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, 2007

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

               For the transition period from ________ to ________

                        Commission File Number - 0-20632

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

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

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

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

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

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

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

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

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

                                      None
                                (Title of class)

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

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

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

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

        Indicate by check mark  whether the  registrant  is a large  accelerated
filer, an accelerated  filer, a  non-accelerated  filer, or a smaller  reporting
company.  See definition of "large accelerated  filer,"  "accelerated filer" and
"smaller  reporting  company" in Rule 12b-2 of the  Exchange  Act.  (Check one):
        Large accelerated filer [ ]                        Accelerated filer [ ]
        Non-accelerated  filer [X] (Do not check
          if a smaller reporting company)          Smaller reporting company [ ]

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

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

        At March 26, 2008, there were 23,661 shares of the  registrant's  common
stock outstanding.

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

                                          2007 ANNUAL REPORT ON FORM 10-K

                                                TABLE OF CONTENTS
                                                                                                            Page
                                                                                                            ----
                                                      Part I
<S>             <C>                                                                                           <C>
     Item 1.    Business...............................................................................       1
     Item 1A.   Risk Factors...........................................................................      12
     Item 1B.   Unresolved Staff Comments..............................................................      14
     Item 2.    Properties.............................................................................      14
     Item 3.    Legal Proceedings......................................................................      14
     Item 4.    Submission of Matters to a Vote of Security Holders....................................      15

                                                      Part II
     Item 5.    Market for the Registrant's Common Equity, Related Stockholder Matters
                    and Issuer Purchases of Equity Securities..........................................      15
     Item 6.    Selected Financial Data................................................................      16
     Item 7.    Management's Discussion and Analysis of Financial Condition and
                    Results of Operations..............................................................      17
     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................................................................      52
     Item 9B.   Other Information......................................................................      52

                                                      Part III
     Item 10.   Directors, Executive Officers and Corporate Governance.................................      53
     Item 11.   Executive Compensation.................................................................      57
     Item 12.   Security Ownership of Certain Beneficial Owners and Management
                    and Related Stockholder Matters....................................................      62
     Item 13.   Certain Relationships and Related Transactions, and Director Independence..............      63
     Item 14.   Principal Accounting Fees and Services.................................................      64

                                                      Part IV
     Item 15.   Exhibits, Financial Statement Schedules................................................      65

     Signatures........................................................................................     115

</TABLE>
                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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



<PAGE>

                                     PART I

Item 1.  Business

General.  We are a registered bank holding  company  incorporated in Missouri in
1978 and  headquartered  in St. Louis,  Missouri.  We operate through our wholly
owned subsidiary bank holding company,  The San Francisco  Company,  or SFC, and
SFC's  majority-owned  subsidiary  bank,  First Bank, both  headquartered in St.
Louis,  Missouri.  In  conjunction  with  the  acquisition  of  Coast  Financial
Holdings,  Inc.,  or CFHI,  on November 30, 2007,  First Bank issued one million
shares of Class B non-voting  common stock to CFHI, and thus,  First Bank became
96.89%  owned by SFC and 3.11% owned by CFHI.  First Bank  operates  through its
subsidiaries,  as listed below,  and its branch  banking  offices.  First Bank's
subsidiaries  are wholly  owned,  except for SBLS LLC,  which was 76.0% owned by
First Bank and 24.0% owned by First  Capital  America,  Inc. as of December  31,
2007.

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

First Bank  currently  operates  217  branch  offices  in  California,  Florida,
Illinois,  Missouri and Texas,  with 253  automated  teller  machines,  or ATMs,
across the five  states.  Over the last ten years,  our  organization  has grown
significantly,  primarily as a result of our  acquisition  strategy,  as well as
through internal growth.  At December 31, 2007, we had assets of $10.90 billion,
loans, net of unearned discount, of $8.88 billion, deposits of $9.15 billion and
stockholders' equity of $867.5 million.

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

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

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

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

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

<TABLE>
<CAPTION>

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

<S>                                <C>              <C>                        <C>        <C>             <C>
First Preferred Capital Trust IV   January 2003      Publicly Underwritten      8.15%     $46,000,000    $47,422,700
First Bank Statutory Trust          March 2003         Private Placement        8.10%      25,000,000     25,774,000
First Bank Statutory Trust II     September 2004       Private Placement      Variable     20,000,000     20,619,000
Royal Oaks Capital Trust I         October 2004        Private Placement      Variable      4,000,000      4,124,000
First Bank Statutory Trust III     November 2004       Private Placement      Variable     40,000,000     41,238,000
First Bank Statutory Trust IV      February 2006       Private Placement      Variable     40,000,000     41,238,000
First Bank Statutory Trust V         April 2006        Private Placement      Variable     20,000,000     20,619,000
First Bank Statutory Trust VI        June 2006         Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust VII     December 2006       Private Placement      Variable     50,000,000     51,547,000
First Bank Statutory Trust VIII    February 2007       Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust X        August 2007        Private Placement      Variable     15,000,000     15,464,000
First Bank Statutory Trust IX     September 2007       Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust XI     September 2007       Private Placement      Variable     10,000,000     10,310,000

</TABLE>

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

In the past  three  years,  we have  added  two  business  lines,  including  an
insurance premium financing company and an insurance brokerage agency, providing
our  customers  with new and expanded  products and services to  complement  our
existing line of financial  services.  In line with our small  business  lending
strategy,  we segmented the loan  origination and servicing  functions and added
new  business   development   officers  throughout  our  markets.   Through  our
acquisition  of CFHI on November 30, 2007,  we entered a fifth state,  expanding
our banking  franchise  by 20 branch  offices in  Florida's  Manatee,  Pinellas,
Hillsborough  and Pasco  counties.  Our  entrance  into Florida  should  provide
further  opportunities  for growth and  delivery of our full range of  financial
products and services.  We further expanded our banking franchise in the Houston
and Dallas  markets,  as well as in southern  California.  With the  significant
expansion of our Chicago banking  franchise over recent years, we have created a
complete  regional  structure  in the Chicago  area as well as three  additional
commercial banking groups to enable our credit  administration,  commercial real
estate and commercial  and industrial  banking  groups,  branch  administration,
credit review,  and human  resources and training  functions to better serve our
customers  and  employees.  We continue to focus on  modifying  and  effectively
repositioning our internal and external resources to better serve the markets in
which we operate.  Although these efforts have led to certain  increased capital
expenditures  and noninterest  expenses,  we expect they will lead to additional
internal growth, more efficient  operations and improved  profitability over the
long term, in accordance with our long-term corporate vision.

In the development of our banking franchise, we acquire other entities providing
financial  services  as one means of  achieving  our  growth  objectives  and to
augment  internal  growth.  Acquisitions  may serve to enhance our presence in a
given market, to expand the extent of our market area, to enable us to enter new
or  noncontiguous  markets  or to  enable us to  expand  the array of  financial
services that we provide. Due to the nature of our ownership, we have elected to
engage only in those acquisitions that can be accomplished for cash, rather than
by issuing securities,  which given the characteristics of the acquisition arena

<PAGE>

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,  providing
further financial disincentives to paying large premiums in cash acquisitions.

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

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

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

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

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

During  the  three  years  ended  December  31,  2007,  we  completed  ten  bank
acquisitions,  four branch office purchases, and the acquisition of an insurance
premium financing company and an insurance  brokerage agency. As demonstrated in
the following table, our acquisitions  during the past three years have expanded
our  banking  franchise  to a fifth  state with our  entrance  into the  Florida
market,  significantly  increased our banking franchise  presence in the dynamic
market areas of Houston,  Dallas and southern California,  and further augmented
our existing  markets in metropolitan  Chicago and the Midwest.  We funded these
acquisitions  from available cash reserves,  borrowings under our secured credit
facility and proceeds from the issuance of subordinated debentures.

These  transactions,  which are further  described in Note 2 to our Consolidated
Financial Statements, are summarized as follows:

<TABLE>
<CAPTION>
                                                Loans,                                                         Net
                                                Net of                                         Goodwill      Banking
          Entity /                   Total     Unearned   Investment              Purchase     and Other    Locations
        Closing Date                 Assets    Discount   Securities   Deposits     Price     Intangibles   Acquired
        ------------                 ------    --------   ----------   --------     -----     -----------   --------
                                                         (dollars expressed in thousands)
2007
----
   Coast Financial Holdings, Inc.
     Bradenton, Florida
<S>                                <C>          <C>         <C>          <C>        <C>          <C>            <C>
     November 30, 2007             $ 660,400    518,000     70,400      628,100     12,100       10,600        20

   Royal Oaks Bancshares, Inc.
     Houston, Texas
     February 28, 2007               206,900    175,500      4,100      159,100     38,600       27,700         6
                                   ---------    -------     ------      -------    -------      -------        --
                                   $ 867,300    693,500     74,500      787,200     50,700       38,300        26
                                   =========    =======     ======      =======    =======      =======        ==

2006
----
   MidAmerica National Bank
     Peoria and Bloomington,
     Illinois
     Branch Offices (1)
     November 10, 2006             $ 158,300    154,100         --       48,200         --        2,400         1

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

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

   San Diego Community Bank
     Chula Vista, California
     August 15, 2006                  91,700     78,600      2,800       76,100     25,500       11,200         3

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

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

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

   Adrian N. Baker & Company
     Clayton, Missouri
     March 31, 2006                    3,000         --         --           --      7,400        9,500        --

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

   First National Bank of Sachse
     Sachse, Texas
     January 3, 2006                  76,200     49,300     14,300       66,200     20,800       12,400         1
                                   ---------    -------     ------      -------    -------      -------        --
                                   $ 794,300    545,100     37,300      475,600    144,600      111,600        12
                                   =========    =======     ======      =======    =======      =======        ==

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                                Loans,                                                         Net
                                                Net of                                         Goodwill      Banking
          Entity /                   Total     Unearned   Investment              Purchase     and Other    Locations
        Closing Date                 Assets    Discount   Securities   Deposits     Price     Intangibles   Acquired
        ------------                 ------    --------   ----------   --------     -----     -----------   --------
                                                         (dollars expressed in thousands)
2005
----
   Northway State Bank
     Grayslake, Illinois
<S>                                <C>           <C>            <C>       <C>       <C>           <C>          <C>
     October 31, 2005              $  50,400     41,800         --       45,200     10,300        5,400         1

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

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

   FBA Bancorp, Inc.
     Chicago, Illinois
     April 29, 2005                   73,300     54,300      5,400       55,700     10,500        4,500         3
                                   ---------    -------     ------      -------    -------      -------        --
                                   $ 280,300    209,600     20,100      238,100     54,500       25,800         9
                                   =========    =======     ======      =======    =======      =======        ==
--------------------------
(1)  The Peoria  and  Bloomington,  Illinois  branch  offices of  MidAmerica  National Bank, or MidAmerica, were
     acquired  by First Bank through a purchase of certain assets and  assumption of certain liabilities  of the
     branch offices.  Total   assets consisted  primarily  of  loans  and  fixed  assets.  Concurrent  with this
     transaction, First Bank closed and merged one of the former MidAmerica  banking  offices  into  an existing
     First Bank banking office located in Peoria, Illinois, and,  in addition,  First Bank closed and merged one
     of its existing banking offices  into  one  of the  former  MidAmerica  banking  offices located in Peoria,
     Illinois.
(2)  The Beverly Hills, California branch office of  First  Bank  of  Beverly  Hills was  acquired by First Bank
     through a purchase  of  certain  assets and  assumption of certain liabilities  of the branch office. Total
     assets consisted primarily of cash received upon assumption of the deposit  liabilities and certain assets.
(3)  In conjunction  with  the  acquisition  of  UPAC, First Bank  repaid  in  full the  outstanding  senior and
     subordinated notes of UPAC, including accumulated accrued and unpaid interest, totaling $125.9 million.
(4)  Community  Bank  operated  two  banking  offices, one  in Pittsfield, Illinois  and  one in Mount Sterling,
     Illinois. On June 16, 2006, First Bank sold the  Mount  Sterling, Illinois  banking  office  to  Beardstown
     Savings, s.b. At the time of the sale, the Mount Sterling banking office had assets of $2.7 million, loans,
     net of unearned discount, of  $2.4 million, and  deposits  of  $3.7 million.  First Bank  consolidated  its
     existing banking office in Pittsfield with and into the acquired Pittsfield banking office.
(5)  The Richardson, Texas branch office of Dallas National Bank was acquired by First Bank  through a  purchase
     of certain assets and assumption of certain  liabilities  of  the  branch  office. Total  assets  consisted
     primarily of cash received upon assumption of the deposit liabilities and certain assets.
(6)  The Roodhouse, Illinois branch of Bank and Trust Company was acquired by  First Bank  through a purchase of
     certain assets and assumption of certain liabilities of the branch office. Total assets consisted primarily
     of cash received upon assumption of the deposit liabilities.
</TABLE>

For the years  ended  December  31,  2007,  2006 and 2005,  net income was $57.2
million, $111.7 million and $96.9 million, respectively.  Additional information
pertaining  to our  business  and  results  of  operations  is  included  in the
information set forth in pages 17 through 51 of Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and in pages 106
through  107 of  "Note  20 to our  Consolidated  Financial  Statements,"  and is
incorporated  herein by reference.  Although we may encounter certain short-term
adverse  effects on our  operating  results  associated  with  acquisitions,  we
believe  the  long-term  benefits  of our  acquisition  program  will exceed the
short-term  issues  encountered  with  certain  acquisitions.   Accordingly,  in
addition  to  concentrating  on internal  growth  through  continued  efforts to
further develop our corporate  infrastructure and product and service offerings,
we expect to continue to identify and pursue  opportunities  for further  growth
through acquisitions and expansionary de novo branch activities.

De Novo Branch  Offices.  During the three years ended  December  31,  2007,  we
opened the following nine de novo branch offices:
<TABLE>
<CAPTION>

                               Branch Office Location                          Date Opened
                               ----------------------                          -----------
<S>                        <C>                                              <C>
                           Farmington, Missouri                             January 18, 2005
                           St. Louis, Missouri                              January 22, 2007
                           Katy (Houston), Texas                            February 26, 2007
                           Lincoln (Sacramento), California                  March 12, 2007
                           Dardenne Prairie (St. Louis), Missouri              May 9, 2007
                           Chula Vista (San Diego), California                June 25, 2007
                           Brentwood (San Francisco), California           September 24, 2007
                           Shadow Creek Ranch (Houston), Texas              October 15, 2007
                           Valencia (Los Angeles), California               October 29, 2007
</TABLE>

<PAGE>

Other  Corporate  Transactions.  On July 19, 2007,  we completed the sale of two
banking offices located in Denton and Garland, Texas (collectively, Texas Branch
Offices)  to Synergy  Bank,  SSB, a  subsidiary  of  Premier  Bancshares,  Inc.,
resulting in a pre-tax gain of $1.0 million. At the time of the transaction, the
Texas  Branch  Offices had loans,  net of  unearned  discount,  of $911,000  and
deposits of $52.0 million.

Acquisition  and   Integration   Costs.   Certain  costs   associated  with  our
acquisitions  are accrued as of the  respective  consummation  dates,  including
costs that we incur related to salary continuation agreements,  or other similar
agreements,  of executive management and certain other employees of the acquired
entities that were in place prior to the acquisition  dates,  and costs relating
to  adjustments  to the  staffing  levels  of the  acquired  entities  or to the
anticipated  termination of information  technology or item processing contracts
of the acquired entities prior to their stated  contractual  expiration dates. A
summary of the cumulative  acquisition and integration costs attributable to our
acquisitions,  which were accrued as of the consummation dates of the respective
acquisition,  are summarized in Note 2 to our Consolidated Financial Statements.
These  acquisition  and  integration  costs are  reflected  in accrued and other
liabilities  in our  consolidated  balance  sheets.  As the  obligation  to make
payments  under  these  agreements  is accrued at the  consummation  date,  such
payments do not have any impact on our  consolidated  statements  of income.  We
also incur  integration costs associated with our acquisitions that are expensed
in our consolidated  statements of income that relate  principally to additional
costs incurred in conjunction with the information technology conversions of the
respective  entities,  as further discussed under  "Management's  Discussion and
Analysis of  Financial  Condition  and  Results of  Operations  --Comparison  of
Results  of  Operations  for 2007 and  2006,  and  --Comparison  of  Results  of
Operations for 2006 and 2005."

Lending  Activities.  As further  discussed under  "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations --Loans and Allowance
for Loan Losses," our business  development efforts are primarily focused on the
origination  of the  following  general loan types:  commercial,  financial  and
agricultural  loans;  real  estate  construction  and  land  development  loans;
commercial real estate mortgage loans; and to a lesser extent,  residential real
estate mortgage  loans.  Our lending  strategy  emphasizes  quality,  growth and
diversification.   Throughout  our  organization,  we  employ  a  common  credit
underwriting  policy.  In  addition  to  underwriting  based  on  estimates  and
projection of financial strength,  collateral values and future cash flows, most
loans to borrowing entities other than individuals  require the guarantee of the
parent  company  or entity  sponsor,  or in the case of  smaller  entities,  the
personal  guarantees  of  the  principals.  Our  enhanced  business  development
resources  continue  to assist  in the  realignment  of  certain  acquired  loan
portfolios, which were skewed toward loan types that reflected the abilities and
experiences  of the  management  members of the acquired  entities.  In order to
achieve a more diversified  portfolio,  to address  asset-quality  issues in the
portfolios  and to achieve a higher  interest  yield on our loan  portfolio,  we
reduced a  substantial  portion  of the  loans  that were  acquired  in  certain
acquisitions  through payments,  refinancing with other financial  institutions,
charge-offs  and, in certain  instances,  sales of loans.  As the acquired  loan
portfolios  decrease,  we attempt to replenish  them with higher  yielding loans
that are internally  generated by our business  development  function.  With our
acquisitions,  we have expanded our business development function into the newly
acquired  market  areas.  We also  continued  to grow through  internal  growth.
Consequently,  in spite of  relatively  large  reductions  in  certain  acquired
portfolios,  our  aggregate  loan  portfolio,  net  of  unearned  discount,  has
increased  63.5% from $5.43  billion at December 31, 2002,  to $8.88  billion at
December 31, 2007.

Commercial,   Financial  and   Agricultural.   Our  commercial,   financial  and
agricultural loan portfolio,  including lease financing,  was $2.38 billion,  or
26.8% of total loans, at December 31, 2007,  compared to $1.93 billion, or 25.2%
of total  loans,  at December  31, 2006.  The primary  component of  commercial,
financial and agricultural  loans is commercial  loans,  which are made based on
the borrowers'  general  credit  strength and ability to generate cash flows for
repayment from income sources.  Most of these loans are made on a secured basis,
generally  involving the use of company  equipment,  inventory  and/or  accounts
receivable,  and, from time to time, real estate,  as collateral.  Regardless of
collateral, substantial emphasis is placed on the borrowers' ability to generate
cash flow  sufficient  to operate  the  business  and  provide  coverage of debt
servicing  requirements.  Commercial  loans are frequently  renewable  annually,
although some terms may be as long as five years.  These loans typically require
the  borrower  to  maintain  certain  operating  covenants  appropriate  for the
specific  business,  such as  profitability,  debt service  coverage and current
asset and leverage  ratios,  which are  generally  reported  and  monitored on a
quarterly basis and subject to more detailed annual  reviews.  Commercial  loans
are made to customers  primarily  located in First Bank's geographic trade areas
of  California,  Florida,  Illinois,  Missouri  and Texas  that are  engaged  in
manufacturing,  retailing, wholesaling and service businesses. This portfolio is
not concentrated in large specific  industry  segments that are characterized by
sufficient homogeneity that would result in significant concentrations of credit
exposure.  Rather,  it is a highly  diversified  portfolio that encompasses many
industry   segments.   Within  both  our  real  estate  and  commercial  lending
portfolios,  we strive for the highest degree of diversity that is  practicable.
We also emphasize the development of other service  relationships,  particularly
deposit accounts, with our commercial borrowers.
<PAGE>

Real Estate Construction and Development.  Our real estate construction and land
development  loan  portfolio  was $2.14  billion,  or 24.1% of total  loans,  at
December  31,  2007,  compared to $1.83  billion,  or 23.9% of total  loans,  at
December 31, 2006. Real estate  construction and land development  loans include
commitments  for  construction of both  residential  and commercial  properties.
Commercial  real  estate  projects  often  require   commitments  for  permanent
financing from other lenders upon completion of the project and, more typically,
may include a short-term  amortizing  component of the financing  from the bank.
Commitments  for  construction  of  multi-tenant  commercial and retail projects
generally require lease commitments from a substantial primary tenant or tenants
prior to  commencement  of  construction.  We typically  engage in  multi-phase,
multi-tenant  projects, as opposed to large vertical projects,  that allow us to
complete the projects in phases and limit the number of tenant  building  starts
based upon  successful  lease and/or sale of the tenant  units.  We finance some
projects for  borrowers  whose home office is located  within our trade area but
the  particular  project  may be outside  our normal  trade  area.  Although  we
generally do not engage in developing  commercial and  residential  construction
lending  business  outside  of  our  trade  area,   certain  loans  acquired  in
acquisitions  from time to time have been related to projects  outside our trade
area.  Residential real estate construction and development loans are made based
on the cost of land acquisition and development,  as well as the construction of
the residential  units.  Although we finance the cost of display units and units
held for sale, a  substantial  portion of the loans for  individual  residential
units  have  purchase  commitments  prior to  funding.  Residential  condominium
projects are funded as the building construction progresses, but funding of unit
finishing is generally based on firm sales contracts.

Commercial  Real Estate.  Our  commercial  real estate loan  portfolio was $2.43
billion,  or 27.4% of total  loans,  at  December  31,  2007,  compared to $2.20
billion,  or 28.7% of total loans, at December 31, 2006.  Commercial real estate
loans  include  loans for which the  intended  source of repayment is rental and
other  income  from  the real  estate.  This  includes  commercial  real  estate
developed  for lease to third  parties  as well as the  owner's  occupancy.  The
underwriting of owner occupied  commercial  real estate loans generally  follows
the  procedures  for  commercial  lending  described  above,   except  that  the
collateral is real estate, and the loan term may be longer. The primary emphasis
in  underwriting  loans for which the source of repayment is the  performance of
the  collateral is the projected cash flow from the real estate and its adequacy
to cover the operating  costs of the project and the debt service  requirements.
Secondary emphasis is placed on the appraised value of the real estate, with the
requirement  that the  appraised  liquidation  value of the  collateral  must be
adequate  to repay  the debt and  related  interest  in the  event the cash flow
becomes insufficient to service the debt. Generally,  underwriting terms require
the loan  principal not to exceed 80% of the appraised  value of the  collateral
and the loan maturity not to exceed ten years.  Commercial real estate loans are
made for commercial office space,  retail  properties,  industrial and warehouse
facilities and  recreational  properties.  We typically only finance  commercial
real estate or rental  properties that have lease  commitments for a majority of
the rentable space.

Residential  Real Estate  Mortgage.  Our  residential  real estate mortgage loan
portfolio  was $1.60  billion,  or 18.0% of total  loans,  at December 31, 2007,
compared  to $1.27  billion,  or 16.6% of total  loans,  at December  31,  2006.
Residential   real  estate   mortgage  loans  are  primarily  loans  secured  by
single-family,  owner-occupied  properties.  These loans include both adjustable
rate and fixed rate mortgage loans.  Although we typically originate residential
real estate mortgage loans for sale in the secondary mortgage market in the form
of a mortgage-backed security or to various private third-party investors,  from
time-to-time, we retain certain residential mortgage loans in our loan portfolio
as directed by management's business strategies.  These strategies are reflected
in the expansion of our  one-to-four  family  residential  real estate  mortgage
loans,  excluding  loans held for sale,  since 2004,  with a home equity product
line campaign in 2004 and our business strategy  decision,  which began in 2003,
to retain a  portion  of our new loan  production  in our real  estate  mortgage
portfolio  to provide  more  diversification  within our loan  portfolio  and to
compensate for continued weak loan demand in other sectors of our loan portfolio
at that time. In addition, in 2005, we began retaining additional mortgage loans
in our residential real estate mortgage portfolio, including 15-year fixed rate,
conforming  conventional  adjustable rate mortgages and other similar  products,
which  contributed  to an increase  in this  portion of our loan  portfolio  and
represented a strategy we employed  throughout the first and second  quarters of
2006 prior to  reverting  to our  longer-term  business  strategy of selling the
majority of our mortgage loan production in the secondary mortgage market.

Throughout  2007, we experienced  deterioration  in our residential  real estate
mortgage  portfolio,  primarily in our sub-prime  portfolio  (loans that carry a
higher interest rate to compensate for increased  credit risk).  Our involvement
in the sub-prime  market was limited to the  origination  and subsequent sale of
these loans in the secondary market, and historically represented  approximately
40% of our mortgage banking loan  origination and sale volumes.  Our residential
real estate  mortgage  loans included  approximately  $54.8 million of sub-prime
mortgage loans, representing  approximately 0.6% of our total loan portfolio, at
December   31,   2007,   of  which   approximately   $6.6  million  were  deemed
nonperforming.   During  the  first  quarter  of  2007,  we  discontinued   loan
originations  of this  product  following  a decline in bid prices and in market
liquidity  for  these loan products. We  expect the  declining market conditions

<PAGE>

associated with our one-to-four  family  residential  mortgage loan portfolio to
continue  in the near term and we are  aggressively  addressing  the risk in our
portfolio  through  loan  sales  and  other  means as  further  discussed  under
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations --Loans and Allowance for Loan Losses."

Nonperforming Loans. Our nonperforming loans were $202.2 million,  $48.7 million
and  $97.2  million  at  December  31,  2007,   2006  and  2005,   respectively,
representing 2.28%, 0.64% and 1.38%, respectively,  of total loans. The level of
nonperforming  loans at  December  31,  2007 is  significantly  higher  than our
historical  averages primarily due to an increase in nonperforming  loans in our
Northern  California real estate portfolio to $99.2 million at December 31, 2007
from $7.9  million at  December  31,  2006;  the CFHI  acquisition,  which added
nonperforming  loans of $45.1 million;  and an increase in  nonperforming  loans
within our one-to-four  family residential  mortgage loan portfolio,  as further
discussed under "Management's Discussion and Analysis of Financial Condition and
Results of Operations --Loans and Allowance for Loan Losses."

Market Areas. As of December 31, 2007, First Bank's 217 banking  facilities were
located  in  California,  Florida,  Illinois,  Missouri  and  Texas.  First Bank
operates in the St. Louis  metropolitan area, in eastern Missouri and throughout
Illinois,  including Chicago.  First Bank also operates in southern  California,
including  San Diego and the greater Los Angeles  metropolitan  area,  including
Ventura County,  Riverside County and Orange County; in Santa Barbara County; in
northern  California,   including  the  greater  San  Francisco,  San  Jose  and
Sacramento  metropolitan  areas; in Texas in the Houston and Dallas metropolitan
areas, and in Florida,  including  Bradenton and the greater Tampa  metropolitan
area. Our larger  networks of branch offices are located in high growth markets,
specifically  the Los Angeles,  San  Francisco,  Chicago and Tampa  metropolitan
areas.

The  following  table  lists the  geographic  market  areas in which  First Bank
operates,  total  deposits,  deposits as a percentage of total  deposits and the
number of locations as of December 31, 2007:

<TABLE>
<CAPTION>
                                                                           Total          Deposits        Number
                                                                         Deposits      as a Percentage      of
                               Geographic Area                         (in millions)  of Total Deposits  Locations
                               ---------------                         -------------  -----------------  ---------

<S>                                                                     <C>                  <C>            <C>
Southern California..................................................    $ 2,172.9           23.8%          42
Northern Illinois (including Chicago metropolitan area)..............      1,572.0           17.2           36
St. Louis, Missouri metropolitan area................................      1,542.3           16.9           33
Northern California..................................................      1,111.5           12.1           20
Central and southern Illinois........................................      1,082.3           11.8           33
Texas................................................................        640.4            7.0           21
Florida..............................................................        614.9            6.7           20
Missouri (excluding the St. Louis metropolitan area).................        412.9            4.5           12
                                                                         ---------          -----          ---
     Total deposits..................................................    $ 9,149.2          100.0%         217
                                                                         =========          =====          ===

</TABLE>

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

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

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

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

Supervision and Regulation

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

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

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

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.
<PAGE>

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% and
the  minimum  consolidated  ratio of Tier I  capital  (as  described  below)  to
risk-adjusted  assets  required  for  bank  holding  companies  is 4%.  At least
one-half  of the total  capital  must be  composed  of common  equity,  retained
earnings,  qualifying  noncumulative perpetual preferred stock, a limited amount
of qualifying cumulative perpetual preferred stock and minority interests in the
equity  accounts  of  consolidated  subsidiaries,  less  certain  items  such as
goodwill and certain  other  intangible  assets,  which amount is referred to as
"Tier I  capital."  The  remainder  may  consist of  qualifying  hybrid  capital
instruments,  perpetual debt, mandatory  convertible debt securities,  a limited
amount of  subordinated  debt,  preferred  stock that does not qualify as Tier I
capital  and a limited  amount of loan and lease loss  reserves,  which  amount,
together with Tier I capital, is referred to as "Total Risk-Based Capital."

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

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

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

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

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

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

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

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

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

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

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

Dividends.  Our primary source of funds in the future is the dividends,  if any,
paid by First  Bank.  The ability of First Bank to pay  dividends  is limited by
federal laws, by regulations  promulgated by the bank regulatory agencies and by
principles  of prudent  bank  management.  Under the most  restrictive  of these
requirements,  the  future  payment of  dividends  from First Bank is limited to
approximately  $114.0 million at December 31, 2007,  unless prior  permission of
the regulatory authorities is obtained.

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

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

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

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

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

Sarbanes-Oxley   addresses,   among  other  matters:  (i)  the  creation  of  an
independent  accounting oversight board to oversee the audit of public companies
and auditors who perform such audits; (ii) auditor independence provisions which
restrict  non-audit  services that independent  accountants may provide to their
audit clients; (iii) additional corporate governance and responsibility measures
which require the chief executive officer and chief financial officer to certify
financial statements,  to forfeit salary and bonuses in certain situations,  and
protect  whistleblowers and informants;  (iv) expansion of the audit committee's
authority and  responsibility  by requiring that the audit committee have direct
control  of the  outside  auditor,  be able to hire and fire  the  auditor,  and
approve all non-audit services; (v) requirements that audit committee members be
independent;  (vi) disclosure of a code of ethics;  and (vii) enhanced penalties
for fraud and other violations.  The provisions of  Sarbanes-Oxley  also require
that  management  assess the  effectiveness  of internal  control over financial
reporting  and that the  independent  auditor  issue an  attestation  report  on
management's  report on internal control over financial  reporting.  As we are a
non-accelerated  filer and the provisions of Sarbanes-Oxley became effective for
us as of  December  31,  2007,  management's  report on  internal  control  over
financial reporting was not subject to attestation by the Company's  Independent
Registered  Public Accounting Firm as of December 31, 2007 pursuant to temporary
rules of the SEC that permit the Company to provide only management's  report in
this  annual  report,  as  further  discussed  under  "Item 9A --  Controls  and
Procedures."

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

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

First Bank is a member of the Federal  Reserve  System and the Federal Home Loan
Bank System.  As a member,  First Bank is required to hold  investments in those
systems.  First Bank was in compliance  with these  requirements at December 31,
2007, with  investments of $26.3 million in stock of the Federal Reserve Bank of
St.  Louis  and  $13.3  million  in stock of the  Federal  Home Loan Bank of Des
Moines.  First Bank also holds an investment of $794,000 in stock of the Federal
Home Loan Bank of San  Francisco  and $201,000 in stock of the Federal Home Loan
Bank of Dallas, as a nonmember, to collateralize certain Federal Home Loan Bank,
or FHLB, advances assumed in conjunction with certain acquisition transactions.

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

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

Employees

As of March 26, 2008, we employed  approximately  2,525  employees.  None of the
employees  are subject to a  collective  bargaining  agreement.  We consider our
relationships with our employees to be good.

Item 1A.   Risk Factors

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

Weakness in the real estate market has adversely affected us and may continue to
do so. As discussed under "Business  --Lending  Activities," we have experienced
deterioration  within  our  residential  real  estate  mortgage  loan  portfolio
throughout 2007, primarily in our sub-prime loan portfolio. Our residential real
estate  mortgage  loans  were $1.60  billion at  December  31,  2007  (including
approximately $54.8 million of sub-prime mortgage loans),  representing 18.0% of
our loan portfolio.  The effects of ongoing mortgage market challenges,  as well
as the ongoing  correction in residential  real estate market prices and reduced
levels of home sales,  could result in further price reductions in single family
home values, adversely affecting the value of collateral securing mortgage loans
held,  mortgage loan  originations  and gains recognized on the sale of mortgage
loans.  In the event the allowance for loan losses is insufficient to cover such
losses,  our  earnings,  capital,  liquidity  and  financial  condition  may  be
adversely affected.

Our emphasis on commercial real estate lending and real estate  construction and
development  lending  has  increased  our credit  risk.  Our  expanded  level of
commercial real estate and construction  and development  lending may carry with
it greater credit risk than the credit risk  associated  with  residential  real
estate  lending.  A  substantial  portion of our loans are secured by commercial
real estate. Commercial real estate and real estate construction and development
loans were $2.43 billion and $2.14 billion,  respectively, at December 31, 2007,
representing 27.4% and 24.1%, respectively,  of our loan portfolio. As discussed
under "Business --Lending Activities," we have experienced increasing amounts of
nonperforming   loans  within  our  real  estate  construction  and  development
portfolio and commercial real estate  portfolio,  reflective of declining market
conditions  surrounding land acquisition and development loans,  particularly in
our Northern California market, as a result of increased developer  inventories,
slower lot and home sales,  and declining  market values.  Furthermore,  problem
loans acquired with our bank acquisitions have also significantly contributed to
the  increasing  amounts of  nonperforming  loans within these loan  portfolios.
Adverse  developments  affecting real estate in one or more of our markets could
further  increase  the  credit  risk  associated  with our loan  portfolio.  The
Department  of the  Treasury,  Federal  Reserve  and  FDIC  collectively  issued
guidance entitled, "Concentrations in Commercial Real Estate Lending, Sound Risk
Management Practices," that focuses on financial institutions that have high and
increasing  concentrations  of  commercial  real estate  loans on their  balance
sheets  that  make them more  vulnerable  to  cyclical  commercial  real  estate
markets,  and  is  intended  to  reinforce  the  institution's  risk  management
practices and appropriate capital levels associated with these concentrations.

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

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

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

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

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

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

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

We operate in a highly regulated  environment.  Recently  enacted,  proposed and
future  legislation and regulations may increase our cost of doing business.  We
and our  subsidiaries  are subject to extensive  federal and state  legislation,
regulation and supervision.  Recently enacted,  proposed and future  legislation
and  regulations  have had and are  expected to  continue to have a  significant
impact on the financial  services  industry.  Expansion of our banking franchise
into Florida  subjects us to  legislation  and  regulations  applicable  to that
state, which may also increase our costs of doing business in that market.  Some
of the legislative and regulatory changes,  including the Sarbanes-Oxley Act and
the USA Patriot Act,  have and are expected to continue to increase our costs of
doing  business,  particularly  personnel and technology  expenses  necessary to
maintain compliance with the expanded regulatory requirements. Additionally, the
legislative  and  regulatory  changes  could  reduce  our  ability to compete in
certain  markets,  as  further  discussed  under  "Business   --Supervision  and
Regulation."
<PAGE>

Item 1B.  Unresolved Staff Comments

None.

Item 2.   Properties

We own our office  building,  which  houses  our  principal  place of  business,
located at 135 North Meramec,  Clayton,  Missouri 63105. The property is in good
condition   and  consists  of   approximately   60,353  square  feet,  of  which
approximately  1,791 square feet is currently leased to others. Of our other 216
offices and four operations and administrative  facilities at December 31, 2007,
115 are located in buildings  that we own and 105 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

CFHI Securities  Litigation.  Prior to our acquisition of CFHI, CFHI and certain
of its present and former  officers were named as defendants in three  purported
class action complaints filed in the United States District Court for the Middle
District of Florida,  Tampa  Division  (the Court)  alleging  violations  of the
federal  securities  laws,  the first of which was filed with the Court on March
20, 2007 (the Securities Actions).  On June 22, 2007, the Court entered an order
pursuant to which the Court (i)  consolidated the Securities  Actions,  with the
matter  proceeding  under the docket for Grand Lodge of Pennsylvania v. Brian P.
Peters, et al., Case No.  8:07-cv-429-T-26-EAJ  and (ii) appointed Troy Ratcliff
and Daniel  Altenburg (the Lead  Plaintiffs) as lead plaintiffs  pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995.

Subsequently,  on or  about  August  24,  2007,  the  Lead  Plaintiffs  filed  a
consolidated amended class action complaint (the Amended Complaint). The Amended
Complaint  added as defendants  (i) the then current  members of CFHI's Board of
Directors,  (ii) one  former  member of  CFHI's  Board of  Directors,  (iii) the
underwriters of CFHI's October 5, 2005 public offering of common stock, and (iv)
CFHI's external auditors.

The Amended Complaint was brought on behalf of a putative class of purchasers of
CFHI's common stock  between  January 21, 2005 and January 22, 2007. In general,
the Amended  Complaint  alleges  that  CFHI's SEC filings and public  statements
contained    misstatements    and   omissions    regarding    its    residential
construction-to-permanent lending operations and, more specifically, regarding a
home builder and its affiliates and that CFHI's  financial  statements  violated
U.S. generally  accepted  accounting  principles.  The Amended Complaint asserts
claims under Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the  Securities  Exchange  Act of 1934 and Rule  10b-5  promulgated
thereunder.  On August 30,  2007,  the Lead  Plaintiffs  filed a notice with the
Court  voluntarily  dismissing  their  claims  against Anne V. Lee and Justin D.
Locke without prejudice.

CFHI filed a motion to dismiss the Amended  Complaint  on December 3, 2007.  The
Lead  Plaintiffs  filed an  omnibus  opposition  to CFHI's  motion to dismiss on
February 1, 2008.

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

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

None.


                                     PART II

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

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

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

Item 6.   Selected Financial Data

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

<TABLE>
<CAPTION>

                                                                  As of or For the Year Ended December 31, (1)
                                                         --------------------------------------------------------------
                                                              2007        2006        2005        2004        2003
                                                              ----        ----        ----        ----        ----
                                                        (dollars expressed in thousands, except share and per share data)

Income Statement Data:
<S>                                                     <C>              <C>         <C>         <C>         <C>
    Interest income....................................  $   699,913     646,304     493,940     394,782     391,153
    Interest expense...................................      316,461     261,862     168,259      94,767     104,026
                                                         -----------  ----------  ----------  ----------  ----------
      Net interest income..............................      383,452     384,442     325,681     300,015     287,127
    Provision for loan losses..........................       75,000      12,000      (4,000)     25,750      49,000
                                                         -----------  ----------  ----------  ----------  ----------
      Net interest income after provision for
        loan losses....................................      308,452     372,442     329,681     274,265     238,127
    Noninterest income.................................      103,269     112,943      96,085      87,199      87,519
    Noninterest expense................................      344,250     319,216     277,638     233,218     226,880
                                                         -----------  ----------  ----------  ----------  ----------
      Income before provision for income taxes
        and minority interest in income (loss)
        of subsidiary..................................       67,471     166,169     148,128     128,246      98,766
    Provision for income taxes.........................       10,159      55,062      52,509      45,338      35,955
                                                         -----------  ----------  ----------  ----------  ----------
      Income before minority interest in income
        (loss) of subsidiary...........................       57,312     111,107      95,619      82,908      62,811
    Minority interest in income (loss) of subsidiary...           78        (587)     (1,287)         --          --
                                                         -----------  ----------  ----------  ----------  ----------
      Net income.......................................  $    57,234     111,694      96,906      82,908      62,811
                                                         ===========  ==========  ==========  ==========  ==========

Dividends:
    Preferred stock....................................  $       786         786         786         786         786
    Common stock.......................................           --          --          --          --          --
    Ratio of total dividends declared to net income....         1.37%       0.70%       0.81%       0.95%       1.25%

Per Share Data:
    Earnings per common share:
      Basic............................................  $  2,385.68    4,687.38    4,062.36    3,470.80    2,621.39
      Diluted..........................................     2,379.45    4,630.72    4,007.46    3,421.58    2,588.31
    Weighted average shares of common stock
      outstanding......................................       23,661      23,661      23,661      23,661      23,661

Balance Sheet Data:
    Investment securities..............................  $ 1,019,271   1,464,946   1,340,783   1,813,349   1,049,714
    Loans, net of unearned discount....................    8,883,254   7,666,481   7,020,771   6,137,968   5,328,075
    Total assets.......................................   10,897,360  10,158,714   9,170,333   8,732,841   7,106,940
    Total deposits.....................................    9,149,193   8,443,086   7,541,831   7,151,970   5,961,615
    Other borrowings...................................      376,123     373,899     539,174     594,750     273,479
    Notes payable......................................       39,000      65,000     100,000      15,000      17,000
    Subordinated debentures............................      353,752     297,966     215,461     273,300     209,320
    Common stockholders' equity........................      854,425     787,372     665,875     587,830     536,752
    Total stockholders' equity.........................      867,488     800,435     678,938     600,893     549,815

Earnings Ratios:
    Return on average assets...........................         0.55%       1.16%       1.10%       1.10%       0.87%
    Return on average stockholders' equity.............         6.83       15.26       15.11       14.44       11.68
    Net interest margin (2)............................         4.07        4.36        4.01        4.36        4.45
    Efficiency ratio (3)...............................        70.73       64.18       65.83       60.23       60.56
    Tangible efficiency ratio (3)......................        68.18       62.53       64.68       59.48       59.89

Asset Quality Ratios:
    Allowance for loan losses to loans.................         1.90%       1.90        1.93        2.46        2.19
    Nonperforming loans to loans (4)...................         2.28        0.64        1.38        1.40        1.41
    Allowance for loan losses to nonperforming
        loans (4)......................................        83.27      299.05      139.23      175.65      154.52
    Nonperforming assets to loans and other
        real estate (5)................................         2.40        0.72        1.41        1.46        1.62
    Net loan charge-offs to average loans..............         0.83        0.09        0.21        0.45        0.61
<PAGE>

Capital Ratios:
    Average total stockholders' equity to average
        total assets...................................         8.10        7.61        7.28        7.61        7.48
    Total risk-based capital ratio.....................        10.09       10.25       10.14       10.61       10.27
    Leverage ratio.....................................         8.32        8.13        8.13        7.89        7.62

-----------------------------
(1) The comparability of the selected data presented is affected by the acquisitions of 13 banks, an insurance brokerage
    agency, an insurance premium financing company, a loan origination business and five branch offices during the five-
    year period ended December 31, 2007. 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) Net interest margin is the ratio of net interest income (expressed on a  tax-equivalent basis)  to average interest-
    earning assets.
(3) Efficiency ratio  is  the  ratio  of  noninterest  expense to the sum of net interest income and noninterest income.
    Tangible efficiency ratio is the ratio of noninterest expense (excluding amortization of intangible assets)  to  the
    sum of net interest income and noninterest income.
(4) Nonperforming loans consist of nonaccrual loans and certain loans with restructured terms.
(5) Nonperforming assets consist of nonperforming loans and other real estate.
</TABLE>


<PAGE>


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

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

RESULTS OF OPERATIONS

Overview

Net income was $57.2  million,  $111.7  million and $96.9  million for the years
ended  December 31,  2007,  2006 and 2005,  respectively.  Our return on average
assets  and our  return on average  stockholders'  equity  were 0.55% and 6.83%,
respectively,  for the year  ended  December  31,  2007,  compared  to 1.16% and
15.26%, respectively,  for 2006, and 1.10% and 15.11%,  respectively,  for 2005.
Our earnings levels reflect the following:

     >>   a  provision  for loan  losses  of $75.0  million  for the year  ended
          December  31, 2007,  compared to $12.0  million in 2006 and a negative
          provision for loan losses of $4.0 million in 2005;

     >>   net interest  income of $383.5 million for the year ended December 31,
          2007,  compared to $384.4  million in 2006 and $325.7 million in 2005,
          which  contributed to a decline in our net interest margin to of 4.07%
          for the year ended  December 31,  2007,  compared to 4.36% in 2006 and
          4.01% in 2005;

     >>   gains on loans  sold and held for sale of $14.1  million  for the year
          ended  December 31, 2007,  compared to $26.0 million in 2006 and $20.8
          million in 2005;

     >>   noninterest  expense of $344.3 million for the year ended December 31,
          2007,  compared to $319.2  million in 2006 and $277.6 million in 2005;
          and

     >>   a  provision  for  income  taxes of $10.2  million  for the year ended
          December 31, 2007, compared to $55.1 million in 2006 and $52.5 million
          in 2005.

The increase in the provision  for loan losses in 2007 was  primarily  driven by
increased net loan  charge-offs  and a decline in asset  quality  related to our
one-to-four  family  residential  mortgage  and  real  estate  construction  and
development loan portfolios,  as further  discussed under  "--Provision for Loan
Losses."

The  declines in our net  interest  income and our net  interest  margin in 2007
primarily  resulted  from an  increase in higher  priced  deposit  accounts  and
pressures  on loan  yields  as a result of  competitive  conditions  within  our
markets, as further discussed under "--Net Interest Income."

The decrease in gain on loans sold and held for sale in 2007 primarily  resulted
from a decrease  in the volume of loans  originated  and sold.  The  decrease in
volume is primarily  attributable to the  discontinuation of the origination and
subsequent  sale of  sub-prime  loans in  February  of 2007,  as well as overall
market disruption, as further discussed under "--Noninterest Income."

The overall  increase  in the level of  noninterest  expense  for 2007  reflects
increased  salaries and employee benefits  expense,  occupancy and furniture and
equipment expenses and amortization of intangible assets,  commensurate with the
significant   expansion  of  our  branch  office  network   resulting  from  our
acquisitions  of  an  insurance  premium  financing  company  and  an  insurance
brokerage  agency in 2006,  the addition of 38 branch  offices  associated  with
acquisitions  in 2006 and 2007 and the opening of eight de novo  branch  offices
during 2007,  in addition to certain  other  nonrecurring  expenses  incurred in
2007,  primarily related to profit  improvement  initiatives and other items, as
further discussed under "--Noninterest Expense."
<PAGE>

Our earnings in 2006 were driven by an 18.0% increase in net interest income and
a 17.5%  increase in noninterest  income.  Our average  interest-earning  assets
increased 8.7% and, coupled with higher prevailing  interest rates,  contributed
to a $58.8 million  increase in net interest  income and  improvement in our net
interest  margin,  which increased 35 basis points to 4.36% for 2006, from 4.01%
for 2005.  Noninterest  income  increased to $112.9 million in 2006,  from $96.1
million in 2005.  The increases in net interest  income and  noninterest  income
were partially offset by an increase in our provision for loan losses and higher
levels of noninterest  expense.  Noninterest  expense  increased 15.0% to $319.2
million  in 2006,  from  $277.6  million in 2005.  The  increased  expenses  are
commensurate  with  significant  expansion  of our  branch  office  network  and
employee base in several key markets  resulting from our  acquisitions  of other
financial  institutions  in 2005 and 2006,  and the  acquisition of an insurance
premium  financing  company  and an  insurance  brokerage  agency  in 2006.  Our
aggressive  and diligent  efforts to improve asset  quality  resulted in a 44.4%
reduction in nonperforming assets during 2006.

