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). If any Trustee shall be so removed, the Holders of Capital
Securities,  by act of the  Holders of a Majority in  liquidation  amount of the
Capital  Securities then outstanding  delivered to the Relevant  Trustee,  shall
promptly appoint a successor  Relevant  Trustee or Trustees,  and such successor
Trustee shall comply with the applicable requirements of this Section 4.5. If no
successor  Relevant  Trustee  shall have been so  appointed  by the Holders of a
Majority  in  liquidation   amount  of  the  Capital   Securities  and  accepted
appointment  in the manner  required  by this  Section  4.5 within 30 days after
delivery of an instrument of removal, the Relevant Trustee or any Holder who has
been a Holder  of the  Securities  for at least  six  months  may,  on behalf of
himself  and all others  similarly  situated,  petition  any  federal,  state or
District of Columbia court of competent  jurisdiction  for the  appointment of a
successor  Relevant  Trustee.  Such court may thereupon,  after prescribing such
notice, if any, as it may deem proper,  appoint a successor  Relevant Trustee or
Trustees.

         (d)      The   Institutional   Trustee   shall   give  notice  of  each
resignation  and each removal of a Trustee and each  appointment  of a successor
Trustee to all Holders and to the Sponsor. Each notice shall include the name of
the successor  Relevant Trustee and the address of its Corporate Trust Office if
it is the Institutional Trustee.

         (e)      Notwithstanding the foregoing or any other  provision  of this
Declaration,  in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become  incompetent  or  incapacitated,  the vacancy
created  by  such  death,  incompetence  or  incapacity  may  be  filled  by the
Institutional  Trustee  following  the  procedures in this Section 4.5 (with the
successor  being a  Person  who  satisfies  the  eligibility  requirement  for a
Delaware  Trustee  set  forth  in this  Declaration)  (the  "Successor  Delaware
Trustee").

         (f)      In case of the appointment hereunder of a  successor  Relevant
Trustee,  the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Securities  shall execute and deliver an amendment hereto wherein
each  successor  Relevant  Trustee shall accept such  appointment  and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm  to, and to vest in,  each  successor  Relevant  Trustee all the rights,
powers,  trusts and duties of the retiring  Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of

<PAGE>

this  Declaration  as  shall be  necessary  to  provide  for or  facilitate  the
administration  of the  Trust  by more  than  one  Relevant  Trustee,  it  being
understood  that  nothing  herein or in such  amendment  shall  constitute  such
Relevant  Trustees  co-trustees  and upon the  execution  and  delivery  of such
amendment  the  resignation  or removal of the retiring  Relevant  Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee,  without any further act, deed or conveyance,  shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on  request  of the  Trust or any  successor  Relevant  Trustee,  such  retiring
Relevant  Trustee  shall duly  assign,  transfer  and deliver to such  successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Securities and the Trust
subject to the payment of all unpaid  fees,  expenses  and  indemnities  of such
retiring Relevant Trustee.

         (g)      No   Institutional  Trustee  or  Delaware  Trustee  shall   be
liable for the acts or omissions to act of any Successor  Institutional  Trustee
or Successor Delaware Trustee, as the case may be.

         (h)      The  Holders  of  the Capital Securities will have no right to
vote to appoint,  remove or replace the Administrators,  which voting rights are
vested exclusively in the Holders of the Common Securities.

         (i)      Any successor Delaware Trustee shall file an amendment  to the
Certificate  of Trust  with the  Secretary  of  State of the  State of  Delaware
identifying the name and principal place of business of such Delaware Trustee in
the State of Delaware.

         Section 4.6.    Vacancies Among Trustees.  If a Trustee  ceases to hold
                         ------------------------
office for any reason and the number of  Trustees  is not  reduced  pursuant  to
Section 4.1, a vacancy  shall occur.  A resolution  certifying  the existence of
such  vacancy by the  Trustees or, if there are more than two, a majority of the
Trustees,  shall be conclusive  evidence of the  existence of such vacancy.  The
vacancy shall be filled with a Trustee appointed in accordance with Section 4.5.

         Section 4.7.    Effect    of    Vacancies.  The   death,   resignation,
                         -------------------------
retirement,  removal,  bankruptcy,  dissolution,  liquidation,  incompetence  or
incapacity  to perform the duties of a Trustee  shall not  operate to  dissolve,
terminate or annul the Trust or terminate this  Declaration.  Whenever a vacancy
in the number of  Trustees  shall  occur,  until  such  vacancy is filled by the
appointment  of a Trustee in  accordance  with Section  4.5,  the  Institutional
Trustee  shall have all the powers  granted to the Trustees and shall  discharge
all the duties imposed upon the Trustees by this Declaration.

         Section 4.8.    Meetings   of  the  Trustees  and  the  Administrators.
                         ------------------------------------------------------
Meetings of the Administrators  shall be held from time to time upon the call of
an Administrator.  Regular meetings of the  Administrators may be held in person
in the United States or by telephone,  at a place (if applicable) and time fixed
by resolution  of the  Administrators.  Notice of any in-person  meetings of the
Trustees with the Administrators or meetings of the Administrators shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic  meetings of the Trustees with the  Administrators or meetings of
the Administrators or any committee thereof shall be hand delivered or otherwise
delivered  in writing  (including  by  facsimile,  with a hard copy by overnight
courier) not less than 24 hours before a meeting.  Notices shall contain a brief
statement  of the time,  place and  anticipated  purposes  of the  meeting.  The
presence  (whether in person or by telephone) of a Trustee or an  Administrator,
as the case may be, at a  meeting  shall  constitute  a waiver of notice of such
meeting  except  where  the  Trustee  or an  Administrator,  as the case may be,
attends a meeting for the express purpose of objecting to the transaction of any
activity  on the  grounds  that the  meeting  has not been  lawfully  called  or
convened.  Unless  provided  otherwise  in this  Declaration,  any action of the
Trustees or the Administrators, as the case may be, may be taken at a meeting by
vote of a majority of the  Trustees or the  Administrators  present  (whether in
person or by  telephone)  and  eligible  to vote with  respect  to such  matter,
provided that a Quorum is present, or without a meeting by the unanimous written

<PAGE>

consent of the Trustees or the Administrators.  Meetings of the Trustees and the
Administrators  together  shall be held  from  time to time upon the call of any
Trustee or an Administrator.

        Section 4.9.     Delegation of Power.
                         -------------------

         (a)      Any Administrator may,  by  power of attorney consistent  with
applicable law,  delegate to any other natural person over the age of 21 that is
a U.S.  Person  his or her power for the  purpose  of  executing  any  documents
contemplated in Section 2.6; and

         (b)      the  Administrators  shall have power to delegate from time to
time to such of their number the doing of such things and the  execution of such
instruments  either in the name of the Trust or the names of the  Administrators
or  otherwise  as the  Administrators  may deem  expedient,  to the extent  such
delegation is not  prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.

         Section 4.10.   Conversion,  Consolidation  or Succession  to Business.
                         ------------------------------------------------------
Any Person into which the  Institutional  Trustee or the Delaware Trustee may be
merged  or  converted  or  with  which  it may be  consolidated,  or any  Person
resulting   from  any  merger,   conversion  or   consolidation   to  which  the
Institutional  Trustee or the Delaware  Trustee shall be a party,  or any Person
succeeding  to all or  substantially  all the  corporate  trust  business of the
Institutional  Trustee or the  Delaware  Trustee  shall be the  successor of the
Institutional  Trustee or the Delaware Trustee  hereunder,  provided such Person
shall be  otherwise  qualified  and eligible  under this Article and,  provided,
                                                                       --------
further,  that such Person shall file an amendment to the  Certificate  of Trust
-------
with the Secretary of State of the State of Delaware as  contemplated in Section
4.5(i).

                                    ARTICLE V

                                  DISTRIBUTIONS

         Section 5.1.    Distributions.  Holders shall receive Distributions  in
                         -------------
accordance  with the  applicable  terms  of the  relevant  Holder's  Securities.
Distributions  shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their  respective  terms. If and
to the extent  that the  Debenture  Issuer  makes a payment of  Interest  or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee  shall and is  directed,  to the  extent  funds are  available  for that
purpose, to make a distribution (a "Distribution") of such amounts to Holders.
                                    ------------

                                   ARTICLE VI

                             ISSUANCE OF SECURITIES

         Section 6.1.    General Provisions Regarding Securities.
                         ---------------------------------------

         (a)      The  Administrators  shall, on  behalf of the Trust, issue one
series  of  capital  securities   substantially  in  the  form  of  Exhibit  A-1
representing  undivided  beneficial  interests in the assets of the Trust having
such  terms as are set  forth in Annex I and one  series  of  common  securities
representing  undivided  beneficial  interests in the assets of the Trust having
such terms as are set forth in Annex I. The Trust shall issue no  securities  or
other interests in the assets of the Trust other than the Capital Securities and
the Common  Securities.  The Capital  Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has  occurred and is  continuing,  the rights of Holders of the
Common  Securities  to payment in respect of  Distributions  and  payments  upon
liquidation,  redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.
<PAGE>

         (b)      The Certificates shall be signed on behalf of the Trust by one
or  more  Administrators.  Such  signature  shall  be the  facsimile  or  manual
signature of any Administrator. In case any Administrator of the Trust who shall
have signed any of the Securities  shall cease to be such  Administrator  before
the  Certificates so signed shall be delivered by the Trust,  such  Certificates
nevertheless may be delivered as though the person who signed such  Certificates
had not ceased to be such  Administrator,  and any  Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security,  shall be an Administrator  of the Trust,  although at the date of the
execution  and  delivery  of the  Declaration  any such  person  was not such an
Administrator.  A Capital Security shall not be valid until authenticated by the
facsimile or manual  signature  of an  Authorized  Officer of the  Institutional
Trustee.  Such signature shall be conclusive  evidence that the Capital Security
has been authenticated  under this Declaration.  Upon written order of the Trust
signed by one  Administrator,  the Institutional  Trustee shall authenticate the
Capital Securities for original issue. The Institutional  Trustee may appoint an
authenticating  agent  that  is  a  U.S.  Person  acceptable  to  the  Trust  to
authenticate  the  Capital  Securities.   A  Common  Security  need  not  be  so
authenticated.

         (c)      The  Capital  Securities  issued  to  QIBs shall be, except as
provided in Section 6.4, Book-Entry Capital Securities issued in the form of one
or more Global  Capital  Securities  registered in the name of the Depositary or
its nominee and deposited  with the Depositary or a custodian for the Depositary
for  credit by the  Depositary  to the  respective  accounts  of the  Depositary
Participants  thereof (or such other  accounts as they may direct).  The Capital
Securities  issued to a Person other than a QIB shall be issued in the form of a
Definitive Capital Securities Certificate.

         (d)      The consideration  received  by the Trust for the  issuance of
the Securities  shall  constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.

         (e)      Upon   issuance  of   the  Securities  as   provided  in  this
Declaration,  the  Securities  so issued  shall be deemed to be validly  issued,
fully paid and,  except as provided in Section 9.1(b) with respect to the Common
Securities, non-assessable.

         (f)      Every   Person,  by  virtue  of  having  become  a  Holder  in
accordance with the terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this Declaration and
the Guarantee.

         Section 6.2.    Paying Agent, Transfer Agent and  Registrar.  The Trust
                         -------------------------------------------
shall  maintain in Wilmington,  Delaware,  an office or agency where the Capital
Securities  may be  presented  for payment  ("Paying  Agent"),  and an office or
                                              -------------
agency  where  Securities  may be  presented  for  registration  of  transfer or
exchange  (the  "Transfer  Agent").  The Trust shall keep or cause to be kept at
                 ---------------
such  office or agency a register  for the  purpose of  registering  Securities,
transfers and exchanges of  Securities,  such register to be held by a registrar
(the  "Registrar").  The  Administrators  may  appoint  the  Paying  Agent,  the
       ---------
Registrar and the Transfer Agent and may appoint one or more  additional  Paying
Agents or one or more  co-Registrars,  or one or more co-Transfer Agents in such
other  locations as it shall  determine.  The term "Paying  Agent"  includes any
                                                    -------------
additional paying agent, the term "Registrar"  includes any additional registrar
                                   ---------
or co-Registrar and the term "Transfer  Agent" includes any additional  transfer
                              ---------------
agent.  The  Administrators  may  change  any Paying  Agent,  Transfer  Agent or
Registrar at any time without  prior  notice to any Holder.  The  Administrators
shall  notify the  Institutional  Trustee of the name and  address of any Paying
Agent,  Transfer  Agent  and  Registrar  not a party  to this  Declaration.  The
Administrators  hereby  initially  appoint the  Institutional  Trustee to act as
Paying Agent,  Transfer  Agent and Registrar for the Capital  Securities and the
Common  Securities.  The  Institutional  Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.

         Section  6.3.   Form  and  Dating.  The  Capital   Securities  and  the
                         -----------------
Institutional   Trustee's   certificate  of  authentication   thereon  shall  be

<PAGE>

substantially  in the form of Exhibit  A-1, and the Common  Securities  shall be
substantially  in the form of Exhibit A-2, each of which is hereby  incorporated
in and expressly  made a part of this  Declaration.  Certificates  may be typed,
printed,  lithographed  or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators,  as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers,  notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule, agreements to which the Trust is subject if any, or
usage  (provided  that any such  notation,  legend or  endorsement  is in a form
acceptable  to the  Sponsor).  The Trust at the  direction of the Sponsor  shall
furnish  any such  legend  not  contained  in Exhibit  A-1 to the  Institutional
Trustee in writing.  Each Capital  Security shall be dated on or before the date
of its  authentication.  The terms and provisions of the Securities set forth in
Annex I and the forms of  Securities  set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Institutional
Trustee,  the Delaware Trustee,  the  Administrators  and the Sponsor,  by their
execution and delivery of this  Declaration,  expressly  agree to such terms and
provisions and to be bound thereby.  Capital  Securities  will be issued only in
blocks having a stated  liquidation  amount of not less than $100,000.00 and any
multiple of $1,000.00 in excess thereof.

         The Capital Securities are being offered and sold by the Trust pursuant
to the Placement  Agreement in definitive,  registered  form without coupons and
with the Restricted Securities Legend.

         Section 6.4.    Book-Entry Capital Securities.
                         -----------------------------

         (a)      A Global  Capital  Security  may be exchanged,  in whole or in
part, for Definitive Capital Securities  Certificates registered in the names of
Owners only if such exchange  complies with Article VIII and (i) the  Depositary
advises the  Administrators  and the  Institutional  Trustee in writing that the
Depositary   is  no  longer   willing  or  able  to   properly   discharge   its
responsibilities  with respect to the Global Capital Security,  and no qualified
successor is appointed by the Administrators  within ninety (90) days of receipt
of such notice,  (ii) the Depositary  ceases to be a clearing agency  registered
under the  Exchange  Act and the  Administrators  fail to  appoint  a  qualified
successor  within ninety (90) days of obtaining  knowledge of such event,  (iii)
the  Administrators at their option advise the Institutional  Trustee in writing
that the Trust elects to terminate the book-entry system through the Depositary,
or (iv) an Indenture  Event of Default has occurred and is continuing.  Upon the
occurrence of any event specified in clause (i), (ii),  (iii) or (iv) above, the
Administrators shall notify the Depositary and instruct the Depositary to notify
all Owners of Book-Entry Capital Securities and the Institutional Trustee of the
occurrence  of  such  event  and  of  the  availability  of  Definitive  Capital
Securities Certificates to Owners of the Capital Securities requesting the same.
Upon  the  issuance  of  Definitive   Capital   Securities   Certificates,   the
Administrators and the Institutional  Trustee shall recognize the Holders of the
Definitive  Capital  Securities  Certificates  as Holders.  Notwithstanding  the
foregoing,  if an Owner of a beneficial  interest in a Global  Capital  Security
wishes at any time to transfer an interest in such Global Capital  Security to a
Person  other  than a QIB,  such  transfer  shall be  effected,  subject  to the
Applicable  Depositary  Procedures,  in accordance  with the  provisions of this
ERROR!  REFERENCE  SOURCE NOT FOUND.  and Article VIII, and the transferee shall
receive a Definitive  Capital  Securities  Certificate  in connection  with such
transfer. A holder of a Definitive Capital Securities  Certificate that is a QIB
may upon request, and in accordance with the provisions of this ERROR! REFERENCE
SOURCE NOT FOUND. and Article VIII,  exchange such Definitive Capital Securities
Certificate for a beneficial interest in a Global Capital Security.

         (b)      If   any  Global  Capital  Security is  to  be  exchanged  for
Definitive  Capital  Securities  Certificates  or  canceled  in part,  or if any
Definitive Capital Securities Certificate is to be exchanged in whole or in part
for any Global Capital  Security,  then either (i) such Global Capital  Security
shall be so surrendered for exchange or cancellation as provided in this Section
6.4 and Article VIII or (ii) the aggregate  liquidation  amount  represented  by
such  Global  Capital  Security  shall be  reduced,  subject to Section  6.3, or
increased  by an amount  equal to the  liquidation  amount  represented  by that
portion of the Global Capital Security to be so exchanged or canceled,  or equal

<PAGE>

to the  liquidation  amount  represented by such Definitive  Capital  Securities
Certificates to be so exchanged for any Global Capital Security, as the case may
be, by means of an appropriate  adjustment made on the records of the Registrar,
whereupon  the  Institutional   Trustee,   in  accordance  with  the  Applicable
Depositary   Procedures,   shall  instruct  the  Depositary  or  its  authorized
representative to make a corresponding  adjustment to its records. Upon any such
surrender to the  Administrators or the Registrar of any Global Capital Security
or Securities by the Depositary,  accompanied by registration instructions,  the
Administrators,  or any  one of  them,  shall  execute  the  Definitive  Capital
Securities  Certificates in accordance with the  instructions of the Depositary.
None of the Registrar,  Administrators,  or the  Institutional  Trustee shall be
liable for any delay in delivery of such  instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions.

         (c)      Every Definitive Capital Securities Certificate  executed  and
delivered upon  registration or transfer of, or in exchange for or in lieu of, a
Global Capital  Security or any portion  thereof shall be executed and delivered
in the form of, and shall be, a Global Capital Security,  unless such Definitive
Capital Securities  Certificate is registered in the name of a Person other than
the Depositary for such Global Capital Security or a nominee thereof.

         (d)      The Depositary or its nominee, as registered owner of a Global
Capital  Security,  shall be the Holder of such Global Capital  Security for all
purposes under this Declaration and the Global Capital Security, and Owners with
respect to a Global Capital  Security shall hold such interests  pursuant to the
Applicable  Depositary  Procedures.  The Registrar,  the  Administrators and the
Institutional  Trustee  shall be  entitled to deal with the  Depositary  for all
purposes  of  this  Declaration   relating  to  the  Global  Capital  Securities
(including the payment of the  liquidation  amount of and  Distributions  on the
Book-Entry Capital Securities represented thereby and the giving of instructions
or directions by Owners of Book-Entry Capital Securities represented thereby and
the giving of notices) as the sole Holder of the Book-Entry  Capital  Securities
represented thereby and shall have no obligations to the Owners thereof. None of
the Administrators,  the Institutional  Trustee nor the Registrar shall have any
liability in respect of any transfers effected by the Depositary.

         (e)      The  rights of the Owners of the Book-Entry Capital Securities
shall be  exercised  only through the  Depositary  and shall be limited to those
established by law, the Applicable  Depositary Procedures and agreements between
such Owners and the  Depositary  and/or the Depositary  Participants;  provided,
however,  solely  for the  purpose of  determining  whether  the  Holders of the
requisite amount of Capital  Securities have voted on any matter provided for in
this  Declaration,  to the extent that Capital  Securities are  represented by a
Global Capital Security,  the Administrators  and the Institutional  Trustee may
conclusively  rely on, and shall be fully  protected  in relying on, any written
instrument  (including a proxy)  delivered to the  Institutional  Trustee by the
Depositary setting forth the Owners' votes or assigning the right to vote on any
matter  to any other  Persons  either in whole or in part.  To the  extent  that
Capital  Securities are  represented by a Global Capital  Security,  the initial
Depositary will make book-entry transfers among the Depositary  Participants and
receive and transmit payments on the Capital  Securities that are represented by
a Global  Capital  Security  to such  Depositary  Participants,  and none of the
Sponsor,  the  Administrators  or  the  Institutional  Trustee  shall  have  any
responsibility  or  obligation  with respect  thereto.

         (f)      To  the  extent  that a notice or other  communication  to the
Holders is required under this  Declaration,  for so long as Capital  Securities
are  represented  by a  Global  Capital  Security,  the  Administrator  and  the
Institutional  Trustee  shall give all such  notices and  communications  to the
Depositary, and shall have no obligations to the Owners.
<PAGE>

         Section 6.5.    Mutilated, Destroyed, Lost or Stolen Certificates.
                         -------------------------------------------------
         If:

         (a)      any   mutilated  Certificates should  be  surrendered  to  the
Registrar, or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and

         (b)      there shall be delivered to the Registrar,  the Administrators
and the  Institutional  Trustee such security or indemnity as may be required by
them to keep each of them harmless;

then, in the absence of notice that such Certificate shall have been acquired by
a protected  purchaser,  an  Administrator  on behalf of the Trust shall execute
(and in the case of a Capital Security  Certificate,  the Institutional  Trustee
shall  authenticate)  and  deliver,  in  exchange  for or in  lieu  of any  such
mutilated,  destroyed,  lost or stolen  Certificate,  a new  Certificate of like
denomination.  In connection with the issuance of any new Certificate under this
Section 6.5, the  Registrar or the  Administrators  may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection  therewith.  Any  duplicate  Certificate  issued  pursuant to this
Section shall  constitute  conclusive  evidence of an ownership  interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

         Section 6.6.    Temporary Securities.  Until definitive  Securities are
                         --------------------
ready for  delivery,  the  Administrators  may  prepare  and, in the case of the
Capital  Securities,  the Institutional  Trustee shall  authenticate,  temporary
Securities.   Temporary  Securities  shall  be  substantially  in  the  form  of
definitive  Securities but may have variations that the Administrators  consider
appropriate  for  temporary   Securities.   Without   unreasonable   delay,  the
Administrators  shall  prepare and, in the case of the Capital  Securities,  the
Institutional Trustee shall authenticate,  definitive Securities in exchange for
temporary Securities.

         Section 6.7.    Cancellation.  The   Administrators  at  any  time  may
                         ------------
deliver Securities to the Institutional Trustee for cancellation.  The Registrar
shall forward to the Institutional Trustee any Securities  surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly  cancel  all  Securities  surrendered  for  registration  of  transfer,
payment,  replacement  or  cancellation  and  shall  dispose  of  such  canceled
Securities as the  Administrators  direct.  The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.

         Section 6.8.    CUSIP Numbers. The Trust in  issuing the Securities may
                         -------------
use "CUSIP"  numbers (if then generally in use),  and, if so, the  Institutional
Trustee shall use CUSIP  numbers in notice of  redemption  as a  convenience  to
Holders;   provided,   however,   that  any  such   notice  may  state  that  no
           --------    -------
representation  is made as to the  correctness of such numbers either as printed
on the  Securities  or as  contained  in  any  notice  of  redemption  and  that
identification  numbers printed on the Securities and any such redemption  shall
not be affected by any defect in or  omission of such  numbers.  The Trust shall
promptly notify the Institutional  Trustee in writing of any change in the CUSIP
numbers.

         Section 6.9.    Rights of Holders; Waivers of Past Defaults.
                         -------------------------------------------

         (a)      The legal title to the Trust Property is vested exclusively in
the  Institutional  Trustee (in its capacity as such) in accordance with Section
2.5, and the Holders  shall not have any right or title  therein  other than the
undivided  beneficial  interest  in the assets of the Trust  conferred  by their
Securities and they shall have no right to call for any partition or division of
property,  profits  or rights  of the  Trust  except  as  described  below.  The
Securities  shall be personal  property giving only the rights  specifically set
forth therein and in this  Declaration.  The Securities shall have no preemptive
or similar rights.

         (b)      For so long as any Capital Securities remain  outstanding,  if
upon an Indenture Event of Default,  the Debenture  Trustee fails or the holders

<PAGE>

of not less than 25% in principal  amount of the outstanding  Debentures fail to
declare  the  principal  of all of the  Debentures  to be  immediately  due  and
payable,  the  Holders  of a  Majority  in  liquidation  amount  of the  Capital
Securities then  outstanding  shall have the right to make such declaration by a
notice in writing to the  Institutional  Trustee,  the Sponsor and the Debenture
Trustee.

         At any time after a  declaration  of  acceleration  with respect to the
Debentures  has been made and  before a judgment  or decree  for  payment of the
money  due has  been  obtained  by the  Debenture  Trustee  as  provided  in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default,  the Holders of a Majority
in  liquidation  amount of the  Capital  Securities,  by  written  notice to the
Institutional  Trustee,  the Sponsor and the Debenture Trustee,  may rescind and
annul such declaration and its consequences if:

                  (i)    the Debenture  Issuer  has  paid  or deposited with the
         Debenture Trustee a sum sufficient to pay

                         (A)  all overdue installments of interest on all of the
                  Debentures,

                         (B)  any accrued  Additional  Interest on  all  of  the
                  Debentures,

                         (C)  the principal of (and premium,  if  any,  on)  any
                  Debentures  that  have  become  due  otherwise  than  by  such
                  declaration  of  acceleration  and   interest  and  Additional
                  Interest thereon at the rate borne by the Debentures, and

                         (D   all  sums   paid  or  advanced  by  the  Debenture
                  Trustee under the Indenture and the  reasonable  compensation,
                  expenses,   disbursements  and   advances   of  the  Debenture
                  Trustee   and  the Institutional  Trustee,  their  agents  and
                  counsel; and

                  (ii)   all Events  of Default with respect to the  Debentures,
         other than the non-payment of the principal of the Debentures  that has
         become due solely  by  such acceleration, have  been cured or waived as
         provided in Section 5.7 of the Indenture.

         The Holders of at least a Majority in liquidation amount of the Capital
Securities  may, on behalf of the Holders of all the Capital  Securities,  waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest on
the Debentures (unless such default or Indenture Event of Default has been cured
and a sum sufficient to pay all matured  installments  of interest and principal
due  otherwise  than by  acceleration  has been  deposited  with  the  Debenture
Trustee) or a default  under the  Indenture or an Indenture  Event of Default in
respect of a covenant or provision  that under the Indenture  cannot be modified
or amended without the consent of the holder of each outstanding  Debenture.  No
such  rescission  shall  affect  any  subsequent  default  or  impair  any right
consequent thereon.

         Upon receipt by the  Institutional  Trustee of written notice declaring
such an  acceleration,  or rescission and annulment  thereof,  by Holders of any
part  of the  Capital  Securities,  a  record  date  shall  be  established  for
determining  Holders of outstanding  Capital Securities entitled to join in such
notice,  which  record  date  shall be at the close of  business  on the day the
Institutional  Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons,  shall be entitled to join
in such notice,  whether or not such Holders  remain  Holders  after such record
date; provided, that unless such declaration of acceleration,  or rescission and
annulment,  as the case may be,  shall have  become  effective  by virtue of the
requisite  percentage  having  joined in such notice prior to the day that is 90
days after such record date,  such notice of  declaration  of  acceleration,  or
rescission and annulment,  as the case may be, shall  automatically  and without
further  action by any Holder be canceled and of no further  effect.  Nothing in
this  paragraph  shall  prevent a Holder,  or a proxy of a Holder,  from giving,
after  expiration of such 90-day period,  a new written notice of declaration of

<PAGE>

acceleration,  or rescission and annulment thereof,  as the case may be, that is
identical to a written notice that has been canceled  pursuant to the proviso to
the preceding  sentence,  in which event a new record date shall be  established
pursuant to the provisions of this Section 6.9.

         (c)      Except as otherwise provided in paragraphs (a) and (b) of this
Section  6.9,  the Holders of at least a Majority in  liquidation  amount of the
Capital Securities may, on behalf of the Holders of all the Capital  Securities,
waive any past  default  or Event of  Default  and its  consequences.  Upon such
waiver,  any such  default or Event of  Default  shall  cease to exist,  and any
default  or Event of  Default  arising  therefrom  shall be  deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any  subsequent  or other  default  or Event of  Default  or  impair  any  right
consequent thereon.

                                  ARTICLE VII

                      DISSOLUTION AND TERMINATION OF TRUST

         Section 7.1.    Dissolution and Termination of Trust.
                         ------------------------------------

         (a)      The Trust shall dissolve on the first to occur of:

                  (i)    unless  earlier  dissolved,  on  December 15, 2039, the
         expiration of the term of the Trust;

                  (ii)   upon a  Bankruptcy Event with  respect to the  Sponsor,
         the Trust or the Debenture Issuer;

                  (iii)  upon the filing of a certificate of dissolution  or its
         equivalent with respect to the Sponsor (other than in connection with a
         merger,  consolidation or similar  transaction  not  prohibited  by the
         Indenture,  this  Declaration  or the Guarantee, as the case may be) or
         upon the  revocation  of the charter of the Sponsor and the  expiration
         of  90  days  after  the  date  of  revocation  without a reinstatement
         thereof;

                  (iv)   upon the distribution of the Debentures to  the Holders
         of the Securities, upon exercise of the right of the  Holder  of all of
         the outstanding  Common Securities to dissolve the Trust as provided in
         Annex I hereto;

                  (v)    upon the  entry of  a decree  of  judicial  dissolution
         of the  Holder of the Common Securities,  the Sponsor, the Trust or the
         Debenture Issuer;

                  (vi)   when  all of the Securities shall have been called  for
       redemption and the amounts  necessary for  redemption  thereof shall have
       been paid to the Holders in accordance  with the terms of the Securities;
       or

                  (vii)  before the issuance of any Securities, with the consent
         of all of the Trustees and the Sponsor.

         (b)      As  soon  as  is  practicable after the occurrence of an event
referred  to in  Section  7.1(a),  and  after  satisfaction  of  liabilities  to
creditors of the Trust as required by applicable law, including of the Statutory
Trust  Act,  and  subject  to the terms set forth in Annex I, the  Institutional
Trustee shall terminate the Trust by filing a certificate of  cancellation  with
the Secretary of State of the State of Delaware.
<PAGE>

         (c)      The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.

                                  ARTICLE VIII

                              TRANSFER OF INTERESTS

         Section 8.1.    General.
                         -------

         (a)      Subject  to  Section  8.1(c),  where  Capital  Securities  are
presented  to the  Registrar  or a  co-registrar  with a request  to  register a
transfer  or to  exchange  them  for  an  equal  number  of  Capital  Securities
represented by different certificates, the Registrar shall register the transfer
or make the  exchange  if its  requirements  for such  transactions  are met. To
permit  registrations  of transfer and exchanges,  the Trust shall issue and the
Institutional  Trustee shall authenticate  Capital Securities at the Registrar's
request.

         (b)      Upon  issuance  of  the Common  Securities,  the Sponsor shall
acquire and retain  beneficial and record ownership of the Common Securities and
for so long as the  Securities  remain  outstanding,  and to the fullest  extent
permitted by applicable  law, the Sponsor shall  maintain 100%  ownership of the
Common  Securities;  provided,  however,  that any  permitted  successor  of the
                     --------   -------
Sponsor, in its capacity as Debenture Issuer, under the Indenture that is a U.S.
Person may succeed to the Sponsor's ownership of the Common Securities.

         (c)      Capital  Securities  may  only  be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this  Declaration
and  in the  terms  of  the  Securities.  To the  fullest  extent  permitted  by
applicable  law, any transfer or purported  transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect  whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities,  and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.

         (d)      The Registrar shall provide for the registration of Securities
and of transfers of Securities,  which will be effected  without charge but only
upon payment  (with such  indemnity as the  Registrar may require) in respect of
any tax or other  governmental  charges  that may be imposed in  relation to it.
Upon surrender for  registration  of transfer of any  Securities,  the Registrar
shall  cause one or more new  Securities  of the same  tenor to be issued in the
name of the designated transferee or transferees. Every Security surrendered for
registration  of  transfer  shall be  accompanied  by a  written  instrument  of
transfer in form  satisfactory  to the Registrar  duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.7. A transferee  of a Security  shall be entitled to the rights and
subject  to the  obligations  of a Holder  hereunder  upon the  receipt  by such
transferee of a Security. By acceptance of a Security,  each transferee shall be
deemed to have agreed to be bound by this Declaration.

         (e)      The  Trust  shall  not  be required (i) to issue, register the
transfer of, or exchange any Securities during a period beginning at the opening
of  business  five  days  before  the day of any  selection  of  Securities  for
redemption and ending at the close of business on the earliest date on which the
relevant notice of redemption is deemed to have been given to all Holders of the
Securities  to be redeemed,  or (ii) to register the transfer or exchange of any
Security so selected for  redemption in whole or in part,  except the unredeemed
portion of any Security being redeemed in part.
<PAGE>

         Section 8.2.    Transfer Procedures and Restrictions.
                         ------------------------------------

         (a)      The  Capital Securities shall  bear the  Restricted Securities
Legend,  which shall not be removed  unless there is delivered to the Trust such
satisfactory  evidence,  which may include an opinion of counsel satisfactory to
the  Institutional  Trustee,  as may be reasonably  required by the Trust,  that
neither  the legend nor the  restrictions  on  transfer  set forth  therein  are
required to ensure that  transfers  thereof  comply with the  provisions  of the
Securities Act. Upon provision of such satisfactory  evidence, the Institutional
Trustee,  at the written direction of the Trust,  shall authenticate and deliver
Capital Securities that do not bear the legend.

         (b)      Except as permitted by Section 8.2(a),  each  Capital Security
shall bear a legend (the "Restricted  Securities  Legend") in substantially  the
                          ------------------------------
following  form and a  Capital  Security  shall  not be  transferred  except  in
compliance with such legend,  unless otherwise  determined by the Sponsor,  upon
the advice of counsel expert in securities  law, in accordance  with  applicable
law:

                  [If  the  Capital  Security  is to be Global Capital Security-
         THIS  CAPITAL  SECURITY  IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
         DECLARATION  HEREINAFTER REFERRED  TO AND  IS REGISTERED IN THE NAME OF
         THE  DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL
         SECURITY  IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME
         OF  A  PERSON  OTHER  THAN  DTC  OR  ITS  NOMINEE  ONLY  IN THE LIMITED
         CIRCUMSTANCES  DESCRIBED IN  THE  DECLARATION,  AND NO TRANSFER OF THIS
         CAPITAL  SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY  AS A
         WHOLE  BY  DTC  TO  A NOMINEE  OF  DTC OR BY A NOMINEE OF DTC TO DTC OR
         ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
         CIRCUMSTANCES.

                  UNLESS  THIS  CAPITAL  SECURITY  IS PRESENTED BY AN AUTHORIZED
         REPRESENTATIVE  OF  DTC  TO FIRST BANK STATUTORY TRUST III OR ITS AGENT
         FOR REGISTRATION OF TRANSFER, EXCHANGE  OR  PAYMENT,  AND  ANY  CAPITAL
         SECURITY ISSUED  IS  REGISTERED  IN  THE  NAME OF CEDE & CO. OR IN SUCH
         OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
         PAYMENT HEREON IS MADE TO CEDE & CO.  OR   TO  SUCH  OTHER ENTITY AS IS
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
         OR OTHER USE HEREOF  FOR VALUE  OR OTHERWISE  BY OR  TO  ANY  PERSON IS
         WRONGFUL INASMUCH  AS  THE  REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN.]

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY  STATE  SECURITIES LAWS
         OR  ANY  OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
         INTEREST  OR  PARTICIPATION  HEREIN  MAY  BE REOFFERED, SOLD, ASSIGNED,
         TRANSFERRED, PLEDGED,  ENCUMBERED  OR  OTHERWISE  DISPOSED  OF  IN  THE
         ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
         OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF  THE SECURITIES ACT
         AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER  OF  THIS SECURITY
         BY ITS ACCEPTANCE HEREOF AGREES TO  OFFER, SELL  OR  OTHERWISE TRANSFER
         THIS  SECURITY  ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A

<PAGE>

         REGISTRATION  STATEMENT THAT  HAS  BEEN  DECLARED  EFFECTIVE  UNDER THE
         SECURITIES  ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
         A  QUALIFIED   INSTITUTIONAL  BUYER  IN   A  TRANSACTION   MEETING  THE
         REQUIREMENTS  OF  RULE  144A SO  LONG  AS THIS SECURITY IS ELIGIBLE FOR
         RESALE PURSUANT  TO  RULE 144A IN  ACCORDANCE  WITH RULE 144A, (D) TO A
         NON-U.S. PERSON  IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903
         OR  RULE  904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
         (E) TO  AN  INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN  THE  MEANING OF
         SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
         THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR  FOR THE  ACCOUNT OF SUCH
         AN INSTITUTIONAL ACCREDITED INVESTOR, FOR  INVESTMENT  PURPOSES AND NOT
         WITH A  VIEW  TO,  OR  FOR  OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY
         DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY
         OTHER AVAILABLE EXEMPTION  FROM  THE  REGISTRATION  REQUIREMENTS OF THE
         SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO
         ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN  OPINION
         OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
         OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A  COPY  OF  WHICH
         MAY BE OBTAINED FROM THE SPONSOR  OR  THE  TRUST. HEDGING  TRANSACTIONS
         INVOLVING THIS SECURITY MAY NOT BE  CONDUCTED UNLESS IN COMPLIANCE WITH
         THE SECURITIES ACT.

                  THE  HOLDER  OF  THIS  SECURITY  BY ITS ACCEPTANCE HEREOF ALSO
         AGREES, REPRESENTS AND WARRANTS THAT IT IS  NOT  AN  EMPLOYEE  BENEFIT,
         INDIVIDUAL RETIREMENT ACCOUNT OR OTHER  PLAN  OR ARRANGEMENT SUBJECT TO
         TITLE I OF THE  EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974, AS
         AMENDED  ("ERISA"),  OR  SECTION 4975  OF  THE INTERNAL REVENUE CODE OF
         1986,  AS  AMENDED  (THE "CODE") (EACH A "PLAN"), OR  AN  ENTITY  WHOSE
         UNDERLYING  ASSETS  INCLUDE "PLAN  ASSETS"  BY  REASON  OF  ANY  PLAN'S
         INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF  ANY
         PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS
         SUCH PURCHASER OR HOLDER IS ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE
         UNDER U.S. DEPARTMENT OF  LABOR  PROHIBITED TRANSACTION CLASS EXEMPTION
         96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE  EXEMPTION  OR
         ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY  SECTION
         406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH  PURCHASE
         OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR  ANY  INTEREST
         THEREIN WILL BE DEEMED TO HAVE REPRESENTED  BY ITS PURCHASE AND HOLDING
         THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT  PLAN  WITHIN THE
         MEANING OF SECTION 3(3) OF ERISA, OR  A  PLAN  TO WHICH SECTION 4975 OF
         THE CODE IS APPLICABLE, A TRUSTEE OR  OTHER  PERSON ACTING ON BEHALF OF
         AN EMPLOYEE BENEFIT PLAN OR  PLAN, OR  ANY OTHER PERSON OR ENTITY USING
         THE ASSETS OF ANY  EMPLOYEE  BENEFIT  PLAN  OR  PLAN TO   FINANCE  SUCH
         PURCHASE,  OR (ii) SUCH  PURCHASE  WILL  NOT  RESULT  IN  A  PROHIBITED

<PAGE>

         TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE  CODE FOR
         WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

                  THIS SECURITY WILL BE ISSUED AND MAY  BE  TRANSFERRED ONLY  IN
         BLOCKS  HAVING  A  LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
         SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
         TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT  OF  LESS
         THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
         WHATSOEVER.

                  THE HOLDER OF THIS SECURITY AGREES THAT IT  WILL  COMPLY  WITH
         THE FOREGOING RESTRICTIONS.

         (c)      To permit registrations of transfers and exchanges,  the Trust
shall  execute  and  the  Institutional   Trustee  shall  authenticate   Capital
Securities at the Registrar's request.

         (d)      Registrations  of  transfers  or exchanges  will  be  effected
without  charge,  but only upon payment (with such indemnity as the Registrar or
the Sponsor may require) in respect of any tax or other governmental charge that
may be imposed in relation to it.

         (e)      All   Capital  Securities  issued  upon  any  registration  of
transfer or exchange  pursuant to the terms of this  Declaration  shall evidence
the  same  security  and  shall be  entitled  to the same  benefits  under  this
Declaration as the Capital  Securities  surrendered  upon such  registration  of
transfer or exchange.

         Section 8.3.    Deemed Security Holders. The Trust, the Administrators,
                         -----------------------
the Trustees,  the Paying Agent,  the Transfer  Agent or the Registrar may treat
the Person in whose name any  Certificate  shall be  registered on the books and
records  of  the  Trust  as the  sole  holder  of  such  Certificate  and of the
Securities   represented   by  such   Certificate   for  purposes  of  receiving
Distributions and for all other purposes whatsoever and, accordingly,  shall not
be bound to  recognize  any  equitable  or other  claim to or  interest  in such
Certificate or in the Securities  represented by such Certificate on the part of
any Person,  whether or not the Trust,  the  Administrators,  the Trustees,  the
Paying Agent,  the Transfer  Agent or the  Registrar  shall have actual or other
notice thereof.

                                   ARTICLE IX

                           LIMITATION OF LIABILITY OF
             HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

         Section 9.1.    Liability.
                         ---------

         (a)      Except  as  expressly  set forth  in  this   Declaration,  the
Guarantee and the terms of the Securities, the Sponsor shall not be:

                 (i)     personally  liable for the return of any portion of the
         capital  contributions  (or  any return  thereon) of the Holders of the
         Securities which shall be made solely from assets of the Trust; or

                 (ii)    required to pay to the Trust or to  any  Holder  of the
        Securities any deficit upon dissolution of the Trust or otherwise.
<PAGE>

         (b)      The Holder of the Common Securities shall be liable for all of
the  debts  and  obligations  of the  Trust  (other  than  with  respect  to the
Securities) to the extent not satisfied out of the Trust's assets.

         (c)      Pursuant  to  the  Statutory  Trust Act,  the  Holders  of the
Capital  Securities  shall  be  entitled  to the  same  limitation  of  personal
liability extended to stockholders of private  corporations for profit organized
under the General Corporation Law of the State of Delaware.

         Section 9.2.    Exculpation.
                         -----------

         (a)      No  Indemnified  Person  shall   be  liable,   responsible  or
accountable  in damages or otherwise to the Trust or any Covered  Person for any
loss,  damage or claim  incurred by reason of any act or omission  performed  or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority  conferred on such  Indemnified  Person by this Declaration or by law,
except that an Indemnified  Person shall be liable for any such loss,  damage or
claim  incurred by reason of such  Indemnified  Person's  negligence  or willful
misconduct with respect to such acts or omissions.

         (b)      An Indemnified  Person shall be fully  protected in relying in
good faith upon the  records of the Trust and upon such  information,  opinions,
reports or  statements  presented  to the Trust by any Person as to matters  the
Indemnified   Person   reasonably   believes  are  within  such  other  Person's
professional or expert  competence and, if selected by such Indemnified  Person,
has been  selected  by such  Indemnified  Person with  reasonable  care by or on
behalf of the Trust, including information,  opinions,  reports or statements as
to the value and amount of the  assets,  liabilities,  profits,  losses,  or any
other  facts  pertinent  to the  existence  and  amount  of  assets  from  which
Distributions to Holders of Securities might properly be paid.

         Section 9.3.    Fiduciary Duty.
                         --------------

         (a)      To the extent that, at law or in equity, an Indemnified Person
has duties (including  fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered  Person,  an Indemnified  Person acting under this
Declaration  shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified  Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and  liabilities of the  Indemnified
Person.

         (b)      Whenever  in   this  Declaration  an  Indemnified   Person  is
permitted or required to make a decision:

                  (i)    in  its  "discretion"  or  under  a  grant  of  similar
         authority, the Indemnified  Person  shall be entitled to consider  such
         interests and factors as it desires, including  its own  interests, and
         shall  have  no  duty  or  obligation  to give any consideration to any
         interest of or factors affecting the Trust or any other Person; or

                  (ii)   in its "good faith" or under another express  standard,
         the Indemnified Person shall act under such express standard  and shall
         not  be  subject to any  other  or  different  standard imposed by this
         Declaration or by applicable law.

         Section 9.4.    Indemnification.
                         ---------------

         (a)      The Sponsor shall  indemnify,  to the full extent permitted by
law, any Indemnified  Person who was or is a party or is threatened to be made a

<PAGE>

party to any  threatened,  pending  or  completed  action,  suit or  proceeding,
whether civil,  criminal,  administrative or investigative (other than an action
by or in the  right  of the  Trust)  arising  out of or in  connection  with the
acceptance or  administration  of this Declaration by reason of the fact that he
is  or  was  an  Indemnified  Person  against  expenses  (including   reasonable
attorneys' fees and expenses),  judgments,  fines and amounts paid in settlement
actually and reasonably  incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he  reasonably  believed to
be in or not opposed to the best  interests of the Trust,  and,  with respect to
any  criminal  action or  proceeding,  had no  reasonable  cause to believe  his
conduct was  unlawful.  The  termination  of any action,  suit or  proceeding by
judgment,  order, settlement,  conviction,  or upon a plea of nolo contendere or
its equivalent,  shall not, of itself, create a presumption that the Indemnified
Person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best  interests of the Trust,  and,  with respect to
any criminal  action or  proceeding,  had  reasonable  cause to believe that his
conduct was unlawful.

         (b)      The Sponsor shall  indemnify,  to the full extent permitted by
law, any Indemnified  Person who was or is a party or is threatened to be made a
party to any threatened,  pending or completed action or suit by or in the right
of the Trust to procure a judgment in its favor  arising out of or in connection
with the acceptance or  administration of this Declaration by reason of the fact
that he is or was an Indemnified Person against expenses  (including  reasonable
attorneys'  fees  and  expenses)  actually  and  reasonably  incurred  by him in
connection  with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust;  provided,  however,  that no such  indemnification
                              --------   -------
shall be made in  respect  of any  claim,  issue  or  matter  as to  which  such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon  application  that,  despite the adjudication of liability but in
view of all the  circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

         (c)      To the extent that an Indemnified Person  shall  be successful
on the merits or otherwise  (including  dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
9.4,  or in  defense  of any  claim,  issue  or  matter  therein,  he  shall  be
indemnified,  to the full extent permitted by law,  against expenses  (including
attorneys'  fees  and  expenses)  actually  and  reasonably  incurred  by him in
connection therewith.

