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, 2005

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

                        Commission File Number - 0-20632

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

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

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

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

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

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

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

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

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

         Indicate  by check  mark 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. [ ] Yes [X] 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 amendments to this Form 10-K. [X]

         Indicate by check mark whether the  registrant  is a large  accelerated
filer, an accelerated filer, or a non-accelerated filer:

 Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [X]

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

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

         At March 27, 2006, there were 23,661 shares of the registrant's  common
stock outstanding.

<PAGE>
<TABLE>
<CAPTION>

                                                 FIRST BANKS, INC.

                                           2005 FORM 10-K ANNUAL REPORT

                                                 TABLE OF CONTENTS
                                                                                                            Page
                                                                                                            ----
                                                      Part I
<S>              <C>                                                                                          <C>
     Item 1.    Business...............................................................................       1
     Item 1A.   Risk Factors...........................................................................      17
     Item 1B.   Unresolved Staff Comments..............................................................      18
     Item 2.    Properties.............................................................................      18
     Item 3.    Legal Proceedings......................................................................      19
     Item 4.    Submission of Matters to a Vote of Security Holders....................................      19

                                                      Part II
     Item 5.    Market for the Registrant's Common Equity, Related Stockholder Matters
                    and Issuer Purchases of Equity Securities..........................................      19
     Item 6.    Selected Financial Data................................................................      20
     Item 7.    Management's Discussion and Analysis of Financial Condition and
                    Results of Operations..............................................................      21
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.............................      55
     Item 8.    Financial Statements and Supplementary Data............................................      55
     Item 9.    Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure...........................................................      55
     Item 9A.   Controls and Procedures................................................................      55
     Item 9B.   Other Information......................................................................      55

                                                      Part III
     Item 10.   Directors and Executive Officers of the Registrant.....................................      56
     Item 11.   Executive Compensation.................................................................      60
     Item 12.   Security Ownership of Certain Beneficial Owners and Management
                    and Related Stockholder Matters....................................................      61
     Item 13.   Certain Relationships and Related Transactions.........................................      62
     Item 14.   Principal Accountant Fees and Services.................................................      62

                                                      Part IV
     Item 15.   Exhibits, Financial Statements Schedules...............................................      63

     Signatures........................................................................................     111
</TABLE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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



<PAGE>


                                     PART I

Item 1.  Business

General.  We are a registered bank holding  company  incorporated in Missouri in
1978 and  headquartered  in St. Louis,  Missouri.  We operate through our wholly
owned  subsidiary  bank holding  company,  The San  Francisco  Company,  or SFC,
headquartered  in San  Francisco,  California,  and its wholly owned  subsidiary
bank,  First Bank,  headquartered  in St. Louis,  Missouri.  First Bank operates
through  its branch  banking  offices  and  subsidiaries,  First  Bank  Business
Capital, Inc. (formerly FB Commercial Finance,  Inc.), Missouri Valley Partners,
Inc. and Small  Business  Loan Source LLC, or SBLS LLC,  which,  except for SBLS
LLC, are wholly owned  subsidiaries.  First Bank  currently  operates 178 branch
offices  in  California,   Illinois,   Missouri  and  Texas.   Since  1994,  our
organization has grown  significantly,  primarily as a result of our acquisition
strategy,  as well as through  internal  growth.  At December 31,  2005,  we had
assets of $9.17  billion,  loans,  net of unearned  discount,  of $7.02 billion,
deposits of $7.54 billion and stockholders' equity of $678.9 million.

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

         Through First Bank,  we offer a broad range of commercial  and personal
deposit  products,  including  demand,  savings,  money  market and time deposit
accounts.  In addition,  we market combined basic services for various  customer
groups,  including  packaged  accounts for more  affluent  customers,  and sweep
accounts,   lock-box  deposits  and  cash  management  products  for  commercial
customers.  We also  offer  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,  and asset-based  loans and trade financing.  Other financial
services   include   mortgage   banking,   debit  cards,   brokerage   services,
credit-related insurance, internet banking, automated teller machines, telephone
banking,  safe deposit boxes,  trust,  private banking and  institutional  money
management services.

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

         Since  1996,  we have  formed 10  financing  entities  that  operate as
affiliated  business  or  statutory  trusts.  These  trusts,  of which  six were
outstanding  at December 31, 2005,  were created for the sole purpose of issuing
trust  preferred  securities,  and  the  sole  assets  of  the  trusts  are  our
subordinated  debentures.  In  conjunction  with the  formation of our financing
entities  and  their  issuance  of the  trust  preferred  securities,  we issued
subordinated  debentures to each of our financing entities in amounts equivalent
to the  respective  trust  preferred  securities  plus the  amount of the common
securities of the individual trusts, as outlined in the following table and more
fully  described in Note 12 to our  Consolidated  Financial  Statements.  We pay
interest on our subordinated debentures to our respective financing entities. In
turn,  our  financing  entities  pay  distributions  to the holders of the trust
preferred  securities.   These  interest  and  distribution  payments  are  paid
quarterly in arrears, in March, June, September, and December of each year, with
the  exception  of the  trust  preferred  securities  and  related  subordinated
debentures  of First Bank  Capital  Trust,  which are payable  semi-annually  in
arrears  in April and  October of each year.  The  distributions  payable on our
subordinated  debentures  are included in interest  expense in our  consolidated
statements of income.

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

<TABLE>
<CAPTION>
                                                                              Interest     Preferred      Subordinated
        Name of Trust               Date Formed        Type of Offering         Rate       Securities      Debentures
        -------------               -----------        ----------------         ----       ----------      ----------

<S>                                       <C>        <C>                       <C>         <C>             <C>
First Preferred Capital Trust III  November 2001     Publicly Underwritten      9.00       55,200,000      56,907,250
First Bank Capital Trust            April 2002         Private Placement      Variable     25,000,000      25,774,000
First Bank Statutory Trust          March 2003         Private Placement        8.10       25,000,000      25,774,000
First Preferred Capital Trust IV   January 2003      Publicly Underwritten      8.15       46,000,000      47,422,700
First Bank Statutory Trust II      September 2004      Private Placement      Variable     20,000,000      20,619,000
First Bank Statutory Trust III     November 2004       Private Placement      Variable     40,000,000      41,238,000
First Bank Statutory Trust IV      February 2006       Private Placement      Variable     40,000,000      41,238,000

</TABLE>

<PAGE>


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

Strategy. 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
only engage in those acquisitions that can be accomplished for cash, rather than
by  issuing  securities.  However,  by  using  cash  in  our  acquisitions,  the
characteristics  of  the  acquisition  arena  may,  at  times,  place  us  at  a
competitive   disadvantage   relative   to  other   acquirers   offering   stock
transactions.  This results from the market  attractiveness  of other  financial
institutions'  stock and the  advantages  of tax-free  exchanges  to the selling
shareholders. Our acquisition activities are generally somewhat sporadic because
we may consummate  multiple  transactions in a particular period,  followed by a
substantially less active acquisition period. Furthermore, the intangible assets
recorded in conjunction with these acquisitions create an immediate reduction in
our  regulatory  capital.  This  reduction,  as required by  regulatory  policy,
provides  further  financial  disincentives  to paying  large  premiums  in cash
acquisitions.

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

         During the five  years  ended  December  31,  2005,  we  completed  ten
acquisitions of banks, one acquisition of a loan origination  business,  and two
purchases  of branch  offices,  which  provided  us with an  aggregate  of $2.84
billion in assets and 53 banking  locations as of the dates of the acquisitions.
This included five bank  acquisitions in  metropolitan  Chicago,  Illinois,  and
three in metropolitan Los Angeles,  California. Our acquisitions of FBA Bancorp,
Inc., or FBA, in Chicago,  Illinois,  in April 2005, and Northway State Bank, or
NSB, in Grayslake,  Illinois,  in November  2005,  served to further  expand our
growing Chicago banking  franchise with the addition of four banking offices and
$123.7 million in assets. In September 2005, we expanded our southern California
banking franchise with our acquisition of International  Bank of California,  or
IBOC,  in Los  Angeles,  California,  which  provided  five  additional  banking
locations.  We also  completed a purchase  of the  Roodhouse,  Illinois,  branch
office from Bank and Trust Company in September  2005. In addition,  in 2005, we
announced  plans  to  expand  our  Dallas,  Texas  banking  franchise  with  our
acquisition  of First National Bank of Sachse,  or FNBS,  which was completed on
January 3, 2006,  and our  acquisition  of the branch office of Dallas  National
Bank in Richardson, Texas, or East Renner Branch, which was completed on January
20, 2006. We also announced plans to acquire Pittsfield Community Bancorp, Inc.,
or  Bancorp,  and  its  wholly  owned  banking  subsidiary,  Community  Bank  of
Pittsfield,  or  Pittsfield,  in  Pittsfield,  Illinois,  and First  Independent
National  Bank,  in Plano,  Texas.  In 2004,  we expanded our Chicago,  Illinois
banking  franchise with our  acquisition of Continental  Mortgage  Corporation -
Delaware, or CMC, in Aurora,  Illinois, which provided an additional two banking
offices and $140.7 million in assets, and Hillside Investors, Ltd., or Hillside,
and its wholly owned banking subsidiary,  CIB Bank (collectively,  CIB Bank), in
Hillside,  Illinois.  The  acquisition  of  CIB  Bank  represented  the  largest
acquisition  in our  history,  providing  us with  assets of $1.20  billion  and
expanding  our branch  banking  network in the Chicago  metropolitan  area by an
additional 16 branch offices.  In August 2004, we acquired  substantially all of
the assets of Small  Business Loan Source,  Inc.,  or SBLS,  in Houston,  Texas,
which   originates,   sells  and   services   United   States   Small   Business
Administration,  or SBA, loans to small business  concerns.  In 2003, we further
expanded our Midwest  banking  franchise  with our  acquisition  of Bank of Ste.
Genevieve, or BSG, in Ste. Genevieve,  Missouri. These acquisitions have allowed

<PAGE>
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  activities  required are  specifically  dependent  upon the
individual  circumstances  surrounding  each  acquisition,  the  majority of our
efforts have been concentrated in various areas including, but not limited to:

         >>  improving asset quality;

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

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

         >>  renegotiating long-term leases that provide space in excess of that
             necessary  for  banking  activities  and/or  at rates in  excess of
             current market rates, or subleasing excess space to third parties;

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

         >>  managing  actual or potential  litigation that existed with respect
             to   acquired   entities   to   minimize   the   overall  costs  of
             negotiation, settlement or litigation.

         The  post-acquisition  process also  includes the combining of separate
and  distinct  entities  together  to form a cohesive  organization  with common
objectives  and focus.  We have  invested  significant  resources to  reorganize
staff,  recruit  personnel  where needed,  and establish the direction and focus
necessary  for the  combined  entity  to  take  advantage  of the  opportunities
available  to it.  This  investment  contributed  to  increases  in  noninterest
expense,  and  resulted in the  creation of new banking  units  within the newly
integrated  combined entity,  which conveyed a more consistent image and quality
of service.  The new banking units 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  did not  contribute to  reductions of  noninterest
expense,  they  contributed to the commercial  and retail  business  development
efforts of the banks,  and  ultimately to their  prospects for improving  future
profitability.

         In 2002 and 2003,  our  acquisition  prospects  were  somewhat  limited
primarily due to the market environment requiring  significantly higher premiums
in order  to  transact  financial  institution  acquisitions.  As a  result,  we
expanded our business  strategy to include the opening of de novo branch offices
as another means of achieving our growth objectives. Our de novo branch strategy
also provides similar  opportunities to our acquisition  strategy by allowing us
to  enhance  our  presence  in our  existing  markets  and  enter  new  markets.
Additionally,   we  generally  have  more  flexibility  in  selecting  the  most
opportunistic sites for our de novo branches, constructing the branch offices in
accordance  with our standard  business  model and  marketing  and promoting our
customized products and services under our long-established trade name. In 2004,
we opened  four de novo  branches  in Houston  and  McKinney,  Texas,  Wildwood,
Missouri,  which  is  located  in  West  St.  Louis  County,  and in San  Diego,
California.  In  January  2005,  we  opened  an  additional  de novo  branch  in
Farmington,  Missouri.  Furthermore, we have plans to open several additional de
novo branch  offices in 2006.  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.

         In conjunction with our de novo and acquisition  strategy, we have also
focused on building and reorganizing the infrastructure  necessary to accomplish
our objectives for internal growth. Our organization is structured to leverage a
strong  sales  organization  in each  of our  major  market  areas.  Within  the
individual markets,  the sales organization is supported by a regional structure
to  position it to serve the market  opportunities  within each area in the four
states that 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.
With the significant  expansion of our Chicago banking franchise in the past two
years, we have created a complete regional structure in the Chicago area as well
as three  additional  commercial  banking  groups to better  service  our credit
administration,  commercial  real estate and commercial  and industrial  banking
groups, branch  administration,  credit review, and human resources and training
functions.  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

<PAGE>

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.

Lending Activities.  Our enhanced business development resources assisted in the
realignment of certain acquired loan  portfolios,  which were skewed toward loan
types that reflected the abilities and experiences of the management  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 which
were  acquired  during  this  time  through  payments,  refinancing  with  other
financial institutions,  charge-offs and, in certain instances,  sales of loans.
As a result,  our portfolio of consumer and installment  loans,  net of unearned
discount,  decreased  significantly from $174.3 million, or 3.7% of total loans,
excluding  loans held for sale, at December 31, 2000, to $51.8 million,  or 0.8%
of total  loans,  excluding  loans held for sale,  at  December  31,  2005.  The
decrease  primarily  reflects  reductions in our indirect auto,  credit card and
student loan portfolios. The sale of our student loan and credit card portfolios
in 2001 was  consistent  with our  objective  of  reducing  the  amount  of less
profitable loans and expanding our commercial  lending and other consumer loans,
including home equity loans.  We do not have any  continuing  involvement in the
transferred  assets relating to the student loan and credit card portfolios sold
in 2001.  Our expansion of other consumer loans is reflected in our portfolio of
one-to-four family residential real estate mortgage loans,  excluding loans held
for  sale,  which  increased  from  $726.5  million,  or 15.5%  of total  loans,
excluding loans held for sale, at December 31, 2000, to $1.21 billion,  or 18.1%
of total loans,  excluding  loans held for sale,  at December 31, 2005,  in line
with our current focus to increase  residential  mortgage  loans and home equity
lines. Our business strategy decision in mid-2003 to retain a portion of our new
loan  production  in  our  real  estate  mortgage   portfolio  to  provide  more
diversification  within the portfolio and to compensate  for continued weak loan
demand in other sectors of our loan portfolio,  as well as our business strategy
in the third quarter of 2005 to retain  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,
contributed to this increase.

         As components of acquired loan portfolios  decreased,  we replaced them
with  higher  yielding  loans that were  internally  generated  by our  business
development   function.   With  our  acquisitions,   we  expanded  our  business
development  function into the newly acquired market areas. We have continued to
grow  through  internal  growth and  acquisitions,  and  completed  the  largest
acquisition  in  our  history  in  November  2004.  Consequently,  in  spite  of
relatively large reductions in certain acquired  portfolios,  our aggregate loan
portfolio,  net of  unearned  discount,  increased  47.7% from $4.75  billion at
December 31, 2000, to $7.02 billion at December 31, 2005.

         Our  business   development   efforts  are  primarily  focused  on  the
origination  of  loans  in  three  general  types:  commercial,   financial  and
agricultural loans,  including lease financing,  which totaled $1.62 billion, or
23.1% of total  loans,  at December 31, 2005;  commercial  real estate  mortgage
loans,  which totaled $2.11  billion,  or 30.1% of total loans,  at December 31,
2005; and real estate  construction  and land development  loans,  which totaled
$1.56  billion,  or 22.3% of total loans,  at December  31,  2005.  We have also
focused our efforts on retaining certain  residential real estate mortgage loans
in our loan portfolio.  Such loans totaled approximately $1.21 billion, or 17.3%
of total loans, at December 31, 2005.

         The primary component of commercial,  financial and agricultural  loans
is  commercial  loans,  which are made based on the  borrowers'  general  credit
strength and ability to generate cash flows for repayment  from income  sources.
Most of these loans are made on a secured basis,  generally involving the use of
company equipment, inventory and/or accounts receivable, and, from time to time,
real estate, as collateral.  Regardless of collateral,  substantial  emphasis is
placed on the borrowers' ability to generate cash flow sufficient to operate the
business and provide coverage of debt servicing  requirements.  Commercial loans
are frequently  renewable  annually,  although some terms may be as long as five
years.  These loans typically require the borrower to maintain certain operating
covenants  appropriate for the specific  business,  such as profitability,  debt
service  coverage and current  asset and leverage  ratios,  which are  generally
reported and monitored on a quarterly  basis and subject to more detailed annual
reviews.

         Commercial  loans  are made to  customers  primarily  located  in First
Bank's  geographic trade areas of California,  Illinois,  Missouri and Texas who
are engaged in  manufacturing,  retailing,  wholesaling and service  businesses.
This portfolio is not concentrated in large specific  industry segments that are
characterized  by  sufficient  homogeneity  that  would  result  in  significant
concentrations of credit exposure.  Rather, it is a highly diversified portfolio
that  encompasses  many  industry  segments.  Within  both our real  estate  and
commercial  lending  portfolios,  we strive for the highest  degree of diversity
that  is  practicable.  We also  emphasize  the  development  of  other  service
relationships with our commercial borrowers, particularly deposit accounts.

         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

<PAGE>
the owner's occupancy. The underwriting of owner occupied commercial real estate
loans generally  follows the procedures for commercial  lending described above,
except that the collateral is real estate,  and the loan term may be longer. The
primary emphasis in underwriting  loans for which the source of repayment is the
performance  of the  collateral is the projected  cash flow from the real estate
and its  adequacy  to cover  the  operating  costs of the  project  and the debt
service requirements. Secondary emphasis is placed on the appraised value of the
real estate,  with the requirement that the appraised  liquidation  value of the
collateral must be adequate to repay the debt and related  interest in the event
the cash flow becomes insufficient to service the debt. Generally,  underwriting
terms require the loan principal not to exceed 80% of the appraised value of the
collateral and the loan maturity not to exceed ten years. Commercial real estate
loans are made for  commercial  office space,  retail  properties,  hospitality,
industrial  and warehouse  facilities  and  recreational  properties.  We rarely
finance  commercial  real  estate or rental  properties  that do not have  lease
commitments for a majority of the rentable space.

         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 within our trade area for which the  particular
project  may be outside our normal  trade area.  However,  we  generally  do not
engage in developing  commercial and residential  construction  lending business
outside of our trade  area,  although  certain of the loans  acquired  in recent
acquisitions   have  resulted  in  this  situation.   Residential   real  estate
construction  and  development  loans  are  made  based  on  the  cost  of  land
acquisition  and  development,  as well as the  construction  of the residential
units.  Although we finance the cost of display units and units held for sale, a
substantial portion of the loans for individual  residential units have purchase
commitments prior to funding. Residential condominium projects are funded as the
building  construction  progresses,  but funding of unit  finishing is generally
based on firm sales contracts.

         In  addition to  underwriting  based on  estimates  and  projection  of
financial  strength,  collateral  values and future  cash  flows,  most loans to
borrowing  entities other than  individuals  require the guarantee of the parent
company or entity  sponsor,  or in the case of smaller  entities,  the  personal
guarantees of the principals.

         Our commercial  leasing portfolio totaled $3.0 million and $5.9 million
at December 31, 2005 and 2004,  respectively,  reflecting significant reductions
from $124.1  million at December 31, 2000.  This  portfolio  consisted of leases
originated by our former subsidiary, First Capital Group, Inc., headquartered in
Albuquerque,   New  Mexico,  primarily  through  third  parties,  on  commercial
equipment  including  aircraft parts and equipment.  During 2002, we changed the
nature of this business,  ultimately  deciding to discontinue  the operations of
First Capital  Group,  Inc. and transfer all  responsibilities  for the existing
portfolio to a new leasing staff in St. Louis,  Missouri.  Furthermore,  in June
2004, we completed the sale of a significant  portion of our commercial  leasing
portfolio, resulting in a reduction of the commercial leasing portfolio by $33.1
million to $9.6 million.  The portfolio has been further reduced to $3.0 million
at December 31, 2005.

         Our  nonperforming  loans were $97.2  million,  $85.8 million and $75.4
million at December 31, 2005, 2004  and 2003, respectively,  representing 1.38%,
1.40% and 1.41%,  respectively,  of total loans.  These levels of  nonperforming
loans  are  higher  than  our  historical  averages  which we  attribute  to our
acquisitions,   total  portfolio   growth  and  increased   commercial   lending
activities.  During 2005, we experienced  continued improvement in our portfolio
of  nonperforming  assets  through the first nine  months of the year,  however,
further  deterioration  of certain  acquired loans in the fourth quarter of 2005
contributed  to an  overall  increase  in  nonperforming  loans for 2005 and the
decision to sell certain  loans and transfer  them to loans held for sale.  This
increase was primarily  associated with the  deterioration of a few large credit
relationships in the Midwest region during the fourth quarter of 2005, including
two large credit  relationships  of $14.9  million and $16.6  million,  or $31.5
million in aggregate.  As a result,  on December 31, 2005,  we  recognized  $7.6
million of loan  charge-offs in conjunction  with the transfer of  approximately
$59.7 million of nonperforming loans to our held for sale portfolio. These loans
included the two large credit  relationships  that had  deteriorated  during the
fourth  quarter of 2005 and one credit  relationship  of $12.4  million that was
included  in  nonperforming  loans at  December  31,  2004 with a value of $14.5
million,  all of which were  acquired  in the  purchase  of CIB Bank.  The $59.7
million  represents the estimated fair value, net of costs,  that is expected to
be realized at the time of sale. In January 2006, we received a payoff on one of
the  nonperforming  loans in our held for sale portfolio,  reducing the held for
sale  portfolio  by $12.4  million and  resulting in the  recognition  of a $5.0
million loan  recovery.  Furthermore,  in March 2006, we completed the sale of a
majority  of the  remaining  nonaccrual  loans in our  held for sale  portfolio,
reducing the held for sale portfolio by $32.5  million.  We continue to actively
market the remaining loans held for sale through an independent third party. The
overall  increase  in  nonperforming  loans  in 2005  was  partially  offset  by

<PAGE>

significant  improvement of 21.0% in the level of nonperforming loans during the
first  three  quarters  of 2005  resulting  from  the sale of  certain  acquired
nonperforming  loans,  strengthening  of certain loans,  and loan payoffs and/or
external refinancing of various credits. A portion of the loan payoffs and sales
during the first quarter of 2005  pertaining to certain  acquired  nonperforming
loans  that were  classified  as loans  held for sale as of  December  31,  2004
contributed  to a reallocation  of the purchase price on our  acquisition of CIB
Bank, as further discussed in Note 2 to our Consolidated Financial Statements.

         The  level of  nonperforming  loans  associated  with our  acquisitions
completed in 2005 was not significant.  Our nonperforming  assets,  exclusive of
the  2004  acquisitions,  exhibited  substantial  improvement  throughout  2004,
primarily as a result of significant  loan payoffs,  the  liquidation of certain
real property that had been acquired through foreclosure,  the sale of a portion
of our commercial leasing portfolio,  the sale of certain acquired nonperforming
loans, the  strengthening of certain loans and our continued  efforts to improve
asset  quality.  However,  as we  continued  to  further  analyze  the CIB  Bank
acquisition,  we  determined  the level of  problem  loans that we  expected  to
acquire with this acquisition  would, when combined with our existing  portfolio
of such  loans,  result in a level of  problem  loans that was  unacceptable  to
management.  Consequently,  during the fourth  quarter of 2004, we completed the
sale of approximately $50.2 million of problem loans, including $19.1 million of
nonperforming  loans,  which include loans on nonaccrual status and restructured
loans.  Additionally,  at  December  31,  2004,  we had $12.9  million  of loans
classified  as  held  for  sale  that  we  acquired  from  CIB  Bank  that  were
subsequently  sold in early  2005,  as  previously  discussed.  The  increase in
nonperforming  loans  in 2002 and 2003 was  primarily  attributable  to  general
economic  conditions,  additional  problems  identified in certain acquired loan
portfolios  and the  continued  deterioration  of the portfolio of leases in our
commercial  leasing  portfolio,  particularly the segment related to the airline
industry.  Furthermore,  in January 2003,  we  foreclosed  on a residential  and
recreational  development  property  that had been placed on  nonaccrual  status
during the second quarter of 2002. The relationship related to a residential and
recreational development project that had significant financial difficulties and
experienced  inadequate  project  financing,  project  delays  and weak  project
management.  We sold this  property  in  February  2004,  thereby  reducing  our
nonperforming  assets by $9.2  million,  and  realizing a gain of $2.7  million,
before  applicable  income taxes.  We believe these  increases in  nonperforming
assets, while partially attributable to our acquisitions and the overall risk in
our loan  portfolio,  are reflective of cyclical trends  experienced  within the
banking industry as a result of economic  conditions within our market areas. We
continue  our efforts to improve  asset  quality  through an ongoing  process of
problem loan work-out,  loan payoffs and external refinancings,  and the sale of
certain  nonperforming  loans. Loans past due 90 days or more and still accruing
interest showed significant improvement during 2005, decreasing $23.1 million to
$5.6 million at December 31, 2005,  from $28.7  million at December 31, 2004 and
$2.8  million  at  December  31,  2003.  Loan  charge-offs,  net of  recoveries,
decreased  to $13.4  million for 2005,  compared  to $24.8  million for 2004 and
$32.7 million for 2003, as further  discussed  under  "--Loans and Allowance for
Loan Losses."

         The results of our due diligence  reviews of the loan portfolios of CMC
and CIB Bank prior to their  acquisition  indicated  significant  asset  quality
problems and, particularly with respect to CIB Bank, a significant concentration
in  commercial  real estate loans  outstanding  to a relatively  small number of
borrowers.  The  acquisition  of CMC in July  2004  resulted  in a $2.5  million
increase in our nonperforming  loans,  which have subsequently  declined to $1.9
million and  $400,000 at December  31, 2004 and 2005,  respectively.  Also,  the
acquisition of CIB Bank resulted in a significant  increase in our nonperforming
loans. As of the date of the acquisition,  November 30, 2004, CIB Bank had $60.3
million of nonperforming  loans,  which  represented  approximately  8.8% of CIB
Bank's  total  loan  portfolio.  As a  result  of loan  payoffs,  the  level  of
nonperforming  loans  related  to our CIB  Bank  acquisition  declined  to $50.5
million at December 31, 2004,  representing  58.8% of  nonperforming  loans. The
level  of  nonperforming  loans  related  to our CIB  Bank  acquisition  further
declined to $32.8  million,  or 48.4% of  nonperforming  loans at September  30,
2005,  resulting from sales of loans and additional loan payoffs.  However, as a
result of  further  deterioration  of a few credit  relationships  in the fourth
quarter  of 2005,  the  level of  nonperforming  loans  related  to our CIB Bank
acquisition  increased to $55.0 million,  or 56.6% of  nonperforming  loans,  at
December  31,  2005.  We had  anticipated  these  problems  in  negotiating  the
acquisition  price of CIB Bank.  In 2004,  we  transferred  $18.3 million of CIB
Bank's  nonperforming  loans to loans held for sale and recorded a corresponding
charge of $5.4 million to our allowance for loan losses to reduce the loans held
for sale to their  estimated fair value,  net of costs,  that was expected to be
realized  at the time of the  sale.  While  CIB Bank had  utilized  a  long-term
workout  strategy to address certain  nonperforming  assets,  our strategy is to
address problem assets in a more accelerated manner.  Accordingly, we elected to
hold  for  sale  a  portion  of the  problem  assets  acquired  from  CIB  Bank.
Furthermore,  we increased  the  allowance  for loan losses by $15.7  million to
reflect the additional  reserves  associated with the loans transferred to loans
held  for sale  and the  application  of our loss  factors  to CIB  Bank's  loan
portfolio  risk  ratings.  This  reflects our use of  strategies  for more rapid
disposition  and  recovery  of certain  acquired  classified  and  nonperforming
assets. As further described in Note 2 to our Consolidated Financial Statements,
we  completed  the sale of these loans  during the first and second  quarters of
2005. We recorded a $10.0 million reduction in goodwill to adjust loans held for
sale,  net  of  the  related  tax  effect,  as a  result  of  loan  payoffs  and

<PAGE>

significantly  higher sales prices  received over the original  third-party  bid
estimates for certain loans held for sale. At December 31, 2005, we  transferred
an  additional  $56.1  million  of  nonperforming   loans  associated  with  our
acquisition  of CIB Bank to loans  held for  sale and  recorded  a $6.0  million
charge-off to our allowance for loan losses to reduce the loans held for sale to
their estimated fair value, net of costs, that is expected to be realized at the
time of the sale. We are actively  marketing  these loans through an independent
third party.  These  nonperforming  loans will continue to be a primary focus of
members  of our  Credit  Administration  function  as we  work  to  resolve  the
individual  issues  surrounding  these  credit  relationships  that led to their
deterioration.

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

         During 2001 and 2002,  the nation  generally  experienced  a relatively
mild, but prolonged  economic slow down that affected us and much of the banking
industry.  This was  exacerbated  by the terrorist  attacks in late 2001 and the
effects the attacks and related governmental responses had on economic activity.
In 2003,  we continued to  experience  weak  economic  conditions  in our market
areas, despite some slight economic improvements in certain sectors. The overall
effects  of  the  economic  downturn  have  been  inconsistent  between  various
geographic areas of the country,  as well as different  segments of the economy.
To us, the effects of the downturn can be observed in generally  lower  interest
rates,  which  have a negative  impact on our net  interest  income,  and on the
performance of our loan portfolio,  which is reflected in higher  delinquencies,
nonperforming  assets,  charge-offs  and provisions for loan losses,  as well as
reduced  loan  demand from  customers.  The impact of lower  interest  rates was
significantly   reduced  through  the  use  of  various   derivative   financial
instruments that provide hedges of this interest rate risk. However, the benefit
of these derivative financial instruments was substantially reduced in late 2004
and 2005  with the  maturity  and  termination  of  certain  interest  rate swap
agreements  and increases in the overall  interest  rates that began in mid-2004
and continued  throughout 2005, as further discussed under "--Interest Rate Risk
Management."  During 2002 and 2003, we incurred  continued  asset quality issues
that were at least partially  attributable to economic  conditions.  During 2004
and 2005,  certain sectors of the economy have stabilized,  which contributed to
the overall improvement in our asset quality,  exclusive of our 2004 acquisition
transactions.  During 2005, our asset quality reflected substantial  improvement
during  the  first  nine  months  as a result  of the sale of  certain  acquired
nonperforming  loans,  the  strengthening of certain loans, and loan payoffs and
external  refinancing  of  various  credits.  However,  as a result  of  further
deterioration  of a few large  relationships  in the fourth quarter of 2005, our
overall level of nonperforming assets increased during 2005.

         Within our market areas,  the impact of the economy has become  evident
at  different  times.  In our Midwest  market,  a  perceptible  increase in loan
delinquencies began in late 2000 and continued throughout 2001, with some modest
improvement  in 2002 and 2003.  The  increase  in  delinquencies  was  primarily
focused in commercial,  financial and agricultural  loans, lease financing loans
and, to a lesser extent,  commercial real estate loans,  and initially  involved
borrowers that had already encountered some operating problems that continued to
deteriorate as the economy became weaker.  Included in this were loans on hotels
and leases to the commercial airline industry.  In both instances,  the industry
had been suffering from overcapacity prior to 2001, which then became much worse
with  the  economic  downturn  and the  effects  of  terrorist  attacks.  As the
recession  continued,  the effects expanded to companies that had been stronger,
but  succumbed to the ongoing  effects of slowed  economic  activity.  We sold a
significant  portion of the remaining leases in our commercial leasing portfolio
in June 2004.  While we  recognized  a trend in asset  quality  improvement,  we
recorded  a  significant  increase  in  the  level  of our  nonperforming  loans
associated with our acquisition of CIB Bank.  Nonperforming loans and leases for
the Midwest  region were $82.8  million at December 31, 2005,  compared to $76.0
million  and  $56.2  million  at  December  31,  2004  and  2003,  respectively.
Nonperforming  loans  associated  with our  acquisition  of CIB Bank were  $55.0
million and $50.5  million at  December  31,  2005 and 2004,  respectively.  The
significant  improvement in nonperforming  assets that was reflected during most
of 2004 was offset by the previously  discussed increase in nonperforming assets
resulting  from  our  acquisitions  of CMC and CIB  Bank.  We saw a  significant
improvement in nonperforming  loans during the first nine months of 2005, which,
however,  was offset by  further  deterioration  of a few credit  relationships,
primarily  associated  with CIB Bank,  during  the fourth  quarter  of 2005,  as
previously  discussed.  We  continue to address the  significant  asset  quality
issues  that we  inherited  with our  acquisition  of CIB Bank and expect  these
issues to improve over time through our efforts to improve  nonperforming loans.

<PAGE>

Net loan  charge-offs for our Midwest  banking region  decreased to $8.7 million
for the year ended  December  31,  2005,  compared  to $11.2  million  and $25.7
million  for the years  ended  December  31,  2004 and 2003,  respectively.  The
decrease in 2005 is primarily attributable to the strengthening of asset quality
related to our core portfolio  throughout  most of 2005. The decrease in 2004 is
attributable to a $14.7 million decrease in net loan charge-offs associated with
our commercial leasing business,  partially offset by a $3.0 million increase in
net loan  charge-offs  associated with our CMC loan portfolio.  The increase for
2003 is attributable to a $6.4 million  increase in net loan  charge-offs in our
commercial leasing portfolio.

         Our  California  banking  region  recognized  net  loan  recoveries  of
$704,000  and  $680,000  for  the  years  ended  December  31,  2005  and  2003,
respectively.  In 2004, we  experienced  certain  problems with two  significant
commercial  credit  relationships  concentrated  in a single lending unit in the
southern  California region. As a result, net loan charge-offs in our California
banking  region for the year ended  December  31,  2004 were $8.6  million,  and
included  $6.9  million  of   charge-offs   related  to  these  two   individual
relationships.  Nonperforming  loans for our California banking region were $8.7
million at December  31,  2005,  compared to $1.6  million and $13.0  million at
December 31, 2004 and 2003,  respectively.  Generally,  the effects on us of the
economic downturn in California have been primarily limited to the San Francisco
Bay area,  including  the area known as  "Silicon  Valley."  Although  we have a
substantial  banking  presence in the San Francisco Bay area, we have relatively
little  direct  exposure to the high  technology  companies.  Consequently,  the
decline  in that  industry  beginning  in 2000 had little  direct  effect on our
California  operations.  However,  as the  magnitude of the problems in the high
technology sector increased, the effects spread to companies that were suppliers
and servicers of the high  technology  sector,  and to commercial real estate in
the  area.  As a result,  our  asset  quality  issues  in  California  have been
primarily  concentrated  within the San Francisco Bay area, and generally do not
involve  Southern  California  or  the  Sacramento-Roseville  area  in  Northern
California.

         Our Texas banking  operation  represents a somewhat  smaller portion of
our overall lending  function.  The Texas economy has generally  continued to be
fairly  strong,   resulting  in  relatively  few  asset  quality  issues.  Total
nonperforming  loans for this  region  were $5.7  million  and $8.2  million  at
December  31,  2005 and  2004,  respectively,  of which  $1.8  million  and $6.2
million,  respectively,  were  associated  with SBLS LLC,  whose loan  portfolio
included a significant  concentration  of assets  associated with the distressed
shrimping vessels industry,  as previously  discussed.  Net loan charge-offs for
the Texas  region were $5.4 million for the year ended  December  31, 2005,  and
included $3.8 million of net loan charge-offs associated with SBLS LLC. Net loan
charge-offs  for 2004 were $4.9 million and included  $3.4 million on two credit
relationships  and $690,000 of net loan  charge-offs  related to our purchase of
assets from SBLS. We recorded net loan  charge-offs for our Texas region of $7.7
million for the year ended  December  31,  2003,  which  included  $6.6  million
associated with three credit relationships.

         In addition to restructuring  our loan portfolio,  we also have changed
the  composition  of our deposit  base.  The deposit  mix of 2005  reflects  our
continued  efforts  in this  regard as a  majority  of our  deposit  development
programs are directed toward increased transaction accounts,  such as demand and
savings  accounts,  rather  than  time  deposits.  We  have  also  expanded  our
development  of  multiple  account   relationships  with  individual  customers,
expanding our  relationship  with existing  customers and expanding the products
provided to our customers.  This growth is accomplished by cross-selling various
products  and  services,  packaging  account  types and offering  incentives  to
deposit customers on other deposit or non-deposit services. The expansion of our
small business market lending  provides  additional  opportunities to cross sell
other financial  services such as investment,  trust,  insurance and traditional
personal  banking  services to small business  owners.  In addition,  commercial
borrowers are encouraged to maintain their operating  deposit  accounts with us.
Although  time  deposits  have  increased to $3.15 billion at December 31, 2005,
they represented 41.8% of total deposits, as compared to $2.31 billion, or 46.0%
of total deposits at December 31, 2000.  Total demand and savings  accounts have
increased to $4.39 billion,  or 58.2% of total  deposits,  at December 31, 2005,
from $2.70 billion, or 54.0% of total deposits, at December 31, 2000, reflecting
our  continued  focus  on  transactional   accounts  and  full  service  deposit
relationships with our customers.

         Despite the significant expenses we incurred in the amalgamation of the
acquired entities into our corporate  culture and systems,  and in the expansion
of our  organizational  capabilities,  the earnings of the acquired entities and
the  increased  net  interest  income  resulting  from  the  transition  in  the
composition of our loan and deposit portfolios have contributed to improving net
income.  For the years ended  December  31, 2005 and 2004,  net income was $96.9
million  and $82.9  million,  respectively,  compared  to $62.8  million,  $45.2
million and $64.5  million in 2003,  2002 and 2001,  respectively.  The negative
provision  for loan  losses  of $4.0  million  in 2005  reflects  a  significant
reduction in net loan charge-offs  and,  exclusive of a deterioration of certain
credit relationships during the fourth quarter of 2005 that were associated with
our acquisition of CIB Bank, an overall improvement in asset quality and reduced
levels of  nonperforming  loans during the first nine months of 2005, as further
discussed  under  "--Comparison  of  Results of  Operations  for 2005 and 2004 -

<PAGE>

Provision  for Loan Losses" and under  "--Loans and  Allowance for Loan Losses."
The  higher-than-historical  provision for loan losses in 2003 reflects the then
current  economic  environment  and  significantly  increased  loan  charge-off,
delinquency and nonperforming  trends.  The reduced provision for loan losses in
2004 reflects loan sales of problem credits and,  exclusive of 2004  acquisition
activity,   an  overall   improvement  in  asset  quality,   reduced  levels  of
nonperforming  loans and lower net loan charge-offs,  as further discussed under
"--Comparison  of Results of  Operations  for 2004 and 2003 - Provision for Loan
Losses."  Although  we  anticipate  certain  short-term  adverse  effects on our
operating  results  associated  with  acquisitions,  we  believe  the  long-term
benefits  of  our  acquisition   program  will  exceed  the  short-term   issues
encountered with some acquisitions. Accordingly, in addition to concentrating on
internal  growth  through  continued  efforts to further  develop our  corporate
infrastructure  and  product  and  service  offerings,  we expect to continue to
identify and pursue  opportunities  for further growth through  acquisitions and
expansionary de novo branch activities.

Acquisitions.  In  the  development  of  our  banking  franchise,  we  emphasize
acquiring  other  financial  institutions  as one means of achieving  our growth
objectives. Acquisitions may serve to enhance our presence in a given market, to
expand  the  extent  of  our  market  area  or to  enable  us to  enter  new  or
noncontiguous  market areas.  After we consummate an  acquisition,  we expect to
enhance the franchise of the acquired entity by supplementing  the marketing and
business  development  efforts  to broaden  the  customer  bases,  strengthening
particular  segments  of the  business or filling  voids in the  overall  market
coverage.  We have  primarily  utilized  cash,  borrowings  and the  issuance of
subordinated debentures through our various statutory and business trusts, which
serve as financing entities, to meet our growth objectives under our acquisition
program.



<PAGE>

         During the three  years ended  December  31,  2005,  we  completed  six
acquisitions of banks,  one branch office  purchase and purchased  substantially
all of the assets and assumed certain  liabilities of a company that originates,
sells and services SBA loans to small business concerns.  As demonstrated in the
following table, our acquisitions during the three years ended December 31, 2005
have primarily served to significantly increase our presence in the metropolitan
Chicago,  Illinois  market and to further  augment our existing  markets and our
California and Midwest banking franchises. These transactions, which are further
described in Note 2 to our Consolidated Financial Statements,  are summarized as
follows:
<TABLE>
<CAPTION>
                                                Loans,                                                     Number
                                                Net of                                                       of
           Entity /                  Total     Unearned  Investment               Purchase                 Banking
         Closing Date                Assets    Discount  Securities    Deposits     Price      Goodwill   Locations
         ------------                ------    --------  ----------    --------     -----      --------   ---------
                                                         (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        3,800        1

      International Bank of
      California
      Los Angeles, California
      September 30, 2005             151,600    113,500     14,700      132,100     33,700       12,000        5

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

      FBA Bancorp, Inc.
      Chicago, Illinois
      April 29, 2005                  73,300     54,300      5,400       55,700     10,500        2,800        3
                                 -----------    -------    -------    ---------    -------      -------       --
                                 $   280,300    209,600     20,100      238,100     54,500       18,600        9
                                 ===========    =======    =======    =========    =======      =======       ==


    2004
    ----
      Hillside Investors, Ltd.
      Hillside, Illinois
      November 30, 2004          $ 1,196,700    683,300    393,200    1,102,000     67,400           --       16

      Small Business Loan
      Source, Inc. (2)
      Houston, Texas
      August 31, 2004                 47,100     24,000         --           --     45,600        5,900       --

      Continental Mortgage
      Corporation - Delaware
      Aurora, Illinois
      July 30, 2004                  140,700     73,600     44,800      104,600      4,200 (3)      100        2
                                 -----------    -------    -------    ---------    -------      -------       --
                                 $ 1,384,500    780,900    438,000    1,206,600    117,200        6,000       18
                                 ===========    =======    =======    =========    =======      =======       ==

    2003
    ----
      Bank of Ste. Genevieve
      Ste. Genevieve, Missouri
      March 31, 2003             $   115,100     43,700     47,800       93,700     15,400 (4)      900        2
                                 ===========    =======    =======    =========    =======      =======       ==
    ---------------
    (1)  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.
    (2)  SBLS LLC, a Nevada-based  limited  liability company and subsidiary of First Bank,  purchased  substantially
         all of  the  assets  and  assumed  certain  liabilities of SBLS. In conjunction with this  transaction,  on
         August 30, 2004,  First Bank  granted to First Capital America, Inc., or  FCA, a corporation   owned  by our
         Chairman and members of his immediate family, an option to purchase Membership  Interests  of  SBLS LLC. FCA
         exercised  this  option  on June 30,  2005 and paid First  Bank  $7.4 million in cash.  As a  result of this
         transaction,  SBLS LLC  became 51.0% owned by First Bank and 49.0% owned by FCA.
    (3)  In conjunction with the acquisition of CMC, First Banks redeemed in full all of the outstanding subordinated
         promissory  notes of CMC, including  accumulated  accrued  and unpaid  interest,  totaling  $4.5  million in
         aggregate.
    (4)  First  Banks  completed  its acquisition  of  BSG  in exchange for approximately 974,150 shares of Allegiant
         Bancorp, Inc., or Allegiant,  common stock previously  held  based  upon an  agreed-upon  purchase  price of
         $18.375 per share, or $17.9 million. However, in  conjunction  with a  litigation settlement related to this
         transaction that occurred during the fourth quarter of 2005,  First Banks received 75,758 shares of   common
         stock of National  City  Corporation,  successor to  Allegiant,  with a  fair  value of  approximately  $2.5
         million  at  the  time  of  the  settlement,  as  further described in Note 2 to our Consolidated  Financial
         Statements.
</TABLE>

<PAGE>

         We funded the completed  acquisitions  from  available  cash  reserves,
borrowings  under our term loan and revolving credit  agreements,  proceeds from
the issuance of subordinated  debentures,  dividends from  subsidiaries,  and/or
exchanges of available-for-sale investment securities.

         Pending  Acquisitions.  On August 1, 2005, we executed an Agreement and
Plan of  Reorganization,  which was restated as a Stock Purchase  Agreement with
certain  shareholders of FNBS on October 28, 2005, that provided for First Banks
to acquire  the  outstanding  common  stock of FNBS for  $45.62 per share.  FNBS
operated one banking office in Sachse,  Texas,  located in the northeast  Dallas
metropolitan area. As further described in Note 25 to our Consolidated Financial
Statements, we completed our acquisition of FNBS on January 3, 2006. At the time
of the  acquisition,  FNBS had assets of $76.1 million,  loans,  net of unearned
discount,  of $49.3 million,  deposits of $66.2 million and stockholders' equity
of $9.9 million.

         On November 18,  2005,  we executed a Branch  Purchase  and  Assumption
Agreement that provided for First Bank to acquire the East Renner Branch located
at 4251 East Renner Road, in Richardson,  Texas. As further described in Note 25
to our Consolidated  Financial Statements,  First Bank completed its purchase of
assets and  assumption of  liabilities  of the East Renner Branch on January 20,
2006.  At the time of the  acquisition,  the East  Renner  Branch  had assets of
approximately   $667,000,   including  loans,  net  of  unearned  discount,   of
approximately $144,000, and deposits of approximately $1.1 million.

