UNITED STATESSECURITIES AND EXCHANGE
 COMMISSIONWASHINGTON,
 D.C. 20549FORM 10-Q(Mark One)x
QUARTERLY
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the quarterly period ended March 31,
 2009o
TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the transition period from __________
 to __________Commission File Number: 0-20632FIRST BANKS, INC.(Exact name of registrant as specified in
 its charter) MISSOURI
43-1175538(State or other jurisdiction of
 incorporation or organization)
(I.R.S. Employer Identification No.) 135 North Meramec, Clayton, Missouri
63105(Address of principal executive offices)
(Zip code)(314) 854-4600(Registrants telephone number, including area code)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.xYeso
 NoIndicate
 by check mark whether the registrant has submitted electronically and posted
 on its corporate Web site, if any, every Interactive Data File required to be
 submitted and posted pursuant to Rule 405 of Regulation S-T during the
 preceding 12 months (or for such shorter period that the registrant was
 required to submit and post such files).oYesx
 NoIndicate
 by check mark whether the registrant is a large accelerated filer, an
 accelerated filer, a non-accelerated filer, or a smaller reporting company.
 See the definitions of large accelerated filer, accelerated filer and
 smaller reporting company in Rule 12b-2 of the Exchange Act. Large
 accelerated filer o
Accelerated
 filer oNon-accelerated
 filer x (Do not check if a smaller reporting company)
Smaller
 reporting company oIndicate
 by check mark whether the registrant is a shell company (as defined in Rule
 12b-2 of the Exchange Act). o Yes   x NoIndicate
 the number of shares outstanding of each of the issuers classes of common
 stock, as of the latest practicable date. Class

Shares Outstanding
 at April 30, 2009Common
 Stock, $250.00 par value

23,661     FIRST BANKS, INC.TABLE OF
CONTENTSPagePART I.

FINANCIAL INFORMATIONITEM 1.

FINANCIAL STATEMENTS:CONSOLIDATED
 BALANCE SHEETS

1CONSOLIDATED
 STATEMENTS OF OPERATIONS

2CONSOLIDATED
 STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND
 COMPREHENSIVE INCOME (LOSS)

3CONSOLIDATED
 STATEMENTS OF CASH FLOWS

4NOTES TO
 CONSOLIDATED FINANCIAL STATEMENTS

5ITEM 2.

MANAGEMENTS
 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
 RESULTS OF OPERATIONS

23ITEM 3.

QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

44ITEM 4.

CONTROLS
 AND PROCEDURES

44PART II.

OTHER INFORMATIONITEM 1.

LEGAL
 PROCEEDINGS

45ITEM 6.

EXHIBITS

45SIGNATURES

46PART I  FINANCIAL INFORMATIONITEM
 1  FINANCIAL STATEMENTSFIRST BANKS, INC.CONSOLIDATED BALANCESHEETS  (UNAUDITED)(dollars
 expressed in thousands, except share and per share data)March 31,
 2009

December
 31,2008ASSETSCash and cash
equivalents:Cash and due from
banks

$
155,931


797,638Short-term investments


268,352


44,678Total cash and cash
equivalents


424,283


842,316Investment securities:Available for sale


675,633


605,014Held to maturity (fair value of
$17,573 and
 $18,507, respectively)


16,962


17,912Total investment
securities


692,595


622,926Loans:Commercial, financial and
agricultural


2,529,633


2,575,505Real estate construction and
development


1,460,771


1,572,212Real estate mortgage


4,259,613


4,336,368Consumer and
installment


70,422


77,877Loans held for sale


107,916


38,720Total loans


8,428,355


8,600,682Unearned discount


(6,775
)

(7,707
)Allowance for loan
losses


(256,551
)

(220,214
)Net loans


8,165,029


8,372,761Bank premises and equipment,
net


238,241


236,528Goodwill and other intangible
assets


304,462


306,800Bank-owned life
insurance


119,171


118,825Deferred income taxes


24,553


36,851Other real estate


145,808


91,524Other assets


145,591


154,623Total assets

$
10,259,733


10,783,154LIABILITIESDeposits:Noninterest-bearing
demand

$
1,295,701


1,241,916Interest-bearing
demand


931,608


935,805Savings and money
market


2,824,808


2,777,285Time deposits of $100 or
more


1,226,803


1,254,652Other time deposits


2,372,416


2,531,862Total deposits


8,651,336


8,741,520Other borrowings


254,538


575,133Subordinated
debentures


353,847


353,828Deferred income taxes


33,267


45,565Accrued expenses and other
liabilities


63,943


70,753Total liabilities


9,356,931


9,786,799STOCKHOLDERS EQUITYFirst Banks, Inc.
stockholders equity:Preferred stock:$1.00 par value, 4,689,830 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


12,822Class B adjustable rate, $1.50
par value,
 200,000 shares authorized, 160,505 shares issued and outstanding


241


241Class C fixed rate, cumulative,
perpetual,
 $1.00 par value, 295,400 shares authorized, issued and outstanding


278,870


278,057Class D fixed rate, cumulative,
perpetual,
 $1.00 par value, 14,770 shares authorized, issued and outstanding


17,343


17,343Common stock, $250.00 par value,
25,000
 shares authorized, 23,661 shares issued and outstanding


5,915


5,915Additional paid-in
capital


9,685


9,685Retained earnings


444,287


536,714Accumulated other comprehensive
income


6,250


6,195Total First Banks, Inc.
stockholders
 equity


775,413


866,972Noncontrolling interest in
subsidiaries


127,389


129,383Total stockholders
equity


902,802


996,355Total liabilities and
stockholders equity

$
10,259,733


10,783,154The accompanying notes are an integral part of the consolidated
financial statements.1FIRST BANKS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(dollars
 expressed in thousands, except share and per share data)Three
 Months Ended
 March 31,2009

2008Interest income:Interest and fees on
loans

$
111,552


152,722Investment securities


7,477


11,420Short-term investments


510


162Total interest income


119,539


164,304Interest expense:Deposits:Interest-bearing
demand


453


2,032Savings and money
market


10,255


17,527Time deposits of $100 or
more


10,476


16,769Other time deposits


20,053


27,787Other borrowings


2,341


3,928Notes payable


19


569Subordinated
debentures


4,506


6,165Total interest
expense


48,103


74,777Net interest income


71,436


89,527Provision for loan
losses


108,000


45,947Net interest (loss) income
after provision for loan losses


(36,564
)

43,580Noninterest income:Service charges on deposit
accounts and customer service fees


13,171


12,102Gain on loans sold and held for
sale


4,113


1,680Net gain on investment
securities


532


1,161Bank-owned life insurance
investment income


366


973Investment management
income


527


1,356Insurance fee and commission
income


2,242


1,974Net gain on derivative
instruments


401


3,432Decrease in fair value of
servicing rights


(1,985
)

(1,759
)Loan servicing fees


2,248


2,131Gain on extinguishment of term
repurchase agreement





5,000Other


3,885


5,061Total noninterest
income


25,500


33,111Noninterest expense:Salaries and employee
benefits


32,728


40,570Occupancy, net of rental
income


9,651


9,945Furniture and
equipment


5,224


5,429Postage, printing and
supplies


1,352


1,646Information technology
fees


8,229


9,339Legal, examination and
professional fees


4,117


2,814Amortization of intangible
assets


2,338


2,776Advertising and business
development


973


1,464FDIC insurance


4,094


947Expenses on other real
estate


4,519


620Other


7,625


7,874Total noninterest
expense


80,850


83,424Loss before benefit for income
taxes


(91,914
)

(6,733
)Benefit for income
taxes


(514
)

(2,005
)Net loss


(91,400
)

(4,728
)Less: net (loss) income
attributable to noncontrolling interest in
 subsidiaries


(1,994
)

145Net loss attributable to First
Banks, Inc.

$
(89,406
)
$
(4,873
)Net loss available to common
stockholders

$
(94,440
)

(5,069
)Basic loss per common
share

$
(3,991.40
)

(214.26
)Diluted loss per common
share

$
(3,991.40
)

(214.26
)Weighted average shares of
common stock
 outstanding


23,661


23,661The accompanying notes are an integral part of the consolidated
financial statements.2FIRST BANKS, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYAND COMPREHENSIVE INCOME (LOSS)  (UNAUDITED)Three Months Ended March 31, 2009 and Year Ended December
 31, 2008(dollars expressed in thousands, except per share
data)First Banks, Inc. Stockholders EquityPreferred
 Stock

Common
 Stock

Additional
 Paid-In
 Capital

Retained
 Earnings

Accu-
 mulated
 Other
 Compre-
 hensive
 Income
 (Loss)

Non-
 controlling
 Interest

Total
 Stock-
 holders
 EquityBalance, December 31,
2007

$
13,063


5,915


9,685


818,343


(4,929
)

5,544


847,621Comprehensive loss:Net loss











(287,155
)




(1,158
)

(288,313
)Other comprehensive income
(loss):Unrealized gains on investment
securities, net of tax














6,043





6,043Reclassification adjustment for
investment securities losses included
 in net loss, net of tax














5,694





5,694Change in unrealized gains on
derivative instruments, net of tax














1,745





1,745Reclassification adjustment for
establishment of deferred tax asset
 valuation allowance on derivatives














(1,707
)




(1,707
)Pension liability adjustment,
net of tax














(651
)




(651
)Total
 comprehensive loss




















(277,189
)Change in noncontrolling
interest ownership

















124,997


124,997Cumulative effect of change in
accounting principle











6,312








6,312Issuance of Class C Preferred
Stock


278,057

















278,057Issuance of Class D Preferred
Stock


17,343

















17,343Preferred stock dividends
declared











(786
)







(786
)Balance, December 31,
2008


308,463


5,915


9,685


536,714


6,195


129,383


996,355Comprehensive loss:Net loss











(89,406
)




(1,994
)

(91,400
)Other comprehensive income
(loss):Unrealized gains on investment
securities, net of tax














3,613





3,613Reclassification adjustment for
investment securities gains included
 in net loss, net of tax














(346
)




(346
)Reclassification adjustment for
deferred tax asset valuation allowance
 on investment securities














(257
)




(257
)Change in unrealized gains on
derivative instruments, net of tax














(2,840
)




(2,840
)Reclassification adjustment for
deferred tax asset valuation allowance
 on derivatives














(151
)




(151
)Amortization of net loss
related to pension plan, net of tax














36





36Total
 comprehensive loss




















(91,345
)Accretion of discount on
preferred stock


813








(813
)







Preferred stock dividends
declared











(2,208
)







(2,208
)Balance, March 31,
2009

$
309,276


5,915


9,685


444,287


6,250


127,389


902,802The accompanying notes are
 an integral part of the consolidated financial statements.3FIRST BANKS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)(dollars expressed in thousands)Three Months Ended
 March 31,2009

2008Cash flows from operating
activities:Net loss attributable to First
Banks, Inc.

$
(89,406
)

(4,873
)Adjustments to reconcile net
loss to net cash (used in) provided by
 operating activities:Depreciation and amortization
of bank premises and equipment


5,977


6,145Amortization of intangible
assets


2,338


2,776Originations of loans held for
sale


(172,242
)

(58,190
)Proceeds from sales of loans
held for sale


107,867


55,233Payments received on loans held
for sale


635


9,326Provision for loan
losses


108,000


45,947(Benefit) provision for current
income taxes


(17,486
)

3,876Benefit for deferred income
taxes


(20,623
)

(5,881
)Increase in deferred tax asset
valuation allowance


37,595


Decrease in accrued interest
receivable


2,497


11,935Decrease in accrued interest
payable


(2,254
)

(3,499
)Gain on loans sold and held for
sale


(4,113
)

(1,680
)Net gain on investment
securities


(532
)

(1,161
)Net gain on derivative
instruments


(401
)

(3,432
)Decrease in fair value of
servicing rights


1,985


1,759Gain on extinguishment of term
repurchase agreement





(5,000
)Other operating activities,
net


1,763


5,471Net (loss) income attributable
to noncontrolling interest in
 subsidiaries


(1,994
)

145Net cash (used in) provided by
operating activities


(40,394
)

58,897Cash flows from investing
activities:Proceeds from sales of
investment securities available for sale


20,616


82,377Maturities of investment
securities available for sale


39,706


138,190Maturities of investment
securities held to maturity


944


453Purchases of investment
securities available for sale


(125,244
)

(14,362
)Net decrease (increase) in
loans


97,780


(173,896
)Recoveries of loans previously
charged-off


3,151


2,185Purchases of bank premises and
equipment


(7,846
)

(7,106
)Net proceeds from sales of other
real estate owned


5,460


2,061Other investing activities,
net


781


(937
)Net cash provided by investing
activities


35,348


28,965Cash flows from financing
activities:Increase in demand, savings and
money market deposits


97,111


93,113Decrease in time
deposits


(187,295
)

(330,440
)Decrease in Federal Reserve Bank
advances


(100,000
)

(Decrease) increase in Federal
Home Loan Bank advances


(200,017
)

199,957Decrease in federal funds
purchased





(69,500
)(Decrease) increase in
securities sold under agreements to repurchase


(20,578
)

8,898Advances drawn on notes
payable





25,000Repayments of notes
payable





(6,000
)Payment of preferred stock
dividends


(2,208
)

(196
)Net cash used in financing
activities


(412,987
)

(79,168
)Net (decrease) increase in cash
and cash equivalents


(418,033
)

8,694Cash and cash equivalents,
beginning of period


842,316


231,675Cash and cash equivalents, end
of period

$
424,283


240,369Supplemental disclosures of cash
flow information:Cash paid (received) during the
period for:Interest on
liabilities

$
50,357


79,469Income taxes


(25
)

(4,013
)Noncash investing and financing
activities:Cumulative effect of change in
accounting principle

$



6,312Loans transferred to other real
estate


65,295


4,733The accompanying notes are
 an integral part of the consolidated financial statements.4FIRST BANKS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(1)
BASIS OF PRESENTATIONThe
 consolidated financial statements of First Banks, Inc. and subsidiaries
 (First Banks or the Company) are unaudited and should be read in conjunction
 with the consolidated financial statements contained in the 2008 Annual
 Report on Form 10-K. The consolidated financial statements have been prepared
 in accordance with U.S. generally accepted accounting principles and conform
 to predominant practices within the banking industry. Management of First
 Banks has made a number of estimates and assumptions relating to the
 reporting of assets and liabilities and the disclosure of contingent assets
 and liabilities to prepare the consolidated financial statements in
 conformity with U.S. generally accepted accounting principles. Actual results
 could differ from those estimates. In the opinion of management, all
 adjustments, consisting of normal recurring accruals considered necessary for
 a fair presentation of the results of operations for the interim periods
 presented herein, have been included. Operating results for the three months
 ended March 31, 2009 are not necessarily indicative of the results that may
 be expected for the year ending December 31, 2009.Principles of Consolidation. The consolidated financial statements
 include the accounts of the parent company and its subsidiaries, giving
 effect to the noncontrolling interest in subsidiaries, as more fully
 described below, and in Note 5 to the consolidated financial statements. All
 significant intercompany accounts and transactions have been eliminated.
 Certain reclassifications of 2008 amounts have been made to conform to the
 2009 presentation.First Banks operates
 through its wholly owned subsidiary bank holding company, The San Francisco
 Company (SFC), headquartered in St. Louis, Missouri, and its wholly owned
 subsidiary holding company, Coast Financial Holdings, Inc. (CFHI),
 headquartered in Bradenton, Florida.Prior
 to First Banks acquisition of CFHI in November 2007, First Bank,
 headquartered in St. Louis, Missouri, was a wholly owned banking subsidiary
 of SFC. In November 2007, First Banks completed its acquisition of CFHI and
 its wholly owned banking subsidiary, Coast Bank of Florida (Coast Bank). The
 issued and outstanding shares of common stock of Coast Bank were exchanged
 for newly issued and outstanding shares of non-voting Series B common stock of
 First Bank, and Coast Bank was merged with and into First Bank. As a result,
 SFC is the owner of 100% of the voting Series A outstanding shares of common
 stock of First Bank and CFHI is the owner of 100% of the non-voting Series B
 outstanding shares of common stock of First Bank. Thus, First Bank is 96.82%
 owned by SFC and 3.18% owned by CFHI.First
 Bank operates through its branch banking offices and subsidiaries: First Bank
 Business Capital, Inc.; Missouri Valley Partners, Inc. (MVP); Adrian N. Baker
 & Company (ANB); Universal Premium Acceptance Corporation and its wholly
 owned subsidiary, UPAC of California, Inc. (collectively, UPAC); Small
 Business Loan Source LLC (SBLS LLC) and FB Holdings, LLC (FB Holdings). All
 of the subsidiaries are wholly owned as of March 31, 2009, except SBLS LLC,
 which was 82.55% owned by First Bank and 17.45% owned by First Capital
 America, Inc. (FCA), and FB Holdings, which was 53.23% owned by First Bank
 and 46.77% owned by FCA, as further described in Note 5 and Note 15 to the
 consolidated financial statements. SBLS LLC and FB Holdings are included in
 the consolidated financial statements with the noncontrolling ownership
 interest reported as a component of stockholders equity in the consolidated
 balance sheets as noncontrolling interest in subsidiaries and the earnings
 or loss, net of tax, attributable to the noncontrolling ownership interest,
 reported as net (loss) income attributable to noncontrolling interest in
 subsidiaries in the consolidated statements of operations, as further
 discussed below.Regulatory Matters. In connection with the most
recent regular
 examinations of the Company and First Bank by the Federal Reserve Bank of St.
 Louis (FRB) and the Missouri Division of Finance (MDOF), the Company and First
 Bank entered into informal agreements with each regulatory agency. On
 September 18, 2008, First Bank and its Board of Directors entered into an
 informal agreement with the FRB and the MDOF. In addition, on October 2,
 2008, the Company and its Board of Directors entered into a Memorandum of
 Understanding with the FRB. Each of the agreements is characterized by
 regulatory authorities as an informal action that is neither published nor
 made publicly available by the agencies and is used when circumstances
 warrant a milder form of action than a formal supervisory action, such as a
 cease and desist order.Under
 the terms of the Memorandum of Understanding with the FRB, the Company
 agreed, among other things, to provide certain information to the FRB including,
 but not limited to, financial performance updates, notice of plans to
 materially change its fundamental business and notice to issue trust
 preferred securities or raise additional equity5capital.
 In addition, the Company agreed not to declare any dividends on its common or
 preferred stock or make any distributions of interest or other sums on its
 trust preferred securities without the prior approval of the FRB. The Company
 received the approval of the FRB to declare the regular quarterly dividends
 on its preferred stock to be paid in May and June 2009 and to pay its regular
 quarterly interest payments on its outstanding subordinated debentures for
 further payment to the individual holders of the respective underlying trust
 preferred securities in June and July 2009. However, First Banks is not able
 to predict whether the FRB will approve future payment requests.First
 Bank, under its agreement with the MDOF and the FRB, has agreed to, among
 other things, prepare and submit plans and reports to the agencies regarding
 certain matters including, but not limited to, the performance of First
 Banks loan portfolio. In addition, First Bank agreed not to declare or pay
 any dividends or make certain other payments without the prior consent of the
 MDOF and the FRB and to maintain its Tier 1 capital ratio at no less than
 7.00%. As further described in Note 6 to the consolidated financial
 statements, at March 31, 2009, First Banks Tier 1 capital ratio was 9.15%,
 or approximately $199.3 million over the minimum level required by the
 agreement.The
 Company and First Bank were in full compliance with all provisions of the
 respective informal agreements as of March 31, 2009 and December 31, 2008,
 and are committed to ensuring that the requirements of the agreements are met
 in a timely manner.Significant Accounting Policies. On January 1, 2009,
First Banks implemented
 Statement of Financial Accounting Standards (SFAS) No. 160  Noncontrolling Interests in Consolidated Financial
 Statements, an Amendment of ARB 51. SFAS No. 160 establishes new
 accounting and reporting standards for noncontrolling interests in a
 subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 requires
 entities to classify noncontrolling interests as a component of stockholders
 equity and will require subsequent changes in ownership interests in a
 subsidiary to be accounted for as an equity transaction. Additionally, SFAS
 No. 160 requires entities to recognize a gain or loss upon the loss of
 control of a subsidiary and to remeasure any ownership interest retained at
 fair value on that date. SFAS No. 160 also requires expanded disclosures that
 clearly identify and distinguish between the interests of the parent and the
 interests of the noncontrolling owners. SFAS No. 160 is effective on a
 prospective basis for fiscal years, and interim periods within those fiscal
 years, beginning on or after December 15, 2008, except for the presentation
 and disclosure requirements, which are required to be applied retrospectively.
 The implementation of SFAS No. 160 on January 1, 2009 resulted in the
 noncontrolling interest in subsidiaries of $129.4 million being reclassified
 from a liability to a component of stockholders equity in the consolidated
 balance sheets.(2)
GOODWILL AND OTHER
INTANGIBLE ASSETSGoodwill
 and other intangible assets, net of amortization, were comprised of the
 following at March 31, 2009 and December 31, 2008:March 31, 2009

