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, 2003

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

                        Commission File Number - 0-20632

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

           MISSOURI                                    43-1175538
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

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

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

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

                                                Name of each exchange
           Title of each class                   on which registered
           -------------------                   -------------------
                  None                                   N/A

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

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

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

                   8.15% Cumulative Trust Preferred Securities
                   (issued by First Preferred Capital Trust IV
                      and guaranteed by First Banks, Inc.)
                                (Title of class)

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

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


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

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

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

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

         At March 25, 2004, there were 23,661 shares of the registrant's  common
stock outstanding.

<PAGE>

                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.  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 not place undue reliance on forward-looking statements.

<TABLE>
<CAPTION>

                                                  FIRST BANKS, INC.

                                            2003 FORM 10-K ANNUAL REPORT

                                                  TABLE OF CONTENTS
                                                                                                          Page
                                                                                                          ----
                                                       Part I
<S>                                                                                                         <C>
     Item 1.    Business...............................................................................     1
     Item 2.    Properties.............................................................................    14
     Item 3.    Legal Proceedings......................................................................    14
     Item 4.    Submission of Matters to a Vote of Security Holders....................................    14

                                                       Part II

     Item 5.    Market for the Registrant's Common Equity and Related Stockholder Matters..............    15
     Item 6.    Selected Financial Data................................................................    16
     Item 7.    Management's Discussion and Analysis of Financial Condition and
                    Results of Operations..............................................................    17
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.............................    48
     Item 8.    Financial Statements and Supplementary Data............................................    48
     Item 9.    Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure...........................................................    48
     Item 9A.   Controls and Procedures................................................................    48

                                                       Part III

     Item 10.   Directors and Executive Officers of the Registrant.....................................    50
     Item 11.   Executive Compensation.................................................................    54
     Item 12.   Security Ownership of Certain Beneficial Owners and Management.........................    55
     Item 13.   Certain Relationships and Related Transactions.........................................    56
     Item 14.   Principal Accountant Fees and Services.................................................    56

                                                       Part IV

     Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K........................    57

     Signatures .......................................................................................    99

</TABLE>


<PAGE>

                                     PART I

Item 1.  Business

General.  We are a registered bank holding company  incorporated in Missouri and
headquartered  in St.  Louis  County,  Missouri.  Through the  operation  of our
subsidiaries,  we offer a broad array of  financial  services  to  consumer  and
commercial  customers.  We operate  through  our wholly  owned  subsidiary  bank
holding  company,  The  San  Francisco  Company,  or SFC,  headquartered  in San
Francisco,  California,  and its  wholly  owned  subsidiary  bank,  First  Bank,
headquartered in St. Louis County,  Missouri.  First Bank currently operates 147
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, 2003, we had total
assets  of $7.11  billion,  total  loans,  net of  unearned  discount,  of $5.33
billion,  total  deposits  of $5.96  billion and total  stockholders'  equity of
$549.8 million.

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

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

         In February 1997, our initial financing entity, First Preferred Capital
Trust,  issued $86.25 million of 9.25%  cumulative  trust preferred  securities,
and, in July 1998, our second  financing  entity,  First America  Capital Trust,
issued  $46.0  million  of 8.50%  cumulative  trust  preferred  securities.  The
cumulative trust preferred  securities  issued by First Preferred  Capital Trust
and First  America  Capital  Trust were redeemed in full on May 5, 2003 and June
30, 2003, respectively,  and these financing entities were dissolved. In October
2000, our third financing entity, First Preferred Capital Trust II, issued $57.5
million of 10.24% cumulative trust preferred securities,  and, in November 2001,
our fourth  financing  entity,  First Preferred  Capital Trust III, issued $55.2
million of 9.00% cumulative trust preferred securities. In April 2002, our fifth
financing  entity,  First Bank Capital  Trust,  issued $25.0 million of variable
rate  cumulative  trust  preferred  securities.  On March  20,  2003,  our sixth
financing  entity,  First Bank  Statutory  Trust,  issued $25.0 million of 8.10%
cumulative  trust  preferred  securities,  and,  on April 1, 2003,  our  seventh
financing  entity,  First  Preferred  Capital  Trust IV, issued $46.0 million of
8.15% cumulative trust preferred securities.

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

         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  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 on March 31st, June 30th, September 30th,
and  December  31st of each year,  with the  exception of the First Bank Capital
Trust trust preferred securities and related subordinated debentures,  which are
payable  semi-annually  in arrears on April 22nd and October  22nd of each year.
The  distributions  payable  on our  subordinated  debentures  are  included  in
interest expense in the consolidated statements of income.


<PAGE>


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

Strategy.  In the  development  of  our  banking  franchise,  we  acquire  other
financial  institutions  as  one  means  of  achieving  our  growth  objectives.
Acquisitions may serve to enhance our presence in a given market,  to expand the
extent of our market area or to enable us to enter new or noncontiguous markets.
Due to the nature of our  ownership,  we have  elected  to only  engage in those
acquisitions  that can be accomplished for cash.  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
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  typically  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. 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,   2003,   we  primarily
concentrated our acquisitions in California, completing 12 acquisitions of banks
and three  purchases of branch  offices,  which provided us with an aggregate of
$2.15  billion in total  assets and 45 banking  locations as of the dates of the
acquisitions.  More recent  acquisitions  have occurred in our other  geographic
markets of Missouri,  Illinois and Texas.  In 2002, we completed our acquisition
of a bank holding company in Des Plaines,  Illinois,  as well as the purchase of
two branch offices in Denton and Garland,  Texas.  On March 31, 2003, we further
expanded our Midwest  banking  franchise  with our  acquisition  of Bank of Ste.
Genevieve in Ste.  Genevieve,  Missouri.  These  acquisitions have allowed us to
significantly  expand our presence  throughout  our  geographic  areas,  improve
operational efficiencies,  convey a more consistent image and quality of service
and more cohesively market and deliver our products and services.

         Following our acquisitions,  various tasks 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 which provide space in excess of
               that necessary for banking  activities  and/or 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  included the combining of separate
and  distinct  entities  together  to form a cohesive  organization  with common
objectives and focus.  We invested  significant  resources to reorganize  staff,
recruit personnel where needed,  and establish the direction and focus necessary

<PAGE>

for the combined entity to take advantage of the opportunities  available to it.
This  investment  contributed  to the  increases  in  noninterest  expense,  and
resulted  in the  creation  of  new  banking  entities,  which  conveyed  a more
consistent  image and quality of service.  The new banking  entities  provided a
broad array of banking  products to their  customers and compete  effectively in
their  marketplaces,  even in the presence of other financial  institutions with
much greater resources.  While some of these modifications did not contribute to
reductions of noninterest expense, they contributed to the commercial and retail
business development efforts of the banks, and ultimately to their prospects for
improving future profitability.

         Recently,   our  acquisition   prospects  have  been  somewhat  limited
primarily due to the current market environment  requiring  significantly higher
premiums in order to transact financial institution  acquisitions.  As a result,
we have expanded our business  strategy to include the opening of de novo branch
offices as another means of further achieving our growth objectives. Our de novo
branch strategy also provides similar  opportunities to our acquisition strategy
by  allowing us to enhance our  presence in our  existing  markets and enter new
markets.  Additionally, we generally have more flexibility in selecting the most
opportunistic sites for our de novo branches, constructing the branch offices in
accordance  with our standard  business  model and  marketing  and promoting our
customized  products  and services  under our  long-established  trade name.  In
February 2004, we opened two new de novo branches, one in Houston, Texas and one
in West St. Louis County,  Missouri.  We currently have plans to open additional
de novo branches throughout 2004 in McKinney,  Texas, San Diego,  California and
Farmington,  Missouri. We also expect to further concentrate our efforts on this
portion of our business strategy while continuing to identify viable acquisition
candidates at more reasonable  acquisition  premiums that are commensurate  with
our established acquisition strategy.

         In conjunction with our de novo and acquisition  strategy, we have also
focused on building and reorganizing the infrastructure  necessary to accomplish
our  objectives  for internal  growth.  This  process has  required  significant
increases  in the  resources  dedicated  to  commercial  and  consumer  business
development,  financial  service  product  line  and  delivery  systems,  branch
development and training, advertising and marketing programs, and administrative
and  operational  support.  In  addition,  during  1999,  we began  an  internal
restructuring  process  designed  to better  position  us for future  growth and
opportunities expected to become available as consolidation and changes continue
in the  delivery  of  financial  services.  The  magnitude  of this  project was
extensive  and covered  almost  every area of our  organization.  We continue to
focus on  modifying  and  effectively  repositioning  our  internal and external
resources  to better  serve the  markets  in which we  operate.  Although  these
efforts  have led to certain  increased  capital  expenditures  and  noninterest
expenses, we expect they will lead to additional internal growth, more efficient
operations and improved profitability over the long term.

Lending Activities.  Our enhanced business development resources assisted in the
realignment of certain acquired loan  portfolios,  which were skewed toward loan
types that  reflected  the abilities and  experiences  of the  management of the
acquired entities. In order to achieve a more diversified portfolio,  to address
asset-quality issues in the portfolios and to achieve a higher interest yield on
our loan  portfolio,  we reduced a  substantial  portion of the loans which were
acquired  during this time through  payments,  refinancing  with other financial
institutions,  charge-offs,  and,  in certain  instances,  sales of loans.  As a
result, our portfolio of one-to-four family residential real estate loans, after
reaching a high of $1.20 billion or 44.4% of total loans,  excluding  loans held
for sale,  at December 31,  1995,  has  decreased to $811.7  million or 15.7% of
total loans, excluding loans held for sale, at December 31, 2003. Similarly, our
portfolio of consumer and installment loans, net of unearned discount, decreased
significantly  from $274.4 million or 8.0% of total loans,  excluding loans held
for  sale,  at  December  31,  1998 to $61.3  million  or 1.2% of  total  loans,
excluding  loans held for sale, at December 31, 2003. The decrease  reflects the
reduction  in new  consumer and  installment  loan volumes and the  repayment of
principal on our existing consumer and installment loan portfolio,  all of which
are consistent with our objectives of expanding  commercial lending and reducing
the amount of less profitable loan types.  The decline also reflects the sale of
our student loan and credit card portfolios in 2001, which totaled approximately
$16.9 million and $13.5 million,  respectively, at the time of sale. We recorded
gains of $1.9  million  and  $229,000 on the sale of our credit card and student
loan portfolios,  respectively, and we do not have any continuing involvement in
the transferred assets.

         As these components of our loan portfolio  decreased,  we replaced them
with  higher  yielding  loans that were  internally  generated  by our  business
development   function.   With  our  acquisitions,   we  expanded  our  business
development  function into the new market areas in which we were then operating.
Consequently,  in spite of relatively large  reductions in acquired  portfolios,
our aggregate loan  portfolio,  net of unearned  discount,  increased 48.8% from
$3.58 billion at December 31, 1998 to $5.33 billion at December 31, 2003.

         Our  business  development  efforts are focused on the  origination  of
loans in three general  types:  commercial,  financial and  agricultural  loans,
which  totaled  $1.41  billion at  December  31,  2003;  commercial  real estate
mortgage  loans,   which  totaled  $1.66  billion  at  December  31,  2003;  and
construction and land development loans, which totaled $1.06 billion at December
31, 2003.
<PAGE>

         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  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  Missouri,  Illinois,  California  and Texas who are
engaged in manufacturing,  retailing,  wholesaling and service businesses.  This
portfolio is not  concentrated  in large  specific  industry  segments  that are
characterized  by  sufficient  homogeneity  that  would  result  in  significant
concentrations of credit exposure.  Rather, it is a highly diversified portfolio
that encompasses many industry  segments.  The largest general  concentration in
this portfolio, which is not homogeneous in nature, is agricultural which totals
approximately  $34.0 million,  representing  approximately 2% of the commercial,
financial and agricultural  portfolio.  This portfolio,  however,  is diverse in
geography  and  collateral,  secured  by a mixture  of  agricultural  equipment,
livestock and crop production. The largest homogeneous industry segment included
within this portfolio is the fast-food restaurant segment, in which we had total
loans  outstanding of  approximately  $48.3 million,  representing  3.4% of this
portfolio,  at December 31, 2003.  Diversity in this segment of our portfolio is
represented  by both  geography and a mixture of loans to both  franchisees  and
franchisors,  with  approximately  77.0%  of the  portfolio  involving  loans to
franchisees  and 23.0% to  franchisors.  Within both real estate and  commercial
lending  portfolios,  we strive  for the  highest  degree of  diversity  that is
practicable.  We also emphasize the  development of other service  relationships
with our commercial borrowers, particularly deposit accounts.

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

         Construction  and  land  development  loans  include   commitments  for
construction  of both  residential  and commercial  properties.  Commercial real
estate projects require  commitments for permanent  financing from other lenders
upon  completion  of the project and, more  typically,  may include a short-term
amortizing   component  of  the  financing  from  the  bank.   Commitments   for
construction  of  multi-tenant  commercial  and retail  projects  require  lease
commitments  from a substantial  primary tenant or tenants prior to commencement
of  construction.  We finance some projects for  borrowers  whose home office is
within our trade area for which the particular project may be outside our normal
trade area.  However,  we generally do not engage in developing  commercial  and
residential construction lending business outside of our trade area. Residential
real estate  construction  and  development  loans are made based on the cost of
land acquisition and development, as well as the construction of the residential
units.  Although we finance the cost of display units and units held for sale, a
substantial portion of the loans for individual  residential units have purchase
commitments prior to funding. Residential condominium projects are funded as the
building  construction  progresses,  but funding of unit  finishing is generally
based on firm sales contracts.

         In  addition to  underwriting  based on  estimates  and  projection  of
financial  strength,  collateral  values and future  cash  flows,  many loans to
borrowing entities other than individuals require the personal guarantees of the
principals of the borrowing entity.

         Our  commercial  leasing  portfolio  totaled  $67.3  million and $126.7
million at December 31, 2003 and 2002, respectively.  This portfolio consists of
leases  originated  by  our  former  subsidiary,   First  Capital  Group,  Inc.,
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
<PAGE>
First  Capital  Group,  Inc.  and the transfer of all  responsibilities  for the
existing portfolio to a new leasing staff in St. Louis, Missouri.

         At December 31, 2001, within our commercial  leasing  portfolio,  there
were  approximately  $60.1  million  of  leases of parts  and  equipment  to the
commercial  airline  industry  and  related  aircraft  service  providers.  This
equipment  consisted  primarily of engines,  landing gear and replacement parts,
most of which was used in  maintenance  operations by commercial  airlines or by
third party vendors performing maintenance for the airlines. In addition,  there
were several leases for smaller  aircraft used by charter  services.  Earlier in
2001, it became apparent that the airline  industry in general was  experiencing
problems with overcapacity, and as a result, had begun reducing its requirements
for new and replacement aircraft. This was evidenced by airlines taking portions
of their fleets,  particularly older less efficient aircraft, out of service and
reducing orders for new equipment.  This affected maintenance operations because
as the usage of  aircraft  decreased,  the  maintenance  requirements  were also
reduced.  Consequently,  by late 2001, we  discontinued  new leases of equipment
related to the airline industry.

         While some of the leases in our  portfolio  had  evidenced  problems by
early  2001,  overcapacity  problems  and  resulting  financial  distress in the
commercial  airline  industry became more critical after the terrorist  attacks.
Following these events,  we re-evaluated our aviation related lease portfolio to
examine our overall  exposure to the  industry,  the effects of recent trends on
valuations of equipment and the financial  strength of our lessees.  As a result
of our review, for the year ended December 31, 2001, we incurred $4.5 million of
charge-offs  in  connection  with the aircraft  leasing  portfolio  and had $2.6
million of  nonperforming  aviation  related  leases at December 31,  2001.  The
evaluation  process has evolved  into an ongoing  monitoring  of this  portfolio
through  continuous   communication   with  lessees  to  establish   information
concerning  their  use of  equipment  under  lease,  monitoring  the use of that
equipment, and tracking of changes in equipment and related residual valuations.
When  problems are detected,  we obtain new  valuations  of the  equipment,  and
recognize any  impairment in valuation by  adjustments  to reserves or income as
appropriate depending upon the type of lease. Sources of information for valuing
our leased assets include the Aircraft Bluebook, other public information from a
variety of  sources,  consultation  with other  lessors  and brokers of aviation
equipment and specific engagement of an independent asset management company for
equipment  valuation as well as management of repossessed  assets.  Specifically
with respect to residual values, and to establish  formality in our process,  we
obtained  an  appraisal  of  leased  assets  that  involve  residual  risk by an
International  Society of  Transport  Aircraft  Trading  certified  appraiser of
aviation assets. The information received from these various specialized sources
assists us in valuing our lease  portfolio  and  recognizing  any  impairment on
these  assets.  By December 31,  2002,  the  portfolio  of leases on  commercial
aircraft and parts and  equipment had been reduced to $46.5  million,  with $8.6
million of nonperforming aviation related leases, and $619,000 of charge-offs in
connection with this aircraft leasing  portfolio for the year ended December 31,
2002. At December 31, 2003,  this  portfolio  has been further  reduced to $19.6
million,  with $4.4 million of nonperforming  aviation related leases,  and $4.2
million of charge-offs in connection with the aircraft leasing portfolio for the
year ended December 31, 2003. Furthermore, we recorded $5.5 million in net lease
charge-offs related to three equipment leases that were unrelated to the airline
industry in 2003 as further  discussed  under  "--Loans and  Allowance  for Loan
Losses."

         Our expanded level of commercial lending carries with it greater credit
risk,  which we manage through uniform loan policies,  procedures,  underwriting
and credit administration.  As a consequence of such greater risk, the growth of
our loan  portfolio  must also be  accompanied  by adequate  allowances for loan
losses.  We associate the increased level of commercial  lending  activities and
our  acquisitions  with the  increases  of $7.9  million  and $14.1  million  in
nonperforming   loans  for  the  years  ended   December   31,  2002  and  2001,
respectively.  Nonperforming  loans remained relatively constant in 2003, with a
$199,000  increase from December 31, 2002. In addition,  the loan  portfolios of
Millennium Bank and Union Financial Group,  Ltd., or Union, which we acquired in
2000 and 2001,  respectively,  exhibited  significant  distress,  which  further
contributed to the overall increase in nonperforming loans.

         Millennium  Bank,  which we acquired on December 29,  2000,  operated a
factoring business for doctors,  hospitals and other health care  professionals.
This  business  had  been  started  by  Millennium  Bank  the  year  before  our
acquisition,  and had approximately  $11.0 million of receivables at the time of
our  acquisition.  Due to the  relatively  short  life  of this  operation,  the
portfolio  did not  exhibit  signs of problems  at that time.  Consequently,  we
allowed the business to continue after the  acquisition to determine  whether it
would be an appropriate line of business in the future.  However,  in late 2001,
the factoring receivables began to exhibit signs of distress, and in early 2002,
we determined  one of the larger  borrowers was  incorrectly  accounting for its
receivables, causing the factored balance to be substantially overfunded. During
2002,  other asset quality  issues arose and we charged off  approximately  $2.6
million, or 24.8%, of the health care factoring portfolio. At December 31, 2002,
we had $10.2 million of factoring business  receivables,  which further declined
to $2.1  million at December 31, 2003,  reflecting  our decision to  discontinue
this  line of  business.  Since no  value  was  assigned  to  goodwill  or other
intangible assets of this line of business in the acquisition,  and the problems
arose subsequent to the  acquisition,  we determined that this did not create an
impairment of the goodwill that we recorded in connection with the acquisition.


<PAGE>
         In evaluating the loan portfolios of Union's two subsidiary banks prior
to its  acquisition,  it was clear that  substantial  problems  existed in those
portfolios.  Generally,  credit documentation was poor,  underwriting  standards
were lax and loan terms  were  aggressive.  As we  conducted  our due  diligence
review,  we applied the same asset  quality  standards,  risk rating  system and
allowance  methodology  that we apply to our own loan  portfolio.  Based on this
review, and to address concerns we had regarding Union's loan portfolios and the
level  of its  allowance  for  loan and  lease  losses,  an  escrow  account  of
approximately  $1.6 million was established by withholding  that amount from the
purchase  price.  This escrow  account was available to absorb losses during the
two-year period  following the acquisition from Union Bank's loan portfolio that
were in excess of Union Bank's  allowance  for loan and lease losses at the time
of the due diligence review.  Union's consolidated  allowance for loan and lease
losses was $8.6  million  relative  to an  aggregate  loan  portfolio  of $262.3
million at December 31, 2001, the date of acquisition.

         While we  believed  there  were  substantial  problems  with the  Union
portfolios,  few of  these  had  been  identified  or  addressed  by Union as of
December  31,  2001.  Consequently,  when we  assimilated  these  loans into our
systems and  procedures,  the  problems in the  portfolio  surfaced,  causing an
increase in the amount of problem  assets,  as well as contributing to the level
of loans  charged-off  during 2002. Loan  charge-offs  from the Union portfolios
were $1.4 million for the year ended  December 31, 2003 and $5.2 million for the
year  ended  December  31,  2002,  including  an amount  within  the Union  Bank
portfolio  that was in excess of the  allowance at the date of our due diligence
review and the entire $1.6 million escrow  account.  Furthermore,  nonperforming
loans in the Union  portfolios  increased from $6.9 million at December 31, 2002
to  $7.5  million  at  December  31,  2003.  Because  these  problems  had  been
anticipated in negotiating the acquisition price, they did not affect the amount
of goodwill recorded in connection with this acquisition.

         For the years  ended  December  31,  2003 and 2002,  our  nonperforming
assets  increased  $3.7 million and $11.2 million,  respectively.  Nonperforming
loans were  $75.4  million  and $75.2  million at  December  31,  2003 and 2002,
respectively, as compared to $67.3 million at December 31, 2001. The increase in
nonperforming  loans in 2002  and  2003 is  primarily  attributable  to  general
economic  conditions,  additional  problems  identified  in  the  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.  In addition,  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 relates to a residential and
recreational development project that had significant financial difficulties and
experienced  inadequate  project  financing,  project  delays  and weak  project
management.  As more fully  described in Note 25 to our  Consolidated  Financial
Statements,  we sold this  property  in  February  2004,  thereby  reducing  our
nonperforming  assets by $9.2  million.  Loan  charge-offs,  net of  recoveries,
although still at higher-than-historical  levels, decreased to $32.7 million for
2003,  compared to $54.6  million for 2002 and $22.0 million for 2001 as further
discussed  under  "--Loans  and  Allowance  for Loan  Losses." We believe  these
increases,  while  partially  attributable  to the  overall  risk  in  our  loan
portfolio,  are  reflective of cyclical  trends  experienced  within the banking
industry as a result of weak economic conditions within our market areas.

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

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

<PAGE>
for the years ended December 31, 2003 and 2002, respectively,  compared to $16.3
million for the year ended December 31, 2001. Nonperforming loans and leases for
this region were $56.2  million and $50.5 million at December 31, 2003 and 2002,
respectively, compared to $47.7 million at December 31, 2001.

         Generally,  the effects on us of the  economic  downturn in  California
have been limited to the San  Francisco  Bay area,  including  the area known as
"Silicon  Valley."  Although we have a substantial  banking  presence in the San
Francisco  Bay area,  we have  relatively  little  direct  exposure  to the high
technology  companies.  Consequently,  the decline in that industry beginning in
2000 had little  direct effect on our  California  operations.  However,  as the
magnitude of the problems in the high technology sector  increased,  the effects
spread to companies  that were  suppliers and  servicers of the high  technology
sector,  and to  commercial  real  estate  in the area.  As a result,  our asset
quality issues in California have been concentrated within the San Francisco Bay
area,   and   generally   do   not   involve   Southern    California   or   the
Sacramento-Roseville  area in Northern  California.  Furthermore,  these  issues
primarily  arose  during  2002.  Consequently,  our  California  banking  region
incurred net loan  charge-offs  of $27.6  million and $5.4 million for the years
ended  December  31,  2002 and 2001,  respectively,  in  comparison  to net loan
recoveries of $680,000 in 2003.  Nonperforming  loans for our California banking
region were $13.0 million, $17.2 million and $14.1 million at December 31, 2003,
2002 and 2001, respectively.

         Our Texas banking  operation  represents a somewhat  smaller portion of
our overall lending function. However, the Texas economy has generally continued
to be fairly  strong,  resulting in  relatively  few asset  quality  issues.  We
recorded net loan  charge-offs  of $7.7 million for the year ended  December 31,
2003,  which  included  $6.6  million on three  credit  relationships.  Net loan
charge-offs  were $4.9  million  for the year ended  December  31,  2002,  which
included a charge-off  of $5.3 million on a single loan to a company  engaged in
leasing  equipment,   primarily  to  manufacturers.   This  company  encountered
significant  operating  problems  from  rapid  expansion,   principally  through
acquisition,  accompanied by the economic downturn,  which particularly affected
the manufacturing  sector.  Total  nonperforming loans for this region were $6.2
million,  $5.5 million and $3.5  million at December  31,  2003,  2002 and 2001,
respectively.

         In addition to restructuring  our loan portfolio,  we also have changed
the  composition  of our deposit  base.  The deposit  mix of 2003  reflects  our
continued  efforts  in this  regard as a  majority  of our  deposit  development
programs are directed toward increased transaction accounts,  such as demand and
savings  accounts,  rather  than  time  deposits.  We  have  also  expanded  our
development of multiple account  relationships with individual  customers.  This
growth is accomplished by cross-selling various products and services, packaging
account types and offering  incentives to deposit  customers on other deposit or
non-deposit  services.  In addition,  commercial  borrowers  are  encouraged  to
maintain their operating  deposit  accounts with us. At December 31, 1998, total
time  deposits were $1.80  billion,  or 45.8% of total  deposits.  Although time
deposits have increased to $1.96 billion at December 31, 2003, they  represented
only 32.8% of total deposits,  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, 2003 and 2002,  net income was $62.8
million  and $45.2  million,  respectively,  compared  to $64.5  million,  $56.1
million and $44.2 million in 2001, 2000 and 1999, respectively. The factors that
led to the decline in our earnings for 2002  include the current  interest  rate
environment,  asset quality  issues  requiring  additional  provisions  for loan
losses, and increased operating expenses. The higher-than-historical  provisions
for loan losses in 2003 and 2002 reflect the current  economic  environment  and
significantly increased loan charge-off, delinquency and nonperforming trends as
further discussed under "--Comparison of Results of Operations for 2003 and 2002
- Provision for Loan Losses." 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.  As such, 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  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,  2003,  we  completed  five
acquisitions  of banks and two branch office  purchases.  As demonstrated in the
following table, our acquisitions during the three years ended December 31, 2003
have primarily served to increase our presence in the California markets that we
originally  entered during 1995 and to further augment our existing  markets and
our Midwest banking franchise. These transactions are summarized as follows:
<TABLE>
<CAPTION>
                                                                                                             Number
                                                                   Loans, Net of                               of
                                                          Total      Unearned      Investment                Banking
         Entity                       Closing Date       Assets      Discount      Securities   Deposits    Locations
         ------                       ------------       ------      --------      ----------   ---------   ---------
                                                                (dollars expressed in thousands)
    2003
    ----

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

    2002
    ----

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

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

    2001
    ----

      Union Financial Group, Ltd.
      Swansea, Illinois             December 31, 2001  $ 360,000      263,500        1,150       283,300          9

      BYL Bancorp
      Orange, California            October 31, 2001     281,500      175,000       12,600       251,800          7

      Charter Pacific Bank
      Agoura Hills, California      October 16, 2001     101,500       70,200        7,500        89,000          2
                                                       ---------     --------      -------      --------       ----
                                                       $ 743,000      508,700       21,250       624,100         18
                                                       =========     ========      =======      ========       ====
</TABLE>

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

         Completed Acquisitions and Other Corporate Transactions

         On January 15, 2002, we completed our  acquisition of Plains  Financial
Corporation,  or Plains, and its wholly owned banking subsidiary,  PlainsBank of
Illinois,  National  Association,  Des Plaines,  Illinois, in exchange for $36.5
million in cash.  Plains  operated a total of three  banking  facilities  in Des
Plaines,  Illinois, and one banking facility in Elk Grove Village,  Illinois. At
the time of the transaction,  Plains had $256.3 million in total assets,  $150.4
million  in  loans,  net of  unearned  discount,  $81.0  million  in  investment
securities and $213.4 million in deposits.  This  transaction  was accounted for
using the  purchase  method of  accounting.  Goodwill  was  approximately  $12.6
million, and the core deposit intangibles,  which are being amortized over seven
years  utilizing the  straight-line  method,  were  approximately  $2.9 million.
Plains was merged with and into Union and PlainsBank of Illinois was merged with
and into First Bank.

         On June 22, 2002,  First Bank & Trust  completed its  assumption of the
deposits  and certain  liabilities  and the  purchase  of certain  assets of the
Garland  and Denton,  Texas  branch  offices of Union  Planters  Bank,  National
Association,  or UP branches.  The  transaction  resulted in the  acquisition of
$15.3  million in deposits and one branch office in Garland and $49.6 million in
deposits and one branch office and a detached  drive-thru  facility,  in Denton.
The core deposit  intangibles  associated  with the branch  purchases  were $1.4
million and are being  amortized  over seven years  utilizing the  straight-line
method.

         On December  31,  2002,  we  completed  our  acquisition  of all of the
outstanding  capital stock of First Banks America,  Inc., or FBA, San Francisco,
California,  that we did not  already  own for a price of $40.54 per  share,  or
approximately  $32.4  million.  Prior to this  transaction,  there were  798,753
shares,  or  approximately  6.22%  of  our  former  majority-owned  subsidiary's

<PAGE>

outstanding stock, held publicly. We owned the other 93.78%. In conjunction with
this  transaction,  FBA became a wholly owned subsidiary of First Banks, and was
merged with and into First Banks.  This  transaction was accounted for using the
purchase method of accounting. Goodwill was approximately $14.6 million.

         On  March  31,  2003,  we  completed  our  acquisition  of Bank of Ste.
Genevieve,  or BSG, Ste. Genevieve,  Missouri,  from Allegiant Bancorp, Inc., or
Allegiant,  in exchange for  approximately  974,150  shares of Allegiant  common
stock that we previously  held.  The purpose of the  transaction  was to further
expand our Midwest banking  franchise.  At the time of the acquisition,  BSG had
$115.1  million  in total  assets,  $43.7  million  in  loans,  net of  unearned
discount, $47.8 million in investment securities,  and $93.7 million in deposits
and operated two locations in Ste.  Genevieve,  Missouri.  The  transaction  was
accounted  for using the purchase  method of  accounting.  We recorded a gain of
$6.3  million on the  exchange of the  Allegiant  common  stock and  goodwill of
approximately $3.4 million. The core deposit intangibles were approximately $3.5
million and are being  amortized  over seven years  utilizing the  straight-line
method. BSG was merged with and into First Bank.  Subsequent to the acquisition,
we continued to own 231,779  shares,  or  approximately  1.52% of the issued and
outstanding   shares  of  Allegiant  common  stock.  On  October  27,  2003,  we
contributed  our  remaining  shares of  Allegiant  common  stock to a previously
established  charitable  foundation.  In conjunction with this  transaction,  we
recorded charitable  contribution  expense of $5.1 million,  which was partially
offset  by a gain on the  contribution  of these  available-for-sale  investment
securities of $2.3 million,  representing the difference  between the cost basis
and the fair  value of the  common  stock  on the date of the  contribution.  In
addition,  we  recorded  a tax  benefit  of $2.5  million  associated  with this
transaction.  The  contribution  of this  stock  eliminated  our  investment  in
Allegiant.

         On March 31, 2003, we completed the merger of our two wholly-owned bank
subsidiaries, First Bank and First Bank & Trust, 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.

         Acquisition and Integration Costs

         We accrue  certain costs  associated  with our  acquisitions  as of the
respective  consummation  dates.  Essentially  all of these accrued costs relate
either to adjustments to the staffing levels of the acquired  entities or to the
anticipated  termination of information  technology or item processing contracts
of the acquired entities prior to their stated contractual expiration dates. The
most significant costs that we incur relate to salary  continuation  agreements,
or other similar agreements, of executive management and certain other employees
of the  acquired  entities  that were in place prior to the  acquisition  dates.
These agreements  provide for payments over periods ranging from two to 15 years
and are  triggered as a result of the change in control of the acquired  entity.
Other severance  benefits for employees that are terminated in conjunction  with
the  integration  of the  acquired  entities  into our existing  operations  are
normally paid to the recipients  within 90 days of the  respective  consummation
date. Our accrued  severance  balance of $1.4 million,  as further  described in
Note 2 to our  Consolidated  Financial  Statements,  is comprised of contractual
obligations  under salary  continuation  agreements to ten individuals that have
remaining  terms ranging from four months to  approximately  13 years.  Payments
made under these  agreements are paid from accrued  liabilities and consequently
do not have any impact on our consolidated statements of income.

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

         As further  discussed and quantified under  "--Comparison of Results of
Operations  for 2003 and 2002," and  "--Comparison  of Results of Operations for
2002 and 2001," we also incur costs  associated with our  acquisitions  that are
expensed  in  our  consolidated   statements  of  income.   These  costs  relate
exclusively to additional costs incurred in conjunction with the data processing
conversions of the respective entities.

Market Area. As of December 31, 2003,  First Bank's 147 banking  facilities were
located in California,  eastern Missouri, Illinois and Texas. Our primary market
area is the St. Louis,  Missouri metropolitan area. Our second and third largest
market areas are southern and northern  California,  respectively.  We also have
locations  throughout Illinois,  in the Houston,  Dallas,  Irving,  McKinney and
Denton, Texas metropolitan areas and rural eastern Missouri.


<PAGE>
         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, 2003:

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

<S>                                                                      <C>                 <C>            <C>
St. Louis, Missouri metropolitan area................................    $ 1,391.8           23.3%          29
Southern California..................................................      1,302.9           21.9           31
Northern California..................................................      1,033.1           17.3           16
Central and southern Illinois........................................      1,010.2           16.9           34
Eastern Missouri.....................................................        480.4            8.1           15
Northern Illinois....................................................        428.6            7.2           14
Texas................................................................        314.6            5.3            8
                                                                         ---------          -----          ---
     Total deposits..................................................    $ 5,961.6          100.0%         147
                                                                         =========          =====          ===
</TABLE>

         First Bank  operates in the St.  Louis  metropolitan  area,  in eastern
Missouri and throughout Illinois, including Chicago. First Bank also operates in
southern  California,  including  the  greater Los  Angeles  metropolitan  area,
including  Ventura County,  Riverside County and Orange County; in Santa Barbara
County; in northern  California,  including the greater San Francisco,  San Jose
and Sacramento metropolitan areas; and in Texas in the Houston,  Dallas, Irving,
McKinney and Denton metropolitan areas.

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

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

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

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

Supervision and Regulation

General. Federal and state laws extensively regulate First Bank and us primarily
to protect depositors and customers of First Bank. 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.

         We are a registered bank holding company under the Bank Holding Company
Act of 1956. Consequently, the Board of Governors of the Federal Reserve System,
or Federal  Reserve,  regulates,  supervises  and  examines  us. 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

<PAGE>

FDIC,  which  provides  deposit  insurance  of up to $100,000  for each  insured
depositor.

Bank Holding Company Regulation.  Our activities and those of First Bank have in
the past been  limited  to the  business  of  banking  and  activities  "closely
related" or "incidental" to banking.  Under the  Gramm-Leach-Bliley  Act, or GLB
Act,  which was enacted in November  1999 and is discussed  below,  bank holding
companies  now have the  opportunity  to seek  broadened  authority,  subject to
limitations  on  investment,  to engage in  activities  that are  "financial  in
nature" if all of their subsidiary depository institutions are well capitalized,
well  managed  and have at  least a  satisfactory  rating  under  the  Community
Reinvestment Act (discussed briefly below).

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

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

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

         >>    merging or consolidating with another bank holding company.

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

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

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

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

         In  addition  to the  risk-based  standard,  we are  subject to minimum
requirements  with  respect  to the ratio of our Tier I capital  to our  average
assets less goodwill and certain other intangible assets, or the Leverage Ratio.
Applicable  requirements  provide  for a minimum  Leverage  Ratio of 3% for bank
holding companies that have the highest supervisory rating, while all other bank
holding  companies must maintain a minimum  Leverage Ratio of at least 4% to 5%.
The  Office  of the  Comptroller  of the  Currency,  or OCC,  and the FDIC  have
established capital requirements for banks under their respective  jurisdictions
that are  consistent  with those imposed by the Federal  Reserve on bank holding
companies.  Information  regarding our capital  levels and First Bank's  capital
levels  under the federal  capital  requirements  is contained in Note 21 to our
Consolidated Financial Statements appearing elsewhere in this report.
<PAGE>

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

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

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

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

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

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

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

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

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

Dividends.  Our primary source of funds in the future is the dividends,  if any,
paid by First  Bank.  The ability of First Bank to pay  dividends  is limited by
federal laws, by regulations  promulgated by the bank regulatory agencies and by
principles of prudent bank management.

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

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

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,

<PAGE>

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.
Final  regulations  implementing  the new privacy  standards became effective in
2001.

The Sarbanes-Oxley  Act. In July 2002, the Sarbanes-Oxley Act of 2002 was signed
into law. 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
that file periodic reports with the Securities and Exchange Commission,  or SEC,
such as First Banks, are affected by the Sarbanes-Oxley Act.

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

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

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

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

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

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

         >>    enhanced penalties for fraud and other violations.