         On  December   19,  2005,   we  executed  an  Agreement   and  Plan  of
Reorganization  providing for the  acquisition of Bancorp,  and its wholly owned
banking  subsidiary,   Pittsfield,  for  approximately  $4.9  million  in  cash.
Pittsfield is  headquartered  in  Pittsfield,  Illinois and operates two banking
offices, one in Pittsfield,  Illinois, and one in Mount Sterling,  Illinois. The
transaction,  which is  subject  to  regulatory  approvals,  is  expected  to be
completed  during the second  quarter of 2006. At December 31, 2005,  Pittsfield
reported assets of approximately $17.0 million, loans, net of unearned discount,
of  approximately  $10.7 million,  deposits of  approximately  $13.7 million and
stockholders' equity of approximately $2.7 million. As further described in Note
25 to our  Consolidated  Financial  Statements,  on March 7,  2006,  First  Bank
executed a  Purchase  and  Assumption  Agreement  providing  for the sale of the
banking office located in Mount Sterling,  Illinois to Beardstown Savings,  s.b.
following the completion of our acquisition of Bancorp.

         Subsequent  to December  31,  2005,  we entered  into three  agreements
related to acquisition  transactions,  as more fully described in Note 25 to our
Consolidated Financial Statements.

         Other Corporate Transactions. During the three years ended December 31,
2005, we opened the following five de novo branch offices:

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

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

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

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

         On June 30,  2004,  First  Bank  completed  the  sale of a  significant
portion of the leases in its commercial leasing portfolio.  The sale reduced our
commercial  leasing portfolio by approximately  $33.1 million to $9.6 million at
June 30, 2004. No gain or loss was recorded on the  transaction.  In conjunction
with the transaction, First Bank established a $2.0 million liability associated
with the related  recourse  obligations  for  certain  leases  sold,  as further
described in Note 24 to our Consolidated  Financial  Statements.  Our commercial
leasing portfolio has further declined to $3.0 million at December 31, 2005 from
$5.9 million at December 31, 2004,  reflecting our overall business  strategy to
reduce commercial leasing activities.
<PAGE>

         On March 25,  2005,  we completed  the merger of two branch  offices in
Hillside, located in the Chicago, Illinois metropolitan area.

         Acquisition and Integration  Costs. We accrue certain costs  associated
with our acquisitions,  as applicable,  as of the respective  consummation dates
that relate to adjustments to the staffing levels of the acquired entities or to
the costs of  terminating  existing  information  technology or item  processing
contracts of the acquired entities prior to their stated contractual  expiration
dates.  The most significant  costs that we incur relate to salary  continuation
agreements,  or other similar  agreements,  of executive  management and certain
other  employees  of the  acquired  entities  that  were in  place  prior to the
acquisition  dates.  These agreements  provide for payments over periods ranging
from two to 15 years and are  triggered  as a result of the change in control of
the acquired entity.  Other severance benefits for employees that are terminated
in conjunction  with the integration of the acquired  entities into our existing
operations are normally paid to the recipients  within 90 days of the respective
consummation  date and are expensed in our consolidated  statements of income as
incurred.  Our accrued  severance  balance of  $542,000 at December  31, 2005 is
comprised of contractual obligations under salary continuation agreements to six
individuals with remaining terms ranging from  approximately one to ten years. A
summary of the cumulative  acquisition and integration costs attributable to the
Company's  acquisitions,  which were accrued as of the consummation dates of the
respective  acquisition,  is  included 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.  As
further  discussed and quantified  under  "--Comparison of Results of Operations
for 2005 and 2004," and  "--Comparison  of  Results of  Operations  for 2004 and
2003," we also incur costs associated with our acquisitions that are expensed in
our  consolidated  statements  of income.  These  costs  relate  principally  to
additional  costs  incurred  in  conjunction  with  the  information  technology
conversions of the respective entities.

Market Area. As of December 31, 2005,  First Bank's 177 banking  facilities were
located in California, Illinois, eastern Missouri and Texas. First Bank operates
in the St. Louis metropolitan area, in eastern Missouri and throughout Illinois,
including Chicago.  First Bank also operates in southern  California,  including
the greater Los Angeles metropolitan area,  including Ventura County,  Riverside
County and Orange  County;  in Santa  Barbara  County;  in northern  California,
including the greater San Francisco, San Jose and Sacramento metropolitan areas;
and in Texas in the Houston and Dallas  metropolitan  areas and in McKinney  and
Denton.  Our larger  networks  of branch  offices  are  located  in high  growth
markets,  specifically, Los Angeles, Orange County, Chicago and metropolitan St.
Louis.  Through our recent expansion in the Los Angeles area, our largest market
area is southern  California.  Our second and third largest market areas are the
St. Louis, Missouri metropolitan area and northern Illinois, primarily resulting
from our expansion  activities in the Chicago  metropolitan area during 2004 and
2005, and our fourth largest market area is northern California.

         The  following  table  lists  the  market  areas  in which  First  Bank
operates,  total  deposits,  deposits as a percentage of total  deposits and the
number of locations as of December 31, 2005:
<TABLE>
<CAPTION>
                                                                           Total          Deposits        Number
                                                                         Deposits      as a Percentage      of
                               Geographic Area                         (in millions)  of Total Deposits  Locations
                               ---------------                         -------------  -----------------  ---------

<S>                                                                      <C>                 <C>            <C>
Southern California..................................................    $ 1,771.5           23.5%          38
St. Louis, Missouri metropolitan area................................      1,482.3           19.7           29
Northern Illinois....................................................      1,317.8           17.5           34
Northern California..................................................      1,135.6           15.0           16
Central and southern Illinois........................................      1,009.7           13.4           34
Eastern Missouri.....................................................        475.5            6.3           16
Texas................................................................        349.4            4.6           10
                                                                         ---------          -----          ---
     Total deposits..................................................    $ 7,541.8          100.0%         177
                                                                         =========          =====          ===
</TABLE>

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

         Our principal  competitors  include  other  commercial  banks,  savings
banks,  savings and loan associations,  mutual funds,  finance companies,  trust
companies,  insurance  companies,  leasing  companies,  credit unions,  mortgage
companies, private issuers of debt obligations and suppliers of other investment
alternatives,  such as securities firms and financial holding companies. Many of
our non-bank  competitors  are not subject to the same degree of  regulation  as
that imposed on bank holding companies,  federally insured banks and national or

<PAGE>

state chartered  banks.  As a result, such non-bank  competitors have advantages
over us in providing  certain  services.  We also compete with major  multi-bank
holding  companies,  which are  significantly  larger  than us and have  greater
access to capital and other resources.

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

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

Supervision and Regulation

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

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

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

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

<PAGE>

and its subsidiary  depository  institutions  and  restrictions on extensions of
credit by its  subsidiary  banks to  executive  officers,  directors,  principal
stockholders and the related interests of such persons.

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

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

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

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

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

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

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

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

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

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

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

         Under certain circumstances, a depository institution's primary federal
regulatory  agency  may use its  authority  to lower the  institution's  capital
category.  The banking  agencies are permitted to establish  individual  minimum
capital  requirements   exceeding  the  general  requirements  described  above.

<PAGE>

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 $81.5 million at December 31, 2005, 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  was
enacted.  The  Sarbanes-Oxley  Act imposes a myriad of corporate  governance and
accounting  measures  designed  to ensure  that the  shareholders  of  corporate
America  are treated  fairly and have full and  accurate  information  about the
public companies in which they invest. All public companies, including companies
such as First Banks, that file periodic reports with the Securities and Exchange
Commission, or SEC, are affected by the Sarbanes-Oxley Act.

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

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

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

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

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

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

         >>  enhanced penalties for fraud and other violations.

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

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

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

         First Bank is a member of the  Federal  Reserve  System and the Federal
Home Loan Bank System.  As a member,  First Bank is required to hold investments
in regional banks within those systems.  First Bank was in compliance with these
requirements at December 31, 2005, with investments of $10.3 million in stock of
the  Federal  Home Loan Bank of Des  Moines  and $22.2  million  in stock of the
Federal  Reserve Bank of St. Louis.  First Bank also holds an investment of $2.0
million in stock of the Federal Home Loan Bank of Chicago,  as a  nonmember,  to
collateralize  certain  Federal Home Loan Bank advances  assumed in  conjunction
with certain acquisition transactions.

Monetary  Policy and  Economic  Control.  The  commercial  banking  business  is
affected by legislation,  regulatory policies and general economic conditions as
well as the  monetary  policies  of the  Federal  Reserve.  The  instruments  of
monetary policy available to the Federal Reserve include the following:

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

         >>  the availability of credit at the discount window;

         >>  open market operations;

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

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

         >>  the  imposition  of  and  changes in reserve  requirements  against
             certain borrowings by banks and their affiliates.

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



<PAGE>


Employees

         As of March 27, 2006, we employed  approximately 2,530 employees.  None
of the employees are subject to a collective bargaining  agreement.  We consider
our relationships with our employees to be good.

Item 1A.   Risk Factors

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

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

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

         Geographic  distance between our operations  increases  operating costs
and makes efforts to standardize  operations more difficult.  We operate banking
offices in California, Illinois, Missouri and Texas. The noncontiguous nature of
many of our  geographic  markets  increases  operating  costs  and makes it more
difficult for us to  standardize  our business  practices and  procedures.  As a
result of our  geographic  dispersion,  we face the  following  challenges:  (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  areas;  (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.

         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 carries
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  $2.11  billion  and $1.56  billion,  respectively,  at
December  31,  2005,  representing  31.5% and 23.3%,  respectively,  of our loan
portfolio,  excluding loans held for sale.  During 2004 and 2005, we experienced
increasing amounts of nonperforming  loans within our commercial real estate and
real estate construction and development 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,  as further  discussed  under
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations -- Lending  Activities" and "Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations -- Loans and Allowance for Loan
Losses." On January 13, 2006,  the Department of the Treasury,  Federal  Reserve
and FDIC collectively issued proposed guidance entitled,  "Interagency  Guidance
on  Concentrations  in Commercial  Real Estate  Lending,  Sound Risk  Management
Practices." This proposed  guidance 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.
The comment period ends April 13, 2006.
<PAGE>

         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 increase  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 than we may have
available.

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

Item 1B.  Unresolved Staff Comments

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

Item 2.  Properties

         We own our  office  building,  which  houses  our  principal  place  of
business, located at 135 North Meramec, Clayton, Missouri 63105. The property is
in good  condition  and consists of  approximately  60,353 square feet, of which
approximately  9,970 square feet is currently leased to others. Of our other 177
offices and three operations and administrative  facilities,  101 are located in
buildings that we own and 79 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.



<PAGE>


Item 3.  Legal Proceedings

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

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

         None.



                                     PART II



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

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

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



<PAGE>


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)
                                                          ------------------------------------------------------------
                                                             2005         2004        2003         2002        2001
                                                             ----         ----        ----         ----        ----
                                                        (dollars expressed in thousands, except share and per share data)

Income Statement Data:
<S>                                                       <C>            <C>         <C>          <C>         <C>
    Interest income.....................................  $  493,940     394,782     391,153      425,721     445,385
    Interest expense....................................     168,259      94,767     104,026      157,551     210,246
                                                          ----------   ---------   ---------    ---------   ---------
    Net interest income.................................     325,681     300,015     287,127      268,170     235,139
    Provision for loan losses...........................      (4,000)     25,750      49,000       55,500      23,510
                                                          ----------   ---------   ---------    ---------   ---------
    Net interest income after provision for loan losses.     329,681     274,265     238,127      212,670     211,629
    Noninterest income..................................      94,743      83,486      87,708       67,511      89,095
    Noninterest expense.................................     276,296     229,505     227,069      210,812     202,157
                                                          ----------   ---------   ---------    ---------   ---------
    Income before provision for income taxes,
      minority interest in (loss) income of
      subsidiary and cumulative effect of change
      in accounting principle...........................     148,128     128,246      98,766       69,369      98,567
    Provision for income taxes..........................      52,509      45,338      35,955       22,771      30,048
                                                          ----------   ---------   ---------    ---------   ---------
    Income before minority interest in (loss)
      income of subsidiary and cumulative effect
      of change in accounting principle.................      95,619      82,908      62,811       46,598      68,519
    Minority interest in (loss) income of subsidiary....      (1,287)         --          --        1,431       2,629
                                                          ----------   ---------   ---------    ---------   ---------
    Income before cumulative effect of change in
      accounting principle..............................      96,906      82,908      62,811       45,167      65,890
    Cumulative effect of change in accounting
      principle, net of tax.............................          --          --          --           --      (1,376)
                                                          ----------   ---------   ---------    ---------   ---------
    Net income..........................................  $   96,906      82,908      62,811       45,167      64,514
                                                          ==========   =========   =========    =========   =========

Dividends:
    Preferred stock.....................................  $      786         786         786          786         786
    Common stock........................................          --          --          --           --          --
    Ratio of total dividends declared to net income.....        0.81%       0.95%       1.25%        1.74%       1.22%

Per Share Data:
    Earnings per common share:
      Basic:
         Income before cumulative effect of change
           in accounting principle......................  $ 4,062.36    3,470.80    2,621.39     1,875.69    2,751.54
         Cumulative effect of change in accounting
           principle, net of tax........................          --          --          --           --      (58.16)
                                                          ----------   ---------   ---------    ---------   ---------

         Basic..........................................  $ 4,062.36    3,470.80    2,621.39     1,875.69    2,693.38
                                                          ==========   =========   =========    =========   =========

      Diluted:
         Income before cumulative effect of change
           in accounting principle......................  $ 4,007.46    3,421.58    2,588.31     1,853.64    2,684.93
         Cumulative effect of change in accounting
           principle, net of tax........................          --          --          --           --      (58.16)
                                                          ----------   ---------   ---------    ---------   ---------

         Diluted........................................  $ 4,007.46    3,421.58    2,588.31     1,853.64    2,626.77
                                                          ==========   =========   =========    =========   =========


    Weighted average shares of common
      stock outstanding.................................      23,661      23,661      23,661       23,661      23,661
<PAGE>

Balance Sheet Data:
    Investment securities...............................  $1,340,783   1,813,349   1,049,714    1,145,670     638,644
    Loans, net of unearned discount.....................   7,020,771   6,137,968   5,328,075    5,432,588   5,408,869
    Total assets........................................   9,170,333   8,732,841   7,106,940    7,351,177   6,786,045
    Total deposits......................................   7,541,831   7,151,970   5,961,615    6,172,820   5,683,904
    Notes payable.......................................     100,000      15,000      17,000        7,000      27,500
    Subordinated debentures.............................     215,461     273,300     209,320      278,389     243,457
    Common stockholders' equity.........................     665,875     587,830     536,752      505,978     435,594
    Total stockholders' equity..........................     678,938     600,893     549,815      519,041     448,657

Earnings Ratios:
    Return on average assets............................        1.10%       1.10%       0.87%        0.64%       1.08%
    Return on average stockholders' equity..............       15.11       14.44       11.68         9.44       15.96
    Efficiency ratio (2)................................       65.72       59.84       60.58        62.80       62.35
    Net interest margin (3).............................        4.01        4.36        4.45         4.23        4.34

Asset Quality Ratios:
    Allowance for loan losses to loans..................        1.93        2.46        2.19         1.83        1.80
    Nonperforming loans to loans (4)....................        1.38        1.40        1.41         1.38        1.24
    Allowance for loan losses to
      nonperforming loans (4)...........................      139.23      175.65      154.52       132.29      144.36
    Nonperforming assets to loans and
      other real estate (5).............................        1.41        1.46        1.62         1.52        1.32
    Net loan charge-offs to average loans...............        0.21        0.45        0.61         1.01        0.45

Capital Ratios:
    Average total stockholders' equity to
      average total assets..............................        7.28        7.61        7.48         6.78        6.74
    Total risk-based capital ratio......................       10.14       10.61       10.27        10.68       10.53
    Leverage ratio......................................        8.13        7.89        7.62         6.45        7.24
----------------
(1)  The  comparability of the selected data presented is affected  by the acquisitions of ten banks, a loan origination
     business and two branch offices during the five-year period ended December 31, 2005. The selected data includes the
     financial  position  and  results of  operations  of  each  acquired  entity only for the periods subsequent to its
     respective date of acquisition.
(2)  Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(3)  Net interest rate  margin is  the ratio  of net  interest  income (expressed on a tax-equivalent basis) to  average
     interest-earning assets.
(4)  Nonperforming loans consist of nonaccrual loans and certain loans with restructured terms.
(5)  Nonperforming assets consist of nonperforming loans and other real estate.
</TABLE>
<PAGE>

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

         The  following  presents  management's  discussion  and analysis of our
financial  condition  and  results  of  operations  as of the  dates and for the
periods  indicated.  This  discussion  should  be read in  conjunction  with our
"Selected Financial Data," our Consolidated Financial Statements and the related
notes thereto, and the other financial data contained elsewhere in this report.

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

RESULTS OF OPERATIONS

Overview

         Net income was $96.9  million,  $82.9 million and $62.8 million for the
years  ended  December  31,  2005,  2004 and 2003,  respectively.  Our return on
average  assets and our return on average  stockholders'  equity  were 1.10% and
15.11%,  respectively,  for the year ended December 31, 2005,  compared to 1.10%
and 14.44%,  respectively,  for 2004,  and 0.87% and 11.68%,  respectively,  for
2003.  Results for 2005 reflect  increased net interest  income and  noninterest
income, and a negative provision for loan losses,  partially offset by increased
noninterest expense and an increased provision for income taxes.

         The increase in net income for 2005 over 2004  reflects our  continuing
efforts to  strengthen  earnings  while  simultaneously  focusing on growing our
banking  franchise  and  continuing  our efforts to improve asset  quality.  The
increase  in net income for 2005 was  primarily  attributable  to a  significant
reduction in our provision for loan losses. A negative provision for loan losses
of $8.0 million was recorded during the first nine months of 2005 as a result of
overall improvement in nonperforming loans during this period due to significant
loan  payoffs  and/or  external  refinancing  of  various  credits,  a  sizeable
reduction in net loan charge-offs and the sale of certain  nonperforming  loans.
However,  the improvement in our nonperforming  loans was subsequently offset by
deterioration  of certain  large  credits  during  the  fourth  quarter of 2005,
resulting in a fourth  quarter  provision  for loan losses of $4.0  million,  as
further  discussed  below.  The  increase  in  net  income  for  2005  was  also
attributable   to   increased   net   interest   income   resulting   from   net
interest-earning   assets   provided   by  our  2004   and  2005   acquisitions,
higher-yielding  investment  securities,  and internal loan growth  coupled with
higher  interest  rates on loans.  However,  net interest  income was  adversely
affected  by a  decline  in  earnings  on  our  interest  rate  swap  agreements
associated with our interest rate risk management  program,  primarily resulting
from  increasing  prevailing  interest rates and the maturity and termination of
certain interest rate swap agreements,  as further  discussed under  "--Interest
Rate Risk  Management." In addition,  our interest expense increased as a result
of higher interest rates on deposits and a  redistribution  of deposit  balances
toward  higher-yielding  products  primarily  related to the mix of the CIB Bank
deposit base  acquired,  which  included  higher cost time  deposits,  including
brokered and internet  deposits;  increased  levels of  borrowings  coupled with
increased rates on such borrowings, including our term loan; and the issuance of
additional   subordinated   debentures  late  in  2004  to  partially  fund  our
acquisition of CIB Bank. Our net interest income increased $25.7 million in 2005
to $325.7  million  for the year ended  December  31,  2005,  compared to $300.0
million for 2004. Despite the increase in net interest income and the increasing
interest rate  environment,  our net interest margin  decreased to 4.01% for the
year ended  December  31,  2005,  compared  to 4.36% for 2004  primarily  due to
overall  conditions within our markets and the impact of the decline in earnings
on our interest rate swap  agreements,  both of which continue to exert pressure
on our net interest income and net interest margin. Noninterest income increased
13.5% in 2005 to $94.7 million, from $83.5 million in 2004. Our efficiency ratio
was 65.72% in 2005 compared to 59.84% in 2004, reflecting a significant increase
in our level of noninterest  expenses,  largely attributable to overall expenses
associated  with  our  2004  and  2005  acquisitions,  as  well  as  significant
charitable  contributions  expense  incurred in 2005. The increase in net income
for 2004 was primarily  attributable to a significant reduction in our provision
for  loan  losses  as well as  increased  net  interest  income  resulting  from
higher-yielding  investment  portfolio  securities  and reduced  deposit  rates,
partially  offset by decreased  earnings on our loan portfolio  attributable  to
reduced  earnings  on our  interest  rate swap  agreements  associated  with our
interest rate risk management program.  Results for 2004 also included a gain of
$2.7 million, before applicable income taxes, recorded in February 2004 relating

<PAGE>

to the sale of a  residential  and  recreational  development  property that was
foreclosed  on in  January  2003,  and gains,  net of  expenses,  totaling  $1.0
million,  before applicable income taxes, recorded in February and April 2004 on
the sale of two Midwest branch banking offices.

         We recorded a negative  provision  for loan losses of $4.0  million for
the year ended December 31, 2005. While we had recorded a negative provision for
loan  losses of $8.0  million for the first nine  months of 2005,  reflecting  a
21.0%  improvement  in  nonperforming  loans during this period from the sale of
certain acquired  nonperforming  loans, the strengthening of certain loans, loan
payoffs and /or  external  refinancing  of various  credits,  and a  significant
reduction in net loan  charge-offs,  the level of nonperforming  loans increased
during the fourth quarter of 2005 as a result of further  deterioration of a few
large credit  relationships  in our Midwest  region,  which resulted in a fourth
quarter  provision  for  loan  losses  of $4.0  million.  Net  loan  charge-offs
decreased to $13.4 million in 2005 from $24.8 million in 2004, and included $7.6
million in loan  charge-offs  associated  with the transfer of $59.7  million of
nonperforming  loans to our held for sale  portfolio on December  31, 2005.  The
$59.7  million  represents  the  estimated  fair  value,  net of costs,  that is
expected to be realized at the time of sale. Several of the credit relationships
that had  deteriorated  during the fourth  quarter of 2005 were  included in the
loans transferred to our held for sale portfolio.  Our provision for loan losses
of $25.8  million for the year ended  December 31, 2004  reflected a significant
reduction  from a provision for loan losses of $49.0 million for the  comparable
period in 2003, and was primarily  attributable to loan sales of problem credits
completed  in  late  2004  and,  exclusive  of our  2004  acquisition  activity,
substantial improvement in asset quality,  reduced levels of nonperforming loans
and lower net loan charge-offs.  We continue to closely monitor the level of our
nonperforming assets and our focus of further reducing these assets.

Financial Condition and Average Balances

         Our average total assets were $8.81 billion for the year ended December
31,  2005,  compared  to $7.54  billion  and $7.18  billion  for the years ended
December 31, 2004 and 2003,  respectively.  Our total assets were $9.17 billion,
$8.73  billion  and  $7.11  billion  at  December  31,  2005,   2004  and  2003,
respectively.  We attribute the $437.5 million  increase in total assets in 2005
primarily to internal loan growth within our  commercial  and  residential  real
estate lending portfolios,  our acquisition of CIB Bank late in 2004, as further
discussed  below,  and our  acquisitions  of FBA, IBOC and NSB,  which  provided
assets  of  $275.3  million,  in  aggregate,  as well as the  intangible  assets
associated with these  transactions.  We attribute the $1.63 billion increase in
total assets in 2004  primarily to our  acquisition  of CIB Bank on November 30,
2004,  which provided assets of $1.20 billion,  and our  acquisitions of CCB and
SBLS in the third quarter of 2004,  which provided assets of $187.8 million,  in
aggregate,  as well as the intangible assets associated with those transactions.
Additionally,   exclusive  of  the  loans  provided  by  the  acquisitions,  our
commercial and  residential  real estate  lending  portfolios  increased  $124.1
million in 2004, reflecting internal growth within these portfolios. The overall
increase  in  total  assets  in 2004 was  partially  offset  by a $44.6  million
decrease  in the fair value of our  derivative  instruments  to $4.7  million at
December 31, 2004 from $49.3 million at December 31, 2003,  primarily  resulting
from the maturity of a  significant  notional  amount of our interest  rate swap
agreements in March and September 2004.

         The increase in our average assets for 2005 was primarily  funded by an
increase  in average  deposits  of $1.04  billion to $7.20  billion for the year
ended  December  31,  2005;  an increase in average  other  borrowings  of $85.7
million; an increase in average notes payable of $33.2 million;  and an increase
in average  subordinated  debentures of $38.8  million.  The increase in average
assets for 2004 was  primarily  funded by an  increase  in average  deposits  of
$114.8  million to $6.17  billion for the year ended  December 31, 2004,  and an
increase of $266.7 million in average other borrowings to $486.0 million for the
year  ended  December  31,  2004,  primarily  attributable  to  term  repurchase
agreements.  Funds available from maturities and sales of investment  securities
during 2005 were primarily used to fund loan growth,  resulting in a decrease in
our investment securities portfolio.  A portion of the remaining funds available
from  maturities of investment  securities  were  reinvested in  higher-yielding
available-for-sale investment securities. Interest-earning assets averaged $8.15
billion for the year ended  December  31,  2005,  compared to $6.91  billion and
$6.49  billion for the years  ended  December  31, 2004 and 2003,  respectively,
while  interest-bearing  liabilities  averaged  $6.82 billion for the year ended
December 31,  2005,  compared to $5.78  billion and $5.53  billion for the years
ended December 31, 2004 and 2003, respectively.

         Average loans,  net of unearned  discount,  were $6.44  billion,  $5.51
billion and $5.39 billion for the years ended December 31, 2005,  2004 and 2003,
respectively.  The acquisitions we completed during 2004 and 2005 provided total
loans,  net  of  unearned  discount,  of  $780.9  million  and  $209.6  million,
respectively.  Our 2005 acquisitions of FBA, IBOC and NSB provided loans, net of
unearned  discount,  of  $54.3  million,   $113.5  million  and  $41.8  million,
respectively.  Internal  loan growth of $687.5  million  for 2005 was  primarily
generated from a $286.8 million  increase in our real estate mortgage  portfolio
resulting from management's business decision to retain additional mortgage loan

<PAGE>

product production in our residential real estate mortgage portfolio, and a home
equity product line campaign that we held in mid-2004, a $241.9 million increase
in our real estate construction and development portfolio,  and a $194.8 million
increase in our loans held for sale  portfolio,  including  approximately  $59.7
million of nonperforming  loans that were transferred to the loans held for sale
portfolio  at  December  31,  2005,  as further  discussed  under  "--Loans  and
Allowance for Loan Losses." This increase was partially  offset by reductions in
a  portion  of our  nonperforming  loan  portfolio  due to the  sale of  certain
nonperforming  loans in early 2005, loan payoffs and/or external  refinancing of
various credits. Our 2004 acquisitions of CIB Bank, CCB and SBLS provided loans,
net of unearned  discount,  of $683.3 million,  $73.6 million and $24.0 million,
respectively.  Additionally, internal loan growth in 2004 contributed to a $91.8
million increase in commercial loans and a $32.3 million increase in residential
real estate mortgage loans,  partially offset by a decrease in consumer loans of
$11.9 million.  The overall  increase in our loan portfolio was partially offset
by a decrease in our loan portfolio of $83.2 million  resulting from the sale of
a portion of our commercial leasing portfolio and management's business decision
to  reduce  our  level of  nonperforming  assets  through  the  sale of  certain
nonperforming loans in November and December 2004.

         Investment securities averaged $1.64 billion,  $1.28 billion and $957.4
million for the years ended  December  31,  2005,  2004 and 2003,  respectively,
reflecting  increases of $361.8  million and $325.6  million for the years ended
December  31, 2005 and 2004,  respectively.  We  attribute  the increase in 2005
primarily  to  our  2004  and  2005  acquisitions,   which  provided  investment
securities,  in aggregate,  of $438.0 million and $20.1  million,  respectively.
Funds available from maturities of investment securities,  deposit growth and an
increase  in our other  borrowings  were used to fund  loan  growth  and for the
reinvestment  in  additional   higher-yielding   available-for-sale   investment
securities.  Additionally,  throughout 2005, short-tem investments were utilized
to fund an  anticipated  level of attrition  associated  with our  acquisitions,
primarily time deposits acquired with CIB Bank. Average  short-term  investments
declined  $49.1 million to $70.3  million for the year ended  December 31, 2005,
from $119.4 million in 2004. The increase in 2004 was primarily  associated with
the  investment  of  additional  funds  provided  by an  increase  in our  other
borrowings as well as our  acquisitions  of CIB Bank and CCB,  which provided us
with $393.2  million and $44.8 million of investment  securities,  respectively.
Additionally,  a portion  of excess  short-term  investments  were  utilized  to
purchase higher-yielding  available-for-sale investment securities, resulting in
a decline in average  short-term  investments of $23.7 million to $119.4 million
for the year ended December 31, 2004, from $143.0 million in 2003.

         Nonearning  assets averaged  $662.4 million,  $633.2 million and $698.7
million for the years ended December 31, 2005, 2004 and 2003, respectively.  Our
derivative  financial  instruments  averaged ($3.1)  million,  $25.9 million and
$78.7  million  for  the  years  ended   December  31,  2005,   2004  and  2003,
respectively.  This  reflects a decline in the fair value of certain  derivative
financial  instruments  and the  maturity of $200.0  million and $800.0  million
notional  amount  of  interest  rate  swap  agreements  during  2005  and  2004,
respectively,  as further  discussed under "--Interest Rate Risk Management" and
Note 5 to our Consolidated  Financial  Statements.  In 2005, the acquisitions of
FBA, IBOC and NSB increased our capital  expenditures,  thus  contributing to an
overall  increase in bank premises and equipment,  which was partially offset by
continued depreciation and amortization.  Intangible assets,  primarily goodwill
and core deposit  intangibles  associated  with our  acquisitions,  and deferred
income taxes also  contributed to the increase in our  nonearning  assets during
2005 and 2004.  In 2004,  the  acquisitions  of CIB Bank and CCB, the opening of
four de novo branch banking offices,  partially offset by continued depreciation
and amortization and the divestiture of two branch banking offices,  contributed
to an  overall  increase  in bank  premises  and  equipment.  In  addition,  our
liquidation of certain parcels of other real estate,  as further discussed under
"--Loans and  Allowance  for Loan Losses,"  further  contributed  to the overall
decline in our average nonearning assets in 2004.

         We use deposits as our primary  funding  source and acquire them from a
broad base of local markets,  including both individual and corporate customers.
Deposits  averaged $7.20 billion,  $6.17 billion and $6.05 billion for the years
ended December 31, 2005, 2004 and 2003,  respectively.  Our actual deposits were
$7.54  billion,  $7.15 billion and $5.96 billion at December 31, 2005,  2004 and
2003,  respectively,  reflecting  increases of $389.9 million for 2005 and $1.19
billion for 2004.  The  increase in 2005 is primarily  attributable  to internal
growth stemming from our deposit  development  programs and our  acquisitions of
FBA, IBOC and NSB, which provided deposits of $233.0 million, in aggregate.  The
increase in 2004 is primarily  attributable to our  acquisitions of CIB Bank and
CCB, which provided deposits of $1.10 billion and $104.6 million,  respectively,
as well as the  expansion of our banking  franchise  with the opening of four de
novo branch offices in 2004, in West St. Louis County, Missouri, Houston, Texas,
McKinney, Texas and San Diego, California.  The increase was partially offset by
a $23.4 million reduction in our deposit base associated with our divestiture of
two Midwest branch banking offices during the first and second quarters of 2004.
Although our overall  deposit  levels have increased as a result of our 2004 and

<PAGE>
2005  acquisitions,  the overall  increase in our average deposits was partially
offset by a  significant  decrease in deposits  due to an  anticipated  level of
attrition  associated  with the deposits  acquired  from CIB Bank,  particularly
savings and time deposits,  including brokered and internet deposits.  Excluding
the impact of our acquisitions,  the change in our average deposit mix reflects:
(a) our continued  efforts to restructure the composition of our deposit base as
the majority of our deposit development  programs are directed toward increasing
transactional  accounts,  such  as  demand  and  savings  accounts,  while  more
selectively growing time deposits;  and (b) expanding our relationships with our
existing customers by increasing the number and types of products provided.

         Other  borrowings  averaged $571.7  million,  $486.0 million and $219.3
million for the years ended December 31, 2005, 2004 and 2003, respectively.  The
increase in the average  balances  for 2005 and 2004 reflect  $250.0  million of
term  securities  sold under  agreements to  repurchase  that we entered into in
conjunction with our interest rate risk management  program during the first and
second  quarters  of 2004,  as  further  discussed  in Note 5 and Note 10 to our
Consolidated  Financial  Statements.  The average balance for 2005 also reflects
the  termination of $50.0 million of term  securities  sold under  agreements to
repurchase in November 2005. The increase in average  balances for 2005 and 2004
also  reflect  an  increase  in  daily   securities  sold  under  agreements  to
repurchase, principally in connection with the cash management activities of our
commercial  deposit  customers,  as well as an increase in average  Federal Home
Loan Bank advances, primarily associated with our acquisitions, to $44.2 million
for  2005,  compared  to $21.0  million  and  $12.5  million  for 2004 and 2003,
respectively.

         Our notes  payable  averaged  $36.8  million,  $3.7  million  and $15.4
million for the years ended December 31, 2005, 2004 and 2003, respectively.  Our
notes  payable were $100.0  million at December 31, 2005. On August 11, 2005, we
entered into an Amended and Restated  Secured Credit  Agreement and restructured
our overall financing arrangement,  the most significant change representing the
addition of a term loan,  as further  discussed  in Note 11 to our  Consolidated
Financial  Statements.  In conjunction with this transaction,  we borrowed $80.0
million on the term loan on August 11, 2005 and  borrowed  the  remaining  $20.0
million on November  14,  2005.  The proceeds of the term loan were used to fund
our  acquisition  of IBOC and to  partially  fund the  redemption  of our 10.24%
subordinated  debentures  issued to First  Preferred  Capital Trust II, or First
Preferred II, as further  discussed below. Our note payable was $15.0 million at
December 31, 2004 and resulted  from a single  advance drawn under our revolving
credit line on November 30, 2004 to partially fund our  acquisition of CIB Bank.
As of June 30, 2005, this advance had been repaid in full through dividends from
our  subsidiary  bank.  The balance of our note  payable at December 31, 2003 of
$17.0  million was repaid in April 2004 through  dividends  from our  subsidiary
bank.

         Subordinated  debentures  issued to our statutory  and business  trusts
averaged $259.2  million,  $220.4 million and $249.1 million for the years ended
December  31,  2005,  2004 and 2003,  respectively.  The increase in our average
subordinated   debentures   for  2005   reflects  our  issuance  of   additional
subordinated  debentures  late in 2004, as further  discussed  below,  partially
offset by the  repayment of certain  subordinated  debentures  at the end of the
third  quarter  of  2005.  On  September  30,  2005,  we paid in full all of the
outstanding  $59.3 million of 10.24%  subordinated  debentures that we issued to
First  Preferred  II in October  2000,  as further  described  in Note 12 to our
Consolidated   Financial   Statements.   The  repayment  of  these  subordinated
debentures  was  funded  by  the  term  loan.   During  2004,  our   outstanding
subordinated  debentures  increased  $61.9  million due to the issuance of $20.6
million  of  subordinated  debentures  to FBST  II,  a newly  formed  affiliated
statutory  trust,  in  September  2004,  and the  issuance  of $41.2  million of
subordinated  debentures to FBST III, a newly formed affiliated statutory trust,
in November 2004, as further discussed in Note 12 to our Consolidated  Financial
Statements. The proceeds from the issuance of these subordinated debentures were
utilized to partially fund our acquisition of CIB Bank.

         Stockholders' equity averaged $641.5 million, $574.3 million and $537.6
million for the years ended December 31, 2005, 2004 and 2003,  respectively.  We
primarily  attribute  the  increase  for 2005 to net  income  of $96.9  million,
partially  offset by dividends paid on our Class A and Class B preferred  stock,
and an $18.1 million decrease in accumulated other comprehensive  income,  which
was  comprised of $13.8  million  associated  with the change in our  unrealized
gains and losses on  available-for-sale  investment  securities and $4.3 million
associated  with the  change  in the  fair  value  of our  derivative  financial
instruments.  These  decreases are reflective of changes in prevailing  interest
rates, a decline in the fair value of our derivative financial instruments,  and
the  maturity  of  $200.0  million  notional  amount of our  interest  rate swap
agreements  designated  as cash flow hedges  during 2005,  as further  discussed
under "--Interest Rate Risk Management" and Note 5 to our Consolidated Financial
Statements.  We primarily attribute the increase for 2004 to net income of $82.9
million, partially offset by dividends paid on our Class A and Class B preferred
stock, and a $31.0 million decrease in accumulated other  comprehensive  income,
which was  comprised  of $25.2  million  associated  with the change in the fair
value of our derivative  financial  instruments and $5.8 million associated with
the change in our unrealized gains and losses on  available-for-sale  investment
securities.  These  decreases are  reflective of changes in prevailing  interest
rates, a decline in the fair value of our derivative financial instruments,  and
the  maturity  of  $750.0  million  notional  amount of our  interest  rate swap
agreements designated as cash flow hedges during 2004.



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

<TABLE>
<CAPTION>
                                                                      Years Ended December 31,
                                        ---------------------------------------------------------------------------------------
                                                    2005                           2004                         2003
                                        ---------------------------- ----------------------------- ----------------------------
                                                    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........................  $6,422,341   423,361   6.59%  $5,493,867  340,660    6.20% $5,369,046   354,649   6.61%
       Tax-exempt (4).................      14,629     1,129   7.72       15,187    1,260    8.30      16,317     1,266   7.76
    Investment securities:
       Taxable........................   1,599,161    65,895   4.12    1,245,226   50,170    4.03     914,357    32,442   3.55
       Tax-exempt (4).................      45,626     2,675   5.86       37,775    2,292    6.07      43,074     2,672   6.20
    Short-term investments............      70,251     2,211   3.15      119,370    1,643    1.38     143,046     1,502   1.05
                                        ----------   -------          ----------  -------          ----------   -------
         Total interest-earning
           assets.....................   8,152,008   495,271   6.08    6,911,425  396,025    5.73   6,485,840   392,531   6.05
                                                     -------                      -------                       -------

Nonearning assets.....................     662,396                       633,154                      698,740
                                        ----------                    ----------                   ----------
         Total assets.................  $8,814,404                    $7,544,579                   $7,184,580
                                        ==========                    ==========                   ==========

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

Interest-bearing liabilities:
    Interest-bearing deposits:
       Interest-bearing demand
         deposits.....................  $  905,613     4,398   0.49%  $  856,765    3,472    0.41% $  852,104     5,470   0.64%
       Savings deposits...............   2,135,156    29,592   1.39    2,175,425   20,128    0.93   2,147,573    23,373   1.09
       Time deposits (3)..............   2,906,601    93,167   3.21    2,036,323   49,467    2.43   2,046,741    54,276   2.65
                                        ----------   -------          ----------  -------          ----------   -------
         Total interest-bearing
           deposits...................   5,947,370   127,157   2.14    5,068,513   73,067    1.44   5,046,418    83,119   1.65
    Other borrowings..................     571,717    18,240   3.19      485,994    6,102    1.26     219,264     2,243   1.02
    Notes payable (5).................      36,849     2,305   6.26        3,657      506   13.84      15,418       785   5.09
    Subordinated debentures (3).......     259,214    20,557   7.93      220,428   15,092    6.85     249,146    17,879   7.18
                                        ----------   -------          ----------  -------          ----------   -------
         Total interest-bearing
           liabilities................   6,815,150   168,259   2.47    5,778,592   94,767    1.64   5,530,246   104,026   1.88
                                                     -------                      -------                       -------

Noninterest-bearing liabilities:
    Demand deposits...................   1,257,277                     1,100,072                    1,007,400
    Other liabilities.................     100,462                        91,660                      109,357
                                        ----------                    ----------                   ----------
         Total liabilities............   8,172,889                     6,970,324                    6,647,003
Stockholders' equity..................     641,515                       574,255                      537,577
                                        ----------                    ----------                   ----------
         Total liabilities and
           stockholders' equity.......  $8,814,404                    $7,544,579                   $7,184,580
                                        ==========                    ==========                   ==========
Net interest income...................               327,012                      301,258                       288,505
                                                     =======                      =======                       =======
Interest rate spread..................                         3.61                          4.09                         4.17
Net interest margin (6)...............                         4.01%                         4.36%                        4.45%
                                                               ====                         =====                         ====
--------------------------------
(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 $1.3 million, $1.2 million and $1.4 million for the years ended December 31, 2005, 2004 and 2003, respectively.
(5)   Interest expense on our  notes  payable  includes  commitment, arrangement  and  renewal  fees.  Exclusive of these fees, the
      interest rates paid were 4.93%, 2.87% and 2.35% for the years ended December 31, 2005, 2004 and 2003, respectively.
(6)   Net interest margin  is  the  ratio of net  interest income (expressed on a tax-equivalent basis) to average interest-earning
      assets.
</TABLE>


<PAGE>


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

<TABLE>
<CAPTION>

                                                          Increase (Decrease) Attributable to Change in:
                                               ------------------------------------------------------------------
                                                 December 31, 2005 Compared          December 31, 2004 Compared
                                                    to December 31, 2004               to December 31, 2003
                                               ------------------------------      ------------------------------
                                                                         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.............................    $60,269      22,432     82,701       8,189     (22,178)   (13,989)
       Tax-exempt (4)......................        (45)        (86)      (131)        (91)         85         (6)
    Investment securities:
       Taxable.............................     14,579       1,146     15,725      12,906       4,822     17,728
       Tax-exempt (4)......................        464         (81)       383        (325)        (55)      (380)
    Short-term investments.................       (888)      1,456        568        (277)        418        141
                                               -------     -------     ------      ------     -------    -------
           Total interest income...........     74,379      24,867     99,246      20,402     (16,908)     3,494
                                               -------     -------     ------      ------     -------    -------
Interest paid on:
    Interest-bearing demand deposits.......        209         717        926          29      (2,027)    (1,998)
    Savings deposits.......................       (381)      9,845      9,464         294      (3,539)    (3,245)
    Time deposits (3)......................     24,956      18,744     43,700        (278)     (4,531)    (4,809)
    Other borrowings.......................      1,253      10,885     12,138       3,234         625      3,859
    Notes payable (5)......................      2,219        (420)     1,799        (915)        636       (279)
    Subordinated debentures (3)............      2,882       2,583      5,465      (1,993)       (794)    (2,787)
                                               -------     -------     ------      ------     -------    -------
           Total interest expense..........     31,138      42,354     73,492         371      (9,630)    (9,259)
                                               -------     -------     ------      ------     -------    -------
           Net interest income.............    $43,241     (17,487)    25,754      20,031      (7,278)    12,753
                                               =======     =======     ======      ======     =======    =======
------------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense include the effect of interest rate swap agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%.
(5) Interest expense on our notes payable includes commitment, arrangement and renewal fees.
</TABLE>

Net Interest Income

         The primary source of our income is net interest  income.  Net interest
income (expressed on a tax-equivalent basis) increased to $327.0 million for the
year ended  December 31, 2005,  from $301.3  million and $288.5  million for the
years ended December 31, 2004 and 2003,  respectively.  Our net interest  margin
was 4.01% for the year ended December 31, 2005,  compared to 4.36% and 4.45% for
the years ended December 31, 2004 and 2003, 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  primarily  credit the  increase in net  interest  income in 2005 to
interest-earning assets provided by our acquisitions completed in 2004 and 2005,
internal   loan   growth   coupled   with  higher   interest   rates  on  loans,
higher-yielding   investment   securities   and  the  repayment  of  our  10.24%
subordinated  debentures  in  September  2005.  The overall  increase in our net
interest income was partially offset by increased  interest  expense  associated
with  deposit   growth,   higher   interest  rates  paid  on  deposits,   and  a
redistribution of deposit balances toward  higher-yielding  products; the mix of
the CIB Bank deposit base acquired;  and increased  levels of other  borrowings,
including  our  term  loan,  coupled  with  increased  interest  rates  on  such
borrowings;  and the issuance of additional subordinated debentures in late 2004
to partially  fund our  acquisition  of CIB Bank.  We credit the  increased  net
interest income for 2004 primarily to the net  interest-earning  assets provided
by our 2003 and 2004 acquisitions;  increased average investment securities with
higher yields,  partially offset by increased rates on other  borrowings;  lower
rates  paid on  deposits;  a $63.1  million  net  reduction  in our  outstanding
subordinated debentures during 2003 as well as reduced rates associated with our
outstanding  subordinated  debentures;  increased average investment  securities
with higher  yields;  and increased  average loan balances  associated  with our
acquisitions  and  internal  growth.  As more fully  described in Note 12 to our
Consolidated Financial Statements, in September 2004, we issued $20.6 million of
subordinated debentures to FBST II and in November 2004, we issued $41.2 million
of subordinated debentures to FBST III. On September 30, 2005, we repaid in full
$59.3 million of our  outstanding  subordinated  debentures  that were issued in
October 2000. These transactions,  coupled with our use of derivative  financial
instruments,  have allowed us to reduce our overall interest expense  associated
with our subordinated  debentures as the additional subordinated debentures have
been  issued  at  significantly  lower  interest  rates.   Derivative  financial
instruments  that were entered into in  conjunction  with our interest rate risk
management  program  to  mitigate  the  effects  of  decreasing  interest  rates
contributed $2.2 million, $50.1 million and $64.6 million,  respectively, to net
interest  income for the years  ended  December  31,  2005,  2004 and 2003.  The
decreased  earnings on our interest rate swap agreements for 2005 contributed to
a reduction in our net interest  margin of  approximately  59 basis points,  and
reflects higher interest rates and maturities of $750.0 million of interest rate
swaps  designated  as cash flow hedges and $50.0  million of interest  rate swap
agreements  designated as fair value hedges during 2004;  the maturity of $200.0
million of interest rate swap agreements designated as cash flow hedges in March
2005; and the  termination of $150.0 million and $101.2 million of interest rate
swap  agreements  designated  as fair value  hedges in February  and May,  2005,
respectively.  However,  the  earnings  on our  interest  rate  swap  agreements
contributed  to the  level of our net  interest  margin  in 2004.  Although  the
Company has implemented  other methods to mitigate the reduction in net interest
income  resulting  from  the  decreased  earnings  on  our  interest  rate  swap
agreements,  including the funding of investment  security purchases through the
issuance of term repurchase agreements,  the reduction of our interest rate swap
agreements  has resulted in a substantial  reduction of our net interest  income
and further  compression  of our net interest  margin,  which has been partially
offset by the impact of the rising  rate  environment  experienced  in 2005,  as
further discussed below.