December 31, 2008Gross
 Carrying
 Amount

Accumulated
 Amortization

Gross
 Carrying
 Amount

Accumulated
 Amortization(dollars expressed in thousands)Amortized
 intangible assets:Core deposit intangibles
(1)

$
41,410


(22,643
)


53,916


(33,251
)Customer list
intangibles


23,320


(4,276
)


23,320


(3,903
)Other intangibles


2,385


(1,762
)


2,385


(1,695
)Total

$
67,115


(28,681
)


79,621


(38,849
)Unamortized
 intangible assets:Goodwill

$
266,028





266,028(1)
The
 gross carrying amount and accumulated amortization for core deposit
 intangibles at March 31, 2009 have been reduced by $12.5 million related to
 core deposit intangibles associated with certain acquisitions that became
 fully amortized in December 2008.6Amortization
 of intangible assets was $2.3 million and $2.8 million for the three months
 ended March 31, 2009 and 2008, respectively. Amortization of intangible
 assets, including amortization of core deposit intangibles, customer list
 intangibles and other intangibles has been estimated in the following table,
 and does not take into consideration any potential future acquisitions or
 branch office purchases.(dollars expressed in thousands)Year
 ending December 31:2009 remaining


$
6,9422010



8,8522011



6,6742012



2,4592013



1,5242014



1,473Thereafter



10,510Total


$
38,434Changes
 in the carrying amount of goodwill for the three months ended March 31, 2009
 and 2008 were as follows:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Balance, beginning of
 period

$
266,028


263,747Acquisition-related
 adjustments (1)





632Balance, end of period

$
266,028


264,379(1)
Acquisition-related
 adjustments include additional purchase accounting adjustments for prior
 years acquisitions necessary to appropriately adjust preliminary goodwill
 recorded at the time of the acquisition, which was based upon current
 estimates available at that time, to reflect the receipt of additional
 valuation data. Acquisition-related adjustments recorded in 2008 pertain to
 the acquisition of CFHI in November 2007.The
 Companys annual measurement date for its goodwill impairment test is
 December 31. First Banks engaged an independent valuation firm to assist in
 computing the fair value estimate for the impairment assessment by utilizing
 two separate valuation methodologies and applying a weighted average to each
 methodology in order to determine fair value for its single reporting unit,
 First Bank. The valuation methodologies utilized a comparison of the average
 price to book value of comparable businesses and a discounted cash flow
 valuation technique. As a result of this independent third party valuation,
 the Company concluded that the carrying value of its single reporting unit
 exceeded its fair value at December 31, 2008.Because
 the carrying value of First Banks reporting unit exceeded the estimated fair
 value at December 31, 2008, First Banks engaged the same independent
 valuation firm to assist in computing the fair value of First Banks assets
 and liabilities in order to determine the implied fair value of First Banks
 goodwill at December 31, 2008. Management compared the implied fair value of
 First Banks goodwill, as determined by the independent valuation firm, with
 its carrying value, and concluded that there was no goodwill impairment as of
 December 31, 2008.7(3)
SERVICING RIGHTSMortgage Banking Activities. At March 31, 2009 and December 31,
2008,
 First Banks serviced mortgage loans for others totaling $1.06 billion and
 $1.09 billion, respectively. Changes in mortgage servicing rights for the
 three months ended March 31, 2009 and 2008 were as follows:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Balance, beginning of
period

$
7,418


5,290Re-measurement to fair value
upon election to measure servicing rights
 at fair value under SFAS No. 156





9,538Originated mortgage servicing
rights


1,142


675Change in fair value resulting
from changes in valuation inputs or
 assumptions used in valuation model (1)


184


(684
)Other changes in fair value
(2)


(903
)

(650
)Balance, end of period

$
7,841


14,169(1)
The change
 in fair value resulting from changes in valuation inputs or assumptions used
 in valuation model primarily reflects the change in discount rates and
 prepayment speed assumptions, primarily due to changes in interest rates.(2)
Other
 changes in fair value reflect changes due to the collection/realization of
 expected cash flows over time.Other Servicing Activities. At March 31, 2009 and December 31,
2008,
 First Banks serviced United States Small Business Administration (SBA) loans
 for others totaling $218.4 million and $221.5 million, respectively. Changes
 in SBA servicing rights for the three months ended March 31, 2009 and 2008 were
 as follows:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Balance, beginning of
period

$
8,963


7,468Re-measurement to fair value
upon election to measure servicing rights
 at fair value under SFAS No. 156





905Originated SBA servicing
rights


208


1,362Change in fair value resulting
from changes in valuation inputs or
 assumptions used in valuation model (1)


(1,239
)

(119
)Other changes in fair value
(2)


(27
)

(306
)Balance, end of period

$
7,905


9,310(1)
The change
 in fair value resulting from changes in valuation inputs or assumptions used
 in valuation model primarily reflects the change in discount rates and
 prepayment speed assumptions, primarily due to changes in interest rates.(2)
Other
 changes in fair value reflect changes due to the collection/realization of
 expected cash flows over time.8
(4)
LOSS PER COMMON SHAREThe following is a
 reconciliation of basic and diluted loss per share (EPS) for the three months
 ended March 31, 2009 and 2008:Three Months Ended
 March 31,2009

2008(dollars in
thousands, except share and per share data)Basic:Net loss attributable to First
Banks


$
(89,406
)



(4,873
)Preferred stock dividends
declared and undeclared



(4,221
)



(196
)Accretion of discount on
preferred stock



(813
)



Net loss available to First
Banks common stockholders


$
(94,440
)



(5,069
)Weighted average shares of
common stock outstanding



23,661




23,661Basis loss per common
share


$
(3,991.40
)



(214.26
)Diluted:Net loss available to First
Banks common stockholders


$
(94,440
)



(5,069
)Effect of dilutive
securities:Class A convertible preferred
stock








Diluted EPS  net loss
available to First Banks common stockholders


$
(94,440
)



(5,069
)Weighted average shares of
common stock outstanding



23,661




23,661Effect of dilutive
securities:Class A convertible preferred
stock








Weighted average diluted shares
of common stock outstanding



23,661




23,661Diluted loss per common
share


$
(3,991.40
)



(214.26
)(5)
TRANSACTIONS
WITH
RELATED
 PARTIESFirst Services, L.P.
 (First Services), a limited partnership indirectly owned by First Banks
 Chairman and members of his immediate family, provides information
 technology, item processing and various related services to First Banks, Inc.
 and its subsidiaries. Fees paid under agreements with First Services were
 $7.8 million and $8.6 million for the three months ended March 31, 2009 and
 2008, respectively. First Services leases information technology and other
 equipment from First Bank. First Services paid First Bank rental fees for the
 use of that equipment of $777,000 and $1.1 million during the three months
 ended March 31, 2009 and 2008, respectively. In addition, First Services paid
 approximately $464,000 for the three months ended March 31, 2009 and 2008 in
 rental payments for occupancy of certain First Bank premises from which
 business is conducted.First Brokerage America,
 L.L.C. (First Brokerage), a limited liability company indirectly owned by
 First Banks Chairman and members of his immediate family, received
 approximately $1.6 million and $1.7 million for the three months ended March
 31, 2009 and 2008, in gross commissions paid by unaffiliated third-party
 companies. The commissions received were primarily in connection with the
 sales of annuities, securities and other insurance products to customers of
 First Bank. First Brokerage paid approximately $60,000 and $45,000 for the
 three months ended March 31, 2009 and 2008, respectively, in rental payments
 for occupancy of certain First Bank premises from which brokerage business is
 conducted.First Bank leases certain
 of its in-store branch offices and automated teller machine (ATM) sites from
 Dierbergs Markets, Inc., a grocery store chain headquartered in St. Louis,
 Missouri that is owned and operated by the brother of First Banks Chairman
 and members of his immediate family. Total rent expense incurred by First
 Bank under the lease obligation contracts was $108,000 and $99,000 for the
 three months ended March 31, 2009 and 2008, respectively.In June 2005, FCA, a
 corporation owned by First Banks Chairman and members of his immediate
 family, became a 49.0% owner of SBLS LLC in exchange for $7.4 million
 pursuant to a written option agreement with First Bank. In January and June
 2007, First Bank contributed $4.0 million and $7.8 million, respectively, to
 SBLS LLC in the form of additional capital contributions, thereby increasing
 First Banks ownership of SBLS LLC to 76.0% and decreasing FCAs ownership to
 24.0%. On March 31, 2009, First Bank contributed $5.0 million to SBLS LLC in
 the form of an additional capital contribution, thereby increasing First
 Banks ownership of SBLS LLC to 82.55% and decreasing FCAs ownership to
 17.45%. On April 30, 2009, First Bank and FCA entered into a Purchase
 Agreement9providing for FCA to sell
 its ownership interest in SBLS LLC to First Bank, as further described in
 Note 15 to the consolidated financial statements.In September 2008, SBLS
 LLC executed a Promissory Note with First Bank that provided a $75.0 million
 unsecured revolving line of credit with a maturity date of September 30,
 2009. This Promissory Note renewed the existing promissory note that matured
 on September 30, 2008. Interest was payable monthly in arrears on the
 outstanding loan balance at a current rate equal to the 30-day London Interbank
 Offered Rate plus 40 basis points. On January 1, 2009, SBLS LLC executed an
 Amended Promissory Note with First Bank, which modified the interest payable
 monthly in arrears on the outstanding loan balance to a current rate equal to
 the First Bank internal Commercial Cost of Funds Rate, which was 3.84% for
 the three months ended March 31, 2009. The balance of advances under the
 respective agreements was $67.7 million and $66.2 million at March 31, 2009
 and December 31, 2008, respectively. Interest expense recorded by SBLS LLC
 under the respective agreements was $671,000 and $561,000 for the three
 months ended March 31, 2009 and 2008, respectively. The balance of the
 advances and the related interest expense recognized by SBLS LLC are
 eliminated for purposes of the consolidated financial statements.In May 2008, First Banks
 formed FB Holdings, a limited liability company organized in the State of
 Missouri. FB Holdings operates as a majority-owned subsidiary of First Bank
 and was formed for the primary purpose of holding and managing certain
 nonperforming loans and assets to allow the liquidation of such assets at a
 time that is more economically advantageous to First Bank and to permit an
 efficient vehicle for the investment of additional capital by the Companys
 sole owner of its Class A and Class B preferred stock. During 2008, First
 Bank contributed cash of $9.0 million and nonperforming loans and assets with
 a fair value of approximately $133.3 million, and FCA contributed cash of
 $125.0 million to FB Holdings. As a result, First Bank owned 53.23% and FCA
 owned the remaining 46.77% of FB Holdings as of March 31, 2009. The
 contribution of cash by FCA is reflected as a component of stockholders
 equity in the consolidated balance sheets and, consequently, increased the
 Companys and First Banks total risk-based capital ratios under existing
 regulatory guidelines.FB Holdings entered into a
 Services Agreement with First Banks and First Bank effective May 30, 2008.
 The Services Agreement relates to various services provided to FB Holdings by
 First Banks and First Bank, including loan servicing and special assets
 services as well as various other financial, legal, human resources and
 property management services. Fees paid under the Services Agreement by FB Holdings
 were $185,000 for the three months ended March 31, 2009.On May 15, 2008, First
 Banks entered into a Revolving Credit Note and a Stock Pledge Agreement with
 Investors of America Limited Partnership (Investors of America, LP), as
 amended on August 11, 2008 (the Credit Agreement). Investors of America, LP
 is a Nevada limited partnership that was created by and for the benefit of
 First Banks Chairman and members of his immediate family. There were no
 advances outstanding under the Credit Agreement at March 31, 2009 and
 December 31, 2008. Interest expense, comprised of commitment fees, recorded
 by First Banks under the Credit Agreement was $19,000 for the three months
 ended March 31, 2009.First Bank has had in the
 past, and may have in the future, loan transactions in the ordinary course of
 business with its directors and/or their affiliates. These loan transactions
 have been 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 collectability or
 present other unfavorable features. Loans to directors, their affiliates and
 executive officers of First Banks, Inc. were approximately $45.2 million and
 $49.0 million at March 31, 2009 and December 31, 2008, respectively. First
 Bank does not extend credit to its officers or to officers of First Banks,
 Inc., except extensions of credit secured by mortgages on personal
 residences, loans to purchase automobiles, personal credit card accounts and
 deposit account overdraft protection under a plan whereby a credit limit has
 been established in accordance with First Banks standard credit criteria.(6)
REGULATORYCAPITALFirst 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 result in 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. In addition,
 First Bank is currently required to maintain its Tier 1 capital ratio at no
 less than 7.00% in accordance with the provisions of its agreement entered
 into with the MDOF and the FRB, as further described in Note 1 to the
 consolidated financial statements and under Managements Discussion and
 Analysis of Financial10Condition and Results of
 Operations  Regulatory Matters. At March 31, 2009, First Banks Tier 1
 capital ratio of 9.15% was approximately $199.3 million over the minimum
 level required by the agreement.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 March 31, 2009, First
 Banks and First Bank were well capitalized. As of March 31, 2009, the most
 recent notification from First Banks primary regulator categorized First
 Banks and First Bank as well capitalized under the regulatory framework for
 prompt corrective action. To be categorized as well capitalized, First Banks
 and First Bank must maintain minimum total risk-based, Tier 1 risk-based and
 Tier 1 leverage ratios as set forth in the following table.At March 31, 2009
 and December 31, 2008, First Banks and First Banks required and actual
 capital ratios were as follows:Actual

For
 Capital
 Adequacy
 Purposes

To be Well
 Capitalized Under
 Prompt Corrective
 Action ProvisionsMarch 31, 2009

December 31, 2008Amount

Ratio

Amount

Ratio(dollars expressed in thousands)Total capital (to
risk-weighted assets):First Banks

$
1,054,533


11.37
%
$
1,148,407


12.11
%

8.0
%

10.0
%First Bank


965,479


10.42


1,042,948


11.01


8.0


10.0Tier 1 capital (to
risk-weighted assets):First Banks


720,824


7.77


841,152


8.87


4.0


6.0First Bank


847,901


9.15


923,318


9.75


4.0


6.0Tier 1 capital (to average
assets):First Banks


720,824


7.01


841,152


8.04


3.0


5.0First Bank


847,901


8.27


923,318


8.85


3.0


5.0In March 2005, the Board
 of Governors of the Federal Reserve System (Federal Reserve) adopted a final
 rule, Risk-Based Capital Standards: Trust
 Preferred Securities and the Definition of Capital,which allows
 for the continued limited inclusion of trust preferred securities in Tier 1
 capital. The Federal Reserves final rule limits restricted core capital
 elements to 25% of the sum of all core capital elements, including restricted
 core capital elements, net of goodwill less any associated deferred tax
 liability. Amounts of restricted core capital elements in excess of these
 limits may generally be included in Tier 2 capital. Specifically, amounts of
 qualifying trust preferred securities and cumulative perpetual preferred stock
 in excess of the 25% limit may be included in Tier 2 capital, but will be
 limited, together with subordinated debt and limited-life preferred stock, to
 50% of Tier 1 capital. In addition, the final rule provides that in the last
 five years before the maturity of the underlying subordinated note, the
 outstanding amount of the associated trust preferred securities is to be
 excluded from Tier 1 capital and included in Tier 2 capital, subject to
 one-fifth amortization per year. The final rule provided for a five-year
 transition period, ending March 31, 2009, for the application of the
 quantitative limits. On March 16, 2009, the Federal Reserve adopted a final
 rule that delays the effective date for the application of the quantitative
 limits to March 31, 2011. Until March 31, 2011, the aggregate amount of
 qualifying cumulative perpetual preferred stock and qualifying trust
 preferred securities that may be included in Tier 1 capital is limited to 25%
 of the sum of the following core capital elements: qualifying common
 stockholders equity, qualifying noncumulative and cumulative perpetual
 preferred stock, qualifying noncontrolling interest in the equity accounts of
 consolidated subsidiaries and qualifying trust preferred securities. First
 Banks has determined that the Federal Reserves final rules that will be
 effective in March 2011, if implemented as of March 31, 2009, would reduce
 First Banks Tier 1 capital (to risk-weighted assets) and Tier 1 capital (to
 average assets) to 6.81% and 6.15%, respectively, and would not have an
 impact on total capital (to risk-weighted assets). The final rules that will
 be effective in March 2011, if implemented as of March 31, 2009, would not
 have an impact on First Banks regulatory capital ratios.First Bank is restricted
 by various state and federal regulations as to the amount of dividends that
 are available for payment to First Banks. Under the most restrictive of these
 requirements, the payment of dividends is limited in any calendar year to the
 net profit of the current year combined with the retained net profits of the
 preceding two years. Permission must be obtained for dividends exceeding
 these amounts. Based on the current level of earnings, permission must be
 obtained for any payment of dividends from First Bank to First Banks, Inc.
 Furthermore, First Bank, under its agreement with the MDOF and the FRB, has
 agreed, among other things, not to declare or pay any dividends or make
 certain other payments without the prior consent of the MDOF and the FRB, as
 further described in Note 1 to the consolidated financial statements.11(7)
BUSINESSSEGMENTRESULTSFirst
 Banks business segment is First Bank. The reportable business segment is
 consistent with the management structure of First Banks, First Bank and the
 internal reporting system that monitors performance. First Bank provides
 similar products and services in its defined geographic areas through its
 branch network. The products and services offered include a broad range of
 commercial and personal deposit products, including demand, savings, money
 market and time deposit accounts. In addition, First Bank markets combined
 basic services for various customer groups, including packaged accounts for
 more affluent customers, and sweep accounts, lock-box deposits and cash
 management products for commercial customers. First Bank also offers consumer
 and commercial loans. Consumer lending includes residential real estate, home
 equity and installment lending. Commercial lending includes commercial,
 financial and agricultural loans, real estate construction and development
 loans, commercial real estate loans, small business lending, asset-based
 loans, trade financing and insurance premium financing. Other financial
 services include mortgage banking, debit cards, brokerage services, employee
 benefit and commercial and personal insurance services, internet banking,
 remote deposit, ATMs, telephone banking, safe deposit boxes, and trust,
 private banking and institutional money management services. The revenues
 generated by First Bank and its subsidiaries consist primarily of interest income,
 generated from the loan and investment security portfolios, service charges
 and fees generated from deposit products and services, and fees generated by
 First Banks mortgage banking, insurance, and trust, private banking and
 institutional money management business units. First Banks products and
 services are offered to customers primarily within its respective geographic
 areas, which include eastern Missouri, Illinois, including the Chicago
 metropolitan area, southern and northern California, Houston and Dallas,
 Texas and Floridas Manatee, Pinellas, Hillsborough and Pasco counties.
 Certain loan products are available nationwide. The business segment results
 are consistent with First Banks internal reporting system and, in all
 material respects, with U.S. generally accepted accounting principles and
 practices predominant in the banking industry. The business segment results
 are summarized as follows:First Bank

Corporate, Other
 and Intercompany
 Reclassifications

Consolidated TotalsMarch 31,
 2009

December 31,
 2008

March 31,
 2009

December 31,
 2008

March 31,
 2009

December 31,
 2008(dollars expressed in thousands)Balance sheet information:Investment
 securities

$
677,846


607,443


14,749


15,483


692,595


622,926Loans, net
 of unearned discount


8,421,580


8,592,975








8,421,580


8,592,975Goodwill and
 other intangible assets


304,462


306,800








304,462


306,800Total assets


10,234,781


10,756,737


24,952


26,417


10,259,733


10,783,154Deposits


8,734,694


8,843,901


(83,358
)

(102,381
)

8,651,336


8,741,520Other
 borrowings


254,538


575,133








254,538


575,133Subordinated
 debentures








353,847


353,828


353,847


353,828Total
 stockholders equity


1,164,456


1,240,940


(261,654
)

(244,585
)

902,802


996,355First Bank

Corporate, Other
 and Intercompany
 Reclassifications

Consolidated TotalsThree Months Ended
 March 31,

Three Months Ended
 March 31,

Three Months Ended
 March 31,2009

2008

2009

2008

2009

2008(dollars expressed in thousands)Income statement information:Interest
 income

$
119,416


164,048


123


256


119,539


164,304Interest
 expense


43,677


68,060


4,426


6,717


48,103


74,777Net interest income


75,739


95,988


(4,303
)

(6,461
)

71,436


89,527Provision
 for loan losses


108,000


45,947








108,000


45,947Net interest (loss) income after
provision
 for loan losses


(32,261
)

50,041


(4,303
)

(6,461
)

(36,564
)

43,580Noninterest
 income


25,498


33,297


2


(186
)

25,500


33,111Amortization
 of intangible assets


2,338


2,776








2,338


2,776Other
 noninterest expense


79,071


78,491


(559
)

2,157


78,512


80,648(Loss) income before (benefit)
provision
 for income taxes


(88,172
)

2,071


(3,742
)

(8,804
)

(91,914
)

(6,733
)(Benefit)
 provision for income taxes


(467
)

1,087


(47
)

(3,092
)

(514
)

(2,005
)Net (loss) income


(87,705
)

984


(3,695
)

(5,712
)

(91,400
)

(4,728
)Net (loss) income attributable to
 noncontrolling interest in subsidiaries


(1,994
)

145








(1,994
)

145Net (loss) income attributable
to First
 Banks, Inc.