Financial Condition and Average Balances

Our average  total  assets were $10.34  billion for the year ended  December 31,
2007,  compared to $9.61 billion and $8.81 billion for the years ended  December
31, 2006 and 2005,  respectively,  reflecting  increases  of $727.8  million and
$797.7 million,  respectively.  Our total assets  increased to $10.90 billion at
December 31, 2007,  compared to $10.16 billion and $9.17 billion at December 31,
2006 and 2005, respectively, representing increases of $738.6 million and $988.4
million, respectively. We attribute the increase in our total assets in 2007 and
2006 to a combination of organic growth and growth through  acquisitions  in our
target markets completed during the past three years,  including our acquisition
of CFHI in late 2007 which expanded our banking franchise to the Florida market,
and the acquisition of two financial  service  companies,  an insurance  premium
financing  company and an insurance  brokerage  company,  thereby  providing our
business with new  opportunities,  and expanding the broad array of products and
services  available to our customers.  Our acquisitions  completed in 2005, 2006
and 2007  provided  total  assets  at the  time of the  transactions  of  $280.3
million, $794.3 million and $867.3 million, in aggregate,  respectively, as well
as the related intangible assets associated with these transactions.

Our  interest-earning  assets averaged $9.47 billion for the year ended December
31,  2007,  compared  to $8.86  billion  and $8.15  billion  for the years ended
December 31, 2006 and 2005, respectively, while our interest-bearing liabilities
averaged $8.15 billion for the year ended  December 31, 2007,  compared to $7.50
billion  and $6.82  billion  for the years  ended  December  31,  2006 and 2005,
respectively.  Funds available from increased average deposits of $648.8 million
were  primarily  used to fund an increase in average loans of $597.5  million in
2007.  During 2006, we used funds from the growth of average  deposits of $809.9
million and maturities of investment securities to fund internal loan growth and
to reinvest in higher-yielding  investment securities in 2006. Our average other
borrowings  declined  $18.8  million  and $191.2  million  during 2007 and 2006,
respectively,  as a  result  of a  net  reduction  of  certain  term  repurchase
agreements  utilized  in  conjunction  with our  interest  rate risk  management
program,   as  further  described  below.  We  issued  additional   subordinated
debentures in 2006 and 2007, as further described below, which we primarily used
to  fund  our  bank   acquisitions  and  to  refinance   existing,   higher-cost
subordinated  debentures in December 2006 and April 2007 on their  optional call
dates, as further described below.

Average loans, net of unearned discount,  were $8.07 billion,  $7.47 billion and
$6.44  billion  for  the  years  ended   December  31,  2007,   2006  and  2005,
respectively.  Our  acquisitions  completed  during 2006 and 2007 provided total
loans,  net  of  unearned  discount,  of  $545.1  million  and  $693.5  million,
respectively. Funds available from deposit growth were used to fund loan growth.
Internal  loan  growth of $697.5  million for 2007 was  partially  offset by the
securitization and subsequent sale of certain residential mortgage loans held in
portfolio,  and the sale and/or payoff of certain  nonperforming and other loans
in our residential mortgage loan and commercial real estate loan portfolios,  as
further  discussed under "--Loans and Allowance for Loan Losses."  Internal loan
growth  of $584.2  million  for 2006  reflects  management's  business  strategy
decision to retain  certain  mortgage loan  production in our  residential  real
estate mortgage portfolio during the first half of 2006, partially offset by the
securitization of certain residential mortgage loans in early 2006 which shifted
these assets to available-for-sale  investment  securities,  the sale of certain
residential  mortgage  loans and  certain  nonperforming  and other loans in our
commercial and  commercial  real estate loan  portfolios,  and the payoff of two
significant  nonperforming loans, totaling $27.3 million in aggregate, that were
included in our held for sale portfolio, as further discussed under "--Loans and
Allowance  for Loan  Losses." The increase in average loans for 2007 compared to
2006  primarily  reflects:  an increase  in average  commercial,  financial  and
agricultural  loans of $329.7  million;  an  increase  in  average  real  estate
construction and development loans of $211.0 million; and an increase in average
real estate mortgage loans of $152.2 million;  partially offset by a decrease in
average loans held for sale of $112.4 million. The increase in average loans for
2006 compared to 2005  primarily  reflects:  an increase in average  commercial,
financial and agricultural loans of $215.2 million;  an increase in average real
estate  construction  and development  loans of $367.2  million;  an increase in
average real estate mortgage loans of $374.2 million; and an increase in average
loans held for sale of $83.6 million.
<PAGE>

Investment  securities  averaged  $1.27 billion for the years ended December 31,
2007 and 2006,  compared to $1.64 billion for the year ended  December 31, 2005.
Funds  provided by maturities of  investment  securities in 2007 were  primarily
used to fund internal loan growth.  Securities provided by our bank acquisitions
completed in 2007 were $74.5  million.  Furthermore,  we liquidated  our trading
portfolio in July 2007,  reflecting  a decrease  from the  portfolio  balance of
$81.2 million at December 31, 2006.  Average  short-term  investments  increased
$13.7  million to $130.3  million for the year ended  December  31,  2007,  from
$116.6  million  in  2006.   Funds   available  from  maturities  of  investment
securities,  deposit growth and excess  short-term  investments were utilized to
fund internal loan growth during the majority of 2006,  and the remaining  funds
were  reinvested in  higher-yielding  investment  securities.  These  securities
purchases primarily occurred late in 2006 and resulted from funds available from
deposit  growth  in  excess  of loan  demand.  The  sale  of  available-for-sale
investment  securities associated with the termination of $200.0 million of term
repurchase  agreements  in the  first  half of 2006 was  partially  offset by an
increase in the securities portfolio due to the securitization of $138.9 million
of certain of our  residential  mortgage  loans held in our loan  portfolio,  an
increase in our trading securities  portfolio of $77.8 million, and the addition
of $37.3 million of securities obtained with our bank acquisitions  completed in
2006.

Nonearning assets averaged $866.9 million, $754.7 million and $662.4 million for
the years ended December 31, 2007, 2006 and 2005, respectively. The increases in
2007 and 2006 are largely attributable to our acquisitions,  which increased our
capital expenditures,  thus contributing to an overall increase in bank premises
and  equipment,   partially  offset  by  continued   related   depreciation  and
amortization,  and an increase in intangible  assets  recognized in  conjunction
with the  acquisitions.  In  addition,  purchases  of land,  bank  premises  and
equipment for future de novo branch offices  further  contributed to the overall
increases  in  nonearning  assets  during  these  periods.  Goodwill  and  other
intangible  assets recorded in conjunction  with our  acquisitions  completed in
2007 and 2006 were $38.3 million and $111.6 million in aggregate,  respectively.
Average  deferred  income taxes were $102.9  million,  $121.2 million and $127.1
million for the years ended December 31, 2007, 2006 and 2005, respectively.  The
fair value of our derivative financial instruments averaged $2.2 million, ($4.0)
million and ($3.1) million for the years ended December 31, 2007, 2006 and 2005,
respectively,  and  reflect  changes  in the fair  value of  certain  derivative
financial  instruments  and the maturity  and/or  termination  of certain of our
interest rate swap agreements  during 2006 and 2007, as further  discussed under
"--Interest Rate Risk  Management" and in Note 5 to our  Consolidated  Financial
Statements.

Deposits  averaged $8.66 billion,  $8.01 billion and $7.20 billion for the years
ended December 31, 2007, 2006 and 2005, respectively. Our year-end deposits were
$9.15  billion,  $8.44 billion and $7.54 billion at December 31, 2007,  2006 and
2005,  respectively,  reflecting increases of $706.1 million, $901.3 million and
$389.9 million for 2007, 2006 and 2005, respectively.  The increases in 2007 and
2006 were  attributable to organic growth stemming from our deposit  development
programs  throughout  the  periods,   including  enhanced  product  and  service
offerings coupled with marketing  campaigns,  in addition to our acquisitions of
banks  and/or  branches  that were  completed in 2006 and 2007,  which  provided
aggregate  deposits of $475.6 million and $787.2 million,  respectively,  at the
time of their  acquisition.  The change in the  composition  of our  deposit mix
during  2007  reflects  organic  growth in our  savings,  money  market and time
deposits  attributable  to  our  continued  focus  on  marketing  these  deposit
products,  our deposit  pricing  strategies  and our ongoing  efforts to further
develop  multiple  account  relationships.  On July  19,  2007,  we sold our two
banking  offices  located in Denton and  Garland,  Texas,  which  resulted  in a
decrease in  deposits of $52.0  million.  The change in the  composition  of our
deposit  mix during  2006  reflects  continued  efforts  to expand our  existing
customer  relationships by increasing the number and types of products provided,
efforts to increase transactional  accounts, such as savings and demand accounts
through our deposit development campaigns,  coupled with trends toward increased
time deposits and higher deposit rates paid on certain  products  resulting from
the highly competitive rate market environment. Average time deposits were $3.86
billion,  $3.63 billion and $2.91 billion for the years ended December 31, 2007,
2006 and 2005,  respectively.  Average  demand and savings  deposits  were $4.80
billion,  $4.38 billion and $4.30 billion for the years ended December 31, 2007,
2006 and 2005, respectively.

Other borrowings averaged $361.7 million,  $380.5 million and $571.7 million for
the years ended December 31, 2007, 2006 and 2005, respectively.  The decrease in
the average  balances for 2007 reflects the termination of a $100.0 million term
repurchase  agreement  in  August  2007  that  was  entered  into in July  2006,
partially  offset by an increase in daily  repurchase  agreements,  primarily in
connection with cash management  activities of our commercial deposit customers.
The decrease in the average balances for 2006 reflects the termination of $150.0
million and $50.0 million of term repurchase  agreements in the first and second
quarters  of 2006,  respectively,  partially  offset  by a $100.0  million  term
repurchase  agreement  entered into in July 2006, and the termination of a $50.0
million term repurchase  agreement in late 2005, as further  described in Note 5
and Note 10 to our  Consolidated  Financial  Statements.  We also  attribute the
decrease to the  prepayment  of $35.3 million of FHLB advances that were assumed
with certain bank acquisitions, and a decrease in daily repurchase agreements.
<PAGE>

Our notes payable  averaged $34.9  million,  $88.8 million and $36.8 million for
the years ended December 31, 2007, 2006 and 2005, respectively.  The decrease in
2007  reflects   quarterly   principal   installment   payments  and  additional
prepayments of $61.0 million in aggregate on our term loan  facility,  partially
offset by an additional  borrowing on our term loan facility of $15.0 million in
November 2007 to partially fund our acquisition of CFHI, and borrowings of $20.0
million on our revolving  credit facility in December 2007. The increase in 2006
was  attributable  to the addition of a $100.0  million term loan in conjunction
with the restructuring of our overall financing  arrangement in 2005,  partially
offset by the  subsequent  repayments  of $35.0  million of the term loan during
2006,  reducing the balance to $65.0  million at December 31, 2006,  from $100.0
million at December 31, 2005.

Subordinated  debentures issued to our affiliated  statutory and business trusts
averaged $320.8  million,  $281.5 million and $259.2 million for the years ended
December 31, 2007, 2006 and 2005,  respectively.  During 2007, we issued a total
of $77.3 million of variable rate subordinated  debentures in private placements
through four newly-formed statutory trusts as follows:

     >>   $25.8 million  issued to First Bank  Statutory  Trust VIII on February
          23,  2007,  of which a portion of the  proceeds  from the  issuance of
          these  debentures  were utilized to fund our acquisition of Royal Oaks
          Bancshares, Inc., or Royal Oaks;

     >>   $15.5  million  issued to First Bank  Statutory  Trust X on August 31,
          2007;

     >>   $25.8 million issued to First Bank Statutory Trust IX on September 20,
          2007; and

     >>   $10.3 million issued to First Bank Statutory Trust XI on September 28,
          2007.

We also assumed $4.1 million of subordinated  debentures with our acquisition of
Royal Oaks that Royal Oaks had previously  issued to Royal Oaks Capital Trust I.
On April 22, 2007, we repaid in full $25.8 million of variable rate subordinated
debentures that were issued to First Bank Capital Trust, or FBCT, in conjunction
with the redemption of the cumulative  variable rate trust preferred  securities
issued by FBCT.  On  January 2,  2007,  we repaid in full $56.9  million of 9.0%
fixed rate  subordinated  debentures in  conjunction  with the December 31, 2006
redemption of the trust preferred securities of our former business trust, First
Preferred Capital Trust III, as further described in Note 12 to our Consolidated
Financial  Statements.  During 2006, we also issued a total of $139.2 million of
variable  rate  subordinated  debentures  in  private  placements  through  four
newly-formed statutory trusts: specifically,  $41.2 million issued to First Bank
Statutory  Trust  IV on  March 1,  2006;  $20.6  million  issued  to First  Bank
Statutory  Trust V on April  28,  2006;  $25.8  million  issued  to  First  Bank
Statutory  Trust VI on June 16,  2006;  and $51.5  million  issued to First Bank
Statutory Trust VII on December 14, 2006.

Stockholders' equity averaged $837.5 million,  $731.9 million and $641.5 million
for the years ended December 31, 2007, 2006 and 2005, respectively. The increase
for 2007 reflects: net income of $57.2 million; a $2.5 million cumulative effect
of a change in accounting principle recorded in conjunction with our adoption of
Financial  Accounting  Standards  Board,  or  FASB,   Interpretation  No.  48 --
Accounting for Uncertainty in Income Taxes, an Interpretation of SFAS No. 109 --
Accounting for Income Taxes, or FIN 48, as further  discussed in Note 1 and Note
13 to our Consolidated Financial Statements;  and an increase of $8.1 million in
accumulated other  comprehensive  income,  which was comprised of a $9.1 million
increase  associated  with  the  change  in the  fair  value  of our  derivative
financial  instruments,  partially offset by a $1.0 million decrease  associated
with the  change  in our  unrealized  gains  and  losses  on  available-for-sale
investment  securities;  and dividends paid on our Class A and Class B preferred
stock.  The increase for 2006  reflects:  net income of $111.7  million;  a $6.8
million increase in accumulated other comprehensive  income, which was comprised
of $4.9 million associated with the change in our unrealized gains and losses on
available-for-sale  investment  securities and $1.9 million  associated with the
change in the fair  value of our  derivative  financial  instruments;  partially
offset by dividends paid on our Class A and Class B preferred stock.



<PAGE>


The following table sets forth, on a tax-equivalent  basis,  certain information
relating to our average balance sheets, and reflects the average yield earned on
our   interest-earning   assets,  the  average  cost  of  our   interest-bearing
liabilities  and the resulting net interest  income for the years ended December
31, 2007, 2006 and 2005.
<TABLE>
<CAPTION>

                                                                      Years Ended December 31,
                                   ----------------------------------------------------------------------------------------------
                                                2007                            2006                            2005
                                   ------------------------------  ------------------------------  ------------------------------
                                                 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......................  $ 8,039,922   628,304   7.81%    $7,451,016   580,448   7.79%    $6,422,341   423,361   6.59%
    Tax-exempt (4)...............       29,681     2,340   7.88         21,073     1,623   7.70         14,629     1,129   7.72
  Investment securities:
    Taxable......................    1,233,415    61,785   5.01      1,220,785    57,017   4.67      1,599,161    65,895   4.12
    Tax-exempt (4)...............       39,707     2,468   6.22         47,946     2,885   6.02         45,626     2,675   5.86
  Short-term investments.........      130,283     6,699   5.14        116,630     5,909   5.07         70,251     2,211   3.15
                                   -----------   -------            ----------   -------            ----------   -------
      Total interest-earning
        assets...................    9,473,008   701,596   7.41      8,857,450   647,882   7.31      8,152,008   495,271   6.08
                                                 -------                         -------                         -------
Nonearning assets................      866,907                         754,678                         662,396
                                   -----------                      ----------                      ----------
      Total assets...............  $10,339,915                      $9,612,128                      $8,814,404
                                   ===========                      ==========                      ==========

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

Interest-bearing liabilities:
  Interest-bearing deposits:
    Interest-bearing demand......  $   957,454     9,183   0.96%    $  962,956     8,147   0.85%    $  905,613     4,398   0.49%
    Savings and money market.....    2,613,745    79,804   3.05      2,152,419    53,297   2.48      2,135,156    29,592   1.39
    Time.........................    3,859,552   183,900   4.76      3,631,516   155,252   4.28      2,906,601    93,167   3.21
                                   -----------   -------            ----------   -------            ----------   -------
      Total interest-bearing
        deposits.................    7,430,751   272,887   3.67      6,746,891   216,696   3.21      5,947,370   127,157   2.14
  Other borrowings...............      361,721    16,634   4.60        380,546    16,803   4.42        571,717    18,240   3.19
  Notes payable (5)..............       34,932     2,426   6.94         88,843     5,530   6.22         36,849     2,305   6.26
  Subordinated debentures (3)....      320,840    24,514   7.64        281,500    22,833   8.11        259,214    20,557   7.93
                                   -----------   -------            ----------   -------            ----------   -------
      Total interest-bearing
        liabilities..............    8,148,244   316,461   3.88      7,497,780   261,862   3.49      6,815,150   168,259   2.47
                                                 -------                         -------                         -------
Noninterest-bearing liabilities:
  Demand deposits................    1,232,650                       1,267,681                       1,257,277
  Other liabilities..............      121,484                         114,735                         100,462
                                   -----------                      ----------                      ----------
      Total liabilities..........    9,502,378                       8,880,196                       8,172,889
Stockholders' equity.............      837,537                         731,932                         641,515
                                   -----------                      ----------                      ----------
      Total liabilities and
        stockholders' equity.....  $10,339,915                      $9,612,128                      $8,814,404
                                   ===========                      ==========                      ==========
Net interest income..............                385,135                         386,020                         327,012
                                                 =======                         =======                         =======
Interest rate spread.............                          3.53                            3.82                            3.61
Net interest margin (6)..........                          4.07%                           4.36%                           4.01%
                                                           ====                            ====                            ====

------------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense include the effects of interest rate swap agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustments were approximately
    $1.7 million, $1.6 million and $1.3 million for the years ended December 31, 2007, 2006 and 2005, respectively.
(5) Interest expense on our notes payable includes commitment, arrangement and renewal fees. Exclusive of  these  fees, the interest
    rates paid were 6.41%, 6.11% and 4.93% for the years ended December 31, 2007, 2006 and 2005, 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:
                                             ---------------------------------------------------------------------
                                                   2007 Compared to 2006               2006 Compared to 2005
                                             ---------------------------------   ---------------------------------
                                                                        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.............................  $ 46,350       1,506      47,856      73,513      83,574      157,087
       Tax-exempt (4)......................       678          39         717         497          (3)         494
    Investment securities:
       Taxable.............................       593       4,175       4,768     (16,922)      8,044       (8,878)
       Tax-exempt (4)......................      (510)         93        (417)        137          73          210
    Short-term investments.................       707          83         790       1,923       1,775        3,698
                                             --------     -------     -------     -------     -------     --------
           Total interest income...........    47,818       5,896      53,714      59,148      93,463      152,611
                                             --------     -------     -------     -------     -------     --------
Interest paid on:
    Interest-bearing demand deposits.......       (46)      1,082       1,036         297       3,452        3,749
    Savings and money market deposits......    12,791      13,716      26,507         242      23,463       23,705
    Time deposits (3)......................    10,283      18,365      28,648      26,572      35,513       62,085
    Other borrowings.......................      (844)        675        (169)     (7,199)      5,762       (1,437)
    Notes payable (5)......................    (3,681)        577      (3,104)      3,240         (15)       3,225
    Subordinated debentures (3)............     3,059      (1,378)      1,681       1,801         475        2,276
                                             --------     -------     -------     -------     -------     --------
           Total interest expense..........    21,562      33,037      54,599      24,953      68,650       93,603
                                             --------     -------     -------     -------     -------     --------
           Net interest income.............  $ 26,256     (27,141)       (885)     34,195      24,813       59,008
                                             ========     =======     =======     =======     =======     ========
------------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense include the effect of interest rate swap agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%.
(5) Interest expense on our notes payable includes commitment, arrangement and renewal fees.
</TABLE>

Net Interest Income

The primary source of our income is net interest  income.  Net interest  income,
expressed  on a  tax-equivalent  basis,  was $385.1  million  for the year ended
December 31, 2007,  compared to $386.0  million and $327.0 million for the years
ended  December 31, 2006 and 2005,  respectively.  Our net  interest  margin was
4.07% for the year ended December 31, 2007,  compared to 4.36% and 4.01% for the
years ended December 31, 2006 and 2005, 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.
<PAGE>

We attribute the decrease in net interest margin and net interest income in 2007
to a shift in our deposit mix that  reflects  increased  higher-costing  average
time  deposits  and savings  and money  market  accounts,  in contrast to demand
accounts,  coupled  with  competitive  pressures  on the rates  paid on our loan
portfolio. The average rate paid on interest-bearing deposits increased 46 basis
points to 3.67% for the year ended December 31, 2007, compared to 3.21% in 2006,
while the average yield earned on our interest-earning assets increased 10 basis
points to 7.41% for the year ended December 31, 2007, compared to 7.31% in 2006.
The average rate paid on interest-bearing  liabilities increased 39 basis points
to 3.88% for the year ended  December 31, 2007,  compared to 3.49% in 2006.  Our
average interest-bearing assets increased $615.6 million, or 6.9% during 2007 to
$9.47   billion,   from  $8.86  billion  in  2006.  The  increase  is  primarily
attributable  to  continued  internal  loan growth and  interest-earning  assets
provided by our acquisitions  completed in 2006 and 2007, which provided assets,
in aggregate,  of $867.3 million and $794.3 million,  respectively.  Our average
interest-bearing  deposits  increased  $683.9  million,  or 10.1% during 2007 to
$7.43  billion,  from  $6.75  billion  in  2006.  Our  average  interest-bearing
liabilities increased $650.5 million, or 8.7% during 2007 to $8.15 billion, from
$7.50 billion in 2006. In light of weakening economic  conditions in our markets
and expected continued future rate reductions by the Federal Reserve,  we expect
to experience  continued  downward  pressure on our net interest  margin and net
interest income.

We attribute the increase in net interest  income in 2006 to an 8.7% increase in
our average  interest-earning  assets  stemming from internal  growth and growth
through  acquisitions of banks and other financial service  companies,  combined
with higher yields on those assets  commensurate  with the  prevailing  interest
rates in our markets. The increase in average  interest-earning  assets reflects
increases in average loans and average short-term investments,  and the transfer
of funding from lower-yielding  investment securities to higher-yielding  loans,
partially  offset by increased  interest  expense related to increasing  deposit
balances  along  with a  continued  redistribution  of deposit  balances  toward
higher-yielding  products and higher interest rates paid on those  deposits,  as
well as  increased  interest  expense  paid on the  overall  levels of our other
borrowings and subordinated debentures. Our overall borrowing levels reflect the
reduction in the use of higher cost  funding  sources,  such as term  repurchase
agreements and FHLB advances.  Our average notes payable increased $52.0 million
as a result of the term loan  advances we  borrowed in August 2005 and  November
2005. Our average  subordinated  debentures,  which support acquisitions and are
also utilized for other corporate purposes,  increased $22.3 million as a result
of our  issuance of $139.2  million of  variable  rate  subordinated  debentures
through four newly-formed statutory trusts, partially offset by the repayment of
$56.9 million of 9.0% fixed rate  subordinated  debentures on December 31, 2006.
In addition,  our net  interest  income was  adversely  affected by a decline in
earnings  on our  interest  rate  swap  agreements  that  were  entered  into in
conjunction with our interest rate risk management program, as further discussed
below.

Derivative financial  instruments that were entered into in conjunction with our
interest  rate risk  management  program to mitigate  the effects of  decreasing
interest rates reduced our net interest  income by $3.1 million and $5.0 million
for the years ended  December  31, 2007 and 2006,  respectively,  whereas  these
derivative financial instruments  contributed to an increase in our net interest
income of $2.2 million for the year ended December 31, 2005. The earnings on our
interest rate swap agreements  reduced our net interest margin by  approximately
three and six basis points for 2007 and 2006,  respectively,  and  increased our
net interest  margin by  approximately  three basis points for 2005.  During the
third  quarter of 2006,  we expanded our  utilization  of  derivative  financial
instruments  to reduce  our  exposure  to  falling  interest  rates,  as further
described in Note 5 to our Consolidated  Financial  Statements.  The Company has
implemented various methods to reduce the effect of decreasing interest rates on
our net interest income,  including the funding of investment security purchases
through the  issuance of term  repurchase  agreements.  Our  interest  rate swap
agreements  are  anticipated  to  partially  mitigate  the impact of the Federal
Reserve  interest  rate cuts  throughout  the  fourth  quarter of 2007 and first
quarter of 2008.

Interest income on our loan portfolio,  expressed on a tax-equivalent basis, was
$630.6  million,  $582.1 million and $424.5 million for the years ended December
31,  2007,  2006 and 2005,  respectively.  The yield on our loan  portfolio  was
7.82%,  7.79% and 6.59% for the years ended  December 31,  2007,  2006 and 2005,
respectively,  reflecting  increases  of three basis points and 120 basis points
during 2007 and 2006,  respectively.  The yield on our loan portfolio  increased
during 2007 primarily as a result of increases in the prime rate  throughout the
first  half of 2006  from  7.25% to 8.25% and a  decrease  in the  reduction  of
interest  income  associated  with our interest rate swap  agreements  from $4.2
million  in 2006 to $3.1  million  in  2007,  partially  offset  by  competitive
pressures on loan yields within our markets,  an increase in the average  amount
of nonaccrual  loans during 2007 as compared to 2006, and a decline in the prime
rate from 8.25% to 7.25% from September 2007 through December 31, 2007.

The  yield on our  loan  portfolio  increased  120  basis  points  during  2006,
reflecting  increases in  prevailing  interest  rates that began in mid-2004 and
continued  throughout 2005 and 2006 partially  offset by a reduction of interest

<PAGE>

income associated with our interest rate swap agreements of $4.2 million in 2006
compared to an increase in interest income of $2.6 million in 2005. During 2006,
the Federal Reserve increased the targeted federal funds rate, resulting in four
increases in the prime rate of interest from 7.25% at December 31, 2005 to 8.25%
at December  31,  2006,  and during  2005,  the Federal  Reserve  increased  the
targeted  federal funds rate,  resulting in eight increases in the prime rate of
interest  from 5.25% at December 31, 2004 to 7.25% at December  31, 2005.  These
interest  rates are reflected  not only in the rate of interest  earned on loans
that are indexed to the prime  rate,  but also in other  assets and  liabilities
which  either  have  variable  or  adjustable  rates,  or which have  matured or
repriced  during  these  periods.  In  addition,  interest  income  on our  loan
portfolio  for 2007 reflects the reversal of accrued  interest of  approximately
$2.6  million  upon  placement  of  significant  credits on  nonaccrual  status.
Interest  income on our loan  portfolio  for 2006 also  includes a $2.0  million
recovery of interest and fees from the payoff of a single  nonaccrual  loan,  as
further described under "--Loans and Allowance for Loan Losses."

Interest expense on interest-bearing deposits was $272.9 million, $216.7 million
and  $127.2  million  for the years  ended  December  31,  2007,  2006 and 2005,
respectively.  For the  years  ended  December  31,  2007,  2006 and  2005,  the
aggregate weighted average rate paid on our  interest-bearing  deposit portfolio
was 3.67%, 3.21% and 2.14%,  respectively.  We attribute the increase in 2007 to
higher priced  deposits  driven by  competitive  pricing  conditions  within our
markets,  and a change in the mix of our  average  deposits  to  increased  time
deposits and savings and money  market  accounts.  We attribute  the increase in
2006 to the  rising  interest  rate  environment  and a change in the mix of our
average  deposits  which  reflects a trend towards  increased time deposits over
transactional  accounts,  coupled  with higher  interest  rates paid on deposits
commensurate  with the highly  competitive  rate market that  continues to exert
pressure on our net interest  margin.  While deposit growth continues to provide
an adequate  funding  source for our loan  portfolio,  competitive  pressures on
deposits  within our markets  continue to impact our deposit pricing and our net
interest margin.

Interest  expense on our other  borrowings was $16.6 million,  $16.8 million and
$18.2  million  for  the  years  ended   December  31,  2007,   2006  and  2005,
respectively.  The aggregate  weighted average rate paid on our other borrowings
was 4.60% for the year ended December 31, 2007,  compared to 4.42% and 3.19% for
the years ended December 31, 2006 and 2005, respectively, reflecting the rise in
short-term  interest rates during these  periods.  The increase in the aggregate
weighted  average  rates  paid on our other  borrowings  also  reflect:  (a) the
termination of $50.0 million and $200.0 million of term repurchase agreements in
2005 and 2006,  respectively,  resulting in a prepayment  penalty of $306,000 in
2006;  (b) the  modification  of the pricing  structure of a $100.0 million term
repurchase agreement in August 2006; (c) the entrance into a $100.0 million term
repurchase  agreement  during  2006  and  the  subsequent  termination  of  this
agreement in August 2007, resulting in a prepayment penalty of $330,000; and (d)
the impact of the  related  spreads to the London  Interbank  Offered  Rate,  or
LIBOR, as further described in Note 5 and Note 10 to our Consolidated  Financial
Statements.

Interest  expense on our notes payable was $2.4  million,  $5.5 million and $2.3
million for the years ended December 31, 2007, 2006 and 2005, respectively.  The
aggregate  weighted average rate paid on our notes payable was 6.94%,  6.22% and
6.26% for the years ended December 31, 2007,  2006 and 2005,  respectively.  The
aggregate  weighted  average rates paid reflect  changing  market interest rates
during these periods,  and unused commitment,  arrangement and renewal fees paid
in  conjunction  with this financing  arrangement.  Exclusive of these fees, the
aggregate  weighted average rate paid on our notes payable was 6.41%,  6.11% and
4.93%  for the years  ended  December  31,  2007,  2006 and 2005,  respectively,
reflecting the rise in short-term interest rates during the periods. Our secured
credit agreement  represents a relatively  high-cost funding source as increased
advances  have  the  effect  of  increasing  the  weighted  average  rate of our
non-deposit  liabilities.  We  borrowed  $100.0  million of term loans under the
secured  credit  agreement in late 2005,  subsequently  reduced the  outstanding
balance of these term loans to $65.0  million and $19.0  million at December 31,
2006 and  2007,  respectively,  and taken an  advance  of $20.0  million  on the
revolving  credit  sub-facility  portion of our secured credit agreement in late
2007,  contributing  the overall level of interest expense during these periods,
as further described in Note 11 to our Consolidated Financial Statements.

Interest expense on our subordinated debentures was $24.5 million, $22.8 million
and  $20.6  million  for the  years  ended  December  31,  2007,  2006 and 2005,
respectively.  The  aggregate  weighted  average  rate paid on our  subordinated
debentures  was 7.64%,  8.11% and 7.93% for the years ended  December  31, 2007,
2006 and 2005, respectively.  The aggregate weighted average rates and the level
of interest expense reflect:  (a) the issuance of $77.3 million of variable rate
subordinated  debentures during 2007 through four newly formed statutory trusts,
partially offset by the repayment of $25.8 million of variable rate subordinated
debentures  on  April  22,  2007,  as  further  described  in  Note  12  to  our
Consolidated  Financial  Statements;  (b) the  issuance  of  $139.2  million  of
variable  rate  subordinated  debentures  during 2006  through four newly formed
statutory  trusts,  partially  offset by the  repayment of $56.9 million of 9.0%
fixed rate  subordinated  debentures on December 31, 2006; and (c) the repayment
of $59.3 million of 10.24% fixed rate subordinated debentures in September 2005.

<PAGE>

The refinancing of the outstanding subordinated debentures that carried a higher
fixed  interest rate improved our net interest  income and net interest  margin.
However, the earnings impact of our interest rate swap agreements had a negative
impact on the reduction of interest  expense  associated  with our  subordinated
debentures.  These interest rate swap agreements, which reduced interest expense
by $2.0 million during 2005, increased interest expense by $814,000 during 2006.
These  swap  agreements,  which  were  designated  as fair  value  hedges,  were
terminated in May 2005 and February 2006, as further discussed under "--Interest
Rate Risk Management" and in Note 5 to our Consolidated Financial Statements.

Comparison of Results of Operations for 2007 and 2006

Net Income.  Net income was $57.2 million for the year ended  December 31, 2007,
compared to $111.7 million for 2006. Our return on average assets and our return
on average stockholders' equity were 0.55% and 6.83%, respectively, for the year
ended December 31, 2007, compared to 1.16% and 15.26%,  respectively,  for 2006.
The  decrease  in net  income  for  2007,  as  compared  to 2006,  reflects  the
following:

     >>   a  provision  for loan  losses  of $75.0  million  for the year  ended
          December 31, 2007, compared to $12.0 million in 2006;

     >>   net interest  income of $383.5 million for the year ended December 31,
          2007,  compared  to $384.4  million in 2006,  which  contributed  to a
          decline  in our net  interest  margin  to  4.07%  for the  year  ended
          December 31, 2007, compared to 4.36% in 2006;

     >>   gains on loans  sold and held for sale of $14.1  million  for the year
          ended December 31, 2007, compared to $26.0 million in 2006;

     >>   noninterest  expense of $344.3 million for the year ended December 31,
          2007, compared to $319.2 million in 2006; and

     >>   a  provision  for  income  taxes of $10.2  million  for the year ended
          December 31, 2007, compared to $55.1 million in 2006.

The increase in the provision for loan losses was primarily  driven by increased
net loan  charge-offs  and a decline in asset quality related to our one-to-four
family  residential  mortgage and real estate  construction and development loan
portfolios, as further discussed under "--Provision for Loan Losses."

The decline in our net  interest  income and our net interest  margin  primarily
resulted  from an increase in higher  priced  deposit  accounts and pressures on
loan yields as a result of competitive conditions within our markets, as further
discussed under "--Net Interest Income."

The decrease in gain on loans sold and held for sale  primarily  resulted from a
decrease in the volume of loans  originated  and sold. The decrease in volume is
primarily  attributable to the discontinuation of the origination and subsequent
sale of  sub-prime  loans  in  February  of  2007,  as well  as  overall  market
disruption, as further discussed under "--Noninterest Income."

The overall  increase  in the level of  noninterest  expense  for 2007  reflects
increased  salaries and employee benefits  expense,  occupancy and furniture and
equipment expenses and amortization of intangible assets,  commensurate with the
significant   expansion  of  our  branch  office  network   resulting  from  our
acquisitions  of  an  insurance  premium  financing  company  and  an  insurance
brokerage  agency in 2006,  the addition of 38 branch  offices  associated  with
acquisitions  in 2006 and 2007 and the opening of eight de novo  offices  during
2007,  in  addition to certain  other  nonrecurring  expenses  incurred in 2007,
primarily related to profit improvement  initiatives and other items, as further
discussed under "--Noninterest Expense."

The decrease in the provision for income taxes primarily resulted from decreased
earnings  and the  reversal  of a portion of our  deferred  tax asset  valuation
allowance, as further discussed under "--Provision for Income Taxes."

Provision  for Loan  Losses.  We recorded a  provision  for loan losses of $75.0
million for the year ended  December 31, 2007  compared to $12.0 million for the
year ended  December 31, 2006. The increase in the provision for loan losses was
primarily  driven by  increased  net loan  charge-offs  and a  decline  in asset
quality  related  to  our  one-to-four  family  residential  mortgage  and  land
acquisition,  development and construction loan portfolios.  Throughout 2007, we
encountered  considerable  distress in our one-to-four  family  residential loan
portfolio as a result of the unstable market  conditions  surrounding  sub-prime
loan products.  We also saw declining market conditions in our land acquisition,
development  and   construction   loan   portfolio,   particularly  in  Northern
California,  resulting in increased developer  inventories,  slower lot and home
sales, and declining market values, as well as further  deterioration on certain
residential  development and  construction  portfolio  credits that began in the
latter part of 2006,  as further  discussed  below.  All of these factors led to
increased  risk in our loan  portfolio  thereby  contributing  to a  significant
increase in our  provision  for loan  losses.  We recorded a provision  for loan
losses of $49.0 million for the three months ended December 31, 2007 compared to
$4.0 million for the comparable period in 2006. The increase in the three months
ended December 31, 2007 was primarily  driven by increased net loan  charge-offs
and rapidly  declining market conditions in our one-to-four  family  residential
mortgage  and  certain  sectors  of  our  land   acquisition,   development  and
construction loan portfolios, as discussed above.
<PAGE>

The provision  recorded during 2006 was primarily  driven by significant  growth
within our loan  portfolio,  coupled with  deterioration  within our one-to-four
family  residential  portfolio in addition to the deterioration of certain other
credits,  including  four large  credit  relationships  within  our  residential
development and  construction  portfolio during the later part of 2006 that were
primarily  driven by current  market  conditions,  including  slowdowns  in unit
sales.

Our  nonperforming  loans were $202.2 million at December 31, 2007,  compared to
$48.7  million at December  31,  2006.  The  increase  in the  overall  level of
nonperforming  loans  during  2007 was  primarily  driven by a decline  in asset
quality  related  to  our  one-to-four  family  residential  mortgage  and  land
acquisition,  development and construction loan portfolios,  and the acquisition
of CFHI, which added $45.1 million of nonperforming  loans, as further discussed
under "--Loans and Allowance for Loan Losses."

Our net loan charge-offs  increased to $66.8 million for the year ended December
31, 2007, compared to $6.8 million for the year ended December 31, 2006. Our net
loan  charge-offs  for 2007 were 0.83% of average  loans,  compared  to 0.09% in
2006. Loan charge-offs were $75.4 million for 2007, compared to $22.2 million in
2006, and loan recoveries were $8.7 million for 2007,  compared to $15.4 million
in 2006.  Net loan  charge-offs  were $32.3  million for the three  months ended
December 31, 2007,  compared to $7.6 million for the comparable  period in 2006.
Net loan  charge-offs  for the three  months and year ended  December  31,  2007
include $20.5 million and $40.9 million of net  charge-offs  associated with our
one-to-four  family  residential  loan portfolio,  respectively,  of which $14.5
million and $23.3 million,  respectively,  were recorded in conjunction with the
sale  of  approximately  $59.6  million  of  nonperforming   one-to-four  family
residential  mortgage  loans  during  2007.  Net loan  charge-offs  also include
charge-offs of $7.6 million associated with the sale of certain commercial loans
which  resulted in sales proceeds of $33.5 million.  Loan  charge-offs  for 2006
included  approximately  $3.3 million of loan  charge-offs  associated  with two
significant  residential  development project  relationships that were placed on
nonaccrual  status  during  2006,  in  addition to $2.3  million of  charge-offs
recorded in  conjunction  with the  transfer of certain  portfolio  loans to our
loans  held  for sale  portfolio  prior to their  sale in  December  2006.  Loan
recoveries  for 2006  included  $5.0 million  recorded on the payoff of a single
loan that was transferred to our held for sale portfolio on December 31, 2005.

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

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

Noninterest  Income and Expense.  The  following  table  summarizes  noninterest
income and noninterest expense for the years ended December 31, 2007 and 2006:
<TABLE>
<CAPTION>

                                                                             December 31,      Increase (Decrease)
                                                                        ---------------------  -------------------
                                                                           2007       2006       Amount      %
                                                                           ----       ----       ------    -----
                                                                              (dollars expressed in thousands)
Noninterest income:
<S>                                                                     <C>           <C>       <C>          <C>
    Service charges on deposit accounts and customer service fees....   $  46,834     43,310      3,524      8.1%
    Gain on loans sold and held for sale.............................      14,068     26,020    (11,952)   (45.9)
    Net loss on investment securities................................      (1,646)    (1,813)       167      9.2
    Bank-owned life insurance investment income......................       3,841      3,103        738     23.8
    Investment management income.....................................       7,111      8,412     (1,301)   (15.5)
    Insurance fee and commission income..............................       6,860      4,848      2,012     41.5
    Other............................................................      26,201     29,063     (2,862)    (9.8)
                                                                        ---------   --------    -------
       Total noninterest income......................................   $ 103,269    112,943     (9,674)    (8.6)
                                                                        =========   ========    =======    =====
Noninterest expense:
    Salaries and employee benefits...................................   $ 172,510    166,864      5,646      3.4%
    Occupancy, net of rental income..................................      32,671     26,953      5,718     21.2
    Furniture and equipment..........................................      19,683     16,960      2,723     16.1
    Postage, printing and supplies...................................       6,747      6,721         26      0.4
    Information technology fees......................................      36,305     37,099       (794)    (2.1)
    Legal, examination and professional fees.........................       9,893      8,783      1,110     12.6
    Amortization of intangible assets................................      12,419      8,195      4,224     51.5
    Advertising and business development.............................       6,933      7,128       (195)    (2.7)
    Charitable contributions.........................................       5,942      6,462       (520)    (8.0)
    Other............................................................      41,147     34,051      7,096     20.8
                                                                        ---------   --------    -------
       Total noninterest expense.....................................   $ 344,250    319,216     25,034      7.8
                                                                        =========   ========    =======    =====
</TABLE>

Noninterest  Income.  Noninterest  income was $103.3  million for the year ended
December 31, 2007, in comparison to $112.9 million for 2006.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees, mortgage-banking revenues, investment management income, insurance fee and
commission income and other income.

Service charges on deposit accounts and customer service fees increased to $46.8
million  from $43.3  million  for the years  ended  December  31, 2007 and 2006,
respectively.  The  increase in service  charges and  customer  service  fees is
primarily  attributable to: (a) increased  deposit account  balances  associated
with internal  growth and our  acquisitions of banks completed in 2006 and 2007,
as further discussed under  "--Financial  Condition and Average Balances" and in
Note  2 to our  Consolidated  Financial  Statements;  (b)  increased  cardholder
interchange  income  primarily  due to an  increase  in debit  card usage by our
customer  base;  (c)  increased  fee income from  customer  service  charges for
non-sufficient  funds and returned check fees from our  commercial  deposit base
primarily  as a result of  enhanced  control  of fee  waivers;  and (d)  pricing
increases on certain  service  charges and customer  service fees  instituted to
reflect current market conditions.

Gain on loans  sold and held for sale  decreased  to $14.1  million  from  $26.0
million  for the years  ended  December  31,  2007 and 2006,  respectively.  The
decrease in 2007 is  attributable  to a decrease in the volume of mortgage loans
originated and subsequently  sold in the secondary  market. As further discussed
under  "--Loans  and  Allowance  for  Loan  Losses"  and   "--Mortgage   Banking
Activities," we discontinued the origination and sale in the secondary market of
sub-prime  loans in February  2007, and as such,  the  discontinuation  of these
activities  has reduced the amount of gains on loans sold and held for sale,  in
comparison  to  the  level  that  we  had  historically  generated  through  the
origination   and  sale  of  these   sub-prime  loan   products.   Historically,
approximately  40% of our  origination  and sale volume was related to sub-prime
loan  products.  The  decrease is also  attributable  to: (a) a gain of $851,000
recorded on the sale of approximately  $13.4 million of certain  repurchased and
other  residential  mortgage loans in April 2007,  compared to net gains of $2.4
million recorded on the sale of $278.7 million of certain  residential  mortgage
loans during 2006 and a $3.7  million  gain,  before  applicable  income  taxes,
recorded on the sale of $32.6 million of commercial  loans in December  2006, as
further  discussed under "--Loans and Allowance for Loan Losses" and "--Mortgage
Banking Activities:" and (b) the recognition of $2.1 million of income generated
from the  securitization of $138.9 million in aggregate of residential  mortgage
loans in March and April 2006.

We recorded a net loss on investment securities of $1.6 million and $1.8 million
for the years ended December 31, 2007 and 2006,  respectively.  The net loss for
2007 primarily  resulted from a net decline of $1.5 million in the fair value of
securities  held in our trading  portfolio  prior the liquidation of the trading
portfolio  in July 2007.  The net loss for 2006  primarily  resulted the sale of
certain available-for-sale investment securities associated with the termination
of $200.0  million,  in aggregate,  of term  repurchase  agreements,  as further
described  in  Note  3,  Note  5 and  Note  10  to  our  Consolidated  Financial
Statements,  partially  offset by a gain of $389,000 on the redemption of common
stock held as an available-for-sale investment security.

Bank-owned  life insurance  investment  income was $3.8 million and $3.1 million
for the years ended  December  31, 2007 and 2006,  respectively,  reflecting  an
increased  return on the performance of the underlying  investments  surrounding
the  insurance  contracts  which  is  primarily  attributable  to the  portfolio
investments mix and overall market conditions.

Investment   management  income  generated  by  MVP,  our  institutional   money
management subsidiary, was $7.1 million for the year ended December 31, 2007, in
comparison to $8.4 million in 2006,  reflecting  decreased portfolio  management
fee income  associated with changes in the level of assets under  management and
current market conditions.

Insurance fee and  commission  income  generated by Adrian Baker,  our insurance
brokerage  agency acquired on March 31, 2006 was $6.9 million for the year ended
December 31, 2007, in comparison to $4.8 million in 2006, reflecting a full year
of activity in 2007 as  compared to nine months in 2006 and  increased  customer
volumes,  partially  offset by  reductions in premiums  attributable  to current
market conditions within the insurance industry.

Other income was $26.2  million and $29.1  million for the years ended  December
31, 2007 and 2006,  respectively.  We primarily  attribute  the decline in other
income to:

     >>   a decrease  of $2.2  million  in gains on sales of other real  estate,
          primarily  attributable  to a gain of $1.5 million  recognized  on the
          sale of a parcel of other real estate in January 2006;

     >>   a decrease of $1.7 million attributable to interest due on tax refunds
          associated  with the filing of amended  federal income tax returns for
          the years  from 2000  through  2004 that was  recorded  in the  fourth
          quarter of 2006;

     >>   a release  fee of $938,000  received  in the first  quarter of 2006 on
          funds  collected from a loan  previously  sold in which First Bank was
          entitled  to 25% of any  future  fees  collected  on the loan  under a
          defined  release fee  agreement  that was entered into in  conjunction
          with the loan sale; partially offset by

     >>   an  increase  of $1.6  million  in the gain  (loss) on our  derivative
          instruments  resulting  from an  increase  in the  fair  value  of our
          interest rate floors and caps;

     >>   an increase of $569,000 in gains on sales of other assets. Net pre-tax
          gains on sales of other  assets  were $4.4  million for the year ended
          December  31,  2007,  and  included  a  pre-tax  gain of $2.6  million
          recognized  in November  2007 on the sale of a branch  building  and a
          pre-tax  gain of $1.0 million  recognized  in July 2007 on the sale of
          our  Texas  Branch  Offices,  as  further  described  in Note 2 to our
          Consolidated Financial Statements. Net pre-tax gains on sales of other
          assets  were $3.8  million  for the year ended  December  31, 2006 and
          included a pre-tax gain of $2.8 million gain  recognized  in September
          2006 on the sale of an asset that was acquired as  settlement  in full
          of a loan  previously  charged-off  and a  pre-tax  gain  of  $885,000
          recognized   on  the  sale  of  assets  that  were  acquired  with  an
          acquisition completed in late 2004; and

     >>   income  associated with continued  growth and expansion of our banking
          franchise,  including our de novo branch offices and our  acquisitions
          completed during 2006 and 2007.