         The yield on our loan  portfolio was 6.59% for the year ended  December
31, 2005, compared to 6.21% and 6.61% for 2004 and 2003,  respectively.  Average
loans, net of unearned discount,  were $6.44 billion for the year ended December
31, 2005,  in  comparison to $5.51 billion and $5.39 billion for the years ended
December 31, 2004 and 2003,  respectively.  We attribute the overall increase in
yields on our loan portfolio in 2005 to increases in prevailing  interest rates.
During 2005, the Federal Reserve increased the targeted federal funds rate eight
times,  resulting in eight increases in the prime rate of interest from 5.25% at
December  31, 2004 to 7.25% at  December  31,  2005.  The prime rate of interest
increased  from 4.00% at January 1, 2004 to 5.25% at December 31, 2004.  This is
reflected  not only in the rate of interest  earned on loans that are indexed to
the prime  rate,  but also in other  assets and  liabilities  which  either have
variable or  adjustable  rates,  or which have  matured or repriced  during this
period. Although the rising interest rate environment contributed to an increase
in loan  yields,  total  interest  income on our loan  portfolio  was  adversely
impacted by decreased  earnings on our interest rate swap agreements  designated
as cash flow hedges.  The earnings on these swap  agreements  were $2.6 million,
$38.3 million and $49.4 million for the years ended December 31, 2005, 2004, and
2003,  respectively.  Higher  interest rates and the maturities of interest rate
swap  agreements  designated  as cash flow hedges of $750.0  million in 2004 and
$200.0  million  in  March  2005  resulted  in  decreased  earnings  on our swap
agreements, thereby contributing to a reduction in yields on our loan portfolio,
and a compression of our net interest income of approximately  $35.7 million for
2005  compared  to 2004,  as  further  discussed  under  "--Interest  Rate  Risk
Management." During 2004, increased  competition and general economic conditions
within our market areas  contributed to continued weak loan demand and generally
low prevailing  interest rates resulting in a lower yield on our loan portfolio,
despite the  increases in the prime  lending rate  experienced  in the third and
fourth quarters of 2004.
<PAGE>

         For the years ended  December 31, 2005,  2004 and 2003,  the  aggregate
weighted average rate paid on our interest-bearing  deposit portfolio was 2.14%,
1.44% and 1.65%, respectively.  We attribute the increase in 2005 to the current
rising  interest  rate  environment  and the mix of the CIB  Bank  deposit  base
acquired in November 2004,  which included higher cost time deposits,  including
brokered and internet deposits. In addition,  decreased earnings associated with
certain of our interest rate swap agreements designated as fair value hedges, as
well as the  termination  of $150.0  million  notional  of fair value  hedges in
February  2005,   resulted  in  a  decrease  in  our  net  interest   income  of
approximately  $8.5 million for 2005,  compared to 2004, as further discussed in
Note 5 to our Consolidated  Financial  Statements.  The decline in the aggregate
weighted  average rate paid in 2004 was primarily  attributable to significantly
decreased  rates paid on our  savings  and time  deposits,  which  continued  to
decline in conjunction with the interest rate reductions  previously  discussed.
However, the continued  competitive pressures on deposits within our market area
precluded us from fully  reflecting  the general  interest rate decreases in our
deposit  pricing while still  providing an adequate  funding source for our loan
portfolio.  The  earnings  associated  with  certain of our  interest  rate swap
agreements  designated as fair value hedges  further  contributed to the overall
reduction  in  deposit  rates  paid  on time  deposits;  however,  the  earnings
associated with certain of our interest rate swap agreements were  significantly
reduced  in 2004 due to a  substantially  increasing  level  of  ineffectiveness
experienced in the hedging  relationships as the underlying  hedged  liabilities
neared maturity that  ultimately led to  management's  decision to terminate the
remaining $150.0 million of fair value hedges that hedged a portion of our other
time deposits  effective  February 2005, as discussed above and in Note 5 to our
Consolidated Financial Statements.

         The  aggregate  weighted  average rate on our notes  payable was 6.26%,
13.84%  and  5.09%  for the  years  ended  December  31,  2005,  2004 and  2003,
respectively.  The weighted  average rates paid reflect changing market interest
rates during these periods,  in addition to unused credit  commitment and letter
of  credit  facility  fees on our  secured  credit  agreement  with a  group  of
unaffiliated financial  institutions,  as well as other fees paid in conjunction
with the annual renewal of this financing arrangement. Amounts outstanding under
our term loan bear  interest  at a floating  rate equal to the London  Interbank
Offering  Rate,  or LIBOR,  plus a margin  determined  by the  outstanding  loan
balances and our profitability for the preceding four calendar quarters. Amounts
outstanding  under our revolving line of credit bear interest at a floating rate
equal to the lead bank's  prime rate or, at our  option,  at LIBOR plus a margin
determined  by the  outstanding  loan  balances  and our  profitability  for the
preceding four calendar quarters.  Thus, our secured credit agreement represents
a relatively  high-cost funding source as increased  advances have the effect of
increasing the weighted average rate of our non-deposit liabilities. The overall
cost of this funding source during 2004 was higher due to fees  associated  with
the credit facility  coupled with minimal  borrowings under the revolving credit
line  during  2004 as  compared  to 2003.  The  balance  of our note  payable at
December  31,  2004 was $15.0  million  and  resulted  from an advance  drawn in
November 2004 to partially fund our acquisition of CIB Bank. In January 2005, we
reduced this advance by $11.0  million  through  dividends  from our  subsidiary
bank, and we fully repaid the advance in June 2005. As further described in Note
11 to our Consolidated  Financial  Statements,  we borrowed $80.0 million on our
term loan in August 2005 and $20.0  million on our term loan in  November  2005.
The proceeds of the term loan were  primarily  used to fund our  acquisition  of
IBOC and to partially fund the repayment of our 10.24% subordinated  debentures,
as well as for general corporate purposes and pending acquisitions.

         The aggregate  weighted  average rate paid on our other  borrowings was
3.19% for the year ended  December 31, 2005,  as compared to 1.26% and 1.02% for
the years ended December 31, 2004 and 2003, respectively,  reflecting changes in
the current interest rate environment during these periods.  The increase in the
aggregate  weighted  average rate paid on our other  borrowings in 2005 was also
attributable to the $250.0 million of term  securities sold under  agreements to
repurchase  that we entered  into in  conjunction  with our  interest  rate risk
management  program  during the first and  second  quarters  of 2004,  partially
offset  by the  termination  of $50.0  million  of term  securities  sold  under
agreements to repurchase  in November  2005, as further  discussed in Note 5 and
Note 10 to our Consolidated Financial Statements.
<PAGE>

         The aggregate weighted average rate paid on our subordinated debentures
was 7.93%, 6.85% and 7.18% for the years ended December 31, 2005, 2004 and 2003,
respectively.  The  aggregate  weighted  average  rates reflect the repayment of
$59.3 million of 10.24% subordinated  debentures in September 2005, the issuance
of $61.9 million of  subordinated  debentures in late 2004  associated  with our
acquisition  of CIB Bank,  and the repayment of $136.3  million of  subordinated
debentures and the related issuance of $73.2 million of subordinated  debentures
at lower  interest  rates in 2003.  The  aggregate  weighted  average rates also
reflect the earnings impact of our interest rate swap agreements entered into in
March  2003,  and the two  entered  into in May  2002  and  April  2003  that we
terminated  in May  2005,  as  further  discussed  under  "--Interest  Rate Risk
Management" and in Note 5 to our Consolidated Financial Statements.

Comparison of Results of Operations for 2005 and 2004

         Net Income.  Net income was $96.9  million for the year ended  December
31, 2005,  compared to $82.9 million for 2004.  Our return on average assets and
our return on average stockholders' equity were 1.10% and 15.11%,  respectively,
for  the  year  ended   December  31,  2005,   compared  to  1.10%  and  14.44%,
respectively,  for 2004.  Results for 2005 reflect increased net interest income
and  noninterest  income,  and a negative  provision for loan losses,  partially
offset by increased  noninterest  expense and an increased  provision for income
taxes.  The  increase in 2005  reflects  our  continuing  efforts to  strengthen
earnings and simultaneously  improve asset quality. Net interest-earning  assets
provided  by  our  2004  and  2005  acquisitions,   higher-yielding   investment
securities, and internal loan growth coupled with higher interest rates on loans
contributed to increased interest income in 2005.  However,  net interest income
was  adversely  affected  by a decline in  earnings  on our  interest  rate swap
agreements associated with our interest rate risk management program,  primarily
resulting  from  increasing  prevailing  interest  rates  and the  maturity  and
termination of certain interest rate swap agreements; increased interest expense
as a result of higher interest rates on deposits and a redistribution of deposit
balances  toward  higher-yielding  products  in  conjunction  with  the CIB Bank
deposit base acquired in November 2004;  increased levels of borrowings  coupled
with  increased  rates  on such  borrowings;  and  the  issuance  of  additional
subordinated  debentures  late in 2004 to partially fund our  acquisition of CIB
Bank, as further discussed under "--Net Interest Income." Despite the increasing
interest rate environment,  overall conditions within our markets and the impact
of the decline in  earnings on our  interest  rate swap  agreements  continue to
exert  pressure on our net  interest  income and our net  interest  margin.  The
increase in net income in 2005 also resulted from a significant reduction in our
provision  for  loan  losses  as  a  result  of  overall   improvement   in  our
nonperforming loans during 2005, exclusive of a deterioration of certain credits
in the  fourth  quarter of 2005 that we  transferred  to our loans held for sale
portfolio,  as  further  discussed  under  "--Provision  for  Loan  Losses."  We
primarily attribute the increased  noninterest income to additional  noninterest
income  associated  with  our 2004 and  2005  acquisitions,  increased  gains on
mortgage  loans  sold and held for sale,  increased  investment  management  fee
income,  and increased  service charges on deposit accounts and customer service
fees related to higher deposit balances; partially offset by net losses on sales
of available-for-sale investment securities and the recognition of impairment on
our SBA servicing assets, as further discussed under "--Noninterest Income." The
overall increase in our operating  expenses for 2005, as further discussed under
"--Noninterest  Expense,"  primarily reflects increased expense levels resulting
from our 2004 and 2005  acquisitions  and the  addition  of five de novo  branch
offices  in 2004 and 2005,  significant  charitable  contributions  expense  and
increases in salaries and employee benefits expenses.
<PAGE>

         Provision  for  Loan  Losses.  We  recorded  a  $4.0  million  negative
provision for loan losses for the year ended December 31, 2005, in comparison to
a provision  for loan losses of $25.8  million for the year ended  December  31,
2004. Our net loan charge-offs  declined to $13.4 million from $24.8 million for
the years ended December 31, 2005 and 2004,  respectively.  As further discussed
under "--Lending  Activities" and "--Loans and Allowance for Loan Losses," while
we had  recorded a negative  provision  for loan losses of $8.0  million for the
first nine months of 2005,  reflecting a 21.0%  improvement in our nonperforming
loans  during  this  period  as  a  result  of  the  sale  of  certain  acquired
nonperforming  loans,  the  strengthening  of certain  loans,  loan  payoffs and
external refinancing of various credits, and a significant reduction in net loan
charge-offs,  the level of  nonperforming  loans  increased  during  the  fourth
quarter  of  2005  following  further   deterioration  of  a  few  large  credit
relationships in our Midwest region, resulting in a fourth quarter provision for
loan losses of $4.0 million.  Our nonperforming loans, which had decreased 21.0%
to $67.8  million at September 30, 2005 from $85.8 million at December 31, 2004,
increased  $29.4  million  during the fourth  quarter  of 2005,  resulting  in a
balance of $97.2  million at December  31, 2005.  The increase in  nonperforming
loans  in the  fourth  quarter  of 2005 is  primarily  attributable  to  further
deterioration  of a small number of credit  relationships in our Midwest region,
including two large credit  relationships  associated with our CIB Bank purchase
of $14.9 million and $16.6 million,  or $31.5 million in aggregate.  On December
31, 2005, we recognized $7.6 million of loan  charge-offs to reduce the loans to
their estimated fair value, net of costs, that is expected to be realized at the
time of the sale, and transferred  approximately  $59.7 million of nonperforming
loans  to  our  held  for  sale  portfolio,   which  included   several  of  the
relationships that deteriorated  during the fourth quarter of 2005.  Included in
the loan  charge-offs and loans  transferred to our held for sale portfolio were
$6.0  million  of  loan   charge-offs   and   approximately   $49.6  million  of
nonperforming loans that were associated with our CIB Bank purchase.  In January
2006,  we  received a payoff of one of the  nonperforming  loans in our held for
sale  portfolio that had a carrying value of $12.4 million at December 31, 2005,
and  recorded a $5.0  million  loan  recovery.  Furthermore,  in March 2006,  we
completed the sale of a majority of the remaining  nonaccrual  loans in our held
for sale portfolio that had a carrying value of  approximately  $32.5 million in
aggregate,  at  December  31,  2005,  as  further  described  in  Note 25 to our
Consolidated Financial Statements.

         Our loan policy requires all loans to be placed on a nonaccrual  status
once  principal  or  interest  payments  become 90 days past  due.  Our  general
procedures for monitoring these loans allow individual loan officers to submit a
written  request for  approval to continue the accrual of interest on loans that
become  90 days  past  due.  These  requests  must  be  submitted  for  approval
consistent with the authority  levels provided in our credit approval  policies,
and they are only  granted if an  expected  near term  future  event,  such as a
pending renewal or expected payoff,  exists at the time the loan becomes 90 days
past due. If the expected near term future event does not occur as  anticipated,
the loan is placed on nonaccrual status.  Management 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, 2005
and 2004:
<TABLE>
<CAPTION>

                                                                                 December 31,       Increase (Decrease)
                                                                             -------------------    -------------------
                                                                               2005        2004      Amount        %
                                                                               ----        ----      ------       ---
                                                                                  (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>         <C>
        Service charges on deposit accounts and customer service fees.....  $  39,776     38,230      1,546       4.04%
        Gain on loans sold and held for sale..............................     20,804     18,497      2,307      12.47
        Net (loss) gain on sales of available-for-sale
           investment securities..........................................     (2,873)       257     (3,130) (1,217.90)
        Gain on sales of branches, net of expenses........................         --      1,000     (1,000)   (100.00)
        Bank-owned life insurance investment income.......................      4,860      5,201       (341)     (6.56)
        Investment management income......................................      8,573      6,870      1,703      24.79
        Other.............................................................     23,603     13,431     10,172      75.74
                                                                            ---------    -------     ------
              Total noninterest income....................................  $  94,743     83,486     11,257      13.48
                                                                            =========    =======     ======  =========
     Noninterest expense:
        Salaries and employee benefits....................................  $ 139,764    117,492     22,272      18.96%
        Occupancy, net of rental income...................................     22,081     19,882      2,199      11.06
        Furniture and equipment...........................................     16,015     17,017     (1,002)     (5.89)
        Postage, printing and supplies....................................      5,743      5,010        733      14.63
        Information technology fees.......................................     35,472     32,019      3,453      10.78
        Legal, examination and professional fees..........................      9,319      7,412      1,907      25.73
        Amortization of intangibles associated with the
           purchase of subsidiaries.......................................      4,850      2,912      1,938      66.55
        Communications....................................................      2,012      1,866        146       7.82
        Advertising and business development..............................      7,043      5,493      1,550      28.22
        Charitable contributions..........................................      5,922        577      5,345     926.34
        Other.............................................................     28,075     19,825      8,250      41.61
                                                                            ---------    -------     ------
              Total noninterest expense...................................  $ 276,296    229,505     46,791      20.39
                                                                            =========    =======     ======  =========
</TABLE>

         Noninterest  Income.  Noninterest income was $94.7 million for the year
ended  December 31, 2005, in  comparison to $83.5 million for 2004.  Noninterest
income consists  primarily of service  charges on deposit  accounts and customer
service fees, mortgage-banking revenues, management income and other income.

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

         >>    increased  demand  deposit  account   balances   associated  with
               internal  growth  and  our  acquisitions  of  CCB  and  CIB  Bank
               completed in 2004, and FBA, IBOC and NSB completed in 2005;

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

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

         >>    higher earnings allowances on commercial deposit accounts;

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

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

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

         Noninterest  income includes a net loss on sales of  available-for-sale
securities  of $2.9 million for the year ended  December 31, 2005, in comparison
to a net gain on sales of available-for-sale securities of $257,000 in 2004. The
net loss for 2005  resulted  from  the  sale of  certain  investment  securities
associated with our termination of a $50.0 million term repurchase  agreement in
the fourth  quarter of 2005, as further  discussed in Note 3, Note 5 and Note 10
to our  Consolidated  Financial  Statements.  The net  gain  for  2004  resulted
primarily  from the sales of  certain  investment  securities  held by  acquired
institutions that did not meet our overall investment objectives.

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

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

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

         Other  income was $23.6  million and $13.4  million for the years ended
December 31, 2005 and 2004, respectively. We attribute the primary components of
the increase in other income to:

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

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

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

         >>    an increase of $713,000  reflecting  reductions  of a  contingent
               liability  established in conjunction  with the sale of a portion
               of our commercial  leasing portfolio in June 2004. The reductions
               of the contingent  liability in 2005 and 2004 of $1.1 million and
               $375,000,  respectively, were the result of further reductions in
               related lease  balances for the specific pools of leases sold, as
               further  described  in  Note  24 to  our  Consolidated  Financial
               Statements;

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

         >>    a $602,000 net increase in loan servicing  fees. The net increase
               is primarily  attributable to: increased fees from loans serviced
               for others,  primarily attributable to a $2.3 million increase in
               SBLS LLC loan servicing fees,  offset by an $887,000  increase in
               amortization  of SBA servicing  rights and the  recognition  of a
               $2.4  million  impairment  charge  on  our SBA  servicing  rights
               following  substantial damage to several shrimping vessels within
               the  servicing  portfolio  caused  by the  effects  of  Hurricane
               Katrina;  a $199,000  decrease in mortgage loan  servicing  fees,
               including a lower level of interest  shortfall on mortgage loans,
               offset by a $1.6  million  decrease in  amortization  of mortgage
               servicing  rights;   and  increased  unused  commitment  fees  of
               $281,000.  Interest  shortfall  is  the  difference  between  the
               interest collected from a loan-servicing customer upon prepayment
               of the loan and a full  month's  interest  that is required to be
               remitted to the security owner;

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

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

         >>    our  acquisitions of CCB and CIB Bank completed in 2004, and FBA,
               IBOC and NSB completed in 2005; partially offset by

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

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

         Noninterest  Expense.  Noninterest  expense was $276.3  million for the
year ended  December 31, 2005,  in comparison  to $229.5  million for 2004.  Our
efficiency  ratio was 65.72% for the year ended  December 31, 2005,  compared to
59.84% for 2004. 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 increases in noninterest expense and our efficiency
ratio for 2005 were primarily  attributable  to increases in expenses  resulting
from our 2004 and 2005  acquisitions  and the  addition  of five de novo  branch
offices in 2004 and 2005,  and  increases  in  salaries  and  employee  benefits
expense,  information  technology  expense,  charitable  contributions  expense,
expenses and losses, net of gains, on other real estate, and other expense.

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

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

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

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

         >>    contractual  obligations  of the acquired  entities  that existed
               prior to the  consummation  date  that  either  have no  economic
               benefit  to the  combined  entity or have a penalty  that we will
               incur to cancel the  contractual  obligation.  These  contractual
               obligations  generally relate to existing information  technology
               and item  processing  contracts  of the  acquired  entities  that
               include penalties for early termination.  In conjunction with the
               merger and integration of our acquisitions, the acquired entities
               are  converted to our existing  information  technology  and item
               processing  systems.  Consequently,  the  costs  associated  with
               terminating the existing  contracts of the acquired  entities are
               generally  recorded  as of  the  consummation  date  through  the
               establishment  of  an  accrued   liability  with  the  offsetting
               adjustment  recorded  as  an  increase  to  goodwill  as  further
               discussed  under  "--Acquisitions  - Acquisition  and Integration
               Costs" and Note 2 to our Consolidated Financial Statements.

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

         Salaries and  employee  benefits  increased by $22.3  million to $139.8
million for the year ended  December 31, 2005,  from $117.5  million in 2004. We
attribute  the overall  increase to increased  salaries  and  employee  benefits
expenses associated with an aggregate of 27 additional branches acquired in 2004
and 2005 and five de novo branches  opened in 2004 and 2005; and the addition of
a regional  structure  in Chicago  following  our  significant  expansion in the
Chicago market area, including credit administration, commercial real estate and
commercial and industrial banking groups, branch  administration,  credit review
and human resource and training functions.  The increase is also attributable to
generally higher salary and employee benefit costs associated with employing and
retaining  qualified  personnel,  including enhanced incentive  compensation and
employee benefits plans. Our number of employees on a full-time equivalent basis
increased to 2,288 at December 31, 2005, from 2,172 at December 31, 2004.

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

         Information  technology and item processing fees were $35.5 million and
$32.0 million for the years ended December 31, 2005 and 2004,  respectively.  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  division  and  our  small  business  lending  and  institutional  money
management  subsidiaries.  The increased level of fees is primarily attributable
to the additional branch offices provided by our acquisitions and de novo branch
office openings;  certain  de-conversion  costs from other providers  associated
with our acquisitions, growth and technological advancements consistent with our
product  and  service  offerings;   and  continued  expansion  and  upgrades  to
technological equipment,  networks and communication channels;  partially offset
by expense reductions resulting from information  technology  conversions of our
acquisitions   completed  in  2004,  as  well  as  the  achievement  of  certain
efficiencies  associated with the implementation of various technology projects.
The information  technology conversions of CCB, CIB Bank, FBA, IBOC and NSB were
completed in September 2004, February 2005, June 2005, October 2005 and December
2005, respectively.
<PAGE>

         Legal,  examination  and  professional  fees were $9.3 million and $7.4
million  for the years  ended  December  31,  2005 and 2004,  respectively.  The
continued expansion of overall corporate  activities,  the ongoing  professional
services utilized by certain of our acquired entities,  and increased legal fees
associated with commercial loan  documentation,  collection  efforts and certain
defense litigation costs primarily related to our various acquired entities have
all  contributed to the overall expense levels in 2004 and 2005. The increase in
2005 is also  attributable  to  $471,000 of fees paid for  accounting  and other
services,  including operational and systems support,  provided by the seller of
CIB Bank pursuant to a service  agreement to provide  services from the November
2004 sale date through the system conversion date in February 2005.

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $4.9 million and $2.9 million for the years ended December 31,
2005 and 2004,  respectively.  The  increase  is  attributable  to core  deposit
intangibles  associated  with our  acquisitions of CCB and CIB Bank completed in
2004 and our acquisitions of FBA, IBOC and NSB completed in 2005.

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

         Charitable  contribution  expense was $5.9 million and $577,000 for the
years ended  December 31, 2005 and 2004,  respectively.  The increase in 2005 is
primarily  attributable  to First Bank  contributions  of $2.5  million and $1.5
million,  respectively,  in December  2005 to The  Dierberg  Foundation  and the
Dierberg Operating  Foundation,  Inc.,  charitable  foundations created by First
Banks' Chairman and member of his immediate family, as further described in Note
19 to our Consolidated  Financial Statements.  The increase is also attributable
to  a  $1.5  million  contribution  in  May  2005  to  an  urban  revitalization
development  project  located in the city of St.  Louis.  In  exchange  for this
contribution,  we received  Missouri  state tax credits that will be utilized to
reduce certain state income taxes.

         Other  expense was $28.1  million and $19.8 million for the years ended
December 31, 2005 and 2004,  respectively.  Other expense  encompasses  numerous
general and  administrative  expenses including  insurance,  freight and courier
services,  correspondent  bank  charges,  miscellaneous  losses and  recoveries,
expenses on other real estate owned,  memberships  and  subscriptions,  transfer
agent fees,  sales taxes and travel,  meals and  entertainment.  The increase is
primarily attributable to:

         >>    an increase of $4.0 million in  expenditures  and losses,  net of
               gains,  on other real  estate.  Expenditures  and losses,  net of
               gains,  on other real  estate  were  $644,000  for the year ended
               December  31,  2005 and  included  expenses  of $1.1  million  in
               preparation  for the  sale  of a  parcel  of  other  real  estate
               acquired with the  acquisition  of CIB Bank.  These  expenditures
               were partially offset by approximately $972,000 of gains recorded
               on the sale of six holdings of other real estate.  Gains,  net of
               losses and  expenses,  on other real estate were $3.3 million for
               the year ended  December  31,  2004,  and included a $2.7 million
               gain  recorded  in the  first  quarter  of 2004 on the  sale of a
               residential  and  recreational   development  property  that  was
               transferred   to  other   real   estate  in   January   2003  and
               approximately  $390,000  of  gains  recorded  on the  sale of two
               additional holdings of other real estate;

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

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

         Provision  for Income  Taxes.  The provision for income taxes was $52.5
million for the year ended December 31, 2005,  representing an effective  income
tax rate of 35.5%,  in comparison to $45.3  million,  representing  an effective
income tax rate of 35.4%,  for the year ended December 31, 2004. The increase in
our provision for income taxes  primarily  reflects our increased  earnings.  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 a benefit of $3.1 million  relating to our utilization of
federal and state tax credits. In the second quarter of 2004, we reversed a $2.8
million  tax  reserve  as it was not  longer  deemed  necessary  as a result  of
resolution of a potential  tax  liability.  Excluding  these  transactions,  the
effective  income tax rate was 38.4% and 37.5% for the years ended  December 31,
2005 and 2004, respectively.

Comparison of Results of Operations for 2004 and 2003

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

         Provision  for Loan  Losses.  The  provision  for loan losses was $25.8
million  and $49.0  million  for the years  ended  December  31,  2004 and 2003,
respectively.  Net loan charge-offs were $24.8 million and $32.7 million for the
years ended December 31, 2004 and 2003,  respectively.  In 2003, we continued to
experience the higher level of problem loans,  related  charge-offs and past due
loans that we began to experience  in early 2002.  This was a result of economic
conditions within our market areas,  additional  problems  identified in certain
acquired loan portfolios and continuing  deterioration in our commercial leasing
portfolio,  particularly  the segment of the  portfolio  relating to the airline
industry.  These factors  necessitated higher provisions for loan losses than in
prior periods.  The reduced provision for loan losses in 2004 resulted from loan
sales completed late in the fourth quarter of 2004 and, exclusive of acquisition
activity,   substantial   improvement  in  asset  quality,   reduced  levels  of
nonperforming  loans,  primarily  resulting from significant  loan payoffs,  and
lower net loan charge-offs,  as further  discussed under "--Lending  Activities"
and "--Loans and Allowance for Loan Losses." Our  nonperforming  loans increased
to $85.8  million at December 31, 2004 from $75.4  million at December 31, 2003,
reflecting  the  acquisition  of a  significant  amount of  nonperforming  loans
associated  with our 2004  acquisitions,  particularly  CIB Bank which  provided
nonperforming loans of $60.3 million. In addition, our acquisitions of CCB, SBLS
and  CIB  Bank  provided  $4.4   million,   $3.0  million  and  $26.4   million,
respectively,  in additional  allowances  for loan losses.  Management  expected
nonperforming  assets to remain at higher levels in 2005 because of our CIB Bank
and CCB acquisitions  and considered  these trends in its overall  assessment of
the adequacy of the allowance for loan losses.

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



<PAGE>


         Noninterest   Income  and  Expense.   The  following  table  summarizes
noninterest income and noninterest expense for the years ended December 31, 2004
and 2003:
<TABLE>
<CAPTION>

                                                                                 December 31,       Increase (Decrease)
                                                                              ------------------    -------------------
                                                                                2004       2003      Amount        %
                                                                                ----       ----      ------       ---
                                                                                    (dollars expressed in thousands)

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

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

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

         >>    our acquisitions completed during 2003 and 2004;

         >>    increased demand deposit account balances;

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

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

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

         The gain on loans  sold and held for sale  increased  to $18.5  million
from $15.6 million for the years ended December 31, 2004 and 2003, respectively.
The change  reflects  the  continued  slowdown in 2004 in the volume of mortgage
loans  originated and sold that was initially  experienced in the fourth quarter
of  2003,  management's  decision  to  retain a  portion  of new  mortgage  loan
production in the real estate  mortgage  portfolio in mid-2003 and a decrease in
the  allocation  of direct  mortgage  loan  origination  costs  from  salary and
employee  benefits  expense  to gain on loans  sold and held for sale since late
2003, and a change in the fallout percentage associated with the allocation. The
fallout percentage  represents the percentage of the number of loan applications
that do not result in the  ultimate  origination  of a loan divided by the total
number of loan applications received.
<PAGE>

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

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

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

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

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

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

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

         >>    our acquisitions completed during 2003 and 2004;

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

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

         >>    decreased  net gains on derivative  instruments  of $2.0 million.
               The net loss on derivative  instruments  was $1.5 million for the
               year ended  December 31,  2004,  in  comparison  to a net gain of
               $496,000  in 2003.  The  decrease  in the net gain on  derivative
               instruments  reflects  changes in the fair value of our  interest
               rate cap  agreements,  fair value  hedges and  underlying  hedged
               liabilities. The decrease reflects the discontinuation,  in 2003,
               of  hedge   accounting   treatment  on  two  interest  rate  swap
               agreements that matured in January 2004,  resulting from the loss
               of  our  highly  correlated  hedge  positions  between  the  swap
               agreements and the underlying hedged liabilities;
<PAGE>

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

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

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

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

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

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

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

         Information  technology  fees were $32.0  million and $32.1 million for
the years ended December 31, 2004 and 2003, respectively. We attribute the level
of fees to growth and technological advancements consistent with our product and
service  offerings,  and  continued  expansion  and  upgrades  to  technological
equipment,  networks and  communication  channels,  partially  offset by expense
reductions resulting from the information technology conversion of BSG completed
in 2003, as well as the achievement of certain efficiencies  associated with the
implementation  of  various  technology  projects.  The  information  technology
conversion of CCB was completed in September 2004.

         Legal,  examination  and  professional  fees were $7.4 million and $8.1
million  for the years  ended  December  31,  2004 and 2003,  respectively.  The
decrease in these fees in 2004 is  primarily  associated  with higher legal fees
paid in 2003 related to an ongoing lawsuit that reached final  resolution in the
second quarter of 2004. The continued expansion of overall corporate activities,
the ongoing professional  services utilized by certain of our acquired entities,
and  increased  legal  fees  associated  with  commercial  loan   documentation,
collection  efforts and certain defense  litigation related to acquired entities
have all contributed to the overall expense levels in 2003 and 2004.
<PAGE>

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

         Communications and advertising and business  development  expenses were
$7.4  million and $6.9  million for the years ended  December 31, 2004 and 2003,
respectively.  The  expansion of our sales,  marketing and product group in 2004
and broadened  advertising campaigns have contributed to higher expenditures and
are consistent with our continued  focus on expanding our banking  franchise and
the products and services available to our customers. We continue our efforts to
manage these  expenses  through  renegotiation  of contracts,  enhanced focus on
advertising and promotional  activities in markets that offer greater  benefits,
as well as ongoing cost containment efforts.

         Charitable  contribution  expense was $577,000 and $5.3 million for the
years ended December 31, 2004 and 2003,  respectively.  We recorded contribution
expense  of  $5.1  million  in  the  fourth  quarter  of  2003  related  to  the
contribution  of our  remaining  shares of Allegiant  common  stock,  as further
discussed under "--Overview" and "--Acquisitions - Completed Acquisitions."

         Other  expense was $19.8  million and $32.3 million for the years ended
December 31, 2004 and 2003,  respectively.  Other expense  encompasses  numerous
general and  administrative  expenses including  insurance,  freight and courier
services,  correspondent  bank  charges,  miscellaneous  losses and  recoveries,
expenses on other real estate owned,  memberships  and  subscriptions,  transfer
agent fees, sales taxes and travel,  meals and  entertainment.  We attribute the
majority of the decrease in other expense for 2004, as compared to 2003, to:

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

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

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

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

         >>    continued growth and expansion of our banking franchise.

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

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

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

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

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

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

         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.
<PAGE>

         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 6.4% of net interest income,
based on assets  and  liabilities  at  December  31,  2005.  Although  we do not
anticipate  that  instantaneous  shifts in the yield curve as  projected  in our
simulation  model are likely,  these are indications of the effects that changes
in interest rates would have over time.

         We also prepare and review a more traditional interest rate sensitivity
position in conjunction with the results of our simulation  model. The following
table  presents the  projected  maturities  and periods to repricing of our rate
sensitive  assets and  liabilities as of December 31, 2005,  adjusted to account
for anticipated prepayments:

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

Interest-earning assets:
<S>                                                 <C>           <C>        <C>      <C>          <C>      <C>
   Loans (1)......................................  $4,453,237    318,688    479,676  1,563,896    205,274  7,020,771
   Investment securities..........................     151,245     96,943    248,610    655,604    188,381  1,340,783
   Short-term investments.........................      65,000         --         --         --         --     65,000
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-earning assets..............   4,669,482    415,631    728,286  2,219,500    393,655  8,426,554
   Effect of interest rate swap agreements........    (300,000)   100,000         --    200,000         --         --
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-earning assets after
         the effect of interest
         rate swap agreements.....................  $4,369,482    515,631    728,286  2,419,500    393,655  8,426,554
                                                    ==========  =========  =========  =========  =========  =========
Interest-bearing liabilities:
   Interest-bearing demand accounts...............  $  363,279    225,822    147,275    108,002    137,459    981,837
   Money market accounts..........................   1,416,912         --         --         --         --  1,416,912
   Savings accounts...............................     117,225     96,538     82,747    117,225    275,823    689,558
   Time deposits..................................     906,633    474,495    954,027    793,049     25,970  3,154,174
   Other borrowings...............................     199,874      4,000      4,000    330,300      1,000    539,174
   Notes payable..................................       5,000      5,000     10,000     80,000         --    100,000
   Subordinated debentures........................          --         --         --         --    215,461    215,461
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-bearing liabilities.........   3,008,923    805,855  1,198,049  1,428,576    655,713  7,097,116
   Effect of interest rate swap agreements........      25,000         --         --         --    (25,000)        --
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-bearing liabilities
         after the  effect of interest
         rate swap agreements.....................  $3,033,923    805,855  1,198,049  1,428,576    630,713  7,097,116
                                                    ==========  =========  =========  =========  =========  =========
Interest-sensitivity gap:
   Periodic.......................................  $1,335,559   (290,224)  (469,763)   990,924   (237,058) 1,329,438
                                                                                                            =========
   Cumulative.....................................   1,335,559  1,045,335    575,572  1,566,496  1,329,438
                                                    ==========  =========  =========  =========  =========
Ratio of interest-sensitive assets to
   interest-sensitive liabilities:
       Periodic...................................        1.44       0.64       0.61       1.69       0.62       1.19
                                                                                                            =========
       Cumulative.................................        1.44       1.27       1.11       1.24       1.19
                                                    ==========  =========  =========  =========  =========
---------------
(1) Loans are presented net of unearned discount.
</TABLE>
<PAGE>
         Management made certain  assumptions in preparing the foregoing  table.
These assumptions included:

         >>    loans will repay at projected repayment rates;

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

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

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

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

         Our asset-sensitive position at December 31, 2005 on a cumulative basis
through the twelve-month time horizon remained relatively consistent,  at $575.6
million, or 6.28% of our assets, in comparison to our  asset-sensitive  position
on a cumulative basis through the  twelve-month  time horizon of $571.4 million,
or 6.54% of our assets, at December 31, 2004.

         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,
2005 and 2004 are summarized as follows:
<TABLE>
<CAPTION>

                                                                           December 31,
                                                      ---------------------------------------------------
                                                                2005                        2004
                                                      ------------------------     ----------------------
                                                       Notional       Credit        Notional     Credit
                                                        Amount       Exposure        Amount     Exposure
                                                        ------       --------        ------     --------
                                                                 (dollars expressed in thousands)

<S>                                                   <C>               <C>          <C>          <C>
         Cash flow hedges............................ $ 300,000         114          500,000      1,233
         Fair value hedges...........................    25,000         748          276,200      9,609
         Interest rate floor agreements..............   100,000          70               --         --
         Interest rate lock commitments..............     5,900          --            5,400         --
         Forward commitments to sell
           mortgage-backed securities................    47,000          --           34,000         --
                                                      =========         ===          =======      =====
</TABLE>

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

         For the years ended  December 31, 2005,  2004 and 2003, we realized net
interest income of $2.2 million, $50.1 million and $64.6 million,  respectively,
on our derivative  financial  instruments.  The decreased  earnings for 2005 and
2004 are primarily attributable to an increase in prevailing interest rates that
began in mid-2004 and continued  throughout 2005, the maturity of $800.0 million
notional amount of interest rate swap agreements  during 2004 and $200.0 million
in March 2005,  and the  termination  of $150.0  million  and $101.2  million of
interest rate swap  agreements  designated as fair value hedges in February 2005
and May 2005,  respectively.  Although  we have  implemented  other  methods  to
mitigate the reduction in our net interest income,  the maturity and termination
of the swap  agreements has resulted in a compression of our net interest margin
of  approximately  59 basis  points for the year ended  December  31,  2005,  in
comparison to 2004, and will result in a reduction of future net interest income
and  further  compression  of our net  interest  margin  unless  interest  rates
increase. We recorded net losses on derivative  instruments,  which are included
in noninterest income in our consolidated  statements of income, of $1.1 million
and $1.5 million for the years ended  December 31, 2005 and 2004,  respectively,
in  comparison  to a net gain of $496,000 for the year ended  December 31, 2003.
The net losses  recorded in 2005 reflect  changes in the value of our fair value
hedges and the underlying hedged  liabilities  during 2005 until the termination
of the $150.0 million of interest rate swap agreements  designated as fair value
hedges in February  2005, and the change in the value of our interest rate floor
agreement entered into in September 2005.  Information  regarding our derivative
financial instruments outlined in the table above is further described in Note 5
to our Consolidated Financial Statements appearing elsewhere in this report.
<PAGE>

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,  as further  discussed in "--Loans  and  Allowance  for Loan  Losses."
Servicing   rights  may  either  be  retained  or  released   with   respect  to
conventional,  FHA and VA conforming fixed-rate and conventional adjustable rate
residential mortgage loans.

         For the  three  years  ended  December  31,  2005,  2004 and  2003,  we
originated  residential  mortgage  loans  held for  sale and held for  portfolio
totaling $1.60 billion, $1.14 billion and $2.16 billion,  respectively, and sold
residential  mortgage  loans  totaling  $1.14  billion,  $1.03 billion and $2.19
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 $1.01 billion,  $1.06 billion and $1.22 billion at December
31, 2005, 2004 and 2003, respectively.

         The gain on mortgage loans originated for resale,  including loans sold
and held for sale,  was $18.1  million,  $17.8 million and $15.6 million for the
years ended December 31, 2005, 2004 and 2003,  respectively.  We determine these
gains,  net of  losses,  on a lower of cost or  market  basis.  These  gains are
realized at the time of sale.  The cost basis  reflects both the  adjustments of
the  carrying  values of loans held for sale to the lower of cost,  adjusted  to
include the cost of hedging the loans held for sale, or current  market  values,
as well as the adjustments for any gains or losses on loan commitments for which
the  interest  rate  has  been  established,  net  of  anticipated  underwriting
"fallout,"  adjusted  for the cost of hedging  these loan  commitments.  Fallout
represents  loans not funded due to issues  discovered  during the  underwriting
process or  withdrawal  of the loan request by the  customer.  The increases for
2004 and 2005 are primarily attributable to the continued growth of our mortgage
banking  activities and the relatively high volume of loans  originated and sold
commensurate with the prevailing interest rate environment  experienced in 2003,
partially  offset by the slowdown in the volume of mortgage loans originated and
sold that began in the fourth quarter of 2003 and continued  throughout 2004 and
into the first  quarter of 2005,  coupled with  management's  decision to retain
additional loan volume in our residential  real estate  mortgage  portfolio,  as
discussed above.

         Interest  income on loans held for sale was $11.7  million for the year
ended December 31, 2005, in comparison to $8.8 million and $17.0 million for the
years ended  December  31, 2004 and 2003,  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 $184.1  million,  $133.3 million and $273.0 million for the years ended
December 31, 2005,  2004 and 2003,  respectively.  On an annualized  basis,  our
yield on the portfolio of loans held for sale was 6.36%, 6.61% and 6.21% for the
years ended December 31, 2005, 2004 and 2003,  respectively.  This compares with
our cost of funds, as a percentage of average interest-bearing  liabilities,  of
2.47%,  1.64% and 1.88% for the years ended  December 31,  2005,  2004 and 2003,
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.  Although  net mortgage
loan servicing fees increased  throughout these periods,  they contributed to an
overall reduction in our other noninterest income of $1.2 million,  $2.6 million
and $4.8  million  for the  years  ended  December  31,  2005,  2004  and  2003,
respectively,  including the recognition of  amortization of mortgage  servicing
rights of $5.0  million,  $6.5  million  and $7.5  million  for the years  ended
December 31, 2005, 2004 and 2003, respectively. We attribute the increase in net
loan  servicing  fees in 2005 to  reduced  amortization  of  mortgage  servicing
rights,  partially  offset by a reduction in fees associated with a lower volume
of loans  serviced for others and the retention of a portion of loan  production
in  our  residential  mortgage  loan  portfolio,  as  previously  discussed.  We
attribute  the increase in net loan  servicing  fees in 2004 to  increased  fees
associated  with a  lower  level  of  interest  shortfall  as  well  as  reduced
amortization expense.


<PAGE>
         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,
2005,  2004 and 2003, we had $47.7  million,  $35.3  million and $58.2  million,
respectively,  of loans held for sale and related commitments,  net of committed
loan sales and estimated  underwriting  fallout,  of which $47.0 million,  $34.0
million and $58.5  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.  During the
fourth  quarter  of 2005,  we began  to  engage  in the  trading  of  investment
securities,  which were $3.4  million  at  December  31,  2005.  The  investment
security  portfolio  was $1.34  billion at December 31, 2005,  compared to $1.81
billion and $1.05  billion at December  31, 2004 and 2003,  respectively.  Funds
available from  maturities of investment  securities  during 2005 were primarily
used to fund loan growth, resulting in the decrease in our investment securities
portfolio in 2005. A portion of the remaining funds available from maturities of
investment  securities  were  reinvested in  higher-yielding  available-for-sale
investment  securities.  The decrease also  reflects the sale of the  underlying
available-for-sale  investment  securities  associated with the termination of a
$50.0 million term repurchase  agreement in November 2005, as further  discussed
in Note 3,  Note 5 and Note 10 to our  Consolidated  Financial  Statements.  The
significant  increase  in  the  investment   securities  portfolio  in  2004  is
attributable to securities  acquired through  acquisitions and funds provided by
an increase in other borrowings,  primarily term repurchase agreements, combined
with the overall level of loan demand within our market areas, which affects the
amount of funds available for investment.

Loans and Allowance for Loan Losses

         Interest earned on our loan portfolio  represents the principal  source
of income for First Bank. Interest and fees on loans were 85.9%, 86.5% and 90.9%
of total interest  income for the years ended December 31, 2005,  2004 and 2003,
respectively.  We  recognize  interest  and fees on loans as  income  using  the
interest method of accounting.  Loan  origination fees are deferred and accreted
to interest  income  over the  estimated  life of the loans  using the  interest
method of accounting.  The accrual of interest on loans is discontinued  when it
appears  that  interest or principal  may not be paid in a timely  manner in the
normal course of business.  We generally record payments  received on nonaccrual
and  impaired  loans as  principal  reductions,  and  defer the  recognition  of
interest  income on loans until all principal has been repaid or an  improvement
in the condition of the loan has occurred  which would warrant the resumption of
interest accruals.