$
(85,711
)

839


(3,695
)

(5,712
)

(89,406
)

(4,873
)12(8)
OTHERBORROWINGSOther borrowings were
 comprised of the following at March 31, 2009 and December 31, 2008:March
 31,
 2009

December
 31,2008(dollars
 expressed in thousands)Securities sold under
 agreements to repurchase:Daily


$
133,845




154,423Term



120,000




120,000FRB borrowings (1)








100,000FHLB advances (2)



693




200,710Total


$
254,538




575,133(1)
In November 2008, First Bank entered into a $100.0 million
borrowing
 with the FRB upon termination of a $100.0 million FHLB advance, and
 subsequently renewed the borrowing at maturity in December 2008 at a fixed
 interest rate of 0.42%. First Bank repaid this borrowing upon maturity in
 February 2009.(2)
In January 2008, First Bank entered into a $100.0 million Federal
 Home Loan Bank (FHLB) advance that was scheduled to mature in July 2009 at a
 fixed interest rate of 2.53%. In March 2009, First Bank prepaid this $100.0
 million FHLB advance and incurred a prepayment penalty of $357,000. The prepayment
 penalty was recorded as interest expense on other borrowings in the
 consolidated statements of operations. In July 2008, First Bank entered into
 a $100.0 million FHLB advance at a fixed interest rate of 2.92%. First Bank
 repaid this advance upon maturity in February 2009. In April 2009, First Bank
 entered into two $100.0 million FHLB advances that mature in April 2010 and
 April 2011 at fixed interest rates of 1.69% and 1.77%, respectively.The
 maturity date, par amount, interest rate and interest rate floor strike price
 on First Banks term repurchase agreement as of March 31, 2009 and December
 31, 2008 were as follows:Maturity Date


Par
 Amount

Interest
 Rate

Interest
 Rate Floor
 Strike Price(dollars
 expressed
 in thousands)April 12, 2012 (1)


$
120,000


3.36%

(1)
On March 31, 2008, First Bank restructured its $100.0 million term
 repurchase agreement. The primary modifications were to: (a) increase the
 borrowing amount to $120.0 million; (b) extend the maturity date from October
 12, 2010 to April 12, 2012; (c) convert the interest rate from a variable
 rate to a fixed rate of 3.36%, with interest to be paid quarterly beginning
 on April 12, 2008; and (d) terminate the embedded interest rate floor
 agreements contained within the term repurchase agreement. These
 modifications resulted in a pre-tax gain of $5.0 million, which was recorded
 as noninterest income in the consolidated statements of operations.(9)
SUBORDINATEDDEBENTURESFirst
 Banks has formed or assumed various affiliated Delaware or Connecticut
 statutory and business trusts (collectively, the Trusts) that were created
 for the sole purpose of issuing trust preferred securities. The trust
 preferred securities were issued in private placements, with the exception of
 First Preferred Capital Trust IV, which was issued in a publicly underwritten
 offering. First Banks owns all of the common securities of the Trusts. The
 gross proceeds of the offerings were used by the Trusts to purchase variable
 rate or fixed rate subordinated debentures from First Banks. The subordinated
 debentures are the sole asset of the Trusts. In connection with the issuance
 of the trust preferred securities, First Banks made certain guarantees and
 commitments that, in the aggregate, constitute a full and unconditional
 guarantee by First Banks of the obligations of the Trusts under the trust
 preferred securities. First Banks distributions accrued on the subordinated
 debentures were $4.1 million and $6.1 million for the three months ended
 March 31, 2009 and 2008, respectively, and are included in interest expense
 in the consolidated statements of operations. The structure of the trust
 preferred securities currently satisfies the regulatory requirements for
 inclusion, subject to certain limitations, in First Banks capital base.13A summary of the subordinated debentures issued to the Trusts in
 conjunction with the trust preferred securities offerings at March 31, 2009
 and December 31, 2008 were as follows:Name of
 Trust

Issuance
 Date

Maturity
 Date

Call
 Date(1)

Interest
 Rate (2)

Trust
 Preferred
 Securities

Subordinated
 DebenturesVariable
 RateFirst Bank
 Statutory Trust II

September 2004

September 20, 2034

September 20, 2009

+ 205.0 bp


$
20,000

$
20,619Royal Oaks
 Capital Trust I

October 2004

January 7, 2035

January 7, 2010

+ 240.0 bp



4,000


4,124First Bank
 Statutory Trust III

November 2004

December 15, 2034

December 15, 2009

+ 218.0 bp



40,000


41,238First Bank
 Statutory Trust IV

March 2006

March 15, 2036

March 15, 2011

+ 142.0 bp



40,000


41,238First Bank
 Statutory Trust V

April 2006

June 15, 2036

June 15, 2011

+ 145.0 bp



20,000


20,619First Bank
 Statutory Trust VI

June 2006

July 7, 2036

July 7, 2011

+ 165.0 bp
(3a)


25,000


25,774First Bank
 Statutory Trust VII

December 2006

December 15, 2036

December 15, 2011

+ 185.0 bp
(3b)


50,000


51,547First Bank
 Statutory Trust VIII

February 2007

March 30, 2037

March 30, 2012

+ 161.0 bp
(3c)


25,000


25,774First Bank
 Statutory Trust X

August 2007

September 15, 2037

September 15, 2012

+ 230.0 bp



15,000


15,464First Bank
 Statutory Trust IX

September 2007

December 15, 2037

December 15, 2012

+ 225.0 bp
(3d)


25,000


25,774First Bank
 Statutory Trust XI

September 2007

December 15, 2037

December 15, 2012

+ 285.0 bp



10,000


10,310Fixed
 RateFirst Bank
 Statutory Trust

March 2003

March 20, 2033

March 20, 2008

8.10
%


25,000


25,774First Preferred
 Capital Trust IV

April 2003

June 30, 2033

June 30, 2008

8.15
%


46,000


47,423(1)
The
 subordinated debentures are callable at the option of First Banks on the call
 date shown at 100% of the principal amount plus accrued and unpaid interest.(2)
The
 interest rates paid on the trust preferred securities are based on either a
 variable rate or a fixed rate. The variable rate for the outstanding
 subordinated debentures is based on the three-month LIBOR plus the basis
 point spread shown.(3)
In
 March 2008, First Banks executed four interest rate swap agreements, which
 have been designated as cash flow hedges, to effectively convert the interest
 payments on these subordinated debentures from variable rate to fixed rate to
 the respective call dates as follows:(a)
$25.0
 million notional amount with a maturity date of July 7, 2011 that converts
 the interest rate from a variable rate of LIBOR plus 165 basis points to a
 fixed rate of 4.40%;(b)
$50.0
 million notional amount with a maturity date of December 15, 2011 that
 converts the interest rate from a variable rate of LIBOR plus 185 basis
 points to a fixed rate of 4.905%;(c)
$25.0
 million notional amount with a maturity date of March 30, 2012 that converts
 the interest rate from a variable rate of LIBOR plus 161 basis points to a
 fixed rate of 4.71%; and(d)
$25.0
 million notional amount with a maturity date of December 15, 2012 that
 converts the interest rate from a variable rate of LIBOR plus 225 basis
 points to a fixed rate of 5.565%.Under its Memorandum of Understanding with the FRB, First Banks
 agreed, among other things, to provide certain information to the FRB,
 including, but not limited to, prior notice regarding the issuance of
 additional trust preferred securities. First Banks also agreed not to make
 any distributions of interest or other sums on its outstanding trust
 preferred securities without the prior approval of the FRB, as further
 described in Note 1 to the consolidated financial statements. The Company
 received the approval of the FRB to make its regular quarterly interest
 payments in June and July 2009 on its outstanding subordinated debentures for
 further payment to the individual holders of the respective underlying trust
 preferred securities. However, First Banks is not able to predict whether the
 FRB will approve future payment requests.(10)
STOCKHOLDERS EQUITYThere is no established public trading market for First
Banks common
 stock. Various trusts, which were established by and are administered by and
 for the benefit of First Banks Chairman of the Board and members of his
 immediate family, own all of the voting stock of First Banks.First Banks has four 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
 holders of the Class A and Class B preferred stock have full voting rights.
 Dividends on the Class A and Class B preferred stock are adjustable quarterly
 based on the highest of the Treasury Bill Rate or the Ten Year Constant
 Maturity Rate for the two-week period immediately preceding the beginning of
 the quarter. This rate shall not be less than 6.0% nor more than 12.0% on the
 Class A preferred stock, or less than 7.0% nor more than 15.0% on the Class B
 preferred stock. The annualized dividend rate for the Class A preferred stock
 and the Class B preferred stock is 6.0% and 7.0%, respectively, for the three
 months ended March 31, 2009.On December 31, 2008, First
 Banks issued 295,400 shares of Class C Fixed Rate Cumulative Perpetual
 Preferred Stock (Class C Preferred Stock) and 14,770 shares of Class D Fixed
 Rate Cumulative Perpetual Preferred Stock14(Class D Preferred Stock) to the United States Department of the
 Treasury (U.S. Treasury) in conjunction with the U.S. Treasurys Troubled
 Asset Relief Programs Capital Purchase Program (TARP). The Class C Preferred
 Stock has a par value of $1.00 per share and a liquidation preference of
 $1,000 per share. The holders of the Class C Preferred Stock have no voting
 rights except in certain limited circumstances. The Class C Preferred Stock
 carries an annual dividend rate equal to 5% for the first five years and the
 annual dividend rate increases to 9% thereafter, payable quarterly in arrears
 beginning February 15, 2009. The Class D Preferred Stock has a par value of
 $1.00 per share and a liquidation preference of $1,000 per share. The holders
 of the Class D Preferred Stock have no voting rights except in certain
 limited circumstances. The Class D Preferred Stock carries an annual dividend
 rate equal to 9%, payable quarterly in arrears beginning February 15, 2009.
 The Class C Preferred Stock and the Class D Preferred Stock qualify as Tier 1
 capital. Effective February 17, 2009, the Class C Preferred Stock and the
 Class D Preferred Stock may be redeemed at any time without penalty and
 without the need to raise new capital, subject to the U.S. Treasurys
 consultation with the Companys primary regulatory agency. The Class D
 Preferred Stock may not be redeemed until all of the outstanding shares of
 the Class C Preferred Stock have been redeemed.First Banks allocated the total proceeds received under the TARP of
 $295.4 million to the Class C Preferred Stock and the Class D Preferred Stock
 based on the relative fair values of the respective classes of preferred
 stock at the time of issuance. The discount on the Class C Preferred Stock of
 $17.3 million is being accreted to retained earnings on a level-yield basis
 over five years, consistent with managements estimates of the life of the
 preferred stock. Accretion of the discount on the Class C Preferred Stock was
 $813,000 for the three months ended March 31, 2009.The redemption of any issue of preferred stock requires the prior
 approval of the Federal Reserve. Furthermore, the agreement that First Banks
 entered into with the U.S. Treasury associated with the issuance of the Class
 C and D Preferred Stock contains limitations on certain actions of First
 Banks, including, but not limited to, payment of dividends and redemptions
 and acquisitions of First Banks equity securities. In addition, First Banks,
 under its Memorandum of Understanding with the FRB, has agreed, among other
 things, to provide certain information to the FRB including, but not limited
 to, notice of plans to materially change its fundamental business and notice
 to raise additional equity capital. In addition, First Banks agreed not to
 declare any dividends on its common or preferred stock without the prior
 approval of the FRB, as further described in Note 1 to the consolidated
 financial statements. First Banks received the approval of the FRB to declare
 the regular quarterly dividends on all four classes of its preferred stock to
 be paid in May and June 2009 in accordance with the individual terms of each
 class of preferred stock. However, First Banks is not able to predict whether
 the FRB will approve future dividend requests.On January 1, 2009, First Banks implemented SFAS No. 160 
Noncontrolling Interests in Consolidated Financial
 Statements, an Amendment of ARB 51,which resulted in the
 reclassification of noncontrolling interest in subsidiaries of $129.4 million
 from a liability to a component of stockholders equity in the consolidated
 balance sheets, as further described in Note 1 to the consolidated financial
 statements.The following table presents the transactions affecting accumulated
 other comprehensive income (loss) included in shareholders equity for the
 three months ended March 31, 2009 and 2008:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Net loss

$
(91,400
)

(4,728
)Other comprehensive income
(loss):Unrealized gains on investment
securities, net of tax


3,613


13,050Reclassification adjustment for
investment securities gains included
 in net loss, net of tax


(346
)

(754
)Reclassification adjustment for
deferred tax asset valuation allowance
 on investment securities


(257
)

Change in unrealized gains on
derivative instruments, net of tax


(2,840
)

5,320Reclassification adjustment for
deferred tax asset valuation allowance
 on derivatives


(151
)

Amortization of net loss related
to pension plan, net of tax


36


Comprehensive (loss)
income


(91,345
)

12,888Comprehensive (loss) income
attributable to noncontrolling interest in
 subsidiaries


(1,994
)

145Comprehensive (loss) income
attributable to First Banks, Inc.

$
(89,351
)

12,74315(11)
INCOMETAXESThe realization of First Banks net deferred tax assets is
based on
 the expectation of future taxable income and the utilization of tax planning
 strategies. First Banks recorded a full valuation allowance against its net
 deferred tax assets at December 31, 2008. The deferred tax asset valuation
 allowance was recorded in accordance with SFAS No. 109, Accounting for Income Taxes. Under SFAS
 No. 109, the Company is required to assess whether it is more likely than not
 that some portion or all of the Companys deferred tax assets will not be
 realized. Pursuant to SFAS No. 109, concluding that a deferred tax asset
 valuation allowance is not required is difficult when there is significant
 evidence which is objective and verifiable, such as the lack of recoverable
 taxes, excess of reversing deductible differences over reversing taxable
 differences and cumulative losses in recent years. If, in the future, the
 Company generates taxable income on a sustained basis, managements
 conclusion regarding the need for a deferred tax asset valuation allowance
 could change, resulting in the reversal of a portion or all of such deferred
 tax asset valuation allowance.A summary of First Banks deferred tax assets and deferred tax
 liabilities at March 31, 2009 and December 31, 2008 is as follows:March 31,
 2009

December 31,
 2008(dollars expressed in thousands)Gross deferred tax assets

$
222,607


196,903Valuation allowance


(198,054
)

(160,052
)Deferred tax assets, net of
valuation allowance


24,553


36,851Deferred tax liabilities


33,267


45,565Net deferred tax
liabilities

$
(8,714
)

(8,714
)The Companys valuation allowance was $198.1 million and
$160.1
 million at March 31, 2009 and December 31, 2008, respectively. At March 31,
 2009 and December 31, 2008, for federal income tax purposes, First Banks had
 net operating loss carryforwards of approximately $155.7 million and $105.8
 million, respectively.At March 31, 2009 and December 31, 2008, First Banks
liability for
 uncertain tax positions, excluding interest and penalties, was $3.4 million
 and $3.3 million, respectively. At March 31, 2009 and December 31, 2008, the
 total amount of unrecognized tax benefits that would affect the effective
 income tax rate was $1.6 million. During the three months ended March 31,
 2009, First Banks recorded additional liabilities for unrecognized tax
 benefits of $69,000 that, if recognized, would decrease the provision for
 income taxes by $69,000.It is First Banks policy to separately disclose any interest
or
 penalties arising from the application of federal or state income taxes.
 Interest related to unrecognized tax benefits is included in interest expense
 and penalties related to unrecognized tax benefits are included in
 noninterest expense. At March 31, 2009 and December 31, 2008, interest
 accrued for unrecognized tax positions was $1.1 million and $1.0 million,
 respectively. The Company increased its interest expense by $63,000 and
 $151,000 during the three months ended March 31, 2009 and 2008, respectively.
 There were no penalties for unrecognized tax positions accrued at March 31,
 2009 and December 31, 2008, nor did First Banks recognize any expense for
 penalties during the three months ended March 31, 2009 and 2008.First Banks continually evaluates the unrecognized tax benefits
 associated with its uncertain tax positions. It is reasonably possible that
 the total unrecognized tax benefits as of March 31, 2009 could decrease by
 approximately $1.9 million during the remainder of the year, as a result of
 the lapse of statutes of limitations and potential settlements with the
 federal and state taxing authorities, of which the impact to the provision
 for income taxes is estimated to be approximately $676,000. It is also
 reasonably possible that this decrease could be substantially offset by new
 matters arising during the same period.First Banks files consolidated and separate income tax returns in
the
 U.S. federal jurisdiction and in various state jurisdictions. Management of
 First Banks believes the accrual for tax liabilities is adequate for all open
 audit years based on its assessment of many factors, including past
 experience and interpretations of tax law applied to the facts of each
 matter. This assessment relies on estimates and assumptions. First Banks
 federal income tax returns through 2004 have been examined by the Internal
 Revenue Service (IRS) and except for changes reflected in the protective
 filing of the 2004 federal income tax return, there are no open issues for
 years prior to 2005. Currently, the IRS is examining First Banks federal
 income tax returns for the years 2005 and 2008. These years contain matters
 that could be subject to differing interpretations of applicable tax laws and
 regulations as they relate to the amount, timing or inclusion of revenue and
 expenses. The Company has recorded a tax benefit only for those positions
 that meet the more likely than not standard. First Banks current estimate
 of the resolution of various state16examinations, none of which are in process, is reflected in accrued
 income taxes; however, final settlement of the examinations or changes in
 First Banks estimate may result in future income tax expense or benefit.(12)
FAIR VALUE DISCLOSURESIn accordance with SFAS No. 157, financial assets and financial
 liabilities that are measured at fair value subsequent to initial recognition
 are grouped into three levels of inputs or assumptions that market
 participants would use in pricing the asset or liability, including
 assumptions about risk and the reliability of assumptions used to determine
 fair value. The three input levels are as follows:Level 1 Inputs 
Valuation is based on quoted prices in active markets for identical
 instruments in active markets.Level 2 Inputs 
Valuation is based on quoted prices for similar instruments in
active
 markets; quoted prices for identical or similar instruments in markets that
 are not active; and model-derived valuations whose inputs are observable or
 whose significant value drivers are observable.Level 3 Inputs 
Valuation is generated from model-based techniques that use at
least
 one significant assumption not observable in the market. These unobservable
 assumptions reflect estimates of assumptions that market participants would
 use in pricing the asset or liability. Valuation techniques include use of
 option pricing models, discounted cash flow models and similar techniques.Items Measured on
 a Recurring Basis. Assets and liabilities
 measured at fair value on a recurring basis as of March 31, 2009 are
 reflected in the following table:Fair Value MeasurementsMarch 31, 2009Level 1

Level 2

Level 3

Fair Value(dollars expressed in thousands)Assets:Available-for-sale investment
securities

$
5,594


670,039





675,633Mortgage loans held for
sale





85,558





85,558Derivative instruments





828





828Servicing rights








15,746


15,746Total

$
5,594


756,425


15,746


777,765Liabilities:Derivative instruments

$



5,893





5,893Nonqualified deferred
compensation plan


7,075








7,075Total

$
7,075


5,893





12,968The following table presents the changes in Level 3 assets measured
 on a recurring basis for the three months ended March 31, 2009 and 2008:Servicing RightsThree Months Ended
 March 31,2009

2008(dollars expressed in thousands)Balance, beginning of
period

$
16,381


12,758Impact of election to measure
servicing rights at fair value under
 SFAS No. 156





10,443Total gains or losses
(realized/unrealized):Included in
earnings (1)


(1,985
)

(1,759
)Included in other comprehensive
income





Purchases, issuances and
settlements


1,350


2,037Transfers in and/or out of level
3





Balance, end of period

$
15,746


23,479(1)     Gains
 or losses (realized/unrealized) are included in noninterest income in the
 consolidated statements of operations.Items Measured on
 a Nonrecurring Basis. From time to time, First
 Banks measures certain assets at fair value on a nonrecurring basis. These
 include assets that are measured at the lower of cost or market value that
 were recognized17at fair value below cost at the end of the period. Assets measured
at
 fair value on a nonrecurring basis as of March 31, 2009 are reflected in the
 following table:Fair Value MeasurementsMarch 31, 2009Level 1