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

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

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

         First Bank is a member of the  Federal  Reserve  System and the Federal
Home Loan Bank System. As members, First Bank is required to hold investments in
regional  banks within those  systems.  First Bank was in compliance  with these
requirements at December 31, 2003, with  investments of $5.4 million in stock of
the Federal Home Loan Bank of Des Moines,  $350,000 in stock of the Federal Home
Loan Bank of Chicago  (associated  with the  acquisition  of Union  completed on
December  31,  2001),  $285,000  in stock of the  Federal  Home Loan Bank of San
Francisco, and $18.1 million in stock of the Federal Reserve Bank of St. Louis.
<PAGE>

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

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

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

         >>    open market operations;

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

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

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

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

Employees

         As of March 25, 2004, we employed  approximately 2,160 employees.  None
of the employees are subject to a collective bargaining  agreement.  We consider
our relationships with our employees to be good.

Executive Officers of the Registrant

         Information  regarding  executive  officers is  contained in Item 10 of
Part III hereof (pursuant to General  Instruction G) and is incorporated  herein
by this reference.

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  981 square feet is currently  leased to others.  Of our other 146
offices and two  operations  and  administrative  facilities,  88 are located in
buildings that we own and 60 are located in buildings that we lease.

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

Item 3.  Legal Proceedings

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

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

         None.


<PAGE>


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

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

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


<PAGE>


Item 6.  Selected Financial Data

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

                                                                 As of or For the Year Ended December 31, (1)
                                                      -----------------------------------------------------------------
                                                            2003         2002        2001        2000        1999
                                                            ----         ----        ----        ----        ----
                                                      (dollars expressed in thousands, except share and per share data)
Income Statement Data:
<S>                                                     <C>          <C>         <C>            <C>       <C>
    Interest income...................................  $  391,153     425,721     445,385      423,294     353,456
    Interest expense..................................     104,026     157,551     210,246      201,320     171,125
                                                        ----------   ---------   ---------    ---------   ---------
    Net interest income...............................     287,127     268,170     235,139      221,974     182,331
    Provision for loan losses.........................      49,000      55,500      23,510       14,127      13,073
                                                        ----------   ---------   ---------    ---------   ---------
    Net interest income after
      provision for loan losses.......................     238,127     212,670     211,629      207,847     169,258
    Noninterest income................................      87,708      67,511      89,095       37,414      36,708
    Noninterest expense...............................     227,069     210,812     202,157      152,626     133,815
                                                        ----------   ---------   ---------    ---------   ---------
    Income before provision for income taxes,
      minority interest in income of
      subsidiary and cumulative effect of
      change in accounting principle..................      98,766      69,369      98,567       92,635      72,151
    Provision for income taxes........................      35,955      22,771      30,048       34,482      26,313
                                                        ----------   ---------   ---------    ---------   ---------
    Income before minority interest in
      income of subsidiary and cumulative effect
      of change in accounting principle...............      62,811      46,598      68,519       58,153      45,838
    Minority interest in income of subsidiary.........          --       1,431       2,629        2,046       1,660
                                                        ----------   ---------   ---------    ---------   ---------
    Income before cumulative effect of change in
      accounting principle............................      62,811      45,167      65,890       56,107      44,178
    Cumulative effect of change in
      accounting principle, net of tax ...............          --          --      (1,376)          --          --
                                                        ----------   ---------   ---------    ---------   ---------
    Net income........................................  $   62,811      45,167      64,514       56,107      44,178
                                                        ==========   =========   =========    =========   =========

Dividends:
    Preferred stock...................................  $      786         786         786          786         786
    Common stock......................................          --          --          --           --          --
    Ratio of total dividends declared to net income...        1.25%       1.74%       1.22%        1.40%       1.78%

Per Share Data:
    Earnings per common share:
      Basic:
       Income before cumulative effect of change
         in accounting principle......................  $ 2,621.39    1,875.69    2,751.54     2,338.04    1,833.91
       Cumulative effect of change in
         accounting principle, net of tax.............          --          --      (58.16)          --          --
                                                        ----------   ---------   ---------    ---------   ---------
       Basic..........................................  $ 2,621.39    1,875.69    2,693.38     2,338.04    1,833.91
                                                        ==========   =========   =========    =========   =========

      Diluted:
       Income before cumulative effect of
         change in accounting principle...............  $ 2,588.31    1,853.64    2,684.93     2,267.41    1,775.47
       Cumulative effect of change in
         accounting principle, net of tax.............          --          --      (58.16)          --          --
                                                        ----------   ---------   ---------    ---------   ---------
       Diluted........................................  $ 2,588.31    1,853.64    2,626.77     2,267.41    1,775.47
                                                        ==========   =========   =========    =========   =========


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

Balance Sheet Data:
    Investment securities.............................  $1,049,714   1,145,670     638,644      569,403     455,737
    Loans, net of unearned discount...................   5,328,075   5,432,588   5,408,869    4,752,265   3,996,324
    Total assets......................................   7,106,940   7,351,177   6,786,045    5,882,706   4,871,837
    Total deposits....................................   5,961,615   6,172,820   5,683,904    5,012,415   4,251,814
    Notes payable.....................................      17,000       7,000      27,500       83,000      64,000
    Subordinated debentures...........................     209,320     278,389     243,457      188,718     131,701
    Common stockholders' equity.......................     536,752     505,978     435,594      339,783     281,842
    Total stockholders' equity........................     549,815     519,041     448,657      352,846     294,905

Earnings Ratios:
    Return on average total assets....................        0.87%       0.64%       1.08%        1.09%       0.95%
    Return on average total stockholders' equity......       11.68        9.44       15.96        17.43       15.79
    Efficiency ratio (2)..............................       60.58       62.80       62.35        58.84       61.09
    Net interest margin (3)...........................        4.45        4.23        4.34         4.65        4.24

Asset Quality Ratios:
    Allowance for loan losses to loans................        2.19        1.83        1.80         1.72        1.72
    Nonperforming loans to loans (4)..................        1.41        1.38        1.24         1.12        0.99
    Allowance for loan losses
      to nonperforming loans (4)......................      154.52      132.29      144.36       153.47      172.66
    Nonperforming assets to loans
      and other real estate (5).......................        1.62        1.52        1.32         1.17        1.05
    Net loan charge-offs to average loans.............        0.61        1.01        0.45         0.17        0.22

Capital Ratios:
    Average total stockholders' equity
      to average total assets.........................        7.48        6.78        6.74         6.25        6.00
    Total risk-based capital ratio....................       10.27       10.68       10.53        10.21       10.05
    Leverage ratio....................................        7.62        6.45        7.24         7.46        7.15

---------------------------------
(1)  The comparability of the selected data presented is affected by  the acquisitions of 12 banks and three  branch
     offices during the five-year period ended December 31, 2003. These acquisitions were accounted for as purchases
     and, accordingly, the selected data includes the financial  position and results of operations of each acquired
     entity only for the periods subsequent to its respective date of acquisition.
(2)  Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(3)  Net interest rate margin is the ratio of net  interest income (expressed on  a tax-equivalent basis) to average
     interest-earning assets.
(4)  Nonperforming loans consist of nonaccrual loans and certain loans with restructured terms.
(5)  Nonperforming assets consist of nonperforming loans and other real estate.
</TABLE>


<PAGE>


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

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

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

RESULTS OF OPERATIONS

Overview

         Net income was $62.8  million,  $45.2 million and $64.5 million for the
years  ended  December  31,  2003,  2002 and 2001,  respectively.  Our return on
average assets and our return on average stockholders' equity increased to 0.87%
and 11.68%,  respectively,  for the year ended  December 31,  2003,  compared to
0.64% and 9.44%, respectively,  for 2002 and 1.08% and 15.96%, respectively, for
2001.  Results for 2003 reflect  increased net interest  income and  noninterest
income and decreased  provisions for loan losses, which were partially offset by
higher operating expenses,  primarily attributable to our acquisitions completed
in 2003 and 2002,  and  increased  provisions  for income  taxes.  For the three
months ended  December 31, 2003 and 2002,  our net income was $15.4  million and
$14.8 million, respectively.

         The  increase  in net income  for 2003 was  primarily  attributable  to
increased net interest income  resulting from reduced deposit rates and earnings
on our interest  rate swap  agreements  associated  with our interest  rate risk
management  program in addition to  increased  gains on mortgage  loans sold and
held for sale.  Results for 2003 also included a  nonrecurring  gain relating to
the partial  exchange of our investment in the common stock of Allegiant,  for a
100%  ownership  interest  in  BSG,  Ste.  Genevieve,  Missouri.  Our  remaining
investment  in the  common  stock  of  Allegiant  was  contributed  in full to a
previously  established  charitable  foundation in late 2003. This  nonrecurring
charitable contribution expense was partially offset by the gain realized on the
increase  in the market  value of the  Allegiant  common  stock and the  related
income tax effects of the transaction.  Throughout 2003, we continued to address
residual problems in our loan and lease portfolio stemming from the 2002 decline
in asset quality that was primarily a result of weak economic  conditions within
our markets.  Our provisions  for loan losses,  which declined from 2002 levels,
remained at higher-than-historical  levels. We continue to closely monitor asset
quality and address ongoing challenges posed by the current economic environment
and expect  nonperforming  assets to remain at  elevated  levels  during most of
2004. We have also focused our efforts on strengthening  our net interest margin
and growing  noninterest  income  while  managing  operating  expenses.  Our net
interest margin increased to 4.45% for the year ended December 31, 2003 compared
to  4.23%  for  2002.  Noninterest  income  increased  29.9%  in  2003,  and our
efficiency ratio improved to 60.58% in 2003 from 62.80% in 2002. This has placed
us in a position to benefit from improved economic conditions as they occur. The
decline in our earnings in 2002  primarily  resulted  from the reduced  interest
rate environment and weak economic  conditions  within our market areas, as well
as the related decline in asset quality.  Throughout 2002, we experienced higher
than normal loan charge-offs,  loan  delinquencies and nonperforming  loans that
led to significant increases in the provision for loan losses,  thereby reducing
net income.

         The implementation of Statement of Financial Accounting  Standards,  or
SFAS,  No.  142,  Goodwill  and Other  Intangible  Assets,  on  January 1, 2002,
resulted  in  the   discontinuation  of  amortization  of  certain   intangibles
associated with the purchase of subsidiaries. If we had implemented SFAS No. 142
at the beginning of 2001,  net income for the year ended December 31, 2001 would
have increased $8.1 million.  In addition,  the  implementation of SFAS No. 133,
Accounting  for Derivative  Instruments  and Hedging  Activities,  on January 1,
2001, resulted in the recognition of a cumulative effect of change in accounting
principle of $1.4 million, net of tax, which reduced net income.  Excluding this
item,  net income would have been $65.9 million for the year ended  December 31,
2001. Furthermore,  on December 31, 2003, we implemented FASB Interpretation No.
46,  Consolidation of Variable Interest  Entities,  an interpretation of ARB No.
51, which  resulted in the  deconsolidation  of our five  statutory and business
trusts  that were  created  for the sole  purpose  of  issuing  trust  preferred
securities.  The implementation of this Interpretation had no material effect on
our financial position or results of operations.

<PAGE>
Financial Condition and Average Balances

         Our average total assets were $7.18 billion for the year ended December
31,  2003,  compared  to $7.06  billion  and $6.00  billion  for the years ended
December 31, 2002 and 2001, respectively. Total assets were $7.11 billion, $7.35
billion and $6.79 billion at December 31, 2003, 2002 and 2001, respectively.  We
attribute  the $244.2  million  decrease  in total  assets for 2003 to weak loan
demand from our commercial customers, a reduction in loans and bank premises and
equipment  related to the  divestiture  of four branch  offices,  an anticipated
level of deposit attrition  associated with lower deposit rates,  maturities and
exchanges  of  investment  securities  and a  decline  in  derivative  financial
instruments, partially offset by our acquisition of BSG on March 31, 2003, which
provided assets of $115.1 million. We attribute the increase of $1.06 billion in
total average assets for 2002 primarily to our 2002  acquisitions  of Plains and
the UP branches,  which  provided  assets of $256.3  million and $63.7  million,
respectively,  and our  acquisitions  of Charter  Pacific Bank,  BYL Bancorp and
Union, completed during the fourth quarter of 2001. The increase in total assets
was partially offset by lower loan demand and an anticipated  level of attrition
associated with these acquisitions.

         The  increase  in average  assets for 2003 was  primarily  funded by an
increase  in average  deposits  of $98.1  million to $6.05  billion for the year
ended  December  31,  2003,  and an increase of $25.2  million in average  other
borrowings to $219.3  million for the year ended  December 31, 2003. We utilized
the  majority  of the  funds  generated  from our  deposit  growth  to invest in
available-for-sale  investment  securities,  reduce our  subordinated  debenture
obligations  and  temporarily  invest the remaining funds in federal funds sold,
resulting in  increases in average  investment  securities  and average  federal
funds sold of $135.5 million and $19.8 million,  respectively, to $957.4 million
and $143.0  million,  respectively,  for the year ended  December 31, 2003.  The
increase  in average  assets for 2002 was  primarily  funded by an  increase  in
average  deposits of $867.3 million to $5.96 billion for the year ended December
31, 2002, and an increase of $36.0 million in average other borrowings to $194.1
million for the year ended  December 31,  2002.  We utilized the majority of the
funds  generated  from  our  deposit  growth  to  invest  in  available-for-sale
investment  securities  and the  remaining  funds were  temporarily  invested in
federal  funds sold,  resulting in increases in average  federal  funds sold and
average investment securities of $29.7 million and $364.5 million, respectively,
to $123.3 million and $821.9 million,  respectively, for the year ended December
31, 2002.

         Loans, net of unearned discount,  averaged $5.39 billion, $5.42 billion
and  $4.88  billion  for the  years  ended  December  31,  2003,  2002 and 2001,
respectively. The acquisitions we completed during 2003 and 2002 provided loans,
net of unearned discount, of $43.7 million and $151.0 million,  respectively. We
attribute the decrease in average loans in 2003 to general  economic  conditions
resulting in continued weak loan demand and lower  prevailing  interest rates as
well as increased  competition  within our markets areas.  In addition to growth
provided by acquisitions, for 2003, internal loan growth was provided by a $73.6
million increase in our real estate construction and development portfolio and a
$100.6 million increase in our residential real estate mortgage portfolio due to
increased  volumes  resulting from the current interest rate environment and our
business strategy decision to retain a portion of our residential  mortgage loan
production  that  would  have  previously  been sold in the  secondary  mortgage
market.  These  increases were offset by a $204.2  million  decline in our loans
held for sale resulting from the timing of loans sales in the secondary mortgage
market and  reduced  loan  volumes in the fourth  quarter of 2003,  a  continued
decline in our lease  financing  portfolio of $59.5  million that is  consistent
with our  overall  business  strategy to  de-emphasize  our  commercial  leasing
activities,  a $56.1 million decline in commercial,  financial and  agricultural
loans and a $22.4  million  decline in consumer and  installment  loans,  net of
unearned  discount.  The increase in average loans for 2002 was primarily due to
loans  provided  by our  acquisitions  as well as a $36.1  million  increase  in
residential  real  estate  lending,  offset  by  a  $119.3  million  decline  in
commercial  lending as a result of reduced  loan demand  stemming  from the then
current economic  conditions  prevalent within our markets.  We also experienced
continued  reductions  in  consumer  and  installment  loans,  net  of  unearned
discount,  which  decreased $44.1 million to $79.1 million at December 31, 2002.
This  decrease  reflects  reductions  in new loan  volumes and the  repayment of
principal on our existing portfolio,  and is also consistent with our objectives
of  de-emphasizing  consumer  lending and expanding  commercial  lending.  These
changes result from the focus we have placed on our business development efforts
and the portfolio  repositioning  that originally began in the mid-1990's.  This
repositioning  provided for substantially  all of our residential  mortgage loan
production to be sold in the secondary  mortgage  market and the  origination of
indirect automobile loans to be substantially reduced.

         Investment  securities  averaged  $957.4  million,  $821.9  million and
$457.4  million  for  the  years  ended  December  31,  2003,   2002  and  2001,
respectively,  reflecting increases of $135.5 million and $364.5 million for the
years ended December 31, 2003 and 2002, respectively.  The increases in 2003 and
2002 are primarily  attributable  to increased  purchases of  available-for-sale
investment  securities  due to reduced loan demand and deposit growth as well as
our  acquisitions  of BSG and Plains,  which  provided us with $47.8 million and
$81.0  million of  investment  securities  in 2003 and 2002,  respectively.  The
overall  increase in 2003 was partially  offset by the exchange of our Allegiant
common stock for our ownership in BSG and the subsequent charitable contribution
of our remaining Allegiant shares.


<PAGE>


         Nonearning  assets  averaged $698.7 million for the year ended December
31,  2003,  compared to $687.8  million  and $563.0  million for the years ended
December  31,  2002 and 2001,  respectively.  Derivative  financial  instruments
averaged $78.7 million for the year ended  December 31, 2003,  compared to $72.8
million  and $45.7  million  for the years  ended  December  31,  2002 and 2001,
respectively.  However, our derivative  financial  instruments declined to $49.3
million at December 31, 2003 from $97.9 million at December 31, 2002, consistent
with a decline in the fair value of certain  derivative  financial  instruments.
The increase for 2002 was primarily  attributable  to  additional  interest rate
swap  agreements  entered  into in 2002.  Bank  premises and  equipment,  net of
depreciation and amortization, was $136.7 million at December 31, 2003, compared
to  $152.4   million  and  $149.6   million  at  December  31,  2002  and  2001,
respectively.  Our acquisitions, the purchase and remodeling of a new operations
center and corporate  administrative  building during 2001 and the  construction
and/or renovation of various branch offices contributed to the increases in 2002
and 2001.  In 2003,  lower  capital  expenditures,  continued  depreciation  and
amortization,  and the  divestiture  of four branch  offices  contributed to the
overall  decrease in bank premises and equipment.  Intangible  assets  increased
$6.6 million in 2003 and $26.7 million in 2002 and are primarily attributable to
goodwill  from our  acquisitions  of BSG,  Plains and the purchase of the public
shares of FBA of $3.4 million, $12.6 million and $14.6 million, respectively. In
addition, we recorded core deposit intangibles of $3.5 million and $2.9 million,
respectively,  on our BSG and Plains  acquisitions,  further contributing to the
overall increase.

         We use deposits as our primary  funding  source and acquire them from a
broad base of local markets,  including both individual and corporate customers.
Deposits  averaged $6.05 billion,  $5.96 billion and $5.09 billion for the years
ended December 31, 2003, 2002 and 2001,  respectively.  Total deposits decreased
by $211.2  million to $5.96 billion at December 31, 2003 and primarily  reflects
an anticipated level of attrition  associated with ongoing low deposit rates and
continued  aggressive  competition  within our market  areas as well as an $88.3
million  reduction in our deposit base  associated  with our divestiture of four
branch  offices in late 2003.  The  overall  decline in deposits  was  partially
offset by $93.7 million of deposits  acquired from BSG. The deposit mix for 2003
reflects our continued  efforts to  restructure  the  composition of our deposit
base as the majority of our deposit  development  programs  are directed  toward
increased transaction accounts, such as demand and savings accounts, rather than
time deposits,  and to further develop multiple account  relationships  with our
customers.  In 2002, total deposits increased by $488.9 million to $6.17 billion
at December 31, 2002. We credit this increase  primarily to our acquisitions and
the  expansion  of our deposit  product and service  offerings  available to our
customer  base.  The  increase  for 2002 also  reflects  an  increase in savings
accounts offset by a decline in certain large commercial  accounts due primarily
to  general  economic  conditions  resulting  from the fact that  consumers  are
generally  more  inclined to retain a higher level of liquid assets during times
of economic uncertainty.

         Other  borrowings  averaged $219.3  million,  $194.1 million and $158.0
million for the years ended December 31, 2003, 2002 and 2001, respectively.  The
increase  in the  average  balance  for 2003  reflects  $100.0  million  of term
securities  sold under  agreements to repurchase that we entered into during the
third  quarter of 2003,  offset by a $55.0  million  reduction in federal  funds
purchased, a $30.2 million decrease in daily securities sold under agreements to
repurchase  principally in connection with the cash management activities of our
commercial deposit customers as well as a $7.0 million reduction in Federal Home
Loan Bank  advances.  The  increase in the average  balance for 2002  reflects a
$54.1 million  increase in daily  securities sold under agreements to repurchase
as well as a $15.0  million  increase in federal  funds  purchased,  offset by a
$17.0 million decline in FHLB advances.

         Our note  payable  averaged  $15.4  million,  $17.9  million  and $41.6
million for the years ended December 31, 2003, 2002 and 2001, respectively.  Our
note payable  increased $10.0 million to $17.0 million at December 31, 2003. The
balance of our note payable at December 31, 2003  resulted  from a $34.5 million
advance in June 2003 to partially  fund the  redemption  of $47.4 million of our
subordinated debentures,  and has subsequently been reduced by internally funded
repayments.  Our note  payable  decreased  by $20.5  million to $7.0  million at
December 31, 2002 due to repayments  funded  primarily  through  dividends  from
First Bank and the issuance of additional subordinated debentures in April 2002,
offset by a $36.5 million advance  utilized to fund our acquisition of Plains in
January 2002. The $7.0 million  advance drawn in December 2002 to partially fund
our purchase of the public shares of FBA was repaid in February 2003.

         Subordinated  debentures  issued to our statutory  and business  trusts
averaged $249.1  million,  $265.5 million and $195.5 million for the years ended
December 31, 2003,  2002 and 2001,  respectively.  In November  2001,  we issued
$56.9 million of 9.00% subordinated  debentures to First Preferred Capital Trust
III.  Proceeds  from  this  offering,  net of  underwriting  fees  and  offering
expenses,  were $54.6 million and were used to reduce borrowings.  Distributions
paid on these  subordinated  debentures  were $5.1  million  for the years ended
December 31, 2003 and 2002,  and $640,000 for the year ended  December 31, 2001.

<PAGE>

In April 2002, we issued $25.8 million of variable rate subordinated  debentures
to First Bank Capital Trust in a private placement. Proceeds from this offering,
net of underwriting fees and offering expenses, were $25.0 million and were used
to reduce borrowings.  Distributions paid on these subordinated  debentures were
$1.4  million and $1.1  million for the years ended  December 31, 2003 and 2002,
respectively.  On March 20, 2003, we issued $25.8 million of 8.10%  subordinated
debentures to First Bank Statutory Trust in a private  placement.  Proceeds from
this  offering,  net of  underwriting  fees and  offering  expenses,  were $25.3
million.  Distributions paid on these subordinated  debentures were $1.7 million
for the year ended  December 31, 2003. On April 1, 2003, we issued $47.4 million
of 8.15%  subordinated  debentures to First Preferred Capital Trust IV. Proceeds
from this offering,  net of underwriting fees and offering expenses,  were $45.6
million.  Distributions paid on these subordinated  debentures were $2.9 million
for the year ended  December  31,  2003.  Proceeds  from the 2003  issuances  of
subordinated debentures, in addition to approximately $30.9 million in available
cash and a $34.5 million  advance on our note payable,  were used for the May 5,
2003 redemption of the $88.9 million of 9.25% subordinated  debentures that were
issued  to  First  Preferred  Capital  Trust in  1997,  and the  June  30,  2003
redemption of $47.4 million of 8.50% subordinated debentures that were issued to
First America Capital Trust in 1998.

         Stockholders' equity averaged $537.6 million, $478.6 million and $404.1
million for the years ended December 31, 2003, 2002 and 2001,  respectively.  We
primarily attribute the increase for 2003 to net income of $62.8 million, offset
by  dividends  paid on our  Class A and  Class B  preferred  stock,  and a $31.3
million decrease in accumulated other  comprehensive  income which was comprised
of  $21.3  million  associated  with  the  change  in our  derivative  financial
instruments and $10.0 million associated with the change in our unrealized gains
and losses on available-for-sale investment securities. The increase for 2002 is
attributable to net income of $45.2 million and an increase in accumulated other
comprehensive  income of $26.2 million,  offset by dividends paid on our Class A
and Class B preferred  stock.  The $26.2 million  increase in accumulated  other
comprehensive  income  reflects  $17.3 million  associated  with our  derivative
financial  instruments and $8.9 million associated with the change in unrealized
gains and losses on our available-for-sale investment securities.


<PAGE>


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

                                                                      Years Ended December 31,
                                        --------------------------------------------------------------------------------------
                                                    2003                            2002                        2001
                                        ----------------------------   ---------------------------  --------------------------
                                                    Interest                       Interest                     Interest
                                         Average    Income/  Yield/      Average   Income/  Yield/    Average   Income/  Yield/
                                         Balance    Expense   Rate       Balance   Expense   Rate     Balance   Expense   Rate
                                         -------    -------   ----       -------   -------   ----     -------   -------   ----
                                                                  (dollars expressed in thousands)

                   ASSETS
                   ------

Interest-earning assets:
    Loans: (1) (2) (3)
<S>                                    <C>          <C>        <C>     <C>         <C>        <C>   <C>          <C>      <C>
       Taxable........................ $5,369,046   354,649    6.61%   $5,408,018  389,090    7.19% $4,876,615   411,663  8.44%
       Tax-exempt (4).................     16,317     1,266    7.76        16,490    1,495    9.07       7,684       754  9.81
    Investment securities:
       Taxable........................    914,357    32,442    3.55       773,871   31,845    4.12     439,537    26,886  6.12
       Tax-exempt (4).................     43,074     2,672    6.20        48,078    2,869    5.97      17,910     1,366  7.63
    Federal funds sold and other......    143,046     1,502    1.05       123,285    1,949    1.58      93,561     5,458  5.83
                                       ----------   -------            ----------  -------          ----------   -------
         Total interest-
           earning assets.............  6,485,840   392,531    6.05     6,369,742  427,248    6.71   5,435,307   446,127  8.21
                                                    -------                        -------                       -------
Nonearning assets.....................    698,740                         687,843                      562,991
                                       ----------                      ----------                   ----------
         Total assets................. $7,184,580                      $7,057,585                   $5,998,298
                                       ==========                      ==========                   ==========

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

Interest-bearing liabilities:
    Interest-bearing deposits:
       Interest-bearing
         demand deposits.............. $  852,104     5,470    0.64%   $  755,879    7,551    1.00% $  507,011     7,019  1.38%
       Savings deposits...............  2,147,573    23,373    1.09     1,991,510   35,668    1.79   1,548,441    50,388  3.25
       Time deposits (3)..............  2,046,741    54,276    2.65     2,295,431   85,049    3.71   2,278,263   125,131  5.49
                                       ----------   -------            ----------  -------          ----------   -------
         Total interest-
           bearing deposits...........  5,046,418    83,119    1.65     5,042,820  128,268    2.54   4,333,715   182,538  4.21
    Other borrowings..................    219,264     2,243    1.02       194,077    3,450    1.78     158,047     5,847  3.70
    Note payable (5)..................     15,418       785    5.09        17,947    1,032    5.75      41,590     2,629  6.32
    Subordinated debentures (3).......    249,146    17,879    7.18       265,503   24,801    9.34     195,523    19,232  9.84
                                       ----------   -------            ----------  -------          ----------   -------
         Total interest-
           bearing liabilities........  5,530,246   104,026    1.88     5,520,347  157,551    2.85   4,728,875   210,246  4.45
                                                    -------                        -------                       -------
Noninterest-bearing liabilities:
    Demand deposits...................  1,007,400                         912,915                      754,763
    Other liabilities.................    109,357                         145,731                      110,553
                                       ----------                      ----------                   ----------
         Total liabilities............  6,647,003                       6,578,993                    5,594,191
Stockholders' equity..................    537,577                         478,592                      404,107
                                       ----------                      ----------                   ----------
         Total liabilities and
           stockholders' equity....... $7,184,580                      $7,057,585                   $5,998,298
                                       ==========                      ==========                   ==========
Net interest income...................              288,505                        269,697                       235,881
                                                    =======                        =======                       =======
Interest rate spread..................                         4.17                           3.86                        3.76
Net interest margin (6)...............                         4.45%                          4.23%                       4.34%
                                                               ====                           ====                        ====
-----------------------------
(1)   For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2)   Interest income on loans includes loan fees.
(3)   Interest income and interest expense includes the effects of interest rate swap agreements.
(4)   Information  is  presented  on  a  tax-equivalent  basis assuming a tax rate of 35%.  The tax-equivalent adjustments were
      approximately $1.4 million, $1.5 million and $742,000 for the years ended December 31, 2003, 2002 and 2001, respectively.
(5)   Interest expense on our note payable includes commitment, arrangement and renewal fees.
(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,  which 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, 2003 Compared          December 31, 2002 Compared
                                                     to December 31, 2002               to December 31, 2001
                                               -------------------------------    ------------------------------
                                                                          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.............................  $ (2,824)    (31,617)    (34,441)    42,110     (64,683)    (22,573)
       Tax-exempt (4)......................       (16)       (213)       (229)       802         (61)        741
    Investment securities:
       Taxable.............................     5,345      (4,748)        597     15,767     (10,808)      4,959
       Tax-exempt (4)......................      (305)        108        (197)     1,858        (355)      1,503
    Federal funds sold and other...........       278        (725)       (447)     1,349      (4,858)     (3,509)
                                             --------     -------     -------    -------     -------     -------
           Total interest income...........     2,478     (37,195)    (34,717)    61,886     (80,765)    (18,879)
                                             --------     -------     -------    -------     -------     -------
Interest paid on:
    Interest-bearing demand deposits.......       878      (2,959)     (2,081)     2,809      (2,277)        532
    Savings deposits.......................     2,602     (14,897)    (12,295)    11,866     (26,586)    (14,720)
    Time deposits (3) .....................    (8,461)    (22,312)    (30,773)       932     (41,014)    (40,082)
    Other borrowings.......................       406      (1,613)     (1,207)     1,121      (3,518)     (2,397)
    Note payable (5).......................      (136)       (111)       (247)    (1,378)       (219)     (1,597)
    Subordinated debentures (3)............    (1,456)     (5,466)     (6,922)     6,589      (1,020)      5,569
                                             --------     -------     -------    -------     -------     -------
           Total interest expense..........    (6,167)    (47,358)    (53,525)    21,939     (74,634)    (52,695)
                                             --------     -------     -------    -------     -------     -------
           Net interest income.............  $  8,645      10,163      18,808     39,947      (6,131)     33,816
                                             ========     =======     =======    =======     =======     =======
-----------------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense includes the effect of interest rate swap agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%.
(5) Interest expense on our note payable includes commitment, arrangement and renewal fees.
</TABLE>

Net Interest Income

         The primary source of our income is net interest  income,  which is the
difference  between the interest earned on our  interest-earning  assets and the
interest  paid  on  our  interest-bearing   liabilities.   Net  interest  income
(expressed on a tax-equivalent  basis) increased to $288.5 million,  or 4.45% of
average  interest-earning  assets,  for the year ended  December 31, 2003,  from
$269.7 million,  or 4.23% of  interest-earning  assets,  and $235.9 million,  or
4.34% of  interest-earning  assets,  for the years ended  December  31, 2002 and
2001, respectively. We credit the increased net interest income primarily to the
net interest-earning  assets provided by our acquisitions  completed in 2002 and
2003,  reduced  deposit rates and earnings on our interest rate swap  agreements
that we entered  into in  conjunction  with our  interest  rate risk  management
program,  which  mitigate  the  effects  of  decreasing  interest  rates.  These
derivative   financial   instruments  used  to  hedge  our  interest  rate  risk
contributed $64.6 million, $53.0 million and $23.4 million, respectively, to net
interest  income for the years  ended  December  31,  2003,  2002 and 2001.  The
improved  net  interest  income  is also  attributable  to a $63.1  million  net
reduction in our outstanding subordinated debentures. As more fully described in
Note 12 to our Consolidated  Financial  Statements,  in 2003, we redeemed $136.3
million of subordinated debentures that were issued during 1997 and 1998, and we
issued $25.8 million of  subordinated  debentures to First Bank Statutory  Trust
and $47.4 million of subordinated  debentures to First  Preferred  Capital Trust
IV. These transactions,  coupled with the use of additional derivative financial
instruments,  have allowed us to reduce our overall interest expense  associated
with our  subordinated  debentures.  In addition,  earning assets increased as a
result  of our  acquisitions  of BSG in 2003,  which  provided  assets of $115.1
million,  and Plains and two Texas  branch  purchases  in 2002,  which  provided
assets of $256.3  million and $63.7 million,  respectively.  The increase in net
interest  income,  however,  was partially  offset by prevailing  lower interest
rates,  generally weak loan demand and overall economic conditions that continue
to exert  pressure on our net  interest  margin.  The  increase in net  interest
income for 2002 was primarily  attributable to the net  interest-earning  assets
provided by our  acquisitions and earnings on our interest rate swap agreements,
including  additional  swap  agreements  entered  into  in May  and  June  2002,
partially  offset by reductions in prevailing  interest  rates,  the issuance of
additional  subordinated  debentures,  generally  weaker loan demand and overall
economic  conditions,  which resulted in a reduction in our net interest margin.
In 2002,  we issued $25.8 million of variable  rate  subordinated  debentures to
First  Bank  Capital  Trust.   The  overall  increase  in  interest  expense  on

<PAGE>

subordinated  debentures in 2002 also reflects a change in estimate reducing the
period over which our deferred  issuance costs are being amortized from maturity
date to call date.  This change in estimate was deemed  necessary as a result of
the  significant  decline  in  prevailing  interest  rates  during  2001,  which
increased  the  likelihood  that we would  redeem  certain  of our  subordinated
debentures prior to maturity.  Subsequently,  the decline in prevailing interest
rates lead to the 2003  redemption  of certain  of our  subordinated  debentures
prior to maturity  and the issuance of  additional  subordinated  debentures  at
lower interest rates, as discussed above, while providing replacement regulatory
capital  through  the  associated  trust  preferred  securities  issued  by  our
financing trusts.

         Average total loans, net of unearned  discount,  were $5.39 billion for
the year ended  December  31, 2003,  in  comparison  to $5.42  billion and $4.88
billion for the years ended December 31, 2002 and 2001, respectively.  The yield
on our loan  portfolio  decreased to 6.61% for the year ended December 31, 2003,
in  comparison  to 7.20% for 2002 and 8.44% for 2001.  We attribute  the overall
decline  in yields  and the  decline  in our net  interest  rate  margin in 2002
primarily to the decreases in prevailing  interest rates. During the period from
January 1, 2001 through December 31, 2003, the Board of Governors of the Federal
Reserve System decreased the targeted federal funds rate 13 times,  resulting in
13  decreases  in the  prime  rate of  interest  from  9.50% to  4.00%.  This is
reflected  not only in the rate of interest  earned on loans that are indexed to
the prime  rate,  but also in other  assets and  liabilities  which  either have
variable or adjustable  rates,  or which matured or repriced during this period.
As discussed  above and under  "--Interest  Rate Risk  Management,"  the reduced
level of interest  income earned on our loan  portfolio as a result of declining
interest rates and increased  competition  within our market areas was partially
mitigated by the earnings  associated with our interest rate swap agreements and
the net reduction of our outstanding subordinated debentures.

         For the years ended  December 31, 2003,  2002 and 2001,  the  aggregate
weighted average rate paid on our interest-bearing  deposit portfolio was 1.65%,
2.54%  and  4.21%,   respectively.   We  attribute  the  decline   primarily  to
significantly decreased rates paid on our savings and time deposits,  which have
continued to decline in conjunction with the interest rate reductions previously
discussed.  However, the continued  competitive pressures on deposits within our
market  areas  precluded  us from fully  reflecting  the general  interest  rate
decreases  in our deposit  pricing  while still  providing  an adequate  funding
source for our loan  portfolio.  The  earnings  associated  with  certain of our
interest  rate  swap   agreements   designated  as  fair  value  hedges  further
contributed to the overall reduction in deposit rates paid on time deposits.

         The aggregate  weighted  average rate on our note payable  decreased to
5.09% for the year ended  December 31, 2003,  from 5.75% and 6.32% for the years
ended  December  31, 2002 and 2001,  respectively.  The  overall  changes in the
weighted  average rates paid reflect changing market interest rates during these
periods.  Amounts  outstanding  under our $60.0 million revolving line of credit
with a group of unaffiliated  financial  institutions  bear interest at the lead
bank's corporate base rate or, at our option,  at the London Interbank  Offering
Rate plus a margin  determined by the outstanding  balance and our profitability
for the  preceding  four calendar  quarters.  Thus,  our  revolving  credit line
represents a relatively  high-cost funding source as increased advances have the
effect of increasing the weighted average rate of non-deposit  liabilities.  The
overall  cost of  this  funding  source,  however,  has  been  mitigated  by the
reductions in the prime lending rate and in the average  outstanding  balance of
our note  payable in 2002 and 2003 as compared to 2001.  During  2001,  our note
payable was fully  repaid  from the  proceeds  of our  issuance of  subordinated
debentures to First Preferred Capital Trust III. In December 2001, we obtained a
$27.5  million  advance  to fund our  acquisition  of Union and in  January  and
December 2002, we utilized the note payable to fund our  acquisitions  of Plains
and the public shares of FBA, respectively. The $7.0 million balance of our note
payable at December 31, 2002 was fully repaid in February  2003.  The balance of
our note  payable at December 31, 2003  resulted  from a $34.5  million  advance
drawn  in June  2003 to  partially  fund our  redemption  of  $47.4  million  of
subordinated  debentures,  and has been subsequently reduced by $17.5 million of
internally funded  repayments.  The aggregate  weighted average rate paid on our
other borrowings also declined to 1.02% for the year ended December 31, 2003, as
compared  to  1.78%  and  3.70%  for  2002 and  2001,  respectively,  reflecting
reductions in the current interest rate environment.