         Loans, net of unearned discount,  represented 76.6% of our assets as of
December 31, 2005,  compared to 70.3% of our assets at December 31, 2004. Loans,
net of unearned discount,  increased $882.8 million to $7.02 billion at December
31, 2005 from $6.14 billion at December 31, 2004. Our  acquisitions of FBA, IBOC
and NSB provided  loans,  net of unearned  discount,  of $54.3  million,  $113.5
million  and $41.8  million,  respectively,  or  $209.6  million  in  aggregate.
Exclusive of these  acquisitions  completed in 2005, our loans,  net of unearned
discount,  increased  $687.5 million as a result of internal  growth in 2005. In
addition,  we  reduced  our loans and  leases by $14.3  million in the first and
second quarters of 2005 from the sale of certain nonperforming loans,  resulting
from  management's  business  decision  in late 2004 to reduce  the level of our
nonperforming assets through the sale of certain nonperforming loans. Loans, net
of unearned discount,  increased $809.9 million to $6.14 billion at December 31,
2004 from $5.33 billion at December 31, 2003. Our 2004 acquisitions of CIB Bank,
CCB and SBLS provided loans, net of unearned discount, of $683.3 million,  $73.6
million and $24.0  million,  respectively  or $780.9  million in  aggregate.  In
addition, we reduced our loans and leases by $83.2 million in 2004 from the sale
of a  portion  of our  commercial  leasing  portfolio  and the  sale of  certain
performing and  nonperforming  loans.  Exclusive of these  acquisitions and loan
sales  completed in 2004,  loans,  net of unearned  discount,  increased  $112.2
million from  internal  growth in 2004.  The overall  increase in loans,  net of
unearned discount, in 2005 primarily resulted from:

         >>    an  increase  of  $408.2  million  in our  real  estate  mortgage
               portfolio,  primarily  attributable to internal growth within our
               loan portfolio and our acquisitions  completed during 2005, which
               provided real estate mortgage loans of $166.7 million, as well as
               a home equity  product line  campaign that we held in mid-2004 in
               line  with  our  goal to  increase  our home  equity  lines.  The
               increase is also  attributable to management's  business strategy
               decision  in  mid-2003  to  retain  a  portion  of our  new  loan
               production in our real estate  mortgage  portfolio as a result of
               continued weak loan demand in other sectors of our loan portfolio
               and management's  business  strategy in the third quarter of 2005
               to retain  additional  mortgage  loan product  production  in our
               residential  real estate mortgage  portfolio,  including  15-year
               fixed rate, conforming conventional adjustable rate mortgages and
               other similar products;


<PAGE>
         >>    an increase of $245.8 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,  and a $5.3 million  increase  associated
               with our acquisitions completed in 2005;

         >>    an  increase of $182.1  million in loans held for sale  resulting
               from an overall  increase  in loan  origination  volumes  and the
               timing of loan sales in the secondary mortgage market,  partially
               offset by the sale of certain acquired loans. In addition,  in an
               effort to reduce the level of our  nonperforming  assets  through
               the  sale  of  certain   nonperforming   loans,   we  transferred
               approximately  $59.7 million of  nonperforming  loans to our held
               for sale portfolio at December 31, 2005, further  contributing to
               the overall increase in 2005; and

         >>    an increase of $44.6  million in our  commercial,  financial  and
               agricultural portfolio, primarily attributable to a $36.7 million
               increase associated with our acquisitions  completed during 2005,
               partially  offset by general  runoff of the balances  within this
               portfolio  as  well  as  an   anticipated   amount  of  attrition
               associated with our acquisitions completed during 2003 and 2004.

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

         During the five years ended December 31, 2005,  loans,  net of unearned
discount,  increased  significantly  from $4.75  billion at December 31, 2000 to
$7.02  billion  at  December  31,  2005.   Throughout   this  period,   we  have
substantially  enhanced our  capabilities  for achieving  and managing  internal
growth.  A key element of this process has been the  expansion of our  corporate
business  development staff,  which is responsible for the internal  development
and management of both loan and deposit relationships with commercial customers.
While this process was occurring, in an attempt to achieve more diversification,
a higher level of interest  yield and a reduction  in interest  rate risk within
our loan  portfolio,  we also focused on  repositioning  our  portfolio.  As the
corporate  business  development  effort  continued to  originate a  substantial
volume of new loans,  substantially all of our conforming  residential  mortgage
loan  production was  historically  sold in the secondary  mortgage market until
management's  decision in 2003 to retain a portion of the new loan production in
our real estate mortgage portfolio to offset continued weak loan demand in other
sectors of our loan portfolio and management's  decision in the third quarter of
2005 to retain  additional  mortgage loan product  production in our residential
real  estate  mortgage  portfolio,  including  15-year  fixed  rate,  conforming
conventional adjustable rate mortgages and other similar products.  Furthermore,
we  substantially  reduced our lease financing  portfolio as a result of (a) the
discontinuation  of our New Mexico based leasing operation in 2002, the transfer
of all responsibilities for the existing portfolio to a new leasing staff in St.
Louis,  Missouri, a change in our overall business strategy resulting in reduced
commercial leasing activities and repayment of leases by borrowers,  and (b) the
sale of a significant  portion of our remaining  commercial  leasing  portfolio,
which  reduced the portfolio by  approximately  $33.1 million to $9.6 million at
June 30, 2004.  This portfolio has further  declined to $3.0 million at December
31,  2005.  We  have  also   substantially   reduced  our  consumer  lending  by
discontinuing  the  origination  of indirect  auto loans and selling our student
loan and credit card loan portfolios. This allowed us to fund part of the growth
in  corporate  lending  through  reductions  in  indirect  automobile  and other
consumer-related loans.

         In  addition,  our  acquisitions  have  contributed  to  a  substantial
increase  in the  portfolios  of new loans.  In certain  cases,  these  acquired
portfolios  contained  significant  loan problems,  which we had anticipated and
attempted  to  consider in our  acquisition  pricing.  As we resolved  the asset
quality issues, the portfolios of the acquired entities tended to decline due to
the  elimination  of problem loans and because many of the resources  that would
otherwise be directed toward generating new loans were concentrated on improving
or eliminating  existing  relationships.  We continue to experience  this trend,
primarily as a result of our acquisitions of CCB and CIB Bank, completed in July
2004 and  November  2004,  respectively,  and expect the  resolution  of certain
problem credits acquired from CIB Bank to continue in the near term.



<PAGE>
         The following  table  summarizes  the components of changes in our loan
portfolio, net of unearned discount, for the five years ended December 31, 2005:
<TABLE>
<CAPTION>

                                                                   Increase (Decrease) For the Year Ended December 31,
                                                                --------------------------------------------------------
                                                                   2005         2004       2003       2002        2001
                                                                   ----         ----       ----       ----        ----
                                                                            (dollars expressed in thousands)
      Internal loan volume increase (decrease):
<S>                                                             <C>            <C>        <C>       <C>         <C>
          Commercial lending................................    $ 204,494      91,760     (22,211)  (119,295)   174,568
          Residential real estate lending (1) ..............      481,642      32,348    (103,573)    36,074     48,616
          Consumer lending, net of unearned discount........        1,383     (11,900)    (22,429)   (44,060)   (75,280)
      Loans and leases sold.................................      (14,337)    (83,216)         --         --         --
      Loans provided by acquisitions........................      209,621     780,901      43,700    151,000    508,700
                                                                ---------     -------    --------   --------    -------
          Total increase (decrease).........................    $ 882,803     809,893    (104,513)    23,719    656,604
                                                                =========     =======    ========   ========    =======
      ---------------
      (1) Includes loans held for sale.
</TABLE>

         Our lending strategy  emphasizes quality,  growth and  diversification.
Throughout our organization,  we employ a common credit underwriting policy. Our
commercial  lenders  focus  principally  on  small to  middle-market  companies.
Consumer lenders focus principally on residential  loans,  including home equity
loans 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.

         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,
                                 --------------------------------------------------------------------------------------------------
                                         2005               2004               2003                  2002               2001
                                 ------------------- ------------------ -------------------- ------------------- ------------------
                                   Amount       %      Amount      %       Amount      %       Amount       %      Amount      %
                                   ------       -      ------      -       ------      -       ------       -      ------      -
                                                                (dollars expressed in thousands)

Commercial, financial
<S>                              <C>           <C>   <C>          <C>    <C>          <C>    <C>           <C>   <C>          <C>
    and agricultural............ $1,616,841    24.1% $1,569,321   26.1%  $1,407,626   27.1%  $1,443,016    28.4% $1,532,875   29.5%
Real estate construction
    and development.............  1,564,255    23.3   1,318,413   22.0    1,063,889   20.5      989,650    19.5     954,913   18.4
Real estate mortgage:
    One-to-four-family
      residential loans.........  1,214,121    18.1     870,889   14.5      811,650   15.7      694,604    13.7     798,089   15.3
    Multi-family residential
      loans.....................    143,663     2.2     102,447    1.7      108,163    2.1      112,517     2.2     148,684    2.9
    Commercial real estate
      loans.....................  2,112,004    31.5   2,088,245   34.8    1,662,451   32.1    1,637,001    32.2   1,499,074   28.8
Lease financing.................      2,981      --       5,911    0.1       67,282    1.3      126,738     2.5     148,971    2.8
Consumer and installment,
    net of unearned
    discount....................     51,772     0.8      49,677    0.8       61,268    1.2       79,097     1.5     122,057    2.3
                                 ----------   -----  ----------  -----   ----------  -----   ----------   -----  ----------  -----
        Total loans,
           excluding loans
           held for sale........  6,705,637   100.0%  6,004,903  100.0%   5,182,329  100.0%   5,082,623   100.0%  5,204,663  100.0%
                                              =====              =====               =====                =====              =====
Loans held for sale.............    315,134             133,065             145,746             349,965             204,206
                                 ----------          ----------          ----------          ----------          ----------
        Total loans............. $7,020,771          $6,137,968          $5,328,075          $5,432,588          $5,408,869
                                 ==========          ==========          ==========          ==========          ==========
</TABLE>



<PAGE>


         Loans at December 31, 2005 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....................  $  937,844     195,269      390,940     40,230      52,558   1,616,841
Real estate construction and development..................     888,281      91,562      530,635     28,043      25,734   1,564,255
Real estate mortgage:
    One-to-four family residential loans..................      87,684     136,470       54,905    256,454     678,608   1,214,121
    Multi-family residential loans........................      35,512      37,081       39,425     15,270      16,375     143,663
    Commercial real estate loans..........................     443,229     607,132      501,292    264,792     295,559   2,112,004
Lease financing...........................................          --       2,981           --         --          --       2,981
Consumer and installment, net of unearned discount........      22,882      24,001        2,109      2,460         320      51,772
Loans held for sale.......................................     315,134          --           --         --          --     315,134
                                                            ----------   ---------    ---------    -------   ---------   ---------
      Total loans.........................................  $2,730,566   1,094,496    1,519,306    607,249   1,069,154   7,020,771
                                                            ==========   =========    =========    =======   =========   =========
</TABLE>


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

                                                                                 December 31,
                                                      -----------------------------------------------------------------
                                                          2005          2004         2003          2002         2001
                                                          ----          ----         ----          ----         ----
                                                                           (dollars expressed in thousands)

   Commercial, financial and agricultural:
<S>                                                   <C>              <C>          <C>           <C>          <C>
     Nonaccrual....................................   $    4,937       10,147       26,876        15,787       17,141
     Restructured terms............................           --            4           --            --           --
   Real estate construction and development:
     Nonaccrual....................................       11,137       13,435        6,402        23,378        3,270
   Real estate mortgage:
     One-to-four family residential loans:
       Nonaccrual..................................        9,576        9,881       21,611        14,833       20,780
       Restructured terms..........................           10           11           13            15           20
     Multi-family residential loans:
       Nonaccrual..................................          740          434          804           772          476
     Commercial real estate loans:
       Nonaccrual..................................       70,625       50,671       13,994         8,890       20,642
       Restructured terms..........................           --           --           --         1,907        1,993
   Lease financing:
     Nonaccrual....................................           11          907        5,328         8,723        2,185
   Consumer and installment:
     Nonaccrual....................................          160          310          336           860          794
     Restructured terms............................           --           --           --            --            7
                                                      ----------    ---------    ---------     ---------    ---------
              Total nonperforming loans............       97,196       85,800       75,364        75,165       67,308
   Other real estate...............................        2,025        4,030       11,130         7,609        4,316
                                                      ----------    ---------    ---------     ---------    ---------
              Total nonperforming assets...........   $   99,221       89,830       86,494        82,774       71,624
                                                      ==========    =========    =========     =========    =========

   Loans, net of unearned discount.................   $7,020,771    6,137,968    5,328,075     5,432,588    5,408,869
                                                      ==========    =========    =========     =========    =========

   Loans past due 90 days or more
     and still accruing............................   $    5,576       28,689       2,776          4,635       15,156
                                                      ==========    =========    =========     =========    =========

   Ratio of:
     Allowance for loan losses to loans............         1.93%        2.46%        2.19%         1.83%        1.80%
     Nonperforming loans to loans..................         1.38         1.40         1.41          1.38         1.24
     Allowance for loan losses to
       nonperforming loans.........................       139.23       175.65       154.52        132.29       144.36
     Nonperforming assets to loans and
       other real estate...........................         1.41         1.46         1.62          1.52         1.32
                                                      ==========    =========    =========     =========    =========
</TABLE>
<PAGE>

         Nonperforming assets,  consisting of nonperforming loans and other real
estate owned,  were $99.2  million,  $89.8 million and $86.5 million at December
31, 2005, 2004 and 2003, respectively. Other real estate owned was $2.0 million,
$4.0  million  and  $11.1   million  at  December  31,  2005,   2004  and  2003,
respectively.  Nonperforming loans, consisting of loans on nonaccrual status and
certain  restructured  loans,  were  $97.2  million at  December  31,  2005,  in
comparison  to $85.8  million and $75.4  million at December  31, 2004 and 2003,
respectively.  A significant  portion of our nonperforming  loans includes loans
associated  with  our  acquisition  of CIB Bank in  November  2004,  which  have
increased to $55.0 million,  or 56.6% of  nonperforming  loans,  at December 31,
2005, from $50.5 million, or 58.8% of nonperforming loans, at December 31, 2004.
As further discussed under "--Lending Activities," the increase in nonperforming
loans in 2005 is  primarily  attributable  to the  deterioration  of a few large
credit  relationships  in our Midwest  region during the fourth quarter of 2005,
partially   offset  by   significant   improvement   in  the  overall  level  of
nonperforming  loans  during  the first nine  months of 2005.  The  increase  in
nonperforming  loans in the fourth quarter of 2005 is primarily  attributable to
further  deterioration of a small number of credit  relationships in our Midwest
region, including two large relationships of $14.9 million and $16.6 million, or
$31.5 million in aggregate.  On December 31, 2005, we recognized $7.6 million of
loan  charge-offs  to reduce the loans to their  estimated  fair  value,  net of
costs,  that is expected to be realized at the time of the sale, and transferred
approximately  $59.7  million  of  nonperforming  loans  to our  held  for  sale
portfolio,  which included several of the relationships that deteriorated during
the fourth quarter of 2005 and one credit  relationship of $12.4 million,  which
was included in  nonperforming  loans at December 31, 2004 with a value of $14.5
million.  Included in these loan  charge-offs and loans  transferred to our held
for sale portfolio were $6.0 million of loan charge-offs and approximately $49.6
million of nonperforming  loans that were associated with our CIB Bank purchase.
In January 2006, we received a payoff on one of the  nonperforming  loans in our
held for sale  portfolio,  reducing the held for sale portfolio by $12.4 million
and resulting in the  recognition of a $5.0 million loan recovery.  Furthermore,
in March 2006, we completed  the sale of a majority of the remaining  nonaccrual
loans in our held for sale  portfolio,  reducing the held for sale  portfolio by
$32.5 million,  as further  discussed in Note 25 to our  Consolidated  Financial
Statements.  We continue to actively  market the  remaining  loans held for sale
through an  independent  third party.  The  improvement of  nonperforming  loans
during the first nine months of 2005  primarily  resulted  from:  our  continued
emphasis on improving asset quality; the sale of certain acquired  nonperforming
loans;  strengthening  of  certain  loans;  and  loan  payoffs  and/or  external
refinancing of various  credits,  as further  discussed  below. A portion of the
loan payoffs and sales during the first  quarter of 2005  pertaining  to certain
acquired  nonperforming  loans that were classified as loans held for sale as of
December 31, 2004  contributed  to a  reallocation  of the purchase price on our
acquisition  of CIB Bank,  as further  discussed  in Note 2 to our  Consolidated
Financial Statements.  We also recorded a $1.6 million write-down on an acquired
parcel of other  real  estate  owned to its  estimated  fair  value  based  upon
additional data received. This write-down was recorded as an acquisition-related
adjustment  in the first  quarter of 2005 and is further  discussed in Note 2 to
our Consolidated  Financial  Statements.  The increase in nonperforming loans in
2004 is primarily  associated with our 2004  acquisitions,  partially  offset by
substantial  improvement in our existing portfolio of nonperforming  assets as a
result of significant loan payoffs, the liquidation of foreclosed property,  the
sale of certain  nonperforming loans and the sale of a portion of our commercial
leasing  portfolio.  The  increase  in  nonperforming  loans in 2003 and 2002 is
primarily   attributable  to  the  current  economic  conditions  as  previously
discussed,  additional  problems  identified in two acquired loan portfolios and
continuing  deterioration in our commercial leasing portfolio,  particularly the
segment of the portfolio related to the airline industry.

         The 10.5% net increase in nonperforming assets during 2005 reflects the
following significant changes:

         >>    Overall  improvement in the level of nonperforming  assets during
               the first nine months of 2005,  exclusive of the deterioration of
               certain credit  relationships  as discussed below, as a result of
               our continued focus on improving asset quality through an ongoing
               process of problem loan  work-out;  the sale of certain  acquired
               nonperforming loans, as previously  discussed;  the strengthening
               of certain loans; and loan payoffs and/or external refinancing of
               various  credits,  including  $97.3 million of loan payoffs on 14
               credit  relationships  during  the first and second  quarters  of
               2005;
<PAGE>

         >>    The deterioration of several credit  relationships in the Midwest
               region  during the fourth  quarter of 2005.  There  credits  were
               primarily  associated  with loans acquired in the purchase of CIB
               Bank and included two large credit relationships of $14.9 million
               and $16.6 million, respectively,  which were placed on nonaccrual
               status in the fourth quarter of 2005;

         >>    On December 31,  2005,  we  transferred  11  nonperforming  loans
               totaling  approximately  $59.7  million  to  our  held  for  sale
               portfolio.  These  loans  were  primarily  associated  with loans
               acquired in the purchase of CIB Bank and included  several of the
               loans that had deteriorated during the fourth quarter of 2005, as
               discussed  above,  and one credit  relationship of $12.4 million,
               which was  included in  nonperforming  loans at December 31, 2004
               with a value of $14.5 million. We recognized $7.6 million of loan
               charge-offs in  conjunction  with this transfer to loans held for
               sale to reduce the loans to their  estimated  fair value,  net of
               costs,  that is  expected to be realized at the time of the sale.
               Included in these loan  charge-offs and loans  transferred to our
               held for sale portfolio were $6.0 million of loan charge-offs and
               approximately $49.6 million of nonperforming loans transferred to
               our held for sale  portfolio  that were  associated  with our CIB
               Bank purchase;

         >>    The sale of  approximately  $14.3  million  of  certain  acquired
               nonperforming loans in early 2005,  specifically $2.8 million and
               $11.5 million during the first and second quarters of 2005; and

         >>    A $4.0 million decrease in nonperforming  assets  associated with
               our acquisition of SBLS in August 2004,  primarily resulting from
               $3.8 million of loan charge-offs  recorded in 2005, which reduced
               SBLS LLC's  nonperforming  assets to $2.3 million at December 31,
               2005.  SBLS  LLC  had  a  significant   concentration  of  assets
               associated  with  the  shrimping  vessels  industry,   which  are
               reflected  in both  nonperforming  loans  and  other  repossessed
               assets.  Although we adjusted our asset purchase price to reflect
               this concentration,  asset quality issues will likely continue in
               the near future as a result of this  industry  concentration  and
               its ongoing depressed status,  which has deteriorated  further in
               2005 due to  higher  interest  rates,  increased  fuel  costs and
               damage to several vessels by Hurricane Katrina. The SBA agreed to
               repurchase SBLS LLC's entire  shrimping  vessels  portfolio,  and
               these loans were placed in liquidation  status in 2005.  However,
               the ultimate  liquidation of the shrimping vessels is expected to
               be time  consuming  due to the poor  condition  of certain of the
               vessels following Hurricane Katrina and the potential  collection
               of funds through  insurance  proceeds,  which will likely require
               additional   time  and  effort  to  comply  with  the  individual
               requirements of the respective insurance companies.

         Loans past due 90 days or more and still  accruing  interest  decreased
$23.1  million to $5.6  million at  December  31,  2005,  from $28.7  million at
December 31, 2004, and were $2.8 million at December 31, 2003. The overall level
of such  delinquencies  at December  31,  2005 is  primarily  reflective  of the
continued  growth  in our  loan  portfolio.  The  substantial  increase  in 2004
resulted  from our  acquisitions  of CIB Bank and  CCB,  which  comprised  $27.2
million of our loans  past due 90 days or more and still  accruing  interest  at
December  31,  2004.  A  significant  portion of these loans were past due as to
contractual  maturity and pending  renewal at December 31,  2004;  however,  the
majority  of  the  loan  payments  were  current  and  in  accordance  with  the
contractual  terms of the underlying credit  agreements.  Our allowance for loan
losses as a percentage of loans, net of unearned discount,  was 1.93%, 2.46% and
2.19% at December 31, 2005, 2004 and 2003, respectively.  Our allowance for loan
losses as a percentage of  nonperforming  loans decreased to 139.23% at December
31, 2005, from 175.65% and 154.52% at December 31, 2004 and 2003,  respectively.
The allowance for loan losses was $135.3 million at December 31, 2005,  compared
to  $150.7   million  and  $116.5   million  at  December  31,  2004  and  2003,
respectively.  As reflected in the table below, a $1.0 million  specific reserve
was  established in December 2003 for the estimated loss  associated with a $5.3
million unfunded letter of credit. The letter of credit was subsequently  funded
as a loan in January  2004,  and the related $1.0 million  specific  reserve was
transferred to the allowance for loan losses. In addition,  on June 30, 2004, we
transferred  approximately  $1.5 million from the allowance for loan losses to a
contingent liability related to recourse obligations associated with the sale of
certain leases in our commercial leasing portfolio, as further described in Note
24 to our Consolidated  Financial Statements.  As further described in the table
below and under "--Business - Lending Activities," the allowance for loan losses
also  reflects  an  increase  of $2.0  million in 2005 and an  increase of $33.8
million in 2004 of  balances  acquired  in  conjunction  with our  acquisitions,
including  a $15.7  million  increase  to reflect  the  application  of our loss
factors to CIB Bank's loan portfolio risk ratings, reflecting our strategies for
more rapid resolution of certain acquired  classified and nonperforming  assets.
This  adjustment was partially  offset by our  reclassification,  at the time of
acquisition,  of CIB Bank's specific reserves of $21.7 million as a reduction of
the basis of the individual loan  relationships  (which had no impact on our net
loan  balances),  and the transfer of $18.3  million of  nonperforming  loans to
loans held for sale,  resulting in a corresponding charge of $5.4 million to the
allowance  for loan losses to reduce the loans held for sale to their  estimated
fair value, net of broker costs, that was expected to be realized at the time of
sale.
<PAGE>

         Loan charge-offs decreased to $33.1 million for the year ended December
31, 2005, compared to $50.6 million and $55.8 million for the comparable periods
in 2004 and 2003, respectively.  Loan recoveries were $19.8 million for the year
ended  December 31, 2005,  compared to $25.9  million and $23.0  million for the
comparable  periods in 2004 and 2003,  respectively.  Loan  charge-offs,  net of
recoveries,  decreased  to $13.4  million for the year ended  December 31, 2005,
compared to $24.8 million and $32.7 million for the  comparable  periods in 2004
and 2003,  respectively.  Net loan charge-offs for 2005 included $7.6 million of
charge-offs  associated with the $59.7 million of loans  transferred to our held
for sale  portfolio at December  31, 2005,  as  previously  discussed.  Net loan
charge-offs for 2004 reflect $2.5 million in net charge-offs  related to certain
nonperforming and problem loans that were sold in the fourth quarter of 2004. In
addition,  net loan recoveries  associated with our commercial leasing portfolio
were  $342,000 in 2004,  compared to net loan  charge-offs  of $14.4  million in
2003. We continue to closely  monitor our loan portfolio and address the ongoing
challenges  posed by the  economic  environment,  including  reduced loan demand
within certain  sectors of our loan  portfolio.  We consider this in our overall
assessment  of the  adequacy  of the  allowance  for loan  losses.  The level of
nonperforming  assets from our 2004  acquisitions  significantly  contributed to
increased  levels of problem loans and past due loans,  and we  anticipated  the
level of nonperforming and delinquent loans to continue during 2005 as we worked
to resolve the underlying issues associated with the nonperforming assets of CCB
and CIB Bank,  including our efforts to actively market a significant portion of
the problem loans, as discussed above. Although substantial improvement was made
in this regard  throughout  2005,  we continue our efforts to reduce the overall
level of our nonperforming assets.

         As of December 31, 2005,  2004,  2003,  2002 and 2001,  $124.3 million,
$161.8 million, $109.4 million, $98.2 million and $123.2 million,  respectively,
of loans not included in the table above were identified by management as having
potential credit problems, or problem loans. The decline in the level of problem
loans for the year ended December 31, 2005 primarily reflects improvement in the
management  of these  problem  loans and  success  in  resolving  certain of the
problem loans associated with our 2004 acquisitions. The significant increase in
the level of problem  loans for the year ended  December  31, 2004 is  primarily
attributable  to our  acquisitions  of CCB and CIB Bank, in addition to internal
portfolio growth and economic  conditions  within certain sectors of the markets
in which we operate.  The  significant level of problem loans for the year ended
December  31,  2003  was  primarily  due  to  continuing  deterioration  of  our
commercial leasing portfolio, portfolio growth (both internal and external), the
gradual slow down and uncertainties  that occurred in the economy in the markets
in which  we  operate,  as well as  residual  problem  loans  stemming  from our
acquisition  of Union  Financial  Group,  Ltd. in December  2001.  As previously
discussed  under  "--Lending   Activities,"  certain  acquired  loan  portfolios
exhibited  varying degrees of distress prior to their  acquisition.  While these
problems had been  identified and  considered in our  acquisition  pricing,  the
acquisitions  led to an increase  in  nonperforming  assets and  problem  loans.
Management  continues its efforts to reduce  nonperforming and problem loans and
re-define overall strategy and business plans with respect to our loan portfolio
as deemed necessary.

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

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

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

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

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

         The following  table is a summary of our loan loss  experience  for the
five years ended December 31, 2005:
<TABLE>
<CAPTION>

                                                                As of or For the Years Ended December 31,
                                                      -------------------------------------------------------------
                                                          2005        2004        2003         2002         2001
                                                          ----        ----        ----         ----         ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>            <C>          <C>          <C>          <C>
Allowance for loan losses, beginning of year......... $  150,707     116,451      99,439       97,164       81,592
Acquired allowances for loan losses..................      1,989      33,752         757        1,366       14,046
Other adjustments (1)(2).............................         --        (479)         --           --           --
                                                      ----------   ---------   ---------    ---------    ---------
                                                         152,696     149,724     100,196       98,530       95,638
                                                      ----------   ---------   ---------    ---------    ---------
Loans charged-off:
    Commercial, financial and agricultural...........    (10,500)    (26,550)    (23,476)     (45,697)     (21,085)
    Real estate construction and development.........     (7,838)     (3,481)     (5,825)      (7,778)        (108)
    Real estate mortgage:
       One-to-four family residential loans..........     (3,399)     (4,891)     (4,167)      (2,697)        (802)
       Multi-family residential loans................         --        (139)        (87)        (109)          (4)
       Commercial real estate loans..................     (9,699)     (9,995)     (1,708)      (2,747)      (1,012)
    Lease financing..................................       (491)     (4,536)    (19,160)      (8,426)      (6,749)
    Consumer and installment.........................     (1,196)     (1,051)     (1,350)      (3,070)      (1,693)
                                                      ----------   ---------   ---------    ---------    ---------
          Total......................................    (33,123)    (50,643)    (55,773)     (70,524)     (31,453)
                                                      ----------   ---------   ---------    ---------    ---------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........     10,802      14,983      10,147        8,331        4,015
    Real estate construction and development.........      1,963         748       1,659          631        1,171
    Real estate mortgage:
       One-to-four family residential loans..........      1,953       1,597         781          628          755
       Multi-family residential loans................         --          27          99          792           15
       Commercial real estate loans..................      2,901       2,659       4,174        3,491        1,332
    Lease financing..................................      1,501       4,878       4,805          494          435
    Consumer and installment.........................        637         984       1,363        1,566        1,746
                                                      ----------   ---------   ---------    ---------    ---------
          Total......................................     19,757      25,876      23,028       15,933        9,469
                                                      ----------   ---------   ---------    ---------    ---------
          Net loans charged-off......................    (13,366)    (24,767)    (32,745)     (54,591)     (21,984)
                                                      ----------   ---------   ---------    ---------    ---------
Provision for loan losses............................     (4,000)     25,750      49,000       55,500       23,510
                                                      ----------   ---------   ---------    ---------    ---------
Allowance for loan losses, end of year............... $  135,330     150,707     116,451       99,439       97,164
                                                      ==========   =========   =========    =========    =========

Loans outstanding, net of unearned discount:
    Average.......................................... $6,436,970   5,509,054   5,385,363    5,424,508    4,884,299
    End of year......................................  7,020,771   6,137,968   5,328,075    5,432,588    5,408,869
    End of year, excluding loans held for sale.......  6,705,637   6,004,903   5,182,329    5,082,623    5,204,663
                                                      ==========   =========   =========    =========    =========

Ratio of allowance for loan losses
    to loans outstanding:
    Average..........................................       2.10%       2.74%       2.16%        1.83%        1.99%
    End of year......................................       1.93        2.46        2.19         1.83         1.80
    End of year, excluding loans held for sale.......       2.02        2.51        2.25         1.96         1.87
Ratio of net charge-offs to average
    loans outstanding................................       0.21        0.45        0.61         1.01         0.45
Ratio of current year recoveries to
    preceding year's charge-offs.....................      39.01       46.40       32.65        50.66        55.54
                                                      ==========   =========   =========    =========    =========
---------------
(1)  In December 2003, we established a $1.0 million specific reserve for estimated losses on a $5.3 million letter
     of credit that was recorded in accrued and other  liabilities in  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.
(2)  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>


         The following table is a summary of the allocation of the allowance for
loan losses for the five years ended December 31, 2005:
<TABLE>
<CAPTION>

                                                2005              2004              2003              2002               2001
                                          ----------------  ----------------  ----------------   ---------------    ---------------
                                                   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)

<S>                                       <C>       <C>     <C>        <C>     <C>       <C>     <C>       <C>     <C>       <C>
Commercial, financial
   and agricultural..................     $ 39,245  23.03%  $ 46,195   25.57% $ 37,142   26.42%  $34,915   26.56%   $40,161   28.34%
Real estate construction
   and development...................       32,638  22.28     38,525   21.48    26,782   19.97    22,667   18.22     21,598   17.65
Real estate mortgage:
   One-to-four family
      residential loans..............       10,526  17.29      8,466   14.19     9,684   15.23     7,913   12.79      5,349   14.76
   Multi-family residential loans....           67   2.05         20    1.67       186    2.03        32    2.07         81    2.75
   Commercial real estate loans......       51,199  30.08     55,922   34.01    36,632   31.20    28,477   30.13     25,167   27.71
Lease financing......................          315   0.04        628    0.10     4,830    1.26     3,649    2.33      3,062    2.75
Consumer and installment.............          757   0.74        617    0.81       668    1.15       703    1.46        937    2.26
Loans held for sale..................          583   4.49        334    2.17       527    2.74     1,083    6.44        809    3.78
                                          -------- ------   --------  ------  --------  ------   -------  ------    -------  ------
     Total...........................     $135,330 100.00%  $150,707  100.00% $116,451  100.00%  $99,439  100.00%   $97,164  100.00%
                                          ======== ======   ========  ======  ========  ======   =======  ======    =======  ======
</TABLE>

Deposits

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

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


                                                                      Year Ended December 31,
                                     ------------------------------------------------------------------------------------------
                                                 2005                          2004                           2003
                                     ---------------------------  ------------------------------   ----------------------------
                                                  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.........................  $1,257,277    17.45%     --% $1,100,072     17.83%      --%   $1,007,400    16.64%     --%

Interest-bearing demand deposits...     905,613    12.57    0.49     856,765     13.89     0.41       852,104    14.08    0.64
Savings deposits...................   2,135,156    29.64    1.39   2,175,425     35.27     0.93     2,147,573    35.47    1.09
Time deposits .....................   2,906,601    40.34    3.21   2,036,323     33.01     2.43     2,046,741    33.81    2.65
                                     ----------   ------    ====  ----------    ------     ====    ----------   ------    ====
      Total average deposits.......  $7,204,647   100.00%         $6,168,585    100.00%            $6,053,818   100.00%
                                     ==========   ======          ==========    ======             ==========   ======
</TABLE>

Capital and Dividends

         Historically,  we have accumulated  capital to support our acquisitions
by retaining  most of our earnings.  We pay  relatively  small  dividends on our
Class A convertible,  adjustable rate preferred stock and our Class B adjustable
rate preferred stock,  totaling  $786,000 for the years ended December 31, 2005,
2004 and 2003.
<PAGE>

         Management believes as of December 31, 2005 and 2004, 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, 2005, we had six 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.
Initially, the trusts served as financing subsidiaries, however, as discussed in
Note 1 to our  Consolidated  Financial  Statements,  on December  31,  2003,  we
implemented  Financial Accounting  Standards Board, or FASB,  Interpretation No.
46,  Consolidation of Variable Interest  Entities,  an interpretation of ARB No.
51,  which  resulted in the  deconsolidation  of these  financing  subsidiaries.
Consequently,  the trusts now serve as affiliated statutory and business trusts.
The  implementation  of  this  Interpretation  had  no  material  effect  on our
consolidated financial position or results of operations.

         A summary of the outstanding  trust preferred  securities issued by our
affiliated   statutory  and  business  trusts,  and  our  related   subordinated
debentures  issued  to the  respective  trusts  in  conjunction  with the  trust
preferred securities offerings as of December 31, 2005, is as follows:
<TABLE>
<CAPTION>

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

<S>                                      <C>                   <C>                        <C>            <C>
    First Preferred Capital Trust III    November 2001         Publicly Underwritten      55,200,000     56,907,250
    First Bank Capital Trust              April 2002             Private Placement        25,000,000     25,774,000
    First Bank Statutory Trust            March 2003             Private Placement        25,000,000     25,774,000
    First Preferred Capital Trust IV     January 2003          Publicly Underwritten      46,000,000     47,422,700
    First Bank Statutory Trust II       September 2004           Private Placement        20,000,000     20,619,000
    First Bank Statutory Trust III       November 2004           Private Placement        40,000,000     41,238,000
</TABLE>

         For regulatory  reporting purposes,  the trust preferred securities are
eligible for inclusion,  subject to certain limitations,  in our Tier 1 capital.
As of  December  31,  2005,  there were no  limitations  on the trust  preferred
securities eligible for inclusion in our Tier 1 capital.

Liquidity

         Our  liquidity  is the ability to maintain a cash flow that is adequate
to fund  operations,  service debt  obligations  and meet  obligations and other
commitments  on a timely basis.  We receive  funds for  liquidity  from customer
deposits,  loan  payments,  maturities  of  loans  and  investments,   sales  of
investments and earnings.  In addition,  we may avail ourselves of other sources
of funds by issuing  certificates  of deposit in  denominations  of  $100,000 or
more, borrowing federal funds, selling securities under agreements to repurchase
and utilizing  borrowings from the Federal Home Loan Banks and other borrowings,
including  our term loan and our  revolving  credit line.  The  aggregate  funds
acquired from these sources were $1.72 billion and $1.42 billion at December 31,
2005 and 2004, respectively.

         The  following  table  presents the  maturity  structure of these other
sources of funds,  which consists of certificates of deposit of $100,000 or more
and other borrowings, including our notes payable, at December 31, 2005:
<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....................................    $  354,323            204,874          559,197
         Over three months through six months....................       165,291              9,000          174,291
         Over six months through twelve months...................       314,491             14,000          328,491
         Over twelve months......................................       242,803            411,300          654,103
                                                                     ----------            -------        ---------
              Total..............................................    $1,076,908            639,174        1,716,082
                                                                     ==========            =======        =========
</TABLE>
<PAGE>

         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, 2005 and 2004, First Bank's borrowing  capacity under the agreement
was approximately $743.6 million and $778.7 million,  respectively. In addition,
First Bank's borrowing  capacity through its relationship  with the Federal Home
Loan Bank was  approximately  $679.3  million and $505.2 million at December 31,
2005 and 2004,  respectively.  Exclusive of the Federal Home Loan Bank  advances
outstanding  of $39.3  million and $35.6  million at December 31, 2005 and 2004,
respectively,  which  represent  advances  assumed in  conjunction  with various
acquisitions,  First  Bank  had  no  amounts  outstanding  under  its  borrowing
arrangement with the Federal Home Loan Bank at December 31, 2005 and 2004.

         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, 2005 were
as follows:
<TABLE>
<CAPTION>

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

<S>                                                 <C>              <C>          <C>          <C>           <C>
         Operating leases........................   $   11,356       17,867       12,993       18,231        60,447
         Certificates of deposit (1).............    2,270,737      720,393      137,066       25,978     3,154,174
         Other borrowings........................      207,874      314,500       15,800        1,000       539,174
         Notes payable...........................       20,000       80,000           --           --       100,000
         Subordinated debentures.................           --           --           --      215,461       215,461
         Other contractual obligations...........        1,288          263           18           19         1,588
                                                    ----------    ---------      -------      -------     ---------
              Total..............................   $2,511,255    1,133,023      165,877      260,689     4,070,844
                                                    ==========    =========      =======      =======     =========
         -------------------------
         (1) Amounts exclude the related interest expense accrued on these obligations as of December 31, 2005.
</TABLE>

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

Critical Accounting Policies

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

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

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

         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 to our reported
earnings.  For cash flow hedges,  this would result as more or all of the change
in the fair value of the  affected  derivative  being  reported  in  noninterest
income. For fair value hedges, there may be some impact on our reported earnings
as the change in the fair value of the affected  derivative may not be offset by
changes in the fair  value of the  underlying  hedged  asset or  liability.  See
further  discussion under "--Effects of New Accounting  Standards,"  "--Interest
Rate  Risk  Management"  and  Note 5 to our  Consolidated  Financial  Statements
appearing elsewhere in this report.

         Deferred Tax Assets. We recognize  deferred tax assets and deferred tax
liabilities for the estimated future tax effects of temporary  differences,  net
operating loss  carryforwards and tax credits.  We recognize deferred tax assets
subject to management's  judgment based upon available evidence that realization
is more likely than not. Our deferred tax assets are reduced, if necessary, by a
deferred tax asset valuation allowance.  In the event that we determine we would
not be able to realize all or part of our net deferred tax assets in the future,
we would need to adjust the recorded  value of our  deferred  tax assets,  which
would result in a direct  charge to our provision for income taxes in the period
in which such determination is made. See further discussion under  "--Comparison
of Results  of  Operations  for 2005 and 2004 -  Provision  for  Income  Taxes,"
"--Comparison  of Results of Operations for 2004 and 2003 - Provision for Income
Taxes," and Note 13 to our Consolidated Financial Statements appearing elsewhere
in this report.

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

Effects of New Accounting Standards

         In November 2003, the Emerging  Issues Task Force,  or EITF,  reached a
consensus  on certain  disclosure  requirements  under  EITF Issue No 03-1,  The
Meaning  of  Other-Than-Temporary  Impairment  and Its  Application  to  Certain
Investments.  The new disclosure  requirements  apply to investments in debt and
marketable equity securities that are accounted for under Statement of Financial
Accounting  Standards,  or SFAS, No. 115,  Accounting for Certain Investments in
Debt and Equity Securities, and SFAS No. 124, Accounting for Certain Investments
Held by  Not-for-Profit  Organizations.  Effective for fiscal years ending after

<PAGE>

December 15, 2003,  companies are required to disclose information about debt or
marketable  equity  securities  with market  values below  carrying  values.  We
previously adopted the disclosure  requirements of EITF Issue No. 03-1. In March
2004, the EITF came to a consensus regarding EITF 03-1.  Securities in scope are
those  subject to SFAS No. 115 and SFAS No. 124.  The EITF  adopted a three-step
model that requires management to determine if impairment exists, decide whether
it is other than temporary, and record  other-than-temporary losses in earnings.
In  September  2004,  the FASB  approved  issuing a Staff  Position to delay the
requirement to record impairment losses under EITF 03-1, but broadened the scope
to include  additional  types of securities.  As proposed,  the delay would have
applied  only to those debt  securities  described in paragraph 16 of EITF 03-1,
the Consensus that provides  guidance for  determining  whether an  investment's
impairment is other than  temporary and should be recognized in income.  On June
29, 2005, the FASB directed the EITF to issue EITF Issue 03-1-a,  Implementation
Guidance for the  Application  of Paragraph 16 of EITF Issue No. 03-1, as final.
On November 3, 2005, the FASB issued FASB Staff Position,  or FSP, FAS 115-1 and
FAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to
Certain  Investments.  The  FSP  addresses  determining  when an  investment  is
considered  impaired and whether that  impairment is other than  temporary,  and
measuring an impairment  loss. The FSP also  addresses the  accounting  after an
entity  recognizes  an  other-than-temporary  impairment,  and requires  certain
disclosures  about  unrealized  losses  that the  entity  did not  recognize  as
other-than-temporary  impairments.  The FSP is effective for  reporting  periods
beginning after December 15, 2005. We have evaluated the requirements of FSP FAS
115-1 and FAS  124-1 and do not  expect  them to have a  material  effect on our
financial condition or results of operations.

         In  December  2003,  the  FASB  issued  FASB   Interpretation  No.  46,
Consolidation of Variable Interest Entities,  an interpretation of ARB No. 51, a
revision to FASB  Interpretation  No. 46,  Consolidation  of  Variable  Interest
Entities issued in January 2003. This Interpretation is intended to achieve more
consistent  application of consolidation  policies to variable interest entities
and,  thus to  improve  comparability  between  enterprises  engaged  in similar
activities  even if some of those  activities  are  conducted  through  variable
interest  entities.  The  provisions  of this  Interpretation  are effective for
financial  statements issued for fiscal years ending after December 15, 2003. We
have several statutory and business trusts that were formed for the sole purpose
of issuing trust preferred  securities.  As further described in Note 1 and Note
12 to our Consolidated  Financial Statements appearing elsewhere in this report,
on December 31, 2003, we  implemented  FASB  Interpretation  No. 46, as amended,
which resulted in the  deconsolidation of our statutory and business trusts. The
implementation of this Interpretation had no material effect on our consolidated
financial position or results of operations.  Furthermore, 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 limited inclusion of trust preferred  securities in Tier I capital. As
further discussed in Note 21 to our Consolidated  Financial Statements,  we have
evaluated the impact of the final rule on our financial condition and results of
operations,  and determined the  implementation  of the Federal  Reserve's final
rules  that will be  effective  in March  2009  would  reduce  our bank  holding
company's  Tier I capital  (to  risk-weighted  assets)  and Tier I  capital  (to
average  assets) to 8.47% and 7.74%,  respectively,  as of December 31, 2005. In
October 2005, the Federal Reserve,  in conjunction with various other regulatory
agencies,  announced  plans  to  consider  various  proposed  revisions  to U.S.
risk-based capital standards that would enhance risk sensitivity of the existing
framework.  The comment  period ended in January 2006.  We are awaiting  further
guidance from the Board pending the outcome of the newly proposed revisions, and
are continuing to evaluate the proposed  changes and their overall impact on our
financial condition and results of operations.

         In December 2003,  the Accounting  Standards  Executive  Committee,  or
AcSEC, issued Statement of Position,  or SOP, 03-3, Accounting for Certain Loans
or Debt  Securities  Acquired in a  Transfer,  effective  for loans  acquired in
fiscal years beginning after December 15, 2004. The scope of SOP 03-3 applies to
problem loans that have been acquired, either individually in a portfolio, or in
an acquisition.  These loans must have evidence of credit  deterioration and the
purchaser must not expect to collect  contractual  cash flows.  SOP 03-3 updates
Practice  Bulletin No. 6,  Amortization of Discounts on Certain  Acquired Loans,
for more recently issued literature,  including FASB's SFAS No. 114,  Accounting
by Creditors for  Impairment  of a Loan;  SFAS No. 115,  Accounting  for Certain
Investments  in Debt and Equity  Securities;  and SFAS No. 140,  Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities.
Additionally,  it addresses SFAS No. 91, Accounting for  Nonrefundable  Fees and

<PAGE>

Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of
Leases,  which  requires that  discounts be recognized as an adjustment of yield
over a loan's life.  SOP 03-3 states that an  institution  may no longer display
discounts on purchased  loans within the scope of SOP 03-3 on the balance  sheet
and may not carry over the allowance for loan losses. For those loans within the
scope of SOP 03-3,  this statement  clarifies that a buyer cannot carry over the
seller's  allowance  for loan  losses for the  acquisition  of loans with credit
deterioration.  Loans acquired with evidence of  deterioration in credit quality
since  origination  will need to be  accounted  for under a new method  using an
income  recognition model. This prohibition also applies to purchases of problem
loans not  included in a purchase  business  combination,  which  would  include
syndicated  loans  purchased  in the  secondary  market  and loans  acquired  in
portfolio purchases. We implemented SOP 03-3 in conjunction with our acquisition
of FBA, which we completed on April 29, 2005, our acquisition of IBOC,  which we
completed on September 30, 2005, and our  acquisition of NSB, which we completed
on October 31, 2005.  At  September  30,  2005,  the carrying  value of acquired
problem loans that were being  accounted for under SOP 03-3 totaled $1.8 million
in  aggregate.  During  the  fourth  quarter of 2005,  these  loans were  either
charged-off due to further credit  deterioration or were transferred to our held
for sale  portfolio  and are now  being  accounted  for at the  lower of cost or
market,  less  applicable  selling  costs.  Consequently,  we did not  have  any
acquired  problem loans that are being  accounted for under SOP 03-3 at December
31,  2005.  The  implementation  of  SOP  03-3,  as  it  pertains  to  our  2005
transactions,  did not have a  material  impact on our  financial  condition  or
results of  operations.  We will  continue to evaluate the impact of SOP 03-3 on
our financial  condition and results of operations as it relates to our recently
announced  acquisitions  described in Note 2 and in Note 25 to our  Consolidated
Financial Statements and future transactions.