Level 2

Level 3

Fair Value(dollars expressed in thousands)Assets:Loans held for sale

$



22,358





22,358Impaired loans








402,725


402,725Total

$



22,358


402,725


425,083Non-Financial
 Assets and Non-Financial Liabilities.Certain non-financial assets measured
 at fair value on a non-recurring basis include other real estate (upon
 initial recognition or subsequent impairment), non-financial assets and
 non-financial liabilities measured at fair value in the second step of a
 goodwill impairment test, and intangible assets and other non-financial
 long-lived assets measured at fair value for impairment assessment.During
 the first quarter of 2009, certain other real estate, upon initial
 recognition, was re-measured and reported at fair value through a charge-off
 to the allowance for loan losses based upon the estimated fair value of the
 other real estate. The fair value of other real estate, upon initial
 recognition, is estimated using Level 3 inputs based on third-party
 appraisals, and where applicable, discounted based on managements judgment
 taking into account current market conditions, distressed or forced sale
 price comparisons and other factors in effect at the time of valuation. Other
 real estate measured at fair value upon initial recognition totaled $65.3
 million during the three months ended March 31, 2009. In addition to other
 real estate measured at fair value upon initial recognition, First Banks
 recorded write-downs to the balance of other real estate of $613,000 to
 noninterest expense for the three months ended March 31, 2009. Other real
 estate was $145.8 million at March 31, 2009.(13)
DERIVATIVE FINANCIAL INSTRUMENTSFirst Banks utilizes derivative financial instruments to assist in
 the management of interest rate sensitivity by modifying the re-pricing,
 maturity and option characteristics of certain assets and liabilities.
 Derivative financial instruments held by First Banks as of March 31, 2009 and
 December 31, 2008 are summarized as follows:March 31, 2009

December 31, 2008Notional
 Amount

Credit
 Exposure

Notional
 Amount

Credit
 Exposure(dollars expressed in thousands)Cash flow hedges 
subordinated debentures

$
125,000





125,000


Customer interest rate swap
agreements


62,355





16,000


Interest rate lock
commitments


99,700


1,915


48,700


831Forward commitments to sell
mortgage-backed securities


156,200





40,300


The notional amounts of derivative financial instruments do not
 represent amounts exchanged by the parties and, therefore, are not a measure
 of First Banks credit exposure through its use of these instruments. The
 credit exposure represents the loss First Banks would incur in the event the
 counterparties failed completely to perform according to the terms of the
 derivative financial instruments and the collateral held to support the
 credit exposure was of no value. At March 31, 2009 and December 31, 2008,
 First Banks had pledged cash of $4.1 million and $3.7 million, respectively,
 as collateral in connection with its interest rate swap agreements on
 subordinated debentures.Cash Flow Hedges 
 Subordinated Debentures. First Banks has entered
 into four interest rate swap agreements, which have been designated as cash
 flow hedges, with the objective of stabilizing long-term cost of capital and
 cash flow, and accordingly, net interest expense on subordinated debentures
 to the respective call dates of certain subordinated debentures. These swap
 agreements provide for First Banks to receive an adjustable rate of interest
 equivalent to the three-month London Interbank Offered Rate (LIBOR) plus
 1.65%, 1.85%, 1.61% and 2.25%, and pay a fixed rate of interest. The terms of
 the swap agreements provide for First Banks to pay and receive interest on a
 quarterly basis.The amount receivable by First Banks under these swap agreements
was
 $274,000 and $528,000 at March 31, 2009 and December 31, 2008, respectively,
 and the amount payable by First Banks under these swap agreements was
 $434,000 and $451,000 at March 31, 2009 and December 31, 2008, respectively.18The maturity dates, notional amounts, interest rates paid and
received
 and fair value of First Banks interest rate swap agreements designated as
 cash flow hedges on certain subordinated debentures as of March 31, 2009 and
 December 31, 2008 were as follows:Maturity Date

Notional
 Amount

Interest Rate
 Paid

Interest Rate
 Received

Fair
 Value(dollars expressed in thousands)March 31,
 2009:July 7, 2011

$
25,000

4.40
%

2.74
%

$
(843
)December 15, 2011


50,000

4.91


3.17



(2,032
)March 30, 2012


25,000

4.71


2.84



(1,083
)December 15, 2012


25,000

5.57


3.57



(1,349
)$
125,000

4.90


3.10


$
(5,307
)December 31,
2008:July 7, 2011

$
25,000

4.40
%

6.40
%

$
(575
)December 15, 2011


50,000

4.91


3.85



(1,945
)March 30, 2012


25,000

4.71


3.08



(1,048
)December 15, 2012


25,000

5.57


4.25



(1,308
)$
125,000

4.90


4.29


$
(4,876
)Cash Flow Hedges 
 Loans. First Banks entered into the following
 interest rate swap agreements, which have been designated as cash flow
 hedges, to effectively lengthen the repricing characteristics of certain
 loans to correspond more closely with their funding source with the objective
 of stabilizing cash flow, and accordingly, net interest income over time:Ø
In September 2006, First Banks entered into a $200.0 million
notional
 amount three-year interest rate swap agreement and a $200.0 million notional
 amount four-year interest rate swap agreement. The underlying hedged assets
 were certain variable rate loans within First Banks commercial loan
 portfolio. The swap agreements provided for First Banks to receive a fixed
 rate of interest and pay an adjustable rate of interest equivalent to the
 weighted average prime lending rate minus 2.86%. The terms of the swap
 agreements provided for First Banks to pay and receive interest on a
 quarterly basis. In December 2008, First Banks terminated these swap
 agreements. The pre-tax gain of $20.8 million, in aggregate, is being
 amortized as an increase to interest and fees on loans in the consolidated
 statements of operations over the remaining terms of the respective interest
 rate swap agreements, which had contractual maturity dates of September 18,
 2009 and September 20, 2010.For interest rate swap agreements designated as cash flow hedges,
the
 effective portion of the gain or loss on the derivative is reported as a
 component of other comprehensive income (loss) and reclassified into interest
 income or interest expense in the same period the hedged 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.
 First Banks did not recognize any ineffectiveness related to interest rate
 swap agreements designated as cash flow hedges in the consolidated statements
 of operations for the three months ended March 31, 2009 and 2008. The net
 cash flows on these interest rate swap agreements are recorded as an
 adjustment to interest income or interest expense of the related asset or
 liability being hedged.Customer Interest
 Rate Swap Agreements.First Bank offers interest
 rate swap agreements to certain customers to assist in hedging their risks of
 adverse changes in interest rates. First Bank serves as an intermediary
 between its customers and the financial markets. Each interest rate swap
 agreement between First Bank and its customers is offset by an interest rate
 swap agreement between First Bank and various counterparties. These interest
 rate swap agreements do not qualify for hedge accounting. Changes in the fair
 value are recognized in noninterest income on a monthly basis. Each customer
 contract is paired with an offsetting contract, and as such, there is no
 significant impact to net income (loss). The notional amount of these
 interest rate swap agreements at March 31, 2009 and December 31, 2008 was
 $62.4 million and $16.0 million, respectively.Interest Rate
 Floor Agreements. In September 2005, First Bank
 entered into a $100.0 million notional amount three-year interest rate floor
 agreement in conjunction with its interest rate risk management program. The
 interest rate floor agreement provided for First Bank to receive a quarterly
 fixed rate of interest of 5.00% should the three-month LIBOR equal or fall
 below the strike price of 2.00%. In August 2006, First Bank entered into a
 $200.0 million notional amount three-year interest rate floor agreement in
 conjunction with the restructuring of one of First Banks $100.0 million term
 repurchase agreements, as further described below, to further stabilize net
 interest19income in
 the event of a declining rate scenario. The interest rate floor agreement
 provided for First Bank to receive a quarterly adjustable rate of interest
 equivalent to the differential between the strike price of 4.00% and the
 three-month LIBOR should the three-month LIBOR equal or fall below the strike
 price. In May 2008, First Bank terminated its interest rate floor agreements
 to modify its overall hedge position in accordance with its interest rate
 risk management program, and did not incur any gains or losses in conjunction
 with the termination of these interest rate floor agreements. Changes in the
 fair value of interest rate floor agreements are recognized in noninterest
 income.Interest Rate Floor Agreements Embedded in
 Term Repurchase Agreements. First Bank has a
 term repurchase agreement under a master repurchase agreement with an unaffiliated
 third party, as further described in Note 8 to the consolidated financial
 statements. The underlying securities associated with the term repurchase
 agreement are agency collateralized mortgage obligation securities and are
 held by other financial institutions under safekeeping agreements. The term
 repurchase agreement was entered into with the objective of stabilizing net
 interest income over time, further protecting the net interest margin against
 changes in interest rates and providing funding for security purchases. The
 term repurchase agreement had a borrowing amount of $100.0 million, a
 maturity date of October 12, 2010, and contained an embedded interest rate
 floor agreement which was terminated in 2008. The interest rate floor
 agreement included within the term repurchase agreement represented an
 embedded derivative instrument which, in accordance with existing accounting
 literature governing derivative instruments, was not required to be separated
 from the term repurchase agreement and accounted for separately as a
 derivative financial instrument. As such, the term repurchase agreement is
 reflected in other borrowings in the consolidated balance sheets and the
 related interest expense is reflected as interest expense on other borrowings
 in the consolidated statements of operations. In March 2008, First Bank
 restructured its existing $100.0 million term repurchase agreement. The
 primary modifications were to: (a) increase the borrowing amount from $100.0
 million to $120.0 million; (b) extend the maturity date from October 12, 2010
 to April 12, 2012; (c) convert the interest rate from a variable rate tied to
 LIBOR to a fixed rate of 3.36%; and (d) terminate the embedded interest rate
 floor agreement contained within the term repurchase agreement. These
 modifications resulted in a pre-tax gain of $5.0 million, which is reflected
 in noninterest income in the consolidated statements of operations.Interest Rate Lock Commitments / Forward
 Commitments to Sell Mortgage-Backed Securities.
 Derivative financial instruments issued by First Banks consist of interest
 rate lock commitments to originate fixed-rate loans to be sold. Commitments
 to originate fixed-rate loans consist primarily of residential real estate
 loans. These net loan commitments and loans held for sale are hedged with
 forward contracts to sell mortgage-backed securities, which expire in June
 2009. The fair value of the interest rate lock commitments, which is included
 in other assets in the consolidated balance sheets, was an unrealized gain of
 $1.9 million and $831,000 at March 31, 2009 and December 31, 2008, respectively. The fair value of the forward contracts to sell mortgage-backed
 securities, which is included in other assets in the consolidated balance
 sheets, was an unrealized loss of $1.7 million and $325,000 at March 31, 2009
 and December 31, 2008, respectively. Changes in the fair value of interest
 rate lock commitments and forward commitments to sell mortgage-backed
 securities are recognized in noninterest income.The following
 table summarizes derivative financial instruments held by First Banks, their
 estimated fair values and their location in the consolidated balance sheets
 at March 31, 2009 and December 31, 2008:March 31, 2009

December 31, 2008Balance Sheet
 Location

Fair Value
 Gain (Loss)

Balance Sheet
 Location

Fair Value
 Gain (Loss)(dollars expressed in thousands)Derivative financial
instruments designated as
 hedging instruments under SFAS No. 133:Cash flow hedges 
subordinated debentures

Other liabilities

$
(5,307
)
Other liabilities


(4,876
)Derivative financial
instruments not designated as
 hedging instruments under SFAS No. 133:Customer interest rate swap
agreements

Other assets

$
586

Other assets


76Interest rate lock
commitments

Other assets


1,915

Other assets


831Forward commitments to sell
mortgage-backed securities

Other assets


(1,673
)
Other assets


(325
)Total
derivatives in other assets



$
828




582Customer interest rate swap
agreements

Other liabilities

$
(586
)
Other liabilities


(76
)20The following table summarizes amounts included in the consolidated
 statements of operations and in accumulated other comprehensive income in the
 consolidated balance sheets as of and for the three months ended March 31,
 2009 and 2008 related to interest rate swap agreements designated as cash
 flow hedges:Three Months Ended
 March 31,2009

2008(dollars expressed
 in thousands)Derivative financial
instruments designated as
 hedging instruments under SFAS No. 133:Cash flow hedges 
loans:Amount reclassified from
accumulated other comprehensive income to
 interest income on loans

$
3,938


1,800Amount of gain (loss) recognized
in other comprehensive income





10,388Cash flow hedges 
 subordinated debentures:Amount reclassified from
accumulated other comprehensive income to
 interest expense on subordinated debentures


428


14Amount of gain (loss) recognized
in other comprehensive income


(859
)

(417
)The unamortized gain related to the fair value of the cash flow
 hedges on loans at the date of termination in December 2008 in accumulated
 other comprehensive income was $15.5 million and $19.5 million on a gross
 basis and $10.1 million and $12.7 million, net of tax, at March 31, 2009 and
 December 31, 2008, respectively. The loss included in accumulated other
 comprehensive income related to cash flow hedges on subordinated debentures
 was $5.3 million and $4.9 million on a gross basis and $3.4 million and $3.2
 million, net of tax, at March 31, 2009 and December 31, 2008, respectively.The following table summarizes amounts included in the consolidated
 statements of operations for the three months ended March 31, 2009 and 2008
 related to non-hedging derivative instruments:Three Months Ended
 March 31,2009

2008(dollars expressed
 in thousands)Derivative financial
instruments not designated as
 hedging instruments under SFAS No. 133:Customer interest rate swap
agreements:Net gain on derivative
instruments

$
401


Interest rate floor
agreements:Net gain on derivative
instruments





3,432Interest rate floor agreements
embedded in Term Repurchase Agreements:Gain on extinguishment of term
repurchase agreement





5,000Interest rate lock
commitments:Gain on loans sold and held for
sale


1,084


128Forward commitments to sell
mortgage-backed securities:Gain on loans sold and held for
sale


(1,348
)