Noninterest  Expense.  Noninterest expense was $344.3 million for the year ended
December 31, 2007,  in  comparison to $319.2  million for 2006.  Our  efficiency
ratio was 70.73% for the year ended  December 31,  2007,  compared to 64.18% for
2006. The efficiency ratio is used by the financial services industry to measure
an  organization's  operating  efficiency.  The efficiency  ratio represents the
ratio of noninterest  expense to the sum of net interest  income and noninterest
income.  The increase in noninterest  expense was primarily  attributable to our
2006 and 2007  acquisitions,  including  salaries and employee benefits expense,
occupancy  and  furniture  and  equipment  expenses,  as  well as  increases  in
amortization of intangible assets and other expense.

We record the majority of integration costs  attributable to our acquisitions as
of the consummation date of our 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;
<PAGE>

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

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

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

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

Salaries and employee benefits  increased $5.6 million to $172.5 million for the
year ended  December 31, 2007,  from $166.9  million in 2006.  We attribute  the
overall increase to the following:

     >>   increased  salaries and employee benefits expenses  associated with an
          aggregate of 38 additional  branches  acquired in 2006 and 2007, eight
          de novo  branches  opened in 2007,  and the  acquisitions  of UPAC and
          Adrian Baker in 2006;

     >>   generally  higher salary and employee  benefit costs  associated  with
          employing and retaining qualified personnel; and

     >>   approximately  $4.6  million of  severance  expenses  associated  with
          certain  profit   improvement   initiatives,   primarily   related  to
          reductions in mortgage  banking  production staff levels following the
          discontinuation  of the  origination  and sale of  sub-prime  loans in
          February 2007; partially offset by

     >>   lower salaries and employee benefits expenses resulting from decreased
          staffing  levels  within  our  mortgage   banking   division  and  the
          completion  of certain  other staff  reductions.  Our total  full-time
          equivalent  employees decreased to approximately 2,440 at December 31,
          2007, from 2,630 at December 31, 2006; and

     >>   lower incentive compensation as a result of the decline in earnings.

Occupancy,  net of rental income,  and furniture and equipment expense was $52.4
million  and $43.9  million  for the years  ended  December  31,  2007 and 2006,
respectively.  The increase reflects higher levels of expense resulting from our
de novo  activities and  acquisitions  in 2006 and 2007, as discussed  above, as
well as increased  technology  equipment  expenditures,  continued expansion and
renovation  of  certain  corporate  and  branch  offices,   increased   expenses
associated  with the purchase  and/or lease of properties  that will be utilized
for future branch office  locations,  and depreciation  expense  associated with
acquisitions and capital expenditures.

Information  technology  and item  processing  fees were $36.3 million and $37.1
million for the years ended  December 31, 2007 and 2006,  respectively.  As more
fully  described  in Note 19 to our  Consolidated  Financial  Statements,  First
Services,  L.P.,  a limited  partnership  indirectly  owned by our  Chairman and
members of his immediate  family,  provides  information  technology and various
operational support services to our subsidiaries and us. Information  technology
fees also include fees paid to outside  servicers  associated  with our mortgage
lending and trust divisions,  our small business lending and institutional money
management  subsidiaries,  and UPAC and Adrian Baker. The decrease in these fees
in 2007 reflects a reduction in the number of acquisitions completed during 2007
as  compared to 2006 and the related  de-conversion  costs from other  providers
associated  with bank  acquisitions,  as well as enhanced  automation of certain
services,   including  remote  deposit,  branch  capture  and  electronic  image
exchange,  which has  significantly  contributed to reduced manual processes and
reduced costs  associated with these services,  partially offset by depreciation
expense  associated with the related capital  expenditures  necessary to support
the enhanced delivery channels. The decrease was also partially offset by higher
costs  associated  with the  addition  of de novo  branch  offices  and  offices
provided by our  acquisitions,  including the  acquisition  of CFHI;  growth and
technological  advancements  consistent with our product and service  offerings;
and continued  expansion and upgrades to technological  equipment,  networks and
communication channels.

Legal,  examination and professional fees were $9.9 million and $8.8 million for
the  years  ended  December  31,  2007 and  2006,  respectively.  The  continued
expansion of overall corporate  activities,  the ongoing  professional  services
utilized  by  certain  of our  acquired  entities,  and the levels of legal fees
associated with certain  litigation  matters have all contributed to the overall
expense levels in 2006 and 2007.

Amortization  of  intangible  assets was $12.4  million and $8.2 million for the
years  ended  December  31,  2007  and  2006,  respectively.   The  increase  is
attributable  to core  deposit  intangibles  associated  with  our  acquisitions
completed  in 2006 and  2007,  in  addition  to the  customer  list  intangibles
associated with our  acquisitions of Adrian Baker and UPAC in March 2006 and May
2006,  respectively,  as  further  described  in  Note  2  and  Note  8  to  our
Consolidated Financial Statements.

Charitable contributions expense was $5.9 million and $6.5 million for the years
ended  December  31,  2007 and 2006,  respectively,  reflecting  a  decrease  in
charitable  contributions  made to the Dierberg  Operating  Foundation,  Inc., a
charitable  foundation  established by our Chairman and members of his immediate
family,  as  further  described  in  Note  19  to  our  Consolidated   Financial
Statements.

Other expense was $41.1  million and $34.1 million for the years ended  December
31, 2007 and 2006, respectively.  Other expense encompasses numerous general and
administrative expenses including communications, insurance, freight and courier
services,  correspondent  bank  charges,  miscellaneous  losses and  recoveries,
expenses on other real estate owned,  memberships  and  subscriptions,  transfer
agent fees,  sales taxes and travel,  meals and  entertainment.  The increase in
other expense was primarily attributable to:

     >>   expenses associated with continued growth and expansion of our banking
          franchise,  including our de novo branch offices and our  acquisitions
          completed during 2006 and 2007; and

     >>   an  increase in  overdraft,  robbery,  fraud and other  losses of $6.6
          million  from $2.3  million in 2006 to  approximately  $8.9 million in
          2007, including a single overdraft loss of $5.0 million and an expense
          of $700,000 related to our estimated indemnification  obligation, as a
          member bank, to share certain litigation costs of Visa, Inc., or Visa.
          This  resulted  from  revisions  in  October  2007 to  Visa's  by-laws
          affecting all member banks,  as part of an overall  reorganization  in
          which the member banks indemnified Visa on certain covered litigation.
          The expense related to Visa's American Express  litigation,  which was
          settled by Visa in November 2007, and other Visa litigation  which has
          not yet been settled. As part of the reorganization,  Visa has planned
          an initial  public  offering,  or IPO,  in 2008,  and a portion of the
          proceeds  of the IPO  representing  each member  bank's  proportionate
          share will be used to fund the litigation  settlements.  We anticipate
          our proportional  share of the proceeds of the Visa IPO will more than
          offset our estimated liabilities related to the Visa litigation.

Provision for Income Taxes. The provision for income taxes was $10.2 million for
the year ended December 31, 2007,  representing an effective  income tax rate of
15.1%, in comparison to $55.1 million, representing an effective income tax rate
of 33.1%,  for the year ended  December 31, 2006.  The decrease in our provision
for income taxes primarily reflects our decreased  earnings,  an increase in tax
exempt  income  and a partial  reduction  of our  deferred  tax asset  valuation
allowance.  In the fourth quarter of 2007, we reversed a portion of our deferred
tax asset valuation allowance which had the effect of reducing the provision for
income taxes by $10.7 million.  This reversal was necessitated by a reduction in
the allowance for loan losses  allocated to certain loans  acquired in 2004 as a
result of final resolution of the loans through repayment,  sale or other means.
In 2006,  we reversed a $2.9 million  federal tax reserve and $1.9 million state
tax  reserve  as  they  were no  longer  deemed  necessary  as a  result  of the
resolution  of a potential  tax  liability.  In  addition,  we recorded  net tax
benefits of $1.9 million and $5.6 million relating to the utilization of certain
federal and state tax credits  for the years ended  December  31, 2007 and 2006,
respectively.  Excluding these  transactions,  our effective income tax rate was
34.7% and 38.5% for the years ended December 31, 2007 and 2006, respectively, as
further described in Note 13 to our Consolidated Financial Statements.

Comparison of Results of Operations for 2006 and 2005

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

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

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

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

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

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

                                                                             December 31,      Increase (Decrease)
                                                                        ---------------------  -------------------
                                                                           2006       2005       Amount      %
                                                                           ----       ----       ------    -----
                                                                              (dollars expressed in thousands)
Noninterest income:
<S>                                                                     <C>           <C>       <C>          <C>
    Service charges on deposit accounts and customer service fees....   $  43,310     39,776      3,534      8.9%
    Gain on loans sold and held for sale.............................      26,020     20,804      5,216     25.1
    Net loss on investment securities................................      (1,813)    (2,873)     1,060     36.9
    Bank-owned life insurance investment income......................       3,103      4,860     (1,757)   (36.2)
    Investment management income.....................................       8,412      8,573       (161)    (1.9)
    Insurance fee and commission income..............................       4,848         --      4,848    100.0
    Other............................................................      29,063     24,945      4,118     16.5
                                                                        ---------   --------    -------
       Total noninterest income......................................   $ 112,943     96,085     16,858     17.5
                                                                        =========   ========    =======    =====
Noninterest expense:
    Salaries and employee benefits...................................   $ 166,864    139,764     27,100     19.4%
    Occupancy, net of rental income..................................      26,953     22,081      4,872     22.1
    Furniture and equipment..........................................      16,960     16,015        945      5.9
    Postage, printing and supplies...................................       6,721      5,743        978     17.0
    Information technology fees......................................      37,099     35,472      1,627      4.6
    Legal, examination and professional fees.........................       8,783      9,319       (536)    (5.8)
    Amortization of intangible assets................................       8,195      4,850      3,345     69.0
    Advertising and business development.............................       7,128      7,043         85      1.2
    Charitable contributions.........................................       6,462      5,922        540      9.1
    Other............................................................      34,051     31,429      2,622      8.3
                                                                        ---------   --------    -------
       Total noninterest expense.....................................   $ 319,216    277,638     41,578     15.0
                                                                        =========   ========    =======    =====
</TABLE>

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

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

The gain on loans sold and held for sale  increased to $26.0  million from $20.8
million  for the  years  ended  December  31,  2006 and 2005,  respectively.  We
primarily  attribute  the increase in 2006 to: (a) a $1.7 million  gain,  before
applicable income taxes,  recorded on the sale of certain nonperforming loans in
March  2006  that  were  transferred  to our loans  held for sale  portfolio  on
December 31, 2005; (b) the recognition of $1.2 million and $927,000 of income in
March 2006 and April 2006,  respectively,  generated from the securitization and
transfer  to our  investment  portfolio  of $77.1  million  and  $61.8  million,
respectively,  of residential mortgage loans held in our loan portfolio; (c) net
gains  of $2.4  million  recorded  on the  sale of  $278.7  million  of  certain
residential  mortgage  loans;  and (d) a $3.7 million  gain,  before  applicable
income taxes,  recorded on the sale, in December  2006, of 44 loans in our loans
held for sale portfolio,  of which 26 were nonperforming  loans. The increase in
our gain on loans sold and held for sale was partially  offset by a $1.1 million
write-down of the carrying value of a nonperforming loan that was transferred to
our loans  held for sale  portfolio  on  December  31,  2005,  and  subsequently
transferred back into our loan portfolio at fair value in September 2006.

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

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

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

Insurance fee and  commission  income  generated by Adrian Baker,  our insurance
brokerage agency acquired on March 31, 2006, was $4.8 million for the year ended
December 31, 2006.

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

     >>   an  increase  of $3.1  million  in gains  on  sales  of other  assets,
          including a $2.8 million gain  recognized on the sale of an asset that
          was  acquired as  settlement  in full of a loan  charged-off  in prior
          years and a gain of  $885,000  recognized  on the sale of assets  that
          were acquired with an acquisition completed in late 2004;

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

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

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

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

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

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

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

Noninterest  Expense.  Noninterest expense was $319.2 million for the year ended
December 31, 2006,  in  comparison to $277.6  million for 2005.  Our  efficiency
ratio was 64.18% for the year ended  December 31,  2006,  compared to 65.83% for
2005. The increase in noninterest expense was primarily attributable to our 2005
and  2006  acquisitions,  including  salaries  and  employee  benefits  expense,
occupancy  expense and  information  technology  fees,  as well as  increases in
amortization of intangible assets and other expense.

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

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

Information  technology  and item  processing  fees were $37.1 million and $35.5
million  for the years  ended  December  31,  2006 and 2005,  respectively.  The
increased level of information technology fees was primarily attributable to the
additional branch offices provided by our acquisitions and de novo branch office
openings;  certain  de-conversion costs from other providers associated with our
acquisitions;  growth and technological advancements consistent with our product
and service  offerings;  and continued  expansion and upgrades to  technological
equipment,  networks and  communication  channels,  including  costs to maintain
security and provide compliance with the  Sarbanes-Oxley Act of 2002;  partially
offset by expense reductions resulting from information  technology  conversions
of our  acquisitions  completed in 2005 and 2006, as well as the  achievement of
certain  efficiencies  associated with the  implementation of various technology
projects.

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

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

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

Other expense was $34.1  million and $31.4 million for the years ended  December
31, 2006 and 2005, respectively.  Other expense encompasses numerous general and
administrative expenses including communications, insurance, freight and courier
services,  correspondent  bank  charges,  miscellaneous  losses and  recoveries,
expenses on other real estate owned,  memberships  and  subscriptions,  transfer
agent fees,  sales taxes and travel,  meals and  entertainment.  The increase in
other expense was primarily attributable to:

     >>   a $617,000 specific reserve  established in March 2006 and an increase
          of $746,000  to the  specific  reserve in June 2006 for the  estimated
          loss associated with a $3.1 million unfunded letter of credit acquired
          with an acquisition completed in November 2004;

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

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

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

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

Interest Rate Risk Management

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

We strive to manage our interest rate risk by:

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

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

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

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

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

The ALCO has overall  responsibility  for the  effective  management of interest
rate risk and the approval of policy guidelines. The ALCO includes our President
and Chief Executive Officer,  Chief Financial Officer, Chief Investment Officer,
Executive  Vice  President of Corporate  Banking,  Executive  Vice  President of
Retail Banking,  Director of Risk Management and Audit, and certain other senior
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.

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

We are  "asset-sensitive,"  indicating that our assets would  generally  reprice
with  changes in  interest  rates more  rapidly  than our  liabilities,  and our
simulation  model  indicates a loss of  projected  net  interest  income  should
interest rates decline. While a decline in interest rates of less than 100 basis
points  has  a  relatively  minimal  impact  on  our  net  interest  income,  an
instantaneous  parallel  decline in the interest yield curve of 100 basis points
indicates a pre-tax projected loss of approximately 3.9% of net interest income,
based on assets  and  liabilities  at  December  31,  2007.  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. Our  asset-sensitive  position,  coupled
with the effect of recent cuts in interest rates in late 2007 and in early 2008,
has negatively  impacted our net interest income and will continue to impact the
level of our net interest income over time.
<PAGE>

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,  2007,  adjusted  to  account  for
anticipated prepayments:
<TABLE>
<CAPTION>

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

Interest-earning assets:
<S>                                                     <C>           <C>           <C>       <C>            <C>       <C>
   Loans (1).......................................     $5,160,254     546,334      809,329    2,182,351     184,986   8,883,254
   Investment securities...........................        209,637      68,427      141,071      420,742     179,394   1,019,271
   Short-term investments..........................         14,078          --           --           --          --      14,078
                                                        ----------   ---------   ----------   ----------   ---------   ---------
       Total interest-earning assets...............      5,383,969     614,761      950,400    2,603,093     364,380   9,916,603
   Effect of interest rate swap agreements.........       (400,000)         --           --      400,000          --          --
                                                        ----------   ---------   ----------   ----------   ---------   ---------
       Total interest-earning assets after the
         effect of interest rate swap
         agreements................................     $4,983,969     614,761      950,400    3,003,093     364,380   9,916,603
                                                        ==========   =========   ==========   ==========   =========   =========
Interest-bearing liabilities:
   Interest-bearing demand deposits................     $  362,913     225,596      147,128      107,894     137,319     980,850
   Money market deposits...........................      2,267,206          --           --           --          --   2,267,206
   Savings deposits................................         76,419      62,933       53,942       76,418     179,808     449,520
   Time deposits...................................      1,432,946   1,246,565    1,030,183      481,565       1,235   4,192,494
   Other borrowings................................        375,356          92          170          505          --     376,123
   Notes payable...................................         39,000          --           --           --          --      39,000
   Subordinated debentures.........................        282,481          --           --           --      71,271     353,752
                                                        ----------   ---------   ----------   ----------   ---------   ---------
       Total interest-bearing liabilities..........     $4,836,321   1,535,186    1,231,423      666,382     389,633   8,658,945
                                                        ==========   =========   ==========   ==========   =========   =========
Interest-sensitivity gap:
   Periodic........................................     $  147,648    (920,425)    (281,023)   2,336,711     (25,253)  1,257,658
                                                                                                                       =========
   Cumulative......................................        147,648    (772,777)  (1,053,800)   1,282,911   1,257,658
                                                        ==========   =========   ==========   ==========   =========
Ratio of interest-sensitive assets
   to interest-sensitive liabilities:
       Periodic....................................           1.03        0.40         0.77         4.51        0.94        1.15
                                                                                                                       =========
       Cumulative..................................           1.03        0.88         0.86         1.16        1.15
                                                        ==========   =========   ==========   ==========   =========
-----------------------
(1) Loans are presented net of unearned discount.
</TABLE>

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

     >>   loans will repay at projected repayment rates;

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

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

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

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

Our overall asset-sensitive  position at December 31, 2007 was $1.26 billion, or
11.54%  of our  total  assets,  in  comparison  to our  overall  asset-sensitive
position of $1.39 billion,  or 13.65% of our total assets, at December 31, 2006.
However, we were in a liability-sensitive position on a cumulative basis through
the  twelve-month  time horizon of $1.05 billion,  or 9.67% of our total assets,
and $608.4 million, or 5.99% of our total assets, at December 31, 2007 and 2006,
respectively.  We  primarily  attribute  the  liability-sensitive  position on a
cumulative  basis through the  twelve-month  time horizon in 2007 and 2006 to an
increase in money  market  deposits  and an increase  in the  repricing  of time
deposits within the  twelve-month  time horizon as a result of the interest rate
environment and economic conditions as of December 31, 2007 and 2006.
<PAGE>

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, 2007 and 2006 are
summarized as follows:

<TABLE>
<CAPTION>

                                                                           December 31,
                                                        --------------------------------------------------
                                                                  2007                      2006
                                                        ------------------------  ------------------------
                                                          Notional      Credit      Notional      Credit
                                                           Amount      Exposure      Amount      Exposure
                                                           ------      --------      ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                       <C>            <C>          <C>           <C>
         Cash flow hedges............................     $400,000       5,271       600,000       4,369
         Interest rate floor agreements..............      300,000       1,699       300,000         376
         Interest rate cap agreements................      400,000          50       400,000         139
         Interest rate lock commitments..............        3,000          23         5,900          --
         Forward commitments to sell
           mortgage-backed securities................       55,000          40        54,000          86
                                                          ========      ======      ========      ======
</TABLE>

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

For the years ended December 31, 2007 and 2006, we realized net interest expense
of $3.1 million and $5.0  million,  respectively,  on our  derivative  financial
instruments,  whereas for the year ended  December  31,  2005,  we realized  net
interest  income of $2.2 million on our derivative  financial  instruments.  The
increased  net  interest  expense  associated  with  our  derivative   financial
instruments  reflects the interest rate environment during these periods as well
as a  reduced  level  of  derivative  instruments  due  to the  maturity  and/or
termination  of  certain of these  instruments.  We also  recorded  net gains on
derivative  instruments,  which  are  included  in  noninterest  income  in  the
consolidated  statements of income,  of $1.2 million for the year ended December
31, 2007, in comparison to net losses on derivative  instruments of $390,000 and
$1.1 million for the years ended December 31, 2006 and 2005,  respectively.  The
net gains and losses on derivative  instruments  reflect changes in the value of
our interest  rate floor and interest  rate cap  agreements.  In March 2008,  we
entered into four interest rate swap agreements with a notional amount of $125.0
million in aggregate.  These swap agreements were designated as cash flow hedges
and  effectively  convert the interest  payments on certain of our  subordinated
debentures  from  variable  rate  to  fixed  rate.   Information  regarding  our
derivative  financial  instruments  outlined  in  the  table  above  is  further
described in Note 5 to our Consolidated Financial Statements appearing elsewhere
in this report.

Mortgage Banking Activities

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

For the three  years ended  December  31,  2007,  2006 and 2005,  we  originated
residential  mortgage loans held for sale and held for portfolio totaling $548.0
million,  $1.28 billion and $1.60 billion,  respectively,  and sold  residential
mortgage  loans  totaling  $512.5  million,  $1.11  billion  and $1.14  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 $1.10 billion,  $1.04 billion and $1.01 billion at December 31, 2007,
2006 and 2005, respectively.

Gains on mortgage loans originated for resale, including loans sold and held for
sale,  were $10.5  million,  $18.6 million and $18.1 million for the years ended
December  31, 2007,  2006 and 2005,  respectively.  These gains,  net of losses,
which are  realized at the time of sale,  are  determined  on a lower of cost or
market  basis.  The cost basis  reflects  both the  adjustments  of the carrying
values of loans held for sale to the lower of cost, adjusted to include the cost
of hedging the loans held for sale,  or current  market  values,  as well as the
adjustments  for any gains or losses on loan  commitments for which the interest
rate has been established,  net of anticipated  underwriting "fallout," adjusted
for the cost of hedging these loan  commitments.  Fallout  represents  loans not
funded due to issues discovered during the underwriting process or withdrawal of
the loan request by the customer.  We primarily  attribute the decrease in gains
in 2007 as  compared  to 2006 and the  increase  in gains in 2006 as compared to
2005  to:  (a) a  decrease  in the  volume  of  mortgage  loans  originated  and
subsequently  sold in the  secondary  market;  (b)  net  gains  of $2.4  million
recorded on the sale of $278.7  million of certain  residential  mortgage  loans
during 2006 in comparison to an $851,000 gain,  before  applicable income taxes,
recorded on the sale of approximately  $13.4 million of certain  repurchased and
other residential  mortgage loans in April 2007; and (c) the recognition of $2.1
million  of  income  generated  from the  securitization  of $138.9  million  in
aggregate  of  residential  mortgage  loans in March and April 2006.  As further
discussed  under  "--Loans and Allowance for Loan Losses," we  discontinued  the
origination  and sale in the  secondary  market of  sub-prime  loans in February
2007, and as such, the  discontinuation  of these  activities has  substantially
reduced the amount of gains on loans sold and held for sale,  in  comparison  to
the level that we had historically generated through the origination and sale of
these  sub-prime  loan  products.   Historically,   approximately   40%  of  our
origination and sale volume was related to sub-prime loan products.

Interest  income on mortgage  loans held for sale was $10.1 million for the year
ended  December 31, 2007,  in  comparison to $18.2 million and $11.7 million for
the years ended December 31, 2006 and 2005, 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 $140.7  million,  $247.0 million and $184.1 million for the years ended
December 31, 2007,  2006 and 2005,  respectively.  Our yield on the portfolio of
loans held for sale was 7.16%,  7.39% and 6.36% for the years ended December 31,
2007,  2006 and 2005,  respectively.  This compares with our cost of funds, as a
percentage of average  interest-bearing  liabilities,  of 3.88%, 3.49% and 2.47%
for the years ended December 31, 2007, 2006 and 2005, respectively.

We  report  mortgage  loan  servicing  fees in other  noninterest  income in our
consolidated  statements of income,  net of amortization  of mortgage  servicing
rights,  interest shortfall and mortgage-backed  security guarantee fee expense.
Interest  shortfall equals the difference  between the interest collected from a
loan-servicing  customer upon prepayment of the loan and a full month's interest
that is required to be remitted to the security  owner.  Our gross mortgage loan
servicing  fees were $2.8  million,  $2.7 million and $3.7 million for the years
ended December 31, 2007, 2006 and 2005,  respectively.  Amortization of mortgage
servicing  rights was $2.8 million,  $4.1 million and $5.0 million for the years
ended December 31, 2007, 2006 and 2005, respectively.  We attribute the decrease
in  amortization  of  mortgage  servicing  rights  in 2007 to  lower  levels  of
prepayments.

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, 2007,  2006 and
2005, we had $54.5 million,  $56.0 million and $47.7 million,  respectively,  of
loans held for sale and related  commitments,  net of  committed  loan sales and
estimated  underwriting fallout, of which $55.0 million, $54.0 million and $47.0
million, respectively, were hedged through the use of such forward commitments.

Investment Securities

We classify the securities within our investment portfolio as trading, available
for  sale  or held to  maturity.  Our  investment  security  portfolio  consists
primarily  of  securities  designated  as  available  for sale.  The  investment
security  portfolio  was $1.02  billion at December 31, 2007,  compared to $1.46
billion and $1.34 billion at December 31, 2006 and 2005, respectively.
<PAGE>

We attribute  the decrease in the  investment  securities  portfolio in 2007 to:
maturities  and sales of  investment  securities  of $1.05  billion  and  $170.7
million,  respectively;  the liquidation of our trading  portfolio in July 2007,
reflecting a decrease  from the  portfolio  balance of $81.2 million at December
31,  2006;  partially  offset  by  the  reinvestment  of  funds  available  from
maturities and sales of investment securities of approximately $770.0 million in
higher-yielding  securities;  and our  acquisitions  completed  in  2007,  which
provided $74.5 million in securities. The remaining funds were primarily used to
fund loan growth.

The increase in the investment securities portfolio in 2006 was attributable to:
an  increase  in  the   available-for-sale   securities  portfolio  due  to  the
securitization  of $138.9 million of certain of our  residential  mortgage loans
held in our loan portfolio;  an increase in our trading securities  portfolio of
$77.8   million;   reinvestment   of  funds   available   from   maturities   in
higher-yielding  securities;  and an  increase  of  $37.3  million  relating  to
securities acquired through our acquisitions completed in 2006; partially offset
by  the  sale  of  the  underlying   available-for-sale   investment  securities
associated with the termination of $200.0 million of term repurchase agreements,
as further described in Note 3, Note 5 and Note 10 to our Consolidated Financial
Statements.

Loans and Allowance for Loan Losses

Interest earned on our loan portfolio  represents the principal source of income
for First Bank.  Interest and fees on loans were 90.0%, 90.0% and 85.9% of total
interest  income  for  the  years  ended  December  31,  2007,  2006  and  2005,
respectively.  We  recognize  interest  and fees on loans as  income  using  the
interest method of accounting.  Loan  origination fees are deferred and accreted
to interest  income  over the  estimated  life of the loans  using the  interest
method of accounting.  The accrual of interest on loans is discontinued  when it
appears  that  interest or principal  may not be paid in a timely  manner in the
normal course of business.  We generally record payments  received on nonaccrual
and  impaired  loans as  principal  reductions,  and  defer the  recognition  of
interest  income on loans until all principal has been repaid or an  improvement
in the condition of the loan has occurred  that would warrant the  resumption of
interest accruals.

Loans, net of unearned discount,  represented 81.5% of our assets as of December
31, 2007,  compared to 75.5% of our assets at December 31, 2006.  Loans,  net of
unearned discount, increased $1.22 billion to $8.88 billion at December 31, 2007
from $7.67 billion at December 31, 2006. The overall  increase in loans,  net of
unearned discount, in 2007 is primarily  attributable to internal loan growth of
$697.5  million,  repurchases of certain  residential  mortgage  loans,  and our
acquisitions  completed in 2007, which provided loans, net of unearned discount,
of $693.5  million,  in aggregate.  This  increase was  partially  offset by the
securitization  and sale of certain  residential  mortgage  loans,  and the sale
and/or payoff of certain  nonperforming  and other loans,  as further  discussed
below. We attribute the net increase in our loan portfolio in 2007 primarily to:

     >>   an  increase  of  $447.2  million  in our  commercial,  financial  and
          agricultural   portfolio  primarily   attributable  to  internal  loan
          production  growth and $53.4 million  associated with our acquisitions
          completed in 2007;

     >>   an increase  of $308.7  million in our real  estate  construction  and
          development portfolio primarily  attributable to an increase of $152.7
          million associated with our acquisitions completed in 2007;

     >>   an increase of $332.4 million in our  one-to-four  family  residential
          real estate loan portfolio  primarily  attributable  to an increase of
          $341.9 million associated with our acquisitions completed in 2007, and
          internal loan  production  growth of $131.2  million,  including $31.4
          million of residential  mortgage loans sold with recourse that we were
          required  to  repurchase  based on the terms of the  underlying  sales
          contracts. In addition, we transferred approximately $116.4 million of
          one-to-four  family  residential real estate loans from our loans held
          for sale portfolio,  as further discussed below.  These increases were
          partially offset by the  securitization  and subsequent sale of $101.4
          million of certain residential  mortgage loans held in portfolio,  and
          the sale and/or payoff of certain  nonperforming  and other loans,  as
          further  discussed  below.  Our one-to-four  family  residential  real
          estate  loan  portfolio  included   approximately   $54.8  million  of
          sub-prime  mortgage loans, or 3.4% of our residential real estate loan
          portfolio,  at December 31, 2007, of which  approximately $6.6 million
          of these  sub-prime  mortgage  loans  were  nonperforming  loans.  Our
          primary  recourse  risk  attributable  to  early  payment  default  on
          sub-prime  residential  mortgage loans that we previously  sold in the
          secondary market expires throughout the first quarter of 2008;

     >>   an  increase  of $263.7  million in our  commercial  real  estate loan
          portfolio primarily attributable to internal loan production growth of
          $146.6 million and an increase of $134.3 million  associated  with our
          acquisitions completed in 2007; and
<PAGE>

     >>   a decrease of $150.2 million in loans held for sale resulting from (a)
          the timing of loan  originations and subsequent sales in the secondary
          mortgage market;  (b) a decrease in origination  volumes primarily due
          to our exit from the sub-prime loan  origination  business  during the
          first  quarter of 2007,  which  represented  approximately  40% of our
          mortgage  banking  loan  origination  and  sale  volumes;  and (c) the
          transfer  of  approximately   $116.4  million  of  one-to-four  family
          residential  real estate loans from our held for sale portfolio to our
          loan portfolio.  Such loans were originated with the intent to sell in
          the secondary market;  however,  management  elected not to sell these
          loans due to unstable market conditions and reduced bid prices.

Loans,  net of unearned  discount,  increased $645.7 million to $7.67 billion at
December 31, 2006 from $7.02 billion at December 31, 2005. The overall  increase
in  loans,  net of  unearned  discount,  in 2006 is  primarily  attributable  to
internal loan growth of $584.2 million and our  acquisitions  completed in 2006,
which provided loans, net of unearned discount, of $545.1 million, in aggregate.
This increase was partially offset by the securitization of certain  residential
mortgage loans that we transferred  to our  investment  portfolio,  and the sale
and/or payoff of certain  nonperforming  loans, as further  discussed  below. We
attribute the net increase in our loan portfolio in 2006 primarily to:

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

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

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

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

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

During the five years ended December 31, 2007, loans, net of unearned  discount,
increased  from $5.43  billion at December 31, 2002 to $8.88 billion at December
31, 2007, an increase of $3.45 billion,  or 63.5%.  Throughout  this period,  we
have achieved  significant  growth  through  implementation  of our  acquisition
strategy and we have also enhanced our  capabilities  for achieving and managing
internal  growth.  A key element of this  process has been the  expansion of our
corporate  business  development  staff,  which is responsible  for the internal
development  and  management  of  both  loan  and  deposit   relationships  with
commercial customers.

Our acquisitions  have contributed to an increase in the portfolios of new loans
during the five years ended December 31, 2007. In certain cases,  these acquired
portfolios  contained  significant  loan problems,  which we had anticipated and
considered in our acquisition  pricing. As we resolved the asset quality issues,
the portfolios of the acquired entities tended to decline due to the elimination
of problem  loans and because  many of the  resources  that would  otherwise  be
directed  toward   generating  new  loans  were  concentrated  on  improving  or
eliminating existing problem relationships.

The following table  summarizes the components of changes in our loan portfolio,
net of unearned discount, for the five years ended December 31, 2007:

<TABLE>
<CAPTION>

                                                            Increase (Decrease) For the Year Ended December 31,
                                                        -----------------------------------------------------------
                                                            2007        2006        2005        2004        2003
                                                            ----        ----        ----        ----        ----
                                                                       (dollars expressed in thousands)
Internal loan volume increase (decrease):
<S>                                                     <C>            <C>         <C>           <C>        <C>
     Commercial lending..............................   $  716,168     160,642     204,494      91,760     (22,211)
     Residential real estate lending (1).............      (23,421)    410,181     481,642      32,348    (103,573)
     Consumer lending, net of unearned discount......        4,733      13,412       1,383     (11,900)    (22,429)
Loans and leases sold................................      (72,166)   (344,687)    (14,337)    (83,216)         --
Loans provided by acquisitions.......................      693,495     545,106     209,621     780,901      43,700
Securitization of loans..............................     (102,036)   (138,944)         --          --          --
                                                        ----------    --------    --------    --------    --------
     Total increase (decrease).......................   $1,216,773     645,710     882,803     809,893    (104,513)
                                                        ==========    ========    ========    ========    ========
-----------------------
(1) Includes loans held for sale.
</TABLE>

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

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

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

                                                                         December 31,
                              --------------------------------------------------------------------------------------------------
                                     2007                2006                2005                2004                2003
                              ------------------  ------------------  ------------------  ------------------  ------------------
                                Amount      %       Amount      %       Amount      %       Amount      %       Amount      %
                                ------      -       ------      -       ------      -       ------      -       ------      -
                                                         (dollars expressed in thousands)

Commercial, financial
<S>                           <C>          <C>    <C>           <C>     <C>          <C>     <C>          <C>     <C>          <C>
  and agricultural..........  $2,382,067   27.0%  $1,934,908   26.0%  $1,616,841   24.1%  $1,569,321   26.1%  $1,407,626   27.1%
Real estate construction
  and development...........   2,141,234   24.3    1,832,504   24.6    1,564,255   23.3    1,318,413   22.0    1,063,889   20.5
Real estate mortgage:
  One-to-four-family
    residential loans.......   1,602,575   18.2    1,270,158   17.0    1,214,121   18.1      870,889   14.5      811,650   15.7
  Multi-family residential
    loans...................     177,246    2.0      141,341    1.9      143,663    2.2      102,447    1.7      108,163    2.1
  Commercial real estate
    loans...................   2,431,464   27.6    2,203,649   29.6    2,112,004   31.5    2,088,245   34.8    1,662,451   32.1
Lease financing.............          --     --            4     --        2,981     --        5,911    0.1       67,282    1.3
Consumer and installment,
  net of unearned discount..      82,589    0.9       67,590    0.9       51,772    0.8       49,677    0.8       61,268    1.2
                              ----------  -----   ----------  -----   ----------  -----   ----------  -----   ----------  -----
    Total loans, excluding
      loans held for sale...   8,817,175  100.0%   7,450,154  100.0%   6,705,637  100.0%   6,004,903  100.0%   5,182,329  100.0%
                                          =====               =====               =====               =====               =====

Loans held for sale.........      66,079             216,327             315,134             133,065             145,746
                              ----------          ----------          ----------          ----------          ----------
    Total loans.............  $8,883,254          $7,666,481          $7,020,771          $6,137,968          $5,328,075
                              ==========          ==========          ==========          ==========          ==========
</TABLE>


Loans at December 31, 2007 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.....  $1,397,934      290,189      466,899      104,596      122,449    2,382,067
Real estate construction and development...   1,354,171      145,495      565,572       26,208       49,788    2,141,234
Real estate mortgage:
    One-to-four family residential loans...     136,488      203,405       33,852      189,577    1,039,253    1,602,575
    Multi-family residential loans.........      65,187       70,064       26,958        6,676        8,361      177,246
    Commercial real estate loans...........     563,716      825,672      237,222      447,528      357,326    2,431,464
Consumer and installment, net of
  unearned discount........................      21,034       42,566        3,847       12,959        2,183       82,589
Loans held for sale........................      66,079           --           --           --           --       66,079
                                             ----------    ---------    ---------    ---------    ---------    ---------
      Total loans..........................  $3,604,609    1,577,391    1,334,350      787,544    1,579,360    8,883,254
                                             ==========    =========    =========    =========    =========    =========
</TABLE>

<PAGE>

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

<TABLE>
<CAPTION>

                                                                              December 31,
                                                    ---------------------------------------------------------------
                                                        2007         2006         2005         2004         2003
                                                        ----         ----         ----         ----         ----
                                                                    (dollars expressed in thousands)

Commercial, financial and agricultural:
<S>                                                 <C>               <C>          <C>          <C>          <C>
   Nonaccrual.....................................  $    5,916        9,879        4,937       10,147       26,876
   Restructured terms.............................          --           --           --            4           --
Real estate construction and development:
   Nonaccrual.....................................     151,812       13,344       11,137       13,435        6,402
Real estate mortgage:
   One-to-four family residential loans:
     Nonaccrual...................................      32,931       18,885        9,576        9,881       21,611
     Restructured terms...........................           7            9           10           11           13
   Multi-family residential loans:
     Nonaccrual...................................          --          272          740          434          804
   Commercial real estate loans:
     Nonaccrual...................................      11,294        6,260       70,625       50,671       13,994
Lease financing:
   Nonaccrual.....................................          --           --           11          907        5,328
Consumer and installment:
   Nonaccrual.....................................         263           81          160          310          336
                                                    ----------    ---------    ---------    ---------    ---------
          Total nonperforming loans...............     202,223       48,730       97,196       85,800       75,364
Other real estate.................................      11,225        6,433        2,025        4,030       11,130
                                                    ----------    ---------    ---------    ---------    ---------
          Total nonperforming assets..............  $  213,448       55,163       99,221       89,830       86,494
                                                    ==========    =========    =========    =========    =========

Loans, net of unearned discount...................  $8,883,254    7,666,481    7,020,771    6,137,968    5,328,075
                                                    ==========    =========    =========    =========    =========

Loans past due 90 days or more and still accruing.  $   26,753        5,653        5,576       28,689        2,776
                                                    ==========    =========    =========    =========    =========

Ratio of:
   Allowance for loan losses to loans.............        1.90%        1.90%        1.93%        2.46%        2.19%
   Nonperforming loans to loans...................        2.28         0.64         1.38         1.40         1.41
   Allowance for loan losses to nonperforming
     loans........................................       83.27       299.05       139.23       175.65       154.52
   Nonperforming assets to loans and other
     real estate..................................        2.40         0.72         1.41         1.46         1.62
                                                    ==========    =========    =========    =========    =========
</TABLE>
<

Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and  certain
restructured  loans,  were $202.2 million at December 31, 2007, in comparison to
$48.7  million and $97.2  million at December  31, 2006 and 2005,  respectively.
Other real estate  owned was $11.2  million,  $6.4  million and $2.0  million at
December  31,  2007,  2006 and 2005,  respectively.  Our  nonperforming  assets,
consisting  of  nonperforming  loans and other real  estate  owned,  were $213.4
million,  $55.2 million and $99.2  million at December 31, 2007,  2006 and 2005,
respectively.

We attribute the $158.3 million net increase in our nonperforming  assets during
the year ended December 31, 2007 to the following:

     >>   an increase in nonaccrual  loans of $138.5  million in our real estate
          construction and development  loan portfolio  primarily as a result of
          the  increase in  nonaccrual  loans in our  Northern  California  real
          estate  portfolio  to $99.2  million at  December  31,  2007 from $7.9
          million  at  December  31,  2006.  We  experienced   declining  market
          conditions throughout 2007 in this portfolio, particularly in Northern
          California,  resulting in increased developer inventories,  slower lot
          and home sales, and declining  market values.  The acquisition of CFHI
          also  added  $35.5  million  of  nonaccrual  loans to our real  estate
          construction and development loan portfolio;

     >>   an increase in nonaccrual  loans of $14.0  million in our  one-to-four
          family  residential  real estate loan  portfolio  primarily  driven by
          current   market   conditions,   repurchases   of  certain   sub-prime
          residential mortgage loans sold with recourse,  primarily due to early
          payment  default,  that were placed back into our  one-to-four  family
          residential mortgage loan portfolio,  and the overall deterioration of
          sub-prime  residential mortgage loan products  experienced  throughout
          the mortgage banking industry;
<PAGE>

     >>   during the year ended December 31, 2007, we placed approximately $87.7
          million of one-to-four  family  residential  mortgage loans associated
          with our mortgage banking division on nonaccrual status. This increase
          in nonaccrual  loans was partially  offset by net loan  charge-offs of
          $40.9  million,  loan sales  resulting in a decrease in  nonperforming
          loans of approximately $59.6 million,  and other payment activity.  Of
          the $87.7 million  placed on nonaccrual  status,  approximately  $31.4
          million represented residential mortgage loans sold with recourse that
          we were  required to repurchase  based on the terms of the  underlying
          sales  contracts.  Repurchases  of mortgage  loans sold with  recourse
          declined to $3.5 million for the fourth quarter of 2007, compared to a
          high of $17.2  million  for the second  quarter of 2007.  The  reduced
          level of  repurchase  activity  is  reflective  of our  exit  from the
          sub-prime   market  in  early  2007.   Our  primary   recourse   risk,
          attributable  to  early  payment  default  on  sub-prime   residential
          mortgage  loan  products  that we  previously  sold  in the  secondary
          market,  is expected to be lower in 2008 and  expires  throughout  the
          first quarter of 2008; and

     >>   in  addition,  the  acquisition  of CFHI also  added  $7.4  million of
          nonaccrual  loans to our one-to-four  family  residential  real estate
          loan portfolio.

We took measures  throughout 2007 to reduce the level of our nonperforming loans
through  sales  of  certain  loans.   The  sales  resulted  in  a  reduction  in
nonperforming  loans of  approximately  $67.3  million  during  the  year  ended
December 31, 2007, as described below.

     >>   In  March  2007,   we  entered  into  a  commitment  to  sell  certain
          repurchased  and other  residential  mortgage  loans that were  either
          nonperforming  loans  or  were  deemed  by  management  to be  problem
          credits.  Subsequent  to recording  loan  charge-offs  to reduce these
          loans to the  lower  of cost or  estimated  fair  value at the time of
          transfer,  we  transferred  approximately  $17.5  million  of  certain
          repurchased and other residential  mortgage loans to our held for sale
          loan portfolio.  In April 2007, we completed the sale of approximately
          $13.4  million of these  loans,  received  payoffs on a portion of the
          loans held for sale of  approximately  $1.1 million,  and  transferred
          approximately $2.6 million of loans that were not ultimately  included
          in the sale back into our residential  mortgage loan portfolio.  These
          transactions   resulted  in  a  decrease  in  nonperforming  loans  of
          approximately $11.5 million, in aggregate.

     >>   During the third quarter of 2007, we entered into a commitment to sell
          certain   commercial,   commercial   real   estate  and  real   estate
          construction  and  development  loans that were  either  nonperforming
          loans or were deemed by management to be problem  credits.  Subsequent
          to recording  loan  charge-offs  to reduce these loans to the lower of
          cost or estimated  fair value at the time of transfer,  we transferred
          approximately  $36.5  million of these loans to our held for sale loan
          portfolio.  We completed  the sale of  approximately  $33.2 million of
          these loans in September 2007, resulting in a pre-tax gain of $266,000
          and a decrease in nonperforming  loans of approximately  $7.7 million,
          in aggregate.  In December  2007, we  transferred  the remaining  $3.3
          million of these loans back to portfolio.

     >>   During the third quarter of 2007, we entered into a commitment to sell
          certain  repurchased  and other  residential  mortgage loans that were
          either  nonperforming loans or were deemed by management to be problem
          credits.  Subsequent  to recording  loan  charge-offs  to reduce these
          loans to the  lower  of cost or  estimated  fair  value at the time of
          transfer,  we  transferred  approximately  $10.5  million  of  certain
          repurchased and other residential  mortgage loans to our held for sale
          loan   portfolio.   In  October   2007,   we  completed  the  sale  of
          approximately  $9.4 million of these loans and received payoffs on the
          remaining portion of the loans held for sale. We did not record a gain
          or loss on the sale of these loans. These  transactions  resulted in a
          decrease in  nonperforming  loans of  approximately  $8.6 million,  in
          aggregate.

     >>   During the fourth  quarter of 2007,  we entered into a  commitment  to
          sell certain  repurchased  and other  residential  mortgage loans that
          were either  nonperforming  loans or were deemed by  management  to be
          problem  credits.  Subsequent to recording loan  charge-offs to reduce
          these loans to the lower of cost or  estimated  fair value at the time
          of transfer,  we  transferred  approximately  $21.2 million of certain
          repurchased and other residential  mortgage loans to our held for sale
          loan   portfolio.   In  December   2007,  we  completed  the  sale  of
          approximately $12.0 million of these loans and received payoffs on the
          remaining portion of the loans held for sale. We did not record a gain
          or loss on the sale of these loans. These  transactions  resulted in a
          decrease in  nonperforming  loans of approximately  $10.7 million,  in
          aggregate.
<PAGE>

We expect  the  declining  market  conditions  associated  with our real  estate
construction and development and one-to-four  family  residential  mortgage loan
portfolios to continue in the near term,  which could increase the amount of our
nonperforming loans and provision for loan losses.

We attribute the $44.1 million net decrease in our  nonperforming  assets during
the year ended December 31, 2006 to the following:

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

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

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

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

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

Loans past due 90 days or more and still  accruing  interest  were $26.8 million
and $5.7  million at December 31, 2007 and 2006,  respectively.  The increase in
2007 was  primarily  due to the  timing of  resolution  of loans  past due as to
maturity pending renewal and other matters, as well as our acquisition of CFHI.

Our  allowance  for loan  losses  as a  percentage  of  loans,  net of  unearned
discount,  was  1.90%,  1.90% and 1.93% at  December  31,  2007,  2006 and 2005,
respectively.  Our allowance  for loan losses as a percentage  of  nonperforming
loans was  83.27%,  299.05% and 139.23% at  December  31,  2007,  2006 and 2005,
respectively.  The  decrease in the ratio  during 2007 is  primarily  due to the
significant  increase in  nonperforming  loans,  as  previously  discussed.  Our
allowance for loan losses was $168.4  million at December 31, 2007,  compared to
$145.7 million and $135.3  million at December 31, 2006 and 2005,  respectively.
As  further  described  in the  table  below  and  under  "--Business  - Lending
Activities,"  the  allowance  for loan losses also reflects an increase of $14.4
million, $5.2 million and $2.0 million in 2007, 2006 and 2005, respectively,  of
balances acquired in conjunction with our acquisitions.