         In July  2004,  the  FASB's  Derivatives  Implementation  Group  issued
guidance on SFAS No. 133 Implementation  Issue No. G25, Cash Flow Hedges:  Using
the First-Payments-Received  Technique in Hedging the Variable Interest Payments
on a Group of  Non-Benchmark-Rate-Based  Loans,  or DIG Issue G25. DIG Issue G25
clarifies  the  FASB's  position  on  the  ability  of  entities  to  hedge  the
variability in interest  receipts or overall changes in cash flows on a group of
prime-rate-based   loans.   The   new   guidance   permits   the   use   of  the
first-payments-received   technique  in  a  cash  flow  hedge  of  the  variable
prime-rate-based  or other variable  non-benchmark-rate-based  interest payments
for a rolling  portfolio  of  prepayable  interest-bearing  loans,  provided the
hedging  relationship meets all other conditions in SFAS No. 133, Accounting for
Derivative  Instruments and Hedging Activities,  for cash flow hedge accounting.
If a  pre-existing  cash flow hedging  relationship  has  identified  the hedged
transactions  in a manner  inconsistent  with the guidance in DIG Issue G25, the
hedging  relationship  must be  de-designated  at the effective date, as further
discussed  below,  and any  derivative  gains or  losses  in  accumulated  other
comprehensive income related to the de-designated  hedging  relationships should
be accounted for under paragraphs 31 and 32 of SFAS No. 133. We had pre-existing
cash flow hedging  relationships that were inconsistent with the guidance in DIG
Issue G25. As of September 30, 2004, our accumulated other comprehensive  income
included a $4.1 million net gain  attributable to these  pre-existing  cash flow
hedging  relationships.  DIG  Issue  G25 is  effective  for the  fiscal  quarter
beginning   after  August  9,  2004,   and  shall  be  applied  to  all  hedging
relationships  as of the effective  date. On October 1, 2004, we implemented DIG
Issue G25 and de-designated all of our specific cash flow hedging  relationships
that were  inconsistent  with the guidance in DIG Issue G25.  Consequently,  the
$4.1  million  net gain  associated  with the  de-designated  cash flow  hedging
relationships  is being  amortized  over the remaining  lives of the  respective
hedging relationships, which range from approximately six months to three years.
We elected to  prospectively  re-designate  new cash flow hedging  relationships
based upon minor  revisions  to the  underlying  hedged items as required by the
guidance in DIG Issue G25.  The  implementation  of DIG Issue G25 did not and is
not expected to have a material  impact on our  financial  position,  results of
operations or our interest rate risk management program.

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


<PAGE>

         In July 2005, the FASB issued an exposure  draft titled  Accounting for
Uncertain Tax  Positions,  an  Interpretation  of SFAS No. 109 -- Accounting for
Income Taxes.  This exposure draft  addresses  accounting for tax  uncertainties
that  arise  when a  position  that an  entity  takes on its tax  return  may be
different  from the position that the taxing  authority  may take,  and provides
guidance  about the accounting  for tax benefits  associated  with uncertain tax
positions, classification of a liability recognized for those tax positions, and
interim reporting considerations. The proposed interpretation is not expected to
be issued until the second  quarter of 2006.  We are  currently  evaluating  the
requirements  of the exposure  draft to determine  their impact on our financial
condition and results of operations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

         The  quantitative  and  qualitative  disclosures  about market risk are
included  under "Item 7 -  Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations - Interest Rate Risk  Management"  appearing
on pages 38 through 40 of this report.

Effects of Inflation

         Inflation  affects  financial  institutions  less than  other  types of
companies.   Financial   institutions  make  relatively  few  significant  asset
acquisitions that are directly affected by changing prices.  Instead, the assets
and liabilities are primarily monetary in nature.  Consequently,  interest rates
are more  significant  to the  performance  of financial  institutions  than the
effect of general  inflation  levels.  While a  relationship  exists between the
inflation  rate and interest  rates,  we believe  this is  generally  manageable
through our asset-liability management program.

Item 8.  Financial Statements and Supplementary Data

         The  financial  statements  and  supplementary  data appear on pages 64
through 108 of this report.

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

         None.

Item 9A. Controls and Procedures

         Our Chief  Executive  Officer  and our  Chief  Financial  Officer  have
evaluated the  effectiveness  of our  "disclosure  controls and  procedures" (as
defined in Rules  13a-15(e) and 15d-15(e) under the Exchange Act), as of the end
of the  period  covered  by this  report.  Based on such  evaluation,  our Chief
Executive Officer and our Chief Financial Officer have concluded that, as of the
end of such  period,  the  Company's  disclosure  controls  and  procedures  are
effective in  recording,  processing,  summarizing  and  reporting,  on a timely
basis,  information  required to be disclosed by the Company in the reports that
it files or submits under the Exchange  Act.  There have not been any changes in
the Company's internal control over financial reporting (as such term is defined
in Rules  13a-15(f)  and  15d-15(f)  under the  Exchange  Act) during the fourth
quarter  of 2005 that have  materially  affected,  or are  reasonably  likely to
materially affect, the Company's control over financial reporting.

Item 9B. Other Information

         None.



<PAGE>


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Board of Directors and Committees of the Board

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

         Our Board of Directors  currently consists of seven members,  following
the  resignation  of Mr. Hal J. Upbin on January 27, 2006, as further  discussed
below. The Board determined that Messrs. Gundaker, Steward, Upbin 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)            68      1979      Chairman of the Board of Directors of First Banks, Inc. since 1988;
                                                   Chief  Executive  Officer of First Banks,  Inc.  from 1988 to April
                                                   2003;  President  of First  Banks,  Inc. from 1979 to 1992 and from
                                                   1994 to October 1999; Chairman of the Board of Directors, President
                                                   and Chief Executive  Officer of First Banks America,  Inc.from 1994
                                                   until its merger with First Banks, Inc. in December 2002.

Allen H. Blake                   63      1988      President of First Banks,  Inc. since October 1999; Chief Executive
                                                   Officer of First  Banks,  Inc.  since April 2003;  Chief  Financial
                                                   Officer of First Banks,  Inc. from 1984 to September  1999 and from
                                                   May 2001 to August  31,  2005;  Chief  Operating  Officer  of First
                                                   Banks,  Inc. from 1998 to July 2002;  Director of First Banks, Inc.
                                                   since 1988;  Director,  Executive Vice  President,  Chief Operating
                                                   Officer and Secretary of First Banks America,  Inc. from 1998 until
                                                   its  merger  with  First  Banks,   Inc.  in  December  2002;  Chief
                                                   Financial  Officer  of  First  Banks  America,  Inc.  from  1994 to
                                                   September 1999 and from May 2001 until December 2002.

Terrance M. McCarthy             51      2003      Senior  Executive  Vice  President and Chief  Operating  Officer of
                                                   First Banks, Inc. since August 2002;  Director of First Banks, Inc.
                                                   since April 2003;  Director of First Banks America,  Inc. from July
                                                   2001 until its merger with First  Banks,  Inc.  in  December  2002;
                                                   Executive Vice President of First Banks America,  Inc. from 1999 to
                                                   December  2002;  Chairman of the Board of  Directors  of First Bank
                                                   since January 2003;  President and Chief Executive Officer of First
                                                   Bank  since  August  2002;  Chairman  of the  Board  of  Directors,
                                                   President and Chief Executive  Officer of First Bank and Trust from
                                                   April  2000  until its  merger  with and into  First  Bank in March
                                                   2003;  Director of First Bank Business Capital,  Inc.  (formerly FB
                                                   Commercial  Finance,  Inc.)  since  March  2003;  Chairman  of  the
                                                   Members,  President and Chief  Executive  Officer of Small Business
                                                   Loan Source LLC since September 2004.

Steven F. Schepman (1)           33      2004      Director  of  First  Banks,  Inc.  since  July  2004;  Senior  Vice
                                                   President and Chief  Financial  Officer of First Banks,  Inc. since
                                                   August 31, 2005;  Director of First Bank from April 2001 to October
                                                   2004;  Senior Vice President - Private Banking,  Wealth  Management
                                                   and Trust  Services of First Bank from  November 2000 to August 31,
                                                   2005;  From May 1999 to November 2000, Mr. Schepman was employed in
                                                   various other senior management capacities with First Banks, Inc.

Gordon A. Gundaker (2)           72      2001      President and Chief Executive  Officer of Coldwell Banker Gundaker,
                                                   a  full-service  real  estate  brokerage  company,  in  St.  Louis,
                                                   Missouri.


<PAGE>



David L. Steward (2)             54      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,  St. Louis Science Center,  the United Way of Greater St.
                                                   Louis,  Greater St.  Louis Area Council - Boy Scouts of America and
                                                   Harris-Stowe  State College African  American  Business  Leadership
                                                   Council.

Hal J. Upbin (2)(4)              67     2001(4)    Director  of  Kellwood  Company,  a  manufacturer  and  marketer of
                                                   apparel and related soft goods,  in St.  Louis,  Missouri from 1995
                                                   to  January  31,  2006;  Chairman  of the  Board  of  Directors  of
                                                   Kellwood  Company  from 1999 to January 31, 2006;  Chief  Executive
                                                   Officer of Kellwood  Company  from  December  1997 to June 2, 2005;
                                                   President of Kellwood Company from 1994 to December 2003;  Director
                                                   of Brown Shoe Company.

Douglas H. Yaeger (2)(3)         57      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  immediate  past  Chairman of the Board of Directors of the St.
                                                   Louis  Regional  Commerce  and  Growth  Association;  Director  and
                                                   immediate  past  Chairman of Southern Gas  Association;  Trustee of
                                                   the St. Louis Science Center;  Director of Barnes-Jewish  Hospital,
                                                   Greater  St.  Louis  Area  Council  - Boy  Scouts of  America,  The
                                                   Municipal  Theatre  Association  of St.  Louis,  the  United Way of
                                                   Greater  St.  Louis  and  Webster  University;  President  of Civic
                                                   Progress.
-----------------------------------
(1) Mr. Steven F. Schepman is the son-in-law of Mr. James F. Dierberg.
(2) Member of the Audit Committee.
(3) Mr. Douglas H. Yaeger  serves  as Chairman of the Audit Committee and the audit committee financial expert.
(4) Mr. Hal J. Upbin resigned his positions as a Director of the Board and  as an  independent  member  of  the
    Audit Committee at the regular meeting of the First Banks Board of Directors held on January 27, 2006.
</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 27, 2006 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.  As
previously  discussed,  Mr. Hal J. Upbin resigned his positions as a Director of
the Board and as an  independent  member of the Audit  Committee  at the regular
meeting of our Board of Directors held on January 27, 2006.

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.
<PAGE>

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

         The Audit  Committee  discussed with our Internal 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, 2005 for filing with the SEC.

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

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

Code of Ethics for Principal Executive Officer and Financial Professionals

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

Code of Conduct for Employees, Officers and Directors

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




<PAGE>


Executive Officers

         Our  executive  officers,  each of whom was  elected  to the  office(s)
indicated by the Board of Directors, as of March 27, 2006, were as follows:
<TABLE>
<CAPTION>


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

<S>                            <C>   <C>                                     <C>
James F. Dierberg              68    Chairman of the Board of Directors.     See "Item 10 - Directors  and  Executive
                                                                             Officers  of the  Registrant - Board  of
                                                                             Directors."

Allen H. Blake                 63    President,  Chief Executive  Officer    See "Item 10 - Directors  and  Executive
                                     and Director.                           Officers  of the  Registrant  - Board of
                                                                             Directors."

Terrance M. McCarthy           51    Senior   Executive  Vice  President,    See "Item 10 - Directors  and  Executive
                                     Chief    Operating    Officer    and    Officers  of the  Registrant  - Board of
                                     Director;  Chairman  of the Board of    Directors."
                                     Directors,   President   and   Chief
                                     Executive Officer of First Bank.

Steven F. Schepman             33    Senior   Vice    President,    Chief    See "Item 10 - Directors  and  Executive
                                     Financial Officer and Director.         Officers  of the  Registrant  - Board of
                                                                             Directors."

Russell L. Goldammer           49    Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                     Information Officer.                    Information   Officer   since   November
                                                                             2004;  Chief   Information   Officer  of
                                                                             Outsourcing Solutions,  Inc., St. Louis,
                                                                             Missouri,  from  April  2001 to  October
                                                                             2004;  Senior  Vice  President  of  U.S.
                                                                             Bank  in  Milwaukee,   Wisconsin,   from
                                                                             October 1999 to April 2001.

Daniel W. Jasper               60    Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                     Credit    Officer;    Director   and    Credit  Officer  of  First  Banks,  Inc.
                                     Executive  Vice  President  of First    since   October   2003;    Senior   Vice
                                     Bank.                                   President   and  Acting   Chief   Credit
                                                                             Officer of First  Banks,  Inc.  from May
                                                                             2003  to  October   2003;   Senior  Vice
                                                                             President  -  Credit  Administration  of
                                                                             First Banks, Inc. from 1995 to May 2003.

F. Christopher McLaughlin      52    Executive    Vice     President  and    Executive Vice President and Director of
                                     Director  of  Sales,  Marketing  and    Sales, Marketing and Products  of  First
                                     Products;  Director  of First  Bank.    Banks,Inc.   since    September    2003;
                                                                             Director  of  First Bank  since  October
                                                                             2004; Executive Vice  President-Personal
                                                                             Division,  HSBC Bank USA in Buffalo, New
                                                                             York from 1998 to June 2002; Independent
                                                                             Consultant  from  July  2002  to  August
                                                                             2003.

Mary P. Sherrill               51    Executive    Vice    President   and    Executive  Vice  President  and Director
                                     Director of Operations;  Director of    of  Operations  of  First  Banks,   Inc.
                                     First Bank.                             since  April  2003;  Director  of  First
                                                                             Bank  since  April  2003: Director, Vice
                                                                             Chairman  and  Chief of Bank Operations,
                                                                             Southwest Bank  in  St. Louis,  Missouri
                                                                             from April 1999 to March 2003.


</TABLE>

<PAGE>


Item 11.  Executive Compensation

         The   following   table  sets  forth  certain   information   regarding
compensation earned by the named executive officers for the years ended December
31, 2005, 2004 and 2003:
<TABLE>
<CAPTION>


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

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

<S>                                                               <C>      <C>               <C>         <C>
James F. Dierberg                                                 2005     $ 610,000          --         5,300
Chairman of the Board of Directors                                2004       610,000          --         6,200
                                                                  2003       610,000          --         6,000

Allen H. Blake                                                    2005       448,800     154,800         5,300
President and Chief Executive Officer                             2004       426,000          --         4,200
                                                                  2003       397,300          --         6,000

Terrance M. McCarthy                                              2005       395,000     170,000         5,300
Senior Executive Vice President and Chief Operating Officer       2004       367,500          --         4,200
                                                                  2003       323,500          --         6,000

Daniel W. Jasper                                                  2005       231,300     100,000         5,600
Executive Vice President and Chief Credit Officer                 2004       209,500          --         4,500
                                                                  2003       152,000      15,000         4,700

F. Christopher McLaughlin (2)                                     2005       199,300      70,000         5,300
Executive Vice President and Director of Sales, Marketing         2004       180,300      32,500        51,900 (3)
and Products                                                      2003        55,100          --        29,000 (3)
-----------------------
(1) All other compensation  reported includes matching contributions to our 401(k) Plan for the year
    indicated.
(2) Mr. McLaughlin became an Executive Officer of the Company in September 2003.
(3) All other compensation reportedfor Mr. McLaughlin in 2004 and 2003 includes $46,700 and $29,000,
    respectively, associated  with a corporate relocation package. Additionally, for 2004, all other
    compensation includes matching contributions to our 401(K) Plan of $5,000 and a single ownership
    interest in the amount of $200 granted in Star Lane Trust, our former unit investment trust.
</TABLE>

Compensation  of Directors.  Only those  directors who are neither our employees
nor employees of any of our subsidiaries receive remuneration for their services
as directors.  Such  non-employee  directors  (Messrs.  Gordon  Gundaker,  David
Steward,  Hal Upbin and Douglas Yaeger)  received a fee of $3,000 for each Board
meeting  attended and $1,000 for each Audit Committee  meeting attended in 2005.
Messr. Yaeger also received a fee of $4,000 per calendar quarter for his service
as Chairman of the Audit Committee, and Messrs. Gundaker, Steward and Upbin also
received a fee of $3,000 per  calendar  quarter for their  service as members of
the Audit Committee.  The Audit Committee is currently the only committee of our
Board of  Directors.  Messrs.  Gundaker,  Steward,  Upbin  and  Yaeger  received
$31,000, $31,000, $31,000 and $35,000,  respectively, in director's compensation
in 2005.  Our  non-employee  directors are also eligible to  participate  in our
nonqualified  deferred  compensation plan. As further discussed under "Item 10 -
Directors  and  Executive  Officers of the  Registrant - Board of Directors  and
Committees of the Board," Mr. Hal J. Upbin  resigned his positions as a Director
of the Board and as an independent  member of the Audit Committee at the regular
meeting of our Board of Directors held on January 27, 2006.

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

Compensation Committee Interlocks and Insider Participation.  Messrs.  Dierberg,
Blake,  McCarthy  and Schepman  serve as  executive  officers and members of our
Board of Directors.  First Banks does not have a compensation committee, but its
Board of Directors  performs the  functions of such a committee.  Except for the
foregoing,  none of our executive officers served during 2005 as a member of the
compensation  committee, or any other committee performing similar functions, or
as a director of another entity,  any of whose  executive  officers or directors
served on our Board of Directors.

         See further information regarding transactions with related parties in
Note 19 to our Consolidated Financial Statements appearing on pages 101 and 102
of this report.



<PAGE>


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

         The  following  table  sets  forth,  as  of  March  27,  2006,  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,   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, 2005
     is 456, which shares are not included in the above table.
(5)  Sole voting and investment power.
</TABLE>


<PAGE>

Item 13.   Certain Relationships and Related Transactions

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

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

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

         Transactions   with  related  parties,   including   transactions  with
affiliated  persons and entities,  are described in Note 19 to our  Consolidated
Financial Statements on pages 101 and 102 of this report.

Item 14. Principal Accountant Fees and Services

Fees of Independent Registered Public Accounting Firm

         During  2005 and 2004,  KPMG LLP served as our  Independent  Registered
Public  Accounting Firm and provided  additional  services to our affiliates and
us. The following table sets forth fees for professional audit services rendered
by KPMG LLP for the audit of our  consolidated  financial  statements  and other
audit services in 2005 and 2004:
<TABLE>
<CAPTION>
                                                                                       2005         2004
                                                                                       ----         ----

<S>                                                                                 <C>            <C>
           Audit fees, excluding audit related fees (1).........................    $ 820,500      781,550
           Audit related fees...................................................           --           --
           Tax fees (2).........................................................      111,676       87,221
           All other fees.......................................................           --           --
                                                                                    ---------     --------
                  Total.........................................................    $ 932,176      868,771
                                                                                    =========     ========
           --------------
           (1)  For 2005, audit fees include the audits of the consolidated  financial statements of First
                Banks  and  SBLS  LLC,  and  Hillside and  subsidiaries, as  well as services provided for
                reporting requirements under FDICIA and mortgage banking activities, which are included in
                the audit fees of First Banks, as these services are closely related to the audit of First
                Banks' consolidated  financial statements. Audit  fees also  include other accounting  and
                reporting  consultations.  For  2004,  audit fees include the  audits of  the consolidated
                financial statements of First Banks and Star Lane Trust, SBLS LLC and Hillside, as well as
                services provided for reporting requirements under FDICIA and mortgage banking activities.
                Audit  fees  also  include  additional  fees  related  to   work  performed  under  FDICIA
                requirements  as  of  December 31, 2003 but  billed  in 2004,  and  other  accounting  and
                reporting consultations.
           (2)  For 2005, tax services include preparation of amended income tax returns,  tax  compliance
                and  general  tax  planning  and advice. For 2004, tax services include tax compliance and
                general tax planning and advice.
</TABLE>
<PAGE>

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

         Consistent  with the  Securities and Exchange  Commission  requirements
regarding auditor independence, the Audit Committee recognizes the importance of
maintaining  the  independence,  in  fact  and  appearance,  of our  independent
auditors.  As such, the Audit Committee has adopted a policy for pre-approval of
all  audit  and  permissible  non-audit  services  provided  by the  independent
auditor.  Under the policy, the Audit Committee,  or its designated member, must
pre-approve  services  prior  to  commencement  of the  specified  service.  The
requests for pre-approval are submitted to the Audit Committee or its designated
member by the  Director of Audit with a statement  as to whether in his/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 Statements Schedules.

           (a)  1.  Financial Statements and Supplementary Data - The  financial
                    statements  and  supplementary  data  filed  as part of this
                    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 112
                of this Report.

           (c)  Not Applicable.



<PAGE>


                                FIRST BANKS, INC.

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
________________________________________________________________________________





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

We have audited the  accompanying  consolidated  balance  sheets of First Banks,
Inc. and  subsidiaries  (the Company) as of December 31, 2005 and 2004,  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, 2005. 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,  2005 and 2004,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended December 31, 2005, in conformity with U.S. generally  accepted  accounting
principles.




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

St. Louis, Missouri
March 17, 2006


<PAGE>
<TABLE>
<CAPTION>

                                                 FIRST BANKS, INC.

                                            CONSOLIDATED BALANCE SHEETS

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

                         (dollars expressed in thousands, except share and per share data)
                                                                                                   December 31,
                                                                                           ----------------------------
                                                                                              2005              2004
                                                                                              ----              ----

                                                     ASSETS
                                                     ------

Cash and cash equivalents:
<S>                                                                                         <C>                 <C>
     Cash and due from banks............................................................   $  212,667           149,605
     Short-term investments.............................................................       73,985           117,505
                                                                                           ----------         ---------
          Total cash and cash equivalents...............................................      286,652           267,110
                                                                                           ----------         ---------

Investment securities:
     Trading............................................................................        3,389                --
     Available for sale.................................................................    1,311,289         1,788,063
     Held to maturity (fair value of $25,791 and $25,586, respectively).................       26,105            25,286
                                                                                           ----------         ---------
          Total investment securities...................................................    1,340,783         1,813,349
                                                                                           ----------         ---------

Loans:
     Commercial, financial and agricultural.............................................    1,619,822         1,575,232
     Real estate construction and development...........................................    1,564,255         1,318,413
     Real estate mortgage...............................................................    3,469,788         3,061,581
     Consumer and installment...........................................................       64,724            54,546
     Loans held for sale................................................................      315,134           133,065
                                                                                           ----------         ---------
          Total loans...................................................................    7,033,723         6,142,837
     Unearned discount..................................................................      (12,952)           (4,869)
     Allowance for loan losses..........................................................     (135,330)         (150,707)
                                                                                           ----------         ---------
          Net loans.....................................................................    6,885,441         5,987,261
                                                                                           ----------         ---------

Bank premises and equipment, net of accumulated depreciation and amortization...........      144,941           144,486
Goodwill................................................................................      167,056           156,849
Bank-owned life insurance...............................................................      111,442           106,788
Deferred income taxes...................................................................      128,938           127,397
Other assets............................................................................      105,080           129,601
                                                                                           ----------         ---------
          Total assets..................................................................   $9,170,333         8,732,841
                                                                                           ==========         =========

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

Deposits:
     Noninterest-bearing demand.........................................................   $1,299,350         1,194,662
     Interest-bearing demand............................................................      981,837           875,489
     Savings............................................................................    2,106,470         2,249,644
     Time deposits of $100 or more......................................................    1,076,908           807,220
     Other time deposits................................................................    2,077,266         2,024,955
                                                                                           ----------         ---------
          Total deposits................................................................    7,541,831         7,151,970
Other borrowings........................................................................      539,174           594,750
Notes payable...........................................................................      100,000            15,000
Subordinated debentures.................................................................      215,461           273,300
Deferred income taxes...................................................................       27,104            34,812
Accrued expenses and other liabilities..................................................       61,762            62,116
Minority interest in subsidiary.........................................................        6,063                --
                                                                                           ----------         ---------
          Total liabilities.............................................................    8,491,395         8,131,948
                                                                                           ----------         ---------
<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..............................................................        5,910             5,910
Retained earnings.......................................................................      673,956           577,836
Accumulated other comprehensive loss....................................................      (19,906)           (1,831)
                                                                                           ----------         ---------
          Total stockholders' equity....................................................      678,938           600,893
                                                                                           ----------         ---------
          Total liabilities and stockholders' equity....................................   $9,170,333         8,732,841
                                                                                           ==========         =========

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,
                                                                                ----------------------------------
                                                                                   2005         2004        2003
                                                                                   ----         ----        ----

      Interest income:
<S>                                                                             <C>           <C>          <C>
         Interest and fees on loans..........................................   $ 424,095      341,479     355,472
         Investment securities:
           Taxable...........................................................      65,895       50,170      32,442
           Nontaxable........................................................       1,739        1,490       1,737
         Short-term investments..............................................       2,211        1,643       1,502
                                                                                ---------     --------    --------
              Total interest income..........................................     493,940      394,782     391,153
                                                                                ---------     --------    --------
      Interest expense:
         Deposits:
           Interest-bearing demand...........................................       4,398        3,472       5,470
           Savings...........................................................      29,592       20,128      23,373
           Time deposits of $100 or more.....................................      28,010       13,762      13,075
           Other time deposits...............................................      65,157       35,705      41,201
         Other borrowings....................................................      18,240        6,102       2,243
         Notes payable.......................................................       2,305          506         785
         Subordinated debentures.............................................      20,557       15,092      17,879
                                                                                ---------     --------    --------
              Total interest expense.........................................     168,259       94,767     104,026
                                                                                ---------     --------    --------
              Net interest income............................................     325,681      300,015     287,127
      Provision for loan losses..............................................      (4,000)      25,750      49,000
                                                                                ---------     --------    --------
              Net interest income after provision for loan losses............     329,681      274,265     238,127
                                                                                ---------     --------    --------
      Noninterest income:
         Service charges on deposit accounts and customer service fees.......      39,776       38,230      36,113
         Gain on loans sold and held for sale................................      20,804       18,497      15,645
         Net (loss) gain on sales of available-for-sale
           investment securities.............................................      (2,873)         257       8,761
         Gain on sales of branches, net of expenses..........................          --        1,000       3,992
         Bank-owned life insurance investment income.........................       4,860        5,201       5,469
         Investment management income........................................       8,573        6,870       4,762
         Other...............................................................      23,603       13,431      12,966
                                                                                ---------     --------    --------
              Total noninterest income.......................................      94,743       83,486      87,708
                                                                                ---------     --------    --------
      Noninterest expense:
         Salaries and employee benefits......................................     139,764      117,492      95,441
         Occupancy, net of rental income.....................................      22,081       19,882      20,940
         Furniture and equipment.............................................      16,015       17,017      18,286
         Postage, printing and supplies......................................       5,743        5,010       5,100
         Information technology fees.........................................      35,472       32,019      32,136
         Legal, examination and professional fees............................       9,319        7,412       8,131
         Amortization of intangibles associated with the
           purchase of subsidiaries..........................................       4,850        2,912       2,506
         Communications......................................................       2,012        1,866       2,667
         Advertising and business development................................       7,043        5,493       4,271
         Charitable contributions............................................       5,922          577       5,334
         Other...............................................................      28,075       19,825      32,257
                                                                                ---------     --------    --------
              Total noninterest expense......................................     276,296      229,505     227,069
                                                                                ---------     --------    --------
              Income before provision for income taxes and minority
                interest in loss of subsidiary...............................     148,128      128,246      98,766
      Provision for income taxes.............................................      52,509       45,338      35,955
                                                                                ---------     --------    --------
              Income before minority interest in loss of subsidiary..........      95,619       82,908      62,811
      Minority interest in loss of subsidiary................................      (1,287)          --          --
                                                                                ---------     --------    --------
              Net income.....................................................      96,906       82,908      62,811
      Preferred stock dividends..............................................         786          786         786
                                                                                ---------     --------    --------
              Net income available to common stockholders....................   $  96,120       82,122      62,025
                                                                                =========     ========    ========
<PAGE>

      Basic earnings per common share........................................   $4,062.36     3,470.80    2,621.39
                                                                                =========     ========    ========

      Diluted earnings per common share......................................   $4,007.46     3,421.58    2,588.31
                                                                                =========     ========    ========

      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, 2005

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

                               (dollars expressed in thousands, except per share data)



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

<S>                                                       <C>          <C>     <C>       <C>      <C>        <C>       <C>
Consolidated balances, January 1, 2003...............     $12,822      241     5,915     5,910    433,689    60,464    519,041
                                                                                                                       -------
Year ended December 31, 2003:
    Comprehensive income:
      Net income.....................................          --       --        --        --     62,811        --     62,811
      Other comprehensive loss, net of tax:
        Unrealized losses on investment securities...          --       --        --        --         --    (4,291)    (4,291)
        Reclassification adjustment for gains
          included in net income.....................          --       --        --        --         --    (5,695)    (5,695)
        Derivative instruments:
          Current period transactions................          --       --        --        --         --   (21,265)   (21,265)
                                                                                                                       -------
    Total comprehensive income.......................                                                                   31,560
    Class A preferred stock dividends,
      $1.20 per share................................          --       --        --        --       (769)       --       (769)
    Class B preferred stock dividends,
      $0.11 per share................................          --       --        --        --        (17)       --        (17)
                                                          -------      ---     -----     -----    -------   -------    -------
Consolidated balances, December 31, 2003.............      12,822      241     5,915     5,910    495,714    29,213    549,815
                                                                                                                       -------
Year ended December 31, 2004:
    Comprehensive income:
      Net income.....................................          --       --        --        --     82,908        --     82,908
      Other comprehensive loss, net of tax:
        Unrealized losses on investment securities...          --       --        --        --         --    (5,711)    (5,711)
        Reclassification adjustment for gains
          included in net income.....................          --       --        --        --         --      (167)      (167)
        Derivative instruments:
          Current period transactions................          --       --        --        --         --   (25,166)   (25,166)
                                                                                                                       -------
    Total comprehensive income.......................                                                                   51,864
    Class A preferred stock dividends,
      $1.20 per share................................         --        --        --        --       (769)       --       (769)
    Class B preferred stock dividends,
      $0.11 per share................................         --        --        --        --        (17)       --        (17)
                                                          -------      ---     -----     -----    -------   -------    -------
Consolidated balances, December 31, 2004.............      12,822      241     5,915     5,910    577,836    (1,831)   600,893
                                                                                                                       -------
Year ended December 31, 2005:
    Comprehensive income:
      Net income.....................................          --       --        --        --     96,906        --     96,906
      Other comprehensive loss, net of tax:
        Unrealized losses on investment securities...          --       --        --        --         --   (15,659)   (15,659)
        Reclassification adjustment for losses
          included in net income.....................          --       --        --        --         --     1,867      1,867
        Derivative instruments:
          Current period transactions................          --       --        --        --         --    (4,283)    (4,283)
                                                                                                                       -------
    Total comprehensive income.......................                                                                   78,831
    Class A preferred stock dividends,
      $1.20 per share................................          --       --        --        --       (769)       --       (769)
    Class B preferred stock dividends,
      $0.11 per share................................          --       --        --        --        (17)       --        (17)
                                                          -------      ---     -----     -----    -------   -------    -------
Consolidated balances, December 31, 2005.............     $12,822      241     5,915     5,910    673,956   (19,906)   678,938
                                                          =======      ===     =====     =====    =======   =======    =======

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,
                                                                                --------------------------------------
                                                                                   2005          2004          2003
                                                                                   ----          ----          ----

Cash flows from operating activities:
<S>                                                                             <C>              <C>           <C>
     Net income..............................................................   $   96,906        82,908       62,811
     Adjustments to reconcile net income to net cash
       provided by operating activities:
          Depreciation and amortization of bank premises and equipment.......       17,381        18,579       20,068
          Amortization, net of accretion.....................................       16,111        17,102       24,996
          Originations and purchases of loans held for sale..................   (1,327,890)   (1,036,548)  (2,013,902)
          Proceeds from sales of loans held for sale.........................    1,201,695     1,104,254    2,201,977
          Provision for loan losses..........................................       (4,000)       25,750       49,000
          Provision for deferred income taxes................................       (1,216)         (747)     (16,956)
          (Increase) decrease in accrued interest receivable.................       (2,280)         (696)       4,614
          Net increase in trading securities.................................       (3,389)           --           --
          Gain on loans sold and held for sale...............................      (20,804)      (18,497)     (15,645)
          Net loss (gain) on sales of available-for-sale
            investment securities............................................        2,873          (257)      (8,761)
          Gain on sales of branches, net of expenses.........................           --        (1,000)      (3,992)
          Other operating activities, net....................................       26,438        14,874       36,002
          Minority interest in loss of subsidiary............................       (1,287)           --           --
                                                                                ----------    ----------   ----------
               Net cash provided by operating activities.....................          538       205,722      340,212
                                                                                ----------    ----------   ----------

Cash flows from investing activities:
     Cash (paid) received for acquired entities, net of cash and
       cash equivalents received (paid)......................................      (11,579)       21,098       14,870
     Proceeds from sales of investment securities available for sale.........      147,120        26,340        6,019
     Maturities of investment securities available for sale..................      658,803       680,631    1,298,682
     Maturities of investment securities held to maturity....................        5,635         4,632        5,573
     Purchases of investment securities available for sale...................     (325,642)   (1,029,993)  (1,209,592)
     Purchases of investment securities held to maturity.....................       (6,509)      (19,031)        (103)
     Proceeds from sale of leases............................................           --        35,544           --
     Net increase in loans...................................................     (569,255)     (211,104)    (146,270)
     Recoveries of loans previously charged-off..............................       19,757        25,876       23,028
     Purchases of bank premises and equipment................................      (17,128)      (10,960)      (4,359)
     Sale of minority interest in subsidiary.................................        7,350            --           --
     Other investing activities, net.........................................        1,834        15,358        3,357
                                                                                ----------    ----------   ----------
               Net cash used in investing activities.........................      (89,614)     (461,609)      (8,795)
                                                                                ----------    ----------   ----------

Cash flows from financing activities:
     (Decrease) increase in demand and savings deposits......................      (50,119)       23,355       13,287
     Increase (decrease) in time deposits....................................      199,255       (11,521)    (223,555)
     Decrease in Federal Home Loan Bank advances.............................       (6,144)      (29,020)      (8,548)
     Decrease in federal funds purchased.....................................          (78)           --      (55,000)
     (Decrease) increase in securities sold under agreements to repurchase...      (59,232)      286,928       69,835
     Advances drawn on notes payable.........................................      100,000        15,000       34,500
     Repayments of notes payable.............................................      (15,000)      (17,000)     (24,500)
     Proceeds from issuance of subordinated debentures.......................           --        61,857       70,907
     Repayments of subordinated debentures...................................      (59,278)           --     (136,341)
     Cash paid for sales of branches, net of cash and cash equivalents sold..           --       (19,353)     (60,930)
     Payment of preferred stock dividends....................................         (786)         (786)        (786)
                                                                                ----------    ----------   ----------
               Net cash provided by (used in) financing activities...........      108,618       309,460     (321,131)
                                                                                ----------    ----------   ----------
               Net increase in cash and cash equivalents.....................       19,542        53,573       10,286
Cash and cash equivalents, beginning of year.................................      267,110       213,537      203,251
                                                                                ----------    ----------   ----------
Cash and cash equivalents, end of year.......................................   $  286,652       267,110      213,537
                                                                                ==========    ==========   ==========

Supplemental disclosures of cash flow information:
     Cash paid during the period for:
       Interest on liabilities...............................................   $  162,144        93,406      107,295
       Income taxes..........................................................       56,591        42,701       43,632
                                                                                ==========    ==========   ==========
     Noncash investing and financing activities:
       Loans transferred to other real estate................................   $    3,737         5,142       13,525
                                                                                ==========    ==========   ==========

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


<PAGE>





                                FIRST BANKS, INC.

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

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

         Principles of  Consolidation.  The  consolidated  financial  statements
include the accounts of the parent company and its  subsidiaries,  giving effect
to the minority  interest in one subsidiary,  as more fully described below, and
in Note 2 and Note 19 to the Consolidated Financial Statements.  All significant
intercompany   accounts  and   transactions   have  been   eliminated.   Certain
reclassifications of 2004 and 2003 amounts have been made to conform to the 2005
presentation.

         First Banks operates  through its wholly owned  subsidiary bank holding
company,  The San  Francisco  Company  (SFC),  headquartered  in San  Francisco,
California, and SFC's wholly owned subsidiary bank, First Bank, headquartered in
St. Louis, Missouri.  First Bank operates through its branch banking offices and
subsidiaries,  First Bank Business Capital, Inc., Missouri Valley Partners, Inc.
(MVP) and Small Business Loan Source LLC (SBLS LLC) which,  except for SBLS LLC,
are wholly owned subsidiaries.

         On December  31, 2003,  First Banks  implemented  Financial  Accounting
Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest
Entities,  an interpretation of ARB No. 51, resulting in the  deconsolidation of
First  Banks'  statutory  and business  trusts,  which were created for the sole
purpose  of issuing  trust  preferred  securities.  The  implementation  of this
Interpretation  had no material effect on the Company's  consolidated  financial
position or results of operations.

         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 $65.0  million  and $102.2
million  at  December  31,  2005 and 2004,  respectively,  and  interest-bearing
deposits  were $9.0  million and $15.3  million at  December  31, 2005 and 2004,
respectively.

         First Bank is required to maintain  certain daily  reserve  balances on
hand  in  accordance  with  regulatory  requirements.   These  reserve  balances
maintained in  accordance  with such  requirements  were $24.3 million and $30.2
million at December 31, 2005 and 2004, 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.
Amortization  of  premiums  and  accretion  of  discounts  is  computed  on  the
level-yield   method  taking  into   consideration  the  level  of  current  and
anticipated  prepayments.  Realized gains and losses are included in noninterest
income, based on the amortized cost of the individual security sold.  Unrealized
gains and losses, net of related income tax effects, are recorded in accumulated
other comprehensive  income. All previous fair value adjustments included in the
separate component of accumulated other  comprehensive  income are reversed upon
sale.

         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.
<PAGE>

         A  decline  in  the   market   value  of  any   available-for-sale   or
held-to-maturity  investment security below its carrying value that is deemed to
be  other-than-temporary  results in a reduction  in cost basis of the  carrying
value  to  fair  value.  The  other-than-temporary   impairment  is  charged  to
noninterest  income  and a new  cost  basis  is  established.  When  determining
other-than-temporary  impairment,  consideration  is given as to  whether  First
Banks has the ability and intent to hold the investment  security until a market
price  recovery  and  whether  evidence  indicating  the  carrying  value of the
investment security is recoverable outweighs evidence to the contrary.

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

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

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

         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 due to 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  method and
reflect the  difference  between the value  received  upon sale and the carrying
value of the loans held for sale,  including the cost of hedging the residential
mortgage loans held for sale.  Loans held for sale transferred to loans held for
portfolio or  available-for-sale  investment  securities are transferred at fair
value.

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

         Allowance for Loan Losses.  The allowance for loan losses is maintained
at a level considered adequate to provide for probable losses. The provision for
loan  losses is based on a periodic  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.  As  adjustments  become
necessary,  they are  reflected in the results of  operations  in the periods in
which they  become  known.  In  addition,  various  regulatory  agencies,  as an
integral part of their examination  process,  periodically  review 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.
<PAGE>

         Derivative  Instruments  and Hedging  Activities.  First Banks utilizes
derivative  instruments  and hedging  activities to assist in the  management of
interest  rate  sensitivity  and to modify the  repricing,  maturity  and option
characteristics  of  certain  assets  and  liabilities.  First  Banks  uses such
derivative  instruments solely to reduce its interest rate risk exposure.  First
Banks accounts for derivative  instruments and hedging  activities in accordance
with Statement of Financial  Accounting  Standards  (SFAS) No. 133 -- Accounting
for Derivative  Instruments and Hedging Activities,  as amended,  which requires
all derivative instruments to be recorded in the consolidated balance sheets and
measured at fair value.

         At inception of a derivative  transaction,  First Banks  designates the
derivative  instrument as either a hedge of the fair value of a recognized asset
or liability or of an  unrecognized  firm  commitment  (fair value  hedges) or a
hedge  of a  forecasted  transaction  or the  variability  of cash  flows  to be
received or paid related to a recognized  asset or liability (cash flow hedges).
For all  hedging  relationships,  First  Banks  formally  documents  the hedging
relationship and its  risk-management  objectives and strategy for entering into
the hedging relationship  including the hedging instrument,  the hedged item(s),
the nature of the risk being hedged, how the hedging instrument's  effectiveness
in offsetting  the hedged risk will be assessed and a description  of the method
the Company will  utilize to measure  hedge  ineffectiveness.  This process also
includes  linking all derivative  instruments  that are designated as fair value
hedges or cash flow  hedges  to the  underlying  assets  and  liabilities  or to
specific firm commitments or forecasted transactions. First Banks also assesses,
both at the hedge's  inception and on an ongoing  basis,  whether the derivative
instruments  that are used in  hedging  transactions  are  highly  effective  in
offsetting changes in fair values or cash flows of the hedged item(s).

         First Banks  discontinues  hedge  accounting  prospectively  when it is
determined that the derivative  instrument is no longer  effective in offsetting
changes in the fair value or cash flows of the hedged  item(s),  the  derivative
instrument  expires  or  is  sold,  terminated,  or  exercised,  the  derivative
instrument is de-designated as a hedging  instrument because it is unlikely that
a forecasted  transaction  will occur, a hedged firm  commitment no longer meets
the definition of a firm commitment,  or management  determines that designation
of the derivative instrument as a hedging transaction is no longer appropriate.

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

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

         >>    Interest Rate Swap Agreements - Fair Value Hedges.  Interest rate
               swap agreements designated as fair value hedges are accounted for
               at fair value.  Changes in the fair value of the swap  agreements
               are recognized currently in noninterest income. The change in the
               fair value of the  underlying  hedged  item 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.
<PAGE>

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

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

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

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

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

         First Banks accounts for  intangibles  associated  with the purchase of
subsidiaries  and branch offices in accordance with SFAS No. 142 -- Goodwill and
Other  Intangible  Assets,  and SFAS No. 144 -- Accounting for the Impairment or
Disposal of Long-Lived Assets. Pursuant to SFAS No. 142, goodwill and intangible
assets with  indefinite  useful lives are not amortized,  but instead tested for
impairment at least annually.  Intangible  assets with definite useful lives are
amortized  over  their  respective  estimated  useful  lives to their  estimated
residual  values,  and reviewed for impairment in accordance  with SFAS No. 144.
First Banks amortizes,  on a straight-line  basis, its core deposit  intangibles
and goodwill  associated  with  transactions  structured as purchases of certain
assets and assumption of selected  liabilities (P&A Transactions).  Core deposit
intangibles are amortized over the estimated periods to be benefited,  which has
been estimated at seven years, and goodwill  associated with P&A Transactions is
amortized over the estimated  periods to be benefited,  which has been estimated
to be 15 years.  Goodwill  associated  with the purchase of  subsidiaries is not
amortized, but instead, is tested annually for impairment following First Banks'
existing  methods of measuring and  recording  impairment  losses,  as described
below.

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

         Mortgage Servicing Rights. Mortgage servicing rights are capitalized by
allocating the total cost of the mortgage loans to mortgage servicing rights and
the loans (without mortgage  servicing rights) based on the relative fair values
of the two components. Upon capitalizing the mortgage servicing rights, they are
amortized,  in  proportion to the related  estimated  net servicing  income on a

<PAGE>

basis that approximates the  disaggregated,  discounted basis, over the expected
lives of the related  loans,  which is  approximately  five years.  The weighted
average  amortization  period of mortgage servicing rights is approximately five
years.