(1,167
)(14)
CONTINGENT LIABILITIESIn October 2000, First Banks entered into two continuing guaranty
 contracts. For value received, and for the purpose of inducing a pension fund
 and its trustees and a welfare fund and its trustees (the Funds) to conduct
 business with MVP, First Banks institutional investment management
 subsidiary, First Banks irrevocably and unconditionally guaranteed payment of
 and promised to pay to each of the Funds any amounts up to the sum of $5.0
 million to the extent MVP is liable to the Funds for a breach of the
 Investment Management Agreements (including the Investment Policy Statement
 and Investment Guidelines), by and between MVP and the Funds and/or any
 violation of the Employee Retirement Income Security Act by MVP resulting in
 liability to the Funds. The guaranties are continuing guaranties of all
 obligations that may arise for transactions occurring prior to termination of
 the Investment Management Agreements and are coexistent with the term of the
 Investment Management Agreements. The Investment Management Agreements have
 no specified term but may be terminated at any time upon written notice by
 the Trustees or, at First Banks option, upon thirty days written notice to
 the Trustees. In the event of termination of the Investment Management
 Agreements, such termination shall have no effect on the liability of First
 Banks21with 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 March 31, 2009 and December 31, 2008, First Banks had not
 recorded a liability for the obligations associated with these guaranty
 contracts as the likelihood that First Banks will be required to make
 payments under the contracts is remote.CFHI Securities
 Litigation. Prior to acquisition by First Banks,
 CFHI and certain of its present and former officers were named as defendants
 in three purported class action complaints filed in the United States
 District Court for the Middle District of Florida, Tampa Division (the Court)
 alleging violations of the federal securities laws, the first of which was
 filed with the Court on March 20, 2007 (the Securities Actions). On June 22,
 2007, the Court entered an order pursuant to which the Court (i) consolidated
 the Securities Actions, with the matter proceeding under the docket for Grand
 Lodge of Pennsylvania v. Brian P. Peters, et al., Case No.
 8:07-cv-429-T-26-EAJ and (ii) appointed Troy Ratcliff and Daniel Altenburg
 (the Lead Plaintiffs) as lead plaintiffs pursuant to the provisions of the
 Private Securities Litigation Reform Act of 1995.Subsequent to the disposition of certain preliminary motions filed
by
 plaintiffs and defendants, on April 2, 2008, the Lead Plaintiffs and an
 additional plaintiff, St. Denis J. Villere & Co., LLC, filed a second
 consolidated amended class action complaint (the Amended Complaint). The
 Amended complaint named as defendants (i) certain former officers and members
 of CFHIs board of directors, (ii) the underwriters of CFHIs October 5, 2005
 public offering of common stock, and (iii) CFHIs external auditors.The Amended Complaint was brought on behalf of a putative class of
 purchasers of CFHIs common stock between January 21, 2005 and January 22,
 2007. In general, the Amended Complaint alleges that CFHIs United States
 Securities and Exchange Commission filings and public statements contained
 misstatements and omissions regarding its residential
 construction-to-permanent lending operations and, more specifically,
 regarding a home builder and its affiliates, and also alleges that CFHIs
 financial statements violated U.S. generally accepted accounting principles.
 The Amended Complaint asserts claims under Sections 11 and 15 of the
 Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
 Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. On August 30,
 2007, the Lead Plaintiffs filed a notice with the Court voluntarily
 dismissing their claims against Anne V. Lee and Justin D. Locke without
 prejudice.On or about February 17, 2009, CFHI and the plaintiffs entered into
 an agreement for the settlement of the Securities Actions. Pursuant to the
 agreement, CFHI and its insurer will pay an amount in settlement of the
 claims, and CFHI, the former officer and director defendants, and the
 underwriter defendants will be released and dismissed with prejudice from the
 action. In accordance with the agreement, on March 16, 2009, CFHI paid its
 allocation of the settlement in the amount of $750,000, which was recorded as
 other expense in the consolidated statement of operations for the year ended
 December 31, 2008. Among other terms and conditions, the settlement is
 subject to approval by the Court and will not be consummated if the Court
 fails to grant approval.Other.In
 the ordinary course of business, First Banks and its subsidiaries become
 involved in legal proceedings other than those discussed above. Management,
 in consultation with legal counsel, believes the ultimate resolution of these
 proceedings will not have a material adverse effect on the financial
 condition or results of operations of First Banks and/or its subsidiaries.As further described in Note 1 to the consolidated financial
 statements, the Company and First Bank have entered into informal agreements
 with the MDOF and the FRB.(15)
SUBSEQUENT EVENTSOn April 30,
 2009, First Bank and FCA entered into a Purchase Agreement providing for FCA
 to sell its ownership interest in SBLS LLC to First Bank for a purchase price
 consisting of (i) an initial payment to be made on or before May 15, 2009 of
 an amount equal to 50% of the carrying value of FCAs ownership interest in
 SBLS LLC as of April 30, 2009, as reflected within the financial statements
 of First Banks, which represents an estimate agreed to by First Bank and FCA
 of the fair market value of FCAs ownership interest in SBLS LLC, and (ii) an
 adjustment in the purchase price to reflect such fair market value, based
 upon an appraisal of such value to be performed by an independent third party
 mutually acceptable to First Bank and FCA. As such, effective April 30, 2009,
 First Bank owns 100% of SBLS LLC.22ITEM 2  MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONSForward-Looking Statements and Factors that Could Affect Future
 ResultsThe
 discussion set forth in Managements Discussion and Analysis of Financial
 Condition and Results of Operations contains certain forward-looking
 statements with respect to our financial condition, results of operations and
 business. Generally, forward-looking statements may be identified through the
 use of words such as: believe, expect, anticipate, intend, plan,
 estimate, or words of similar meaning or future or conditional terms such
 as: will, would, should, could, may, likely,
probably, or possibly.
 Examples of forward-looking statements include, but are not limited to
 estimates or projections with respect to our future financial condition, and
 expected or anticipated revenues with respect to our results of operations
 and our business. These forward-looking statements are subject to certain
 risks and uncertainties, not all of which can be predicted or anticipated.
 Factors that may cause our actual results to differ materially from those
 contemplated by the forward-looking statements herein include market
 conditions as well as conditions affecting the banking industry generally and
 factors having a specific impact on us, including but not limited to:Ø
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;Ø
The
 effects of and changes in trade and monetary and fiscal policies and laws,
 including, but not limited to, the interest rate policies of the Federal Open
 Market Committee of the Federal Reserve Board of Governors, the Federal
 Deposit Insurance Corporations Temporary Liquidity Guarantee Program and the
 U.S. Treasurys Capital Purchase Program and Troubled Asset Repurchase
 Program authorized by the Emergency Economic Stabilization Act of 2008.Ø
The
 current stresses in the financial and residential real estate markets,
 including possible continued deterioration in property values;Ø
Possible
 changes in interest rates may increase funding costs and reduce earning asset
 yields, thus reducing margins;Ø
Possible
 changes in general economic and business conditions in the United States in
 general and particularly in the communities and market segments we serve;Ø
Volatility
 and disruption in national and international financial markets;Ø
Government
 intervention in the U.S. financial system;Ø
Changes
 in consumer spending, borrowings and savings habits;Ø
The
 impact of laws and regulations applicable to us and changes therein;Ø
The
 impact of changes in accounting policies and practices, as may be adopted by
 the regulatory agencies, as well as the Public Company Accounting Oversight
 Board, the Financial Accounting Standards Board, and other accounting
 standard setters;Ø
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;Ø
Our
 ability to control the composition of our loan portfolio without adversely
 affecting interest income;Ø
Possible
 changes in the creditworthiness of customers and the possible impairment of
 collectability of loans;Ø
The
 geographic dispersion of our offices;Ø
The
 impact our hedging activities may have on our operating results;Ø
The
 highly regulated environment in which we operate;Ø
Regulatory
 actions that impact First Banks, Inc. and First Bank, including the
 regulatory agreements entered into between the Company, First Bank, the
 Federal Reserve Bank of St. Louis and the Missouri Division of Finance; andØ
Our
 ability to respond to changes in technology or an interruption or breach in
 security of our information systems.With
 regard to our efforts to grow through acquisitions, factors that could affect
 the accuracy or completeness of forward-looking statements contained herein
 include:Ø
The
 competition of larger acquirers with greater resources;Ø
Fluctuations
 in the prices at which acquisition targets may be available for sale;Ø
The
 impact of making acquisitions without using our common stock;Ø
Possible
 asset quality issues, pending litigation, unknown liabilities and/or
 integration issues with the businesses that we have acquired; andØ
The
 impact of the regulatory agreements between the Company, First Bank, the
 Federal Reserve Bank of St. Louis and the Missouri Division of Finance.For
 discussion of these and other risk factors that may impact these
 forward-looking statements, please refer to our 2008 Annual Report on Form
 10-K, as filed with the United States Securities and Exchange Commission on
 March 25, 2009. We do not have a duty to and will not update these
 forward-looking statements. Readers of this Quarterly Report on Form 10-Q
 should therefore consider these risks and uncertainties in evaluating
 forward-looking statements and should not place undue reliance on these
 statements.23GeneralWe are a registered bank holding company incorporated in Missouri
in
 1978 and headquartered in St. Louis, Missouri. We operate through our wholly
 owned subsidiary bank holding company, The San Francisco Company, or SFC,
 headquartered in St. Louis, Missouri; our wholly owned subsidiary holding
 company, Coast Financial Holdings, Inc., or CFHI, headquartered in Bradenton,
 Florida; and SFCs majority-owned subsidiary bank, First Bank, also
 headquartered in St. Louis, Missouri. First Bank operates through its branch
 banking offices and its subsidiaries, as listed below:Ø
First Bank Business Capital, Inc.;Ø
Missouri Valley Partners, Inc., or MVP;Ø
Adrian N. Baker & Company, or Adrian Baker;Ø
Universal Premium Acceptance Corporation and its wholly owned
 subsidiary, UPAC of California, Inc., collectively UPAC;Ø
Small Business Loan Source LLC, or SBLS LLC; andØ
FB Holdings, LLC, or FB Holdings.First Banks subsidiaries are wholly owned except SBLS LLC,
which is
 82.55% owned by First Bank and 17.45% owned by First Capital America, Inc.,
 or FCA, and FB Holdings, which was 53.23% owned by First Bank and 46.77%
 owned by FCA as of March 31, 2009.At March 31, 2009, we had assets of $10.26 billion, loans, net of
 unearned discount, of $8.42 billion, deposits of $8.65 billion and
 stockholders equity of $902.8 million, and we currently operate 215 branch
 banking offices in California, Florida, Illinois, Missouri and Texas.Through First Bank, we offer a broad range of financial services,
 including commercial and personal deposit products, commercial and consumer
 lending, and many other financial products and services. Commercial and
 personal deposit products include demand, savings, money market and time
 deposit accounts. In addition, we market combined basic services for various
 customer groups, including packaged accounts for more affluent customers, and
 sweep accounts, lock-box deposits and cash management products for commercial
 customers. Commercial lending includes commercial, financial and agricultural
 loans, real estate construction and development loans, commercial real estate
 loans, small business lending, asset-based loans, trade financing and
 insurance premium financing. Consumer lending includes residential real
 estate, home equity and installment lending. Other financial services include
 mortgage banking, debit cards, brokerage services, employee benefit and
 commercial and personal insurance services, internet banking, remote deposit,
 automated teller machines, telephone banking, safe deposit boxes, and trust,
 private banking and institutional money management services. The revenues
 generated by First Bank and its subsidiaries consist primarily of interest
 income, generated from the loan and investment security portfolios, service
 charges and fees generated from deposit products and services, and fees and
 commissions generated by our mortgage banking, insurance, and trust, private
 banking and institutional money management business units. Our extensive line
 of products and services are offered to customers primarily within our
 geographic areas, which include eastern Missouri, Illinois, including the
 Chicago metropolitan area, southern and northern California, Houston and
 Dallas, Texas, and Floridas Manatee, Pinellas, Hillsborough and Pasco
 counties. Certain loan products are available nationwide.Primary responsibility for managing our banking unit rests with the
 officers and directors of each unit, but we centralize many of our overall
 corporate policies, procedures and administrative functions and provide
 centralized operational support functions for our subsidiaries. This practice
 allows us to achieve various operating efficiencies while allowing our
 banking units to focus on customer service.Regulatory
 Matters. In connection with the most recent
 regular examinations of the Company and First Bank by the Federal Reserve
 Bank of St. Louis, or FRB, and the State of Missouri Division of Finance, or
 the MDOF, the Company and First Bank entered into informal agreements with each
 agency. On September 18, 2008, First Bank and its Board of Directors entered
 into an informal agreement with the FRB and the MDOF. In addition, on October
 2, 2008, the Company and its Board of Directors entered into a Memorandum of
 Understanding with the FRB. Each of the agreements is characterized by
 regulatory authorities as an informal action that is neither published nor
 made publicly available by the agencies and is used when circumstances
 warrant a milder form of action than a formal supervisory action, such as a
 cease and desist order.Under the terms of the Memorandum of Understanding with the FRB,
the
 Company agreed, among other things, to provide certain information to the FRB
 including, but not limited to, financial performance updates, notice of plans
 to materially change its fundamental business and notice to issue trust
 preferred securities or raise additional equity capital. In addition, the
 Company agreed not to declare any dividends on its common or preferred stock
 or make any distributions of interest or other sums on its trust preferred
 securities without the prior approval of the FRB. The24Company received the approval of the FRB to declare the regular
 quarterly dividends on its preferred stock to be paid in May and June 2009
 and to make its regular quarterly interest payments on its outstanding
 subordinated debentures for further payment to the individual holders of the
 respective underlying trust preferred securities in June and July 2009.
 However, First Banks is not able to predict whether the FRB will approve
 future payment requests.First Bank, under its agreement with the MDOF and the FRB, has
agreed
 to, among other things, prepare and submit plans and reports to the agencies
 regarding certain matters including, but not limited to, the performance of
 First Banks loan portfolio. In addition, First Bank agreed not to declare or
 pay any dividends or make certain other payments without the prior consent of
 the MDOF and the FRB and to maintain its Tier 1 capital ratio at no less than
 7.00%. As further described in Note 6 to our accompanying consolidated
 financial statements, at March 31, 2009, First Banks Tier 1 capital ratio
 was 9.15%, or approximately $199.3 million over the minimum level required by
 the agreement. As further described in Note 1 and Note 6 to our accompanying
 consolidated financial statements, our management has concluded that the
 Company and First Bank were in full compliance with all provisions of the
 respective informal agreements as of March 31, 2009. In addition, the Company
 and First Bank are committed to ensuring that the requirements of the
 agreements are met in a timely manner.Financial ConditionTotal assets were $10.26 billion at March 31, 2009, compared to
 $10.78 billion at December 31, 2008. The decrease in our total assets was
 primarily attributable to decreases in our loan portfolio and cash and
 short-term investments, partially offset by increases in our investment
 securities portfolio and other real estate.Cash and cash equivalents decreased $418.0 million to $424.3
million
 at March 31, 2009, compared to $842.3 million at December 31, 2008. Funds
 available in cash and short-term investments were primarily used to reduce
 our other borrowings, as further discussed below, and to increase our
 investment securities portfolio.Investment securities increased $69.7 million to $692.6 million at
 March 31, 2009, from $622.9 million at December 31, 2008. We used cash and
 cash equivalents to increase our investment securities throughout the quarter
 ended March 31, 2009.Loans, net of unearned discount, decreased $171.4 million to $8.42
 billion at March 31, 2009, from $8.59 billion at December 31, 2008,
 reflecting net loan charge-offs of $71.7 million, transfers to other real
 estate and other loan activity, including repayments and refinancing within
 our real estate mortgage portfolio, partially offset by increased volumes of
 loans held for sale pending sale into the secondary mortgage loan market. Our
 real estate construction and development portfolio decreased $111.4 million
 during the first quarter of 2009, commensurate with our strategy of reducing
 our exposure to real estate loans in light of current market conditions in
 which many of our market sectors have experienced significant declines in
 real estate values, as further discussed under Loans and Allowance for Loan
 Losses.Other real estate increased $54.3 million to $145.8 million at
March
 31, 2009, from $91.5 million at December 31, 2008 reflecting substantially
 higher foreclosure activity driven by continued weak economic conditions in
 certain of our market areas.Deposits decreased $90.2 million to $8.65 billion at March 31,
2009,
 from $8.74 billion at December 31, 2008. Time deposits decreased $187.3
 million during the first three months of 2009, of which $95.9 million
 reflects a decline in deposits in the Certificate of Deposit Account Registry
 Service, or CDARS. The reduction in CDARS deposits is primarily due to
 managements decision to use CDARS for placement of customer deposits and
 thereby earn fee income, rather than using CDARS to acquire time deposits
 from other banks. The decrease in time deposits was partially offset by
 organic growth in noninterest-bearing demand deposits and savings and money
 market deposits of $53.8 million and $47.5 million, respectively, through our
 deposit development programs, including marketing campaigns coupled with
 enhanced product and service offerings.Other borrowings, which are comprised of securities sold under
 agreements to repurchase, Federal Home Loan Bank, or FHLB, advances, Federal
 Reserve, or FRB, borrowings and federal funds purchased, decreased $320.6
 million to $254.5 million at March 31, 2009, compared to $575.1 million at
 December 31, 2008. We utilized excess liquidity from cash and short-term
 investments during the first quarter of 2009 to payoff $200.0 million in FHLB
 advances and $100.0 million in FRB borrowings, as further discussed under
 Liquidity.Total stockholders equity, including noncontrolling interest
in
 subsidiaries, was $902.8 million and $996.4 million at March 31, 2009 and
 December 31, 2008, respectively, reflecting a decrease of $93.6 million
 during the first three months of 2009. The decrease was primarily
 attributable to:Ø
A net loss
 of $89.4 million;25Ø
Dividends
 paid of $196,000 on our Class A and Class B preferred stock;Ø
Dividends
 paid of $2.0 million on our Class C and Class D preferred stock;Ø
An increase
 of $55,000 in accumulated other comprehensive income; andØ
A decrease
 in noncontrolling interest in subsidiaries of $2.0 million resulting from net
 losses in FB Holdings and SBLS LLC.We implemented Statement of Financial Accounting Standards, or
SFAS,
 No. 160  Noncontrolling Interests in
 Consolidated Financial Statements, an Amendment of ARB 51,on January 1, 2009, which resulted in our
 noncontrolling interest in subsidiaries of $129.4 million being reclassified
 from a liability to a component of our stockholders equity in our consolidated
 balance sheets at December 31, 2008, as further discussed in Note 1 and Note
 10 to our consolidated financial statements.Results of OperationsNet Income.
 We recorded a net loss of $89.4 million for the three months ended March 31,
 2009, compared to a net loss of $4.9 million for the three months ended March
 31, 2008. The earnings levels reflect the following:Ø

A provision for loan losses of $108.0 million for the three months
 ended March 31, 2009, compared to $45.9 million for the comparable period in
 2008;Ø
Net interest income of $71.4 million for the three months ended
March
 31, 2009, compared to $89.5 million for the comparable period in 2008, which
 contributed to a decline in our net interest margin to 3.00% for the three
 months ended March 31, 2009, compared to 3.65% for the comparable period in
 2008;Ø
Noninterest income of $25.5 million for the three months ended
March
 31, 2009, compared to $33.1 million for the comparable period in 2008;Ø
Noninterest expense of $80.9 million for the three months ended
March
 31, 2009, compared to $83.4 million for the comparable period in 2008; andØ
A benefit for income taxes of $514,000 for the three months ended
 March 31, 2009, compared to a benefit for income taxes of $2.0 million for
 the comparable period in 2008.The increase in our provision for loan losses in 2009 was primarily
 driven by increases in net loan charge-offs of $42.5 million and
 nonperforming loans resulting from continued deterioration within our real estate
 construction and development and one-to-four family residential loan
 portfolios, as further discussed under Loans and Allowance for Loan
 Losses.The decline in our net interest income and our net interest margin
 was primarily attributable to an increase in nonaccrual loans and a 400 basis
 point decrease, in aggregate, in the prime lending rate in 2008, coupled with
 a significant decline in the London Interbank Offered Rate, or LIBOR, during
 the same period, partially offset by a decrease in deposit and other
 interest-bearing liability costs. We are currently in an asset-sensitive
 balance sheet position, and as such, interest rate cuts by the Federal
 Reserve have an immediate short-term negative effect on our net interest
 income and net interest margin until we can fully re-price our deposits to
 reflect current market interest rates. See further discussion under Net
 Interest Income.The decrease in our noninterest income for the first three months
of
 2009 primarily resulted from a pre-tax gain of $5.0 million recorded on the
 extinguishment of a term repurchase agreement in the first quarter of 2008, a
 decrease in net gains on derivative instruments of $3.0 million and decreases
 in gains on investment securities, bank-owned life insurance and investment
 management income, partially offset by an increase in gains on loans sold and
 held for sale of $2.4 million and an increase in service charges on deposits
 and customer service fees of $1.1 million. See further discussion under
 Noninterest Income.The decrease in noninterest expense primarily resulted from
 reductions in salaries and employee benefits expense attributable to profit
 improvement initiatives and certain staffing reductions completed in 2008 and
 in the first three months of 2009. This decrease was partially offset by
 increased FDIC insurance assessment premiums; legal, examination and
 professional fees; and expenses on other real estate properties, as further
 discussed under Noninterest Expense.The decrease in the benefit for income taxes primarily resulted
from
 the consolidated net operating loss due to existing federal and state net
 operating loss carryforwards on which the realization of the related tax
 benefits is not more likely than not, as further discussed under
 Provision for Income Taxes and in Note 11 to our consolidated financial
 statements.26Net Interest
 Income.Net interest income, expressed on a
 tax-equivalent basis, decreased to $71.7 million for the three months ended
 March 31, 2009, compared to $89.9 million for the comparable period in 2008.
 Our net interest margin declined to 3.00% for the three months ended March
 31, 2009, compared to 3.65% for the comparable period in 2008. Net interest
 income is the difference between interest earned on our interest-earning
 assets, such as loans and investment securities, and interest paid on our interest-bearing
 liabilities, such as deposits and borrowings. Net interest income is affected
 by the level and composition of assets and liabilities, as well as the
 general level of interest rates and changes in interest rates. Interest
 income expressed on a tax-equivalent basis includes the additional amount of
 interest income that would have been earned if our investment in certain
 tax-exempt interest-earning assets had been made in assets subject to
 federal, state and local income taxes yielding the same after-tax income. Net
 interest margin is determined by dividing net interest income computed on a
 tax-equivalent basis by average interest-earning assets. The interest rate
 spread is the difference between the average tax-equivalent yield earned on
 interest-earning assets and the average rate paid on interest-bearing
 liabilities.We attribute the decline in our net interest margin and net
interest
 income to an increase in the average amount of our nonperforming loans in
 addition to the significant decline in the prime lending rate that began in
 September 2007 and continued throughout December 2008 and the decline in
 LIBOR during 2008 and 2009, as further discussed below. Our balance sheet is
 presently asset sensitive, and as such, our net interest margin is negatively
 impacted with each interest rate cut as our loan portfolio re-prices on an
 immediate basis; whereas we are unable to immediately re-price our deposit
 portfolio to current market interest rates, thereby resulting in a
 compression of our net interest margin. The average yield earned on our
 interest-earning assets decreased 167 basis points to 5.01% for the three
 months ended March 31, 2009, compared to 6.68% for the same period in 2008,
 while the average rate paid on our interest-bearing liabilities decreased 109
 basis points to 2.37% for the three months ended March 31, 2009, compared to
 3.46% for the same period in 2008. Our average interest-earning assets
 decreased $223.2 million to $9.69 billion for the three months ended March
 31, 2009, from $9.91 billion for the comparable period in 2008, primarily
 attributable to decreases in average loans and average investment securities,
 partially offset by an increase in average short-term investments. Average
 interest-bearing liabilities decreased to $8.23 billion for the three months
 ended March 31, 2009, from $8.69 billion for the comparable period in 2008.
 Our net interest income for the three months ended March 31, 2009 and 2008
 was positively impacted by an increase in earnings on our interest rate swap
 agreements that were entered into in conjunction with our interest rate risk
 management program, as further discussed below.Interest income on our loan portfolio, expressed on a
tax-equivalent
 basis, decreased to $111.6 million for the three months ended March 31, 2009,
 compared to $152.9 million for the comparable period in 2008. Average loans,
 net of unearned discount, decreased $406.2 million to $8.54 billion for the
 three months ended March 31, 2009, from $8.95 billion for the comparable period
 in 2008. The decrease in average loans primarily reflects a decrease in
 internal growth, net loan charge-offs and transfers to other real estate. The
 yield on our loan portfolio decreased 157 basis points to 5.30% for the three
 months ended March 31, 2009, compared to 6.87% for the comparable period in
 2008, reflecting decreases in the prime lending rate throughout 2008,
 decreases in the LIBOR rate throughout 2008 and 2009, and a significant
 increase in the average amount of nonaccrual loans, as further discussed
 under Loans and Allowance for Loan Losses; partially offset by an increase
 in interest income of $2.1 million associated with our interest rate swap
 agreements. Our nonaccrual loans decreased our average yield on loans by
 approximately 31 basis points during the first quarter of 2009 compared to
 approximately 21 basis points during the first quarter of 2008.Interest income on our investment securities, expressed on a
 tax-equivalent basis, was $7.6 million for the three months ended March 31,
 2009, compared to $11.6 million for the comparable period in 2008. Average
 investment securities were $658.3 million for the three months ended March
 31, 2009, compared to $942.4 million for the comparable period in 2008. The
 reduction in our average investment securities reflects the utilization of
 funds provided by maturities and sales of investment securities to increase
 short-term investments. The yield earned on our investment portfolio was
 4.70% for the three months ended March 31, 2009, compared to 4.95% for the
 comparable period in 2008, reflecting the decline in short-term interest
 rates.Interest income on our short-term investments was $510,000 for the
 three months ended March 31, 2009, compared to $162,000 for the comparable
 period in 2008. Average short-term investments were $485.3 million for the
 three months ended March 31, 2009, compared to $18.2 million for the
 comparable period in 2008. The increase in the average balance of short-term
 investments was primarily due to a higher level of liquidity in the first
 quarter of 2009 as compared to 2008. We utilized short-term investments to
 payoff $300.0 million in other borrowings during the first quarter. The yield
 earned on our short-term investments was 0.43% for the three months ended March
 31, 2009, compared to 3.58% for the comparable period in 2008, reflecting a
 significant decline in short-term interest rates.Interest expense on our interest-bearing deposits decreased to
$41.2
 million for the three months ended March 31, 2009, compared to $64.1 million
 for the comparable period in 2008. Average interest-bearing deposits
 decreased to27$7.42 billion for the three months ended March 31, 2009, compared
to
 $7.77 billion for the comparable period in 2008, reflecting anticipated
 run-off of higher rate certificates of deposits, partially offset by organic
 growth through deposit development programs. The decrease in average
 interest-bearing deposits is comprised of decreases in average time deposits
 of $371.7 million and decreases in average interest-bearing demand deposits
 of $69.8 million; partially offset by increases in average savings and money
 market deposits of $95.7 million. The Florida region accounted for $203.1
 million of the decrease in our average time deposits, which was anticipated
 as part of our planned post-acquisition strategy to improve the net interest
 margin in this region. These time deposits carried substantially higher
 interest rates than those throughout our other markets. This decrease was
 partially offset by an increase in average time deposits in CDARS of $58.8
 million. The aggregate weighted average rate paid on our deposit portfolio
 was 2.25% for the three months ended March 31, 2009, compared to 3.32% for
 the comparable period in 2008, reflective of the declining interest rate
 environment, an anticipated run-off of higher rate certificates of deposit
 and our efforts to reduce deposit costs across our deposit portfolio. The
 weighted average rate paid on our time deposit portfolio declined to 3.36%
 for the three months ended March 31, 2009, from 4.42% for the comparable
 period in 2008; the average rate paid on our savings and money market deposit
 portfolio declined to 1.48% for the three months ended March 31, 2009, from
 2.60% for the comparable period in 2008; and the average rate paid on our
 interest-bearing demand deposits declined to 0.20% for the three months ended
 March 31, 2009, from 0.82% for the comparable period in 2008. We anticipate
 continued reductions in our deposit costs throughout 2009 as certain of our
 certificates of deposit and money market accounts re-price from promotional
 rates to current market interest rates.Interest expense on our other borrowings was $2.3 million for the
 three months ended March 31, 2009, compared to $3.9 million for the
 comparable period in 2008. Average other borrowings were $455.8 million for
 the three months ended March 31, 2009, compared to $531.2 million for the
 comparable period in 2008. The aggregate weighted average rate paid on our
 other borrowings was 2.08% for the three months ended March 31, 2009,
 compared to 2.97% for the comparable period in 2008. The decrease in the
 weighted average rate paid on our other borrowings reflects the reduction in
 short-term interest rates during the periods, as previously discussed.Interest expense on our notes payable was $19,000 for the three
 months ended March 31, 2009, compared to $569,000 for the comparable period
 in 2008. We did not have any balances outstanding under our notes payable for
 the three months ended March 31, 2009. Our notes payable averaged $39.5
 million for the three months ended March 31, 2008. The aggregate weighted
 average rate paid on our notes payable was 5.80% for the three months ended
 March 31, 2008. The weighted average rate paid on our notes payable includes
 unused commitment, arrangement and renewal fees. Exclusive of these fees, the
 weighted average rate paid on our notes payable was zero and 4.67% for the
 three months ended March 31, 2009 and 2008, respectively. The decrease in our
 average notes payable during the periods is attributable to contractual
 payments and additional prepayments made on our outstanding notes payable.
 Specifically, during the second quarter of 2008, we were advanced $30.0
 million under a new secured revolving line of credit with an affiliated
 entity and utilized the proceeds of the advance to terminate and repay in
 full all of the obligations under our former secured credit facility with a
 group of unaffiliated financial institutions. During the third quarter of 2008,
 we repaid in full the outstanding balance on our new secured revolving line
 of credit.Interest expense on our subordinated debentures was $4.5 million
for
 the three months ended March 31, 2009, compared to $6.2 million for the
 comparable period in 2008. Average subordinated debentures were $353.8
 million for the three months ended March 31, 2009 and 2008. The aggregate
 weighted average rate paid on our subordinated debentures was 5.16% for the
 three months ended March 31, 2009, compared to 7.01% for the comparable
 period in 2008. The aggregate weighted average rates and the level of
 interest expense reflect: (a) the reduction in LIBOR rates, and the impact to
 the related spreads to LIBOR during the periods; and (b) the entrance into
 four interest rate swap agreements with a notional amount of $125.0 million
 in aggregate during March 2008 that effectively converted the interest
 payments on certain of our subordinated debentures from a variable rate to a
 fixed rate, as further described under Interest Rate Risk Management and
 in Note 9 and Note 13 to our consolidated financial statements. At March 31,
 2009, a total of $282.5 million, or 79.4%, of our subordinated debentures are
 variable rate, of which $128.9 million, or 36.2%, were effectively converted
 to fixed rates through the respective call dates upon entrance into the
 interest rate swap agreements discussed above. Interest expense on
 subordinated debentures includes interest expense associated with our
 interest rate swap agreements of $428,000 and $14,000 for the three months
 ended March 31, 2009 and 2008, respectively.28The following table sets forth, on a tax-equivalent basis, certain
 information relating to our average balance sheets, and reflects the average
 yield earned on our interest-earning assets, the average cost of our
 interest-bearing liabilities and the resulting net interest income for the
 three months ended March 31, 2009 and 2008.Three Months Ended March 31,2009