         (d)      Any indemnification  of an Administrator  under paragraphs (a)
and (b) of this  Section  9.4 (unless  ordered by a court)  shall be made by the
Sponsor  only as  authorized  in the  specific  case upon a  determination  that
indemnification of the Indemnified Person is proper in the circumstances because
he has met the  applicable  standard of conduct set forth in paragraphs  (a) and
(b). Such  determination  shall be made (i) by the  Administrators by a majority
vote of a Quorum consisting of such  Administrators who were not parties to such
action, suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if
obtainable,  if  a  Quorum  of  disinterested   Administrators  so  directs,  by
independent legal counsel in a written opinion,  or (iii) by the Common Security
Holder of the Trust.

         (e)      To the  ullest extent permitted by  law,  expenses  (including
reasonable  attorneys' fees and expenses)  incurred by an Indemnified  Person in
defending a civil,  criminal,  administrative or investigative  action,  suit or
proceeding  referred to in  paragraphs  (a) and (b) of this Section 9.4 shall be
paid by the Sponsor in advance of the final disposition of such action,  suit or
proceeding  upon receipt of an undertaking  by or on behalf of such  Indemnified
Person to repay such amount if it shall  ultimately be determined that he is not
entitled to be  indemnified  by the Sponsor as  authorized  in this Section 9.4.
Notwithstanding  the  foregoing,  no advance  shall be made by the  Sponsor if a
determination  is reasonably  and promptly made (i) by the  Administrators  by a
majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum
is not  obtainable,  or,  even  if  obtainable,  if a  quorum  of  disinterested

<PAGE>

Administrators so directs,  by independent legal counsel in a written opinion or
(iii) by the Common  Security  Holder of the Trust,  that,  based upon the facts
known to the  Administrators,  counsel or the Common Security Holder at the time
such  determination is made, such Indemnified  Person acted in bad faith or in a
manner that such Indemnified  Person did not believe to be in the best interests
of the Trust, or, with respect to any criminal proceeding, that such Indemnified
Person believed or had reasonable cause to believe his conduct was unlawful.  In
no event  shall any  advance  be made in  instances  where  the  Administrators,
independent  legal counsel or the Common  Security Holder  reasonably  determine
that such Indemnified Person deliberately  breached his duty to the Trust or its
Common or Capital Security Holders.

         (f)      The  Trustees,  at  the  sole cost and expense of the Sponsor,
retain  the right to  representation  by counsel  of their own  choosing  in any
action,  suit or any other  proceeding  for  which  they are  indemnified  under
paragraphs  (a) and (b) of this Section 9.4,  without  affecting  their right to
indemnification  hereunder  or  waiving  any  rights  afforded  to it under this
Declaration or applicable law.

         (g)      The indemnification and  advancement of expenses  provided by,
or granted  pursuant to, the other  paragraphs  of this Section 9.4 shall not be
deemed exclusive of any other rights to which those seeking  indemnification and
advancement  of  expenses  may  be  entitled   under  any  agreement,   vote  of
stockholders  or  disinterested  directors  of the  Sponsor or Capital  Security
Holders of the Trust or  otherwise,  both as to action in his official  capacity
and as to action in another  capacity  while holding such office.  All rights to
indemnification  under  this  Section  9.4 shall be deemed to be  provided  by a
contract  between  the Sponsor  and each  Indemnified  Person who serves in such
capacity  at any time  while  this  Section  9.4 is in  effect.  Any  repeal  or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.

         (h)      The Sponsor or the Trust may  purchase and maintain  insurance
on  behalf  of  any  Person  who is or was an  Indemnified  Person  against  any
liability  asserted  against him and  incurred by him in any such  capacity,  or
arising  out of his status as such,  whether or not the  Sponsor  would have the
power to  indemnify  him against such  liability  under the  provisions  of this
Section 9.4.

         (i)      For purposes  of this Section 9.4,  references  to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent)  absorbed in a consolidation
or  merger,  so that any Person who is or was a  director,  trustee,  officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity,  shall stand in the same position  under the  provisions of this Section
9.4 with  respect to the  resulting  or  surviving  entity as he would have with
respect to such constituent entity if its separate existence had continued.

         (j)      The  indemnification  and advancement of expenses provided by,
or granted pursuant to, this Section 9.4 shall,  unless otherwise  provided when
authorized  or  ratified,  (i)  continue  as to a Person who has ceased to be an
Indemnified  Person and shall inure to the benefit of the heirs,  executors  and
administrators of such a Person;  and (ii) survive the termination or expiration
of this  Declaration  or the earlier  removal or  resignation  of an Indemnified
Person.

         Section 9.5.    Outside Businesses.  Any  Covered  Person, the Sponsor,
                         ------------------
the Delaware Trustee and the  Institutional  Trustee may engage in or possess an
interest in other business ventures of any nature or description,  independently
or with others,  similar or  dissimilar  to the  business of the Trust,  and the
Trust  and the  Holders  of  Securities  shall  have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits derived
therefrom,  and the pursuit of any such venture,  even if  competitive  with the
business of the Trust,  shall not be deemed  wrongful or  improper.  None of any
Covered Person, the Sponsor,  the Delaware Trustee or the Institutional  Trustee
shall be obligated to present any particular  investment or other opportunity to
the Trust even if such  opportunity is of a character  that, if presented to the

<PAGE>

Trust,  could be taken by the Trust,  and any Covered Person,  the Sponsor,  the
Delaware Trustee and the Institutional  Trustee shall have the right to take for
its own account  (individually  or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity.  Any Covered Person,
the Delaware Trustee and the  Institutional  Trustee may engage or be interested
in any financial or other  transaction  with the Sponsor or any Affiliate of the
Sponsor,  or may act as  depositary  for,  trustee or agent  for,  or act on any
committee or body of holders of,  securities or other obligations of the Sponsor
or its Affiliates.

         Section 9.6.    Compensation; Fee. The Sponsor agrees:
                         -----------------

         (a)      to pay to the Trustees from time to time such compensation for
all services  rendered by them hereunder as the parties shall agree from time to
time (which  compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and

         (b)      except as otherwise  expressly  provided  herein, to reimburse
the  Trustees  upon  request  for all  reasonable  expenses,  disbursements  and
advances  incurred or made by the Trustees in  accordance  with any provision of
this  Declaration  (including the reasonable  compensation  and the expenses and
disbursements of their respective agents and counsel),  except any such expense,
disbursement or advance as may be  attributable to its negligence,  bad faith or
willful misconduct.

         For purposes of  clarification,  this Section 9.6 does not  contemplate
the payment by the Sponsor of acceptance or annual  administration fees owing to
the Trustees  under this  Declaration  or the fees and expenses of the Trustees'
counsel in connection with the closing of the transactions  contemplated by this
Declaration.

         The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this  Declaration and the removal or resignation of
any Trustee.

         No Trustee may claim any lien or charge on any property of the Trust as
a result of any amount due pursuant to this Section 9.6.

                                   ARTICLE X

                                   ACCOUNTING

         Section 10.1.   Fiscal Year. The  fiscal  year ("Fiscal Year")  of  the
                         -----------                      -----------
Trust shall be the calendar year, or such other year as is required by the Code.

         Section 10.2.   Certain Accounting Matters.
                         --------------------------

         (a)      At   all   times  during  the  existence  of  the  Trust,  the
Administrators  shall keep, or cause to be kept at the  principal  office of the
Trust in the United  States,  as defined for  purposes  of Treasury  Regulations
section  301.7701-7,  full books of account,  records and supporting  documents,
which shall  reflect in reasonable  detail each  transaction  of the Trust.  The
books of account shall be maintained,  at the Sponsor's  expense,  in accordance
with generally accepted accounting  principles,  consistently applied. The books
of account and the records of the Trust shall be examined by and  reported  upon
(either separately or as part of the Sponsor's  regularly prepared  consolidated
financial  report) as of the end of each  Fiscal  Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.

         (b)      The  Administrators  shall  cause  to  be  duly  prepared  and
delivered  to each of the Holders of  Securities  Form 1099 or such other annual
United States federal  income tax  information  statement  required by the Code,

<PAGE>

containing such information with regard to the Securities held by each Holder as
is required by the Code and the Treasury Regulations.  Notwithstanding any right
under the Code to deliver any such statement at a later date, the Administrators
shall  endeavor to deliver all such  statements  within 30 days after the end of
each Fiscal Year of the Trust.

         (c)      The  Administrators,  at the Sponsor's expense, shall cause to
be duly prepared at the principal office of the Sponsor in the United States, as
`United  States'  is  defined  in  Section  7701(a)(9)  of the  Code  (or at the
principal office of the Trust if the Sponsor has no such principal office in the
United States), and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States  federal  income tax law,
and  any  other  annual  income  tax  returns   required  to  be  filed  by  the
Administrators on behalf of the Trust with any state or local taxing authority.

         Section 10.3.   Banking. The Trust shall maintain in the United States,
                         -------
as defined for purposes of Treasury Regulations section 301.7701-7,  one or more
bank  accounts  in the name and for the sole  benefit  of the  Trust;  provided,
                                                                       --------
however,  that all  payments of funds in respect of the  Debentures  held by the
-------
Institutional  Trustee  shall be made  directly to the  Property  Account and no
other funds of the Trust shall be deposited in the  Property  Account.  The sole
signatories  for  such  accounts  (including  the  Property  Account)  shall  be
designated by the Institutional Trustee.

         Section  10.4.  Withholding.  The  Institutional  Trustee or any Paying
                         -----------
Agent and the  Administrators  shall  comply with all  withholding  requirements
under United States federal,  state and local law. The Institutional  Trustee or
any  Paying  Agent  shall  request,   and  each  Holder  shall  provide  to  the
Institutional  Trustee or any Paying Agent,  such forms or  certificates  as are
necessary to establish an exemption from withholding with respect to the Holder,
and any  representations  and  forms as shall  reasonably  be  requested  by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling,  its withholding  obligations.  The Administrators  shall
file required forms with applicable  jurisdictions and, unless an exemption from
withholding is properly  established by a Holder,  shall remit amounts  withheld
with respect to the Holder to applicable  jurisdictions.  To the extent that the
Institutional  Trustee or any Paying  Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder,  the amount  withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder.  In the event of any claimed  overwithholding,
Holders shall be limited to an action  against the applicable  jurisdiction.  If
the amount  required to be withheld was not withheld  from actual  Distributions
made,  the  Institutional  Trustee  or any Paying  Agent may  reduce  subsequent
Distributions by the amount of such withholding.

                                   ARTICLE XI

                             AMENDMENTS AND MEETINGS

         Section 11.1.   Amendments.
                         ----------

         (a)      Except as otherwise provided in  this  Declaration  or by  any
applicable  terms of the Securities,  this  Declaration may only be amended by a
written instrument  approved and executed (i) by the Institutional  Trustee,  or
(ii) if the  amendment  affects  the  rights,  powers,  duties,  obligations  or
immunities of the Delaware Trustee, by the Delaware Trustee.

         (b)      Notwithstanding any other provision of  this  Article  XI,  an
amendment  may be made,  and any such  purported  amendment  shall be valid  and
effective only if:

                  (i)    the Institutional Trustee shall have first received


<PAGE>

                         (A)  an  Officers' Certificate from each of  the  Trust
                  and  the  Sponsor  that  such  amendment  is permitted by, and
                  conforms  to,  the  terms  of  this Declaration (including the
                  terms of the Securities); and

                         (B)  an opinion of counsel (who may be  counsel  to the
                  Sponsor or the Trust) that such  amendment  is  permitted  by,
                  and  conforms to, the terms of this Declaration (including the
                  terms of the Securities); and

                  (ii)   the result of such amendment would not be to

                         (A)  cause  the  Trust  to  cease to be classified  for
                  purposes of United States federal income taxation as a grantor
                  trust; or

                         (B)  cause the Trust to be deemed  to be an  Investment
                  Company required to be registered under the Investment Company
                  Act.

         (c)      Except  as  provided  in  Section  11.1(d),  (e)  or  (h),  no
amendment  shall be made,  and any such  purported  amendment  shall be void and
ineffective,  unless  the  Holders of a Majority  in  liquidation  amount of the
Capital Securities shall have consented to such amendment.

         (d)      In addition to and notwithstanding any other provision in this
Declaration,  without the consent of each affected Holder,  this Declaration may
not be amended to (i)  change  the amount or timing of any  Distribution  on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the  Securities  as of a  specified  date or change any
conversion  or exchange  provisions  or (ii)  restrict  the right of a Holder to
institute suit for the enforcement of any such payment on or after such date.

         (e)      Sections 9.1(b) and 9.1(c) and this Section  11.1 shall not be
amended without the consent of all of the Holders of the Securities.

         (f)      Article III  shall  not  be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.

         (g)      The   rights  of the Holders of the Capital  Securities  under
Article  IV to appoint  and remove  Trustees  shall not be amended  without  the
consent of the  Holders  of a  Majority  in  liquidation  amount of the  Capital
Securities.

         (h)      This Declaration may be amended by the  Institutional  Trustee
and the Holders of a Majority  in  liquidation  amount of the Common  Securities
without the consent of the Holders of the Capital Securities to:

                  (i)    cure any ambiguity;

                  (ii)   correct or supplement any provision in this Declaration
         that may be defective or inconsistent with any other provision  of this
         Declaration;

                  (iii)  add to  the covenants, restrictions  or  obligations of
         the Sponsor; or

                  (iv)   modify,  eliminate  or  add  to  any  provision of this
         Declaration  to such  extent  as may be  necessary  to ensure  that the
         Trust  will be classified for United States federal income tax purposes
         at all times as a grantor  trust and will not be required  to  register
         as an  Investment Company (including  without  limitation to conform to
         any change in Rule  3a-5, Rule 3a-7  or any other applicable rule under
         the Investment Company  Act or  written  change  in  interpretation  or

<PAGE>

         application  thereof by any  legislative body, court, government agency
         or regulatory authority) which   amendment  does  not  have a  material
         adverse effect on  the rights, preferences or privileges of the Holders
         of Securities;

         provided,  however, that no such modification,  elimination or addition
         --------   -------
referred to in clauses (i), (ii),  (iii) or (iv) shall  adversely  affect in any
material respect the powers, preferences or special rights of Holders of Capital
Securities.

         Section 11.2.   Meetings  of  the  Holders  of  Securities;  Action  by
                         -------------------------------------------------------
Written Consent.
---------------

         (a)      Meetings  of  the  Holders  of  any class of Securities may be
called at any time by the  Administrators  (or as  provided  in the terms of the
Securities)  to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this  Declaration or the terms
of the  Securities.  The  Administrators  shall call a meeting of the Holders of
such class if directed  to do so by the  Holders of at least 10% in  liquidation
amount of such class of Securities.  Such direction shall be given by delivering
to the  Administrators  one or more calls in a writing  stating that the signing
Holders of the  Securities  wish to call a meeting and indicating the general or
specific  purpose  for which the  meeting  is to be called.  Any  Holders of the
Securities  calling a meeting shall specify in writing the Certificates  held by
the Holders of the  Securities  exercising  the right to call a meeting and only
those Securities  represented by such Certificates shall be counted for purposes
of determining  whether the required percentage set forth in the second sentence
of this paragraph has been met.

         (b)      Except to the extent otherwise  provided  in the  terms of the
Securities,  the following  provisions shall apply to meetings of Holders of the
Securities:

                  (i)    notice  of any such  meeting  shall be given to all the
         Holders  of  the Securities  having  a right to vote thereat at least 7
         days  and  not  more  than  60 days  before  the date of such  meeting.
         Whenever  a vote, consent or approval of the Holders of the  Securities
         is  permitted or required under this  Declaration,  such vote,  consent
         or approval may be given at a meeting of the Holders of the Securities.
         Any  action that  may  be  taken at a  meeting  of the  Holders  of the
         Securities  may  be  taken  without a meeting  if a consent in  writing
         setting  forth  the  action  so  taken is signed by  the Holders of the
         Securities owning not less than the minimum  amount  of  Securities  in
         liquidation amount that would be necessary  to  authorize  or take such
         action  at  a  meeting  at which all Holders of the Securities having a
         right to vote thereon were  present  and  voting.  Prompt notice of the
         taking of action without a meeting shall be given to the Holders of the
         Securities  entitled  to vote who have not  consented  in writing.  The
         Administrators  may specify that any written  ballot  submitted  to the
         Holders of the  Securities for the purpose of taking any action without
         a meeting shall be returned to  the Trust within  the time specified by
         the Administrators;

                  (ii)   each  Holder of  a Security may authorize any Person to
         act for it  by  proxy on all matters in which a Holder of Securities is
         entitled to participate, including waiving notice  of any  meeting,  or
         voting or participating at a meeting. No proxy shall be valid after the
         expiration  of  11  months  from  the  date  thereof  unless  otherwise
         provided  in the proxy.  Every proxy shall be revocable at the pleasure
         of  the  Holder  of  the Securities  executing it. Except  as otherwise
         provided  herein,  all  matters  relating  to  the  giving,  voting  or
         validity of proxies shall be governed by the General Corporation Law of
         the State of Delaware relating to proxies, and judicial interpretations
         thereunder, as  if  the  Trust  were a  Delaware  corporation  and  the
         Holders of the  Securities were stockholders of a Delaware corporation;
         each meeting of the Holders of the Securities shall be conducted by the
         Administrators  or  by  such  other  Person that the Administrators may
         designate; and
<PAGE>

                  (iii)  unless the Statutory  Trust Act, this  Declaration,  or
         the terms of the Securities otherwise provides, the Administrators,  in
         their sole discretion, shall establish all other provisions relating to
         meetings  of Holders of Securities, including notice of the time, place
         or purpose of any meeting at which any matter  is to be voted on by any
         Holders of the Securities, waiver of any such notice, action by consent
         without a meeting,   the   establishment  of  a  record  date,   quorum
         requirements, voting in person  or by proxy or any  other  matter  with
         respect to the  exercise of any such right to vote;  provided, however,
                                                              --------  -------
         that each meeting shall be conducted in the United States (as that term
         is defined in Treasury Regulations section 301.7701-7).

                                  ARTICLE XII

        REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE

         Section 12.1.   Representations   and   Warranties   of   Institutional
                         -------------------------------------------------------
Trustee. The initial  Institutional Trustee represents and warrants to the Trust
-------
and to  the  Sponsor  at the  date  of  this  Declaration,  and  each  Successor
Institutional  Trustee  represents  and warrants to the Trust and the Sponsor at
the time of the Successor  Institutional Trustee's acceptance of its appointment
as Institutional Trustee, that:

         (a)      the Institutional  Trustee  is a Delaware banking  corporation
with trust powers,  duly  organized and validly  existing  under the laws of the
State of Delaware with trust power and authority to execute and deliver,  and to
carry out and perform its obligations under the terms of, this Declaration;

         (b)      the execution, delivery and performance  by the  Institutional
Trustee of this Declaration has been duly authorized by all necessary  corporate
action on the part of the Institutional  Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional  Trustee,  enforceable against
it  in   accordance   with  its  terms,   subject  to   applicable   bankruptcy,
reorganization,   moratorium,  insolvency,  and  other  similar  laws  affecting
creditors' rights generally and to general  principles of equity  (regardless of
whether considered in a proceeding in equity or at law);

         (c)      the execution, delivery and performance of this Declaration by
the  Institutional  Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and

         (d)      no consent, approval or authorization of, or registration with
or notice  to,  any state or  federal  banking  authority  is  required  for the
execution,  delivery  or  performance  by  the  Institutional  Trustee  of  this
Declaration.

         Section 12.2.   Representations of  the  Delaware Trustee.  The Trustee
                         -----------------------------------------
that acts as initial Delaware  Trustee  represents and warrants to the Trust and
to the  Sponsor at the date of this  Declaration,  and each  Successor  Delaware
Trustee  represents and warrants to the Trust and the Sponsor at the time of the
Successor Delaware  Trustee's  acceptance of its appointment as Delaware Trustee
that:

         (a)      if it is not a natural person, the Delaware  Trustee  is  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware;

         (b)      if it is not a  natural person,  the execution,  delivery  and
performance by the Delaware Trustee of this Declaration has been duly authorized
by all  necessary  corporate  action on the part of the Delaware  Trustee.  This
Declaration  has been duly executed and delivered by the Delaware  Trustee,  and
under Delaware law (excluding any securities  laws)  constitutes a legal,  valid
and  binding  obligation  of the  Delaware  Trustee,  enforceable  against it in
accordance  with its terms,  subject to applicable  bankruptcy,  reorganization,
moratorium,  insolvency  and other  similar  laws  affecting  creditors'  rights
generally and to general  principles  of equity and the  discretion of the court
(regardless of whether considered in a proceeding in equity or at law);
<PAGE>

         (c)      if it is not a natural person,  the  execution,  delivery  and
performance of this  Declaration by the Delaware  Trustee does not conflict with
or constitute a breach of the charter or by-laws of the Delaware Trustee;

         (d)      it has trust power and authority to execute and  deliver,  and
to carry out and perform its obligations under the terms of, this Declaration;

         (e)      no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority  governing the trust powers
of the Delaware  Trustee is required for the execution,  delivery or performance
by the Delaware Trustee of this Declaration; and

         (f)      the Delaware Trustee is a natural  person who is a resident of
the State of Delaware or, if not a natural person, it is an entity which has its
principal  place of  business in the State of Delaware  and, in either  case,  a
Person that  satisfies  for the Trust the  requirements  of Section  3807 of the
Statutory Trust Act.

                                  ARTICLE XIII

                                  MISCELLANEOUS

        Section 13.1.    Notices.  All  notices provided for in this Declaration
                         -------
shall be in writing,  duly signed by the party giving such notice,  and shall be
delivered,  telecopied  (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:

         (a)      if  given  to  the Trust, in care of the Administrators at the
Trust's  mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):

                  First Bank Statutory Trust III
                  c/o First Banks, Inc.
                  600 James S. McDonnell Boulevard
                  Hazelwood,  Missouri  63042
                  Attention:  Lisa K. Vansickle
                  Telecopy:   314-592-6621

         (b)      if  given  to  the Delaware Trustee, at the Delaware Trustee's
mailing  address set forth below (or such other address as the Delaware  Trustee
may give notice of to the Holders of the Securities):

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890-1600
                  Attention:  Corporate Trust Administration
                  Telecopy:   302-636-4140

         (c)      if given to the Institutional Trustee,  at  the  Institutional
Trustee's  mailing  address  set  forth  below  (or such  other  address  as the
Institutional Trustee may give notice of to the Holders of the Securities):

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890-1600
                  Attention:  Corporate Trust Administration
                  Telecopy:   302-636-4140
<PAGE>

         (d)      if  given  to  the Holder of  the  Common  Securities, at  the
mailing  address of the Sponsor  set forth  below (or such other  address as the
Holder of the Common Securities may give notice of to the Trust):

                  First Banks, Inc.
                  600 James S. McDonnell Boulevard
                  Hazelwood,  Missouri  63042
                  Attention:  Lisa K. Vansickle
                  Telecopy:   314-592-6621

         (e)      if given to any other Holder, at the address set forth  on the
books and records of the Trust.

         All such  notices  shall be deemed to have been given when  received in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered  because of a changed  address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

         Section 13.2.   Governing  Law. This  Declaration and the rights of the
                         --------------
parties  hereunder  shall be governed by and  interpreted in accordance with the
law of the State of Delaware  and all rights and  remedies  shall be governed by
such laws without  regard to the  principles of conflict of laws of the State of
Delaware or any other  jurisdiction  that would call for the  application of the
law of any  jurisdiction  other than the State of Delaware;  provided,  however,
                                                             --------   -------
that  there  shall  not be  applicable  to  the  Trust,  the  Trustees  or  this
Declaration  any  provision  of the laws  (statutory  or common) of the State of
Delaware  pertaining  to  trusts  that  relate  to  or  regulate,  in  a  manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative  requirements  to post  bonds  for  trustees,  officers,  agents  or
employees  of  a  trust,   (c)  the  necessity  for  obtaining  court  or  other
governmental approval concerning the acquisition, holding or disposition of real
or personal  property,  (d) fees or other sums  payable to  trustees,  officers,
agents or employees of a trust,  (e) the allocation of receipts and expenditures
to income or principal,  or (f)  restrictions  or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.

         Section  13.3.  Intention  of the Parties.  It is the  intention of the
                         -------------------------
parties hereto that the Trust be classified for United States federal income tax
purposes  as a  grantor  trust.  The  provisions  of this  Declaration  shall be
interpreted to further this intention of the parties.

         Section 13.4.   Headings.  Headings contained in this  Declaration  are
                         --------
inserted for convenience of reference only and do not affect the  interpretation
of this Declaration or any provision hereof.

         Section 13.5.   Successors  and  Assigns.  Whenever in this Declaration
                         ------------------------
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included,  and all covenants and  agreements in
this  Declaration  by the Sponsor and the  Trustees  shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
<PAGE>

         Section  13.6.  Partial  Enforceability.   If  any  provision  of  this
                         -----------------------
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration,  or the application of
such provision to persons or circumstances  other than those to which it is held
invalid, shall not be affected thereby.

         Section 13.7.   Counterparts.  This  Declaration  may contain more than
                         ------------
one  counterpart of the signature page and this  Declaration  may be executed by
the affixing of the signature of each of the Trustees and  Administrators to any
of such counterpart  signature  pages.  All of such counterpart  signature pages
shall be read as though  one,  and they  shall have the same force and effect as
though all of the signers had signed a single signature page.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS  WHEREOF,  the undersigned  have caused these presents to be
executed as of the day and year first above written.

                            WILMINGTON TRUST COMPANY,
                            as Delaware Trustee


                            By: /s/   Christopher J. Monigle
                               -------------------------------------------------
                               Name:  Christopher J. Monigle
                               Title: Assistant Vice President


                            WILMINGTON TRUST COMPANY,
                            as Institutional Trustee


                            By: /s/   Christopher J. Monigle
                               -------------------------------------------------
                               Name:  Christopher J. Monigle
                               Title: Assistant Vice President


                            FIRST BANKS, INC., as Sponsor


                            By: /s/   Allen H. Blake
                               -------------------------------------------------
                               Name:  Allen H. Blake
                               Title: President and Chief Executive Officer

                            ADMINISTRATORS OF FIRST BANK STATUTORY TRUST III


                            By: /s/   Terrance M. McCarthy
                               -------------------------------------------------
                               Administrator


                            By: /s/   Peter D. Wimmer
                               -------------------------------------------------
                               Administrator


                            By: /s/   Lisa K. Vansickle
                               -------------------------------------------------
                               Administrator



<PAGE>


                                     ANNEX I

                               TERMS OF SECURITIES

            Pursuant to Section 6.1 of the Amended and Restated  Declaration  of
Trust,  dated  as of  November  23,  2004 (as  amended  from  time to time,  the
"Declaration"), the designation, rights, privileges,  restrictions,  preferences
and  other  terms  and  provisions  of the  Capital  Securities  and the  Common
Securities are set out below (each  capitalized term used but not defined herein
has the meaning set forth in the Declaration):

       1.       Designation and Number.
                ----------------------

                (a)      40,000 Floating  Rate Capital  Securities of First Bank
Statutory Trust III (the "Trust"),  with an aggregate stated  liquidation amount
with   respect   to  the   assets  of  the  Trust  of  forty   million   dollars
($40,000,000.00)  and a stated  liquidation amount with respect to the assets of
the Trust of  $1,000.00  per Capital  Security,  are hereby  designated  for the
purposes  of  identification  only  as the  "Capital  Securities".  The  Capital
                                             -------------------
Security  Certificates  evidencing the Capital Securities shall be substantially
in the form of Exhibit A-1 to the  Declaration,  with such changes and additions
thereto or deletions  therefrom as may be required by ordinary usage,  custom or
practice.

                (b)      1,238 Floating Rate Common Securities of the Trust (the
"Common   Securities")  will  be  evidenced  by  Common  Security   Certificates
 -------------------
substantially in the form of Exhibit A-2 to the  Declaration,  with such changes
and  additions  thereto or  deletions  therefrom  as may be required by ordinary
usage, custom or practice.

       2.       Distributions.
                -------------

                (a)      Distributions will be payable on each Security for  the
Distribution  Period beginning on (and including) the date of original  issuance
and ending on (but excluding) the  Distribution  Payment Date in March 2005 at a
rate per annum of 4.54% and shall bear interest for each successive Distribution
Period beginning on (and including) the Distribution Payment Date in March 2005,
and each succeeding Distribution Payment Date, and ending on (but excluding) the
next  succeeding  Distribution  Payment  Date at a rate per  annum  equal to the
3-Month LIBOR,  determined as described  below,  plus 2.18% (the "Coupon Rate"),
                                                                  -----------
applied to the stated  liquidation  amount thereof,  such rate being the rate of
interest  payable on the  Debentures  to be held by the  Institutional  Trustee.
Distributions in arrears will bear interest thereon compounded  quarterly at the
applicable Distribution Rate (to the extent permitted by law). Distributions, as
used herein,  include cash  distributions and any such compounded  distributions
unless  otherwise  noted.  A  Distribution  is payable  only to the extent  that
payments are made in respect of the Debentures held by the Institutional Trustee
and to the extent the Institutional  Trustee has funds available  therefor.  The
amount  of  the  Distribution  payable  for  any  Distribution  Period  will  be
calculated by applying the Distribution  Rate to the stated  liquidation  amount
outstanding at the commencement of the  Distribution  Period on the basis of the
actual number of days in the Distribution  Period concerned  divided by 360. All
percentages  resulting from any  calculations on the Capital  Securities will be
rounded,  if necessary,  to the nearest one  hundred-thousandth  of a percentage
point,  with five  one-millionths  of a percentage  point rounded  upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts  used in or  resulting  from such  calculation  will be  rounded  to the
nearest cent (with one-half cent being rounded upward)).

                (b)      Distributions  on  the  Securities  will be cumulative,
will accrue from the date of original issuance, and will be payable,  subject to
extension of  distribution  payment  periods as described  herein,  quarterly in
arrears on March 15, June 15,  September 15 and December 15 of each year,  or if
such day is not a Business  Day, then the next  succeeding  Business Day (each a

<PAGE>

"Distribution  Payment Date"),  commencing on the  Distribution  Payment Date in
 --------------------------
March 2005 when, as and if available for payment.  The Debenture  Issuer has the
right under the Indenture to defer  payments of interest on the  Debentures,  so
long as no  Extension  Event of  Default  has  occurred  and is  continuing,  by
deferring  the payment of interest on the  Debentures  for up to 20  consecutive
quarterly  periods  (each an  "Extension  Period")  at any time and from time to
                               -----------------
time, subject to the conditions  described below,  during which Extension Period
no interest shall be due and payable. During any Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest will
accrue at an annual rate equal to the Distribution  Rate in effect for each such
Extension  Period,  compounded  quarterly from the date such interest would have
been payable were it not for the Extension  Period,  to the extent  permitted by
law (such interest  referred to herein as "Additional  Interest").  No Extension
                                           --------------------
Period may end on a date other than a  Distribution  Payment Date. At the end of
any such  Extension  Period,  the  Debenture  Issuer shall pay all interest then
accrued  and  unpaid  on  the  Debentures  (together  with  Additional  Interest
thereon);  provided,  however,  that no Extension  Period may extend  beyond the
           --------   -------
Maturity  Date and provided  further,  however,  that during any such  Extension
                   --------  -------   -------
Period, the Debenture Issuer and its Affiliates shall not (i) declare or pay any
dividends  or  distributions  on,  or  redeem,  purchase,  acquire,  or  make  a
liquidation  payment  with  respect  to, any of the  Debenture  Issuer's  or its
Affiliates'  capital stock (other than payments of dividends or distributions to
the  Debenture  Issuer)  or make any  guarantee  payments  with  respect  to the
foregoing,  or (ii) make any payment of principal of or interest or premium,  if
any, on or repay,  repurchase  or redeem any debt  securities  of the  Debenture
Issuer or any  Affiliate  that rank pari passu in all respects with or junior in
interest to the  Debentures  (other  than,  with respect to clauses (i) and (ii)
above, (a) repurchases,  redemptions or other  acquisitions of shares of capital
stock of the  Debenture  Issuer  in  connection  with any  employment  contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees,  officers,  directors or  consultants,  in connection with a dividend
reinvestment  or  stockholder  stock  purchase  plan or in  connection  with the
issuance of capital stock of the  Debenture  Issuer (or  securities  convertible
into or exercisable for such capital stock) as  consideration  in an acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any  exchange or  conversion  of any class or series of the  Debenture
Issuer's  capital  stock (or any capital  stock of a subsidiary of the Debenture
Issuer) for any class or series of the  Debenture  Issuer's  capital stock or of
any class or  series of the  Debenture  Issuer's  indebtedness  for any class or
series of the Debenture  Issuer's  capital stock, (c) the purchase of fractional
interests in shares of the  Debenture  Issuer's  capital  stock  pursuant to the
conversion or exchange  provisions  of such capital stock or the security  being
converted or exchanged, (d) any declaration of a dividend in connection with any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (e) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(f) payments under the Capital Securities  Guarantee).  Prior to the termination
of any Extension  Period,  the Debenture  Issuer may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional  Interest,  the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements.  No interest or Additional Interest shall
be due and payable during an Extension  Period,  except at the end thereof,  but
each  installment  of interest  that would  otherwise  have been due and payable
during  such  Extension  Period  shall  bear  Additional  Interest.  During  any
Extension Period, Distributions on the Securities shall be deferred for a period
equal to the Extension Period. If Distributions are deferred,  the Distributions
due shall be paid on the date that the related  Extension  Period  terminates to
Holders of the  Securities  as they appear on the books and records of the Trust
on the  record  date  immediately  preceding  such  date.  Distributions  on the
Securities  must  be paid on the  dates  payable  (after  giving  effect  to any
Extension  Period)  to the  extent  that the Trust has funds  available  for the
payment of such  distributions in the Property Account of the Trust. The Trust's

<PAGE>

funds  available  for  Distribution  to the  Holders of the  Securities  will be
limited  to  payments  received  from  the  Debenture  Issuer.  The  payment  of
Distributions  out of moneys held by the Trust is  guaranteed  by the  Guarantor
pursuant to the Guarantee.

                (c)      Distributions  on the Securities will be payable to the
Holders  thereof  as they  appear on the books and  records  of the Trust on the
relevant  record dates.  The relevant record dates shall be five days before the
relevant Distribution Payment Date. Distributions payable on any Securities that
are not  punctually  paid on any  Distribution  Payment Date, as a result of the
Debenture  Issuer having failed to make a payment under the  Debentures,  as the
case may be, when due (taking into account any Extension Period),  will cease to
be payable to the Person in whose name such  Securities  are  registered  on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such  Securities  are  registered on the special record
date or other specified date determined in accordance with the Indenture.

                (d)      In the event that there is any money or other  property
held by or for the Trust that is not  accounted  for  hereunder,  such  property
shall be  distributed  Pro Rata (as  defined  herein)  among the  Holders of the
Securities.

        3.       Liquidation Distribution Upon Dissolution.  In the event of the
voluntary or involuntary liquidation,  dissolution, winding-up or termination of
the Trust (each a  "Liquidation")  other than in connection with a redemption of
                    -----------
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after  satisfaction  of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer),  distributions equal to the aggregate of the
stated  liquidation  amount of $1,000.00  per  Security  plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
                                                                     -----------
Distribution"), unless in connection with such Liquidation, the Debentures in an
------------
aggregate  stated  principal  amount equal to the aggregate  stated  liquidation
amount of such Securities,  with an interest rate equal to the Distribution Rate
of, and bearing  accrued and unpaid  interest in an amount  equal to the accrued
and  unpaid  Distributions  on,  and  having  the  same  record  date  as,  such
Securities,  after paying or making  reasonable  provision to pay all claims and
obligations  of the Trust in accordance  with the Statutory  Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.

         The  Sponsor,  as  the Holder of all of the Common Securities,  has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event),  subject to the receipt by the Debenture  Issuer
of prior approval from the Board of Governors of the Federal Reserve System,  or
its designated  district bank, as applicable,  and any successor  federal agency
that is primarily  responsible for regulating the activities of the Sponsor (the
"Federal Reserve"), if the Sponsor is a bank holding company, or from the Office
 ---------------
of  Thrift  Supervision  and any  successor  federal  agency  that is  primarily
responsible for regulating the activities of Sponsor, (the "OTS") if the Sponsor
                                                            ---
is a savings and loan holding  company,  in either case if then  required  under
applicable  capital  guidelines  or policies  of the Federal  Reserve or OTS, as
applicable,  and, after  satisfaction  of liabilities to creditors of the Trust,
cause the Debentures to be distributed to the Holders of the Securities on a Pro
Rata basis in accordance with the aggregate stated liquidation amount thereof.

         If a Liquidation of the Trust occurs as described in  clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing,  after  satisfaction  of liabilities to creditors of the Trust, to
the Holders of the Securities,  the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by
the Institutional Trustee not to be practical,  in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders,  after  satisfaction of liabilities of creditors of the Trust to
the  extent  not  satisfied  by the  Debenture  Issuer,  an amount  equal to the

<PAGE>

Liquidation  Distribution.  An early Liquidation of the Trust pursuant to clause
(iv) of  Section  7.1(a) of the  Declaration  shall  occur if the  Institutional
Trustee  determines  that such  Liquidation is possible by  distributing,  after
satisfaction  of  liabilities  to creditors of the Trust,  to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

            If, upon any such  Liquidation the Liquidation  Distribution  can be
paid only in part because the Trust has insufficient  assets available to pay in
full the aggregate Liquidation  Distribution,  then the amounts payable directly
by the Trust on such  Capital  Securities  shall be paid to the  Holders  of the
Trust  Securities  on a Pro Rata  basis,  except that if an Event of Default has
occurred and is continuing,  the Capital Securities shall have a preference over
the Common Securities with regard to such distributions.

            After  the  date  for  any   distribution  of  the  Debentures  upon
dissolution of the Trust (i) the Securities of the Trust will be deemed to be no
longer outstanding,  (ii) upon surrender of a Holder's  Securities  certificate,
such  Holder of the  Securities  will  receive a  certificate  representing  the
Debentures  to be  delivered  upon such  distribution,  (iii)  any  certificates
representing  the  Securities  still  outstanding  will be deemed  to  represent
undivided  beneficial  interests in such of the  Debentures as have an aggregate
principal  amount  equal to the  aggregate  stated  liquidation  amount  with an
interest rate  identical to the  Distribution  Rate of, and bearing  accrued and
unpaid  interest  equal to accrued and unpaid  distributions  on, the Securities
until such  certificates  are presented to the Debenture Issuer or its agent for
transfer or  reissuance  (and until such  certificates  are so  surrendered,  no
payments of  interest or  principal  shall be made to Holders of  Securities  in
respect of any payments due and payable under the Debentures;  provided, however
                                                               --------  -------
that such failure to pay shall not be deemed to be an Event of Default and shall
not entitle the Holder to the benefits of the Guarantee), and (iv) all rights of
Holders of Securities  under the  Declaration  shall cease,  except the right of
such Holders to receive  Debentures upon surrender of certificates  representing
such Securities.

            4.   Redemption and Distribution.
                 ---------------------------

                (a)      The  Debentures  will  mature on December 15, 2034. The
Debentures may be redeemed by the Debenture  Issuer, in whole or in part, at any
Distribution  Payment Date on or after the Distribution Payment Date in December
2009, at the Redemption  Price.  In addition,  the Debentures may be redeemed by
the Debenture Issuer at the Special  Redemption Price, in whole but not in part,
at any  Distribution  Payment Date,  upon the occurrence and  continuation  of a
Special Event within 120 days  following the occurrence of such Special Event at
the  Special  Redemption  Price,  upon not less  than 30 nor more  than 60 days'
notice  to  holders  of  such  Debentures  so  long as  such  Special  Event  is
continuing.  In each  case,  the right of the  Debenture  Issuer  to redeem  the
Debentures is subject to the Debenture  Issuer having  received  prior  approval
from the Federal Reserve (if the Debenture  Issuer is a bank holding company) or
prior  approval  from the OTS (if the  Debenture  Issuer is a  savings  and loan
holding  company),  in each  case  if then  required  under  applicable  capital
guidelines or policies of the applicable federal agency.

            "3-Month LIBOR" means the London interbank offered interest rate for
             -------------
three-month,  U.S.  dollar deposits  determined by the Debenture  Trustee in the
following order of priority:

                     (1)      the rate (expressed as a percentage per annum) for
            U.S. dollar deposits having a three-month  maturity  that appears on
            Telerate  Page 3750  as  of 11:00 a.m.  (London time) on the related
            Determination  Date  (as defined below).  "Telerate Page 3750" means
            the  display  designated  as "Page 3750" on  the Dow Jones  Telerate
            Service  or such  other  page  as may  replace  Page  3750  on  that
            service or such other  service or services as may  be  nominated  by
            the British Bankers' Association as  the  information vendor for the
            purpose  of  displaying  London  interbank  offered  rates for  U.S.
            dollar deposits;
<PAGE>

                     (2)      if such rate cannoy be identified  on the  related
            Determination   Date,  the  Debenture  Trustee  will   request   the
            principal  London  offices  of four  leading  banks  in  the  London
            interbank  market   to  provide  such   banks'  offered   quotations
            (expressed  as  percentages  per annum) to prime banks in the London
            interbank  market for  U.S.  dollar  deposits  having  a three-month
            maturity  as of 11:00  a.m.  (London  time)  on  such  Determination
            Date. If at least two quotations are  provided,  3-Month LIBOR  will
            be the arithmetic mean of such quotations;

                     (3)      if fewer than two such quotations are provided  as
            requested  in  clause (2) above, the Debenture  Trustee will request
            four  major New York City  banks  to  provide  such  banks'  offered
            quotations   (expressed   as   percentages  per  annum)  to  leading
            European banks for loans in U.S.  dollars  as  of 11:00 a.m. (London
            time)  on  such Determination  Date. If at least two such quotations
            are  provided,  3-Month LIBOR will  be the  arithmetic  mean of such
            quotations; and

                     (4)      if fewer than two such quotations are provided  as
            requested  in  clause  (3)  above,  3-Month  LIBOR will be a 3-Month
            LIBOR   determined   with  respect  to   the   Distribution   Period
            immediately preceding such current Distribution Period.

         If  the  rate  for U.S. dollar  deposits having a three-month  maturity
that initially  appears on Telerate Page 3750 as of 11:00 a.m.  (London time) on
the related  Determination  Date is  superseded  on the Telerate  Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination  Date, then the
corrected rate as so  substituted on the applicable  page will be the applicable
3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         "Capital Treatment Event" means the receipt by the Debenture Issuer and
          -----------------------
the Trust of an  opinion of counsel  experienced  in such  matters to the effect
that, as a result of the  occurrence  of any amendment to, or change  (including
any announced  prospective  change) in, the laws,  rules or  regulations  of the
United States or any political  subdivision thereof or therein, or as the result
of  any  official  or   administrative   pronouncement  or  action  or  decision
interpreting  or applying such laws,  rules or  regulations,  which amendment or
change is effective or which  pronouncement,  action or decision is announced on
or after the date of original issuance of the Debentures,  there is more than an
insubstantial risk that the Sponsor will not, within 90 days of the date of such
opinion,  be  entitled  to treat an amount  equal to the  aggregate  liquidation
amount of the Capital  Securities  as "Tier 1 Capital" (or its then  equivalent)
for purposes of the capital adequacy  guidelines of the Federal Reserve, as then
in effect and applicable to the Sponsor (or if the Sponsor is not a bank holding
company,  such guidelines  applied to the Sponsor as if the Sponsor were subject
to such  guidelines);  provided,  however,  that the inability of the Sponsor to
                       --------   -------
treat all or any portion of the liquidation  amount of the Capital Securities as
Tier l Capital shall not constitute the basis for a Capital  Treatment Event, if
such  inability  results from the Sponsor  having  cumulative  preferred  stock,
minority interests in consolidated subsidiaries,  or any other class of security
or  interest  which  the  Federal  Reserve  or OTS,  as  applicable,  may now or
hereafter accord Tier 1 Capital  treatment in excess of the amount which may now
or hereafter  qualify for treatment as Tier 1 Capital under  applicable  capital
adequacy  guidelines;  provided  further,  however,  that  the  distribution  of
                       --------  -------   -------
Debentures in connection  with the  Liquidation of the Trust shall not in and of
itself  constitute a Capital  Treatment Event unless such Liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.

         "Determination  Date"  means the date that is two London  Banking  Days
          -------------------
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.
<PAGE>

         "Investment  Company  Event" means the receipt by the Debenture  Issuer
          --------------------------
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the  occurrence of a change in law or regulation or written
change  (including  any  announced  prospective  change)  in  interpretation  or
application of law or regulation by any legislative  body,  court,  governmental
agency or regulatory  authority,  there is more than an insubstantial  risk that
the Trust is or, within 90 days of the date of such opinion,  will be considered
an  Investment  Company that is required to be registered  under the  Investment
Company Act which change or prospective change becomes effective or would become
effective,  as the case  may be,  on or after  the date of the  issuance  of the
Debentures.

         "Maturity Date" means December 15, 2034.
          -------------

         "Redemption  Date"  shall  mean the date  fixed for the  redemption  of
          ----------------
Capital Securities, which shall be any Distribution Payment Date on or after the
Distribution Payment Date in December 2009.

         "Redemption Price" means 100% of the principal amount of the Debentures
          ----------------
being  redeemed,  plus  accrued and unpaid  Interest on such  Debentures  to the
Redemption Date.

         "Special  Event" means a Tax Event,  an  Investment  Company Event or a
          --------------
Capital Treatment Event.

         "Special  Redemption  Date"  means a date  on  which  a  Special  Event
          -------------------------
redemption occurs, which shall be a Distribution Payment Date.