         The aggregate weighted average rate paid on our subordinated debentures
was 7.18%, 9.34% and 9.84% for the years ended December 31, 2003, 2002 and 2001,
respectively.  The decreased rate for 2003 primarily  reflects the redemption of
$136.3 million of  subordinated  debentures and the issuance of $73.2 million of
subordinated  debentures at lower interest rates as well as the earnings  impact
of our interest rate swap agreements entered into in 2002 and in March and April
2003.  The  decreased  rate  for 2002  reflects  the net  interest  differential
earnings  impact  of  $4.5  million  associated  with  our  interest  rate  swap
agreements  entered into in May and June 2002. The decline was partially  offset
by the additional expense of our subordinated debentures issued in November 2001
and April 2002 as well as a change in estimate  regarding  the period over which
the  deferred  issuance  costs  associated  with  these  obligations  are  being
amortized.  As  further  discussed  in  Note  12 to our  Consolidated  Financial
Statements, this change in estimate resulted in a reduction of net income in the
amount of  approximately  $2.8 million for the year ended  December 31, 2002, as
compared to what results would have been without the change.


<PAGE>
Comparison of Results of Operations for 2003 and 2002

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

         Provision  for Loan  Losses.  The  provision  for loan losses was $49.0
million  and $55.5  million  for the years  ended  December  31,  2003 and 2002,
respectively.   We  experienced  a  higher  level  of  problem  loans,   related
charge-offs  and past due loans during 2002 due to overall  economic  conditions
within our market areas, problems identified in two acquired loan portfolios and
deterioration in our commercial leasing  portfolio,  particularly the segment of
the  portfolio  relating  to  the  airline  industry.   We  experienced  further
deterioration  in our  commercial  leasing  portfolio in 2003,  contributing  to
continued higher-than-historical provisions for loan losses as further discussed
under  "--Lending  Activities"  and "--Loans and Allowance for Loan Losses." Net
loan  charge-offs  were $32.7  million  and $54.6  million  for the years  ended
December 31, 2003 and 2002, respectively. Net loan charge-offs, unrelated to our
commercial  leasing  portfolio,  included a $6.1 million net  charge-off  on one
significant  credit  relationship  in 2003 and $38.6 million on ten  significant
credit relationships in 2002. Our nonperforming loans increased to $75.4 million
at  December  31,  2003  from  $75.2  million  at  December  31,  2002,  further
contributing to the need for  higher-than-historical  provisions for loan losses
in 2003. Our loan policy requires all loans to be placed on a nonaccrual  status
once  principal  or  interest  payments  become 90 days past  due.  Our  general
procedures for monitoring these loans allow individual loan officers to submit a
written  request for  approval to continue the accrual of interest on loans that
become  90 days  past  due.  These  requests  must  be  submitted  for  approval
consistent with the authority  levels provided in our credit approval  policies,
and they are only  granted if an  expected  near term  future  event,  such as a
pending renewal or expected payoff,  exists at the time the loan becomes 90 days
past due. If the expected near term future event does not occur as  anticipated,
the loan is placed on nonaccrual status. Management expects nonperforming assets
to remain at the higher levels recently  experienced and considered these trends
in its overall assessment of the adequacy of the allowance for loan losses.

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

         Noninterest   Income  and  Expense.   The  following  table  summarizes
noninterest income and noninterest expense for the years ended December 31, 2003
and 2002:
<TABLE>
<CAPTION>
                                                                                  December 31,         Increase (Decrease)
                                                                             --------------------      -------------------
                                                                                2003      2002          Amount       %
                                                                                ----      ----          ------      ---
                                                                                  (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>           <C>        <C>
        Service charges on deposit accounts and customer service fees.....  $  36,113     30,978        5,135      16.58%
        Gain on mortgage loans sold and held for sale.....................     15,645      6,471        9,174     141.77
        Net gain on sales of available-for-sale investment securities.....      8,761         90        8,671   9,634.44
        Gain on sales of branches, net of expenses........................      3,992         --        3,992     100.00
        Bank-owned life insurance investment income.......................      5,469      5,928         (459)     (7.74)
        Net gain on derivative instruments................................        496      2,181       (1,685)    (77.26)
        Other.............................................................     17,232     21,863       (4,631)    (21.18)
                                                                            ---------    -------      -------
              Total noninterest income....................................  $  87,708     67,511       20,197      29.92
                                                                            =========    =======      =======   ========
</TABLE>




<PAGE>
<TABLE>
<CAPTION>
                                                                                 December 31,         Increase (Decrease)
                                                                            ---------------------     -------------------
                                                                              2003         2002        Amount       %
                                                                              ----         ----        ------      ---
                                                                                  (dollars expressed in thousands)

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

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

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

         >>    our acquisitions completed during 2002 and 2003;

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

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

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

         The gain on mortgage  loans sold and held for sale  increased  to $15.6
million  from $6.5  million  for the years  ended  December  31,  2003 and 2002,
respectively. The increase reflects the continued growth of our mortgage banking
activities  in  addition  to  overall  reductions  in  mortgage  loan rates that
contributed to higher volumes of new  originations and  refinancings,  partially
offset by increased  commissions  paid to mortgage loan  originators  associated
with the higher loan volumes.  We experienced a slowdown in overall loan volumes
in the fourth  quarter of 2003 resulting in a decline in gains on mortgage loans
sold and held for sale, and we expect this trend to continue in 2004.

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

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

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

         The net gain on derivative  instruments was $496,000 for the year ended
December 31, 2003, in  comparison  to $2.2 million in 2002.  The decrease in the
net gain on  derivative  instruments  reflects  changes in the fair value of our
interest  rate  cap  agreements,   fair  value  hedges  and  underlying   hedged
liabilities.  The lower 2003 net gain also reflects the discontinuation of hedge
accounting treatment on two interest rate swap agreements that mature in January

<PAGE>

2004,  resulting from the loss of our highly  correlated hedge positions between
the swap agreements and the underlying  hedged  liabilities as further discussed
under "--Interest Rate Risk Management."

         Other  income was $17.2  million and $21.9  million for the years ended
December 31, 2003 and 2002, respectively. We attribute the primary components of
the decrease in other income to:

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

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

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

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

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

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

         >>    increased portfolio  management fee income of $605,000 associated
               with our Institutional Money Management Division;

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

         >>    higher  earnings   associated  with  our  international   banking
               products;

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

         >>    our acquisitions completed during 2002 and 2003.

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

         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.  In addition,  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 (e.g. credit card
               lending).   These  costs  are   generally   recorded  as  of  the
               consummation   date  through  the  establishment  of  an  accrued
               liability with the offsetting  adjustment recorded as an increase
               to goodwill.  These costs are  infrequently  encountered and, for
               all periods presented, are not material to our operations;

         >>    planned  involuntary  employee  termination  benefits  (severance
               costs) as further  discussed under  "--Acquisitions - Acquisition
               and Integration  Costs" and Note 2 to our Consolidated  Financial
               Statements; and
<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  data   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 data  processing  and  information  technology  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 data  processing  conversions of the acquired  entities as
further described and quantified below.

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

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

         Information  technology  fees were $32.1  million  for the years  ended
December  31,  2003  and  2002.  As  discussed  in Note  19 to our  Consolidated
Financial  Statements,  First Services,  L.P., a limited partnership  indirectly
owned by our Chairman and members of his immediate family,  provides information
technology and various  operational support services to our subsidiaries and us.
We attribute the consistently  higher level of fees to growth and  technological
advancements  consistent with our product and service  offerings,  and continued
expansion and upgrades to technological  equipment,  networks and  communication
channels.  These  increases  were  partially  offset by  expense  reductions  of
$554,000  associated with the data processing  conversions of Union,  Plains and
the Denton and Garland, Texas branch purchases in 2002.

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

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

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




<PAGE>


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

         Other  expense was $32.3  million and $25.3 million for the years ended
December 31, 2003 and 2002,  respectively.  Other expense  encompasses  numerous
general and administrative  expenses including travel,  meals and entertainment,
insurance,   freight  and  courier   services,   correspondent   bank   charges,
miscellaneous  losses and recoveries,  memberships and  subscriptions,  transfer
agent fees and sales taxes.  We attribute  the majority of the increase in other
expense for 2003, as compared to 2002, to:

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

         >>    increased   expenses  on  other  real  estate  of  $1.6  million,
               including  gains  and  losses  on  sales  of  other  real  estate
               properties.  The majority of these  increased  expenditures  were
               associated with the operation of the residential and recreational
               development  property transferred to other real estate in January
               2003 and further  discussed under "--Loans and Allowance for Loan
               Losses" and in Note 25 to our Consolidated Financial Statements;

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

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

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

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

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

Comparison of Results of Operations for 2002 and 2001

         Net Income.  Net income was $45.2  million for the year ended  December
31, 2002, compared to $64.5 million for 2001. Results for 2002 reflect increased
net interest income offset by higher operating expenses primarily resulting from
our  acquisitions  completed  in 2001 and 2002.  We also  experienced  increased
provisions  for loan losses,  indicative  of the current  economic  environment,
reflected in increased loan  charge-off,  past due and  nonperforming  trends as
further  discussed under  "--Provision for Loan Losses." The  implementation  of
SFAS No. 142 on January 1, 2002, resulted in the discontinuation of amortization
of certain intangibles  associated with the purchase of subsidiaries.  If we had
implemented SFAS No. 142 at the beginning of 2001, net income for the year ended
December  31,  2001  would  have  increased  $8.1  million.  In  addition,   the
implementation  of SFAS No. 133 on January 1, 2001,  resulted in the recognition
of a cumulative effect of change in accounting principle of $1.4 million, net of
tax,  which reduced net income in 2001.  Excluding  this item,  net income would
have been $65.9 million for the year ended December 31, 2001. The accounting for
derivatives  under the  requirements  of SFAS No. 133 will  continue  to have an
impact on future  financial  results as further  discussed under  "--Noninterest
Income."

         The  overall  increase  in  operating  expenses  for 2002,  as  further
discussed   under   "--Noninterest   Expense,"  was  partially   offset  by  the
discontinuation  of  amortization  of certain  intangibles  associated  with the
purchase of subsidiaries in accordance with the  implementation of SFAS No. 142.
Amortization  of  intangibles  for the year  ended  December  31,  2002 was $2.0
million  compared to $8.2 million for 2001.  The higher  operating  expenses and
increased  provisions  for loan losses were  partially  offset by increased  net
interest income as further discussed under "--Net Interest Income."
<PAGE>

         Provision  for Loan  Losses.  The  provision  for loan losses was $55.5
million  and $23.5  million  for the years  ended  December  31,  2002 and 2001,
respectively.  The significant  increase in the provision for loan losses during
2002 reflects the higher level of problem loans and related loan charge-offs and
past due loans experienced  during the period. The increase in problem assets is
a result of the  economic  conditions  within our markets,  additional  problems
identified in acquired  loan  portfolios  and  continuing  deterioration  in the
portfolio  of  leases  to  the  airline  industry  as  further  discussed  under
"--Lending   Activities"  and  "Loans  and  Allowance  for  Loan  Losses."  Loan
charge-offs  were  $70.5  million  for the year  ended  December  31,  2002,  in
comparison  to  $31.5  million  for  2001.  Included  in this  were  charge-offs
aggregating $38.6 million on ten large credit relationships, representing nearly
55% of loan charge-offs in 2002.  Additionally,  nonperforming  assets increased
$11.2  million  to $82.8  million at  December  31,  2002 from $71.6  million at
December 31, 2001, further contributing to the need for increased provisions for
loan  losses  in  2002.  Management  considered  these  trends  in  its  overall
assessment of the adequacy of the allowance  for loan losses.  In addition,  our
acquisition  of Plains in January  2002  provided  $1.4  million  in  additional
allowance for loan losses.

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

         Noninterest   Income  and  Expense.   The  following  table  summarizes
noninterest income and noninterest expense for the years ended December 31, 2002
and 2001:
<TABLE>
<CAPTION>

                                                                                December 31,         Increase (Decrease)
                                                                            ---------------------    -------------------
                                                                              2002         2001        Amount       %
                                                                              ----         ----        ------      ---
                                                                                   (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>        <C>
        Service charges on deposit accounts and customer service fees.....  $  30,978     22,865      8,113      35.48%
        Gain on mortgage loans sold and held for sale.....................      6,471      5,469      1,002      18.32
        Net gain on sales of available-for-sale investment securities.....         90     18,722    (18,632)    (99.52)
        Bank-owned life insurance investment income.......................      5,928      4,415      1,513      34.27
        Net gain on derivative instruments................................      2,181     18,583    (16,402)    (88.26)
        Other.............................................................     21,863     19,041      2,822      14.82
                                                                            ---------    -------    -------
              Total noninterest income....................................  $  67,511     89,095    (21,584)    (24.23)
                                                                            =========    =======    =======     ======

     Noninterest expense:
        Salaries and employee benefits....................................  $  89,569     83,938      5,631       6.71%
        Occupancy, net of rental income...................................     21,030     17,432      3,598      20.64
        Furniture and equipment...........................................     17,495     12,612      4,883      38.72
        Postage, printing and supplies....................................      5,556      4,869        687      14.11
        Information technology fees.......................................     32,135     26,981      5,154      19.10
        Legal, examination and professional fees..........................      9,284      6,988      2,296      32.86
        Amortization of intangibles associated with
           the purchase of subsidiaries...................................      2,012      8,248     (6,236)    (75.61)
        Communications....................................................      3,166      3,247        (81)     (2.49)
        Advertising and business development..............................      5,023      5,237       (214)     (4.09)
        Charitable contributions..........................................        204        125         79      63.20
        Other.............................................................     25,338     32,480     (7,142)    (21.99)
                                                                            ---------    -------    -------
              Total noninterest expense...................................  $ 210,812    202,157      8,655       4.28
                                                                            =========    =======    =======     ======
</TABLE>

         Noninterest  Income.  Noninterest income was $67.5 million for the year
ended December 31, 2002, compared to $89.1 million for 2001.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees,  mortgage-banking  revenues,  bank-owned life insurance investment income,
net gains on derivative instruments and other income.

         Service charges on deposit accounts and customer service fees increased
to $31.0  million  for 2002,  from $22.9  million  for 2001.  We  attribute  the
increase in service charges and customer service fees to:

         >>    our acquisitions completed during 2001 and 2002;

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

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

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

         The gain on  mortgage  loans sold and held for sale  increased  to $6.5
million  from $5.5  million  for the years  ended  December  31,  2002 and 2001,
respectively.  The increase is primarily  attributable to a significant increase
in the volume of loans originated and sold  commensurate  with the reductions in
mortgage  loan  rates  experienced  in 2001  and  2002 as well as the  continued
expansion of our mortgage banking activities.  This increase is partially offset
by higher  commissions  paid to our mortgage loan  originators  due to increased
loan volumes.

         Noninterest  income  for the years  ended  December  31,  2002 and 2001
includes net gains on the sale of  available-for-sale  investment  securities of
$90,000  and  $18.7  million,  respectively.  The net  gain  for  2002  resulted
primarily  from the sales of  certain  investment  securities  held by  acquired
institutions that did not meet our overall investment  objectives.  The net gain
in 2001 results from a $19.1  million gain  recognized in  conjunction  with the
exchange  of an  equity  investment  in  the  common  stock  of an  unaffiliated
publicly-traded  financial  institution  for $10.0  million  in cash and a $14.4
million equity investment in Allegiant common stock. We owned 7.47% and 7.93% of
the outstanding  shares of Allegiant common stock at December 31, 2002 and 2001,
respectively.  This gain was  partially  offset by a net loss that resulted from
the liquidation of certain equity investment securities.

         Bank-owned  life  insurance  income was $5.9 million for the year ended
December 31, 2002, in comparison  to $4.4 million for the  comparable  period in
2001.  The  increase  for 2002  reflects  changes  in the  portfolio  mix of the
underlying  investments,  which improved our return on this product,  as well as
the reinvestment of earnings.

         The net gain on  derivative  instruments  was $2.2 million for the year
ended December 31, 2002, in comparison to $18.6 million in 2001. The decrease in
income from derivative instruments reflects $4.1 million of gains resulting from
the  terminations of certain  interest rate swap agreements in 2001, the sale of
our interest rate floor agreements in 2001 and ongoing changes in the fair value
of our interest rate cap agreements, fair value hedges and the underlying hedged
liabilities.

         Other  income was $21.9  million and $19.0  million for the years ended
December 31, 2002 and 2001, respectively. We attribute the primary components of
the increase in other income to:

         >>    our acquisitions completed during 2001 and 2002;

         >>    increased portfolio  management fee income of $789,000 associated
               with our Institutional Money Management Division;

         >>    increased  earnings  associated  with our  international  banking
               products;

         >>    increased  rental income  associated with our commercial  leasing
               activities;

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

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

         >>    a $1.9 million gain on the sale,  net of expenses,  of our credit
               card portfolio in 2001. The sale of this portfolio was consistent
               with our  strategic  decision to exit this product line and enter
               into an agent  relationship  with a larger credit card  provider;
               and

         >>    the write-down of approximately  $943,000 on certain aircraft and
               aircraft parts equipment  associated with our commercial  leasing
               operation to its estimable  recoverable  value in June 2002.  The
               write-down  of these assets  became  necessary as a result of the
               continued decline in the airline industry,  primarily  associated
               with  the  terrorist  attacks  on  September  11,  2001,  and the
               oversupply in the market for liquidating this type of equipment.

         Noninterest  Expense.  Noninterest  expense was $210.8  million for the
year ended  December 31, 2002,  in comparison  to $202.2  million for 2001.  The
increase for 2002 reflects the noninterest expense of our acquisitions completed
during 2001 and 2002,  particularly  information technology fees associated with
integrating  the acquired  entities'  systems,  as well as general  increases in
salaries and employee  benefit  expenses,  occupancy and furniture and equipment
expenses and information technology fees, offset by a decline in amortization of
intangibles associated with the purchase of subsidiaries and other expense.
<PAGE>

         Salaries  and  employee  benefits  increased  by $5.6  million to $89.6
million  from $83.9  million  for the years  ended  December  31, 2002 and 2001,
respectively.  We  primarily  associate  the  increase  with  our  2001 and 2002
acquisitions.  However,  the increase also  reflects  higher salary and employee
benefit costs associated with employing and retaining  qualified  personnel.  In
addition,  the increase  includes various  additions to staff throughout 2001 to
enhance senior management expertise and expand our product lines.

         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $38.5  million and $30.0  million for the years ended  December 31, 2002
and  2001,   respectively.   We   primarily   attribute   the  increase  to  our
aforementioned  acquisitions,  including certain expenses  associated with lease
termination  obligations,  the  relocation of certain  branches and  operational
areas,   increased   depreciation   expense  associated  with  numerous  capital
expenditures and the continued expansion and renovation of various corporate and
branch offices,  including our facility that houses our  centralized  operations
and certain corporate and administrative functions.

         Information  technology  fees were $32.1  million and $27.0 million for
the years ended  December  31, 2002 and 2001,  respectively.  We  attribute  the
increased  fees to growth and  technological  advancements  consistent  with our
product and service offerings, continued expansion and upgrades to technological
equipment,  networks and communication  channels,  and expenses of approximately
$554,000  associated with the data  processing  conversions of Union and Plains,
completed in the first  quarter of 2002,  and of the Denton and  Garland,  Texas
branch purchases, completed in the second quarter of 2002.

         Legal,  examination  and  professional  fees were $9.3 million and $7.0
million  for the  years  ended  December  31,  2002 and 2001,  respectively.  We
primarily  attribute  the increase in these fees to 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, expanded corporate activities
and certain defense litigation particularly related to acquired entities.

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $2.0 million and $8.2 million for the years ended December 31,
2002 and 2001,  respectively.  The significant decrease for 2002 is attributable
to the implementation of SFAS No. 142 in January 2002.

         Other  expense was $25.3  million and $32.5 million for the years ended
December 31, 2002 and 2001,  respectively.  Other expense  encompasses  numerous
general and administrative  expenses including travel,  meals and entertainment,
insurance, freight and courier services, correspondent bank charges, advertising
and business development,  miscellaneous losses and recoveries,  memberships and
subscriptions, transfer agent fees and sales taxes.

         We attribute  the majority of the decrease in other expense for 2002 to
an $11.5 million  nonrecurring  litigation  settlement charge in June 2001. This
litigation was initiated by an unaffiliated bank against one of our subsidiaries
and certain  individuals and related to allegations  arising from the employment
by our subsidiary of individuals  previously  employed by the plaintiff bank, as
well as the conduct of those  individuals  while employed by the plaintiff bank.
The  nature of the  litigation  was not  covered  under the terms of either  our
general  liability  or  directors  and officers  liability  insurance  policies.
Consequently,  when it became  apparent that the trial was not  proceeding as we
anticipated,  a decision was made to settle the matter to avoid the risk of more
substantial expenses. Because of the uninsured nature of this litigation and the
unique circumstances  leading to the litigation,  we do not consider this charge
to be a recurring expense.

         The decrease in other  expense also  reflects  the  establishment  of a
specific  reserve for an unfunded letter of credit in the amount of $1.8 million
during 2001. The letter of credit was issued in connection  with a participation
in a credit for the  development of a nuclear waste  remediation  facility.  The
aggregate  credit   arrangement   included  a  line  of  credit,   in  which  we
participated,  and the sale of bonds to various investors,  which were backed by
the letters of credit,  in which we also  participated.  Because the development
failed  to meet  remediation  performance  expectations,  and  consequently  the
economic viability required,  the bondholders  required payment from the issuers
of the letters of credit.  Upon funding the letter of credit, the balance became
an addition to the loan principal, which was then fully charged-off.

         The overall  decrease in other expenses for 2002 was offset by expenses
associated with our  acquisitions  completed during 2001 and 2002 as well as the
continued growth and expansion of our banking franchise.

         Provision  for Income  Taxes.  The provision for income taxes was $22.8
million for the year ended December 31, 2002,  representing an effective  income
tax rate of 32.8%,  in comparison to $30.0  million,  representing  an effective
income tax rate of 30.5%,  for the year ended December 31, 2001. The increase in
the effective income tax rate is primarily attributable to:

<PAGE>
         >>    a reduction  of our  deferred  tax asset  valuation  allowance of
               $13.1 million recorded in December 2001. This reduction, of which
               $8.1 million  represented a reduction in our provision for income
               taxes  and  $5.0  million  represented  an  increase  in  capital
               surplus,  reflects the recognition of deferred tax assets for net
               operating  loss  carryforwards  and  the  expectation  of  future
               taxable income sufficient to realize the net deferred tax assets;
               partially offset by

         >>    the   significant   decrease  in   amortization   of  intangibles
               associated  with the purchase of  subsidiaries in accordance with
               the requirements of SFAS No. 142, which is not deductible for tax
               purposes.

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,  Chief Executive Officer and Chief Financial Officer, Chief Operating
Officer,   Chief  Credit  Officer,  Chief  Investment  Officer  and  the  senior
executives  of  finance,  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.

         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 7.9% of net interest income,
based on assets  and  liabilities  at  December  31,  2003.  Although  we do not

<PAGE>

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, 2003,  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)......................................  $3,844,993    335,570    469,483    645,715     32,314  5,328,075
   Investment securities..........................     139,225     79,084    200,928    499,846    130,631  1,049,714
   Short-term investments.........................      33,735         --         --         --         --     33,735
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-earning assets..............   4,017,953    414,654    670,411  1,145,561    162,945  6,411,524
   Effect of interest rate swap agreements........  (1,100,000)        --    600,000    500,000         --         --
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-earning assets
         after the effect of interest
         rate swap agreements.....................  $2,917,953    414,654  1,270,411  1,645,561    162,945  6,411,524
                                                    ==========  =========  =========  =========  =========  =========
Interest-bearing liabilities:
   Interest-bearing demand accounts...............  $  311,911    193,890    126,450     92,730    118,020    843,001
   Money market accounts..........................   1,708,844         --         --         --         --  1,708,844
   Savings accounts...............................      71,373     58,777     50,381     71,373    167,935    419,839
   Time deposits..................................     389,393    340,083    531,105    694,624        359  1,955,564
   Other borrowings...............................     166,479         --         --    106,000      1,000    273,479
   Note payable...................................          --         --     17,000         --         --     17,000
   Subordinated debentures........................          --         --         --         --    209,320    209,320
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-bearing liabilities.........   2,648,000    592,750    724,936    964,727    496,634  5,427,047
   Effect of interest rate swap agreements........     276,200         --         --   (150,000)  (126,200)        --
                                                    ----------  ---------  ---------  ---------  ---------  ---------
       Total interest-bearing liabilities
         after the effect of interest
         rate swap agreements.....................  $2,924,200    592,750    724,936    814,727    370,434  5,427,047
                                                    ==========  =========  =========  =========  =========  =========
Interest-sensitivity gap:
   Periodic.......................................  $   (6,247)  (178,096)   545,475    830,834   (207,489)   984,477
                                                                                                            =========
   Cumulative.....................................      (6,247)  (184,343)   361,132  1,191,966    984,477
                                                    ==========  =========  =========  =========  =========
Ratio of interest-sensitive assets to
   interest-sensitive liabilities:
     Periodic.....................................        1.00       0.70       1.75       2.02       0.44       1.18
                                                                                                            =========
     Cumulative...................................        1.00       0.95       1.09       1.24       1.18
                                                    ==========  =========  =========  =========  =========
--------------------------------
(1) Loans are presented net of unearned discount.
</TABLE>

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

         >>    loans will repay at projected repayment rates;

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

         >>    interest-bearing demand accounts and savings 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.
<PAGE>

         At December  31,  2003,  our  asset-sensitive  position on a cumulative
basis  through the  twelve-month  time horizon was $361.1  million,  or 5.08% of
total  assets,  in comparison  to our  asset-sensitive  position on a cumulative
basis through the twelve-month time horizon of $338.5 million, or 4.60% of total
assets at December  31, 2002.  We attribute  the increase for 2003 to changes in
customer  preferences  related to the current low interest rate  environment and
economic  conditions.  This is  observed in the  shifting of deposits  from time
deposits  to  interest-bearing  deposits  and  in  continued  weak  loan  demand
resulting  in  increases  in the  amount  of  short-term  investments.  This was
partially  offset  by  our  interest  rate  swap  agreements   entered  into  in
conjunction with our interest rate risk management program.

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

         As previously discussed, we utilize derivative financial instruments to
assist  in  our  management  of  interest  rate  sensitivity  by  modifying  the
repricing,   maturity  and  option   characteristics   of  certain   assets  and
liabilities.  The  derivative  financial  instruments we held as of December 31,
2003 and 2002 are summarized as follows:
<TABLE>
<CAPTION>

                                                         December 31, 2003            December 31, 2002
                                                      -----------------------      -----------------------
                                                        Notional      Credit        Notional      Credit
                                                         Amount      Exposure        Amount      Exposure
                                                         ------      --------        ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                   <C>              <C>          <C>            <C>
         Cash flow hedges............................ $1,250,000       2,857        1,050,000      2,179
         Fair value hedges...........................    326,200      12,614          301,200     11,449
         Interest rate cap agreements................    450,000          --          450,000         94
         Interest rate lock commitments..............     15,500          --           89,000         --
         Forward commitments to sell
           mortgage-backed securities................     58,500          --          245,000         --
                                                      ==========      ======        =========     ======
</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 accounting  loss we would incur in the event the  counterparties
failed completely to perform according to the terms of the derivative  financial
instruments  and the  collateral  held to support the credit  exposure was of no
value.

         During  2003,  2002 and  2001,  we  realized  net  interest  income  on
derivative  financial  instruments  of $64.6  million,  $53.0  million and $23.4
million,  respectively.  The  increase  in 2003  is  primarily  attributable  to
interest  income  associated with the additional swap agreements we entered into
during March,  April and July,  as well as the  continued  decline in prevailing
interest rates. In addition,  we recorded a net gain on derivative  instruments,
which is  included  in  noninterest  income in our  consolidated  statements  of
income, of $496,000, $2.2 million and $18.6 million for the years ended December
31, 2003, 2002 and 2001, respectively.  The decrease in 2003 reflects changes in
the fair value of our interest  rate cap  agreements,  fair value hedges and the
underlying hedged liabilities.  In addition,  in September 2003, we discontinued
hedge accounting  treatment on $50.0 million of fair value hedges that mature in
January 2004 due to the loss of our highly  correlated  hedge positions  between
the swap  agreements and the underlying  hedged  liabilities.  The effect of the
loss of our highly correlated hedge position on the swap agreements  resulted in
the  recognition  of a net loss of  $291,000,  which is included in  noninterest
income in our consolidated financial statements.

         Cash Flow Hedges.  We 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 1998,  we entered into  interest  rate swap  agreements of
               $280.0 million  notional amount that provided for us to receive a
               fixed rate of  interest  and pay an  adjustable  rate of interest
               equivalent to the daily weighted average prime lending rate minus
               2.705%.  The  underlying  hedged assets were certain loans within
               our commercial loan  portfolio.  The terms of the swap agreements
               provided for us to pay interest on a quarterly  basis and receive
               payment on a semiannual basis. In June 2001 and November 2001, we
               terminated  $205.0  million and $75.0  million  notional  amount,
               respectively,  of these swap agreements, which would have expired
               in 2002,  in order to  appropriately  modify  our  overall  hedge
               position in  accordance  with our interest  rate risk  management
               program.  In  conjunction  with these  terminations,  we recorded
               gains of $2.8 million and $1.7 million, respectively.
<PAGE>

         >>    During 1999,  we entered into  interest  rate swap  agreements of
               $175.0 million  notional amount that provided for us 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%. The underlying hedged assets were certain loans within our
               commercial  loan  portfolio.  The  terms of the  swap  agreements
               provided for us to pay and receive interest on a quarterly basis.
               In April 2001, we terminated these swap  agreements,  which would
               have expired in September  2001,  and replaced  them with similar
               swap agreements with extended maturities in order to lengthen the
               period covered by the swaps. In conjunction  with the termination
               of these swap agreements, we recorded a gain of $985,000.

         >>    During  September 2000,  March 2001,  April 2001,  March 2002 and
               July 2003,  we 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 our  commercial  loan
               portfolio.  The swap agreements provide for us 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 us to pay and receive interest on
               a quarterly  basis. In November 2001, we 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 our overall  hedge  position in  accordance
               with our interest  rate risk  management  program.  We recorded a
               gain of $2.6 million in conjunction with the termination of these
               swap  agreements.  The  amount  receivable  by us under  the swap
               agreements was $3.9 million and $3.1 million at December 31, 2003
               and 2002,  respectively,  and the amount  payable by us under the
               swap  agreements  was $1.1  million and  $888,000 at December 31,
               2003 and 2002, respectively.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our  interest  rate swap  agreements  designated  as cash flow
hedges as of December 31, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

                                                         Notional       Interest Rate    Interest Rate      Fair
                  Maturity Date                           Amount            Paid           Received         Value
                  -------------                           ------            ----           --------         -----
                                                                      (dollars expressed in thousands)
         December 31, 2003:
<S>                                                    <C>                  <C>               <C>         <C>
             March 14, 2004..........................  $  150,000           1.20%             3.93%       $    879
             September 20, 2004......................     600,000           1.30              6.78          23,250
             March 21, 2005..........................     200,000           1.18              5.24           8,704
             April 2, 2006...........................     100,000           1.18              5.45           6,881
             July 31, 2007...........................     200,000           1.15              3.08             501
                                                       ----------                                         --------
                                                       $1,250,000           1.24              5.49        $ 40,215
                                                       ==========          =====             =====        ========

         December 31, 2002:
             March 14, 2004..........................  $  150,000           1.45%             3.93%       $  4,130
             September 20, 2004......................     600,000           1.55              6.78          48,891
             March 21, 2005..........................     200,000           1.43              5.24          13,843
             April 2, 2006...........................     100,000           1.43              5.45           9,040
                                                       ----------                                         --------
                                                       $1,050,000           1.50              5.95        $ 75,904
                                                       ==========          =====             =====        ========
</TABLE>

         Fair Value  Hedges.  We 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  September  2000, we entered into $25.0  million  notional
               amount  of  one-year  interest  rate  swap  agreements  and $25.0
               million of five and one-half year  interest rate swap  agreements
               that provided for us to receive  fixed rates of interest  ranging
               from 6.60% to 7.25% and pay an adjustable  rate equivalent to the
               three-month  London  Interbank  Offering Rate minus rates ranging
               from 0.02% to 0.11%.  The underlying  hedged  liabilities  were a
               portion  of our  other  time  deposits.  The  terms  of the  swap
               agreements  provided for us to pay interest on a quarterly  basis
               and receive  interest on either a  semiannual  basis or an annual
               basis.  In  September  2001,  the  one-year  interest  rate  swap
               agreements matured,  and we terminated the five and one-half year
               interest  rate swap  agreements  because  the  underlying  hedged
               liabilities had either matured or been called by their respective
               counterparties. There was no gain or loss recorded as a result of
               the terminations.
<PAGE>

         >>    During  January  2001,  we entered  into $50.0  million  notional
               amount of  three-year  interest rate swap  agreements  and $150.0
               million   notional   amount  of  five-year   interest  rate  swap
               agreements  that  provide  for us to  receive  a  fixed  rate  of
               interest and pay an adjustable rate of interest equivalent to the
               three-month London Interbank Offering Rate. The underlying hedged
               liabilities  are a portion of our other time deposits.  The terms
               of the  swap  agreements  provide  for us to  pay  interest  on a
               quarterly basis and receive  interest on a semiannual  basis. The
               amount  receivable  by us  under  the  swap  agreements  was $5.2
               million at December 31, 2003 and 2002,  and the amount payable by
               us  under  the swap  agreements  was  $537,000  and  $821,000  at
               December 31, 2003 and 2002, respectively.  During September 2003,
               we discontinued  hedge accounting  treatment on the $50.0 million
               notional  amount of three-year swap agreements due to the loss of
               their  highly   correlated  hedge  positions   between  the  swap
               agreements and the  underlying  hedged  liabilities.  The related
               $1.3  million   basis   adjustment  of  the   underlying   hedged
               liabilities was recorded as a reduction of interest  expense over
               the remaining  weighted average maturity of the underlying hedged
               liabilities of approximately three months.

         >>    During May 2002, we entered into $55.2 million notional amount of
               interest  rate swap  agreements  that provide for us to receive a
               fixed rate of  interest  and pay an  adjustable  rate of interest
               equivalent to the three-month London Interbank Offering Rate plus
               2.30%.  During June 2002, we entered into $86.3 million and $46.0
               million  notional  amount,  respectively,  of interest  rate swap
               agreements  that  provide  for us to  receive  a  fixed  rate  of
               interest and pay an adjustable rate of interest equivalent to the
               three-month  London Interbank Offering Rate plus 2.75% and 1.97%,
               respectively.  The underlying hedged liabilities are a portion of
               our  subordinated  debentures.  The terms of the swap  agreements
               provide for us to pay and receive  interest on a quarterly basis.
               There  were no  amounts  receivable  or  payable  under  the swap
               agreements  at  December  31,  2003 and 2002.  The $86.3  million
               notional  amount  interest rate swap  agreement was called by its
               counterparty  in November 2002  resulting in final  settlement of
               this interest  rate swap  agreement in December  2002.  The $46.0
               million  notional  amount interest rate swap agreement was called
               by  its  counterparty  on  May  21,  2003,   resulting  in  final
               settlement of this interest rate swap agreement on June 30, 2003.
               There  was  no  gain  or  loss  recorded  as a  result  of  these
               transactions.

         >>    During March 2003 and April 2003,  we entered into $25.0  million
               and $46.0 million notional amount, respectively, of interest rate
               swap  agreements  that  provide for us to receive a fixed rate of
               interest and pay an adjustable rate of interest equivalent to the
               three-month  London Interbank Offering Rate plus 2.55% and 2.58%,
               respectively.  The underlying hedged liabilities are a portion of
               our  subordinated  debentures.  The terms of the swap  agreements
               provide for us to pay and receive  interest on a quarterly basis.
               There  were no  amounts  receivable  or  payable  under  the swap
               agreements at December 31, 2003.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our interest  rate swap  agreements  designated  as fair value
hedges as of December 31, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

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

             December 31, 2003:
<S>                                                    <C>                  <C>               <C>          <C>
                January 9, 2004 (1)................... $ 50,000             1.15%             5.37%        $    --
                January 9, 2006.......................  150,000             1.15              5.51           9,932
                December 31, 2031.....................   55,200             3.44              9.00           2,499
                March 20, 2033........................   25,000             3.69              8.10          (1,270)
                June 30, 2033.........................   46,000             3.72              8.15          (2,008)
                                                       --------                                            -------
                                                       $326,200             2.10              6.65         $ 9,153
                                                       ========            =====             =====         =======

             December 31, 2002:
                January 9, 2004....................... $ 50,000             1.76%             5.37%        $ 1,972
                January 9, 2006.......................  150,000             1.76              5.51          13,476
                June 30, 2028.........................   46,000             3.77              8.50             495
                December 31, 2031.....................   55,200             4.10              9.00           4,688
                                                       --------                                            -------
                                                       $301,200             2.49              6.58         $20,631
                                                       ========            =====             =====         =======
             -------------------------
             (1) Hedge accounting treatment was discontinued in September 2003 as further discussed above.
</TABLE>
<PAGE>

         Interest Rate Cap  Agreements.  In  conjunction  with our interest rate
swap agreements designated as cash flow hedges that mature in September 2004, we
also entered into $450.0 million notional amount of four-year  interest rate cap
agreements to limit the net interest  expense  associated with our interest rate
swap  agreements in the event of a rising rate  scenario.  The interest rate cap
agreements  provide  for us to receive a quarterly  adjustable  rate of interest
equivalent to the differential between the three-month London Interbank Offering
Rate and the strike  price of 7.50%  should  the  three-month  London  Interbank
Offering  Rate  exceed the strike  price.  At December  31,  2003 and 2002,  the
carrying  value of these  interest  rate cap  agreements,  which is  included in
derivative  instruments in our consolidated  balance sheets, was $0 and $94,000,
respectively.