2008Average
 Balance

Interest
 Income/
 Expense

Yield/
 Rate

Average
 Balance

Interest
 Income/
 Expense

Yield/
 Rate(dollars expressed in thousands)ASSETSInterest-earning
assets:Loans (1)
(2) (3) (4)

$
8,544,602

111,646


5.30
%
$
8,950,752

152,892


6.87
%Investment
securities (4)


658,290

7,631


4.70


942,408

11,602


4.95Short-term
investments


485,320

510


0.43


18,210

162


3.58Total
interest-earning assets


9,688,212

119,787


5.01


9,911,370

164,656


6.68Nonearning assets


895,454







932,839Total
assets

$
10,583,666






$
10,844,209LIABILITIES
 AND STOCKHOLDERS EQUITYInterest-bearing
liabilities:Interest-bearing deposits:Interest-bearing demand

$
929,193

453


0.20
%
$
998,996

2,032


0.82
%Savings and
money market


2,804,803

10,255


1.48


2,709,104

17,527


2.60Time deposits
of $100 or more


1,245,745

10,476


3.41


1,498,582

16,769


4.50Other time
deposits


2,440,494

20,053


3.33


2,559,345

27,787


4.37Total
interest-bearing deposits


7,420,235

41,237


2.25


7,766,027

64,115


3.32Other
borrowings


455,834

2,341


2.08


531,213

3,928


2.97Notes payable
(5)




19





39,472

569


5.80Subordinated
debentures (3)


353,838

4,506


5.16


353,761

6,165


7.01Total
interest-bearing liabilities


8,229,907

48,103


2.37


8,690,473

74,777


3.46Noninterest-bearing
liabilities:Demand
deposits


1,255,793







1,195,776Other
liabilities


114,728







107,285Total
liabilities


9,600,428







9,993,534Stockholders
equity


983,238







850,675Total
liabilities and stockholders equity

$
10,583,666






$
10,844,209Net interest income




71,684







89,879Interest rate spread







2.64







3.22Net interest margin
(6)







3.00
%






3.65
%(1)
For purposes of these
 calculations, nonaccrual loans are included in 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 $248,000 and $352,000 for the three months
 ended March 31, 2009 and 2008, respectively.(5)
Interest expense on our notes
 payable includes commitment, arrangement and renewal fees. Exclusive of these
 fees, the interest rates paid were zero and 4.67% for the three months ended
 March 31, 2009 and 2008, respectively.(6)
Net interest margin is the
 ratio of net interest income (expressed on a tax-equivalent basis) to average
 interest-earning assets.29The following table indicates, on a tax-equivalent basis, the
change
 in interest income and interest expense that is attributable to the change in
 average volume and change in average rates, for the three months ended March
 31, 2009 as compared to the three months ended March 31, 2008. 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.Increase (Decrease) Attributable to Change in:Three Months Ended March 31, 2009
 Compared to 2008Volume

Rate

Net 
 Change(dollars expressed in thousands)Interest earned on:Loans: (1)
(2) (3)Taxable


$
(6,777
)



(34,252
)



(41,029
)Tax-exempt
(4)



(43
)



(174
)



(217
)Investment
securities:Taxable



(3,259
)



(632
)



(3,891
)Tax-exempt (4)



(219
)



139




(80
)Short-term
investments



1,169




(821
)



348Total interest
income



(9,129
)



(35,740
)



(44,869
)Interest paid on:Interest-bearing demand deposits



(134
)



(1,445
)



(1,579
)Savings and
money market deposits



2,901




(10,173
)



(7,272
)Time
deposits



(3,877
)



(10,150
)



(14,027
)Other
borrowings



(510
)



(1,077
)



(1,587
)Notes payable
(5)



(275
)



(275
)



(550
)Subordinated
debentures (3)



7




(1,666
)



(1,659
)Total interest
expense



(1,888
)



(24,786
)



(26,674
)Net interest
income


$
(7,241
)



(10,954
)



(18,195
)(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 notes payable includes commitment, arrangement and renewal
 fees.Provision for Loan
 Losses.We recorded a provision for loan losses
 of $108.0 million for the three months ended March 31, 2009, compared to
 $45.9 million for the three months ended March 31, 2008. The increase in the
 provision for loan losses was primarily driven by increased net loan
 charge-offs and declining asset quality trends associated with our
 one-to-four family residential mortgage and land acquisition, development and
 construction loan portfolios as a result of continued weak economic
 conditions and significant declines in real estate values, and the
 deterioration of two significant credits in our commercial and industrial
 loan portfolio, as further discussed under Loans and Allowance for Loan
 Losses.Our nonperforming loans were $475.7 million at March 31, 2009,
 compared to $442.4 million at December 31, 2008. The increase in the overall
 level of our nonperforming loans during 2009 was primarily driven by a
 decline in asset quality related to our one-to-four family residential
 mortgage and land acquisition, development and construction loan portfolios,
 as further discussed under Loans and Allowance for Loan Losses.Our net loan charge-offs were $71.7 million for the three months
 ended March 31, 2009, compared to $29.2 million for the comparable period in
 2008. Our annualized net loan charge-offs were 3.40% and 1.31% of average
 loans for the three months ended March 31, 2009 and 2008, respectively. Loan
 charge-offs were $74.8 million for the three months ended March 31, 2009,
 compared to $31.3 million for the comparable period in 2008, and loan
 recoveries were $3.2 million for the three months ended March 31, 2009,
 compared to $2.2 million for the comparable period in 2008.Tables summarizing nonperforming assets, past due loans and
 charge-off and recovery experience are presented under Loans and Allowance
 for Loan Losses.Noninterest
 Income.Noninterest income was $25.5 million for
 the three months ended March 31, 2009, compared to $33.1 million for the
 comparable period in 2008. Noninterest income consists primarily of service
 charges on deposit accounts and customer service fees, mortgage-banking
 revenues, investment management income, insurance fee and commission income,
 net gains (losses) on investment securities and derivative instruments,
 changes in the fair value of servicing rights, loan servicing fees and other
 income.30Service charges on deposit accounts and customer service fees
 increased to $13.2 million for the three months ended March 31, 2009, from
 $12.1 million for the comparable period in 2008. The increase in service
 charges and customer service fees is primarily attributable to an increase in
 retail non-sufficient funds and returned check fee income as well as an
 increase in commercial service charges resulting from our efforts to control
 fee waivers and a decrease in the earnings credit rate due to the decline in
 short-term interest rates throughout the periods.Gains on loans sold and held for sale increased to $4.1 million for
 the three months ended March 31, 2009, compared to $1.7 million for the
 comparable period in 2008. The increase is primarily attributable to an
 increase in the volume of mortgage loans originated and subsequently sold in
 the secondary market resulting from increased levels of refinancing of
 one-to-four family residential real estate loans in light of declining
 mortgage interest rates.We recorded net gains on investment securities of $532,000 for the
 three months ended March 31, 2009, compared to $1.2 million for the
 comparable period in 2008. We recorded a pre-tax gain of approximately
 $867,000 on the sale of approximately $81.5 million of mortgage-backed available-for-sale
 investment securities during the first quarter of 2008.Bank owned life insurance investment income was $366,000 and
$973,000
 for the three months ended March 31, 2009 and 2008, respectively. The
 decrease reflects the performance of the underlying investments associated
 with the insurance contracts, which is directly correlated to the portfolio
 mix of investments, the crediting rate associated with the embedded stable
 value protection program and overall market conditions.Investment management income generated by MVP, our institutional
 money management subsidiary, was $527,000 and $1.4 million for the three
 months ended March 31, 2009 and 2008, respectively, reflecting decreased
 portfolio management fee income associated with a decline in assets under
 management and current market conditions.Insurance fee and commission income generated by Adrian Baker, our
 insurance brokerage agency, was $2.2 million for the three months ended March
 31, 2009, compared to $2.0 million for the comparable period in 2008,
 reflecting higher customer volumes and contingency fees earned from certain
 insurance underwriters partially offset by reduced premiums rates
 attributable to the overall soft insurance market conditions experienced in
 the industry.We recorded net gains of $401,000 and $3.4 million on derivative
 instruments for the three months ended March 31, 2009 and 2008, respectively.
 The net gain for the three months ended March 31, 2009 is attributable to
 income generated from sales of our customer interest rate swap agreements.
 The net gain for the three months ended March 31, 2008 is primarily
 attributable to a net increase in the fair value of our interest rate floor
 agreements as a result of the decline in forward rates resulting from the
 Federal Reserve interest rate cuts. In May 2008, we terminated our $300.0
 million interest rate floor agreements to modify our overall hedge position
 in accordance with our interest rate risk management program. We did not
 incur any gains or losses in conjunction with the termination of our interest
 rate floor agreements. See further discussion under Interest Rate Risk
 Management and Note 13 to our consolidated financial statements.We recorded a net loss from changes in the fair value of mortgage
and
 SBA servicing rights of $2.0 million and $1.8 million for the three months
 ended March 31, 2009 and 2008, respectively. The increase in the net loss
 reflects the decline in mortgage interest rates and the related increase in
 prepayment speeds experienced in the current refinance environment. The loss
 also reflects a reduction in the fair value of SBA servicing rights as a
 result of changes in cash flow assumptions on the underlying loans in the
 serviced portfolio.Loan servicing fees were $2.2 million and $2.1 million for the
three
 months ended March 31, 2009 and 2008, respectively. The fees are primarily
 attributable to fee income generated from the servicing of real estate
 mortgage loans owned by investors and originated by our mortgage banking division,
 as well as SBA loans to small business concerns. The increase is due to an
 increase in the balance of loans serviced, partially offset by increased
 interest shortfall on serviced residential mortgage loans attributable to
 accelerated payoffs due to increased refinancing levels. Interest shortfall
 represents the difference between the interest collected from a loan
 servicing customer upon prepayment of the loan and the full month of interest
 that is required to be remitted to the security owner.In March 2008, we restructured a $100.0 million term repurchase
 agreement, which included the following primary modifications: (a) increased
 the borrowing amount to $120.0 million; (b) extended the maturity date from
 October 12, 2010 to April 12, 2012; (c) converted the interest rate from a
 variable rate to a fixed rate of 3.36%; and (d) terminated the embedded
 interest rate floor agreements contained within the term repurchase
 agreement. These modifications resulted in the recognition of the pre-tax
 gain of $5.0 million recorded in the three months ended March 31, 2008, as
 further described in Note 8 and Note 13 to our consolidated financial
 statements.31Other income was $3.9 million and $5.1 million for the three months
 ended March 31, 2009 and 2008, respectively. The decrease is primarily
 attributable to the following:Ø
Recoveries of certain loan principal balances that had been
 previously charged off by the financial institutions prior to their
 acquisition by First Banks of $27,000 for the three months ended March 31,
 2009, compared to $821,000 for the comparable period in 2008; andØ
A gain recognized in March 2008 on the Visa, Inc., or Visa, initial
 public offering of $743,000, representing the cash payment received in
 exchange for a portion of our membership interest in Visa as a result of
 Visas initial public offering.Noninterest Expense. Noninterest expense was $80.9
million for
 the three months ended March 31, 2009, compared to $83.4 million for the
 comparable period in 2008. The decrease in noninterest expense was primarily
 attributable to certain profit improvement initiatives that we implemented
 throughout 2008 and the first three months of 2009, partially offset by
 increased FDIC insurance assessment premiums and expenses on other real
 estate properties.Salaries and employee benefits expense was $32.7 million for the
 three months ended March 31, 2009, compared to $40.6 million for the
 comparable period in 2008. We primarily attribute the overall decrease in
 salaries and employee benefits expense to certain staff reductions during
 2008 and during the first quarter of 2009. Our total full-time equivalent
 employees (FTEs) decreased to approximately 2,170 at March 31, 2009, from
 2,390 at March 31, 2008, representing a decrease of 9.2%. The decrease in
 salaries and employee benefits expense also reflects reduced incentive
 compensation expense due to our earnings performance. Our overall salaries
 and employee benefits expense levels should continue to decline throughout
 2009 as a result of the elimination of our 401(k) matching contribution,
 effective April 1, 2009, and the completion of other profit improvement
 initiatives.Occupancy, net of rental income, and furniture and equipment
expense
 was $14.9 million and $15.4 million for the three months ended March 31, 2009
 and 2008, respectively. The decrease in 2009 reflects reduced furniture,
 fixtures and equipment expenditures associated with prior expansion
 activities, partially offset by an increase in occupancy related expenses as
 a result of standard rent increases at several of our branch banking and
 operations facilities.Information technology and item processing fees were $8.2 million
for
 the three months ended March 31, 2009, compared to $9.3 million for the
 comparable period in 2008. As more fully described in Note 5 to our
 consolidated financial statements, First Services, L.P., a limited
 partnership indirectly owned by our Chairman and members of his immediate
 family, provides information technology and various operational support
 services to our subsidiaries and us. Information technology fees also include
 fees paid to outside servicers associated with our mortgage lending and trust
 divisions, our small business lending and institutional money management
 subsidiaries, and Adrian Baker and UPAC. The decrease in information
 technology fees is primarily due to the implementation of certain profit
 improvement initiatives and negotiated fee reductions with First Services,
 L.P.Legal, examination and professional fees were $4.1 million for the
 three months ended March 31, 2009, compared to $2.8 million for the
 comparable period in 2008, reflecting higher legal expenses related to
 collection and foreclosure efforts associated with certain problem loans and
 ongoing litigation matters. We anticipate legal, examination and professional
 fees will remain at higher than historical levels until economic conditions
 stabilize as a result of higher legal and professional fees associated with
 foreclosures and other collection efforts.Amortization of intangible assets decreased to $2.3 million for the
 three months ended March 31, 2009, from $2.8 million for the comparable
 period in 2008, attributable to the completion of the amortization period of
 certain core deposit intangible assets.Advertising and business development expense was $973,000 for the
 three months ended March 31, 2009, compared to $1.5 million for the
 comparable period in 2008, reflecting certain profit improvement initiatives
 and managements efforts to reduce these expenditures in light of the current
 economic environment.FDIC insurance expense increased to $4.1 million for the three
months
 ended March 31, 2009, from $947,000 for the comparable period in 2008. We had
 built up several million dollars of credits through previous acquisitions
 that were utilized to offset FDIC insurance premiums and were depleted in
 2008. Our premium rates increased in the first quarter of 2009 and are
 expected to continue to increase in the future based on our risk assessment
 rating in addition to recent developments within the banking industry,
 including the failure of other financial institutions. Furthermore, on
 February 27, 2009, the FDIC adopted an interim rule providing for the
 proposal of an emergency special assessment of 20 basis points on June 30,
 2009. The proposed emergency special assessment, which is expected to be
 recorded in the second quarter of 2009, is estimated to be approximately
 $17.0 million based on our current deposit levels.32Expenses on other real estate increased to $4.5 million for the
three
 months ended March 31, 2009, from $620,000 for the comparable period in 2008.
 The increase in other real estate expenses is primarily attributable to
 expenses associated with increased foreclosure activity, including current
 and delinquent real estate taxes paid on other real estate properties as well
 as other property preservation related expenses. The balance of our other
 real estate properties increased to $145.8 million at March 31, 2009, from $91.5
 million at December 31, 2008. We expect the level of write-downs and expenses
 on our other real estate properties to remain at elevated levels in the near
 term as a result of the increase in our other real estate balances and the
 expected future transfer of certain of our nonperforming loans into our other
 real estate portfolio.Other expense was $7.6 million and $7.9 million for the three
months
 ended March 31, 2009 and 2008, respectively. Other expense encompasses
 numerous general and administrative expenses including communications,
 insurance, freight and courier services, correspondent bank charges,
 miscellaneous losses and recoveries, memberships and subscriptions, transfer
 agent fees, sales taxes and travel, meals and entertainment. The decrease in
 other expense is attributable to profit improvement initiatives and
 managements efforts to reduce overall expense levels, partially offset by an
 increase in overdraft losses, and an increase in loan expenses attributable
 to collection efforts related to asset quality matters.Provision for Income Taxes. The benefit for income
taxes was $514,000
 and $2.0 million for the three months ended March 31, 2009 and 2008,
 respectively. The decrease in the benefit for income taxes primarily resulted
 from the consolidated net operating loss due to existing federal and state
 net operating loss carryforwards on which the realization of the related tax
 benefits is not more likely than not, as further described in Note 11 to
 our consolidated financial statements.Interest Rate Risk ManagementWe 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. We also sell interest
 rate swap agreements to certain customers who wish to modify their interest
 rate risk. We offset the interest rate risk of these swap agreements by
 simultaneously purchasing matching interest rate swap agreements with
 offsetting pay/receive rates from other financial institutions. Because of
 the matching terms of the offsetting agreements, the net effect of the
 changes in the fair value of the paired swaps is minimal.The derivative financial instruments we held as of March 31, 2009
and
 December 31, 2008 are summarized as follows:March 31, 2009

December 31, 2008Notional
 Amount

Credit
 Exposure

Notional
 Amount

Credit
 Exposure(dollars expressed in thousands)Cash flow hedges 
subordinated debentures

$
125,000







125,000



Customer interest rate swap
agreements


62,355







16,000



Interest rate lock
commitments


99,700



1,915



48,700



831Forward commitments to sell
mortgage-backed securities


156,200







40,300



We realized net interest income on our derivative financial
 instruments of $3.5 million for the three months ended March 31, 2009,
 compared to $1.8 million for the comparable period in 2008. The earnings
 associated with our derivative financial instruments reflect the interest
 rate environment during these periods as well as the overall level of our
 derivative instruments throughout these periods.We also recorded net gains of $401,000 for the three months ended
 March 31, 2009, compared to $3.4 million for the comparable period in 2008.
 The net gain for the three months ended March 31, 2009 is attributable to
 income generated from the issuance of our customer interest rate swap
 agreements. The net gain for the three months ended March 31, 2008 is
 primarily attributable to a net increase in the fair value of our interest
 rate floor agreements as a result of the decline in forward rates resulting
 from the Federal Reserve interest rate cuts. In May 2008, we terminated our
 $300.0 million interest rate floor agreements to modify our overall hedge
 position in accordance with our interest rate risk management program.Our
 derivative financial instruments are more fully described in Note 13 to our
 consolidated financial statements.33Loans and Allowance for Loan LossesInterest earned on our loan portfolio represents the principal
source
 of income for First Bank. Interest and fees on loans were 93.3% and 93.0% of
 our total interest income for the three months ended March 31, 2009 and 2008,
 respectively. Loans, net of unearned discount, decreased to $8.42 billion, or
 82.1% of our assets, at March 31, 2009, compared to $8.59 billion, or 79.7%
 of our assets, at December 31, 2008. The following table summarizes the
 composition of our loan portfolio at March 31, 2009 and December 31, 2008:March 31,
 2009