         "Special  Redemption  Price" means the price set forth in the following
          --------------------------
table for any Special  Redemption  Date that occurs on the date indicated  below
(or if such day is not a Business Day, then the next  succeeding  Business Day),
expressed as the  percentage of the  principal  amount of the  Debentures  being
redeemed:

----------------------------------------- --------------------------------------
         Month in which Special                 Special Redemption Price
         ----------------------                 ------------------------
         Redemption Date Occurs
         ----------------------
----------------------------------------- --------------------------------------
               March 2005                                104.625%
----------------------------------------- --------------------------------------
               June 2005                                 104.300%
----------------------------------------- --------------------------------------
             September 2005                              104.000%
----------------------------------------- --------------------------------------
             December 2005                               103.650%
----------------------------------------- --------------------------------------
               March 2006                                103.350%
----------------------------------------- --------------------------------------
               June 2006                                 103.000%
----------------------------------------- --------------------------------------
             September 2006                              102.700%
----------------------------------------- --------------------------------------
             December 2006                               102.350%
----------------------------------------- --------------------------------------
               March 2007                                102.050%
----------------------------------------- --------------------------------------
               June 2007                                 101.700%
----------------------------------------- --------------------------------------
             September 2007                              101.400%
----------------------------------------- --------------------------------------

<PAGE>
----------------------------------------- --------------------------------------
             December 2007                               101.050%
----------------------------------------- --------------------------------------
               March 2008                                100.750%
----------------------------------------- --------------------------------------
               June 2008                                 100.450%
----------------------------------------- --------------------------------------
             September 2008                              100.200%
----------------------------------------- --------------------------------------
      December 2008 and thereafter                       100.000%
----------------------------------------- --------------------------------------


         plus, in each case,  accrued and unpaid  Interest on such Debentures to
the Special Redemption Date.

         "Tax Event" means the receipt by the Debenture  Issuer and the Trust of
          ---------
an opinion of  counsel  experienced  in such  matters to the effect  that,  as a
result  of any  amendment  to or change  (including  any  announced  prospective
change) in the laws or any  regulations  thereunder  of the United States or any
political  subdivision or taxing authority thereof or therein, or as a result of
any official administrative  pronouncement (including any private letter ruling,
technical advice memorandum,  field service advice, regulatory procedure, notice
or  announcement  including any notice or  announcement  of intent to adopt such
procedures or regulations)  (an  "Administrative  Action") or judicial  decision
                                  ----------------------
interpreting  or applying such laws or  regulations,  regardless of whether such
Administrative  Action or judicial decision is issued to or in connection with a
proceeding  involving  the  Debenture  Issuer or the Trust  and  whether  or not
subject  to  review  or  appeal,   which   amendment,   clarification,   change,
Administrative Action or decision is enacted,  promulgated or announced, in each
case on or after the date of original issuance of the Debentures,  there is more
than an insubstantial  risk that: (i) the Trust is, or will be within 90 days of
the date of such  opinion,  subject  to United  States  federal  income tax with
respect to income received or accrued on the Debentures;  (ii) interest  payable
by the Debenture  Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States  federal income tax purposes;  or (iii) the Trust is, or
will be within 90 days of the date of such  opinion,  subject  to more than a de
minimis amount of other taxes, duties or other governmental charges.

                (b)      Upon the repayment in full at maturity or redemption in
whole or in part of the Debentures (other than following the distribution of the
Debentures to the Holders of the  Securities),  the proceeds from such repayment
or payment shall  concurrently  be applied to redeem Pro Rata at the  applicable
Redemption Price or Special  Redemption Price, as applicable,  Securities having
an aggregate  liquidation amount equal to the aggregate  principal amount of the
Debentures  so repaid or  redeemed;  provided,  however,  that  holders  of such
                                     --------   -------
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption (other than at the scheduled maturity of the Debentures).

                (c)      If  fewer than all the outstanding Securities are to be
so redeemed,  the Common Securities and the Capital  Securities will be redeemed
Pro Rata and the Capital  Securities  to be redeemed  will be redeemed  Pro Rata
from each Holder of Capital Securities.

                (d)      The Trust may not redeem fewer than all the outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all quarterly  Distribution periods terminating on or
before the date of redemption.
<PAGE>

                (e)      Redemption or Distribution Procedures.
                         -------------------------------------

                        (i)   Notice  of   any   redemption  of,  or  notice  of
         distribution of the Debentures in  exchange   for,  the   Securities (a
         "Redemption/Distribution Notice") will be given by the Trust by mail to
          ------------------------------
         each Holder of Securities to be redeemed or exchanged not fewer than 30
         nor more than 60 days before the date fixed for redemption  or exchange
         thereof which, in the case of a redemption,  will be the date fixed for
         redemption of the  Debentures.  For purposes of the  calculation of the
         date  of  redemption or exchange and the dates  on  which  notices  are
         given  pursuant  to this  paragraph  4(e)(i), a Redemption/Distribution
         Notice  shall  be  deemed  to be  given on the day such notice is first
         mailed  by  first-class  mail,  postage  prepaid,  to  Holders  of such
         Securities.  Each  Redemption/Distribution  Notice  shall  be addressed
         to  the  Holders of such  Securities at the address of each such Holder
         appearing  on  the  books  and  records  of the Trust. No defect in the
         Redemption/Distribution Notice or in the mailing  thereof  with respect
         to any Holder shall affect the  validity of  the redemption or exchange
         proceedings with respect to any other Holder.

                        (ii)  If the Securities are to be redeemed and the Trust
         gives a Redemption/Distribution Notice, which notice may only be issued
         if the Debentures  are  redeemed as set out in this  paragraph 4 (which
         notice  will  be irrevocable),  then,  provided that the  Institutional
                                                --------
         Trustee has a sufficient amount of cash in connection with the  related
         redemption  or maturity of the Debentures,  the  Institutional  Trustee
         will  pay  the relevant Redemption Price or Special  Redemption  Price,
         as applicable, to the Holders of such Securities by check mailed to the
         address of each such Holder  appearing  on the books and records of the
         Trust on the Redemption Date. If a Redemption/Distribution Notice shall
         have been given and funds deposited as required then immediately  prior
         to  the  close  of business on the date of such  deposit  Distributions
         will cease to accrue on the Securities so called for redemption and all
         rights of  Holders  of such  Securities so called for  redemption  will
         cease,  except the right of the Holders of such Securities  to  receive
         the applicable Redemption Price or Special Redemption  Price  specified
         in  paragraph  4(a),  but without  interest on such Redemption Price or
         Special Redemption Price. If payment of the Redemption Price or Special
         Redemption  Price  in respect of any Securities is improperly  withheld
         or refused and not paid either by the Trust or by the Debenture  Issuer
         as   guarantor  pursuant  to  the  Guarantee,  Distributions   on  such
         Securities  will continue to  accrue  at the Distribution Rate from the
         original Redemption Date to the  actual date of  payment, in which case
         the  actual  payment  date  will  be  considered  the  date  fixed  for
         redemption for purposes of calculating  the Redemption Price or Special
         Redemption  Price. In  the  event  of  any  redemption  of the  Capital
         Securities issued by the Trust in part, the Trust shall not be required
         to (i) issue,  register the transfer of or exchange any Security during
         a  period  beginning  at  the  opening of business five days before any
         selection  for  redemption of the Capital  Securities and ending at the
         close of business on the earliest date on which the relevant  notice of
         redemption is deemed to have been given  to all  Holders of the Capital
         Securities  to  be  so  redeemed  or (ii) register  the  transfer of or
         exchange  any Capital  Securities  so selected for redemption, in whole
         or in part, except for the unredeemed portion of any Capital Securities
         being redeemed in part.

                        (iii) Redemption/Distribution Notices shall be  sent  by
         the  Administrators  on  behalf of the Trust to (A) in  respect  of the
         Capital  Securities,  the  Holders  thereof  and (B)  in respect of the
         Common Securities, the Holder thereof.

                        (iv)  Subject   to   the   foregoing and  applicable law
         (including, without limitation, United States federal securities laws),
         and  provided  that the  acquiror  is  not  the  Holder  of  the Common
         Securities  or  the obligor under the Indenture,  the Sponsor or any of
         its  subsidiaries  may  at  any  time  and  from  time to time purchase
         outstanding  Capital  Securities  by  tender, in  the open market or by
         private agreement.
<PAGE>
         5.      Voting Rights - Capital Securities.
                 ----------------------------------

                (a)      Except as provided  under paragraphs  5(b) and 7 and as
otherwise  required  by law and the  Declaration,  the  Holders  of the  Capital
Securities will have no voting rights. The Administrators are required to call a
meeting of the Holders of the Capital Securities if directed to do so by Holders
of at least 10% in liquidation amount of the Capital Securities.

                (b)      Subject to the requirements of obtaining a tax  opinion
by the  Institutional  Trustee  in certain  circumstances  set forth in the last
sentence of this paragraph,  the Holders of a Majority in liquidation  amount of
the Capital  Securities,  voting separately as a class, have the right to direct
the  time,  method,  and  place of  conducting  any  proceeding  for any  remedy
available  to the  Institutional  Trustee,  or  exercising  any  trust  or power
conferred upon the  Institutional  Trustee under the Declaration,  including the
right to direct the Institutional  Trustee, as holder of the Debentures,  to (i)
exercise  the  remedies  available  under  the  Indenture  as the  holder of the
Debentures,  (ii) waive any past default that is waivable  under the  Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment,  modification or termination
of the  Indenture  or the  Debentures  where  such  consent  shall be  required;
provided,  however,  that,  where a consent or action under the Indenture  would
--------   -------
require the consent or act of the holders of greater  than a simple  majority in
aggregate  principal amount of Debentures (a "Super Majority") affected thereby,
                                              --------------
the Institutional  Trustee may only give such consent or take such action at the
written  direction  of the  Holders of at least the  proportion  in  liquidation
amount of the Capital  Securities  outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Debentures  outstanding.  If
the Institutional Trustee fails to enforce its rights under the Debentures after
the Holders of a Majority in liquidation  amount of such Capital Securities have
so directed the Institutional Trustee, to the fullest extent permitted by law, a
Holder of the  Capital  Securities  may  institute a legal  proceeding  directly
against the Debenture Issuer to enforce the Institutional Trustee's rights under
the  Debentures  without  first  instituting  any legal  proceeding  against the
Institutional  Trustee  or any  other  person  or  entity.  Notwithstanding  the
foregoing,  if an Event of Default has occurred and is continuing and such event
is  attributable  to the  failure of the  Debenture  Issuer to pay  interest  or
principal on the Debentures on the date the interest or principal is payable (or
in the case of redemption,  the Redemption Date or the Special  Redemption Date,
as applicable),  then a Holder of record of the Capital  Securities may directly
institute a proceeding for  enforcement  of payment,  on or after the respective
due dates specified in the Debentures,  to such Holder directly of the principal
of or interest on the Debentures  having an aggregate  principal amount equal to
the aggregate  liquidation  amount of the Capital Securities of such Holder. The
Institutional  Trustee shall notify all Holders of the Capital Securities of any
default  actually  known  to  the  Institutional  Trustee  with  respect  to the
Debentures  unless (x) such  default  has been cured prior to the giving of such
notice  or (y) the  Institutional  Trustee  determines  in good  faith  that the
withholding  of such notice is in the  interest  of the Holders of such  Capital
Securities,  except where the default  relates to the payment of principal of or
interest on any of the  Debentures.  Such notice shall state that such Indenture
Event of Default also  constitutes  an Event of Default  hereunder.  Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the  Institutional  Trustee has obtained
an opinion of tax counsel to the effect that,  as a result of such  action,  the
Trust will not be  classified  as other than a grantor  trust for United  States
federal income tax purposes.

         In the event the consent of the Institutional Trustee, as the holder of
the  Debentures,  is required under the Indenture with respect to any amendment,
modification or termination of the Indenture,  the  Institutional  Trustee shall

<PAGE>

request the  direction  of the Holders of the  Securities  with  respect to such
amendment,  modification  or  termination  and shall  vote with  respect to such
amendment,  modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class;  provided,  however,
                                                             --------   -------
that  where a  consent  under the  Indenture  would  require  the  consent  of a
Super-Majority,  the  Institutional  Trustee  may only give such  consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities  outstanding  which the  relevant  Super-Majority  represents  of the
aggregate  principal  amount of the Debentures  outstanding.  The  Institutional
Trustee shall not take any such action in accordance  with the directions of the
Holders of the  Securities  unless the  Institutional  Trustee  has  obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified  as other than a grantor trust for United States  federal
income tax purposes.

         A waiver of an Indenture  Event of Default will  constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of  Holders of the  Capital  Securities  may be given at a  separate  meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the  Securities  in the Trust or pursuant to written  consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital  Securities are entitled to vote, or of any matter upon which action
by written  consent of such Holders is to be taken,  to be mailed to each Holder
of record of the Capital  Securities.  Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which  such  action  is to be taken,  (ii) a  description  of any  resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which  written  consent is sought and (iii)  instructions
for the  delivery of proxies or  consents.  No vote or consent of the Holders of
the  Capital  Securities  will be  required  for the Trust to redeem  and cancel
Capital  Securities or to  distribute  the  Debentures  in  accordance  with the
Declaration and the terms of the Securities.

         Notwithstanding  that Holders of the Capital Securities are entitled to
vote or  consent  under any of the  circumstances  described  above,  any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall,  for purposes
of such vote or  consent,  be treated  as if such  Capital  Securities  were not
outstanding.

         In no event will  Holders of the Capital  Securities  have the right to
vote to appoint,  remove or replace the Administrators,  which voting rights are
vested  exclusively in the Sponsor as the Holder of all of the Common Securities
of the  Trust.  Under  certain  circumstances  as more  fully  described  in the
Declaration,  Holders of Capital  Securities  have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.

         6.      Voting Rights - Common Securities.
                 ---------------------------------

                 (a)     Except  as  provided  under paragraphs 6(b), 6(c) and 7
and as otherwise required by law and the Declaration, the Common Securities will
have no voting rights.

                 (b)     The Holders of the Common  Securities are entitled,  in
accordance  with Article IV of the  Declaration,  to vote to appoint,  remove or
replace any Administrators.

                 (c)     Subject  to  Section  6.9  of  the Declaration and only
after each Event of Default (if any) with respect to the Capital  Securities has
been cured,  waived, or otherwise  eliminated and subject to the requirements of
the second to last  sentence  of this  paragraph,  the  Holders of a Majority in
liquidation amount of the Common  Securities,  voting separately as a class, may
direct the time,  method,  and place of conducting any proceeding for any remedy
available  to the  Institutional  Trustee,  or  exercising  any  trust  or power
conferred upon the  Institutional  Trustee under the Declaration,  including (i)
directing the time,  method,  place of conducting  any proceeding for any remedy
available to the Debenture  Trustee,  or exercising any trust or power conferred
on the Debenture  Trustee with respect to the Debentures,  (ii) waiving any past
default  and  its  consequences  that  is waivable under the Indenture, or (iii)

<PAGE>

exercising any right to rescind or annul a declaration that the principal of all
the  Debentures  shall be due and  payable;  provided,  however,  that,  where a
                                             --------   -------
consent  or action  under the  Indenture  would  require a Super  Majority,  the
Institutional  Trustee  may only give such  consent  or take such  action at the
written  direction  of the  Holders of at least the  proportion  in  liquidation
amount of the Common Securities which the relevant Super Majority  represents of
the aggregate  principal amount of the Debentures  outstanding.  Notwithstanding
this  paragraph  6(c),  the  Institutional  Trustee  shall not revoke any action
previously  authorized  or  approved  by a vote or consent of the Holders of the
Capital  Securities.  Other than with respect to directing the time,  method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the  Institutional  Trustee
shall not take any action  described  in (i),  (ii) or (iii)  above,  unless the
Institutional  Trustee has obtained an opinion of tax counsel to the effect that
for the  purposes  of United  States  federal  income  tax the Trust will not be
classified  as other  than a grantor  trust on account  of such  action.  If the
Institutional  Trustee  fails to  enforce  its  rights,  to the  fullest  extent
permitted by law, under the Declaration, any Holder of the Common Securities may
institute  a legal  proceeding  directly  against  any  Person  to  enforce  the
Institutional Trustee's rights under the Declaration,  without first instituting
a legal proceeding against the Institutional Trustee or any other Person.

         Any approval or direction  of Holders of the Common  Securities  may be
given at a separate  meeting of Holders of the Common  Securities  convened  for
such purpose,  at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent.  The  Administrators  will cause a notice of any
meeting at which  Holders of the Common  Securities  are entitled to vote, or of
any matter upon which action by written  consent of such Holders is to be taken,
to be mailed to each  Holder of the Common  Securities.  Each such  notice  will
include a statement  setting  forth (i) the date of such  meeting or the date by
which such action is to be taken, (ii) a description of any resolution  proposed
for  adoption at such  meeting on which such  Holders are entitled to vote or of
such matter upon which written consent is sought and (iii)  instructions for the
delivery of proxies or consents.

         No vote or consent of the  Holders  of the  Common  Securities  will be
required for the Trust to redeem and cancel  Common  Securities or to distribute
the  Debentures  in  accordance  with  the  Declaration  and  the  terms  of the
Securities.

         7.      Amendments to Declaration and Indenture.
                 ---------------------------------------

                 (a)     In addition to any requirements under  Section 11.1  of
the Declaration,  if any proposed amendment to the Declaration  provides for, or
the Trustees,  Sponsor or Administrators  otherwise  propose to effect,  (i) any
action that would adversely affect the powers,  preferences or special rights of
the Securities,  whether by way of amendment to the Declaration or otherwise, or
(ii) the Liquidation of the Trust, other than as described in Section 7.1 of the
Declaration,  then the Holders of outstanding  Securities,  voting together as a
single  class,  will be entitled to vote on such  amendment or proposal and such
amendment  or proposal  shall not be  effective  except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities, affected
thereby;  provided,  however, if any amendment or proposal referred to in clause
          --------   -------
(i) above would adversely affect only the Capital  Securities or only the Common
Securities,  then  only the  affected  class  will be  entitled  to vote on such
amendment  or proposal  and such  amendment  or proposal  shall not be effective
except with the  approval of a Majority in  liquidation  amount of such class of
Securities.

                 (b)     In the event the consent  of  the Institutional Trustee
as the holder of the  Debentures is required under the Indenture with respect to
any amendment,  modification  or termination of the Indenture or the Debentures,
the Institutional  Trustee shall request the written direction of the Holders of
the Securities with respect to such  amendment,  modification or termination and
shall vote with  respect to such  amendment,  modification,  or  termination  as

<PAGE>

directed by a Majority in liquidation  amount of the Securities  voting together
as a single class;  provided,  however, that where a consent under the Indenture
                    --------   -------
would require a Super  Majority,  the  Institutional  Trustee may only give such
consent  at  the  direction  of  the  Holders  of at  least  the  proportion  in
liquidation   amount  of  the  Securities  which  the  relevant  Super  Majority
represents of the aggregate principal amount of the Debentures outstanding.

                 (c)     Notwithstanding   the   foregoing,  no   amendment   or
modification  may be made to the  Declaration if such amendment or  modification
would (i) cause the Trust to be classified for purposes of United States federal
income  taxation  as other  than a  grantor  trust,  (ii)  reduce  or  otherwise
adversely  affect the  powers of the  Institutional  Trustee or (iii)  cause the
Trust to be deemed an  Investment  Company  which is required  to be  registered
under the Investment Company Act.

                 (d)     Notwithstanding any provision of the  Declaration,  the
right  of  any  Holder  of  the  Capital   Securities  to  receive   payment  of
distributions and other payments upon redemption or otherwise, on or after their
respective  due dates,  or to institute a suit for the  enforcement  of any such
payment on or after such  respective  dates,  shall not be  impaired or affected
without the consent of such Holder.  For the protection  and  enforcement of the
foregoing  provision,  each and every Holder of the Capital  Securities shall be
entitled to such relief as can be given either at law or equity.

         8.      Pro Rata. A reference in these terms of the  Securities  to any
                 --------
payment,  distribution  or  treatment as being "Pro Rata" shall mean pro rata to
                                                --------
each Holder of the Securities  according to the aggregate  liquidation amount of
the  Securities  held  by the  relevant  Holder  in  relation  to the  aggregate
liquidation  amount of all Securities then outstanding  unless, in relation to a
payment,  an Event of Default has occurred and is continuing,  in which case any
funds  available to make such payment  shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital  Securities  held  by the  relevant  Holder  relative  to the  aggregate
liquidation  amount  of all  Capital  Securities  outstanding,  and  only  after
satisfaction  of all amounts owed to the Holders of the Capital  Securities,  to
each  Holder  of the  Common  Securities  Pro Rata  according  to the  aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.

         9.      Ranking.  The  Capital  Securities  rank  pari  passu  with and
                 -------
payment thereon shall be made Pro Rata with the Common  Securities  except that,
where an Event of Default has occurred and is continuing,  the rights of Holders
of the Common  Securities to receive payment of Distributions  and payments upon
liquidation,  redemption  and  otherwise are  subordinated  to the rights of the
Holders  of the  Capital  Securities  with the  result  that no  payment  of any
Distribution  on, or  Redemption  Price (or  Special  Redemption  Price) of, any
Common Security,  and no other payment on account of redemption,  liquidation or
other acquisition of Common Securities,  shall be made unless payment in full in
cash of all accumulated  and unpaid  Distributions  on all  outstanding  Capital
Securities for all distribution  periods  terminating on or prior thereto, or in
the case of payment of the Redemption  Price (or Special  Redemption  Price) the
full  amount of such  Redemption  Price  (or  Special  Redemption  Price) on all
outstanding Capital Securities then called for redemption,  shall have been made
or  provided  for,  and all funds  immediately  available  to the  Institutional
Trustee  shall  first  be  applied  to  the  payment  in  full  in  cash  of all
Distributions on, or the Redemption Price (or Special  Redemption Price) of, the
Capital Securities then due and payable.

         10.     Acceptance of Guarantee and Indenture.  Each   Holder   of  the
                 -------------------------------------
Capital  Securities  and  the  Common  Securities,  by the  acceptance  of  such
Securities,   agrees  to  the  provisions  of  the   Guarantee,   including  the
subordination provisions therein and to the provisions of the Indenture.

         11.     No Preemptive  Rights. The Holders of the Securities shall have
                 ---------------------
no preemptive or similar rights to subscribe for any additional securities.
<PAGE>

         12.     Miscellaneous.  These   terms  constitute    a   part  of   the
                 -------------
Declaration.  The Sponsor will provide a copy of the Declaration, the Guarantee,
and the Indenture to a Holder without  charge on written  request to the Sponsor
at its principal place of business.



<PAGE>


                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         THIS CAPITAL  SECURITY IS A GLOBAL  SECURITY  WITHIN THE MEANING OF THE
DECLARATION  HEREINAFTER  REFERRED  TO AND IS  REGISTERED  IN  THE  NAME  OF THE
DEPOSITORY  TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL  SECURITY IS
EXCHANGEABLE  FOR CAPITAL  SECURITIES  REGISTERED  IN THE NAME OF A PERSON OTHER
THAN DTC OR ITS  NOMINEE  ONLY IN THE  LIMITED  CIRCUMSTANCES  DESCRIBED  IN THE
DECLARATION,  AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF
THIS  CAPITAL  SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC TO DTC OR  ANOTHER  NOMINEE  OF DTC) MAY BE  REGISTERED  EXCEPT  IN  LIMITED
CIRCUMSTANCES.

         UNLESS  THIS   CAPITAL   SECURITY  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE  OF DTC TO  FIRST  BANK  STATUTORY  TRUST  III OR ITS  AGENT  FOR
REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY CAPITAL SECURITY ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY  TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY
PERSON IS WRONGFUL  INASMUCH AS THE REGISTERED OWNER HEREOF,  CEDE & CO., HAS AN
INTEREST HEREIN.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR INVESTMENT  PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE  OBTAINED  FROM THE SPONSOR OR THE TRUST.  HEDGING  TRANSACTIONS
INVOLVING  THIS  SECURITY MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH THE
SECURITIES ACT.
<PAGE>

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00  (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED  TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED BY THE  DECLARATION  TO CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.
<PAGE>

      Certificate Number P-1                    40,000 Capital Securities
      CUSIP NO. [_______]

                                November 23, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                         First Bank Statutory Trust III

               (liquidation amount $1,000.00 per Capital Security)

         First Bank  Statutory  Trust III, a statutory  trust  created under the
laws of the State of Delaware (the  "Trust"),  hereby  certifies that Cede & Co.
(the  "Holder")  is the  registered  owner of  capital  securities  of the Trust
representing  undivided  beneficial  interests  in  the  assets  of  the  Trust,
(liquidation amount $1,000.00 per capital security) (the "Capital  Securities").
Subject to the  Declaration  (as  defined  below),  the Capital  Securities  are
transferable  on the  books  and  records  of the  Trust in  person or by a duly
authorized  attorney,  upon surrender of this  Certificate  duly endorsed and in
proper form for transfer.  The Capital Securities  represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Capital  Securities  shall in all respects
be subject to, the  provisions of the Amended and Restated  Declaration of Trust
of the Trust dated as of November 23, 2004,  among Peter D. Wimmer,  Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators,  Wilmington Trust Company, as
Delaware  Trustee,  Wilmington Trust Company,  as Institutional  Trustee,  First
Banks,  Inc.,  as  Sponsor,  and the  holders  from  time  to time of  undivided
beneficial  interests in the assets of the Trust,  including the  designation of
the terms of the Capital  Securities as set forth in Annex I to such amended and
restated  declaration  as the  same  may be  amended  from  time  to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration,  the Guarantee,  and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.

                       Signatures appear on following page



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                    FIRST BANK STATUTORY TRUST III



                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title: Administrator


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.


                                    WILMINGTON TRUST COMPANY,
                                    as the Institutional Trustee


                                    By:
                                      ------------------------------------------
                                                   Authorized Officer



<PAGE>


                      [FORM OF REVERSE OF CAPITAL SECURITY]

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 4.54%  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the  Distribution  Payment Date in March
2005  and at an  annual  rate  for  each  successive  period  beginning  on (and
including)  the  Distribution  Payment Date in March 2005,  and each  succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.18% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),

<PAGE>

and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
                               --------   -------
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

         The Capital Securities shall be redeemable as provided in the
Declaration.



<PAGE>


                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital
Security Certificate to:

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

         (Insert assignee's social security or tax identification number)


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

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





         (Insert address and zip code of assignee) and irrevocably appoints

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





         agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.

         Date:
              ---------------------------------------

         Signature:
                   ----------------------------------

                         (Sign exactly as your name appears on the other side of
this Capital Security Certificate)

         Signature Guarantee:1














1 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association  or credit union  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

<PAGE>


                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

         THIS COMMON SECURITY HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT
OF  1933,  AS  AMENDED,  AND MAY NOT BE  OFFERED,  SOLD,  PLEDGED  OR  OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

         THIS CERTIFICATE IS NOT TRANSFERABLE  EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION.

        Certificate Number C-1                      1,238 Common Securities

                                November 23, 2004

             Certificate Evidencing Floating Rate Common Securities

                                       of

                         First Bank Statutory Trust III

         First Bank  Statutory  Trust III, a statutory  trust  created under the
laws of the State of Delaware (the "Trust"),  hereby certifies that First Banks,
Inc. (the  "Holder") is the registered  owner of common  securities of the Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common  Securities").  The  Common  Securities  represented  hereby  are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the  provisions of the Amended and Restated  Declaration of Trust of
the Trust dated as of November  23,  2004,  among Peter D.  Wimmer,  Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators,  Wilmington Trust Company, as
Delaware  Trustee,  Wilmington Trust Company,  as Institutional  Trustee,  First
Banks,  Inc.,  as  Sponsor,  and the  holders  from  time  to time of  undivided
beneficial  interest in the assets of the Trust including the designation of the
terms of the  Common  Securities  as set  forth in Annex I to such  amended  and
restated  declaration,  as the  same  may be  amended  from  time to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the  Declaration,  the Guarantee and the Indenture to the Holder  without charge
upon written request to the Sponsor at its principal place of business.

         As set forth in the Declaration,  when an Event of Default has occurred
and is  continuing,  the rights of Holders  of Common  Securities  to payment in
respect of Distributions and payments upon Liquidation,  redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.

         Upon  receipt  of  this  Certificate,   the  Holder  is  bound  by  the
Declaration and is entitled to the benefits thereunder.

         By acceptance  of this  Certificate,  the Holder  agrees to treat,  for
United States federal income tax purposes,  the Debentures as  indebtedness  and
the Common  Securities  as evidence of  undivided  beneficial  ownership  in the
Debentures.

         This Common Security is governed by, and construed in accordance  with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                 FIRST BANK STATUTORY TRUST III


                                 By:
                                    --------------------------------------------
                                     Name:
                                     Title: Administrator


<PAGE>


                      [FORM OF REVERSE OF COMMON SECURITY]

         Distributions  payable on each  Common  Security  will be payable at an
annual rate equal to 4.54%  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the  Distribution  Payment Date in March
2005  and at an  annual  rate  for  each  successive  period  beginning  on (and
including)  the  Distribution  Payment Date in March 2005,  and each  succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.18% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Common Security,  such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any   calculations  on  the  Common
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).
<PAGE>

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
                               --------   -------
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional  Interest.  During any Extension Period,  Distributions on the Common
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture Issuer.

         The  Common   Securities   shall  be  redeemable  as  provided  in  the
Declaration.



<PAGE>


                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned  assigns and transfers this Common
Security Certificate to:

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

         (Insert assignee's social security or tax identification number)

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





         (Insert address and zip code of assignee) and irrevocably appoints

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



                                                                          agent
         -----------------------------------------------------------------

                           to  transfer  this Common Security Certificate on the
                           books of the Trust.  The agent may substitute another
                           to act for him or her.

                           Date:
                                ------------------------------------------------

                           Signature:
                                     -------------------------------------------

                           (Sign  exactly as your name appears on the other side
                           of this Common Security Certificate)

                           Signature:
                                     -------------------------------------------

                           (Sign  exactly as your name appears on the other side
                           of   this  Common  Security  Certificate)

         Signature Guarantee2









2 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association or credit union,  meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other  "signature  guarantee  program" as may be determined by the Security
registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

                              (See Document No. 17)



<PAGE>



                                    EXHIBIT C

                               PLACEMENT AGREEMENT

                              (See Document No. 1)






<PAGE>
                                                                    Exhibit 4.37
















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




                               GUARANTEE AGREEMENT

                                 by and between

                                FIRST BANKS, INC.

                                       and

                            WILMINGTON TRUST COMPANY

                          Dated as of November 23, 2004



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


<PAGE>

                               GUARANTEE AGREEMENT

         This GUARANTEE AGREEMENT (this  "Guarantee"),  dated as of November 23,
2004,  is executed and  delivered by First Banks,  Inc., a Missouri  corporation
(the "Guarantor"), and Wilmington Trust Company, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of First
Bank Statutory Trust III, a Delaware statutory trust (the "Issuer").

         WHEREAS,  pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"),  dated as of the date hereof among Wilmington Trust Company, not
in  its  individual   capacity  but  solely  as   institutional   trustee,   the
administrators of the Issuer named therein,  the Guarantor,  as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer,  the Issuer is issuing on the date  hereof  those  undivided  beneficial
interests,  having  an  aggregate  liquidation  amount  of  $40,000,000.00  (the
"Capital Securities"); and

         WHEREAS,   as  incentive  for  the  Holders  to  purchase  the  Capital
Securities,  the Guarantor desires  irrevocably and unconditionally to agree, to
the  extent  set  forth in this  Guarantee,  to pay to the  Holders  of  Capital
Securities the Guarantee  Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;

         NOW, THEREFORE,  in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

         Section  1.1.  Definitions  and  Interpretation.   In  this  Guarantee,
                        --------------------------------
unless the context otherwise requires:

         (a)    capitalized terms used  in this Guarantee but not defined in the
preamble  above have the  respective  meanings  assigned to them in this Section
1.1;

         (b)    a term  defined  anywhere in this Guarantee has the same meaning
throughout;

         (c)    all  references  to "the  Guarantee" or "this  Guarantee" are to
this Guarantee as modified, supplemented or amended from time to time;

         (d)    all references in this Guarantee to "Articles" or "Sections" are
to Articles or Sections of this Guarantee, unless otherwise specified;

         (e)    terms  defined in the Declaration as at the date of execution of
this  Guarantee  have the same  meanings  when  used in this  Guarantee,  unless
otherwise  defined in this Guarantee or unless the context  otherwise  requires;
and

         (f)    a  reference to the singular includes the plural and vice versa.

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
          ---------
the Securities Act of 1933, as amended, or any successor rule thereunder.

         "Beneficiaries"  means any  Person to whom the  Issuer is or  hereafter
          -------------
becomes indebted or liable.
<PAGE>

         "Capital  Securities" has the meaning set forth in the recitals to this
          -------------------
Guarantee.

         "Common Securities" means the common securities issued by the Issuer to
          -----------------
the Guarantor pursuant to the Declaration.

         "Corporate  Trust Office" means the office of the Guarantee  Trustee at
          -----------------------
which the  corporate  trust  business of the  Guarantee  Trustee  shall,  at any
particular  time,  be  principally  administered,  which  office  at the date of
execution of this Guarantee is located at Rodney Square North, 1100 North Market
Street,   Wilmington,   Delaware   19890-1600,    Attention:   Corporate   Trust
Administration.

         "Covered Person" means any Holder of Capital Securities.
          --------------

         "Debentures" means the debt securities of the Guarantor  designated the
          ----------
Floating Rate Junior  Subordinated  Deferrable Interest Debentures due 2034 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

         "Declaration  Event of Default"  means an "Event of Default" as defined
          -----------------------------
in the Declaration.

         "Event of Default" has the meaning set forth in Section 2.4(a).
          ----------------

         "Guarantee  Payments"  means the following  payments or  distributions,
          -------------------
without duplication,  with respect to the Capital Securities,  to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration)  which are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available  therefor,  (ii) the Redemption
Price to the extent the Issuer has funds available therefor, with respect to any
Capital  Securities  called for  redemption  by the  Issuer,  (iii) the  Special
Redemption  Price to the extent the Issuer has funds  available  therefor,  with
respect to Capital  Securities  redeemed upon the occurrence of a Special Event,
and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination  of the Issuer (other than in connection  with the  distribution  of
Debentures  to the Holders of the  Capital  Securities  in exchange  therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment,  to the extent the Issuer shall have funds available  therefor,
and (b) the amount of assets of the Issuer remaining  available for distribution
to Holders in  liquidation  of the Issuer  (in  either  case,  the  "Liquidation
Distribution").

         "Guarantee  Trustee" means Wilmington Trust Company,  until a Successor
          ------------------
Guarantee Trustee has been appointed and has accepted such appointment  pursuant
to the  terms  of this  Guarantee  and  thereafter  means  each  such  Successor
Guarantee Trustee.

         "Guarantor" means  First  Banks,  Inc. and  each of its  successors and
          ---------
assigns.

         "Holder"  means any holder,  as  registered on the books and records of
          ------
the Issuer, of any Capital Securities;  provided,  however, that, in determining
                                        --------   -------
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

         "Indemnified  Person" means the Guarantee Trustee, any Affiliate of the
          -------------------
Guarantee Trustee, or any officers, directors, shareholders,  members, partners,
employees,  representatives,  nominees,  custodians  or agents of the  Guarantee
Trustee.

         "Indenture" means the Indenture dated as of the date hereof between the
          ---------
Guarantor and  Wilmington  Trust  Company,  not in its  individual  capacity but
solely as trustee, and any indenture  supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.
<PAGE>

         "Issuer"  has the meaning set forth in the  opening  paragraph  to this
          ------
Guarantee.

         "Liquidation  Distribution" has the meaning set forth in the definition
          -------------------------
of "Guarantee Payments" herein.

         "Majority  in  liquidation  amount  of the  Capital  Securities"  means
          --------------------------------------------------------------
Holder(s) of outstanding  Capital  Securities,  voting together as a class,  but
separately  from the  holders  of  Common  Securities,  of more  than 50% of the
aggregate  liquidation amount (including the stated amount that would be paid on
redemption,  liquidation or otherwise,  plus accrued and unpaid Distributions to
the date upon  which the  voting  percentages  are  determined)  of all  Capital
Securities then outstanding.

         "Obligations"  means  any  costs,  expenses  or  liabilities  (but  not
          -----------
including  liabilities related to taxes) of the Issuer other than obligations of
the  Issuer to pay to  holders  of any Trust  Securities  the  amounts  due such
holders pursuant to the terms of the Trust Securities.

         "Officer's   Certificate"   means,   with  respect  to  any  Person,  a
          -----------------------
certificate  signed by one  Authorized  Officer of such  Person.  Any  Officer's
Certificate  delivered  with respect to compliance  with a condition or covenant
provided for in this Guarantee shall include:

                (a) a  statement   that  the  officer   signing  the   Officer's
         Certificate  has read  the  covenant or condition  and the  definitions
          relating thereto;

                (b) a brief statement of the nature and scope of the examination
         or investigation  undertaken  by the officer in rendering the Officer's
         Certificate;

                (c) a statement that the officer  has made such  examination  or
         investigation  as,  in such officer's  opinion,  is necessary to enable
         such officer  to express an informed  opinion as to whether or not such
         covenant or condition has been complied with; and

                (d) a  statement as to whether,  in the opinion of the  officer,
         such condition or covenant has been complied with.

         "Person" means a legal person,  including any individual,  corporation,
          ------
estate, partnership,  joint venture,  association,  joint stock company, limited
liability  company,  trust,  unincorporated  association,  or  government or any
agency or political subdivision thereof, or any other entity of whatever nature.

         "Redemption Price" has the meaning set forth in the Indenture.
          ----------------

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
          -------------------
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President,  Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily  performing functions similar
to those  performed  by any of the above  designated  officers  and  also,  with
respect to a particular  corporate trust matter,  any other officer to whom such
matter is referred  because of that officer's  knowledge of and familiarity with
the particular subject.

         "Special Event" has the meaning set forth in the Indenture.
          -------------

         "Special Redemption Price" has the meaning set forth in the Indenture.
          ------------------------
<PAGE>

         "Successor  Guarantee  Trustee"  means a  successor  Guarantee  Trustee
          -----------------------------
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

         "Trust   Securities"  means  the  Common  Securities  and  the  Capital
          ------------------
Securities.

                                   ARTICLE II

                          POWERS, DUTIES AND RIGHTS OF
                                GUARANTEE TRUSTEE

         Section 2.1.   Powers and Duties of the Guarantee Trustee.
                        ------------------------------------------
         (a)    This Guarantee shall be held by the  Guarantee  Trustee  for the
benefit of the  Holders of the Capital  Securities,  and the  Guarantee  Trustee
shall not  transfer  this  Guarantee  to any  Person  except a Holder of Capital
Securities  exercising  his or her rights  pursuant  to  Section  4.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its  appointment to act as Successor  Guarantee  Trustee.  The right,  title and
interest of the  Guarantee  Trustee  shall  automatically  vest in any Successor
Guarantee  Trustee,  and such vesting and  cessation of title shall be effective
whether or not conveyancing  documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.

         (b)    If  an  Event of Default actually known to a Responsible Officer
of the Guarantee  Trustee has occurred and is continuing,  the Guarantee Trustee
shall  enforce  this  Guarantee  for the  benefit of the  Holders of the Capital
Securities.

         (c)    The Guarantee Trustee,  before the  occurrence  of any  Event of
Default and after  curing all Events of Default  that may have  occurred,  shall
undertake  to perform  only such  duties as are  specifically  set forth in this
Guarantee,  and no implied  covenants shall be read into this Guarantee  against
the Guarantee  Trustee.  In case an Event of Default has occurred  (that has not
been waived  pursuant to Section  2.4) and is  actually  known to a  Responsible
Officer of the Guarantee  Trustee,  the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee, and use the same degree of
care and skill in its exercise  thereof,  as a prudent  person would exercise or
use under the circumstances in the conduct of his or her own affairs.

         (d)    No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

                (i)    prior to the occurrence of any Event of Default and after
         the  curing  or  waiving of all  such  Events  of Default that may have
         occurred:

                       (A)     the  duties  and  obligations  of  the  Guarantee
                Trustee shall be  determined  solely by the  express  provisions
                of this Guarantee, and the Guarantee Trustee shall not be liable
                except for  the  performance  of  such  duties  and  obligations
                as are specifically set forth in this Guarantee,  and no implied
                covenants or  obligations  shall  be read  into  this  Guarantee
                against the Guarantee Trustee; and

                       (B)     in  the  absence  of bad faith on the part of the
                Guarantee Trustee,  the Guarantee Trustee may conclusively rely,
                as to the truth  of the  statements  and the  correctness of the
                opinions expressed  therein, upon  any  certificates or opinions
                furnished   to  the  Guarantee  Trustee  and  conforming  to the
                requirements of this

<PAGE>

                Guarantee; but in the case of any such  certificates or opinions
                that by any provision  hereof are  specifically  required  to be
                furnished to the Guarantee Trustee,  the Guarantee Trustee shall
                be under a duty to examine the same to determine  whether or not
                they conform to the requirements of this Guarantee;

                (ii)   the  Guarantee Trustee  shall not be liable for any error
         of  judgment  made  in  good  faith  by  a  Responsible  Officer of the
         Guarantee  Trustee,  unless  it  shall  be proved that such Responsible
         Officer of the Guarantee Trustee or the Guarantee Trustee was negligent
         in ascertaining the pertinent facts upon which such judgment was made;

                (iii)  the  Guarantee  Trustee shall not be liable  with respect
         to any  action taken or  omitted  to be  taken  by it in good  faith in
         accordance with  the written  direction of the Holders of not less than
         a Majority  in liquidation amount of the Capital Securities relating to
         the  time, method and place of conducting any proceeding for any remedy
         available  to the Guarantee Trustee, or relating to the exercise of any
         trust  or  power  conferred  upon  the  Guarantee  Trustee  under  this
         Guarantee; and

                (iv)   no   provision   of  this  Guarantee  shall  require  the
         Guarantee Trustee  to expend or risk its own funds or  otherwise  incur
         personal financial liability in the performance of any of its duties or
         in  the  exercise  of  any of its rights or  powers,  if the  Guarantee
         Trustee shall have  reasonable grounds for believing that the repayment
         of such funds is not reasonably assured to it under the terms  of  this
         Guarantee  or security and indemnity,  reasonably  satisfactory  to the
         Guarantee  Trustee,  against such  risk or liability is not  reasonably
         assured to it.

         Section 2.2.      Certain Rights of Guarantee Trustee.
                           -----------------------------------

         (a)    Subject to the provisions of Section 2.1:

                (i)    The Guarantee Trustee may conclusively rely, and shall be
         fully  protected   in  acting  or  refraining  from  acting  upon,  any
         resolution,    certificate,  statement,  instrument,  opinion,  report,
         notice,  request, direction, consent,  order,  bond,  debenture,  note,
         other  evidence  of indebtedness or other paper or document believed by
         it  to  be  genuine  and  to have been signed, sent or presented by the
         proper party or parties.

                (ii)   Any direction  or act  of the Guarantor  contemplated  by
         this  Guarantee   shall  be  sufficiently  evidenced  by  an  Officer's
         Certificate.

                (iii)  Whenever,  in the administration of this  Guarantee,  the
         Guarantee  Trustee  shall deem it desirable  that a matter be proved or
         established before  taking, suffering or omitting any action hereunder,
         the  Guarantee  Trustee  (unless other evidence is herein  specifically
         prescribed)  may, in the absence of bad faith on its part,  request and
         conclusively  rely  upon  an  Officer's  Certificate  of the  Guarantor
         which,  upon  receipt of such request,  shall be promptly  delivered by
         the Guarantor.

                (iv)   The Guarantee Trustee  shall  have  no duty to see to any
          recording,   filing  or   registration   of  any  instrument  (or  any
          re-recording, refiling or re-registration thereof).

                (v)    The Guarantee Trustee may  consult  with  counsel  of its
          selection,  and the advice or opinion of such  counsel with respect to
          legal matters shall be full and complete  authorization and protection
          in respect of any action taken, suffered or omitted by it hereunder in
          good faith and in accordance with such advice or opinion. Such counsel
          may be  counsel  to the  Guarantor  or any of its  Affiliates  and may
          include any of its  employees.  The  Guarantee  Trustee shall have the
          right at any time to seek instructions  concerning the  administration
          of this Guarantee from any court of competent jurisdiction.
<PAGE>

                (vi)  The Guarantee Trustee  shall be  under  no  obligation  to
         exercise any of the rights or powers vested in it by this Guarantee at
         the  request or direction of any Holder,  unless such Holder shall have
         provided  to  the  Guarantee  Trustee  such  security  and   indemnity,
         reasonably  satisfactory  to the Guarantee Trustee,  against the costs,
         expenses  (including  attorneys' fees  and expenses and the expenses of
         the   Guarantee   Trustee's   agents,   nominees  or  custodians)   and
         liabilities   that  might be  incurred  by it in  complying  with  such
         request  or direction,  including  such  reasonable  advances as may be
         requested  by the Guarantee Trustee;  provided,  however,  that nothing
                                               --------   -------
         contained  in  this  Section  2.2(a)(vi)  shall  relieve the  Guarantee
         Trustee, upon  the occurrence of an Event of Default, of its obligation
         to exercise the rights and powers vested in it by this Guarantee.

                (vii)  The Guarantee  Trustee  shall  not be  bound  to make any
         investigation  into  the facts or  matters  stated  in any  resolution,
         certificate,  statement,  instrument, opinion, report, notice, request,
         direction,  consent,  order, bond, debenture,  note, other  evidence of
         indebtedness or other paper or document, but the Guarantee  Trustee, in
         its discretion,  may make such further inquiry  or  investigation  into
         such facts or matters as it may see fit.

                (viii) The Guarantee  Trustee  may  execute any of the trusts or
         powers  hereunder or perform any duties hereunder either directly or by
         or   through  agents,  nominees,   custodians  or  attorneys,  and  the
         Guarantee  Trustee  shall  not be  responsible  for any  misconduct  or
         negligence  on  the part of any agent or  attorney  appointed  with due
         care by it hereunder.

