UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE
                                   ACT OF 1934

                  For the quarterly period ended June 30, 2007

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

               For the transition period from _______ to ________

                         Commission File Number: 0-20632

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

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

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

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

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

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

         Indicate by check mark whether the  registrant  is a large  accelerated
filer,  an accelerated  filer,  or a  non-accelerated  filer.  See definition of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act.  (Check  one):
Large accelerated filer [ ]    Accelerated filer [ ]   Non-accelerated filer [X]

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

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practical date.

                                                        Shares Outstanding
               Class                                     at July 31, 2007
               -----                                    ------------------

   Common Stock, $250.00 par value                            23,661



<PAGE>





                                            FIRST BANKS, INC.

                                            TABLE OF CONTENTS

<TABLE>
<CAPTION>




                                                                                                          Page
                                                                                                          ----

PART I.      FINANCIAL INFORMATION

   ITEM 1.   FINANCIAL STATEMENTS

<S>                                                                                                         <C>
             CONSOLIDATED BALANCE SHEETS...............................................................     1

             CONSOLIDATED STATEMENTS OF INCOME.........................................................     2

             CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 AND COMPREHENSIVE INCOME..............................................................     3

             CONSOLIDATED STATEMENTS OF CASH FLOWS.....................................................     4

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................................     5

   ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 AND RESULTS OF OPERATIONS.............................................................    18

   ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................................    36

   ITEM 4.   CONTROLS AND PROCEDURES...................................................................    36

PART II.     OTHER INFORMATION

   ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................    37

   ITEM 6.   EXHIBITS..................................................................................    37

SIGNATURES.............................................................................................    38

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                         PART I - FINANCIAL INFORMATION
                                         ITEM 1 - FINANCIAL STATEMENTS

                                               FIRST BANKS, INC.

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

                                                                                        June 30,     December 31,
                                                                                          2007           2006
                                                                                          ----           ----
                                                                                       (unaudited)

                                                    ASSETS
                                                    ------

Cash and cash equivalents:
<S>                                                                                    <C>               <C>
     Cash and due from banks........................................................  $   190,903        215,974
     Short-term investments.........................................................      239,305        153,583
                                                                                      -----------     ----------
          Total cash and cash equivalents...........................................      430,208        369,557
                                                                                      -----------     ----------

Investment securities:
     Trading........................................................................       68,110         81,168
     Available for sale.............................................................    1,265,437      1,359,729
     Held to maturity (fair value of $19,497 and $23,971, respectively).............       19,944         24,049
                                                                                      -----------     ----------
          Total investment securities...............................................    1,353,491      1,464,946
                                                                                      -----------     ----------

Loans:
     Commercial, financial and agricultural.........................................    2,082,303      1,934,912
     Real estate construction and development.......................................    1,952,495      1,832,504
     Real estate mortgage...........................................................    3,678,997      3,615,148
     Consumer and installment.......................................................       90,452         83,008
     Loans held for sale............................................................      197,320        216,327
                                                                                      -----------     ----------
          Total loans...............................................................    8,001,567      7,681,899
     Unearned discount..............................................................      (12,991)       (15,418)
     Allowance for loan losses......................................................     (142,922)      (145,729)
                                                                                      -----------     ----------
          Net loans.................................................................    7,845,654      7,520,752
                                                                                      -----------     ----------

Bank premises and equipment, net....................................................      209,885        178,417
Goodwill and other intangible assets................................................      317,786        295,382
Bank-owned life insurance...........................................................      114,768        113,778
Deferred income taxes...............................................................      106,683        100,175
Other assets........................................................................      100,260        115,707
                                                                                      -----------     ----------
          Total assets..............................................................  $10,478,735     10,158,714
                                                                                      ===========     ==========

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

Deposits:
     Noninterest-bearing demand.....................................................  $ 1,250,173      1,281,108
     Interest-bearing demand........................................................      932,114        981,939
     Savings........................................................................    2,710,802      2,352,575
     Time deposits of $100 or more..................................................    1,475,110      1,419,579
     Other time deposits............................................................    2,385,195      2,407,885
                                                                                      -----------     ----------
          Total deposits............................................................    8,753,394      8,443,086
Other borrowings....................................................................      434,971        373,899
Notes payable.......................................................................       35,000         65,000
Subordinated debentures.............................................................      302,166        297,966
Deferred income taxes...............................................................       39,591         42,826
Accrued expenses and other liabilities..............................................       75,750        130,033
Minority interest in subsidiary.....................................................        5,568          5,469
                                                                                      -----------     ----------
          Total liabilities.........................................................    9,646,440      9,358,279
                                                                                      -----------     ----------


<PAGE>

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

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued
       and outstanding..............................................................          --             --
     Class A convertible, adjustable rate, $20.00 par value, 750,000
       shares authorized, 641,082 shares issued and outstanding.....................       12,822         12,822
     Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
       160,505 shares issued and outstanding........................................          241            241
Common stock, $250.00 par value, 25,000 shares authorized,
     23,661 shares issued and outstanding...........................................        5,915          5,915
Additional paid-in capital..........................................................        9,685          9,685
Retained earnings...................................................................      825,979        784,864
Accumulated other comprehensive loss................................................      (22,347)       (13,092)
                                                                                      -----------     ----------
          Total stockholders' equity................................................      832,295        800,435
                                                                                      -----------     ----------
          Total liabilities and stockholders' equity................................  $10,478,735     10,158,714
                                                                                      ===========     ==========


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


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

                               CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
                      (dollars expressed in thousands, except share and per share data)


                                                                          Three Months Ended     Six Months Ended
                                                                               June 30,              June 30,
                                                                         --------------------  --------------------
                                                                            2007       2006       2007       2006
                                                                            ----       ----       ----       ----
Interest income:
<S>                                                                      <C>          <C>        <C>        <C>
     Interest and fees on loans........................................  $ 157,822    141,728    311,579    273,062
     Investment securities.............................................     17,182     14,856     33,374     29,633
     Short-term investments............................................      2,315      1,147      4,193      2,270
                                                                         ---------   --------   --------   --------
          Total interest income........................................    177,319    157,731    349,146    304,965
                                                                         ---------   --------   --------   --------
Interest expense:
     Deposits:
       Interest-bearing demand.........................................      2,313      1,947      4,929      3,775
       Savings.........................................................     20,460     12,255     38,797     23,438
       Time deposits of $100 or more...................................     18,204     14,258     35,234     25,814
       Other time deposits.............................................     28,180     23,146     55,970     43,180
     Other borrowings..................................................      4,941      3,246      9,292      7,941
     Notes payable.....................................................        636      1,477      1,544      2,897
     Subordinated debentures...........................................      5,814      5,722     11,748     11,374
                                                                         ---------   --------   --------   --------
          Total interest expense.......................................     80,548     62,051    157,514    118,419
                                                                         ---------   --------   --------   --------
          Net interest income..........................................     96,771     95,680    191,632    186,546
Provision for loan losses..............................................      5,500      5,000      9,000      6,000
                                                                         ---------   --------   --------   --------
          Net interest income after provision for loan losses..........     91,271     90,680    182,632    180,546
                                                                         ---------   --------   --------   --------
Noninterest income:
     Service charges on deposit accounts and customer service fees.....     11,661     10,996     22,269     21,228
     Gain on loans sold and held for sale..............................      4,558      6,099      8,484     12,920
     Net loss on investment securities.................................     (1,533)    (1,216)    (1,240)    (3,987)
     Bank-owned life insurance investment income.......................        999        652      1,712      1,767
     Investment management income......................................      1,542      2,296      3,052      4,597
     Insurance fee and commission income...............................      1,868      1,834      3,563      1,834
     Other.............................................................      4,942      5,218     10,780     13,017
                                                                         ---------   --------   --------   --------
          Total noninterest income.....................................     24,037     25,879     48,620     51,376
                                                                         ---------   --------   --------   --------
Noninterest expense:
     Salaries and employee benefits....................................     43,732     42,610     88,960     82,104
     Occupancy, net of rental income...................................      7,747      6,425     15,168     12,660
     Furniture and equipment...........................................      4,676      4,116      9,227      8,079
     Postage, printing and supplies....................................      1,649      1,988      3,431      3,414
     Information technology fees.......................................      9,189      9,190     18,520     18,251
     Legal, examination and professional fees..........................      2,681      2,408      4,414      4,505
     Amortization of intangible assets.................................      3,227      1,680      6,153      3,197
     Advertising and business development..............................      1,670      2,150      3,570      3,877
     Charitable contributions..........................................      1,462      1,707      3,378      3,324
     Other.............................................................      8,402      8,777     17,315     16,455
                                                                         ---------   --------   --------   --------
          Total noninterest expense....................................     84,435     81,051    170,136    155,866
                                                                         ---------   --------   --------   --------
          Income before provision for income taxes and minority
              interest in income (loss) of subsidiary..................     30,873     35,508     61,116     76,056
Provision for income taxes.............................................     11,092     13,500     22,042     25,203
                                                                         ---------   --------   --------   --------
          Income before minority interest in income (loss)
              of subsidiary............................................     19,781     22,008     39,074     50,853
Minority interest in income (loss) of subsidiary.......................         31        (78)       101       (236)
                                                                         ---------   --------   --------    -------
          Net income...................................................     19,750     22,086     38,973     51,089
Preferred stock dividends..............................................        132        132        328        328
                                                                         ---------   --------   --------   --------
          Net income available to common stockholders..................  $  19,618     21,954     38,645     50,761
                                                                         =========   ========   ========   ========

Basic earnings per common share........................................  $  829.17     927.86   1,633.29   2,145.35
                                                                         =========   ========   ========   ========

Diluted earnings per common share......................................  $  821.63     916.31   1,620.45   2,118.11
                                                                         =========   ========   ========   ========

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


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

<TABLE>
<CAPTION>


                                                    FIRST BANKS, INC.