         Pledged  Collateral.  At  December  31,  2003 and  2002,  we had a $5.0
million  letter of  credit  issued on our  behalf  to the  counterparty  and had
pledged investment  securities  available for sale with a fair value of $229,000
and  $239,000,   respectively,   in  connection  with  our  interest  rate  swap
agreements.  In addition,  at December 31, 2003, we had pledged cash of $700,000
as collateral in connection with our interest rate swap agreements.  At December
31,  2003 and 2002,  we had  accepted,  as  collateral  in  connection  with our
interest  rate  swap  agreements,  cash of  $51.3  million  and  $99.1  million,
respectively.

         Interest  Rate  Lock   Commitments  /  Forward   Commitments   to  Sell
Mortgage-Backed  Securities.  Derivative  financial  instruments  issued  by  us
consist  of  interest  rate lock  commitments  to  originate  fixed-rate  loans.
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.

         Interest Rate Floor Agreements.  During January 2001 and March 2001, we
entered into $200.0 million and $75.0 million notional amount, respectively,  of
four-year  interest  rate floor  agreements  to further  stabilize  net interest
income  in the  event of a  falling  rate  scenario.  The  interest  rate  floor
agreements  provided for us to receive a quarterly  adjustable  rate of interest
equivalent to the differential between the three-month London Interbank Offering
Rate  and the  strike  prices  of  5.50%  or  5.00%,  respectively,  should  the
three-month  London  Interbank  Offering Rate fall below the  respective  strike
prices.  In November 2001, we terminated these interest rate floor agreements in
order to appropriately  modify our overall hedge position in accordance with our
interest rate risk management program.  In conjunction with the termination,  we
recorded an  adjustment of $4.0 million  representing  the decline in fair value
from our previous  month-end  measurement  date. These  agreements  provided net
interest income of $2.1 million for the year ended December 31, 2001.

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 limited to loans held for sale that we acquire in  conjunction  with
our  acquisition of other  financial  institutions.  Exclusive of these acquired
loans,  we do not  purchase  loans to be held for sale.  Generally,  we sell our
production of residential mortgage loans in the secondary loan markets. However,
in mid 2003,  we made a business  strategy  decision  to retain a portion of new
residential  mortgage  loan  production  in our real estate  mortgage  portfolio
primarily as a result of continued weak loan demand in other sectors of our loan
portfolio,  as further  discussed in "--Loans and  Allowance  for Loan  Losses."
Servicing  rights are both retained and 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,  2003,  2002 and  2001,  we
originated  loans for resale  totaling  $2.16  billion,  $1.95 billion and $1.52
billion and sold loans totaling $2.00 billion,  $1.60 billion and $1.34 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 $1.22 billion,  $1.29 billion and $1.07 billion at December 31, 2003,
2002 and 2001, respectively.

         The gain on mortgage loans originated for resale,  including loans sold
and held for sale,  was $15.6  million,  $6.5  million and $5.5  million for the
years ended December 31, 2003, 2002 and 2001,  respectively.  We determine these
gains,  net of  losses,  on a lower of cost or  market  basis.  These  gains are
realized at the time of sale.  The cost basis  reflects both the  adjustments of
the  carrying  values of loans held for sale to the lower of cost,  adjusted  to
include the cost of hedging the loans held for sale, or current  market  values,
as well as the adjustments for any gains or losses on loan commitments for which
the  interest  rate  has  been  established,  net  of  anticipated  underwriting
"fallout,"  (loans not funded due to issues  discovered  during the underwriting
process) adjusted for the cost of hedging these loan commitments.  The increases
for 2003 and 2002 are  primarily  attributable  to the  continued  growth of our
mortgage  banking  activities and the continued high volume of loans  originated

<PAGE>

and sold commensurate with the prevailing interest rate environment  experienced
throughout  2002 and 2003.  During  the third  quarter  of 2003,  we  recognized
impairment of $800,000 through a valuation  allowance  associated with a decline
in the fair value of an individual  mortgage  servicing rights stratum below its
carrying value,  net of the valuation  allowance.  We subsequently  reversed the
$800,000 impairment  valuation allowance during the third and fourth quarters of
2003 based upon an increase in the fair value of the mortgage  servicing  rights
stratum above the carrying  value,  net of the valuation  allowance,  as further
discussed in Note 6 to our Consolidated Financial Statements appearing elsewhere
in this report.

         Interest  income on loans held for sale was $17.0  million for the year
ended  December 31, 2003,  in  comparison to $15.1 million and $11.1 million for
the years ended December 31, 2002 and 2001, 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 $273.0  million,  $206.0 million and $150.8 million for the years ended
December 31, 2003,  2002 and 2001,  respectively.  On an annualized  basis,  our
yield on the portfolio of loans held for sale was 6.21%, 7.32% and 7.38% for the
years ended December 31, 2003, 2002 and 2001,  respectively.  This compares with
our cost of funds, as a percentage of average interest-bearing  liabilities,  of
1.88%,  2.85% and 4.45% for the years ended  December 31,  2003,  2002 and 2001,
respectively.

         We report  mortgage loan servicing fees 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.  Loan servicing
fees,  net,  are  included  in  other  noninterest  income  in the  consolidated
statements of operations.  Net loan servicing fees decreased  other  noninterest
income by $3.8 million for the year ended  December  31, 2003,  whereas such net
fees increased other  noninterest  income by $321,000 and $222,000 for the years
ended  December  31,  2002 and  2001,  respectively.  Amortization  of  mortgage
servicing  rights was $7.5 million,  $3.8 million and $3.7 million for the years
ended December 31, 2003, 2002 and 2001, respectively.  We attribute the decrease
in net loan  servicing  fees in 2003  primarily  to  increased  amortization  of
mortgage servicing rights,  resulting from the high volumes of loan refinancings
and payoffs associated with continued low mortgage interest rates experienced in
2002 and 2003,  and a higher  level of interest  shortfall.  The increase in net
loan servicing fees in 2002 primarily  reflects the significant  increase in the
volume of loans originated and sold commensurate with the reductions in mortgage
interest rates experienced in 2001.

         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,
2003,  2002 and 2001, we had $58.2 million,  $234.6 million and $209.9  million,
respectively,  of loans held for sale and related commitments,  net of committed
loan sales and estimated  underwriting  fallout, of which $58.5 million,  $245.0
million and $197.5  million,  respectively,  were hedged through the use of such
forward commitments.

Investment Securities

         We classify the securities  within our investment  portfolio as held to
maturity or available  for sale.  We do not engage in the trading of  investment
securities.  Our investment  security portfolio consists primarily of securities
designated as available for sale.  The investment  security  portfolio was $1.05
billion and $1.15 billion at December 31, 2003 and 2002, respectively,  compared
to $638.6  million  at  December  31,  2001.  The  significant  increase  in the
investment  securities  portfolio  in 2002 and 2003,  as  compared  to 2001,  is
attributable to securities  acquired through  acquisitions and funds provided by
deposit growth combined with the overall level of reduced 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 90.9%, 91.6% and 92.5%
of total interest  income for the years ended December 31, 2003,  2002 and 2001,
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.
<PAGE>

         Loans, net of unearned  discount,  represented 75.0% of total assets as
of December  31,  2003,  compared to 73.9% of total assets at December 31, 2002.
Total loans, net of unearned discount, decreased $104.5 million to $5.33 billion
for the year ended  December  31, 2003,  and  increased  $23.7  million to $5.43
billion for the year ended  December 31, 2002.  Exclusive of our  acquisition of
BSG in 2003, which provided loans, net of unearned  discount,  of $43.7 million,
loans decreased  $148.2 million in 2003. The overall  decrease in loans,  net of
unearned discount, primarily results from:

         >>    continued weak loan demand from our commercial  customers,  which
               is indicative of the current economic conditions prevalent within
               most of our markets;

         >>    a decline of $204.2  million  in loans  held for sale,  resulting
               from management's  business strategy decision to retain a portion
               of our new residential mortgage loan production in our portfolio,
               as further  discussed below,  combined with a slowdown in overall
               loan volumes  experienced  during the fourth  quarter of 2003 and
               the timing of loan sales in the secondary mortgage market;

         >>    continued  decline  of  $59.5  million  in  our  lease  financing
               portfolio, partially due to net loan charge-offs of $14.4 million
               for  2003.   Our  leasing   portfolio  has  declined   since  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 and a
               change in our  overall  business  strategy  resulting  in reduced
               commercial leasing activities;

         >>    a decline  of $35.4  million  in our  commercial,  financial  and
               agricultural  portfolio due to an anticipated amount of attrition
               associated  with  our  acquisitions  completed  during  2002  and
               general runoff of balances within this portfolio; and

         >>    continued reductions in new consumer and installment loan volumes
               and  the  repayment  of  principal  on  our  existing   portfolio
               consistent with our objectives of de-emphasizing consumer lending
               and expanding commercial lending; partially offset by

         >>    an  increase  of  $138.1  million  in our  real  estate  mortgage
               portfolio   primarily   associated  with  management's   business
               strategy  decision  in  mid-2003  to retain a portion  of our new
               residential  mortgage loan production in our real estate mortgage
               portfolio  primarily  due to continued  weak loan demand in other
               sectors of our loan portfolio as previously discussed; and

         >>    an increase of $74.2 million in our real estate  construction and
               development   portfolio  resulting  from  seasonal  increases  on
               existing and available credit lines.

         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)  because  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.
<PAGE>

         During the five years ended  December  31, 2003,  total  loans,  net of
unearned  discount,  increased  significantly from $3.58 billion at December 31,
1998 to $5.33  billion at December 31,  2003.  Throughout  this period,  we have
substantially  enhanced our  capabilities  for achieving  and managing  internal
growth.  A key element of this process has been the  expansion of our  corporate
business  development staff,  which is responsible for the internal  development
and management of both loan and deposit relationships with commercial customers.
While this process was occurring, in an attempt to achieve more diversification,
a higher level of interest  yield and a reduction  in interest  rate risk within
our loan  portfolio,  we also focused on  repositioning  our  portfolio.  As the
corporate  business  development  effort  continued to  originate a  substantial
volume of new loans,  substantially all of our conforming  residential  mortgage
loan  production has been  historically  sold in the secondary  mortgage  market
until  management's  decision  in 2003  to  retain  a  portion  of the new  loan
production in our real estate mortgage  portfolio to offset  continued weak loan
demand  in other  sectors  of our loan  portfolio.  We have  also  substantially
reduced  our  consumer  lending by  discontinuing  the  origination  of indirect
automobile  loans  and  the  sale of 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  added  substantial  portfolios  of new
loans. Some of these portfolios  contained  significant loan problems,  which we
had  anticipated  and attempted to consider in our  acquisition  pricing.  As we
resolved the asset  quality  issues,  the  portfolios  of the acquired  entities
tended to decline due to the  elimination  of problem  loans and because many of
the resources that would otherwise be directed toward  generating new loans were
concentrated on improving or eliminating existing relationships.  We continue to
experience  this trend as a result of our  acquisitions  of Millennium  Bank and
Union completed in December 2000 and 2001, respectively.

         The following table summarizes the effects of these factors on our loan
portfolio, net of unearned discount, for the five years ended December 31, 2003:
<TABLE>
<CAPTION>

                                                                  (Decrease)Increase For the Year Ended December 31,
                                                              ---------------------------------------------------------
                                                                  2003         2002        2001       2000       1999
                                                                  ----         ----        ----       ----       ----
                                                                            (dollars expressed in thousands)
      Internal loan volume (decrease) increase:
<S>                                                           <C>            <C>          <C>        <C>        <C>
          Commercial lending................................  $  (22,211)    (119,295)    174,568    360,410    363,486
          Residential real estate lending (1) ..............    (103,573)      36,074      48,616     20,137   (126,418)
          Consumer lending, net of unearned discount........     (22,429)     (44,060)    (75,280)   (64,606)   (56,349)
      Loans provided by acquisitions........................      43,700      151,000     508,700    440,000    235,500
                                                              ----------    ---------   ---------  ---------  ---------
          Total (decrease) increase.........................  $ (104,513)      23,719     656,604    755,941    416,219
                                                              ==========    =========   =========  =========  =========
      --------------------------------
       (1) Includes loans held for sale, which decreased $204.2 million for the year ended December 31, 2003.
</TABLE>

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

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

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

                                                                           December 31,
                                   ---------------------------------------------------------------------------------------------
                                          2003                2002               2001             2000               1999
                                   ------------------ ------------------- ----------------- -----------------  -----------------
                                     Amount       %      Amount      %      Amount      %     Amount     %       Amount     %
                                     ------      ---     ------     ---     ------     ---    ------    ---      ------    ---
                                                                (dollars expressed in thousands)

Commercial, financial
<S>                                <C>          <C>   <C>           <C>   <C>         <C>   <C>         <C>    <C>         <C>
    and agricultural.............  $1,407,626   27.1% $1,443,016    28.4% $1,532,875  29.5% $1,372,196  29.3%  $1,086,919  27.4%
Real estate construction
    and development..............   1,063,889   20.5     989,650    19.5     954,913  18.4     809,682  17.3      795,081  20.1
Real estate mortgage:
    One-to-four-family
      residential loans..........     811,650   15.7     694,604    13.7     798,089  15.3     726,474  15.5      720,630  18.2
    Multi-family
      residential loans..........     108,163    2.1     112,517     2.2     148,684   2.9      80,220   1.7       73,864   1.9
    Commercial real estate loans.   1,662,451   32.1   1,637,001    32.2   1,499,074  28.8   1,396,163  29.8    1,057,075  26.7
Lease financing..................      67,282    1.3     126,738     2.5     148,971   2.8     124,088   2.7           --    --
Consumer and installment, net of
    unearned discount............      61,268    1.2      79,097     1.5     122,057   2.3     174,337   3.7      225,343   5.7
                                   ----------  -----  ----------   -----  ---------- -----  ---------- -----   ---------- -----
        Total loans, excluding
           loans held for sale...   5,182,329  100.0%  5,082,623   100.0%  5,204,663 100.0%  4,683,160 100.0%   3,958,912 100.0%
                                               =====               =====             =====             =====              =====
Loans held for sale..............     145,746            349,965             204,206            69,105             37,412
                                   ----------         ----------          ----------        ----------         ----------
        Total loans..............  $5,328,075         $5,432,588          $5,408,869        $4,752,265         $3,996,324
                                   ==========         ==========          ==========        ==========         ==========
</TABLE>


<TABLE>
<CAPTION>

         Loans at December 31, 2003 mature as follows:

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

<S>                                                         <C>           <C>         <C>        <C>       <C>  <C>
Commercial, financial and agricultural....................  $1,220,172    154,903     15,424     17,127    --   1,407,626
Real estate construction and development..................     936,428    121,784      3,382      2,295    --   1,063,889
Real estate mortgage:
    One-to-four family residential loans..................     448,132    125,892     91,455    145,217   954     811,650
    Multi-family residential loans........................      58,679     40,487      5,433      3,564    --     108,163
    Commercial real estate loans..........................   1,030,784    467,282     72,105     92,280    --   1,662,451
Lease financing...........................................       6,608     59,999         --        675    --      67,282
Consumer and installment, net of unearned discount........      29,771     30,485         18        994    --      61,268
Loans held for sale.......................................     145,746         --         --         --    --     145,746
                                                            ----------  ---------    -------    -------   ---   ---------
      Total loans.........................................  $3,876,320  1,000,832    187,817    262,152   954   5,328,075
                                                            ==========  =========    =======    =======   ===   =========

</TABLE>
<PAGE>

         Nonperforming  assets include nonaccrual loans,  restructured loans and
other real estate.  The following table presents the categories of nonperforming
assets and certain ratios as of the dates indicated:
<TABLE>
<CAPTION>
                                                                                  December 31,
                                                           ------------------------------------------------------------
                                                               2003        2002         2001         2000         1999
                                                               ----        ----         ----         ----         ----
                                                                           (dollars expressed in thousands)

   Commercial, financial and agricultural:
<S>                                                        <C>             <C>          <C>         <C>          <C>
     Nonaccrual........................................    $   26,876      15,787       17,141      21,424       18,397
     Restructured terms................................            --          --           --          22           29
   Real estate construction and development:
     Nonaccrual........................................         6,402      23,378        3,270      11,068        1,886
   Real estate mortgage:
     One-to-four family residential loans:
       Nonaccrual......................................        21,611      14,833       20,780       5,645        7,703
       Restructured terms..............................            13          15           20          28           18
     Multi-family residential loans:
       Nonaccrual......................................           804         772          476         593          722
       Restructured terms..............................            --          --           --         908          923
     Commercial real estate loans:
       Nonaccrual......................................        13,994       8,890       20,642      10,286        7,989
       Restructured terms..............................            --       1,907        1,993       2,016        2,038
   Lease financing:
     Nonaccrual........................................         5,328       8,723        2,185       1,013           --
   Consumer and installment:
     Nonaccrual........................................           336         860          794         155           32
     Restructured terms................................            --          --            7           8           --
                                                           ----------   ---------    ---------   ---------    ---------
              Total nonperforming loans................        75,364      75,165       67,308      53,166       39,737
   Other real estate...................................        11,130       7,609        4,316       2,487        2,129
                                                           ----------   ---------    ---------   ---------    ---------
              Total nonperforming assets...............    $   86,494      82,774       71,624      55,653       41,866
                                                           ==========   =========    =========   =========    =========

   Loans, net of unearned discount.....................    $5,328,075   5,432,588    5,408,869   4,752,265    3,996,324
                                                           ==========   =========    =========   =========    =========

   Loans past due 90 days or more and still accruing...    $    2,776       4,635       15,156       3,009        5,844
                                                           ==========   =========    =========   =========    =========

   Ratio of:
     Allowance for loan losses to loans................          2.19%       1.83%        1.80%       1.72%        1.72%
     Nonperforming loans to loans......................          1.41        1.38         1.24        1.12         0.99
     Allowance for loan losses to
       nonperforming loans.............................        154.52      132.29        44.36      153.47       172.66
     Nonperforming assets to loans
       and other real estate...........................          1.62        1.52         1.32        1.17         1.05
                                                           ==========   =========    =========   =========    =========
</TABLE>
<PAGE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
certain  restructured  loans,  were  $75.4  million at  December  31,  2003,  in
comparison  to $75.2  million and $67.3  million at December  31, 2002 and 2001,
respectively. As further discussed under "--Lending Activities," 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.  Nonperforming  assets,  consisting of nonperforming loans and
other real estate owned were $86.5 million,  $82.8 million and $71.6 million for
the years ended December 31, 2003, 2002 and 2001, respectively. 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 relates to a residential and recreational  development project that
had  significant  financial  difficulties  and  experienced  inadequate  project
financing,  project delays and weak project  management.  This  relationship had
previously  been on  nonaccrual  status and was removed from  nonaccrual  status
during  the third  quarter  of 2001 due to  financing  being  recast  with a new
borrower, who appeared able to meet ongoing developmental expectations.  The new
borrower subsequently encountered internal management problems, which negatively
impacted and further delayed development of the project. As further discussed in
Note 25 to our  Consolidated  Financial  Statements,  we sold this  property  in
February  2004,  thereby  reducing  nonperforming  assets by $9.2 million.  Loan
charge-offs, net of recoveries, decreased to $32.7 million for 2003, compared to
$54.6  million  for 2002 and  $22.0  million  for  2001.  Net loan  charge-offs,
unrelated  to our  commercial  leasing  portfolio,  included a $6.1  million net
charge-off on one significant  credit  relationship in 2003 and $38.6 million on
ten large credit  relationships  in 2002. Net  charge-offs  associated  with our
commercial  leasing  portfolio  increased  to $14.4  million  in 2003  from $7.9
million in 2002. The increase in nonperforming  loans for 2001 reflects cyclical
trends experienced within the banking industry as a result of economic slowdown,
as well as the asset quality of acquired  institutions.  Our Union  acquisition,
completed  in December  2001,  resulted in the  addition of  approximately  $8.9
million  of  nonperforming  loans and $3.6  million of loans past due 90 days or
more. We anticipate  the trend of elevated  nonperforming  and  delinquent  loan
levels will continue  during 2004,  and we continue to monitor asset quality and
address the ongoing challenges posed by the current economic environment.

         As of December 31, 2003, 2002 and 2001,  $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  (problem loans).
The significant level of problem loans for the years ended December 31, 2003 and
2002  are  primarily  due to  problem  loans  included  in the  acquisitions  of
Millenium  Bank and Union,  completed in December  2000 and 2001,  respectively,
continuing  deterioration of our commercial leasing portfolio,  portfolio growth
(both  internal and external) and the gradual slow down and  uncertainties  that
have  occurred in the economy in the markets in which we operate.  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. As of
December 31, 2000,  1999 and 1998,  problem loans totaled $50.2  million,  $36.3
million and $21.3 million, respectively.

         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  criticized  credits  by
regulators, on our monthly loan watch list. Loans may be added to our watch list
for reasons that are temporary and  correctable,  such as the absence of current
financial  statements  of the  borrower or a deficiency  in loan  documentation.
Other loans are added whenever any adverse  circumstance is detected which might
affect the borrower's  ability to meet the terms of the loan. The delinquency of
a scheduled loan payment,  deterioration in the borrower's  financial  condition
identified in a review of periodic financial statements, a decrease in the value
of the  collateral  securing the loan,  or a change in the economic  environment
within which the borrower  operates could initiate the addition of a loan to our
watch  list.  Loans on our watch list  require  periodic  detailed  loan  status
reports  prepared by the  responsible  officer,  which are  discussed  in formal
meetings with credit review and credit administration staff members.  Downgrades
of loan risk  ratings may be initiated  by the  responsible  loan officer at any
time. However, upgrades of risk ratings may only be made with the concurrence of
selected credit review and credit  administration staff members generally at the
time of the formal watch list review meetings.
<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.  We
derive these factors from our actual loss experience and from published national
surveys of norms in the industry.  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  and the
ratio of net loans to total assets,  and the economic  conditions of the regions
in which  we  operate.  Based on this  quantitative  and  qualitative  analysis,
provisions  are made to the  allowance  for loan  losses.  Such  provisions  are
reflected in our consolidated statements of income.

         The  allocation  of the allowance for loan losses by loan category is a
result of the  application  of our risk rating system  augmented by  qualitative
analysis.  As such, the same  procedures we employ to determine the overall risk
in our loan  portfolio  and our  requirements  for the allowance for loan losses
determines the distribution of the allowance by loan category. Consequently, the
distribution of the allowance will change from period to period due to:

         >>    changes in the aggregate loan balances by loan category;

         >>    changes in the identified risk in each loan in the portfolio over
               time,  excluding  those  homogeneous  categories of loans such as
               consumer and installment  loans and residential real estate loans
               for which risk ratings are changed based on payment  performance;
               and

         >>    changes in loan concentrations by borrower.

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

         The following  table is a summary of loan loss  experience for the five
years ended December 31, 2003:
<TABLE>
<CAPTION>

                                                                As of or For the Years Ended December 31,
                                                      -------------------------------------------------------------
                                                           2003        2002        2001         2000         1999
                                                           ----        ----        ----         ----         ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>             <C>         <C>          <C>           <C>
Allowance for loan losses, beginning of year......... $   99,439      97,164      81,592       68,611        60,970
Acquired allowances for loan losses..................        757       1,366      14,046        6,062         3,008
                                                      ----------  ----------  ----------   ----------    ----------
                                                         100,196      98,530      95,638       74,673        63,978
                                                      ----------  ----------  ----------   ----------    ----------

Loans charged-off:
    Commercial, financial and agricultural...........    (23,476)    (45,697)    (21,085)      (9,690)      (10,855)
    Real estate construction and development.........     (5,825)     (7,778)       (108)      (2,229)         (577)
    Real estate mortgage:
       One-to-four family residential loans..........     (4,167)     (2,697)       (802)        (452)       (1,010)
       Multi-family residential loans................        (87)       (109)         (4)          --           (19)
       Commercial real estate loans..................     (1,708)     (2,747)     (1,012)      (1,761)       (1,532)
    Lease financing..................................    (19,160)     (8,426)     (6,749)         (78)           --
    Consumer and installment.........................     (1,350)     (3,070)     (1,693)      (2,840)       (3,728)
                                                      ----------  ----------  ----------   ----------    ----------
          Total......................................    (55,773)    (70,524)    (31,453)     (17,050)      (17,721)
                                                      ----------  ----------  ----------   ----------    ----------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........     10,147       8,331       4,015        5,556         3,602
    Real estate construction and development.........      1,659         631       1,171          319           849
    Real estate mortgage:
       One-to-four family residential loans..........        781         628         755          536           407
       Multi-family residential loans................         99         792          15           93           286
       Commercial real estate loans..................      4,174       3,491       1,332        1,308         1,664
    Lease financing..................................      4,805         494         435           65            --
    Consumer and installment.........................      1,363       1,566       1,746        1,965         2,473
                                                      ----------  ----------  ----------   ----------    ----------
          Total......................................     23,028      15,933       9,469        9,842         9,281
                                                      ----------  ----------  ----------   ----------    ----------
          Net loans charged-off......................    (32,745)    (54,591)    (21,984)      (7,208)       (8,440)
                                                      ----------  ----------  ----------   ----------    ----------
Provision for loan losses............................     49,000      55,500      23,510       14,127        13,073
                                                      ----------  ----------  ----------   ----------    ----------
Allowance for loan losses, end of year............... $  116,451      99,439      97,164       81,592        68,611
                                                      ==========  ==========  ==========   ==========    ==========

Loans outstanding, net of unearned discount:
    Average.......................................... $5,385,363   5,424,508   4,884,299    4,290,958     3,812,508
    End of year......................................  5,328,075   5,432,588   5,408,869    4,752,265     3,996,324
    End of year, excluding loans held for sale.......  5,182,329   5,082,623   5,204,663    4,683,160     3,958,912
                                                      ==========  ==========  ==========   ==========    ==========

Ratio of allowance for loan losses
    to loans outstanding:
       Average.......................................       2.16%       1.83%       1.99%        1.90%         1.80%
       End of year...................................       2.19        1.83        1.80         1.72          1.72
       End of year, excluding loans held for sale....       2.25        1.96        1.87         1.74          1.73
Ratio of net charge-offs to
    average loans outstanding........................       0.61        1.01        0.45         0.17          0.22
Ratio of current year recoveries to
    preceding year's total charge-offs...............      32.65       50.66       55.54        55.54         91.14
                                                      ==========  ==========  ==========    =========    ==========
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

       The following table is a summary of the allocation of the allowance for
loan losses for the five years ended December 31, 2003:

                                            2003              2002              2001             2000             1999
                                      -----------------  ---------------  ---------------  ---------------- -----------------
                                               Percent          Percent           Percent          Percent          Percent
                                                 of               of                of               of               of
                                              Category         Category          Category         Category         Category
                                                 to               to                to               to               to
                                                Total            Total             Total            Total            Total
                                      Amount    Loans    Amount  Loans    Amount   Loans   Amount   Loans   Amount   Loans
                                      ------    -----    ------  -----    ------   -----   ------   -----   ------   -----
                                                                     (dollars expressed in thousands)

Commercial, financial
<S>                                   <C>        <C>     <C>      <C>     <C>      <C>     <C>       <C>     <C>       <C>
   and agricultural.................  $ 37,142   26.42%  $34,915  26.56%  $40,161  28.34%  $32,130   28.87%  $24,898   27.20%
Real estate construction
   and development..................    26,782   19.97    22,667  18.22    21,598  17.65    14,667   17.04    13,264   19.90
Real estate mortgage:
   One-to-four family
     residential loans..............     9,684   15.23     7,913  12.79     5,349  14.76     4,334   15.29     3,449   18.03
   Multi-family residential loans...       186    2.03        32   2.07        81   2.75        12    1.69         3    1.85
   Commercial real estate loans.....    36,632   31.20    28,477  30.13    25,167  27.71    20,345   29.38    17,138   26.45
Lease financing.....................     4,830    1.26     3,649   2.33     3,062   2.75     1,114    2.61        --      --
Consumer and installment............       668    1.15       703   1.46       937   2.26     2,028    3.67     4,390    5.64
Loans held for sale.................       527    2.74     1,083   6.44       809   3.78       222    1.45       160    0.93
Unallocated (1).....................        --      --        --     --        --     --     6,740      --     5,309      --
                                      --------  ------   ------- ------   ------- ------   -------  ------   -------  ------
     Total..........................  $116,451  100.00%  $99,439 100.00%  $97,164 100.00%  $81,592  100.00%  $68,611  100.00%
                                      ========  ======   ======= ======   ======= ======   =======  ======   =======  ======
----------------------
(1) During 2001, we reviewed our practice of maintaining unallocated reserves in light of continuing refinement in our loss
    estimation processes.  We concluded the use of unallocated reserves would be discontinued.  Consequently, reserves were
    aligned with their respective portfolios.
</TABLE>

Deposits

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

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

                                                                 Year Ended December 31,
                                    -----------------------------------------------------------------------------------------
                                                 2003                           2002                         2001
                                    ----------------------------  ---------------------------   -----------------------------
                                                 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.................. $1,007,400   16.64%     --%   $  912,915   15.33%     --%   $  754,763    14.83%      --%
Interest-bearing demand deposits...    852,104   14.08    0.64       755,879   12.69    1.00       507,011     9.97     1.38
Savings deposits...................  2,147,573   35.47    1.09     1,991,510   33.44    1.79     1,548,441    30.43     3.25
Time deposits .....................  2,046,741   33.81    2.65     2,295,431   38.54    3.71     2,278,263    44.77     5.49
                                    ----------  ------    ====    ----------  ------    ====    ----------   ------     ====
      Total average deposits....... $6,053,818  100.00%           $5,955,735  100.00%           $5,088,478   100.00%
                                    ==========  ======            ==========  ======            ==========   ======
</TABLE>
<PAGE>

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, 2003,
2002 and 2001.

         Management believes as of December 31, 2003 and 2002, First Bank and we
were "well capitalized," as defined by the Federal Deposit Insurance Corporation
Improvement Act of 1991.

         We have formed seven statutory and business trusts,  which were created
for the sole purpose of issuing trust preferred securities. As further described
in Note 12 to our  Consolidated  Financial  Statements,  the sole  assets of the
statutory and business trusts are our subordinated  debentures.  Initially,  the
trusts served as financing subsidiaries,  however, as discussed in Note 1 to our
Consolidated  Financial  Statements,  on December 31, 2003, we implemented  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 trust  preferred  securities  issued by our affiliated
statutory and business trusts, and our related subordinated debentures issued to
the  respective  trusts  in  conjunction  with the  trust  preferred  securities
offerings, is as follows:
<TABLE>
<CAPTION>

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

<S>                                   <C>                   <C>                       <C>              <C>
First Preferred Capital Trust (1)     December 1996         Publicly Underwritten     $86,250,000      $88,917,550
First America Capital Trust (2)         June 1998           Publicly Underwritten      46,000,000       47,422,700
First Preferred Capital Trust II      October 2000          Publicly Underwritten      57,500,000       59,278,375
First Preferred Capital Trust III     November 2001         Publicly Underwritten      55,200,000       56,907,250
First Bank Capital Trust               April 2002             Private Placement        25,000,000       25,774,000
First Bank Statutory Trust             March 2003             Private Placement        25,000,000       25,774,000
First Preferred Capital Trust IV      January 2003          Publicly Underwritten      46,000,000       47,422,700
--------------------
(1) On May 5, 2003, we redeemed in full the trust preferred securities and related subordinated debentures.
(2) On June 30, 2003, we redeemed in full the trust preferred securities and related subordinated debentures.
</TABLE>

         For regulatory  reporting purposes,  the trust preferred securities are
currently eligible for inclusion,  subject to certain limitations, in our Tier 1
capital. Because of these limitations, as of December 31, 2003, $35.2 million of
the  trust  preferred  securities  were not  includable  in our Tier I  capital,
although this amount was included in our total risk-based capital.

Liquidity

         Our  liquidity  is the ability to maintain a cash flow that is adequate
to fund  operations,  service debt  obligations  and meet  obligations and other
commitments  on a timely  basis.  First Bank receives  funds for liquidity  from
customer deposits, loan payments, maturities of loans and investments,  sales of
investments and earnings.  In addition,  we may avail ourselves of other sources
of funds by issuing  certificates  of deposit in  denominations  of  $100,000 or
more, borrowing federal funds, selling securities under agreements to repurchase
and utilizing  borrowings from the Federal Home Loan Banks and other borrowings,
including our revolving  credit line.  The aggregate  funds  acquired from these
sources  were $726.9  million and $742.5  million at December 31, 2003 and 2002,
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,
other borrowings and our note payable, at December 31, 2003:
<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................................        $ 92,622             166,479        259,101
         Over three months through six months................          78,112                  --         78,112
         Over six months through twelve months...............         124,322              17,000        141,322
         Over twelve months..................................         141,383             107,000        248,383
                                                                     --------             -------        -------
              Total..........................................        $436,439             290,479        726,918
                                                                     ========             =======        =======
</TABLE>
<PAGE>

         In addition to these  sources of funds,  First Bank has  established  a
borrowing   relationship   with  the  Federal   Reserve  Bank.   This  borrowing
relationship,  which is secured by  commercial  loans,  provides  an  additional
liquidity  facility that may be utilized for contingency  purposes.  At December
31, 2003 and 2002,  First Bank's  borrowing  capacity  under the  agreement  was
approximately $909.3 million and $1.22 billion, respectively. In addition, First
Bank's borrowing  capacity  through its relationship  with the Federal Home Loan
Bank was  approximately  $449.5  million and $223.6 million at December 31, 2003
and 2002,  respectively.  Exclusive  of the  Federal  Home  Loan  Bank  advances
outstanding  of $7.0  million and $14.0  million at December  31, 2003 and 2002,
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, 2003 and 2002.

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

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

<S>                                                              <C>              <C>          <C>         <C>
         Operating leases....................................    $    8,689       17,782       20,971      47,442
         Certificates of deposit.............................     1,260,848      694,357          359   1,955,564
         Other borrowings....................................       166,479      106,000        1,000     273,479
         Note payable........................................        17,000           --           --      17,000
         Subordinated debentures.............................            --           --      209,320     209,320
         Other contractual obligations.......................         6,175          725           37       6,937
                                                                 ----------      -------      -------   ---------
              Total..........................................    $1,459,191      818,864      231,687   2,509,742
                                                                 ==========      =======      =======   =========
</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 the
consolidated  financial  statements,  accompanying  notes  to  the  consolidated
financial  statements,  selected consolidated and other financial data appearing
elsewhere in this report, and management's  discussion and analysis of financial
condition and results of operations  are, to a large degree,  dependent upon our
accounting  policies.  The selection and application of our accounting  policies
involve judgments, estimates and uncertainties that are susceptible to change.

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

         Loans and Allowance for Loan Losses.  We maintain an allowance for loan
losses at a level we consider  adequate to provide  for  probable  losses in our
loan  portfolio.  The  determination  of our allowance for loan losses  requires
management to make  significant  judgments  and estimates  based upon a periodic
analysis of our loans held for  portfolio and held for sale  considering,  among
other factors,  current economic conditions,  loan portfolio  composition,  past
loan loss experience,  independent appraisals, the fair value of underlying loan

<PAGE>

collateral,  our  customers'  ability  to repay  their  loans and  selected  key
financial  ratios.  If actual events prove the estimates and assumptions we used
in determining our allowance for loan losses were incorrect, we may need to make
additional provisions for loan losses. See further discussion under "--Loans and
Allowance for Loan Losses" and Note 4 to our Consolidated  Financial  Statements
appearing elsewhere in this report.

         Derivative  Financial  Instruments.  We  utilize  derivative  financial
instruments  to  assist  in our  management  of  interest  rate  sensitivity  by
modifying the repricing,  maturity and option  characteristics of certain assets
and  liabilities.  The judgments and  assumptions  that are most critical to the
application  of  this  critical   accounting  policy  are  those  affecting  the
estimation of fair value and hedge effectiveness.  Fair value is based on quoted
market prices where  available.  If quoted market prices are  unavailable,  fair
value is based on quoted  market prices of  comparable  derivative  instruments.
Factors that affect  hedge  effectiveness  include the initial  selection of the
derivative that will be used as a hedge and how well changes in its cash flow or
fair value have  correlated  and are expected to  correlate  with changes in the
cash  flow or fair  value of the  underlying  hedged  asset or  liability.  Past
correlation  is easy to  demonstrate,  but  expected  correlation  depends  upon
projections and trends that may not always hold true within  acceptable  limits.
Changes in  assumptions  and  conditions  could result in greater than  expected
inefficiencies  that,  if large  enough,  could reduce or eliminate the economic
benefits   anticipated  when  the  hedges  were  established  and/or  invalidate
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 would be minimal  impact on our reported
earnings  as the  change  in the fair  value of the  affected  derivative  would
virtually 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 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 2002 and 2001 - 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

         On April  30,  2003,  the FASB  issued  SFAS No.  149 --  Amendment  of
Statement 133 on Derivative  Instruments  and Hedging  Activities.  SFAS No. 149
amends  and  clarifies   financial   accounting  and  reporting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for  hedging  activities  under  SFAS No.  133.  SFAS No. 149 is
effective for contracts  entered into or modified after  September 30, 2003, and
for hedging relationships designated after June 30, 2003. All provisions of SFAS
No. 149 are required to be applied  prospectively.  In 2003, we implemented SFAS
No.  149,  which did not have a material  effect on our  consolidated  financial
statements.
<PAGE>

         On May 15, 2003, the FASB issued SFAS No. 150 -- Accounting for Certain
Financial  Instruments with Characteristics of both Liabilities and Equity. SFAS
No. 150 improves the accounting for certain  financial  instruments  that, under
previous guidance, issuers could account for as equity as it requires that those
instruments be classified as  liabilities  in statements of financial  position.
Most of the guidance in SFAS No. 150 is effective for all financial  instruments
entered into or modified  after May 31, 2003,  and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. For private
companies,  mandatorily  redeemable financial instruments were initially subject
to the provisions of SFAS No. 150 for the fiscal period beginning after December
15, 2003. However, on November 7, 2003, the FASB elected to defer this effective
date  of  mandatorily   redeemable  financial  instruments  of  certain  private
companies to fiscal periods beginning after December 15, 2004. Furthermore,  the
FASB elected to indefinitely  defer the effective date of the provisions of SFAS
No. 150 for certain mandatorily redeemable noncontrolling interests. In 2003, we
implemented  SFAS  No.  150,  which  did  not  have  a  material  effect  on our
consolidated financial statements.