Our net loan charge-offs were $66.8 million,  $6.8 million and $13.4 million for
the years ended  December 31, 2007,  2006 and 2005,  respectively.  Our net loan
charge-offs as a percentage of average loans were 0.83%, 0.09% and 0.21% for the
years ended December 31, 2007, 2006 and 2005, respectively. Net loan charge-offs
for the year ended  December 31, 2007 include $40.9  million of net  charge-offs
associated  with our one-to-four  family  residential  loan  portfolio.  We sold
approximately  $59.6 million of  nonperforming  one-to-four  family  residential
mortgage loans during 2007, resulting in total charge-offs of $23.3 million. Net
loan  charge-offs also include  charge-offs of $7.6 million  associated with the
sale of  certain  commercial  loans that  resulted  in sales  proceeds  of $33.5
million.  Loan charge-offs for 2006 included  approximately $3.3 million of loan
charge-offs  associated with two  significant  residential  development  project
relationships  that were placed on nonaccrual status during 2006, in addition to
$2.3 million of charge-offs recorded in conjunction with the transfer of certain
portfolio  loans to our loans  held for sale  portfolio  prior to their  sale in
December  2006.  Loan  recoveries  for 2006  included  a $5.0  million  recovery
recorded  on the payoff of a single  loan that was  transferred  to our held for
sale portfolio on December 31, 2005.
<PAGE>

We  continue  to closely  monitor  our loan  portfolio  and  address the ongoing
challenges posed by the economic environment,  including reduced loan demand and
highly  competitive  markets within certain  sectors of our loan  portfolio.  We
consider  this in our overall  assessment  of the adequacy of the  allowance for
loan losses.

As of December  31, 2007,  2006,  2005,  2004 and 2003,  $157.1  million,  $67.1
million,  $124.3 million,  $161.8 million and $109.4 million,  respectively,  of
loans not included in the  nonperforming  assets table above were  identified by
management as having potential  credit problems,  or problem loans. The increase
in the level of problem loans during 2007 reflects  economic  conditions  within
certain sectors of our markets as previously discussed. The decline in the level
of problem  loans during 2006 and 2005  primarily  reflects  improvement  in the
management of these loans and success in resolving  certain of the problem loans
associated with our 2004 and 2005 acquisitions.  The significant increase in the
level of  problem  loans for the year  ended  December  31,  2004 was  primarily
attributable to our  acquisition of CIB Bank, in addition to internal  portfolio
growth and economic conditions within certain sectors of the markets in which we
operate.  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 in light
of ongoing and dramatic changes in market  conditions in the markets in which we
operate.

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

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

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

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

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

The  following  table is a summary of the  allocation  of the allowance for loan
losses for the five years ended December 31, 2007:

<TABLE>
<CAPTION>
                                             2007               2006               2005               2004               2003
                                      ------------------ ------------------ ------------------ ------------------ ------------------
                                                 Percent            Percent            Percent            Percent            Percent
                                                   of                 of                 of                 of                 of
                                                Category           Category           Category           Category           Category
                                                   of                 of                 of                 of                 of
                                                  Loans              Loans              Loans              Loans              Loans
                                                   to                 to                 to                 to                 to
                                                  Total              Total              Total              Total              Total
                                        Amount    Loans    Amount    Loans    Amount    Loans    Amount    Loans    Amount    Loans
                                        ------    -----    ------    -----    ------    -----    ------    -----    ------    -----
                                                            (dollars expressed in thousands)

Commercial, financial and
<S>                                    <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>
  agricultural...................      $ 41,319   26.82%  $ 47,973   25.24%  $ 39,245   23.03%  $ 46,195   25.57%  $ 37,142   26.42%
Real estate construction
  and development................        67,034   24.10     40,410   23.90     32,638   22.28     38,525   21.48     26,782   19.97
Real estate mortgage:
  One-to-four family residential
    loans........................        16,312   18.04     13,308   16.57     10,526   17.29      8,466   14.19      9,684   15.23
  Multi-family residential
    loans........................            --    2.00         95    1.84         67    2.05         20    1.67        186    2.03
  Commercial real estate loans...        42,617   27.37     41,833   28.75     51,199   30.08     55,922   34.01     36,632   31.20
Lease financing..................           194      --         87      --        315    0.04        628    0.10      4,830    1.26
Consumer and installment.........           835    0.93      1,035    0.88        757    0.74        617    0.81        668    1.15
Loans held for sale..............            80    0.74        988    2.82        583    4.49        334    2.17        527    2.74
                                       --------  ------   --------  ------   --------  ------   --------  ------   --------  ------
      Total......................      $168,391  100.00%  $145,729  100.00%  $135,330  100.00%  $150,707  100.00%  $116,451  100.00%
                                       ========  ======   ========  ======   ========  ======   ========  ======   ========  ======

</TABLE>



<PAGE>


The following  table is a summary of our loan loss experience for the five years
ended December 31, 2007:
<TABLE>
<CAPTION>

                                                                 As of or For the Years Ended December 31,
                                                      ---------------------------------------------------------------
                                                          2007         2006         2005         2004         2003
                                                          ----         ----         ----         ----         ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>             <C>          <C>          <C>           <C>
Allowance for loan losses, beginning of year......... $  145,729      135,330      150,707      116,451       99,439
Acquired allowances for loan losses..................     14,425        5,208        1,989       33,752          757
Other adjustments (1)................................         --           --           --         (479)          --
                                                      ----------    ---------    ---------    ---------    ---------
                                                         160,154      140,538      152,696      149,724      100,196
                                                      ----------    ---------    ---------    ---------    ---------
Loans charged-off:
    Commercial, financial and agricultural...........    (13,212)      (6,905)     (10,500)     (26,550)     (23,476)
    Real estate construction and development.........    (15,203)      (6,202)      (7,838)      (3,481)      (5,825)
    Real estate mortgage:
       One-to-four family residential loans..........    (41,793)      (3,779)      (3,399)      (4,891)      (4,167)
       Multi-family residential loans................        (76)        (241)          --         (139)         (87)
       Commercial real estate loans..................     (3,764)      (3,635)      (9,699)      (9,995)      (1,708)
    Lease financing..................................         --         (607)        (491)      (4,536)     (19,160)
    Consumer and installment.........................     (1,390)        (834)      (1,196)      (1,051)      (1,350)
                                                      ----------    ---------    ---------    ---------    ---------
          Total......................................    (75,438)     (22,203)     (33,123)     (50,643)     (55,773)
                                                      ----------    ---------    ---------    ---------    ---------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........      4,739        5,237       10,802       14,983       10,147
    Real estate construction and development.........        307        1,661        1,963          748        1,659
    Real estate mortgage:
       One-to-four family residential loans..........        864        1,066        1,953        1,597          781
       Multi-family residential loans................          9           --           --           27           99
       Commercial real estate loans..................      1,588        6,048        2,901        2,659        4,174
    Lease financing..................................        437          731        1,501        4,878        4,805
    Consumer and installment.........................        731          651          637          984        1,363
                                                      ----------    ---------    ---------    ---------    ---------
          Total......................................      8,675       15,394       19,757       25,876       23,028
                                                      ----------    ---------    ---------    ---------    ---------
          Net loans charged-off......................    (66,763)      (6,809)     (13,366)     (24,767)     (32,745)
                                                      ----------    ---------    ---------    ---------    ---------
Provision for loan losses............................     75,000       12,000       (4,000)      25,750       49,000
                                                      ----------    ---------    ---------    ---------    ---------
Allowance for loan losses, end of year............... $  168,391      145,729      135,330      150,707      116,451
                                                      ==========    =========    =========    =========    =========

Loans outstanding, net of unearned discount:
    Average.......................................... $8,069,603    7,472,089    6,436,970    5,509,054    5,385,363
    End of year......................................  8,883,254    7,666,481    7,020,771    6,137,968    5,328,075
    End of year, excluding loans held for sale.......  8,817,175    7,450,154    6,705,637    6,004,903    5,182,329
                                                      ==========    =========    =========    =========    =========

Ratio of allowance for loan losses to loans
  outstanding:
    Average..........................................       2.09%        1.95%        2.10%        2.74%        2.16%
    End of year......................................       1.90         1.90         1.93         2.46         2.19
    End of year, excluding loans held for sale.......       1.91         1.96         2.02         2.51         2.25
Ratio of net charge-offs to average loans
    outstanding......................................       0.83         0.09         0.21         0.45         0.61
Ratio of current year recoveries to
    preceding year's charge-offs.....................      39.07        46.48        39.01        46.40        32.65
                                                      ==========    =========    =========    =========    =========
---------------------
(1)  In December 2003, we established a $1.0 million specific reserve for estimated losses  on a $5.3 million letter of
     credit that was recorded in accrued and other liabilities in our consolidated balance sheets. In January 2004, the
     letter of credit was fully funded as a loan and the  related $1.0 million  specific  reserve was reclassified from
     accrued and other liabilities to the allowance for loan losses. In  June 2004, we  reclassified $1.5 million  from
     the allowance for loan losses to accrued and other liabilities to establish a specific reserve associated with our
     commercial leasing portfolio sale and related recourse obligations for certain leases sold.
</TABLE>

<PAGE>


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 ended December 31, 2007,  2006 and 2005, and the weighted  average
interest rates on each category of deposits:
<TABLE>
<CAPTION>


                                                                          Year Ended December 31,
                                          ----------------------------------------------------------------------------------------
                                                      2007                          2006                          2005
                                          ----------------------------  ----------------------------  ----------------------------
                                                       Percent                       Percent                       Percent
                                                         of                            of                           of
                                            Amount    Deposits   Rate      Amount   Deposits   Rate      Amount   Deposits  Rate
                                            ------    --------   ----      ------   --------   ----      ------   --------  ----
                                                                       (dollars expressed in thousands)

<S>                                       <C>           <C>        <C>   <C>          <C>       <C>    <C>          <C>       <C>
Noninterest-bearing demand deposits...    $1,232,650    14.23%     --%   $1,267,681   15.82%     --%   $1,257,277   17.45%    --%
Interest-bearing demand deposits......       957,454    11.05    0.96       962,956   12.01    0.85       905,613   12.57   0.49
Savings and money market deposits.....     2,613,745    30.17    3.05     2,152,419   26.86    2.48     2,135,156   29.64   1.39
Time deposits.........................     3,859,552    44.55    4.76     3,631,516   45.31    4.28     2,906,601   40.34   3.21
                                          ----------   ------    ====    ----------  ------    ====    ----------  ------   ====
   Total average deposits.............    $8,663,401   100.00%           $8,014,572  100.00%           $7,204,647  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 each of the years ended  December 31,
2007, 2006 and 2005.

Management  believes  as of December  31, 2007 and 2006,  First Bank and we were
"well  capitalized,"  as defined in  regulations  adopted  pursuant  to the FDIC
Improvement Act of 1991. First Bank's and our actual and required capital ratios
are further described in Note 21 to our Consolidated Financial Statements.

As of December 31, 2007, we had 13 affiliated Delaware or Connecticut  statutory
and  business  trusts that were  created for the sole  purpose of issuing  trust
preferred  securities.  As  further  described  in Note  12 to our  Consolidated
Financial  Statements,  the sole assets of the statutory and business trusts are
our subordinated debentures.

A summary of the outstanding trust preferred securities issued by our affiliated
statutory and business trusts, and our related subordinated debentures issued to
the  respective  trusts  in  conjunction  with the  trust  preferred  securities
offerings as of December 31, 2007, is as follows:
<TABLE>
<CAPTION>

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

<S>                                <C>               <C>                       <C>        <C>            <C>
First Preferred Capital Trust IV   January 2003      Publicly Underwritten      8.15%     $46,000,000    $47,422,700
First Bank Statutory Trust          March 2003         Private Placement        8.10%      25,000,000     25,774,000
First Bank Statutory Trust II     September 2004       Private Placement      Variable     20,000,000     20,619,000
Royal Oaks Capital Trust I         October 2004        Private Placement      Variable      4,000,000      4,124,000
First Bank Statutory Trust III     November 2004       Private Placement      Variable     40,000,000     41,238,000
First Bank Statutory Trust IV      February 2006       Private Placement      Variable     40,000,000     41,238,000
First Bank Statutory Trust V        April 2006         Private Placement      Variable     20,000,000     20,619,000
First Bank Statutory Trust VI       June 2006          Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust VII     December 2006       Private Placement      Variable     50,000,000     51,547,000
First Bank Statutory Trust VIII    February 2007       Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust X        August 2007        Private Placement      Variable     15,000,000     15,464,000
First Bank Statutory Trust IX     September 2007       Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust XI     September 2007       Private Placement      Variable     10,000,000     10,310,000
</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, 2007, $59.7 million of the trust preferred
securities was not eligible for inclusion in our Tier 1 capital;  however,  this
amount was eligible for inclusion in our total risk-based capital.

<PAGE>

Liquidity

Our  liquidity  is the  ability to maintain a cash flow that is adequate to fund
operations,  service debt obligations and meet obligations and other commitments
on a timely basis. We receive funds for liquidity from customer  deposits,  loan
payments,  maturities  of  loans  and  investments,  sales  of  investments  and
earnings.  In  addition,  we may avail  ourselves  of other  sources of funds by
issuing  certificates of deposit in denominations of $100,000 or more, borrowing
federal funds,  selling  securities under agreements to repurchase and utilizing
borrowings from the FHLB and other  borrowings,  including our term loan and our
revolving  credit line.  The  aggregate  funds  acquired from these sources were
$1.96 billion and $1.86 billion at December 31, 2007 and 2006, respectively.

The following  table  presents the maturity  structure of these other sources of
funds,  which consist of  certificates  of deposit of $100,000 or more and other
borrowings, including our notes payable, at December 31, 2007:
<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....................................   $  619,373           281,266         900,639
     Over three months through six months....................      428,756             1,000         429,756
     Over six months through twelve months...................      354,482            21,080         375,562
     Over twelve months......................................      144,246           111,777         256,023
                                                                ----------          --------       ---------
         Total...............................................   $1,546,857           415,123       1,961,980
                                                                ==========          ========       =========
</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, 2007 and 2006,  First Bank's  borrowing  capacity  under the  agreement  was
approximately  $523.3  million and $639.1  million,  respectively.  In addition,
First  Bank's  borrowing  capacity  through its  relationship  with the FHLB was
approximately  $672.3  million and $666.0 million at December 31, 2007 and 2006,
respectively.  We had FHLB advances  outstanding of $857,000 and $4.0 million at
December  31,  2007 and  2006,  respectively,  all of which  represent  advances
assumed in conjunction  with various  acquisitions.  On January 18, 2008,  First
Bank entered into two $100.0  million FHLB  advances that mature in January 2009
and July 2009,  respectively,  to increase  our  liquidity in light of uncertain
market conditions and increased loan funding needs.

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,  2007 were as
follows:
<TABLE>
<CAPTION>

                                                 Less Than        1-3          3-5         Over
                                                  1 Year         Years        Years       5 Years      Total (1)
                                                  ------         -----        -----       -------      -----
                                                                 (dollars expressed in thousands)

<S>                                             <C>              <C>          <C>          <C>         <C>
     Operating leases.......................    $   17,193       29,001       21,372       53,074      120,640
     Certificates of deposit (2)............     3,696,359      413,266       81,635        1,234    4,192,494
     Other borrowings (2)...................       275,346      100,777           --           --      376,123
     Notes payable (2)......................        28,000       11,000           --           --       39,000
     Subordinated debentures (2)............            --           --           --      353,752      353,752
     Other contractual obligations..........         2,067 (3)      250          136           77        2,530
                                                ----------      -------      -------      -------    ---------

         Total..............................    $4,018,965      554,294      103,143      408,137    5,084,539
                                                ==========      =======      =======      =======    =========
     -------------------------
     (1)  Amounts exclude FIN 48 unrecognized tax liabilities of $11.2 million and related accrued interest  expense
          of $1.4 million for which the timing of payment of such liabilities cannot be reasonably estimated  as  of
          December 31, 2007.
     (2)  Amounts exclude the related interest expense accrued on these obligations as of December 31, 2007.
     (3)  Includes an accrued expense related to our estimated indemnification obligation, as  member bank, to share
          certain litigation costs of Visa, as further described under "--Noninterest Expense."
</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  interest  on  the
subordinated  debentures that we issued to our affiliated statutory and business
financing trusts.

<PAGE>


Critical Accounting Policies

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

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

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

Derivative Financial Instruments. We utilize derivative financial instruments to
assist  in  our  management  of  interest  rate  sensitivity  by  modifying  the
repricing,   maturity  and  option   characteristics   of  certain   assets  and
liabilities.  The  judgments  and  assumptions  that  are most  critical  to the
application  of  this  critical   accounting  policy  are  those  affecting  the
estimation of fair value and hedge effectiveness.  Fair value is based on quoted
market prices where  available.  If quoted market prices are  unavailable,  fair
value is based on quoted  market prices of  comparable  derivative  instruments.
Factors that affect  hedge  effectiveness  include the initial  selection of the
derivative that will be used as a hedge and how well changes in its cash flow or
fair value have  correlated  and are expected to  correlate  with changes in the
cash  flow or fair  value of the  underlying  hedged  asset or  liability.  Past
correlation  is easy to  demonstrate,  but  expected  correlation  depends  upon
projections and trends that may not always hold true within  acceptable  limits.
Changes in  assumptions  and  conditions  could result in greater than  expected
inefficiencies  that,  if large  enough,  could reduce or eliminate the economic
benefits   anticipated  when  the  hedges  were  established  and/or  invalidate
continuation of hedge accounting. Greater inefficiency and/or discontinuation of
hedge  accounting  are likely to result in increased  volatility in our reported
earnings.  For cash flow hedges,  this would result as more or all of the change
in the fair value of the  affected  derivative  being  reported  in  noninterest
income. For fair value hedges, there may be some impact on our reported earnings
as the change in the fair value of the affected  derivative may not be offset by
changes in the fair  value of the  underlying  hedged  asset or  liability.  For
further   discussion,   refer  to  "--Effects  of  New  Accounting   Standards,"
"--Interest  Rate  Risk  Management"  and Note 5 to our  Consolidated  Financial
Statements appearing elsewhere in this report.

Deferred Tax Assets.  We recognize  deferred tax assets for the estimated future
tax effects of temporary  differences,  net operating loss carryforwards and tax
credits. We recognize deferred tax assets subject to management's judgment based
upon available  evidence that  realization is more likely than not. Our deferred
tax  assets  are  reduced,  if  necessary,  by a  deferred  tax asset  valuation
allowance. In the event that we determine we would not be able to realize all or
part of our  deferred  tax  assets in the  future,  we would  need to adjust the
recorded value of our deferred tax assets, which would result in a direct charge
to our provision for income taxes in the period in which such  determination  is
made. For further discussion,  refer to "--Effects of New Accounting Standards,"
"--Comparison  of Results of Operations for 2007 and 2006 - Provision for Income
Taxes," "--Comparison of Results of Operations for 2006 and 2005 - Provision for
Income Taxes," and Note 1 and Note 13 to our Consolidated  Financial  Statements
appearing elsewhere in this report.
<PAGE>

Business  Combinations.  We emphasize acquiring other financial  institutions as
one means of achieving  our growth  objectives.  The  determination  of the fair
value of the assets and liabilities  acquired in these transactions,  as well as
the returns on  investment  that may be achieved,  requires  management  to make
significant judgments and estimates based upon detailed analyses of the existing
and future  economic  value of such  assets and  liabilities  and/or the related
income  streams,  including the resulting  intangible  assets.  If actual events
prove the estimates and  assumptions we used in  determining  the fair values of
the  acquired  assets and  liabilities  or the  projected  income  streams  were
incorrect,  we may need to make additional adjustments to the recorded values of
such assets and liabilities,  which could result in increased  volatility in our
reported earnings.  In addition,  we may need to make additional  adjustments to
the  recorded  value of our  intangible  assets,  which may impact our  reported
earnings  and  directly  impacts  our  regulatory  capital  levels.  For further
discussion,  refer to "--Effects of New Accounting Standards,"  "--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 February 2006, the FASB issued Statement of Financial  Accounting  Standards,
or SFAS,  No. 155 -- Accounting  For Certain Hybrid  Financial  Instruments,  an
amendment of SFAS No. 133 -- Accounting For Derivative  Instruments  and Hedging
Activities  and SFAS No. 140. SFAS No. 155 allows  entities to remeasure at fair
value a hybrid  financial  instrument that contains an embedded  derivative that
otherwise  would require  bifurcation  from the host  instrument,  if the holder
irrevocably  elects to account for the whole  instrument  on a fair value basis.
Subsequent  changes in the fair value of the  instrument  would be recognized in
earnings.  In January 2007, the FASB posted to its website  revisions to certain
SFAS No. 133  implementation  issues that were  affected by the issuance of SFAS
No. 155 and SFAS No. 156 (discussed  below).  These  revisions  provide a narrow
scope exception for securitized  interests in prepayable  financial  assets that
only contain an embedded  derivative that results from the embedded call options
in the underlying  prepayable financial assets if certain criteria are met. SFAS
No. 155 is effective for financial instruments acquired, issued, or subject to a
remeasurement  event occurring after the beginning of the first fiscal year that
begins after September 15, 2006. Early adoption is permitted as of the beginning
of the  fiscal  year  unless the entity has  already  issued  interim  financial
statements  during that fiscal year. We  implemented  SFAS No. 155 on January 1,
2007, which did not have a material impact on our financial condition or results
of operations.

In March 2006,  the FASB  issued SFAS No. 156 --  Accounting  for  Servicing  of
Financial Assets.  SFAS No. 156, an amendment of FASB SFAS No. 140 -- Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities,  addresses the recognition and measurement of separately recognized
servicing  assets and  liabilities  and  allows  mark-to-market  accounting  for
servicing  rights  resulting  in  reporting  that is similar to fair value hedge
accounting, but without the effort and system costs needed to identify effective
hedging  instruments  and  document  hedging  relationships.  SFAS  No.  156  is
effective for fiscal years beginning after September 15, 2006. Early adoption is
permitted as of the  beginning of an entity's  fiscal year unless the entity has
already  issued  interim  financial  statements  during  that  fiscal  year.  We
implemented  SFAS No.  156 on  January  1,  2007,  which did not have a material
impact on our financial condition or results of operations.  On January 1, 2008,
we opted to measure  servicing rights at fair value. The election of this option
resulted in the  recognition  of a cumulative  effect of a change in  accounting
principle  of $5.8  million,  which was  recorded as an  increase  to  beginning
retained earnings as further  described in Note 1 to our Consolidated  Financial
Statements.

In June 2006,  the FASB issued FIN 48 -- Accounting  for  Uncertainty  in Income
Taxes, an  Interpretation of SFAS No. 109 -- Accounting for Income Taxes. FIN 48
clarifies the accounting for uncertainty in income taxes in financial statements
and prescribes a recognition  threshold and measurement  attribute for financial
statement  recognition and measurement of a tax position taken or expected to be
taken. FIN 48 also provides guidance on derecognition,  classification, interest
and penalties,  accounting in interim periods, disclosure and transition. FIN 48
is effective for fiscal years  beginning after December 15, 2006. We implemented
FIN 48 on  January 1, 2007,  as further  described  in Note 1 and Note 13 to our
Consolidated Financial Statements.

In September 2006, the FASB issued SFAS No. 157 -- Fair Value Measurements. SFAS
No. 157 defines fair value,  establishes a framework for measuring fair value in
U.S. generally accepted  accounting  principles,  and expands  disclosures about
fair  value   measurements.   SFAS  No.  157  applies  under  other   accounting
pronouncements  that  require or permit  fair value  measurements,  and does not
require any new fair value  measurements.  SFAS No. 157 is effective  for fiscal
years beginning after November 15, 2008, and interim periods within those fiscal
years.  Early  adoption is permitted as of the  beginning of an entity's  fiscal
year unless the entity has already issued interim  financial  statements  during
that fiscal year. We are currently  evaluating the  requirements of SFAS No. 157
to determine their impact on our financial condition and results of operations.
<PAGE>

In February  2007,  the FASB  issued  SFAS No. 159 -- The Fair Value  Option for
Financial Assets and Financial  Liabilities,  including an amendment of SFAS No.
115. SFAS No. 159 provides entities with an option to report selected  financial
assets and  liabilities at fair value in an effort to reduce both  complexity in
accounting for financial  instruments  and the volatility in earnings  caused by
measuring related assets and liabilities differently.  SFAS No. 159 is effective
for fiscal years beginning after November 15, 2007. Retrospective application is
not allowed.  Early  adoption is  permitted  as of the  beginning of an entity's
fiscal year that begins on or before November 15, 2007, provided the entity also
elects  to adopt all of the  provisions  of SFAS No.  157 at the early  adoption
date.  We  implemented  SFAS No. 159 on  January  1, 2008,  which did not have a
material impact on our financial condition or results of operations.

In December 2007, the FASB issued SFAS No. 141(R) -- Business Combinations. SFAS
No. 141(R) will  significantly  change how entities apply the acquisition method
to business  combinations.  The most significant  changes affecting how entities
will account for business  combinations  under SFAS No. 141(R) include:  (a) the
acquisition  date will be the date the acquirer  obtains  control;  (b) all (and
only)  identifiable  assets acquired,  liabilities  assumed,  and noncontrolling
interests in the acquiree will be stated at fair value on the acquisition  date;
(c) assets or  liabilities  arising from  noncontractual  contingencies  will be
measured at their acquisition date fair value only if it is more likely than not
that they meet the definition of an asset or liability on the acquisition  date;
(d) adjustments  subsequently  made to the provisional  amounts  recorded on the
acquisition date will be made  retroactively  during a measurement period not to
exceed one year; (e)  acquisition-related  restructuring  costs that do not meet
the  criteria in SFAS No. 146 -- Accounting  for Costs  Associated  with Exit or
Disposal Activities, will be expensed as incurred; (f) transaction costs will be
expensed as incurred;  (g) reversals of deferred income tax valuation allowances
and income tax  contingencies  will be recognized in earnings  subsequent to the
measurement  period;  and (h) the  allowance for loan losses of an acquiree will
not be permitted to be recognized by the acquirer. Additionally, SFAS No. 141(R)
will  require new and modified  disclosures  surrounding  subsequent  changes to
acquisition-related  contingencies,  contingent  consideration,   noncontrolling
interests, acquisition-related transaction costs, fair values and cash flows not
expected  to  be  collected  for  acquired  loans,  and  an  enhanced   goodwill
rollforward.  SFAS  No.  141(R)  is  effective  for  all  business  combinations
completed on or after  January 1, 2009.  Early  adoption is not  permitted.  For
business  combinations  in which the  acquisition  date was before the effective
date, the provisions of SFAS No. 141(R) will apply to the subsequent  accounting
for deferred income tax valuation  allowances and income tax  contingencies  and
will  require any changes in those  amounts to be recorded in  earnings.  We are
currently  evaluating the impact that SFAS No. 141(R) will have on our financial
condition,  results of operations and the disclosures  that will be presented in
our consolidated financial statements.

In December  2007, the FASB issued SFAS No. 160 --  Noncontrolling  Interests in
Consolidated  Financial  Statements,  an  Amendment  of ARB  51.  SFAS  No.  160
establishes new accounting and reporting standards for noncontrolling  interests
in a subsidiary and for the  deconsolidation of a subsidiary.  SFAS No. 160 will
require  entities  to  classify  noncontrolling  interests  as  a  component  of
stockholders'  equity and will require subsequent changes in ownership interests
in a subsidiary to be accounted for as an equity transaction. Additionally, SFAS
No.  160 will  require  entities  to  recognize  a gain or loss upon the loss of
control of a subsidiary and to remeasure any ownership interest retained at fair
value on that date. SFAS No. 160 also requires expanded disclosures that clearly
identify and  distinguish  between the interests of the parent and the interests
of the noncontrolling  owners.  SFAS No. 160 is effective on a prospective basis
for fiscal years, and interim periods within those fiscal years, beginning on or
after   December  15,  2008,   except  for  the   presentation   and  disclosure
requirements,  which are required to be applied retrospectively.  Early adoption
is not permitted.  We are currently  evaluating the requirements of SFAS No. 160
to determine their impact on our financial condition,  results of operations and
the disclosures that will be presented in our consolidated financial statements.

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 34
through 36 of this report.
<PAGE>

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 67 through 112
of this report.

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

None.

Item 9A.  Controls and Procedures

Disclosure Controls and Procedures

The Company's  management,  including our President and Chief Executive  Officer
and  our  Chief  Financial  Officer  have  evaluated  the  effectiveness  of our
"disclosure  controls  and  procedures"  (as  defined  in  Rules  13a-15(e)  and
15d-15(e)  under the Exchange  Act), as of the end of the period covered by this
report. Based on such evaluation,  our President and Chief Executive Officer and
our Chief  Financial  Officer have concluded that, as of the end of such period,
the Company's  disclosure  controls and procedures  were 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 2007 that have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal control over financial reporting.

Management's Annual Report on Internal Control Over Financial Reporting

Management's report on internal control over financial reporting appears on page
66 of this  report and is  incorporated  herein by this  reference.  Management,
under the supervision of the Company's President and Chief Executive Officer and
Chief Financial Officer,  has excluded internal control over financial reporting
associated  with CFHI  from its  assessment  of the  effectiveness  of  internal
control over financial reporting as of December 31, 2007. Management's report on
internal control over financial  reporting was not subject to attestation by the
Company's Independent  Registered Public Accounting Firm as of December 31, 2007
pursuant to  temporary  rules of the SEC that permit the Company to provide only
management's report in this annual report.

Item 9B.  Other Information

None.






<PAGE>


                                                          PART III

Item 10.  Directors, Executive Officers and Corporate Governance

Board of Directors and Committees of the Board

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

<TABLE>
<CAPTION>


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


<S>                              <C>     <C>       <C>
James F. Dierberg (1)            70      1979      Chairman  of  the  Board  of  Directors of First Banks,  Inc. since
                                                   1988; Chief  Executive  Officer of First  Banks,  Inc. from 1988 to
                                                   April 2003;  President of First Banks,  Inc.  from 1979 to 1992 and
                                                   from  1994  to  October 1999;  Chairman  of the Board of Directors,
                                                   President and Chief Executive Officer of First Banks America,  Inc.
                                                   from 1994 until its merger with First Banks, Inc. in December 2002.

Terrance M. McCarthy             53      2003      President and Chief  Executive  Officer of First Banks,  Inc. since
                                                   April 1, 2007;  Senior Executive Vice President and Chief Operating
                                                   Officer of First  Banks,  Inc.  from August 2002 to March 31, 2007;
                                                   Director of First Banks,  Inc. since April 2003;  Director of First
                                                   Banks  America,  Inc.  from July 2001 until its  merger  with First
                                                   Banks,  Inc. in December  2002;  Executive  Vice President of First
                                                   Banks  America,  Inc. from 1999 to December  2002;  Chairman of the
                                                   Board of  Directors  of First Bank since  January  2003;  Executive
                                                   Vice  President  of First Bank since June 25, 2007;  President  and
                                                   Chief Executive  Officer of First Bank from August 2002 to June 25,
                                                   2007;  Chairman  of the  Board of  Directors,  President  and Chief
                                                   Executive  Officer  of First  Bank and Trust  from April 2000 until
                                                   its merger with and into First Bank in March 2003.

Steven F. Schepman (1)           35      2004      Director  of First  Banks,  Inc.  since July 2004;  Executive  Vice
                                                   President  and  Director  of  Corporate  Development  and  Business
                                                   Segments of First  Banks,  Inc.  since  April 2, 2007;  Senior Vice
                                                   President  and Chief  Financial  Officer of First Banks,  Inc. from
                                                   August  2005 to April 1,  2007;  Director  of First Bank from April
                                                   2001 to October  2004;  Senior Vice  President  - Private  Banking,
                                                   Wealth  Management  and Trust  Services of First Bank from November
                                                   2000 to  August  31,  2005;  From May 1999 to  November  2000,  Mr.
                                                   Schepman   was  employed  in  various   other   senior   management
                                                   capacities with First Banks, Inc.

Gordon A. Gundaker (2)           74      2001      Chairman of the Board of  Directors of Gundaker  Commercial  Group,
                                                   Inc.,  a  full-service   commercial   real  estate  firm  providing
                                                   brokerage,   development,   construction   and   asset   management
                                                   services,  in St. Louis,  Missouri,  since July 2007; President and
                                                   Chief Executive  Officer of Coldwell Banker Gundaker from September
                                                   2001 to July 2007.

David L. Steward (2)             56      2000      Chairman  of the  Board  of  Directors  of  World  Wide  Technology
                                                   Holding Co., Inc., an electronic  procurement and logistics company
                                                   in the information  technology  industry,  in St. Louis,  Missouri;
                                                   Director   of   Centene   Corporation,   Civic   Progress   of  St.
                                                   Louis,  the St. Louis  Regional  Commerce  and Growth  Association,
                                                   the Regional Business Council,  Webster  University,  Barnes Jewish
                                                   Hospital,  the United  Way of Greater  St.  Louis and  Greater  St.
                                                   Louis Area Council - Boy Scouts of America.



<PAGE>



Douglas H. Yaeger (2)(3)         59      2000      Chairman of the Board of Directors,  President and Chief  Executive
                                                   Officer  of The  Laclede  Group,  Inc.,  an exempt  public  utility
                                                   holding company in St. Louis,  Missouri since 2001; Chairman of the
                                                   Board of  Directors,  President  and  Chief  Executive  Officer  of
                                                   Laclede Gas Company  since 1999;  President  of Laclede Gas Company
                                                   since 1997;  Director  and Chief  Operating  Officer of Laclede Gas
                                                   Company from 1997 to 1999;  Executive  Vice  President - Operations
                                                   and  Marketing of Laclede Gas Company  from 1995 to 1997;  Director
                                                   and past  Chairman  of the  Board  of  Directors  of the St.  Louis
                                                   Regional  Commerce  and  Growth  Association;   Director  and  past
                                                   Chairman  of Southern  Gas  Association;  Director of American  Gas
                                                   Association;   Director  and   Chairman  of  the  Missouri   Energy
                                                   Development  Association;  Commissioner  of the St.  Louis  Science
                                                   Center; Director of Barnes-Jewish Hospital,  Greater St. Louis Area
                                                   Council - Boy Scouts of America,  The Municipal Theatre Association
                                                   of St.  Louis,  the  United Way of Greater  St.  Louis and  Webster
                                                   University; Chairman of Civic Progress.
----------------------------------
(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

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

The  members  of the Audit  Committee  as of March 26,  2008 were Mr.  Gordon A.
Gundaker,  Mr.  David L. Steward and Mr.  Douglas H.  Yaeger,  who serves as the
Chairman of the Audit Committee and the Audit Committee financial expert.

<PAGE>

Audit Committee Report

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

The Audit Committee  reviewed with the Independent  Registered Public Accounting
Firm,  who is  responsible  for  planning  and  carrying  out a proper audit and
expressing an opinion on the  conformity of our audited  consolidated  financial
statements with U.S. generally accepted accounting  principles,  their judgments
as to the  acceptability  of the  accounting  principles  we use, and such other
matters as are required to be discussed with the Audit Committee by Statement on
Auditing Standards No. 114, The Auditor's  Communication With Those Charged with
Governance.  In addition,  the Audit  Committee  discussed with the  Independent
Registered  Public  Accounting  Firm its  independence  from  management and the
Company,  including the matters  required by Standard No. 1 of the  Independence
Standards  Board,  and the  Audit  Committee  considered  the  compatibility  of
non-audit services provided by the Independent Registered Public Accounting Firm
with the firm's independence. KPMG LLP has provided the Audit Committee with the
written  disclosures and letter  required by Standard No. 1 of the  Independence
Standards Board.

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

In  reliance  on the  reviews  and  discussions  referred  to  above,  the Audit
Committee  recommended to the Board of Directors  that the audited  consolidated
financial statements be included in the Annual Report on Form 10-K as of and for
the year ended December 31, 2007 for filing with the SEC.

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

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

Code of Ethics for Principal Executive Officer and Financial Professionals

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

Code of Conduct for Employees, Officers and Directors

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



<PAGE>


Executive Officers

Our executive  officers,  each of whom was elected to the office(s) indicated by
the Board of Directors, as of March 26, 2008, were as follows:
<TABLE>
<CAPTION>


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

<S>                             <C>                                          <C>
James F. Dierberg               70   Chairman of the Board of Directors.     See  "Item  10  -  Directors,  Executive
                                                                             Officers  and  Corporate   Governance  -
                                                                             Board of Directors."

Terrance M. McCarthy            53   President,  Chief Executive  Officer    See  "Item  10  -  Directors,  Executive
                                     and Director;  Chairman of the Board    Officers  and  Corporate   Governance  -
                                     of Directors of First Bank.             Board of Directors."

Steven F. Schepman              35   Executive Vice  President,  Director    See  "Item  10  -  Directors,  Executive
                                     of   Corporate    Development    and    Officers  and  Corporate   Governance  -
                                     Business Segments, and Director.        Board of Directors."

Russell L. Goldammer            51   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.

Robert S. Holmes, Jr.           44   Executive     Vice    President    -    Executive   Vice   President   of  First
                                     Commercial    Banking;    President,    Banks,   Inc.   since   July  1,   2007;
                                     Chief    Executive    Officer    and    President  and Chief  Executive  Officer
                                     Director of First Bank.                 of  First  Bank  since  June  25,  2007;
                                                                             Director of First Bank  since July 2007;
                                                                             Group  Senior  Vice President - Regional
                                                                             Commercial Banking Group of LaSalle Bank
                                                                             N.A. in   Chicago, Illinois  from  March
                                                                             2007 to June 2007; Senior Vice President
                                                                             and   Chief   Administrative   Officer -
                                                                             Commercial Banking Division  of  LaSalle
                                                                             Bank  N.A.  in   Chicago, Illinois  from
                                                                             March  2006  to  March 2007; Senior Vice
                                                                             President  and  Region  Head  of LaSalle
                                                                             Bank  N.A.  in  St. Louis, Missouri from
                                                                             September 1996 to March 2006.

Daniel W. Jasper                62   Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                     Credit   Officer;   Executive   Vice    Credit  Officer  of  First  Banks,  Inc.
                                     President,  Chief Credit Officer and    since   October   2003;    Senior   Vice
                                     Director of First 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       54   Executive  Vice  President, Director    Executive  Vice  President  and Director
                                     of  Retail  Banking  and Director of    of Retail Banking  since  April 2, 2007;
                                     Sales,   Marketing   and   Products;    Executive Vice President and Director of
                                     Director of First Bank.                 Sales, Marketing  and  Products of First
                                                                             Banks,  Inc.   since   September   2003;
                                                                             Director  of  First  Bank  since October
                                                                             2004;   Executive   Vice   President   -
                                                                             Personal Banking Division, HSBC Bank  of
                                                                             USA  in  Buffalo,  New York from 1998 to
                                                                             June 2002; Independent  Consultant  from
                                                                             July 2002 to August 2003.


<PAGE>


Mary P. Sherrill                53   Executive    Vice    President   and    Executive  Vice  President  and Director
                                     Director of Operations;  Director of    of  Operations  of  First  Banks,   Inc.
                                     First Bank.                             since  April  2003;  Director  of  First
                                                                             Bank  since  April  2003; Director, Vice
                                                                             Chairman and Chief of  Bank  Operations,
                                                                             Southwest Bank  in  St. Louis,  Missouri
                                                                             from April 1999 to March 2003.


Lisa K. Vansickle               40   Senior  Vice   President  and  Chief    Senior   Vice    President   and   Chief
                                     Financial   Officer;   Senior   Vice    Financial  Officer of First Banks,  Inc.
                                     President,  Secretary  and  Director    since   April  2,  2007;   Senior   Vice
                                     of First Bank.                          President   and   Controller   of  First
                                                                             Banks,  Inc.  from January 2001 to April
                                                                             1, 2007;  Vice  President and Controller
                                                                             of First Banks,  Inc. from April 1999 to
                                                                             January   2001;   Vice   President   and
                                                                             Director   of   Internal    Audit   from
                                                                             December  1997  to  March  1999;  Senior
                                                                             Vice  President,  Secretary and Director
                                                                             of First Bank since July 2001.

</TABLE>
Item 11.  Executive Compensation

Compensation  Discussion and Analysis.  As outlined in the stock ownership table
included  in "Item 12 -  Security  Ownership  of Certain  Beneficial  Owners and
Management and Related Stockholder Matters," all of our voting stock is owned by
various  trusts,  established by and  administered by and for the benefit of Mr.
James F.  Dierberg,  our  Chairman of the Board,  and  members of his  immediate
family. Therefore, we do not use equity awards in our compensation program.

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

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

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

Bonus. We offer our key executive officers  additional  compensation  through an
Executive  Incentive  Compensation Plan, or the Plan. The objectives of the Plan
are to promote superior  short-term and long-term  financial  performance of the
Company through its key executives;  to reward those key executive  officers who
deliver  solid  results  with  market-competitive  incentives;  and to  attract,
motivate and retain  skilled and  experienced  individuals  who can increase the

<PAGE>

size and  profitability  of the  Company.  Our  Chairman  of the  Board has full
discretion to determine on an annual basis those  executives who are eligible to
participate in the Plan. Each of the named  executive  officers is a participant
in the Plan, along with certain other executive officers,  with the exception of
Ms. Vansickle and Mr.  Schepman.  Mr. Schepman is the son-in-law of Mr. James F.
Dierberg  and lineal  descendants  of Mr.  Dierberg  and their  spouses  are not
eligible to  participate  in the Plan.  Ms. Vansickle  received a  discretionary
bonus in 2007. Mr. Schepman received a discretionary bonus in 2007 and 2006.

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

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

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



<PAGE>


Executive  Compensation.  The  following  table sets forth  certain  information
regarding  compensation  earned by the named  executive  officers  for the years
ended December 31, 2007 and 2006:
<TABLE>
<CAPTION>


                                             SUMMARY COMPENSATION TABLE

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

<S>                                            <C>        <C>                <C>         <C>         <C>
James F. Dierberg                              2007       $610,000            --         9,000         619,000
Chairman of the Board of Directors             2006        610,000            --         8,800         618,800

Terrance M. McCarthy (3)                       2007        478,000       374,800         9,000         861,800
President and                                  2006        409,000       345,000         8,800         762,800
Chief Executive Officer

Lisa K. Vansickle (4)                          2007        174,000        24,000        18,300 (5)     216,300
Senior Vice President
and Chief Financial Officer

Russell L. Goldammer                           2007        237,200       222,400         9,000         468,600
Executive Vice President and
Chief Information Officer

Daniel W. Jasper                               2007        264,800       239,000         9,000         512,800
Executive Vice President                       2006        245,600       215,000         8,800         469,400
and Chief Credit Officer

Allen H. Blake (6)                             2007        118,800       573,600       234,500 (7)     926,900
(Former President and                          2006        470,000       413,800         8,800         892,600
Chief Executive Officer)

Steven F. Schepman (4)                         2007        194,300        35,000         9,000         238,300
Executive Vice President and                   2006        175,400        20,000         8,300         203,700
Director of Corporate Development and
Business Segments
(Former Chief Financial Officer)
--------------------------------------
(1)   Salary and bonus reported for Messrs. McCarthy, Blake and Jasper include amounts deferred in our NQDC Plan,
      as further described below and in Note 17 to our  Consolidated  Financial Statements, of $47,800,  $310,500
      and $26,500, respectively, or  an  aggregate of $384,800. Salary reported for  Messrs. Dierberg, Goldammer,
      Schepman, and Ms. Vansickle did not include  any  amounts deferred in our NQDC Plan. Earnings by  the named
      executives on their NQDC Plan balances did not include any above-market or preferential earnings.
(2)   All other compensation reported reflects contributions to our 401(k) Plan,  as further described in Note 17
      to our Consolidated Financial Statements,  with the exception of the amounts reported for Ms. Vansickle and
      Mr. Blake, as further described below.
(3)   Mr. McCarthy became President and Chief Executive Officer of First Banks,  Inc. on April 1, 2007.
(4)   Ms. Vansickle served as Senior Vice President  and  Controller  of First Banks, Inc. until April 2, 2007 at
      which time she assumed the role of Senior Vice President and  Chief  Financial Officer of First Banks, Inc.
      Mr. Schepman  served as  Senior Vice President and Chief Financial Officer of First Banks, Inc. until April
      2, 2007 at which time he assumed the role of Executive Vice President and Director of Corporate Development
      and Business Segments of First Banks, Inc.
(5)   All other compensation reported for Ms. Vansickle reflects a contribution  to our 401(k) Plan of $8,300 and
      the payout of a $10,000 award previously granted under an incentive plan that Ms. Vansickle participated in
      prior to the time she became a named executive officer on April 2, 2007.  Ms. Vansickle's participation  in
      that incentive plan terminated at the time she became a named executive officer.
(6)   Mr. Blake retired from the Company on March 31, 2007.
(7)   All other  compensation  reported  for  Mr. Blake for  2007  reflects a contribution to  our 401(k) Plan of
      $9,000, an NQDC Plan distribution of $144,000, an automobile valued at $55,100 awarded upon  his retirement
      on March 31, 2007 and taxes of $26,400 related to the receipt of the automobile.
</TABLE>

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

The NQDC Plan allows for us to credit the deferred  compensation accounts of any
participant with discretionary contributions, however, we have not made any such
discretionary  contributions  under the NQDC Plan since its inception.  Any such
contributions,  if made, would vest over a five-year period.  Earnings or losses
on participant  account  balances  resulting from the  participant's  investment
choices are credited or charged to the participant  accounts on a monthly basis.
We recognize these earnings or losses in our  consolidated  statements of income
on a monthly basis. In the event of retirement, payment of the vested portion of
the participant's deferred compensation account balance is either made through a
single lump sum payment or annual  payments  over five or ten years,  subject to
election by the participant.  Payment of the vested portion of the participant's
deferred  compensation account balance is made through a single lump sum payment
in the event the participant  terminates his or her employment for reasons other
than  retirement.  We did not make any withdrawals or distributions to the named
executive  officers,  except Mr. Blake, or the  non-employee  directors from our
NQDC Plan for the year ended December 31, 2007.