            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME - (UNAUDITED)
                     Six Months Ended June 30, 2007 and 2006 and Six Months Ended December 31, 2006
                                (dollars expressed in thousands, except per share data)



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

<S>                                                         <C>        <C>     <C>       <C>         <C>        <C>         <C>
Balances, December 31, 2005................................ $12,822    241     5,915     5,910       673,956    (19,906)    678,938
                                                                                                                            -------
Six months ended June 30, 2006:
   Comprehensive income: (1)
     Net income............................................      --     --        --        --        51,089         --      51,089
     Other comprehensive loss, net of tax:
       Unrealized losses on investment securities..........      --     --        --        --            --    (11,903)    (11,903)
       Reclassification adjustment for investment
         securities losses included in net income..........      --     --        --        --            --      1,739       1,739
       Derivative instruments:
         Current period transactions.......................      --     --        --        --            --       (162)       (162)
                                                                                                                            -------
   Total comprehensive income..............................                                                                  40,763
   Class A preferred stock dividends, $0.50 per share......      --     --        --        --          (321)        --        (321)
   Class B preferred stock dividends, $0.04 per share......      --     --        --        --            (7)        --          (7)
                                                            -------    ---     -----     -----       -------    -------     -------
Balances, June 30, 2006....................................  12,822    241     5,915     5,910       724,717    (30,232)    719,373
                                                                                                                            -------
Six months ended December 31, 2006:
   Comprehensive income:
     Net income............................................      --     --        --        --        60,605         --      60,605
     Other comprehensive income, net of tax:
       Unrealized gains on investment securities...........      --     --        --        --            --     15,569      15,569
       Reclassification adjustment for investment
         securities gains included in net income...........      --     --        --        --            --       (497)       (497)
       Derivative instruments:
         Current period transactions.......................      --     --        --        --            --      2,068       2,068
                                                                                                                            -------
   Total comprehensive income..............................                                                                  77,745
   Adjustment for the utilization of net operating
       losses associated with prior acquisitions...........      --     --        --     3,775            --         --       3,775
   Class A preferred stock dividends, $0.70 per share......      --     --        --        --          (448)        --        (448)
   Class B preferred stock dividends, $0.07 per share......      --     --        --        --           (10)        --         (10)
                                                            -------    ---     -----     -----       -------    -------     -------
Balances, December 31, 2006................................  12,822    241     5,915     9,685       784,864    (13,092)    800,435
                                                                                                                            -------
Six months ended June 30, 2007:
   Comprehensive income: (1)
     Net income............................................      --     --        --        --        38,973         --      38,973
     Other comprehensive loss, net of tax:
       Unrealized losses on investment securities..........      --     --        --        --            --     (8,565)     (8,565)
       Reclassification adjustment for investment
         securities gains included in net income...........      --     --        --        --            --        (94)        (94)
       Derivative instruments:
         Current period transactions.......................      --     --        --        --            --       (596)       (596)
                                                                                                                            -------
   Total comprehensive income..............................                                                                  29,718
   Cumulative effect of change in accounting principle.....      --     --        --        --         2,470         --       2,470
   Class A preferred stock dividends, $0.50 per share......      --     --        --        --          (321)        --        (321)
   Class B preferred stock dividends, $0.04 per share......      --     --        --        --            (7)        --          (7)
                                                            -------    ---     -----     -----       -------    -------     -------
Balances, June 30, 2007.................................... $12,822    241     5,915     9,685       825,979    (22,347)    832,295
                                                            =======    ===     =====     =====       =======    =======     =======

<PAGE>

------------------
(1) Disclosure of comprehensive income:

                                                                        Three Months Ended     Six Months Ended
                                                                             June 30,              June 30,
                                                                       --------------------  --------------------
                                                                          2007       2006       2007       2006
                                                                          ----       ----       ----       ----
Comprehensive income:
    Net income........................................................  $ 19,750    22,086     38,973     51,089
    Other comprehensive loss, net of tax:
       Unrealized losses on investment securities.....................   (11,185)   (8,343)    (8,565)   (11,903)
       Reclassification adjustment for investment securities
          losses (gains) included in net income.......................        --       201        (94)     1,739
       Derivative instruments:
          Current period transactions.................................    (2,318)      141       (596)      (162)
                                                                        --------   -------    -------    -------
Total comprehensive income............................................  $  6,247    14,085     29,718     40,763
                                                                        ========   =======    =======    =======


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


<PAGE>
<TABLE>
<CAPTION>

                                             FIRST BANKS, INC.

                           CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
                                    (dollars expressed in thousands)
                                                                                                 Six Months Ended
                                                                                                     June 30,
                                                                                              ----------------------
                                                                                                 2007        2006
                                                                                                 ----        ----

Cash flows from operating activities:
<S>                                                                                          <C>             <C>
     Net income..........................................................................     $  38,973      51,089
     Adjustments to reconcile net income to net cash provided by operating activities:
       Depreciation and amortization of bank premises and equipment......................         9,774       8,975
       Amortization, net of accretion....................................................         8,311       7,018
       Originations of loans held for sale...............................................      (372,254)   (369,752)
       Proceeds from sales of loans held for sale........................................       404,076     444,231
       Payments received on loans held for sale..........................................        11,506      19,163
       Provision for loan losses.........................................................         9,000       6,000
       Provision for current income taxes................................................        19,943      22,143
       Provision for deferred income taxes...............................................         2,099       3,060
       Decrease in accrued interest receivable...........................................         2,317         153
       (Decrease) increase in accrued interest payable...................................        (5,403)        527
       Proceeds from sales of trading securities.........................................        13,177       4,463
       Maturities of trading securities..................................................        16,476         304
       Purchases of trading securities...................................................       (17,939)    (53,580)
       Gain on loans sold and held for sale..............................................        (8,484)    (12,920)
       Net loss on investment securities.................................................         1,240       3,987
       Other operating activities, net...................................................        (3,754)     (2,785)
       Minority interest in income (loss) of subsidiary..................................           101        (236)
                                                                                              ---------    --------
          Net cash provided by operating activities......................................       129,159     131,840
                                                                                              ---------    --------

Cash flows from investing activities:
     Cash paid for acquired entities, net of cash and cash equivalents received..........       (16,233)   (221,092)
     Proceeds from sales of investment securities available for sale.....................           487     197,027
     Maturities of investment securities available for sale..............................       606,058     659,466
     Maturities of investment securities held to maturity................................         4,223       2,053
     Purchases of investment securities available for sale...............................      (520,751)   (515,951)
     Purchases of investment securities held to maturity.................................          (134)       (865)
     Net increase in loans...............................................................      (205,254)   (543,069)
     Recoveries of loans previously charged-off..........................................         3,546       8,450
     Purchases of bank premises and equipment............................................       (36,244)    (10,670)
     Other investing activities, net.....................................................         4,088      (1,820)
                                                                                              ---------    --------
          Net cash used in investing activities..........................................      (160,214)   (426,471)
                                                                                              ---------    --------

Cash flows from financing activities:
     Increase (decrease) in demand and savings deposits..................................       224,746     (53,534)
     (Decrease) increase in time deposits................................................       (73,677)    442,740
     Decrease in Federal Home Loan Bank advances.........................................       (33,283)    (18,328)
     Increase (decrease) in securities sold under agreements to repurchase...............        61,155    (197,985)
     Repayments of notes payable.........................................................       (30,000)    (15,000)
     Proceeds from issuance of subordinated debentures...................................        25,774      87,631
     Repayments of subordinated debentures...............................................       (82,681)         --
     Payment of preferred stock dividends................................................          (328)       (328)
                                                                                              ---------    --------
          Net cash provided by financing activities......................................        91,706     245,196
                                                                                              ---------    --------
          Net increase (decrease) in cash and cash equivalents...........................        60,651     (49,435)
Cash and cash equivalents, beginning of period...........................................       369,557     286,652
                                                                                              ---------    --------
Cash and cash equivalents, end of period.................................................     $ 430,208     237,217
                                                                                              =========    ========
Supplemental disclosures of cash flow information:
     Cash paid (received) during the period for:
       Interest on liabilities...........................................................     $ 162,917     117,892
       Income taxes......................................................................        (7,462)     11,290
                                                                                              =========    ========

     Noncash investing and financing activities:
       Securitization and transfer of loans to investment securities.....................     $      --     138,944
       Loans transferred to other real estate............................................         6,400       3,452
                                                                                              =========    ========

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




<PAGE>


                                FIRST BANKS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)      BASIS OF PRESENTATION

         The  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 2006
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 and six months ended June 30, 2007 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending December 31, 2007.