         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 five statutory and business trusts.
The  implementation  of  this  Interpretation  had  no  material  effect  on our
consolidated financial position or results of operations.  Furthermore,  in July
2003, the Board of Governors of the Federal  Reserve System issued a supervisory
letter  instructing  bank  holding  companies  to  continue to include the trust
preferred  securities in their Tier I capital for regulatory  capital  purposes,
subject to applicable limits, until notice is given to the contrary. The Federal
Reserve  intends  to  review  the  regulatory  implications  of  any  accounting
treatment  changes and, if necessary or warranted,  provide further  appropriate
guidance.  There can be no assurance  that the Federal  Reserve will continue to
allow bank holding companies to include trust preferred securities in their Tier
I capital for regulatory capital purposes.

         In January 2004,  the FASB's  Derivatives  Implementation  Group issued
preliminary  guidance on SFAS No. 133 Implementation Issue No. G25, 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.  DIG Issue G25  indicates  that an entity is
unable to hedge  variability in interest receipts on a group of prime rate based
loans as the prime rate is not considered a benchmark  interest rate and that an
entity is unable to hedge  overall  changes in cash flows as credit  risk is not
considered in the hedging  interest rate swap.  The effective  date of DIG Issue
G25 is the first day of the first  fiscal  quarter  beginning  after the cleared
guidance is posted to the FASB's  website,  and should be applied to all hedging
relationships  as of the  effective  date. 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 and any derivative gains or losses in other
comprehensive income related to the de-designated  hedging  relationships should
be accounted for under  paragraphs 31 and 32 under SFAS No. 133.  Presently,  we
have pre-existing cash flow hedging relationships that are inconsistent with the
guidance in DIG Issue G25.  As of December  31,  2003,  our other  comprehensive
income  included a $26.1 million gain  attributable to these  pre-existing  cash
flow  hedging  relationships.  Pending  the  outcome of DIG Issue G25, we may be
required to de-designate  these specific hedging  relationships and accrete this
gain into noninterest  income over the remaining lives of the respective hedging
relationships.  The  public  comment  period  on DIG Issue G25 ends on March 25,
2004.

         In March 2004,  the SEC issued  Staff  Accounting  Bulletin  No. 105 --
Application of Accounting  Principles to Loan  Commitments,  which addresses the
application  of generally  accepted  accounting  principles to loan  commitments
accounted  for as  derivative  instruments.  We  are  currently  evaluating  the
potential  impact  this  Bulletin  could  have  on  our  consolidated  financial
statements.
<PAGE>

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 32 through 37 of this report.

Effects of Inflation

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

Item 8.  Financial Statements and Supplementary Data

         The  financial  statements  and  supplementary  data appear on pages 58
through 95 of this report.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure None.

Item 9A. Controls and Procedures

         As of the  December  31,  2003  and  pursuant  to Rules  13a-15(e)  and
15d-15(e) under the Securities  Exchange Act of 1934, or the Exchange Act, First
Banks,  under the  supervision  and with the  participation  of the First Banks'
management,  including its principal  executive officer and principal  financial
officer,  has  evaluated  the  effectiveness  of the design and operation of its
disclosure  controls and procedures.  Based upon this evaluation,  the principal
executive  officer and principal  financial  officer has  concluded  that, as of
December  31,  2003,  First  Banks'  disclosure  controls  and  procedures  were
effective to ensure that information  required to be disclosed by First Banks in
reports that it files or submits under the Exchange Act is recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

         During the quarter ended December 31, 2003,  there have been no changes
made in First Banks'  internal  control over financial  reporting (as defined in
Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) that have  materially
affected,  or are  reasonably  likely to  materially  affect,  the First  Banks'
internal control over financial reporting.




<PAGE>


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Board of Directors and Committees of the Board

         Our Board of  Directors  consists of eight  members,  three of whom the
Board  of  Directors  determined  to  be  independent.  Each  of  our  directors
identified in the  following  table was elected or appointed to serve a one-year
term and until his successor has been duly qualified for office.

<TABLE>
<CAPTION>


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


<S>                              <C>     <C>       <C>
James F. Dierberg (1)            66      1979      Chairman of the Board of Directors of First Banks,  Inc. since 1988;
                                                   Chief  Executive  Officer of First  Banks,  Inc.  from 1988 to April
                                                   2003;  President  of First  Banks,  Inc.  from 1979 to 1992 and from
                                                   1994 to October 1999; Chairman of the Board of Directors,  President
                                                   and Chief  Executive  Officer of FBA from 1994 until its merger with
                                                   First Banks on December 31, 2002.

Allen H. Blake                   61      1988      President of First Banks,  Inc. since October 1999; Chief Executive
                                                   Officer of First  Banks,  Inc.  since April 2003;  Chief  Financial
                                                   Officer of First Banks,  Inc. from 1984 to September 1999 and since
                                                   May 2001;  Chief Operating  Officer of First Banks,  Inc. from 1998
                                                   to July 2002;  Director and  Secretary of First Banks,  Inc.  since
                                                   1988; Director,  Executive Vice President,  Chief Operating Officer
                                                   and  Secretary  of FBA from 1998 until its merger  with First Banks
                                                   on December 31, 2002;  Chief Financial  Officer of FBA from 1994 to
                                                   September 1999 and from May 2001 until December 2002.

Terrance M. McCarthy             49      2003      Senior  Executive  Vice  President and Chief  Operating  Officer of
                                                   First Banks, Inc. since August 2002;  Director of First Banks, Inc.
                                                   since April  2003;  Director of FBA from July 2001 until its merger
                                                   with First Banks on December 31, 2002;  Executive Vice President of
                                                   FBA from 1999 to December 2002;  Chairman of the Board of Directors
                                                   of First Bank since  January 2003;  President  and Chief  Executive
                                                   Officer of First Bank since August  2002;  Chairman of the Board of
                                                   Directors,  President  and  Chief  Executive  Officer  of FB&T from
                                                   April 2000  until its merger  with and into First Bank on March 31,
                                                   2003; Director of FB Commercial Finance, Inc. since March 2003.

Michael J. Dierberg (1)          32      2001      General Counsel of First Banks,  Inc. since June 2002;  Senior Vice
                                                   President  (Northern  California Region) of First Bank & Trust from
                                                   July 2001 to June 2002.  Prior to joining  First Banks,  Inc.,  Mr.
                                                   Dierberg  served as an attorney  for the Office of the  Comptroller
                                                   of the Currency in Washington, D.C. from 1998 to July 2001.

Gordon A. Gundaker (2)           69      2001      President and Chief Executive  Officer of Coldwell Banker Gundaker,
                                                   a  full-service  real  estate  brokerage  company,  in  St.  Louis,
                                                   Missouri.

David L. Steward (2)             52      2000      Chairman of the Board of Directors,  President and Chief  Executive
                                                   Officer of World Wide Technology,  Inc., an electronic  procurement
                                                   and logistics company in the information  technology  industry,  in
                                                   St.  Louis,  Missouri;  Chairman  of  the  Board  of  Directors  of
                                                   Telcobuy.com  (an  affiliate  of  World  Wide  Technology,   Inc.);
                                                   Director of Civic  Progress of St.  Louis,  the St. Louis  Regional
                                                   Commerce and Growth  Association,  the Regional  Business  Council,
                                                   Missouri Technology  Corporation,  Webster  University,  BJC Health
                                                   System,  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.


<PAGE>



Hal J. Upbin (2)                 65      2001      Director  of  Kellwood  Company,  a  manufacturer  and  marketer of
                                                   apparel and related soft goods, in St. Louis,  Missouri since 1995;
                                                   Chairman of the Board of Directors and Chief  Executive  Officer of
                                                   Kellwood  Company  since 1997;  President of Kellwood  Company from
                                                   1997 to December  2003;  President and Chief  Operating  Officer of
                                                   Kellwood  Company  from  1994 to  1997;  Executive  Vice  President
                                                   Corporate  Development from 1992 to 1994; Vice President  Corporate
                                                   Development from 1990 to 1992; Director of Brown Shoe Company.

Douglas H. Yaeger (2)(3)         55      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;  Chairman
                                                   of the Board of Directors of the St.  Louis  Regional  Commerce and
                                                   Growth Association;  Director of Southern Gas Association,  the St.
                                                   Louis  Science  Center,  Civic  Progress,  Greater  St.  Louis Area
                                                   Council - Boy Scouts of  America,  the  United  Way of Greater  St.
                                                   Louis, The Municipal  Theatre  Association of St. Louis and Webster
                                                   University.
----------------------------------
(1)  Mr. Michael J. Dierberg is the son of Mr. James F. Dierberg. See Item 12. Security Ownership of Certain Beneficial
     Owners and Management.
(2)  Member of the Audit Committee.
(3)  Mr. Douglas H. Yaeger serves as Chairman of the Audit Committee and audit committee financial expert.
</TABLE>

Committees and Meetings of the Board of Directors

         Four  members of our Board of Directors  serve on the Audit  Committee,
three 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 is composed of four directors
and operates under a written charter adopted by the Board of Directors.

         The members of the  committee  as of March 25, 2004 were Mr.  Gordon A.
Gundaker,  Mr. David L. Steward, Mr. Hal J. Upbin and Mr. Douglas H. Yaeger, who
serves as the Chairman of the Audit Committee and the audit committee  financial
expert.  Mr.  Steward,  Mr. Upbin and Mr. Yaeger  currently serve as independent
members  of  the  Audit   Committee.   Mr.  Gundaker   currently   serves  as  a
non-independent member of the Audit Committee.  Previously,  Mr. Gundaker served
as an independent  member of the Audit Committee;  however,  in 2003, one of Mr.
Gundaker's  related  business  interests  maintained  commercial real estate and
development  loans with First Bank that resulted in interest and fee payments of
approximately  $298,000 to First Bank in  accordance  with the  respective  loan
terms.  These interest and fee payments  exceeded 5% of Mr.  Gundaker's  related
business interest's gross revenues, or $204,000, in 2003.  Consequently,  at the
time the interest and fee payments exceeded $204,000, Mr. Gundaker was no longer
deemed to be  independent  in  accordance  with  existing  rules of the National
Association of Securities Dealers, or NASD. The Board of Directors  subsequently
appointed Mr.  Gundaker to the Audit  Committee as a  non-independent  member in
accordance  with  existing  NASD  rules,  which  allow one  director  who is not
independent, and is not a current employee or an immediate family member of such
employee,  to be  appointed  to the  Audit  Committee.  The  Board of  Directors
determined, under the exceptional and limited circumstances exemption allowed by
the existing NASD rules, that Mr.  Gundaker's  membership on the Audit Committee
was  desirable  by First  Banks'  interests  and the  interests  of First Banks'
shareholders,  based upon his business expertise,  his previous contributions to
First Banks as an independent  member of the Audit  Committee and other relevant
considerations.  Furthermore,  the Board of Directors took into account that Mr.
Gundaker  is  expected  to  meet  the   newly-enacted   Audit  Committee  member
independence  requirements  of the  NASD and the New York  Stock  Exchange  that
become effective for First Banks on October 31, 2004.



<PAGE>


Audit Committee Report

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

         The Audit  Committee  reviewed with the independent  auditors,  who are
responsible  for planning and  carrying  out a proper  audit and  expressing  an
opinion on the conformity of our audited consolidated  financial statements with
accounting principles generally accepted in the United States of America,  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
auditors  their  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 auditors with the auditors' independence.  KPMG LLP has provided
the Audit Committee with the written disclosures and letter required by Standard
No. 1 of the Independent Standards Board.

         The  Audit  Committee  discussed  with  our  internal  and  independent
auditors  the overall  scope and plans for their  respective  audits.  The Audit
Committee  met with the  internal  and  independent  auditors,  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, 2003 for filing with the SEC.

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

Code of Ethics for Principal Executive Officer and Financial Professionals

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



<PAGE>
<TABLE>
<CAPTION>


Executive Officers

         Our  executive  officers,  each of who  was  elected  to the  office(s)
indicated by the Board of Directors, as of March 25, 2004, were as follows:


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

<S>                             <C>                                          <C>
James F. Dierberg               66   Chairman of the Board of Directors.     See Item 10 -  "Directors  and  Executive
                                                                             Officers  of the  Registrant  - Board  of
                                                                             Directors."

Allen H. Blake                  61   President,  Chief Executive Officer,    See Item 10 - "Directors  and  Executive
                                     Chief Financial  Officer,  Secretary    Officers  of the  Registrant  - Board of
                                     and Director.                           Directors."


Terrance M. McCarthy            49   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;
                                     Director of FB  Commercial  Finance,
                                     Inc.

Daniel W. Jasper                58   Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                     Credit  Officer;  Director  of First    Credit  Officer  of  First  Banks,  Inc.
                                     Bank;   Director  of  FB  Commercial    since   October   2003;    Senior   Vice
                                     Finance, Inc.                           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       50   Executive    Vice    President   and    Executive  Vice  President  and Director
                                     Director  of  Sales,  Marketing  and    of  Sales,  Marketing  and  Products  of
                                     Products.                               First Banks,  Inc. since September 2003;
                                                                             Executive   Vice    President   Personal
                                                                             Banking Personal Banking  Division, HSBC
                                                                             Bank USA  in Buffalo, New York from 1998
                                                                             to  June  2002,  Independent  Consultant
                                                                             from July 2002 to August 2003.

Mary P. Sherrill                49   Executive    Vice    President   and    Executive  Vice  President  and Director
                                     Director of Operations;  Director of    of  Operations  of  First  Banks,   Inc.
                                     First Bank.                             since  April  2003;  Director  of  First
                                                                             Bank since  April  2003;  Director, Vice
                                                                             Chairman  and  Chief of Bank Operations,
                                                                             Southwest Bank  in  St.  Louis, Missouri
                                                                             from 1999 to March 2003.

Mark T. Turkcan                 48   Executive  Vice President - Mortgage    Mr.   Turkcan   has  been   employed  in
                                     Banking;   Director  and   Executive    various executive  capacities with First
                                     Vice President of First Bank.           Banks, Inc. since 1990.
</TABLE>

Section 16(a) Beneficial Ownership Reporting Compliance

         To our knowledge,  our directors,  executive officers and shareholders,
who are subject,  in their  capacity as such, to the reporting  obligations  set
forth in Section 16 of the Securities  Exchange Act of 1934, as amended,  or the
Exchange Act,  filed on a timely basis reports  required by Section 16(a) of the
Exchange Act during the year ended December 31, 2003.



<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, 2003, 2002 and 2001:
<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                                                 2003    $  610,000          --         6,000
Chairman of the Board of Directors                                2002       605,000      35,000         5,500
                                                                  2001       585,000     100,000         2,850

Allen H. Blake                                                    2003       397,300          --         6,000
President, Chief Executive Officer and                            2002       360,500      45,000         5,500
Chief Financial Officer                                           2001       343,700      58,000         2,590

Terrance M. McCarthy                                              2003       323,500          --         6,000
Senior Executive Vice President and                               2002       269,000      50,000         3,200
Chief Operating Officer;                                          2001       220,000      38,000         5,200
Chairman of the Board of Directors, President and
Chief Executive Officer of First Bank

Daniel W. Jasper (2)                                              2003       152,000      15,000         4,700
Executive Vice President and Chief Credit Officer;
Director of First Bank

Mark T. Turkcan                                                   2003       203,000      47,700         6,000
Executive Vice President - Mortgage Banking;                      2002       188,000      35,000         5,500
Director and Executive Vice President of First Bank               2001       177,500      22,500         5,250

Donald W. Williams (3)                                            2003       129,200          --       630,300 (3)
                                                                  2002       311,000      35,000         5,500
                                                                  2001       297,000      48,000         5,250

-----------------------
(1)  All other compensation reported includes matching contributions to our 401(k)  Plan for the year indicated and
     ownership interests granted in units of Star Lane Trust, our unit investment trust that was created on January
     21, 2000.
(2)  Mr. Jasper became an Executive Officer of the Company in October 2003.
(3)  Mr. Williams, Senior Executive Vice President and Chief Credit Officer, discontinued his employment with First
     Banks in April 2003. Mr. Williams' compensation for 2003 includes a payment in the amount of $630,000 under an
     employment contract by and among Mr. Williams, First Banks and First Bank.
</TABLE>

Compensation  of Directors.  Only those  directors who are neither our employees
nor employees of any of our subsidiaries receive remuneration for their services
as directors.  Such non-employee  directors (currently Messrs.  Gordon Gundaker,
David Steward,  Hal Upbin and Douglas Yaeger)  received a fee of $3,000 for each
Board meeting  attended and $1,000 for each Audit Committee  meeting attended in
2003.  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,  $30,000,  $29,000 and $35,000,  respectively,  in director's
compensation in 2003.

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

Compensation Committee Interlocks and Insider Participation.  Messrs.  Dierberg,
Blake and  McCarthy  serve as  executive  officers  and  members of our Board of
Directors.  First Banks does not have a compensation committee, but its Board of
Directors performs the functions of such a committee.  Except for the foregoing,
none  of  our  executive  officers  served  during  2003  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 page 89 of this
report.



<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth,  as  of  March  25,  2004,  certain
information  with  respect to the  beneficial  ownership  of all  classes of our
voting  capital stock by each person known to us to be the  beneficial  owner of
more than five percent of the  outstanding  shares of the respective  classes of
our stock:
<TABLE>
<CAPTION>

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

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

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

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

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

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

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

All executive officers and directors
    other than Mr. James F. Dierberg
    and members of his immediate family...........................             0             0%       0.0%
--------------------
   *   Represents less than 1.0%.
  (1)  Each of the above-named trustees and beneficial owners are United States citizens, and the business address
       for each  such  individual is 135 North Meramec Avenue, Clayton, Missouri 63105. Mr. James F. Dierberg, our
       Chairman of the Board, and Mrs. Mary W. Dierberg, are husband and wife,  and  Messrs. James F. Dierberg II,
       Michael J. Dierberg and Mrs. Ellen D. Schepman, formerly  Ms. Ellen C. Dierberg, are  their adult children.
  (2)  Due to the relationship between Mr. James F. Dierberg, his wife and their  children, Mr. Dierberg is deemed
       to share voting and investment power over these shares.
  (3)  Due to the relationship between Mr. James F. Dierberg, his wife and  First Bank, Mr. Dierberg  is deemed to
       share voting and investment power over these shares.
  (4)  Convertible into common stock, based on the appraised value of the common stock at the date  of conversion.
       Assuming an appraised value of the common stock equal to the book value, the  number of  shares  of  common
       stock into which the Class A Preferred Stock is convertible at December 31, 2003 is 565, 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 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 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  unless  that person has been
previously approved for overdraft protection under a plan whereby a credit limit
has been established in accordance with First Bank's standard credit criteria.

         Transactions  with related  parties are more fully described in Note 19
to our Consolidated Financial Statements.

Item 14. Principal Accountant Fees and Services

Fees of Independent Auditors

         During 2003 and 2002, KPMG LLP served as our  independent  auditors and
provided  additional services to our affiliates and us. The following table sets
forth fees for professional audit services rendered by KPMG LLP for the audit of
our consolidated financial statements in 2003 and 2002:
<TABLE>
<CAPTION>

                                                                                      2003           2002
                                                                                      ----           ----

<S>                                                                                 <C>            <C>
           Audit fees, excluding audit related fees (1).........................    $ 475,000      523,000
           Audit related fees...................................................           --           --
           Tax fees.............................................................       76,784       19,990
           All other fees (2)...................................................        8,173      284,093
                                                                                    ---------    ---------
                  Total.........................................................    $ 559,957      827,083
                                                                                    =========    =========
           ------------------------
           (1)  Audit fees include audits of the financial statements of Star Lane Trust as well as services
                provided for reporting requirements under FDICIA and mortgage  banking activities. For 2003,
                audit related fees consisted of work performed related to the First Preferred Capital  Trust
                IV trust preferred securities offering. For 2002, audit related fees  principally  consisted
                of consultation on various accounting matters, reporting  requirements for Lender's Interest
                and Special Allowance Request and Reports submitted to  the  U.S.  Department  of  Education
                associated with our former student lending programs and the review of FBA's proxy statement.
           (2)  All  other  fees  consist  primarily  of tax compliance and consultative services. For 2002,
                these fees also include fees associated with a branch operations and organization consulting
                project.
</TABLE>

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

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



<PAGE>


                                     PART IV

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

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

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

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

         (b)     Reports on Form 8-K.

                     During the quarter  ended  December 31, 2003,  we filed one
                     Current  Report on Form 8-K on October 28, 2003. Item 12 of
                     the  report  referenced  a  press  release announcing First
                     Banks,  Inc.'s  financial  results  for  the three and nine
                     months  ended  September 30, 2003.  A  copy  of  the  press
                     release was included as Exhibit 99.5.

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



<PAGE>
<TABLE>
<CAPTION>
                                               CONSOLIDATED BALANCE SHEETS
                            (dollars expressed in thousands, except share and per share data)

                                                                                               December 31,
                                                                                        --------------------------
                                                                                           2003            2002
                                                                                           ----            ----
                                                       ASSETS
                                                       ------
Cash and cash equivalents:
<S>                                                                                     <C>                <C>
     Cash and due from banks.......................................................     $  179,802         194,519
     Short-term investments........................................................         33,735           8,732
                                                                                        ----------       ---------
          Total cash and cash equivalents..........................................        213,537         203,251
                                                                                        ----------       ---------
Investment securities:
     Available for sale............................................................      1,038,787       1,129,244
     Held to maturity (fair value of $11,341 and $16,978, respectively)............         10,927          16,426
                                                                                        ----------       ---------
          Total investment securities..............................................      1,049,714       1,145,670
                                                                                        ----------       ---------
Loans:
     Commercial, financial and agricultural........................................      1,407,626       1,443,016
     Real estate construction and development......................................      1,063,889         989,650
     Real estate mortgage..........................................................      2,582,264       2,444,122
     Lease financing...............................................................         67,282         126,738
     Consumer and installment......................................................         71,652          86,763
     Loans held for sale...........................................................        145,746         349,965
                                                                                        ----------       ---------
          Total loans..............................................................      5,338,459       5,440,254
     Unearned discount.............................................................        (10,384)         (7,666)
     Allowance for loan losses.....................................................       (116,451)        (99,439)
                                                                                        ----------       ---------
          Net loans................................................................      5,211,624       5,333,149
                                                                                        ----------       ---------

Derivative instruments.............................................................         49,291          97,887
Bank premises and equipment, net of accumulated depreciation and amortization......        136,739         152,418
Goodwill...........................................................................        145,548         140,112
Bank-owned life insurance..........................................................         97,521          92,616
Deferred income taxes..............................................................        102,844          92,157
Other assets.......................................................................        100,122          93,917
                                                                                        ----------       ---------
          Total assets.............................................................     $7,106,940       7,351,177
                                                                                        ==========       =========
                                                   LIABILITIES
                                                   -----------
Deposits:
     Noninterest-bearing demand....................................................     $1,034,367         986,674
     Interest-bearing demand.......................................................        843,001         819,429
     Savings.......................................................................      2,128,683       2,176,616
     Time deposits of $100 or more.................................................        436,439         469,904
     Other time deposits...........................................................      1,519,125       1,720,197
                                                                                        ----------       ---------
          Total deposits...........................................................      5,961,615       6,172,820
Other borrowings...................................................................        273,479         265,644
Note payable.......................................................................         17,000           7,000
Subordinated debentures............................................................        209,320         278,389
Deferred income taxes..............................................................         41,683          61,204
Accrued expenses and other liabilities.............................................         54,028          47,079
                                                                                        ----------       ---------
          Total liabilities........................................................      6,557,125       6,832,136
                                                                                        ----------       ---------
                                              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..................................................................        495,714         433,689
Accumulated other comprehensive income.............................................         29,213          60,464
                                                                                        ----------       ---------
          Total stockholders' equity...............................................        549,815         519,041
                                                                                        ----------       ---------
          Total liabilities and stockholders' equity...............................     $7,106,940       7,351,177
                                                                                        ==========       =========

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

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                               CONSOLIDATED STATEMENTS OF INCOME
                                (dollars expressed in thousands, except share and per share data)

                                                                                     Years Ended December 31,
                                                                                ----------------------------------
                                                                                   2003         2002        2001
                                                                                   ----         ----        ----
      Interest income:
<S>                                                                             <C>            <C>         <C>
         Interest and fees on loans..........................................   $ 355,472      390,062     412,153
         Investment securities:
           Taxable...........................................................      32,442       31,845      26,886
           Nontaxable........................................................       1,737        1,865         888
         Federal funds sold and other........................................       1,502        1,949       5,458
                                                                                ---------     --------    --------
              Total interest income..........................................     391,153      425,721     445,385
                                                                                ---------     --------    --------
      Interest expense:
         Deposits:
           Interest-bearing demand...........................................       5,470        7,551       7,019
           Savings...........................................................      23,373       35,668      50,388
           Time deposits of $100 or more.....................................      13,075       19,047      28,026
           Other time deposits...............................................      41,201       66,002      97,105
         Other borrowings....................................................       2,243        3,450       5,847
         Note payable........................................................         785        1,032       2,629
         Subordinated debentures.............................................      17,879       24,801      19,232
                                                                                ---------     --------    --------
              Total interest expense.........................................     104,026      157,551     210,246
                                                                                ---------     --------    --------
              Net interest income............................................     287,127      268,170     235,139
      Provision for loan losses..............................................      49,000       55,500      23,510
                                                                                ---------     --------    --------
              Net interest income after provision for loan losses............     238,127      212,670     211,629
                                                                                ---------     --------    --------
      Noninterest income:
         Service charges on deposit accounts and customer service fees.......      36,113       30,978      22,865
         Gain on mortgage loans sold and held for sale.......................      15,645        6,471       5,469
         Net gain on sales of available-for-sale investment securities.......       8,761           90      18,722
         Gain on sales of branches, net of expenses..........................       3,992           --          --
         Bank-owned life insurance investment income.........................       5,469        5,928       4,415
         Net gain on derivative instruments..................................         496        2,181      18,583
         Other...............................................................      17,232       21,863      19,041
                                                                                ---------     --------    --------
              Total noninterest income.......................................      87,708       67,511      89,095
                                                                                ---------     --------    --------
      Noninterest expense:
         Salaries and employee benefits......................................      95,441       89,569      83,938
         Occupancy, net of rental income.....................................      20,940       21,030      17,432
         Furniture and equipment.............................................      18,286       17,495      12,612
         Postage, printing and supplies......................................       5,100        5,556       4,869
         Information technology fees.........................................      32,136       32,135      26,981
         Legal, examination and professional fees............................       8,131        9,284       6,988
         Amortization of intangibles associated
           with the purchase of subsidiaries.................................       2,506        2,012       8,248
         Communications......................................................       2,667        3,166       3,247
         Advertising and business development................................       4,271        5,023       5,237
         Charitable contributions............................................       5,334          204         125
         Other...............................................................      32,257       25,338      32,480
                                                                                ---------     --------    --------
              Total noninterest expense......................................     227,069      210,812     202,157
                                                                                ---------     --------    --------
              Income before provision for income taxes, minority
                interest in income of subsidiary and cumulative
                effect of change in accounting principle.....................      98,766       69,369      98,567
      Provision for income taxes.............................................      35,955       22,771      30,048
                                                                                ---------     --------    --------
              Income before minority interest in income
                of subsidiary and cumulative
                effect of change in accounting principle.....................      62,811       46,598      68,519
      Minority interest in income of subsidiary..............................          --        1,431       2,629
                                                                                ---------     --------    --------
              Income before cumulative effect of change
                in accounting principle......................................      62,811       45,167      65,890
      Cumulative effect of change in accounting principle, net of tax........          --           --      (1,376)
                                                                                ---------     --------    --------
              Net income.....................................................      62,811       45,167      64,514
      Preferred stock dividends..............................................         786          786         786
                                                                                ---------     --------    --------
              Net income available to common stockholders....................   $  62,025       44,381      63,728
                                                                                =========     ========    ========
<PAGE>

      Basic earnings per common share:
         Income before cumulative effect of change in accounting principle...   $2,621.39     1,875.69    2,751.54
         Cumulative effect of change in accounting principle, net of tax.....          --           --      (58.16)
                                                                                ---------     --------    --------
         Basic...............................................................   $2,621.39     1,875.69    2,693.38
                                                                                =========     ========    ========
      Diluted earnings per common share:
         Income before cumulative effect of change in accounting principle...   $2,588.31     1,853.64    2,684.93
         Cumulative effect of change in accounting principle, net of tax.....          --           --      (58.16)
                                                                                ---------     --------    --------
         Diluted.............................................................   $2,588.31     1,853.64    2,626.77
                                                                                =========     ========    ========

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

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


<PAGE>
<TABLE>
<CAPTION>
                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                                      Three Years Ended December 31, 2003
                                             (dollars expressed in thousands, except per share data)




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

<S>                            <C>                 <C>         <C>     <C>       <C>     <C>      <C>        <C>     <C>
Consolidated balances, January 1, 2001...........  $12,822     241     5,915     2,267            325,580    6,021   352,846
Year ended December 31, 2001:
    Comprehensive income:
      Net income.................................       --      --        --        --   64,514    64,514       --    64,514
      Other comprehensive income, net of tax:
        Unrealized losses on investment
         securities, net of reclassification
         adjustment (1)..........................       --      --        --        --   (1,871)       --   (1,871)   (1,871)
        Derivative instruments:
          Cumulative effect of change in
             accounting principle, net...........       --      --        --        --    9,069        --    9,069     9,069
          Current period transactions............       --      --        --        --   27,021        --   27,021    27,021
          Reclassification to earnings...........       --      --        --        --   (5,943)       --   (5,943)   (5,943)
                                                                                        -------
      Comprehensive income.......................                                        92,790
                                                                                        =======
    Class A preferred stock dividends,
        $1.20 per share..........................       --      --        --        --               (769)      --      (769)
    Class B preferred stock dividends,
        $0.11 per share..........................       --      --        --        --                (17)      --       (17)
    Effect of capital stock transactions of
      majority-owned subsidiary..................       --      --        --     3,807                 --       --     3,807
                                                   -------    ----     -----     -----            -------  -------   -------
Consolidated balances, December 31, 2001.........   12,822     241     5,915     6,074            389,308   34,297   448,657
Year ended December 31, 2002:
    Comprehensive income:
      Net income.................................       --      --        --        --   45,167    45,167       --    45,167
      Other comprehensive income, net of tax:
        Unrealized gains on investment
          securities, net of reclassification
          adjustment (1).........................       --      --        --        --    8,909        --    8,909     8,909
        Derivative instruments:
          Current period transactions............       --      --        --        --   17,258        --   17,258    17,258
                                                                                        -------
      Comprehensive income.......................                                        71,334
                                                                                        =======
    Class A preferred stock dividends,
        $1.20 per share..........................       --      --        --        --               (769)      --      (769)
    Class B preferred stock dividends,
        $0.11 per share..........................       --      --        --        --                (17)      --       (17)
    Effect of capital stock transactions of
      majority-owned subsidiary..................       --      --        --      (164)                --       --      (164)
                                                   -------    ----     -----     -----            -------  -------   -------
Consolidated balances, December 31, 2002.........   12,822     241     5,915     5,910            433,689   60,464   519,041
Year ended December 31, 2003:
    Comprehensive income:
      Net income.................................       --      --        --        --   62,811    62,811       --    62,811
      Other comprehensive loss, net of tax:
        Unrealized losses on investment
          securities, net of reclassification
          adjustment (1).........................       --      --        --        --   (9,986)       --   (9,986)   (9,986)
        Derivative instruments:
          Current period transactions............       --      --        --        --  (21,265)       --  (21,265)  (21,265)
                                                                                        -------
      Comprehensive income.......................                                        31,560
                                                                                        =======
    Class A preferred stock dividends,
        $1.20 per share..........................       --      --        --        --               (769)      --      (769)
    Class B preferred stock dividends,
        $0.11 per share..........................       --      --        --        --                (17)      --       (17)
                                                   -------    ----     -----     -----            -------  -------   -------

Consolidated balances, December 31, 2003.........  $12,822     241     5,915     5,910            495,714   29,213   549,815
                                                   =======    ====     =====     =====            =======  =======   =======


<PAGE>

--------------------------------------
(1) Disclosure of reclassification adjustment:
</TABLE>
<TABLE>
<CAPTION>
                                                                                                Years Ended December 31,
                                                                                            ------------------------------
                                                                                               2003       2002       2001
                                                                                               ----       ----       ----

<S>                                                                                         <C>          <C>       <C>
     Unrealized (losses) gains on investment securities arising during the year..........   $(4,291)     8,968      10,298
     Less reclassification adjustment for gains included in net income...................     5,695         59      12,169
                                                                                            -------     ------      ------
     Unrealized (losses) gains on investment securities..................................   $(9,986)     8,909      (1,871)
                                                                                            =======     ======      ======

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


<PAGE>
<TABLE>
<CAPTION>

                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (dollars expressed in thousands)

                                                                                      Years ended December 31,
                                                                                -----------------------------------
                                                                                     2003        2002        2001
                                                                                     ----        ----        ----

Cash flows from operating activities:
<S>                                                                             <C>             <C>          <C>
     Net income..............................................................   $   62,811      45,167       64,514
     Adjustments to reconcile net income to net cash
       used in operating activities:
          Cumulative effect of change in accounting principle, net of tax....           --          --        1,376
          Depreciation and amortization of bank premises and equipment.......       20,068      18,902       12,713
          Amortization, net of accretion.....................................       24,996      17,769       11,203
          Originations and purchases of loans held for sale..................   (2,158,251) (1,954,346)  (1,524,156)
          Proceeds from sales of loans held for sale.........................    2,003,574   1,602,500    1,339,258
          Provision for loan losses..........................................       49,000      55,500       23,510
          Provision for income taxes.........................................       35,955      22,771       30,048
          Payments of income taxes...........................................      (43,632)    (34,287)     (19,297)
          Decrease in accrued interest receivable............................        4,614       2,197       11,641
          Interest accrued on liabilities....................................      104,026     157,551      210,246
          Payments of interest on liabilities................................     (107,295)   (162,825)    (219,099)
          Gain on mortgage loans sold and held for sale......................      (15,645)     (6,471)      (5,469)
          Net gain on sales of available-for-sale investment securities......       (8,761)        (90)     (18,722)
          Gain on sales of branches, net of expenses.........................       (3,992)         --           --
          Net gain on derivative instruments.................................         (496)     (2,181)     (18,583)
          Other operating activities, net....................................        7,390      (1,138)       2,837
          Minority interest in income of subsidiary..........................           --       1,431        2,629
                                                                                ----------  ----------   ----------
               Net cash used in operating activities.........................      (25,638)   (237,550)     (95,351)
                                                                                ----------  ----------   ----------

Cash flows from investing activities:
     Cash received for acquired entities, net of
       cash and cash equivalents paid........................................       14,870      11,715        6,351
     Proceeds from sales of investment securities available for sale.........        6,019      55,130       85,824
     Maturities of investment securities available for sale..................    1,499,476   1,085,993      762,548
     Maturities of investment securities held to maturity....................        5,573       6,829        4,292
     Purchases of investment securities available for sale...................   (1,209,592) (1,380,165)    (824,300)
     Proceeds from terminations of derivative instruments....................           --          --       22,203
     Net decrease (increase) in loans........................................       18,786     199,051       (6,252)
     Recoveries of loans previously charged-off..............................       23,028      15,933        9,469
     Purchases of bank premises and equipment................................       (4,359)    (15,565)     (36,452)
     Other investing activities..............................................        3,254       6,992       (1,081)
                                                                                ----------  ----------   ----------
               Net cash provided by (used in) investing activities...........      357,055     (14,087)      22,602
                                                                                ----------  ----------   ----------

Cash flows from financing activities:
     Increase in demand and savings deposits.................................       13,287     450,541      299,466
     Decrease in time deposits...............................................     (223,555)   (245,637)    (254,748)
     Repayments of Federal Home Loan Bank advances...........................       (8,548)    (16,600)      (5,000)
     (Decrease) increase in federal funds purchased..........................      (55,000)    (26,000)      70,000
     Increase in securities sold under agreements to repurchase..............       69,835      46,989        8,438
     Advances drawn on note payable..........................................       34,500      43,500       69,500
     Repayments of note payable..............................................      (24,500)    (64,000)    (125,000)
     Proceeds from issuance of subordinated debentures.......................       70,907      25,007       54,474
     Payments for redemptions of subordinated debentures.....................     (136,341)         --           --
     Sale of branch deposits.................................................      (60,930)         --           --
     Payment of preferred stock dividends....................................         (786)       (786)        (786)
                                                                                ----------  ----------   ----------
               Net cash (used in) provided by financing activities...........     (321,131)    213,014      116,344
                                                                                ----------  ----------   ----------
               Net increase (decrease) in cash and cash equivalents..........       10,286     (38,623)      43,595
Cash and cash equivalents, beginning of year.................................      203,251     241,874      198,279
                                                                                ----------  ----------   ----------
Cash and cash equivalents, end of year.......................................   $  213,537     203,251      241,874
                                                                                ==========  ==========   ==========

Noncash investing and financing activities:
     Reduction of deferred tax asset valuation reserve.......................   $       --          --        4,971
     Loans transferred to other real estate..................................       13,525       7,607        3,493
                                                                                ==========  ==========   ==========

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

</TABLE>

<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

         Basis  of  Presentation.   The  accompanying   consolidated   financial
statements  of First Banks have been  prepared  in  accordance  with  accounting
principles  generally  accepted  in the United  States of America 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  accounting
principles  generally  accepted in the United States of America.  Actual results
could differ from those estimates.