The  following  table  sets forth  certain  information  regarding  nonqualified
deferred  compensation earned by the named executive officers for the year ended
December 31, 2007:
<TABLE>
<CAPTION>


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


                                          Executive           Aggregate          Aggegrate           Aggregate
                                       Contributions in       Earnings in     Distributions in       Balance at
Name and Principal Position(s)       Last Fiscal Year (1)  Last Fiscal Year   Last Fiscal Year    December 31, 2007
------------------------------       ----------------      ----------------   ----------------    -----------------

<S>                                      <C>                   <C>                     <C>           <C>
James F. Dierberg                        $     --               18,000                 --             410,700 (2)
Chairman of the Board of Directors

Terrance M. McCarthy                       47,800               31,000                 --             581,200 (3)
President and
Chief Executive Officer

Lisa K. Vansickle                              --                2,200                 --              45,000 (4)
Senior Vice President
and Chief Financial Officer

Daniel W. Jasper                           26,500                8,400                 --             222,000 (5)
Executive Vice President
and Chief Credit Officer

Allen H. Blake                            310,500               85,800           (144,000) (6)      1,363,400 (7)
(Former President and
Chief Executive Officer)

Steven F. Schepman                             --                  300                 --               5,400 (8)
Executive Vice President and
Director of Corporate Development and
Business Segments
(Former Chief Financial Officer)

----------------------
(1)  All executive contributions represent the deferral of base salary and/or  bonus payments reflected in the "Summary
     Compensation Table." We did not make any discretionary contributions under the  NQDC  Plan as  of and for the year
     ended December 31, 2007.
(2)  Of this amount, $305,500 represents deferrals of cash consideration from  prior years  that were  reflected in the
     "Summary Compensation Table" in our  Annual Report on Form 10-K  for  the  relevant years.  The  remaining balance
     represents the cumulative earnings on the original deferred amounts and the participant's 2007 activity.
(3)  Of this amount, $403,300  represents  deferrals  of  cash  consideration  from  prior years. The remaining balance
     represents the cumulative earnings on the original deferred amounts and the participant's 2007 activity.
(4)  Of this amount,  $33,200  represents  deferrals  of  cash  consideration from  prior  years. The remaining balance
     represents the cumulative earnings on the original deferred amounts and the participant's 2007 activity.
(5)  Of this amount, $160,000 represents deferrals of cash consideration from  prior years  that  were reflected in the
     "Summary  Compensation  Table"  in our  Annual  Report  on Form 10-K for the relevant years. The remaining balance
     represents the cumulative earnings on the original deferred amounts and the participant's 2007 activity.
(6)  Following  his  retirement  effective  on March 31, 2007,  Mr. Allen H. Blake  received  the  first  of ten annual
     distributions of his NQDC Plan participant account balance, which is fully vested.
(7)  Of this amount, $906,700 represents deferrals of cash consideration from  prior  years  that were reflected in the
     "Summary  Compensation  Table" in  our  Annual  Report  on Form 10-K for the relevant years. The remaining balance
     represents the cumulative earnings on the original deferred amounts and the participant's 2007 activity, including
     a distribution of $144,000 paid in 2007.
(8)  Of this amount, $5,000 represents deferrals of cash consideration from  prior years  tha t were  reflected  in the
     "Summary  Compensation  Table"  in  our  Annual Report on Form 10-K for the relevant years. The remaining  balance
     represents the cumulative earnings on the original deferred amounts and the participant's 2007 activity.
</TABLE>

<PAGE>

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

Compensation of Directors. The following table sets forth compensation earned by
the named non-employee directors for the year ended December 31, 2007:

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

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

         Gordon A. Gundaker          $ 29,750           29,750

         David L. Steward (1)          29,750           29,750

         Douglas H. Yaeger (1)(2)      34,000           34,000

         -------------------------
         (1)  Fees paid for Messrs. Steward and Yaeger include payments deferred
              in  our  NQDC  Plan  of  $29,750  and $34,000, respectively, or an
              aggregate of $63,750. Earnings by the directors on their NQDC Plan
              balances  did  not  include  any   above-market  or   preferential
              earnings.
         (2)  Mr. Yaeger serves as Chairman of the Audit Committee and the Audit
              Committee Financial Expert.

Our executive officers that are also directors do not receive remuneration other
than  salaries  and bonuses for  serving on our Board of  Directors.  Only those
directors who are neither our employees nor employees of any of our subsidiaries
receive cash  remuneration  for their services as directors.  Effective with the
October 2007 Board and Audit Committee  meetings,  such  non-employee  directors
received  a fee of $3,000 for each Board  meeting  attended  and $1,000 for each
Audit Committee meeting  attended.  Mr. Yaeger also received a fee of $1,250 per
calendar  quarter for his service as  Chairman of the Audit  Committee.  Messrs.
Yaeger,  Gundaker and Steward also received a fee of $3,750 per calendar quarter
as a retainer for their service as members of the Board of  Directors.  Prior to
the October 2007 meetings,  such non-employee directors received a fee of $3,000
for each Board  meeting  attended  and $1,000 for each Audit  Committee  meeting
attended.  Mr. Yaeger also received a fee of $4,000 per calendar quarter for his
service as Chairman of the Audit  Committee,  and Messrs.  Gundaker  and Steward
also received a fee of $3,000 per calendar  quarter for their service as members
of the  Audit  Committee.  Our  non-employee  directors  are  also  eligible  to
participate   in  our  NQDC  Plan.  Our  directors  do  not  receive  any  other
compensation,  and there are no arrangements for amounts to be paid to directors
upon  resignation  or any  other  termination  of such  director  or a change in
control of the Company.  The Audit  Committee is currently the only committee of
our Board of Directors.

Compensation  Committee Interlocks and Insider  Participation.  We do not have a
compensation committee, therefore, our Board of Directors performs the functions
of such a committee.  Messrs.  Dierberg,  McCarthy  and  Schepman  serve or have
served as executive  officers  and/or members of our Board of Directors.  Except
for the foregoing, none of our executive officers served during 2007 as a member
of  our  compensation  committee,  or any  other  committee  performing  similar
functions,  or as a director of another entity,  any of whose executive officers
or directors served on our Board of Directors.

See further information  regarding  transactions with related parties in Note 19
to our Consolidated  Financial  Statements appearing on pages 104 through 106 of
this report.

Compensation Committee Report.

Our  Board of  Directors,  which  performs  the  functions  of our  compensation
committee,  has reviewed the Compensation  Discussion and Analysis and discussed
such  with  management.  Based on such  review  and  discussions,  the  Board of
Directors  recommended the  Compensation  Discussion and Analysis be included in
the Company's  Annual Report on Form 10-K as of and for the year ended  December
31, 2007.

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

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



<PAGE>


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

The following table sets forth, as of March 26, 2008,  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, Clayton, Missouri 63105. Mr. James F. Dierberg, our Chairman
      of the Board, and Mrs. Mary W. Dierberg, are husband and wife, and Messrs. James F. Dierberg II and Michael
      J. Dierberg and Mrs. Ellen D. Schepman,formerly Ms. Ellen C. Dierberg, are their adult children.
(2)   Due to the relationship between Mr. James F. Dierberg, his wife and their  children, Mr. Dierberg is deemed
      to share voting and investment power over these shares.
(3)   Due to the relationship between Mr. James F. Dierberg, his wife and First  Bank, Mr. Dierberg is  deemed to
      share voting and investment power over these shares.
(4)   Convertible into common stock, based on the appraised value of the common  stock at the date of conversion.
      Assuming an appraised value of the common stock equal to  the book  value, the  number of shares of  common
      stock into which the Class A Preferred Stock is convertible at December 31, 2007 is  355, which  shares are
      not included in the above table.
(5)   Sole voting and investment power.

</TABLE>

<PAGE>


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

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

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

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

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

Transactions  with  related  parties,  including  transactions  with  affiliated
persons and  entities,  are described in Note 19 to our  Consolidated  Financial
Statements on pages 104 through 106 of this report.

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

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



<PAGE>


Item 14.  Principal Accounting Fees and Services

Fees of Independent Registered Public Accounting Firm

During  2007 and 2006,  KPMG LLP  served as our  Independent  Registered  Public
Accounting  Firm and provided  services to our  affiliates and us. The following
table sets forth fees for professional  audit services  rendered by KPMG LLP for
the audit of our consolidated  financial  statements and other audit services in
2007 and 2006:

<TABLE>
<CAPTION>
                                                                                       2007          2006
                                                                                       ----          ----

<S>                   <C>                                                           <C>             <C>
           Audit fees (1).......................................................    $ 610,500       601,500
           Audit related fees...................................................           --            --
           Tax fees (2).........................................................           --        82,637
           All other fees.......................................................           --            --
                                                                                    ---------      --------
                  Total.........................................................    $ 610,500       684,137
                                                                                    =========      ========
          ------------------------
          (1)  For 2007 and 2006,  audit fees include the  audits  of  the  consolidated financial  statements of
               First Banks and SBLS LLC, as well as services provided for reporting requirements under FDICIA and
               mortgage  banking  activities,  which  are  included  in  the audit fees of First Banks,  as these
               services  are  closely  related  to the  audit of First  Banks' consolidated financial statements.
               Audit fees also include other accounting and reporting consultations.
          (2)  For 2006, 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 our  independent
auditors.  Under the policy, the Audit Committee, or its designated member, must
pre-approve  services  prior  to  commencement  of the  specified  service.  The
requests for pre-approval are submitted to the Audit Committee or its designated
member by the  Director of Audit with a statement  as to whether in his/her view
the request is consistent with the Securities and Exchange Commission's rules on
auditor independence.  The Audit Committee reviews the pre-approval requests and
the fees paid for such services at their regularly  scheduled quarterly meetings
or at special meetings.

<PAGE>

                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules

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

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

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

         (b)  The index of required  exhibits is included beginning on  page 116
              of this Report.

         (c)  Not Applicable.



<PAGE>


Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------

Management of First Banks,  Inc. (the Company) is responsible  for  establishing
and  maintaining  adequate  internal  control  over  financial  reporting.   The
Company's internal control over financial  reporting is a process designed under
the  supervision  of the  President  and Chief  Executive  Officer and the Chief
Financial Officer to provide reasonable  assurance  regarding the reliability of
financial  reporting and the  preparation  of financial  statements for external
purposes in accordance with U.S. generally accepted accounting principles.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in circumstances or that the degree of compliance
with the policies and procedures may deteriorate.

On November 30, 2007, the Company  completed its  acquisition of Coast Financial
Holdings,  Inc. and its wholly owned banking  subsidiary,  Coast Bank of Florida
(collectively, CFHI). Coast Bank of Florida was merged with and into First Bank,
the Company's indirect wholly owned subsidiary, on November 30, 2007. Management
has excluded internal control over financial reporting associated with CFHI from
its assessment of the effectiveness of internal control over financial reporting
as of December 31, 2007.  As of December 31, 2007,  the assets  associated  with
CFHI represented  approximately  6.1% of the total assets of the Company.  Total
revenue, defined as net interest income and noninterest income,  associated with
CFHI  included in the Company's  total  revenue for the year ended  December 31,
2007 was limited to the period from  December 1, 2007 to December 31, 2007,  and
represented  0.1% of the Company's total revenue for the year ended December 31,
2007.

Management  assessed the  effectiveness  of the Company's  internal control over
financial reporting as of December 31, 2007, based on the framework set forth by
the Committee of Sponsoring Organizations of the Treadway Commission in Internal
Control - Integrated Framework.  Based on that assessment,  management concluded
that, as of December 31, 2007,  the Company's  internal  control over  financial
reporting is effective based on the criteria  established in Internal  Control -
Integrated Framework.

This  annual  report  does not include an  attestation  report of the  Company's
Independent  Registered Public  Accounting Firm regarding  internal control over
financial  reporting.  Management's report was not subject to attestation by the
Company's  Independent  Registered  Public Accounting Firm pursuant to temporary
rules of the United States  Securities and Exchange  Commission  that permit the
Company to provide only management's report in this annual report.





<PAGE>


                                FIRST BANKS, INC.

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






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

We have audited the  accompanying  consolidated  balance  sheets of First Banks,
Inc. and  subsidiaries  (the Company) as of December 31, 2007 and 2006,  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, 2007. 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,  2007 and 2006,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended December 31, 2007, in conformity with U.S. generally  accepted  accounting
principles.

As  discussed  in note 1 to the  consolidated  financial  statements,  effective
January 1, 2007,  the  Company  adopted  Financial  Accounting  Standards  Board
Interpretation  No.  48 --  Accounting  for  Uncertainty  in  Income  Taxes,  an
Interpretation  of  Statement  of  Financial  Accounting  Standards  No.  109 --
Accounting for Income Taxes.




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


St. Louis, Missouri
March 26, 2008


<PAGE>

<TABLE>
<CAPTION>

                                                   FIRST BANKS, INC.

                                             CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------

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

                                                                                              December 31,
                                                                                      ----------------------------
                                                                                          2007             2006
                                                                                          ----             ----

                                                        ASSETS
                                                        ------

Cash and cash equivalents:
<S>                                                                                   <C>                  <C>
     Cash and due from banks........................................................  $   217,597          215,974
     Short-term investments.........................................................       14,078          153,583
                                                                                      -----------       ----------
          Total cash and cash equivalents...........................................      231,675          369,557
                                                                                      -----------       ----------

Investment securities:
     Trading........................................................................           --           81,168
     Available for sale.............................................................    1,000,392        1,359,729
     Held to maturity (fair value of $19,078 and $23,971, respectively).............       18,879           24,049
                                                                                      -----------       ----------
          Total investment securities...............................................    1,019,271        1,464,946
                                                                                      -----------       ----------

Loans:
     Commercial, financial and agricultural.........................................    2,382,067        1,934,912
     Real estate construction and development.......................................    2,141,234        1,832,504
     Real estate mortgage...........................................................    4,211,285        3,615,148
     Consumer and installment.......................................................       97,117           83,008
     Loans held for sale............................................................       66,079          216,327
                                                                                      -----------       ----------
          Total loans...............................................................    8,897,782        7,681,899
     Unearned discount..............................................................      (14,528)         (15,418)
     Allowance for loan losses......................................................     (168,391)        (145,729)
                                                                                      -----------       ----------
          Net loans.................................................................    8,714,863        7,520,752
                                                                                      -----------       ----------

Bank premises and equipment, net....................................................      238,331          178,417
Goodwill and other intangible assets................................................      315,651          295,382
Bank-owned life insurance...........................................................      116,619          113,778
Deferred income taxes...............................................................      138,618          100,175
Other assets........................................................................      122,332          115,707
                                                                                      -----------       ----------
          Total assets..............................................................  $10,897,360       10,158,714
                                                                                      ===========       ==========

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

Deposits:
     Noninterest-bearing demand.....................................................  $ 1,259,123        1,281,108
     Interest-bearing demand........................................................      980,850          981,939
     Savings and money market.......................................................    2,716,726        2,352,575
     Time deposits of $100 or more..................................................    1,546,857        1,419,579
     Other time deposits............................................................    2,645,637        2,407,885
                                                                                      -----------       ----------
          Total deposits............................................................    9,149,193        8,443,086
Other borrowings....................................................................      376,123          373,899
Notes payable.......................................................................       39,000           65,000
Subordinated debentures.............................................................      353,752          297,966
Deferred income taxes...............................................................       46,834           42,826
Accrued expenses and other liabilities..............................................       59,426          130,033
Minority interest in subsidiary.....................................................        5,544            5,469
                                                                                      -----------       ----------
          Total liabilities.........................................................   10,029,872        9,358,279
                                                                                      -----------       ----------
<PAGE>

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

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued and outstanding.           --               --
     Class A convertible, adjustable rate, $20.00 par value, 750,000
       shares authorized, 641,082 shares issued and outstanding.....................       12,822           12,822
     Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
       160,505 shares issued and outstanding........................................          241              241
Common stock, $250.00 par value, 25,000 shares authorized,
     23,661 shares issued and outstanding...........................................        5,915            5,915
Additional paid-in capital..........................................................        9,685            9,685
Retained earnings...................................................................      843,782          784,864
Accumulated other comprehensive loss................................................       (4,957)         (13,092)
                                                                                      -----------       ----------
          Total stockholders' equity................................................      867,488          800,435
                                                                                      -----------       ----------
          Total liabilities and stockholders' equity................................  $10,897,360       10,158,714
                                                                                      ===========       ==========

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


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

                                         CONSOLIDATED STATEMENTS OF INCOME
------------------------------------------------------------------------------------------------------------------

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

                                                                                     Years Ended December 31,
                                                                                ----------------------------------
                                                                                   2007        2006         2005
                                                                                   ----        ----         ----
 Interest income:
<S>                                                                              <C>          <C>          <C>
    Interest and fees on loans...............................................   $ 629,825     581,503      424,095
    Investment securities:
      Taxable................................................................      61,785      57,017       65,895
      Nontaxable.............................................................       1,604       1,875        1,739
    Short-term investments...................................................       6,699       5,909        2,211
                                                                                ---------    --------     --------
        Total interest income................................................     699,913     646,304      493,940
                                                                                ---------    --------     --------
 Interest expense:
    Deposits:
      Interest-bearing demand................................................       9,183       8,147        4,398
      Savings and money market...............................................      79,804      53,297       29,592
      Time deposits of $100 or more..........................................      71,480      59,114       28,010
      Other time deposits....................................................     112,420      96,138       65,157
    Other borrowings.........................................................      16,634      16,803       18,240
    Notes payable............................................................       2,426       5,530        2,305
    Subordinated debentures..................................................      24,514      22,833       20,557
                                                                                ---------    --------     --------
        Total interest expense...............................................     316,461     261,862      168,259
                                                                                ---------    --------     --------
        Net interest income..................................................     383,452     384,442      325,681
 Provision for loan losses...................................................      75,000      12,000       (4,000)
                                                                                ---------    --------     --------
        Net interest income after provision for loan losses..................     308,452     372,442      329,681
                                                                                ---------    --------     --------
 Noninterest income:
    Service charges on deposit accounts and customer service fees............      46,834      43,310       39,776
    Gain on loans sold and held for sale.....................................      14,068      26,020       20,804
    Net loss on investment securities........................................      (1,646)     (1,813)      (2,873)
    Bank-owned life insurance investment income..............................       3,841       3,103        4,860
    Investment management income.............................................       7,111       8,412        8,573
    Insurance fee and commission income......................................       6,860       4,848           --
    Other....................................................................      26,201      29,063       24,945
                                                                                ---------    --------     --------
        Total noninterest income.............................................     103,269     112,943       96,085
                                                                                ---------    --------     --------
 Noninterest expense:
    Salaries and employee benefits...........................................     172,510     166,864      139,764
    Occupancy, net of rental income..........................................      32,671      26,953       22,081
    Furniture and equipment..................................................      19,683      16,960       16,015
    Postage, printing and supplies...........................................       6,747       6,721        5,743
    Information technology fees..............................................      36,305      37,099       35,472
    Legal, examination and professional fees.................................       9,893       8,783        9,319
    Amortization of intangible assets........................................      12,419       8,195        4,850
    Advertising and business development.....................................       6,933       7,128        7,043
    Charitable contributions.................................................       5,942       6,462        5,922
    Other....................................................................      41,147      34,051       31,429
                                                                                ---------    --------     --------
        Total noninterest expense............................................     344,250     319,216      277,638
                                                                                ---------    --------     --------
        Income before provision for income taxes and minority interest in
           income (loss) of subsidiary.......................................      67,471     166,169      148,128
 Provision for income taxes..................................................      10,159      55,062       52,509
                                                                                ---------    --------     --------
        Income before minority interest in income (loss) of subsidiary.......      57,312     111,107       95,619
 Minority interest in income (loss) of subsidiary............................          78        (587)      (1,287)
                                                                                ---------    --------     --------
        Net income...........................................................      57,234     111,694       96,906
 Preferred stock dividends...................................................         786         786          786
                                                                                ---------    --------     --------
        Net income available to common stockholders..........................   $  56,448     110,908       96,120
                                                                                =========    ========     ========

 Basic earnings per common share.............................................   $2,385.68    4,687.38     4,062.36
                                                                                =========    ========     ========

 Diluted earnings per common share...........................................   $2,379.45    4,630.72     4,007.46
                                                                                =========    ========     ========

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

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


<PAGE>

<TABLE>
<CAPTION>
                                                            FIRST BANKS, INC.

                           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                                  Three Years Ended December 31, 2007

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

                                         (dollars expressed in thousands, except per share data)



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

<S>                                                       <C>        <C>     <C>         <C>        <C>          <C>        <C>
Balances, January 1, 2005...............................  $12,822    241     5,915       5,910      577,836      (1,831)    600,893
                                                                                                                           --------
Year ended December 31, 2005:
    Comprehensive income:
      Net income........................................       --     --        --          --       96,906          --      96,906
      Other comprehensive loss, net of tax:
        Unrealized losses on investment securities......       --     --        --          --           --     (15,659)    (15,659)
        Reclassification adjustment for investment
           securities losses included in net income.....       --     --        --          --           --       1,867       1,867
        Derivative instruments:
           Current period transactions..................       --     --        --          --           --      (4,283)     (4,283)
                                                                                                                           --------
    Total comprehensive income..........................                                                                     78,831
    Class A preferred stock dividends, $1.20 per share..       --     --        --          --         (769)         --        (769)
    Class B preferred stock dividends, $0.11 per share..       --     --        --          --          (17)         --         (17)
                                                          -------   ----    ------      ------     --------    --------    --------
Balances, December 31, 2005.............................   12,822    241     5,915       5,910      673,956     (19,906)    678,938
                                                                                                                           --------
Year ended December 31, 2006:
    Comprehensive income:
      Net income........................................       --     --        --          --      111,694          --     111,694
      Other comprehensive income, net of tax:
        Unrealized gains on investment securities.......       --     --        --          --           --       3,666       3,666
        Reclassification adjustment for investment
           securities losses included in net income.....       --     --        --          --           --       1,242       1,242
        Derivative instruments:
           Current period transactions..................       --     --        --          --           --       1,906       1,906
                                                                                                                           --------
    Total comprehensive income..........................                                                                    118,508
    Adjustment for the utilization of net operating
        losses associated with prior acquisitions.......       --     --        --       3,775           --          --       3,775
    Class A preferred stock dividends, $1.20 per share..       --     --        --          --         (769)         --        (769)
    Class B preferred stock dividends, $0.11 per share..       --     --        --          --          (17)         --         (17)
                                                          -------   ----    ------      ------     --------    --------    --------
Balances, December 31, 2006.............................   12,822    241     5,915       9,685      784,864     (13,092)    800,435
                                                                                                                           --------
Year ended December 31, 2007:
    Comprehensive income:
      Net income........................................       --     --        --          --       57,234          --      57,234
      Other comprehensive income, net of tax:
        Unrealized losses on investment securities......       --     --        --          --           --      (1,135)     (1,135)
        Reclassification adjustment for investment
           securities losses included in net income.....       --     --        --          --           --         122         122
        Derivative instruments:
           Current period transactions..................       --     --        --          --           --       9,148       9,148
                                                                                                                           --------
    Total comprehensive income..........................                                                                     65,369
    Cumulative effect of change in accounting principle.       --     --        --          --        2,470          --       2,470
    Class A preferred stock dividends, $1.20 per share..       --     --        --          --         (769)         --        (769)
    Class B preferred stock dividends, $0.11 per share..       --     --        --          --          (17)         --         (17)
                                                          -------   ----    ------      ------     --------    --------    --------
Balances, December 31, 2007.............................  $12,822    241     5,915       9,685      843,782      (4,957)    867,488
                                                          =======   ====    ======      ======     ========    ========    ========


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


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

                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------------------

                                              (dollars expressed in thousands)
                                                                                      Years ended December 31,
                                                                               --------------------------------------
                                                                                   2007          2006          2005
                                                                                   ----          ----          ----
Cash flows from operating activities:
<S>                                                                              <C>            <C>           <C>
     Net income..............................................................  $   57,234       111,694        96,906
     Adjustments to reconcile net income to net cash provided by
         (used in) operating activities:
       Depreciation and amortization of bank premises and equipment..........      21,610        18,912        17,381
       Amortization of intangible assets.....................................      12,419         8,195         4,850
       Other amortization, net of accretion..................................       3,941         5,668        11,261
       Originations of loans held for sale...................................    (508,391)   (1,000,765)   (1,327,890)
       Proceeds from sales of loans held for sale............................     669,571     1,161,224     1,187,671
       Payments received on loans held for sale..............................      16,038        30,312        17,070
       Provision for loan losses.............................................      75,000        12,000        (4,000)
       Provision for current income taxes....................................      15,731        44,854        53,725
       Provision for deferred income taxes...................................      (5,572)       10,208        (1,216)
       Decrease (increase) in accrued interest receivable....................       5,542        (9,781)       (2,280)
       (Decrease) increase in accrued interest payable.......................     (12,854)        6,230         6,115
       Proceeds from sales of trading securities.............................      81,038         9,947            --
       Maturities of trading securities......................................      16,651           989            --
       Purchases of trading securities.......................................     (17,939)      (88,494)       (3,389)
       Gain on loans sold and held for sale..................................     (14,068)      (26,020)      (20,804)
       Net loss on investment securities.....................................       1,646         1,813         2,873
       Gain on sales of branches, net of expenses............................      (1,018)           --            --
       Other operating activities, net.......................................     (24,253)      (33,182)      (50,472)
       Minority interest in income (loss) of subsidiary......................          78          (587)       (1,287)
                                                                               ----------    ----------    ----------
               Net cash provided by (used in) operating activities...........     392,404       263,217       (13,486)
                                                                               ----------    ----------    ----------
Cash flows from investing activities:
     Cash received (paid) for acquired entities, net of cash and
       cash equivalents (paid) received......................................         545      (204,690)      (11,579)
     Cash paid for sale of branches, net of cash and cash equivalents sold...     (48,926)           --            --
     Proceeds from sales of investment securities available for sale.........     170,699       198,061       147,120
     Maturities of investment securities available for sale..................   1,040,690     1,003,970       658,803
     Maturities of investment securities held to maturity....................       5,271         2,887         5,635
     Purchases of investment securities available for sale...................    (769,845)   (1,065,738)     (325,642)
     Purchases of investment securities held to maturity.....................        (133)         (865)       (6,509)
     Proceeds from sales of commercial loans held for sale...................      33,471        68,350        14,024
     Net increase in loans...................................................    (826,731)     (510,054)     (569,255)
     Recoveries of loans previously charged-off..............................       8,675        15,394        19,757
     Purchases of bank premises and equipment................................     (52,788)      (37,904)      (17,128)
     Sale of minority interest in subsidiary.................................          --            --         7,350
     Other investing activities, net.........................................      10,108            12         1,834
                                                                               ----------    ----------    ----------
               Net cash used in investing activities.........................    (428,964)     (530,577)      (75,590)
                                                                               ----------    ----------    ----------
Cash flows from financing activities:
     Increase (decrease) in demand, savings and money market deposits........     204,038        10,185       (50,119)
     (Decrease) increase in time deposits....................................    (232,870)      415,562       199,255
     Decrease in Federal Home Loan Bank advances.............................     (36,368)      (43,410)       (6,144)
     Increase (decrease) in federal funds purchased..........................      76,500            --           (78)
     Decrease in securities sold under agreements to repurchase..............     (80,477)     (135,464)      (59,232)
     Advances drawn on notes payable.........................................      35,000            --       100,000
     Repayments of notes payable.............................................     (61,000)      (35,000)      (15,000)
     Proceeds from issuance of subordinated debentures.......................      77,322       139,178            --
     Repayments of subordinated debentures...................................     (82,681)           --       (59,278)
     Payment of preferred stock dividends....................................        (786)         (786)         (786)
                                                                               ----------    ----------    ----------
               Net cash (used in) provided by financing activities...........    (101,322)      350,265       108,618
                                                                               ----------    ----------    ----------
               Net (decrease) increase in cash and cash equivalents..........    (137,882)       82,905        19,542
Cash and cash equivalents, beginning of year.................................     369,557       286,652       267,110
                                                                               ----------    ----------    ----------
Cash and cash equivalents, end of year.......................................  $  231,675       369,557       286,652
                                                                               ==========    ==========    ==========

<PAGE>

Supplemental disclosures of cash flow information:
     Cash paid during the period for:
       Interest on liabilities...............................................  $  329,315       255,632       162,144
       Income taxes..........................................................       8,961        45,497        56,591
                                                                               ==========    ==========    ==========
     Noncash investing and financing activities:
       Securitization and transfer of loans to investment securities.........  $  101,869       138,944            --
       Loans held for sale transferred to loan portfolio.....................     116,391            --            --
       Loans transferred to other real estate................................      16,269         7,542         3,737
                                                                               ==========    ==========    ==========
     Business Combinations:
       Fair value of tangible assets acquired (noncash)......................  $  810,847       608,123       239,988
       Goodwill and other intangible assets recorded with
          net assets acquired................................................      33,304       111,676        28,243
       Liabilities assumed...................................................    (844,696)     (515,109)     (256,652)
                                                                               ==========    ==========    ==========

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

</TABLE>

<PAGE>


                                FIRST BANKS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

Principles of Consolidation.  The consolidated  financial statements include the
accounts of the parent company and its  subsidiaries,  giving effect to minority
interest,  as more fully  described  below,  and in Note 19 to the  Consolidated
Financial  Statements.  All significant  intercompany  accounts and transactions
have been eliminated.  Certain  reclassifications  of 2006 and 2005 amounts have
been made to conform to the 2007 presentation.

First Banks operates  through its wholly owned  subsidiary bank holding company,
The San Francisco Company (SFC),  headquartered in St. Louis,  Missouri, and its
wholly owned subsidiary holding company, Coast Financial Holdings,  Inc. (CFHI),
headquartered in Bradenton, Florida.

Prior to First Banks'  acquisition  of CFHI on November  30,  2007,  First Bank,
headquartered in St. Louis,  Missouri,  was a wholly owned banking subsidiary of
SFC. On November 30, 2007,  First Banks  completed its  acquisition of CFHI, and
its wholly owned banking  subsidiary,  Coast Bank of Florida  (Coast Bank).  The
issued and  outstanding  shares of common stock of Coast Bank were exchanged for
the newly issued and outstanding  shares of non-voting  Series B common stock of
First Bank, and Coast Bank was subsequently  merged with and into First Bank. As
a result,  SFC was owner of 100% of the voting  Series A  outstanding  shares of
common stock of First Bank and CFHI was owner of 100% of the non-voting Series B
outstanding  shares of common stock of First Bank.  Thus,  First Bank was 96.89%
owned by SFC and 3.11% owned by CFHI as of December 31, 2007.

First Bank operates through its branch banking offices and  subsidiaries:  First
Bank Business Capital,  Inc.;  Missouri Valley Partners,  Inc. (MVP);  Adrian N.
Baker & Company (Adrian Baker); Universal Premium Acceptance Corporation and its
wholly owned  subsidiary,  UPAC of  California,  Inc.;  and Small  Business Loan
Source LLC (SBLS LLC). All of the subsidiaries are wholly owned, except for SBLS
LLC,  which is  76.0%  owned by First  Bank  and  24.0%  owned by First  Capital
America,  Inc. (FCA) as of December 31, 2007, as further described in Note 19 to
the Consolidated Financial Statements.

Cash and Cash  Equivalents.  Cash,  due from banks and  short-term  investments,
which include federal funds sold and interest-bearing  deposits,  are considered
to be cash and cash equivalents for purposes of the  consolidated  statements of
cash flows.  Federal  funds sold were $152.2  million at December 31, 2006,  and
interest-bearing  deposits  were $14.1  million and $1.4 million at December 31,
2007 and 2006, 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  $26.5  million  and $24.7  million at
December 31, 2007 and 2006, respectively.

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

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

Investment  securities  designated  as available for sale,  which  represent any
security that First Banks has no immediate plan to sell but which may be sold in
the future under  different  circumstances,  are stated at fair value.  Realized
gains and losses are included in noninterest income, based on the amortized cost
of the individual  security sold.  Unrealized  gains and losses,  net of related
income tax  effects,  are recorded in  accumulated  other  comprehensive  income
(loss).  All previous fair value adjustments  included in the separate component
of  accumulated  other  comprehensive  income  (loss)  are  reversed  upon sale.
Premiums  and  discounts  incurred  relative  to the  par  value  of  securities
purchased are amortized or accreted,  respectively,  on the  level-yield  method
taking into consideration the level of current and anticipated prepayments.
<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 fair  value  of any  available-for-sale  or  held-to-maturity
investment  security  below its  carrying  value that is deemed to be other than
temporary results in a reduction in the cost basis of the carrying value to fair
value. The other-than-temporary  impairment is charged to noninterest income and
a  new  cost  basis  is  established.   When  determining   other-than-temporary
impairment, consideration is given as to whether First 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 and costs are deferred and accreted to interest
income over the  estimated  life of the loans using the interest  method.  Loans
held for  portfolio  are stated at cost as First Banks has the ability and it is
management's intention to hold them to maturity.

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

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

In accordance  with Statement of Position 03-3,  Accounting for Certain Loans or
Debt Securities  Acquired in a Transfer (SOP 03-3),  acquired impaired loans are
classified as nonaccrual loans and are initially  measured at fair value with no
allocated allowance for loan losses. An allowance for loan losses is recorded to
the extent there is further credit  deterioration  subsequent to the acquisition
date.

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

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

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

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

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

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

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

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

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

Goodwill  and Other  Intangible  Assets.  Goodwill and other  intangible  assets
primarily  consist of goodwill,  core  deposit  intangibles  and  customer  list
intangibles. Goodwill and intangible assets with indefinite useful lives are not
amortized,  but instead  tested for  impairment  at least  annually.  Intangible
assets with definite useful lives are amortized over their respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance  with  Statement of Financial  Accounting  Standards  (SFAS) No. 144.
First Banks amortizes,  on a straight-line  basis, its core deposit intangibles,
customer list intangibles and other  intangibles.  Core deposit  intangibles and
customer  list  intangibles  are  amortized  over the  estimated  periods  to be
benefited,  which have been  estimated at five to seven  years,  and seven to 16
years, respectively.  Goodwill is not amortized, but instead, is tested annually
for impairment in accordance with First Banks' existing methods of measuring and
recording impairment losses, as described below.

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

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

The value of mortgage  servicing  rights is  adversely  affected  when  mortgage
interest  rates decline which  normally  causes  mortgage  loan  prepayments  to
increase. When loans are prepaid or refinanced,  the related unamortized balance
of the  mortgage  servicing  rights is  charged  to  amortization  expense.  The
determination  of the fair value of the mortgage  servicing  rights is performed
quarterly  based  upon an  independent  third  party  valuation.  Based on these
analyses,  a comparison of the fair value of the mortgage  servicing rights with
the carrying value of the mortgage servicing rights is made, with impairment, if
any,  recognized  at that time.  The  impairment  analyses  are  prepared  using
stratifications  of the mortgage  servicing rights based on the predominant risk
characteristics of the underlying mortgage loans, including size, interest rate,
weighted  average original term,  weighted average  remaining term and estimated
prepayment  speeds.  As part of these  analyses,  the fair value of the mortgage
servicing  rights for each  stratum is  compared  to the  carrying  value of the
mortgage servicing rights for each stratum.  To the extent the carrying value of
the mortgage  servicing rights exceeds the fair value of the mortgage  servicing
rights for a stratum,  First Banks recognizes  impairment equal to the amount by

<PAGE>

which the carrying value of the mortgage  servicing rights for a stratum exceeds
the fair value.  Impairment is recognized through a valuation  allowance that is
recorded as a reduction of mortgage  servicing rights.  The valuation  allowance
may be  reversed  based  upon  subsequent  improvement  in the  fair  value of a
stratum;  however,  First Banks does not  recognize  fair value of the  mortgage
servicing  rights in excess of the carrying value of mortgage  servicing  rights
for any  stratum.  Changes  in the  valuation  allowance  are  reflected  in the
consolidated statements of income in the periods in which the change occurs.

SBA servicing  rights are  capitalized  by allocating  the total cost of the SBA
loans to servicing rights and the loans (without  servicing rights) based on the
relative fair values of the two components.  The fair value of servicing  rights
is computed using the present value of the estimated  future servicing income in
excess of such income  estimated at a normal  servicing fee rate.  The servicing
rights, net of the valuation allowance, are amortized in proportion to, and over
the period of, the estimated net servicing  revenue of the underlying SBA loans,
which range from six to 25 years.  The weighted average  amortization  period of
the SBA servicing rights is  approximately  16 years.  The  determination of the
fair value of the SBA servicing rights is performed monthly based upon quarterly
independent  third  party  valuation  analyses.   Based  on  these  analyses,  a
comparison of the fair value of the SBA servicing rights with the carrying value
of the SBA servicing rights is made, with impairment, if any, recognized at that
time. The predominant risk  characteristics  of the underlying SBA loans used to
stratify SBA servicing rights for purposes of measuring impairment include size,
interest rate,  weighted average original term,  weighted average remaining term
and estimated  prepayment  speeds.  To the extent the carrying  value of the SBA
servicing rights exceeds the fair value of the SBA servicing rights, First Banks
recognizes impairment equal to the amount by which the carrying value of the SBA
servicing  rights  exceeds the fair value.  Impairment is  recognized  through a
valuation  allowance  that is recorded as a reduction of SBA  servicing  rights.
Changes in the valuation allowance are reflected in the consolidated  statements
of income in the  periods  in which the  change  occurs.  First  Banks  does not
recognize fair value of the SBA servicing rights in excess of the carrying value
of SBA servicing rights for any stratum.

On January 1, 2008, First Banks opted to measure  servicing rights at fair value
as permitted by SFAS No. 156 - Accounting for Servicing of Financial Assets. The
election of this option  resulted in the  recognition of a cumulative  effect of
change  in  accounting  principle  of $5.8  million,  which was  recorded  as an
increase to beginning  retained  earnings.  As such,  effective January 1, 2008,
changes  in the  fair  value  of  mortgage  and  SBA  servicing  rights  will be
recognized in earnings in the period in which the change occurs.

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 noninterest
expense as  incurred.  Other real estate was $11.2  million and $6.4  million at
December 31, 2007 and 2006, 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.

First  Banks   implemented   Financial   Accounting   Standards   Board   (FASB)
Interpretation  No.  48 --  Accounting  for  Uncertainty  in  Income  Taxes,  an
Interpretation  of SFAS No. 109 -- Accounting  for Income  Taxes,  on January 1,
2007 (FIN 48). The  implementation  of FIN 48 resulted in the  recognition  of a
cumulative effect of change in accounting  principle of $2.5 million,  which was
recorded as an increase to beginning retained earnings,  as further described in
Note 13 to the Consolidated Financial Statements.

In accordance  with FIN 48, First Banks'  policy is to  separately  disclose any
interest or penalties  arising from the  application  of federal or state income
taxes.  Interest  related to  unrecognized  tax benefits is included in interest
expense and  penalties  related to  unrecognized  tax  benefits  are included in
noninterest  expense.  There were no penalties related to tax matters accrued at
January 1, 2007,  nor did the Company  recognize any  penalties  during the year
ended December 31, 2007.
<PAGE>

First Banks and its  subsidiaries  file  income tax returns in the U.S.  federal
jurisdiction and various states.  Management of First Banks believes the accrual
for tax liabilities is adequate for all open audit years based on its assessment
of many  factors,  including  past  experience  and  interpretations  of tax law
applied to the facts of each matter.  This  assessment  relies on estimates  and
assumptions.  First Banks is no longer subject to U.S.  federal,  state or local
income tax  examination by tax authorities for the years prior to 2003, with the
exception of certain states where the statute of  limitations is four years.  In
those  circumstances,  First Banks is no longer subject to  examination  for the
years  prior to 2002.  At  December  31,  2007,  there were no state  income tax
examinations  in  process.  First  Banks  was  notified  in  December  2007 of a
scheduled  federal  tax  examination  for the 2004  tax  year.  However,  it was
subsequently closed during 2008 with a no change letter issued.

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

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

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



<PAGE>


(2)      ACQUISITIONS, INTEGRATION COSTS AND OTHER CORPORATE TRANSACTIONS

Completed  Acquisitions.  During the three years ended December 31, 2007,  First
Banks completed the following acquisitions:

<TABLE>
<CAPTION>
                                                                                                     Goodwill
                                                                          Total        Purchase      and Other
             Entity                                  Date                Assets          Price      Intangibles
             ------                                  ----                ------          -----      -----------
                                                                            (dollars expressed in thousands)
     2007
     ----
       Coast Financial Holdings, Inc.
<S>                                                                    <C>               <C>           <C>
         Bradenton, Florida                    November 30, 2007       $  660,400        12,100        10,600

       Royal Oaks Bancshares, Inc.
         Houston, Texas                        February 28, 2007          206,900        38,600        27,700
                                                                       ----------      --------      --------
                                                                       $  867,300        50,700        38,300
                                                                       ==========      ========      ========
     2006
     ----
       MidAmerica National Bank
         Peoria and Bloomington, Illinois
         Branch Offices (1)                    November 10, 2006       $  158,300            --         2,400

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

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

       San Diego Community Bank
         Chula Vista, California                August 15, 2006            91,700        25,500        11,200

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

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

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

       Adrian N. Baker & Company
         Clayton, Missouri                      March 31, 2006              3,000         7,400         9,500

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

       First National Bank of Sachse
         Sachse, Texas                          January 3, 2006            76,200        20,800        12,400
                                                                       ----------      --------      --------
                                                                       $  794,300       144,600       111,600
                                                                       ==========      ========      ========
     2005
     ----
       Northway State Bank
         Grayslake, Illinois                   October 31, 2005        $   50,400        10,300         5,400

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

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

       FBA Bancorp, Inc.
         Chicago, Illinois                      April 29, 2005             73,300        10,500         4,500
                                                                       ----------      --------      --------
                                                                       $  280,300        54,500        25,800
                                                                       ==========      ========      ========
     ----------------
     (1) First Bank acquired the branch offices through a purchase of certain assets  and  assumption  of  certain
         liabilities of the branch offices. Total assets consisted of cash received upon assumption of the deposit
         liabilities and loans.
     (2) In conjunction with the  acquisition of UPAC, First Bank  repaid  in  full  the  outstanding  senior  and
         subordinated  notes of UPAC, including  accumulated  accrued and unpaid interest, totaling $125.9 million.
</TABLE>
<PAGE>

Goodwill and other intangible assets  associated with the acquisitions  included
in the table above are not deductible for tax purposes.  For 2007, 2006 and 2005
acquisitions,  goodwill  and other  intangible  assets in the  amounts  of $38.3
million, $111.6 million and $25.8 million, respectively,  were assigned to First
Bank.

The consolidated financial statements include the financial position and results
of operations of the  aforementioned  transactions for the periods subsequent to
the  respective  acquisition  dates,  and the assets  acquired  and  liabilities
assumed were recorded at their  estimated fair value on the  acquisition  dates.
These fair value  adjustments for the  acquisitions  completed in 2007 represent
current  estimates and are subject to further  adjustments as the valuation data
is finalized.  The  aforementioned  acquisitions were funded from available cash
reserves,   borrowings  under  First  Banks'  term  loan  and  revolving  credit
agreements, and/or proceeds from the issuance of subordinated debentures.

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

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

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

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

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

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

On March 31, 2006, First Bank completed its acquisition of Adrian Baker for $7.4
million in cash and certain payments contingent on the future earnings of Adrian
Baker for each of the years in the three-year  period following the closing date
of the  transaction.  Adrian  Baker is an  insurance  brokerage  agency based in
Clayton,  Missouri that provides a comprehensive  range of employee  benefit and
commercial  and  personal   insurance   services  on  a  nationwide  basis.  The
acquisition  served to  diversify  First  Banks'  products  and services in this
specialized  industry.  The transaction was funded through internally  generated
funds. At the time of the  acquisition,  Adrian Baker had assets of $3.0 million
and  stockholders'  equity  of  $810,000.  Goodwill  was $5.8  million,  and the
customer list intangibles, which are being amortized over 15 years utilizing the
straight-line method, were $3.7 million. Adrian Baker operates as a wholly owned
subsidiary of First Bank.

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

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

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

On August 15, 2006, First Banks completed its acquisition of San Diego Community
Bank (SDCB) for $25.5 million in cash.  SDCB was  headquartered  in Chula Vista,
California,  which is located  approximately  ten miles  south of  downtown  San
Diego, and operated two other banking offices in Kearney Mesa and Otay Mesa. The
acquisition  served  to  expand  First  Banks'  banking  franchise  in  southern
California.  The transaction was funded through  internally  generated funds and
the issuance of subordinated debentures associated with the private placement of
$20.0 million of trust preferred  securities  through a newly formed  affiliated
statutory trust, as further  described in Note 12 to the Consolidated  Financial
Statements.  At the time of the  acquisition,  SDCB had assets of $91.7 million,
loans, net of unearned discount, of $78.6 million, deposits of $76.1 million and
stockholders' equity of $12.3 million.  Preliminary goodwill of $7.5 million was
subsequently  adjusted to $6.9 million, and the core deposit intangibles,  which
are being amortized over five years  utilizing the  straight-line  method,  were
$4.3  million.  SDCB was  merged  with and  into  First  Bank at the time of the
acquisition.
<PAGE>
On August 31, 2006,  First Banks completed its  acquisition of TeamCo,  Inc. and
its wholly owned banking subsidiary, Oak Lawn Bank (collectively,  Oak Lawn) for
$13.9 million in cash. Oak Lawn was headquartered in Oak Lawn,  Illinois,  which
is located  approximately  15 miles  southwest  of the  Chicago  Loop in Chicago
Southland,  and operated a second banking office in Orland Park, Illinois, which
is located approximately 39 miles southwest of downtown Chicago. The acquisition
served to expand  First  Banks'  banking  franchise  in Chicago,  Illinois.  The
transaction  was funded through  internally  generated funds and the issuance of
subordinated  debentures  associated with the private placement of $25.0 million
of trust preferred securities through a newly formed affiliated statutory trust,
as further described in Note 12 to the Consolidated Financial Statements. At the
time of the  acquisition,  Oak Lawn had assets of $67.9 million,  loans,  net of
unearned discount, of $43.1 million, deposits of $60.1 million and stockholders'
equity  of $5.5  million.  Goodwill  was  $7.3  million,  and the  core  deposit
intangibles,   which  are  being   amortized  over  five  years   utilizing  the
straight-line method, were $2.3 million. Oak Lawn was merged with and into First
Bank at the time of the acquisition.

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

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

On February  28,  2007,  First Banks  completed  its  acquisition  of Royal Oaks
Bancshares,  Inc. and its wholly owned banking subsidiary,  Royal Oaks Bank, ssb
(collectively,   Royal  Oaks)  for  $38.6  million  in  cash.   Royal  Oaks  was
headquartered in Houston, Texas and operated five banking offices in the Houston
area. In addition, at the time of the acquisition, Royal Oaks was in the process
of opening a de novo branch banking office located in the Heights, near downtown
Houston,  which subsequently opened on April 16, 2007. The acquisition served to
expand First Banks' banking  franchise in Houston,  Texas.  The  transaction was
funded  through  internally  generated  funds and the  issuance of  subordinated
debentures  associated  with the  private  placement  of $25.0  million of trust
preferred  securities  through a newly formed  affiliated  statutory  trust,  as
further described in Note 12 to the Consolidated  Financial  Statements.  At the
time of the acquisition,  Royal Oaks had assets of $206.9 million, loans, net of
unearned   discount,   of  $175.5  million,   deposits  of  $159.1  million  and
stockholders'  equity of $9.6  million.  Goodwill was $23.0 million and the core
deposit  intangibles,  which are being  amortized over five years  utilizing the
straight-line method, were $4.7 million.  Royal Oaks Bancshares,  Inc. and Royal
Oaks Bank,  ssb were merged with and into SFC and First Bank,  respectively,  at
the time of the acquisition.

On November 30, 2007,  First Banks  completed  its  acquisition  of CFHI and its
wholly owned  banking  subsidiary,  Coast Bank  (collectively,  Coast) for $12.1
million in cash. Coast was  headquartered in Bradenton,  Florida and operated 20
banking offices in Florida's Manatee, Pinellas, Hillsborough and Pasco counties.
In  addition,  at the time of the  acquisition,  Coast had two  planned  de novo
branch  banking  offices,  one  located  in the  Pinellas  County  community  of
Clearwater,  and the other located in Sarasota County. The acquisition served to
establish  First  Banks'  banking  franchise  in  the  state  of  Florida.   The
transaction  was funded through  internally  generated funds and the issuance of
subordinated  debentures  associated with the private placement of $15.0 million
of trust preferred securities through a newly formed affiliated statutory trust,
as further described in Note 12 to the Consolidated Financial Statements. At the
time of the  acquisition,  Coast had  assets of $660.4  million,  loans,  net of
unearned   discount,   of  $518.0  million,   deposits  of  $628.1  million  and
stockholders'  equity of $14.2 million.  Preliminary goodwill was $10.1 million,
the core  deposit  intangibles,  which  are  being  amortized  over  five  years
utilizing  the  straight-line   method,  were  $327,000  and  other  intangibles
associated with non-compete agreements, which are being amortized over two years
utilizing the  straight-line  method,  were $176,000.  CFHI operates as a wholly
owned  subsidiary  of First Banks and owns 100% of the newly  issued  non-voting
Class B common  stock of First  Bank.  Coast Bank was merged with and into First
Bank at the time of the acquisition,  and accordingly,  CFHI became the owner of
3.11%  of  First  Bank,  as  further  described  in  Note 1 to the  Consolidated
Financial Statements.