         The  consolidated  financial  statements  include  the  accounts of the
parent company and its  subsidiaries,  giving effect to the minority interest in
one subsidiary, as more fully described below, and in Note 6 to the Consolidated
Financial  Statements.  All significant  intercompany  accounts and transactions
have been eliminated.  Certain  reclassifications of 2006 amounts have been made
to conform to the 2007 presentation.

         First Banks operates  through its wholly owned  subsidiary bank holding
company,  The San Francisco  Company  (SFC),  and SFC's wholly owned  subsidiary
bank, First Bank, both headquartered in St. Louis, Missouri. First Bank operates
through  its branch  banking  offices  and  subsidiaries:  First  Bank  Business
Capital, Inc.; Missouri Valley Partners,  Inc. (MVP); Adrian N. Baker & Company;
Universal Premium Acceptance  Corporation and its wholly owned subsidiary,  UPAC
of California,  Inc.  (collectively,  UPAC);  and Small Business Loan Source LLC
(SBLS LLC). All of the subsidiaries are wholly owned, except for SBLS LLC, which
is 76.0%  owned by First Bank and 24.0%  owned by First  Capital  America,  Inc.
(FCA) as of June 30, 2007,  as further  described in Note 6 to the  Consolidated
Financial Statements.

         Significant  Accounting  Policies.  First Banks  implemented  Financial
Accounting  Standards  Board  (FASB)  Interpretation  No. 48 --  Accounting  for
Uncertainty in Income Taxes, an Interpretation of SFAS No. 109 -- Accounting for
Income Taxes, on January 1, 2007 (FIN 48). The implementation of FIN 48 resulted
in the recognition of a cumulative  effect of change in accounting  principle of
$2.5 million,  which was recorded as an increase to beginning retained earnings,
as  further  described  in Note  12 to the  Consolidated  Financial  Statements.
Interest  related to unrecognized  tax benefits is included in interest  expense
and penalties  related to unrecognized  tax benefits are included in noninterest
expense.

(2)      ACQUISITIONS, INTEGRATION COSTS AND OTHER CORPORATE TRANSACTIONS

         Completed Acquisitions. On February 28, 2007, First Banks completed its
acquisition  of  Royal  Oaks  Bancshares,  Inc.  and its  wholly  owned  banking
subsidiary, Royal Oaks Bank, ssb (collectively, Royal Oaks) for $38.6 million in
cash. Royal Oaks was  headquartered in Houston,  Texas and operated five banking
offices in the Houston area. In addition, at the time of the acquisition,  Royal
Oaks was in the process of opening a de novo branch  banking  office  located in
the Heights, near downtown Houston, which subsequently opened on April 16, 2007.
The  acquisition  served to expand  First Banks'  banking  franchise in Houston,
Texas.  The  transaction was funded through  internally  generated funds and the
issuance of subordinated  debentures  associated  with the private  placement of
$25.0 million of trust preferred  securities  through a newly formed  affiliated
statutory trust, as further  described in Note 11 to the Consolidated  Financial
Statements.  At the time of the  acquisition,  Royal  Oaks had  assets of $206.9
million, loans, net of unearned discount, of $175.5 million,  deposits of $159.1
million  and  stockholders'  equity of $9.6  million.  The assets  acquired  and
liabilities  assumed  were  recorded  at  their  estimated  fair  value  on  the
acquisition date. The fair value adjustments represent current estimates and are
subject to further  adjustment as the valuation  data is finalized.  Preliminary
goodwill,  which is not  deductible  for tax purposes,  was $23.1  million,  and
preliminary core deposit intangibles,  which are being amortized over five years
utilizing the  straight-line  method,  were $4.5 million.  Royal Oaks was merged
with and into First Bank at the time of the acquisition.

         Acquisition  and Integration  Costs.  First Banks accrues certain costs
associated with its  acquisitions as of the respective  consummation  dates. The
accrued  costs  relate to  adjustments  to the  staffing  levels of the acquired
entities or to the  anticipated  termination of  information  technology or item

<PAGE>

processing  contracts of the acquired entities prior to their stated contractual
expiration  dates. The most significant  costs that First Banks incurs relate to
salary  continuation  agreements,  or other  similar  agreements,  of  executive
management  and certain  other  employees of the acquired  entities that were in
place prior to the acquisition dates. These agreements provide for payments over
periods  generally ranging from two to 15 years and are triggered as a result of
the change in control of the  acquired  entity.  Other  severance  benefits  for
employees  that  are  terminated  in  conjunction  with the  integration  of the
acquired entities into First Banks' existing operations are normally paid to the
recipients  within 90 days of the respective  consummation date and are expensed
in the  consolidated  statements  of income as incurred.  The accrued  severance
balance of $219,000 as of June 30, 2007, as  summarized in the following  table,
is comprised of contractual  obligations under salary continuation agreements to
five  individuals  with remaining terms ranging from  approximately  one to nine
years.  As the obligation to make payments under these  agreements is accrued at
the consummation  date, such payments do not have any impact on the consolidated
statements of income.  First Banks also incurs integration costs associated with
acquisitions that are expensed in the consolidated  statements of income.  These
costs relate  principally to additional  costs incurred in conjunction  with the
information  technology  conversions of the respective  entities.  The following
table summarizes the cumulative  acquisition and integration costs  attributable
to the Company's  acquisitions,  which were accrued as of the consummation dates
of the respective acquisition and are reflected in accrued and other liabilities
in the consolidated balance sheets:

<TABLE>
<CAPTION>
                                                                                   Information
                                                                   Severance     Technology Fees      Total
                                                                   ---------     ---------------      -----
                                                                        (dollars expressed in thousands)

<S>                                                                  <C>              <C>              <C>
         Balance at December 31, 2006.............................   $ 386              --             386
         Six Months Ended June 30, 2007:
             Amounts accrued during the period....................     100             512             612
             Payments.............................................    (267)           (512)           (779)
                                                                     -----            ----            ----
         Balance at June 30, 2007.................................   $ 219              --             219
                                                                     =====            ====            ====
</TABLE>

         Other Corporate Transactions.  On May 18, 2007, First Bank entered into
a  Purchase  and  Assumption  Agreement  providing  for  Synergy  Bank,  SSB,  a
subsidiary  of Premier  Bancshares,  Inc.,  to acquire  First Bank's two banking
offices located in Denton and Garland, Texas (collectively,  Branch Offices). As
further  described in Note 14 to the Consolidated  Financial  Statements,  First
Bank completed its sale of the Branch Offices on July 19, 2007.

         During  the six  months  ended June 30,  2007,  First  Bank  opened the
following de novo branch offices:

               Branch Office Location                             Date Opened
               ----------------------                             -----------
                 St. Louis, Missouri                           January 22, 2007
                 Katy (Houston), Texas                         February 26, 2007
                 Lincoln (Sacramento), California               March 12, 2007
                 Dardenne Prairie (St. Louis), Missouri           May 9, 2007
                 Chula Vista (San Diego), California             June 25, 2007
<PAGE>


(3)      GOODWILL AND OTHER INTANGIBLE ASSETS

         Goodwill  and  other  intangible  assets,  net  of  amortization,  were
comprised of the following at June 30, 2007 and December 31, 2006:
<TABLE>
<CAPTION>
                                                             June 30, 2007             December 31, 2006
                                                       -------------------------    -----------------------
                                                         Gross                       Gross
                                                        Carrying    Accumulated     Carrying    Accumulated
                                                         Amount    Amortization      Amount    Amortization
                                                         ------    ------------      ------    ------------
                                                                  (dollars expressed in thousands)

         Amortized intangible assets:
<S>                                                    <C>           <C>             <C>         <C>
             Core deposit intangibles................  $  65,367     (24,184)        60,867      (18,850)
             Customer list intangibles...............     23,320      (1,660)        23,320         (913)
             Goodwill associated with
                P&A Transactions (1).................      2,210      (1,360)         2,210       (1,288)
                                                       ---------     -------        -------      -------
                   Total.............................  $  90,897     (27,204)        86,397      (21,051)
                                                       =========     =======        =======      =======

         Unamortized intangible assets:
             Goodwill associated with
                stock purchases......................  $ 254,093                    230,036
                                                       =========                    =======
         ------------------
         (1) P&A Transactions represent transactions structured as purchases of certain assets and assumption
             of selected liabilities.
</TABLE>

         Amortization of intangible assets was $3.2 million and $6.2 million for
the three and six months ended June 30, 2007, respectively, and $1.7 million and
$3.2 million for the  comparable  periods in 2006.  Amortization  of  intangible
assets,  including  amortization  of core  deposit  intangibles,  customer  list
intangibles and goodwill associated with P&A Transactions, has been estimated in
the following table, and does not take into  consideration  any potential future
acquisitions or branch office purchases.
<TABLE>
<CAPTION>