                (ix)   Any action taken by the Guarantee  Trustee  or its agents
         hereunder  shall bind  the Holders of the Capital  Securities,  and the
         signature  of  the  Guarantee  Trustee  or its  agents  alone  shall be
         sufficient  and  effective to  perform any such action.  No third party
         shall  be  required  to inquire as to the  authority  of the  Guarantee
         Trustee  to  so act or as to its  compliance  with any of the terms and
         provisions  of  this  Guarantee,  both of which  shall be  conclusively
         evidenced  by  the  Guarantee  Trustee's  or its  agent's  taking  such
         action.

                (x)    Whenever in  the administration  of  this  Guarantee  the
         Guarantee  Trustee shall deem it desirable to receive instructions with
         respect  to  enforcing  any remedy or right or taking any other  action
         hereunder, the  Guarantee Trustee (i) may request instructions from the
         Holders of  a Majority in liquidation amount of the Capital Securities,
         (ii)  may refrain  from  enforcing  such remedy or right or taking such
         other action until  such instructions are received,  and (iii) shall be
         protected  in conclusively relying on or acting in accordance with such
         instructions.

                (xi)   The Guarantee Trustee shall not be liable  for any action
          taken,  suffered,  or omitted to be taken by it in good faith, without
          negligence,  and reasonably  believed by it to be authorized or within
          the  discretion  or  rights  or  powers  conferred  upon  it  by  this
          Guarantee.

         (b)    No provision  of this  Guarantee  shall be deemed to impose  any
duty or obligation  on the  Guarantee  Trustee  to  perform  any  act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction  in which it shall be  illegal  or in which the  Guarantee  Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right,  power,  duty or obligation.
No permissive  power or authority  available to the  Guarantee  Trustee shall be
construed to be a duty.
<PAGE>

         Section 2.3.  Not  Responsible  for  Recitals or Issuance of Guarantee.
                       --------------------------------------------------------
The recitals contained in this Guarantee shall be taken as the statements of the
Guarantor,  and the  Guarantee  Trustee does not assume any  responsibility  for
their  correctness.  The  Guarantee  Trustee makes no  representation  as to the
validity or sufficiency of this Guarantee.

         Section 2.4.  Events of Default; Waiver.

         (a)    An Event of Default under this  Guarantee  will  occur  upon the
failure of the  Guarantor  to perform  any of its  payment or other  obligations
hereunder.

         (b)    The Holders of a Majority in liquidation  amount of the  Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver,  any such Event of Default shall cease to exist,  and shall be
deemed to have been  cured,  for every  purpose of this  Guarantee,  but no such
waiver shall extend to any  subsequent  or other  default or Event of Default or
impair any right consequent thereon.

         Section 2.5.  Events of Default; Notice.
                       -------------------------

         (a)    The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class  postage  prepaid,  to the
Holders of the Capital  Securities and the  Guarantor,  notices of all Events of
Default actually known to a Responsible Officer of the Guarantee Trustee, unless
such  defaults  have been  cured  before the  giving of such  notice,  provided,
                                                                       --------
however,  that the  Guarantee  Trustee  shall be protected in  withholding  such
-------
notice if and so long as a Responsible  Officer of the Guarantee Trustee in good
faith  determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.

         (b)    The Guarantee  Trustee  shall not be deemed to have knowledge of
any  Event  of  Default unless the Guarantee Trustee shall have received written
notice from the  Guarantor or a Holder of the Capital  Securities (except in the
case of a payment  default),  or a Responsible  Officer of the Guarantee Trustee
charged with  the  administration  of  this Guarantee shall have obtained actual
knowledge thereof.

                                  ARTICLE III

                                GUARANTEE TRUSTEE

         Section 3.1.  Guarantee Trustee; Eligibility.
                       ------------------------------

         (a)    There shall at all times be a Guarantee Trustee which shall:

                (i)    not be an Affiliate of the Guarantor, and

                (ii)   be a corporation  organized and doing  business under the
         laws of the United States of  America or any State or Territory thereof
         or of the District of Columbia,  or Person  authorized  under such laws
         to  exercise  corporate  trust powers,  having a combined  capital  and
         surplus  of  at  least  50  million  U.S. dollars  ($50,000,000),   and
         subject to  supervision  or examination by Federal, State,  Territorial
         or  District  of  Columbia  authority.  If  such  corporation publishes
         reports  of  condition  at  least  annually,  pursuant to law or to the
         requirements  of  the  supervising  or examining  authority referred to
         above, then, for the purposes  of this Section 3.1(a)(ii), the combined
         capital  and  surplus of  such  corporation  shall  be deemed to be its
         combined capital and surplus as set forth in  its most recent report of
         condition so published.
<PAGE>

         (b)    If at any time the  Guarantee Trustee shall cease to be eligible
to  so act under Section 3.1(a),  the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 3.2(c).

         (c)    If the Guarantee Trustee has or shall acquire  any  "conflicting
interest"  within the meaning of Section 310(b) of the Trust  Indenture Act, the
Guarantee  Trustee shall either  eliminate such interest or resign to the extent
and in the manner provided by, and subject to this Guarantee.

         Section 3.2.  Appointment,   Removal   and  Resignation  of   Guarantee
                       ---------------------------------------------------------
Trustee.
-------

         (a)    Subject  to  Section  3.2(b),  the  Guarantee   Trustee  may  be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.

         (b)    The Guarantee Trustee shall not be  removed in  accordance  with
Section  3.2(a) until a Successor  Guarantee  Trustee has been appointed and has
accepted  such  appointment  by written  instrument  executed by such  Successor
Guarantee Trustee and delivered to the Guarantor.

         (c)    The  Guarantee  Trustee  appointed  to  office shall hold office
until a Successor  Guarantee  Trustee shall have been  appointed  or  until  its
removal or resignation.  The  Guarantee  Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee  Trustee and delivered to the Guarantor,  which  resignation shall
not take effect  until a Successor Guarantee Trustee has been appointed  and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee  Trustee and delivered to the  Guarantor  and the resigning  Guarantee
Trustee.

         (d)    If no Successor Guarantee Trustee shall have been  appointed and
accepted  appointment  as  provided  in this  Section  3.2  within 60 days after
delivery of an  instrument  of removal or  resignation,  the  Guarantee  Trustee
resigning or being removed may petition any court of competent  jurisdiction for
appointment of a Successor  Guarantee Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any, as it may deem  proper,  appoint a Successor
Guarantee Trustee.

         (e)    No Guarantee  Trustee  shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.

         (f)    Upon  termination of this Guarantee or removal or resignation of
the Guarantee  Trustee  pursuant to this Section 3.2, the Guarantor shall pay to
the Guarantee  Trustee all amounts owing to the Guarantee Trustee under Sections
7.2 and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV

                                   GUARANTEE

        Section 4.1.   Guarantee.
                       ---------

         (a)    The  Guarantor irrevocably  and unconditionally agrees to pay in
full  to  the  Holders   the  Guarantee   Payments  (without    duplication   of
amounts theretofore  paid by the  Issuer),  as and when due,  regardless  of any
defense  (except  the  defense  of  payment by the Issuer),  right of set-off or
counterclaim that the  Issuer  may  have or assert.  The Guarantor's  obligation
to make a  Guarantee  Payment may be satisfied by direct payment of the required
amounts  by  the  Guarantor  to the Holders or by causing the Issuer to pay such
amounts to the Holders.

         (b)    The  Guarantor  hereby   also  agrees  to  assume  any  and  all
Obligations  of  the  Issuer  and  in  the  event  any such Obligation is not so
assumed, subject to the terms  and  conditions   hereof,  the  Guarantor  hereby
irrevocably   and  unconditionally  guarantees  to  each  Beneficiary  the  full
payment,  when and as due,  of any and  all Obligations  to such  Beneficiaries.
This  Guarantee is intended to be for the benefit of, and to be enforceable  by,
all  such Beneficiaries, whether  or not such Beneficiaries have received notice
hereof.

         Section 4.2.  Waiver of Notice and Demand.  The Guarantor hereby waives
                       ---------------------------
notice of acceptance of this  Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first  against  the Issuer or any other  Person  before  proceeding  against the
Guarantor,  protest,  notice  of  nonpayment,  notice  of  dishonor,  notice  of
redemption and all other notices and demands.

         Section 4.3.  Obligations  Not Affected.  The  obligations,  covenants,
                       -------------------------
agreements and duties of the Guarantor  under this Guarantee  shall in no way be
affected or impaired by reason of the happening  from time to time of any of the
following:

         (a)    the release or waiver, by operation of law or  otherwise, of the
performance  or  observance  by the Issuer of any express or implied  agreement,
covenant,  term or condition  relating to the Capital Securities to be performed
or observed by the Issuer;

         (b)    the  extension  of  time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price,  Special  Redemption  Price,
Liquidation  Distribution  or any  other  sums  payable  under  the terms of the
Capital  Securities  or the extension of time for the  performance  of any other
obligation under,  arising out of or in connection with, the Capital  Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Special  Redemption  Price,  Liquidation  Distribution or other sum payable that
results from the extension of any interest  payment  period on the Debentures or
any  extension  of  the  maturity  date  of  the  Debentures  permitted  by  the
Indenture);

         (c)    any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

         (d)    the voluntary or involuntary liquidation,  dissolution, sale  of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization,  arrangement, composition or readjustment of  debt
of, or other similar proceedings  affecting,  the Issuer or any of the assets of
the Issuer;
<PAGE>

         (e)    any invalidity of, or  defect  or  deficiency  in,  the  Capital
Securities;

         (f)    the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or

         (g) any other circumstance  whatsoever that might  otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this  Section  4.3 that the  obligations  of the  Guarantor  hereunder  shall be
absolute and unconditional  under any and all  circumstances.

         There  shall be no  obligation  of the  Holders  to give  notice to, or
obtain  consent of, the  Guarantor  with respect to the  happening of any of the
foregoing.

         Section 4.4.  Rights of Holders.
                       -----------------

         (a)    The Holders of a Majority in liquidation  amount of the  Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee  Trustee in respect of this
Guarantee  or to direct the  exercise of any trust or power  conferred  upon the
Guarantee  Trustee under this  Guarantee;  provided,  however,  that (subject to
                                           --------   -------
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the  action  or  proceeding  so  directed  may not  lawfully  be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees  or a trust  committee of directors  or trustees  and/or  Responsible
Officers  shall  determine  that the action or  proceedings  so  directed  would
involve the Guarantee Trustee in personal liability.

         (b)    Any   Holder  of  Capital  Securities   may  institute  a  legal
proceeding  directly  against the Guarantor to enforce the  Guarantee  Trustee's
rights  under  this  Guarantee,  without  first  instituting  a legal proceeding
against the Issuer,  the  Guarantee  Trustee or any other Person.  The Guarantor
waives  any  right  or  remedy  to require that any such action be brought first
against  the  Issuer,  the  Guarantee  Trustee  or  any  other  Person before so
proceeding  directly against the Guarantor.

         Section 4.5.  Guarantee of Payment.  This Guarantee creates a guarantee
                       --------------------
of payment and not of collection.

         Section 4.6.  Subrogation. The Guarantor shall be subrogated to all (if
                       -----------
any) rights of the Holders of Capital  Securities  against the Issuer in respect
of any  amounts  paid to such  Holders by the  Guarantor  under this  Guarantee;
provided,  however,  that the Guarantor shall not (except to the extent required
--------   -------
by  mandatory  provisions  of law) be entitled to enforce or exercise  any right
that it may acquire by way of  subrogation or any  indemnity,  reimbursement  or
other agreement,  in all cases as a result of payment under this Guarantee,  if,
after giving  effect to any such  payment,  any amounts are due and unpaid under
this Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding  sentence,  the Guarantor  agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

         Section 4.7.  Independent Obligations.  The Guarantor acknowledges that
                       -----------------------
its obligations  hereunder are independent of the obligations of the Issuer with
respect to the  Capital  Securities  and that the  Guarantor  shall be liable as
principal and as debtor  hereunder to make  Guarantee  Payments  pursuant to the
terms of this Guarantee  notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 4.3 hereof.

         Section 4.8.  Enforcement by a Beneficiary.  A Beneficiary  may enforce
                       ----------------------------
the obligations of the Guarantor  contained in Section 4.1(b)  directly  against
the Guarantor  and the Guarantor  waives any right or remedy to require that any
action be  brought  against  the  Issuer or any  other  person or entity  before

<PAGE>

proceeding  against the  Guarantor.  The  Guarantor  shall be  subrogated to all
rights (if any) of any Beneficiary  against the Issuer in respect of any amounts
paid to the  Beneficiaries  by the  Guarantor  under this  Guarantee;  provided,
                                                                       --------
however,  that the  Guarantor  shall  not  (except  to the  extent  required  by
-------
mandatory  provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any  indemnity,  reimbursement  or other
agreement,  in all cases as a result of payment under this Guarantee,  if at the
time of any such payment,  and after giving effect to such payment,  any amounts
are due and unpaid under this Guarantee.

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

         Section 5.1.  Limitation  of  Transactions.  So  long  as  any  Capital
                       ----------------------------
Securities  remain  outstanding,  if  (a)  there  shall  have  occurred  and  be
continuing  an Event of  Default  or a  Declaration  Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and  such  period,  or  any  extension  thereof,  shall  have  commenced  and be
continuing,  then the Guarantor  shall not and shall not permit any Affiliate to
(x)  declare or pay any  dividends  or  distributions  on, or redeem,  purchase,
acquire,  or make a liquidation  payment with respect to, any of the Guarantor's
or  such  Affiliate's  capital  stock  (other  than  payments  of  dividends  or
distributions  to the Guarantor) or make any guarantee  payments with respect to
the foregoing or (y) make any payment of principal of or interest or premium, if
any, on or repay,  repurchase or redeem any debt  securities of the Guarantor or
any Affiliate that rank pari passu in all respects with or junior in interest to
the  Debentures  (other  than,  with  respect to clauses (x) and (y) above,  (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Guarantor in  connection  with any  employment  contract,  benefit plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Guarantor (or securities  convertible  into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the  occurrence  of the Event of  Default,  Declaration  Event of  Default or
Extension Period, as applicable,  (ii) as a result of any exchange or conversion
of any class or series of the Guarantor's capital stock (or any capital stock of
a  subsidiary  of the  Guarantor)  for any class or  series  of the  Guarantor's
capital stock or of any class or series of the Guarantor's  indebtedness for any
class or  series  of the  Guarantor's  capital  stock,  (iii)  the  purchase  of
fractional  interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange  provisions  of such capital stock or the security  being
converted or exchanged,  (iv) any  declaration of a dividend in connection  with
any  stockholders'  rights  plan,  or the  issuance  of  rights,  stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights  pursuant  thereto,  (v) any  dividend  in the form of  stock,  warrants,
options or other  rights  where the dividend  stock or the stock  issuable  upon
exercise of such warrants,  options or other rights is the same stock as that on
which the  dividend  is being  paid or ranks  pari  passu with or junior to such
stock and any cash  payments in lieu of  fractional  shares issued in connection
therewith, or (vi) payments under this Guarantee).

         Section 5.2.  Ranking.  This  Guarantee  will  constitute  an unsecured
                       -------
obligation  of the Guarantor  and will rank  subordinate  and junior in right of
payment  to all  present  and  future  Senior  Indebtedness  (as  defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities  agrees to the foregoing  provisions of this  Guarantee and the other
terms set forth herein.

         The right of the Guarantor to participate in any distribution of assets
of  any  of  its  subsidiaries  upon  any  such   subsidiary's   liquidation  or
reorganization  or otherwise is subject to the prior claims of creditors of that
subsidiary,  except to the extent the  Guarantor  may itself be  recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee  will  be  effectively   subordinated   to  all  existing  and  future

<PAGE>

liabilities of the Guarantor's  subsidiaries,  and claimants should look only to
the assets of the  Guarantor for payments  hereunder.  This  Guarantee  does not
limit the  incurrence  or issuance  of other  secured or  unsecured  debt of the
Guarantor,  including Senior Indebtedness of the Guarantor,  under any indenture
that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI

                                   TERMINATION

         Section 6.1.  Termination.  This  Guarantee  shall  terminate as to the
                       -----------
Capital  Securities  (i) upon full  payment of the  Redemption  Price or Special
Redemption  Price of all  Capital  Securities  then  outstanding,  (ii) upon the
distribution  of all of the  Debentures  to the  Holders  of all of the  Capital
Securities or (iii) upon full payment of the amounts  payable in accordance with
the Declaration upon dissolution of the Issuer.  This Guarantee will continue to
be  effective  or will be  reinstated,  as the case  may be,  if at any time any
Holder of Capital  Securities  must  restore  payment of any sums paid under the
Capital Securities or under this Guarantee.

                                  ARTICLE VII

                                 INDEMNIFICATION

         Section 7.1.  Exculpation.
                       -----------

         (a)    No   Indemnified  Person   shall   be   liable,  responsible  or
accountable in damages or otherwise to the  Guarantor or any Covered  Person for
any loss, damage or claim  incurred by reason of any act  or omission  performed
or omitted  by  such  Indemnified  Person in  good faith in accordance with this
Guarantee and in a manner that such Indemnified  Person  reasonably  believed to
be  within  the  scope of the authority conferred on  such Indemnified Person by
this Guarantee or by law,  except that an  Indemnified  Person  shall be  liable
for  any  such  loss, damage  or  claim  incurred by reason of such  Indemnified
Person's  negligence  or  willful  misconduct  with  respect  to  such  acts  or
omissions.

         (b)    An  Indemnified  Person  shall be fully  protected in relying in
good  faith  upon  the  records  of  the  Issuer  or the Guarantor and upon such
information, opinions,  reports  or  statements  presented  to the Issuer or the
Guarantor by any Person as to matters the Indemnified Person reasonably believes
are within such other Person's  professional  or expert  competence and who,  if
selected by such Indemnified  Person,  has been selected with reasonable care by
such Indemnified Person, including information,  opinions, reports or statements
as to the value and amount of the  assets, liabilities, profits, losses,  or any
other  facts  pertinent  to  the  existence  and  amount  of  assets  from which
Distributions  to Holders of Capital Securities might properly be paid.

         Section 7.2.  Indemnification.
                       ---------------

         (a)    The Guarantor agrees to indemnify each Indemnified  Person  for,
and  to  hold  each  Indemnified  Person  harmless  against,  any  and all loss,
liability,  damage,  claim or  expense  incurred  without  negligence or willful
misconduct  on  the  part  of  the  Indemnified  Person,  arising  out  of or in
connection  with  the acceptance  or  administration  of  the  trust  or  trusts
hereunder,  including,  but not  limited to, the costs and  expenses  (including
reasonable  legal fees and expenses) of  the Indemnified Person defending itself
against,   or  investigating,  any  claim  or  liability in connection  with the
exercise  or  performance  of  any  of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify  as  set forth  in this Section 7.2 shall
survive the resignation or removal of the  Guarantee Trustee and the termination
of this Guarantee.
<PAGE>

         (b)    Promptly  after  receipt  by  an  Indemnified  Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified Person
will, if a claim in respect  thereof is to be made  against the  Guarantor under
this Section 7.2, notify the Guarantor in writing of the  commencement  thereof;
but the failure so to notify the Guarantor  (i) will not relieve  the  Guarantor
from  liability   under  paragraph  (a)  above unless and to the extent that the
Guarantor did  not  otherwise  learn  of such  action  and such  failure results
in the forfeiture  by the  Guarantor of substantial rights and defenses and (ii)
will  not,  in  any  event,  relieve  the  Guarantor from any obligations to any
Indemnified  Person   other  than  the  indemnification  obligation  provided in
paragraph  (a) above. The Guarantor shall be entitled to appoint  counsel of the
Guarantor's  choice  at  the  Guarantor's  expense to represent the  Indemnified
Person in any  action  for  which  indemnification  is sought (in which case the
Guarantor  shall  not thereafter be responsible for the fees and expenses of any
separate counsel retained by the Indemnified  Person or  Persons  except  as set
forth   below);  provided,  however,  that  such  counsel  shall  be  reasonably
                 --------   -------
satisfactory   to  the  Indemnified Person.   Notwithstanding  the   Guarantor's
election  to  appoint  counsel  to  represent  the  Guarantor in an action,  the
Indemnified  Person shall have the right to employ separate  counsel  (including
local counsel),  and the Guarantor  shall bear the reasonable  fees,  costs  and
expenses  of  such  separate  counsel if (i)  the  use of counsel  chosen by the
Guarantor  to  represent  the  Indemnified  Person would  present  such  counsel
with a conflict of interest,  (ii) the actual or  potential  defendants  in,  or
targets  of, any  such  action  include  both  the  Indemnified  Person and  the
Guarantor  and the  Indemnified  Person  shall have reasonably  concluded   that
there may be legal defenses  available to it and/or other Indemnified  Person(s)
which  are  different  from or  additional  to those available to the Guarantor,
(iii)  the  Guarantor  shall   not  have  employed  counsel satisfactory  to the
Indemnified  Person to represent  the  Indemnified  Person  within  a reasonable
time  after notice of the institution of such action or (iv) the Guarantor shall
authorize the Indemnified  Person to employ separate counsel at the  expense  of
the  Guarantor.  The  Guarantor  will not,  without the prior written consent of
the Indemnified  Persons,  settle or compromise or consent to the  entry  of any
judgment  with  respect to any  pending or  threatened  claim,  action,  suit or
proceeding in respect of  which  indemnification  or  contribution may be sought
hereunder  (whether or  not the  Indemnified  Persons  are  actual or  potential
parties to such claim or action) unless such settlement, compromise  or  consent
includes   an  unconditional  release  of  each  Indemnified  Person  from   all
liability arising out of such claim, action, suit or proceeding.

         Section 7.3.  Compensation;  Reimbursement  of Expenses.  The Guarantor
                       -----------------------------------------
agrees:

         (a)    to  pay  to   the  Guarantee  Trustee  from  time  to  time such
compensation for all services  rendered by it  hereunder  as the  parties  shall
agree  to  from  time  to  time (which compensation shall not  be limited by any
provision  of  law  in  regard  to  the compensation  of a trustee of an express
trust); and

         (b)    except as otherwise expressly provided herein,  to reimburse the
Guarantee  Trustee upon request for all reasonable  expenses,  disbursements and
advances  incurred  or made  by it in  accordance  with  any  provision  of this
Guarantee   (including  the  reasonable   compensation   and  the  expenses  and
disbursements of its agents and counsel), except any such expense,  disbursement
or advance as may be attributable to its negligence or willful misconduct.

         For purposes of  clarification,  this Section 7.3 does not  contemplate
the payment by the Guarantor of acceptance or annual  administration  fees owing
to the Guarantee  Trustee for services to be provided by the  Guarantee  Trustee
under this Guarantee or the fees and expenses of the Guarantee Trustee's counsel
in  connection  with  the  closing  of the  transactions  contemplated  by  this
Guarantee.  The provisions of this Section 7.3 shall survive the  resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.
<PAGE>
                                  ARTICLE VIII

                                  MISCELLANEOUS

         Section 8.1.  Successors  and Assigns.  All  guarantees  and agreements
                       -----------------------
contained  in this  Guarantee  shall bind the  successors,  assigns,  receivers,
trustees and  representatives of the Guarantor and shall inure to the benefit of
the Holders of the Capital  Securities  then  outstanding.  Except in connection
with any merger or consolidation of the Guarantor with or into another entity or
any sale, transfer or lease of the Guarantor's assets to another entity, in each
case, to the extent permitted under the Indenture,  the Guarantor may not assign
its rights or delegate its  obligations  under this Guarantee  without the prior
approval  of the  Holders of at least a Majority  in  liquidation  amount of the
Capital Securities.

         Section 8.2.  Amendments.  Except  with  respect to any changes that do
                       ----------
not  adversely  affect  the  rights  of Holders of the Capital Securities in any
material  respect  (in which case no consent of Holders will be required),  this
Guarantee may be amended  only with the prior  approval  of the Holders  of  not
less  than  a  Majority  in  liquidation  amount of the Capital Securities.  The
provisions of the Declaration  with  respect  to  amendments  thereof  apply  to
the giving of such approval.

         Section 8.3.  Notices. All notices provided for in this Guarantee shall
                       -------
be in  writing,  duly  signed  by the party  giving  such  notice,  and shall be
delivered, telecopied or mailed by first class mail, as follows:

         (a)    If given  to the Guarantee Trustee,  at the  Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee  Trustee
may give notice of to the Holders of the Capital Securities and the Guarantor):

         Wilmington Trust Company
         Rodney Square North
         1100 North Market Street
         Wilmington, Delaware  19890-1600
         Attention:  Corporate Trust Administration
         Telecopy:  302-636-4140

         (b)    If  given to the Guarantor,  at the Guarantor's  mailing address
set forth below (or such other address as  the  Guarantor  may give notice of to
the Holders of the Capital Securities and to the Guarantee Trustee):

         First Banks, Inc.
         600 James S. McDonnell Boulevard
         Hazelwood, Missouri  63042
         Attention:  Lisa K. Vansickle
         Telecopy:  314-592-6621

         (c)    If given to any Holder of the Capital Securities, at the address
set forth on the books and records of the Issuer.

         All such  notices  shall be deemed to have been given when  received in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage  prepaid,  except that if a notice or other document is refused delivery
or cannot be  delivered  because  of a changed  address  of which no notice  was
given,  such notice or other  document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

         Section 8.4.  Benefit.  This Guarantee is solely for the benefit of the
                       -------
Beneficiaries  and,  subject to Section 2.1(a),  is not separately  transferable
from the Capital Securities.

         Section 8.5.  Governing Law. THIS  GUARANTEE  SHALL BE GOVERNED BY, AND
                       -------------
CONSTRUED AND INTERPRETED IN ACCORDANCE  WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).

         Section 8.6.  Counterparts.  This  Guarantee  may be executed in one or
                       ------------
more  counterparts,  each of which shall be an original,  but all of which taken
together shall constitute one and the same instrument.

         Section 8.7   Separability.  In  case  one or  more  of the  provisions
                       ------------
contained in this Guarantee shall for any reason be held to be invalid,  illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other  provisions  of this  Guarantee,  but this  Guarantee
shall be construed as if such invalid or illegal or unenforceable  provision had
never been contained herein.



                     Signatures appear on the following page

<PAGE>


     THIS GUARANTEE is executed as of the day and year first above written.



                                FIRST BANKS, INC., as Guarantor

                                By: /s/    Allen H. Blake
                                   ---------------------------------------------
                                    Name:  Allen H. Blake
                                    Title: President and Chief Executive Officer



                                WILMINGTON TRUST COMPANY, as Guarantee Trustee

                                By: /s/    Christopher J. Monigle
                                   ---------------------------------------------
                                    Name:  Christopher J. Monigle
                                    Title: Assistant Vice President


<PAGE>

                                                                    Exhibit 4.38
                                FIRST BANKS, INC.

                            40,000 Capital Securities


                        Floating Rate Capital Securities
               (Liquidation Amount $1,000.00 per Capital Security)


                               PLACEMENT AGREEMENT

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

                                                               November 22, 2004


FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117

Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York  10019

Ladies and Gentlemen:

      First  Banks,  Inc.,  a  Missouri  corporation  (the  "Company"),  and its
financing subsidiary, First Bank Statutory Trust III, a Delaware statutory trust
(the "Trust," and hereinafter together with the Company, the "Offerors"), hereby
confirm their agreement  (this  "Agreement")  with you as placement  agents (the
"Placement Agents"), as follows:

Section 1.      Issuance and Sale of Securities.
                -------------------------------

        1.1.    Introduction.  The Offerors  propose to  issue  and  sell at the
                ------------
Closing (as defined in Section 2.3.1 hereof) 40,000 of the Trust's Floating Rate
Capital Securities,  with a liquidation amount of $1,000.00 per capital security
(the "Capital  Securities"),  to First Tennessee Bank National  Association (the
"Purchaser") pursuant to the terms of a Subscription  Agreement entered into, or
to be entered into on or prior to the Closing Date (as defined in Section  2.3.1
hereof), between the Offerors and the Purchaser (the "Subscription  Agreement"),
the form of which is attached hereto as Exhibit A-1 and incorporated herein by
                                        -----------
this reference.

        1.2.    Operative Agreements. The Capital Securities shall be fully  and
                --------------------
unconditionally  guaranteed on a subordinated  basis by the Company with respect
to distributions and amounts payable upon  liquidation,  redemption or repayment
(the  "Guarantee")   pursuant  and  subject  to  the  Guarantee  Agreement  (the
"Guarantee  Agreement"),  to be dated as of the Closing  Date and  executed  and
delivered by the Company and Wilmington Trust Company  ("WTC"),  as trustee (the
"Guarantee  Trustee"),  for the benefit  from time to time of the holders of the
Capital  Securities.  The  entire  proceeds  from the  sale by the  Trust to the
holders of the Capital  Securities  shall be combined  with the entire  proceeds
from the sale by the Trust to the Company of its common  securities (the "Common
Securities"),  and  shall be used by the  Trust to  purchase  $41,238,000.00  in

<PAGE>

principal amount of the Floating Rate Junior  Subordinated  Deferrable  Interest
Debentures (the  "Debentures")  of the Company.  The Capital  Securities and the
Common  Securities  for the Trust  shall be issued  pursuant  to an Amended  and
Restated  Declaration  of Trust among WTC, as Delaware  trustee  (the  "Delaware
Trustee"),  WTC, as institutional  trustee (the  "Institutional  Trustee"),  the
Administrators  named  therein,  and the Company,  to be dated as of the Closing
Date and in substantially the form heretofore  delivered to the Placement Agents
(the "Trust Agreement"). The Debentures shall be issued pursuant to an Indenture
(the  "Indenture"),  to be dated as of the Closing Date, between the Company and
WTC, as indenture trustee (the "Indenture Trustee"). The documents identified in
this  Section  1.2 and in Section 1.1 are  referred to herein as the  "Operative
Documents."

        1.3.     Rights of Purchaser. The Capital Securities  shall  be  offered
                 -------------------
and sold by the Trust directly to the Purchaser  without  registration of any of
the Capital Securities, the Debentures or the Guarantee under the Securities Act
of 1933, as amended (the "Securities  Act"), or any other applicable  securities
laws in reliance  upon  exemptions  from the  registration  requirements  of the
Securities  Act and other  applicable  securities  laws. The Offerors agree that
this  Agreement  shall  be  incorporated  by  reference  into  the  Subscription
Agreement  and the  Purchaser  shall be entitled to each of the  benefits of the
Placement Agents and the Purchaser under this Agreement and shall be entitled to
enforce  obligations  of the  Offerors  under this  Agreement as fully as if the
Purchaser were a party to this Agreement.  The Offerors and the Placement Agents
have entered into this  Agreement to set forth their  understanding  as to their
relationship and their respective rights, duties and obligations.

        1.4.     Legends. Upon original issuance thereof, and until such time as
                 -------
the  same  is no  longer  required  under  the  applicable  requirements  of the
Securities Act, the Capital  Securities and Debentures  certificates  shall each
contain a legend as required pursuant to any of the Operative Documents.

Section 2.       Purchase of Capital Securities.
                 ------------------------------

        2.1.     Exclusive Rights; Purchase  Price.  From  the date hereof until
                 ---------------------------------
the Closing Date (which date may be extended by mutual agreement of the Offerors
and the Placement Agents), the Offerors hereby grant to the Placement Agents the
exclusive  right  to  arrange  for the  sale of the  Capital  Securities  to the
Purchaser at a purchase price of $1,000.00 per Capital Security.

        2.2.     Subscription  Agreement. The  Offerors hereby agree to evidence
                 -----------------------
their  acceptance of the  subscription by  countersigning  a copy of each of the
Subscription Agreement and returning the same to the Placement Agents.

        2.3.     Closing and Delivery of Payment.
                 -------------------------------

                 2.3.1. Closing; Closing Date. The  sale  and  purchase  of  the
                        ---------------------
Capital  Securities  by the  Offerors  to the  Purchaser  shall  take place at a
closing (the "Closing") at the offices of Lewis, Rice & Fingersh, L.C., at 10:00
a.m. (St. Louis time) on November 23, 2004, or such other business day as may be
agreed upon by the  Offerors  and the  Placement  Agents (the  "Closing  Date");
provided,  however,  that in no event  shall the  Closing  Date occur later than
--------   -------
November 30, 2004 unless consented to by the Purchaser. Payment by the Purchaser
shall be payable in the manner set forth in the Subscription Agreement and shall
be made prior to or on the Closing Date.

                 2.3.2. Delivery. Not less than two full business days prior  to
                        --------
the Closing Date, a global Capital Security certificate in definitive form shall
be made  available by or on behalf of the Offerors to the  Placement  Agents and
the  Institutional  Trustee  for  inspecting,   checking  and  delivery  to  the
Depository Trust Company ("DTC") or its custodian.
<PAGE>

        2.4.     Costs and Expenses. Whether or not this Agreement is terminated
                  ------------------
or the  sale of the  Capital  Securities  is  consummated,  the  Company  hereby
covenants  and  agrees  that it shall  pay or cause to be paid  (directly  or by
reimbursement)  all reasonable costs and expenses incident to the performance of
the  obligations  of the  Offerors  under this  Agreement,  including  all fees,
expenses and  disbursements  of counsel and  accountants  for the Offerors;  all
reasonable  expenses  incurred  by the  Offerors  incident  to the  preparation,
execution and delivery of the Trust Agreement, the Indenture, and the Guarantee;
and all other reasonable  costs and expenses  incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement.

        2.5.     Failure to Close.  If any of  the  conditions  to  the  Closing
                 ----------------
specified in this Agreement shall not have been fulfilled to the satisfaction of
the  Placement  Agents or if the  Closing  shall not have  occurred on or before
10:00 a.m. (St. Louis  time) on  November  30,  2004,  then  each party  hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further  obligations under this Agreement without thereby waiving any rights
it may have by reason of such nonfulfillment or failure; provided, however, that
                                                         --------  -------
the  obligations  of the parties  under  Sections 2.4, 7.5 and 9 shall not be so
relieved and shall continue in full force and effect.

Section 3.       Closing Conditions.  The obligations of  the Purchaser and  the
                 ------------------
Placement Agents on the Closing Date shall be subject to the accuracy, at and as
of the Closing  Date,  of the  representations  and  warranties  of the Offerors
contained in this Agreement,  to the accuracy, at and as of the Closing Date, of
the  statements  of the  Offerors  made  in any  certificates  pursuant  to this
Agreement,  to the performance by the Offerors of their  respective  obligations
under this  Agreement,  to  compliance,  at and as of the Closing  Date,  by the
Offerors with their respective agreements herein contained, and to the following
further conditions:

        3.1.     Opinions of Counsel. On the Closing Date,  the Placement Agents
                 -------------------
shall have  received  the  following  favorable  opinions,  each dated as of the
Closing Date: (a) from Stinson Morrison Hecker LLP, counsel for the Offerors and
addressed to the Purchaser, the Placement Agents and WTC  in  substantially  the
form set forth on Exhibit B-1 attached  hereto and  incorporated  herein by this
                  -----------
reference, (b) from Richards, Layton & Finger, P.A., special Delaware counsel to
the  Offerors and  addressed  to the  Purchaser,  the  Placement  Agents and the
Offerors, in substantially the form set forth on Exhibit B-2 attached hereto and
                                                 -----------
incorporated herein by this reference and (c) from Lewis, Rice & Fingersh, L.C.,
special tax counsel to the Offerors,  and addressed to the Placement  Agents and
the Offerors, in substantially the form set forth on Exhibit B-3 attached hereto
                                                     -----------
and incorporated herein by this reference, subject to the receipt by Lewis, Rice
&  Fingersh,  L.C. of a  representation  letter from the Company in the form set
forth in Exhibit B-3  completed in a manner  reasonably  satisfactory  to Lewis,
         -----------
Rice & Fingersh,  L.C.  (collectively,  the "Offerors'  Counsel  Opinions").  In
rendering the Offerors' Counsel Opinions, counsel to the Offerors may rely as to
factual  matters upon  certificates  or other  documents  furnished by officers,
directors  and trustees of the  Offerors  (copies of which shall be delivered to
the Placement  Agents and the Purchaser) and by government  officials,  and upon
such other  documents  as  counsel  to the  Offerors  may,  in their  reasonable
opinion, deem appropriate as a basis for the Offerors' Counsel Opinions. Counsel
to the  Offerors  may specify the  jurisdictions  in which they are  admitted to
practice  and that they are not  admitted to practice in any other  jurisdiction
and are not  experts  in the law of any  other  jurisdiction.  If the  Offerors'
counsel is not  admitted to  practice  in the State of New York,  the opinion of
Offerors' counsel may assume, for purposes of the opinion,  that the laws of the
State of New York are substantively  identical,  in all respects material to the
opinion,  to the internal laws of the state in which such counsel is admitted to
practice.  Such Offerors'  Counsel  Opinions shall not state that they are to be
governed or qualified by, or that they are  otherwise  subject to, any treatise,
written policy or other document relating to legal opinions,  including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
<PAGE>

        3.2.     Officer's Certificate.  At the Closing Date, the  Purchaser and
                 ---------------------
the Placement Agents shall have received certificates from an authorized officer
of  the  Company,   dated  as  of  the  Closing  Date,   stating  that  (i)  the
representations and warranties of the Offerors set forth in Section 5 hereof are
true and correct as of the Closing Date and that the Offerors have complied with
all  agreements  and satisfied  all  conditions on their part to be performed or
satisfied at or prior to the Closing Date, (ii) since the date of this Agreement
the  Offerors  have  not  incurred  any  liability  or  obligation,   direct  or
contingent,  or  entered  into  any  material  transactions,  other  than in the
ordinary  course of  business,  which is  material  to the  Offerors,  and (iii)
covering such other matters as the Placement Agents may reasonably request.

        3.3.     Administrator's Certificate. At the Closing Date, the Purchaser
                 ---------------------------
and the  Placement  Agents  shall  have  received a  certificate  of one or more
Administrators  of the Trust,  dated as of the Closing  Date,  stating  that the
representations  and warranties of the Trust set forth in Section 5 are true and
correct  as of the  Closing  Date and  that  the  Trust  has  complied  with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.

        3.4.    Purchase Permitted by  Applicable  Laws;  Legal Investment.  The
                ----------------------------------------------------------
purchase  of and  payment  for  the  Capital  Securities  as  described  in this
Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation,  (b) not subject the Purchaser
or the  Placement  Agents to any penalty or, in the  reasonable  judgment of the
Purchaser and the Placement Agents,  other onerous  conditions under or pursuant
to any applicable law or  governmental  regulation,  and (c) be permitted by the
laws and  regulations  of the  jurisdictions  to  which  the  Purchaser  and the
Placement Agents are subject.

        3.5.    Consents and Permits.   The  Company  and  the Trust shall  have
                --------------------
received  all  consents,  permits  and other  authorizations,  and made all such
filings and declarations,  as may be required from any person or entity pursuant
to any law, statute,  regulation or rule (federal, state, local and foreign), or
pursuant to any agreement,  order or decree to which the Company or the Trust is
a party or to which  either is  subject,  in  connection  with the  transactions
contemplated by this Agreement.

        3.6.     Information. Prior to  or  on  the  Closing  Date, the Offerors
                 -----------
shall  have  furnished  to  the  Placement  Agents  such  further   information,
certificates,  opinions  and  documents  addressed  to  the  Purchaser  and  the
Placement Agents, which the Placement Agents may reasonably request,  including,
without  limitation,  a complete  set of the  Operative  Documents  or any other
documents or certificates  required by this Section 3; and all proceedings taken
by the Offerors in connection  with the issuance,  offer and sale of the Capital
Securities as herein  contemplated shall be reasonably  satisfactory in form and
substance to the Placement Agents.

        If any condition  specified  in this  Section  3  shall  not  have  been
fulfilled when and as required in this  Agreement,  or if any of the opinions or
certificates  mentioned  above  or  elsewhere  in this  Agreement  shall  not be
reasonably  satisfactory  in form and  substance to the Placement  Agents,  this
Agreement may be terminated by the Placement Agents by notice to the Offerors at
any time at or prior to the Closing Date.  Notice of such  termination  shall be
given to the  Offerors in writing or by  telephone  or  facsimile  confirmed  in
writing.

Section 4.       Conditions to the Offerors' Obligations. The obligations of the
                 ---------------------------------------
Offerors to sell the Capital  Securities  to the Purchaser  and  consummate  the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and  as of the  Closing  Date,  of the  representations  and  warranties  of the
Placement  Agents  contained  in this  Agreement  and to the  following  further
conditions:

        4.1.     Executed  Agreement.  The Offerors shall have received from the
                 -------------------
Placement Agents an executed copy of this Agreement.
<PAGE>

        4.2.     Fulfillment of Other Obligations.  The Placement  Agents  shall
                 --------------------------------
have  fulfilled  all of  their  other  obligations  and  duties  required  to be
fulfilled under this Agreement prior to or at the Closing.

Section 5.       Representations and Warranties of the Offerors.   Except as set
                 ----------------------------------------------
forth on the Disclosure  Schedule (as defined in Section 11.1) attached  hereto,
if any,  the  Offerors  jointly  and  severally  represent  and  warrant  to the
Placement  Agents and the  Purchaser as of the date hereof and as of the Closing
Date as follows:

        5.1.     Securities Law Matters.
                 ----------------------
                 (a) Neither   the   Company  nor  the  Trust,  nor any of their
"Affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor any person acting on any of their behalf has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security,  under  circumstances  that would require the  registration  under the
Securities Act of any of the Capital Securities, the Guarantee or the Debentures
(collectively,  the "Securities") or any other securities to be issued, or which
may be issued, by the Purchaser.

                (b) Neither  the  Company  nor  the  Trust,  nor  any  of  their
Affiliates,  nor any person acting on its or their behalf has (i) other than the
Placement  Agents,  offered  for  sale  or  solicited  offers  to  purchase  the
Securities,  or (ii) engaged in any form of offering,  general  solicitation  or
general  advertising (within the meaning of Regulation D) in connection with any
offer or sale of any of the Securities.

                 (c) The Securities satisfy the eligibility requirements of Rule
144A (d)(3) under the Securities Act.

                 (d) Neither  the  Company  nor  the  Trust is or, after  giving
effect to the offering and sale of the Capital  Securities and the  consummation
of the transactions described in this Agreement, will be an "investment company"
or an entity  "controlled"  by an "investment  company," in each case within the
meaning of Section 3(a) of the  Investment  Company Act of 1940, as amended (the
"Investment  Company  Act"),  without  regard to Section 3(c) of the  Investment
Company Act.

                 (e) Neither the Company nor the Trust has paid or agreed to pay
to any person or entity (other than the Placement  Agents) any  compensation for
soliciting another to purchase any of the Securities.

        5.2.     Organization,  Standing  and  Qualification  of the Trust.  The
                 ---------------------------------------------------------
Trust has been duly  created  and is  validly  existing  in good  standing  as a
statutory trust under the Delaware  Statutory  Trust Act (the  "Statutory  Trust
Act") with the power and  authority  to own property and to conduct the business
it  transacts  and  proposes  to  transact  and to enter  into and  perform  its
obligations  under  the  Operative  Documents.  The Trust is duly  qualified  to
transact  business  as a  foreign  entity  and  is  in  good  standing  in  each
jurisdiction in which such qualification is necessary,  except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the Trust. The Trust is not a party to or otherwise bound by any agreement other
than the  Operative  Documents.  The Trust is and will,  under  current  law, be
classified  for federal  income tax  purposes  as a grantor  trust and not as an
association taxable as a corporation.

        5.3.     Trust Agreement.  The  Trust Agreement has been duly authorized
                 ---------------
by the Company  and,  on the  Closing  Date,  will have been duly  executed  and
delivered by the Company and the  Administrators of the Trust, and, assuming due
authorization,   execution  and  delivery  by  the  Delaware   Trustee  and  the
Institutional Trustee, will be a valid and binding obligation of the Company and
such  Administrators,  enforceable  against them in  accordance  with its terms,
subject to (a)  applicable  bankruptcy,  insolvency,  moratorium,  receivership,
reorganization, liquidation and other laws relating  to  or affecting creditors'

<PAGE>

rights generally,  and (b) general  principles of equity  (regardless of whether
considered  and applied in a proceeding  in equity or at law)  ("Bankruptcy  and
Equity").  Each of the  Administrators of the Trust is an employee or a director
of the Company or of a financial  institution  subsidiary of the Company and has
been duly authorized by the Company to execute and deliver the Trust Agreement.

        5.4.     Guarantee Agreement and the Indenture.  Each  of  the Guarantee
                 -------------------------------------
and the  Indenture  has been duly  authorized by the Company and, on the Closing
Date, will have been duly executed and delivered by the Company,  and,  assuming
due authorization,  execution and delivery by the Guarantee Trustee, in the case
of the Guarantee,  and by the Indenture  Trustee,  in the case of the Indenture,
will be a valid and binding obligation of the Company  enforceable against it in
accordance with its terms, subject to Bankruptcy and Equity.

        5.5.     Capital   Securities   and  Common  Securities.   The   Capital
                 ----------------------------------------------
Securities  and the Common  Securities  have been duly  authorized  by the Trust
Agreement and, when issued and delivered against payment therefor on the Closing
Date  to the  Purchaser,  in the  case  of the  Capital  Securities,  and to the
Company,  in the case of the  Common  Securities,  will be  validly  issued  and
represent undivided beneficial interests in the assets of the Trust. None of the
Capital  Securities  or the Common  Securities is subject to preemptive or other
similar rights.  On the Closing Date, all of the issued and  outstanding  Common
Securities  will be directly  owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance.

        5.6.     Debentures.  The Debentures have been  duly  authorized  by the
                 ----------
Company and, at the Closing Date,  will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture,  and,
when  authenticated  in the manner  provided for in the  Indenture and delivered
against  payment  therefor  by the  Trust,  will  constitute  valid and  binding
obligations of the Company entitled to the benefits of the Indenture enforceable
against the Company in accordance  with their terms,  subject to Bankruptcy  and
Equity.

        5.7.     Power and Authority.  This Agreement has been duly  authorized,
                 -------------------
executed and  delivered by the Company and the Trust and  constitutes  the valid
and binding  obligation  of the Company and the Trust,  enforceable  against the
Company and the Trust in accordance  with its terms,  subject to Bankruptcy  and
Equity.