         Principles of  Consolidation.  The  consolidated  financial  statements
include the accounts of the parent company and its subsidiaries, net of minority
interest,  as more fully described below. All significant  intercompany accounts
and transactions  have been eliminated.  Certain  reclassifications  of 2002 and
2001 amounts have been made to conform to the 2003 presentation.

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

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

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

         Cash  and  Cash  Equivalents.  Cash,  due  from  banks  and  short-term
investments, which include federal funds sold and interest-bearing deposits, are
considered  to be cash and cash  equivalents  for  purposes of the  consolidated
statements of cash flows.

         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 $34.0 million and $26.5
million at December 31, 2003 and 2002, respectively.

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

         Investment  securities  designated as available for sale, which include
any  security  that First Banks has no  immediate  plan to sell but which may be
sold in the future  under  different  circumstances,  are stated at fair  value.
Realized  gains and losses are  included  in  noninterest  income,  based on the
amortized cost of the individual security sold. Unrealized gains and losses, net
of related income tax effects,  are recorded in accumulated other  comprehensive
income.  All previous fair value adjustments  included in the separate component
of accumulated other comprehensive income are reversed upon sale.



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

         A  decline  in  the   market   value  of  any   available-for-sale   or
held-to-maturity  investment security below its carrying value that is deemed to
be  other-than-temporary  results in a permanent reduction of the carrying value
to fair value. The permanent  impairment is charged to noninterest  income and a
new  cost  basis  is  established.   When  determining   permanent   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.  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.  When measuring  impairment,  the
expected  future cash flows of an impaired  loan or lease are  discounted at the
loan's  effective  interest  rate.  Alternatively,  impairment  is  measured  by
reference to an observable market price, if one exists, or the fair value of the
collateral  for  a  collateral-dependent  loan.  Regardless  of  the  historical
measurement method used, First Banks measures impairment based on the fair value
of the collateral when  foreclosure is probable.  Additionally,  impairment of a
restructured  loan is measured by  discounting  the total  expected  future cash
flows at the loan's  effective  rate of interest as stated in the original  loan
agreement.

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

         Loans Held for Sale.  Loans  held for sale are  carried at the lower of
cost or market  value,  which is determined  on an  individual  loan basis.  The
amount by which cost exceeds  market value is recorded in a valuation  allowance
as a reduction of loans held for sale.  Changes in the  valuation  allowance are
reflected  as part of the gain on  mortgage  loans sold and held for sale in the
consolidated  statements  of income in the periods in which the  changes  occur.
Gains or losses on the sale of loans held for sale are  determined on a specific
identification  method.  Loans  held for  sale  transferred  to  loans  held for
portfolio or  available-for-sale  investment  securities are transferred at fair
value.

         Loan Servicing Income. Loan servicing income is included in noninterest
income and represents fees earned for servicing real estate mortgage loans owned
by  investors,  net  of  federal  agency  guarantee  fees,  interest  shortfall,
amortization  of  mortgage   servicing  rights  and  the  impairment   valuation
allowance.  Such fees are  generally  calculated  on the  outstanding  principal
balance of the loans serviced and are recorded as income when earned.

         Allowance for Loan Losses.  The allowance for loan losses is maintained
at a level considered adequate to provide for probable losses. The provision for
loan losses is based on a periodic  analysis of the loans held for portfolio and
held for sale,  considering,  among other factors,  current economic conditions,
loan portfolio composition,  past loan loss experience,  independent appraisals,
loan  collateral,  payment  experience  and selected key  financial  ratios.  As
adjustments become necessary, they are reflected in the results of operations in
the  periods  in which  they  become  known.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review
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>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

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

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

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

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


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

         On January 1, 2002,  First Banks  adopted  SFAS No. 142 -- Goodwill and
Other  Intangible  Assets,  and SFAS No 144 -- Accounting  for the Impairment or
Disposal of Long-Lived Assets. Pursuant to SFAS No. 142, goodwill and intangible
assets with  indefinite  useful lives are not amortized,  but instead tested for
impairment at least annually.  Intangible  assets with definite useful lives are
amortized  over  their  respective  estimated  useful  lives to their  estimated
residual values,  and reviewed for impairment in accordance with SFAS No 144. In
2002, First Banks completed the required  transitional goodwill impairment test,
to  determine  the  potential  impact,  if any,  on the  consolidated  financial
statements.  The  results of the  transitional  and annual  goodwill  impairment
testing did not identify any goodwill impairment losses.

         At the date of adoption, First Banks had unamortized goodwill of $115.9
million and core deposit intangibles of $9.6 million,  which were subject to the
transition  provisions of SFAS No. 142.  Accordingly,  First Banks  continues to
amortize,  on a straight-line  basis, its core deposit  intangibles and goodwill
associated  with the purchase of branch  offices.  Core deposit  intangibles are
amortized over the estimated  periods to be benefited,  which has been estimated
at seven years,  and goodwill  associated with the purchase of branch offices is
amortized over the estimated  periods to be benefited,  which has been estimated
at 15 years.  Goodwill associated with the purchase of subsidiaries is no longer
amortized, but instead, is tested annually for impairment following First Banks'
existing  methods of measuring and  recording  impairment  losses,  as described
below. Prior to January 1, 2002,  goodwill was amortized using the straight-line
method over the estimated  periods to be  benefited,  which ranged from 10 to 15
years.

         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.
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Mortgage  Servicing Rights.  Mortgage servicing rights are amortized in
proportion  to the  related  estimated  net  servicing  income  on a basis  that
approximates the disaggregated, discounted basis over the estimated lives of the
related mortgages  considering the level of current and anticipated  repayments,
which range from five to ten years. The weighted average  amortization period of
the 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.  First Banks
assesses  impairment  using   stratifications  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.  The  amount by which  the  carrying  value of the  mortgage
servicing  rights  for each  stratum  exceeds  the fair value is  recorded  in a
valuation allowance as a reduction of mortgage servicing rights.  Changes in the
valuation  allowance are reflected in the  consolidated  statements of income in
the periods in which the change occurs.

         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.

         Income  Taxes.  Deferred tax assets and  liabilities  are  reflected at
currently  enacted  income  tax  rates  applicable  to the  period  in which the
deferred tax assets or  liabilities  are expected to be realized or settled.  As
changes  in the  tax  laws  or  rates  are  enacted,  deferred  tax  assets  and
liabilities are adjusted through the provision for income taxes.

         First Banks,  Inc. and its eligible  subsidiaries  file a  consolidated
federal income tax return and unitary or  consolidated  state income tax returns
in all applicable states.

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

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

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



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(2)      ACQUISITIONS, INTEGRATION  COSTS AND OTHER CORPORATE  TRANSACTIONS

         During the three years ended December 31, 2003,  First Banks  completed
the following acquisitions:
<TABLE>
<CAPTION>

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

   2003
   ----

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

   2002
   ----

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

     Plains Financial Corporation
     Des Plaines, Illinois                     January 15, 2002               256,300        36,500          12,600
                                                                            ---------       -------        --------
                                                                            $ 320,000       101,600          12,600
                                                                            =========       =======        ========

   2001
   ----

     Union Financial Group, Ltd.
     Swansea, Illinois                         December 31, 2001            $ 360,000        26,700          11,500

     BYL Bancorp
     Orange, California                        October 31, 2001               281,500        49,000          19,000

     Charter Pacific Bank
     Agoura Hills, California                  October 16, 2001               101,500        18,900           6,300
                                                                            ---------       -------        --------
                                                                            $ 743,000        94,600          36,800
                                                                            =========       =======        ========
</TABLE>

         Goodwill  associated with the acquisitions  included in the table above
is not  expected to be  deductible  for tax  purposes.  For 2003,  2002 and 2001
acquisitions,  goodwill in the amounts of $3.4 million,  $12.6 million and $36.8
million, respectively, was assigned to First Bank.

         The  aforementioned  transactions were accounted for using the purchase
method of accounting and,  accordingly,  the consolidated  financial  statements
include  the  financial  position  and  results of  operations  for the  periods
subsequent to the  respective  acquisition  dates,  and the assets  acquired and
liabilities  assumed were recorded at fair value at the acquisition dates. These
acquisitions were funded from available cash reserves,  proceeds from exchanges,
sales and maturities of  available-for-sale  investment  securities,  borrowings
under First Banks'  revolving credit agreement and proceeds from the issuance of
trust preferred securities.  Due to the immaterial effect on previously reported
financial  information,  pro forma  disclosures  have not been  prepared for the
aforementioned transactions.

         As  discussed  in  Note  1  to  the  Notes  to  Consolidated  Financial
Statements,  FB&T was merged with and into First Bank on March 31, 2003 to allow
certain  administrative  and  operational  economies not available while the two
subsidiary banks maintained separate charters.

         On December 31, 2003,  the net assets of First Banc  Mortgage,  Inc., a
subsidiary of First Bank, were distributed to First Bank.


<PAGE>

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

         First Banks accrues certain costs  associated with its  acquisitions as
of the respective consummation dates. The accrued costs relate to adjustments to
the staffing levels of the acquired  entities or to the anticipated  termination
of information  technology or item processing contracts of the acquired entities
prior to their stated  contractual  expiration dates. The most significant costs
that First  Banks  incurs  relate to salary  continuation  agreements,  or other
similar agreements,  of executive  management and certain other employees of the
acquired  entities  that were in place  prior to the  acquisition  dates.  These
agreements  provide for payments  over periods  ranging from two to 15 years and
are triggered as a result of the change in control of the acquired entity. Other
severance  benefits for employees that are  terminated in  conjunction  with the
integration of the acquired  entities into First Banks' existing  operations are
normally paid to the recipients  within 90 days of the  respective  consummation
date. The accrued severance balance of $1.4 million,  as summarized in the table
below,  is  comprised  of  contractual  obligations  under  salary  continuation
agreements to 10 individuals  and have remaining  terms ranging from four months
to  approximately  13 years.  Payments made under these agreements are paid from
accrued expenses and other liabilities and consequently,  do not have any impact
on the consolidated statements of income.

         A summary of acquisition  and  integration  costs  attributable  to the
acquisitions  included  in the  foregoing  table,  which were  accrued as of the
consummation  dates  of the  respective  acquisition,  is  listed  below.  These
acquisition  and integration  costs are reflected in accrued  expenses and other
liabilities in the consolidated balance sheets.
<TABLE>
<CAPTION>

                                                                             Information
                                                          Severance        Technology Fees       Total
                                                          ---------        ---------------       -----
                                                                 (dollars expressed in thousands)

<S>                                                        <C>                    <C>           <C>
       Balance at December 31, 2000..................      $3,169                 --            3,169
       Year Ended December 31, 2001:
         Amounts accrued at acquisition date.........       3,885                516            4,401
         Payments....................................      (3,120)              (363)          (3,483)
                                                           ------              -----           ------
       Balance at December 31, 2001..................       3,934                153            4,087
       Year Ended December 31, 2002:
         Amounts accrued at acquisition date.........         239                250              489
         Payments....................................      (1,822)              (375)          (2,197)
                                                           ------              -----           ------
       Balance at December 31, 2002..................       2,351                 28            2,379
       Year Ended December 31, 2003:
         Amounts accrued at acquisition date.........         100                350              450
         Reversal to goodwill........................         (39)              (108)            (147)
         Payments....................................      (1,000)              (270)          (1,270)
                                                           ------              -----           ------
       Balance at December 31, 2003..................      $1,412                 --            1,412
                                                           ======              =====           ======
</TABLE>

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


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(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, 2003 and 2002 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, 2003:
    Carrying value:
       U.S. Government agencies
          and corporations:
<S>                                     <C>           <C>       <C>       <C>        <C>       <C>    <C>       <C>      <C>
             Mortgage-backed..........  $    613      7,913     63,394    743,476    815,396   6,353  (3,725)   818,024  4.55%
             Other....................    50,048     81,227      1,293         --    132,568   1,288    (533)   133,323  3.13
       State and political
          subdivisions................     3,749     11,293     14,280      1,924     31,246     801     (11)    32,036  3.72
       Corporate debt securities......    17,029      5,772         --         --     22,801     477      --     23,278  5.47
       Equity investments ............       449         --         --      7,457      7,906      78      --      7,984  7.83
       Federal Home Loan Bank and
          Federal Reserve Bank stock
             (no stated maturity).....    24,142         --         --         --     24,142      --      --     24,142  5.31
                                        --------    -------     ------    -------  ---------  ------  ------  ---------
              Total...................  $ 96,030    106,205     78,967    752,857  1,034,059   8,997  (4,269) 1,038,787  4.41
                                        ========    =======     ======    =======  =========  ======  ======  =========  ====

    Fair value:
       Debt securities................  $ 72,247    106,999     80,558    746,857
       Equity securities..............    24,591         --         --      7,535
                                        --------    -------     ------    -------
              Total...................  $ 96,838    106,999     80,558    754,392
                                        ========    =======     ======    =======

    Weighted average yield............      4.65%      2.84%      4.51%      4.59%
                                        ========    =======     ======    =======

 December 31, 2002:
    Carrying value:
       U.S. Treasury..................  $149,963         --         --         --    149,963      --     (65)   149,898  1.12%
       U.S. Government agencies
          and corporations:
             Mortgage-backed..........       797     10,841     37,617    494,832    544,087   8,632    (145)   552,574  4.55
             Other....................   223,106     81,774      2,340         --    307,220   3,509     (37)   310,692  2.45
       State and political
          subdivisions................     1,605      7,946     17,487      5,655     32,693     592     (38)    33,247  3.78
       Corporate debt securities......     5,012     20,847         --         --     25,859     514      (8)    26,365  5.76
       Equity investments.............    15,434         --         --     13,350     28,784   7,880    (307)    36,357  5.35
       Federal Home Loan Bank and
          Federal Reserve Bank stock
             (no stated maturity).....    20,111         --         --         --     20,111      --      --     20,111  4.45
                                        --------    -------     ------    -------  ---------  ------  ------  ---------
              Total...................  $416,028    121,408     57,444    513,837  1,108,717  21,127    (600) 1,129,244  3.53
                                        ========    =======     ======    =======  =========  ======  ======  =========  ====

    Fair value:
       Debt securities................  $381,224    125,038     58,291    508,223
       Equity securities..............    42,952         --         --     13,516
                                        --------    -------     ------    -------
              Total...................  $424,176    125,038     58,291    521,739
                                        ========    =======     ======    =======

    Weighted average yield............      1.77%      4.58%      4.17%      4.64%
                                        ========     =======    ======    =======
</TABLE>



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         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, 2003 and 2002 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, 2003:
    Carrying value:
<S>                                    <C>           <C>        <C>          <C>      <C>      <C>     <C>      <C>   <C>
       Mortgage-backed securities..... $     --         --         --        576      576      26       --      602   6.34%
       State and political
        subdivisions..................    3,098      2,968      4,285         --   10,351     388       --   10,739   4.93
                                       --------     ------     ------    -------   ------    ----      ---   ------
           Total...................... $  3,098      2,968      4,285        576   10,927     414       --   11,341   5.00
                                       ========     ======     ======    =======   ======    ====      ===   ======   ====

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

    Weighted average yield............     5.22%      4.46%      5.04%      6.34%
                                       ========     ======     ======    =======



 December 31, 2002:
    Carrying value:
       Mortgage-backed securities..... $     --         --         --      2,203    2,203      66       --    2,269   6.69%
       State and political
        subdivisions..................    2,472      6,313      5,438         --   14,223     487       (1)  14,709   4.88
                                       --------     ------     ------    -------   ------    ----      ---   ------
           Total...................... $  2,472      6,313      5,438      2,203   16,426     553       (1)  16,978   5.12
                                       ========     ======     ======    =======   ======    ====      ===   ======   ====

    Fair value:
       Debt securities................ $  2,517      6,581      5,611      2,269
                                       ========     ======     ======    =======

    Weighted average yield............     4.76%      4.93%      4.88%      6.69%
                                       ========     ======     ======    =======
</TABLE>


         Proceeds from sales of  available-for-sale  investment  securities were
$6.0 million,  $55.1 million and $85.8 million for the years ended  December 31,
2003, 2002 and 2001,  respectively.  Gross gains of $576,600,  $91,000 and $19.1
million were  realized on these sales during the years ended  December 31, 2003,
2002 and 2001,  respectively.  Gross losses of $1,600 and $384,000 were realized
on these sales during the years ended December 31, 2002 and 2001,  respectively.
There were no gross losses realized on securities  sales in 2003. In 2003, First
Banks also recognized  non-cash gains of $6.3 million on the partial exchange of
equity securities for a 100% ownership interest in Bank of Ste.  Genevieve,  and
$2.3 million gain on the  subsequent  contribution  of the  remaining  shares of
equity  securities  to  a  charitable  foundation.   In  addition,  First  Banks
recognized a $431,000 impairment loss due to an other-than-temporary  decline in
the fair value of an equity fund investment.

         Proceeds from calls of investment securities were $41.5 million,  $64.0
million and $121.8 million for the years ended December 31, 2003, 2002 and 2001,
respectively.  Gross gains of $11,200 and $6,800 were  realized on these  called
securities  during the years ended  December  31,  2003 and 2001,  respectively.
Gross  losses of $1,900 and $1,400  were  realized  on these  called  securities
during the years ended December 31, 2003 and 2001,  respectively.  There were no
gross gains or gross losses realized on called securities in 2002.

         First Bank is a member of the Federal Home Loan Bank (FHLB)  system and
the Federal Reserve Bank (FRB) system and maintains  investments in FHLB and FRB
Stock.  These  investments  are recorded at cost,  which  represents  redemption
value.  The  investment  in FRB stock is  maintained at a minimum of 6% of First
Bank's  capital stock and capital  surplus.  The  investments in FHLB of Chicago
stock and FHLB of San Francisco stock are maintained at an amount equal to 5% of
advances.  The investment in FHLB of Des Moines stock is maintained at an amount
equal to 0.12% of First  Bank's  total assets as of December 31, 2002 plus 4.45%
of advances plus 0.15% of outstanding standby letters of credit.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Investment  securities  with a carrying value of  approximately  $379.4
million and $313.0  million at December  31, 2003 and 2002,  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, 2003, were as follows:
<TABLE>
<CAPTION>

                                            Less than 12 months         12 months or more                Total
                                        -------------------------  -------------------------   ------------------------
                                           Fair        Unrealized      Fair      Unrealized     Fair         Unrealized
                                           Value         Losses        Value       Losses       Value          Losses
                                           -----         ------        -----       ------       -----          ------
                                                                  (dollars expressed in thousands)
 Available for sale:
    U.S. Government agencies
       and corporations:
<S>                                     <C>              <C>            <C>          <C>        <C>            <C>
          Mortgage-backed.............  $ 226,339        (3,716)        450          (9)        226,789        (3,725)
          Other.......................     50,094          (533)         --          --          50,094          (533)
    State and political subdivisions..      1,315           (11)         --          --           1,315           (11)
                                        ---------       -------        ----        ----        --------       -------
             Total....................  $ 277,748        (4,260)        450          (9)        278,198        (4,269)
                                        =========       =======        ====        ====        ========       =======
</TABLE>

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

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

(4)      LOANS AND ALLOWANCE FOR LOAN LOSSES

         Changes in the allowance  for loan losses for the years ended  December
31, 2003, 2002 and 2001 were as follows:
<TABLE>
<CAPTION>

                                                                                2003         2002         2001
                                                                                ----         ----         ----
                                                                               (dollars expressed in thousands)

<S>                                                                           <C>           <C>         <C>
               Balance, beginning of year.................................    $ 99,439      97,164      81,592
               Acquired allowances for loan losses........................         757       1,366      14,046
                                                                              --------     -------     -------
                                                                               100,196      98,530      95,638
                                                                              --------     -------     -------
               Loans charged-off..........................................     (55,773)    (70,524)    (31,453)
               Recoveries of loans previously charged-off.................      23,028      15,933       9,469
                                                                              --------     -------     -------
                  Net loans charged-off...................................     (32,745)    (54,591)    (21,984)
                                                                              --------     -------     -------
               Provision for loan losses..................................      49,000      55,500      23,510
                                                                              --------     -------     -------
               Balance, end of year.......................................    $116,451      99,439      97,164
                                                                              ========     =======     =======
</TABLE>



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         At December 31, 2003 and 2002,  First Banks had $75.4 million and $75.2
million  of  impaired   loans,   including  $75.4  million  and  $73.2  million,
respectively,  of loans on  nonaccrual  status.  At December  31, 2003 and 2002,
impaired  loans also  include  $13,000 and $2.0 million of  restructured  loans.
Interest on nonaccrual loans,  which would have been recorded under the original
terms of the loans,  was $5.9  million,  $7.1  million and $8.2  million for the
years ended December 31, 2003,  2002 and 2001,  respectively.  Of these amounts,
$2.6  million,  $2.2 million and $2.9 million was actually  recorded as interest
income on such loans in 2003,  2002 and 2001,  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  $17.7  million and $14.8  million at December  31, 2003 and 2002,
respectively.  The  average  recorded  investment  in  impaired  loans was $69.6
million,  $78.1 million and $62.4 million for the years ended December 31, 2003,
2002 and 2001,  respectively.  The amount of interest income  recognized using a
cash basis method of  accounting  during the time these loans were  impaired was
$2.6  million,   $4.6  million  and  $5.8  million  in  2003,   2002  and  2001,
respectively.  At December  31, 2003 and 2002,  First Banks had $2.8 million and
$4.6 million, respectively, of loans past due 90 days or more and still accruing
interest.

         First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California.  At December 31, 2003 and 2002,  approximately 91% and 92%
of the total loan  portfolio,  respectively,  and 80% and 78% 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  71% and 70% of the loan
portfolio  at December  31, 2003 and 2002,  respectively,  of which 25% and 28%,
respectively,  were made to  consumers  in the form of  residential  real estate
mortgages and home equity lines of credit.

         In general,  First Banks is a collateral  lender.  At December 31, 2003
and 2002, 99% and 98%,  respectively,  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.

(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, 2003 and 2002 are summarized as
follows:
<TABLE>
<CAPTION>

                                                                            December 31,
                                                        ---------------------------------------------------
                                                                 2003                        2002
                                                        ------------------------  -------------------------
                                                          Notional      Credit      Notional      Credit
                                                           Amount      Exposure      Amount      Exposure
                                                           ------      --------      ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                     <C>             <C>        <C>             <C>
         Cash flow hedges.............................. $1,250,000      2,857      1,050,000       2,179
         Fair value hedges.............................    326,200     12,614        301,200      11,449
         Interest rate cap agreements..................    450,000         --        450,000          94
         Interest rate lock commitments................     15,500         --         89,000          --
         Forward commitments to sell
           mortgage-backed securities..................     58,500         --        245,000          --
                                                        ==========     ======     ==========      ======
</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 accounting loss First Banks would incur in the event the
counterparties  failed  completely  to  perform  according  to the  terms of the
derivative  financial  instruments and the collateral held to support the credit
exposure was of no value.




<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         During 2003, 2002 and 2001, First Banks realized net interest income on
derivative  financial  instruments  of $64.6  million,  $53.0  million and $23.4
million,  respectively.  In  addition,  First  Banks  recorded  a  net  gain  on
derivative  instruments,   which  is  included  in  noninterest  income  in  the
consolidated  statements of income, of $496,000,  $2.2 million and $18.6 million
for the years ended December 31, 2003, 2002 and 2001, respectively.

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

         >>    During  1998,   First  Banks  entered  into  interest  rate  swap
               agreements of $280.0  million  notional  amount that provided for
               First  Banks  to  receive  a fixed  rate of  interest  and pay an
               adjustable  rate of  interest  equivalent  to the daily  weighted
               average prime lending rate minus 2.705%.  The  underlying  hedged
               assets were certain loans within the commercial  loan  portfolio.
               The terms of the swap  agreements  provided for First Bank to pay
               interest on a quarterly basis and receive payment on a semiannual
               basis.  In June 2001 and November  2001,  First Banks  terminated
               $205.0 million and $75.0 million notional  amount,  respectively,
               of these swap  agreements,  which would have expired in 2002,  in
               order to  appropriately  modify the  overall  hedge  position  in
               accordance  with  First  Banks'  interest  rate  risk  management
               program.  In  conjunction  with these  terminations,  First Banks
               recorded gains of $2.8 million and $1.7 million, respectively.

         >>    During  1999,   First  Banks  entered  into  interest  rate  swap
               agreements of $175.0  million  notional  amount that provided for
               First  Banks  to  receive  a fixed  rate of  interest  and pay an
               adjustable  rate of interest  equivalent to the weighted  average
               prime lending rate minus 2.70%. The underlying hedged assets were
               certain loans within the commercial loan portfolio.  The terms of
               the swap  agreements  provided for First Banks to pay and receive
               interest  on a  quarterly  basis.  In  April  2001,  First  Banks
               terminated  these swap  agreements,  which would have  expired in
               September  2001,  and replaced them with similar swap  agreements
               with extended  maturities in order to lengthen the period covered
               by the swaps.  In conjunction  with the termination of these swap
               agreements, First Banks recorded a gain of $985,000.

         >>    During  September 2000,  March 2001,  April 2001,  March 2002 and
               July 2003, First Banks entered into interest rate swap agreements
               of $600.0 million, $200.0 million, $175.0 million, $150.0 million
               and $200.0 million notional amount, respectively.  The underlying
               hedged  assets  are  certain  loans  within the  commercial  loan
               portfolio. The swap agreements provide for First Banks to receive
               a fixed rate of interest and pay an  adjustable  rate of interest
               equivalent  to the  weighted  average  prime  lending  rate minus
               2.70%, 2.82%, 2.82%, 2.80% and 2.85%, respectively.  The terms of
               the swap  agreements  provide  for First Banks to pay and receive
               interest on a quarterly  basis.  In  November  2001,  First Banks
               terminated  $75.0 million  notional amount of the swap agreements
               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.   First  Banks  recorded  a  gain  of  $2.6  million  in
               conjunction  with the termination of these swap  agreements.  The
               amount  receivable under the swap agreements was $3.9 million and
               $3.1 million at December 31, 2003 and 2002, respectively, and the
               amount  payable  under the swap  agreements  was $1.1 million and
               $888,000 at December 31, 2003 and 2002, respectively.
<PAGE>

         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, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

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

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

         December 31, 2002:
             March 14, 2004........................   $  150,000            1.45%             3.93%        $  4,130
             September 20, 2004....................      600,000            1.55              6.78           48,891
             March 21, 2005........................      200,000            1.43              5.24           13,843
             April 2, 2006.........................      100,000            1.43              5.45            9,040
                                                      ----------                                           --------
                                                      $1,050,000            1.50              5.95         $ 75,904
                                                      ==========           =====             =====         ========
</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  September  2000,  First Banks  entered into $25.0 million
               notional  amount of one-year  interest rate swap  agreements  and
               $25.0  million  of five and  one-half  year  interest  rate  swap
               agreements  that  provided for First Banks to receive fixed rates
               of  interest  ranging  from 6.60% to 7.25% and pay an  adjustable
               rate equivalent to the three-month London Interbank Offering Rate
               minus rates ranging from 0.02% to 0.11%.  The  underlying  hedged
               liabilities were a portion of the other time deposits.  The terms
               of the swap  agreements  provided for First Banks to pay interest
               on a quarterly basis and receive  interest on either a semiannual
               basis  or an  annual  basis.  In  September  2001,  the  one-year
               interest rate swap agreements matured, and First Banks terminated
               the five and one-half year interest rate swap agreements  because
               the  underlying  hedged  liabilities  had either  matured or been
               called by their respective  counterparties.  There was no gain or
               loss recorded as a result of the terminations.

         >>    During  January  2001,  First Banks  entered  into $50.0  million
               notional  amount of three-year  interest rate swap agreements and
               $150.0 million  notional  amount of five-year  interest rate swap
               agreements  that  provide for First Banks to receive a fixed rate
               of interest and pay an adjustable rate of interest  equivalent to
               the three-month  London  Interbank  Offering Rate. The underlying
               hedged  liabilities  are a portion  of First  Banks'  other  time
               deposits.  The  terms of the swap  agreements  provide  for First
               Banks to pay interest on a quarterly  basis and receive  interest
               on a  semiannual  basis.  The  amount  receivable  under the swap
               agreements  was $5.2 million at December  31, 2003 and 2002,  and
               the amount  payable  under the swap  agreements  was $537,000 and
               $821,000 at  December  31,  2003 and 2002,  respectively.  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  their  highly  correlated  hedge
               positions  between the swap agreements and the underlying  hedged
               liabilities.  The related $1.3 million  basis  adjustment  of the
               underlying  hedged  liabilities  was  recorded as a reduction  of
               interest expense over the remaining  weighted average maturity of
               the underlying hedged liabilities of approximately  three months.
               In  addition,  the  effect of the loss of the  highly  correlated
               hedge position on the swap agreements resulted in the recognition
               of a net loss of  $291,000,  which  is  included  in  noninterest
               income.
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         >>    During May 2002,  First Banks entered into $55.2 million notional
               amount of interest  rate swap  agreements  that provide for First
               Banks to receive a fixed rate of interest  and pay an  adjustable
               rate of interest  equivalent to the three-month  London Interbank
               Offering Rate plus 2.30%.  During June 2002,  First Banks entered
               into  $86.3   million   and  $46.0   million   notional   amount,
               respectively,  of interest rate swap  agreements that provide for
               First  Banks  to  receive  a fixed  rate of  interest  and pay an
               adjustable rate of interest  equivalent to the three-month London
               Interbank Offering Rate plus 2.75% and 1.97%,  respectively.  The
               underlying  hedged  liabilities  are a  portion  of First  Banks'
               subordinated debentures. The terms of the swap agreements provide
               for First Banks to pay and receive interest on a quarterly basis.
               There  were no  amounts  receivable  or  payable  under  the swap
               agreements  at  December  31,  2003 and 2002.  The $86.3  million
               notional  amount  interest rate swap  agreement was called by its
               counterparty  in November 2002  resulting in final  settlement of
               this interest  rate swap  agreement in December  2002.  The $46.0
               million  notional  amount interest rate swap agreement was called
               by  its  counterparty  on  May  21,  2003,   resulting  in  final
               settlement of this interest rate swap agreement on June 30, 2003.
               There  was  no  gain  or  loss  recorded  as a  result  of  these
               transactions.

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

         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, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

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

         December 31, 2003:
<S>                                                       <C>               <C>               <C>         <C>
             January 9, 2004 (1)......................    $ 50,000          1.15%             5.37%       $     --
             January 9, 2006..........................     150,000          1.15              5.51           9,932
             December 31, 2031........................      55,200          3.44              9.00           2,499
             March 20, 2033...........................      25,000          3.69              8.10          (1,270)
             June 30, 2033............................      46,000          3.72              8.15          (2,008)
                                                          --------                                        --------
                                                          $326,200          2.10              6.65        $  9,153
                                                          ========         =====             =====        ========

         December 31, 2002:
             January 9, 2004..........................    $ 50,000          1.76%             5.37%       $  1,972
             January 9, 2006..........................     150,000          1.76              5.51          13,476
             June 30, 2028............................      46,000          3.77              8.50             495
             December 31, 2031........................      55,200          4.10              9.00           4,688
                                                          --------                                        --------
                                                          $301,200          2.49              6.58        $ 20,631
                                                          ========         =====             =====        ========
         ----------------------
         (1)  Hedge accounting treatment was discontinued in September 2003 as further discussed above.
</TABLE>
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Interest Rate Cap  Agreements.  In  conjunction  with the interest rate
swap  agreements  designated as cash flow hedges that mature in September  2004,
First  Banks also  entered  into $450.0  million  notional  amount of  four-year
interest rate cap agreements to limit the net interest  expense  associated with
the interest rate swap  agreements in the event of a rising rate  scenario.  The
interest  rate cap  agreements  provide  for First  Banks to receive a quarterly
adjustable  rate  of  interest  equivalent  to  the  differential   between  the
three-month  London Interbank Offering Rate and the strike price of 7.50% should
the  three-month  London  Interbank  Offering Rate exceed the strike  price.  At
December  31,  2003 and 2002,  the  carrying  value of these  interest  rate cap
agreements,  which is included in  derivative  instruments  in the  consolidated
balance sheets, was $0 and $94,000, respectively.

         Pledged  Collateral.  At December 31, 2003 and 2002,  First Banks had a
$5.0 million letter of credit issued on its behalf to the  counterparty  and had
pledged investment  securities  available for sale with a fair value of $229,000
and  $239,000,   respectively,   in  connection  with  the  interest  rate  swap
agreements.  In addition,  at December 31, 2003, First Banks had pledged cash of
$700,000 as collateral in connection with the interest rate swap agreements.  At
December  31,  2003 and  2002,  First  Banks  had  accepted,  as  collateral  in
connection  with the interest  rate swap  agreements,  cash of $51.3 million and
$99.1 million, respectively.

         Interest  Rate  Lock   Commitments  /  Forward   Commitments   to  Sell
Mortgage-Backed  Securities.  Derivative  financial  instruments issued by First
Banks consist of interest rate lock commitments to originate  fixed-rate  loans.
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.

         Interest  Rate Floor  Agreements.  During  January 2001 and March 2001,
First Banks  entered  into $200.0  million and $75.0  million  notional  amount,
respectively,  of four-year  interest rate floor agreements to further stabilize
net interest  income in the event of a falling rate scenario.  The interest rate
floor agreements provided for First Banks to receive a quarterly adjustable rate
of  interest  equivalent  to the  differential  between the  three-month  London
Interbank  Offering Rate and the strike prices of 5.50% or 5.00%,  respectively,
should the three-month  London Interbank Offering Rate fall below the respective
strike prices.  In November  2001,  First Banks  terminated  these interest rate
floor agreements in order to appropriately  modify the overall hedge position in
accordance with the interest rate risk management  program.  In conjunction with
the termination, First Banks recorded an adjustment of $4.0 million representing
the decline in fair value from the previous  month-end  measurement  date. These
agreements  provided  net  interest  income of $2.1  million  for the year ended
December 31, 2001.

(6)      MORTGAGE BANKING ACTIVITIES

         At December 31, 2003 and 2002,  First Banks  serviced  loans for others
amounting to $1.22 billion and $1.29 billion,  respectively.  Borrowers'  escrow
balances held by First Banks on such loans were $4.7 million and $6.1 million at
December 31, 2003 and 2002, respectively.

         Changes in mortgage  servicing  rights,  net of  amortization,  for the
years ended December 31, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

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

<S>                                                                                    <C>            <C>
              Balance, beginning of year...........................................    $  14,882      10,125
              Originated mortgage servicing rights.................................        8,062       8,566
              Amortization.........................................................       (7,536)     (3,809)
              Impairment valuation allowance.......................................         (800)         --
              Reversal of impairment valuation allowance...........................          800          --
                                                                                       ---------    --------
              Balance, end of year.................................................    $  15,408      14,882
                                                                                       =========    ========
</TABLE>

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The fair value of mortgage servicing rights was $18.3 million and $17.2
million at December  31, 2003 and 2002,  respectively.  At December 31, 2003 and
2002,  the  excess  of the fair  value of  mortgage  servicing  rights  over the
carrying value was $2.9 million and $2.3 million,  respectively. The predominant
risk  characteristics of the underlying mortgage loans used to stratify mortgage
servicing  rights for purposes of measuring  impairment  include size,  interest
rate,  weighted  average  original  term,  weighted  average  remaining term and
estimated prepayment speeds.

         During 2003,  First Banks  recognized  impairment of $800,000 through a
valuation allowance associated with a decline in the fair value of an individual
mortgage servicing rights stratum below its carrying value, net of the valuation
allowance.  Subsequently, First Banks reversed the $800,000 impairment valuation
allowance  based upon an  increase in the fair value of the  mortgage  servicing
rights stratum above the carrying value, net of the valuation  allowance.  First
Banks did not incur any impairment of mortgage servicing rights during the years
ended  December 31, 2002 and 2001,  respectively.  First Banks  capitalizes  its
mortgage  servicing rights by allocating the total cost of the mortgage loans to
mortgage  servicing  rights and the loans (without  mortgage  servicing  rights)
based on the relative fair values of the two components.  Upon  capitalizing the
mortgage  servicing  rights,  they are  amortized,  in proportion to the related
estimated net servicing income on a basis that  approximates the  disaggregated,
discounted basis, over the expected lives of the related loans, which range from
five  to ten  years.  The  weighted  average  amortization  period  of  mortgage
servicing  rights  is  approximately  five  years.  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  monthly 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 monthly,  with impairment,  if any,  recognized at that time. The
impairment analyses are prepared using stratifications of the mortgage servicing
rights based on the predominant risk  characteristics of the underlying mortgage
loans,  including size,  interest rate, weighted average original term, weighted
average  remaining  term  and  estimated  prepayment  speeds.  As part of  these
analyses,  the fair value of the mortgage  servicing  rights for each stratum is
compared  to the  carrying  value  of the  mortgage  servicing  rights  for each
stratum.  To the extent the  carrying  value of the  mortgage  servicing  rights
exceeds the fair value of the  mortgage  servicing  rights for a stratum,  First
Banks  recognizes  impairment equal to the amount by which the carrying value of
the mortgage  servicing rights for a stratum exceeds the fair value.  Impairment
is recognized  through a valuation  allowance that is recorded as a reduction of
mortgage servicing rights.  Changes in the valuation  allowance are reflected in
the consolidated statements of income in the periods in which the change occurs.
First Banks does not,  however,  recognize fair value of the mortgage  servicing
rights in excess of the  carrying  value of  mortgage  servicing  rights for any
stratum.