                                                                           (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                      <C>
              2007 remaining.........................................................  $  6,302
              2008...................................................................    12,606
              2009...................................................................    10,703
              2010...................................................................    10,242
              2011...................................................................     7,941
              2012...................................................................     2,392
              Thereafter.............................................................    13,507
                                                                                       --------
                 Total...............................................................  $ 63,693
                                                                                       ========
</TABLE>
<PAGE>

         Changes in the carrying amount of goodwill for the three and six months
ended June 30, 2007 and 2006 were as follows:
<TABLE>
<CAPTION>

                                                                Three Months Ended        Six Months Ended
                                                                     June 30,                 June 30,
                                                              ----------------------    --------------------
                                                                  2007       2006         2007       2006
                                                                  ----       ----         ----       ----
                                                                     (dollars expressed in thousands)

<S>                                                            <C>          <C>          <C>        <C>
         Balance, beginning of period........................   $253,504    181,955      230,958    167,056
         Goodwill acquired during the period.................      1,476     44,910       24,659     59,806
         Acquisition-related adjustments (1).................         --        (18)        (602)        20
         Amortization - P&A Transactions.....................        (37)       (36)         (72)       (71)
                                                                --------   --------     --------   --------
         Balance, end of period..............................   $254,943    226,811      254,943    226,811
                                                                ========   ========     ========   ========
         ------------------
         (1)  Acquisition-related  adjustments  recorded  in 2007  pertain to the acquisition  of San Diego
              Community Bank in August 2006.  Acquisition-related  adjustments include additional  purchase
              accounting adjustments 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.

(4)      SERVICING RIGHTS

         Mortgage  Banking  Activities.  At June 30, 2007 and December 31, 2006,
First Banks serviced mortgage loans for others totaling $983.0 million and $1.04
billion,   respectively.   Changes  in  mortgage   servicing   rights,   net  of
amortization,  for the three and six months ended June 30, 2007 and 2006 were as
follows:

                                                                Three Months Ended       Six Months Ended
                                                                     June 30,                June 30,
                                                               --------------------    --------------------
                                                                  2007       2006         2007       2006
                                                                  ----       ----         ----       ----
                                                                     (dollars expressed in thousands)

         Balance, beginning of period........................    $5,407      7,034        5,867      6,623
         Originated mortgage servicing rights (1)............       322      1,270          655      2,728
         Amortization........................................      (725)    (1,067)      (1,518)    (2,114)
                                                                 ------     ------       ------     ------
         Balance, end of period..............................    $5,004      7,237        5,004      7,237
                                                                 ======     ======       ======     ======
         -------------------
         (1)  In March 2006, First Banks capitalized mortgage servicing rights  of $1.2 million  associated
              with the securitization of $77.1 million of certain residential mortgage  loans held  in  the
              Company's loan portfolio, resulting in the  recognition of $1.2  million  in  loan  servicing
              income related to the future servicing  of the underlying loans. Additionally, in April 2006,
              First  Banks  capitalized   mortgage  servicing  rights  of  $927,000  associated  with   the
              securitization of $61.8 million of certain residential  mortgage  loans held in the Company's
              loan portfolio, resulting in the  recognition of $927,000 in loan servicing income related to
              the future servicing of the underlying loans.
</TABLE>

         First Banks did not incur any impairment of mortgage  servicing  rights
during the three and six months ended June 30, 2007 and 2006.



<PAGE>


         Amortization  of  mortgage  servicing  rights at June 30, 2007 has been
estimated in the following table:
<TABLE>
<CAPTION>

                                                                          (dollars expressed in thousands)

         Year ending December 31:
<S>           <C>                                                                     <C>
              2007 remaining........................................................  $   998
              2008..................................................................    1,248
              2009..................................................................      810
              2010..................................................................      631
              2011..................................................................      518
              2012..................................................................      518
              Thereafter............................................................      281
                                                                                      -------
                  Total.............................................................  $ 5,004
                                                                                      =======
</TABLE>

         Other  Servicing  Activities.  At June 30, 2007 and  December 31, 2006,
First Banks serviced United States Small Business Administration (SBA) loans for
others totaling $145.6 million and $143.4 million, respectively.  Changes in SBA
servicing  rights,  net of amortization  and  impairment,  for the three and six
months ended June 30, 2007 and 2006 were as follows:
<TABLE>
<CAPTION>

                                                                Three Months Ended       Six Months Ended
                                                                     June 30,                 June 30,
                                                               --------------------    --------------------
                                                                  2007       2006         2007       2006
                                                                  ----       ----         ----       ----
                                                                     (dollars expressed in thousands)

<S>                                                             <C>          <C>          <C>        <C>
         Balance, beginning of period........................   $ 7,795      8,942        8,064      9,489
         Originated SBA servicing rights.....................       523        146          990        318
         Amortization........................................      (403)      (417)        (816)      (858)
         Impairment..........................................      (295)      (462)        (618)      (740)
                                                                -------     ------       ------     ------
         Balance, end of period..............................   $ 7,620      8,209        7,620      8,209
                                                                =======     ======       ======     ======
</TABLE>

         First Banks  recognized  impairment  of $295,000  and  $618,000 for the
three and six  months  ended  June 30,  2007,  respectively,  and  $462,000  and
$740,000 for the comparable  periods in 2006.  The  impairment  recorded for the
three and six months  ended June 30,  2007  resulted  from a decline in the fair
value  of  the  SBA  servicing   assets  below  the  carrying  value   primarily
attributable  to payoffs  received on certain  existing  loans.  The  impairment
recorded  for the three and six  months  ended  June 30,  2006  resulted  from a
decline in the fair value of the SBA servicing  assets below the carrying  value
primarily  attributable  to the placement of certain loans on nonaccrual  status
and payoffs received on certain existing loans.

         Amortization  of SBA  servicing  rights  at  June  30,  2007  has  been
estimated in the following table:
<TABLE>
<CAPTION>

                                                                          (dollars expressed in thousands)

         Year ending December 31:
<S>                                                                                   <C>
              2007 remaining........................................................  $   779
              2008..................................................................    1,340
              2009..................................................................    1,101
              2010..................................................................      902
              2011..................................................................      737
              2012..................................................................      600
              Thereafter............................................................    2,161
                                                                                      -------
                  Total.............................................................  $ 7,620
                                                                                      =======
</TABLE>



<PAGE>


(5)      EARNINGS PER COMMON SHARE

         The  following is a  reconciliation  of basic and diluted  earnings per
share (EPS) for the three and six months ended June 30, 2007 and 2006:
<TABLE>
<CAPTION>

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

     Three months ended June 30, 2007:
<S>                                                                  <C>            <C>           <C>
         Basic EPS - income available to common stockholders......   $19,618        23,661        $  829.17
         Effect of dilutive securities:
           Class A convertible preferred stock....................       128           373            (7.54)
                                                                     -------       -------        ---------
         Diluted EPS - income available to common stockholders....   $19,746        24,034        $  821.63
                                                                     =======       =======        =========

     Three months ended June 30, 2006:
         Basic EPS - income available to common stockholders......   $21,954        23,661        $  927.86
         Effect of dilutive securities:
           Class A convertible preferred stock....................       128           438           (11.55)
                                                                     -------       -------        ---------
         Diluted EPS - income available to common stockholders....   $22,082        24,099        $  916.31
                                                                     =======       =======        =========

     Six months ended June 30, 2007:
         Basic EPS - income available to common stockholders......   $38,645        23,661        $1,633.29
         Effect of dilutive securities:
           Class A convertible preferred stock....................       321           385           (12.84)
                                                                     -------       -------        ---------
         Diluted EPS - income available to common stockholders....   $38,966        24,046        $1,620.45
                                                                     =======       =======        =========

     Six months ended June 30, 2006:
         Basic EPS - income available to common stockholders......   $50,761        23,661        $2,145.35
         Effect of dilutive securities:
           Class A convertible preferred stock....................       321           456           (27.24)
                                                                     -------       -------        ---------
         Diluted EPS - income available to common stockholders....   $51,082        24,117        $2,118.11
                                                                     =======       =======        =========
</TABLE>

(6)      TRANSACTIONS WITH RELATED PARTIES

         First Services,  L.P., a limited partnership  indirectly owned by First
Banks'  Chairman  and  members of his  immediate  family,  provides  information
technology,  item processing and various related  services to First Banks,  Inc.
and its subsidiaries.  Fees paid under agreements with First Services, L.P. were
$7.7 million and $15.5 million for the three and six months ended June 30, 2007,
respectively,  and $7.3 million and $15.0 million for the comparable  periods in
2006.  First Services,  L.P. leases  information  technology and other equipment
from First Bank.  During the three  months  ended June 30, 2007 and 2006,  First
Services,  L.P.  paid First Bank $885,000 and $1.0  million,  respectively,  and
during the six months ended June 30, 2007 and 2006,  First  Services,  L.P. paid
First Bank $2.0 million and $2.2 million,  respectively,  in rental fees for the
use of that equipment.