        5.8.     No Defaults. The  Trust  is  not  in  violation  of  the  Trust
                 -----------
Agreement  or, to the  knowledge  of the  Administrators,  any  provision of the
Statutory  Trust Act. The execution,  delivery and performance by the Company or
the Trust of this  Agreement or the Operative  Documents to which it is a party,
and the consummation of the transactions  contemplated herein or therein and the
use of the proceeds therefrom, will not conflict with or constitute a breach of,
or a default under, or result in the creation or imposition of any lien,  charge
or other  encumbrance  upon any property or assets of the Trust,  the Company or
any of the Company's  Subsidiaries  (as defined in Section 5.11 hereof) pursuant
to any contract,  indenture,  mortgage,  loan  agreement,  note,  lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a party
or by which it or any of them may be bound,  or to which any of the  property or
assets of any of them is subject, except for a conflict,  breach, default, lien,
charge or encumbrance which could not, singly or in the aggregate, reasonably be
expected to have a Material  Adverse  Effect nor will such action  result in any
violation  of the Trust  Agreement  or the  Statutory  Trust Act or require  the
consent, approval, authorization or order of any court or governmental agency or
body. As used herein,  the term "Material  Adverse Effect" means any one or more
effects that  individually  or in the  aggregate are material and adverse to the
Offerors' ability to consummate the transactions  contemplated  herein or in the
Operative  Documents  or any one or more  effects  that  individually  or in the
aggregate  are material and adverse to the condition  (financial or  otherwise),
earnings,  affairs, business,  prospects or results of operations of the Company
and its  Subsidiaries  taken as whole,  whether or not occurring in the ordinary
course of business.
<PAGE>

        5.9.     Organization, Standing and Qualification  of  the  Company. The
                 ----------------------------------------------------------
Company has been duly  incorporated  and is validly existing as a corporation in
good standing under the laws of Missouri, with all requisite corporate power and
authority  to own its  properties  and conduct the  business  it  transacts  and
proposes to transact,  and is duly qualified to transact business and is in good
standing as a foreign  corporation in each jurisdiction  where the nature of its
activities requires such qualification,  except where the failure of the Company
to be so  qualified  would  not,  singly or in the  aggregate,  have a  Material
Adverse Effect.

        5.10.    Subsidiaries of the Company.  Each of the Company's significant
                 ---------------------------
subsidiaries  (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the "Significant Subsidiaries")) is listed in Exhibit C attached hereto and
                                                   ---------
incorporated herein by this reference. Each Significant Subsidiary has been duly
organized  and is validly  existing and in good  standing  under the laws of the
jurisdiction in which it is chartered or organized, with all requisite power and
authority  to own its  properties  and conduct the  business  it  transacts  and
proposes to transact,  and is duly qualified to transact business and is in good
standing  as a foreign  entity  in each  jurisdiction  where  the  nature of its
activities  requires  such  qualification,  except where the failure of any such
Significant Subsidiary to be so qualified would not, singly or in the aggregate,
have a Material  Adverse  Effect.  All of the issued and  outstanding  shares of
capital stock of the Significant  Subsidiaries (a) have been duly authorized and
are validly  issued,  (b) are fully paid and  nonassessable,  and (c) are wholly
owned,  directly or  indirectly,  by the Company  free and clear of any security
interest,  mortgage,  pledge,  lien,  encumbrance,  restriction  upon  voting or
transfer, preemptive rights, claim, equity or other defect.

        5.11.    Permits. The Company and each of its subsidiaries  (as  defined
                 -------
in Section 1-02(x) of Regulation S-X to the Securities Act) (the "Subsidiaries")
have all  requisite  power  and  authority,  and all  necessary  authorizations,
approvals, orders, licenses,  certificates and permits of and from regulatory or
governmental  officials,  bodies and tribunals, to own or lease their respective
properties and to conduct their  respective  businesses as now being  conducted,
except  such  authorizations,  approvals,  orders,  licenses,  certificates  and
permits  which,  if not obtained  and  maintained,  would not,  singly or in the
aggregate,  have a Material  Adverse Effect,  and neither the Company nor any of
its  Subsidiaries  has  received  any  notice  of  proceedings  relating  to the
revocation  or  modification  of any  such  authorizations,  approvals,  orders,
licenses,  certificates  or permits which,  singly or in the  aggregate,  if the
failure to be so licensed or approved is the subject of an unfavorable decision,
ruling or finding,  would,  singly or in the aggregate,  have a Material Adverse
Effect;  and the  Company  and  its  Subsidiaries  are in  compliance  with  all
applicable laws,  rules,  regulations and orders and consents,  the violation of
which would, singly or in the aggregate, have a Material Adverse Effect.

        5.12.    Conflicts, Authorizations and Approvals.  Neither  the  Company
                 ---------------------------------------
nor any of its  Subsidiaries  is in  violation  of its  respective  articles  or
certificate  of  incorporation,  charter or  by-laws  or similar  organizational
documents or in default in the  performance  or  observance  of any  obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which either the
Company or any of its Subsidiaries is a party, or by which it or any of them may
be bound or to which any of the  property or assets of the Company or any of its
Subsidiaries is subject, the effect of which violation or default in performance
or observance would have, singly or in the aggregate, a Material Adverse Effect.

        5.13.    Holding Company Registration and Deposit Insurance. The Company
                 --------------------------------------------------
is duly  registered (i) as a bank holding  company or financial  holding company
under the Bank Holding  Company Act of 1956, as amended,  and the regulations of
the Board of Governors of the Federal Reserve System (the "Federal  Reserve") or
(ii) as a savings and loan  holding  company  under the Home Owners' Loan Act of
1933, as amended,  and the regulations of the Office of Thrift  Supervision (the
"OTS"),  and  the  deposit  accounts  of  the  Company's  Subsidiary  depository
institutions are insured by the Federal Deposit Insurance  Corporation  ("FDIC")
to the fullest  extent  permitted  by law and the rules and  regulations  of the
FDIC,  and no proceedings  for the  termination of such insurance are pending or
threatened.
<PAGE>

        5.14.    Financial Statements.
                 --------------------

                 (a) The consolidated balance sheets of the Company  and  all of
its  Subsidiaries  as of  December  31, 2003 and  December  31, 2002 and related
consolidated income statements and statements of changes in shareholders' equity
for the three years ended December 31, 2003 together with the notes thereto, and
the consolidated balance sheets of the Company and all of its Subsidiaries as of
September 30, 2004 and the related consolidated income statements and statements
of changes in  shareholders'  equity for the nine months  then ended,  copies of
each of  which  have  been  provided  to the  Placement  Agents  (together,  the
"Financial  Statements"),  have  been  prepared  in  accordance  with  generally
accepted  accounting  principles applied on a consistent basis (except as may be
disclosed  therein) and fairly  present in all material  respects the  financial
position and the results of operations  and changes in  shareholders'  equity of
the  Company  and all of its  Subsidiaries  as of the dates and for the  periods
indicated  (subject,  in the case of  interim  financial  statements,  to normal
recurring year-end adjustments,  none of which shall be material). The books and
records of the Company  and all of its  Subsidiaries  have been,  and are being,
maintained  in all  material  respects in  accordance  with  generally  accepted
accounting principles and any other applicable legal and accounting requirements
and reflect only actual transactions.

                 (b) The information in  the Company's  most  recently filed (i)
FR Y-9C filed with the Federal Reserve if the Company is a bank holding company,
(ii) FR Y-9SP  filed with the  Federal  Reserve  if the  Company is a small bank
holding  company or (iii) H-(b)11 filed with the OTS if the Company is a savings
and loan holding company (the "Regulatory  Report"),  previously provided to the
Placement Agents fairly presents in all material respects the financial position
of the Company and, where  applicable,  all of its Subsidiaries as of the end of
the period represented by such Regulatory Report.

                 (c) Since  the respective dates of the Financial Statements and
the Regulatory Report,  there has been no material adverse change or development
with  respect to the  financial  condition or earnings of the Company and all of
its Subsidiaries, taken as a whole.

                 (d) The accountants of the  Company who certified the Financial
Statements  are   independent   public   accountants  of  the  Company  and  its
Subsidiaries  within  the  meaning  of the  Securities  Act  and the  rules  and
regulations thereunder.

        5.15.    Exchange Act Reporting.  The  reports filed with the Securities
                 ----------------------
and Exchange  Commission (the  "Commission") by the Company under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the regulations thereunder
at the time they  were  filed  with the  Commission  complied  as to form in all
material respects with the requirements of the 1934 Act and such reports did not
contain an untrue  statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  in which they were made, not misleading,  except to
the extent  superseded  by a  subsequent  report  filed by the Company  with the
Commission.

        5.16.    Regulatory Enforcement Matters. Neither the Company nor any  of
                 ------------------------------
its Subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation  with respect
to, any  cease-and-desist  order,  agreement,  consent agreement,  memorandum of
understanding  or other regulatory enforcement action, proceeding  or order with

<PAGE>

or by, or is a party to any commitment  letter or similar  undertaking to, or is
subject to any  directive  by, or has been since January 1, 2001, a recipient of
any  supervisory  letter from, or since  January 1, 2001,  has adopted any board
resolutions  at the request of, any  Regulatory  Agency (as defined  below) that
currently  restricts  in any material  respect the conduct of their  business or
that in any material  manner  relates to their  capital  adequacy,  their credit
policies,  their ability or authority to pay dividends or make  distributions to
their  shareholders  or make  payments  of  principal  or interest on their debt
obligations,   their   management  or  their   business   (each,  a  "Regulatory
Agreement"),  nor has the Company or any of its Subsidiaries  been advised since
January 1, 2001,  by any  Regulatory  Agency that it is  considering  issuing or
requesting  any  such  Regulatory  Agreement.  There is no  material  unresolved
violation,  criticism or exception by any Regulatory  Agency with respect to any
report or statement  relating to any  examinations  of the Company or any of its
Subsidiaries.  As used herein, the term "Regulatory Agency" means any federal or
state  agency   charged  with  the   supervision  or  regulation  of  depository
institutions,  bank, financial or savings and loan holding companies, or engaged
in  the   insurance  of   depository   institution   deposits,   or  any  court,
administrative  agency or commission or other governmental agency,  authority or
instrumentality  having supervisory or regulatory  authority with respect to the
Company  or  any  of  its  Subsidiaries.  Neither  the  Company  nor  any of the
Subsidiaries is currently  unable to pay dividends or make  distributions to its
shareholders with respect to any class of its equity  securities,  or prohibited
from paying principal or interest on its debt obligations,  due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the reasonable
judgment  of the  Company's  management,  neither  the  Company  nor  any of the
Subsidiaries  will be unable in the foreseeable  future to pay dividends or make
distributions with respect to any class of equity  securities,  or be prohibited
from paying principal or interest on its debt obligations,  due to a restriction
or limitation, whether by statute, contract or otherwise.

        5.17.    No Material Change.  Since December 31, 2003, there has been no
                 ------------------
material adverse change or development with respect to the condition  (financial
or otherwise),  earnings, affairs, business,  prospects or results of operations
of the  Company or its  Subsidiaries  on a  consolidated  basis,  whether or not
arising in the ordinary course of business.

        5.18.    No Undisclosed Liabilities.  Neither  the  Company nor  any  of
                 --------------------------
its Subsidiaries has any material liability,  whether known or unknown,  whether
asserted or  unasserted,  whether  absolute or  contingent,  whether  accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including  any  liability  for  taxes  (and  there is no past or  present  fact,
situation,  circumstance,  condition  or other  basis for any  present or future
action, suit, proceeding,  hearing, charge,  complaint,  claim or demand against
the Company or its Subsidiaries  giving rise to any such liability),  except (i)
for  liabilities  set  forth  in  the  Financial   Statements  and  (ii)  normal
fluctuation  in the amount of the  liabilities  referred  to in clause (i) above
occurring  in the  ordinary  course of  business  of the  Company and all of its
Subsidiaries  since the date of the most recent  balance  sheet  included in the
Financial Statements.

        5.19.    Litigation. No   charge,    investigation,   action,  suit   or
                 ----------
proceeding is pending or, to the knowledge of the Offerors,  threatened, against
or  affecting  the  Company  or its  Subsidiaries  or any  of  their  respective
properties  before  or by  any  courts  or  any  regulatory,  administrative  or
governmental official,  commission, board, agency or other authority or body, or
any arbitrator,  wherein an unfavorable decision,  ruling or finding could have,
singly or in the aggregate, a Material Adverse Effect.

        5.20.    Deferral of Interest Payments on Debentures. The Company has no
                 -------------------------------------------
present  intention to exercise  its option to defer  payments of interest on the
Debentures  as  provided  in  the  Indenture.  The  Company  believes  that  the
likelihood that it would exercise its right to defer payments of interest on the
Debentures as provided in the Indenture at any time during which the  Debentures
are outstanding is remote because of the  restrictions  that would be imposed on
the  Company's  ability to declare or pay dividends or  distributions  on, or to
redeem, purchase,  acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal,  interest or premium on, or repay,  repurchase or redeem,  any of its

<PAGE>

debt securities that rank pari passu in all respects with, or junior in interest
to, the Debentures.

Section 6.       Representations and Warranties of  the  Placement  Agents. Each
                 ---------------------------------------------------------
Placement Agent represents and warrants to the Offerors as to itself (but not as
to the other Placement Agent) as follows:

        6.1.     Organization, Standing and Qualification.
                 ----------------------------------------

                 (a) FTN  Financial  Capital  Markets  is  a  division  of First
Tennessee  Bank  National  Association,  a  national  banking  association  duly
organized,  validly  existing and in good standing  under the laws of the United
States,  with full power and authority to own,  lease and operate its properties
and conduct its business as currently  being  conducted.  FTN Financial  Capital
Markets is duly qualified to transact  business as a foreign  corporation and is
in good standing in each other  jurisdiction in which it owns or leases property
or conducts its business so as to require  such  qualification  and in which the
failure to so qualify would,  individually or in the aggregate,  have a material
adverse effect on the condition  (financial or otherwise),  earnings,  business,
prospects or results of operations of FTN Financial Capital Markets.

                 (b) Keefe,  Bruyette  &  Woods,  Inc.  is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
New York, with full power and authority to own, lease and operate its properties
and conduct its business as currently being conducted.  Keefe, Bruyette & Woods,
Inc. is duly qualified to transact  business as a foreign  corporation and is in
good standing in each other  jurisdiction in which it owns or leases property or
conducts  its  business  so as to require  such  qualification  and in which the
failure to so qualify would,  individually or in the aggregate,  have a material
adverse effect on the condition  (financial or otherwise),  earnings,  business,
prospects or results of operations of Keefe, Bruyette & Woods, Inc.

        6.2.     Power and Authority. The  Placement  Agent  has  all  requisite
                 -------------------
power and authority to enter into this  Agreement,  and this  Agreement has been
duly and validly  authorized,  executed and delivered by the Placement Agent and
constitutes  the legal,  valid and binding  agreement  of the  Placement  Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
Bankruptcy  and  Equity  and  except  as  any  indemnification  or  contribution
provisions thereof may be limited under applicable securities laws.

        6.3.     General Solicitation.  In the case of the offer and sale of the
                 --------------------
Capital Securities,  no form of general  solicitation or general advertising was
used by the Placement Agent or its  representatives  including,  but not limited
to, advertisements,  articles,  notices or other communications published in any
newspaper,  magazine or similar medium or broadcast over  television or radio or
any  seminar  or  meeting  whose  attendees  have been  invited  by any  general
solicitation or general advertising.

        6.4.     Purchaser. The Placement Agent has made such reasonable inquiry
                 ---------
as is  necessary  to  determine  that the  Purchaser  is  acquiring  the Capital
Securities for its own account,  except as  contemplated  in Section 7.8 hereto,
and that the Purchaser does not intend to distribute  the Capital  Securities in
contravention of the Securities Act or any other applicable securities laws.

        6.5.     Qualified Purchasers. The  Placement  Agent  has not offered or
                 --------------------
sold and will not arrange for the offer or sale of the Capital Securities except
(i) to those the Placement Agent reasonably believes are "accredited  investors"
(as defined in Rule 501 of Regulation  D), or (ii) in any other manner that does
not require  registration of the Capital Securities under the Securities Act. In
connection  with  each such  sale,  the  Placement  Agent has taken or will take
reasonable  steps to ensure  that the  purchaser  is aware that (a) such sale is
being made in reliance on an exemption  under the  Securities Act and (b) future
transfers of the Capital  Securities  will not be made except in compliance with
applicable securities laws.
<PAGE>

        6.6.     Offering Circulars.   Neither  the  Placement   Agent  nor  its
                 ------------------
representatives  will include any non-public  information about the Company, the
Trust or any of their  Affiliates  in any  registration  statement,  prospectus,
offering  circular or private  placement  memorandum used in connection with any
purchase of Capital  Securities  without the prior written  consent of the Trust
and the Company.

Section 7.       Covenants of the Offerors. The Offerors covenant and agree with
                 -------------------------
the Placement Agents and the Purchaser as follows:

        7.1.     Compliance with Representations  and  Warranties.   During  the
                 ------------------------------------------------
period from the date of this  Agreement to the Closing Date,  the Offerors shall
use their best  efforts and take all action  necessary or  appropriate  to cause
their representations and warranties contained in Section 5 hereof to be true as
of the Closing Date,  after giving effect to the  transactions  contemplated  by
this Agreement, as if made on and as of the Closing Date.

        7.2.     Sale and Registration of  Securities.   The Offerors and  their
                 ------------------------------------
Affiliates  shall not nor shall any of them  permit any  person  acting on their
behalf (other than the Placement  Agents),  to directly or indirectly  (i) sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the  Securities  Act) that would or could be  integrated
with the sale of the  Capital  Securities  in a manner  that would  require  the
registration  under the  Securities Act of the Securities or (ii) make offers or
sales of any such Security,  or solicit  offers to buy any such Security,  under
circumstances  that would  require the  registration  of any of such  Securities
under the Securities Act.

        7.3.     Use of Proceeds. The Trust shall use the proceeds from the sale
                 ---------------
of the Capital  Securities and the Common  Securities to purchase the Debentures
from the Company.

        7.4.     Investment  Company.  The Offerors shall not engage, or  permit
                 -------------------
any Subsidiary to engage, in any activity which would cause it or any Subsidiary
to be an "investment  company"  under the  provisions of the Investment  Company
Act.

        7.5.     Reimbursement of  Expenses.   If  the  sale   of   the  Capital
                 --------------------------
Securities  provided for herein is not consummated (i) because any condition set
forth in Section 3 hereof is not  satisfied,  or (ii)  because  of any  refusal,
inability  or  failure on the part of the  Company  or the Trust to perform  any
agreement  herein or comply with any provision  hereof other than by reason of a
breach by the Placement Agents, the Company shall reimburse the Placement Agents
upon demand for all of their pro rata share of out-of-pocket expenses (including
reasonable  fees and  disbursements  of  counsel)  in an  amount  not to  exceed
$50,000.00 that shall have been incurred by them in connection with the proposed
purchase and sale of the Capital Securities.  Notwithstanding the foregoing, the
Company shall have no  obligation  to reimburse  the Placement  Agents for their
out-of-pocket  expenses  if the sale of the  Capital  Securities  fails to occur
because the Placement Agents fail to fulfill a condition set forth in Section 4.

        7.6.     Solicitation and Advertising.  In  connection with any offer or
                 ----------------------------
sale of any of the Securities,  the Offerors shall not, nor shall either of them
permit any of their Affiliates or any person acting on their behalf,  other than
the Placement Agents,  to engage in any form of general  solicitation or general
advertising (as defined in Regulation D).

        7.7.     Compliance with Rule 144A(d)(4) under the Securities Act.    So
                 --------------------------------------------------------
long as any of the Securities are outstanding  and are  "restricted  securities"
within the meaning of Rule  144(a)(3)  under the  Securities  Act,  the Offerors
will,  during any period in which they are not subject to and in compliance with
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange Act"), or the Offerors are not exempt from such reporting requirements
pursuant  to and in  compliance  with Rule  12g3-2(b)  under the  Exchange  Act,
provide to each holder of such  restricted  securities  and to each  prospective
purchaser (as designated by such holder) of such restricted securities, upon the


<PAGE>

request of such holder or prospective  purchaser in connection with any proposed
transfer,  any information  required to be provided by Rule 144A(d)(4) under the
Securities  Act, if applicable.  This covenant is intended to be for the benefit
of the holders, and the prospective  purchasers designated by such holders, from
time to time of such  restricted  securities.  The  information  provided by the
Offerors pursuant to this Section 7.7 will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

        7.8.     Transfer Notice.  The Offerors acknowledge that First Tennessee
                 ---------------
Bank  National   Association   ("First  Tennessee")  may  transfer  the  Capital
Securities that it is purchasing, in whole or in part, at any time and from time
to time  following  the Closing  Date by  delivering  the notice (the  "Transfer
Notice") attached as Exhibit A to the Subscription Agreement.

        7.9.     Quarterly Reports.  Within 50  days of the end of each calendar
                 -----------------
year quarter and within 100 days of the end of each  calendar year during  which
the  Debentures  are  issued and outstanding and the Purchaser  holds any of the
Capital  Securities,  the  Offerors  shall submit to  the  Purchaser a completed
quarterly report in the form attached hereto as  Exhibit D as  well as a copy of
                                                 ----------
the applicable  Regulatory Report for the Company.  If First Tennessee transfers
any or all of the Capital  Securities  as  contemplated  under  Section  7.8, in
addition to the reporting  obligations of the Offerors to the Purchaser provided
for in this Section 7.9, the Offerors shall submit to the trustee  designated in
the Transfer Notice such periodic  reports as may be required by such trustee in
the form and at such times as such trustee may require. The Offerors acknowledge
and agree that such designated  trustee and its successors and assigns are third
party beneficiaries of this Section 7.9.

        7.10.    Book-Entry  Registration.  Each Offeror will cooperate with the
                 ------------------------
Placement Agents and use all commercially reasonable efforts to make the Capital
Securities,  and in the event the Debentures  are  distributed to holders of the
Capital  Securities,  to  make  the  Debentures,   eligible  for  clearance  and
settlement  as  book-entry  securities  through the  facilities of DTC, and will
execute,  deliver and comply with all  representations  made to, and  agreements
with, DTC and Nasdaq's PORTAL system.

Section 8.       Covenants of  the  Placement  Agents.  The   Placement   Agents
                 ------------------------------------
covenant  and agree with the Offerors  that,  during the period from the date of
this  Agreement to the Closing Date,  the Placement  Agents shall use their best
efforts  and  take  all  action   necessary  or   appropriate   to  cause  their
representations  and warranties  contained in Section 6 to be true as of Closing
Date, after giving effect to the transactions contemplated by this Agreement, as
if made on and as of the Closing Date. The Placement Agents further covenant and
agree  not to  engage  in  hedging  transactions  with  respect  to the  Capital
Securities  unless  such  transactions  are  conducted  in  compliance  with the
Securities Act.

Section 9.       Indemnification.
                 ---------------

        9.1.     Indemnification Obligation.  The  Offerors  shall  jointly  and
                 --------------------------
severally indemnify and hold harmless the Placement Agents and the Purchaser and
each of their  respective  agents,  employees,  officers and  directors and each
person that controls either of the Placement  Agents or the Purchaser within the
meaning of Section 15 of the  Securities  Act or Section 20 of the Exchange Act,
and agents, employees,  officers and directors or any such controlling person of
either of the Placement Agents or the Purchaser (each such person or entity,  an
"Indemnified  Party")  from and  against any and all  losses,  claims,  damages,
judgments,  liabilities or expenses, joint or several, to which such Indemnified
Party may become  subject  under the  Securities  Act, the Exchange Act or other
federal or state  statutory  law or  regulation,  or at common law or  otherwise
(including in settlement of any litigation,  if such settlement is effected with
the written consent of the Offerors),  insofar as such losses, claims,  damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon, or relate to, in whole or in part, (a) any untrue statement

<PAGE>

or alleged  untrue  statement of a material  fact  contained in any  information
(whether  written or oral) or documents  executed in favor of, furnished or made
available to the Placement  Agents or the Purchaser by the Offerors,  or (b) any
omission or alleged  omission to state in any  information  (whether  written or
oral) or  documents  executed in favor of,  furnished  or made  available to the
Placement Agents or the Purchaser by the Offerors a material fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
shall reimburse each Indemnified  Party for any legal and other expenses as such
expenses are reasonably  incurred by such  Indemnified  Party in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, judgments,  liability,  expense or action described in this Section 9.1.
In addition to their other obligations under this Section 9, the Offerors hereby
agree that,  as an interim  measure  during the  pendency of any claim,  action,
investigation,  inquiry or other  proceeding  arising out of, or based upon,  or
related to the matters described above in this Section 9.1, they shall reimburse
each  Indemnified  Party on a quarterly basis for all reasonable  legal or other
expenses incurred in connection with  investigating or defending any such claim,
action, investigation, inquiry or other proceeding,  notwithstanding the absence
of a  judicial  determination  as to the  propriety  and  enforceability  of the
possibility  that such  payments  might later be held to have been improper by a
court  of  competent   jurisdiction.   To  the  extent  that  any  such  interim
reimbursement  payment is so held to have been improper,  each Indemnified Party
shall  promptly  return such amounts to the  Offerors  together  with  interest,
determined on the basis of the prime rate (or other commercial  lending rate for
borrowers of the highest credit  standing)  announced from time to time by First
Tennessee  Bank  National  Association  (the  "Prime  Rate").  Any such  interim
reimbursement payments which are not made to an Indemnified Party within 30 days
of a request for  reimbursement  shall bear  interest at the Prime Rate from the
date of such request.

        9.2.     Conduct of Indemnification Proceedings. Promptly  after receipt
                 --------------------------------------
by an Indemnified Party under this Section 9 of notice of  the  commencement  of
any action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the  Offerors  under this Section 9, notify the Offerors in writing
of the  commencement  thereof;  but,  subject to Section 9.4, the omission to so
notify the  Offerors  shall not  relieve  them from any  liability  pursuant  to
Section 9.1 which the Offerors may have to any  Indemnified  Party unless and to
the extent that the  Offerors  did not  otherwise  learn of such action and such
failure by the  Indemnified  Party results in the  forfeiture by the Offerors of
substantial rights and defenses.  In case any such action is brought against any
Indemnified  Party and such Indemnified Party seeks or intends to seek indemnity
from the Offerors, the Offerors shall be entitled to participate in, and, to the
extent that they may wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party; provided,  however, if the defendants in
                                        --------   -------
any such action  include  both the  Indemnified  Party and the  Offerors and the
Indemnified  Party shall have reasonably  concluded that there may be a conflict
between the  positions of the Offerors and the  Indemnified  Party in conducting
the defense of any such action or that there may be legal defenses  available to
it and/or other  Indemnified  Parties which are different  from or additional to
those available to the Offerors,  the Indemnified  Party shall have the right to
select  separate  counsel  to  assume  such  legal  defenses  and  to  otherwise
participate in the defense of such action on behalf of such  Indemnified  Party.
Upon  receipt of notice  from the  Offerors to such  Indemnified  Party of their
election to so assume the defense of such action and approval by the Indemnified
Party of counsel,  the Offerors  shall not be liable to such  Indemnified  Party
under this Section 9 for any legal or other  expenses  subsequently  incurred by
such  Indemnified  Party in connection  with the defense  thereof unless (i) the
Indemnified  Party  shall have  employed  such  counsel in  connection  with the
assumption  of legal  defenses in  accordance  with the proviso in the preceding
sentence (it being  understood,  however,  that the Offerors shall not be liable
for the expenses of more than one separate counsel  representing the Indemnified
Parties who are parties to such  action),  or (ii) the  Offerors  shall not have
employed counsel  reasonably  satisfactory to the Indemnified Party to represent
the  Indemnified  Party within a reasonable time after notice of commencement of
the  action,  in each of which  cases the fees and  expenses  of counsel of such
Indemnified Party shall be at the expense of the Offerors.
<PAGE>
        9.3.     Contribution. If  the  indemnification  provided  for  in  this
                 ------------
Section 9 is required by its terms, but is for any reason held to be unavailable
to or otherwise insufficient to hold harmless an Indemnified Party under Section
9.1 in respect of any losses, claims, damages,  liabilities or expenses referred
to herein or therein,  then the Offerors shall  contribute to the amount paid or
payable by such Indemnified  Party as a result of any losses,  claims,  damages,
judgments,  liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the  Indemnified  Party,  on the other hand,  from the offering of
such Capital Securities,  or (ii) if the allocation provided by clause (i) above
is not permitted by applicable  law, in such  proportion  as is  appropriate  to
reflect not only the relative  benefits referred to in clause (i) above but also
the relative fault of the Offerors,  on the one hand, and the Placement  Agents,
on  the  other  hand,  in  connection   with  the  statements  or  omissions  or
inaccuracies  in the  representations  and  warranties  herein or other breaches
which  resulted in such  losses,  claims,  damages,  judgments,  liabilities  or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits  received by the Offerors,  on the one hand, and the Placement
Agents, on the other hand, shall be deemed to be in the same proportion,  in the
case of the  Offerors,  as the total price paid to the  Offerors for the Capital
Securities sold by the Offerors to the Purchaser (net of the  compensation  paid
to the Placement Agents hereunder,  but before deducting  expenses),  and in the
case of the Placement Agents, as the compensation received by them, bears to the
total of such amounts paid to the Offerors and received by the Placement  Agents
as  compensation.  The relative  fault of the Offerors and the Placement  Agents
shall be  determined  by reference  to, among other  things,  whether the untrue
statement  or alleged  untrue  statement  of a material  fact or the omission or
alleged omission of a material fact or the inaccurate or the alleged  inaccurate
representation  and/or warranty relates to information  supplied by the Offerors
or the Placement Agents and the parties' relative intent,  knowledge,  access to
information  and  opportunity  to correct or prevent such statement or omission.
The provisions  set forth in Section 9.2 with respect to notice of  commencement
of any action shall apply if a claim for contribution is made under this Section
9.3; provided, however, that no additional notice shall be required with respect
     --------  -------
to any action for which notice has been given under  Section 9.2 for purposes of
indemnification.  The Offerors and the Placement  Agents agree that it would not
be just  and  equitable  if  contribution  pursuant  to this  Section  9.3  were
determined by pro rata allocation or by any other method of allocation that does
not take  account of the  equitable  considerations  referred to in this Section
9.3.  The  amount  paid or payable  by an  Indemnified  Party as a result of the
losses, claims, damages, judgments,  liabilities or expenses referred to in this
Section 9.3 shall be deemed to  include,  subject to the  limitations  set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection  with  investigating  or defending any such action or claim. In no
event shall the liability of the Placement Agents hereunder be greater in amount
than the dollar  amount of the  compensation  (net of  payment of all  expenses)
received by the Placement Agents upon the sale of the Capital  Securities giving
rise to such obligation. No person found guilty of fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  from  any  person  who was not  found  guilty  of such  fraudulent
misrepresentation.

        9.4.     Additional Remedies.  The indemnity and contribution agreements
                 -------------------
contained in this Section 9 are in addition to any  liability  that the Offerors
may otherwise have to any Indemnified Party.

        9.5.     Additional Indemnification.  The Company  shall  indemnify  and
                 --------------------------
hold harmless the Trust against all loss,  liability,  claim, damage and expense
whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.

Section 10.      Rights and Responsibilities of Placement Agents.
                 -----------------------------------------------

        10.1.    Reliance. In performing their duties under this Agreement,  the
                 --------
Placement Agents shall be entitled to rely upon any notice, signature or writing
which  they  shall in good  faith  believe  to be  genuine  and to be  signed or
presented by a proper party or parties.  The Placement  Agents may rely upon any
opinions or certificates  or other documents  delivered by the Offerors or their
counsel or designees to either the Placement Agents or the Purchaser.
<PAGE>

        10.2.    Rights of Placement Agents.  In connection with the performance
                 --------------------------
of their duties under this Agreement,  the Placement  Agents shall not be liable
for any error of judgment or any action  taken or omitted to be taken unless the
Placement  Agents were  grossly  negligent or engaged in willful  misconduct  in
connection  with such  performance  or  non-performance.  No  provision  of this
Agreement  shall require the Placement  Agents to expend or risk their own funds
or  otherwise  incur any  financial  liability  on behalf  of the  Purchaser  in
connection with the performance of any of their duties hereunder.  The Placement
Agents  shall be under no  obligation  to  exercise  any of the rights or powers
vested in them by this Agreement.

Section 11.      Miscellaneous.
                 -------------

        11.1.    Disclosure Schedule. The  term "Disclosure Schedule,"  as  used
                 -------------------
herein,  means the schedule,  if any, attached to this Agreement that sets forth
items the disclosure of which is necessary or appropriate as an exception to one
or more representations or warranties  contained in Section 5 hereof;  provided,
that  any item  set  forth  in the  Disclosure  Schedule  as an  exception  to a
representation  or warranty  shall be deemed an admission  by the Offerors  that
such  item  represents  an  exception,  fact,  event  or  circumstance  that  is
reasonably  likely  to result  in a  Material  Adverse  Effect.  The  Disclosure
Schedule shall be arranged in paragraphs  corresponding  to the section  numbers
contained  in Section  5.  Nothing in the  Disclosure  Schedule  shall be deemed
adequate to disclose an exception to a  representation  or warranty  made herein
unless  the  Disclosure   Schedule  identifies  the  exception  with  reasonable
particularity  and describes the relevant  facts in reasonable  detail.  Without
limiting the generality of the immediately preceding sentence,  the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure  Schedule
shall not be deemed  adequate to disclose an  exception to a  representation  or
warranty  made herein unless the  representation  or warranty has to do with the
existence  of the  document or other item  itself.  Information  provided by the
Company in response to any due diligence  questionnaire shall not be deemed part
of the Disclosure  Schedule and shall not be deemed to be an exception to one or
more  representations  or  warranties  contained in Section 5 hereof unless such
information is  specifically  included on the Disclosure  Schedule in accordance
with the provisions of this Section 11.1.

        11.2.    Legal Expenses.  At Closing, the Placement Agents shall provide
                 --------------
a credit for the  Offerors'  transaction-related legal expenses in the amount of
$10,000.00.

        11.3.    Non-Disclosure. Except as required by applicable law, including
                 --------------
without limitation securities laws and regulations promulgated  thereunder,  (i)
the Offerors  shall not, and will cause their advisors and  representatives  not
to, issue any press release or other public statement regarding the transactions
contemplated  by this  Agreement or the Operative  Documents  prior to or on the
Closing Date and (ii) following the Closing Date, the Offerors shall not include
in any press release,  other public statement or other  communication  regarding
the transactions  contemplated by this Agreement or the Operative Documents, any
reference to the Placement Agents,  WTC, the Purchaser,  the term "PreTS" or any
derivations  thereof,  or the  terms and  conditions  of this  Agreement  or the
Operative Documents.  Notwithstanding anything to the contrary, the Offerors may
(1) consult any tax advisor  regarding U.S.  federal income tax treatment or tax
structure of the transaction contemplated under this Agreement and the Operative
Documents  and (2) disclose to any and all persons,  without  limitation  of any
kind, the U.S. Federal income tax structure (in each case, within the meaning of
Treasury  Regulation ss.  1.6011-4) of the transaction  contemplated  under this
Agreement and the Operative  Documents and all materials of any kind  (including
opinions or other tax  analyses)  that are  provided to you relating to such tax
treatment and tax structure. For this purpose, "tax structure" is limited to any
facts relevant to the U.S.  federal income tax treatment of the  transaction and
does not include information relating to identity of the parties.
<PAGE>

        11.4.    Notices.  Prior to the Closing, and thereafter with respect  to
                 -------
matters pertaining to this Agreement only, all notices and other  communications
provided for or permitted  hereunder shall be made in writing by  hand-delivery,
first-class mail, telex,  telecopier or overnight air courier  guaranteeing next
day delivery:

         if to the Placement Agents, to:

                                  FTN Financial Capital Markets
                                  845 Crossover Lane, Suite 150
                                  Memphis, Tennessee  38117
                                  Telecopier: 901-435-4706
                                  Telephone:  800-456-5460
                                  Attention:  James D. Wingett

                                          and

                                  Keefe, Bruyette & Woods, Inc.
                                  787 7th Avenue
                                  4th Floor
                                  New York, New York  10019
                                  Telecopier: 212-403-2000
                                  Telephone:  212-403-1004
                                  Attention:  Mitchell Kleinman, General Counsel

         with a copy to:

                                  Lewis, Rice & Fingersh, L.C.
                                  500 North Broadway, Suite 2000
                                  St. Louis, Missouri  63102
                                  Telecopier:  314-241-6056
                                  Telephone:   314-444-7600
                                  Attention:  Thomas C. Erb, Esq.

                                          and

                                  Sidley Austin Brown & Wood LLP
                                  787 7th Avenue
                                  New York, New York  10019
                                  Telecopier: 212-839-5599
                                  Telephone:  212-839-5300
                                  Attention:  Renwick Martin, Esq.

         if to the Offerors, to:

                                  First Banks, Inc.
                                  600 James S. McDonnell Boulevard
                                  Hazelwood, Missouri  63042
                                  Telecopier: 314-592-6621
                                  Telephone:  314-592-6603
                                  Attention:  Lisa K. Vansickle
<PAGE>

         with a copy to:

                                  Stinson Morrison Hecker LLP
                                  1201 Walnut Street
                                  Kansas City, Missouri  64106
                                  Telecopier:  816-474-4208
                                  Telephone:   816-691-3351
                                  Attention:  C. Robert Monroe, Esq.

        All such notices and  communications  shall be  deemed to have been duly
given (i) at the time  delivered by hand,  if  personally  delivered,  (ii) five
business days after being  deposited in the mail,  postage  prepaid,  if mailed,
(iii) when  answered  back,  if telexed,  (iv) the next business day after being
telecopied,  or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing,  the  foregoing  notice  provisions  shall be  superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Offerors,  and their respective counsel, may change their respective
notice  addresses  from time to time by written  notice to all of the  foregoing
persons.

        11.5.    Parties  in  Interest,  Successors  and  Assigns.   Except   as
                 ------------------------------------------------
expressly set forth herein, this Agreement is made solely for the benefit of the
Placement Agents,  the Purchaser and the Offerors and any person controlling the
Placement Agents, the Purchaser or the Offerors and their respective  successors
and assigns;  and no other  person  shall  acquire or have any right under or by
virtue of this  Agreement.  This Agreement  shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.

        11.6.    Counterparts. This  Agreement  may  be executed  by the parties
                 ------------
hereto in separate counterparts,  each of which when so executed shall be deemed
to be an original and all of which taken together  shall  constitute one and the
same agreement.

        11.7.    Headings. The headings in this Agreement are for convenience of
                 --------
reference only and shall not limit or otherwise affect the meaning hereof.

        11.8.    Governing Law.  THIS   AGREEMENT   SHALL  BE  GOVERNED  BY  AND
                 -------------
CONSTRUED IN ACCORDANCE  WITH THE INTERNAL LAWS (AND NOT THE LAWS  PERTAINING TO
CONFLICTS OF LAWS) OF THE STATE OF NEW YORK.

        11.9.    Entire  Agreement.  This Agreement, together with the Operative
                 -----------------
Documents and the other documents  delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive  statement of the
agreement  and  understanding  of the  parties  hereto in respect of the subject
matter  contained  herein  and  therein.  There are no  restrictions,  promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This  Agreement,  together with the Operative  Documents and the other
documents  delivered in connection  with the  transaction  contemplated  by this
Agreement,  supersedes  all prior  agreements  and  understandings  between  the
parties with respect to such subject matter.

        11.10.   Severability.  In  the  event  that  any  one  or  more  of the
                 ------------
provisions contained herein, or the application thereof in any circumstances, is
held  invalid,  illegal or  unenforceable  in any respect  for any  reason,  the
validity,  legality  and  enforceability  of any such  provision  in every other
respect and of the remaining  provisions hereof shall not be in any way impaired
or  affected,  it being  intended  that  all of the  Placement  Agents'  and the
Purchaser's  rights and  privileges  shall be  enforceable to the fullest extent
permitted by law.

        11.11.   Survival.  The Placement Agents and the Offerors, respectively,
                 --------
agree that the  representations,  warranties and agreements made by each of them
in this Agreement and in any certificate or other instrument  delivered pursuant
hereto shall remain in full force and effect and shall  survive the delivery of,
and payment for, the Capital Securities.

                     Signatures appear on the following page



<PAGE>


        If this Agreement is  satisfactory to you, please so indicate by signing
the  acceptance of this  Agreement and deliver such  counterpart to the Offerors
whereupon this Agreement will become binding  between us in accordance  with its
terms.

                               Very truly yours,

                               FIRST BANKS, INC.


                               By: /s/  Allen H. Blake
                                  ----------------------------------------------
                               Name:    Allen H. Blake
                                    --------------------------------------------
                               Title:   President and Chief Executive Officer
                                     -------------------------------------------


                               FIRST BANK STATUTORY TRUST III


                               By: /s/  Lisa K. Vansickle
                                  ----------------------------------------------
                               Name:    Lisa K. Vansickle
                                    --------------------------------------------
                               Title:   Administrator



CONFIRMED AND ACCEPTED,
as of the date first set forth above

FTN FINANCIAL CAPITAL MARKETS,
a division of First Tennessee Bank National Association,
as a Placement Agent


By: /s/   James D. Wingett
   ------------------------------------------------------------
Name:     James D. Wingett
     ----------------------------------------------------------
Title:    Senior Vice President
      ---------------------------------------------------------


KEEFE, BRUYETTE & WOODS, INC.,
a New York corporation, as a Placement Agent


By:  /s/  Peter J. Wirth
    -----------------------------------------------------------
Name:     Peter J. Wirth
     ----------------------------------------------------------
Title:    Managing Director
      ---------------------------------------------------------


<PAGE>

                                    EXHIBIT A
                                    ---------

                         FORM OF SUBSCRIPTION AGREEMENT
                         ------------------------------

                         FIRST BANK STATUTORY TRUST III
                                FIRST BANKS, INC.

                             SUBSCRIPTION AGREEMENT

                                November 23, 2004

         THIS  SUBSCRIPTION  AGREEMENT (this  "Agreement") made among First Bank
Statutory Trust III (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  et seq.),  First Banks,  Inc., a Missouri  corporation,  with its
principal  offices  located  at 600  James S.  McDonnell  Boulevard,  Hazelwood,
Missouri 63042 (the "Company" and, collectively with the Trust, the "Offerors"),
and First Tennessee Bank National Association (the "Purchaser").

                                    RECITALS:

         A.      The Trust desires to issue 40,000 of its Floating Rate  Capital
Securities (the "Capital Securities"),  liquidation amount $1,000.00 per Capital
Security,  representing  an undivided  beneficial  interest in the assets of the
Trust  (the  "Offering"),  to be issued  pursuant  to an  Amended  and  Restated
Declaration of Trust (the  "Declaration")  by and among the Company,  Wilmington
Trust Company ("WTC"),  the  administrators  named therein,  and the holders (as
defined therein),  which Capital  Securities are to be guaranteed by the Company
with respect to  distributions  and payments upon  liquidation,  redemption  and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and

         B.      The proceeds from the sale of the  Capital  Securities  will be
combined  with the  proceeds  from the sale by the Trust to the  Company  of its
common  securities,  and will be used by the  Trust to  purchase  an  equivalent
amount of Floating Rate Junior  Subordinated  Deferrable  Interest Debentures of
the  Company  (the  "Debentures")  to be issued by the  Company  pursuant  to an
indenture to be executed by the Company and WTC, as trustee  (the  "Indenture");
and

         C.      In consideration of the premises and the mutual representations
and covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

         1.1.    Upon  the   execution of this Agreement,  the  Purchaser hereby
agrees to purchase from the Trust 40,000 Capital  Securities at a price equal to
$1,000.00 per Capital  Security (the  "Purchase  Price") and the Trust agrees to
sell such Capital  Securities  to the Purchaser  for said  Purchase  Price.  The
rights  and  preferences  of  the  Capital  Securities  are  set  forth  in  the
Declaration.  The Purchase  Price is payable in immediately  available  funds on
November  23,  2004,  or such other  business  day as may be  designated  by the
Purchaser,  but in no event later than November 30, 2004 (the  "Closing  Date").
The Offerors  shall provide the Purchaser  wire transfer  instructions  no later
than 1 day following the date hereof.

         1.2.     The   Placement  Agreement,   dated   November 22, 2004   (the
"Placement  Agreement"),  among the Offerors and the placement agents identified

<PAGE>

therein  (the  "Placement   Agents")   includes  certain   representations   and
warranties,  covenants  and  conditions  to closing  and certain  other  matters
governing  the  Offering.  The  Placement  Agreement is hereby  incorporated  by
reference into this Agreement and the Purchaser shall be entitled to each of the
benefits of the Placement Agents and the Purchaser under the Placement Agreement
and shall be entitled  to enforce the  obligations  of the  Offerors  under such
Placement  Agreement as fully as if the Purchaser were a party to such Placement
Agreement.

         1.3.     Anything herein or in the Placement Agreement notwithstanding,
the Offerors  acknowledge and agree that, so long as Purchaser holds some or all
of the Capital Securities, the Purchaser may in its discretion from time to time
transfer or sell,  or sell or grant  participation  interests in, some or all of
such  Capital  Securities  to  one or  more  parties,  provided  that  any  such
transaction complies, as applicable,  with the registration  requirements of the
Securities  Act of  1933,  as  amended  (the  "Securities  Act")  and any  other
applicable  securities  laws,  is  pursuant  to an  exemption  therefrom,  or is
otherwise not subject thereto.

                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF PURCHASER

         2.1.     The Purchaser understands and  acknowledges  that  none of the
Capital  Securities,  the Debentures or the Guarantee have been registered under
the Securities Act or any other applicable securities law, are being offered for
sale  by  the  Trust  in  transactions  not  requiring  registration  under  the
Securities Act, and may not be offered,  sold, pledged or otherwise  transferred
by the Purchaser except in compliance with the registration  requirements of the
Securities Act or any other applicable securities laws, pursuant to an exemption
therefrom or in a transaction not subject thereto.