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Amortization of mortgage servicing rights, as it relates to the balance
at December 31, 2003 of $15.4 million,  has been  estimated  through 2008 in the
following table:

                                                            (dollars expressed
                                                               in thousands)
              Year ending December 31:
                  2004.....................................      $ 4,594
                  2005.....................................        4,269
                  2006.....................................        3,648
                  2007.....................................        2,179
                  2008.....................................          718
                                                                 -------
                      Total................................      $15,408
                                                                 =======

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

         Bank premises and equipment were comprised of the following at December
31, 2003 and 2002:
<TABLE>
<CAPTION>

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

<S>                                                                                   <C>              <C>
              Land.................................................................   $  22,901        23,175
              Buildings and improvements...........................................     103,053       100,787
              Furniture, fixtures and equipment....................................     109,403       114,910
              Leasehold improvements...............................................      24,194        28,006
              Construction in progress.............................................       4,056         4,134
                                                                                      ---------     ---------
                  Total............................................................     263,607       271,012
              Less accumulated depreciation and amortization.......................     126,868       118,594
                                                                                      ---------     ---------
                  Bank premises and equipment, net.................................   $ 136,739       152,418
                                                                                      =========     =========
</TABLE>

         Depreciation and amortization  expense for the years ended December 31,
2003,  2002 and 2001 totaled $20.1  million,  $18.9  million and $12.7  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 $14.1 million,  $13.9 million and $12.9 million
for the years ended  December  31,  2003,  2002 and 2001,  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>
                  2004...................................................................  $ 8,689
                  2005...................................................................    6,222
                  2006...................................................................    5,040
                  2007...................................................................    3,628
                  2008...................................................................    2,892
                  Thereafter.............................................................   20,971
                                                                                           -------
                      Total future minimum lease payments................................  $47,442
                                                                                           =======
</TABLE>

         First Banks also leases to  unrelated  parties a portion of its banking
facilities.  Total rental income was $6.1 million, $5.8 million and $4.8 million
for the years ended December 31, 2003, 2002 and 2001, respectively.







<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

         Intangible assets associated with the purchase of subsidiaries,  net of
amortization, were comprised of the following at December 31, 2003 and 2002:
<TABLE>
<CAPTION>

                                                            2003                           2002
                                                ----------------------------  ----------------------------
                                                   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..............  $  17,391         (4,233)        13,871           (1,869)
         Goodwill associated with
           purchases of branch offices.........      2,210           (861)         2,210             (718)
                                                 ---------        -------        -------          -------
              Total............................  $  19,601         (5,094)        16,081           (2,587)
                                                 =========        =======        =======          =======

     Unamortized intangible assets:
         Goodwill associated with the
           purchase of subsidiaries............  $ 144,199                       138,620
                                                 =========                       =======
</TABLE>

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries and branch offices was $2.5 million,  $2.0 million and $8.3 million
for the years  ended  December  31,  2003,  2002 and 2001,  respectively.  As of
December 31, 2003, the remaining  estimated life of the amortization  period for
goodwill   associated   with  purchases  of  branch  offices  and  core  deposit
intangibles  was  11  years  and  seven  years,  respectively.  Amortization  of
intangibles associated with the purchase of subsidiaries, including amortization
of core deposit  intangibles  and branch office  purchases,  has been  estimated
through 2008 in the following  table, and does not take into  consideration  any
potential future acquisitions or branch office purchases.

                                        (dollars expressed in thousands)

         Year ending December 31:
              2004...............................  $   2,632
              2005...............................      2,632
              2006...............................      2,632
              2007...............................      2,632
              2008...............................      2,632
                                                   ---------
                Total............................  $  13,160
                                                   =========

         Changes in the carrying amount of goodwill for the years ended December
31, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

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

<S>                                                                       <C>                <C>
         Balance, beginning of year....................................   $  140,112         115,860
         Goodwill acquired during year.................................        1,026          24,963
         Acquisition-related adjustments...............................        4,553            (569)
         Amortization - purchases of branch offices....................         (143)           (142)
                                                                          ----------        --------
         Balance, end of year..........................................   $  145,548         140,112
                                                                          ==========        ========
</TABLE>



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The following is a reconciliation  of reported net income to net income
adjusted to reflect the adoption of SFAS No. 142, as if it had been  implemented
on January 1, 2001:
<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
                                                                        -----------------------------------------
                                                                         2003             2002             2001
                                                                         ----             ----             ----
                                                                  (dollars expressed in thousands, except per share data)
       Net income:
<S>                                                                    <C>                <C>             <C>
         Reported net income......................................     $  62,811          45,167          64,514
         Add back - goodwill amortization.........................            --              --           8,078
                                                                       ---------        --------        --------
           Adjusted net income....................................     $  62,811          45,167          72,592
                                                                       =========        ========        ========

       Basic earnings per share:
         Reported net income......................................     $2,621.39        1,875.69        2,693.38
         Add back - goodwill amortization.........................            --              --          341.14
                                                                       ---------        --------        --------
           Adjusted net income....................................     $2,621.39        1,875.69        3,034.52
                                                                       =========        ========        ========

       Diluted earnings per share:
         Reported net income......................................     $2,588.31        1,853.64        2,626.77
         Add back - goodwill amortization.........................            --              --          328.99
                                                                       ---------        --------        --------
           Adjusted net income....................................     $2,588.31        1,853.64        2,955.76
                                                                       =========        ========        ========

(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, 2003 is as follows:

                                                                   Time deposits of     Other time
                                                                   $100,000 or more      deposits        Total
                                                                   ----------------      --------        -----
                                                                          (dollars expressed in thousands)

         Year ending December 31:
               2004...............................................     $ 295,056         965,792       1,260,848
               2005...............................................        72,091         316,640         388,731
               2006...............................................        22,880          92,775         115,655
               2007...............................................        30,964          90,300         121,264
               2008...............................................        15,448          53,259          68,707
               Thereafter.........................................            --             359             359
                                                                       ---------       ---------       ---------
                  Total...........................................     $ 436,439       1,519,125       1,955,564
                                                                       =========       =========       =========
</TABLE>

(10)     OTHER  BORROWINGS

         Other  borrowings  were comprised of the following at December 31, 2003
and 2002:
<TABLE>
<CAPTION>
                                                                                           2003        2002
                                                                                           ----        ----
                                                                                  (dollars expressed in thousands)

<S>                                                                                    <C>            <C>
              Federal funds purchased..............................................    $      --      55,000
              Securities sold under agreements to repurchase:
                Daily..............................................................      166,479     196,644
                Term...............................................................      100,000          --
              FHLB advances........................................................        7,000      14,000
                                                                                       ---------    --------
                  Total other borrowings...........................................    $ 273,479     265,644
                                                                                       =========    ========
</TABLE>

         The average  balance of other  borrowings was $219.3 million and $194.1
million, respectively, and the maximum month-end balance of other borrowings was
$294.1 million and $265.6  million,  respectively,  for the years ended December
31, 2003 and 2002. The average rates paid on other  borrowings  during the years
ended  December  31,  2003,   2002  and  2001  were  1.02%,   1.78%  and  3.70%,
respectively.  The assets  underlying the daily securities sold under agreements
to  repurchase  and the  FHLB  advances  are  held by First  Banks.  The  assets
underlying the term securities  sold under  agreements to repurchase are held by
other financial institutions under safekeeping agreements.



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         On July 30, 2003,  First Banks entered into a $50.0  million  four-year
reverse repurchase  agreement under a master repurchase  agreement.  Interest is
paid quarterly and is equivalent to the three-month  London  Interbank  Offering
Rate minus 0.68% plus a floating  amount equal to the  differential  between the
three-month London Interbank Offering Rate and the strike price of 3.50%, if the
three-month  London  Interbank  Offering Rate exceeds 3.50%. On August 13, 2003,
First  Banks  entered  into  an  additional  $50.0  million  three-year  reverse
repurchase  agreement  under a master  repurchase  agreement.  Interest  is paid
quarterly and is equivalent to the three-month  London  Interbank  Offering Rate
minus  0.565%  plus a floating  amount  equal to the  differential  between  the
three-month London Interbank Offering Rate and the strike price of 3.00%, if the
three-month  London  Interbank  Offering  Rate  exceeds  3.00%.  The  underlying
securities associated with the reverse repurchase agreements are mortgage-backed
securities and are not under First Banks' physical control.

(11)     NOTE PAYABLE

         First  Banks has a revolving  credit line with a group of  unaffiliated
financial  institutions (Credit Agreement).  The Credit Agreement,  dated August
14, 2003,  replaced a similar  revolving credit agreement dated August 22, 2002.
The Credit Agreement  provides a $60.0 million revolving credit line and a $20.0
million letter of credit facility.  Interest is payable on outstanding principal
loan balances at a floating rate equal to either the lender's  prime rate or, at
First Banks' option, the London Interbank Offering Rate plus a margin determined
by the  outstanding  loan balances and First Banks' net income for the preceding
four calendar  quarters.  If the loan balances  outstanding  under the revolving
credit line are accruing at the prime rate, interest is to be paid quarterly. If
the loan balances  outstanding  under the revolving  credit line are accruing at
the London InterBank  Offering Rate,  interest is payable based on the one, two,
three or six-month London  Interbank  Offering Rate, as selected by First Banks.
The  interest  rate for  borrowings  under  the  Credit  Agreement  was 2.19% at
December 31, 2003, and was based on the  applicable  London  Interbank  Offering
Rate plus a margin of 1.00%.  Amounts may be borrowed under the Credit Agreement
until  August 12,  2004,  at which time the  principal  and  interest is due and
payable.

         The  Credit  Agreement  requires  First  Banks to comply  with  various
covenants,  including  maintenance of certain  minimum  capital ratios for First
Banks and First Bank,  certain  maximum  nonperforming  assets  ratios for First
Banks and First Bank and a minimum  return on assets ratio for First  Banks.  In
addition, it prohibits the payment of dividends on First Banks' common stock. At
December 31, 2003 and 2002,  First Banks and First Bank were in compliance  with
all restrictions and requirements of the respective credit agreements.

         Loans under the Credit  Agreement are secured by First Banks' ownership
interest in the capital stock of its  subsidiaries.  Under the Credit Agreement,
there were  outstanding  borrowings  of $17.0  million at December 31, 2003.  At
December 31, 2002, there were  outstanding  borrowings of $7.0 million under the
previous credit agreement.

         The  average  balance  and  maximum  month-end  balance  of  borrowings
outstanding  under the Credit Agreement during the years ended December 31, 2003
and 2002 were as follows:
<TABLE>
<CAPTION>

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

<S>                                                                                  <C>            <C>
         Average balance...........................................................  $ 15,418       17,947
         Maximum month-end balance.................................................    34,500       50,000
                                                                                     ========      =======
</TABLE>

         The average rates paid on the outstanding  borrowings  during the years
ended  December  31,  2003,   2002  and  2001  were  5.09%,   5.75%  and  6.32%,
respectively.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(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 to a date not earlier than
March 31,  2002 or  extended  to a date not later than March 31, 2046 if certain
conditions  were met. The  subordinated  debentures were the sole asset of First
Preferred I. In connection with the issuance of the preferred securities,  First
Banks  made  certain   guarantees  and  commitments   that,  in  the  aggregate,
constituted a full and unconditional guarantee by First Banks of the obligations
of First  Preferred I under the First  Preferred I preferred  securities.  First
Banks'  proceeds  from the  issuance  of the  subordinated  debentures  to First
Preferred I, net of underwriting fees and offering expenses, were $85.8 million.
On May 5, 2003,  First Banks redeemed in full the $88.9 million of  subordinated
debentures.  The funds  necessary for the redemption  were provided from 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 from available  cash.  First Banks'  distributions  on the  subordinated
debentures,  which were payable quarterly in arrears,  were $2.9 million for the
year ended  December 31, 2003, and $8.2 million for the years ended December 31,
2002 and 2001.

         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  to a date not  earlier  than June 30,  2003 or extended to a date not
later  than June 30,  2037 if  certain  conditions  were met.  The  subordinated
debentures  were the sole asset of FACT. In connection  with the issuance of the
FACT preferred  securities,  First Banks made certain guarantees and commitments
that, in the aggregate,  constituted a full and unconditional guarantee by First
Banks of the  obligations  of FACT under the FACT  preferred  securities.  First
Banks' proceeds from the issuance of the subordinated debentures to FACT, net of
underwriting fees and offering expenses,  were $45.4 million.  On June 30, 2003,
First Banks redeemed in full the $47.4 million of subordinated  debentures.  The
funds  necessary for the  redemption  were provided from available cash 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,
and $4.0 million for the years ended December 31, 2002 and 2001.

         In October 2000, First Preferred Capital Trust II (First Preferred II),
a newly formed  Delaware  business  trust,  issued 2.3 million  shares of 10.24%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 71,135  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred II's common  securities.  The
gross proceeds of the offering were used by First Preferred II to purchase $59.3
million  of  10.24%  subordinated  debentures  from  First  Banks,  maturing  on
September  30, 2030.  The  maturity  date may be shortened to a date not earlier
than  September  30,  2005,  if certain  conditions  are met.  The  subordinated
debentures  are the sole asset of First  Preferred  II. In  connection  with the
issuance of the preferred  securities,  First Banks made certain  guarantees and
commitments  that,  in  the  aggregate,  constitute  a  full  and  unconditional
guarantee  by First Banks of the  obligations  of First  Preferred  II under the
First Preferred II preferred securities. First Banks' proceeds from the issuance
of the subordinated  debentures to First Preferred II, net of underwriting  fees
and offering  expenses,  were $56.9 million.  First Banks'  distributions on the
subordinated  debentures  issued  to  First  Preferred  II,  which  are  payable
quarterly in arrears,  were $6.1 million for the years ended  December 31, 2003,
2002 and 2001.

         In November 2001,  First Preferred  Capital Trust III (First  Preferred
III), a newly formed Delaware business trust, issued 2.2 million shares of 9.00%
cumulative trust preferred securities at $25 per share in an underwritten public
offering,  and issued 68,290  shares of common  securities to First Banks at $25
per share. First Banks owns all of First Preferred III's common securities.  The
gross  proceeds of the  offering  were used by First  Preferred  III to purchase
$56.9 million of 9.00%  subordinated  debentures  from First Banks,  maturing on
September  30, 2031.  The  maturity  date may be shortened to a date not earlier
than  September  30,  2006,  if certain  conditions  are met.  The  subordinated


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

debentures  are the sole asset of First  Preferred  III. In connection  with the
issuance of the preferred  securities,  First Banks made certain  guarantees and
commitments  that,  in  the  aggregate,  constitute  a  full  and  unconditional
guarantee by First Banks of the  obligations  of First  Preferred  III under the
First  Preferred  III  preferred  securities.  First  Banks'  proceeds  from the
issuance  of  the  subordinated  debentures  to  First  Preferred  III,  net  of
underwriting  fees and  offering  expenses,  were $54.6  million.  First  Banks'
distributions  on the  subordinated  debentures  issued to First  Preferred III,
which are payable  quarterly  in arrears,  were $5.1 million for the years ended
December 2003 and 2002, and $640,000 for the year ended December 31, 2001.

         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  to a date not  earlier  than April 22,  2007,  if
certain  conditions are met. The  subordinated  debentures are the sole asset of
FBCT. In connection  with the issuance of the FBCT preferred  securities,  First
Banks made certain guarantees and commitments that, in the aggregate, constitute
a full and  unconditional  guarantee by First Banks of the  obligations  of FBCT
under the FBCT preferred securities.  First Banks' proceeds from the issuance of
the  subordinated  debentures  to FBCT,  net of  offering  expenses,  were $25.0
million.  The  distribution  rate on the FBCT  securities  is  equivalent to the
six-month London Interbank Offering Rate plus 387.5 basis points, and is payable
semi-annually  in arrears on April 22 and October 22,  beginning  on October 22,
2002. First Banks'  distributions on the subordinated  debentures issued to FBCT
were $1.4  million and $1.1  million for the years ended  December  31, 2003 and
2002, respectively.

         On March 20, 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  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 beginning March 31, 2003, were $1.7
million for the year ended December 31, 2003.

         On April 1, 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 owned 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 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  beginning on June 30, 2003, were $2.9 million
for the year ended December 31, 2003.

         The  distributions   payable  on  all  of  First  Banks'   subordinated
debentures are included in interest  expense in the  consolidated  statements of
income.

         The  subordinated  debentures  were  issued  in  conjunction  with  the
formation of various  financing  entities and their issuance of trust  preferred
securities.  First Banks has five  issues of trust  preferred  securities  as of
December 31, 2003.  The structure of the trust  preferred  securities  currently
satisfies  the  regulatory  requirements  for  inclusion,   subject  to  certain
limitations, in First Banks' capital base.


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         First Banks previously followed the practice of amortizing its deferred
issuance costs  associated  with its  subordinated  debentures  over the 30-year
period through the respective  maturity date of each issue. In 2002, First Banks
reviewed  this  practice  relative  to the  significant  decline  in  prevailing
interest rates experienced in 2001 and continuing in 2002 and determined that it
was probable  that some or all of the  existing  issues would be called by First
Banks prior to their stated  maturity date.  Therefore,  First Banks changed the
period over which its deferred  issuance  costs are  amortized to the  five-year
period ending on the respective dates the issues became callable.  The effect of
this change in  accounting  estimate on the results of  operations  for the year
ended  December 31, 2002 was a reduction of net income of $4.4  million,  net of
$1.5 million tax benefit.

(13)     INCOME TAXES

         Income tax expense  attributable to income from  continuing  operations
for the years ended December 31, 2003, 2002 and 2001 consists of:
<TABLE>
<CAPTION>

                                                                                   2003        2002      2001
                                                                                   ----        ----      ----
                                                                                (dollars expressed in thousands)
              Current income tax expense:
<S>                                                                               <C>         <C>       <C>
                  Federal....................................................     $40,194     15,210    22,252
                  State......................................................      12,717      3,510     1,583
                                                                                  -------     ------    ------
                                                                                   52,911     18,720    23,835
                                                                                  -------     ------    ------
              Deferred income tax expense:
                  Federal....................................................     (12,463)     4,020    13,691
                  State......................................................      (4,493)        31       626
                                                                                  -------     ------    ------
                                                                                  (16,956)     4,051    14,317
                                                                                  -------     ------    ------
              Reduction in deferred valuation allowance......................          --         --    (8,104)
                                                                                  -------     ------    ------
                      Total..................................................     $35,955     22,771    30,048
                                                                                  =======     ======    ======
</TABLE>

         The  effective  rates of  federal  income  taxes  for the  years  ended
December  31,  2003,  2002 and 2001 differ from  statutory  rates of taxation as
follows:
<TABLE>
<CAPTION>

                                                                             Years Ended December 31,
                                                            ----------------------------------------------------------
                                                                   2003                2002                2001
                                                            ----------------     ----------------   ------------------
                                                            Amount   Percent     Amount    Percent   Amount   Percent
                                                            ------   -------     ------    -------   ------   -------
                                                                         (dollars expressed in thousands)

         Income before provision for income taxes,
           minority interest in income
           of subsidiary and cumulative effect of
<S>                                                         <C>                  <C>                <C>
           change in accounting principle...............    $98,766              $69,369            $98,567
                                                            =======              =======            =======
         Provision for income taxes calculated
           at federal statutory income tax rates........    $34,568     35.0%    $24,279    35.0%   $34,498     35.0%
         Effects of differences in tax reporting:
           Tax-exempt interest income, net of
               tax preference adjustment................       (911)    (0.9)       (972)   (1.4)      (539)    (0.5)
           State income taxes...........................      5,346      5.4       2,302     3.3      1,436      1.5
           Amortization of intangibles associated
               with the purchase of subsidiaries........         --      --           --     --       2,827      2.9
           Reduction in deferred valuation allowance....         --      --           --     --      (8,104)    (8.2)
           Bank owned life insurance, net of premium....     (1,762)    (1.8)     (1,957)   (2.8)    (1,431)    (1.5)
           Other, net...................................     (1,286)    (1.3)       (881)   (1.3)     1,361      1.3
                                                            -------    -----     -------   -----    -------    -----
                 Provision for income taxes.............    $35,955     36.4%    $22,771    32.8%   $30,048     30.5%
                                                            =======    =====     =======   =====    =======    =====
</TABLE>


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The tax effects of temporary  differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2003 and 2002 are as follows:
<TABLE>
<CAPTION>

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

              Deferred tax assets:
<S>                                                                                   <C>           <C>
                  Net operating loss carryforwards................................    $ 30,702      38,666
                  Allowance for loan losses.......................................      49,680      37,730
                  Alternative minimum tax credits.................................       2,667       2,773
                  Quasi-reorganization adjustment of bank premises................       1,076       1,126
                  Interest on nonaccrual loans....................................       2,649       3,354
                  Mortgage servicing rights.......................................       6,250       5,549
                  Deferred compensation...........................................       2,977       2,112
                  Other real estate...............................................          24         118
                  State taxes.....................................................       5,018          --
                  Other...........................................................       1,801         729
                                                                                      --------    --------
                      Deferred tax assets.........................................     102,844      92,157
                                                                                      --------    --------
              Deferred tax liabilities:
                  Depreciation on bank premises and equipment.....................       9,399       7,457
                  Net fair value adjustment for investment securities
                    available for sale............................................       1,655       7,184
                  Net fair value adjustment for derivative instruments............      14,075      26,566
                  Unrealized gains on investment securities.......................       3,156       2,276
                  Operating leases................................................       1,812       6,808
                  Core deposit intangibles........................................       4,328       3,460
                  Discount on loans...............................................       1,377       1,654
                  Equity investments..............................................       5,405       3,656
                  FHLB stock dividends............................................         181         407
                  State taxes.....................................................          --         797
                  Other...........................................................         295         939
                                                                                      --------    --------
                      Deferred tax liabilities....................................      41,683      61,204
                                                                                      --------    --------
                      Net deferred tax assets.....................................    $ 61,161      30,953
                                                                                      ========    ========
</TABLE>

         The realization of First Banks' net deferred tax assets is based on the
availability of carrybacks to prior taxable  periods,  the expectation of future
taxable income and the  utilization of tax planning  strategies.  Based on these
factors,  management  believes  it is more likely than not that First Banks will
realize the recognized net deferred tax assets of $61.2 million.

         There were no changes in the deferred tax asset valuation allowance for
the years ended  December  31, 2003 and 2002.  Changes in the deferred tax asset
valuation allowance for the year ended December 31, 2001 were as follows:
<TABLE>
<CAPTION>


                                                                                       2001
                                                                                       ----
                                                                         (dollars expressed in thousands)
<S>                                                                                  <C>
              Balance, beginning of year...........................................  $ 13,075
              Current year deferred provision, change in
                  deferred tax asset valuation allowance...........................    (8,104)
              Reduction attributable to utilization of deferred tax assets:
                 Adjustment to additional paid-in capital..........................    (4,971)
                                                                                     --------
              Balance, end of year.................................................  $     --
                                                                                     ========
</TABLE>
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The valuation  allowances were established by First Banks in connection
with three  separate  acquisitions  that occurred in 1994 and 1995.  First Banks
acquired  BancTEXAS  Group,  Inc.  in  1994  and CCB  Bancorp,  Inc.  and  First
Commercial Bancorp, Inc. in 1995.

         The ability to utilize the deferred tax assets  recorded in  connection
with these  acquisitions  was  subject to a number of  limitations.  Among these
limitations was the restriction  that net operating  losses and other attributes
can only be used against  income  generated by the  acquired  subsidiaries  and,
also,  limitations  were placed on the amount of net operating  losses  utilized
during a specified  period.  The  requirement  that BancTEXAS  Group,  Inc. file
separate federal income tax returns placed further limitations on the ability to
utilize  the  deferred  tax  assets.  The prior  operating  history of the three
acquired  entities  did not provide  First  Banks with  adequate  assurances  to
conclude  at the time of the  acquisition  that it was more likely than not that
the deferred tax assets would be realized.

         During the years 1995  through  2000 to the extent that  certain of the
deferred  tax assets  were  realized,  the  valuation  allowances  were  reduced
accordingly.

         During 2001, based on management's analysis, it was determined that the
remaining  valuation  allowances  were no longer  needed.  The  reversal  of the
valuation allowances that were established in connection with the acquisition of
BancTEXAS  Group,  Inc. and First  Commercial  Bancorp,  Inc.  were  credited to
additional  paid-in  capital  as a result  of the  entities'  implementation  of
quasi-reorganizations  in 1994  and  1996,  respectively.  The  reversal  of the
valuation  allowance  established as a result of the acquisition of CCB Bancorp,
Inc.  was  credited to the  provision  for income taxes as there was no positive
goodwill or other intangibles associated with the purchase of CCB Bancorp, Inc.

         The  valuation  allowance  for deferred tax assets at December 31, 1999
included $1.3 million that was  recognized  in 2000 and credited to  intangibles
associated  with the  purchase  of  subsidiaries.  In  addition,  the  valuation
allowance  for deferred tax assets at December 31, 2000  included  $5.0 million,
which was credited to additional  paid-in capital in 2001 under the terms of the
quasi-reorganizations implemented for BancTEXAS Group, Inc. and First Commercial
Bancorp, Inc. as of December 31, 1994 and 1996, respectively.

         At  December  31,  2003 and  2002,  the  accumulation  of prior  years'
earnings  representing tax bad debt deductions were approximately $30.8 million.
If these tax bad debt  reserves  were  charged  for  losses  other than bad debt
losses,  First Bank 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, 2003 and 2002, for federal income taxes purposes, First
Banks had net operating loss  carryforwards of  approximately  $87.7 million and
$110.5 million,  respectively.  The net operating loss  carryforwards  for First
Banks expire as follows:

                                                             (dollars expressed
                                                                in thousands)

         Year ending December 31:
             2004............................................   $     856
             2005............................................       8,591
             2006............................................       3,412
             2007............................................       6,930
             2008............................................      30,132
             2009 - 2020.....................................      37,798
                                                                ---------
                 Total.......................................   $  87,719
                                                                =========



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(14)     EARNINGS PER COMMON SHARE

         The following is a reconciliation of the basic and diluted earnings per
share computations for the periods indicated:
<TABLE>
<CAPTION>
                                                                                                          Per Share
                                                                               Income        Shares        Amount
                                                                               ------        ------        ------
                                                                     (dollars in thousands, except share and per share data)
     Year ended December 31, 2003:
<S>                                                                          <C>             <C>         <C>
         Basic EPS - income available to common stockholders...............  $  62,025       23,661      $2,621.39
         Effect of dilutive securities:
           Class A convertible preferred stock.............................        769          600         (33.08)
                                                                             ---------      -------      ---------
         Diluted EPS - income available to common stockholders.............  $  62,794       24,261      $2,588.31
                                                                             =========      =======      =========

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

     Year ended December 31, 2001:
         Basic EPS - income before cumulative effect.......................  $  65,104       23,661      $2,751.54
         Cumulative effect of change in accounting principle, net of tax...     (1,376)          --         (58.16)
                                                                             ---------      -------      ---------
         Basic EPS - income available to common stockholders...............     63,728       23,661       2,693.38
         Effect of dilutive securities:
           Class A convertible preferred stock.............................        769          893         (66.61)
                                                                             ---------      -------      ---------
         Diluted EPS - income available to common stockholders.............  $  64,497       24,554      $2,626.77
                                                                             =========      =======      =========
</TABLE>

(15)     CREDIT COMMITMENTS

         First Banks is a party to  commitments  to extend credit and commercial
and  standby  letters in 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 contracts 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. At December
31, 2003, First Banks  established a $1.0 million specific reserve for estimated
losses on a $5.3 million letter of credit that was subsequently funded as a loan
in early January 2004.

         Commitments  to extend  credit at  December  31,  2003 and 2002 were as
follows:
<TABLE>
<CAPTION>

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

<S>                                                                                    <C>            <C>
              Commitments to extend credit..........................................   $ 2,269,311    1,921,896
              Commercial and standby letters of credit..............................       187,789      188,567
                                                                                       -----------    ---------
                                                                                       $ 2,457,100    2,110,463
                                                                                       ===========    =========
</TABLE>
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Commitments  to extend  credit are  agreements to lend to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. The standby letters of credit at December 31,
2003  expire  within 15 years.  Since many of the  commitments  are  expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash  requirements.   Each  customer's   creditworthiness  is
evaluated on a case-by-case basis. The amount of collateral obtained,  if deemed
necessary upon extension of credit,  is based on management's  credit evaluation
of the counterparty. Collateral held varies but may include accounts receivable,
inventory, property, plant, equipment, income-producing commercial properties or
single family  residential  properties.  In the event of  nonperformance,  First
Banks may obtain and liquidate the collateral to recover  amounts paid under its
guarantees on these financial instruments.

         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.

(16)     FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair value of financial instruments is management's estimate of the
values at which the  instruments  could be  exchanged in a  transaction  between
willing parties.  These estimates are subjective and may vary significantly from
amounts  that would be  realized  in actual  transactions.  In  addition,  other
significant  assets are not considered  financial  assets including the mortgage
banking  operation,  deferred  tax  assets,  bank  premises  and  equipment  and
intangibles  associated  with the  purchase of  subsidiaries.  Further,  the tax
ramifications  related to the realization of the unrealized gains and losses can
have a  significant  effect  on the  fair  value  estimates  and  have  not been
considered in any of the estimates.

         The  estimated  fair value of First  Banks'  financial  instruments  at
December 31, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

                                                                        2003                          2002
                                                             --------------------------    -------------------------
                                                               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..........................   $  213,537        213,537       203,251         203,251
       Investment securities:
         Available for sale...............................    1,038,787      1,038,787     1,129,244       1,129,244
         Held to maturity.................................       10,927         11,341        16,426          16,978
       Net loans..........................................    5,211,624      5,229,213     5,333,149       5,355,838
       Derivative instruments.............................       49,291         49,291        97,887          97,887
       Bank-owned life insurance..........................       97,521         97,521        92,616          92,616
       Accrued interest receivable........................       32,797         32,797        35,665          35,665
       Interest rate lock commitments.....................          (77)           (77)        1,258           1,258
       Forward contracts to sell
         mortgage-backed securities.......................         (636)          (636)       (2,752)         (2,752)
                                                             ==========      =========     =========      ==========

     Financial Liabilities:
       Deposits:
         Noninterest-bearing demand.......................   $1,034,367      1,034,367       986,674         986,674
         Interest-bearing demand..........................      843,001        843,001       819,429         819,429
         Savings .........................................    2,128,683      2,128,683     2,176,616       2,176,616
         Time deposits....................................    1,955,564      1,988,035     2,190,101       2,239,882
       Other borrowings...................................      273,479        273,479       265,644         265,644
       Note payable.......................................       17,000         17,000         7,000           7,000
       Accrued interest payable...........................        8,799          8,799        11,778          11,778
       Subordinated debentures............................      209,320        225,227       278,389         293,135
                                                             ==========      =========     =========      ==========

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



<PAGE>
         NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  (CONTINUED)

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

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

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

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

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

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

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

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

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

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

(17)     EMPLOYEE BENEFITS

         First Banks' 401(k) plan is a  self-administered  savings and incentive
plan covering  substantially  all employees.  Employer-match  contributions  are
determined annually under the plan by First Banks' Board of Directors.  Employee
contributions  are  limited  to $12,000 of gross  compensation  for 2003.  Total
employer  contributions  under the plan were $1.7  million  for the years  ended
December  31, 2003 and 2002,  and $1.3  million for the year ended  December 31,
2001.  The plan assets are held and managed under a trust  agreement  with First
Bank's trust department.

(18)     PREFERRED STOCK

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

         The 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

<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, 2003, 2002 and 2001.

(19)     TRANSACTIONS WITH RELATED PARTIES

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

         First Services,  L.P., a limited partnership  indirectly owned by First
Banks'  Chairman  and  members of his  immediate  family,  provides  information
technology  and  various  related   services  to  First  Banks,   Inc.  and  its
subsidiaries.  Fees paid under  agreements with First Services,  L.P. were $26.8
million for the years ended  December 31, 2003 and 2002,  and $23.1  million for
the year ended December 31, 2001.  During 2003,  2002 and 2001,  First Services,
L.P. paid First Bank $4.2 million, $3.9 million and $2.0 million,  respectively,
in rental fees for the use of data processing and other equipment owned by First
Banks.

         First Brokerage  America,  L.L.C., a limited liability company which is
indirectly  owned by First Banks' Chairman and members of his immediate  family,
received approximately $3.2 million, $3.3 million and $3.0 million for the years
ended December 31, 2003,  2002 and 2001,  respectively,  in commissions  paid by
unaffiliated  third-party companies.  The commissions received were primarily in
connection with the sales of annuities,  securities and other insurance products
to customers of First Bank.

         First Title Guaranty LLC (First  Title),  a limited  liability  company
established and administered by and for the benefit of First Banks' Chairman and
members of his immediate family, received approximately  $492,000,  $412,000 and
$316,000 for the years ended December 31, 2003, 2002 and 2001, respectively,  in
commissions  for  policies  purchased  by First Banks or customers of First Bank
from  unaffiliated  third-party  insurers.  The insurance  premiums on which the
aforementioned  commissions were earned were  competitively bid, and First Banks
deems the commissions First Title earned from unaffiliated third-party companies
to be  comparable  to those  that  would  have been  earned  by an  unaffiliated
third-party agent.

         First  Bank  has 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  $20.0  million and $12.8  million at December  31, 2003 and 2002,
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  and personal  credit card
accounts.

         During 2002, First Capital America,  Inc., a corporation owned by First
Banks' Chairman and members of his immediate family, received approximately $1.0
million of origination  and servicing fees  associated  with  commercial  leases
originated  and  serviced  for  First  Bank by the  employees  of First  Capital
America, Inc.

         During 2001,  Tidal Insurance  Limited  (Tidal),  a former  corporation
owned  indirectly by First Banks' Chairman and members of his immediate  family,
received approximately  $132,000 in insurance premiums for accident,  health and
life  insurance  policies  purchased  by loan  customers  of  First  Banks.  The
insurance policies were issued by an unaffiliated company and subsequently ceded
to Tidal.  First Banks believes the premiums paid by the loan customers of First
Bank were  comparable to those that such loan  customers  would have paid if the
premiums were subsequently ceded to an unaffiliated third-party insurer.

         On  October  27,  2003,  First  Banks  contributed  231,779  shares  of
Allegiant  Bancorp,  Inc., or Allegiant,  common stock with a fair value of $5.1
million to The Dierberg  Foundation,  a charitable  trust created by and for the
benefit of First  Banks'  Chairman  and  members  of his  immediate  family.  In
conjunction with this transaction,  First Banks recorded charitable contribution
expense  of  $5.1  million,  which  was  partially  offset  by  a  gain  on  the
contribution of these available-for-sale  investment securities of $2.3 million,
representing  the  difference  between  the cost basis and the fair value of the
common stock on the date of the contribution.  In addition, First Banks recorded
a tax benefit of $2.5 million associated with this transaction. The contribution
of the common stock eliminated First Banks' investment in Allegiant.


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(20)     BUSINESS SEGMENT RESULTS

         First Banks'  business  segment is First Bank. The reportable  business
segments are consistent with the management structure of First Banks, First Bank
and the internal reporting system that monitors performance. First Bank provides
similar products and services in its defined geographic areas through its branch
network.  The products and services  offered include a broad range of commercial
and personal deposit products,  including demand, savings, money market and time
deposit  accounts.  In addition,  First Bank markets combined basic services for
various  customer  groups,   including   packaged  accounts  for  more  affluent
customers,  and sweep accounts,  lock-box deposits and cash management  products
for  commercial  customers.  First Bank also offers both consumer and commercial
loans.  Consumer  lending  includes  residential  real  estate,  home equity and
installment  lending.  Commercial  lending  includes  commercial,  financial and
agricultural loans, real estate  construction and development loans,  commercial
real  estate  loans,  asset-based  loans and trade  financing.  Other  financial
services   include   mortgage   banking,   debit  cards,   brokerage   services,
credit-related insurance, internet banking, automated teller machines, telephone
banking,  safe deposit boxes and trust,  private banking and institutional money
management  services.  The revenues generated by First Bank consist primarily of
interest income, generated from the loan and investment security portfolios, and
service charges and fees, generated from the deposit products and services.  The
geographic  areas  include  eastern  Missouri,  Illinois,  southern and northern
California and Houston, Dallas, Irving, McKinney and Denton, Texas. The products
and services are offered to customers  primarily within First Banks'  respective
geographic areas.