         First Brokerage America, L.L.C., a limited liability company indirectly
owned by First Banks'  Chairman and members of his  immediate  family,  received
approximately  $1.4  million and $2.4 million for the three and six months ended
June 30, 2007, respectively,  and $809,000 and $1.4 million,  respectively,  for
the  comparable  periods  in 2006,  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.

         On January 16, 2007,  First Banks  contributed  48,796 shares of common
stock held in its available-for-sale investment securities portfolio with a fair
value of $1.7 million to the Dierberg Operating Foundation, Inc. (Foundation), a
charitable  foundation  established by First Banks'  Chairman and members of his
immediate  family.  In conjunction with this  transaction,  First Banks recorded
charitable  contributions expense of $1.7 million, which was partially offset by
a gain on the contribution of these available-for-sale  investment securities of
$147,000,  representing the difference between the cost basis and the fair value
of the common stock on the date of the  contribution.  In addition,  First Banks
recognized  a tax  benefit of $1.0  million  associated  with this  transaction.
During the second quarter of 2007,  First Bank  contributed $1.3 million in cash
to the Foundation,  thereby bringing the total value of charitable contributions
to the  Foundation to $1.3 million and $3.0 million for the three and six months
ended June 30,  2007,  respectively.  During the three and six months ended June
30,  2006,  First  Bank  contributed  $2.5  million  and $3.0  million  in cash,
respectively, to the Foundation.
<PAGE>

         First Bank leases certain of its in-store  branch offices and ATM sites
from Dierbergs Markets,  Inc., a grocery store chain headquartered in St. Louis,
Missouri that is owned and operated by the brother of First Banks'  Chairman and
members of his immediate family. Total rent expense incurred by First Bank under
the lease  obligation  contracts  was $99,000 and $197,000 for the three and six
months  ended June 30,  2007,  respectively,  and  $105,000 and $191,000 for the
comparable periods in 2006.

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

         In June 2005,  SBLS LLC executed a  Multi-Party  Agreement by and among
SBLS LLC, First Bank, Colson Services Corp.,  fiscal transfer agent for the SBA,
and the SBA,  in addition to a Loan and  Security  Agreement  by and among First
Bank and the SBA  (collectively,  the  Agreement)  that provided a $50.0 million
warehouse line of credit for loan funding purposes.  The Agreement  provided for
an initial  maturity date of June 30, 2008,  which was extended on June 15, 2006
by First Bank to June 30, 2009. Interest was payable monthly, in arrears, on the
outstanding balances at a rate equal to First Bank's prime lending rate minus 50
basis points. On March 1, 2007, SBLS LLC modified the Agreement with First Bank.
The primary  modifications to the structure of the financing arrangement include
(a) an increase  in the  warehouse  line of credit  from $50.0  million to $60.0
million;  and (b) interest is payable  monthly,  in arrears,  on the outstanding
balances  at a rate  equal to First  Bank's  prime  lending  rate minus 50 basis
points,  with the  option  of  electing  to have a  portion  of the  outstanding
principal  balance  in  amounts  not  greater  than  $40.0  million,  in minimum
increments  of  $500,000,  bear  interest at a fixed rate per annum equal to the
one-month  London  Interbank  Offering Rate (LIBOR) plus 215 basis  points,  the
three-month LIBOR plus 215 basis points or the long-term interest rate swap rate
plus 215 basis  points,  provided  that no more than three  fixed-rate  interest
periods  may be in effect at any given  time and no  interest  period may extend
beyond the  maturity  date.  Advances  under the  Agreement  are  secured by the
assignment  of the  majority of the assets of SBLS LLC.  The balance of advances
outstanding  under this line of credit was $51.8  million  and $47.5  million at
June 30, 2007 and December 31, 2006,  respectively.  Interest  expense  recorded
under the Agreement by SBLS LLC for the three and six months ended June 30, 2007
was $947,000 and $1.9 million,  respectively,  and $652,000 and $1.2 million for
the comparable  periods in 2006. The balance of the advances under the Agreement
and the related interest expense recognized by SBLS LLC are fully eliminated for
purposes of the Consolidated Financial Statements.

         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  collectibility  or  present  other  unfavorable  features.   Loans  to
directors,  their  affiliates and executive  officers of First Banks,  Inc. were
approximately  $51.4 million and $55.9 million at June 30, 2007 and December 31,
2006,  respectively.  First Bank does not extend  credit to its  officers  or to
officers of First Banks,  Inc., except extensions of credit secured by mortgages
on personal  residences,  loans to purchase  automobiles,  personal  credit card
accounts and deposit account overdraft  protection under a plan whereby a credit
limit has been  established  in  accordance  with First Bank's  standard  credit
criteria.

         In August  2005,  First Bank  entered  into a contract  with World Wide
Technology,  Inc.  (WWT),  a wholly owned  subsidiary  of World Wide  Technology
Holding Co.,  Inc.  (WWTHC).  WWTHC is an electronic  procurement  and logistics
company in the  information  technology  industry  headquartered  in St.  Louis,
Missouri.  The  contract  provided  for WWT to  provide  information  technology
services  associated  with the  initial  phase of a  corporate-wide  upgrade  of
personal  computers  to First Bank  employees  in an  ongoing  effort to further
standardize the  technological  infrastructure  throughout the First Bank branch
banking network. Mr. David L. Steward, a director of First Banks and a member of
the Audit  Committee  of First  Banks,  serves as the  Chairman  of the Board of
Directors of WWTHC. Prior to entering into this contract, the Audit Committee of
First  Banks  reviewed  and  approved  the  utilization  of WWT for  information
technology  services  for this  phase of the  project  with  fees not to  exceed
$500,000.  First Bank made payments of $478,000 under the contract for the first
phase of the project, of which $471,000 in payments were made during 2005 and an
additional  $7,000 in payments were made during the three months ended March 31,
2006.  During 2006, First Bank evaluated the second phase of its  corporate-wide
personal computer upgrade project and entered into a contract with WWT in August
2006 for additional information technology services. Prior to entering into this
contract,  the  Audit  Committee  of  First  Banks  reviewed  and  approved  the
utilization  of WWT for  this  phase of the  project  with  fees  not to  exceed
$500,000. First Bank made payments of $379,000 under the contract for the second
phase of the project  which is now  complete,  of which $12,000 in payments were
made during the six months ended June 30, 2007.


<PAGE>


(7)      REGULATORY CAPITAL

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

         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy  require  First  Banks and First Bank to maintain  minimum  amounts and
ratios  of  total  and  Tier  1  capital  (as  defined  in the  regulations)  to
risk-weighted  assets,  and of Tier 1  capital  to  average  assets.  Management
believes,  as of June 30,  2007,  First  Banks  and  First  Bank  were each well
capitalized. As of June 30, 2007, the most recent notification from First Banks'
primary  regulator  categorized  First Banks and First Bank as well  capitalized
under the regulatory  framework for prompt corrective  action. To be categorized
as well  capitalized,  First Banks and First Bank must  maintain  minimum  total
risk-based,  Tier 1  risk-based  and Tier 1 leverage  ratios as set forth in the
following table.

         At June 30, 2007 and December  31, 2006,  First Banks' and First Bank's
required and actual capital ratios were as follows:
<TABLE>
<CAPTION>


                                                            Actual
                                           -----------------------------------------      For         To be Well
                                              June 30, 2007       December 31, 2006     Capital    Capitalized Under
                                           -------------------   -------------------    Adequacy   Prompt Corrective
                                             Amount     Ratio      Amount     Ratio     Purposes   Action Provisions
                                             ------     -----      ------     -----     --------   -----------------
                                                (dollars expressed in thousands)

Total capital (to risk-weighted assets):
<S>                                        <C>          <C>      <C>         <C>         <C>            <C>
    First Banks..........................  $ 955,729    10.05%   $ 929,688    10.25%      8.0%           10.0%
    First Bank...........................    956,810    10.08      925,013    10.23       8.0            10.0

Tier 1 capital (to risk-weighted assets):
    First Banks..........................    820,810     8.63      789,967     8.71       4.0             6.0
    First Bank...........................    837,825     8.83      811,530     8.97       4.0             6.0

Tier 1 capital (to average assets):
    First Banks..........................    820,810     8.14      789,967     8.13       3.0             5.0
    First Bank...........................    837,825     8.33      811,530     8.38       3.0             5.0
</TABLE>