         2.2.     The  Purchaser  represents  and  warrants  that,   except   as
contemplated  under Section 1.3 hereof, it is purchasing the Capital  Securities
for its own  account,  for  investment,  and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of the Securities
Act or other applicable  securities laws, subject to any requirement of law that
the  disposition  of its property be at all times within its control and subject
to its  ability to resell  such  Capital  Securities  pursuant  to an  effective
registration  statement under the Securities Act or under Rule 144A or any other
exemption  from  registration  available  under the  Securities Act or any other
applicable securities law.

         2.3.     The   Purchaser  represents  and  warrants  that  neither  the
Offerors  nor the  Placement  Agents are acting as a fiduciary  or  financial or
investment adviser for the Purchaser.

         2.4.     The  Purchaser  represents and warrants that it is not relying
(for purposes of making any investment  decision or otherwise)  upon any advice,
counsel or  representations  (whether written or oral) of the Offerors or of the
Placement Agents.

         2.5.     The  Purchaser  represents   and   warrants  that (a)  it  has
consulted with its own legal, regulatory, tax, business,  investment,  financial
and  accounting  advisers  in  connection  herewith  to the extent it has deemed
necessary,  (b) it has had a  reasonable  opportunity  to ask  questions  of and
receive  answers from officers and  representatives  of the Offerors  concerning
their respective  financial condition and results of operations and the purchase
of the Capital  Securities,  and any such  questions  have been  answered to its
satisfaction,  (c) it has had the  opportunity to review all publicly  available
records and filings  concerning the Offerors and it has carefully  reviewed such
records and filings that it considers relevant to making an investment decision,
and (d) it has made its own  investment  decisions  based upon its own judgment,
due diligence  and advice from such advisers as it has deemed  necessary and not
upon any view expressed by the Offerors or the Placement Agents.
<PAGE>

         2.6.     The Purchaser represents and warrants  that it is a "qualified
institutional buyer" as defined under Rule 144A under the Securities Act. If the
Purchaser is a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A
under the Securities Act, it owns and invests on a discretionary  basis not less
than U.S.  $25,000,000.00  in securities of issuers that are not affiliated with
it. The Purchaser is not a participant-directed  employee plan, such as a 401(k)
plan,  or any  other  type of plan  referred  to in  paragraph  (a)(1)(i)(D)  or
(a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F)
of Rule 144A that holds the assets of such a plan, unless  investment  decisions
with respect to the plan are made solely by the fiduciary, trustee or sponsor of
such plan.

         2.7.     The  Purchaser  represents  and warrants that on each day from
the date on which it acquires the Capital  Securities  through and including the
date on which it disposes of its interests in the Capital Securities, either (i)
it is not (a) an  "employee  benefit  plan" (as  defined in Section  3(3) of the
United  States  Employee  Retirement  Income  Security  Act of 1974,  as amended
("ERISA")) which is subject to the provisions of Part 4 of Subtitle B of Title I
  -----
of ERISA, or any entity whose  underlying  assets include the assets of any such
plan (an "ERISA Plan"),  (b) any other "plan" (as defined in Section  4975(e)(1)
          ----------
of the United  States  Internal  Revenue Code of 1986,  as amended (the "Code"))
                                                                         ----
which is subject  to the  provisions  of Section  4975 of the Code or any entity
whose underlying  assets include the assets of any such plan (a "Plan"),  (c) an
                                                                 ----
entity  whose  underlying  assets  include  the assets of any such ERISA Plan or
other Plan by reason of Department  of Labor  regulation  section  2510.3-101 or
otherwise,  or (d) a governmental or church plan that is subject to any federal,
state or local law which is  substantially  similar to the provisions of Section
406 of  ERISA  or  Section  4975 of the  Code (a  "Similar  Law");  or (ii)  the
                                                   ------------
purchase,  holding and disposition of the Capital  Securities by it will satisfy
the  requirements  for  exemptive  relief  under  Prohibited  Transaction  Class
Exemption  ("PTCE") 84-14,  PTCE 90-1, PTCE 91-38,  PTCE 95-60,  PTCE 96-23 or a
             ----
similar exemption,  or, in the case of a plan subject to a Similar Law, will not
result in a non-exempt violation of such Similar Law.

         2.8.     The Purchaser represents and warrants that it is acquiring the
Capital  Securities as principal for its own account for investment  and, except
as  contemplated  under Section 1.3 hereof,  not for sale in connection with any
distribution  thereof.  It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were not
specifically  solicited  from any person owning a beneficial  interest in it for
the purpose of enabling it to purchase any Capital Securities.  The Purchaser is
not a (i) partnership,  (ii) common trust fund or (iii) special trust,  pension,
profit  sharing or other  retirement  trust fund or plan in which the  partners,
beneficiaries  or  participants,  as  applicable,  may designate the  particular
investments to be made or the allocation of any investment  among such partners,
beneficiaries  or  participants,  and except as  contemplated  under Section 1.3
hereof, it agrees that it shall not hold the Capital  Securities for the benefit
of any other  person  and shall be the sole  beneficial  owner  thereof  for all
purposes  and that it shall  not sell  participation  interests  in the  Capital
Securities  or enter  into any  other  arrangement  pursuant  to which any other
person shall be entitled to a  beneficial  interest in the  distribution  on the
Capital Securities.  The Capital Securities  purchased directly or indirectly by
the Purchaser  constitute  an investment of no more than 40% of its assets.  The
Purchaser  understands  and agrees  that any  purported  transfer of the Capital
Securities to a purchaser which would cause the  representations  and warranties
of Section 2.6 and this Section 2.8 to be  inaccurate  shall be null and void ab
initio and the Offerors  retain the right to resell any Capital  Securities sold
to non-permitted transferees.

         2.9.     The Purchaser  represents  and warrants that it has full power
and authority to execute and deliver this Agreement, to make the representations
and warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.
<PAGE>

         2.10.    The Purchaser represents  and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.

         2.11.    The Purchaser represents and warrants that this  Agreement has
been duly authorized, executed and delivered by the Purchaser.

         2.12.    The  Purchaser  understands  and acknowledges that the Company
will  rely  upon  the  truth  and  accuracy  of the  foregoing  acknowledgments,
representations,  warranties  and  agreements  and  agrees  that,  if any of the
acknowledgments,  representations,  warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate,  it
shall promptly notify the Company.

         2.13.    The Purchaser understands that no public market exists for any
of the Capital  Securities,  and that it is unlikely  that a public  market will
ever exist for the Capital Securities.

                                  ARTICLE III

                                 MISCELLANEOUS

         3.1.     Any notice or  other  communication given  hereunder shall  be
deemed sufficient if in writing and sent by registered or certified mail, return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

                  To the Offerors:     First Banks, Inc.
                                       600 James S. McDonnell Boulevard
                                       Hazelwood, Missouri  63042
                                       Attention:  Lisa K. Vansickle
                                       Fax:  314-592-6621

                  To the Purchaser:    First Tennessee Bank National Association
                                       845 Crossover Lane, Suite 150
                                       Memphis, Tennessee  38117
                                       Attention:  David Work
                                       Fax:  901-435-7983

                  Unless otherwise expressly   provided herein, notices shall be
deemed to have been  given on the date of  mailing,  except  notice of change of
address, which shall be deemed to have been given when received.

         3.2.     This  Agreement  shall  not  be  changed,  modified or amended
except by a writing signed by the parties to be charged,  and this Agreement may
not be discharged  except by  performance  in accordance  with its terms or by a
writing signed by the party to be charged.

         3.3.     Upon the execution and  delivery  of  this  Agreement  by  the
Purchaser,  this  Agreement  shall become a binding  obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.
<PAGE>

         3.4.     NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED
BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

         3.5.     The parties agree to execute  and  deliver  all  such  further
documents,  agreements and instruments and take such other and further action as
may be  necessary  or  appropriate  to carry out the purposes and intent of this
Agreement.

         3.6.     This  Agreement  may  be executed  in one or more counterparts
each of which  shall be  deemed an  original,  but all of which  shall  together
constitute one and the same instrument.

         3.7.     In the event that any one or more of the  provisions contained
herein,  or the  application  thereof  in any  circumstances,  is held  invalid,
illegal or unenforceable in any respect for any reason,  the validity,  legality
and  enforceability  of any such  provision  in every  other  respect and of the
remaining  provisions  hereof shall not be in any way  impaired or affected,  it
being  intended  that  all of the  Offerors'  and  the  Purchaser's  rights  and
privileges shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF,  this Agreement is agreed to and accepted as of the
day and year first written above.


FIRST TENNESSEE BANK NATIONAL ASSOCIATION


By:
   --------------------------------------------------
Print Name:
            -----------------------------------------
Title:
       ----------------------------------------------

                                   FIRST BANKS, INC.


                                   By:
                                      ------------------------------------------

                                   Name:
                                        ----------------------------------------

                                   Title:
                                         ---------------------------------------

                                   FIRST BANK STATUTORY TRUST III


                                   By:
                                      ------------------------------------------

                                   Name:
                                        ----------------------------------------

                                   Title:  Administrator



<PAGE>

                       EXHIBIT A TO SUBSCRIPTION AGREEMENT
                       -----------------------------------

                             FORM OF TRANSFER NOTICE

                                     [DATE]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-1600
Attention:  Corporate Trust Administration

Dear Sir or Madam:

         The  undersigned  hereby  notifies you of the transfer of [________] of
the Capital  Securities of First Bank  Statutory  Trust III, such transfer to be
effective on [DATE OF TRANSFER]. In accordance with Section 7.9 of the Placement
Agreement dated November 22, 2004 between the Offerors and the placement  agents
named therein (the "Placement  Agreement"),  periodic reports shall be delivered
to  [_______________]  on each March 15, June 15,  September  15 and December 15
during the term of the Capital Securities, commencing [___________], in the form
attached  thereto.  Capitalized  terms  used in this  notice  and not  otherwise
defined  shall  have  the  meanings  ascribed  to such  terms  in the  Placement
Agreement.

         As the Institutional  Trustee and Registrar,  you are hereby instructed
to notify The Depository Trust Company of the transfer of Capital  Securities to
[_______________],  if  such  notification  is  required  as  a  Fast  Automated
Securities Transfer Program Agent for DTC. The undersigned hereby certifies that
this notice has been delivered to the Company,  and Wilmington Trust Company has
no duty or obligation to provide such notice.

                                FIRST TENNESSEE BANK NATIONAL ASSOCIATION


                                By:
                                   ---------------------------------------------
                                Name:
                                     -------------------------------------------
                                Title:
                                      ------------------------------------------




cc:      First Banks, Inc.




<PAGE>

                                   EXHIBIT B-1
                                   -----------

                         FORM OF COMPANY COUNSEL OPINION
                         -------------------------------

                                November 23, 2004

First Tennessee Bank National Association       FTN Financial Capital Markets
845 Crossover Lane, Suite 150                   845 Crossover Lane, Suite 150
Memphis, Tennessee  38117                       Memphis, Tennessee  38117

Wilmington Trust Company                        Keefe, Bruyette & Woods, Inc.
Rodney Square North                             787 7th Avenue, 4th Floor
1100 North Market Street                        New York, New York  10019
Wilmington, Delaware  19890-1600

Ladies and Gentlemen:

         We have  acted as counsel  to First  Banks,  Inc.  (the  "Company"),  a
Missouri  corporation in connection with a certain  Placement  Agreement,  dated
November 22, 2004,  (the "Placement  Agreement"),  between the Company and First
Bank Statutory Trust III (the "Trust"),  on one hand, and FTN Financial  Capital
Markets and Keefe, Bruyette & Woods, Inc. (the "Placement Agents"), on the other
hand.  Pursuant  to the  Placement  Agreement,  and  subject  to the  terms  and
conditions stated therein, the Trust will issue and sell to First Tennessee Bank
National  Association  (the  "Purchaser"),  $40,000,000.00  aggregate  principal
amount of Floating Rate Capital  Securities  (liquidation  amount  $1,000.00 per
capital security) (the "Capital Securities").

         Capitalized  terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.

         The law covered by the opinions  expressed herein is limited to the law
of the United States of America and of the State of Missouri.

         We have  made such  investigations  of law as,  in our  judgment,  were
necessary  to render  the  following  opinions.  We have also  reviewed  (a) the
Company's Articles of Incorporation,  as amended,  and its By-Laws,  as amended;
and (b) such corporate documents,  records,  information and certificates of the
Company and the  Subsidiaries,  certificates  of public  officials or government
authorities and other documents as we have deemed  necessary or appropriate as a
basis for the opinions  hereinafter  expressed.  As to certain facts material to
our  opinions,   we  have  relied,   with  your  permission,   upon  statements,
certificates or representations, including those delivered or made in connection
with the above-referenced  transaction, of officers and other representatives of
the Company and the Subsidiaries and the Trust.

         As used herein, the phrases "to the best of our knowledge" or "known to
us" or other similar phrases mean the actual knowledge of the attorneys who have
had active involvement in the transactions  described above or who have prepared
or signed  this  opinion  letter,  or who  otherwise  have  devoted  substantial
attention to legal matters for the Company.

         Based upon and subject to the foregoing and the further  qualifications
set forth below, we are of the opinion as of the date hereof that:
<PAGE>

         1. The Company is validly  existing and in good standing under the laws
of the State of Missouri and is duly  registered as a bank holding company under
the Bank  Holding  Company  Act of 1956,  as  amended.  Each of the  Significant
Subsidiaries  is validly  existing  and in good  standing  under the laws of its
jurisdiction  of   organization.   Each  of  the  Company  and  the  Significant
Subsidiaries  has  full  corporate  power  and  authority  to own or  lease  its
properties  and to conduct its business as such business is currently  conducted
in all material respects.  To the best of our knowledge,  all outstanding shares
of capital stock of the Significant  Subsidiaries  have been duly authorized and
validly issued,  and are fully paid and nonassessable  except to the extent such
shares  may be  deemed  assessable  under 12 U.S.C.  Section  1831o or 12 U.S.C.
Section 55, and are owned of record and beneficially, directly or indirectly, by
the Company.

         2. The issuance, sale and delivery of the Debentures in accordance with
the terms and conditions of the Placement  Agreement and the Operative Documents
have been duly authorized by all necessary actions of the Company. The issuance,
sale and delivery of the  Debentures by the Company and the  issuance,  sale and
delivery of the Capital Securities and the Common Securities by the Trust do not
give rise to any  preemptive or other rights to subscribe for or to purchase any
shares of capital stock or equity  securities of the Company or the  Significant
Subsidiaries  pursuant to the corporate  Articles of  Incorporation  or Charter,
By-Laws  or  other  governing  documents  of  the  Company  or  the  Significant
Subsidiaries,  or,  to the  best  of  our  knowledge,  any  agreement  or  other
instrument  to which  either the  Company or the  Subsidiaries  is a party or by
which the Company or the Significant Subsidiaries may be bound.

         3. The  Company  has all  requisite  corporate  power to enter into and
perform its  obligations  under the  Placement  Agreement  and the  Subscription
Agreement,  and the Placement Agreement and the Subscription Agreement have been
duly  and  validly  authorized,  executed  and  delivered  by  the  Company  and
constitute the legal, valid and binding  obligations of the Company  enforceable
in accordance with their terms, except as the enforcement thereof may be limited
by general  principles  of equity  and by  bankruptcy  or other  laws  affecting
creditors' rights generally,  and except as the indemnification and contribution
provisions thereof may be limited under applicable laws and certain remedies may
not be available in the case of a non-material breach.

         4.  Each of the  Indenture,  the  Trust  Agreement  and  the  Guarantee
Agreement has been duly authorized,  executed and delivered by the Company,  and
is a  valid  and  legally  binding  obligation  of the  Company  enforceable  in
accordance  with its terms,  subject to the  effect of  bankruptcy,  insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

         5. The Debentures have been duly authorized,  executed and delivered by
the Company,  are entitled to the benefits of the Indenture and are legal, valid
and  binding  obligations  of the  Company  enforceable  against  the Company in
accordance  with their terms,  subject to the effect of bankruptcy,  insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

         6.  To the best of our knowledge, neither the Company,  the Trust,  nor
any of the Subsidiaries is in breach or violation of, or default under,  with or
without  notice  or lapse of time or both,  its  Articles  of  Incorporation  or
Charter, By-Laws or other governing documents (including without limitation, the
Trust  Agreement).  The  execution,  delivery and  performance  of the Placement
Agreement and the Operative  Documents and the  consummation of the transactions
contemplated by the Placement  Agreement and the Operative  Documents do not and
will not (i) result in the creation or imposition of any material  lien,  claim,
charge, encumbrance or restriction upon any property or assets of the Company or
the  Subsidiaries,  or (ii)  conflict  with,  constitute  a  material  breach or

<PAGE>

violation of, or constitute a material default under,  with or without notice or
lapse of time or both,  any of the terms,  provisions  or  conditions of (A) the
Articles of  Incorporation or Charter,  By-Laws or other governing  documents of
the  Company  or the  Subsidiaries,  or (B) to the  best of our  knowledge,  any
material contract, indenture, mortgage, deed of trust, loan or credit agreement,
note,  lease,  franchise,  license or any other agreement or instrument to which
the  Company  or the  Subsidiaries  is a party or by which any of them or any of
their  respective  properties may be bound or (C) any order,  decree,  judgment,
franchise,  license,  permit,  rule  or  regulation  of any  court,  arbitrator,
government,  or  governmental  agency or  instrumentality,  domestic or foreign,
known to us having  jurisdiction  over the Company or the Subsidiaries or any of
their respective  properties which, in the case of each of (i) or (ii) above, is
material to the Company and the Subsidiaries on a consolidated basis.

         7.  Except for filings,  registrations  or  qualifications  that may be
required by applicable securities laws, no authorization,  approval,  consent or
order of, or filing,  registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required under
the  laws  of  the  State  of  Missouri  in  connection  with  the  transactions
contemplated  by  the  Placement   Agreement  and  the  Operative  Documents  in
connection with the offer and sale of the Capital  Securities as contemplated by
the Placement Agreement and the Operative Documents.

         8.  To the best of our knowledge  (i) no action,  suit or proceeding at
law or in equity is pending or threatened to which the Company, the Trust or the
Subsidiaries  are or may be a party,  and (ii) no action,  suit or proceeding is
pending  or  threatened  against  or  affecting  the  Company,  the Trust or the
Subsidiaries or any of their properties,  before or by any court or governmental
official,  commission,  board or other administrative agency, authority or body,
or any  arbitrator,  wherein an  unfavorable  decision,  ruling or finding could
reasonably be expected to have a material  adverse effect on the consummation of
the  transactions  contemplated  by the  Placement  Agreement  and the Operative
Documents  or the issuance and sale of the Capital  Securities  as  contemplated
therein or the condition (financial or otherwise),  earnings, affairs, business,
or results of operations  of the Company,  the Trust and the  Subsidiaries  on a
consolidated basis.

         9.   Assuming the  truth  and  accuracy  of  the   representations  and
warranties of the Placement Agents in the Placement  Agreement and the Purchaser
in the  Subscription  Agreement,  it is not  necessary  in  connection  with the
offering,  sale and delivery of the Capital  Securities,  the Debentures and the
Guarantee Agreement (or the Guarantee) to register the same under the Securities
Act of 1933, as amended,  under the circumstances  contemplated in the Placement
Agreement and the Subscription Agreement.

         10.  Neither the Company nor the Trust is or after giving effect to the
offering  and  sale  of the  Capital  Securities  and  the  consummation  of the
transactions  described  in the  Placement  Agreement  will be,  an  "investment
company" or an entity  "controlled"  by an  "investment  company,"  in each case
within the meaning of the  Investment  Company Act of 1940, as amended,  without
regard to Section 3(c) of such Act.

         The opinion expressed in the first two sentences of numbered paragraph
1 of this opinion is based solely upon certain certificates and confirmations
issued by the applicable governmental officer or authority with respect to each
of the Company and the Significant Subsidiaries.

         With respect to the foregoing opinions, since no member of this firm is
actively  engaged in the  practice of law in the States of Delaware or New York,
we do not  express  any  opinions  as to the  laws of such  states  and have (i)
relied, with your approval, upon the opinion of Richards,  Layton & Finger, P.A.
with respect to matters of Delaware law and (ii) assumed, with your approval and

<PAGE>

without rendering any opinion to such effect,  that the laws of the State of New
York, in all respects material to this opinion,  are substantively  identical to
the laws of the State of Missouri, without regard to conflict of law provisions.

         The opinions  expressed  herein are rendered to you solely  pursuant to
Section 3.1(a) of the Placement  Agreement.  As such, they may be relied upon by
you only and may not be used or relied upon by any other  person for any purpose
whatsoever without our prior written consent.

                                                     Very truly yours,


<PAGE>


                                   EXHIBIT B-2
                                   -----------

                        FORM OF DELAWARE COUNSEL OPINION
                        --------------------------------

To Each of the Persons
Listed on Schedule A Hereto

         Re:      First Bank Statutory Trust III
                  ------------------------------
Ladies and Gentlemen:

         We have  acted as special  Delaware  counsel  for First Bank  Statutory
Trust III, a Delaware  statutory  trust (the  "Trust"),  in connection  with the
matters set forth herein.  At your request,  this opinion is being  furnished to
you.

         For  purposes  of  giving  the  opinions  hereinafter  set  forth,  our
examination  of documents  has been limited to the  examination  of originals or
copies of the following:

         (a) The Certificate of Trust of the Trust (the "Certificate of Trust"),
as filed in the office of the  Secretary of State of the State of Delaware  (the
"Secretary of State") on November 4, 2004;

         (b) The Declaration of Trust, dated as of November 4, 2004, among First
Banks, Inc., a Missouri corporation (the "Company"), Wilmington Trust Company, a
Delaware banking corporation  ("WTC"),  as trustee and the administrators  named
therein (the "Administrators");

         (c) The Amended and Restated  Declaration of Trust of the Trust,  dated
as of November 23, 2004  (including the form of Capital  Securities  Certificate
attached thereto as Exhibit A-1 and the terms of the Capital Securities attached
as Annex I) (the "Declaration of Trust"), among the Company, as sponsor, WTC, as
Delaware  trustee  (the  "Delaware  Trustee")  and  institutional  trustee  (the
"Institutional Trustee"), the Administrators and the holders, from time to time,
of undivided beneficial interests in the assets of the Trust;

         (d) The Placement  Agreement,  dated November 22, 2004 (the  "Placement
Agreement"), among the Company, the Trust, and FTN Financial Capital Markets and
Keefe, Bruyette & Woods, Inc., as placement agents;

         (e)  The   Subscription   Agreement,   dated  November  23,  2004  (the
"Subscription Agreement"), among the Trust, the Company and First Tennessee Bank
National  Association  (the documents  identified in items (c) through (e) being
collectively referred to as the "Operative Documents");

         (f) The  Capital  Securities  being  issued  on the  date  hereof  (the
"Capital Securities");

         (g) The Common  Securities being issued on the date hereof (the "Common
Securities") (the documents  identified in items (f) and (g) being  collectively
referred to as the "Trust Securities"); and

         (h) A Certificate  of Good Standing for the Trust,  dated  November 22,
2004, obtained from the Secretary of State.
<PAGE>

         Capitalized  terms used  herein and not  otherwise  defined are used as
defined  in the  Declaration  of  Trust,  except  that  reference  herein to any
document shall mean such document as in effect on the date hereof.  This opinion
is being delivered pursuant to Section 3.1 of the Placement Agreement.

         For purposes of this opinion,  we have not reviewed any documents other
than the documents listed in paragraphs (a) through (h) above. In particular, we
have not reviewed any document  (other than the  documents  listed in paragraphs
(a) through (h) above) that is referred to in or  incorporated by reference into
the documents  reviewed by us. We have assumed that there exists no provision in
any document  that we have not reviewed that is  inconsistent  with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing  documents,  the statements and
information  set forth  therein and the  additional  matters  recited or assumed
herein,  all of which we have  assumed to be true,  complete and accurate in all
material respects.

         With respect to all  documents  examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic  originals,  (ii) the
conformity  with the  originals  of all  documents  submitted to us as copies or
forms, and (iii) the genuineness of all signatures.

         For purposes of this opinion,  we have assumed (i) that the Declaration
of Trust constitutes the entire agreement among the parties thereto with respect
to  the  subject  matter  thereof,  including  with  respect  to  the  creation,
operation,  and termination of the Trust,  and that the Declaration of Trust and
the  Certificate of Trust are in full force and effect and have not been amended
further,  (ii) that there are no proceedings  pending or  contemplated,  for the
merger,  consolidation,  liquidation,  dissolution  or termination of the Trust,
(iii) except to the extent provided in paragraph 1 below, the due creation,  due
formation or due  organization,  as the case may be, and valid existence in good
standing  of each party to the  documents  examined  by us under the laws of the
jurisdiction governing its creation,  formation or organization,  (iv) that each
party to the  documents  examined  by us is  qualified  to do  business  in each
jurisdiction  where such  qualification  is required  generally  or necessary in
order for such party to enforce its rights under the  documents  examined by us,
(v) the legal  capacity of each natural  person who is a party to the  documents
examined by us, (vi) except to the extent set forth in  paragraph 2 below,  that
each of the parties to the documents  examined by us has the power and authority
to execute and deliver,  and to perform its obligations  under,  such documents,
(vii)  except to the extent  provided  in  paragraph  3 below,  that each of the
parties  to the  documents  examined  by us has duly  authorized,  executed  and
delivered  such  documents,  (viii) the receipt by each Person to whom a Capital
Security  is to be issued by the Trust (the  "Capital  Security  Holders")  of a
Capital  Security  Certificate for the Capital  Security and the payment for the
Capital  Securities  acquired by it, in accordance with the Declaration of Trust
and the Subscription Agreement,  (ix) that the Capital Securities are issued and
sold to the Holders of the Capital Securities in accordance with the Declaration
of Trust and the  Subscription  Agreement,  (x) the  receipt by the Person  (the
"Common Securityholder") to whom the common securities of the Trust representing
common  undivided  beneficial  interests in the assets of the Trust (the "Common
Securities" and, together with the Capital  Securities,  the "Trust Securities")
are to be issued by the Trust of a Common  Security  Certificate  for the Common
Securities  and the  payment  for  the  Common  Securities  acquired  by it,  in
accordance  with the Declaration of Trust,  (xi) that the Common  Securities are
issued and sold to the Common  Securityholder in accordance with the Declaration
of Trust,  (xii) that each of the  parties to the  documents  reviewed by us has
agreed to and  received  the  stated  consideration  for the  incurrence  of its
obligations under such documents and (xiii) that each of the documents  reviewed
by us (other  than the  Declaration  of Trust) is a legal,  valid,  binding  and
enforceable  obligation  of the  parties  thereto in  accordance  with the terms
thereof.  We have not participated in the preparation of any offering  materials
with  respect  to the Trust  Securities  and  assume no  responsibility  for its
contents.
<PAGE>

         This opinion is limited to the laws of the State of Delaware (excluding
the  securities  laws of the State of Delaware),  and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations  relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules,  regulations and orders  thereunder that are
currently in effect.

         We express no opinion as to (i) the effect of suretyship  defenses,  or
defenses  in  the  nature  thereof,  with  respect  to  the  obligations  of any
applicable  guarantor,  joint obligor,  surety,  accommodation  party,  or other
secondary  obligor or any provisions of the Declaration of Trust with respect to
indemnification  or  contribution  and (ii) the accuracy or  completeness of any
exhibits or schedules to the Operative Documents.  No opinion is given herein as
to the  choice  of law or  internal  substantive  rules of law that any court or
other  tribunal  may apply to the  transactions  contemplated  by the  Operative
Documents.

         We  express  no  opinion  as to the  enforceability  of any  particular
provision of the Declaration of Trust or the other Operative  Documents relating
to remedies after default.

         We  express  no  opinion  as to the  enforceability  of any  particular
provision of any of the Operative Documents relating to (i) waivers of rights to
object to jurisdiction  or venue,  or consents to  jurisdiction  or venue,  (ii)
waivers of rights to (or methods  of) service of process,  or rights to trial by
jury, or other rights or benefits bestowed by operation of law, (iii) waivers of
any applicable defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
variations of provisions  which are not capable of waiver or variation under the
Uniform  Commercial  Code  ("UCC")  of the  State,  (v) the  grant of  powers of
attorney to any person or entity,  or (vi)  exculpation or exoneration  clauses,
indemnity  clauses,  and clauses  relating  to releases or waivers of  unmatured
claims or rights.

         We have made no  examination  of, and no opinion is given  herein as to
the  Trustee's  or the  Trust's  title to or other  ownership  rights in, or the
existence of any liens,  charges or encumbrances  on, or adverse claims against,
any asset or property held by the Institutional Trustee or the Trust. We express
no opinion as to the creation, validity,  attachment,  perfection or priority of
any  mortgage,  security  interest or lien in any asset or property  held by the
Institutional Trustee or the Trust.

         We  express   no  opinion  as  to  the  effect  of  events   occurring,
circumstances arising, or changes of law becoming effective or occurring,  after
the date hereof on the matters  addressed in this opinion letter,  and we assume
no  responsibility  to inform you of additional or changed facts,  or changes in
law, of which we may become aware.

         We  express  no  opinion  as to any  requirement  that any party to the
Operative  Documents (or any other persons or entities  purportedly  entitled to
the benefits  thereof) qualify or register to do business in any jurisdiction in
order to be able to  enforce  its  rights  thereunder  or  obtain  the  benefits
thereof.

         Based upon the foregoing, and upon our examination of such questions of
law and  statutes of the State of Delaware as we have  considered  necessary  or
appropriate,  and subject to the  assumptions,  qualifications,  limitations and
exceptions set forth herein, we are of the opinion that:

         1.  The Trust has been duly created  and is  validly  existing  in good
standing as a statutory trust under the Delaware Statutory Trust Act (12 Del. C.
                                                                         -------
ss. 3801, et seq.) (the "Act"). All filings required under the laws of the State
          -- ---
of Delaware  with respect to the creation and valid  existence of the Trust as a
statutory trust have been made.
<PAGE>

         2.  Under the Declaration of Trust and the Act, the Trust has the trust
power and  authority  to (A) execute and deliver the  Operative  Documents,  (B)
perform its obligations  under such Operative  Documents and (C) issue the Trust
Securities.

         3.  The execution and delivery by the Trust of the Operative Documents,
and the performance by the Trust of its obligations  thereunder,  have been duly
authorized by all necessary trust action on the part of the Trust.

         4.  The Declaration  of Trust  constitutes  a legal,  valid and binding
obligation  of  the  Company,  the  Trustees  and  the  Administrators,  and  is
enforceable  against  the  Company,  the  Trustees  and the  Administrators,  in
accordance with its terms.

         5.  Each of the  Operative  Documents  constitutes  a legal,  valid and
binding  obligation of the Trust,  enforceable  against the Trust, in accordance
with its terms.

         6.  The  Capital  Securities  have been duly authorized for issuance by
the Declaration of Trust,  and, when duly executed and delivered to and paid for
by the  purchasers  thereof in accordance  with the  Declaration  of Trust,  the
Subscription Agreement and the Placement Agreement,  the Capital Securities will
be validly issued,  fully paid and, subject to the  qualifications  set forth in
paragraph 8 below, nonassessable undivided beneficial interests in the assets of
the Trust and will entitle the Capital Securities Holders to the benefits of the
Declaration of Trust.  The issuance of the Capital  Securities is not subject to
preemptive or other similar rights under the Act or the Declaration of Trust.

         7.  The Common Securities have been duly authorized for issuance by the
Declaration  of Trust and,  when duly  executed and  delivered to the Company as
Common  Security  Holder in accordance  with the  Declaration of Trust,  will be
validly issued,  fully paid and, subject to paragraph 8 below and Section 9.1(b)
of the  Declaration  of Trust  (which  provides  that the  Holder of the  Common
Securities  are  liable  for  debts and  obligations  of  Trust),  nonassessable
undivided  beneficial  interests in the assets of the Trust and will entitle the
Common Security Holder to the benefits of the Declaration of Trust. The issuance
of the Common  Securities is not subject to  preemptive or other similar  rights
under the Act or the Declaration of Trust.

         8.  Under the  Declaration  of Trust and the Act,  the  Holders  of the
Capital  Securities,  as beneficial owners of the Trust, will be entitled to the
same  limitation  of  personal  liability  extended to  stockholders  of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.  We note that the Holders of the Capital  Securities and the Holder
of the Common Securities may be obligated, pursuant to the Declaration of Trust,
(A) to provide  indemnity  and/or  security in connection  with and pay taxes or
governmental  charges  arising from  transfers or exchanges of Capital  Security
Certificates and the issuance of replacement Capital Security Certificates,  and
(B)  to  provide  security  or  indemnity  in  connection  with  requests  of or
directions to the Institutional  Trustee to exercise its rights and powers under
the Declaration of Trust.

         9.  Neither the execution, delivery and performance by the Trust of the
Operative  Documents,   nor  the  consummation  by  the  Trust  of  any  of  the
transactions  contemplated  thereby,  requires  the consent or approval  of, the
authorization  of, the  withholding  of  objection on the part of, the giving of
notice to, the filing,  registration or qualification with, or the taking of any
other action in respect of, any governmental authority or agency of the State of
Delaware,  other than the filing of the  Certificate of Trust with the Secretary
of State (which Certificate of Trust has been duly filed).

         10. Neither the execution, delivery and performance by the Trust of the
Trust  Documents,  nor  the  consummation  by  the  Trust  of  the  transactions

<PAGE>

contemplated  thereby, (i) is in violation of the Declaration of Trust or of any
law, rule or regulation of the State of Delaware applicable to the Trust or (ii)
to the  best of our  knowledge,  without  independent  investigation,  violates,
contravenes or constitutes a default under,  or results in a breach of or in the
creation of any lien (other than as permitted by the Operative  Documents)  upon
any property of the Trust under any indenture,  mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement,  license or
other  agreement or  instrument  to which the Trust is a party or by which it is
bound.

         11. Assuming  that the Trust will not be taxable as a  corporation  for
federal income tax purposes,  but rather will be classified for such purposes as
a grantor trust under Subpart E, Part I of Subchapter J of the Internal  Revenue
Code of 1986,  as  amended,  the Trust will not be  subject  to any tax,  fee or
governmental charge under the laws of the State of Delaware.

         The opinions expressed in paragraph 4, 5, 6, 7 and 8 above are subject,
as to  enforcement,  to  the  effect  upon  the  Declaration  of  Trust  of  (i)
bankruptcy, insolvency, moratorium, receivership,  reorganization,  liquidation,
fraudulent  conveyance  and  transfer,  and other  similar  laws  relating to or
affecting  the rights and remedies of creditors  generally,  (ii)  principles of
equity,  including  applicable law relating to fiduciary  duties  (regardless of
whether  considered  and applied in a proceeding in equity or at law), and (iii)
the effect of  applicable  public  policy on the  enforceability  of  provisions
relating to indemnification or contribution.

         We consent to your  relying  as to  matters of  Delaware  law upon this
opinion in connection  with the Placement  Agreement.  We also consent to Lewis,
Rice & Fingersh,  L.C.'s and Stinson Morrison Hecker LLP's relying as to matters
of Delaware law upon this opinion in connection  with opinions to be rendered by
them on the date hereof pursuant to the Placement Agreement.

         Except as stated above, without our prior written consent, this opinion
may not be  furnished  or quoted to, or relied upon by, any other Person for any
purpose.

                                            Very truly yours,



<PAGE>


                                   SCHEDULE A
                                   ----------

Wilmington Trust Company

FTN Financial Capital Markets

Keefe, Bruyette & Woods, Inc.

First Tennessee Bank National Association

First Banks, Inc.






<PAGE>

                                   EXHIBIT B-3
                                   -----------

                           FORM OF TAX COUNSEL OPINION
                           ---------------------------


First Banks, Inc.
600 James S. McDonnell Boulevard
Hazelwood, Missouri  63042

First Bank Statutory Trust III
c/o First Banks, Inc.
600 James S. McDonnell Boulevard
Hazelwood, Missouri  63042

FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117

Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York 10019

Ladies and Gentlemen:

         We have acted as special tax counsel to First Banks,  Inc. and to First
Bank  Statutory  Trust  III in  connection  with the  proposed  issuance  of (i)
Floating  Rate Capital  Securities,  liquidation  amount  $1,000.00  per Capital
Security  (the  "Capital  Securities")  of First  Bank  Statutory  Trust  III, a
statutory  business  trust  created  under the laws of Delaware  (the  "Trust"),
pursuant to the terms of the Amended and Restated  Declaration of Trust dated as
of the date hereof by First Banks, Inc., a Missouri corporation (the "Company"),
Wilmington Trust Company,  as Delaware  trustee,  Wilmington  Trust Company,  as
institutional  trustee,  and Peter D. Wimmer,  Terrance M.  McCarthy and Lisa K.
Vansickle,  as Administrators (the "Trust Agreement"),  (ii) Junior Subordinated
Deferrable Interest  Debentures (the "Corresponding  Debentures") of the Company
issued  pursuant to the terms of an  Indenture  dated as of the date hereof from
the Company to Wilmington  Trust Company,  as trustee (the  "Indenture"),  which
Debentures  are to be sold by the Company to the Trust,  and (iii) the Guarantee
Agreement of the Company with respect to the Capital  Securities dated as of the
date hereof (the "Guarantee")  between the Company and Wilmington Trust Company,
as guarantee trustee.

         We have examined originals or copies, certified or otherwise identified
to our satisfaction, of documents, corporate records and other instruments as we
have deemed necessary or appropriate for purposes of this opinion  including (i)
the  Indenture,  (ii) the form of the  Corresponding  Debentures  attached as an
exhibit to the Indenture, (iii) the Trust Agreement, (iv) the Guarantee, and (v)
the forms of Capital Securities  Certificate attached as an exhibit to the Trust
Agreement  (collectively  the  "Documents").  Furthermore,  we have  relied upon
certain  representations  made by the Company and upon the opinion of  Richards,
Layton  &  Finger,  P.A.  as  to  certain  matters  of  Delaware  law.  In  such
examination,  we have assumed the authenticity of all documents  submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies, the authenticity of the originals of such
latter  documents,  the genuineness of all signatures and the correctness of all
representations  made  therein.  We  have  further  assumed  that  there  are no
agreements or understandings  contemplated therein other than those contained in
the Documents.
<PAGE>

         Based upon the  foregoing,  and assuming  (i) that the final  Documents
will be substantially identical to the forms examined, (ii) full compliance with
all the terms of the final Documents,  and (iii) the accuracy of representations
made by the Company and delivered to us, we are of the opinion that:

         (a)      The   Corresponding   Debentures   will   be   classified   as
                  indebtedness  of  the  Company  for  U.S.  federal  income tax
                  purposes.

         (b)      The Trust will be characterized as a  grantor trust and not as
                  an  association  taxable  as  a  corporation  for U.S. federal
                  income tax purposes.

         The opinions  expressed  above are based on existing  provisions of the
Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  existing  Treasury
regulations,  published  interpretations  by the Internal Revenue Service of the
Code and such Treasury regulations,  and existing court decisions,  any of which
could be changed at any time.  Any such changes may or may not be  retroactively
applied,  and may result in federal  income tax  consequences  that  differ from
those  reflected  in the  opinions  set forth  above.  We note that  there is no
authority  directly  on  point  dealing  with  securities  such  as the  Capital
Securities  or with  transactions  of the type  described  herein,  and that the
authorities   on  which   this   opinion   is  based  are   subject  to  various
interpretations.  Further,  you should be aware that opinions of counsel have no
official  status and are not  binding  on the  Internal  Revenue  Service or the
courts.  Accordingly, we can provide no assurance that the interpretation of the
federal  income tax laws set forth in our opinions will prevail if challenged by
the IRS in an administrative or judicial proceeding.

         We have also assumed that each transaction  contemplated herein will be
carried out strictly in accordance with the Documents. Any variance in the facts
may result in Federal income tax  consequences  that differ from those reflected
in the opinions set forth above.

         Additionally,  we undertake no obligation to update this opinion in the
event there is either a change in the legal authorities, in the facts (including
the taking of any action by any party to any of the  transactions  described  in
the Documents  relating to such  transactions) or in the Documents on which this
opinion is based, or an inaccuracy in any of the  representations  upon which we
have relied in rendering this opinion.

         We  express  no opinion  with  respect  to any matter not  specifically
addressed by the foregoing opinions,  including state or local tax consequences,
or any federal, state, or local issue not specifically referred to and discussed
above including,  without limitation,  the effect on the matters covered by this
opinion of the laws of any other jurisdiction.

         This letter is delivered  for the benefit of the  specified  addressees
and may not be relied upon by any other person. No portion of this letter may be
quoted or otherwise referred to in any document or delivered to any other person
or entity without the express  written consent of Lewis,  Rice & Fingersh,  L.C.
This opinion letter is rendered as of the date set forth above.

                                                    Very truly yours,

                                                    LEWIS, RICE & FINGERSH, L.C.



<PAGE>



Lewis, Rice & Fingersh, L.C.
500 N. Broadway, Suite 2000
St. Louis, Missouri  63102
Attention:  Lawrence H. Weltman, Esq.


     Re:  Representations   Concerning  the  Issuance  of  Junior   Subordinated
          Deferrable  Interest  Debentures  (the  "Debentures")  to  First  Bank
          Statutory  Trust III (the "Trust") and Sale of Trust  Securities  (the
          "Trust Securities") of the Trust

Ladies and Gentlemen:

         In accordance  with your  request,  First Banks,  Inc. (the  "Company")
hereby makes the following representations in connection with the preparation of
your opinion letter as to the United States federal income tax  consequences  of
the issuance by the Company of the  Debentures  to the Trust and the sale of the
Trust Securities.

         Company hereby represents that:

         1.  The sole assets of the Trust will be the  Debentures,  any interest
paid  on  the  Debentures  to  the  extent  not  distributed,  proceeds  of  the
Debentures, or any of the foregoing.

         2.  The Company  intends to use the net  proceeds  from the sale of the
Debentures for general corporate purposes.

         3.  The  Trust  was  not formed to conduct any trade or business and is
not  authorized  to  conduct  any trade or  business.  The Trust  exists for the
exclusive  purposes of (i) issuing and selling the Trust Securities,  (ii) using
the proceeds from the sale of Trust  Securities to acquire the  Debentures,  and
(iii) engaging only in activities necessary or incidental thereto.

         4.  The Trust was formed to facilitate direct  investment in the assets
of the Trust,  and the existence of multiple  classes of ownership is incidental
to that purpose.  There is no intent to provide holders of such interests in the
Trust with diverse interests in the assets of the Trust.

         5.  The  Company  intends  to  create  a  debtor-creditor  relationship
between the Company, as debtor, and the Trust, as a creditor,  upon the issuance
and sale of the  Debentures  to the Trust by the  Company.  The Company will (i)
record and at all times  continue to reflect the Debentures as  indebtedness  on
its separate books and records for financial accounting purposes, and (ii) treat
the Debentures as indebtedness for all United States tax purposes.

         6.  During  each  year,  the  Trust's  income  will  consist  solely of
payments made by the Company with respect to the Debentures.  Such payments will
not be derived  from the active  conduct of a  financial  business by the Trust.
Both the Company's  obligation to make such payments and the  measurement of the
amounts  payable by the  Company  are  defined  by the terms of the  Debentures.
Neither the Company's  obligation to make such payments nor the  measurement  of
the amounts  payable by the Company is dependent on income or profits of Company
or any affiliate of the Company.

         7.  The Company  expects  that it will be able to make,  and will make,
timely payment of amounts identified by the Debentures as principal and interest
in  accordance  with the  terms of the  Debentures  with  available  capital  or
accumulated earnings.
<PAGE>

         8.  The Company presently  has no intention to  defer interest payments
on the  Debentures,  and it considers  the  likelihood  of such a deferral to be
remote  because,  if it were to exercise its right to defer payments of interest
with respect to the Debentures,  it would not be permitted to declare or pay any
dividends  or  distributions  on,  or  redeem,  purchase,  acquire,  or  make  a
liquidation  payment  with  respect to, any capital  stock of the Company or any
affiliate of the Company (other than payments of dividends or  distributions  to
the Company) or make any payment of principal of or interest or premium, if any,
on or repay,  repurchase,  or redeem any debt  securities  of the Company or any
affiliate of the Company that rank pari passu in all respects  with or junior in
interest to the Debentures, in each case subject to limited exceptions stated in
Section 2.11 of the Indenture to be entered into in connection with the issuance
of the Debentures.

         9.  Immediately  after  the  issuance  of  the Debentures, the debt-to-
equity ratio of the Company (as  determined for financial  accounting  purposes,
but  excluding  deposit  liabilities  from the  Company's  debt)  will be within
standard  depository  institution  industry norms and, in any event,  will be no
higher than four to one (4 : 1).

         10. To  the  best  of  our  knowledge,  the  Company  is  currently  in
compliance with all federal,  state, and local capital  requirements,  except to
the extent that  failure to comply with any such  requirements  would not have a
material adverse effect on the Company and its affiliates.

         11. The Company  will not issue any class of common  stock or preferred
stock senior to the Debentures during their term.

         12. The  Internal  Revenue  Service  has not  challenged  the  interest
deduction on any class of the Company's  subordinated  debt in the last ten (10)
years on the basis  that such debt  constitutes  equity for  federal  income tax
purposes.

         The above  representations  are  accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise  notified by us in writing.  The undersigned  understands that you
will rely on the foregoing in connection with rendering  certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company.

                                             Very truly yours,

                                             FIRST BANKS, INC.