December 31,
 2008(dollars expressed in thousands)Commercial, financial and
agricultural


$
2,529,633




2,575,505Real estate construction and
development



1,460,771




1,572,212Real estate mortgage:One-to-four
family residential



1,493,825




1,553,366Multi-family
residential



234,711




220,404Commercial real
estate



2,531,077




2,562,598Consumer and installment, net of
unearned discount



63,647




70,170Loans held for sale



107,916




38,720Loans, net of
unearned discount


$
8,421,580




8,592,975We attribute the net decrease in our loan portfolio during the
first
 quarter of 2009 primarily to:Ø
A
 decrease of $45.9 million in our commercial, financial and agricultural
 portfolio, reflecting a decline in internal loan production within this
 portfolio and net loan charge-offs of $23.5 million, primarily comprised of
 two significant charge-offs totaling $20.5 million, as further discussed
 below;Ø
A decrease of $111.4 million in our real estate construction and
 development portfolio primarily attributable to our efforts concentrated on
 reducing the exposure in our construction and development portfolio in the
 majority of our regions in light of the current economic environment within
 our market areas. The decrease of $111.4 million during the first quarter of
 2009 is primarily attributable to net loan charge-offs of $17.5 million,
 transfers to other real estate and other loan activity. The following table
 summarizes the composition of our real estate construction and development
 portfolio by region as of March 31, 2009 and December 31, 2008:March 31,
 2009

December 31,
 2008(dollars expressed in thousands)Northern California


$
197,036




234,942Florida



26,662




37,242Southern California



504,354




504,354Chicago



179,703




185,054Metropolitan St. Louis,
Missouri



199,653




230,254Texas



258,327




283,993Other



95,036




96,373Total


$
1,460,771




1,572,212Of
 the remaining balance in our real estate construction and development
 portfolio of $1.46 billion, $242.5 million, or 16.6%, is on nonaccrual status
 at March 31, 2009. We have charged the vast majority of these nonaccrual loans
 down to appraised values based on appraisals dated on or after January 1,
 2008 and have established additional reserves on these loans as further
 described below.Within
 our real estate construction and development portfolio, we have experienced the
 most distress in our Northern and Southern California and Chicago regions. Of
 the remaining Northern California portfolio balance of $197.0 million, $54.0
 million, or 27.4%, of loans were in a nonperforming status as of March 31,
 2009; of the remaining Southern California portfolio balance of $504.4
 million, $75.2 million, or 14.9%, of loans were in a nonperforming status as
 of March 31, 2009; and of the remaining Chicago portfolio balance of $179.7
 million, $67.0 million, or 37.3%, of loans were in a nonperforming status as
 of March 31, 2009. We also experienced continued distress within our Florida
 and metropolitan St. Louis regions, as further discussed below;34Ø
A decrease of $59.5 million in our one-to-four family residential
 real estate loan portfolio primarily attributable to net loan charge-offs of
 $27.6 million, transfers to other real estate and payments, partially offset
 by an increase in our home equity loan portfolio of $10.0 million. The
 following table summarizes the composition of our one-to-four family
 residential real estate loan portfolio as of March 31, 2009 and December 31,
 2008:March 31,
 2009

December 31,
 2008(dollars expressed in thousands)One-to-four family residential
real estate:Non-Mortgage
Division portfolio


$
431,036




450,264Mortgage
Division portfolio, excluding Florida



403,267




427,821Florida
portfolio



219,445




245,187Home equity portfolio



440,077




430,094Total


$
1,493,825




1,553,366We have not incurred
 significant losses or delinquencies within our Non-Mortgage Division loan
 portfolio, which consists of prime mortgage loans originated to customers
 from our retail branch banking network.Our Mortgage Division
 portfolio, excluding Florida, consists of both prime mortgage loans and Alt A
 and sub-prime mortgage loans. At March 31, 2009, approximately 49.7% of the
 Mortgage Division portfolio consisted of prime mortgages and the remaining
 50.3% consisted of Alt A and sub-prime mortgages. We continue to experience
 significant distress within this portfolio of loans. We recorded net loan
 charge-offs of $10.7 million on this portfolio for the three months ended
 March 31, 2009 as a result of charging these loans down to 67.5% of current
 appraised values at the time these loans became nonperforming loans, which
 represents an estimate of average sale transactions based on ongoing sale
 activity. As of March 31, 2009, approximately 23.1% of this portfolio is
 delinquent or restructured, consisting of loans 30-89 days delinquent of
 $27.6 million, restructured loans of $18.2 million and nonaccrual loans of
 $47.3 million.Our Florida portfolio was
 acquired in the CFHI acquisition and consists primarily of prime and Alt A
 mortgage loans. We incurred net loan charge-offs of $14.0 million on this
 portfolio in the first quarter of 2009. As of March 31, 2009, approximately
 21.1% of the Florida portfolio is delinquent or restructured, consisting of
 loans 30-89 days delinquent of $11.3 million, restructured loans of $8.9
 million and nonaccrual loans of $26.1 million.Our home equity portfolio
 consists of prime loans originated to customers from our retail branch
 banking network. We have not incurred significant losses or delinquencies
 within this portfolio of loans; andØ
A
 decrease of $31.5 million in our commercial real estate loan portfolio
 primarily due to a decline in internal loan production within this portfolio
 and net loan charge-offs of $2.9 million.These
 decreases in our loan portfolio were partially offset by:Ø
An
 increase of $69.2 million in our loans held for sale portfolio resulting from
 increased levels of refinancing of one-to-four family residential real estate
 loans in light of declining mortgage interest rates, coupled with the timing
 of loan originations and subsequent sales in the secondary mortgage market;
 andØ
An
 increase of $14.3 million in multi-family residential real estate loans
 primarily attributable to internal loan production growth.The overall change in the mix of
 our loan portfolio is commensurate with our strategy of reducing our exposure
 to real estate, particularly construction and land development, in the
 current economic environment in which many of our market sectors have
 experienced significant declines in real estate values.35Nonperforming assets include nonaccrual loans, restructured loans
and
 other real estate. The following table presents the categories of nonperforming
 assets and certain ratios as of March 31, 2009 and December 31, 2008:March 31,
 2009

December 31,
 2008(dollars expressed in thousands)Commercial, financial and
agricultural:Nonaccrual


$
71,711




40,647Real estate construction and
development:Nonaccrual



242,495




270,444Real estate mortgage:One-to-four
family residential:Nonaccrual



88,458




83,140Restructured



27,089




24,641Multi-family
residential:Nonaccrual



1,855




545Commercial real
estate:Nonaccrual



43,353




23,009Consumer and
installment:Nonaccrual



725




Total
nonperforming loans



475,686




442,426Other real estate



145,808




91,524Total
nonperforming assets


$
621,494




533,950Loans, net of unearned
discount


$
8,421,580




8,592,975Loans past due 90 days or more
and still accruing


$
7,256




7,094Ratio of:Allowance for
loan losses to loans



3.05
%



2.56
%Nonperforming
loans to loans



5.65




5.15Allowance for
loan losses to nonperforming loans



53.93




49.77Nonperforming
assets to loans and other real estate



7.25




6.15Nonperforming loans, consisting of loans on nonaccrual status and
 certain restructured loans, were $475.7 million at March 31, 2009, compared
 to $442.4 million at December 31, 2008 and $236.8 million at March 31, 2008.
 Nonperforming loans were 5.65% of loans, net of unearned discount, at March
 31, 2009, compared to 5.15% at December 31, 2008 and 2.63% at March 31, 2008.
 Other real estate owned increased to $145.8 million at March 31, 2009, from
 $91.5 million at December 31, 2008 and $13.2 million at March 31, 2008. Our
 nonperforming assets, consisting of nonperforming loans and other real estate
 owned, were $621.5 million at March 31, 2009, compared to $534.0 million at
 December 31, 2008 and $250.0 million at March 31, 2008. Loans past due 90
 days or more and still accruing interest were $7.3 million at March 31, 2009,
 compared to $7.1 million and $23.6 million at December 31, 2008 and March 31,
 2008, respectively.Our nonperforming assets at March 31, 2009 included $34.9 million
of
 nonaccrual loans and $77.2 million of other real estate owned, or $112.1
 million of nonperforming assets, held by FB Holdings, a subsidiary of First
 Bank which is 46.77% owned by FCA, an affiliated entity. As such, FB Holdings
 owned approximately 18.0% of our nonperforming assets at March 31, 2009. Our
 nonperforming assets at December 31, 2008 included $61.0 million of nonaccrual
 loans and $51.9 million of other real estate owned, or $112.9 million of
 nonperforming assets, in aggregate, held by FB Holdings, and as such, FCA
 owned approximately 21.1% of our nonperforming assets at December 31, 2008.36Nonperforming assets at March 31, 2009 increased $87.5 million, or
 16.4%, from nonperforming assets at December 31, 2008. The following table
 summarizes the composition of our nonperforming assets by region / business
 segment at March 31, 2009 and December 31, 2008:March 31,
 2009

December 31,
 2008(dollars expressed in thousands)Northern California real
estate

$
109,982


103,325Mortgage Division, excluding
Florida


77,137


67,591Florida


76,160


81,303Southern California real
estate


84,819


77,349Chicago real estate


66,986


46,272Metropolitan St. Louis, Missouri
real estate


54,893


56,031Texas real estate


25,304


27,143First Bank Business Capital,
Inc.


14,005


24,501Southern California commercial
and industrial


22,678


3,007Other


89,530


47,428Total nonperforming
assets

$
621,494


533,950We attribute the $87.5 million increase in our nonperforming assets
 during the first quarter of 2009 to the following:Ø
An increase in nonaccrual loans of $31.1 million in our commercial,
 financial and agricultural portfolio primarily resulting from continued weak
 economic conditions nationwide, including the addition of a single $20.0 million
 credit placed on nonaccrual status, net of a $10.0 million charge-off;
 partially offset by a $10.5 million loan charge-off recorded on a single
 credit relationship in our First Bank Business Capital, Inc. subsidiary,
 which was on nonaccrual status at December 31, 2008;Ø
An increase in nonaccrual loans of $20.3 million in our commercial
 real estate portfolio primarily driven by continued weak economic conditions
 and significant declines in real estate values;Ø
An overall net increase in nonaccrual loans of $5.3 million in our
 one-to-four family residential real estate loan portfolio primarily driven by
 current market conditions and the overall deterioration of Alt A and
 sub-prime residential mortgage loan products experienced throughout the
 mortgage banking industry. Our one-to-four family residential nonaccrual
 loans in our Mortgage Banking division, excluding Florida, increased $8.8
 million, from $38.5 million at December 31, 2008 to $47.3 million at March
 31, 2009. Our one-to-four family residential nonaccrual loans in our Florida
 region decreased $4.6 million, from $30.7 million at December 31, 2008 to
 $26.1 million at March 31, 2009. The remaining increase of $1.1 million
 occurred in our Non-Mortgage division portfolio;Ø
An increase in one-to-four family restructured loans of $2.4
million
 to $27.1 million at March 31, 2009, consisting of total restructured loans of
 $32.6 million, partially offset by $5.5 million of restructured loans
 classified as nonaccrual in the one-to-four family residential real estate
 loan category. At March 31, 2009, restructured loans in our mortgage banking
 division and Florida region were $18.2 million and $8.9 million,
 respectively, or $27.1 million in aggregate. Throughout 2008 and the first
 quarter of 2009, certain one-to-four family residential mortgage loans in our
 Florida region and mortgage banking division, primarily located in
 California, were restructured, whereby the contractual interest rate was
 reduced over a certain time period due to concentrated efforts to work with
 borrowers to facilitate appropriate loan terms in light of ongoing market
 conditions and individual borrower circumstances. At the time of the
 restructuring, the individual loans were in full compliance with the terms of
 the original loan contracts. As of March 31, 2009, we had total restructured
 loans of $32.6 million, of which $5.5 million, or 16.8%, were on nonaccrual
 status and $1.8 million, or 5.5% were delinquent. As such, 22.3% of our
 restructured loans were delinquent or on nonaccrual status at March 31, 2009;
 andØ
An increase in other real estate owned of $54.3 million to $145.8
 million at March 31, 2009, primarily resulting from the foreclosure of real
 estate construction and development loans throughout the first quarter of
 2009.These increases in nonperforming asset levels were partially offset
 by:Ø
A decrease in nonaccrual loans of $27.9 million in our real estate
 construction and development loan portfolio primarily driven by net loan
 charge-offs of $17.5 million and transfers to other real estate. We continue
 to experience deterioration in our real estate construction and development
 portfolio as a result of weak economic conditions and significant continued
 declines in real estate values and we expect these37trends to continue until market conditions stabilize, both on a
 nationwide basis and in our primary market areas.Although we experienced a significant increase in nonperforming
 assets during 2008 that continued throughout the first quarter of 2009, we
 have written a significant portion of the balances of these assets down to
 appraised values based on appraisals obtained on or after January 1, 2008. We
 do expect, however, the declining and unstable market conditions associated
 with our one-to-four family residential mortgage loan portfolio and our real
 estate construction and development portfolio to continue, which will likely
 continue to impact the overall level of our nonperforming loans, loan
 charge-offs and provision for loan losses and other real estate balances
 associated with these segments of our loan portfolio.Loans past due 90 days or more and still accruing interest were
$7.3
 million and $7.1 million at March 31, 2009 and December 31, 2008,
 respectively. Under our loan policy, loans are placed on nonaccrual status
 once principal or interest payments become 90 days past due. However,
 individual loan officers may submit written requests for approval to continue
 the accrual of interest on loans that become 90 days past due. These requests
 may be submitted for approval consistent with the authority levels provided
 in our credit approval policies, and they are only granted if an expected
 near term future event, such as a pending renewal or expected payoff, exists
 at the time the loan becomes 90 days past due. If the expected near term
 future event does not occur as anticipated, the loan is then placed on
 nonaccrual status. Management considers the nonperforming loan trends in its
 overall assessment of the adequacy of the allowance for loan losses.The outstanding balance and carrying amount of impaired loans
 acquired in acquisitions was $12.9 million and $4.4 million at March 31,
 2009, respectively, and $79.5 million and $42.1 million at March 31, 2008, respectively.
 Changes in the carrying amount of impaired loans acquired in acquisitions for
 the three months ended March 31, 2009 and 2008 were as follows:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Balance, beginning of
 period

$
9,997


46,003Transfers to other real
 estate


(2,774
)

(2,323
)Loans charged-off


(2,548
)

(1,388
)Payments and settlements


(232
)

(225
)Balance, end of period

$
4,443


42,067There was no allowance for loan losses related to these loans at
 March 31, 2009 and December 31, 2008 as these loans are recorded at lower of
 cost or fair value. As the loans were classified as nonaccrual loans, there
 was no accretable yield related to these loans at March 31, 2009 and December
 31, 2008.Our allowance for loan losses as a percentage of loans, net of
 unearned discount, was 3.05% at March 31, 2009, 2.56% at December 31, 2008
 and 2.05% at March 31, 2008. The increase in this ratio is primarily due to
 the increase in nonperforming and other problem loans, which increased the
 provision for loan losses, and the overall reduction in the balance of our
 loan portfolio during the three months ended March 31, 2009. Our allowance
 for loan losses as a percentage of nonperforming loans was 53.93%, 49.77% and
 78.20% at March 31, 2009, December 31, 2008 and March 31, 2008, respectively.
 Our allowance for loan losses was $256.6 million at March 31, 2009, $220.2
 million at December 31, 2008 and $185.2 million at March 31, 2008.38Changes in
 the allowance for loan losses for the three months ended March 31, 2009 and
 2008 were as follows:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Balance, beginning of
period

$
220,214


168,391Loans charged-off:Commercial financial and
agricultural


(24,111
)

(1,765
)Real estate construction and
development


(17,990
)

(17,723
)Real estate mortgage:One-to-four family residential
loans


(28,777
)

(11,343
)Commercial real estate
loans


(3,692
)

(185
)Consumer and
installment


(244
)

(323
)Total loans
charged-off


(74,814
)

(31,339
)Recoveries of loans previously
charged-off:Commercial financial and
agricultural


656


1,454Real estate construction and
development


451


396Real estate mortgage:One-to-four family residential
loans


1,147


181Commercial real estate
loans


821


72Consumer and
installment


76


82Recoveries of loans previously
charged-off


3,151


2,185Net loans charged-off


(71,663
)

(29,154
)Provision for loan
losses


108,000


45,947Balance, end of period

$
256,551


185,184We recorded net loan charge-offs of $71.7 million for the three
 months ended March 31, 2009, compared to $29.2 million for the comparable
 period in 2008. Our annualized net loan charge-offs as a percentage of
 average loans was 3.40% and 1.31% for the three months ended March 31, 2009
 and 2008, respectively. The following table summarizes the composition of our
 net loan charge-offs (recoveries) by region / business segment for the three months
 ended March 31, 2009 and 2008:Three Months Ended
 March 31,2009

2008(dollars expressed in thousands)Northern California real
 estate

$
3,093


15,882Mortgage Division,
 excluding Florida


10,707


9,541Florida


19,856


2,317Southern California real
 estate


6,452


Chicago real estate


3,389


Metropolitan St. Louis,
 Missouri real estate


(117
)