         In March 2005,  the Federal  Reserve  adopted a final rule,  Risk-Based
Capital  Standards:  Trust  Preferred  Securities and the Definition of Capital,
which allows for the continued limited  inclusion of trust preferred  securities
in Tier 1 capital.  The  Federal  Reserve's  final rule limits  restricted  core
capital  elements  to 25% of the sum of all  core  capital  elements,  including
restricted core capital elements,  net of goodwill less any associated  deferred
tax liability.  Amounts of restricted  core capital  elements in excess of these
limits may  generally  be included in Tier 2 capital.  Specifically,  amounts of
qualifying trust preferred  securities and cumulative  perpetual preferred stock
in  excess  of the 25%  limit may be  included  in Tier 2  capital,  but will be
limited,  together with subordinated  debt and limited-life  preferred stock, to
50% of Tier 1 capital.  In addition,  the final rule  provides  that in the last
five  years  before  the  maturity  of the  underlying  subordinated  note,  the
outstanding  amount  of  the  associated  trust  preferred  securities  is to be
excluded  from  Tier 1  capital  and  included  in Tier 2  capital,  subject  to
one-fifth  amortization  per  year.  The final  rule  provides  for a  five-year
transition   period,   ending  March  31,  2009,  for  the  application  of  the
quantitative  limits.  Until March 31, 2009, the aggregate  amount of qualifying
cumulative  perpetual preferred stock and qualifying trust preferred  securities
that may be  included  in Tier 1  capital  is  limited  to 25% of the sum of the
following  core  capital  elements:   qualifying  common  stockholders'  equity,
qualifying  noncumulative and cumulative  perpetual preferred stock,  qualifying
minority  interest  in the equity  accounts  of  consolidated  subsidiaries  and
qualifying  trust  preferred  securities.  First Banks has  determined  that the
Federal  Reserve's  final  rules  that  will be  effective  in  March  2009,  if
implemented  as of June 30,  2007,  would reduce First Banks' Tier 1 capital (to
risk-weighted assets) and Tier 1 capital (to average assets) to 7.73% and 7.29%,
respectively,  and would not have an impact on total  capital (to  risk-weighted
assets).


<PAGE>


(8)      BUSINESS SEGMENT RESULTS

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

         The business  segment results are consistent with First Banks' internal
reporting system and, in all material  respects,  with U.S.  generally  accepted
accounting  principles and practices  predominant in the banking  industry.  The
business segment results are summarized as follows:

<TABLE>
<CAPTION>


                                                                     Corporate, Other
                                                                     and Intercompany
                                              First Bank             Reclassifications         Consolidated Totals
                                       ------------------------  -------------------------  -------------------------
                                         June 30,  December 31,     June 30,  December 31,    June 30,  December 31,
                                           2007        2006           2007        2006          2007        2006
                                           ----        ----           ----        ----          ----        ----
                                                             (dollars expressed in thousands)
Balance sheet information:
<S>                                    <C>           <C>              <C>         <C>         <C>         <C>
Investment securities................. $ 1,330,037   1,439,118        23,454      25,828      1,353,491   1,464,946
Loans, net of unearned discount.......   7,988,576   7,666,481            --          --      7,988,576   7,666,481
Goodwill and other intangible assets..     317,786     295,382            --          --        317,786     295,382
Total assets..........................  10,450,564  10,116,246        28,171      42,468     10,478,735  10,158,714
Deposits..............................   8,779,348   8,550,062       (25,954)   (106,976)     8,753,394   8,443,086
Other borrowings......................     434,971     373,899            --          --        434,971     373,899
Notes payable.........................          --          --        35,000      65,000         35,000      65,000
Subordinated debentures...............          --          --       302,166     297,966        302,166     297,966
Stockholders' equity..................   1,128,623   1,086,876      (296,328)   (286,441)       832,295     800,435
                                       ===========  ==========     =========   =========     ==========  ==========

                                                                     Corporate, Other
                                                                     and Intercompany
                                              First Bank             Reclassifications         Consolidated Totals
                                       ------------------------  -------------------------  -------------------------
                                          Three Months Ended        Three Months Ended         Three Months Ended
                                               June 30,                  June 30,                   June 30,
                                       ------------------------  -------------------------  -------------------------
                                           2007        2006           2007        2006          2007        2006
                                           ----        ----           ----        ----          ----        ----
                                                             (dollars expressed in thousands)
Income statement information:

Interest income....................... $   177,077     157,503           242         228        177,319     157,731
Interest expense......................      74,123      54,979         6,425       7,072         80,548      62,051
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Net interest income................     102,954     102,524        (6,183)     (6,844)        96,771      95,680
Provision for loan losses.............       5,500       5,000            --          --          5,500       5,000
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Net interest income after provision
     for loan losses..................      97,454      97,524        (6,183)     (6,844)        91,271      90,680
                                       -----------  ----------     ---------   ---------     ----------  ----------
Noninterest income....................      24,180      26,015          (143)       (136)        24,037      25,879
Amortization of intangible assets.....       3,227       1,680            --          --          3,227       1,680
Other noninterest expense.............      81,174      78,766            34         605         81,208      79,371
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Income before provision for income
     taxes and minority interest in
     income (loss) of subsidiary......      37,233      43,093        (6,360)     (7,585)        30,873      35,508
Provision for income taxes............      13,329      16,152        (2,237)     (2,652)        11,092      13,500
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Income before minority interest in
     income (loss) of subsidiary......      23,904      26,941        (4,123)     (4,933)        19,781      22,008
Minority interest in income (loss)
     of subsidiary....................          31         (78)           --          --             31         (78)
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Net income......................... $    23,873      27,019        (4,123)     (4,933)        19,750      22,086
                                       ===========  ==========     =========   =========     ==========  ==========
<PAGE>

                                                                     Corporate, Other
                                                                     and Intercompany
                                               First Bank            Reclassifications         Consolidated Totals
                                       ------------------------  -------------------------  -------------------------
                                           Six Months Ended          Six Months Ended           Six Months Ended
                                               June 30,                  June 30,                   June 30,
                                       ------------------------  -------------------------  -------------------------
                                           2007        2006           2007        2006          2007        2006
                                           ----        ----           ----        ----          ----        ----
                                                             (dollars expressed in thousands)
Income statement information:

Interest income....................... $   348,646     304,527           500         438        349,146     304,965
Interest expense......................     144,324     104,363        13,190      14,056        157,514     118,419
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Net interest income................     204,322     200,164       (12,690)    (13,618)       191,632     186,546
Provision for loan losses.............       9,000       6,000            --          --          9,000       6,000
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Net interest income after provision
     for loan losses..................     195,322     194,164       (12,690)    (13,618)       182,632     180,546
                                       -----------  ----------     ---------   ---------     ----------  ----------
Noninterest income....................      48,796      51,756          (176)       (380)        48,620      51,376
Amortization of intangible assets.....       6,153       3,197            --          --          6,153       3,197
Other noninterest expense.............     161,064     150,418         2,919       2,251        163,983     152,669
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Income before provision for income
     taxes and minority interest in
     income (loss) of subsidiary......      76,901      92,305       (15,785)    (16,249)        61,116      76,056
Provision for income taxes............      27,955      30,890        (5,913)     (5,687)        22,042      25,203
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Income before minority interest in
     income (loss) of subsidiary......      48,946      61,415        (9,872)    (10,562)        39,074      50,853
Minority interest in income (loss)
    of subsidiary.....................         101        (236)           --          --            101        (236)
                                       -----------  ----------     ---------   ---------     ----------  ----------
   Net income......................... $    48,845      61,651        (9,872)    (10,562)        38,973      51,089
                                       ===========  ==========     =========   =========     ==========  ==========
</TABLE>


<PAGE>


(9)      OTHER BORROWINGS

         Other  borrowings  were comprised of the following at June 30, 2007 and
December 31, 2006:
<TABLE>
<CAPTION>

                                                                               June 30,    December 31,
                                                                                 2007          2006
                                                                                 ----          ----
                                                                          (dollars expressed in thousands)

         Securities sold under agreements to repurchase:
<S>                                                                           <C>             <C>
              Daily.........................................................  $ 231,029       169,874
              Term..........................................................    200,000       200,000
         FHLB advances......................................................      3,942         4,025
                                                                              ---------      --------
                  Total.....................................................  $ 434,971       373,899
                                                                              =========      ========
</TABLE>

         The maturity  dates,  par amounts,  interest  rate spreads and interest
rate floor strike prices on First Bank's term  repurchase  agreements as of June
30, 2007 and December 31, 2006 were as follows:
<TABLE>
<CAPTION>

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

<S>                                                         <C>                      <C>             <C>
         July 19, 2010....................................  $ 100,000        LIBOR + 0.5475%         5.00%
         October 12, 2010.................................    100,000        LIBOR - 0.5100%         4.50%
                                                            ---------
                                                            $ 200,000
                                                            =========
         ------------------
         (1)  The interest rate paid on these term repurchase agreements is based on the  three-month LIBOR
              plus the spread amount shown minus a floating rate, subject to a 0% floor, equal to two times
              the differential between the three-month LIBOR and the strike price shown, if the three-month
              LIBOR falls below the strike price associated with the interest rate floor agreements.
</TABLE>

(10)     NOTES PAYABLE

         First Banks' $96.0 million First  Amendment to its Amended and Restated
Secured Credit  Agreement,  dated August 10, 2006,  with a group of unaffiliated
financial  institutions  (Credit Agreement) is secured by First Banks' ownership
interest in the capital stock of SFC and First Bank. Letters of credit issued to
unaffiliated  third  parties  on behalf of First  Banks  under the $1.0  million
senior secured standby letter of credit facility portion of the Credit Agreement
were $450,000 at June 30, 2007 and December 31, 2006,  and had not been drawn on
by the  counterparties.  First  Banks had not drawn  any  advances  on the $10.0
million senior secured revolving credit facility portion of the Credit Agreement
as of June 30, 2007 and December 31, 2006. The outstanding  principal balance of
the senior  secured term loan  facility  (Term Loan) of the Credit  Agreement is
payable in  quarterly  installments  of $5.0  million,  at a  minimum,  with the
remainder  of the Term Loan balance to be repaid in full,  including  any unpaid
interest, upon maturity on August 10, 2008. During the six months ended June 30,
2007,  First Banks made payments of $30.0 million on the  outstanding  principal
balance of the Term Loan,  reducing the balance  from $65.0  million at December
31, 2006 to $35.0 million at June 30, 2007.