         The business  segment results are consistent with First Banks' internal
reporting  system  and,  in  all  material  respects,  with  generally  accepted
accounting  principles and practices  predominant in the banking industry.  Such
principles and practices are summarized in Note 1 to the consolidated  financial
statements.
<TABLE>
<CAPTION>

                                                                               Corporate, Other
                                                                               and Intercompany
                                                  First Bank                 Reclassifications (1)        Consolidated Totals
                                      --------------------------------   --------------------------  ----------------------------
                                          2003     2002 (2)   2001 (2)    2003       2002     2001     2003      2002       2001
                                          ----     ----       ----        ----       ----     ----     ----      ----       ----
                                                                      (dollars expressed in thousands)
Balance sheet information:

<S>                                   <C>         <C>          <C>         <C>     <C>      <C>    <C>        <C>         <C>
Investment securities................ $1,042,809  1,114,479    613,572     6,905   31,191   25,072  1,049,714 1,145,670   638,644
Loans, net of unearned discount......  5,328,075  5,432,589  5,409,286        --       (1)    (417) 5,328,075 5,432,588 5,408,869
Goodwill.............................    145,548    140,112    115,860        --       --       --    145,548   140,112   115,860
Total assets.........................  7,097,635  7,357,155  6,765,001     9,305   (5,978)  21,044  7,106,940 7,351,177 6,786,045
Deposits.............................  5,977,042  6,189,928  5,698,072   (15,427) (17,108) (14,168) 5,961,615 6,172,820 5,683,904
Note payable.........................         --         --         --    17,000    7,000   27,500     17,000     7,000    27,500
Subordinated debentures..............         --         --         --   209,320  278,389  243,457    209,320   278,389   243,457
Stockholders' equity.................    766,397    777,548    720,049  (216,582)(258,507)(271,392)   549,815   519,041   448,657
                                      ==========  =========  =========  ======== ======== ========  ========= ========= =========


Income statement information:

Interest income...................... $  390,340    424,358    445,180       813    1,363      205    391,153   425,721   445,385
Interest expense.....................     85,524    132,040    189,957    18,502   25,511   20,289    104,026   157,551   210,246
                                      ----------  ---------  ---------  -------- -------- --------  --------- --------- ---------
     Net interest income.............    304,816    292,318    255,223   (17,689) (24,148) (20,084)   287,127   268,170   235,139
Provision for loan losses............     49,000     55,500     23,510        --       --       --     49,000    55,500    23,510
                                      ----------  ---------  ---------  -------- -------- --------  --------- --------- ---------
     Net interest income
       after provision
       for loan losses...............    255,816    236,818    231,713   (17,689) (24,148) (20,084)   238,127   212,670   211,629
Noninterest income...................     79,813     69,355     71,578     7,895   (1,844)  17,517     87,708    67,511    89,095
Noninterest expense..................    216,373    207,576    185,148    10,696    3,236   17,009    227,069   210,812   202,157
                                      ----------  ---------  ---------  -------- -------- --------  --------- --------- ---------
     Income before provision for
       income taxes, minority
       interest in income of
       subsidiary and cumulative
       effect of change in
       accounting principle..........    119,256     98,597    118,143   (20,490) (29,228) (19,576)    98,766    69,369    98,567
Provision for income taxes...........     44,871     35,332     36,218    (8,916) (12,561)  (6,170)    35,955    22,771    30,048
                                      ----------  ---------  ---------  -------- -------- --------  --------- --------- ---------

<PAGE>

     Income before minority
       interest in income
       of subsidiary and
       cumulative effect of
       change in accounting
       principle.....................     74,385     63,265     81,925   (11,574) (16,667) (13,406)    62,811    46,598    68,519
Minority interest in
     income of subsidiary............         --         --         --        --    1,431    2,629         --     1,431     2,629
                                      ----------  ---------  ---------  -------- -------- --------  --------- --------  ---------
     Income before cumulative
       effect of change in
       accounting principle..........     74,385     63,265     81,925   (11,574) (18,098) (16,035)    62,811    45,167    65,890
Cumulative effect of change
   in accounting principle,
   net of tax........................         --         --     (1,376)       --       --       --         --        --    (1,376)
                                      ----------  ---------  ---------  -------- -------- --------  --------- --------- ---------
     Net income...................... $   74,385     63,265     80,549   (11,574) (18,098) (16,035)    62,811    45,167    64,514
                                      ==========  =========  =========  ======== ======== ========  ========= ========= =========
----------------------------------
(1)  Corporate and other includes $11.6 million, $16.1 million and $12.5 million of interest expense on subordinated debentures,
     after applicable income tax benefit of $6.3 million, $8.7 million and $6.7 million, for the years ended  December 31, 2003,
     2002 and 2001, respectively.
(2)  First Bank & Trust was merged with and into First Bank on March 31, 2003 as further described in Note 2 to the consolidated
     financial statements. Accordingly, the 2002 and 2001 amounts have been restated to reflect  this  combination  of  entities
     under common control.
</TABLE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(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,  2003,  First Banks and First Bank were each well
capitalized.

         As of December 31, 2003, the most recent notification from First Banks'
primary  regulator  categorized  First Banks and First Bank as well  capitalized
under the regulatory  framework for prompt corrective  action. To be categorized
as well  capitalized,  First Banks and First Bank must  maintain  minimum  total
risk-based,  Tier 1  risk-based  and Tier 1 leverage  ratios as set forth in the
table below.
<PAGE>

         At December 31, 2003 and 2002,  First Banks' and First Bank's  required
and actual capital ratios were as follows:
<TABLE>
<CAPTION>

                                                                Actual                                   To be Well
                                                          ------------------                          Capitalized Under
                                                                                   For Capital        Prompt Corrective
                                                          2003         2002     Adequacy Purposes     Action Provisions
                                                          ----         ----     -----------------     -----------------

     Total capital (to risk-weighted assets):
<S>                                                       <C>          <C>             <C>                  <C>
              First Banks.............................    10.27%       10.68%          8.0%                 10.0%
              First Bank..............................    10.41        10.75           8.0                  10.0
              FB&T (1)................................       --        10.18           8.0                  10.0

     Tier 1 capital (to risk-weighted assets):
              First Banks.............................     8.46         7.47           4.0                   6.0
              First Bank..............................     9.15         9.49           4.0                   6.0
              FB&T (1)................................       --         8.93           4.0                   6.0

     Tier 1 capital (to average assets):
              First Banks.............................     7.62         6.45           3.0                   5.0
              First Bank..............................     8.22         7.79           3.0                   5.0
              FB&T (1)................................       --         8.26           3.0                   5.0
------------------------------
     (1) First Bank & Trust was merged with and into First Bank on March 31, 2003.
</TABLE>

(22)     DISTRIBUTION OF EARNINGS OF FIRST BANK

         First Bank is restricted by various state and federal  regulations,  as
well  as by the  terms  of the  Credit  Agreement  described  in  Note 11 to the
consolidated  financial  statements,  as to the  amount  of  dividends  that are
available for payment to First Bank,  Inc.  Under the most  restrictive of these
requirements,  the  future  payment of  dividends  from First Bank is limited to
approximately $16.7 million at December 31, 2003, unless prior permission of the
regulatory authorities and/or the lending banks is obtained.

(23)     PARENT COMPANY ONLY FINANCIAL INFORMATION

         Following  are  condensed  balance  sheets of First  Banks,  Inc. as of
December 31, 2003 and 2002,  and  condensed  statements of income and cash flows
for the years ended December 31, 2003, 2002 and 2001:
<TABLE>
<CAPTION>
                            CONDENSED BALANCE SHEETS

                                                                                           December 31,
                                                                                        -----------------
                                                                                        2003         2002
                                                                                        ----         ----
                                                                                 (dollars expressed in thousands)
                                   Assets
                                   ------
<S>                                                                                  <C>              <C>
     Cash deposited in subsidiary bank...........................................    $   15,917       4,469
     Investment securities.......................................................         6,905      31,191
     Investment in subsidiaries..................................................       767,311     778,520
     Other assets................................................................         1,563       7,227
                                                                                     ----------    --------
           Total assets..........................................................    $  791,696     821,407
                                                                                     ==========    ========

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

     Note payable................................................................    $   17,000       7,000
     Subordinated debentures.....................................................       209,320     278,389
     Accrued expenses and other liabilities......................................        15,561      16,977
                                                                                     ----------    --------
           Total liabilities.....................................................       241,881     302,366
     Stockholders' equity........................................................       549,815     519,041
                                                                                     ----------    --------
           Total liabilities and stockholders' equity............................    $  791,696     821,407
                                                                                     ==========    ========

</TABLE>
<PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                    Years Ended December 31,
                                                                               ---------------------------------
                                                                                  2003        2002        2001
                                                                                  ----        ----        ----
                                                                                (dollars expressed in thousands)

     Income:
<S>                                                                           <C>            <C>         <C>
       Dividends from subsidiaries........................................    $  67,000      28,000      53,500
       Management fees from subsidiaries..................................       23,992      21,754      20,443
       Gain on sale of securities.........................................        8,218          97      19,134
       Other..............................................................        1,301       3,383       6,008
                                                                              ---------     -------      ------
           Total income...................................................      100,511      53,234      99,085
                                                                              ---------     -------      ------
     Expense:
       Interest...........................................................       18,664      21,855      17,759
       Salaries and employee benefits.....................................       19,366      15,726      13,309
       Legal, examination and professional fees...........................        3,903       2,824       2,895
       Charitable contributions...........................................        5,134          11          16
       Other..............................................................        6,852       7,906      20,323
                                                                              ---------     -------      ------
           Total expense..................................................       53,919      48,322      54,302
                                                                              ---------     -------      ------
           Income before income tax benefit and equity
              in undistributed earnings of subsidiaries...................       46,592       4,912      44,783
     Income tax benefit...................................................       (8,891)    (10,502)     (2,418)
                                                                              ---------     -------      ------
           Income before equity in undistributed earnings
              of subsidiaries.............................................       55,483      15,414      47,201
     Equity in undistributed earnings of subsidiaries.....................        7,328      29,753      17,313
                                                                              ---------     -------      ------
           Net income.....................................................    $  62,811      45,167      64,514
                                                                              =========     =======      ======

</TABLE>


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                   Years Ended December 31,
                                                                           --------------------------------------
                                                                              2003          2002           2001
                                                                              ----          ----           ----
                                                                               (dollars expressed in thousands)

     Cash flows from operating activities:
<S>                                                                       <C>              <C>            <C>
       Net income......................................................   $  62,811        45,167         64,514
       Adjustments to reconcile net income to net cash provided by
         operating activities:
           Net income of subsidiaries..................................     (74,328)      (57,753)       (70,730)
           Dividends from subsidiaries.................................      67,000        28,000         53,500
           Other, net..................................................         292         3,366         (1,441)
                                                                          ---------      --------       --------
              Net cash provided by operating activities................      55,775        18,780         45,843
                                                                          ---------      --------       --------

     Cash flows from investing activities:
       Decrease (increase) in investment securities....................          --           261         (9,382)
       Investment in common securities of FBST,
         First Preferred IV, FBCT and First Preferred III..............      (2,197)         (774)        (1,707)
       Payments from redemption of investment in common securities
         of First Preferred I and FACT.................................       4,090            --             --
       Acquisitions of subsidiaries....................................          --       (56,334)       (63,767)
       Capital reductions (contributions) from (to) subsidiaries.......      10,000           (70)        (5,900)
       Decrease in advances to subsidiary..............................          --        34,000         27,000
       Other, net......................................................          --            (9)         6,540
                                                                          ---------      --------       --------
              Net cash provided by (used in) investing activities......      11,893       (22,926)       (47,216)
                                                                          ---------      --------       --------

     Cash flows from financing activities:
       Advances drawn on note payable..................................      34,500        43,500         69,500
       Repayments of note payable......................................     (24,500)      (64,000)      (125,000)
       Proceeds from issuance of subordinated debentures...............      70,907        25,007         54,474
       Payments for redemption of subordinated debentures..............    (136,341)           --             --
       Payment of preferred stock dividends............................        (786)         (786)          (786)
                                                                          ---------      --------       --------
              Net cash (used in) provided by financing activities......     (56,220)        3,721         (1,812)
                                                                          ---------      --------       --------
              Net increase (decrease) in cash deposited in First Bank..      11,448          (425)        (3,185)
     Cash deposited in First Bank, beginning of year...................       4,469         4,894          8,079
                                                                          ---------      --------       --------
     Cash deposited in First Bank, end of year.........................   $  15,917         4,469          4,894
                                                                          =========      ========       ========

     Noncash investing activities:
       Cash paid for interest..........................................   $  16,489        21,855         21,068
       Reduction of deferred tax asset valuation reserve...............          --            --            636
                                                                          =========      ========       ========
</TABLE>

(24)     CONTINGENT LIABILITIES

         In October  2000,  First Banks  entered  into two  continuing  guaranty
contracts.  For value  received,  and for the purpose of inducing a pension fund
and its  trustees  and a welfare  fund and its  trustees  (the Funds) to conduct
business with Missouri Valley Partners,  Inc. (MVP), First Bank's  institutional
investment  management  subsidiary,  First Banks irrevocably and unconditionally
guaranteed payment of and promised to pay to each of the Funds any amounts up to
the sum of $5.0 million to the extent MVP is liable to the Funds for a breach of
the Investment  Management Agreements (including the Investment Policy Statement
and  Investment  Guidelines),  by and  between  MVP and  the  Funds  and/or  any
violation of the Employee  Retirement  Income  Security Act by MVP  resulting in
liability  to  the  Funds.  The  guaranties  are  continuing  guaranties  of all
obligations  that may arise for  transactions  occurring prior to termination of
the Investment  Management  Agreements and are co-existent  with the term of the
Investment Management  Agreements.  The Investment Management Agreements have no
specified  term but may be  terminated  at any time upon  written  notice by the
Trustees or, at First  Banks'  option,  upon thirty days  written  notice to the
Trustees. In the event of termination of the Investment  Management  Agreements,
such  termination  shall  have no effect on the  liability  of First  Banks with

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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,
2003,  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.

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

(25)     SUBSEQUENT EVENTS

         On February 9, 2004,  First Banks sold a residential  and  recreational
development property that had been held as other real estate since January 2003.
Prior to foreclosure,  the real estate  construction and development loan was on
nonaccrual status due to significant financial difficulties,  inadequate project
financing,  project  delays and weak project  management.  At December 31, 2003,
this property had a carrying value of $9.2 million,  representing  approximately
82.5% of First Banks'  total other real estate  assets.  First Banks  recorded a
gain, before applicable income taxes, of approximately  $2.7 million on the sale
of this property.




<PAGE>

                          INDEPENDENT AUDITORS' REPORT






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, 2003 and 2002,  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, 2003. 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 auditing standards generally accepted
in the  United  States of  America.  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,  2003 and 2002,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 2003, in conformity  with  accounting  principles  generally
accepted in the United States of America.

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



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

St. Louis, Missouri
March 18, 2004



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




                                                                                 2003 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..............................................   $  99,814      98,481        96,164          96,694
Interest expense.............................................      30,651      27,468        23,084          22,823
                                                                ---------    --------      --------        --------
    Net interest income......................................      69,163      71,013        73,080          73,871
Provision for loan losses....................................      11,000      10,000        15,000          13,000
                                                                ---------    --------      --------        --------
    Net interest income after provision for loan losses......      58,163      61,013        58,080          60,871
Noninterest income...........................................      25,547      18,925        20,242          22,994
Noninterest expense..........................................      53,587      57,545        54,530          61,407
                                                                ---------    --------      --------        --------
    Income before provision for income taxes.................      30,123      22,393        23,792          22,458
Provision for income taxes...................................      11,092       7,693        10,092           7,078
                                                                ---------    --------      --------        --------
    Net income...............................................   $  19,031      14,700        13,700          15,380
                                                                =========    ========      ========        ========
Earnings per common share:
    Basic....................................................   $  796.04      615.70        570.75          638.90
                                                                =========    ========      ========        ========

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


                                                                                 2002 Quarter Ended
                                                               -------------------------------------------------------
                                                                 March 31     June 30    September 30    December 31
                                                                 --------     -------    ------------    -----------
                                                               (dollars expressed in thousands, except per share data)

Interest income..............................................   $ 106,806     107,508       106,017         105,390
Interest expense.............................................      42,684      41,820        37,836          35,211
                                                                ---------    --------      --------        --------
    Net interest income......................................      64,122      65,688        68,181          70,179
Provision for loan losses....................................      13,000      12,000        13,700          16,800
                                                                ---------    --------      --------        --------
    Net interest income after provision for loan losses......      51,122      53,688        54,481          53,379
Noninterest income...........................................      13,442      15,276        20,087          18,706
Noninterest expense..........................................      51,465      53,967        53,765          51,615
                                                                ---------    --------      --------        --------
    Income before provision for income taxes and
      minority interest in income of subsidiary..............      13,099      14,997        20,803          20,470
Provision for income taxes...................................       4,771       5,328         7,372           5,300
                                                                ---------    --------      --------        --------
    Income before minority interest in income of subsidiary..       8,328       9,669        13,431          15,170
Minority interest in income of subsidiary....................         328         301           437             365
                                                                ---------    --------      --------        --------
    Net income...............................................   $   8,000       9,368        12,994          14,805
                                                                =========    ========      ========        ========
Earnings per common share:
    Basic....................................................   $  329.84      390.35        540.87          614.64
                                                                =========    ========      ========        ========

    Diluted..................................................   $  328.30      384.48        534.32          609.63
                                                                =========    ========      ========        ========
</TABLE>



<PAGE>


                              INVESTOR INFORMATION

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

         The preferred  securities of First Preferred Capital Trust II and First
Preferred Capital Trust III are traded on the Nasdaq National Market System with
the ticker symbols "FBNKN" and "FBNKM,"  respectively.  The preferred securities
of First Preferred  Capital Trust II and First  Preferred  Capital Trust III are
represented by a global  security that has been deposited with and registered in
the  name of The  Depository  Trust  Company,  New  York,  New York  (DTC).  The
beneficial  ownership  interests  of these  preferred  securities  are  recorded
through the DTC book-entry system. The high and low preferred  securities prices
and the dividends declared for 2003 and 2002 are summarized as follows:
<TABLE>
<CAPTION>

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

                                                                       2003                  2002
                                                                ------------------    -----------------    Dividend
                                                                   High      Low       High       Low      Declared
                                                                   ----      ---       ----       ---      --------
<S>                                                               <C>       <C>        <C>       <C>      <C>
     First quarter............................................    $29.00    27.80      28.50     27.55    $ 0.640000
     Second quarter...........................................     29.25    27.90      28.40     26.85      0.640000
     Third quarter............................................     28.70    27.40      28.65     27.85      0.640000
     Fourth quarter...........................................     28.14    27.25      28.25     27.30      0.640000
                                                                                                          ----------
                                                                                                          $ 2.560000
                                                                                                          ==========

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

                                                                       2003                  2002
                                                                ------------------    -----------------    Dividend
                                                                   High      Low       High       Low      Declared
                                                                   ----      ---       ----       ---      --------
     First quarter............................................    $27.70    26.55      26.75     25.90    $ 0.562500
     Second quarter...........................................     28.50    27.00      27.22     26.25      0.562500
     Third quarter............................................     28.55    26.90      27.00     26.50      0.562500
     Fourth quarter...........................................     29.80    27.21      27.05     26.50      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 2003 are summarized as follows:
<TABLE>
<CAPTION>

                        FIRST PREFERRED CAPITAL TRUST IV (ISSUE DATE - APRIL 1, 2003) - FBSPrA

                                                                                             2003
                                                                                      -----------------    Dividend
                                                                                       High        Low     Declared
                                                                                       ----        ---     --------
<S>                                                                                   <C>         <C>     <C>
     Second quarter................................................................   $ 27.80     26.00   $ 0.503715
     Third quarter.................................................................     28.20     27.35     0.509375
     Fourth quarter................................................................     28.20     27.23     0.509375
                                                                                                          ----------
                                                                                                          $ 1.522465
                                                                                                          ==========

</TABLE>


<PAGE>

                        INVESTOR INFORMATION (CONTINUED)
<TABLE>
<CAPTION>

FOR INFORMATION CONCERNING FIRST BANKS, PLEASE CONTACT:

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


TRANSFER AGENTS:

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

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

</TABLE>

<PAGE>




                                   SIGNATURES

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


                              FIRST BANKS, INC.


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

Date:    March 25, 2004

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

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

<S>     <C>                                                      <C>                            <C>
       /s/ James F. Dierberg                                     Director                       March 25, 2004
       ------------------------------------------
           James F. Dierberg

       /s/ Allen H. Blake                                        Director                       March 25, 2004
       ------------------------------------------
           Allen H. Blake

       /s/ Terrance M. McCarthy                                  Director                       March 25, 2004
       ------------------------------------------
           Terrance M. McCarthy

       /s/ Michael J. Dierberg                                   Director                       March 25, 2004
       ------------------------------------------
           Michael J. Dierberg

       /s/ Gordon A. Gundaker                                    Director                       March 25, 2004
       ------------------------------------------
           Gordon A. Gundaker

       /s/ David L. Steward                                      Director                       March 25, 2004
       ------------------------------------------
           David L. Steward

       /s/ Hal J. Upbin                                          Director                       March 25, 2004
       ------------------------------------------
           Hal J. Upbin

       /s/ Douglas H. Yaeger                                     Director                       March 25, 2004
       ------------------------------------------
           Douglas H. Yaeger

</TABLE>

<PAGE>


                                INDEX TO EXHIBITS

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

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

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

   4.1    Reference is made to Article III of the Company's Restated Articles of
          Incorporation  (incorporated herein by reference to Exhibit 3.1 of the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          1997).

   4.2    The  Company   agrees  to  furnish  to  the  Securities  and  Exchange
          Commission upon request pursuant to Item  601(b)(4)(iii) of Regulation
          S-K, copies of instruments defining the rights of holders of long term
          debt of the Company and its subsidiaries.

   4.3    Agreement as to Expenses and Liabilities  (relating to First Preferred
          Capital Trust ("First Preferred I")) (incorporated herein by reference
          to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the
          quarter ended March 31, 1997).

   4.4    Agreement  as to  Expenses  and  Liabilities  dated  October  19, 2000
          (relating to First Preferred  Capital Trust II ("First Preferred II"))
          (filed as Exhibit 4.8 to the Company's  Registration Statement on Form
          S-2, File No. 333-46270, dated September 20, 2000).

   4.5    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).

   4.6    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).

   4.7    Preferred  Securities Guarantee Agreement (relating to First Preferred
          I) (incorporated  herein by reference to Exhibit 4(b) to the Company's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1997).

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

   4.9    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).

   4.10   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).

   4.11   Indenture  (relating  to First  Preferred I)  (incorporated  herein by
          reference to Exhibit 4(c) to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended March 31, 1997).

   4.12   Indenture  between  First Banks,  Inc. and State Street Bank and Trust
          Company  of  Connecticut,  National  Association,  as  Trustee,  dated
          October 19, 2000  (relating to First  Preferred  II) (filed as Exhibit
          4.1 to the  Company's  Registration  Statement  on Form S-2,  File No.
          333-46270, dated September 20, 2000).
<PAGE>
   4.13   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).

   4.14   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).

   4.15   Amended and Restated Trust  Agreement  (relating to First Preferred I)
          (incorporated  herein by reference  to Exhibit  4(d) to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1997).

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

   4.17   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).

   4.18   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).

   4.19   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).

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

   4.21   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).

   4.22   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).

   4.23   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).

   4.24   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).

   4.25   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).

   4.26   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).



<PAGE>


   4.27   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).

   4.28   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).

   4.29   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).

   4.30   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).

   4.31   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).

   10.1   Shareholders'  Agreement by and among James F. Dierberg II and Mary W.
          Dierberg,  Trustees  under the Living  Trust of James F.  Dierberg II,
          dated July 24, 1989,  Michael  James  Dierberg  and Mary W.  Dierberg,
          Trustees under the Living Trust of Michael James Dierberg,  dated July
          24, 1989;  Ellen C. Dierberg and Mary W. Dierberg,  Trustees under the
          Living  Trust of Ellen C.  Dierberg  dated  July 17,  1992,  and First
          Banks, Inc.  (incorporated  herein by reference to Exhibit 10.3 to the
          Company's Registration Statement on Form S-1, File No 33-50576,  dated
          August 6, 1992).

   10.2   Comprehensive Banking System License and Service Agreement dated as of
          July 24,  1991,  by and  between  the  Company  and FiServ  CIR,  Inc.
          (incorporated  herein by reference  to Exhibit  10.4 to the  Company's
          Registration Statement on Form S-1, File No. 33-50576, dated August 6,
          1992).

   10.3*  Employment  Agreement by and among the Company,  First Bank and Donald
          W. Williams, dated March 22, 1993 (incorporated herein by reference to
          Exhibit 10(iii)(A) to the Company's Annual Report on Form 10-K for the
          year ended December 31, 1993).

   10.4   Secured  Credit  Agreement  ($60,000,000  Revolving  Loan Facility and
          $20,000,000  Letter of Credit Facility),  dated as of August 14, 2003,
          among First Banks, Inc. and Wells Fargo Bank, National Association, as
          Agent, Bank One, LaSalle Bank National Association, The Northern Trust
          Company,  Union Bank of California,  N.A.,  Fifth Third Bank (Chicago)
          and U.S. Bank national  Association  (incorporated herein by reference
          to Exhibit  10.27 to the Company's  Quarterly  Report on Form 10-Q for
          the quarter ended September 30, 2003).

   10.5*  Service Agreement by and between First Services, L.P. and First Banks,
          Inc.,  dated  October 15, 2001  (incorporated  herein by  reference to
          Exhibit 10.6 to the Company's  Annual Report on Form 10-K for the year
          ended December 31, 2001).

   10.6*  Service Agreement by and between First Services,  L.P. and First Bank,
          dated December 30, 2002  (incorporated  herein by reference to Exhibit
          10.19 to the Company's  Quarterly  Report on Form 10-Q for the quarter
          ended March 31, 2003).

   10.7*  First   Banks,   Inc.  -   Executive   Incentive   Compensation   Plan
          (incorporated  herein by reference to Exhibit  10.26 to the  Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).

   14     Code  of  Ethics  for  Principal   Executive   Officer  and  Financial
          Professionals - filed herewith.

   21.1   Subsidiaries of the Company - filed herewith.

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

   32     Section 1350 Certifications - filed herewith.

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


<PAGE>
                                                                      Exhibit 14
================================================================================

                                FIRST BANKS, INC.

                 CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER
                           AND FINANCIAL PROFESSIONALS

================================================================================

                                  INTRODUCTION
                                  ------------

The Board of Directors of First Banks, Inc. ("First Banks" or the "Company") has
adopted this Code of Ethics (the "Code") to govern the  professional  conduct of
its Principal  Executive  Officer and Financial  Professionals  (as such term is
hereinafter defined) for the purposes of promoting:

     1.   Honest and ethical  conduct,  including the ethical handling of actual
          or apparent  conflicts of interest  between  personal and professional
          relationships;

     2.   Full, fair, accurate,  timely and understandable disclosure in reports
          and  documents  that a  registrant  files  with,  or  submits  to, the
          Securities  and  Exchange  Commission  (the "SEC") and in other public
          communications  made  by  the  registrant  and  that  are  within  the
          Principal Executive Officer's responsibility;

     3.   Compliance with applicable governmental laws, rules and regulations;

     4.   The prompt  internal  reporting  to an  appropriate  person or persons
          identified in the code of violations of the code; and

     5.   Accountability for adherence to the code.

This Code applies to the Principal  Executive  Officer (i.e. the Chief Executive
Officer) of First Banks and all Financial Professionals of the Company and First
Bank,  collectively the "Covered  Officers." For purposes of this Code, the term
"Financial  Professionals"  includes  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.

First  Banks  expects  its  employees  to act in  accordance  with  the  highest
standards of  professional  and  personal  integrity in all aspects of their job
responsibilities  and activities;  to comply and assure the Company's compliance
with all applicable laws, rules and regulations of the jurisdictions under which
the  Company  operates;  to  deter  wrongdoing;  and to  conduct  themselves  in
accordance with the employment  guidelines described in the First Banks Employee
Handbook and other  policies and  procedures  adopted by First Banks that govern
the conduct of its employees. Covered Officers are reminded of their obligations
under the First Banks Employee  Handbook.  The  obligations  under this Code are
intended to supplement the First Banks Employee Handbook.

                              CONFLICTS OF INTEREST
                              ---------------------

Each Covered Officer is required to adhere to the highest  standards of business
ethics and should be highly sensitive to situations that may give rise to actual
or apparent  conflicts  of  interest.  A "conflict  of  interest"  occurs when a
Covered Officer's private interest interferes with the interests of First Banks,
or the Covered  Officer's  service to First  Banks.  A Covered  Officer must not
improperly  use his or her  personal  influence  or  personal  relationships  to
influence corporate decisions or financial reporting whereby the Covered Officer

<PAGE>

would benefit personally to the detriment of the Company. Covered Officers shall
conduct  their  personal and  professional  affairs in a manner that avoids both
real  and  apparent  conflicts  of  interest  between  their  interests  and the
interests of First Banks. In addition, each Covered Officer shall provide prompt
and full  disclosure to the Director of Human  Resources  and/or the Director of
Audit,  in  writing,  of any  material  transaction  or  relationship  that  may
reasonably be expected to give rise to a conflict of interest.

                     EXPECTED STANDARDS OF ETHICAL BEHAVIOR
                     --------------------------------------

Covered Officers are expected to:

     1.   Maintain skills appropriate and necessary for the performance of their
          job responsibilities for the Company.

     2.   Engage in and  promote  honest  and  ethical  conduct,  including  the
          ethical  handling of actual or apparent  conflicts of interest between
          personal and professional relationships.

     3.   Refrain from  engaging in any  activity  that would  compromise  their
          professional  ethics or otherwise prejudice their ability to carry out
          their required duties for the Company.

     4.   Consult with other  officers and employees (to the extent  appropriate
          within  his or her area of  responsibility)  with a goal of  promoting
          full, fair, accurate,  timely and understandable disclosure in reports
          and  documents  that a  registrant  files  with,  or  submits  to, the
          Securities  and  Exchange  Commission  (the "SEC") and in other public
          communications  made  by  the  registrant  and  that  are  within  the
          Principal Executive Officer's responsibility.

     5.   Establish, administer and adhere to appropriate systems and procedures
          to ensure that  transactions  are recorded in First  Banks'  financial
          records in accordance with accounting principles generally accepted in
          the  United  States  of  America,   established   Company  policy  and
          appropriate regulatory pronouncements and guidelines.

     6.   Establish, administer and adhere to financial accounting controls that
          are  appropriate  to ensure the integrity of the  financial  reporting
          process and the availability of timely,  relevant  information for the
          safe, sound and profitable operation of the Company.

     7.   Completely disclose all relevant information reasonably expected to be
          needed by regulatory  examiners and internal and external auditors for
          the full,  complete  and  successful  discharge  of their  duties  and
          responsibilities;
<PAGE>

     8.   Comply with all applicable  governmental  laws, rules and regulations,
          as well as the rules and regulations of self-regulatory  organizations
          of which First Banks or its subsidiaries is a member.

     9.   Promptly report any violations or possible  violations of this Code to
          the Director of Human Resources and/or the Director of Audit or any of
          the parties of channels  listed in the First Banks Employee  Handbook.
          Failure to do so is in itself a violation of this Code.

     10.  Strictly adhere to all aspects of this Code.

                          REPORTING AND ACCOUNTABILITY
                          ----------------------------

Upon adoption of the Code (or thereafter as applicable,  upon becoming a Covered
Officer),  each Covered Officer shall affirm in writing to the Director of Human
Resources  that  he or she  has  received,  read  and  understands  the  Code by
completing the "Acknowledgement Form" included herein.  Thereafter, on an annual
basis  beginning on December 31, 2004, each Covered Officer shall affirm that he
or she has complied with the  requirements of the Code by completing the "Annual
Certification  Form"  included  herein.  The  Covered  Officers'  employment  is
contingent  upon  completion  of  the   Acknowledgement   Form  and  the  Annual
Certification Forms.

The Board of  Directors  hereby  designates  the  Director of Audit as the "Code
Compliance  Officer." The Code  Compliance  Officer (or his/her  designee) shall
take all action  considered  appropriate to investigate  any actual or potential
conflicts of interest or violations of the Code reported to him/her. Any matters
the Code Compliance  Officer  believes is a conflict of interest or violation of
the Code will be reported to the Board of Directors of First Banks,  which shall
determine  further  appropriate  action(s).  The  Director  of  Audit  shall  be
responsible  for reviewing any requests for waivers from the  provisions of this
Code and such requests for waivers will be reported to the Board of Directors of
First Banks,  which shall have sole authority to grant or deny any such waivers.
Any  violations  of this  Code,  any  waivers  granted  from  this  Code and any
potential  conflicts of interest and their  resolution  shall be reported to the
Board of Directors of First Banks at the next regularly scheduled meeting.  This
provision  of the Code and any waivers,  including  implicit  waivers,  shall be
appropriately disclosed in accordance with applicable SEC rules and regulations.

                                   AMENDMENTS
                                   ----------

The Board of Directors of First Banks must approve and adopt any  amendments  to
this Code.


ADOPTED:  November 1, 2003


<PAGE>


                              ACKNOWLEDGEMENT FORM

I acknowledge  that I have received,  read and understand the First Banks,  Inc.
Code of Ethics for Principal Executive Officer and Financial  Professionals (the
"Code"),  dated  November 1, 2003,  and  understand my  obligations as a Covered
Officer  (as such term is defined in the Code) to comply with all aspects of the
Code. I also understand my obligations  under the Code supplement my obligations
under the "First Banks Employee Handbook."

Furthermore, I understand:

     o    that I will be held accountable for my adherence to the Code;

     o    that my  failure  to  observe  the  terms of the Code  may  result  in
          disciplinary action, up to and including termination of employment;

     o    that violations of the Code may also constitute  violations of law and
          may  result in civil and  criminal  penalties  for me, my  supervisors
          and/or First Banks;

     o    that my  agreement  to  comply  with the Code  does not  constitute  a
          contract for employment.

     o    that should I have any questions  regarding the appropriate  course of
          action to take in a particular situation, I should immediately contact
          the Director of Human Resources and/or the Director of Audit; and

     o    I may  choose to remain  anonymous  in  reporting  any  violations  or
          possible  violations  of the Code  through  the use of  "First  Banks'
          Policy for Submission of Concerns Regarding Questionable Accounting or
          Auditing Matters," which I have received, read and understand.


                                   ---------------------------------------------
                                   Signature of Covered Officer


                                   ---------------------------------------------
                                   Printed Name of Covered Officer


                                   ---------------------------------------------
                                   Title of Covered Officer


                                   ---------------------------------------------
                                   Date


<PAGE>


                            ANNUAL CERTIFICATION FORM

I acknowledge  that I have received,  read and understand the First Banks,  Inc.
Code of Ethics for Principal Executive Officer and Financial  Professionals (the
"Code"),  dated  November 1, 2003,  and  understand my  obligations as a Covered
Officer  (as such term is defined in the Code) to comply with all aspects of the
Code. I also understand my obligations  under the Code supplement my obligations
under the First Banks  Employee  Handbook.  Furthermore,  I  understand  that my
agreement to comply with the Code does not constitute a contract for employment.

I certify  that I have fully  complied  with all  aspects of the Code during the
calendar year ended December 31, 20__.



                                   ---------------------------------------------
                                   Signature of Covered Officer


                                   ---------------------------------------------
                                   Printed Name of Covered Officer


                                   ---------------------------------------------
                                   Title of Covered Officer


                                   ---------------------------------------------
                                   Date



<PAGE>

                                                                    EXHIBIT 21.1

                                FIRST BANKS, INC.

                                  Subsidiaries


         The following is a list of our  subsidiaries  and the  jurisdiction  of
incorporation or organization.
<TABLE>
<CAPTION>


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

<S>                                                                     <C>
   The San Francisco Company                                            Delaware

        First Bank                                                      Missouri

             First Land Trustee Corp.                                   Missouri

             FB Commercial Finance, Inc.                                Missouri

             Missouri Valley Partners, Inc.                             Missouri

             Bank of San Francisco Realty Investors, Inc.              California

             Star Lane Holdings Trust Statutory Trust                  Connecticut

                  Star Lane Trust                                       New York


</TABLE>


<PAGE>

                                                                      EXHIBIT 31

                           CERTIFICATIONS REQUIRED BY
                     RULE 13a-(14)(a) (17 CFR 240.13a-14(a))
                    OR RULE 15d-14(a) (17 CFR 240.15d-14(a))
                     OF 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 year end that has  materially  affected,  or is reasonably
          likely to materially  affect,  the Registrant's  internal control over
          financial reporting; and

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

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

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

Date:  March 25, 2004
                              FIRST BANKS, INC.



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

<PAGE>

                                                                      EXHIBIT 32

                           CERTIFICATIONS REQUIRED BY
                     RULE 13a-(14)(b) (17 CFR 240.13a-14(b))
                    OR RULE 15d-14(b) (17 CFR 240.15d-14(b))
                        AND SECTION 1350 OF CHAPTER 63 OF
               TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350)


         I,  Allen H.  Blake,  President,  Chief  Executive  Officer  and  Chief
Financial  Officer of First Banks,  Inc. (the "Company"),  certify,  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

         (1) The Annual Report on Form 10-K of the Company for the annual period
ended December 31, 2003 (the "Report")  fully complies with the  requirements of
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2) The  information  contained in the Report fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.


Dated:  March 25, 2004

                                  /s/ Allen H. Blake
                                  ----------------------------------------------
                                      Allen H. Blake
                                      President, Chief Executive Officer and
                                      Chief Financial Officer
                                      (Principal Executive Officer and Principal
                                      Financial and Accounting Officer)


A signed  original of this  written  statement  required by Section 906 has been
provided to First  Banks,  Inc.  and will be retained by First  Banks,  Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.