(2
)Texas real estate


1,630


409First Bank Business Capital


10,470


Southern California
 commercial and industrial


10,114


547Other


6,069


460Total net loan
charge-offs

$
71,663


29,154Net loan charge-offs recorded for the three months ended March 31,
 2009 included $23.5 million of net loan charge-offs associated with our
 commercial, financial and agricultural portfolio, compared to $311,000 for
 the comparable period in 2008, reflecting declining market conditions within
 certain sectors of this portfolio. Specifically in this portfolio, we
 recorded a $10.5 million loan charge-off on a single credit in our First Bank
 Business Capital, Inc. subsidiary as well as a $10.0 million loan charge-off
 on a single credit in our Southern California market area that went on
 nonaccrual status during the first quarter of 2009. Net loan charge-offs
 recorded for the three months ended March 31, 2009 also included $17.5
 million of net loan charge-offs associated with our real estate construction
 and development portfolio, compared to $17.3 million for the comparable
 period in 2008. We continue to experience significant distress and
 drastically declining market conditions within our Northern and Southern
 California, Chicago and St. Louis real estate markets, resulting in increased
 developer inventories, slower lot and home sales and significantly declining
 real estate values. Net loan charge-offs recorded for the three months ended
 March 31, 2009 also included $10.7 million of net loan charge-offs associated
 with our mortgage division, excluding Florida, compared to $9.5 million for
 the comparable period in 2008, and $19.9 million of net loan charge-offs
 associated39with our Florida region, compared to $2.3 million for the
comparable
 period in 2008, including $14.0 million and $187,000 of net loan charge-offs,
 respectively, on our Florida one-to-four family residential portfolio. We
 continue to experience deterioration in our one-to-four family residential
 portfolios as a result of weak economic conditions in the nationwide housing
 markets and significant declines in real estate values in all of our markets.
 Should real estate values further decline as a result of current economic
 conditions, we may continue to experience deterioration within our loan
 portfolio, and as a result, continued increased loan charge-offs.We continue to closely monitor our loan portfolio and address the
 ongoing challenges posed by the severely weakened economic environment,
 including reduced loan demand and highly competitive markets within certain
 sectors of our portfolio. Specifically, we continue to focus on loan
 portfolio segments in which we have experienced significant loan charge-offs
 and on loan portfolio segments that could generate additional loan
 charge-offs in the future, such as commercial real estate. We consider these
 factors in our overall assessment of the adequacy of our allowance for loan
 losses.As of March 31, 2009 and December 31, 2008, $296.7 million and
$224.1
 million, respectively, of loans not included in the nonperforming assets table
 above were identified by management as having potential credit problems, or
 problem loans. The increase in the level of problem loans during 2009
 reflects continued weak economic conditions in the nationwide housing markets
 and ongoing significant declines in real estate values in all of our markets.
 We continue our efforts to reduce nonperforming and problem loans and
 re-define our overall strategy and business plans with respect to our loan
 portfolio as deemed necessary in light of ongoing and dramatic changes in
 market conditions in the markets in which we operate.Our credit management policies and procedures focus on identifying,
 measuring and controlling credit exposure. These procedures employ a
 lender-initiated system of rating credits, which is ratified in the loan
 approval process and subsequently tested in internal credit reviews, external
 audits and regulatory bank examinations. The system requires the rating of
 all loans at the time they are originated or acquired, except for homogeneous
 categories of loans, such as residential real estate mortgage loans and
 consumer loans. These homogeneous loans are assigned an initial rating based
 on our experience with each type of loan. We adjust the ratings of the
 homogeneous loans based on payment experience subsequent to their
 origination.We include adversely rated credits, including loans requiring close
 monitoring that would not normally be considered classified credits by our
 regulators, on our monthly loan watch list. Loans may be added to our watch
 list for reasons that are temporary and correctable, such as the absence of
 current financial statements of the borrower or a deficiency in loan
 documentation. Loans may also be added to our watch list whenever any adverse
 circumstance is detected which might affect the borrowers ability to comply
 with the contractual terms of the loan. The delinquency of a scheduled loan
 payment, deterioration in the borrowers financial condition identified in a
 review of periodic financial statements, a decrease in the value of the
 collateral securing the loan, or a change in the economic environment within
 which the borrower operates could initiate the addition of a loan to our
 watch list. Loans on our watch list require periodic detailed loan status
 reports prepared by the responsible officer which are discussed in formal
 meetings with credit review and credit administration staff members. Upgrades
 and downgrades of loan risk ratings may be initiated by the responsible loan
 officer. However, upgrades of risk ratings associated with significant credit
 relationships and/or problem credit relationships may only be made with the
 concurrence of appropriate regional or senior regional credit officers.Each month, the credit administration department provides
management
 with detailed lists of loans on the watch list and summaries of the entire
 loan portfolio by risk rating. These are coupled with analyses of changes in
 the risk profile of the portfolio, changes in past-due and nonperforming
 loans and changes in watch list and classified loans over time. In this
 manner, we continually monitor the overall increases or decreases in the
 level of risk in our loan portfolio. Factors are applied to the loan
 portfolio for each category of loan risk to determine acceptable levels of
 allowance for loan losses. Furthermore, management has implemented additional
 procedures to analyze concentrations in our real estate portfolio in light of
 current economic and market conditions. These procedures include monthly
 meetings with our real estate groups and enhanced reporting to track land,
 lot, construction and finished inventory levels within our real estate
 construction and development portfolio. In addition, a quarterly evaluation
 of each lending unit is performed based on certain factors, such as lending
 personnel experience, recent credit reviews, loan concentrations and other
 factors. Based on this evaluation, changes to the allowance for loan losses
 may be required due to the perceived risk of particular portfolios. In
 addition, management exercises a certain degree of judgment in its analysis
 of the overall adequacy of the allowance for loan losses. In its analysis,
 management considers the changes in the portfolio, including growth,
 composition, the ratio of net loans to total assets, and the economic
 conditions of the regions in which we operate. Based on this quantitative and
 qualitative analysis, adjustments are made to the allowance for loan losses.
 Such adjustments are reflected in our consolidated statements of operations.40The allocation of the allowance for loan losses by loan category
is a
 result of the application of our risk rating system augmented by qualitative
 analysis. The same procedures we employ to determine the overall risk in our
 loan portfolio and our requirements for the allowance for loan losses
 determine the distribution of the allowance by loan category. Consequently,
 the distribution of the allowance will change from period to period due to
 (a) changes in the aggregate loan balances by loan category; (b) changes in
 the identified risk in each loan in the portfolio over time, excluding those
 homogeneous categories of loans such as consumer and installment loans and
 residential real estate mortgage loans for which risk ratings are changed
 based on payment performance; and (c) changes in loan concentrations by
 borrower.LiquidityOur liquidity is the ability to maintain a cash flow that is
adequate
 to fund operations, service debt obligations and meet obligations and other
 commitments on a timely basis. We receive funds for liquidity from customer
 deposits, loan payments, maturities of loans and investments, sales of
 investments and earnings. In addition, we may avail ourselves of other
 sources of funds by issuing certificates of deposit in denominations of
 $100,000 or more, including certificates issued through the CDARS program,
 borrowing federal funds, selling securities under agreements to repurchase
 and utilizing borrowings from the FHLB, the FRB and other borrowings. The
 aggregate funds acquired from these sources were $1.48 billion and $1.83
 billion at March 31, 2009 and December 31, 2008, respectively.The following
 table presents the maturity structure of these other sources of funds, which
 consists of certificates of deposit of $100,000 or more and other borrowings
 at March 31, 2009:Certificates of Deposit
 of $100,000 or More

Other
 Borrowings

Total(dollars expressed in thousands)Three months or less


$
268,439



133,845


402,284Over three months through
 six months



355,926






355,926Over six months through
 twelve months



475,541






475,541Over twelve months



126,897



120,693


247,590Total


$
1,226,803



254,538


1,481,341In addition to these sources of funds, First Bank has established a
 borrowing relationship with the FRB. This borrowing relationship, which is
 secured by commercial loans, provides an additional liquidity facility that
 may be utilized for contingency purposes. First Banks borrowing capacity
 under the agreement was approximately $1.23 billion at March 31, 2009, an
 increase from $1.14 billion at December 31, 2008. We had FRB borrowings
 outstanding of zero and $100.0 million at March 31, 2009 and December 31,
 2008, respectively, as further discussed below.In addition, First Banks borrowing capacity through its
relationship
 with the FHLB was approximately $1.14 billion and $911.1 million at March 31,
 2009 and December 31, 2008, respectively. First Bank requests advances and/or
 repays advances from the FHLB based on its current and future projected
 liquidity needs. We had FHLB advances outstanding of $693,000 at March 31,
 2009, compared to $200.7 million at December 31, 2008.To increase our liquidity in 2008 in light of uncertain market
 conditions and increased loan funding needs, First Bank entered into four
 $100.0 million FHLB advances scheduled to mature in November 2008, January
 2009, February 2009 and July 2009, at fixed interest rates of 2.23%, 3.16%,
 2.92%, and 2.53%, respectively. In September 2008 and November 2008, we
 prepaid two $100.0 million FHLB advance that were scheduled to mature in
 November 2008 and January 2009, respectively, and incurred prepayment penalties
 of $3,000 and $117,000, respectively. In November 2008, we replaced the
 higher rate FHLB advance with a borrowing of $100.0 million from the FRB with
 a substantially lower interest rate of 0.42%. In February 2009, funds
 available from short-term investments were utilized to repay the $100.0
 million FHLB advance and the $100.0 million FRB borrowing upon maturity. In
 March 2009, we prepaid the remaining $100.0 million FHLB advance that was
 scheduled to mature in July 2009 and incurred a prepayment penalty of
 $357,000, which was recorded as interest expense on other borrowings, as
 further described in Note 8 to our consolidated financial statements. In
 April 2009, we entered into two $100.0 million FHLB advances that mature in
 April 2010 and April 2011 at fixed interest rates of 1.69% and 1.77%,
 respectively.First Banks also has a borrowing relationship with its affiliated
 entity, Investors of America, LP, which provides for a $30.0 million secured
 revolving line of credit to be utilized for general working capital needs and
 capital investments in subsidiaries, as further described in Note 5 to our
 consolidated financial statements. First Banks did not have any balances
 outstanding on this borrowing arrangement at March 31, 2009 or December 31,
 2008. In addition, the Company is currently required to obtain prior approval
 from the FRB prior to incurring additional debt41obligations, including advancing funds under this borrowing
 arrangement, in accordance with the provisions of the informal agreements
 further described under Regulatory Matters.Our loan-to-deposit ratio decreased to 97.3% at March 31, 2009,
from 98.3% at December 31, 2008. We continue to closely monitor liquidity and
 implement actions deemed necessary to maintain an appropriate level of
 liquidity in light of unstable market conditions, changes in loan funding
 needs, operating and debt service requirements and current deposit trends.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 March 31, 2009 were as
 follows:Less than
 1 Year

1-3
 Years

3-5
 Years

Over5
 Years

Total (1)(dollars expressed in thousands)Operating leases

$
16,437


26,962


18,401


44,746


106,546Certificates of deposit
(2)


3,152,040


414,697


31,901


581


3,599,219Other borrowings
(2)


133,845


693


120,000





254,538Subordinated debentures
(2)











353,847


353,847Preferred stock issued under the
TARP (2) (3)











310,170


310,170Other contractual
obligations


772
(4)

376


292


6


1,446Total

$
3,303,094


442,728


170,594


709,350


4,625,766(1)
Amounts
 exclude FIN 48 unrecognized tax liabilities of $3.4 million and related
 accrued interest expense of $1.1 million for which the timing of payment of
 such liabilities cannot be reasonably estimated as of March 31, 2009.(2)
Amounts
 exclude the related interest expense and dividends accrued on these
 obligations as of March 31, 2009. As further described under Regulatory
 Matters, we currently may not make any distributions of interest or other
 sums on our subordinated debentures and related underlying trust preferred
 securities without the prior approval of the FRB.(3)
Amounts
 payable upon redemption of the Class C and Class D preferred stock issued
 under the TARP of $295.4 million and $14.8 million, respectively.(4)
Includes
 an accrued expense related to our remaining estimated indemnification
 obligation, as a member bank, to share certain litigation costs of Visa.We agreed, among other things, not to declare or pay any dividends
on
 our common or preferred stock or make any distributions of interest or other
 sums on our trust preferred securities without the prior approval of the FRB,
 as previously discussed under Regulatory Matters. In April 2009, we
 received pre-approval from the FRB to declare and pay the regular quarterly
 dividends on our preferred stock to be paid in May and June 2009 and to pay
 the regular quarterly interest payments on our outstanding subordinated debentures
 for further payment to the individual holders of the respective underlying
 trust preferred securities in June and July 2009. However, we are not able to
 predict whether the FRB will approve future payment requests.Management believes the available liquidity will be sufficient to
 permit the distribution of dividends to us sufficient to meet our operating
 and debt service requirements, both on a short-term and long-term basis, and
 to pay interest on the subordinated debentures that we issued to our affiliated
 statutory and business financing trusts and the dividends on our preferred
 stock that we issued to the Dierberg family and the U.S. Treasury. However,
 our ability to receive future dividends from First Bank to assist us in
 meeting our operating and debt service requirements, both on a short-term and
 long-term basis, is subject to regulatory approval, as further described
 above and under Regulatory Matters.Effects of New Accounting StandardsIn December 2007, the FASB issued SFAS No. 141(R) 
Business Combinations. SFAS No. 141(R)
 significantly changes how entities apply the acquisition method to business
 combinations. The most significant changes affecting how entities account for
 business combinations under SFAS No. 141(R) include: (a) the acquisition date
 is the date the acquirer obtains control; (b) all (and only) identifiable
 assets acquired, liabilities assumed, and noncontrolling interests in the
 acquiree are stated at fair value on the acquisition date; (c) assets or
 liabilities arising from noncontractual contingencies are measured at their
 acquisition date fair value only if it is more likely than not that they meet
 the definition of an asset or liability on the acquisition date; (d)
 adjustments subsequently made to the provisional amounts recorded on the
 acquisition date are made retroactively during a measurement period not to
 exceed one year; (e) acquisition-related restructuring costs that do not meet
 the criteria in SFAS No. 146  Accounting
 for Costs Associated with Exit or Disposal Activities, are
 expensed as incurred; (f) transaction costs are expensed as incurred; (g)
 reversals of deferred income tax valuation allowances and income tax
 contingencies are recognized in earnings subsequent to the measurement
 period; and (h) the allowance for loan losses of an acquiree is not permitted
 to be recognized by the acquirer. Additionally, SFAS No. 141(R) requires new
 and modified disclosures surrounding subsequent changes to
 acquisition-related contingencies, contingent consideration,42noncontrolling interests, acquisition-related transaction costs,
fair
 values and cash flows not expected to be collected for acquired loans, and an
 enhanced goodwill rollforward. SFAS No. 141(R) is effective for all business
 combinations completed on or after January 1, 2009. For business combinations
 in which the acquisition date was before the effective date, the provisions
 of SFAS No. 141(R) apply to the subsequent accounting for deferred income tax
 valuation allowances and income tax contingencies and will require any
 changes in those amounts to be recorded in earnings. The adoption of SFAS No.
 141(R) did not have a material impact on our financial condition, results of
 operations or the disclosures that are presented in our consolidated
 financial statements.In December 2007, the FASB issued SFAS No. 160 
Noncontrolling Interests in Consolidated Financial
 Statements, an Amendment of ARB 51. SFAS No. 160 establishes new
 accounting and reporting standards for noncontrolling interests in a
 subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 requires
 entities to classify noncontrolling interests as a component of stockholders
 equity and requires subsequent changes in ownership interests in a subsidiary
 to be accounted for as an equity transaction. Additionally, SFAS No. 160
 requires entities to recognize a gain or loss upon the loss of control of a
 subsidiary and to remeasure any ownership interest retained at fair value on
 that date. SFAS No. 160 also requires expanded disclosures that clearly
 identify and distinguish between the interests of the parent and the
 interests of the noncontrolling owners. SFAS No. 160 is effective on a
 prospective basis for fiscal years, and interim periods within those fiscal
 years, beginning on or after December 15, 2008, except for the presentation
 and disclosure requirements, which are required to be applied
 retrospectively. We implemented SFAS No. 160 on January 1, 2009, which
 resulted in our noncontrolling interest in subsidiaries of $129.4 million at
 December 31, 2008 being reclassified from a liability to a component of our
 stockholders equity in our consolidated balance sheets.In March 2008, the FASB issued SFAS No. 161  Disclosures
about Derivative Instruments and
 Hedging Activities, an Amendment of SFAS No. 133  Accounting for Derivative Instruments and Hedging
 Activities. SFAS No. 161 requires entities to provide greater
 transparency about (a) how and why an entity uses derivative instruments, (b)
 how derivative instruments and related hedged items are accounted for under
 SFAS No. 133 and its related interpretations, and (c) how derivative
 instruments and related hedged items affect an entitys financial position,
 results of operations and cash flows. To meet those objectives, SFAS No. 161
 requires (1) qualitative disclosures about objectives for using derivatives
 by primary underlying risk exposure and by purpose or strategy (fair value
 hedge, cash flow hedge, and non-hedges), (2) information about the volume of
 derivative activity in a flexible format that the preparer believes is the
 most relevant and practicable, (3) tabular disclosures about balance sheet
 location and gross fair value amounts of derivative instruments, income
 statement and other comprehensive income location of gain and loss amounts on
 derivative instruments by type of contract, and (4) disclosures about
 credit-risk related contingent features in derivative agreements. SFAS No.
 161 is effective for financial statements issued for fiscal years and interim
 periods beginning after November 15, 2008. We implemented SFAS No. 161 on
 January 1, 2009 and the required disclosures are reported in Note 13 to our
 consolidated financial statements.In April 2009, the FASB issued FASB Staff Position, or FSP, SFAS
 157-4 Determining Fair Value When the Volume and Level of
 Activity for the Asset or Liability Have Significantly Decreased and
 Identifying Transactions That Are Not Orderly. FSP SFAS 157-4
 affirms that the objective of fair value when the market for an asset is not
 active is the price that would be received to sell the asset in an orderly
 transaction, and clarifies and includes additional factors for determining
 whether there has been a significant decrease in market activity for an asset
 when the market for that asset is not active. FSP SFAS 157-4 requires an
 entity to base its conclusion about whether a transaction was not orderly on
 the weight of the evidence. FSP SFAS 157-4 also amended SFAS No. 157, Fair Value Measurements, to expand
 certain disclosure requirements. FSP SFAS 157-4 is effective for interim and
 annual periods ending after June 15, 2009 and is applied prospectively. We
 will adopt the provisions of FSP SFAS 157-4 during the second quarter of 2009
 which are not expected to significantly impact our consolidated financial
 statements.In April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2
Recognition
 and Presentation of Other-Than-Temporary Impairments. FSP SFAS
 115-2 and SFAS 124-2 (i) changes existing guidance for determining whether an
 impairment is other than temporary to debt securities and (ii) replaces the
 existing requirement that the entitys management assert it has both the
 intent and ability to hold an impaired security until recovery with a
 requirement that management assert: (a) it does not have the intent to sell
 the security; and (b) it is more likely than not it will not have to sell the
 security before recovery of its cost basis. Under FSP SFAS 115-2 and SFAS
 124-2, declines in the fair value of held-to-maturity and available-for-sale
 securities below their cost that are deemed to be other than temporary are
 reflected in earnings as realized losses to the extent the impairment is
 related to credit losses. The amount of the impairment related to other
 factors is recognized in other comprehensive income. FSP SFAS 115-2 and SFAS
 124-2 is effective for interim and annual periods ending after June 15, 2009
 and is applied prospectively. We will adopt the provisions of FSP 157-4 and
 SFAS 124-2 during the second quarter of 2009 which are not expected to
 significantly impact our consolidated financial statements.43In April 2009, the FASB issued FSP SFAS 107-1 and Accounting
 Principles Board, or APB, Opinion 28-1 Interim Disclosures about Fair Value of Financial Instruments. FSP
 SFAS 107-1 and APB Opinion 28-1 amend SFAS No. 107, Disclosures about Fair Value of Financial
 Instruments, to require an entity to provide disclosures about
 fair value of financial instruments in interim financial information and
 amends APB Opinion No. 28, Interim Financial
 Reporting, to require those disclosures in summarized financial
 information at interim reporting periods. Under FSP SFAS 107-1 and APB
 Opinion 28-1, a publicly traded company shall include disclosures about the
 fair value of its financial instruments whenever it issues summarized
 financial information for interim reporting periods. In addition, entities
 must disclose, in the body or in the accompanying notes of its summarized
 financial information for interim reporting periods and in its financial statements
 for annual reporting periods, the fair value of all financial instruments for
 which it is practicable to estimate that value, whether recognized or not
 recognized in the statement of financial position, as required by SFAS No.
 107. The new interim disclosures required by FSP SFAS 107-1 and APB Opinion
 28-1 will be included in our interim financial statements beginning with the
 second quarter of 2009.ITEM 3 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISKAt December 31, 2008, our risk management programs
simulation model
 indicated a loss of projected net interest income should interest rates
 decline. 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 50
 basis points was projected to have a relatively minimal impact on our net
 interest income, an instantaneous parallel decline in the interest yield
 curve of 50 basis points indicated a pre-tax projected loss of approximately
 3.6% of net interest income, based on assets and liabilities at December 31,
 2008. At March 31, 2009, we remain in an asset-sensitive position and thus,
 remain subject to a higher level of risk in a declining interest rate
 environment. Although we do not anticipate that instantaneous shifts in the
 yield curve as projected in our simulation model are likely, these are indications
 of the effects that changes in interest rates would have over time.Our asset-sensitive position, coupled with the effect of cuts in
 interest rates throughout 2008, has negatively impacted our net interest
 income and will continue to impact the level of our net interest income
 throughout 2009, as reflected in our net interest margin for the three months
 ended March 31, 2009 as compared to the comparable period in 2008, and
 further discussed under Managements Discussion and Analysis of Financial
 Condition and Results of Operations  Results of Operations.ITEM 4 
CONTROLS AND PROCEDURESThe Companys management, including our President and Chief
Executive
 Officer and our Chief Financial Officer have evaluated the effectiveness of
 our disclosure controls and procedures (as defined in Rules 13a-15(e) and
 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act), as
 of the end of the period covered by this report. Based on such evaluation,
 our President and Chief Executive Officer and our Chief Financial Officer
 have concluded that, as of the end of such period, the Companys disclosure
 controls and procedures were effective in recording, processing, summarizing
 and reporting, on a timely basis, information required to be disclosed by the
 Company in the reports that it files or submits under the Exchange Act. There
 have not been any changes in the Companys internal control over financial
 reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
 Exchange Act) during the fiscal quarter to which this report relates that
 have materially affected, or are reasonably likely to materially affect, the
 Companys internal control over financial reporting.44PART II  OTHER INFORMATIONITEM 1 
LEGAL PROCEEDINGSThe information required by this item is set forth in Note 14,
 Contingent Liabilities, to our consolidated financial statements appearing
 elsewhere in this report and is incorporated herein by reference.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 these existing proceedings will
 not have a material adverse effect on our business, financial condition or
 results of operations.As further described in Managements Discussion and Analysis
of
 Financial Condition and Results of Operations and in Note 1 to our
 consolidated financial statements appearing elsewhere in this report, the
 Company and First Bank have entered into informal agreements with the Federal
 Reserve Bank of St. Louis and the Missouri Division of Finance.ITEM 6 
EXHIBITSThe exhibits
 are numbered in accordance with the Exhibit Table of Item 601 of Regulation
 S-K.Exhibit Number
Description31.1
Rule 13a-14(a) / 15d-14(a) Certifications of Chief
Executive Officer
  filed herewith.31.2
Rule 13a-14(a) / 15d-14(a) Certifications of Chief
Financial Officer
  filed herewith.32.1
Section 1350 Certifications of Chief Executive
Officer  filed herewith.32.2
Section 1350 Certifications of Chief Financial
Officer  filed
 herewith.45SIGNATURESPursuant
 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.Date:    May
 14, 2009FIRST BANKS, INC.By:
/s/ Terrance
 M. McCarthyTerrance M. McCarthyPresident and Chief Executive
Officer(Principal Executive
Officer)By:
/s/ Lisa K.
 VansickleLisa K. VansickleSenior Vice President and Chief
Financial
 Officer(Principal Financial and
Accounting
 Officer)46