         The Credit  Agreement  requires  maintenance of certain minimum capital
ratios for First  Banks and First Bank,  certain  maximum  nonperforming  assets
ratios for First Bank and a minimum  return on assets ratio for First Banks.  In
addition, it contains additional covenants, including a limitation on the amount
of  dividends on First  Banks'  common  stock that may be paid to  stockholders.
First  Banks  and  First  Bank  were in  compliance  with all  restrictions  and
requirements of the Credit Agreement at June 30, 2007 and December 31, 2006.

         Subsequent to June 30, 2007,  First Banks entered into a $125.0 million
Secured Credit  Agreement with a group of  unaffiliated  financial  institutions
(Secured  Credit  Agreement)  to renew and modify First Banks'  existing  Credit
Agreement,  as  further  described  in  Note  14 to the  Consolidated  Financial
Statements.
<PAGE>

(11)     SUBORDINATED DEBENTURES

         First  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 III and First  Preferred  Capital Trust IV, which
were issued in underwritten public offerings. First Banks owns all of the common
securities of the Trusts.  The gross  proceeds of the offerings were used by the
Trusts to purchase  fixed rate or variable  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 $5.8 million and $11.7 million for
the three and six months ended June 30, 2007, respectively, and $5.4 million and
$10.0 million for the comparable periods in 2006.

         A  summary  of the  subordinated  debentures  issued  to the  Trusts in
conjunction with the trust preferred  securities  offerings at June 30, 2007 and
December 31, 2006 were as follows:

<TABLE>
<CAPTION>
                                                                                                                   Subordinated
                                                                                                                    Debentures
                                                                                                      Trust    ---------------------
                                                       Maturity            Call           Interest  Preferred  June 30, December 31,
     Name of Trust                Issuance Date          Date              Date (1)       Rate (2)  Securities   2007       2006
     -------------                -------------          ----              ----           ----      ----------   ----       ----

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

Fixed Rate
----------
First Preferred Capital
   Trust III (6)                   November 2001  December 31, 2031   December 31, 2006       9.00%    55,200        --        --
First Bank Statutory Trust           March 2003     March 20, 2033      March 20, 2008        8.10%    25,000    25,774    25,774
First Preferred Capital
   Trust IV                          April 2003     June 30, 2033       June 30, 2008         8.15%    46,000    47,423    47,423

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

(12)     INCOME TAXES

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

         The Company's  liability for unrecognized tax benefits was $2.5 million
at January 1, 2007, after consideration of the $2.5 million cumulative effect of
change in accounting  principle  adjustment to the beginning balance of retained
earnings.  The total  amount of Federal and state  unrecognized  tax benefits at
January 1, 2007 that, if  recognized,  would affect the effective tax rate,  was
$1.4  million,  net of the Federal tax  benefit.  The  Company's  liability  for
unrecognized  tax  benefits was $12.1  million at June 30,  2007,  of which $2.0
million  would affect the  effective  tax rate,  if  recognized.  During the six
months ended June 30, 2007,  the Company  recorded  additional  liabilities  for
unrecognized  tax benefits of $9.6 million that, if  recognized,  would decrease
the effective tax rate by $600,000,  net of the Federal tax benefit. First Banks
expects a reduction of $1.8  million in  unrecognized  tax  benefits  during the
remainder of 2007 as a result of the statute of limitations closing for the 2002
and 2003 tax years,  of which the impact to the  effective tax rate is estimated
to be approximately $492,000, net of the Federal tax benefit.

         In  accordance  with FIN 48, it is  management's  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 January 1, 2007 and June 30, 2007,  the balance of
interest  accrued on  unrecognized  tax benefits was $944,000 and $1.4  million,
respectively.  The amount of interest recognized during the three and six months
ended June 30, 2007 was $281,000 and $470,000, respectively. First Banks expects
a reduction of  approximately  $510,000 in the accrued  interest on unrecognized
tax  benefits  during  the  remainder  of 2007 as a  result  of the  statute  of
limitations  closing  for the 2002 and 2003 tax years.  There were no  penalties
related to tax matters accrued at January 1, 2007, nor did the Company recognize
any penalties during the three and six months ended June 30, 2007.

         First  Banks and its  subsidiaries  file income tax returns in the U.S.
federal jurisdiction and various states.  Management of First Banks believes the
accrual for tax  liabilities  is adequate  for all open audit years based on its
assessment of many factors, including past experience and interpretations of tax
law applied to the facts of each matter. This assessment relies on estimates and
assumptions.  First Banks is no longer subject to U.S. federal,  state and local
income tax  examination by tax authorities for the years prior to 2002, with the
exception of certain states where the statute of  limitations is four years.  In
those  circumstances,  First Banks is no longer subject to  examination  for the
years prior to 2001. At June 30, 2007, there were no federal or state income tax
examinations in process.

(13)     CONTINGENT LIABILITIES

         In October  2000,  First Banks  entered  into two  continuing  guaranty
contracts.  For value  received,  and for the purpose of inducing a pension fund
and its  trustees  and a welfare  fund and its  trustees  (the Funds) to conduct
business with MVP, First Bank's institutional  investment management subsidiary,
First Banks irrevocably and  unconditionally  guaranteed payment of and promised
to pay to each of the Funds any  amounts  up to the sum of $5.0  million  to the
extent  MVP is liable to the  Funds  for a breach of the  Investment  Management
Agreements   (including   the   Investment   Policy   Statement  and  Investment
Guidelines),  by and  between  MVP and the Funds  and/or  any  violation  of the
Employee  Retirement  Income  Security Act by MVP  resulting in liability to the
Funds.  The  guaranties are continuing  guaranties of all  obligations  that may
arise  for  transactions  occurring  prior  to  termination  of  the  Investment
Management  Agreements  and are  coexistent  with  the  term  of the  Investment
Management  Agreements.  The Investment  Management Agreements have no specified
term but may be terminated  at any time upon written  notice by the Trustees or,
at First Banks' option, upon thirty days written notice to the Trustees.  In the
event of termination of the Investment Management  Agreements,  such termination
shall have no effect on the liability of First Banks with respect to obligations
incurred before such  termination.  The obligations of First Banks are joint and
several  with those of MVP.  First Banks does not have any  recourse  provisions
that would  enable it to recover  from third  parties any amounts paid under the
contracts  nor does  First  Banks  hold any  assets  as  collateral  that,  upon
occurrence  of a required  payment  under the  contract,  could be liquidated to
recover all or a portion of the  amount(s)  paid.  At June 30, 2007 and December
31,  2006,  First  Banks  had not  recorded  a  liability  for  the  obligations
associated with these guaranty contracts as the likelihood that First Banks will
be required to make payments under the contracts is remote.
<PAGE>

(14)     SUBSEQUENT EVENTS

         On July 19, 2007,  First Bank  completed its sale of the Branch Offices
to Synergy Bank, SSB, a subsidiary of Premier Bancshares, Inc. At June 30, 2007,
the Branch Offices had loans, net of unearned discount, of $911,000 and deposits
of $52.0 million.

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

         The Secured Credit  Agreement  requires  maintenance of certain minimum
capital  ratios for First Banks and First Bank,  certain  maximum  nonperforming
assets  ratios  for First  Bank and a minimum  return on assets  ratio for First
Banks. In addition, it contains additional covenants,  including a limitation on
the  amount  of  dividends  on First  Banks'  common  stock  that may be paid to
stockholders.  The Secured Credit Agreement is secured by First Banks' ownership
interest in the capital stock of SFC and First Bank.

         On August 3, 2007,  First Banks  entered into an Agreement  and Plan of
Merger  providing for the acquisition of Coast Financial  Holdings,  Inc. (CFHI)
and its wholly owned banking  subsidiary,  Coast Bank of Florida  (collectively,
Coast). Coast, headquartered in Bradenton,  Florida, operates 20 banking offices
in Florida's  Manatee,  Pinellas,  Hillsborough and Pasco counties,  and has two
planned de novo branch offices,  one located in the Pinellas County community of
Clearwater,  and the other located in Sarasota  County.  At June 30, 2007, Coast
had  assets  of $741.7  million,  loans,  net of  unearned  discount,  of $581.2
million, deposits of $681.3 million and stockholders' equity of $36.1 million.