<PAGE>

Acquisition and Integration  Costs. First Banks accrues certain costs associated
with its acquisitions as of the respective consummation dates. The accrued costs
relate to adjustments to the staffing levels of the acquired  entities or to the
anticipated  termination of information  technology or item processing contracts
of the acquired entities prior to their stated contractual expiration dates. The
most  significant  costs that First Banks incurs  relate to salary  continuation
agreements,  or other similar  agreements,  of executive  management and certain
other  employees  of the  acquired  entities  that  were in  place  prior to the
acquisition dates. These agreements provide for payments that are triggered as a
result of the change in control of the acquired entity. Other severance benefits
for employees  that are terminated in  conjunction  with the  integration of the
acquired entities into First Banks' existing operations are normally paid to the
recipients  within 90 days of the respective  consummation date and are expensed
in the  consolidated  statements  of income as incurred.  The accrued  severance
balance of $1.1 million as of December 31, 2007,  as summarized in the following
table,  is  comprised  of  contractual  obligations  under  salary  continuation
agreements to seven individuals with remaining terms ranging from  approximately
one  month  to nine  years.  As the  obligation  to make  payments  under  these
agreements is accrued at the  consummation  date,  such payments do not have any
impact on the  consolidated  statements  of  income.  First  Banks  also  incurs
integration  costs  associated  with  acquisitions  that  are  expensed  in  the
consolidated  statements of income. These costs relate principally to additional
costs incurred in conjunction with the information technology conversions of the
respective entities.  The following table summarizes the cumulative  acquisition
and integration  costs  attributable to the Company's  acquisitions,  which were
accrued  as of the  consummation  dates of the  respective  acquisition  and are
reflected in accrued 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, 2004.........................   $   761                --               761
         Year Ended December 31, 2005:
           Amounts accrued during the year....................       785             1,265             2,050
           Payments...........................................    (1,004)           (1,131)           (2,135)
                                                                 -------           -------           -------
         Balance at December 31, 2005.........................       542               134               676
                                                                 -------           -------           -------
         Year Ended December 31, 2006:
           Amounts accrued during the year....................     1,702             1,949             3,651
           Payments...........................................    (1,858)           (2,083)           (3,941)
                                                                 -------           -------           -------
         Balance at December 31, 2006.........................       386                --               386
                                                                 -------           -------           -------
         Year Ended December 31, 2007:
           Amounts accrued during the year....................     1,492             2,061             3,553
           Payments...........................................      (807)           (2,061)           (2,868)
                                                                 -------           -------           -------
         Balance at December 31, 2007.........................   $ 1,071                --             1,071
                                                                 =======           =======           =======
</TABLE>

Other Corporate Transactions. On July 19, 2007, First Bank completed the sale of
two banking offices located in Denton and Garland,  Texas  (collectively,  Texas
Branch Offices) to Synergy Bank, SSB, a subsidiary of Premier Bancshares,  Inc.,
resulting in a pre-tax gain of $1.0 million. At the time of the transaction, the
Texas  Branch  Offices had loans,  net of  unearned  discount,  of $911,000  and
deposits of $52.0 million.

During the three years ended December 31, 2007,  First Bank opened the following
de novo branch offices:
<TABLE>
<CAPTION>

                         Branch Office Location                                Date Opened
                         ----------------------                                -----------
<S>                        <C>                                              <C>
                           Farmington, Missouri                             January 18, 2005
                           St. Louis, Missouri                              January 22, 2007
                           Katy (Houston), Texas                            February 26, 2007
                           Lincoln (Sacramento), California                  March 12, 2007
                           Dardenne Prairie (St. Louis), Missouri              May 9, 2007
                           Chula Vista (San Diego), California                June 25, 2007
                           Brentwood (San Francisco), California           September 24, 2007
                           Shadow Creek Ranch (Houston), Texas              October 15, 2007
                           Valencia (Los Angeles), California               October 29, 2007

</TABLE>

<PAGE>


(3)      INVESTMENTS IN DEBT AND EQUITY SECURITIES

Securities Available for Sale. The amortized cost,  contractual maturity,  gross
unrealized  gains and losses and fair value of investment  securities  available
for sale at December 31, 2007 and 2006 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, 2007:
   Carrying value:
<S>                                   <C>            <C>       <C>       <C>       <C>           <C>        <C>      <C>      <C>
     U.S. Treasury..................  $  75,116       --       --        --        75,116        19         --       75,135   2.49%
     U.S. Government sponsored
       agencies.....................     25,212   19,334       --       968        45,514       600         --       46,114   5.30
     Mortgage-backed securities.....      3,401   12,706   46,211   736,611       798,929     1,785    (16,755)     783,959   4.81
     State and political
       subdivisions.................      7,337   11,191   10,242     1,357        30,127       315         (8)      30,434   4.06
     Equity investments.............         --       --       --    29,747        29,747         5     (5,597)      24,155   4.05
     Federal Home Loan Bank and
       Federal Reserve Bank stock
       (no stated maturity).........     40,595       --       --        --        40,595        --         --       40,595   5.49
                                      ---------  -------  -------  --------     ---------    ------   --------    ---------
          Total.....................  $ 151,661   43,231   56,453   768,683     1,020,028     2,724    (22,360)   1,000,392   4.64
                                      =========  =======  =======  ========     =========    ======   ========    =========   ====

   Fair value:
     Debt securities................  $ 111,211   43,811   56,436   724,184
     Equity securities..............     40,595       --       --    24,155
                                      ---------  -------  -------  --------
          Total.....................  $ 151,806   43,811   56,436   748,339
                                      =========  =======  =======  ========

   Weighted average yield...........       3.85%    4.87%    4.47%     4.80%
                                      =========  =======  =======  ========

 December 31, 2006:
   Carrying value:
     U.S. Government sponsored
       agencies.....................  $ 344,636   29,737    4,032       966       379,371        81       (742)     378,710   4.99%
     Mortgage-backed securities.....        438   11,477   50,670   839,172       901,757       610    (19,514)     882,853   4.76
     State and political
        subdivisions................      4,102   16,294   11,493     2,122        34,011       260        (56)      34,215   3.90
     Equity investments ............         --       --       --    26,608        26,608     1,527       (234)      27,901   4.06
     Federal Home Loan Bank and
       Federal Reserve Bank stock
       (no stated maturity).........     36,050       --       --        --        36,050        --         --       36,050   5.49
                                      ---------  -------  -------  --------     ---------    ------   --------    ---------
          Total.....................  $ 385,226   57,508   66,195   868,868     1,377,797     2,478    (20,546)   1,359,729   4.81
                                      =========  =======  =======  ========     =========    ======   ========    =========   ====

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

   Weighted average yield...........       5.01%    4.69%    4.57%     4.75%
                                      =========  =======  =======  ========
</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, 2007 and 2006 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, 2007
   Carrying value:
<S>                                   <C>             <C>   <C>      <C>         <C>           <C>       <C>      <C>         <C>
     Mortgage-backed securities..     $     --        --    6,775    6,052       12,827        174       (52)     12,949      5.15%
     State and political
        subdivisions.............        1,081     3,889      821      261        6,052         82        (5)      6,129      4.29
                                      --------    ------   ------   ------      -------       ----      ----     -------
          Total..................     $  1,081     3,889    7,596    6,313       18,879        256       (57)     19,078      4.87
                                      ========    ======   ======   ======      =======       ====      ====     =======      ====

   Fair value:
     Debt securities.............     $  1,083     3,910    7,801    6,284
                                      ========    ======   ======   ======

   Weighted average yield........         3.71%     4.32%    5.13%    5.10%
                                      ========    ======   ======   ======

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

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

   Weighted average yield........         3.84%     4.21%    5.02%    5.07%
                                      ========    ======   ======   ======
</TABLE>

Proceeds  from sales of  available-for-sale  investment  securities  were $170.7
million,  $198.0  million and $147.1  million for the years ended  December  31,
2007,  2006 and 2005,  respectively.  Gross gains of $115,000 and $389,300  were
realized  on sales of  available-for-sale  investment  securities  for the years
ended  December  31,  2007 and 2006,  respectively.  There  were no gross  gains
recognized on the sale of these securities for the year ended December 31, 2005.
Gross gains of $147,000  and  $121,000  were  realized  on the  contribution  of
certain  available-for-sale  investment  securities for the years ended December
31,  2007  and  2006,  respectively,  as  further  described  in  Note 19 to the
Consolidated  Financial Statements.  Gross losses of $459,000,  $2.7 million and
$2.9 million were realized on sales of available-for-sale  investment securities
for the years ended December 31, 2007,  2006 and 2005,  respectively.  The gross
losses for the year ended December 31, 2006 included a loss of $2.7 million that
resulted  from the  sale of  $197.0  million  of  available-for-sale  investment
securities for liquidity  purposes,  including the related termination of $200.0
million in aggregate of term repurchase agreements, as further described in Note
5 and Note 10 to the Consolidated  Financial Statements.  The gross loss of $2.9
million for the year ended  December 31, 2005  resulted  from the sale of $150.0
million of  available-for-sale  investment  securities  for liquidity  purposes,
including the related termination of a $50.0 million term repurchase  agreement,
as further described in Note 5 to the Consolidated Financial Statements.

Proceeds from calls of investment  securities  were $7.3 million,  $27.5 million
and  $16.6  million  for the  years  ended  December  31,  2007,  2006 and 2005,
respectively.  Gross gains  realized on called  securities  were $11,700 for the
year ended  December  31,  2007.  There were no gross  gains  realized on called
securities  in 2006 and 2005.  Gross  losses of $500,  $2,100  and  $3,800  were
realized on called securities during the years ended December 31, 2007, 2006 and
2005,  respectively.  Net losses on trading securities were $1.5 million for the
year ended  December 31, 2007 and net gains on trading  securities  were $97,000
for the year ended  December 31, 2006.  The trading  portfolio was liquidated in
July 2007.

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

Investment  securities with a carrying value of approximately $561.2 million and
$586.4  million at December  31, 2007 and 2006,  respectively,  were  pledged in
connection  with  deposits  of public  and trust  funds,  securities  sold under
agreements to repurchase and for other purposes as required by law.

Gross  unrealized  losses on  investment  securities  and the fair  value of the
related  securities,  aggregated by investment  category and length of time that
individual  securities have been in a continuous  unrealized  loss position,  at
December 31, 2007 and 2006, were as follows:
<TABLE>
<CAPTION>

                                                                    December 31, 2007
                                       ---------------------------------------------------------------------------
                                         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>
   Mortgage-backed securities.......   $  59,902        (178)      511,820     (16,577)      571,722     (16,755)
   State and political subdivisions.         999          (1)        2,519          (7)        3,518          (8)
   Equity investments...............       8,581      (4,166)        3,391      (1,431)       11,972      (5,597)
                                       ---------     -------      --------    --------     ---------    --------
        Total.......................   $  69,482      (4,345)      517,730     (18,015)      587,212     (22,360)
                                       =========     =======      ========    ========     =========    ========

 Held to maturity:
   Mortgage-backed securities.......   $      --          --         4,703         (52)        4,703         (52)
   State and political subdivisions.          --          --           975          (5)          975          (5)
                                       ---------     -------      --------    --------     ---------    --------
        Total.......................   $      --          --         5,678         (57)        5,678         (57)
                                       =========     =======      ========    ========     =========    ========

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

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

U.S.  Government  sponsored  agencies  and  mortgage-backed   securities  -  The
unrealized losses on investments in mortgage-backed  securities and other agency
securities were caused by fluctuations in interest rates. The contractual  terms
of these securities are guaranteed by  government-sponsored  enterprises.  It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized  cost.  Because  First  Banks has the ability and intent to hold these
investments until a market price recovery or maturity, these investments are not
considered other-than-temporarily impaired. At December 31, 2007, the unrealized
losses  for  mortgage-backed  securities  for 12  months  or more  included  111
securities.  At December 31, 2006,  the  unrealized  losses for U.S.  government
sponsored  agencies  for 12  months  or more  included  19  securities,  and the
unrealized losses for mortgage-backed  securities for 12 months or more included
138 securities.

State and political subdivisions - The unrealized losses on investments in state
and political  subdivisions were caused by fluctuations in interest rates. It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized cost.  Because the decline in fair value is attributable to changes in
interest rates and not credit  quality,  and because First Banks has the ability
and intent to hold these  investments until a market price recovery or maturity,
these  investments  are  not  considered   other-than-temporarily  impaired.  At
December  31,  2007 and 2006,  the  unrealized  losses  for state and  political
subdivisions for 12 months or more included 17 and 53 securities, respectively.
<PAGE>

Equity  investments - The unrealized losses on investments in equity investments
primarily consist of unrealized losses on investments in the common stock of two
companies in the financial services industry caused by economic events affecting
the financial  services industry as a whole. First Banks evaluated the near-term
prospects of the  individual  companies in relation to the severity and duration
of the impairment.  Based on that evaluation and First Banks' ability and intent
to hold these  investments  for a  reasonable  period of time  sufficient  for a
forecasted  recovery  of  fair  value,  these  investments  are  not  considered
other-than-temporarily impaired. At December 31, 2007, the unrealized losses for
equity  investments  for 12  months or more  included  a single  company  in the
financial services industry.

(4)      LOANS AND ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses for the years ended  December 31, 2007,
2006 and 2005 were as follows:
<TABLE>
<CAPTION>
                                                                                2007        2006        2005
                                                                                ----        ----        ----
                                                                              (dollars expressed in thousands)

<S>                                                                          <C>           <C>         <C>
         Balance, beginning of year........................................  $ 145,729     135,330     150,707
         Acquired allowances for loan losses...............................     14,425       5,208       1,989
                                                                             ---------    --------    --------
                                                                               160,154     140,538     152,696
                                                                             ---------    --------    --------
         Loans charged-off.................................................    (75,438)    (22,203)    (33,123)
         Recoveries of loans previously charged-off........................      8,675      15,394      19,757
                                                                             ---------    --------    --------
              Net loans charged-off........................................    (66,763)     (6,809)    (13,366)
                                                                             ---------    --------    --------
         Provision for loan losses.........................................     75,000      12,000      (4,000)
                                                                             ---------    --------    --------
         Balance, end of year..............................................  $ 168,391     145,729     135,330
                                                                             =========    ========    ========
</TABLE>

First Banks had $202.2 million and $48.7 million of impaired  loans,  consisting
of loans on  nonaccrual  status,  at December  31, 2007 and 2006,  respectively.
Interest on nonaccrual  loans that would have been  recorded  under the original
terms of the loans was $16.2  million,  $3.7  million  and $9.9  million for the
years ended December 31, 2007,  2006 and 2005,  respectively.  Of these amounts,
$8.0 million,  $1.3 million and $3.4 million was recorded as interest  income on
such loans in 2007, 2006 and 2005,  respectively.  The allowance for loan losses
includes an allocation  for each impaired  loan,  with the exception of acquired
impaired loans classified as nonaccrual loans,  which are initially  measured at
fair value with no allocated  allowance for loan losses,  in accordance with SOP
03-3, as further discussed below. The aggregate  allocation of the allowance for
loan losses related to impaired loans was  approximately  $31.3 million and $9.7
million at  December  31,  2007 and 2006,  respectively.  The  average  recorded
investment in impaired loans was $88.9 million,  $73.6 million and $79.9 million
for the years ended December 31, 2007, 2006 and 2005,  respectively.  The amount
of interest income recognized using a cash basis method of accounting during the
time these loans were impaired was $2.5  million,  $3.7 million and $3.6 million
in 2007, 2006 and 2005, respectively. At December 31, 2007 and 2006, First Banks
had $26.8 million and $5.7 million,  respectively,  of loans past due 90 days or
more and still accruing interest.

First Banks recorded  impaired loans  acquired in  acquisitions  during the year
ended  December  31,  2007 of  $45.7  million  at the time of  acquisition.  The
outstanding   balance  and  carrying   amount  of  impaired  loans  acquired  in
acquisitions was $84.9 million and $46.0 million,  respectively, at December 31,
2007, and $838,000 and $820,000,  respectively,  at December 31, 2006. There was
no  allowance  for loan losses  related to these loans at December  31, 2007 and
2006.  As  these  loans  were  classified  as  nonaccrual  loans,  there  was no
accretable yield related to these loans at December 31, 2007 and 2006.

First  Banks'  primary  market  areas  are the  states of  California,  Florida,
Illinois,  Missouri and Texas. At December 31, 2007 and 2006,  approximately 92%
and  90% of the  total  loan  portfolio,  respectively,  and  83% and 77% 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  72%  and  74% of the  loan
portfolio at December 31, 2007 and 2006, respectively, of which 26% were made to
consumers in the form of residential real estate mortgages and home equity lines
of credit.  First Bank also offers  residential  real estate mortgage loans with
terms that require interest only payments.  At December 31, 2007, the balance of
such loans was approximately  $219.0 million,  of which $212.0 million were held
for  portfolio  and $7.0 million were held for sale.  At December 31, 2006,  the
balance of such loans was $332.6 million,  of which $276.5 million were held for
portfolio and $56.1 million were held for sale.
<PAGE>

In general,  First Banks is a secured lender. At December 31, 2007 and 2006, 98%
and 99% of the loan portfolio was  collateralized,  respectively.  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.

First Bank originates certain one-to-four family residential  mortgage loans for
sale in the secondary  market.  First Bank has a repurchase  obligation on these
loans in the event of fraud or early payment default.  The early payment default
provisions  generally  range from four months to one year after sale of the loan
in the secondary market.

Loans to directors, their affiliates and executive officers of First Banks, Inc.
were  approximately  $57.7  million and $55.9  million at December  31, 2007 and
2006,  respectively,  as  further  described  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, 2007 and 2006 are summarized as
follows:
<TABLE>
<CAPTION>

                                                                            December 31,
                                                         --------------------------------------------------
                                                                   2007                      2006
                                                         ------------------------  ------------------------
                                                           Notional     Credit       Notional     Credit
                                                            Amount     Exposure       Amount     Exposure
                                                            ------     --------       ------     --------
                                                                  (dollars expressed in thousands)

<S>                                                        <C>          <C>            <C>         <C>
         Cash flow hedges...............................   $400,000      5,271        600,000      4,369
         Interest rate floor agreements.................    300,000      1,699        300,000        376
         Interest rate cap agreements...................    400,000         50        400,000        139
         Interest rate lock commitments.................      3,000         23          5,900         --
         Forward commitments to sell
             mortgage-backed securities.................     55,000         40         54,000         86
                                                           ========      =====       ========      =====
</TABLE>

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

For the years  ended  December  31,  2007 and 2006,  First  Banks  realized  net
interest  expense  of  $3.1  million  and  $5.0  million,  respectively,  on its
derivative financial instruments,  whereas for the year ended December 31, 2005,
First Banks  realized  net  interest  income of $2.2  million on its  derivative
financial instruments. First Banks recorded net gains on derivative instruments,
which are  included in  noninterest  income in the  consolidated  statements  of
income,  of $1.2 million for the year ended  December 31, 2007, in comparison to
net losses on derivative  instruments of $390,000 and $1.1 million for the years
ended  December  31,  2006 and 2005,  respectively.  The net gains and losses on
derivative  instruments  reflect  changes in the value of First Banks'  interest
rate floor and interest rate cap agreements.

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

     >>   During March 2001,  April 2001 and July 2003, First Banks entered into
          interest rate swap  agreements of $200.0  million,  $175.0 million and
          $200.0 million notional amount,  respectively.  The underlying  hedged
          assets were certain variable rate loans within First Banks' commercial
          loan  portfolio.  The swap  agreements  provided  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
          2.82%, 2.82% and 2.85%, respectively. The terms of the swap agreements
          provided  for First Banks to pay and  receive  interest on a quarterly
          basis.  In  March  2005,  the  $200.0  million  notional  amount  swap
          agreement  that was entered  into in March 2001  matured.  In November
          2001, First Banks terminated $75.0 million notional amount of the swap
          agreements   originally  entered  into  in  April  2001  in  order  to
          appropriately modify its overall hedge position in accordance with its
          interest  rate  risk  management  program,  and  in  April  2006,  the
          remaining  $100.0  million  notional  amount of these swap  agreements
          matured.  On July 31, 2007,  the $200.0 million  notional  amount swap
          agreement that was entered into in July 2003 matured.

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

The amount  receivable by First Banks under the swap agreements was $6.0 million
and $7.0  million at December  31, 2007 and 2006,  respectively,  and the amount
payable by First Banks under the swap  agreements  was $683,000 and $2.7 million
at December 31, 2007 and 2006, respectively.

The maturity dates, notional amounts,  interest rates paid and received and fair
value of First Banks'  interest  rate swap  agreements  designated  as cash flow
hedges as of December 31, 2007 and 2006 were as follows:
<TABLE>
<CAPTION>

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

         December 31, 2007:
<S>                                                    <C>               <C>            <C>         <C>
           September 18, 2009.......................   $ 200,000         4.39%          5.20%       $  4,585
           September 20, 2010.......................     200,000         4.39           5.20           7,331
                                                       ---------                                    --------
                                                       $ 400,000         4.39           5.20        $ 11,916
                                                       =========        =====          =====        ========

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

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

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

     >>   During May 2002,  March 2003 and April 2003,  First Banks entered into
          $55.2  million,  $25.0  million  and $46.0  million  notional  amount,
          respectively, of interest rate swap agreements that provided for First
          Banks to receive a fixed rate of interest and pay an  adjustable  rate
          of interest  equivalent to the three-month LIBOR plus 2.30%, 2.55% and
          2.58%, respectively.  The underlying hedged liabilities were a portion
          of  First  Banks'  subordinated  debentures.  The  terms  of the  swap
          agreements  provided for First Banks to pay and receive  interest on a
          quarterly basis. In May 2005, First Banks terminated the $55.2 million
          and  $46.0  million  notional  amount  swap  agreements  in  order  to
          appropriately  modify future hedge  positions in accordance with First
          Banks' interest rate risk management  program.  The resulting $854,000
          basis adjustment of the underlying hedged  liabilities,  in aggregate,
          was  being  recorded  as a  reduction  of  interest  expense  over the
          remaining  maturities  of the  underlying  hedged  liabilities,  which
          ranged from 26 to 28 years at the time of the  termination.  Effective
          February  2006,  First Banks  terminated  the remaining  $25.0 million
          notional swap agreement.  In conjunction with this transaction,  First
          Banks  recorded the  resulting  $1.7 million  basis  adjustment of the
          underlying  hedged  liabilities and the remaining balance of the basis
          adjustments  associated  with the swap agreements that were terminated
          in May 2005,  totaling  $834,000,  in the  consolidated  statements of
          income.  The  recognition  of the net basis  adjustments on all of the
          terminated  fair value  interest  rate swap  agreements  resulted in a
          pre-tax loss of $849,000 that was recorded in February 2006.

Interest Rate Floor  Agreements.  In September  2005,  First Bank entered into a
$100.0  million  notional  amount  three-year  interest rate floor  agreement in
conjunction  with its interest rate risk management  program.  The interest rate
floor  agreement  provides  for First Bank to receive a quarterly  fixed rate of
interest of 5.00%  should the  three-month  LIBOR equal or fall below the strike
price of  2.00%.  In August  2006,  First  Bank  entered  into a $200.0  million
notional amount three-year interest rate floor agreement in conjunction with the
restructuring of one of First Bank's $100.0 million term repurchase  agreements,
as further  described  below,  to further  stabilize net interest  income in the
event of a declining rate scenario.  The interest rate floor agreement  provides
for First Bank to receive a quarterly  adjustable rate of interest equivalent to
the  differential  between the strike price of 4.00% and the  three-month  LIBOR
should the  three-month  LIBOR  equal or fall below the strike  price.  The fair
value of the interest rate floor  agreements,  which is included in other assets
in the  consolidated  balance sheets,  was $1.7 million and $376,000 at December
31, 2007 and 2006, respectively.

Interest Rate Floor  Agreements  Embedded in Term Repurchase  Agreements.  First
Bank has term  repurchase  agreements  under master  repurchase  agreements with
unaffiliated third parties,  as further described in Note 10 to the Consolidated
Financial  Statements.  The  underlying  securities  associated  with  the  term
repurchase   agreements  are   mortgage-backed   securities  and  callable  U.S.
Government agency securities and are held by other financial  institutions under
safekeeping  agreements.  The term repurchase  agreements were entered into with
the objective of stabilizing net interest income over time,  further  protecting
net interest margin against changes in interest rates and providing  funding for
security purchases.  The interest rate floor agreements included within the term
repurchase  agreements  represent  embedded  derivative  instruments  which,  in
accordance with existing accounting literature governing derivative instruments,
are not  required  to be  separated  from the  term  repurchase  agreements  and
accounted for separately as a derivative financial instrument. As such, the term
repurchase  agreements  are reflected in other  borrowings  in the  consolidated
balance sheets and the related interest expense is reflected as interest expense
on other borrowings in the consolidated statements of income.

In the fourth  quarter of 2005,  First Bank  terminated  its $50.0  million term
repurchase agreement with a maturity date of August 15, 2006, and simultaneously
recognized a loss of $2.9 million on the sale of  available-for-sale  investment
securities associated with the termination of the term repurchase agreement.  In
the first and second quarters of 2006,  First Bank terminated  $200.0 million of
the $300.0  million of term  repurchase  agreements  outstanding at December 31,
2005,  resulting in the recognition of a $2.7 million loss on the sale of $200.0
million  of  investment  securities  held  in  First  Bank's  available-for-sale
investment   portfolio,   and  prepayment  penalties  of  $306,000  incurred  in
conjunction  with the early  termination  of these term  repurchase  agreements.
Additionally,  in August 2006,  First Bank  restructured  the  remaining  $100.0
million term  repurchase  agreement  to extend the maturity  date to October 12,
2010 and to modify the pricing  structure,  including  the  interest  rate floor
strike  price.   First  Bank  did  not  incur  any  costs  associated  with  the
restructuring of the agreement.

In July 2006, First Bank entered into a $100.0 million four-year term repurchase
agreement under a master repurchase  agreement with an unaffiliated third party.
On August 7, 2007,  First Bank  terminated  this $100.0 million term  repurchase
agreement  with a maturity  date of July 19,  2010,  and  incurred a  prepayment
penalty  of  $330,000  in  conjunction  with the early  termination  of the term
repurchase  agreement,  as  further  described  in Note  10 to the  Consolidated
Financial Statements.

Interest  Rate Cap  Agreements.  In  September  2006,  First Bank entered into a
$200.0  million  notional  amount  three-year  interest rate cap agreement and a
$200.0  million  notional  amount  four-year  interest  rate  cap  agreement  in
conjunction  with the  interest  rate swap  agreements  designated  as cash flow
hedges that First Banks entered into in September 2006, as previously described,
to limit the net interest  expense  associated  with First Banks'  interest rate
swap  agreements  in the event of a rising  rate  scenario.  The $200.0  million
notional amount three-year  interest rate cap agreement  provides for First Bank
to  receive  a  quarterly   adjustable  rate  of  interest   equivalent  to  the
differential  between the three-month LIBOR and the strike price of 7.00% should
the  three-month  LIBOR exceed the strike  price.  The $200.0  million  notional
amount four-year  interest rate cap agreement provides for First Bank to receive
a quarterly  adjustable rate of interest equivalent to the differential  between
the three-month LIBOR and the strike price of 7.50% should the three-month LIBOR
exceed the strike  price.  The fair value of the interest  rate cap  agreements,
which is  included  in other  assets in the  consolidated  balance  sheets,  was
$50,000 and $139,000 at December 31, 2007 and 2006, respectively.
<PAGE>

Pledged Collateral. At December 31, 2007 and 2006, First Banks had accepted cash
of $21.4  million and $4.2  million,  respectively,  as collateral in connection
with its interest rate swap agreements.

Interest Rate Lock  Commitments / Forward  Commitments  to Sell  Mortgage-Backed
Securities.  Derivative  financial  instruments issued by First Banks consist of
interest  rate  lock  commitments  to  originate  fixed-rate  loans  to be sold.
Commitments to originate  fixed-rate loans consist primarily of residential real
estate loans. These net loan commitments and loans held for sale are hedged with
forward contracts to sell mortgage-backed  securities,  which expire in February
2008. The fair value of the interest rate lock commitments, which is included in
other assets in the  consolidated  balance sheets,  was $23,000 and ($17,000) at
December  31,  2007  and  2006,  respectively.  The fair  value  of the  forward
contracts to sell  mortgage-backed  securities,  which is included in loans held
for sale in the consolidated balance sheets, was $40,000 and $86,000 at December
31, 2007 and 2006, respectively.

(6)      SERVICING RIGHTS

Mortgage Banking Activities. At December 31, 2007 and 2006, First Banks serviced
mortgage   loans  for  others   totaling   $1.10  billion  and  $1.04   billion,
respectively.  Borrowers' escrow balances held by First Banks on such loans were
$6.2  million  and $5.7  million at December  31,  2007 and 2006,  respectively.
Changes in mortgage servicing rights,  net of amortization,  for the years ended
December 31, 2007 and 2006 were as follows:
<TABLE>
<CAPTION>

                                                                                      2007        2006
                                                                                      ----        ----
                                                                              (dollars expressed in thousands)

<S>                                                                                 <C>            <C>
         Balance, beginning of year...............................................  $  5,867       6,623
         Originated mortgage servicing rights.....................................     2,219       3,298
         Amortization.............................................................    (2,796)     (4,054)
                                                                                    --------     -------
         Balance, end of year.....................................................  $  5,290       5,867
                                                                                    ========     =======
</TABLE>

The fair value of  mortgage  rights was  approximately  $14.8  million and $14.7
million at December 31, 2007 and 2006,  respectively.  First Banks did not incur
any impairment of mortgage  servicing rights during the years ended December 31,
2007, 2006 and 2005.

Amortization  of  mortgage  servicing  rights  at  December  31,  2007  has been
estimated in the following table:
<TABLE>
<CAPTION>

                                                                              (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                         <C>
              2008......................................................................  $ 1,393
              2009......................................................................      990
              2010......................................................................      822
              2011......................................................................      712
              2012......................................................................      712
              Thereafter................................................................      661
                                                                                          -------
                  Total.................................................................  $ 5,290
                                                                                          =======
</TABLE>

Other Servicing Activities.  At December 31, 2007 and 2006, First Banks serviced
SBA loans for others totaling  $149.9 million and $143.4 million,  respectively.
The carrying value of SBA servicing rights  approximates fair value.  Changes in
SBA servicing  rights,  net of amortization and impairment,  for the years ended
December 31, 2007 and 2006 were as follows:
<TABLE>
<CAPTION>

                                                                                      2007        2006
                                                                                      ----        ----
                                                                              (dollars expressed in thousands)

<S>                                                                                 <C>            <C>
         Balance, beginning of year...............................................  $  8,064       9,489
         Originated SBA servicing rights..........................................     2,053       1,630
         Amortization.............................................................    (1,830)     (1,662)
         Impairment...............................................................      (819)     (1,393)
                                                                                    --------     -------
         Balance, end of year.....................................................  $  7,468       8,064
                                                                                    ========     =======
</TABLE>
<PAGE>

Amortization of SBA servicing  rights at December 31, 2007 has been estimated in
the following table:
<TABLE>
<CAPTION>

                                                                              (dollars expressed in thousands)

         Year ending December 31:
<S>           <C>                                                                         <C>
              2008......................................................................  $ 1,523
              2009......................................................................    1,239
              2010......................................................................    1,004
              2011......................................................................      812
              2012......................................................................      654
              Thereafter................................................................    2,236
                                                                                          -------
                  Total.................................................................  $ 7,468
                                                                                          =======
</TABLE>


(7)      BANK PREMISES AND EQUIPMENT, NET

Bank premises and equipment,  net of accumulated  depreciation and amortization,
were comprised of the following at December 31, 2007 and 2006:

<TABLE>
<CAPTION>
                                                                                      2007         2006
                                                                                      ----         ----
                                                                              (dollars expressed in thousands)

<S>                                                                               <C>              <C>
         Land...................................................................   $  52,187       42,386
         Buildings and improvements.............................................     168,135      126,903
         Furniture, fixtures and equipment......................................     144,999      124,980
         Leasehold improvements.................................................      30,825       25,250
         Construction in progress...............................................      25,617       18,066
                                                                                   ---------    ---------
              Total.............................................................     421,763      337,585
         Less: Accumulated depreciation and amortization........................    (183,432)    (159,168)
                                                                                   ---------    ---------
              Bank premises and equipment, net..................................   $ 238,331      178,417
                                                                                   =========    =========
</TABLE>

Depreciation  and  amortization  expense for the years ended  December 31, 2007,
2006 and 2005 was $21.6 million, $18.9 million and $17.4 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 $21.8  million,  $18.0 million and $15.5 million for the years ended
December 31, 2007,  2006 and 2005,  respectively.  Future minimum lease payments
under noncancellable operating leases extend through 2084 as follows:

<TABLE>
<CAPTION>
                                                                              (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                       <C>
              2008....................................................................  $  17,193
              2009....................................................................     15,503
              2010....................................................................     13,498
              2011....................................................................     11,599
              2012....................................................................      9,773
              Thereafter..............................................................     53,074
                                                                                        ---------
                  Total future minimum lease payments.................................  $ 120,640
                                                                                        =========
</TABLE>

First  Banks  also  leases  to  unrelated  parties  a  portion  of  its  banking
facilities.  Rental income  associated with these leases was $6.4 million,  $5.9
million and $6.4 million for the years ended  December 31, 2007,  2006 and 2005,
respectively.


<PAGE>

(8)      GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets, net of amortization, were comprised of the
following at December 31, 2007 and 2006:

<TABLE>
<CAPTION>
                                                                 2007                          2006
                                                      --------------------------    --------------------------
                                                        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 (1)........    $  53,916       (23,873)         60,867       (18,850)
              Customer list intangibles...........       23,320        (2,408)         23,320          (913)
              Other intangibles...................        2,386        (1,437)          2,210        (1,288)
                                                      ---------      --------        --------      --------
                  Total...........................    $  79,622       (27,718)         86,397       (21,051)
                                                      =========      ========        ========      ========

         Unamortized intangible assets:
              Goodwill associated with
                stock purchases...................    $ 263,747                       230,036
                                                      =========                      ========
         --------------------
         (1)  The core deposit intangibles' gross carrying amount and accumulated amortization were  reduced
              by $10.6 million and $4.7 million, respectively, during the fourth quarter of 2007, as further
              described in Note 13 to the Consolidated  Financial  Statements. The core deposit intangibles'
              gross carrying amount and accumulated amortization were also reduced by $1.4 million  and $1.0
              million, respectively, during the third quarter of 2007 in  conjunction  with the  sale of the
              Texas Branch Offices on July 19, 2007, as  further described  in  Note 2 to  the  Consolidated
              Financial Statements.

</TABLE>

Amortization  of  intangible  assets was $12.4  million,  $8.2  million and $4.9
million for the years ended December 31, 2007, 2006 and 2005,  respectively.  As
of December 31, 2007, the remaining  estimated life of the amortization  periods
for core deposit  intangibles,  customer list intangibles and other  intangibles
was  five  years,  15 years  and  seven  years,  respectively.  Amortization  of
intangible assets, including amortization of core deposit intangibles,  customer
list  intangibles  and other  intangibles  has been  estimated in the  following
table, and does not take into consideration any potential future acquisitions or
branch office purchases.
<TABLE>
<CAPTION>

                                                                               (dollars expressed in thousands)

         Year ending December 31:
<S>           <C>                                                                           <C>
              2008.....................................................................     $11,103
              2009.....................................................................       9,309
              2010.....................................................................       8,852
              2011.....................................................................       6,674
              2012.....................................................................       2,459
              Thereafter...............................................................      13,507
                                                                                            -------
                  Total................................................................     $51,904
                                                                                            =======
</TABLE>

<PAGE>

Changes in the carrying amount of goodwill for the years ended December 31, 2007
and 2006 were as follows:
<TABLE>
<CAPTION>
                                                                                       2007          2006
                                                                                       ----          ----
                                                                               (dollars expressed in thousands)

<S>                                                                                 <C>             <C>
         Balance, beginning of year.............................................    $ 230,036       165,992
         Goodwill acquired during the year......................................       34,586        63,378
         Acquisition-related adjustments (1)....................................         (625)          666
         Other adjustments (2)..................................................         (250)           --
                                                                                    ---------     ---------
         Balance, end of year...................................................    $ 263,747       230,036
                                                                                    =========     =========
         -----------------------
         (1)  Acquisition-related adjustments include  additional  purchase  accounting adjustments for prior
              years' acquisitions necessary to appropriately adjust preliminary goodwill recorded at the time
              of the acquisition, which was based upon current estimates available  at  that time, to reflect
              the receipt of additional valuation data.  Acquisition-related  adjustments  recorded  in  2007
              primarily pertain to the acquisition of SDCB in August 2006 and acquisition-related adjustments
              recorded  in  2006  primarily  pertain  to  the  acquisition of NSB in October 2005, as further
              described in Note 2 to the Consolidated Financial Statements.
         (2)  Other adjustments recorded in 2007 pertain to the sale of the Texas Branch Offices on  July 19,
              2007, as further described in Note 2 to the Consolidated Financial Statements.
</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, 2007 is as follows:
<TABLE>
<CAPTION>
                                                             Time deposits of   Other time
                                                             $100,000 or more    deposits         Total
                                                             ----------------    --------         -----
                                                                      (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                               <C>              <C>             <C>
              2008............................................  $ 1,402,611      2,293,748      3,696,359
              2009............................................       85,143        231,486        316,629
              2010............................................       22,189         74,448         96,637
              2011............................................       20,752         28,265         49,017
              2012............................................       15,525         17,092         32,617
              Thereafter......................................          637            598          1,235
                                                                -----------     ----------     ----------
                  Total.......................................  $ 1,546,857      2,645,637      4,192,494
                                                                ===========     ==========     ==========
</TABLE>

(10)     OTHER  BORROWINGS

Other borrowings were comprised of the following at December 31, 2007 and 2006:
<TABLE>
<CAPTION>
                                                                                        2007        2006
                                                                                        ----        ----
                                                                                (dollars expressed in thousands)
         Securities sold under agreements to repurchase:
<S>                                                                                  <C>           <C>
              Daily...............................................................   $ 198,766     169,874
              Term................................................................     100,000     200,000
         Federal funds purchased..................................................      76,500          --
         FHLB advances............................................................         857       4,025
                                                                                     ---------    --------
                  Total...........................................................   $ 376,123     373,899
                                                                                     =========    ========
</TABLE>

The average  balance of other  borrowings  was $361.7 million and $380.5 million
and the maximum  month-end  balance of other  borrowings  was $432.0 million and
$535.7 million for the years ended December 31, 2007 and 2006, respectively. The
average rates paid on other borrowings during the years ended December 31, 2007,
2006 and 2005 were 4.60%,  4.42% and 3.19%,  respectively.  Interest  expense on
securities sold under agreements to repurchase was $15.6 million,  $16.1 million
and  $16.5  million  for the  years  ended  December  31,  2007,  2006 and 2005,
respectively.  Interest expense on FHLB advances was $348,000, $689,000 and $1.6
million for the years ended  December  31,  2007,  2006 and 2005,  respectively.
Interest  expense on federal funds purchased was $130,000,  $63,000 and $143,000
for the years ended December 31, 2007, 2006 and 2005,  respectively.  The assets
underlying the daily securities sold under agreements to repurchase and the FHLB
advances are held by First Banks. The underlying  securities associated with the
term  repurchase  agreements  are  mortgage-backed  securities and callable U.S.
Government agency securities and are held by other financial  institutions under
safekeeping  agreements.  As  further  described  in Note 5 to the  Consolidated
Financial  Statements,  the interest rate floor  agreements  included within the
term repurchase agreements represent embedded derivative instruments.
<PAGE>

The maturity dates,  par amounts,  interest rate spreads and interest rate floor
strike prices on First Bank's term repurchase agreements as of December 31, 2007
and 2006 were as follows:
<TABLE>
<CAPTION>

                                                      Par               Interest Rate   Interest Rate Floor
              Maturity Date                          Amount               Spread (1)       Strike Price (1)
              -------------                          ------               ------           ------------
                                              (dollars expressed
                                                 in thousands)
         December 31, 2007:
<S>                                                <C>                 <C>
             October 12, 2010....................  $ 100,000           LIBOR - 0.5100%         4.50%
                                                   =========

         December 31, 2006:
             July 19, 2010 (2)...................  $ 100,000           LIBOR + 0.5475%         5.00%
             October 12, 2010....................    100,000           LIBOR - 0.5100%         4.50%
                                                   ---------
                                                   $ 200,000
                                                   =========

         ------------------
         (1)  The interest rate paid on the term repurchase agreements is based on the three-month LIBOR plus
              or minus the spread amount shown minus a floating rate, subject  to  a 0%  floor, equal to  two
              times the differential between the three-month LIBOR and the strike price shown, if  the three-
              month LIBOR falls below the strike price associated with the interest rate floor agreements.
         (2)  First  Bank  terminated  this  term  repurchase  agreement  on  August 7, 2007,  resulting in a
              prepayment penalty of $330,000.
</TABLE>

(11)     NOTES PAYABLE

On August 8, 2007,  First Banks  entered into a $125.0  million  Secured  Credit
Agreement with a group of unaffiliated  financial  institutions  (Secured Credit
Agreement) to renew and modify its existing $96.0 million First Amendment to its
Amended  and  Restated   Secured  Credit   Agreement,   dated  August  10,  2006
(Predecessor  Agreement).  The  terms  and  conditions  of  the  Secured  Credit
Agreement  provide for a $125.0 million revolving credit facility that includes:
(i) a $5.0 million  sub-facility  for the issuance of standby letters of credit;
(ii) a $10.0  million  sub-facility  for  swingline  loans  (from  the  Agent as
Swingline  Lender);  and (iii)  three-year  term loan  conversion  options  with
minimum  borrowing  amounts of $10.0 million,  amortizing  with equal  quarterly
installments  of  principal  based  on a  four-year  straight-line  amortization
schedule and a final  maturity of three years from  execution of each term loan,
including  the existing  term loan,  which had a balance of $35.0  million as of
August 8, 2007 (Existing Term Loan). Each term loan, including the Existing Term
Loan, reduces the availability under the revolving credit facility.  First Banks
has the right to request an increase in the Secured  Credit  Agreement to $150.0
million,  with a minimum increase of $10.0 million and additional  increments of
$5.0 million.  Interest is payable on outstanding principal loan balances of the
revolving  credit loan and each term loan at a floating rate equal to either the
lender's prime rate or, at First Banks' option,  LIBOR plus a margin  determined
by the  outstanding  principal loan balances and First Banks' net income for the
preceding four calendar  quarters.  If the  outstanding  principal loan balances
under the  revolving  credit  loan and each term loan are  accruing at the prime
rate,  interest is payable  quarterly in arrears.  If the outstanding  principal
loan balances under the revolving credit loan and each term loan are accruing at
LIBOR,  interest is payable based on the one, two, three or six-month  LIBOR, as
selected by First Banks.  First Banks is also subject to a quarterly  commitment
fee on the unused  portion  of the  revolving  credit  facility.  Amounts  could
initially be borrowed under the revolving  credit facility until August 7, 2008,
at which time the principal and interest was due and payable, excluding the term
loans.  The maturity  date was  subsequently  extended to September 1, 2008,  as
further discussed below. First Banks' Existing Term Loan, which had a balance of
$5.0 million at December 31, 2007, is payable in quarterly  installments of $5.0
million,  at a  minimum,  with  the  remaining  balance  to be  repaid  in full,
including  any unpaid  interest,  upon  maturity on March 31, 2009.  Interest is
payable on  outstanding  principal  loan  balances of the  swingline  loans at a
floating rate equal to the lender's  prime rate.  The principal  balances of the
swingline loans,  together with accrued and unpaid interest,  are payable on the
next to occur date of either the fifteenth day of the month or the last business
day of the month following the advance date(s) of the swingline loans.
<PAGE>

The Secured Credit  Agreement  requires  maintenance of certain  minimum capital
ratios for First  Banks and First Bank,  certain  maximum  nonperforming  assets
ratios for First Bank and a minimum  return on assets ratio for First Banks.  In
addition, it contains additional covenants, including a limitation on the amount
of dividends on First Banks' common stock that may be paid to stockholders.  The
Secured Credit  Agreement is secured by First Banks'  ownership  interest in the
capital  stock of SFC and First Bank.  Subsequent  to December 31,  2007,  First
Banks entered into First and Second  Amendments to the Secured Credit Agreement,
as further described in Note 25 to the Consolidated Financial Statements.  These
amendments include modifications to certain financial covenants,  the collateral
pledge agreement and the maturity date of the revolving  credit facility.  First
Banks and First Bank were in compliance with all  restrictions  and requirements
of the respective credit agreements at December 31, 2007 and 2006.

Notes payable were comprised of the following at December 31, 2007 and 2006:

<TABLE>
<CAPTION>
                                                                                        2007        2006
                                                                                        ----        ----
                                                                                (dollars expressed in thousands)

<S>                                                                                <C>              <C>
         Term loans.................................................................  $ 19,000      65,000
         Revolving credit...........................................................    20,000          --
                                                                                      --------     -------
                  Total.............................................................  $ 39,000      65,000
                                                                                      ========     =======
</TABLE>


During the year ended December 31, 2007, First Banks had drawn advances of $15.0
million and made payments of $61.0 million on the outstanding principal balances
of the term loans,  reducing the balance from $65.0 million at December 31, 2006
to $19.0 million at December 31, 2007.  During the year ended December 31, 2007,
First  Banks  had  drawn  advances  of $20.0  million  on the  revolving  credit
sub-facility portion of the Secured Credit Agreement.  First Banks had not drawn
any revolving  credit advances on the  Predecessor  Agreement as of December 31,
2006.  Letters of credit issued to unaffiliated third parties on behalf of First
Banks under the  standby  letter of credit  sub-facility  portion of the Secured
Credit  Agreement  and  Predecessor  Agreement  were  $200,000  and  $450,000 at
December  31,  2007 and  2006,  respectively,  and had not been  drawn on by the
counterparties.