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

         SBA  Servicing   Rights.   SBA  servicing  rights  are  capitalized  by
allocating  the total  cost of the SBA loans to  servicing  rights and the loans
(without  servicing  rights)  based  on the  relative  fair  values  of the  two
components.  The fair value of  servicing  rights is computed  using the present
value  of the  estimated  future  servicing  income  in  excess  of such  income
estimated at a normal servicing fee rate. The servicing rights, net of valuation
allowance, are amortized in proportion to, and over the period of, the estimated
net servicing  revenue of the underlying SBA loans,  which range from nine to 25
years. The weighted average  amortization  period of the SBA servicing rights is
approximately 20 years. The determination of the fair value of the SBA servicing
rights is performed  monthly based upon an  independent  third party  valuation.
Based on these  analyses,  a comparison  of the fair value of the SBA  servicing
rights  with  the  carrying  value of the SBA  servicing  rights  is made,  with
impairment,   if  any,   recognized   at  that  time.   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,  however,
recognize fair value of the SBA servicing rights in excess of the carrying value
of SBA servicing rights for any stratum.

         Other  Real  Estate.  Other  real  estate,  consisting  of real  estate
acquired  through  foreclosure or deed in lieu of foreclosure,  is stated at the
lower of cost or fair value less  applicable  selling costs.  The excess of cost
over fair value of the  property  at the date of  acquisition  is charged to the
allowance for loan losses.  Subsequent  reductions in carrying value, to reflect
current fair value or costs incurred in maintaining the properties,  are charged
to expense as  incurred.  Other real estate was $2.0 million and $4.0 million at
December 31, 2005 and 2004, respectively.

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

         Financial   Instruments  With  Off-Balance   Sheet  Risk.  A  financial
instrument is defined as cash,  evidence of an ownership  interest in an entity,
or a contract  that  conveys or  imposes on an entity the  contractual  right or
obligation to either  receive or deliver cash or another  financial  instrument.
First Banks  utilizes  financial  instruments  to reduce the interest  rate risk

<PAGE>

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.

(2)      ACQUISITIONS AND INTEGRATION COSTS

         Completed Acquisitions

         During the three years ended December 31, 2005,  First Banks  completed
the following acquisitions:
<TABLE>
<CAPTION>

                                                                     Total        Purchase
       Entity                                 Date                  Assets         Price          Goodwill
       ------                                 ----                  ------         -----          --------
                                                                        (dollars expressed in thousands)
2005
----
  Northway State Bank
<S>                                      <C>                          <C>           <C>              <C>
  Grayslake, Illinois                    October 31, 2005         $   50,400        10,300           3,800

  International Bank of California
  Los Angeles, California               September 30, 2005           151,600        33,700          12,000

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

  FBA Bancorp, Inc.
  Chicago, Illinois                       April 29, 2005              73,300        10,500           2,800
                                                                  ----------       -------         -------
                                                                  $  280,300        54,500          18,600
                                                                  ==========       =======         =======
2004
----
  Hillside Investors, Ltd.
  Hillside, Illinois                     November 30, 2004        $1,196,700        67,400              --

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

  Continental Mortgage
  Corporation - Delaware
  Aurora, Illinois                         July 30, 2004             140,700         4,200 (2)         100
                                                                  ----------       -------         -------
                                                                  $1,384,500       117,200           6,000
                                                                  ==========       =======         =======
2003
----
  Bank of Ste. Genevieve
  Ste. Genevieve, Missouri                March 31, 2003          $  115,100        15,400             900
                                                                  ==========       =======         =======
--------------
(1)  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 consist
     primarily of cash received upon assumption of the deposit liabilities.
(2)  In conjunction with the acquisition of Continental Mortgage  Corporation - Delaware (CMC), First Banks
     redeemed in full all of the outstanding subordinated promissory  notes  of CMC, including  accumulated
     accrued and unpaid interest, totaling $4.5 million in aggregate.

</TABLE>

<PAGE>
         Goodwill  associated with the acquisitions  included in the table above
is not  deductible  for  tax  purposes,  with  the  exception  of  the  goodwill
associated  with the purchase of assets and  assumption of  liabilities of Small
Business Loan Source,  Inc.  (SBLS),  which is deductible for tax purposes.  For
2005, 2004 and 2003 acquisitions, goodwill in the amounts of $18.6 million, $6.0
million and $900,000, respectively, was 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 fair value at the acquisition dates. These
fair value adjustments for the acquisitions  completed in 2005 represent current
estimates  and are  subject  to further  adjustments  as the  valuation  data is
finalized.   These  acquisitions  were  funded  from  available  cash  reserves,
borrowings  under  First  Banks'  term  loan and  revolving  credit  agreements,
proceeds  from  the  issuance  of   subordinated   debentures,   dividends  from
subsidiaries, and/or exchanges of available-for-sale investment securities.

         On March 31, 2003,  First Banks  completed its  acquisition  of Bank of
Ste. Genevieve (BSG), Ste.  Genevieve,  Missouri,  from Allegiant Bancorp,  Inc.
(Allegiant),  in exchange for  approximately  974,150 shares of Allegiant common
stock  previously held. The purpose of the transaction was to further expand the
Midwest  banking  franchise.  At the  time of the  acquisition,  BSG had  $115.1
million in assets,  $43.7  million in loans,  net of  unearned  discount,  $47.8
million in investment securities and $93.7 million in deposits, and operated two
locations  in Ste.  Genevieve,  Missouri.  First  Banks  recorded a gain of $6.3
million on the exchange of the Allegiant common stock.  Preliminary  goodwill of
approximately $3.4 million was subsequently  adjusted to approximately  $900,000
as a result of a litigation  settlement between the parties that occurred in the
fourth  quarter  of  2005  pertaining  to  the  acquisition.  The  core  deposit
intangibles,  which are not deductible for tax purposes, were approximately $3.5
million and are being  amortized  over seven years  utilizing the  straight-line
method. BSG was merged with and into First Bank.  Subsequent to the acquisition,
First Banks  continued  to own 231,779  shares,  or  approximately  1.52% of the
issued and  outstanding  shares of Allegiant  common stock. In October 2003, the
remaining  shares of  Allegiant  common stock were  contributed  to a previously
established  charitable  foundation.   In  conjunction  with  this  transaction,
charitable  contribution  expense  was  recorded  of  $5.1  million,  which  was
partially  offset  by a gain on the  contribution  of  these  available-for-sale
investment  securities of $2.3 million,  representing the difference between the
cost  basis  and  the  fair  value  of  the  common  stock  on the  date  of the
contribution.  In addition, First Banks recognized a tax benefit of $2.5 million
associated with this transaction.  The contribution of this stock eliminated the
Company's  investment in Allegiant.  However, in conjunction with the settlement
that occurred  during the fourth quarter of 2005,  First Banks  received  75,758
shares of common stock of National  City  Corporation,  successor to  Allegiant,
with a fair value of  approximately  $2.5 million at the time of the settlement,
which was treated as an adjustment to the purchase price of the acquisition.

         On July 30, 2004,  First Banks completed its acquisition of CMC and its
wholly owned banking  subsidiary,  Continental  Community Bank and Trust Company
(CCB) for $4.2  million in cash,  and  redeemed  in full all of the  outstanding
subordinated  promissory notes of CMC, including  accumulated accrued and unpaid
interest,  totaling $4.5 million in aggregate.  The acquisition served to expand
First Banks' banking franchise in Chicago,  Illinois. The transaction was funded
through  internally  generated  funds.  CMC,  through CCB,  operated two banking
offices in the Chicago  suburban  communities  of Aurora and Villa Park.  At the
time of the  transaction,  CMC had  assets  of  $140.7  million,  loans,  net of
unearned discount, of $73.6 million and deposits of $104.6 million.  Preliminary
goodwill of $1.5 million was  subsequently  adjusted to  approximately  $100,000
during the third quarter of 2005,  and the core deposit  intangibles,  which are
not  deductible  for tax  purposes  and are being  amortized  over  seven  years
utilizing the straight-line  method,  were approximately  $2.0 million.  CMC was
merged with and into SFC and CCB was merged with and into First Bank.

         On August 31, 2004, SBLS LLC, a Nevada-based  limited liability company
and  subsidiary  of First Bank,  purchased  substantially  all of the assets and
assumed  certain  liabilities  of SBLS,  headquartered  in  Houston,  Texas,  in
exchange  for cash and  certain  payments  contingent  on future  valuations  of
specifically   identified  assets,   including  servicing  assets  and  retained
interests  in   securitizations,   as  further  described  in  Note  24  to  the
Consolidated Financial Statements. The transaction was funded through internally
generated  funds. At the time of the  transaction,  SBLS LLC purchased from SBLS
assets of $47.1 million,  including $24.0 million of SBA loans,  net of unearned
discount, and $15.1 million of SBA servicing rights, and assumed $1.5 million of
liabilities,  resulting  in a net cash  payment of $45.6  million.  Goodwill was
approximately  $5.9 million and is deductible  for tax purposes.  In conjunction
with this  transaction,  on August 30, 2004, First Bank granted to First Capital
America, Inc. (FCA), a corporation owned by First Banks' Chairman and members of
his immediate  family, an option to purchase  Membership  Interests of SBLS LLC.
FCA  exercised  this option on June 30, 2005 and paid First Bank $7.4 million in
cash. As a result of this transaction, SBLS LLC became 51.0% owned by First Bank
and  49.0%  owned  by FCA,  and  accordingly,  effective  June 30,  2005,  FCA's
ownership  interest is  recognized  as minority  interest in  subsidiary  in the
consolidated  balance sheets and,  beginning July 1, 2006, the related  minority
interest  in income or loss of  subsidiary  is  recognized  in the  consolidated
statements of income.
<PAGE>

         On November 30, 2004, First Banks completed its acquisition of Hillside
Investors,  Ltd.  (Hillside) and its wholly owned banking  subsidiary,  CIB Bank
(collectively, CIB Bank), headquartered in Hillside, Illinois, for approximately
$67.4 million in cash.  The  acquisition  served to  significantly  expand First
Banks'  banking  franchise  in Chicago,  Illinois.  The  transaction  was funded
through the  issuance of  subordinated  debentures  associated  with two private
placements of $60.0 million in aggregate of trust preferred  securities  through
newly formed affiliated statutory trusts, as further discussed in Note 12 to the
Consolidated  Financial  Statements.  The  acquisition  was also funded  through
borrowings  under  the  Company's  revolving  line of  credit  with a  group  of
unaffiliated financial institutions. CIB Bank operated 16 banking offices in the
Chicago, Illinois metropolitan area, including ten offices in Cook County, three
offices in Lake  County,  two  offices  in Will  County and one office in DuPage
County.  At the time of the  transaction,  CIB Bank had assets of $1.20 billion,
loans, net of unearned  discount,  of $683.3 million,  investment  securities of
$393.2  million  and  deposits  of  $1.10  billion.   Preliminary  goodwill  was
approximately  $4.3  million  and the core  deposit  intangibles,  which are not
deductible for tax purposes and are being  amortized over seven years  utilizing
the straight-line method, were approximately $13.4 million. As further described
below,  goodwill and core deposit intangibles were subsequently  adjusted during
the first  quarter of 2005.  Hillside  was merged with and into SFC and CIB Bank
was merged with and into First Bank.

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

                                                                                November 30, 2004
                                                                        (dollars expressed in thousands)

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

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

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

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


         During  the  first  quarter  of  2005,  First  Banks  recorded  certain
acquisition-related  adjustments  pertaining to its  acquisition of Hillside and
CIB  Bank.   Acquisition-related   adjustments   included   additional  purchase
accounting   adjustments  necessary  to  appropriately  adjust  the  preliminary
goodwill  of $4.3  million  recorded at the time of the  acquisition,  which was
based upon current  estimates  available at that time, to reflect the receipt of
additional  valuation  data.  The aggregate  adjustments  resulted in a purchase
price  reallocation among goodwill,  core deposit  intangibles and bank premises
and equipment.  The purchase price reallocation  resulted in the reallocation of
$3.1 million of negative goodwill to core deposit  intangibles and bank premises
and  equipment,  thereby  reducing such assets by $2.8 million and $2.4 million,
net of the  related  tax  effect of $1.1  million  and  $941,000,  respectively.
Following  the  recognition  of the  acquisition-related  adjustments,  goodwill

<PAGE>

recorded was reduced from $4.3 million to zero and the core deposit intangibles,
which are not  deductible  for tax purposes and are being  amortized  over seven
years  utilizing the  straight-line  method,  were reduced from $13.4 million to
$10.6 million,  net of the related tax effect. The individual  components of the
$4.3 million  acquisition-related  adjustments  to goodwill and the $3.1 million
purchase price reallocation recorded in the first quarter of 2005 are summarized
as follows:

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

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

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

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

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

         On April  29,  2005,  First  Banks  completed  its  acquisition  of FBA
Bancorp, Inc. (FBA) and its wholly owned subsidiary, First Bank of the Americas,
S.S.B.  (FBOTA),  for $10.5 million in cash.  The  acquisition  served to expand
First Banks' banking franchise in Chicago,  Illinois. The transaction was funded
through internally generated funds. FBA was headquartered in Chicago,  Illinois,
and through FBOTA,  operated three banking offices in the  southwestern  Chicago
metropolitan communities of Back of the Yards, Little Village and Cicero. At the
time of the acquisition, FBA had assets of $73.3 million, loans, net of unearned
discount, of $54.3 million and deposits of $55.7 million.  Preliminary goodwill,
which is not deductible for tax purposes,  was approximately  $2.8 million,  and
the core deposit intangibles,  which are not deductible for tax purposes and are
being  amortized  over seven years  utilizing  the  straight-line  method,  were
approximately  $1.7  million.  FBA was merged  with and into SFC,  and FBOTA was
merged with and into First Bank.

         On September  23, 2005,  First Bank  completed  its  assumption  of the
deposit  liabilities of the Roodhouse,  Illinois branch office of Bank and Trust
Company,  an Illinois  commercial  bank,  for  $100,000 in cash.  At the time of
assumption,  the deposit  liabilities  of the Roodhouse  branch office were $5.1
million. The core deposit intangibles, which are deductible for tax purposes and
are being amortized over seven years utilizing the  straight-line  method,  were
$100,000.

         On  September  30,  2005,  First Banks  completed  its  acquisition  of
International  Bank  of  California  (IBOC)  for  $33.7  million  in  cash.  The
acquisition  served to further expand First Banks' banking franchise in Southern
California,   providing  five   additional   banking  offices  in  Los  Angeles,
California,  including  one branch in downtown Los Angeles and four  branches in
eastern Los Angeles County, in Alhambra,  Arcadia,  Artesia and Rowland Heights.
The transaction was funded with a portion of the proceeds of First Banks' $100.0
million term loan, as further discussed in Note 11 to the Consolidated Financial
Statements.  At the time of the acquisition,  IBOC had assets of $151.6 million,
loans,  net of  unearned  discount,  of $113.5  million  and  deposits of $132.1
million.  Preliminary  goodwill,  which is not deductible for tax purposes,  was
approximately  $12.0 million,  and the core deposit  intangibles,  which are not
deductible for tax purposes and are being  amortized over seven years  utilizing
the straight-line  method, were approximately $3.8 million. IBOC was merged with
and into First Bank.

         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 located 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,  which is not deductible for tax purposes,

<PAGE>

was approximately $3.8 million, and the core deposit intangibles,  which are not
deductible for tax purposes and are being  amortized over seven years  utilizing
the straight-line method, were approximately  $909,000.  NSB was merged with and
into First Bank.

         Pending Acquisitions

         On August 1,  2005,  First  Banks  executed  an  Agreement  and Plan of
Reorganization,  which was restated as a Stock  Purchase  Agreement with certain
shareholders  of First National Bank of Sachse (FNBS) on October 28, 2005,  that
provided  for First Banks to acquire the  outstanding  common  stock of FNBS for
$45.62 per share. FNBS operated one banking office in Sachse,  Texas, located in
the northeast Dallas  metropolitan  area. As further described in Note 25 to the
Consolidated Financial Statements, First Banks completed its acquisition of FNBS
on January 3, 2006.

         On  November  18,  2005,  First  Bank  executed a Branch  Purchase  and
Assumption  Agreement  that provided for First Bank to acquire the branch office
of Dallas  National Bank located at 4251 East Renner Road, in Richardson,  Texas
(East  Renner  Branch).  As  further  described  in Note 25 to the  Consolidated
Financial Statements, First Bank completed its purchase of assets and assumption
of liabilities of the East Renner Branch on January 20, 2006.

         On December 19,  2005,  First Banks  executed an Agreement  and Plan of
Reorganization  providing for the acquisition of Pittsfield  Community  Bancorp,
Inc.  (Bancorp)  and its wholly  owned  banking  subsidiary,  Community  Bank of
Pittsfield  (Pittsfield),  for approximately $4.9 million in cash. Pittsfield is
headquartered in Pittsfield,  Illinois and operates two banking offices,  one in
Pittsfield,  Illinois,  and one in Mount Sterling,  Illinois.  The  transaction,
which is subject to regulatory approvals, is expected to be completed during the
second  quarter of 2006.  At December 31, 2005,  Pittsfield  reported  assets of
approximately $17.0 million,  loans, net of unearned discount,  of approximately
$10.7 million,  deposits of approximately $13.7 million and stockholders' equity
of  approximately  $2.7  million.  As  further  described  in  Note  25  to  the
Consolidated  Financial  Statements,  on March 7, 2006,  First  Bank  executed a
Purchase and Assumption  Agreement  providing for the sale of the banking office
located in Mount Sterling,  Illinois to Beardstown  Savings,  s.b.  (Beardstown)
following the completion of First Banks' acquisition of Bancorp.

         Subsequent to December 31, 2005,  First Banks and/or First Bank entered
into  three  agreements  related  to  acquisition  transactions,  as more  fully
described in Note 25 to the Consolidated Financial Statements.

         Acquisition and Integration Costs

         First Banks accrues certain costs  associated with its  acquisitions as
of the respective consummation dates. The accrued costs relate to adjustments to
the staffing levels of the acquired  entities or to the anticipated  termination
of information  technology or item processing contracts of the acquired entities
prior to their stated  contractual  expiration dates. The most significant costs
that First  Banks  incurs  relate to salary  continuation  agreements,  or other
similar agreements,  of executive  management and certain other employees of the
acquired  entities  that were in place  prior to the  acquisition  dates.  These
agreements  provide for payments  over periods  ranging from two to 15 years and
are triggered as a result of the change in control of the acquired entity. Other
severance  benefits for employees that are  terminated in  conjunction  with the
integration of the acquired  entities into First Banks' existing  operations are
normally paid to the recipients  within 90 days of the  respective  consummation
date and are expensed in the consolidated  statements of income as incurred. The
accrued severance balance of $542,000,  as summarized in the following table, is
comprised of contractual obligations under salary continuation agreements to six
individuals with remaining terms ranging from approximately one to ten 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.



<PAGE>


         A  summary  of  the  cumulative   acquisition  and  integration   costs
attributable  to  the  Company's  acquisitions,  which  were  accrued  as of the
consummation  dates  of the  respective  acquisition,  is  listed  below.  These
acquisition and integration costs are reflected in accrued 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, 2002........................    $ 2,351                28             2,379
         Year Ended December 31, 2003:
           Amounts accrued at acquisition date...............        100               350               450
           Reversal to goodwill..............................        (39)             (108)             (147)
           Payments..........................................     (1,000)             (270)           (1,270)
                                                                 -------            ------            ------
         Balance at December 31, 2003........................      1,412                --             1,412
                                                                 -------            ------            ------
         Year Ended December 31, 2004:
           Amounts accrued at acquisition date...............        180               496               676
           Payments..........................................       (831)             (496)           (1,327)
                                                                 -------            ------            ------
         Balance at December 31, 2004........................        761                --               761
                                                                 -------            ------            ------
           Year Ended December 31, 2005:
           Amounts accrued at acquisition date...............        785             1,265             2,050
           Payments..........................................     (1,004)           (1,131)           (2,135)
                                                                 -------            ------            ------
         Balance at December 31, 2005........................    $   542               134               676
                                                                 =======            ======            ======

</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, 2005 and 2004 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, 2005:
    Carrying value:
       U.S. Government sponsored
<S>                                       <C>         <C>          <C>                 <C>                <C>     <C>       <C>
          agencies....................    $212,869    181,800      4,400         --    399,069     --   (4,725)   394,344   3.32%
       Mortgage-backed securities.....         281      9,899     52,121    783,831    846,132    149  (22,156)   824,125   4.60
       State and political
          subdivisions................       5,574     17,242      8,864        710     32,390    293     (109)    32,574   3.79
       Corporate debt securities......       7,721         --         --         --      7,721     --      (15)     7,706   4.58
       Equity investments ............         156         --         --     16,995     17,151    961       --     18,112   4.64
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........      34,428         --         --         --     34,428     --       --     34,428   4.87
                                          --------    -------    -------    -------  ---------  -----  -------  ---------
              Total...................    $261,029    208,941     65,385    801,536  1,336,891  1,403  (27,005) 1,311,289   4.21
                                          ========    =======    =======    =======  =========  =====  =======  =========   ====

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

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

 December 31, 2004:
    Carrying value:
       U.S. Treasury..................    $  9,977         --         --         --      9,977     --       (3)     9,974   2.31%
       U.S. Government sponsored
          agencies....................     165,551    486,621     12,556         --    664,728    529   (2,736)   662,521   3.11
       Mortgage-backed securities.....         244     12,435     77,558    941,140  1,031,377  3,661   (6,863) 1,028,175   4.55
       State and political
          subdivisions................       4,467     20,149     13,492      2,479     40,587    650      (10)    41,227   3.63
       Corporate debt securities......       6,218         --         --         --      6,218     26       (1)     6,243   5.40
       Equity investments ............         367         --         --     10,230     10,597    383       --     10,980   6.72
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........      28,943         --         --         --     28,943     --       --     28,943   4.98
                                          --------    -------    -------    -------  ---------  -----  -------  ---------
              Total...................    $215,767    519,205    103,606    953,849  1,792,427  5,249   (9,613) 1,788,063   4.01
                                          ========    =======    =======    =======  =========  =====  =======  =========   ====

    Fair value:
       Debt securities................    $186,472    517,273    103,989    940,406
       Equity securities..............      29,310         --         --     10,613
                                          --------    -------    -------    -------
              Total...................    $215,782    517,273    103,989    951,019
                                          ========    =======    =======    =======

    Weighted average yield............        2.82%      3.28%      4.55%      4.61%
                                          ========    =======    =======    =======
</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, 2005 and 2004 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, 2005:
    Carrying value:
<S>                                       <C>        <C>       <C>        <C>       <C>        <C>       <C>       <C>       <C>
       Mortgage-backed securities.....    $    --       --     6,970       8,495    15,465       9       (321)     15,153    5.09%
       State and political
         subdivisions.................      1,350    8,331       695         264    10,640      67        (69)     10,638    4.20
                                          -------    -----     -----      ------    ------     ---       ----      ------    ----
           Total......................    $ 1,350    8,331     7,665       8,759    26,105      76       (390)     25,791    4.73
                                          =======    =====     =====      ======    ======     ===       ====      ======    ====

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

    Weighted average yield............       4.40%    4.20%     5.03%       5.02%
                                          =======    =====     =====      ======

 December 31, 2004:
    Carrying value:
       Mortgage-backed securities.....    $    --       --     7,060      10,288    17,348      96         (1)     17,443    5.01%
       State and political
         subdivisions.................        545    5,150     1,977         266     7,938     211         (6)      8,143    4.52
                                          -------    -----     -----      ------    ------     ---       ----      ------    ----
           Total......................    $   545    5,150     9,037      10,554    25,286     307         (7)     25,586    4.86
                                          =======    =====     =====      ======    ======     ===       ====      ======    ====

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

    Weighted average yield............       4.93%    4.13%     5.22%       4.89%
                                          =======    =====     =====      ======
</TABLE>

         There were no sales of trading  securities  for the year ended December
31, 2005. Proceeds from sales of  available-for-sale  investment securities were
$147.1 million,  $26.3 million and $6.0 million for the years ended December 31,
2005, 2004 and 2003,  respectively.  There were no gross gains realized on sales
of available-for-sale investment securities in 2005. Gross gains of $257,100 and
$576,600 were  realized on these sales during the years ended  December 31, 2004
and 2003,  respectively.  Gross losses of $2.9 million were realized on sales of
available-for-sale  investment  securities  during the year ended  December  31,
2005. The gross loss of $2.9 million 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 on November 22,
2005, as further  described in Note 5 and Note 10 to the Consolidated  Financial
Statements.  There were no gross losses realized on sales of  available-for-sale
investment securities in 2004 and 2003.

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

         Proceeds from calls of investment securities were $16.6 million,  $63.1
million and $41.5 million for the years ended December 31, 2005,  2004 and 2003,
respectively.  There were no gross gains  realized on called  securities in 2005
and 2004. Gross gains of $11,200 were realized on these called securities during
the year ended  December  31,  2003.  Gross  losses of $3,800  and  $1,900  were
realized on these called securities during the years ended December 31, 2005 and
2003, respectively.  There were no gross losses realized on called securities in
2004.

         First Bank is a member of the Federal Home Loan Bank (FHLB)  system and
the Federal Reserve Bank (FRB) system and maintains  investments in FHLB and FRB
stock.  These  investments  are recorded at cost,  which  represents  redemption
value.  The  investment  in FRB stock is  maintained at a minimum of 6% of First
Bank's  capital  stock and capital  surplus.  The  investment in FHLB of Chicago
stock is  maintained at a minimum of 5% of advances.  The  investment in FHLB of
Des Moines stock is maintained at an amount equal to 0.12% of First Bank's total
assets as of December 31, 2004, up to a maximum of $10.0 million,  plus 4.45% of
advances and 0.15% of outstanding standby letters of credit.
<PAGE>

         Investment  securities  with a carrying value of  approximately  $619.4
million and $731.8  million at December  31, 2005 and 2004,  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, 2005 and 2004, were as follows:
<TABLE>
<CAPTION>


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

Held to maturity:
   Mortgage-backed securities...   $   14,828       (321)          --           --         14,828       (321)
   State and political
     subdivisions...............        4,462        (58)         365          (11)         4,827        (69)
                                   ----------    -------      -------      -------      ---------    -------

         Total..................   $   19,290       (379)         365          (11)        19,655       (390)
                                   ==========    =======      =======      =======      =========    =======

                                                                 December 31, 2004
                                   ---------------------------------------------------------------------------
                                     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. Treasury................   $    9,974         (3)          --           --          9,974         (3)
   U.S. Government sponsored
     agencies...................      480,912     (2,736)          --           --        480,912     (2,736)
   Mortgage-backed securities...      657,939     (6,863)          --           --        657,939     (6,863)
   State and political
     subdivisions...............        1,964        (10)          --           --          1,964        (10)
   Corporate debt securities....          510         (1)          --           --            510         (1)
                                   ----------    -------      -------      -------      ---------    -------
         Total..................   $1,151,299     (9,613)          --           --      1,151,299     (9,613)
                                   ==========    =======      =======      =======      =========    =======

Held to maturity:
   Mortgage-backed securities...   $    3,161         (1)          --           --          3,161         (1)
   State and political
     subdivisions...............          926         (6)          --           --            926         (6)
                                   ----------    -------      -------      -------      ---------    -------

         Total..................   $    4,087         (7)          --           --          4,087         (7)
                                   ==========    =======      =======      =======      =========    =======
</TABLE>

<PAGE>

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

         State and political  subdivisions  and corporate debt  securities - The
unrealized  losses  on  investments  in state  and  political  subdivisions  and
corporate debt  securities  were caused by fluctuations in interest rates. It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized cost.  Because the decline in fair value is attributable to changes in
interest rates and not credit  quality,  and because First Banks has the ability
and intent to hold these  investments until a market price recovery or maturity,
these  investments  are  not  considered   other-than-temporarily  impaired.  At
December 31, 2005,  the unrealized  losses for state and political  subdivisions
for 12 months or more included seven securities.

(4)      LOANS AND ALLOWANCE FOR LOAN LOSSES

         Changes in the allowance  for loan losses for the years ended  December
31, 2005, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>
                                                                       2005         2004          2003
                                                                       ----         ----          ----
                                                                      (dollars expressed in thousands)

<S>                                                                 <C>            <C>           <C>
         Balance, beginning of year..............................   $ 150,707      116,451       99,439
         Acquired allowances for loan losses.....................       1,989       33,752          757
         Other adjustments (1)(2)................................          --         (479)          --
                                                                    ---------      -------      -------
                                                                      152,696      149,724      100,196
                                                                    ---------      -------      -------
         Loans charged-off.......................................     (33,123)     (50,643)     (55,773)
         Recoveries of loans previously charged-off..............      19,757       25,876       23,028
                                                                    ---------      -------      -------
            Net loans charged-off................................     (13,366)     (24,767)     (32,745)
                                                                    ---------      -------      -------
         Provision for loan losses...............................      (4,000)      25,750       49,000
                                                                    ---------      -------      -------
         Balance, end of year....................................   $ 135,330      150,707      116,451
                                                                    =========      =======      =======
         ---------------
         (1) In December 2003, First Bank established a $1.0 million specific reserve for estimated losses
             on a $5.3 million letter of credit that was recorded in accrued and other liabilities in  the
             consolidated balance sheets. In January 2004, the letter of credit was fully funded as a loan
             and  the  related $1.0 million  specific  reserve  was  reclassified  from  accrued and other
             liabilities to the allowance for loan losses.
         (2) In June 2004,  First Bank  reclassified $1.5 million from the  allowance  for  loan losses to
             accrued and other liabilities to establish a specific reserve associated  with the commercial
             leasing  portfolio  sale  and  related  recourse  obligations  for  certain leases sold. This
             liability has been reduced to $500,000 at December 31,  2005, as further described in Note 24
             to the Consolidated Financial Statements.

</TABLE>
<PAGE>

         At December 31, 2005 and 2004,  First Banks had $97.2 million and $85.8
million of impaired loans, consisting of loans on nonaccrual status. Interest on
nonaccrual  loans that would have been recorded  under the original terms of the
loans was $9.9  million,  $4.4  million  and $5.9  million  for the years  ended
December 31, 2005, 2004 and 2003, respectively.  Of these amounts, $3.4 million,
$716,000 and $2.6 million was recorded as interest income on such loans in 2005,
2004  and  2003,  respectively.  The  allowance  for  loan  losses  includes  an
allocation for each impaired loan. The aggregate allocation of the allowance for
loan losses related to impaired loans was approximately  $20.1 million and $21.4
million at  December  31,  2005 and 2004,  respectively.  The  average  recorded
investment in impaired loans was $79.9 million,  $77.3 million and $69.6 million
for the years ended December 31, 2005, 2004 and 2003,  respectively.  The amount
of interest income recognized using a cash basis method of accounting during the
time these loans were  impaired was $3.6  million,  $717,000 and $2.6 million in
2005, 2004 and 2003,  respectively.  At December 31, 2005 and 2004,  First Banks
had $5.6 million and $28.7 million,  respectively,  of loans past due 90 days or
more and still accruing interest.  First Banks did not have any acquired problem
loans that are being accounted for under SOP 03-3 at December 31, 2005.

         First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California.  At December 31, 2005 and 2004,  approximately 91% and 90%
of the total loan  portfolio,  respectively,  and 83% and 82% 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  76% and 74% of the loan
portfolio  at December  31, 2005 and 2004,  respectively,  of which 27% and 22%,
respectively,  were made to  consumers  in the form of  residential  real estate
mortgages  and home equity lines of credit.  First Bank also offers  residential
real estate  mortgage loans with terms that require  interest only payments.  At
December 31, 2005, the balance of such loans was $332.3 million, of which $194.6
million were held for portfolio and $137.7 million were held for sale.

         In general,  First Banks is a secured lender.  At December 31, 2005 and
2004,  99% of the loan portfolio was  collateralized.  Collateral is required in
accordance   with  the  normal   credit   evaluation   process  based  upon  the
creditworthiness  of the  customer  and the  credit  risk  associated  with  the
particular transaction.

         Loans to directors,  their  affiliates and executive  officers of First
Banks, Inc. were  approximately  $37.9 million and $31.0 million at December 31,
2005 and 2004, respectively, as further discussed in Note 19 to the Consolidated
Financial Statements.



<PAGE>


(5)      DERIVATIVE INSTRUMENTS

         First Banks utilizes derivative financial  instruments to assist in the
management of interest rate sensitivity by modifying the repricing, maturity and
option  characteristics of certain assets and liabilities.  Derivative financial
instruments  held by First Banks at December 31, 2005 and 2004 are summarized as
follows:
<TABLE>
<CAPTION>

                                                                      December 31,
                                                    ------------------------------------------------
                                                             2005                      2004
                                                    -----------------------  -----------------------
                                                     Notional     Credit      Notional     Credit
                                                      Amount     Exposure      Amount     Exposure
                                                      ------     --------      ------     --------
                                                            (dollars expressed in thousands)

<S>                                                 <C>            <C>         <C>          <C>
         Cash flow hedges........................   $ 300,000      114         500,000      1,233
         Fair value hedges.......................      25,000      748         276,200      9,609
         Interest rate floor agreement...........     100,000       70              --         --
         Interest rate lock commitments..........       5,900       --           5,400         --
         Forward commitments to sell
            mortgage-backed securities...........      47,000       --          34,000         --
                                                    =========      ===         =======      =====
</TABLE>

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

         For the years  ended  December  31,  2005,  2004 and 2003,  First Banks
realized net interest  income of $2.2 million,  $50.1 million and $64.6 million,
respectively, on its derivative financial instruments.  First Banks recorded net
losses on derivative  instruments,  which are included in noninterest  income in
the consolidated  statements of income, of $1.1 million and $1.5 million for the
years ended  December 31, 2005 and 2004,  respectively,  in  comparison to a net
gain of $496,000 for the year ended December 31, 2003.

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

         >>    During  September 2000,  March 2001,  April 2001,  March 2002 and
               July 2003, First Banks entered into interest rate swap agreements
               of $600.0 million, $200.0 million, $175.0 million, $150.0 million
               and $200.0 million notional amount, respectively.  The underlying
               hedged  assets are certain  loans within First Banks'  commercial
               loan portfolio.  The swap agreements,  which have been designated
               as cash flow  hedges,  provide for First Banks to receive a fixed
               rate  of  interest  and  pay  an  adjustable   rate  of  interest
               equivalent  to the  weighted  average  prime  lending  rate minus
               2.70%, 2.82%, 2.82%, 2.80% and 2.85%, respectively.  The terms of
               the swap  agreements  provide  for First Banks to pay and receive
               interest on a quarterly  basis.  In  November  2001,  First Banks
               terminated  $75.0 million  notional amount of the swap agreements
               originally  entered into in April 2001,  which would have expired
               in April 2006, in order to appropriately modify its overall hedge
               position in  accordance  with its interest  rate risk  management
               program. In addition,  the $150.0 million notional swap agreement
               that was entered  into in March 2002  matured in March 2004,  the
               $600.0 million notional swap agreements that were entered into in
               September 2000 matured in September  2004, and the $200.0 million
               notional  swap  agreement  that was  entered  into in March  2001
               matured on March 21, 2005.  The amount  receivable by First Banks
               under the swap  agreements  was $2.4  million and $2.7 million at
               December 31, 2005 and 2004, respectively,  and the amount payable
               by First Banks  under the swap  agreements  was $2.5  million and
               $1.4 million at December 31, 2005 and 2004, respectively.

         In October 2004, First Banks  implemented the guidance  required by the
FASB's Derivatives Implementation Group on SFAS No. 133 Implementation Issue No.
G25, Cash Flow Hedges:  Using the  First-Payments-Received  Technique in Hedging

<PAGE>

the Variable Interest Payments on a Group of Non-Benchmark-Rate-Based Loans (DIG
issue G25) and de-designated all of the specific  pre-existing cash flow hedging
relationships  that  were  inconsistent  with the  guidance  in DIG  Issue  G25.
Consequently,  the $4.1 million net gain associated with the de-designated  cash
flow hedging relationships at September 30, 2004, is being amortized to interest
income over the remaining lives of the respective hedging  relationships,  which
ranged   from   approximately   six  months  to  three  years  at  the  date  of
implementation.  First Banks elected to prospectively re-designate new cash flow
hedging  relationships based upon minor revisions to the underlying hedged items
as required by the  guidance in DIG Issue G25. The  implementation  of DIG Issue
G25 did not and is not  expected  to have a  material  impact  on  First  Banks'
consolidated  financial statements,  results of operations or interest rate risk
management program.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of First Banks' interest rate swap agreements  designated as cash
flow hedges as of December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>

                                           Notional        Interest Rate     Interest Rate      Fair
                  Maturity Date             Amount             Paid            Received         Value
                  -------------             ------             ----            --------         -----
                                                          (dollars expressed in thousands)
         December 31, 2005:
<S>                                       <C>                  <C>               <C>          <C>
            April 2, 2006.............    $ 100,000            4.43%             5.45%        $    205
            July 31, 2007.............      200,000            4.40              3.08           (5,296)
                                          ---------                                           --------
                                          $ 300,000            4.41              3.87         $ (5,091)
                                          =========            ====              ====         ========

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

</TABLE>


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

         >>    During  January  2001,  First Banks  entered  into $50.0  million
               notional  amount of three-year  interest rate swap agreements and
               $150.0 million  notional  amount of five-year  interest rate swap
               agreements  that provided for First Banks to receive a fixed rate
               of interest and pay an adjustable rate of interest  equivalent to
               the  three-month  London  Interbank  Offering Rate  (LIBOR).  The
               underlying  hedged  liabilities  were a portion  of First  Banks'
               other time deposits.  The terms of the swap  agreements  provided
               for First Banks to pay interest on a quarterly  basis and receive
               interest on a semiannual  basis.  The amount  receivable by First
               Banks under the swap  agreements was $3.9 million at December 31,
               2004,  and the  amount  payable  by First  Banks  under  the swap
               agreements  was $695,000 at December 31, 2004.  During  September
               2003, First Banks discontinued hedge accounting  treatment on the
               $50.0 million  notional  amount of three-year swap agreements due
               to the loss of the highly  correlated hedge positions between the
               swap  agreements  and  the  underlying  hedged  liabilities.  The
               related $1.3 million basis  adjustment of the  underlying  hedged
               liabilities was recorded as a reduction of interest  expense over
               the remaining  weighted average maturity of the underlying hedged
               liabilities,  which was approximately  three months. In addition,
               the effect of the loss of the highly correlated hedge position on
               the swap agreements  resulted in the recognition of a net loss of
               $291,000,  which was included in  noninterest  income.  The $50.0
               million   notional  swap  agreement   matured  in  January  2004.
               Effective February 25, 2005, First Banks terminated the remaining
               $150.0 million notional 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.
<PAGE>

         >>    During May 2002,  June 2002,  March  2003 and April  2003,  First
               Banks entered into $55.2 million,  $46.0  million,  $25.0 million
               and $46.0 million notional amount, respectively, of interest rate
               swap  agreements  that provide for First Banks to receive a fixed
               rate  of  interest  and  pay  an  adjustable   rate  of  interest
               equivalent to the three-month LIBOR plus 2.30%,  1.97%, 2.55% and
               2.58%,  respectively.  The underlying  hedged  liabilities  are a
               portion of First Banks' subordinated debentures. The terms of the
               swap  agreements  provide  for  First  Banks  to pay and  receive
               interest on a quarterly basis. The amounts receivable and payable
               by First Banks  under the swap  agreements  at December  31, 2005
               were $506,000 and $420,000,  respectively.  There were no amounts
               receivable or payable  under the swap  agreements at December 31,
               2004.  The  $46.0  million  notional  amount  interest  rate swap
               agreement  that was  entered  into in June 2002 was called by its
               counterparty  in May 2003  resulting in final  settlement of this
               interest  rate swap  agreement  in June 2003.  Effective  May 27,
               2005,  First Banks terminated the $55.2 million and $46.0 million
               notional swap agreements in order to appropriately  modify future
               hedge  positions in  accordance  with First Banks'  interest rate
               risk management program.  The resulting $854,000 basis adjustment
               of the  underlying  hedged  liabilities,  in aggregate,  is 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.  As  further
               discussed in Note 25 to the  Consolidated  Financial  Statements,
               effective February 16, 2006, First Banks terminated the remaining
               $25.0 million notional swap agreement.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of First Banks' interest rate swap agreements  designated as fair
value hedges as of December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>

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

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

         December 31, 2004:
            January 9, 2006 (2)........   $ 150,000            2.06%             5.51%         $ 3,610
            December 31, 2031 (3)......      55,200            4.27              9.00            2,171
            March 20, 2033.............      25,000            4.52              8.10             (929)
            June 30, 2033 (3)..........      46,000            4.55              8.15           (1,689)
                                          ---------                                            -------
                                          $ 276,200            3.14              6.88          $ 3,163
                                          =========            ====              ====          =======
         --------------
         (1) The interest rate swap agreement was terminated effective February  16,  2006, as further
             discussed in Note 25 to the Consolidated Financial Statements.
         (2) The interest rate swap agreement was terminated effective February 25, 2005.
         (3) The interest rate swap agreements were terminated effective May 27, 2005.
</TABLE>

         Interest  Rate Floor and Cap  Agreements.  On September 9, 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%.  The  carrying  value of the  interest  rate  floor
agreement, which is included in other assets in the consolidated balance sheets,
was $70,000 at December 31, 2005.

         During  2003 and 2004,  First Bank  entered  into five term  repurchase
agreements under master repurchase  agreements with unaffiliated  third parties,
as further discussed 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 and further  protecting  net interest  margin against
changes in interest rates.  The interest rate floor  agreements  included within
the term repurchase  agreements (and the interest rate cap agreements previously
included within the term repurchase  agreements)  represent embedded  derivative
instruments which, in accordance with existing accounting  literature  governing
derivative  instruments,  are  not  required  to  be  separated  from  the  term
repurchase  agreements  and accounted for  separately as a derivative  financial
instrument.  As such,  the term  repurchase  agreements  are  reflected in other
borrowings in the  consolidated  balance sheets and the related interest expense
is  reflected  as  interest  expense  on other  borrowings  in the  consolidated
statements  of  income.  As  further  described  in Note 10 to the  Consolidated

<PAGE>

Financial  Statements,  on March 21,  2005,  in  accordance  with the  Company's
interest rate risk management  program,  First Bank modified its term repurchase
agreements under master repurchase agreements with unaffiliated third parties to
terminate the interest rate cap  agreements  embedded  within the agreements and
simultaneously  enter into interest rate floor agreements,  also embedded within
the  agreements.  These  modifications  resulted in  adjustments to the existing
interest rate spread to LIBOR for the underlying agreements.  The modified terms
of the term repurchase  agreements became effective during the second quarter of
2005.  First Bank did not incur any costs  associated with the  modifications of
the  agreements nor did the  modifications  result in a change to the accounting
treatment of the embedded derivative instruments. As further described in Note 3
and Note 10 to the  Consolidated  Financial  Statements,  on November  22, 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 the  underlying  securities  associated  with  the term
repurchase  agreement.  In  addition,  as  further  described  in Note 25 to the
Consolidated  Financial Statements,  on February 14, 2006, First Bank terminated
its two $50.0 million term repurchase agreements with maturity dates of June 14,
2007.

         Pledged  Collateral.  At December 31, 2005 and 2004,  First Banks had a
$2.0 million and a $5.0 million  letter of credit,  respectively,  issued on its
behalf to the counterparty and had pledged investment  securities  available for
sale with a fair value of $5.1 million and $527,000, respectively, in connection
with its interest rate swap  agreements.  At December 31, 2005,  First Banks had
pledged cash of $1.8 million as collateral in connection  with its interest rate
swap  agreements.  At December 31, 2004,  First Banks had accepted  cash of $6.0
million as collateral in connection with its interest rate swap agreements.

         Interest  Rate  Lock   Commitments  /  Forward   Commitments   to  Sell
Mortgage-Backed  Securities.  Derivative  financial  instruments issued by First
Banks consist of interest rate lock commitments to originate fixed-rate loans to
be  sold.  Commitments  to  originate  fixed-rate  loans  consist  primarily  of
residential  real estate loans.  These net loan  commitments  and loans held for
sale are hedged with forward contracts to sell mortgage-backed  securities.  The
carrying value of these interest rate lock commitments  included in other assets
in the  consolidated  balance  sheets was  ($49,000) and $20,000 at December 31,
2005 and 2004, respectively.

(6)      SERVICING RIGHTS

         Mortgage Banking Activities. At December 31, 2005 and 2004, First Banks
serviced mortgage loans for others amounting to $1.01 billion and $1.06 billion,
respectively.  Borrowers' escrow balances held by First Banks on such loans were
$5.0  million  and $4.4  million at December  31,  2005 and 2004,  respectively.
Changes in mortgage servicing rights,  net of amortization,  for the years ended
December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>


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

<S>                                                                            <C>            <C>
         Balance, beginning of year.......................................     $ 10,242       15,408
         Servicing rights acquired during the period......................          435          155
         Originated mortgage servicing rights.............................          904        1,221
         Amortization.....................................................       (4,958)      (6,542)
                                                                               --------       ------
         Balance, end of year.............................................     $  6,623       10,242
                                                                               ========       ======
</TABLE>

         First Banks did not incur any impairment of mortgage  servicing  rights
during the years ended  December  31, 2005 and 2004.  During  2003,  First Banks
recognized  impairment of $800,000 through a valuation allowance associated with
a decline in the fair value of an individual  mortgage  servicing rights stratum
below  its  carrying  value,  net  of  the  valuation  allowance.   First  Banks
subsequently  reversed the impairment  valuation allowance in 2003 based upon an
increase in the fair value of the mortgage  servicing  rights  stratum above the
carrying value, net of the valuation allowance.