Date: November 22, 2004                      By:  ______________________________

                                             Title: ____________________________



<PAGE>

                                    EXHIBIT C
                                    ---------

                            SIGNIFICANT SUBSIDIARIES
                            ------------------------

The San Francisco Company

First Bank



<PAGE>

                                    EXHIBIT D
                                    ---------

                            FORM OF QUARTERLY REPORT
                            ------------------------


First Tennessee Bank National Association
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117
Attention:  David Work

BANK HOLDING COMPANY
As of [March 31, June 30, September 30 or December 31], 20__

Tier 1 to Risk Weighted Assets                                     _________%

Ratio of Double Leverage                                           _________%

Non-Performing Assets to Loans and OREO                            _________%

Ratio of Reserves to Non-Performing Loans                          _________%

Ratio of Net Charge-Offs to Loans                                  _________%

Return on Average Assets (annualized)**                            _________%

Net Interest Margin (annualized)**                                 _________%

Efficiency Ratio                                                   _________%

Ratio of Loans to Assets                                           _________%

Ratio of Loans to Deposits                                         _________%

Total Assets                                                      $__________

Year to Date Income                                               $__________

-------------------
*A table describing the quarterly report  calculation  procedures is provided
on page D-2

** To  annualize  Return  on  Average  Assets  and Net Interest Margin do the
   following:
1st Quarter-multiply income statement item by 4, then divide by balance sheet
item(s)
2nd Quarter-multiply income statement item  by 2,then divide by balance sheet
item(s)
3rd Quarter-divide income statement item by 3,then multiply by 4, then divide
by balance sheet item(s)
4th Quarter-should already be an annual number
NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS


<PAGE>

<TABLE>
<CAPTION>

                                                     Financial Definitions


----------------------- --------------------------------------------------  ---------------------------------------------------
Report Item             Corresponding  FRY-9C or LP Line  Items with Line
                        Item corresponding Schedules                        Description of Calculation
----------------------- --------------------------------------------------  ---------------------------------------------------
<S>                     <C>                                                 <C>                                      <C>
"Tier  1  Capital"  to  BHCK7206                                            Tier  1  Risk  Ratio:   Core  Capital   (Tier  1)/
Risk Weighted Assets    Schedule HC-R                                       Risk-Adjusted Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio    of     Double  (BHCP0365)/(BHCP3210)                               Total equity  investments in subsidiaries  divided
Leverage                Schedule PC  in the LP                              by  the  total  equity  capital.   This  field  is
                                                                            calculated   at   the   parent    company   level.
                                                                            "Subsidiaries"    include   bank,   bank   holding
                                                                            company, and nonbank subsidiaries.
----------------------- --------------------------------------------------  ---------------------------------------------------
Non-Performing  Assets  (BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/     Total Nonperforming Assets  (NPLs+Foreclosed  Real
to Loans and OREO       (BHCK2122+BHCK2744)                                 Estate+Other  Nonaccrual  &  Repossessed  Assets)/
                        Schedules HC-C, HC-M & HC-N                         Total Loans + Foreclosed Real Estate
----------------------- --------------------------------------------------  ---------------------------------------------------
Ratio of  Reserves  to  (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-    Total Loan  Loss   and   Allocated   Transfer  Risk
Non-Performing Loans    BHCK3507)                                           Reserves/ Total  Nonperforming  Loans (Nonaccrual +
                        Schedules HC & HC-N                                 Restructured)
----------------------- --------------------------------------------------  ---------------------------------------------------
Ratio      of      Net  (BHCK4635-BHCK4605)/(BHCK3516)                      Net charge offs for the period as a  percentage  of
Charge-Offs to Loans    Schedules HI-B & HC-K                               average loans.
----------------------- --------------------------------------------------  ---------------------------------------------------
Return on Assets        (BHCK4340/BHCK3368)                                 Net Income as a percentage of Assets.
                        Schedules HI & HC-K
----------------------- --------------------------------------------------  ---------------------------------------------------
Net Interest Margin     (BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+    (Net Interest Income Fully  Taxable Equivalent,  if
                        BHCK985)                                             available / Average Earning Assets)
                        Schedules HI Memorandum and HC-K
----------------------- --------------------------------------------------  ---------------------------------------------------
Efficiency Ratio        (BHCK4093)/(BHCK4519+BHCK4079)                      (Noninterest   Expense)/   (Net  Interest    Income
                        Schedule HI                                         Fully  Taxable  Equivalent,   if  available,   plus
                                                                            Noninterest Income)
----------------------- --------------------------------------------------  ---------------------------------------------------
Ratio   of   Loans  to  (BHCKB528+BHCK5369)/BHCK2170)                       Total  Loans & Leases  (Net of  Unearned   Income &
Assets                  Schedule HC                                         Gross of Reserve)/ Total Assets
----------------------- --------------------------------------------------  ---------------------------------------------------
Ratio   of   Loans  to  (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+    Total  Loans & Leases  (Net  of  Unearned  Income &
Deposits                BHFN6636)                                           Gross  of  Reserve)/   Total   Deposits   (Includes
                        Schedule HC                                         Domestic and Foreign Deposits)
----------------------- --------------------------------------------------  ---------------------------------------------------
Total Assets            (BHCK2170)                                          The  sum   of  total  assets.   Includes  cash  and
                        Schedule HC                                         balances   due    from   depository   institutions;
                                                                            securities;  federal  funds  sold  and   securities
                                                                            purchased  under  agreements  to resell;  loans and
                                                                            lease   financing   receivables;  trading   assets;
                                                                            premises and fixed assets; other real estate owned;
                                                                            investments  in   unconsolidated  subsidiaries  and
                                                                            associated   companies;   customer's  liability  on
                                                                            acceptances  outstanding;  intangible  assets;   and
                                                                            other assets.

----------------------- --------------------------------------------------  ---------------------------------------------------
Net Income              (BHCK4300)                                          The   sum of  income  (loss)  before  extraordinary
                        Schedule HI                                         items   and  other  adjustments  and  extraordinary
                                                                            items;   and  other  adjustments,   net  of  income
                                                                            taxes.
----------------------- --------------------------------------------------  ---------------------------------------------------
</TABLE>




<PAGE>


                                First Banks, Inc.
                               Disclosure Schedule
                                     to the
                               Placement Agreement


     Section  5.10 Subsidiaries  of  the  Company - All issued  and  outstanding
                   ------------------------------
     common stock of The San Francisco Company, a wholly owned subsidiary of the
     Company,  and First Bank, a wholly owned  subsidiary  of The San  Francisco
     Company,  has been pledged to Wells Fargo Bank, National Association as the
     Agent for the ratable benefit of certain  lenders  pursuant to the terms of
     that certain Secured Credit Agreement dated as of August 14, 2003 among the
     Company,  the Lenders  signatory  thereto and the Agent, as amended by that
     certain First Amendment to Secured Credit  Agreement dated as of August 12,
     2004 (the "Credit Agreement").


     Section  5.16 Regulatory Enforcement Matters - Pursuant to the terms of the
                   ------------------------------
     Credit  Agreement,  the Company has agreed not to pay any  dividends on its
     common  stock and is limited as to the amount of any  dividend  paid on its
     preferred stock during any 12 month period.




<PAGE>
                                                                    Exhibit 4.39

         FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

         THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE COMPANY,  (B) PURSUANT TO A
REGISTRATION  STATEMENT  THAT HAS BEEN DECLARED  EFFECTIVE  UNDER THE SECURITIES
ACT,  (C) TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED
INSTITUTIONAL  BUYER IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH  RULE  144A,  (D)  TO A  NON-U.S.  PERSON  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH  (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY  FOR  ITS OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF SUCH AN  INSTITUTIONAL
ACCREDITED  INVESTOR,  FOR  INVESTMENT  PURPOSES  AND NOT WITH A VIEW TO, OR FOR
OFFER  OR  SALE  IN  CONNECTION  WITH,  ANY  DISTRIBUTION  IN  VIOLATION  OF THE
SECURITIES  ACT,  OR (F)  PURSUANT  TO ANY OTHER  AVAILABLE  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION  SATISFACTORY  TO  IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING AN AGGREGATE  PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE  PRINCIPAL  AMOUNT OF LESS THAN  $100,000.00  SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.
<PAGE>

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED  BY THE  INDENTURE  TO  CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

         Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                First Banks, Inc.

                                November 23, 2004

         First Banks,  Inc., a Missouri  corporation  (the "Company"  which term
includes any successor Person under the Indenture  hereinafter referred to), for
value  received  promises  to  pay  to  Wilmington  Trust  Company,  not  in its
individual capacity but solely as Institutional Trustee for First Bank Statutory
Trust III (the "Holder") or registered  assigns,  the principal sum of forty-one
million two hundred thirty-eight  thousand dollars  ($41,238,000.00) on December
15, 2034,  and to pay interest on said  principal sum from November 23, 2004, or
from the most recent Interest  Payment Date (as defined below) to which interest
has been paid or duly provided for,  quarterly (subject to deferral as set forth
herein) in arrears on March 15, June 15,  September  15 and  December 15 of each
year or if such day is not a Business Day, then the next succeeding Business Day
(each such date, an "Interest  Payment Date") (it being understood that interest
accrues for any such non-Business Day),  commencing on the Interest Payment Date
in March 2005, at an annual rate equal to 4.54% beginning on (and including) the
date of original  issuance and ending on (but  excluding)  the Interest  Payment
Date in March 2005 and at an annual rate for each successive period beginning on
(and  including) the Interest  Payment Date in March 2005,  and each  succeeding
Interest  Payment  Date,  and  ending  on (but  excluding)  the next  succeeding
Interest  Payment Date (each a "Distribution  Period"),  equal to 3-Month LIBOR,
determined as described  below,  plus 2.18% (the "Coupon Rate"),  applied to the
principal amount hereof, until the principal hereof is paid or duly provided for
or made  available  for  payment,  and on any  overdue  principal  and  (without
duplication and to the extent that payment of such interest is enforceable under
applicable  law) on any overdue  installment of interest  (including  Additional
Interest) at the Interest Rate in effect for each applicable period,  compounded
quarterly,  from the dates  such  amounts  are due  until  they are paid or made
available  for  payment.  The amount of interest  payable for any period will be
computed on the basis of the actual  number of days in the  Distribution  Period
concerned  divided by 360. The interest  installment so payable,  and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture,  be paid to the Person in whose name this  Debenture  (or one or more
Predecessor  Securities)  is  registered at the close of business on the regular
record date for such  interest  installment,  which shall be five  Business Days
prior to the day on which the relevant  Interest  Payment Date occurs.  Any such
interest installment not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such regular record date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor  Securities)
is registered at the close of business on a special record date.
<PAGE>

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month U.S. dollar deposits  determined by the Trustee in
the following  order of priority:  (i) the rate  (expressed as a percentage  per
annum) for U.S. dollar  deposits  having a three-month  maturity that appears on
Telerate Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
Date  ("Telerate  Page 3750" means the display  designated as "Page 3750" on the
Dow Jones  Telerate  Service or such other page as may replace Page 3750 on that
service or such other  service or  services as may be  nominated  by the British
Bankers'  Association  as the  information  vendor for the purpose of displaying
London  interbank  offered rates for U.S.  dollar  deposits);  (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the  principal  London  offices of four  leading  banks in the London  interbank
market to provide such banks' offered  quotations  (expressed as percentages per
annum) to prime banks in the London  interbank  market for U.S.  dollar deposits
having  a  three-month   maturity  as  of  11:00  a.m.  (London  time)  on  such
Determination Date. If at least two quotations are provided,  3-Month LIBOR will
be the  arithmetic  mean of such  quotations;  (iii)  if  fewer  than  two  such
quotations  are  provided as  requested  in clause (ii) above,  the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such  Determination  Date. If at least
two such  quotations are provided,  3-Month LIBOR will be the arithmetic mean of
such  quotations;  and (iv) if fewer than two such  quotations  are  provided as
requested  in  clause  (iii)  above,  3-Month  LIBOR  will  be a  3-Month  LIBOR
determined with respect to the Distribution  Period  immediately  preceding such
current  Distribution  Period.  If the rate for U.S.  dollar  deposits  having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such  Determination  Date. As used
herein,  "Determination  Date"  means the date that is two London  Banking  Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All percentages  resulting from any calculations on the Debentures will
be rounded, if necessary,  to the nearest one hundred-thousandth of a percentage
point,  with five  one-millionths  of a percentage  point rounded  upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts  used in or  resulting  from such  calculation  will be  rounded  to the
nearest cent (with one-half cent being rounded upward)).

         The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained  for that  purpose in any coin or  currency  of the United  States of
America  that at the time of payment is legal  tender for  payment of public and
private debts; provided,  however, that payment of interest may be made by check
               --------   -------
mailed to the registered holder at such address as shall appear in the Debenture
Register if a request for a wire  transfer by such holder has not been  received
by the Company or by wire transfer to an account appropriately designated by the
holder  hereof.  Notwithstanding  the  foregoing,  so long as the holder of this
Debenture  is the  Institutional  Trustee,  the payment of the  principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Trustee.
<PAGE>

         So  long  as  no  Extension  Event  of  Default  has  occurred  and  is
continuing,  the Company  shall have the right,  from time to time,  and without
causing an Event of Default,  to defer payments of interest on the Debentures by
extending  the interest  payment  period on the  Debentures at any time and from
time  to  time  during  the  term of the  Debentures,  for up to 20  consecutive
quarterly  periods (each such extended  interest  payment period,  an "Extension
Period"),  during  which  Extension  Period no  interest  (including  Additional
Interest)  shall be due and payable  (except any Additional Sums that may be due
and  payable).  No  Extension  Period may end on a date  other than an  Interest
Payment Date.  During an Extension  Period,  interest will continue to accrue on
the Debentures,  and interest on such accrued  interest will accrue at an annual
rate equal to the Interest Rate in effect for such Extension Period,  compounded
quarterly  from the date such  interest  would have been payable were it not for
the Extension  Period, to the extent permitted by law (such interest referred to
herein as "Additional  Interest").  At the end of any such Extension  Period the
           --------------------
Company  shall pay all  interest  then  accrued  and  unpaid  on the  Debentures
(together  with  Additional  Interest  thereon);   provided,  however,  that  no
                                                   --------   -------
Extension Period may extend beyond the Maturity Date; provided further, however,
                                                      -------- -------  -------
that  during any such  Extension  Period,  the  Company  shall not and shall not
permit  any  Affiliate  to  engage  in  any of the  activities  or  transactions
described  on  the  reverse  side  hereof  and in the  Indenture.  Prior  to the
termination of any Extension Period, the Company may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension Period shall bear Additional Interest.  The Company must give the
Trustee  notice of its  election to begin or extend an  Extension  Period by the
close of business at least 5 Business  Days prior to the  Interest  Payment Date
with respect to which interest on the Debentures  would have been payable except
for the election to begin or extend such Extension Period.

         The indebtedness evidenced by this Debenture is, to the extent provided
in the  Indenture,  subordinate  and  junior  in right of  payment  to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the  provisions of the Indenture  with respect  thereto.  Each holder of this
Debenture,  by  accepting  the  same,  (a)  agrees to and shall be bound by such
provisions,  (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or  appropriate to acknowledge or effectuate the
subordination   so   provided   and  (c)   appoints   the  Trustee  his  or  her
attorney-in-fact  for any and all such purposes.  Each holder hereof,  by his or
her  acceptance  hereof,  hereby  waives  all  notice of the  acceptance  of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness,  whether now outstanding or hereafter incurred,  and waives
reliance by each such holder upon said provisions.

         This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
certificate of  authentication  hereon shall have been signed by or on behalf of
the Trustee.

         The  provisions  of this  Debenture  are  continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.



<PAGE>


       IN WITNESS WHEREOF, the Company has duly executed this certificate.

                                           FIRST BANKS, INC.


                                           By /s/    Allen H. Blake
                                              ----------------------------------
                                              Name:  Allen H. Blake
                                              Title: President and
                                                     Chief Executive Officer




<PAGE>


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This  is one  of the  Debentures  referred  to in the  within-mentioned
Indenture.

                                           WILMINGTON TRUST COMPANY, as Trustee


                                           By:/s/ Chrisopher J. Monigle
                                              ----------------------------------
                                                  Authorized Officer



<PAGE>

                              REVERSE OF DEBENTURE

         This  Debenture  is  one  of  the  floating  rate  junior  subordinated
deferrable interest debentures of the Company,  all issued or to be issued under
and pursuant to the Indenture  dated as of November 23, 2004 (the  "Indenture"),
duly  executed  and  delivered  between the Company  and the  Trustee,  to which
Indenture reference is hereby made for a description of the rights,  limitations
of rights,  obligations,  duties and immunities  thereunder of the Trustee,  the
Company  and the  holders  of the  Debentures.  The  Debentures  are  limited in
aggregate principal amount as specified in the Indenture.

         Upon the  occurrence and  continuation  of a Special Event prior to the
Interest  Payment  Date in December  2009,  the Company  shall have the right to
redeem the Debentures in whole,  but not in part, at any Interest  Payment Date,
within 120 days following the  occurrence of such Special Event,  at the Special
Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in  part,  but in all  cases in a  principal  amount  with  integral
multiples of  $1,000.00,  on any Interest  Payment Date on or after the Interest
Payment Date in December 2009, at the Redemption Price.

         Prior to  10:00  a.m.  New York  City  time on the  Redemption  Date or
Special  Redemption  Date,  as  applicable,  the Company  will  deposit with the
Trustee  or with one or more  paying  agents an amount  of money  sufficient  to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate  Redemption  Price or
Special Redemption Price.

         If all,  or less than  all,  the  Debentures  are to be  redeemed,  the
Company  will give the  Trustee  notice  not less than 45 nor more than 60 days,
respectively,  prior to the  Redemption  Date or  Special  Redemption  Date,  as
applicable,  as to the aggregate  principal  amount of Debentures to be redeemed
and the Trustee shall select,  in such manner as in its sole discretion it shall
deem  appropriate  and fair,  the  Debentures  or portions  thereof (in integral
multiples of $1,000.00) to be redeemed.

         Notwithstanding  the  foregoing,  any  redemption  of Debentures by the
Company  shall be subject  to the  receipt  of any and all  required  regulatory
approvals.

         In case an Event of Default described in Section 5.1(a),  (d) or (e) of
the Indenture shall have occurred and be continuing, upon demand of the Trustee,
the  principal  of all of the  Debentures  shall  become due and  payable in the
manner, with the effect and subject to the conditions provided in the Indenture.

         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee,  with the  consent  of the  holders  of not  less  than a  majority  in
aggregate principal amount of the Debentures at the time outstanding, to execute
supplemental  indentures for the purpose of adding any provisions to or changing
in any manner or  eliminating  any of the provisions of this Indenture or of any
supplemental  indenture  or of modifying in any manner the rights of the holders
of the Debentures;  provided, however, that no such supplemental indenture shall
without  the  consent of the  holders of each  Debenture  then  outstanding  and
affected  thereby (i) change the fixed maturity of any Debenture,  or reduce the
principal  amount thereof or any premium  thereon,  or reduce the rate or extend
the time of  payment  of  interest  thereon,  or reduce  any  amount  payable on
redemption  thereof or make the  principal  thereof or any  interest  or premium
thereon  payable  in any  coin or  currency  other  than  that  provided  in the
Debentures,  or impair or affect the right of any  Securityholder  to  institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture.
<PAGE>

         The Indenture  also  contains  provisions  permitting  the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
on behalf of the  holders  of all of the  Debentures  to waive  (or  modify  any
previously  granted  waiver of) any past  default or Event of  Default,  and its
consequences,  except a default (a) in the payment of principal of, premium,  if
any,  or  interest  on any of the  Debentures,  (b) in respect of  covenants  or
provisions  hereof or of the  Indenture  which  cannot be  modified  or  amended
without the consent of the holder of each Debenture affected,  or (c) in respect
of the covenants contained in Section 3.9 of the Indenture;  provided,  however,
that if the  Debentures  are held by the Trust or a trustee of such trust,  such
waiver or  modification  to such waiver shall not be effective until the holders
of a majority in Liquidation  Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
if the consent of the holder of each  outstanding  Debenture is  required,  such
waiver shall not be effective  until each holder of the Trust  Securities of the
Trust shall have  consented  to such waiver.  Upon any such waiver,  the default
covered  thereby  shall be deemed to be cured for all purposes of the  Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any  subsequent  or other  default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by the  Indenture,  said default or Event of
Default shall for all purposes of the  Debentures and the Indenture be deemed to
have been cured and to be not continuing.

         No reference herein to the Indenture and no provision of this Debenture
or of the Indenture  shall alter or impair the obligation of the Company,  which
is absolute and unconditional,  to pay the principal of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and place
and at the rate and in the money herein prescribed.

         The Company has agreed that if Debentures  are initially  issued to the
Trust or a  trustee  of such  Trust in  connection  with the  issuance  of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such  Trust) and (i) there shall have  occurred  and be  continuing  an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities  Guarantee,  or (iii) the Company shall
have  given  notice  of its  election  to  defer  payments  of  interest  on the
Debentures by extending the interest  payment period as provided herein and such
Extension  Period,  or any  extension  thereof,  shall be  continuing,  then the
Company  shall not,  and shall not allow any  Affiliate  of the  Company to, (x)
declare or pay any dividends or distributions on, or redeem, purchase,  acquire,
or make a  liquidation  payment  with respect to, any of the  Company's  capital
stock or its  Affiliates'  capital  stock  (other than  payments of dividends or
distributions to the Company) or make any guarantee payments with respect to the
foregoing  or (y) make any payment of  principal  of or interest or premium,  if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures  (other  than,  with  respect  to  clauses  (x)  and (y)  above,  (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company  in  connection  with any  employment  contract,  benefit  plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company (or securities  convertible  into or  exercisable  for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable  Extension  Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary  of the Company) for any class or series of the  Company's
capital  stock or of any class or series of the Company's  indebtedness  for any
class or series of the Company's  capital stock,  (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange  provisions  of such capital stock or the security  being  converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).
<PAGE>

         The  Debentures  are issuable  only in  registered,  certificated  form
without coupons and in minimum  denominations of $100,000.00 and any multiple of
$1,000.00 in excess  thereof.  As provided in the  Indenture  and subject to the
transfer  restrictions  and  limitations as may be contained  herein and therein
from time to time,  this Debenture is  transferable  by the holder hereof on the
Debenture  Register of the Company.  Upon due  presentment  for  registration of
transfer  of any  Debenture  at the  Principal  Office of the  Trustee or at any
office or agency of the  Company  maintained  for such  purpose as  provided  in
Section 3.2 of the  Indenture,  the Company  shall  execute,  the Company or the
Trustee  shall  register  and the  Trustee  or the  Authenticating  Agent  shall
authenticate  and make  available for delivery in the name of the  transferee or
transferees  a  new  Debenture  for  a  like  aggregate  principal  amount.  All
Debentures  presented  for  registration  of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating Agent)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer  in  form   satisfactory  to,  the  Company  and  the  Trustee  or  the
Authenticating Agent duly executed by the holder or his attorney duly authorized
in writing.  No service charge shall be made for any exchange or registration of
transfer of Debentures,  but the Company or the Trustee may require payment of a
sum  sufficient to cover any tax, fee or other  governmental  charge that may be
imposed in connection therewith.

         Prior to due presentment for registration of transfer of any Debenture,
the Company,  the Trustee,  any  Authenticating  Agent,  any paying  agent,  any
transfer  agent and any  Debenture  registrar  may deem the Person in whose name
such Debenture  shall be registered  upon the Debenture  Register to be, and may
treat  him as,  the  absolute  owner  of such  Debenture  (whether  or not  such
Debenture  shall be  overdue)  for the  purpose  of  receiving  payment of or on
account of the principal of, premium, if any, and interest on such Debenture and
for all  other  purposes;  and  neither  the  Company  nor the  Trustee  nor any
Authenticating  Agent  nor any  paying  agent  nor any  transfer  agent  nor any
Debenture  registrar  shall be affected by any notice to the contrary.  All such
payments  so made to any holder  for the time  being or upon his order  shall be
valid,  and, to the extent of the sum or sums so paid,  effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.

         No recourse for the payment of the principal of or premium,  if any, or
interest  on any  Debenture,  or for any claim  based  thereon or  otherwise  in
respect  thereof,  and no  recourse  under or upon any  obligation,  covenant or
agreement of the Company in the Indenture or in any supplemental  indenture,  or
in  any  such  Debenture,  or  because  of  the  creation  of  any  indebtedness
represented  thereby,  shall  be  had  against  any  incorporator,  stockholder,
employee,  officer or director, as such, past, present or future, of the Company
or of any  successor  Person of the  Company,  either  directly  or through  the
Company  or any  successor  Person  of the  Company,  whether  by  virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise,  it being expressly  understood that all such liability is
hereby  expressly  waived and released as a condition of, and as a consideration
for, the execution of the Indenture and the issue of the Debentures.

         Capitalized terms used and not defined in this Debenture shall have the
meanings  assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.

         THE INDENTURE AND THE DEBENTURES  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.

<PAGE>

                                                                    EXHIBIT 4.40
                         FIRST BANK STATUTORY TRUST III
                                FIRST BANKS, INC.

                             SUBSCRIPTION AGREEMENT

                                November 23, 2004

           THIS SUBSCRIPTION AGREEMENT (this  "Agreement") made among First Bank
Statutory Trust III (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  et seq.),  First Banks,  Inc., a Missouri  corporation,  with its
principal  offices  located  at 600  James S.  McDonnell  Boulevard,  Hazelwood,
Missouri 63042 (the "Company" and, collectively with the Trust, the "Offerors"),
and First Tennessee Bank National Association (the "Purchaser").

                                    RECITALS:

     A.    The Trust  desires  to  issue  40,000  of its Floating  Rate  Capital
Securities (the "Capital Securities"),  liquidation amount $1,000.00 per Capital
Security,  representing  an undivided  beneficial  interest in the assets of the
Trust  (the  "Offering"),  to be issued  pursuant  to an  Amended  and  Restated
Declaration of Trust (the  "Declaration")  by and among the Company,  Wilmington
Trust Company ("WTC"),  the  administrators  named therein,  and the holders (as
defined therein),  which Capital  Securities are to be guaranteed by the Company
with respect to  distributions  and payments upon  liquidation,  redemption  and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and

     B.    The proceeds from the sale of the Capital Securities will be combined
with the  proceeds  from the sale by the  Trust  to the  Company  of its  common
securities,  and will be used by the Trust to purchase an  equivalent  amount of
Floating Rate Junior Subordinated  Deferrable Interest Debentures of the Company
(the  "Debentures")  to be issued by the Company  pursuant to an indenture to be
executed by the Company and WTC, as trustee (the "Indenture"); and

     C.    In consideration of the premises and the mutual  representations  and
covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

     1.1.  Upon the execution of this Agreement, the Purchaser  hereby agrees to
purchase from the Trust 40,000 Capital  Securities at a price equal to $1,000.00
per Capital  Security (the  "Purchase  Price") and the Trust agrees to sell such
Capital  Securities to the Purchaser  for said  Purchase  Price.  The rights and
preferences  of the Capital  Securities  are set forth in the  Declaration.  The
Purchase Price is payable in immediately  available  funds on November 23, 2004,
or such other  business day as may be  designated  by the  Purchaser,  but in no
event later than  November 30, 2004 (the  "Closing  Date").  The Offerors  shall
provide the Purchaser wire transfer  instructions  no later than 1 day following
the date hereof.

     1.2.  The Placement  Agreement,  dated  November  22, 2004 (the  "Placement
Agreement"), among the Offerors and the placement agents identified therein (the
"Placement Agents") includes certain  representations and warranties,  covenants
and conditions to closing and certain other matters governing the Offering.  The
Placement  Agreement is hereby incorporated by reference into this Agreement and
the Purchaser shall be entitled to each of the benefits of the Placement  Agents
and the Purchaser under the Placement Agreement and shall be entitled to enforce
the  obligations of the Offerors  under such Placement  Agreement as fully as if
the Purchaser were a party to such Placement Agreement.
<PAGE>

     1.3.  Anything herein or in the Placement  Agreement  notwithstanding,  the
Offerors  acknowledge  and agree that, so long as Purchaser holds some or all of
the Capital  Securities,  the Purchaser may in its discretion  from time to time
transfer or sell,  or sell or grant  participation  interests in, some or all of
such  Capital  Securities  to  one or  more  parties,  provided  that  any  such
transaction complies, as applicable,  with the registration  requirements of the
Securities  Act of  1933,  as  amended  (the  "Securities  Act")  and any  other
applicable  securities  laws,  is  pursuant  to an  exemption  therefrom,  or is
otherwise not subject thereto.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     2.1.  The Purchaser understands and  acknowledges  that none of the Capital
Securities,  the  Debentures or the  Guarantee  have been  registered  under the
Securities  Act or any other  applicable  securities  law, are being offered for
sale  by  the  Trust  in  transactions  not  requiring  registration  under  the
Securities Act, and may not be offered,  sold, pledged or otherwise  transferred
by the Purchaser except in compliance with the registration  requirements of the
Securities Act or any other applicable securities laws, pursuant to an exemption
therefrom or in a transaction not subject thereto.

     2.2.  The Purchaser represents  and warrants that,  except as  contemplated
under Section 1.3 hereof,  it is purchasing  the Capital  Securities for its own
account,  for  investment,  and not  with a view  to,  or for  offer  or sale in
connection with, any distribution  thereof in violation of the Securities Act or
other  applicable  securities  laws,  subject to any requirement of law that the
disposition  of its  property be at all times  within its control and subject to
its  ability  to  resell  such  Capital  Securities  pursuant  to  an  effective
registration  statement under the Securities Act or under Rule 144A or any other
exemption  from  registration  available  under the  Securities Act or any other
applicable securities law.

     2.3.  The Purchaser  represents  and warrants that neither the Offerors nor
the  Placement  Agents are acting as a  fiduciary  or  financial  or  investment
adviser for the Purchaser.

     2.4.  The Purchaser  represents  and  warrants  that it is not relying (for
purposes  of making any  investment  decision  or  otherwise)  upon any  advice,
counsel or  representations  (whether written or oral) of the Offerors or of the
Placement Agents.

     2.5.  The Purchaser represents  and warrants that (a) it has consulted with
its own legal, regulatory, tax, business,  investment,  financial and accounting
advisers in connection  herewith to the extent it has deemed  necessary,  (b) it
has had a reasonable  opportunity  to ask questions of and receive  answers from
officers  and  representatives  of  the  Offerors  concerning  their  respective
financial  condition and results of  operations  and the purchase of the Capital
Securities,  and any such questions have been answered to its satisfaction,  (c)
it has had the opportunity to review all publicly  available records and filings
concerning  the Offerors and it has carefully  reviewed such records and filings
that it considers relevant to making an investment decision, and (d) it has made
its own  investment  decisions  based upon its own  judgment,  due diligence and
advice  from such  advisers  as it has  deemed  necessary  and not upon any view
expressed by the Offerors or the Placement Agents.

     2.6.  The Purchaser  represents  and  warrants  that  it  is  a  "qualified
institutional buyer" as defined under Rule 144A under the Securities Act. If the
Purchaser is a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A
under the Securities Act, it owns and invests on a discretionary  basis not less
than U.S.  $25,000,000.00  in securities of issuers that are not affiliated with
it. The Purchaser is not a participant-directed  employee plan, such as a 401(k)
plan,  or any  other  type of plan  referred  to in  paragraph  (a)(1)(i)(D)  or
(a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F)
of Rule 144A that holds the assets of such a plan, unless  investment  decisions
with respect to the plan are made solely by the fiduciary, trustee or sponsor of
such plan.
<PAGE>

     2.7.  The Purchaser represents  and warrants that on each day from the date
on which it acquires the Capital  Securities  through and  including the date on
which it disposes of its interests in the Capital  Securities,  either (i) it is
not (a) an  "employee  benefit  plan" (as defined in Section  3(3) of the United
States Employee  Retirement  Income Security Act of 1974, as amended  ("ERISA"))
                                                                        -----
which is subject to the  provisions of Part 4 of Subtitle B of Title I of ERISA,
or any entity whose  underlying  assets  include the assets of any such plan (an
"ERISA  Plan"),  (b) any other "plan" (as defined in Section  4975(e)(1)  of the
 -----------
United States  Internal  Revenue Code of 1986, as amended (the "Code")) which is
                                                                ----
subject  to the  provisions  of  Section  4975 of the Code or any  entity  whose
underlying assets include the assets of any such plan (a "Plan"),  (c) an entity
                                                          ----
whose underlying  assets include the assets of any such ERISA Plan or other Plan
by reason of Department of Labor regulation section 2510.3-101 or otherwise,  or
(d) a governmental or church plan that is subject to any federal, state or local
law which is substantially  similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code (a "Similar  Law");  or (ii) the purchase,  holding and
                             ------------
disposition of the Capital  Securities by it will satisfy the  requirements  for
exemptive relief under Prohibited  Transaction  Class Exemption  ("PTCE") 84-14,
                                                                   ----
PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar exemption, or, in the
case of a plan  subject  to a  Similar  Law,  will not  result  in a  non-exempt
violation of such Similar Law.

     2.8.  The  Purchaser  represents  and  warrants  that  it  is acquiring the
Capital  Securities as principal for its own account for investment  and, except
as  contemplated  under Section 1.3 hereof,  not for sale in connection with any
distribution  thereof.  It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were not
specifically  solicited  from any person owning a beneficial  interest in it for
the purpose of enabling it to purchase any Capital Securities.  The Purchaser is
not a (i) partnership,  (ii) common trust fund or (iii) special trust,  pension,
profit  sharing or other  retirement  trust fund or plan in which the  partners,
beneficiaries  or  participants,  as  applicable,  may designate the  particular
investments to be made or the allocation of any investment  among such partners,
beneficiaries  or  participants,  and except as  contemplated  under Section 1.3
hereof, it agrees that it shall not hold the Capital  Securities for the benefit
of any other  person  and shall be the sole  beneficial  owner  thereof  for all
purposes  and that it shall  not sell  participation  interests  in the  Capital
Securities  or enter  into any  other  arrangement  pursuant  to which any other
person shall be entitled to a  beneficial  interest in the  distribution  on the
Capital Securities.  The Capital Securities  purchased directly or indirectly by
the Purchaser  constitute  an investment of no more than 40% of its assets.  The
Purchaser  understands  and agrees  that any  purported  transfer of the Capital
Securities to a purchaser which would cause the  representations  and warranties
of Section 2.6 and this Section 2.8 to be  inaccurate  shall be null and void ab
initio and the Offerors  retain the right to resell any Capital  Securities sold
to non-permitted transferees.

     2.9.  The  Purchaser  represents  and  warrants that it has full  power and
authority to execute and deliver this Agreement, to make the representations and
warranties  specified  herein,  and to consummate the transactions  contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.

     2.10. The  Purchaser  represents  and  warrants  that  no filing  with,  or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.
<PAGE>

     2.11. The  Purchaser  represents  and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.

     2.12. The Purchaser understands and acknowledges that the Company will rely
upon the truth and accuracy of the foregoing  acknowledgments,  representations,
warranties  and  agreements  and  agrees  that,  if any of the  acknowledgments,
representations,  warranties or agreements deemed to have been made by it by its
purchase of the Capital  Securities  are no longer  accurate,  it shall promptly
notify the Company.

     2.13. The Purchaser understands that no public market exists for any of the
Capital Securities, and that it is unlikely that a public market will ever exist
for the Capital Securities.

                                   ARTICLE III

                                  MISCELLANEOUS

     3.1.  Any notice or other  communication  given  hereunder  shall be deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

           To the Offerors:       First Banks, Inc.
                                  600 James S. McDonnell Boulevard
                                  Hazelwood, Missouri  63042
                                  Attention:  Lisa K. Vansickle
                                  Fax:  314-592-6621

           To the Purchaser:      First Tennessee Bank National Association
                                  845 Crossover Lane, Suite 150
                                  Memphis, Tennessee  38117
                                  Attention:  David Work
                                  Fax:  901-435-7983

              Unless  otherwise  expressly  provided  herein,  notices  shall be
deemed to have been  given on the date of  mailing,  except  notice of change of
address, which shall be deemed to have been given when received.

     3.2.  This Agreement shall not be changed,  modified or amended except by a
writing  signed by the  parties to be  charged,  and this  Agreement  may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.

     3.3.  Upon the execution and delivery of this  Agreement by the  Purchaser,
this Agreement  shall become a binding  obligation of the Purchaser with respect
to the purchase of Capital Securities as herein provided.

     3.4.  NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY
OF THE  PARTIES  HERETO,  THE  PARTIES  EXPRESSLY  AGREE  THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>

     3.5.  The parties agree to execute and deliver all such further  documents,
agreements  and  instruments  and take such other and  further  action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

     3.6.  This  Agreement may be executed in one or more  counterparts  each of
which shall be deemed an original,  but all of which shall  together  constitute
one and the same instrument.

     3.7.  In the event that any one or more of the provisions contained herein,
or the application  thereof in any  circumstances,  is held invalid,  illegal or
unenforceable  in any  respect  for  any  reason,  the  validity,  legality  and
enforceability of any such provision in every other respect and of the remaining
provisions  hereof  shall  not be in any way  impaired  or  affected,  it  being
intended  that all of the Offerors' and the  Purchaser's  rights and  privileges
shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page



<PAGE>


         IN WITNESS WHEREOF,  this Agreement is agreed to and accepted as of the
day and year first written above.


FIRST TENNESSEE BANK NATIONAL ASSOCIATION


By:/s/      David S. Work
   -------------------------------------
Print Name: David S. Work
           -----------------------------
Title:      Executive Vice President
      ----------------------------------

                                       FIRST BANKS, INC.


                                       By: /s/ Allen H. Blake
                                          --------------------------------------

                                       Name:   Allen H. Blake
                                            ------------------------------------

                                       Title:  President and Chief Executive
                                               Officer
                                             -----------------------------------

                                       FIRST BANK STATUTORY TRUST III


                                       By: /s/ Lisa K. Vansickle
                                          --------------------------------------

                                       Name:   Lisa K. Vansickle
                                             -----------------------------------

                                       Title:  Administrator



<PAGE>


                       EXHIBIT A TO SUBSCRIPTION AGREEMENT
                       -----------------------------------

                             FORM OF TRANSFER NOTICE

                                     [DATE]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-1600
Attention:  Corporate Trust Administration

Dear Sir or Madam:

         The  undersigned  hereby  notifies you of the transfer of [________] of
the Capital  Securities of First Bank  Statutory  Trust III, such transfer to be
effective on [DATE OF TRANSFER]. In accordance with Section 7.9 of the Placement
Agreement dated November 22, 2004 between the Offerors and the placement  agents
named therein (the "Placement  Agreement"),  periodic reports shall be delivered
to  [_______________]  on each March 15, June 15,  September  15 and December 15
during the term of the Capital Securities, commencing [___________], in the form
attached  thereto.  Capitalized  terms  used in this  notice  and not  otherwise
defined  shall  have  the  meanings  ascribed  to such  terms  in the  Placement
Agreement.

         As the Institutional  Trustee and Registrar,  you are hereby instructed
to notify The Depository Trust Company of the transfer of Capital  Securities to
[_______________],  if  such  notification  is  required  as  a  Fast  Automated
Securities Transfer Program Agent for DTC. The undersigned hereby certifies that
this notice has been delivered to the Company,  and Wilmington Trust Company has
no duty or obligation to provide such notice.

                               FIRST TENNESSEE BANK NATIONAL ASSOCIATION


                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------




cc:      First Banks, Inc.


<PAGE>
                                                                    Exhibit 4.41

Certificate Number P-1                                 40,000 Capital Securities
        CUSIP NO. 319278 AA 5

THIS CAPITAL SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER  REFERRED TO AND IS REGISTERED IN THE NAME OF THE  DEPOSITORY  TRUST
COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL  SECURITY IS EXCHANGEABLE  FOR
CAPITAL  SECURITIES  REGISTERED  IN THE NAME OF A PERSON  OTHER  THAN DTC OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES  DESCRIBED IN THE DECLARATION,  AND NO
TRANSFER  OF THIS  CAPITAL  SECURITY  (OTHER  THAN A  TRANSFER  OF THIS  CAPITAL
SECURITY  AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR
ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO FIRST BANK  STATUTORY  TRUST III OR ITS AGENT FOR  REGISTRATION  OF TRANSFER,
EXCHANGE OR PAYMENT,  AND ANY CAPITAL  SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT  HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF DTC), ANY TRANSFER,  PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED  (THE  "SECURITIES  ACT"),  ANY  STATE  SECURITIES  LAWS  OR  ANY  OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY  DISTRIBUTION  IN VIOLATION OF
THE SECURITIES  ACT, OR (F) PURSUANT TO ANY OTHER  AVAILABLE  EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE  OBTAINED  FROM THE SPONSOR OR THE TRUST.  HEDGING  TRANSACTIONS
INVOLVING  THIS  SECURITY MAY NOT BE  CONDUCTED  UNLESS IN  COMPLIANCE  WITH THE
SECURITIES ACT.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (I) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (II)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00  (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED  TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.
<PAGE>

IN CONNECTION  WITH ANY  TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE
DECLARATION   TO  CONFIRM  THAT  THE  TRANSFER   COMPLIES   WITH  THE  FOREGOING
RESTRICTIONS.

                                November 23, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                         First Bank Statutory Trust III

                (liquidation amount $1,000 per Capital Security)

         First Bank  Statutory  Trust III, a statutory  trust  created under the
laws of the State of Delaware (the  "Trust"),  hereby  certifies that Cede & Co.
(the  "Holder")  is the  registered  owner of  capital  securities  of the Trust
representing  undivided  beneficial  interests  in  the  assets  of  the  Trust,
(liquidation  amount $1,000 per capital  security)  (the "Capital  Securities").
Subject to the  Declaration  (as  defined  below),  the Capital  Securities  are
transferable  on the  books  and  records  of the  Trust in  person or by a duly
authorized  attorney,  upon surrender of this  Certificate  duly endorsed and in
proper form for transfer.  The Capital Securities  represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Capital  Securities  shall in all respects
be subject to, the  provisions of the Amended and Restated  Declaration of Trust
of the Trust dated as of November 23, 2004,  among Peter D. Wimmer,  Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators,  Wilmington Trust Company, as
Delaware  Trustee,  Wilmington Trust Company,  as Institutional  Trustee,  First
Banks,  Inc.,  as  Sponsor,  and the  holders  from  time  to time of  undivided
beneficial  interests in the assets of the Trust,  including the  designation of
the terms of the Capital  Securities as set forth in Annex I to such amended and
restated  declaration  as the  same  may be  amended  from  time  to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration,  the Guarantee,  and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware,  without  regard to principles of conflict of
laws.

                       Signature appears on following page



<PAGE>


         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                             FIRST BANK STATUTORY TRUST III



                                             By:/s/     Lisa K. Vansickle
                                                --------------------------------
                                                 Name:  Lisa K. Vansickle
                                                 Title: Administrator



<PAGE>


                          CERTIFICATE OF AUTHENTICATION

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.


                                             WILMINGTON TRUST COMPANY,
                                             as the Institutional Trustee


                                             By: /s/ Christopher J. Monigle
                                                --------------------------------
                                                     Authorized Officer



<PAGE>


                           REVERSE OF CAPITAL SECURITY

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 4.54%  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the  Distribution  Payment Date in March
2005  and at an  annual  rate  for  each  successive  period  beginning  on (and
including)  the  Distribution  Payment Date in March 2005,  and each  succeeding
Distribution  Payment Date, and ending on (but  excluding)  the next  succeeding
Distribution  Payment  Date  (each a  "Distribution  Period"),  equal to 3-Month
LIBOR, determined as described below, plus 2.18% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest  payable on the Debentures to be held by the  Institutional
Trustee.   Distributions  in  arrears  will  bear  interest  thereon  compounded
quarterly at the Distribution  Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded  distributions unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  for  any  Distribution  Period  will  be  calculated  by  applying  the
Distribution  Rate  to  the  stated   liquidation   amount  outstanding  at  the
commencement  of the  Distribution  Period on the basis of the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

         The Distribution  Rate for any  Distribution  Period will at no time be
higher than the maximum  rate then  permitted by New York law as the same may be
modified by United States law.

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).
<PAGE>

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding  Business  Day  (each  such  day,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Extension  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  provided,  however,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

         The  Capital   Securities  shall  be  redeemable  as  provided  in  the
Declaration.



<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital Security
Certificate to:

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


(Insert assignee's social security or tax identification number)
                                                                ----------------

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

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



(Insert address and zip code of assignee) and irrevocably appoints


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



agent to transfer this Capital  Security  Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:
     ---------------------------------------

Signature:
          ----------------------------------

(Sign  exactly as your name appears on the other side of this  Capital  Security
Certificate)

Signature Guarantee:1





























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

     1 Signature must be guaranteed by an "eligible guarantor  institution" that
     is a bank,  stockbroker,  savings  and loan  association  or  credit  union
     meeting the  requirements  of the Security  registrar,  which  requirements
     include  membership or  participation  in the  Securities  Transfer  Agents
     Medallion Program ("STAMP") or such other "signature  guarantee program" as
     may  be  determined  by  the  Security  registrar  in  addition  to,  or in
     substitution for, STAMP, all in accordance with the Securities Exchange Act
     of 1934, as amended.

<PAGE>
                                                                   Exhibit 10.10

             First Banks, Inc. Executive Incentive Compensation Plan

OBJECTIVES

o    Promote superior short- and long-term financial performance of the
     institution through the efforts of key executive officers.
o    Reward those key executive officers who deliver solid results with
     market-competitive incentives; provide above-market incentives for those
     who far exceed expectations.
o    Attract, motivate, and retain skilled and experienced individuals who can
     increase the size and profitability of the institution.

ELIGIBLE PARTICIPANTS

The Chairman of the Board of First Banks, Inc. will annually determine those
eligible to participate in the Plan. Aside from the CEO, the Plan is designed
for the handful of executive officers whose impact is felt in every region and
business unit of the company and whose contribution to the organization's
success is difficult to measure by objective criteria alone. Although it is
anticipated that individuals such as the CFO, COO, CCO, Director of Sales and
Marketing, Director of Operations, and Director of Technology would be eligible
participants, the Chairman of the Board retains full discretion to determine
eligibility in the Plan. Lineal descendants of James F. Dierberg and their
spouses are not eligible to participate in the Plan, regardless of position.

Employees who are hired or promoted into eligible positions between January 1st
and August 31st of the Plan Year will be considered for participation on a
prorated basis.

INCENTIVE COMPENSATION FUNDING

Funding of incentive compensation is based on the weighted average Return On
Equity (ROE) for First Banks, Inc. For the CEO, the weighted average ROE is
defined as the current plan year ROE times 60% plus the preceding year's ROE
times 25% plus the ROE two years prior times 15%. For all other participants,
the weighted average ROE is defined as the current plan year ROE times 75% plus
the preceding year's ROE times 25%. For purposes of this Plan, ROE is calculated
using the net income and equity as reported in the company's annual report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, except
that (1) equity does not include unrealized gain or loss on derivatives; and (2)
extraordinary gain on the sale of branches, business lines, or other assets that
would otherwise represent 5% or more of net income shall be excluded for
purposes of calculating ROE for purposes of the Plan.