The average  balance and maximum  month-end  balance of  borrowings  outstanding
under the Secured  Credit  Agreement and the  Predecessor  Agreement  during the
years ended December 31, 2007 and 2006, respectively, were as follows:

<TABLE>
<CAPTION>


                                                                                       2007          2006
                                                                                       ----          ----
                                                                                (dollars expressed in thousands)

<S>                                                                                   <C>           <C>
         Average balance............................................................  $ 34,932      88,843
         Maximum month-end balance..................................................    55,000     100,000
                                                                                      ========    ========
</TABLE>

The  average  rates paid on the  outstanding  borrowings  during the years ended
December  31,  2007,  2006 and 2005 were 6.94%,  6.22% and 6.26%,  respectively.
Interest expense  recognized on borrowings  under the secured credit  agreements
includes commitment,  arrangement and renewal fees. Exclusive of these fees, the
average rates paid on the outstanding borrowings during the years ended December
31, 2007, 2006 and 2005 were 6.41%, 6.11% and 4.93%, respectively.
<PAGE>

(12)     SUBORDINATED DEBENTURES

First Banks has formed various affiliated Delaware or Connecticut  statutory and
business  trusts  (collectively,  the  Trusts)  that were  created  for the sole
purpose of issuing trust preferred  securities.  The trust preferred  securities
were issued in private placements, with the exception of First Preferred Capital
Trust II, First Preferred  Capital Trust III and First  Preferred  Capital Trust
IV, which were issued in underwritten public offerings.  First Banks owns all of
the common  securities of the Trusts.  The gross  proceeds of the offerings were
used by the  Trusts  to  purchase  variable  rate  or  fixed  rate  subordinated
debentures from First Banks. The  subordinated  debentures are the sole asset of
the Trusts.  In connection with the issuance of the trust preferred  securities,
First Banks made certain  guarantees  and  commitments  that, in the  aggregate,
constitute a full and unconditional  guarantee by First Banks of the obligations
of the Trusts under the trust preferred  securities.  First Banks' distributions
accrued on the  subordinated  debentures  were $24.4 million,  $22.4 million and
$20.9  million  for  the  years  ended   December  31,  2007,   2006  and  2005,
respectively,   and  are  included  in  interest  expense  in  the  consolidated
statements  of income.  Deferred  issuance  costs  associated  with First Banks'
subordinated  debentures are included as a reduction of subordinated  debentures
in the consolidated  balance sheets and are amortized on a straight-line  basis.
The  structure  of  the  trust  preferred  securities  currently  satisfies  the
regulatory requirements for inclusion,  subject to certain limitations, in First
Banks' capital base.



<PAGE>

<TABLE>
<CAPTION>

A summary of the  subordinated  debentures  issued to the Trusts in  conjunction
with the trust preferred securities offerings at December 31, 2007 and 2006 were
as follows:

                                                                                                                      Subordinated
                                                                                                           Trust       Debentures
                                                           Maturity            Call           Interest   Preferred  ----------------
     Name of Trust                   Issuance Date           Date              Date (1)       Rate (2)   Securities   2007    2006
     -------------                   -------------           ----              -----          ----       ----------   ----    ----

Variable Rate
-------------
<S>                                          <C>             <C>                 <C>           <C>         <C>        <C>     <C>
First Bank Capital Trust (3)           April 2002      April 22, 2032      April 22, 2007    + 387.5 bp   $25,000   $    --  25,774
First Bank Statutory Trust II        September 2004  September 20, 2034  September 20, 2009  + 205.0 bp    20,000    20,619  20,619
Royal Oaks Capital Trust I (4)        October 2004    January 7, 2035     January 7, 2010    + 240.0 bp     4,000     4,124      --
First Bank Statutory Trust III        November 2004  December 15, 2034   December 15, 2009   + 218.0 bp    40,000    41,238  41,238
First Bank Statutory Trust IV          March 2006     March 15, 2036      March 15, 2011     + 142.0 bp    40,000    41,238  41,238
First Bank Statutory Trust V           April 2006     June 15, 2036       June 15, 2011      + 145.0 bp    20,000    20,619  20,619
First Bank Statutory Trust VI          June 2006      July 7, 2036        July 7, 2011       + 165.0 bp    25,000    25,774  25,774
First Bank Statutory Trust VII       December 2006   December 15, 2036   December 15, 2011   + 185.0 bp    50,000    51,547  51,547
First Bank Statutory Trust VIII (5)  February 2007    March 30, 2037      March 30, 2012     + 161.0 bp    25,000    25,774      --
First Bank Statutory Trust X (6)      August 2007    September 15, 2037  September 15, 2012  + 230.0 bp    15,000    15,464      --
First Bank Statutory Trust IX (7)    September 2007  December 15, 2037   December 15, 2012   + 225.0 bp    25,000    25,774      --
First Bank Statutory Trust XI (8)    September 2007  December 15, 2037   December 15, 2012   + 285.0 bp    10,000    10,310      --

Fixed Rate
----------
First Preferred Capital
   Trust III (9)                      November 2001  December 31, 2031   December 31, 2006        9.00%    55,200        --      --
First Bank Statutory Trust             March 2003     March 20, 2033      March 20, 2008          8.10%    25,000    25,774  25,774
First Preferred Capital Trust IV       April 2003     June 30, 2033       June 30, 2008           8.15%    46,000    47,423  47,423

(1)  The subordinated debentures are callable at the option of First Banks on the call  date shown  at 100% of the principal  amount
     plus accrued and unpaid interest.
(2)  The interest rates paid on the trust preferred securities are based on  either  a  fixed  rate or a variable rate. The variable
     rate is based on the three-month LIBOR plus the basis point spread shown, with the exception of First Bank Capital Trust, which
     was based on the six-month LIBOR plus the basis point spread shown.
(3)  On April 22, 2007, First Banks redeemed the cumulative variable rate trust  preferred securities at  the liquidation  value  of
     $1,000 per preferred security, together with distributions accumulated and unpaid to  the  redemption date. In conjunction with
     this transaction, First Banks paid in full its outstanding $25.8 million of subordinated debentures  that were  issued by First
     Banks to First Bank Capital Trust. The funds  necessary  for  the redemption  of  the subordinated  debentures were provided by
     internally generated funds and the net proceeds from the issuance  of  $25.8 million  of  subordinated debentures to First Bank
     Statutory Trust VIII (FBST VIII) on February 23, 2007, as further described below.
(4)  In conjunction with the acquisition of Royal Oaks  on  February 28, 2007, as  further described  in Note 2 to  the Consolidated
     Financial Statements, First Banks  assumed  the  subordinated  debentures of  Royal Oaks Capital Trust I, a  Delaware statutory
     trust.
(5)  On February 23, 2007,  FBST VIII,  a  newly  formed  Delaware  statutory  trust,  issued 25,000  variable  rate trust preferred
     securities at $1,000 per security in  a  private  placement  and  issued 774  common  securities  to First  Banks at $1,000 per
     security. Interest is payable quarterly in arrears, beginning on March 30, 2007.
(6)  On August 31, 2007, First Bank Statutory Trust X, a newly formed Delaware  statutory trust,  issued  15,000 variable rate trust
     preferred securities at $1,000 per security in a private placement and issued 464 common securities  to  First  Banks at $1,000
     per security. Interest is payable quarterly in arrears, beginning on December 15, 2007.
(7)  On September 20, 2007, First Bank Statutory Trust IX, a newly formed  Delaware  statutory  trust, issued  25,000  variable rate
     trust preferred securities at $1,000 per security in a private placement  and  issued 774  common  securities to First Banks at
     $1,000 per security. Interest is payable quarterly in arrears, beginning on December 15, 2007.
(8)  On September 28, 2007, First Bank Statutory Trust XI, a  newly  formed  Delaware  statutory  trust, issued 10,000 variable rate
     trust preferred securities at $1,000 per security in a private placement  and  issued 310  common securities to  First Banks at
     $1,000 per security. Interest is payable quarterly in arrears, beginning on December 15, 2007.
(9)  On December 31, 2006, First Banks redeemed the cumulative fixed rate trust preferred securities at the liquidation value of $25
     per preferred security, together with distributions accumulated and unpaid to the  redemption  date. In  conjunction  with this
     transaction, First Banks paid in full its outstanding $56.9 million of subordinated debentures that were  issued by First Banks
     to First Preferred Capital Trust III. The net proceeds associated with these  transactions  were  paid on  January 2, 2007. The
     funds necessary for the redemption of the subordinated debentures were  provided  by  internally  generated  funds  and the net
     proceeds from the issuance of additional subordinated debentures to First Bank Statutory Trust VII on December 14, 2006.


</TABLE>


<PAGE>


(13)     INCOME TAXES

Provision for income taxes for the years ended December 31, 2007,  2006 and 2005
consists of:
<TABLE>
<CAPTION>

                                                                                    2007       2006       2005
                                                                                    ----       ----       ----
                                                                                 (dollars expressed in thousands)
         Current provision for taxes:
<S>                                                                              <C>         <C>         <C>
              Federal........................................................    $ 23,264     41,582     48,306
              State..........................................................       3,213      3,272      5,419
                                                                                 --------    -------    -------
                                                                                   26,477     44,854     53,725
                                                                                 --------    -------    -------
         Deferred provision for taxes:
              Federal........................................................      (3,167)    10,062        116
              State..........................................................      (2,405)       146     (1,332)
                                                                                 --------    -------    -------
                                                                                   (5,572)    10,208     (1,216)
                                                                                 --------    -------    -------
         Reduction in deferred tax asset valuation allowance.................     (10,746)        --         --
                                                                                 --------    -------    -------
                  Total......................................................    $ 10,159     55,062     52,509
                                                                                 ========    =======    =======
</TABLE>


The  effective  rates of federal  income taxes for the years ended  December 31,
2007,  2006 and 2005  differ  from the  federal  statutory  rates of taxation as
follows:
<TABLE>
<CAPTION>

                                                                          Years Ended December 31,
                                                         ----------------------------------------------------------
                                                                2007                2006                2005
                                                         ------------------  ------------------  ------------------
                                                          Amount   Percent    Amount   Percent    Amount   Percent
                                                          ------   -------    ------   -------    ------   -------
                                                                      (dollars expressed in thousands)
         Income before provision for income taxes
           and minority interest in income (loss)
<S>                                                      <C>                 <C>                <C>
           of subsidiary..............................   $  67,471           $ 166,169           $ 148,128
                                                         =========           =========           =========
         Provision for income taxes calculated
           at federal statutory income tax rates......   $  23,615   35.0%   $  58,159   35.0%   $  51,845   35.0%
         Effects of differences in tax reporting:
           Tax-exempt interest income, net of
               tax preference adjustment..............        (962)  (1.4)        (908)  (0.5)        (814)  (0.5)
           State income taxes.........................         488    0.7        3,487    2.0        4,773    3.2
           Reduction in prior year contingency
               reserve................................          --     --       (4,154)  (2.5)      (2,116)  (1.4)
           Bank owned life insurance, net of premium..      (1,283)  (1.9)      (1,039)  (0.6)      (1,602)  (1.1)
           Reduction in deferred tax asset
               valuation allowance....................     (10,746) (15.9)          --     --          --      --
           Other, net.................................        (953)  (1.4)        (483)  (0.3)         423    0.3
                                                         ---------  -----    ---------  -----    ---------  -----
                 Provision for income taxes...........   $  10,159   15.1%   $  55,062   33.1%   $  52,509   35.5%
                                                         =========  =====    =========  =====    =========  =====
</TABLE>
The $4.2  million  and $2.1  million  reductions  in the prior year  contingency
reserve,  reflected in 2006 and 2005,  respectively,  resulted from reversals of
federal and state tax reserves no longer deemed necessary.




<PAGE>


The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 2007 and
2006 were as follows:
<TABLE>
<CAPTION>

                                                                                           December 31,
                                                                                           ------------
                                                                                         2007        2006
                                                                                         ----        ----
                                                                                 (dollars expressed in thousands)
              Deferred tax assets:
<S>                                                                                  <C>            <C>
                  Net operating loss carryforwards................................   $  23,143      26,267
                  Deferred built-in loss carryforward.............................       3,105       3,345
                  Allowance for loan losses.......................................      88,835      60,052
                  Loans held for sale.............................................       1,558         572
                  Alternative minimum and general business tax credits............       3,489       3,510
                  Interest on nonaccrual loans....................................       6,001       2,286
                  Deferred compensation...........................................       7,842       7,732
                  Net fair value adjustment for available-for-sale
                    investment securities.........................................       6,857       6,312
                  Net fair value adjustment for derivative instruments............          --         755
                  Partnership investments.........................................       7,865       7,079
                  Overdraft, robbery and other fraud losses.......................       5,612          --
                  Accrued contingent liabilities..................................       2,030         533
                  Other...........................................................       5,559       3,133
                                                                                     ---------    --------
                      Gross deferred tax assets...................................     161,896     121,576
                                                                                     ---------    --------
                  Valuation allowance.............................................     (23,278)    (21,401)
                                                                                     ---------    --------
                      Deferred tax assets, net of valuation allowance.............     138,618     100,175
                                                                                     ---------    --------
              Deferred tax liabilities:
                  Depreciation on bank premises and equipment.....................       6,534       8,445
                  Servicing rights................................................       1,909         919
                  Net fair value adjustment for derivative instruments............       4,171          --
                  Core deposit intangibles........................................       5,252       8,887
                  Customer list intangibles.......................................       8,695       9,307
                  Discount on loans...............................................       5,246       5,446
                  Equity investments..............................................       5,707       6,103
                  State taxes.....................................................       6,826       2,594
                  Other ..........................................................       2,494       1,125
                                                                                     ---------    --------
                      Deferred tax liabilities....................................      46,834      42,826
                                                                                     ---------    --------
                      Net deferred tax assets.....................................   $  91,784      57,349
                                                                                     =========    ========

</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 $91.8 million at December 31,
2007.

Changes  in the  deferred  tax asset  valuation  allowance  for the years  ended
December 31, 2007, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>

                                                                                   2007       2006       2005
                                                                                   ----       ----       ----
                                                                                (dollars expressed in thousands)

<S>                                                                              <C>         <C>        <C>
         Balance, beginning of year...........................................   $21,401     17,754     17,767
         Purchase acquisitions................................................    20,177         --         --
         Reversal of deferred tax asset valuation allowance
              to income tax expense...........................................   (10,746)        --         --
         Reversal of deferred tax asset valuation allowance
              to goodwill and other intangible assets.........................    (7,554)        --         --
         Adjustment to purchase acquisitions completed in prior periods.......        --      3,647        (13)
                                                                                 -------     ------     ------
         Balance, end of year.................................................   $23,278     21,401     17,754
                                                                                 =======     ======     ======
</TABLE>

<PAGE>

Upon completion of the 2004  acquisition of CIB Bank and the 2007 acquisition of
CFHI, the net deferred tax assets  associated  with the respective  acquisitions
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  acquisitions is subject
to a number of limitations.  Among these limitations is the restriction that any
built-in  loss (the fair value of the  entity was less than the tax basis)  that
existed  at the date of  acquisition,  if  realized  within the first five years
subsequent  to the date of  acquisition,  will be  deferred  and must be carried
forward and  subjected to rules  similar to the rules for  carrying  forward net
operating losses. Based upon these factors,  management  established a valuation
allowance  for CIB Bank in 2004 and CFHI in 2007 in the amount of $21.4  million
and $20.2 million, respectively.  Until the implementation of SFAS No. 141(R) --
Business Combinations, at which time the current guidance is expected to change,
subsequent  reductions in the $20.2 million valuation allowance  associated with
the  acquisition  of CFHI will be  credited  to  goodwill  and other  intangible
assets. Subsequent reductions in the $3.1 million valuation allowance associated
with the  acquisition  of CIB Bank will be credited to the  provision for income
taxes.

At December 31, 2007, the deferred tax assets associated with the acquisition of
CIB Bank were  evaluated  and  management  concluded  that $18.3  million of the
valuation allowance was no longer required as the corresponding net deferred tax
assets no longer existed due to the recognition of temporary differences.  First
Banks did not have any goodwill  related to the CIB Bank acquisition at December
31, 2007. In accordance with SFAS No. 141,  Business  Combinations,  First Banks
reduced the carrying values of certain acquired assets to zero, which included a
reduction of core  deposit  intangibles  of $5.9  million and bank  premises and
equipment of $6.6 million.  In addition,  net deferred tax assets were increased
by $4.9 million to reflect the impact of the  reductions of the carrying  values
of the core deposit  intangibles and bank premises and equipment.  The remaining
amount of $10.7 million was recorded as a reduction of income tax expense.

On January 1, 2007, First Banks implemented FIN 48. The implementation of FIN 48
resulted  in the  recognition  of a  cumulative  effect of change in  accounting
principle  of $2.5  million,  which was  recorded as an  increase  to  beginning
retained earnings.

At  December  31, 2007 and  January 1, 2007,  First  Banks had a  liability  for
uncertain tax positions,  excluding interest and penalties, of $12.2 million and
$2.6 million, respectively. A reconciliation of the beginning and ending balance
of the unrecognized tax benefits is as follows:
<TABLE>
<CAPTION>

                                                                                      2007
                                                                                      ----
                                                                        (dollars expressed in thousands)

<S>                                                                                 <C>
                  Balance, beginning of year......................................  $  2,559
                  Additions:
                      Tax positions taken during the current year.................     2,352
                      Tax positions taken during the prior year...................     9,134
                  Reductions:
                      Tax positions taken during the prior year...................        (6)
                      Lapse of statute of limitations.............................    (1,795)
                                                                                    --------
                  Balance, end of year............................................  $ 12,244
                                                                                    ========
</TABLE>

At December 31, 2007 and January 1, 2007, the total amount of  unrecognized  tax
benefits  that would  affect the  effective  tax rate were $1.2 million and $1.4
million, respectively.

During the year ended December 31, 2007,  First Banks recorded  interest expense
of $527,000  related to  unrecognized  tax  benefits.  At December  31, 2007 and
January 1, 2007,  interest  accrued  for  unrecognized  tax  positions  was $1.4
million and $944,000, respectively. There were no penalties for unrecognized tax
positions  accrued at December 31, 2007 or January 1, 2007,  nor did First Banks
recognize any expense for penalties during 2007.

The Company continually  evaluates the unrecognized tax benefits associated with
its  uncertain  tax  positions.   It  is  reasonably  possible  that  the  total
unrecognized   tax  benefits  as  of  December   31,  2007  could   decrease  by
approximately  $1.4 million by December  31,  2008,  as a result of the lapse of
statutes of  limitations  and potential  settlements  with the federal and state
taxing  authorities,  of which the impact to the effective tax rate is estimated
to be approximately  $367,000. It is also reasonably possible that this decrease
could be substantially offset by new matters arising during the same period.

The  Company  files  consolidated  and  separate  income tax returns in the U.S.
federal jurisdiction and in various state  jurisdictions.  The Company's federal
returns  through 2004 have been examined by the Internal  Revenue  Service (IRS)
with the  examination  of the 2004 tax year being closed in February  2008.  The
Company's current estimate of the resolution of various state examinations, none
of which are in process,  is reflected in accrued income taxes;  however,  final
settlement of the  examinations or changes in the Company's  estimate may result
in future income tax expense or benefit.
<PAGE>

At  December  31,  2007 and 2006,  the  accumulation  of prior  years'  earnings
representing tax bad debt deductions was approximately  $29.8 million.  If these
tax bad debt reserves were charged for losses other than bad debt losses,  First
Banks would be required to recognize taxable income in the amount of the charge.
It is not contemplated that such  tax-restricted  retained earnings will be used
in a manner that would create federal income tax liabilities.

At December 31, 2007 and 2006,  for federal income taxes  purposes,  First Banks
had net operating loss carryforwards  relating to pre-acquisition  tax losses of
acquired   entities  of   approximately   $66.1   million  and  $75.0   million,
respectively.  At December 31, 2007,  the net operating loss  carryforwards  for
First Banks expire as follows:
<TABLE>
<CAPTION>

                                                                              (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                        <C>
              2008..................................................................     $   6,297
              2009..................................................................         5,740
              2010..................................................................             7
              2011 - 2025...........................................................        54,080
                                                                                         ---------
                  Total.............................................................     $  66,124
                                                                                         =========
</TABLE>

During 2007 and 2004, First Banks recognized built-in losses associated with the
acquisitions  of CFHI and CIB  Bank,  respectively.  A portion  of the  realized
built-in  losses was deferred in the year of  acquisition  and is required to be
carried forward  subject to rules similar to the rules for carrying  forward net
operating  losses.  Utilization  of the  realized  built-in  losses  is  allowed
subsequent to the utilization of any net operating loss carryforwards associated
with the acquisitions of CFHI and CIB Bank. Consequently,  at December 31, 2007,
First  Banks  had  deferred  built-in  loss  carryforwards,   in  aggregate,  of
approximately   $7.4  million.   Utilization  of  the  deferred   built-in  loss
carryforwards is allowed beginning in the year 2020, and such losses will expire
in the year 2024.

(14)     EARNINGS PER COMMON SHARE

The following is a  reconciliation  of basic and diluted EPS for the years ended
December 31, 2007, 2006 and 2005:
<TABLE>
<CAPTION>

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

         Year ended December 31, 2007:
<S>                                                                   <C>             <C>        <C>
           Basic EPS - income available to common stockholders...     $ 56,448        23,661     $ 2,385.68
           Effect of dilutive securities:
              Class A convertible preferred stock................          769           385          (6.23)
                                                                      --------      --------     ----------
           Diluted EPS - income available to common stockholders.     $ 57,217        24,046     $ 2,379.45
                                                                      ========      ========     ==========

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

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

(15)     CREDIT COMMITMENTS

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

Commitments to extend fixed and variable rate credit, and commercial and standby
letters of credit at December 31, 2007 and 2006 were as follows:
<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                      -------------------------
                                                                                          2007          2006
                                                                                          ----          ----
                                                                                         (dollars expressed
                                                                                            in thousands)

<S>                                                                                   <C>             <C>
         Commitments to extend credit...............................................  $ 3,057,404     3,092,804
         Commercial and standby letters of credit...................................      201,436       171,097
                                                                                      -----------    ----------
                                                                                      $ 3,258,840     3,263,901
                                                                                      ===========    ==========
</TABLE>


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

Commercial and standby letters of credit are conditional  commitments  issued to
guarantee the performance of a customer to a third party.  The letters of credit
are  primarily  issued to support  public and  private  borrowing  arrangements,
including  commercial  paper,  bond  financing  and similar  transactions.  Most
letters of credit  extend for less than one year.  The credit  risk  involved in
issuing  letters of credit is essentially the same as that involved in extending
loan  facilities to customers.  Upon  issuance of the  commitments,  First Banks
typically holds marketable securities,  certificates of deposit, inventory, real
property or other assets as collateral  supporting  those  commitments for which
collateral is deemed  necessary.  The standby  letters of credit at December 31,
2007 expire, at various dates, within nine years.

(16)     FAIR VALUE OF FINANCIAL INSTRUMENTS

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



<PAGE>


The estimated fair value of First Banks'  financial  instruments at December 31,
2007 and 2006 were as follows:
<TABLE>
<CAPTION>


                                                                     2007                          2006
                                                           ------------------------      ------------------------
                                                            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...................    $  231,675       231,675         369,557       369,557
           Investment securities:
               Trading.................................            --            --          81,168        81,168
               Available for sale......................     1,000,392     1,000,392       1,359,729     1,359,729
               Held to maturity........................        18,879        19,078          24,049        23,971
           Net loans...................................     8,714,863     8,633,525       7,520,752     7,325,521
           Derivative instruments......................        13,728        13,728          (1,573)       (1,573)
           Bank-owned life insurance...................       116,619       116,619         113,778       113,778
           Accrued interest receivable.................        55,193        55,193          55,464        55,464

         Financial Liabilities:
           Deposits:
               Noninterest-bearing demand..............    $1,259,123     1,259,123       1,281,108     1,281,108
               Interest-bearing demand.................       980,850       980,850         981,939       981,939
               Savings and money market................     2,716,726     2,716,726       2,352,575     2,352,575
               Time deposits...........................     4,192,494     4,227,747       3,827,464     3,827,464
           Other borrowings............................       376,123       376,123         373,899       373,899
           Notes payable...............................        39,000        39,000          65,000        65,000
           Accrued interest payable....................        18,639        18,639          28,176        28,176
           Subordinated debentures.....................       353,752       353,200         297,966       303,302

         Off-Balance Sheet Financial Instruments:
           Commitments to extend credit, standby
               letters of credit and financial
               guarantees..............................    $    1,582         1,582           1,363         1,363
</TABLE>

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

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

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

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

Derivative instruments: The fair value of derivative instruments, including cash
flow hedges, fair value hedges, interest rate floor and cap agreements, interest
rate lock commitments and forward commitments to sell mortgage-backed securities
is based on quoted market prices where  available.  If quoted market prices were
not  available,  the fair value was based on quoted  market prices of comparable
instruments.

Bank-owned life insurance:  The fair value of 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.

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

<PAGE>

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

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

Subordinated debentures: The fair value of fixed rate subordinated debentures 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  values of  variable  rate  subordinated  debentures
approximate fair value.

Off-Balance Sheet Financial Instruments: The fair value of commitments to extend
credit,  standby  letters  of credit  and  financial  guarantees  were  based on
estimated probable credit losses.

(17)     EMPLOYEE BENEFITS

First  Banks'  401(k) plan is a  self-administered  savings and  incentive  plan
covering   substantially  all  employees.   Employer  match   contributions  are
determined annually under the plan by First Banks' Board of Directors.  Employee
contributions  were  limited to $15,500 of gross  compensation  for 2007.  Total
employer  contributions under the plan were $4.4 million,  $3.9 million and $2.4
million for the years ended December 31, 2007, 2006 and 2005, respectively.  The
plan assets are held and managed under a trust agreement with First Bank's trust
department.

First Banks'  nonqualified  deferred  compensation  plan,  which covers a select
group of employees,  is administered by an independent  third party. The plan is
exempt from the participation,  vesting,  funding and fiduciary  requirements of
the Employee Retirement Income Security Act of 1974. Participants may contribute
from 1% to 25% of their  salary  and up to 100% of their  bonuses  on a  pre-tax
basis.  Balances  outstanding under the plan, which are reflected in accrued and
other liabilities in the consolidated balance sheets, were $9.2 million and $8.1
million at December 31, 2007 and 2006, respectively. Plan expense recorded under
the plan,  which is reflected in salaries and employee  benefits  expense in the
consolidated  statements of income, was $682,000,  $845,000 and $592,000 for the
years ended December 31, 2007, 2006 and 2005, respectively.

(18)     STOCKHOLDERS' EQUITY

First  Banks  has two  classes  of  preferred  stock  outstanding.  The  Class A
preferred  stock is  convertible  into shares of common stock at a rate based on
the ratio of the par value of the preferred stock to the current market value of
the common stock at the date of  conversion,  to be  determined  by  independent
appraisal at the time of  conversion.  Shares of Class A preferred  stock may be
redeemed  by  First  Banks at any  time at  105.0%  of par  value.  The  Class B
preferred stock may not be redeemed or converted. The redemption of any issue of
preferred  stock  requires  the prior  approval of the Board of Governors of the
Federal Reserve System (Federal Reserve). The holders of the Class A and Class B
preferred  stock have full voting  rights.  Dividends on the Class A and Class B
preferred  stock are adjustable  quarterly  based on the highest of the Treasury
Bill  Rate or the Ten  Year  Constant  Maturity  Rate  for the  two-week  period
immediately  preceding the beginning of the quarter. This rate shall not be less
than 6.0% nor more than 12.0% on the Class A preferred  stock, or less than 7.0%
nor more than 15.0% on the Class B preferred stock. The annual dividend rate was
6.0% for the Class A preferred  stock and 7.0% for the Class B  preferred  stock
for the years ended December 31, 2007, 2006 and 2005, respectively.

Other  comprehensive  income  (loss) of $8.1  million,  $6.8 million and ($18.1)
million, as presented in the accompanying  Consolidated Statements of Changes in
Stockholders'  Equity and  Comprehensive  Income, is reflected net of income tax
expense (benefit) of $4.4 million, $3.7 million and ($9.7) million for the years
ended December 31, 2007, 2006 and 2005, respectively.

On January 1, 2007, First Banks implemented FIN 48. The implementation of FIN 48
resulted  in the  recognition  of a  cumulative  effect of change in  accounting
principle  of $2.5  million,  which was  recorded as an  increase  to  beginning
retained  earnings,  as  further  described  in  Note  1  and  Note  13  to  the
Consolidated Financial Statements.

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

<PAGE>

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

(19)     TRANSACTIONS WITH RELATED PARTIES

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

First Services, L.P. (First Services), a limited partnership indirectly owned by
First Banks' Chairman and members of his immediate family,  provides information
technology,  item processing and various related  services to First Banks,  Inc.
and its subsidiaries.  Fees paid under agreements with First Services were $34.1
million,  $34.8 million and $33.9 million for the years ended December 31, 2007,
2006 and 2005,  respectively.  First Services leases information  technology and
other equipment from First Bank. During 2007, 2006 and 2005, First Services paid
First Bank $3.7 million, $4.2 million and $4.3 million,  respectively, in rental
fees  for  the  use  of  that  equipment.  In  addition,   First  Services  paid
approximately  $1.8  million,  $1.6 million and $1.6 million for the years ended
December 31, 2007, 2006 and 2005, respectively, in rental payments for occupancy
of certain First Bank premises from which business is conducted.

First Brokerage America,  L.L.C. (First Brokerage),  a limited liability company
indirectly  owned by First Banks' Chairman and members of his immediate  family,
received approximately $4.8 million, $3.0 million and $2.6 million for the years
ended December 31, 2007, 2006 and 2005, respectively,  in gross commissions paid
by unaffiliated  third-party companies.  The commissions received were primarily
in  connection  with the sales of  annuities,  securities  and  other  insurance
products  to  customers  of  First  Bank.  First  Brokerage  paid  approximately
$183,000,  $114,000 and $113,000 for the years ended December 31, 2007, 2006 and
2005,  respectively,  in rental  payments for  occupancy  of certain  First Bank
premises from which brokerage business is conducted.

First Title  Guaranty LLC D/B/A First Banc  Insurors  (First  Title),  a limited
liability  company  owned by First Banks'  Chairman and members of his immediate
family  prior to its merger with and into First  Brokerage,  effective  April 2,
2007, received approximately $35,000,  $221,000 and $379,000 for the years ended
December 31, 2007,  2006 and 2005,  respectively,  in commissions  for insurance
policies  purchased by First Banks or customers of First Bank from  unaffiliated
third-party  insurers.  The insurance  premiums on which these  commissions were
earned were  competitively  bid,  and First Banks deemed 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. In May 2006,
Adrian Baker, a subsidiary of First Bank,  purchased the personal and commercial
insurance  book of business from First Title.  First Bank engaged an independent
third  party to perform a business  valuation  of the  personal  and  commercial
insurance  book  of  business  of  First  Title,  which  was  determined  to  be
approximately  $270,000 and is being  amortized  over seven years  utilizing the
straight-line method.

On January 16, 2007, First Banks contributed  48,796 shares of common stock held
in its  available-for-sale  investment securities portfolio with a fair value of
$1.7 million to the Dierberg Operating Foundation,  Inc. (Operating Foundation),
a charitable foundation  established by First Banks' Chairman and members of his
immediate  family.  In conjunction with this  transaction,  First Banks recorded
charitable contribution expense of $1.7 million, which was partially offset by a
gain on the contribution of these  available-for-sale  investment  securities of
$147,000,  representing the difference between the cost basis and the fair value
of the common stock on the date of the  contribution.  In addition,  First Banks
recognized  a tax  benefit of $1.0  million  associated  with this  transaction.
Furthermore,  First  Bank  contributed  $3.5  million  in cash to the  Operating
Foundation,  thereby bringing the total value of charitable contributions to the
Operating  Foundation  to $5.3  million for the year ended  December  31,  2007.
During  2006,  First Bank  contributed  $5.0  million  in cash to the  Operating
Foundation. In addition, in November 2006, First Banks contributed 26,962 shares
of common stock held in its  available-for-sale  investment securities portfolio
with a fair value of $1.0 million to the Operating  Foundation.  In  conjunction
with this transaction,  First Banks recorded charitable  contribution expense of
$1.0 million,  which was partially offset by a gain on the contribution of these
available-for-sale  investment securities of $121,000. In addition,  First Banks
recognized a tax benefit of $522,000  associated with this  transaction.  During
2005, First Bank contributed $2.5 million in cash to The Dierberg Foundation,  a
charitable  foundation  established by First Banks'  Chairman and members of his
immediate family, and $1.5 million in cash to the Operating Foundation.
<PAGE>

First Banks  periodically  purchases various products from Hermannhof,  Inc. and
Dierberg Star Lane  Vineyards,  entities that are owned by First Banks' Chairman
and  members of his  immediate  family.  First  Banks  utilizes  these  products
primarily  for  customer  and  employee  events  and  promotions,  and  business
development functions.  During the years ended December 31, 2007, 2006 and 2005,
First Banks purchased products aggregating approximately $333,000,  $376,000 and
$320,000, respectively, from these entities.

First Bank  leases  certain of its  in-store  branch  offices and ATM sites from
Dierbergs  Markets,  Inc., a grocery  store chain  headquartered  in St.  Louis,
Missouri that is owned and operated by the brother of First Banks'  Chairman and
members of his immediate family. Total rent expense incurred by First Bank under
the lease obligation contracts was $395,000, $385,000 and $335,000 for the years
ended December 31, 2007, 2006 and 2005, respectively.

In June 2005,  FCA, a corporation  owned by First Banks' Chairman and members of
his  immediate  family,  became a 49.0% owner of SBLS LLC in  exchange  for $7.4
million  pursuant to a written  option  agreement with First Bank. On January 2,
2007,  First Bank  contributed $4.0 million to SBLS LLC in the form of a capital
contribution,  which increased  First Bank's  ownership of SBLS LLC to 63.9% and
decreased FCA's ownership to 36.1%. On June 29, 2007,  First Bank contributed an
additional  $7.8  million  to SBLS  LLC in the form of a  capital  contribution,
thereby  increasing  First Bank's  ownership of SBLS LLC to 76.0% and decreasing
FCA's ownership to 24.0%.

In June 2005,  SBLS LLC executed a Multi-Party  Agreement by and among SBLS LLC,
First Bank,  Colson Services  Corp.,  fiscal transfer agent for the SBA, and the
SBA, in addition to a Loan and  Security  Agreement  by and among First Bank and
the SBA  (collectively,  the Agreement) that provided a $50.0 million  warehouse
line of credit for loan funding purposes.  The Agreement provided for an initial
maturity  date of June 30,  2008,  which was  extended on June 15, 2006 by First
Bank to June  30,  2009.  Interest  was  payable  monthly,  in  arrears,  on the
outstanding  loan balances at a current rate equal to First Bank's prime lending
rate minus 50 basis  points.  On March 1, 2007,  SBLS LLC modified the Agreement
with First Bank.  The primary  modifications  to the  structure of the financing
arrangement  included (a) an increase in the warehouse line of credit from $50.0
million to $60.0 million;  and (b) interest was payable monthly,  in arrears, on
the  outstanding  balances at a rate equal to First  Bank's  prime  lending rate
minus 50 basis  points,  with the  option of  electing  to have a portion of the
outstanding  principal  balance in amounts not greater  than $40.0  million,  in
minimum increments of $500,000, bear interest at a fixed rate per annum equal to
the one-month LIBOR plus 215 basis points,  the three-month LIBOR plus 215 basis
points or the long-term interest rate swap rate plus 215 basis points,  provided
that no more than three  fixed-rate  interest  periods would be in effect at any
given time and no interest period would extend beyond the maturity date.  During
the third quarter of 2007,  SBLS LLC further  modified the Agreement  with First
Bank. The primary  modifications  to the structure of the financing  arrangement
included (a) an extension of the maturity date to June 30, 2010 and (b) interest
was payable monthly, in arrears, on the outstanding  balances at a rate equal to
First  Bank's  prime  lending  rate minus 100 basis  points,  with the option of
electing to have a portion of the outstanding  principal  balance in amounts not
greater than $40.0 million, in minimum increments of $500,000,  bear interest at
a fixed rate per annum equal to the one-month  LIBOR plus 165 basis points,  the
three-month LIBOR plus 165 basis points or the long-term interest rate swap rate
plus 165 basis  points,  provided  that no more than three  fixed-rate  interest
periods would be in effect at any given time and no interest period would extend
beyond the maturity date.

On September 28, 2007, the existing loan under the Agreement was refinanced by a
Promissory  Note entered  into  between SBLS LLC and First Bank that  provides a
$75.0  million  unsecured  revolving  line of  credit  with a  maturity  date of
September 30, 2008.  Interest is payable monthly, in arrears, on the outstanding
loan  balances at a current rate equal to the 30-day LIBOR plus 40 basis points.
The balance of advances  outstanding under the Promissory Note was $52.3 million
at December 31, 2007.  The balance of advances  outstanding  under the Agreement
was $47.5 million and $31.4 million at December 31, 2006 and 2005, respectively.
Interest  expense  recorded by SBLS LLC under the Promissory  Note and Agreement
was $3.4 million, $3.0 million and $1.9 million for the years ended December 31,
2007,  2006 and  2005,  respectively.  The  balance  of the  advances  under the
Promissory  Note and the related  interest  expense  recognized  by SBLS LLC are
eliminated for purposes of the Consolidated Financial Statements.

First Bank has had in the past, and may have in the future, loan transactions in
the ordinary  course of business  with its  directors  and/or their  affiliates.
These loan  transactions  have been made on the same terms,  including  interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions with unaffiliated  persons and did not involve more than the normal
risk  of  collectibility  or  present  other  unfavorable  features.   Loans  to
directors,  their  affiliates and executive  officers of First Banks,  Inc. were
approximately  $57.7  million and $55.9  million at December  31, 2007 and 2006,
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.
<PAGE>

In August 2005,  First Bank entered into a contract with World Wide  Technology,
Inc. (WWT), a wholly owned subsidiary of World Wide Technology Holding Co., Inc.
(WWTHC).  WWTHC  is an  electronic  procurement  and  logistics  company  in the
information  technology  industry  headquartered  in St.  Louis,  Missouri.  The
contract provided for WWT to provide information  technology services associated
with the initial  phase of a  corporate-wide  upgrade of personal  computers  to
First  Bank  employees  in  an  ongoing  effort  to  further   standardize   the
technological  infrastructure  throughout the First Bank branch banking network.
Mr.  David L.  Steward,  a  director  of First  Banks  and a member of the Audit
Committee  of First  Banks,  serves as the Chairman of the Board of Directors of
WWTHC. Prior to entering into this contract,  the Audit Committee of First Banks
reviewed and approved the utilization of WWT for information technology services
for this phase of the project with fees not to exceed $500,000.  First Bank made
payments of $478,000  under the contract for the first phase of the project,  of
which  $471,000 in payments  were made during 2005 and an  additional  $7,000 in
payments  were made during 2006.  During 2006,  First Bank  evaluated the second
phase of its corporate-wide personal computer upgrade project and entered into a
contract with WWT in August 2006 for additional information technology services.
Prior to  entering  into this  contract,  the  Audit  Committee  of First  Banks
reviewed and approved the  utilization of WWT for this phase of the project with
fees not to exceed  $500,000.  First Bank made  payments of  $379,000  under the
contract for the now completed second phase of the project, of which $367,000 in
payments  were made in 2006 and an  additional  $12,000  in  payments  were made
during 2007.

(20)     BUSINESS SEGMENT RESULTS

First Banks' business segment is First Bank. The reportable  business segment is
consistent  with the  management  structure of First  Banks,  First Bank and the
internal reporting system that monitors performance. First Bank provides similar
products  and  services  in its  defined  geographic  areas  through  its branch
network.  The products and services  offered include a broad range of commercial
and personal deposit products,  including demand, savings, money market and time
deposit  accounts.  In addition,  First Bank markets combined basic services for
various  customer  groups,   including   packaged  accounts  for  more  affluent
customers,  and sweep accounts,  lock-box deposits and cash management  products
for commercial customers.  First Bank also offers 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, small business lending,  asset-based loans, trade financing and insurance
premium  financing.  Other financial  services include mortgage  banking,  debit
cards,  brokerage  services,   employee  benefit  and  commercial  and  personal
insurance services, internet banking, remote deposit, automated teller machines,
telephone   banking,   safe  deposit  boxes  and  trust,   private  banking  and
institutional  money management  services.  The revenues generated by First Bank
and its subsidiaries  consist  primarily of interest income,  generated from the
loan and investment security portfolios, service charges and fees generated from
deposit  products and  services,  and fees  generated  by First Banks'  mortgage
banking,   insurance,   and  trust,  private  banking  and  institutional  money
management  business  units.  First Banks'  products and services are offered to
customers primarily within its geographic areas, which include eastern Missouri,
Illinois,  including  the  Chicago  metropolitan  area,  southern  and  northern
California,   Houston  and  Dallas,  Texas,  and  Florida's  Manatee,  Pinellas,
Hillsborough and Pasco counties. Certain loan products, including small business
loans and insurance  premium financing loans, are available  nationwide  through
SBLS LLC and UPAC.



<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.
The business segment results are summarized as follows:
<TABLE>
<CAPTION>

                                                                        Corporate, Other
                                                                        and Intercompany
                                          First Bank                    Reclassifications                Consolidated Totals
                             -----------------------------------  ------------------------------  ---------------------------------
                                 2007        2006        2005       2007       2006       2005       2007        2006       2005
                                 ----        ----        ----       ----       ----       ----       ----        ----       ----
                                                                 (dollars expressed in thousands)
Balance sheet information:

<S>                          <C>           <C>         <C>          <C>        <C>        <C>      <C>         <C>        <C>
Investment securities......  $   997,486   1,439,118   1,324,219    21,785     25,828     16,564   1,019,271   1,464,946  1,340,783
Loans, net of unearned
    discount...............    8,883,254   7,666,481   7,020,771        --         --         --   8,883,254   7,666,481  7,020,771
Goodwill and other
    intangible assets......      315,651     295,382     191,901        --         --         --     315,651     295,382    191,901
Total assets...............   10,867,592  10,116,246   9,148,931    29,768     42,468     21,402  10,897,360  10,158,714  9,170,333
Deposits...................    9,164,868   8,550,062   7,601,162   (15,675)  (106,976)   (59,331)  9,149,193   8,443,086  7,541,831
Other borrowings...........      376,123     373,899     539,174        --         --         --     376,123     373,899    539,174
Notes payable..............           --          --          --    39,000     65,000    100,000      39,000      65,000    100,000
Subordinated debentures....           --          --          --   353,752    297,966    215,461     353,752     297,966    215,461
Stockholders' equity.......    1,228,419   1,086,876     931,192  (360,931)  (286,441)  (252,254)    867,488     800,435    678,938
                             ===========  ==========  ==========  ========   ========   ========  ==========  ==========  =========

Income statement information:

Interest income............  $   698,744     645,100     493,182     1,169      1,204        758     699,913     646,304    493,940
Interest expense...........      289,702     233,982     145,608    26,759     27,880     22,651     316,461     261,862    168,259
                             -----------  ----------  ----------  --------   --------   --------  ----------  ----------  ---------
  Net interest income......      409,042     411,118     347,574   (25,590)   (26,676)   (21,893)    383,452     384,442    325,681
Provision for loan losses..       75,000      12,000      (4,000)       --         --         --      75,000      12,000     (4,000)
                             -----------  ----------  ----------  --------   --------   --------  ----------  ----------  ---------
  Net interest income
    after provision
    for loan losses........      334,042     399,118     351,574   (25,590)   (26,676)   (21,893)    308,452     372,442    329,681
Noninterest income.........      103,631     112,549      96,871      (362)       394       (786)    103,269     112,943     96,085
Amortization of
    intangible assets......       12,419       8,195       4,850        --         --         --      12,419       8,195      4,850
Other noninterest expense..      328,122     307,468     269,634     3,709      3,553      3,154     331,831     311,021    272,788
                             -----------  ----------  ----------  --------   --------   --------  ----------  ----------  ---------
  Income before provision
    for income taxes and
    minority interest in
    income (loss) of
    subsidiary.............       97,132     196,004     173,961   (29,661)   (29,835)   (25,833)     67,471     166,169    148,128
Provision for income taxes.       20,958      65,752      61,517   (10,799)   (10,690)    (9,008)     10,159      55,062     52,509
                             -----------  ----------   ---------  --------   --------   --------  ----------  ----------  ---------
  Income before minority
    interest in income
    (loss) of subsidiary...       76,174     130,252     112,444   (18,862)   (19,145)   (16,825)     57,312     111,107     95,619
Minority interest in
    income (loss) of
    subsidiary.............           78        (587)     (1,287)       --         --         --          78        (587)    (1,287)
                             -----------  ----------  ----------  --------   --------   --------  ----------  ----------  ---------
  Net income...............  $    76,096     130,839     113,731   (18,862)   (19,145)   (16,825)     57,234     111,694     96,906
                             ===========  ==========  ==========  ========   ========   ========  ==========  ==========  =========
</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.
<PAGE>

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,  2007 and  2006,  First  Banks  and  First  Bank  were  each  well
capitalized.  As of December 31, 2007, the most recent  notification  from First
Banks'  primary  regulator  categorized  First  Banks  and  First  Bank  as well
capitalized under the regulatory  framework for prompt corrective  action. To be
categorized  as well  capitalized,  First  Banks  and First  Bank must  maintain
minimum total  risk-based,  Tier 1 risk-based and Tier 1 leverage  ratios as set
forth in the following table.

At December 31, 2007 and 2006, First Banks' and First Bank's required and actual
capital ratios were as follows:
<TABLE>
<CAPTION>


                                                            Actual
                                          ------------------------------------------    For          To be Well
                                                  2007                  2006          Capital     Capitalized Under
                                          --------------------  --------------------  Adequacy    Prompt Corrective
                                             Amount     Ratio      Amount     Ratio   Purposes    Action Provisions
                                             ------     -----      ------     -----   --------    -----------------
                                                (dollars expressed in thousands)

Total capital (to risk-weighted assets):
<S>                                       <C>           <C>      <C>          <C>        <C>            <C>
    First Banks.........................  $1,032,607    10.09%   $ 929,688    10.25%     8.0%           10.0%
    First Bank..........................   1,048,345    10.26      925,013    10.23      8.0            10.0

Tier 1 capital (to risk-weighted assets):
    First Banks.........................     844,421     8.25      789,967     8.71      4.0             6.0
    First Bank..........................     920,080     9.00      811,530     8.97      4.0             6.0

Tier 1 capital (to average assets):
    First Banks.........................     844,421     8.32      789,967     8.13      3.0             5.0
    First Bank..........................     920,080     9.09      811,530     8.38      3.0             5.0
</TABLE>

In March 2005,  the Federal  Reserve  adopted a final rule,  Risk-Based  Capital
Standards:  Trust  Preferred  Securities  and the  Definition of Capital,  which
allows for the continued limited inclusion of trust preferred securities in Tier
1 capital.  The Federal  Reserve's  final rule limits  restricted  core  capital
elements to 25% of the sum of all core capital  elements,  including  restricted
core  capital  elements,  net of  goodwill  less  any  associated  deferred  tax
liability. Amounts of restricted core capital elements in excess of these limits
may generally be included in Tier 2 capital. Specifically, amounts of qualifying
trust preferred securities and cumulative perpetual preferred stock in excess of
the 25% limit may be included in Tier 2 capital,  but will be limited,  together
with  subordinated  debt  and  limited-life  preferred  stock,  to 50% of Tier 1
capital. In addition, the final rule provides that in the last five years before
the maturity of the underlying  subordinated note, the outstanding amount of the
associated trust preferred  securities is to be excluded from Tier 1 capital and
included in Tier 2 capital,  subject to  one-fifth  amortization  per year.  The
final rule provides for a five-year  transition  period,  ending March 31, 2009,
for the  application  of the  quantitative  limits.  Until March 31,  2009,  the
aggregate  amount  of  qualifying   cumulative  perpetual  preferred  stock  and
qualifying trust preferred  securities that may be included in Tier 1 capital is
limited to 25% of the sum of the  following  core capital  elements:  qualifying
common stockholders' equity,  qualifying  noncumulative and cumulative perpetual
preferred  stock,  qualifying  minority  interest  in  the  equity  accounts  of
consolidated subsidiaries and qualifying trust preferred securities. First Banks
has determined that the Federal  Reserve's final rules that will be effective in
March 2009, if  implemented  as of December 31, 2007,  would reduce First Banks'
Tier 1 capital (to risk-weighted  assets) and Tier 1 capital (to average assets)
to 7.39% and 7.45%, respectively,  and would not have an impact on total capital
(to risk-weighted assets).