<PAGE>
         Amortization of mortgage servicing rights at December 31, 2005 has been
estimated in the following table:
<TABLE>
<CAPTION>

                                                                                 (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                            <C>
              2006........................................................................   $ 3,266
              2007........................................................................     1,991
              2008........................................................................       881
              2009........................................................................       352
              2010........................................................................       133
                                                                                             -------
                  Total...................................................................   $ 6,623
                                                                                             =======
</TABLE>

         Other Servicing Activities.  At December 31, 2005 and 2004, First Banks
serviced SBA loans for others  amounting to $163.4  million and $174.7  million,
respectively.  Changes in SBA servicing  rights,  net of  amortization,  for the
years ended December 31, 2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                                                                        2005          2004
                                                                                        ----          ----
                                                                                 (dollars expressed in thousands)

<S>                                                                                  <C>
         Balance, beginning of year..............................................     $ 13,013           --
         Servicing rights acquired during the year...............................           --       13,983
         Originated servicing rights.............................................        1,065          373
         Amortization............................................................       (2,230)        (884)
         Changes in impairment valuation allowance...............................       (2,359)        (459)
                                                                                      --------       ------
         Balance, end of year....................................................     $  9,489       13,013
                                                                                      ========       ======
</TABLE>
         First Banks recognized  impairment of $2.4 million and $459,000 for the
years ended  December 31, 2005 and 2004,  respectively.  The  impairment of $2.4
million recorded for the year ended December 31, 2005 resulted from a decline in
the fair value of the SBA servicing  assets below the carrying  value  primarily
related to substantial  damage to several shrimping vessels within the servicing
portfolio  caused by the  effects of  Hurricane  Katrina,  as well as  continued
distress  affecting  the  U.S.  shrimping  industry  and the  ability  of  these
borrowers to repay their loans.

         Amortization  of SBA  servicing  rights at  December  31, 2005 has been
estimated in the following table:
<TABLE>
<CAPTION>
                                                                                 (dollars expressed in thousands)

         Year ending December 31:
<S>                                                                                          <C>
              2006........................................................................   $ 1,640
              2007........................................................................     1,382
              2008........................................................................     1,161
              2009........................................................................       974
              2010........................................................................       816
              Thereafter..................................................................     3,516
                                                                                             -------
                  Total...................................................................   $ 9,489
                                                                                             =======

(7)      BANK  PREMISES  AND  EQUIPMENT,  NET  OF  ACCUMULATED  DEPRECIATION AND
         AMORTIZATION

         Bank premises and equipment were comprised of the following at December
31, 2005 and 2004:

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

         Land....................................................................   $  33,191        29,566
         Buildings and improvements..............................................     118,426       114,447
         Furniture, fixtures and equipment.......................................     111,238       109,756
         Leasehold improvements..................................................      25,494        24,348
         Construction in progress................................................       2,269         4,074
                                                                                    ---------       -------
              Total..............................................................     290,618       282,191
         Less accumulated depreciation and amortization..........................     145,677       137,705
                                                                                    ---------       -------
              Bank premises and equipment, net...................................   $ 144,941       144,486
                                                                                    =========       =======
</TABLE>
<PAGE>

         Depreciation and amortization  expense for the years ended December 31,
2005,  2004 and 2003 totaled $17.4  million,  $18.6  million and $20.1  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 $15.5 million,  $13.2 million and $14.1 million
for the years ended  December  31,  2005,  2004 and 2003,  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>
             2006.........................................................................  $ 11,356
             2007.........................................................................     9,375
             2008.........................................................................     8,492
             2009.........................................................................     7,431
             2010.........................................................................     5,562
             Thereafter...................................................................    18,231
                                                                                            --------
                 Total future minimum lease payments......................................  $ 60,447
                                                                                            ========
</TABLE>
         First Banks also leases to  unrelated  parties a portion of its banking
facilities.  Total rental income was $6.4 million, $5.8 million and $6.1 million
for the years ended December 31, 2005, 2004 and 2003, respectively.

(8)      INTANGIBLE  ASSETS  ASSOCIATED  WITH  THE  PURCHASE OF SUBSIDIARIES AND
         BRANCH OFFICES

         Intangible  assets  associated  with the purchase of  subsidiaries  and
branch offices, net of amortization, were comprised of the following at December
31, 2005 and 2004:
<TABLE>
<CAPTION>
                                                       2005                           2004
                                            ---------------------------    --------------------------
                                               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.............   $  36,555     (11,710)          32,823        (7,003)
     Goodwill associated with
       purchases of branch offices........       2,210      (1,146)           2,210        (1,003)
                                             ---------     -------          -------        ------
         Total............................   $  38,765     (12,856)          35,033        (8,006)
                                             =========     =======          =======        ======

Unamortized intangible assets:
     Goodwill associated with the
       purchase of subsidiaries...........   $ 165,992                      155,642
                                             =========                      =======
</TABLE>
         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries was $4.9 million, $2.9 million and $2.5 million for the years ended
December 31, 2005,  2004 and 2003,  respectively.  As of December 31, 2005,  the
remaining estimated life of the amortization period for core deposit intangibles
and goodwill  associated  with  purchases of branch  offices was seven years and
nine  years,  respectively.  Amortization  of  intangibles  associated  with the
purchase of  subsidiaries  and branch  offices,  including  amortization of core
deposit  intangibles  and branch  office  purchases,  has been  estimated in the
following  table,  and does not take into  consideration  any  potential  future
acquisitions or branch office purchases.
<TABLE>
<CAPTION>

                                                                                 (dollars expressed in thousands)

         Year ending December 31:
<S>                                                                                      <C>
            2006.........................................................................   $  5,349
            2007.........................................................................      5,349
            2008.........................................................................      5,349
            2009.........................................................................      3,446
            2010.........................................................................      2,986
            Thereafter...................................................................      3,430
                                                                                            --------
                Total....................................................................   $ 25,909
                                                                                            ========
</TABLE>

<PAGE>
         Changes in the carrying amount of goodwill for the years ended December
31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>
                                                                 2005              2004
                                                                 ----              ----
                                                             (dollars expressed in thousands)

<S>                                                           <C>                <C>
         Balance, beginning of year......................     $ 156,849          145,548
         Goodwill acquired during the year...............        18,579           11,665
         Acquisition-related adjustments (1).............        (8,229)            (222)
         Amortization - purchases of branch offices......          (143)            (142)
                                                              ---------          -------
         Balance, end of year............................     $ 167,056          156,849
                                                              =========          =======
         ---------------
         (1)   Acquisition-related adjustments  recorded in 2005, as  further described in Note 2  to the
               Consolidated Financial Statements, included $4.3 million recorded in  the first quarter of
               2005 pertaining to the acquisition of CIB Bank, $1.4 million recorded in the third quarter
               of 2005 pertaining to the acquisition  of  CMC, and $2.5 million  recorded  in  the fourth
               quarter of 2005 pertaining to the acquisition of BSG.
</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, 2005 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>
             2006........................................     $  834,105      1,436,632       2,270,737
             2007........................................        157,022        425,765         582,787
             2008........................................         33,984        103,622         137,606
             2009........................................         13,576         47,263          60,839
             2010........................................         17,897         58,330          76,227
             Thereafter..................................         20,324          5,654          25,978
                                                              ----------      ---------       ---------
                  Total..................................     $1,076,908      2,077,266       3,154,174
                                                              ==========      =========       =========
</TABLE>

(10)     OTHER BORROWINGS

         Other  borrowings  were comprised of the following at December 31, 2005
and 2004:
<TABLE>
<CAPTION>
                                                                                 2005         2004
                                                                                 ----         ----
                                                                         (dollars expressed in thousands)

         Securities sold under agreements to repurchase:
<S>                                                                           <C>           <C>
             Daily........................................................    $ 199,874     209,106
             Term.........................................................      300,000     350,000
         FHLB advances....................................................       39,300      35,644
                                                                              ---------     -------
                  Total...................................................    $ 539,174     594,750
                                                                              =========     =======
</TABLE>

         The average  balance of other  borrowings was $571.7 million and $486.0
million, respectively, and the maximum month-end balance of other borrowings was
$604.3 million and $605.6  million,  respectively,  for the years ended December
31, 2005 and 2004. The average rates paid on other  borrowings  during the years
ended  December  31,  2005,   2004  and  2003  were  3.19%,   1.26%  and  1.02%,
respectively. Interest expense on securities sold under agreements to repurchase
was $16.5  million,  $5.4 million and $1.6 million for the years ended  December
31, 2005,  2004 and 2003,  respectively.  Interest  expense on FHLB advances was
$1.6 million,  $716,000 and $535,000 for the years ended December 31, 2005, 2004
and 2003,  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  discussed  in  Note 5 to the  Consolidated  Financial  Statements,  the
interest rate floor  agreements  included within the term repurchase  agreements
(and the  interest  rate cap  agreements  previously  included  within  the term
repurchase agreements) represent embedded derivative instruments.  In accordance
with the Company's  interest rate risk management  program,  First Bank modified

<PAGE>

its  term  repurchase   agreements  under  master  repurchase   agreements  with
unaffiliated  third parties on March 21, 2005 to terminate the interest rate cap
agreements  previously  embedded within the agreements and simultaneously  enter
into interest rate floor agreements, also embedded within the agreements.  These
modifications  resulted in  adjustments to the interest rate spread to LIBOR for
the agreements,  as set forth in the following  table. The modified terms of the
repurchase  agreements  became  effective  immediately  following the respective
quarterly  scheduled  interest  payment  dates that  occurred  during the second
quarter  of 2005.  First  Bank did not incur any costs in  conjunction  with the
modifications of the agreements.

         The maturity  dates,  par amounts,  interest  rate spreads and interest
rate floor/cap  strike prices on First Bank's term  repurchase  agreements as of
December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>
                                                               Par               Interest Rate     Interest Rate Floor /
                       Maturity Date                         Amount              Spread (1)(2)     Cap Strike Price (1)(2)
                       -------------                         ------              -------------     -----------------------
                                                       (dollars expressed
                                                          in thousands)

         December 31, 2005:
<S>                                                           <C>                <C>                    <C>
              January 12, 2007............................    150,000           LIBOR + 0.0050%         3.00% / Floor
              June 14, 2007 (3)...........................     50,000           LIBOR - 0.3300%         3.00% / Floor
              June 14, 2007 (3)...........................     50,000           LIBOR - 0.3400%         3.00% / Floor
              August 1, 2007..............................     50,000           LIBOR + 0.0800%         3.00% / Floor
                                                            ---------
                                                            $ 300,000
                                                            =========

         December 31, 2004:
              August 15, 2006 (4).........................  $  50,000           LIBOR - 0.8250%         3.00% / Cap
              January 12, 2007............................    150,000           LIBOR - 0.8350%         3.50% / Cap
              June 14, 2007...............................     50,000           LIBOR - 0.6000%         5.00% / Cap
              June 14, 2007...............................     50,000           LIBOR - 0.6100%         5.00% / Cap
              August 1, 2007..............................     50,000           LIBOR - 0.9150%         3.50% / Cap
                                                            ---------
                                                            $ 350,000
                                                            =========
         ---------------
         (1)  As of December 31, 2005, the interest rates  paid on the term  repurchase agreements were  based on the
              three-month LIBOR reset in arrears plus or minus the spread amount shown above minus a  floating amount
              equal to the differential between the three-month  LIBOR reset in arrears  and the strike  price  shown
              above, if the three-month LIBOR reset  in  arrears falls  below  the  strike price  associated with the
              interest rate floor agreements.
         (2)  As of December 31, 2004, the interest rates paid on  the  term  repurchase agreements were based on the
              three-month LIBOR reset in arrears minus the spread amount shown above plus a floating amount  equal to
              the differential between the  three-month  LIBOR reset in  arrears and the strike price shown above, if
              the three-month LIBOR reset in arrears exceeded the strike price associated with the  interest rate cap
              agreements.
         (3)  First Bank terminated  these repurchase  agreements on February 14, 2006, as further  described in Note
              25 to the Consolidated Financial Statements.
         (4)  First Bank terminated this term repurchase agreement on November 22, 2005,  resulting in  a  prepayment
              penalty of $281,000 and the recognition of a $2.9 million loss  on the related  sale of the  underlying
              securities  associated  with  the  term  repurchase  agreement, as  further  described in Note 3 to the
              Consolidated Financial Statements.
</TABLE>

(11)     NOTES PAYABLE

         Notes payable were  comprised of the following at December 31, 2005 and
2004:
<TABLE>
<CAPTION>
                                                                                         2005              2004
                                                                                         ----              ----
                                                                                   (dollars expressed in thousands)

<S>                                                                                   <C>                 <C>
         Revolving credit.........................................................    $      --           15,000
         Term loan................................................................      100,000               --
                                                                                      ---------           ------
               Total..............................................................    $ 100,000           15,000
                                                                                      =========           ======
</TABLE>

         On August 11,  2005,  First Banks  entered into an Amended and Restated
Secured Credit  Agreement with a group of  unaffiliated  financial  institutions
(Credit  Agreement)  in the  amount  of $122.5  million.  The  Credit  Agreement
replaced a secured  credit  agreement  dated August 14, 2003,  and  subsequently
amended on August 12, 2004, that provided a $75.0 million  revolving credit line
and a  $25.0  million  letter  of  credit  facility  (collectively,  the  Credit
Agreements). The Credit Agreement contains material changes to the structure and
terms  of the  financing  arrangement,  the  most  significant  of  which is the
addition of a term loan. The Credit Agreement provides a $15.0 million revolving
credit facility (Revolving Credit), a $7.5 million letter of credit facility (LC

<PAGE>

Facility)  and a $100.0  million term loan  facility  (Term  Loan).  Interest is
payable on outstanding  principal loan balances under the Revolving  Credit at a
floating  rate  equal to either  the  lender's  prime  rate or, at First  Banks'
option,  LIBOR plus a margin  determined  by the  outstanding  loan balances and
First Banks' net income for the preceding  four calendar  quarters.  If the loan
balances  outstanding under the Revolving Credit are accruing at the prime rate,
interest is paid monthly.  If the loan balances  outstanding under the Revolving
Credit are accruing at LIBOR,  interest is payable based on the one, two,  three
or  six-month  LIBOR,  as  selected  by First  Banks.  Interest  is  payable  on
outstanding principal loan balances of the Term Loan at a floating rate equal to
LIBOR plus a margin determined by the outstanding loan balances and First Banks'
net income for the preceding four calendar  quarters.  First Banks has not drawn
any advances on the Revolving Credit.  First Banks borrowed $80.0 million on the
Term Loan on August  11,  2005 and  borrowed  the  remaining  $20.0  million  on
November 14, 2005. The outstanding principal balance of the Term Loan is payable
in ten equal  quarterly  installments  of $5.0 million  commencing  on March 31,
2006,  with the  remainder  of the  Term  Loan  balance  to be  repaid  in full,
including any unpaid interest,  upon maturity on August 10, 2008. Amounts may be
borrowed  under the  Revolving  Credit until August 10, 2006,  at which time the
principal and interest  outstanding is due and payable.  The Credit Agreement is
secured  by  First  Banks'  ownership  interest  in  the  capital  stock  of its
subsidiaries.  Under the Credit Agreements, there were outstanding borrowings of
$100.0  million and $15.0  million at December 31, 2005 and 2004,  respectively.
The  interest  rate for  outstanding  borrowings  under the Credit  Agreement at
December 31, 2005 and 2004 was 5.38% and 3.44%, respectively.  Letters of credit
issued to  unaffiliated  third parties on behalf of First Banks under the Credit
Agreements  were $2.9  million and $6.3  million at December  31, 2005 and 2004,
respectively, and had not been drawn on by the counterparties.

         The 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.
First  Banks  and  First  Bank  were in  compliance  with all  restrictions  and
requirements of the Credit Agreements at December 31, 2005 and 2004.

         The  average  balance  and  maximum  month-end  balance  of  borrowings
outstanding under the Credit Agreements during the years ended December 31, 2005
and 2004 were as follows:
<TABLE>
<CAPTION>

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

<S>                                                                          <C>                 <C>
         Average balance..................................................   $ 36,849            3,657
         Maximum month-end balance........................................    100,000           15,000
                                                                             ========           ======
</TABLE>

         The average rates paid on the outstanding  borrowings  during the years
ended  December  31,  2005,  2004  and  2003  were  6.26%,   13.84%  and  5.09%,
respectively.  Interest  expense  recognized  on  borrowings  under  the  Credit
Agreement  includes  commitment,  arrangement and renewal fees. During 2004, the
average rate paid on the outstanding  borrowings  reflects a marginal  increased
level of  commitment,  arrangement  and renewal  fees on a much  smaller base of
borrowings outstanding during the year, thereby causing the average rate paid to
be significantly higher than in 2005 and 2003.

(12)     SUBORDINATED DEBENTURES

         In February 1997, First Preferred  Capital Trust (First Preferred I), a
newly  formed  Delaware  business  trust,  issued 3.45  million  shares of 9.25%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 106,702 shares of common  securities to First Banks at $25
per share. First Banks owned all of First Preferred I's common  securities.  The
gross proceeds of the offering were used by First  Preferred I to purchase $88.9
million of 9.25% subordinated debentures from First Banks, maturing on March 31,
2027. The maturity date could have been shortened, at the option of First Banks,
to a date not  earlier  than March 31, 2002 or extended to a date not later than
March 31, 2046 if certain conditions were met. The subordinated  debentures were
the sole asset of First  Preferred  I. In  connection  with the  issuance of the
preferred securities,  First Banks made certain guarantees and commitments that,
in the aggregate,  constituted a full and unconditional guarantee by First Banks
of the  obligations of First  Preferred I under the First  Preferred I preferred
securities.  First  Banks'  proceeds  from  the  issuance  of  the  subordinated
debentures to First Preferred I, net of underwriting fees and offering expenses,
were $85.8 million.  On May 5, 2003,  First Banks redeemed the cumulative  trust
preferred  securities  at the  liquidate  value of $25 per  preferred  security,
together with  distributions  accumulated and unpaid to the redemption  date. In

<PAGE>

conjunction with this transaction, First Banks paid in full the $88.9 million of
subordinated debentures. The funds necessary for the redemption were provided by
the net proceeds  from the issuance of  additional  subordinated  debentures  to
First Bank Statutory Trust and First Preferred Capital Trust IV of $25.3 million
and $45.6 million,  respectively,  as further discussed below, and approximately
$18.0 million of available  cash  reserves.  First Banks'  distributions  on the
subordinated  debentures,  which were payable  quarterly  in arrears,  were $2.9
million for the year ended December 31, 2003.

         In July 1998,  First  America  Capital  Trust  (FACT),  a newly  formed
Delaware  business trust,  issued 1.84 million shares of 8.50%  cumulative trust
preferred  securities at $25 per share in an underwritten  public offering,  and
issued 56,908 shares of common securities to First Banks at $25 per share. First
Banks owned all of FACT's common securities.  The gross proceeds of the offering
were used by FACT to purchase  $47.4  million of 8.50%  subordinated  debentures
from First Banks,  maturing on June 30, 2028.  The maturity date could have been
shortened,  at the option of First  Banks,  to a date not earlier  than June 30,
2003 or extended  to a date not later than June 30,  2037 if certain  conditions
were met. The subordinated debentures were the sole asset of FACT. In connection
with the  issuance of the FACT  preferred  securities,  First Banks made certain
guarantees  and  commitments  that,  in the  aggregate,  constituted  a full and
unconditional guarantee by First Banks of the obligations of FACT under the FACT
preferred   securities.   First  Banks'   proceeds  from  the  issuance  of  the
subordinated debentures to FACT, net of underwriting fees and offering expenses,
were $45.4 million.  On June 30, 2003, First Banks redeemed the cumulative 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 the $47.4 million of
subordinated  debentures.  The funds  necessary for the redemption were provided
from available cash reserves of $12.9 million and an advance of $34.5 million on
First  Banks' note  payable.  First  Banks'  distributions  on the  subordinated
debentures,  which were payable quarterly in arrears,  were $2.0 million for the
year ended December 31, 2003.

         In October 2000, First Preferred Capital Trust II (First Preferred II),
a newly formed  Delaware  business  trust,  issued 2.3 million  shares of 10.24%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 71,135  shares of common  securities to First Banks at $25
per share. First Banks owned all of First Preferred II's common securities.  The
gross proceeds of the offering were used by First Preferred II to purchase $59.3
million  of  10.24%  subordinated  debentures  from  First  Banks,  maturing  on
September 30, 2030. The maturity date could have been  shortened,  at the option
of First  Banks,  to a date not earlier  than  September  30,  2005,  if certain
conditions  were met. The  subordinated  debentures were the sole asset of First
Preferred II. In connection with the issuance of the preferred securities, First
Banks  made  certain   guarantees  and  commitments   that,  in  the  aggregate,
constituted a full and unconditional guarantee by First Banks of the obligations
of First Preferred II under the First Preferred II preferred  securities.  First
Banks'  proceeds  from the  issuance  of the  subordinated  debentures  to First
Preferred  II,  net of  underwriting  fees and  offering  expenses,  were  $56.9
million.  On September  30, 2005,  First Banks  redeemed  the  cumulative  trust
preferred  securities at the  liquidation  value of $25 per preferred  security,
together with  distributions  accumulated and unpaid to the redemption  date. In
conjunction  with this  transaction,  First  Banks paid in full its  outstanding
$59.3  million of  subordinated  debentures  that were  issued by First Banks to
First Preferred II. The funds  necessary for the redemption of the  subordinated
debentures  were  provided  from a portion of the  proceeds of First Banks' Term
Loan. First Banks' distributions on the subordinated  debentures issued to First
Preferred II, which were payable quarterly in arrears, were $4.6 million for the
year ended  December 31, 2005 and $6.1 million for the years ended  December 31,
2004 and 2003.

         In November 2001,  First Preferred  Capital Trust III (First  Preferred
III), a newly formed Delaware business trust, issued 2.2 million shares of 9.00%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 68,290  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred III's common securities.  The
gross  proceeds of the  offering  were used by First  Preferred  III to purchase
$56.9 million of 9.00%  subordinated  debentures  from First Banks,  maturing on
December 31, 2031.  The maturity date may be  shortened,  at the option of First
Banks,  to a date not earlier than December 31, 2006, if certain  conditions are
met. The  subordinated  debentures are the sole asset of First Preferred III. In
connection  with the  issuance  of the  preferred  securities,  First Banks made
certain guarantees and commitments that, in the aggregate, constitute a full and
unconditional guarantee by First Banks of the obligations of First Preferred III
under the First Preferred III preferred  securities.  First Banks' proceeds from
the  issuance of the  subordinated  debentures  to First  Preferred  III, net of
underwriting  fees and  offering  expenses,  were $54.6  million.  First  Banks'

<PAGE>

distributions  on the  subordinated  debentures  issued to First  Preferred III,
which are payable  quarterly  in arrears,  were $5.1 million for the years ended
December 31, 2005, 2004 and 2003.

         In April 2002, First Bank Capital Trust (FBCT), a newly formed Delaware
business trust, issued 25,000 shares of variable rate cumulative trust preferred
securities at $1,000 per share in a private placement,  and issued 774 shares of
common  securities  to First Banks at $1,000 per share.  First Banks owns all of
the common  securities of FBCT.  The gross proceeds of the offering were used by
FBCT to purchase  $25.8 million of variable rate  subordinated  debentures  from
First Banks,  maturing on April 22, 2032. The maturity date of the  subordinated
debentures may be shortened,  at the option of First Banks to a date not earlier
than April 22, 2007, if certain conditions are met. The subordinated  debentures
are the  sole  asset of  FBCT.  In  connection  with  the  issuance  of the FBCT
preferred securities,  First Banks made certain guarantees and commitments that,
in the aggregate,  constitute a full and unconditional  guarantee by First Banks
of the  obligations  of FBCT under the FBCT preferred  securities.  First Banks'
proceeds  from the  issuance  of the  subordinated  debentures  to FBCT,  net of
offering  expenses,  were  $25.0  million.  The  distribution  rate on the  FBCT
securities is equivalent to the six-month LIBOR plus 387.5 basis points,  and is
payable  semi-annually  in  arrears on April 22 and  October  22.  First  Banks'
distributions  on the subordinated  debentures  issued to FBCT were $1.9 million
for the year  ended  December  31,  2005 and $1.4  million  for the years  ended
December 31, 2004 and 2003.

         In March  2003,  First Bank  Statutory  Trust  (FBST),  a newly  formed
Connecticut  statutory  trust,  issued 25,000 shares of 8.10%  cumulative  trust
preferred securities at $1,000 per share in a private placement,  and issued 774
shares of common securities to First Banks at $1,000 per share. First Banks owns
all of the common  securities of FBST.  The gross  proceeds of the offering were
used by FBST to purchase  $25.8 million of 8.10%  subordinated  debentures  from
First Banks,  maturing on March 20, 2033. The maturity date of the  subordinated
debentures may be shortened, at the option of First Banks, to a date not earlier
than March 20, 2008, if certain conditions are met. The subordinated  debentures
are the  sole  asset of  FBST.  In  connection  with  the  issuance  of the FBST
preferred securities,  First Banks made certain guarantees and commitments that,
in the aggregate,  constitute a full and unconditional  guarantee by First Banks
of the  obligations  of FBST under the FBST preferred  securities.  First Banks'
proceeds  from the  issuance  of the  subordinated  debentures  to FBST,  net of
offering  expenses,  were  $25.3  million.  First  Banks'  distributions  on the
subordinated  debentures issued to FBST, which are payable quarterly in arrears,
were $2.1  million for the years  ended  December  31,  2005 and 2004,  and $1.7
million for the year ended December 31, 2003.

         In April 2003, First Preferred Capital Trust IV (First Preferred IV), a
newly  formed  Delaware  business  trust,  issued 1.84  million  shares of 8.15%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 56,908  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred IV's common  securities.  The
gross  proceeds  of the  offering  were used by First  Preferred  IV to purchase
approximately  $47.4 million of 8.15% subordinated  debentures from First Banks,
maturing on June 30, 2033. The maturity date may be shortened,  at the option of
First Banks, to a date not earlier than June 30, 2008, if certain conditions are
met. The  subordinated  debentures are the sole asset of First  Preferred IV. In
connection  with the  issuance  of the  preferred  securities,  First Banks made
certain guarantees and commitments that, in the aggregate, constitute a full and
unconditional  guarantee by First Banks of the obligations of First Preferred IV
under the First  Preferred IV preferred  securities.  First Banks' proceeds from
the  issuance  of the  subordinated  debentures  to First  Preferred  IV, net of
underwriting fees and offering expenses, were approximately $45.6 million. First
Banks'  distributions on the subordinated  debentures  issued to First Preferred
IV,  which are payable  quarterly  in arrears,  were $3.9  million for the years
ended  December 31, 2005 and 2004,  and $2.9 million for the year ended December
31, 2003.

         In September  2004,  First Bank  Statutory  Trust II (FBST II), a newly
formed  Delaware  statutory  trust,  issued 20,000 shares of variable rate trust
preferred securities at $1,000 per share in a private placement,  and issued 619
shares of common securities to First Banks at $1,000 per share. First Banks owns
all of the common securities of FBST II. The gross proceeds of the offering were
used by  FBST  II to  purchase  $20.6  million  of  variable  rate  subordinated
debentures  from First Banks,  maturing on September 20, 2034. The maturity date
of the subordinated  debentures may be shortened,  at the option of First Banks,
to a date not earlier than  September 20, 2009, if certain  conditions  are met.
The  subordinated  debentures are the sole asset of FBST II. In connection  with
the  issuance of the FBST II  preferred  securities,  First  Banks made  certain
guarantees  and  commitments  that,  in the  aggregate,  constitute  a full  and
unconditional  guarantee by First Banks of the  obligations of FBST II under the

<PAGE>

FBST II preferred  securities.  Proceeds  from the issuance of the  subordinated
debentures  to FBST II,  net of  offering  expenses,  were  $20.6  million.  The
distribution  rate on the FBST II securities  is  equivalent to the  three-month
LIBOR plus 205.0 basis points.  First Banks'  distributions  on the subordinated
debentures issued to FBST II, which are payable quarterly in arrears,  were $1.1
million  and  $236,000  for  the  years  ended   December  31,  2005  and  2004,
respectively.

         In November 2004,  First Bank  Statutory  Trust III (FBST III), a newly
formed  Delaware  statutory  trust,  issued 40,000 shares of variable rate trust
preferred  securities  at $1,000  per share in a private  placement,  and issued
1,238  shares of common  securities  to First  Banks at $1,000 per share.  First
Banks owns all of the common  securities of FBST III. The gross  proceeds of the
offering  were used by FBST III to  purchase  $41.2  million  of  variable  rate
subordinated  debentures  from First Banks,  maturing on December 15, 2034.  The
maturity date of the subordinated  debentures may be shortened, at the option of
First Banks, to a date not earlier than December 15, 2009, if certain conditions
are met.  The  subordinated  debentures  are the  sole  asset  of FBST  III.  In
connection with the issuance of the FBST III preferred  securities,  First Banks
made certain  guarantees and  commitments  that, in the aggregate,  constitute a
full and  unconditional  guarantee by First Banks of the obligations of FBST III
under the FBST III  preferred  securities.  Proceeds  from the  issuance  of the
subordinated  debentures  to FBST III,  net of  offering  expenses,  were  $41.2
million.  The distribution  rate on the FBST III securities is equivalent to the
three-month  LIBOR plus 218.0 basis points.  First Banks'  distributions  on the
subordinated  debentures  issued to FBST III,  which are  payable  quarterly  in
arrears,  were $2.3 million and  $203,000 for the years ended  December 31, 2005
and 2004, respectively.

         The  distributions   payable  on  all  of  First  Banks'   subordinated
debentures are included in interest  expense in the  consolidated  statements of
income.  Deferred  issuance  costs  associated  with First  Banks'  subordinated
debentures  are  included  as a  reduction  of  subordinated  debentures  in the
consolidated balance sheets and are amortized on a straight-line basis.

         The  subordinated  debentures were issued to First Banks in conjunction
with the  formation  of various  financing  entities  and the  issuance of trust
preferred  securities by the financing  entities.  First Banks has six issues of
trust preferred  securities as of December 31, 2005.  Subsequent to December 31,
2005,  First Banks,  through a newly formed  statutory trust  affiliate,  issued
$40.0 million of subordinated debentures,  as more fully described in Note 25 to
the  Consolidated  Financial  Statements.  The structure of the trust  preferred
securities  currently  satisfies  the  regulatory  requirements  for  inclusion,
subject to certain limitations, in First Banks' capital base.

(13)     INCOME TAXES

         Provision  for income  taxes  attributable  to income  from  continuing
operations for the years ended December 31, 2005, 2004 and 2003 consists of:
<TABLE>
<CAPTION>

                                                                           2005       2004       2003
                                                                           ----       ----       ----
                                                                        (dollars expressed in thousands)
         Current provision for taxes:
<S>                                                                      <C>         <C>         <C>
             Federal................................................     $48,306     36,578      40,194
             State..................................................       5,419      9,507      12,717
                                                                         -------     ------     -------
                                                                          53,725     46,085      52,911
                                                                         -------     ------     -------
         Deferred provision for taxes:
             Federal................................................         116        236     (12,463)
             State..................................................      (1,332)      (983)     (4,493)
                                                                         -------     ------     -------
                                                                          (1,216)      (747)    (16,956)
                                                                         -------     ------     -------
                  Total.............................................     $52,509     45,338      35,955
                                                                         =======     ======     =======
</TABLE>



<PAGE>

         The  effective  rates of  federal  income  taxes  for the  years  ended
December  31,  2005,  2004 and 2003 differ from the federal  statutory  rates of
taxation as follows:
<TABLE>
<CAPTION>

                                                                     Years Ended December 31,
                                                    ----------------------------------------------------------
                                                           2005                2004                2003
                                                    -----------------   -----------------    -----------------
                                                     Amount   Percent    Amount   Percent     Amount   Percent
                                                     ------   -------    ------   -------     ------   -------
                                                                (dollars expressed in thousands)
Income before provision for income taxes and
<S>                                                <C>                  <C>                  <C>
  minority interest in loss of subsidiary......     $148,128            $128,246             $ 98,766
                                                    ========            ========             ========
Provision for income taxes calculated
  at federal statutory income tax rates........     $ 51,845   35.0%    $ 44,886    35.0%    $ 34,568    35.0%
Effects of differences in tax reporting:
  Tax-exempt interest income, net of
      tax preference adjustment................         (814)  (0.5)        (791)   (0.6)        (911)   (0.9)
  State income taxes...........................        4,773    3.2        5,541     4.3        5,346     5.4
  Reduction in prior year contingency reserve..       (2,116)  (1.4)      (2,825)   (2.2)          --      --
  Bank owned life insurance, net of premium....       (1,602)  (1.1)      (1,670)   (1.3)      (1,762)   (1.8)
  Other, net...................................          423    0.3          197     0.2       (1,286)   (1.3)
                                                    --------   ----     --------    ----     --------    ----
        Provision for income taxes.............     $ 52,509   35.5%    $ 45,338    35.4%    $ 35,955    36.4%
                                                    ========   ====     ========    ====     ========    ====
</TABLE>

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

         The tax effects of temporary  differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2005 and 2004 were as follows:
<TABLE>
<CAPTION>

                                                                                  December 31,
                                                                                  ------------
                                                                               2005         2004
                                                                               ----         ----
                                                                        (dollars expressed in thousands)
     Deferred tax assets:
<S>                                                                         <C>            <C>
         Net operating loss carryforwards................................   $  35,513      38,786
         Deferred built-in loss carryforward.............................       3,824       8,988
         Allowance for loan losses.......................................      57,137      64,866
         Loans held for sale.............................................       5,562         175
         Alternative minimum tax credits.................................       2,770       2,667
         Interest on nonaccrual loans....................................       3,582       4,346
         Servicing rights................................................      10,081       8,366
         Deferred compensation...........................................       6,462       4,541
         Net fair value adjustment for available-for-sale
             investment securities.......................................       8,954       1,527
         Net fair value adjustment for derivative instruments............       1,782          --
         Partnership investments.........................................       4,161       1,244
         State taxes.....................................................         515       1,996
         Other...........................................................       6,349       7,662
                                                                            ---------     -------
             Gross deferred tax assets...................................     146,692     145,164
                                                                            ---------     -------
         Valuation allowance.............................................     (17,754)    (17,767)
                                                                            ---------     -------
             Deferred tax assets, net of valuation allowance.............     128,938     127,397
                                                                            ---------     -------
     Deferred tax liabilities:
         Depreciation on bank premises and equipment.....................       8,407      11,567
         Net fair value adjustment for derivative instruments............          --         524
         Unrealized gains on investment securities.......................         144       3,386
         Core deposit intangibles........................................       6,491       7,859
         Discount on loans...............................................       4,878       4,412
         Equity investments..............................................       6,331       6,970
         Other ..........................................................         853          94
                                                                            ---------     -------
             Deferred tax liabilities....................................      27,104      34,812
                                                                            ---------     -------
             Net deferred tax assets.....................................   $ 101,834      92,585
                                                                            =========     =======
</TABLE>
<PAGE>

         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 $101.8 million at December 31,
2005.

         There were no changes in the deferred tax asset valuation allowance for
the year ended  December 31, 2003.  Changes in the deferred tax asset  valuation
allowance for the years ended December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>

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

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

         Upon  completion of the  acquisition  of CIB Bank, the net deferred tax
assets associated with the acquisition were evaluated to determine whether it is
more likely than not that the net deferred tax assets will be  recognized in the
future.  The  ability  to  utilize  the net  deferred  tax  assets  recorded  in
connection  with the  acquisition is subject to a number of  limitations.  Among
these  limitations is the restriction that any built-in loss (the fair value was
less than the tax basis) that  existed at the date of  acquisition,  if realized
within the first  five  years  subsequent  to the date of  acquisition,  will be
disallowed  and must be carried  forward and  subjected to rules  similar to the
rules for  carrying  forward net  operating  losses.  Based upon these  factors,
management  determined that a valuation  allowance should be established for CIB
Bank in the amount of $17.8  million.  Subsequent  reductions  in the  valuation
allowance will be credited to intangible  assets associated with the purchase of
subsidiaries.

         At  December  31,  2005 and  2004,  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, 2005 and 2004, for federal income taxes purposes, First
Banks had net  operating  loss  carryforwards  relating to  pre-acquisition  tax
losses of acquired entities of approximately  $101.5 million and $110.8 million,
respectively.  At December 31, 2005,  the net operating loss  carryforwards  for
First Banks expire as follows:
<TABLE>
<CAPTION>

                                                                                (dollars expressed in thousands)
         Year ending December 31:
<S>          <C>                                                                              <C>
             2006......................................................................   $   1,654
             2007......................................................................       4,356
             2008......................................................................      19,881
             2009......................................................................       9,714
             2010 - 2025...............................................................      65,862
                                                                                          ---------
                  Total................................................................   $ 101,467
                                                                                          =========
</TABLE>

         During 2004, First Banks recognized built-in losses associated with the
acquisition  of CIB Bank.  A  portion  of the  recognized  built-in  losses  was
disallowed  for 2004 and is  required  to be  carried  forward  subject to rules
similar to the rules for carrying forward net operating  losses.  Utilization of
the recognized  built-in losses is allowed  subsequent to the utilization of any
net operating loss  carryforwards  associated  with the acquisition of CIB Bank.
Consequently,  at December 31,  2005,  First Banks had  deferred  built-in  loss
carryforwards  of  approximately  $9.1  million.  Utilization  of  the  deferred
built-in  loss  carryforwards  is allowed  beginning in the year 2016,  and such
losses will expire in the year 2024.



<PAGE>


(14)     EARNINGS PER COMMON SHARE

         The  following  is a  reconciliation  of  the  basic  and  diluted  EPS
computations for the years ended December 31, 2005, 2004 and 2003:
<TABLE>
<CAPTION>

                                                                                                 Per Share
                                                                      Income        Shares         Amount
                                                                      ------        ------         ------
                                                              (dollars in thousands, except share and per share data)
   Year ended December 31, 2005:
<S>                                                                  <C>            <C>         <C>
     Basic EPS - income available to common stockholders........     $ 96,120       23,661      $ 4,062.36
     Effect of dilutive securities:
       Class A convertible preferred stock......................          769          516          (54.90)
                                                                     --------      -------      ----------
     Diluted EPS - income available to common stockholders......     $ 96,889       24,177      $ 4,007.46
                                                                     ========      =======      ==========

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

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

(15)     CREDIT COMMITMENTS

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

         Commitments  to extend fixed and variable rate credit,  and  commercial
and standby letters of credit at December 31, 2005 and 2004 were as follows:

<TABLE>
<CAPTION>

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

<S>                                                                           <C>             <C>
         Commitments to extend credit......................................   $ 2,785,028     2,311,529
         Commercial and standby letters of credit..........................       191,634       180,785
                                                                              -----------     ---------
                                                                              $ 2,976,662     2,492,314
                                                                              ===========     =========
</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.
<PAGE>

         Commercial and standby  letters of credit are  conditional  commitments
issued to guarantee the performance of a customer to a third party.  The letters
of  credit  are  primarily  issued  to  support  public  and  private  borrowing
arrangements,   including   commercial   paper,   bond   financing  and  similar
transactions.  Most letters of credit extend for less than one year.  The credit
risk  involved  in  issuing  letters of credit is  essentially  the same as that
involved  in  extending  loan  facilities  to  customers.  Upon  issuance of the
commitments, First Banks typically holds marketable securities,  certificates of
deposit, inventory, real property or other assets as collateral supporting those
commitments  for which  collateral is deemed  necessary.  The standby letters of
credit at December 31, 2005 expire, at various dates, all within 11 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 intangible
assets  associated  with  the  purchase  of  subsidiaries  and  branch  offices.
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.

         The  estimated  fair value of First  Banks'  financial  instruments  at
December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>


                                                              2005                           2004
                                                    -------------------------      -------------------------
                                                     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......................   $  286,652       286,652         267,110        267,110
   Investment securities:
       Trading....................................        3,389         3,389              --             --
       Available for sale.........................    1,311,289     1,311,289       1,788,063      1,788,063
       Held to maturity...........................       26,105        25,791          25,286         25,586
   Net loans......................................    6,885,441     6,847,421       5,987,261      5,986,880
   Derivative instruments.........................       (6,530)       (6,530)          4,681          4,681
   Bank-owned life insurance......................      111,442       111,442         102,239        102,239
   Accrued interest receivable....................       43,280        43,280          39,776         39,776
   Interest rate lock commitments.................          (49)          (49)             20             20
   Forward commitments to sell
       mortgage-backed securities.................         (538)         (538)            (99)           (99)
                                                     ==========     =========       =========      =========

Financial Liabilities:
   Deposits:
       Noninterest-bearing demand.................   $1,299,350     1,299,350       1,194,662      1,194,662
       Interest-bearing demand....................      981,837       981,837         875,489        875,489
       Savings....................................    2,106,470     2,106,470       2,249,644      2,249,644
       Time deposits..............................    3,154,174     3,154,174       2,832,175      2,832,175
   Other borrowings...............................      539,174       539,174         594,750        594,750
   Notes payable..................................      100,000       100,000          15,000         15,000
   Accrued interest payable.......................       21,023        21,023          14,376         14,376
   Subordinated debentures........................      215,461       219,675         273,300        283,337
                                                     ==========     =========       =========      =========

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

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

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

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

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

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

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

         Deposits: The fair value of deposits generally payable on demand (i.e.,
noninterest-bearing   and  interest-bearing  demand  and  savings  accounts)  is
considered  equal  to their  respective  carrying  amounts  as  reported  in the
consolidated  balance sheets. The fair value of demand deposits does not include
the  benefit  that  results  from  the  low-cost  funding  provided  by  deposit
liabilities  compared to the cost of  borrowing  funds in the  market.  The fair
value disclosed for time deposits was estimated utilizing a discounted cash flow
calculation  that applied  interest  rates  currently  being  offered on similar
deposits to a schedule of aggregated monthly maturities of time deposits.

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

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

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

(17)     EMPLOYEE BENEFITS

         First Banks' 401(k) plan is a  self-administered  savings and incentive
plan covering  substantially  all employees.  Employer match  contributions  are
determined annually under the plan by First Banks' Board of Directors.  Employee
contributions  were  limited to $14,000 of gross  compensation  for 2005.  Total
employer  contributions under the plan were $2.4 million,  $2.1 million and $1.7
million for the years ended December 31, 2005, 2004 and 2003, respectively.  The
plan assets are held and managed under a trust agreement with First Bank's trust
department.

(18)     PREFERRED STOCK

         First Banks has two classes of preferred stock outstanding. The Class A
preferred  stock is  convertible  into shares of common stock at a rate based on
the ratio of the par value of the preferred stock to the current market value of
the common stock at the date of  conversion,  to be  determined  by  independent
appraisal at the time of  conversion.  Shares of Class A preferred  stock may be
redeemed  by  First  Banks at any  time at  105.0%  of par  value.  The  Class B
preferred stock may not be redeemed or converted. The redemption of any issue of
preferred  stock  requires  the prior  approval of the Board of Governors of the
Federal Reserve System (Federal Reserve).

         The holders of the Class A and Class B preferred stock have full voting
rights.  Dividends  on the Class A and Class B  preferred  stock are  adjustable
quarterly  based  on the  highest  of the  Treasury  Bill  Rate or the Ten  Year
Constant  Maturity  Rate  for the  two-week  period  immediately  preceding  the
beginning  of the  quarter.  This rate shall not be less than 6.0% nor more than
12.0% on the Class A preferred  stock,  or less than 7.0% nor more than 15.0% on
the Class B preferred stock. The annual dividend rates for the Class A and Class
B preferred stock were 6.0% and 7.0%, respectively, for the years ended December
31, 2005, 2004 and 2003.



<PAGE>


(19)     TRANSACTIONS WITH RELATED PARTIES

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

         First Services,  L.P., a limited partnership  indirectly owned by First
Banks'  Chairman  and  members of his  immediate  family,  provides  information
technology,  item processing and various related  services to First Banks,  Inc.
and its subsidiaries.  Fees paid under agreements with First Services, L.P. were
$29.6 million,  $26.6 million and $26.8 million for the years ended December 31,
2005,  2004 and 2003,  respectively.  First Services,  L.P.  leases  information
technology  and other  equipment  from First Bank.  During 2005,  2004 and 2003,
First  Services,  L.P.  paid  First Bank $4.3  million,  $4.3  million  and $4.2
million, respectively, in rental fees for the use of that equipment.

         First Brokerage America, L.L.C., a limited liability company indirectly
owned by First Banks'  Chairman and members of his  immediate  family,  received
approximately  $2.6  million,  $3.3 million and $3.2 million for the years ended
December  31,  2005,  2004  and  2003,  respectively,  in  commissions  paid  by
unaffiliated  third-party companies.  The commissions received were primarily in
connection with the sales of annuities,  securities and other insurance products
to customers of First Bank.

         First Title  Guaranty LLC D/B/A First Banc Insurors  (First  Title),  a
limited liability company  established and administered by First Banks' Chairman
and members of his immediate family, received approximately  $379,000,  $514,000
and $492,000 for the years ended December 31, 2005, 2004 and 2003, respectively,
in commissions for policies  purchased by First Banks or customers of First Bank
from unaffiliated  third-party  insurers.  The insurance premiums on which these
commissions  were  earned  were  competitively  bid,  and First  Banks deems the
commissions  First Title earned from  unaffiliated  third-party  companies to be
comparable to those that would have been earned by an  unaffiliated  third-party
agent.

         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 $335,000, $297,000 and $255,000 for the years
ended December 31, 2005, 2004 and 2003, respectively.