There are separate funding formulae for the CEO and all other participants, as
outlined below. If the weighted average ROE is less than Threshold (12.5%), no
incentive amount will be generated.


<PAGE>


CEO Funding Formula:
--------------------
40(weighted average ROE)(100) - 12.5)(CEO's annual base salary at end of plan
year). Incentive may not exceed 300% of salary.

Other Participants Funding Formula:
-----------------------------------
30((weighted average ROE)(100) - 12.5)0.8(total of all participants' annual base
salaries at end of plan year). Incentive may not exceed 150% of salary.

See the Attachment to the Executive Incentive Plan: Incentive Funding, for a
graphical representation of the formulas.

INCENTIVE COMPENSATION DISTRIBUTION

Distributions of incentive funds, if any, are handled separately for the CEO and
all other participants. For the CEO, the amount funded under the incentive
formula outlined above will be the amount distributed to the CEO, unless
determined otherwise by the Board of Directors.

For executives other than the CEO, the funding generated by the incentive
formula outlined above is the Incentive Pool. Absent special circumstances
outlined later, the amount of funds in the Incentive Pool will be the total
amount distributed to participants.

The funds in the Incentive Pool will be distributed among the participants
proportionately based on the ratio of each participant's annual base salary at
the end of the Plan Year to the aggregate of all participants' annual base
salaries at the end of the Plan Year, provided however, that the CEO may
exercise discretion in awarding a greater or lesser amount to any one or more
participants, such that the total amount funded is ultimately awarded among all
participants. Such discretion will be exercised based on the CEO's best judgment
as to the relative contributions (or lack thereof) made by each participant
toward improving ROE during the Plan Year.

NEW PARTICIPANTS

The funding and distributions for individuals who become participants between
January 1st and August 31st of the Plan Year will be prorated for the number of
full months during such year that they are participants. There shall be no
funding or distribution for individuals who become participants after August
31st of the Plan Year.

SPECIAL CIRCUMSTANCES

1.       Significant Extraordinary Items. Significant extraordinary items may be
         taken into consideration and such adjustments made (upward or downward)
         as deemed appropriate by the Board of Directors.

2.       Participant Receives Performance Rating Below "Achieves Performance
         Requirements." The CEO has the discretion to reduce the funding of the
         Incentive Pool if one or more participants receive a performance review
         below "Achieves Performance Requirements" (or equivalent). The funding
         may be reduced up to an amount equal to the reduction in distribution
         to the executive(s) failing to receive a "Achieves Performance
         Requirements" review or better. The purpose of this provision is to
         prevent distortions that might otherwise occur if one or more
         executives received little or no distribution and the total amount of
         funding had to be allocated among the remaining participants.



<PAGE>

3.       Fewer than Three Participants aside from the CEO. If for any reason
         there are fewer than three participants in the Plan other than the CEO,
         the Chairman of the Board has the discretion to increase or decrease
         the total funding up to 20% of the participants' total salaries.

SALARY AND EMPLOYEE BENEFIT ADMINISTRATION

Payments made pursuant to the Plan will not be used in determining benefit
levels under any employee benefits program.

PAYMENT DATE

Payments will be made to eligible participants as soon as practical following
the close of the Plan Year and the determination of financial results.
Participants must be employed by First Banks, Inc., its Subsidiaries or
Affiliates on the date that payments are made, unless payment is required
earlier under applicable State laws or regulations.

TERMINATION

Those participants whose employment is terminated during the Plan Year due to
retirement, death or disability are eligible to be considered for an award at
such time as other award determinations are made. Such awards, if any, will be
prorated through the date of termination and are payable at the time all other
awards under this Plan are made. Participants who voluntarily terminate during
the Plan Year, or whose employment is terminated involuntarily for any reason,
are not eligible to receive an award under the Plan.

PLAN NONCONTRACTUAL

Nothing herein contained shall be construed as a commitment or agreement on the
part of any person employed by First Banks, Inc. or any of its Subsidiaries or
Affiliates to continue such person's employment with First Banks, Inc., its
Subsidiaries or Affiliates, and nothing herein contained shall be construed as a
commitment or agreement on the part of First Banks, Inc., its Subsidiaries or
Affiliates to continue the employment of or the annual rate of compensation of
any such person for any period, and all participants shall remain subject to
discharge to the same extent as if the Plan had never been put into effect.

PLAN AMENDMENTS

The Board of Directors may amend or terminate the Plan at any time.

EFFECTIVE DATE

The foregoing has been approved by the Board of Directors, effective January 1,
2004.

<PAGE>

                                                                   Exhibit 10.11
                                FIRST BANKS, INC.

                     NONQUALIFIED DEFERRED COMPENSATION PLAN


                                    SECTION 1

                                   Definitions

1.1   Affiliate. "Affiliate" means any corporation, partnership, joint venture,
      ---------
association or similar organization or entity that is required to be aggregated
with the Company pursuant to Code Section 414(b), (c), or (m).

1.2   Beneficiary. "Beneficiary" means the individual or individuals designated
      -----------
by the Participant pursuant to Section 5.4 of the Plan.

1.3   Code. "Code" means the Internal Revenue Code of 1986, as amended from time
      ----
to time. Any reference to a section of the Code includes any comparable section
or sections of any future legislation that amends, supplements or supersedes
that section.

1.4   Company. "Company" means FIRST BANKS, INC., located at 11901 Olive
      -------
Boulevard, St. Louis, Missouri 63141, employer tax identification number
43-1175538, which Company has established the Plan, as set forth herein.

1.5.  Compensation. "Compensation" means total taxable salary, bonuses and
      ------------
commissions paid to a Participant by the Employer (determined without regard to
any amounts in the Participant's Deferred Compensation Account).

1.6.  Deferred Compensation Account. "Deferred Compensation Account" means the
      -----------------------------
bookkeeping account maintained under the Plan in the Participant's name to
reflect amounts deferred under the Plan pursuant to Section 3 (as adjusted under
Section 4) and any Employer discretionary Contributions made on behalf of the
Participant (as adjusted under Section 4).

1.7.  Deferral Election. "Deferral Election" means a written notice filed by the
      -----------------
Participant with the Employer specifying the Compensation or bonus to be
deferred by the Participant.

1.8.  Distribution Date. "Distribution Date" means the date a Participant
      -----------------
terminates employment or association with the Employer for whatever reason.

1.9.  Early Retirement Date. "Early Retirement Date" means the date the
      ---------------------
Participant attains 55 years of age and has been employed by the Company or its
Affiliates for at least 10 years.


<PAGE>


1.10. Effective Date. "Effective Date" means September 1, 1999.
      --------------

1.11. Employee. "Employee" means an employee of an Employer who meets the
      --------
eligibility criteria set forth in Subsection 3.1 of the Plan and who is a member
of a select group of management or highly compensated employees as defined under
ERISA or the regulations thereunder.

1.12. Employer. "Employer" means, individually, the Company and each Affiliate
      --------
of the Company that adopts the Plan in accordance with Subsections 7.1. The
Company and any Affiliates that adopt the Plan are sometimes collectively
referred to herein as the "Employers."

1.13. ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974,
      -----
as amended from time to time. Any reference to a section of ERISA includes any
comparable section or sections of any future legislation that amends,
supplements or supersedes that section.

1.15. Normal Retirement Date. "Normal Retirement Date" means the date the
      ----------------------
Participant attains 65 years of age.

1.16. Participant. "Participant" means an Employee who meets the eligibility
      -----------
criteria set forth in Subsection 3.1 and who has made a Deferral Election in
accordance with the terms of the Plan.

1.17. Plan. "Plan" means the provisions of the Plan, as set forth herein.
      ----

1.18. Plan Administrator. The "Plan Administrator" means the Company.
      ------------------

1.19  Plan Year. "Plan Year" means the calendar year. However, if the Effective
      ---------
Date of the Plan is other than January 1 of a year, the initial Plan year shall
be a short Plan year, beginning on the Effective Date and ending on the
following December 31.

1.20. Unforeseeable Financial Emergency. "Unforeseeable Financial Emergency"
      ---------------------------------
means a severe financial hardship of the Participant resulting from:

          a)     A sudden and unexpected illness or accident of the Participant
                 or of a dependent the Participant (as defined in Section
                 152(a) of the Code);

          b)     Loss of Participant's property to casualty; or

          c)     Such other similar extraordinary and unforeseeable
                 circumstances resulting from events beyond the control of the
                 Participant.

Whether a Participant has an Unforeseeable Financial Emergency shall be
determined in the sole discretion of the Plan Administrator.

1.21. Valuation Date. "Valuation Date" means the each business day. A business
      --------------
day is any day the New York Stock Exchange (NYSE) is open for trading.
<PAGE>

1.22. Other Definitions. In addition to the terms defined in this Section 1,
      -----------------
other terms are defined when first used in later Sections of this Plan.


                                    SECTION 2

                           Purpose and Administration

2.1.  Purpose. The Company has established the Plan primarily for the purpose of
      -------
providing deferred compensation to a select group of management or highly
compensated employees of the Employers. The Plan is intended to be a top-hat
plan described in Section 201(2) of ERISA. The Company intends that the Plan
(and each Trust under the Plan as described in Subsection 6.1) shall be treated
as unfunded for tax purposes and for purposes of Title I of ERISA. An Employer's
obligations hereunder, if any, to a Participant (or to a Participant's
beneficiary) shall be unsecured and shall be a mere promise by the Employer to
make payments hereunder in the future. A Participant (or the Participant's
beneficiary) shall be treated as a general unsecured creditor of the Employer.

2.2.  Administration. The Plan shall be administered by the Plan Administrator.
      --------------
The Company may designate a committee or individual to carry out the
administration of the Plan on behalf of the Company who shall serve at the
pleasure of the Company's Board of Directors and may be removed by such Board
with or without cause. Any individual so designated may resign upon written
notice to the Company's Board of Directors. The Company shall have full power
and authority to designate those persons employed by the Company who may
participate in the Plan.

The Plan Administrator shall have the powers, rights, and duties set forth in
the Plan and shall have the power, in the Plan Administrator's sole and absolute
discretion, to determine all questions arising under the Plan, including the
determination of the rights of all persons with respect to the Plan and to
interpret the provisions of the Plan and remedy any ambiguities,
inconsistencies, or omissions. Any decisions of the Plan Administrator shall be
final and binding on all persons with respect to the Plan and the benefits
provided under the Plan.

If a Participant is assisting the Plan Administrator (either individually or as
a member of a committee), the Participant may not decide or determine any matter
or question concerning such Participant's benefits under the Plan that the
Participant would not have the right to decide or determine if the Participant
were not serving as the Plan Administrator.


                                    SECTION 3

                 Eligibility, Participation, Deferral Elections,
                           and Employer Contributions

3.1.  Eligibility and Participation. Subject to the conditions and limitations
      -----------------------------
of the Plan, all employees with a position ranking of Vice President or above
and earning an annual base salary of at least $75,000 per Plan Year are eligible
to participate in the Plan. Annual base salary shall be determined based either
on an employee's base salary for the preceding calendar year (for current
employees) or on an employee's base salary for the current year (for employee's
hired during the Plan year and employees receiving a change in his or her base
salary during the Plan Year).
<PAGE>

         An Employee shall become a participant in the Plan, effective the first
day of the month thirty (30) days following designation by the Employer that the
Employee is eligible to participate, provided, however, that the election form
is returned to the Plan Administrator within the time prescribed by the Plan
Administrator. Thereafter, an Employee who meets the eligibility requirements
stated herein may also become a participant in the Plan effective January 1st of
the following Plan Year in which he or she meets the eligibility requirements,
provided the election form is returned to the Plan Administrator on or before
December 1 of the year in which he or she meets the eligibility requirements. An
employee who meets the eligibility requirements and does not return the election
form to the Plan Administrator on or before December 1 of the Plan year in which
he or she first meets the eligibility requirements set forth above must again
meet the eligibility requirements in order to participate in the Plan. A
Participant shall remain a participant in the Plan until the entire balance of
the Participant's Deferred Compensation Account has been distributed.

3.2.  Rules for Deferral Elections. Any person meeting the eligibility
      ----------------------------
requirement of Subsection 3.1 may make a Deferral Election to defer receipt of
Compensation he or she otherwise would be entitled to receive for a Plan Year in
accordance with the rules set forth below:

          a)     All Deferral Elections must be made in writing on the form
                 prescribed by the Plan and will be effective only when filed
                 with the Plan Administrator no later than the date specified by
                 the Plan Administrator. In no event may a Deferral Election be
                 made later than the last day of the Plan Year preceding the
                 Plan Year in which the amount being deferred would otherwise be
                 made available to the Participant. However, in the case of a
                 Participant's initial year of employment or association with an
                 Employer, the Participant may make a Deferral Election with
                 respect to compensation for services to be performed subsequent
                 to such Deferral Election, provided such election is made no
                 later than 30 days after the date the Participant first becomes
                 eligible for the Plan. Furthermore, in the case of a short
                 initial Plan year, each Participant may make a Deferral
                 Election with respect to compensation for services to be
                 performed subsequent to such Deferral Election, provided such
                 election is made no later than 30 days after the Effective
                 Date.

          b)     With respect to Plan years following the Participant's initial
                 year in the Plan, failure to complete a subsequent Deferral
                 Election shall constitute a waiver of the Participant's right
                 to elect a different amount of Compensation to be deferred for
                 each such Plan Year and shall be considered an affirmation and
                 ratification to continue the Participant's existing Deferral
                 Election. However, a Participant may, prior to the beginning of
                 any Plan Year, elect to increase or decrease the amount of
                 Compensation to be deferred for the next following Plan Year
                 by filing another Deferral Election with the Plan Administrator
                 in accordance with paragraph (a) above.

          c)     A Deferral Election in effect for a Plan Year may not be
                 modified during the Plan Year, except that a Participant may
                 terminate the Participant's Deferral Election during a Plan
                 Year in the event of an Unforeseeable Financial Emergency.


<PAGE>



3.3   Amounts Deferred. Commencing on the effective date of participation, a
      ----------------
Participant may elect to defer (a) up to 25% of the Participant's Compensation
for a Plan Year and (b) up to 100% of the Participant's bonus/commissions for a
Plan Year. The amount of Compensation and bonus/commissions deferred by a
Participant shall be credited to the Participant's Deferred Compensation Account
as of the Valuation Date coincident with or immediately following the date such
Compensation and bonus/commission would, but for the Participant's Deferral
Election, be payable to the Participant.

3.4.  Employer Discretionary Contributions. An Employer may, in its sole
      ------------------------------------
discretion, credit to the Deferred Compensation Account of any Participant
employed by that Employer an amount determined by the Employer in its sole
discretion (an "Employer Discretionary Contribution") for a Plan Year. Any
Employer Discretionary Contribution for a Plan year will be credited to a
Participant's Deferred Compensation Account as of the Valuation Date specified
by the Employer.


                                    SECTION 4

                         Deferred Compensation Accounts

4.1.  Deferred Compensation Accounts. All amounts deferred pursuant to one or
      ------------------------------
more deferral Elections under the Plan and any Employer discretionary
Contributions shall be credited to a Participant's Deferred Compensation Account
and shall be adjusted under Subsection 4.2.

4.2.  Deferral Account Adjustments and Investment Options. As of each Valuation
      ---------------------------------------------------
Date, the Plan Administrator shall adjust amounts in a Participant's Deferred
Compensation Account to reflect earnings (or losses) in the Investment Options
(as defined in Subsection 4.4) attributable to the Participant's Deferred
Compensation Account. Earnings (or losses) on amounts in a Participant's
Deferred Compensation Account shall accrue commencing on the date the Deferred
Compensation Account first has a positive balance and shall continue to accrue
until the entire balance in the Participant's Deferred Compensation Account has
been distributed. Earnings (or losses) shall be credited to a Participant's
Deferred Compensation Account based on the realized rate of return (net of any
expenses and taxes paid from the Trust) on the Investment Options attributable
to the Participant's Deferred Compensation Account.

4.3.  Vesting. A Participant shall be fully vested in the amounts in the
      -------
Participant's Deferred Compensation Account attributable to the Participant's
Deferral Elections. If Employer Discretionary Contributions are made under the
Plan, a Participant shall be vested in the amount in the Participant's Deferred
Compensation Account attributable to Employer Discretionary Contributions in
accordance with the Five Year Vesting Schedule.

                                                  Nonforfeitable Percentage
                                                  -------------------------

         Less than five (5) years...............              0%
         Five (5) or more years.................            100%

Vesting for Participants will be determined by Years of Service with the
Employer.
<PAGE>

For the purpose of determining a Participant's vested benefit with respect to
Employer Discretionary Contributions, a "Year of Service" means each
twelve-month period of employment or association with the Company and the
Affiliates. Notwithstanding the foregoing, a Participant shall be fully vested
in the entire balance in the Participant's Deferred Compensation Account upon
the Participant's Normal Retirement Date, death or becoming disabled (as
provided in Subsection 5.2 below), provided the date on which the Participant
dies or becomes disabled occurs while the Participant is actively employed by or
associated with the Employer. The portion of a Participant's Deferred
Compensation Account in which the Participant is not fully vested shall be
forfeited to the Employer by the Participant.

Notwithstanding the vesting schedule set forth above, the balance in a
Participant's Deferred Compensation Account attributable to Employer
Discretionary contributions will be forfeited (and neither the Participant nor
the Participant's beneficiaries will have any rights thereto) if the
Participant's employment with the Employer is terminated for Good Cause. "Good
Cause" means the Participant's gross negligence, fraud, dishonesty, or willful
violation of any law or significant policy of the Employer that is committed in
connection with the Participant's employment by or association with the
Employer. Whether a Participant has been terminated for Good Cause shall be
determined by the Plan Administrator.

4.4.  Investment Options. The Plan Administrator may establish procedures
      ------------------
governing the ability of the Participant to give investment directions, which
procedures may be modified from time to time by the Plan Administrator, in the
sole discretion of the Plan Administrator. Currently, Participant may make
written Investment Option instructions to the Plan Administrator for transfers
between Investment Options as of any Valuation Date. Generally, a Participant
may specify a percentage or dollar amount to be reallocated from one or more
Divisions, as well as the proportional allocation to the applicable Divisions.

         The Plan Administrator, in its sole discretion, may offer a range of
investments from which a Participant can select and direct investment in for
their individual Account. Such investment options may be changed added, deleted
or modified from time to time in the Plan Administrator's sole discretion.
Currently, each Division has different objectives and policies which provide the
Participant with a variety of investment alternatives.


                                    SECTION 5

                               Payment of Benefits

5.1.  Payment upon Retirement. Payment of the vested portion of a Participant's
      -----------------------
Deferred Compensation Account shall be made as soon as administratively possible
following the last business day of the month in which the Participant's
Distribution Date occurs. Payment of the vested portion of a Participant's
Deferred Compensation Account shall be made in accordance with the Participant's
Election. Currently, the options being offered to Participants are 1) monthly
payments over five (5) years; 2) monthly payments over ten (10) years; or 3) a
single lump sum payment. These payment options may be changed, added, deleted or
modified in the Plan Administrator's sole discretion. A Participant may change
his or her benefit payment so long as said change is made, in writing to the
Plan Administrator, at least thirteen (13) months prior to the commencement of
payment of benefits. The amount of each monthly payment will equal the current
balance multiplied by a fraction: the numerator is 1 and the denominator is the
number of remaining payments, including the current one. For example, if this is
the first of a five (5) year (60 month) payout, the payment would be 1/60th of
the current balance. The next payment would be 1/59th, and so on.
<PAGE>

5.2.  Payment Upon Disability. In the event a Participant becomes disabled (as
      -----------------------
defined below) while the Participant is employed by or associated with an
Employer, payment of the Participant's Deferred Compensation Account shall be
made (or shall commence) as soon as practicable after the Valuation Date
coincident with or next following the date on which the Plan Administrator
determines that the Participant is disabled. Payment of the vested portion of a
Participant's Deferred Compensation Account shall be made in accordance with the
Participant's election. Currently, the options being offered to a Participant
who is disabled are (1) monthly payments over five (5) years; (2) monthly
payments over ten (10) years; or (3) a single lump sum payment. These payment
options may be changed, added, deleted or modified in the Plan Administrator's
sole discretion. A Participant may change his or her benefit payment so long as
said change is made, in writing, at least thirteen (13) months prior to the
commencement of payment of benefits. Further, a Participant who has previously
selected a 5 or 10 year monthly payment may, in the event of disability, change
said benefit payment at any time prior to the commencement of payment of
benefits to a lump sum payment with the written consent of the Plan
Administrator. For purposes of this Subsection 5.2, a Participant shall be
considered disabled if the Participant is unable to engage in any substantially
gainful activity by reason of any medically determined physical or mental
impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve months. Whether
a Participant is disabled for purposes of the Plan shall be determined by the
Plan Administrator, and in making such determination, the Plan Administrator may
rely on the opinion of a physician (or physicians) selected by the Plan
Administrator for such purpose.

5.3.  Payment Upon Death of a Participant. A Participant's Deferred Compensation
      -----------------------------------
Account shall be paid to the Participant's beneficiary (designated in accordance
with Subsection 5.4) as follows:

         1.       Death Prior to Commencement of Benefits. If the Participant
                  ---------------------------------------
                  dies prior to the commencement of Benefit payments to him or
                  her, the Employer shall pay the Participant's Vested Benefits
                  to the Participant's Beneficiary or Beneficiaries designated
                  in accordance with Section 5.4 below in a single lump sum.
                  Such payment shall be made as soon as administratively
                  feasible following the death of the Participant.

         2.       Death After Commencement of Benefits. If the Participant dies
                  ------------------------------------
                  after the commencement of Benefit payments to him or her, but
                  prior to the completion of all such payments due and owing
                  under the Plan, the Employer shall continue to make such
                  payments to the Participant's Beneficiary or Beneficiaries
                  designated in accordance with Section 5.4 below in the manner
                  and over the period that applied to the Participant at the
                  time of his or her death.

                  Such continuing payments shall commence as soon as
                  administratively feasible following the Employer's receipt of
                  notice of the Participant's death, provided the Employer is
                  furnished with a death certificate and such other
                  documentation and information as the Employer may reasonably
                  require.


<PAGE>



5.4.  Beneficiary. If a Participant is married on the date of the Participant's
      -----------
death, the Participant's beneficiary shall be the Participant's spouse, unless
the Participant names a beneficiary or beneficiaries (other than the
Participant's spouse) to receive the balance of the Participant's Deferred
Compensation Account in the event of the Participant's death prior to the
payment of the Participant's entire Deferred Compensation Account. To be
effective, any beneficiary designation must be filed in writing with the Plan
Administrator in accordance with rules and procedures adopted by the Plan
Administrator for that purpose. A Participant may revoke an existing beneficiary
designation by filing another written beneficiary designation with the Plan
Administrator at any time and without the consent of prior beneficiaries. The
latest beneficiary designation received by the Plan Administrator shall be
controlling. If no beneficiary is named by a Participant, or if the Participant
survives all of the Participant's named beneficiaries and does not designate
another beneficiary, the Participant's Deferred Compensation Account shall be
paid in the following order of precedence:

          a)     The Participant's spouse;

          b)     The Participant's children (including adopted children) per
                 stirpes; or

          c)     The Participant's estate.

5.5   Payment Upon Termination of Employment. In the event a Participant
      --------------------------------------
terminates his employment with Employer for any reason other than Retirement
(early or normal), Death or Disability, payment of the vested portion of a
Participant's Deferred Compensation Account (which is not forfeited pursuant to
Section 4.3) shall be made in a single lump sum as soon as administratively
possible following the last business day of the month in which the Participant's
Distribution Date occurs.

5.5.  Unforeseeable Financial Emergency. If the Plan Administrator determines
      ---------------------------------
that a Participant has incurred an Unforeseeable Financial Emergency, the
Participant may receive in cash the portion of the balance of the Participant's
Deferred Compensation Account needed to satisfy the Unforeseeable Financial
Emergency, but only if the Unforeseeable Financial Emergency may not be relieved
(a) through reimbursement or compensation by insurance or otherwise or (b) by
liquidation of the Participant's assets to the extent the liquidation of such
assets would not itself cause severe financial hardship. A payment on account of
an Unforeseeable Financial Emergency shall not be in excess of the amount needed
to relieve such Unforeseeable Financial Emergency and shall be made as soon as
practicable following the date on which the Plan Administrator approves such
payment.


5.6.  Withholding of Taxes. In connection with the Plan, the Employer shall
      --------------------
withhold any applicable Federal, state or local income tax and employment taxes,
including Social Security taxes, at such time and in such amounts as is
necessary to comply with applicable laws and regulations.



<PAGE>

                                    SECTION 6

                                  MISCELLANEOUS

6.1.  Funding. Each Employer under the Plan shall establish and maintain one or
      -------
more grantor trusts (individually, a "Trust") to hold assets to be used for
payment of benefits under the Plan. A Trust shall conform with the terms of
Internal Revenue Service Revenue Procedure 92-64 (or any subsequent
administrative ruling). The assets of the Trust with respect to benefits payable
to the Participants employed by or associated with an Employer shall remain the
assets of such Employer subject to the claims of its general creditors. Any
payments by a Trust of benefits provided to a Participant under the Plan shall
be considered payment by the applicable Employer and shall discharge such
Employer from any further liability under the Plan for such payments.

6.2.  Interests Not Transferable. Except as to withholding of any tax under the
      --------------------------
laws of the United States or any state or locality, no benefit payable at any
time under the Plan shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, or any other encumbrance of any kind or to
any attachment, garnishment, or other legal process of any kind. Any attempt by
a person (including a Participant or a Participant's beneficiary) to anticipate,
alienate, sell, transfer, assign, pledge, or otherwise encumber any benefits
under the Plan, whether currently or thereafter payable, shall be void. If any
person shall attempt to, or shall alienate, sell, transfer, assign, pledge or
otherwise encumber such person's benefits under the Plan, or if by any reason of
such person's bankruptcy or other event happening at any time, such benefits
would devolve upon any other person or would not be enjoyed by the person
entitled thereto under the Plan, then the Plan Administrator, in the Plan
Administrator's sole discretion, may terminate the interest in any such benefits
of the person otherwise entitled thereto under the Plan and may hold or apply
such benefits in such manner as the Plan Administrator may deem proper.

6.3.  Forfeitures and Unclaimed Amounts. Unclaimed amounts shall consist of the
      ---------------------------------
amounts in the Deferred Compensation Account of a Participant that cannot be
distributed because of the Plan Administrator's inability, after a reasonable
search, to locate a Participant or the Participant's beneficiary, as applicable,
within a period of two years after the Distribution Date upon which the payment
of benefits became due. Unclaimed amounts shall be forfeited at the end of such
two-year period. These forfeitures will reduce the obligations of the Employer,
if any, under the Plan. After an unclaimed amount has been forfeited, the
Participant or beneficiary, as applicable, shall have no further right to
amounts in the Participant's Deferred Compensation Account.

6.4.  Controlling Law. The law of the state of Missouri shall be controlling in
      ---------------
all matters relating to the Plan to the extent not preempted by Federal Law.

6.5.  Number. Words in the plural shall include the singular, and the singular
      ------
shall include the plural.

6.6.  Action by the Employers. Except as otherwise specifically provided herein,
      -----------------------
any action required of or permitted to be taken by an Employer under the Plan
shall be by resolution of its Board of Directors or by resolution of a duly
authorized committee of its Board of Directors or by action of a person or
persons authorized by resolution of such Board of Directors or such committee.
<PAGE>

6.7.  No Fiduciary Relationship. Nothing contained in this Plan, and no action
      -------------------------
taken pursuant to its provisions by either the Employers or the Participants
shall create, or be construed to create a fiduciary relationship between the
Employer and the Participant, a designated beneficiary, other beneficiaries of
the Participant, or any other person.

6.8.  Claims Procedures. Any person (hereinafter referred to as a "Claimant")
      -----------------
who believes that he or she is being denied a benefit to which he or she may be
entitled under the Plan may file a written request for such benefit with the
Plan Administrator. Such written request must set forth the Claimant's claim and
must be addressed to the Plan Administrator, 11901 Olive Boulevard, St. Louis,
Missouri 63141. Upon receipt of a claim, the Plan Administrator shall advise the
Claimant that a reply will be forthcoming within ninety days and shall deliver a
reply within ninety days. The Plan Administrator may, however, extend the reply
period for an additional ninety days for reasonable cause. If the claim is
denied in whole or in part, the Plan Administrator shall issue a written
determination, using language calculated to be understood by the Claimant,
setting forth:

      a)  The specific reason or reasons for such denial;

      b)  The specific reference to pertinent provisions of the Plan upon which
          such denial is based;

      c)  A description of any additional material or information necessary for
          the Claimant to perfect the Claimant's claim and an explanation why
          such material or such information is necessary; and

      d)  Appropriate information as to the steps to be taken if the Claimant
          wishes to submit the claim for review, and the time limits for
          requesting such a review.

Within sixty days after the receipt by the Claimant of the written determination
described above, the Claimant may request in writing, that the Plan
Administrator review the Plan Administrator's determination. The request must be
addressed to the Plan Administrator, at 11901 Olive Boulevard, St. Louis,
Missouri 63141. The Claimant or the Claimant's duly authorized representative
may, but need not, review the pertinent documents and submit issues and comments
in writing for consideration by the Plan Administrator. If the claimant does not
request a review of the Plan Administrator's determination within such sixty day
period, the Claimant shall be barred and estopped from challenging the Plan
Administrator's determination. Within sixty days after the Plan Administrator's
receipt of a request for review, the Plan Administrator will review the
determination. After considering all materials presented by the Claimant, the
Plan Administrator will render a written determination, written in a manner
calculated to be understood by the Claimant setting forth the specific reasons
for the decision and containing specific references to the pertinent provisions
of the Plan on which the decision is based. If special circumstances require
that the sixty day time period be extended, the Plan Administrator will so
notify the Claimant and will render the decision as soon as practicable, but no
later than one hundred twenty days after receipt of the request for review.

6.9.  Notice. Any notice required or permitted to be given under the provisions
      ------
of the Plan shall be in writing, and shall be signed by the party giving or
making the same. If such notice, consent or demand is mailed to a party hereto,
it shall be sent by United Stated certified mail, postage prepaid, addressed to
such party's last known address as shown on the records of the Employers.
Notices to the Plan Administrator should be sent in care of the Plan
Administrator to 11901 Olive Boulevard, St. Louis, Missouri 63141. The date of
such mailing shall be deemed the date of notice. Either party may change the
address to which notice is to be sent by giving notice of the change of address
in the manner set forth above.
<PAGE>

6.10  Unsecured General Creditor Status of Employee. The Employer's obligation
      ---------------------------------------------
hereunder shall be an unfunded and unsecured promise to pay money in the future.
To the extent that any person acquires a right to receive payments from the
Employer under the provisions hereof, such right shall be no greater than the
right of any unsecured general creditor of the Employer; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Employer.

6.11  No Contract of Employment. Nothing contained herein shall be construed to
      -------------------------
be a contract of employment for any term of years, nor as conferring upon the
Employee the right to continue to be employed by the Employer in his or her
present capacity, or in any capacity. It is expressly understood by the parties
hereto that this Plan relates to the payment of deferred compensation for the
Employee's services and is not intended to be an employment contract.

6.12  Heading. The headings of the Plan have been inserted for convenience of
      -------
reference only and are to be ignored in any construction of the provisions
hereof.


                                    SECTION 7

                             Employer Participation

7.1.  Adoption of Plan. Any Affiliate of the Company may, with the approval of
      ----------------
the Company, adopt the Plan by filing with the Company a resolution of its Board
of Directors to that effect.

7.2.  Withdrawal from the Plan by Employer. Any Employer shall have the right,
      ------------------------------------
at any time, upon the approval of, and under such conditions as may be provided
by the Plan Administrator, to withdraw from the Plan by delivering to the Plan
Administrator written notice of its election so to withdraw. Upon receipt of
such notice by the Plan Administrator, the portion of the Deferred Compensation
Account of Participants and beneficiaries attributable to amounts deferred while
the Participants were employed by or associated with such withdrawing Employer
shall be distributed from the Trust at the direction of the Plan Administrator
in cash at such time or times as the Plan Administrator in the Plan
Administrator's dole discretion, may deem to be in the best interest of such
Participants and their beneficiaries. To the extent the amounts held in the
Trust for the benefit of such Participants and beneficiaries are not sufficient
to satisfy the Employer's obligation to such Participants and their
beneficiaries accrued on account of their employment with the Employer, the
remaining amount necessary to satisfy such obligation shall be an obligation of
the Employer, and the other Employers shall have no further obligation to such
Participants and beneficiaries with respect to such amounts.



<PAGE>



                                    SECTION 8
                            Amendment and Termination

The Company intends the Plan to be permanent, but reserves the right at any time
to modify, amend or terminate the Plan at its sole and exclusive direction;
provided however, that except as provided below, any amendment or termination of
the Plan shall not reduce or eliminate any balance in a Participant's Deferred
compensation Account accrued through the date of such amendment or termination.
Upon termination of the Plan, the Company may provide that notwithstanding the
Participant's Distribution Date, all Deferred Compensation Account balances will
be distributed on a date selected by the Company. Notice of any amendment or
termination shall be given to each Participant and Beneficiary of any deceased
Participant entitled to benefits.

                                    SECTION 9

                                Change of Control

9.1.  Overriding Provisions Applicable During a Restricted Period. The following
      -----------------------------------------------------------
provisions of this Section 9 will become effective on a Restricted Date as the
result of a Change of Control and will remain in effect during the Restricted
Period beginning on that date until the following related Unrestricted Date, and
during the Restricted Period, will supersede any of the Provisions of the Plan
to the extent necessary to eliminate any inconsistencies between the provisions
of this Section 9 and any other provisions of the Plan, including any
supplements thereto.

9.2.  Suspension of Part of All of the Overriding Provisions. If a majority of
      ------------------------------------------------------
the members of the Entire Board are Continuing Directors (provided such majority
is equal to the same number as constituted a majority of the Entire Board
immediately prior to the Change of Control), by the affirmative vote of a
majority of the Entire Board and a majority of those members of the Entire Board
who are Continuing Directors, all or a designated portion or portions of the
following provisions of this Section 9 may be declared not applicable as to the
specified transaction or event. No portion of the provisions of this Section 9
will apply to any transaction or event to the extent such portion is
inconsistent with the requirements of applicable law.

9.3.  Definitions. For purposes of this Section 9, the definitions set forth in
      -----------
Paragraphs (a) through (k) below will apply. Definitions set forth elsewhere in
the Plan also will apply to the provisions set forth in this Section 9, except
that where a definition set forth elsewhere in the Plan and a definition set
forth in this Subsection conflict, the definition set forth in this Subsection
will govern.

         a)  "Acquiring Person" will mean any Person, who or which, together
             with all and Associates of such Person, is the Beneficial Owner of
             shares of Common stock of the Company constituting more than 20
             percent of the common stock then outstanding.

         b)  "Affiliate" and "Associate" will have the meaning described to such
              terms in Rule b-2 of the General Rules and Regulations under the
              Securities Exchange Act of 1934 (the "Act").

         c)  "Beneficial Owner" will have the meaning ascribed to such term in
             Rule 1 3d-3 of the Act.
<PAGE>

         d)  "Board of Directors" will mean the Board of Directors of the
             Company.

         e)  A "Change of Control" will be deemed to occur (i) upon any Person
             becoming an Acquiring Person if the Board of Directors has not
             recommended that stockholders of the Company tender or otherwise
             sell their common stock to such Acquiring Person; (ii) upon the
             approval by the stockholders of the Company of a reorganization,
             merger or consolidation, in each case, with respect to which
             persons who were stockholders of the Company immediately prior to
             such reorganization, merger or consolidation, do not, immediately
             thereafter, own more than 50 percent of the combined voting power
             entitled to vote generally in the election of directors of the
             reorganized, consolidated or merged Company's then outstanding
             securities; or (iii) upon a liquidation or dissolution of the
             Company or the sale of all or substantially all of the Company's
             assets.

         f)  "Continuing Director" will mean:

                  (i)    any member of the Board of Directors immediately prior
                         to a Change of Control, or

                  (ii)   any successor of a Continuing Director who is
                         recommended or elected to such continuing Director by
                         a majority of the Continuing Directors then in office
                         and is neither an Acquiring Person, an Affiliate of
                         an Acquiring Person, nor a representative or nominee
                         of an Acquiring Person or of any such Affiliate while
                         such person is a member of the Board of Directors.

         Notwithstanding the foregoing, a successor will not be deemed to be a
         Continuing Director unless, immediately prior to his or her appointment
         or election, a majority of the members of the Entire Board were
         Continuing Directors (and unless such majority is equal to the same
         number as constituted a majority of the Entire Board immediately prior
         to the Change of Control).

         g)  "Person" will mean any individual, firm, corporation or other
             entity, and will any "group" as that term is used in Rule 13d-5(b)
             of the Act.

         h)  "Restricted Date" will mean the date on which a Change of Control
             occurs.

         i)  "Restricted Period" will mean the period beginning on a Restricted
             Date and ending on the fifth anniversary of such Restricted Date.

         j)  "Unrestricted Date" will mean the last day of a Restricted Period.

         k)  "Entire Board" will mean the total number of members of the Board
             of Directors that there would be if there were no vacancies on such
             Board.

9.4.  Benefits Vested on Restricted Date. Effective on a Restricted Date, the
      ----------------------------------
balances in the Deferred Compensation Accounts (including any contributions and
investment earnings after that date) of each Participant who is a Participant in
the Plan on that date will become fully vested and nonforfeitable.
<PAGE>

9.5.  Prohibition Against Amendment. During the Restricted Period, the
      -----------------------------
provisions of the Section 9 may not be amended or deleted and may not be
superseded by any other provision of the Plan (including the provisions of any
exhibit or supplement thereto).

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly
authorized officers on this 1st day of September 1999.

                                           FIRST BANKS, INC.



                                     By:  /s/ Allen H. Blake
                                          --------------------------------------

                                    Its : President, Chief Executive Officer and
                                          Chief Financial Officer

ATTEST: /s/ John G. Kitson
        -------------------------

Its: Senior Vice President
     Director of Human Resources

<PAGE>


                                                                   Exhibit 10.12
                               FIRST AMENDMENT TO
                               ------------------
                                FIRST BANKS, INC.
                                -----------------
                     NONQUALIFIED DEFERRED COMPENSATION PLAN
                     ---------------------------------------

         First Banks, Inc. ("Employer"), hereby makes this First Amendment to
the First Banks, Inc. Nonqualified Deferred Compensation Plan ("Plan").

         WITNESSETH:

         WHEREAS, Employer is desirous of amending its Plan in order to provide
participation by more executives in the Plan; and

         WHEREAS, Section 8 of the Plan gives the Employer the authority to
amend the Plan.

         NOW THEREFORE, in consideration of the above premises, the Employer
hereby amends the Plan as follows:

         1.       Section 1.5 of Section 1 is hereby deleted in its entirety and
the following is inserted in lieu thereof:

                  1.5 Compensation. "Compensation" means total taxable salary,
                      ------------
bonus, fees and commissions paid to a Participant by the Employer (determined
without regard to any amounts in the Participant's Deferred Compensation
Account).

         2.       Section 1.9 of Section 1 is amended by inserting after the
word "by" and before the word "Company" appearing in the third line of said
paragraph the words "or associated with".

         3.       Section 1.16 of Section 1 is hereby revoked in its entirety
and the following is inserted in lieu thereof:

                  1.16 Participant. "Participant" means an Employee and Director
                       -----------
who meet the eligibility criteria set forth in Sub-Section 3.1 and who has made
a Deferral Election in accordance with the terms of the Plan.

         4.       Section 1 is hereby amended by adding the following paragraph
at the end thereof:

                  1.23 Director. "Director" means any director of First Banks,
                       --------
Inc., or any other participating entity who receives fees as and for his/her
services as a director.



<PAGE>


         5.       Paragraph 3.1 of Section 3 is hereby amended by adding the
following at the end thereof:

                      Subject to the conditions and limitations of the Plan, any
Director is eligible to participate in the Plan. A Director shall become a
Participant in the Plan immediately upon attending the first Director's meeting
after the date of this Amendment, provided, however, that the election form is
returned to the Plan Administrator within the time prescribed by the Plan
Administrator. A Director who does not return the election form to the Plan
Administrator within the time prescribed therefore, will not become a
Participant in the Plan until the election form is returned to the Plan
Administrator.

         6.       Paragraph 3.3 of Section 3 is hereby deleted and the following
inserted in lieu thereof:

                  3.3 Amounts Deferred. Commencing on the effective date of
                      ----------------
participation, an Employee may elect to defer (a) up to 25% of the Employee's
Compensation for a Plan year, (b) up to 100% of the Participant's
bonus/commissions for a Plan year. A Director may elect to defer up to 100% of
the Director's fees. The amount of compensation bonus/commissions and fees
deferred by a Participant shall be credited to the Participant's Deferred
Compensation Account, as of the valuation date coincident with or immediately
following the date such compensation, bonus/commission and fees would, but for
the Participant's Deferral Election, be payable to the Participant.

         7.       Paragraph 5.5 of Section 5 shall be amended by inserting after
the word "employment" and before the word "with" appearing in the second line of
said paragraph the words "or his association".

         8.       This Amendment shall be effective on the 1st day of September
2000.

         9.       In all other respects, the Plan shall remain unchanged and in
full force and effect.

         IN WITNESS WHEREOF, the Employer has executed this First Amendment to
First Banks, Inc. Nonqualified Deferred Compensation Plan this 1st day of
September 2000.

                                             FIRST BANKS, INC.


                                             By: /s/ John G. Kitson
                                                ------------------------------
                                                EMPLOYER



<PAGE>

                                                                    EXHIBIT 21.1

                                FIRST BANKS, INC.

                                  Subsidiaries


         The following is a list of our  subsidiaries  and the  jurisdiction  of
incorporation or organization.
<TABLE>
<CAPTION>


                                                                      Jurisdiction of Incorporation
                      Name of Subsidiary                                     of Organization
                      ------------------                                     ---------------

<S>        <C>                                                                  <C>
           The San Francisco Company                                            Delaware

                First Bank                                                      Missouri

                     First Land Trustee Corp.                                   Missouri

                     FB Commercial Finance, Inc.                                Missouri

                     Missouri Valley Partners, Inc.                             Missouri

                     Bank of San Francisco Realty Investors, Inc.              California

                     Star Lane Holdings Trust Statutory Trust                  Connecticut

                          Star Lane Trust                                       New York

                     Small Business Loan Source LLC                              Nevada

                     Small Business Loan Source Funding Corporation             Delaware

</TABLE>

<PAGE>


                                                                      EXHIBIT 31

                           CERTIFICATIONS REQUIRED BY
                       RULE 13a-(14)(a) OR RULE 15d-14(a)
                    UNDER THE SECURITIES EXCHANGE ACT OF 1934


I, Allen H. Blake, certify that:

1.       I have reviewed this Annual Report on Form 10-K (the "Report") of First
         Banks, Inc. (the "Registrant");

2.       Based  on  my  knowledge,  this  Report  does  not  contain  any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such statements were made, not misleading  with  respect  to the period
         covered by this Report;

3.       Based on my knowledge, the  financial  statements, and  other financial
         information  included in  this  Report,  fairly present in all material
         respects the financial condition, results of  operations and cash flows
         of the Registrant as of, and for, the periods presented in this Report;

4.       The Registrant's other certifying officer(s)  and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined  in  Exchange  Act  Rules  13a-15(e) and  15d-15(e))  for   the
         Registrant and have:

         a)       Designed such disclosure  controls and  procedures,  or caused
                  such  disclosure  controls and procedures to be designed under
                  our supervision,  to ensure that material information relating
                  to the Registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this Report is being prepared;

         b)       Evaluated the  effectiveness  of the  Registrant's  disclosure
                  controls  and  procedures  and  presented  in this  Report our
                  conclusions about the effectiveness of the disclosure controls
                  and  procedures,  as of the end of the period  covered by this
                  Report based on such evaluation; and

         c)       Disclosed  in  this  Report  any  change  in the  Registrant's
                  internal control over financial reporting that occurred during
                  the Registrant's  most recent fiscal quarter (the Registrant's
                  fourth  fiscal  quarter in the case of an annual  report) that
                  has materially affected, or is reasonably likely to materially
                  affect,  the  Registrant's  internal  control  over  financial
                  reporting; and

5.       The Registrant's  other  certifying  officer(s)  and I  have disclosed,
         based on our most recent evaluation of internal  control over financial
         reporting, to the Registrant's auditors and the audit  committee of the
         Registrant's board of directors (or persons  performing  the equivalent
         functions):

         a)       All significant  deficiencies  and material  weaknesses in the
                  design  or  operation  of  internal   control  over  financial
                  reporting which are reasonably  likely to adversely affect the
                  Registrant's ability to record, process,  summarize and report
                  financial information; and

         b)       Any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  Registrant's internal control over financial reporting.

Date:  March 25, 2005
                             FIRST BANKS, INC.



                             By: /s/ Allen H. Blake
                                 -----------------------------------------------
                                     Allen H. Blake
                                     President, Chief Executive Officer and
                                     Chief Financial Officer
                                     (Principal Executive Officer and
                                     Principal Financial and Accounting Officer)

<PAGE>

                                                                      EXHIBIT 32

                           CERTIFICATIONS PURSUANT TO
                             18 U.S.C. SECTION 1350


         I,  Allen H.  Blake,  President,  Chief  Executive  Officer  and  Chief
Financial  Officer of First Banks,  Inc. (the "Company"),  certify,  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

         (1) The Annual Report on Form 10-K of the Company for the annual period
ended December 31, 2004 (the "Report")  fully complies with the  requirements of
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2) The  information  contained in the Report fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.


Dated:  March 25, 2005

                                 /s/  Allen H. Blake
                                 -----------------------------------------------
                                      Allen H. Blake
                                      President, Chief Executive Officer and
                                      Chief Financial Officer
                                      (Principal Executive Officer and Principal
                                      Financial and Accounting Officer)