(22)     DISTRIBUTION OF EARNINGS OF FIRST BANK

First Bank is  restricted  by various  state and federal  regulations  as to the
amount of dividends  that are available for payment to First Banks,  Inc.  Under
the most restrictive of these requirements, the future payment of dividends from
First Bank is limited to  approximately  $114.0  million at December  31,  2007,
unless prior permission of the regulatory authorities is obtained.



<PAGE>


(23)     PARENT COMPANY ONLY FINANCIAL INFORMATION

Following are condensed  balance sheets of First Banks,  Inc. as of December 31,
2007 and 2006,  and condensed  statements of income and cash flows for the years
ended December 31, 2007, 2006 and 2005:
<TABLE>
<CAPTION>


                                          CONDENSED BALANCE SHEETS

                                                                                          December 31,
                                                                                    ------------------------
                                                                                        2007        2006
                                                                                        ----        ----
                                                                                (dollars expressed in thousands)
                                                 Assets
                                                 ------
<S>                                                                                  <C>             <C>
         Cash deposited in First Bank............................................    $   14,791      16,688
         Cash deposited in unaffiliated financial institutions...................            --          26
                                                                                     ----------   ---------
              Total cash ........................................................        14,791      16,714
         Investment securities...................................................        21,785      25,828
         Investment in subsidiaries..............................................     1,228,266   1,087,356
         Advances due from CFHI..................................................         1,401          --
         Advances due from SFC...................................................            --      90,000
         Other assets............................................................         8,116      17,014
                                                                                     ----------   ---------
              Total assets.......................................................    $1,274,359   1,236,912
                                                                                     ==========   =========

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

         Notes payable...........................................................    $   39,000      65,000
         Subordinated debentures.................................................       353,752     297,966
         Accrued expenses and other liabilities..................................        14,119      73,511
                                                                                     ----------   ---------
              Total liabilities..................................................       406,871     436,477
         Stockholders' equity....................................................       867,488     800,435
                                                                                     ----------   ---------
              Total liabilities and stockholders' equity.........................    $1,274,359   1,236,912
                                                                                     ==========   =========


                                       CONDENSED STATEMENTS OF INCOME

                                                                                  Years Ended December 31,
                                                                             ----------------------------------
                                                                                2007        2006        2005
                                                                                ----        ----        ----
                                                                              (dollars expressed in thousands)

         Income:
           Dividends from subsidiaries...................................    $  45,000      70,000      94,050
           Management fees from subsidiaries.............................       34,386      35,525      31,975
           Gain on sale of available-for-sale investment securities......          145         767          --
           Other.........................................................        1,424       2,284       1,049
                                                                             ---------    --------    --------
              Total income...............................................       80,955     108,576     127,074
                                                                             ---------    --------    --------
         Expense:
           Interest......................................................       26,940      28,356      22,860
           Salaries and employee benefits................................       23,829      25,530      23,238
           Legal, examination and professional fees......................        2,979       3,796       3,959
           Charitable contributions......................................        1,905       1,068         100
           Other.........................................................       10,037       9,660       8,687
                                                                             ---------    --------    --------
              Total expense..............................................       65,690      68,410      58,844
                                                                             ---------    --------    --------
              Income before benefit for income taxes and equity
                in undistributed earnings of subsidiaries................       15,265      40,166      68,230
         Benefit for income taxes........................................      (10,825)    (10,690)     (9,004)
                                                                             ---------    --------    --------
              Income before equity in undistributed earnings
                of subsidiaries..........................................       26,090      50,856      77,234
         Equity in undistributed earnings of subsidiaries................       31,144      60,838      19,672
                                                                             ---------    --------    --------
              Net income.................................................    $  57,234     111,694      96,906
                                                                             =========    ========    ========
</TABLE>



<PAGE>
<TABLE>
<CAPTION>


                                     CONDENSED STATEMENTS OF CASH FLOWS

                                                                                  Years Ended December 31,
                                                                             ----------------------------------
                                                                                2007        2006        2005
                                                                                ----        ----        ----
                                                                               (dollars expressed in thousands)

         Cash flows from operating activities:
<S>                                                                          <C>           <C>          <C>
           Net income....................................................    $  57,234     111,694      96,906
           Adjustments to reconcile net income to net cash provided by
              (used in) operating activities:
                Net income of subsidiaries...............................      (76,144)   (130,838)   (113,722)
                Dividends from subsidiaries..............................       45,000      70,000      94,050
                Decrease (increase) in advances due from SFC.............       90,000     (90,000)         --
                Other, net...............................................        8,739     (10,610)      4,882
                                                                             ---------    --------    --------
                  Net cash provided by (used in) operating activities....      124,829     (49,754)     82,116
                                                                             ---------    --------    --------

         Cash flows from investing activities:
           Increase in investment securities.............................       (2,616)     (6,375)     (5,304)
           Investment in common securities of affiliated business
              and statutory trusts.......................................       (2,322)     (4,178)         --
           Payments from redemption of investment in common securities
              of affiliated business and statutory trusts................        2,481          --       1,778
           Acquisitions of subsidiaries..................................      (50,749)    (85,514)    (52,400)
           Capital contributions to subsidiaries.........................      (40,000)         --          --
           Other, net....................................................       (1,401)     (1,682)      1,340
                                                                             ---------    --------    --------
                  Net cash used in investing activities..................      (94,607)    (97,749)    (54,586)
                                                                             ---------    --------    --------

         Cash flows from financing activities:
           Advances drawn on notes payable...............................       35,000          --     100,000
           Repayments of notes payable...................................      (61,000)    (35,000)    (15,000)
           Proceeds from issuance of subordinated debentures.............       77,322     139,178          --
           Repayments of subordinated debentures.........................      (82,681)         --     (59,278)
           Payment of preferred stock dividends..........................         (786)       (786)       (786)
                                                                             ---------    --------    --------
                  Net cash (used in) provided by financing activities....      (32,145)    103,392      24,936
                                                                             ---------    --------    --------
                  Net (decrease) increase in cash........................       (1,923)    (44,111)     52,466
         Cash, beginning of year.........................................       16,714      60,825       8,359
                                                                             ---------    --------    --------
         Cash, end of year...............................................    $  14,791      16,714      60,825
                                                                             =========    ========    ========

         Noncash investing activities:
           Cash paid for interest........................................    $  28,685      28,843      18,690
                                                                             =========    ========    ========

</TABLE>


<PAGE>
(24)     CONTINGENT LIABILITIES

In October 2000, First Banks entered into two continuing guaranty contracts. For
value received,  and for the purpose of inducing a pension fund and its trustees
and a welfare fund and its trustees  (the Funds) to conduct  business  with MVP,
First  Bank's  institutional  investment  management  subsidiary,   First  Banks
irrevocably  and  unconditionally  guaranteed  payment of and promised to pay to
each of the Funds any amounts up to the sum of $5.0 million to the extent MVP is
liable  to the  Funds  for a  breach  of the  Investment  Management  Agreements
(including the Investment  Policy Statement and Investment  Guidelines),  by and
between MVP and the Funds and/or any violation of the Employee Retirement Income
Security Act by MVP  resulting in liability  to the Funds.  The  guaranties  are
continuing  guaranties  of all  obligations  that  may  arise  for  transactions
occurring prior to termination of the Investment  Management  Agreements and are
coexistent with the term of the Investment Management Agreements. The Investment
Management  Agreements  have no specified term but may be terminated at any time
upon written notice by the Trustees or, at First Banks' option, upon thirty days
written  notice to the Trustees.  In the event of  termination of the Investment
Management Agreements, such termination shall have no effect on the liability of
First Banks with respect to obligations  incurred before such  termination.  The
obligations  of First Banks are joint and several with those of MVP. First Banks
does not have any recourse provisions that would enable it to recover from third
parties  any  amounts  paid under the  contracts  nor does First  Banks hold any
assets as  collateral  that,  upon  occurrence  of a required  payment under the
contract, could be liquidated to recover all or a portion of the amount(s) paid.
At December 31, 2007 and 2006,  First Banks had not recorded a liability for the
obligations  associated  with these guaranty  contracts as the  likelihood  that
First Banks will be required to make payments under the contracts is remote.

CFHI  Securities  Litigation.  Prior to  acquisition  by First  Banks,  CFHI and
certain of its present and former  officers  were named as  defendants  in three
purported class action  complaints filed in the United States District Court for
the Middle District of Florida, Tampa Division (the "Court") alleging violations
of the federal  securities  laws, the first of which was filed with the Court on
March 20, 2007 (the "Securities  Actions").  On June 22, 2007, the Court entered
an order pursuant to which the Court (i)  consolidated  the Securities  Actions,
with the matter  proceeding  under the docket for Grand Lodge of Pennsylvania v.
Brian P. Peters, et al., Case No.  8:07-cv-429-T-26-EAJ  and (ii) appointed Troy
Ratcliff  and  Daniel  Altenburg  (the  "Lead  Plaintiffs")  as lead  plaintiffs
pursuant to the provisions of the Private  Securities  Litigation  Reform Act of
1995.

Subsequently,  on or  about  August  24,  2007,  the  Lead  Plaintiffs  filed  a
consolidated  amended  class action  complaint  (the "Amended  Complaint").  The
Amended  Complaint  added as defendants  (i) the then current  members of CFHI's
Board of Directors,  (ii) one former member of CFHI's Board of Directors,  (iii)
the  underwriters of CFHI's October 5, 2005 public offering of common stock, and
(iv) CFHI's external auditors.

The Amended Complaint was brought on behalf of a putative class of purchasers of
CFHI's common stock  between  January 21, 2005 and January 22, 2007. In general,
the Amended  Complaint alleges that CFHI's United States Securities and Exchange
Commission  (SEC)  filings and public  statements  contained  misstatements  and
omissions regarding its residential construction-to-permanent lending operations
and, more  specifically,  regarding a home builder and its  affiliates  and that
CFHI's  financial   statements   violated  U.S.  generally  accepted  accounting
principles. The Amended Complaint asserts claims under Sections 11 and 15 of the
Securities Act of 1933 and Sections  10(b) and 20(a) of the Securities  Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder.  On August 30, 2007, the Lead
Plaintiffs  filed a notice with the Court  voluntarily  dismissing  their claims
against Anne V. Lee and Justin D. Locke without prejudice.

CFHI filed a motion to dismiss the Amended  Complaint  on December 3, 2007.  The
Lead  Plaintiffs  filed an  omnibus  opposition  to CFHI's  motion to dismiss on
February 1, 2008.

Other.  In the  ordinary  course of business,  First Banks and its  subsidiaries
become  involved  in  legal   proceedings  other  than  those  discussed  above.
Management, in consultation with legal counsel, believes the ultimate resolution
of these  proceedings  will not have a material  adverse effect on the financial
condition or results of operations of First Banks and/or its subsidiaries.

(25)     SUBSEQUENT EVENTS (UNAUDITED)

On February 12, 2008,  First Banks  entered into First and Second  Amendments to
its existing $125.0 million  Secured Credit  Agreement  (Amended  Secured Credit
Agreement).  The primary  modifications,  as  reflected  in the Amended  Secured
Credit  Agreement,  include  changes  to  the  borrower  pledge  agreement,  the
termination  date  of the  revolving  credit  facility,  and  certain  financial
covenants.  The Amended  Secured  Credit  Agreement  is secured by First  Banks'
ownership interest in the capital stock of both SFC and CFHI, which was acquired
by First Banks on November 30, 2007,  and all of the capital stock of First Bank
owned by SFC and CFHI. The termination date of the revolving credit facility was
extended from August 7, 2008 to September 1, 2008.  The  financial  covenants of
the Amended Secured Credit Agreement include modifications applicable to certain
quarterly   periods  for  the  minimum  return  on  assets  ratio,  the  maximum
nonperforming  asset  ratio and the  minimum  allowance  for loan and lease loss
ratio, as well as an additional  covenant regarding minimum net income for First
Banks.
<PAGE>

<TABLE>
<CAPTION>

                                                  FIRST BANKS, INC.

                                   QUARTERLY CONDENSED FINANCIAL DATA -- UNAUDITED
---------------------------------------------------------------------------------------------------------------------

                                                                                 2007 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............................................  $ 171,827       177,319       178,105        172,662
  Interest expense...........................................     76,966        80,548        80,259         78,688
                                                               ---------      --------      --------       --------
     Net interest income.....................................     94,861        96,771        97,846         93,974
  Provision for loan losses..................................      3,500         5,500        17,000         49,000
                                                               ---------      --------      --------       --------
     Net interest income after provision for loan losses.....     91,361        91,271        80,846         44,974
  Noninterest income.........................................     24,583        24,037        26,840         27,809
  Noninterest expense........................................     85,701        84,435        84,529         89,585
                                                               ---------      --------      --------       --------
     Income (loss) before provision (benefit) for income
       taxes and minority interest in income (loss)
       of subsidiary.........................................     30,243        30,873        23,157        (16,802)
  Provision (benefit) for income taxes.......................     10,950        11,092         8,087        (19,970)
                                                               ---------      --------      --------       --------
     Income before minority interest in income (loss)
       of subsidiary.........................................     19,293        19,781        15,070          3,168
  Minority interest in income (loss) of subsidiary...........         70            31            74            (97)
                                                               ---------      --------      --------       --------
     Net income..............................................  $  19,223        19,750        14,996          3,265
                                                               =========      ========      ========       ========

  Earnings per common share:
     Basic...................................................  $  804.12        829.17        625.48         126.91
                                                               =========      ========      ========       ========

     Diluted.................................................  $  799.23        821.63        623.84         126.91
                                                               =========      ========      ========       ========


                                                                                 2006 Quarter Ended
                                                               ------------------------------------------------------
                                                                March 31       June 30    September 30    December 31
                                                                --------       -------    ------------    -----------
                                                               (dollars expressed in thousands, except per share data)

  Interest income............................................  $ 147,234       157,731       168,293        173,046
  Interest expense...........................................     56,368        62,051        69,109         74,334
                                                               ---------      --------      --------       --------
     Net interest income.....................................     90,866        95,680        99,184         98,712
  Provision for loan losses..................................      1,000         5,000         2,000          4,000
                                                               ---------      --------      --------       --------
     Net interest income after provision for loan losses.....     89,866        90,680        97,184         94,712
  Noninterest income.........................................     25,497        25,879        29,994         31,573
  Noninterest expense........................................     74,815        81,051        80,473         82,877
                                                               ---------      --------      --------       --------
     Income before provision for income taxes and minority
       interest in loss of subsidiary........................     40,548        35,508        46,705         43,408
  Provision for income taxes.................................     11,703        13,500        17,249         12,610
                                                               ---------      --------      --------       --------
     Income before minority interest in loss of subsidiary...     28,845        22,008        29,456         30,798
  Minority interest in loss of subsidiary....................       (158)          (78)         (204)          (147)
                                                               ---------      --------      --------       --------
     Net income..............................................  $  29,003        22,086        29,660         30,945
                                                               =========      ========      ========       ========

  Earnings per common share:
     Basic...................................................  $1,217.49        927.86      1,245.28       1,296.75
                                                               =========      ========      ========       ========

     Diluted.................................................  $1,202.46        916.31      1,231.06       1,285.63
                                                               =========      ========      ========       ========

</TABLE>



<PAGE>

<TABLE>
<CAPTION>

<S>                                              <C>
                                                 FIRST BANKS, INC.

                                               INVESTOR INFORMATION
-------------------------------------------------------------------------------------------------------------------
</TABLE>

FIRST BANKS, INC. PREFERRED SECURITIES
--------------------------------------

The preferred  securities of First Preferred  Capital Trust IV are traded on the
New  York  Stock  Exchange  with  the  ticker  symbol  "FBSPrA."  The  preferred
securities  of First  Preferred  Capital  Trust IV are  represented  by a global
security  that  has  been  deposited  with  and  registered  in the  name of The
Depository  Trust Company,  New York, New York (DTC).  The beneficial  ownership
interests of these preferred  securities are recorded through the DTC book-entry
system. The high and low preferred  securities prices and the dividends declared
for 2007 and 2006 are summarized as follows:

<TABLE>
<CAPTION>

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

                                                                      2007                2006
                                                               ------------------  ------------------    Dividend
                                                                 High      Low       High      Low       Declared
                                                                 ----      ---       ----      ---       --------
<S>                                                             <C>       <C>        <C>      <C>       <C>
         First quarter........................................  $28.00    25.65      28.00    25.76     $ 0.509375
         Second quarter.......................................   26.75    25.17      27.65    26.38       0.509375
         Third quarter........................................   25.96    24.30      28.05    26.70       0.509375
         Fourth quarter.......................................   25.37    24.29      29.20    26.75       0.509375
                                                                                                        ----------
                                                                                                        $ 2.037500
                                                                                                        ==========

</TABLE>
<TABLE>


FOR INFORMATION CONCERNING FIRST BANKS, PLEASE CONTACT:
------------------------------------------------------

<S>                                       <C>                                        <C>
Terrance M. McCarthy                      Steven F. Schepman                         Lisa K. Vansickle
President and                             Executive Vice President and               Senior Vice President
   Chief Executive Officer                   Director of Corporate Development          and Chief Financial Officer
600 James S. McDonnell Blvd.                 and Business Segments                   600 James S. McDonnell Blvd.
Mail Code - M1-199-071                    600 James S. McDonnell Blvd.               Mail Code - M1-199-014
Hazelwood, Missouri 63042                 Mail Code - M1-199-071                     Hazelwood, Missouri 63042
Telephone - (314) 592-5000                Hazelwood, Missouri 63042                  Telephone - (314) 592-5000
www.firstbanks.com                        Telephone - (314) 592-5000                 www.firstbanks.com
------------------                        www.firstbanks.com                         ------------------
                                          ------------------
</TABLE>



TRANSFER AGENT:
--------------

Computershare Investor Services, LLC
2 North LaSalle Street
Chicago, Illinois 60602
Telephone - (312) 588-4990
www.computershare.com
---------------------



<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/ Terrance M. McCarthy
                                     -------------------------------------------
                                          Terrance M. McCarthy
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)


                                 By:  /s/ Lisa K. Vansickle
                                     -------------------------------------------
                                          Lisa K. Vansickle
                                          Senior Vice President and
                                          Chief Financial Officer
                                          (Principal Financial and Accounting
                                          Officer)

Date:    March 26, 2008

         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 26, 2008
   -----------------------------------------
       James F. Dierberg

   /s/ Terrance M. McCarthy                                  Director                     March 26, 2008
   -----------------------------------------
       Terrance M. McCarthy

   /s/ Steven F. Schepman                                    Director                     March 26, 2008
   -----------------------------------------
       Steven F. Schepman

   /s/ Gordon A. Gundaker                                    Director                     March 26, 2008
   -----------------------------------------
       Gordon A. Gundaker

   /s/ David L. Steward                                      Director                     March 26, 2008
   -----------------------------------------
       David L. Steward

   /s/ Douglas H. Yaeger                                     Director                     March 26, 2008
   -----------------------------------------
       Douglas H. Yaeger

</TABLE>

<PAGE>



                                INDEX TO EXHIBITS

   Exhibit
   Number                          Description
   ------                          -----------

    3.1   Restated  Articles  of  Incorporation  of  the  Company,   as  amended
          (incorporated  herein by reference  to Exhibit  3(i) to the  Company's
          Annual Report on Form 10-K for the year ended December 31, 1993).

    3.2   By-Laws of the Company  (incorporated  herein by  reference to Exhibit
          3.2 to Amendment No. 2 to the Company's Registration Statement on Form
          S-1, File No. 33-50576, dated September 15, 1992).

    4.1   Agreement as to Expenses and Liabilities between First Banks, Inc. and
          First  Preferred  Capital  Trust IV, dated April 1, 2003  (relating to
          First Preferred Capital Trust IV ("First Preferred IV")) (incorporated
          herein by reference to Exhibit 10.20 to the Company's Quarterly Report
          on Form 10-Q for the quarter ended June 30, 2003).

    4.2   Preferred  Securities  Guarantee Agreement by and between First Banks,
          Inc.  and Fifth Third Bank,  dated  April 1, 2003  (relating  to First
          Preferred  IV)  (incorporated  herein by reference to Exhibit 10.21 to
          the Company's Quarterly Report on Form 10-Q for the quarter ended June
          30, 2003).

    4.3   Indenture  between First Banks, Inc. and Fifth Third Bank, as Trustee,
          dated April 1, 2003  (relating to First  Preferred  IV)  (incorporated
          herein by reference to Exhibit 10.22 to the Company's Quarterly Report
          on Form 10-Q for the quarter ended June 30, 2003).

    4.4   Amended and  Restated  Trust  Agreement  among First Banks,  Inc.,  as
          Depositor,  Fifth Third Bank, as Property  Trustee,  Wilmington  Trust
          Company, as Delaware Trustee, and the Administrative  Trustees,  dated
          April 1, 2003 (relating to First Preferred IV) (incorporated herein by
          reference to Exhibit 10.23 to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended June 30, 2003).

    4.5   Indenture between First Banks, Inc., as Issuer, and 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).

    4.6   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).

    4.7   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).

    4.8   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).

    4.9   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).

    4.10  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).

    4.11  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>

    4.12  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).

    4.13  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company,  as Trustee,  dated as of  September  20, 2004  (incorporated
          herein by reference to Exhibit 4.26 to the Company's  Annual Report on
          Form 10-K for the year ended December 31, 2004).

    4.14  Amended  and  Restated  Declaration  of Trust by and among  Wilmington
          Trust  Company,  as Delaware  Trustee and the  Institutional  Trustee,
          First  Banks,  Inc.,  as  Sponsor,  and Allen H.  Blake,  Terrance  M.
          McCarthy  and  Lisa  K.  Vansickle,  as  Administrators,  dated  as of
          September 20, 2004  (incorporated  herein by reference to Exhibit 4.27
          to the  Company's  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 2004).

    4.15  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust Company,  dated as of September 20, 2004 (incorporated herein by
          reference to Exhibit 4.28 to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 2004).

    4.16  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust  II and FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods, as Placement Agents,  dated as of September 10, 2004
          (incorporated  herein by reference  to Exhibit  4.29 to the  Company's
          Annual Report on Form 10-K for the year ended December 31, 2004).

    4.17  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of September 20, 2004 (incorporated herein
          by reference to Exhibit 4.30 to the  Company's  Annual  Report on Form
          10-K for the year ended December 31, 2004).

    4.18  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust  II,  First  Banks,  Inc.  and First  Tennessee  Bank
          National  Association,  dated as of September  20, 2004  (incorporated
          herein by reference to Exhibit 4.31 to the Company's  Annual Report on
          Form 10-K for the year ended December 31, 2004).

    4.19  Capital  Securities  Subscription  Agreement by and between First Bank
          Statutory  Trust II, First Banks,  Inc. and Preferred Term  Securities
          XV,  Ltd.,  dated as of  September  20, 2004  (incorporated  herein by
          reference to Exhibit 4.32 to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 2004).

    4.20  Capital  Securities  Certificate P-1 of First Bank Statutory Trust II,
          dated September 20, 2004 (incorporated  herein by reference to Exhibit
          4.33 to the  Company's  Annual  Report on Form 10-K for the year ended
          December 31, 2004).

    4.21  Capital  Securities  Certificate P-2 of First Bank Statutory Trust II,
          dated September 20, 2004 (incorporated  herein by reference to Exhibit
          4.34 to the  Company's  Annual  Report on Form 10-K for the year ended
          December 31, 2004).

    4.22  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company,  as  Trustee,  dated as of November  23,  2004  (incorporated
          herein by reference to Exhibit 4.35 to the Company's  Annual Report on
          Form 10-K for the year ended December 31, 2004).

    4.23  Amended  and  Restated  Declaration  of Trust by and among  Wilmington
          Trust  Company,  as Delaware  Trustee and the  Institutional  Trustee,
          First Banks,  Inc.,  as Sponsor,  and Terrance M.  McCarthy,  Peter D.
          Wimmer and Lisa K. Vansickle, as Administrators,  dated as of November
          23, 2004  (incorporated  herein by  reference  to Exhibit  4.36 to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2004).

    4.24  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust Company,  dated as of November 23, 2004 (incorporated  herein by
          reference to Exhibit 4.37 to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 2004).

    4.25  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust III and FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods, as Placement  Agents,  dated as of November 22, 2004
          (incorporated  herein by reference  to Exhibit  4.38 to the  Company's
          Annual Report on Form 10-K for the year ended December 31, 2004).

    4.26  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of November 23, 2004 (incorporated  herein
          by reference to Exhibit 4.39 to the  Company's  Annual  Report on Form
          10-K for the year ended December 31, 2004).
<PAGE>

    4.27  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust III,  First  Banks,  Inc.  and First  Tennessee  Bank
          National  Association,  dated as of November  23,  2004  (incorporated
          herein by reference to Exhibit 4.40 to the Company's  Annual Report on
          Form 10-K for the year ended December 31, 2004).

    4.28  Capital Securities  Certificate P-1 of First Bank Statutory Trust III,
          dated November 23, 2004  (incorporated  herein by reference to Exhibit
          4.41 to the  Company's  Annual  Report on Form 10-K for the year ended
          December 31, 2004).

    4.29  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company, as Trustee, dated as of March 1, 2006 (incorporated herein by
          reference  to Exhibit 4.1 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended March 31, 2006).

    4.30  Amended  and  Restated  Declaration  of Trust by and among  Wilmington
          Trust  Company,  as Delaware  Trustee and the  Institutional  Trustee,
          First Banks, Inc., as Sponsor, and Allen H. Blake, Peter D. Wimmer and
          Lisa K.  Vansickle,  as  Administrators,  dated as of  March  1,  2006
          (incorporated  herein by  reference  to Exhibit  4.2 to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2006).

    4.31  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust  Company,  dated as of March 1,  2006  (incorporated  herein  by
          reference  to Exhibit 4.3 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended March 31, 2006).

    4.32  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust  IV and FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods, as Placement  Agents,  dated as of February 16, 2006
          (incorporated  herein by  reference  to Exhibit  4.4 to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2006).

    4.33  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of March 1, 2006  (incorporated  herein by
          reference  to Exhibit 4.5 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended March 31, 2006).

    4.34  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust  IV,  First  Banks,  Inc.  and First  Tennessee  Bank
          National  Association,  dated as of March 1, 2006 (incorporated herein
          by reference to Exhibit 4.6 to the Company's  Quarterly Report on Form
          10-Q for the quarter ended March 31, 2006).

    4.35  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust IV, First Banks,  Inc. and Preferred Term  Securities
          XXI, Ltd., dated as of March 1, 2006 (incorporated herein by reference
          to Exhibit 4.7 to the Company's  Quarterly Report on Form 10-Q for the
          quarter ended March 31, 2006).

    4.36  Capital  Securities  Certificate P-1 of First Bank Statutory Trust IV,
          dated March 1, 2006  (incorporated  herein by reference to Exhibit 4.8
          to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
          March 31, 2006).

    4.37  Capital  Securities  Certificate P-2 of First Bank Statutory Trust IV,
          dated March 1, 2006  (incorporated  herein by reference to Exhibit 4.9
          to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
          March 31, 2006).

    4.38  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company, as Trustee,  dated as of April 28, 2006 (incorporated  herein
          by reference to Exhibit 4.1 to the Company's  Quarterly Report on Form
          10-Q for the quarter ended June 30, 2006).

    4.39  Amended  and  Restated  Declaration  of Trust of First Bank  Statutory
          Trust V by and among Wilmington Trust Company, as Delaware Trustee and
          the Institutional Trustee, First Banks, Inc., as Sponsor, and Allen H.
          Blake, Peter D. Wimmer and Lisa K. Vansickle, as Administrators, dated
          as of April 28, 2006 (incorporated  herein by reference to Exhibit 4.2
          to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
          June 30, 2006).

    4.40  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust  Company,  dated as of April 28,  2006  (incorporated  herein by
          reference  to Exhibit 4.3 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended June 30, 2006).

    4.41  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust  V and  FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods,  as  Placement  Agents,  dated as of April 27,  2006
          (incorporated  herein by  reference  to Exhibit  4.4 to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 2006).
<PAGE>

    4.42  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of April 28, 2006 (incorporated  herein by
          reference  to Exhibit 4.5 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended June 30, 2006).

    4.43  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory Trust V, First Banks, Inc. and First Tennessee Bank National
          Association,  dated as of  April  28,  2006  (incorporated  herein  by
          reference  to Exhibit 4.6 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended June 30, 2006).

    4.44  Capital  Securities  Certificate  P-1 of First Bank Statutory Trust V,
          dated as of April  28,  2006  (incorporated  herein  by  reference  to
          Exhibit  4.7 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended June 30, 2006).

    4.45  Indenture between First Banks,  Inc., as Issuer, and Wells Fargo Bank,
          National  Association,   as  Trustee,   dated  as  of  June  16,  2006
          (incorporated  herein by  reference  to Exhibit  4.8 to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 2006).

    4.46  Amended  and  Restated  Declaration  of Trust of First Bank  Statutory
          Trust VI by and among Wells Fargo Delaware Trust Company,  as Delaware
          Trustee,  Wells Fargo Bank,  National  Association,  as  Institutional
          Trustee, First Banks, Inc., as Sponsor, and Allen H. Blake and Lisa K.
          Vansickle, as Administrators,  dated as of June 16, 2006 (incorporated
          herein by reference to Exhibit 4.9 to the Company's  Quarterly  Report
          on Form 10-Q for the quarter ended June 30, 2006).

    4.47  Guarantee  Agreement by and between First Banks,  Inc. and Wells Fargo
          Bank,  National  Association,  dated as of June 16, 2006 (incorporated
          herein by reference to Exhibit 4.10 to the Company's  Quarterly Report
          on Form 10-Q for the quarter ended June 30, 2006).

    4.48  Purchase Agreement among First Bank Statutory Trust VI, Issuer,  First
          Banks, Inc., Sponsor, and Bear, Stearns & Co. Inc., Initial Purchaser,
          dated as of June 14, 2006 (incorporated herein by reference to Exhibit
          4.11 to the  Company's  Quarterly  Report on Form 10-Q for the quarter
          ended June 30, 2006).

    4.49  Junior Subordinated Debt Security due 2036 of First Banks, Inc., dated
          as of June 16, 2006 (incorporated  herein by reference to Exhibit 4.12
          to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
          June 30, 2006).

    4.50  Debenture  Subscription Agreement by and between First Banks, Inc. and
          First Bank Statutory Trust VI, dated as of June 16, 2006 (incorporated
          herein by reference to Exhibit 4.13 to the Company's  Quarterly Report
          on Form 10-Q for the quarter ended June 30, 2006).

    4.51  Capital Securities Certificate P-001 of First Bank Statutory Trust VI,
          dated as of June 16, 2006 (incorporated herein by reference to Exhibit
          4.14 to the  Company's  Quarterly  Report on Form 10-Q for the quarter
          ended June 30, 2006).

    4.52  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company,  as  Trustee,  dated as of December  14,  2006  (incorporated
          herein by reference to Exhibit 4.57 to the Company's  Annual Report on
          Form 10-K for the year ended December 31, 2006).

    4.53  Amended  and  Restated  Declaration  of Trust of First Bank  Statutory
          Trust VII by and among Wilmington  Trust Company,  as Delaware Trustee
          and the  Institutional  Trustee,  First Banks,  Inc., as Sponsor,  and
          Terrance  M.  McCarthy,  Peter D.  Wimmer  and Lisa K.  Vansickle,  as
          Administrators,  dated as of December 14, 2006 (incorporated herein by
          reference to Exhibit 4.58 to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 2006).

    4.54  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust Company,  dated as of December 14, 2006 (incorporated  herein by
          reference to Exhibit 4.59 to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 2006).

    4.55  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust VII and FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods,  as Placement  Agents,  dated as of December 6, 2006
          (incorporated  herein by reference  to Exhibit  4.60 to the  Company's
          Annual Report on Form 10-K for the year ended December 31, 2006).

    4.56  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of December 14, 2006 (incorporated  herein
          by reference to Exhibit 4.61 to the  Company's  Annual  Report on Form
          10-K for the year ended December 31, 2006).

    4.57  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust VII,  First  Banks,  Inc.  and First  Tennessee  Bank
          National  Association,  dated as of December  14,  2006  (incorporated
          herein by reference to Exhibit 4.62 to the Company's  Annual Report on
          Form 10-K for the year ended December 31, 2006).

    4.58  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust VII, First Banks,  Inc. and Preferred Term Securities
          XXIV,  Ltd.,  dated as of December  14, 2006  (incorporated  herein by
          reference to Exhibit 4.63 to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 2006).

    4.59  Capital Securities  Certificate P-1 of First Bank Statutory Trust VII,
          dated as of December  14, 2006  (incorporated  herein by  reference to
          Exhibit 4.64 to the Company's  Annual Report on Form 10-K for the year
          ended December 31, 2006).

    4.60  Capital Securities  Certificate P-2 of First Bank Statutory Trust VII,
          dated as of December  14, 2006  (incorporated  herein by  reference to
          Exhibit 4.65 to the Company's  Annual Report on Form 10-K for the year
          ended December 31, 2006).

    4.61  Junior Subordinated Indenture between First Banks, Inc. and Wilmington
          Trust Company, as Trustee, dated as of February 23, 2007 (incorporated
          herein by reference to Exhibit 4.1 to the Company's  Quarterly  Report
          on Form 10-Q for the quarter ended March 31, 2007).

    4.62  Amended and Restated  Trust  Agreement of First Bank  Statutory  Trust
          VIII among First Banks, Inc., as Depositor,  Wilmington Trust Company,
          as Property Trustee and as Delaware Trustee, and Terrance M. McCarthy,
          Peter D. Wimmer and Lisa K.  Vansickle,  as  Administrative  Trustees,
          dated as of February  23, 2007  (incorporated  herein by  reference to
          Exhibit  4.2 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended March 31, 2007).

    4.63  Guarantee  Agreement of First Bank Statutory  Trust VIII between First
          Banks, Inc., as Guarantor,  and Wilmington Trust Company, as Guarantee
          Trustee,  dated  as of  February  23,  2007  (incorporated  herein  by
          reference  to Exhibit 4.3 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended March 31, 2007).

    4.64  Purchase Agreement among First Banks, Inc., First Bank Statutory Trust
          VIII and TWE,  Ltd.,  and Credit  Suisse,  acting  through  its Cayman
          Islands  branch,  as  Purchasers,   dated  as  of  February  23,  2007
          (incorporated  herein by  reference  to Exhibit  4.4 to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2007).

    4.65  Floating Rate Junior  Subordinated Note due 2037 of First Banks, Inc.,
          dated as of February  23, 2007  (incorporated  herein by  reference to
          Exhibit  4.5 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended March 31, 2007).

    4.66  Junior  Subordinated Note Subscription  Agreement between First Banks,
          Inc.  and First Bank  Statutory  Trust VIII,  dated as of February 23,
          2007 (incorporated herein by reference to Exhibit 4.6 to the Company's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2007).

    4.67  Preferred  Securities  Certificate  P-1 of First Bank Statutory  Trust
          VIII, dated as of February 23, 2007 (incorporated  herein by reference
          to Exhibit 4.7 to the Company's  Quarterly Report on Form 10-Q for the
          quarter ended March 31, 2007).

    4.68  Indenture  between  First  Banks,  Inc.,  as Issuer,  and LaSalle Bank
          National  Association,  as  Trustee,  dated  as  of  August  31,  2007
          (incorporated  herein by  reference  to Exhibit  4.1 to the  Company's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2007).

    4.69  Amended  and  Restated  Declaration  of Trust of First Bank  Statutory
          Trust X by and among LaSalle Bank National Trust Delaware, as Delaware
          Trustee, LaSalle Bank National Association,  as Institutional Trustee,
          First  Banks,  Inc.,  as  Sponsor,  and  Peter D.  Wimmer  and Lisa K.
          Vansickle,   as   Administrators,   dated  as  of  August   31,   2007
          (incorporated  herein by  reference  to Exhibit  4.2 to the  Company's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2007).

    4.70  Guarantee  Agreement by and between First Banks, Inc. and LaSalle Bank
          National Association, dated as of August 31, 2007 (incorporated herein
          by reference to Exhibit 4.3 to the Company's  Quarterly Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.71  Placement  Agreement  by and among  First Bank  Statutory  Trust X, as
          Issuer,  First  Banks,  Inc.,  as  Sponsor,  and Cohen &  Company,  as
          Placement Agent, dated as of August 29, 2007  (incorporated  herein by
          reference  to Exhibit 4.4 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.72  Junior Subordinated Debt Security due 2037 of First Banks, Inc., dated
          as of August 31, 2007 (incorporated herein by reference to Exhibit 4.5
          to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
          September 30, 2007).
<PAGE>

    4.73  Debenture  Subscription Agreement by and between First Banks, Inc. and
          First  Bank   Statutory   Trust  X,  dated  as  of  August  31,   2007
          (incorporated  herein by  reference  to Exhibit  4.6 to the  Company's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2007).

    4.74  Capital Securities  Certificate P-001 of First Bank Statutory Trust X,
          dated as of August  31,  2007  (incorporated  herein by  reference  to
          Exhibit  4.7 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 2007).

    4.75  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company,  as Trustee,  dated as of  September  20, 2007  (incorporated
          herein by reference to Exhibit 4.8 to the Company's  Quarterly  Report
          on Form 10-Q for the quarter ended September 30, 2007).

    4.76  Amended  and  Restated  Declaration  of Trust of First Bank  Statutory
          Trust IX by and among  Wilmington  Trust Company,  as Delaware Trustee
          and Institutional Trustee, First Banks, Inc., as Sponsor, and Terrance
          M. McCarthy, Peter D. Wimmer and Lisa K. Vansickle, as Administrators,
          dated as of September  20, 2007  (incorporated  herein by reference to
          Exhibit  4.9 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 2007).

    4.77  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust Company,  dated as of September 20, 2007 (incorporated herein by
          reference to Exhibit 4.10 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.78  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust  IX and FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods, Inc., as Placement Agents, dated as of September 13,
          2007  (incorporated  herein  by  reference  to  Exhibit  4.11  to  the
          Company's  Quarterly  Report  on  Form  10-Q  for  the  quarter  ended
          September 30, 2007).

    4.79  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of September 20, 2007 (incorporated herein
          by reference to Exhibit 4.12 to the Company's Quarterly Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.80  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust IX, First Banks,  Inc. and Preferred Term  Securities
          XXVII,  Ltd., dated as of September 20, 2007  (incorporated  herein by
          reference to Exhibit 4.13 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.81  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust  IX,  First  Banks,  Inc.  and First  Tennessee  Bank
          National  Association,  dated as of September  20, 2007  (incorporated
          herein by reference to Exhibit 4.14 to the Company's  Quarterly Report
          on Form 10-Q for the quarter ended September 30, 2007).

    4.82  Capital  Securities  Certificate P-1 of First Bank Statutory Trust IX,
          dated as of September  20, 2007  (incorporated  herein by reference to
          Exhibit 4.15 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 2007).

    4.83  Capital  Securities  Certificate P-2 of First Bank Statutory Trust IX,
          dated as of September  20, 2007  (incorporated  herein by reference to
          Exhibit 4.16 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 2007).

    4.84  Indenture between First Banks,  Inc., as Issuer,  and Wilmington Trust
          Company,  as Trustee,  dated as of  September  28, 2007  (incorporated
          herein by reference to Exhibit 4.17 to the Company's  Quarterly Report
          on Form 10-Q for the quarter ended September 30, 2007).

    4.85  Amended  and  Restated  Declaration  of Trust of First Bank  Statutory
          Trust XI by and among  Wilmington  Trust Company,  as Delaware Trustee
          and Institutional Trustee, First Banks, Inc., as Sponsor, and Terrance
          M. McCarthy, Peter D. Wimmer and Lisa K. Vansickle, as Administrators,
          dated as of September  28, 2007  (incorporated  herein by reference to
          Exhibit 4.18 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 2007).
<PAGE>

    4.86  Guarantee  Agreement by and between First Banks,  Inc. and  Wilmington
          Trust Company,  dated as of September 28, 2007 (incorporated herein by
          reference to Exhibit 4.19 to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.87  Placement  Agreement  by and  among  First  Banks,  Inc.,  First  Bank
          Statutory  Trust  XI and FTN  Financial  Capital  Markets  and  Keefe,
          Bruyette & Woods, Inc., as Placement Agents, dated as of September 27,
          2007  (incorporated  herein  by  reference  to  Exhibit  4.20  to  the
          Company's  Quarterly  Report  on  Form  10-Q  for  the  quarter  ended
          September 30, 2007).

    4.88  Floating Rate Junior  Subordinated  Deferrable  Interest  Debenture of
          First Banks, Inc., dated as of September 28, 2007 (incorporated herein
          by reference to Exhibit 4.21 to the Company's Quarterly Report on Form
          10-Q for the quarter ended September 30, 2007).

    4.89  Capital  Securities  Subscription  Agreement  by and among  First Bank
          Statutory  Trust  XI,  First  Banks,  Inc.  and First  Tennessee  Bank
          National  Association,  dated as of September  28, 2007  (incorporated
          herein by reference to Exhibit 4.22 to the Company's  Quarterly Report
          on Form 10-Q for the quarter ended September 30, 2007).

    4.90  Capital  Securities  Certificate P-1 of First Bank Statutory Trust XI,
          dated as of September  28, 2007  (incorporated  herein by reference to
          Exhibit 4.23 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 2007).

    10.1  Shareholders'  Agreement by and among James F. Dierberg II and Mary W.
          Dierberg,  Trustees  under the Living  Trust of James F.  Dierberg II,
          dated July 24, 1989,  Michael  James  Dierberg  and Mary W.  Dierberg,
          Trustees under the Living Trust of Michael James Dierberg,  dated July
          24, 1989;  Ellen C. Dierberg and Mary W. Dierberg,  Trustees under the
          Living  Trust of Ellen C.  Dierberg  dated  July 17,  1992,  and First
          Banks, Inc.  (incorporated  herein by reference to Exhibit 10.3 to the
          Company's Registration Statement on Form S-1, File No 33-50576,  dated
          August 6, 1992).

    10.2  Comprehensive Banking System License and Service Agreement dated as of
          July 24,  1991,  by and  between  the  Company  and FiServ  CIR,  Inc.
          (incorporated  herein by reference  to Exhibit  10.4 to the  Company's
          Registration Statement on Form S-1, File No. 33-50576, dated August 6,
          1992).

    10.3  AFS Customer  Agreement by and between First Banks,  Inc. and Advanced
          Financial Solutions, Inc., dated January 29, 2004 (incorporated herein
          by reference to Exhibit 10.1 to the Company's Quarterly Report on Form
          10-Q for the quarter ended March 31, 2004).

    10.4  Management  Services  Agreement by and between  First Banks,  Inc. and
          First Bank, dated February 28, 2004 (incorporated  herein by reference
          to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
          quarter ended March 31, 2004).

    10.5  Service Agreement by and between First Services, L.P. and First Banks,
          Inc., dated May 1, 2004  (incorporated  herein by reference to Exhibit
          10.3 to the  Company's  Quarterly  Report on Form 10-Q for the quarter
          ended June 30, 2004).

    10.6  Service Agreement by and between First Services,  L.P. and First Bank,
          dated May 1, 2004 (incorporated herein by reference to Exhibit 10.4 to
          the Company's Quarterly Report on Form 10-Q for the quarter ended June
          30, 2004).

    10.7  Service Agreement by and between First Banks, Inc. and First Services,
          L.P., dated May 1, 2004  (incorporated  herein by reference to Exhibit
          10.5 to the  Company's  Quarterly  Report on Form 10-Q for the quarter
          ended June 30, 2004).

    10.8* First Banks, Inc. Executive Incentive Compensation Plan  (incorporated
          herein by reference to Exhibit 10.10 to the Company's Annual Report on
          Form 10-K for the year ended December 31, 2004).

    10.9* First   Banks,   Inc.    Nonqualified   Deferred   Compensation   Plan
          (incorporated  herein by reference to Exhibit  10.11 to the  Company's
          Annual Report on Form 10-K for the year ended December 31, 2004).
<PAGE>

   10.10* First   Amendment   to   First  Banks,  Inc.   Nonqualified   Deferred
          Compensation Plan  (incorporated  herein by reference to Exhibit 10.12
          to the  Company's  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 2004).

   10.11  Secured Credit  Agreement  ($125.0 million  Revolving Credit Facility,
          including $10.0 million Swingline Sub-Facility and $5.0 million Letter
          of Credit  Sub-Facility),  dated as of August  8,  2007,  by and among
          First  Banks,  Inc.  and Wells Fargo Bank,  National  Association,  as
          Agent, JP Morgan Chase Bank, N.A., LaSalle Bank National  Association,
          The Northern Trust  Company,  Union Bank of  California,  N.A.,  Fifth
          Third Bank (Chicago) and U.S. Bank National Association  (incorporated
          herein by reference to Exhibit 10 to the Company's Quarterly Report on
          Form 10-Q for the quarter ended September 30, 2007).

   10.12  First Amendment to the  Secured Credit Agreement, dated as of February
          12,  2008,  by and among  First  Banks,  Inc.  and Wells  Fargo  Bank,
          National  Association,  as Agent,  and JP  Morgan  Chase  Bank,  N.A.,
          LaSalle Bank National Association,  The Northern Trust Company,  Union
          Bank of California,  N.A. and Fifth Third Bank (Chicago) (incorporated
          herein by reference to Exhibit 10.1 to the Company's Current Report on
          Form 8-K dated February 19, 2008).

   10.13  Second  Amendment  to  the  Secured  Credit  Agreement,  dated  as  of
          February  12,  2008,  by and among First  Banks,  Inc. and Wells Fargo
          Bank, National Association,  as Agent, and JP Morgan Chase Bank, N.A.,
          LaSalle Bank National Association,  The Northern Trust Company,  Union
          Bank of  California,  N.A.,  Fifth Third Bank  (Chicago) and U.S. Bank
          National Association (incorporated herein by reference to Exhibit 10.2
          to the Company's Current Report on Form 8-K dated February 19, 2008).

    14.1  Code  of  Ethics  for  Principal   Executive   Officer  and  Financial
          Professionals, as amended - filed herewith.

    21.1  Subsidiaries of the Company - filed herewith.

    31.1  Rule 13a-14(a) / 15d-14(a) Certifications of Chief Executive Officer -
          filed herewith.

    31.2  Rule 13a-14(a) / 15d-14(a) Certifications of Chief Financial Officer -
          filed herewith.

    32.1  Section  1350  Certifications  of  Chief  Executive  Officer  -  filed
          herewith.

    32.2  Section  1350  Certifications  of  Chief  Financial  Officer  -  filed
          herewith.

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