         First  Bank  has had in the  past,  and may  have in the  future,  loan
transactions   in  the  ordinary  course  of  business  with  its  directors  or
affiliates.  These  loan  transactions  have been on the same  terms,  including
interest rates and  collateral,  as those  prevailing at the time for comparable
transactions with unaffiliated  persons and did not involve more than the normal
risk  of  collectibility  or  present  other  unfavorable  features.   Loans  to
directors,  their  affiliates and executive  officers of First Banks,  Inc. were
approximately  $37.9  million and $31.0  million at December  31, 2005 and 2004,
respectively.  First Bank does not extend  credit to its officers or to officers
of First  Banks,  Inc.,  except  extensions  of credit  secured by  mortgages on
personal  residences,  loans  to  purchase  automobiles,  personal  credit  card
accounts and deposit account overdraft  protection under a plan whereby a credit
limit has been  established  in  accordance  with First Bank's  standard  credit
criteria.

         First Banks pays  compensation  to its Chairman and certain  members of
his immediate  family.  Mr. Steven F.  Schepman,  the son-in-law of First Banks'
Chairman,  and Director of First Banks since July 2004 and Senior Vice President
and Chief  Financial  Officer of First Banks since August 2005,  received salary
and bonus compensation of $195,000 and $182,100 for the years ended December 31,
2005 and 2004,  respectively.  Mr. Michael J. Dierberg,  the son of First Banks'
Chairman,  and  Director  and  General  Counsel of First  Banks until July 2004,
received  salary and bonus  compensation  of $62,300 for the year ended December
31, 2004.

         On August 30, 2004,  First Bank granted to FCA, a corporation  owned by
First Banks' Chairman and members of his immediate  family,  a written option to
purchase 735 Membership  Interests of SBLS LLC, a wholly owned limited liability
company of First Bank, at a price of $10,000 per  Membership  Interest,  or $7.4
million in  aggregate.  The option could have been  exercised by FCA at any time

<PAGE>

prior to its expiration,  which was extended to June 30, 2005. On June 30, 2005,
FCA   exercised   this  option  and  paid  First  Bank  $7.4  million  in  cash.
Consequently,  SBLS LLC became  51.0% owned by First Bank and 49.0% owned by FCA
as of June 30, 2005.

         On June 30,  2005,  SBLS LLC  executed a  Multi-Party  Agreement by and
among SBLS LLC, First Bank,  Colson Services Corp.,  physical transfer agent for
the SBA, and the SBA, in addition to a Loan and Security  Agreement by and among
First Bank and the SBA  (collectively,  the Agreement) that provides a warehouse
line of credit for loan funding purposes.  The Agreement  provides for a maximum
credit  line of $50.0  million  and has an  initial  term of three  years with a
maturity date of June 30, 2008. At the end of the first year, First Bank, at its
option, may extend the existing maturity date by one additional year, subject to
certain conditions.  Interest is payable monthly, in arrears, on the outstanding
balances at a rate equal to First Bank's prime lending rate.  Advances under the
Agreement  are secured by the  assignment  of the majority of the assets of SBLS
LLC.  The  balance of advances  outstanding  under this line of credit was $31.4
million at December 31, 2005.  Interest  expense recorded under the Agreement by
SBLS LLC since its  inception on June 30, 2005 was $1.9  million.  However,  the
balance of the advances  under the  Agreement and the related  interest  expense
recognized  by SBLS LLC are fully  eliminated  for purposes of the  Consolidated
Financial Statements.

         On August 5, 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  provides  for WWT to  provide  information  technology
services  associated  with the  deployment  of personal  computers to First Bank
employees in an effort to further  modernize  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 with fees not to exceed
$500,000 for the year ended  December 31, 2005.  As of December 31, 2005,  First
Bank had made payments of $471,000 under the contract.

         During 2005,  First Bank  contributed  $2.5 million and $1.5 million to
The  Dierberg   Foundation  and  the  Dierberg   Operating   Foundation,   Inc.,
respectively,  charitable  foundations  created  by First  Banks'  Chairman  and
members of his immediate family. There were no charitable contributions to these
organizations  during 2004. During 2003, First Banks contributed  231,779 shares
of  Allegiant  common  stock with a fair value of $5.1  million to The  Dierberg
Foundation.   In  conjunction  with  this  transaction,   First  Banks  recorded
charitable contribution expense of $5.1 million, which was partially offset by a
gain on the contribution of these  available-for-sale  investment  securities of
$2.3 million,  representing  the difference  between the cost basis and the fair
value of the common stock on the date of the  contribution.  In addition,  First
Banks recognized a tax benefit of $2.5 million associated with this transaction.
The  contribution  of the common stock  eliminated  First Banks'  investment  in
Allegiant.

         First Banks  periodically  purchases  various products from Hermannhof,
Inc.  and  Dierberg  Star Lane  Vineyards,  entities  that were created 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, 2005, 2004 and 2003,
First Banks purchased products of approximately $320,000, $189,000 and $150,000,
in aggregate, respectively, from these entities.

(20)     BUSINESS SEGMENT RESULTS

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

<PAGE>

banking,  safe deposit boxes and trust,  private banking and institutional money
management  services.  The revenues generated by First Bank consist primarily of
interest income, generated from the loan and investment security portfolios, and
service charges and fees, generated from the deposit products and services.  The
geographic areas include eastern Missouri, Illinois, including Chicago, southern
and  northern  California,  and Houston  and Dallas,  Texas.  The  products  and
services are offered to  customers  primarily  within  First  Banks'  respective
geographic areas.

         The business  segment results are consistent with First Banks' internal
reporting system and, in all material  respects,  with U.S.  generally  accepted
accounting  principles and predominant  practices  within the banking  industry.
Such  principles  and  practices are  summarized  in Note 1 to the  Consolidated
Financial Statements. The business segment results are summarized as follows:
<TABLE>
<CAPTION>

                                                                           Corporate, Other
                                                                           and Intercompany
                                                First Bank                 Reclassifications (1)           Consolidated Totals
                                    --------------------------------  ----------------------------  -------------------------------
                                       2005       2004       2003       2005      2004      2003       2005      2004       2003
                                       ----       ----       ----       ----      ----      ----       ----      ----       ----
                                                                    (dollars expressed in thousands)
Balance sheet information:

<S>                                 <C>         <C>        <C>          <C>        <C>       <C>    <C>        <C>        <C>
Investment securities.............. $1,324,219  1,803,454  1,042,809    16,564     9,895     6,905  1,340,783  1,813,349  1,049,714
Loans, net of unearned discount....  7,020,771  6,137,968  5,328,075        --        --        --  7,020,771  6,137,968  5,328,075
Goodwill...........................    167,056    156,849    145,548        --        --        --    167,056    156,849    145,548
Total assets.......................  9,148,931  8,720,331  7,097,635    21,402    12,510     9,305  9,170,333  8,732,841  7,106,940
Deposits...........................  7,601,162  7,161,636  5,977,042   (59,331)   (9,666)  (15,427) 7,541,831  7,151,970  5,961,615
Notes payable......................         --         --         --   100,000    15,000    17,000    100,000     15,000     17,000
Subordinated debentures............         --         --         --   215,461   273,300   209,320    215,461    273,300    209,320
Stockholders' equity...............    931,192    877,473    766,397  (252,254) (276,580) (216,582)   678,938    600,893    549,815
                                    ==========  =========  =========  ========  ========  ========  =========  =========  =========

Income statement information:

Interest income.................... $  493,182    394,196    390,340       758       586       813    493,940    394,782    391,153
Interest expense...................    145,608     79,260     85,524    22,651    15,507    18,502    168,259     94,767    104,026
                                    ----------  ---------  ---------  --------  --------  --------  ---------  ---------  ---------
     Net interest income...........    347,574    314,936    304,816   (21,893)  (14,921)  (17,689)   325,681    300,015    287,127
Provision for loan losses..........     (4,000)    25,750     49,000        --        --        --     (4,000)    25,750     49,000
                                    ----------  ---------  ---------  --------  --------  --------  ---------  ---------  ---------
     Net interest income after
       provision for loan losses...    351,574    289,186    255,816   (21,893)  (14,921)  (17,689)   329,681    274,265    238,127
Noninterest income.................     95,529     84,077     79,813      (786)     (591)    7,895     94,743     83,486     87,708
Noninterest expense................    273,142    226,183    216,373     3,154     3,322    10,696    276,296    229,505    227,069
                                    ----------  ---------  ---------  --------  --------  --------  ---------  ---------  ---------
     Income before provision for
       income taxes and minority
       interest in loss of
       subsidiary..................    173,961    147,080    119,256   (25,833)  (18,834)  (20,490)   148,128    128,246     98,766
Provision for income taxes.........     61,517     54,682     44,871    (9,008)   (9,344)   (8,916)    52,509     45,338     35,955
                                    ----------  ---------  ---------  --------  --------  --------  ---------  ---------  ---------
     Income before minority
       interest in loss of
       subsidiary..................    112,444     92,398     74,385   (16,825)   (9,490)  (11,574)    95,619     82,908     62,811
Minority interest in loss
     of subsidiary.................     (1,287)        --         --        --        --        --     (1,287)        --         --
                                    ----------  ---------  ---------  --------  --------  --------  ---------  ---------  ---------
     Net income.................... $  113,731     92,398     74,385   (16,825)   (9,490)  (11,574)    96,906     82,908     62,811
                                    ==========  =========  =========  ========  ========  ========  =========  =========  =========
---------------
(1)  Corporate and other includes $13.4 million, $9.8 million and $11.6 million of interest expense on subordinated debentures,
     after applicable income tax benefit of $7.2 million, $5.3 million and $6.3 million for the years ended  December 31, 2005,
     2004 and 2003, respectively.
</TABLE>

(21)     REGULATORY CAPITAL

         First  Banks and First Bank are subject to various  regulatory  capital
requirements administered by the federal and state banking agencies.  Failure to
meet minimum capital  requirements can initiate  certain  mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct  material  effect on First Banks'  financial  statements.  Under  capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
First Banks and First Bank must meet specific  capital  guidelines  that involve
quantitative measures of assets, liabilities and certain off-balance sheet items
as  calculated  under  regulatory  accounting  practices.  Capital  amounts  and
classifications  are also subject to  qualitative  judgments  by the  regulators
about components, risk weightings and other factors.

         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy  require  First  Banks and First Bank to maintain  minimum  amounts and
ratios  of  total  and  Tier  1  capital  (as  defined  in the  regulations)  to
risk-weighted  assets,  and of Tier 1  capital  to  average  assets.  Management
believes, as of December 31, 2005 and 2004, First Banks and First Bank were each

<PAGE>

well  capitalized.  As of December 31, 2005, 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, 2005 and 2004,  First Banks' and First Bank's  required
and actual capital ratios were as follows:

<TABLE>
<CAPTION>

                                                                                                To be Well
                                                       Actual                                Capitalized Under
                                                 ------------------       For Capital        Prompt Corrective
                                                  2005        2004     Adequacy Purposes     Action Provisions
                                                  ----        ----     -----------------     -----------------

Total capital (to risk-weighted assets):
<S>                                              <C>          <C>             <C>                  <C>
     First Banks.............................    10.14%       10.61%          8.0%                 10.0%
     First Bank..............................    10.66        10.73           8.0                  10.0

Tier 1 capital (to risk-weighted assets):
     First Banks.............................     8.88         8.43           4.0                   6.0
     First Bank..............................     9.41         9.47           4.0                   6.0

Tier 1 capital (to average assets):
     First Banks.............................     8.13         7.89           3.0                   5.0
     First Bank..............................     8.61         8.86           3.0                   5.0
</TABLE>

         On March 1, 2005,  the Board adopted a final rule,  Risk-Based  Capital
Standards:  Trust  Preferred  Securities  and the  Definition of Capital,  which
allows for the continued limited inclusion of trust preferred securities in Tier
1 capital.  The Federal  Reserve's  final rule limits  restricted  core  capital
elements to 25% of the sum of all core capital  elements,  including  restricted
core  capital  elements,  net of  goodwill  less  any  associated  deferred  tax
liability. Amounts of restricted core capital elements in excess of these limits
may generally be included in Tier 2 capital. Specifically, amounts of qualifying
trust preferred securities and cumulative perpetual preferred stock in excess of
the 25% limit may be included in Tier 2 capital,  but will be limited,  together
with  subordinated  debt  and  limited-life  preferred  stock,  to 50% of Tier 1
capital. In addition, the final rule provides that in the last five years before
the maturity of the underlying  subordinated note, the outstanding amount of the
associated trust preferred  securities is to be excluded from Tier 1 capital and
included in Tier 2 capital,  subject to  one-fifth  amortization  per year.  The
final rule provides for a five-year  transition  period,  ending March 31, 2009,
for the  application  of the  quantitative  limits.  Until March 31,  2009,  the
aggregate  amount  of  qualifying   cumulative  perpetual  preferred  stock  and
qualifying trust preferred  securities that may be included in Tier 1 capital is
limited to 25% of the sum of the  following  core capital  elements:  qualifying
common stockholders' equity,  qualifying  noncumulative and cumulative perpetual
preferred  stock,  qualifying  minority  interest  in  the  equity  accounts  of
consolidated subsidiaries and qualifying trust preferred securities. First Banks
has evaluated the impact of the final rule on the Company's  financial condition
and results of  operations,  and determined  the  implementation  of the Federal
Reserve's  final rules that will be  effective  in March 2009 would reduce First
Banks' Tier 1 capital (to  risk-weighted  assets) and Tier 1 capital (to average
assets) to 8.47% and 7.74%,  respectively,  as of December 31, 2005.  In October
2005,  the  Federal  Reserve,  in  conjunction  with  various  other  regulatory
agencies,  announced  plans  to  consider  various  proposed  revisions  to U.S.
risk-based capital standards that would enhance risk sensitivity of the existing
framework.  The comment  period ended in January  2006.  First Banks is awaiting
further  guidance  from the Board  pending  the  outcome  of the newly  proposed
revisions,  and is continuing to evaluate the proposed changes and their overall
impact on the Company's financial condition and results of operations.

(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  $81.5 million at December
31, 2005, 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, 2005 and 2004,  and  condensed  statements of income and cash flows
for the years ended December 31, 2005, 2004 and 2003:

<TABLE>
<CAPTION>

                                  CONDENSED BALANCE SHEETS

                                                                                 December 31,
                                                                              -----------------
                                                                              2005         2004
                                                                              ----         ----
                                                                       (dollars expressed in thousands)
                             Assets
                             ------

<S>                                                                        <C>              <C>
Cash deposited in First Bank...........................................    $   59,036       8,359
Cash deposited in unaffiliated financial institutions..................         1,789          --
                                                                           ----------     -------
     Total cash........................................................        60,825       8,359
Investment securities..................................................        16,564       9,895
Investment in subsidiaries.............................................       931,690     879,316
Other assets...........................................................         3,425       2,665
                                                                           ----------     -------
     Total assets......................................................    $1,012,504     900,235
                                                                           ==========     =======

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

Notes payable..........................................................    $  100,000      15,000
Subordinated debentures................................................       215,461     273,300
Accrued expenses and other liabilities.................................        18,105      11,042
                                                                           ----------     -------
     Total liabilities.................................................       333,566     299,342
Stockholders' equity...................................................       678,938     600,893
                                                                           ----------     -------
     Total liabilities and stockholders' equity........................    $1,012,504     900,235
                                                                           ==========     =======

                             CONDENSED STATEMENTS OF INCOME


                                                                           Years Ended December 31,
                                                                       ---------------------------------
                                                                         2005         2004        2003
                                                                         ----         ----        ----
                                                                       (dollars expressed in thousands)

Income:
   Dividends from subsidiaries.....................................    $ 94,050      40,000       67,000
   Management fees from subsidiaries...............................      31,975      27,853       23,992
   Gain on sale of available-for-sale investment securities........          --          --        8,218
   Other...........................................................       1,049         710        1,301
                                                                       --------      ------      -------
      Total income.................................................     127,074      68,563      100,511
                                                                       --------      ------      -------
Expense:
   Interest........................................................      22,860      15,597       18,664
   Salaries and employee benefits..................................      23,238      20,699       19,366
   Legal, examination and professional fees........................       3,959       2,943        3,903
   Charitable contributions........................................         100          43        5,134
   Other...........................................................       8,687       8,114        6,852
                                                                       --------      ------      -------
      Total expense................................................      58,844      47,396       53,919
                                                                       --------      ------      -------
      Income before benefit for income taxes and equity
        in undistributed earnings of subsidiaries..................      68,230      21,167       46,592
Benefit for income taxes...........................................      (9,004)     (9,344)      (8,891)
                                                                       --------      ------      -------
      Income before equity in undistributed earnings
        of subsidiaries............................................      77,234      30,511       55,483
Equity in undistributed earnings of subsidiaries...................      19,672      52,397        7,328
                                                                       --------      ------      -------
      Net income...................................................    $ 96,906      82,908       62,811
                                                                       ========      ======      =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                            CONDENSED STATEMENTS OF CASH FLOWS

                                                                            Years Ended December 31,
                                                                       ----------------------------------
                                                                          2005         2004        2003
                                                                          ----         ----        ----
                                                                        (dollars expressed in thousands)

Cash flows from operating activities:
<S>                                                                    <C>            <C>          <C>
  Net income......................................................     $  96,906      82,908       62,811
  Adjustments to reconcile net income to net cash provided by
     operating activities:
       Net income of subsidiaries.................................      (113,722)    (92,397)     (74,328)
       Dividends from subsidiaries................................        94,050      40,000       67,000
       Other, net.................................................         4,882      (3,262)         292
                                                                       ---------     -------     --------
         Net cash provided by operating activities................        82,116      27,249       55,775
                                                                       ---------     -------     --------

Cash flows from investing activities:
  Increase in investment securities...............................        (5,304)       (915)          --
  Investment in common securities of affiliated business
     and statutory trusts.........................................            --      (1,857)      (2,197)
  Payments from redemption of investment in common securities
     of affiliated business and statutory trusts..................         1,778          --        4,090
  Acquisitions of subsidiaries....................................       (52,400)    (76,067)          --
  Capital (contributions) reductions (to) from subsidiaries.......            --     (15,000)      10,000
  Other, net......................................................         1,340         (39)          --
                                                                       ---------     -------     --------
         Net cash (used in) provided by investing activities......       (54,586)    (93,878)      11,893
                                                                       ---------     -------     --------

Cash flows from financing activities:
  Advances drawn on notes payable.................................       100,000      15,000       34,500
  Repayments of notes payable.....................................       (15,000)    (17,000)     (24,500)
  Proceeds from issuance of subordinated debentures...............            --      61,857       70,907
  Repayments of subordinated debentures...........................       (59,278)         --     (136,341)
  Payment of preferred stock dividends............................          (786)       (786)        (786)
                                                                       ---------     -------     --------
         Net cash provided by (used in) financing activities......        24,936      59,071      (56,220)
                                                                       ---------     -------     --------
         Net increase (decrease)in cash...........................        52,466      (7,558)      11,448
Cash, beginning of year...........................................         8,359      15,917        4,469
                                                                       ---------     -------     --------
Cash, end of year.................................................     $  60,825       8,359       15,917
                                                                       =========     =======     ========

Noncash investing activities:
  Cash paid for interest..........................................     $  18,690      13,527       16,489
                                                                       =========     =======     ========
</TABLE>

(24)     CONTINGENT LIABILITIES

         In October  2000,  First Banks  entered  into two  continuing  guaranty
contracts.  For value  received,  and for the purpose of inducing a pension fund
and its  trustees  and a welfare  fund and its  trustees  (the Funds) to conduct
business with MVP, First Bank's institutional  investment management subsidiary,
First Banks irrevocably and  unconditionally  guaranteed payment of and promised
to pay to each of the Funds any  amounts  up to the sum of $5.0  million  to the
extent  MVP is liable to the  Funds  for a breach of the  Investment  Management
Agreements   (including   the   Investment   Policy   Statement  and  Investment
Guidelines),  by and  between  MVP and the Funds  and/or  any  violation  of the
Employee  Retirement  Income  Security Act by MVP  resulting in liability to the
Funds.  The  guaranties are continuing  guaranties of all  obligations  that may
arise  for  transactions  occurring  prior  to  termination  of  the  Investment
Management  Agreements  and are  coexistent  with  the  term  of the  Investment
Management  Agreements.  The Investment  Management Agreements have no specified
term but may be terminated  at any time upon written  notice by the Trustees or,
at First Banks' option, upon thirty days written notice to the Trustees.  In the
event of termination of the Investment Management  Agreements,  such termination
shall have no effect on the liability of First Banks with respect to obligations
incurred before such  termination.  The obligations of First Banks are joint and
several  with those of MVP.  First Banks does not have any  recourse  provisions
that would  enable it to recover  from third  parties any amounts paid under the
contracts  nor does  First  Banks  hold any  assets  as  collateral  that,  upon
occurrence  of a required  payment  under the  contract,  could be liquidated to
recover all or a portion of the  amount(s)  paid.  At December 31,  2005,  First
Banks had not recorded a liability  for the  obligations  associated  with these
guaranty  contracts as the likelihood  that First Banks will be required to make
payments under the contracts is remote.
<PAGE>

         On June 30, 2004,  First Bank  recorded a liability of $2.0 million for
recourse  obligations  related to the  completion  of the sale of a  significant
portion of the leases in its commercial leasing  portfolio.  For value received,
First  Bank,  as  seller,  indemnified  the  buyer of  certain  leases  from any
liability or loss resulting from defaults  subsequent to the sale.  First Bank's
indemnification  for  the  recourse   obligations  is  limited  to  a  specified
percentage,  ranging from 15% to 25%, of the aggregate  lease  purchase price of
specific pools of leases sold. As of December 31, 2005 and 2004,  this liability
was  $500,000  and  $1.6  million,  respectively,  reflecting  a  change  in the
estimated  probable loss based upon the payments  received from the borrowers of
the specific pools of leases sold and the performance of the portfolio.

         On August 31, 2004, SBLS LLC acquired  substantially  all of the assets
and assumed certain  liabilities of SBLS, as further  discussed in Note 2 to the
Consolidated  Financial  Statements.  The Amended and  Restated  Asset  Purchase
Agreement (Asset Purchase  Agreement)  governing this  transaction  provides for
certain payments to the seller  contingent on future  valuations of specifically
identified  assets,   including  servicing  assets  and  retained  interests  in
securitizations. SBLS LLC was not required to make any payments to the seller as
of September 30, 2005, the first  measurement  date under the terms of the Asset
Purchase Agreement.  As of December 31, 2005 and 2004, SBLS LLC had not recorded
a liability for the obligations  associated with these contingent  payments,  as
the likelihood  that SBLS LLC will be required to make future payments under the
Asset Purchase Agreement is not ascertainable at the present time.

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

(25)     SUBSEQUENT EVENTS (UNAUDITED)

         On January 3, 2006, First Banks completed its acquisition of a majority
of the outstanding common stock of FNBS, Sachse,  Texas, for approximately $20.8
million in cash. 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.  The  assets  acquired  and  liabilities  assumed  were
recorded at their estimated fair value on the  acquisition  date. The fair value
adjustments  represent current estimates and are subject to further  adjustments
as  the  valuation  data  is  finalized.  Preliminary  goodwill,  which  is  not
deductible  for tax  purposes,  was  approximately  $9.0  million,  and the core
deposit  intangibles,  which are not  deductible  for tax  purposes  and will be
amortized over five years utilizing the straight-line method, were approximately
$3.6 million. FNBS was merged with and into First Bank.

         On January 18, 2006,  First Banks executed a Stock  Purchase  Agreement
providing  for  the  acquisition  of  First  Independent  National  Bank  (First
Independent)  for  approximately  $19.2 million in cash.  First  Independent  is
headquartered in Plano, Texas and operates two banking offices in Plano,  Texas,
located in Collin County.  In addition,  First  Independent is in the process of
opening a de novo branch banking  office located in the Preston Forest  Shopping
Center in  Dallas  County.  The  transaction,  which is  subject  to  regulatory
approvals,  is expected to be completed  during the second  quarter of 2006.  At
December 31, 2005, First Independent had assets of approximately  $75.4 million,
loans, net of unearned  discount,  of approximately  $61.1 million,  deposits of
approximately  $66.1  million and  stockholders'  equity of  approximately  $8.0
million.

         On January 20, 2006,  First Bank completed its  acquisition of the East
Renner Branch. At the time of the acquisition, the East Renner Branch had assets
of  approximately  $667,000,  including  loans,  net of  unearned  discount,  of
approximately $144,000, and deposits of approximately $1.1 million.

         First Banks  transferred  approximately  $59.7 million of nonperforming
loans to its held for sale portfolio on December 31, 2005 and actively  marketed
the loans for sale  through an  independent  third  party.  On January 30, 2006,
First  Banks  received a payoff on one of these  nonaccrual  loans held for sale
that had a carrying  value of $12.4  million at December 31,  2005.  This credit
relationship  was acquired with the acquisition of CIB Bank. In conjunction with
this loan payoff,  First Banks  recognized  a loan  recovery of $5.0 million and
interest  income  and late fees of $2.0  million.  In March  2006,  First  Banks
completed  the sale of a majority of the remaining  nonaccrual  loans that had a
carrying  value of  approximately  $32.5 million in  aggregate,  at December 31,

<PAGE>

2005.  First  Bank  recorded  a  gain,   before   applicable  income  taxes,  of
approximately  $1.7 million on the sale of these loans.  First Bank continues to
actively  market the  remaining  nonaccrual  loans that had a carrying  value of
approximately $14.9 million at December 31, 2005.

         On January 31, 2006,  First Bank  executed a Stock  Purchase  Agreement
providing for the acquisition of KIF, Inc. (KIF), 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  approximately  $52.8 million in cash. In  conjunction
with the  acquisition  of UPAC,  First Banks will repay in full the  outstanding
balance  of the  subordinated  notes of UPAC,  which  was  approximately  $114.2
million at December  31,  2005.  UPAC is an insurance  premium  finance  company
headquartered  in the Kansas  City suburb of Lenexa,  Kansas and  operates in 49
states,  including offices in St. Louis, Chicago, Los Angeles,  Dallas,  Boston,
Cleveland,  Fort  Lauderdale,  Minneapolis,  New  York  City,  Philadelphia  and
Portland.  The  transaction,  which is subject to certain  state  approvals,  is
expected to be  completed  during the second  quarter of 2006.  At December  31,
2005, UPAC had assets of  approximately  $146.6 million,  loans of approximately
$144.2 million and stockholders' equity of approximately $17.3 million.

         On February 14, 2006,  First Bank terminated its two $50.0 million term
repurchase  agreements  with maturity  dates of June 14, 2007,  and recognized a
$1.6 million loss on the related sale of the  underlying  securities  associated
with the term repurchase agreements.

         On February 16, 2006, First Banks terminated its single remaining $25.0
million notional fair value interest rate swap agreement.  The underlying hedged
liabilities  were  a  portion  of  First  Banks'  subordinated  debentures.   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 fair value interest rate
swap agreements that were terminated  effective May 27, 2005, totaling $834,000,
in its  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.

         On March 1,  2006,  First  Bank  Statutory  Trust IV (FBST IV), a newly
formed  Delaware  statutory  trust,  issued 40,000 shares of variable rate trust
preferred  securities  at $1,000  per share in a private  placement,  and issued
1,238  shares of common  securities  to First  Banks at $1,000 per share.  First
Banks owns all of the common  securities  of FBST IV. The gross  proceeds of the
offering  were  used by FBST IV to  purchase  $41.2  million  of  variable  rate
subordinated  debentures  from First  Banks,  maturing  on March 15,  2036.  The
maturity date of the subordinated  debentures may be shortened, at the option of
First Banks,  to a date not earlier than March 15, 2011,  if certain  conditions
are  met.  The  subordinated  debentures  are the  sole  asset  of FBST  IV.  In
connection  with the issuance of the FBST IV preferred  securities,  First Banks
made certain  guarantees and  commitments  that, in the aggregate,  constitute a
full and  unconditional  guarantee by First Banks of the  obligations of FBST IV
under  the FBST IV  preferred  securities.  Proceeds  from the  issuance  of the
subordinated  debentures  to FBST  IV,  net of  offering  expenses,  were  $41.2
million.  The  distribution  rate on the FBST IV securities is equivalent to the
three-month  LIBOR plus 142.0 basis points,  and is payable quarterly in arrears
beginning June 15, 2006.

         On March 7,  2006,  First  Bank  executed  a  Purchase  and  Assumption
Agreement  providing  for the sale of the  Pittsfield  banking  office  in Mount
Sterling,  Illinois to  Beardstown  following  the  completion  of First  Banks'
acquisition  of  Bancorp,  as further  described  in Note 2 to the  Consolidated
Financial Statements. The transaction, which is subject to regulatory approvals,
is expected to be completed during the second quarter of 2006.















<PAGE>

<TABLE>
<CAPTION>


                                                  FIRST BANKS, INC.
                                   QUARTERLY CONDENSED FINANCIAL DATA -- UNAUDITED

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

                                                                                 2005 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............................................   $ 112,228      117,188      127,801       136,723
  Interest expense...........................................      34,149       39,367       45,155        49,588
                                                                ---------     --------     --------      --------
     Net interest income.....................................      78,079       77,821       82,646        87,135
  Provision for loan losses..................................          --       (8,000)          --         4,000
                                                                ---------     --------     --------      --------
     Net interest income after provision for loan losses.....      78,079       85,821       82,646        83,135
  Noninterest income.........................................      21,101       25,803       24,535        23,304
  Noninterest expense........................................      63,755       69,773       67,439        75,329
                                                                ---------     --------     --------      --------
     Income before provision for income taxes and minority
       interest in loss of subsidiary........................      35,425       41,851       39,742        31,110
  Provision for income taxes.................................      13,298       15,005       13,265        10,941
                                                                ---------     --------     --------      --------
     Income before minority interest in loss of subsidiary...      22,127       26,846       26,477        20,169
  Minority interest in loss of subsidiary....................          --           --       (1,036)         (251)
                                                                ---------     --------     --------      --------
     Net income..............................................   $  22,127       26,846       27,513        20,420
                                                                =========     ========     ========      ========

  Earnings per common share:
     Basic...................................................   $  926.87     1,129.05     1,154.52        851.91
                                                                =========     ========     ========      ========

     Diluted.................................................   $  915.04     1,110.42     1,139.46        846.12
                                                                =========     ========     ========      ========


                                                                                 2004 Quarter Ended
                                                                ----------------------------------------------------
                                                                 March 31     June 30    September 30   December 31
                                                                 --------     -------    ------------   -----------
                                                              (dollars expressed in thousands, except per share data)

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

  Earnings per common share:
     Basic...................................................   $  763.81     1,093.42       826.33        787.25
                                                                =========     ========     ========      ========

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

</TABLE>



<PAGE>
                                FIRST BANKS, INC.

                              INVESTOR INFORMATION
--------------------------------------------------------------------------------

FIRST BANKS, INC. PREFERRED SECURITIES
--------------------------------------

         The  preferred  securities  of First  Preferred  Capital  Trust III are
traded on the Nasdaq  National Market System with the ticker symbol "FBNKM." The
preferred  securities of First Preferred  Capital Trust III are represented by a
global  security that has been  deposited with and registered in the name of The
Depository  Trust Company,  New York, New York (DTC).  The beneficial  ownership
interests of these preferred  securities are recorded through the DTC book-entry
system. The high and low preferred  securities prices and the dividends declared
for 2005 and 2004 are summarized as follows:
<TABLE>
<CAPTION>

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

                                                                   2005                  2004
                                                            ------------------    -----------------   Dividend
                                                              High      Low       High       Low      Declared
                                                              ----      ---       ----       ---     ----------
         <S>                                                 <C>        <C>        <C>       <C>      <C>
         First quarter...................................   $ 27.50    26.25      27.95     27.00    $ 0.562500
         Second quarter..................................     27.05    26.00      27.00     25.55      0.562500
         Third quarter...................................     27.09    25.75      29.10     26.04      0.562500
         Fourth quarter..................................     26.40    25.75      27.55     26.55      0.562500
                                                                                                     ----------
                                                                                                     $ 2.250000
                                                                                                     ==========
</TABLE>

         The preferred securities of First Preferred Capital Trust IV are traded
on the New York Stock  Exchange with the ticker  symbol  "FBSPrA." The preferred
securities  of First  Preferred  Capital  Trust IV are  represented  by a global
security  that has been  deposited  with and  registered in the name of DTC. The
beneficial  ownership  interests  of these  preferred  securities  are  recorded
through the DTC book-entry system. The high and low preferred  securities prices
and the dividends declared for 2005 and 2004 are summarized as follows:

<TABLE>
<CAPTION>

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

                                                                   2005                 2004
                                                            ------------------    ----------------    Dividend
                                                              High      Low       High       Low      Declared
                                                              ----      ---       ----       ---     ----------
         <S>                                                  <C>       <C>       <C>      <C>      <C>
         First quarter...................................   $ 27.80    26.00      28.60     27.35    $ 0.509375
         Second quarter..................................     27.55    25.75      28.00     25.70      0.509375
         Third quarter...................................     27.40    26.28      28.00     25.80      0.509375
         Fourth quarter..................................     27.61    25.97      28.00     26.81      0.509375
                                                                                                     ----------
                                                                                                     $ 2.037500
                                                                                                     ==========
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

           FOR INFORMATION CONCERNING FIRST BANKS, PLEASE CONTACT:

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


          TRANSFER AGENTS:
                                    FBNKM                                                 FBSPrA
                                    -----                                                 ------

                     U.S. Bank Corporate Trust Services                       Computershare Investor Services, LLC
                     One Federal Street, Third Floor                          2 North LaSalle Street
                     Boston, Massachusetts 02110                              Chicago, Illinois 60602
                     Telephone - (800) 934-6802                               Telephone - (312) 588-4990
                     www.usbank.com                                           www.computershare.com
                     --------------                                           ---------------------
</TABLE>





<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                       FIRST BANKS, INC.


                                       By: /s/ Allen H. Blake
                                           -------------------------------------
                                               Allen H. Blake
                                               President and Chief Executive
                                               Officer
                                               (Principal Executive Officer)


                                       By: /s/ Steven F. Schepman
                                           -------------------------------------
                                               Steven F. Schepman
                                               Senior Vice President and
                                               Chief Financial Officer
                                               (Principal Financial and
                                               Accounting Officer)

Date:    March 27, 2006

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.

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

/s/ James F. Dierberg                        Director             March 27, 2006
-------------------------------------
    James F. Dierberg

/s/ Allen H. Blake                           Director             March 27, 2006
-------------------------------------
    Allen H. Blake

/s/ Terrance M. McCarthy                     Director             March 27, 2006
-------------------------------------
    Terrance M. McCarthy

/s/ Steven F. Schepman                       Director             March 27, 2006
-------------------------------------
    Steven F. Schepman

/s/ Gordon A. Gundaker                       Director             March 27, 2006
-------------------------------------
    Gordon A. Gundaker

/s/ David L. Steward                         Director             March 27, 2006
-------------------------------------
    David L. Steward

/s/ Douglas H. Yaeger                        Director             March 27, 2006
-------------------------------------
    Douglas H. Yaeger


<PAGE>
                                    INDEX TO EXHIBITS

           Exhibit
           Number                      Description
           ------                      -----------

            2.1      Stock  Purchase  Agreement by and among First Banks,  Inc.,
                     The San Francisco  Company,  CIB Marine  Bancshares,  Inc.,
                     Hillside  Investors,  Ltd., and CIB Bank,  dated August 12,
                     2004  (incorporated  herein by reference to Exhibit 10.6 to
                     the Company's  Current  Report on Form 8-K dated August 12,
                     2004).

            3.1      Restated  Articles  of  Incorporation  of the  Company,  as
                     amended  (incorporated  herein by reference to Exhibit 3(i)
                     to the  Company's  Annual  Report on Form 10-K for the year
                     ended December 31, 1993).

            3.2      By-Laws of the Company (incorporated herein by reference to
                     Exhibit   3.2  to   Amendment   No.  2  to  the   Company's
                     Registration  Statement  on Form  S-1,  File No.  33-50576,
                     dated September 15, 1992).

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

            4.2      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).

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

            4.4      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).

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

            4.6      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).

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

            4.8      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).

            4.9      Indenture  between  First  Banks,   Inc.,  as  Issuer,  and
                     Wilmington Trust Company, as Trustee, dated as of April 10,
                     2002  (incorporated  herein by reference to Exhibit 4.15 to
                     the Company's Quarterly Report on Form 10-Q for the quarter
                     ended June 30, 2002).

            4.10     Guarantee  Agreement for First Bank Capital Trust, dated as
                     of April 10,  2002  (incorporated  herein by  reference  to
                     Exhibit 4.16 to the Company's Quarterly Report on Form 10-Q
                     for the quarter ended June 30, 2002).
<PAGE>


            4.11     Amended  and  Restated  Declaration  of Trust of First Bank
                     Capital  Trust,  dated as of April 10,  2002  (incorporated
                     herein  by  reference  to  Exhibit  4.17  to the  Company's
                     Quarterly  Report on Form 10-Q for the  quarter  ended June
                     30, 2002).

            4.12     Floating Rate Junior Subordinated Debt Security Certificate
                     of First Banks,  Inc.,  dated April 10, 2002  (incorporated
                     herein  by  reference  to  Exhibit  4.18  to the  Company's
                     Quarterly  Report on Form 10-Q for the  quarter  ended June
                     30, 2002).

            4.13     Capital  Security  Certificate of First Bank Capital Trust,
                     dated  as  of  April  10,  2002  (incorporated   herein  by
                     reference to Exhibit 4.19 to the Company's Quarterly Report
                     on Form 10-Q for the quarter ended June 30, 2002).

            4.14     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).

            4.15     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).

            4.16     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).

            4.17     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).

            4.18     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).

            4.19     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).

            4.20     Common  Securities  Subscription  Agreement  by and between
                     First Bank Statutory Trust and First Banks,  Inc., dated as
                     of March 20,  2003  (incorporated  herein by  reference  to
                     Exhibit   10.12  to  Amendment   No.  4  to  the  Company's
                     Registration  Statement on Form S-2,  File No.  333-102549,
                     dated March 24, 2003).

            4.21     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).

            4.22     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).

            4.23     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
                     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).



<PAGE>
            4.24     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).

            4.25     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).

            4.26     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).

            4.27     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).

            4.28     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).

            4.29     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).

            4.30     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).

            4.31     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).

            4.32     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).

            4.33     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).

            4.34     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).

            4.35     Floating  Rate  Junior  Subordinated   Deferrable  Interest
                     Debenture  of First Banks,  Inc.,  dated as of November 23,
                     2004  (incorporated  herein by reference to Exhibit 4.39 to
                     the Company's Annual Report on Form 10-K for the year ended
                     December 31, 2004).

            4.36     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).

            4.37     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).



<PAGE>
            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     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).

            10.3     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).

            10.4     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).

            10.5     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).

            10.6     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).

            10.7*    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).

            10.8*    First Banks, Inc.  Nonqualified  Deferred Compensation Plan
                     (incorporated  herein by reference to Exhibit  10.11 to the
                     Company's  Annual  Report on Form  10-K for the year  ended
                     December 31, 2004).

            10.9*    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).

            10.10    Amended  and  Restated  Secured  Credit  Agreement  ($100.0
                     million Term Loan Facility,  $15.0 million Revolving Credit
                     Facility and $7.5 million Letter of Credit Facility), dated
                     as of August 11, 2005,  by and among First Banks,  Inc. and
                     Wells Fargo Bank, National Association, as Agent, JP Morgan
                     Chase Bank, N.A.,  LaSalle Bank National  Association,  The
                     Northern  Trust Company,  Union Bank of  California,  N.A.,
                     Fifth  Third  Bank   (Chicago)   and  U.S.   Bank  National
                     Association (incorporated herein by reference to Exhibit 10
                     to the  Company's  Quarterly  Report  on Form  10-Q for the
                     quarter ended September 30, 2005).

            14.1     Code  of  Ethics  for  Principal   Executive   Officer  and
                     Financial  Professionals  (incorporated herein by reference
                     to Exhibit 14 to the  Company's  Annual Report on Form 10-K
                     for the year ended December 31, 2003).

            21.1     Subsidiaries of the Company - filed herewith.

            31.1     Rule   13a-14(a)  /  15d-14(a)   Certifications   of  Chief
                     Executive Officer - filed herewith.

            31.2     Rule   13a-14(a)  /  15d-14(a)   Certifications   of  Chief
                     Financial Officer - filed herewith.

            32.1     Section 1350  Certifications  of Chief Executive  Officer -
                     filed herewith.

            32.2     Section 1350  Certifications  of Chief Financial  Officer -
                     filed herewith.

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



<PAGE>

<TABLE>
<CAPTION>

                                                                                           EXHIBIT 21.1

                                FIRST BANKS, INC.

                                  SUBSIDIARIES


The  following is a list of our subsidiaries and the jurisdiction of incorporation or organization:


                                                                           Jurisdiction of Incorporation
                                  Name of Subsidiary                              of Organization
                                  ------------------                              ---------------

<S>                <C>                                                                <C>
 The San Francisco Company                                                            Delaware

         First Bank                                                                   Missouri

                  First Land Trustee Corp.                                            Missouri

                  First Bank Business Capital, Inc. (1)                               Missouri

                  Missouri Valley Partners, Inc.                                      Missouri

                  Bank of San Francisco Realty Investors, Inc.                       California

                  Small Business Loan Source LLC (2)                                   Nevada

                  Small Business Loan Source Funding Corporation                      Delaware

 ---------------
 (1) Formerly FB Commercial Finance, Inc.
 (2) First Bank owns 51% of Small Business Loan Source LLC.

</TABLE>


<PAGE>


                                                                    EXHIBIT 31.1

                           CERTIFICATIONS REQUIRED BY
                       RULE 13a-(14)(a) OR RULE 15d-14(a)
                    UNDER THE SECURITIES EXCHANGE ACT OF 1934


I, Allen H. Blake, certify that:

1.   I have  reviewed  this Annual  Report on Form 10-K (the  "Report") of First
     Banks, Inc. (the "Registrant");

2.   Based on my knowledge, this Report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     Report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  Report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this Report;

4.   The  Registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this Report is being prepared;

     b)   Evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures and presented in this Report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this Report based on such evaluation; and

     c)   Disclosed  in this  Report  any  change in the  Registrant's  internal
          control over financial reporting that occurred during the Registrant's
          most recent fiscal quarter (the Registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  Registrant's  internal
          control over financial reporting; and

5.   The Registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the Registrant's auditors and the audit committee of the Registrant's board
     of directors (or persons performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  Registrant's  ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          control over financial reporting.


Date: March 27, 2006

                                   FIRST BANKS, INC.


                                   By: /s/ Allen H. Blake
                                       -----------------------------------------
                                           Allen H. Blake
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


<PAGE>


                                                                    EXHIBIT 31.2

                           CERTIFICATIONS REQUIRED BY
                       RULE 13a-(14)(a) OR RULE 15d-14(a)
                    UNDER THE SECURITIES EXCHANGE ACT OF 1934


I, Steven F. Schepman, certify that:

1.   I have  reviewed  this Annual  Report on Form 10-K (the  "Report") of First
     Banks, Inc. (the "Registrant");

2.   Based on my knowledge, this Report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     Report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  Report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this Report;

4.   The  Registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this Report is being prepared;

     b)   Evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures and presented in this Report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this Report based on such evaluation; and

     c)   Disclosed  in this  Report  any  change in the  Registrant's  internal
          control over financial reporting that occurred during the Registrant's
          most recent fiscal quarter (the Registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  Registrant's  internal
          control over financial reporting; and

5.   The Registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the Registrant's auditors and the audit committee of the Registrant's board
     of directors (or persons performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  Registrant's  ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          control over financial reporting.


Date: March 27, 2006

                                   FIRST BANKS, INC.


                                   By: /s/ Steven F. Schepman
                                       -----------------------------------------
                                           Steven F. Schepman
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Accounting
                                           Officer)



<PAGE>


                                                                    EXHIBIT 32.1

                           CERTIFICATIONS PURSUANT TO
                             18 U.S.C. SECTION 1350


         I,  Allen H.  Blake,  President  and Chief  Executive  Officer of First
Banks,  Inc.  (the  "Company"),   certify,   pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

         (1)   The  Annual  Report on Form 10-K of the  Company  for the  annual
               period ended December 31, 2005 (the "Report") fully complies with
               the  requirements  of Sections  13(a) or 15(d) of the  Securities
               Exchange Act of 1934; and

         (2)   The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial  condition  and  results  of
               operations of the Company.


Date:  March 27, 2006

                                   By: /s/ Allen H. Blake
                                       -----------------------------------------
                                           Allen H. Blake
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)



<PAGE>


                                                                    EXHIBIT 32.2

                           CERTIFICATIONS PURSUANT TO
                             18 U.S.C. SECTION 1350


         I,  Steven F.  Schepman,  Senior  Vice  President  and Chief  Financial
Officer of First Banks, Inc. (the "Company"),  certify,  pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

         (1)   The  Annual  Report on Form 10-K of the  Company  for the  annual
               period ended December 31, 2005 (the "Report") fully complies with
               the  requirements  of Sections  13(a) or 15(d) of the  Securities
               Exchange Act of 1934; and

         (2)   The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial  condition  and  results  of
               operations of the Company.


Date:  March 27, 2006

                                    By: /s/ Steven F. Schepman
                                        ----------------------------------------
                                            Steven F. Schepman
                                            Senior Vice President and
                                            Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)