         Under the terms of the Agreement and Plan of Merger,  each  outstanding
share of Coast's  common stock will be  converted  into and will  represent  the
right to receive an amount equal to  approximately  $22.1 million divided by the
number of shares of Coast's common stock outstanding, or approximately $3.40 per
share in cash, without interest thereon. This price is subject to adjustment if,
on or  about  the  date  that  the  transaction  closes  each  of the  following
conditions  exist:  (a)  Coast's  allowance  for loan and lease  losses plus its
tangible equity is less than 75% of Coast's  nonperforming loans and leases plus
other real estate owned (such  difference  is referred to as the  "Deficiency"),
and (b) the  Deficiency  is  greater  than  $1.0  million.  If each of the above
conditions  exists on or about the date that the  transaction  closes,  then the
$22.1  million  will be reduced to the  nearest  $500,000  increment,  upward or
downward,  to the full amount of the  Deficiency  and the per share merger price
will be reduced accordingly. The transaction, which is subject to regulatory and
shareholder approvals,  is expected to be completed during the fourth quarter of
2007.




<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The  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:  fluctuations in interest
rates and in the economy,  including the threat of future terrorist  activities,
existing  and  potential  wars and/or  military  actions  related  thereto,  and
domestic responses to terrorism or threats of terrorism;  the impact of laws and
regulations  applicable  to us and  changes  therein;  the impact of  accounting
pronouncements  applicable to us and changes therein;  competitive conditions in
the  markets in which we conduct  our  operations,  including  competition  from
banking and non-banking  companies with substantially greater resources than us,
some of which may offer and develop products and services not offered by us; our
ability to control  the  composition  of our loan  portfolio  without  adversely
affecting interest income; the credit risk associated with consumers who may not
repay loans;  the geographic  dispersion of our offices;  the impact our hedging
activities may have on our operating results;  the highly regulated  environment
in which we operate;  and our ability to respond to changes in technology.  With
regard to our efforts to grow  through  acquisitions,  factors that could affect
the accuracy or  completeness of  forward-looking  statements  contained  herein
include:  our ability to consummate  pending  acquisitions;  the  competition of
larger  acquirers with greater  resources;  fluctuations  in the prices at which
acquisition targets may be available for sale; the impact of making acquisitions
without  using our common stock;  and possible  asset  quality  issues,  pending
litigation,  unknown  liabilities  and/or integration issues with the businesses
that we have acquired.  For discussion of these and other risk factors, refer to
our 2006 Annual Report on Form 10-K, as filed with the  Securities  and Exchange
Commission.  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 undo reliance on these statements.

                                     General

We are a registered  bank holding  company  incorporated in Missouri in 1978 and
headquartered  in St.  Louis,  Missouri.  We operate  through  our wholly  owned
subsidiary bank holding company,  The San Francisco  Company,  or SFC, and SFC's
wholly owned  subsidiary  bank,  First Bank,  both  headquartered  in St. Louis,
Missouri. First Bank operates through its subsidiaries, as listed below, and its
branch banking  offices.  First Bank's  subsidiaries are wholly owned except for
Small  Business Loan Source LLC, or SBLS LLC, which is 76.0% owned by First Bank
and 24.0% owned by First Capital America, Inc. as of June 30, 2007.

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

At June 30,  2007,  we had  assets of $10.48  billion,  loans,  net of  unearned
discount,  of $7.99 billion,  deposits of $8.75 billion and stockholders' equity
of  $832.3  million,  and  currently  operate  197  branch  banking  offices  in
California, 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

<PAGE>

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,  and Houston and Dallas,  Texas. Certain loan products,
including  small  business  loans and insurance  premium  financing  loans,  are
available nationwide through our subsidiaries, SBLS LLC and UPAC.

Primary responsibility for managing our banking 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.


                               Financial Condition

Total assets were $10.48  billion at June 30, 2007  reflecting a $320.0  million
increase  from $10.16  billion at December 31,  2006.  The increase in our total
assets was  attributable to our acquisition of Royal Oaks  Bancshares,  Inc., or
Royal Oaks,  on February  28, 2007,  the opening of five de novo branch  offices
during the first six months of 2007,  and internal  growth.  Our  acquisition of
Royal Oaks provided assets of $206.9  million,  as summarized in the table below
and further described in Note 2 to our Consolidated Financial Statements.

Loans,  net of unearned  discount,  increased $322.1 million to $7.99 billion at
June 30, 2007,  from $7.67  billion at December 31,  2006,  reflecting  internal
growth  and the  addition  of  $175.5  million  of  loans  associated  with  our
acquisition of Royal Oaks, as further discussed under "--Loans and Allowance for
Loan Losses." Funds available from deposit growth were utilized to fund internal
loan growth.

Our investment securities portfolio decreased $111.5 million to $1.35 billion at
June 30, 2007,  from $1.46  billion at December  31,  2006.  The majority of the
funds provided by maturities and sales of investment securities during the first
six months of 2007 were  reinvested  in  short-term  investments,  which include
federal funds sold and interest-bearing deposits,  resulting in an $85.7 million
increase in our  short-term  investments to $239.3 million at June 30, 2007. The
decrease in our  investment  securities  portfolio also includes a $13.1 million
reduction  in our  trading  portfolio  to $68.1  million  at June 30,  2007.  We
liquidated our remaining trading portfolio in July 2007.

Goodwill and other  intangible  assets increased $22.4 million to $317.8 million
at June 30, 2007, primarily resulting from goodwill and core deposit intangibles
recorded  in  conjunction  with our  acquisition  of Royal  Oaks,  as more fully
described in Note 2 and Note 3 to our Consolidated Financial Statements.

The  overall  increase in our total  assets  also  reflects an increase of $31.5
million in net bank premises and equipment,  primarily due to our acquisition of
Royal Oaks and capital  expenditures  associated  with de novo  branch  offices,
branch  remodels and/or  relocations,  along with an increase in deferred income
taxes of $6.5 million,  as more fully  described in Note 12 to our  Consolidated
Financial  Statements.  The overall  increase in our total assets was  partially
offset by a $15.4 million decrease in other assets.
<PAGE>

As shown in the following  table,  we completed our  acquisition  of Royal Oaks,
located in Houston,  Texas,  on February 28, 2007,  adding a total of six branch
offices.  In addition,  we further  expanded our branch office  network with the
opening  of five de novo  branch  offices  during  the first six months of 2007,
located in Sacramento and San Diego, California,  Houston, Texas, and two in St.
Louis, Missouri.

<TABLE>
<CAPTION>

                                                Loans,                                                    Number
                                                Net of                                      Goodwill        of
           Entity /                 Total      Unearned   Investment             Purchase   and Other     Banking
         Closing Date               Assets     Discount   Securities  Deposits    Price    Intangibles   Locations
         ------------               ------     --------   ----------  --------    -----    -----------   ---------
                                                          (dollars expressed in thousands)
Royal Oaks Bancshares, Inc.
Houston, Texas
<S>                               <C>           <C>          <C>       <C>        <C>         <C>             <C>
February 28, 2007                 $ 206,900     175,500      4,100     159,100    38,600      27,700          6
                                  =========    ========     ======    ========   =======     =======         ==
</TABLE>

Deposits  increased $310.3 million to $8.75 billion at June 30, 2007, from $8.44
billion at December  31,  2006,  reflecting  growth in savings and money  market
deposits  through  enhanced  product  campaigns,  in  addition to growth in time
deposits  greater than $100,000.  Deposits  provided by our acquisition of Royal
Oaks were $159.1  million,  in  aggregate.  The impact of  continued  aggressive
competition  within our market  areas,  coupled  with an  anticipated  amount of
attrition  associated with our 2006 and 2007  acquisitions,  continues to have a
significant  influence on the level of our deposits and the interest  rates paid
on those  deposits.  Growth in our savings,  money  market and time  deposits is
primarily  attributable  to our  continued  focus  on  marketing  these  deposit
products,  our deposit  pricing  strategies  and our ongoing  efforts to further
develop multiple account  relationships  with our customers.  Our deposit growth
during the six months ended June 30, 2007 reflects a $358.2 million  increase in
our savings and money market accounts,  and a $55.5 million increase in our time
deposits of $100,000 or more; partially offset by a $49.8 million decline in our
interest-bearing   demand   deposits,   a   $30.9   million   decline   in   our
noninterest-bearing  demand  accounts and a $22.7  million  decline in our other
time deposits.

Other  borrowings,  which are comprised of securities  sold under  agreements to
repurchase and Federal Home Loan Bank, or FHLB, advances, were $435.0 million at
June 30,  2007  compared to $373.9  million at  December  31, 2006 and reflect a
$61.2 million increase in retail securities sold under agreements to repurchase.

Notes  payable  decreased  $30.0  million to $35.0 million at June 30, 2007 as a
result of scheduled quarterly principal installment payments of $5.0 million and
additional  prepayments of $20.0 million on our term loan  facility,  as further
described in Note 10 to our Consolidated Financial Statements.

Our subordinated debentures increased $4.2 million to $302.2 million at June 30,
2007,  from $298.0 million at December 31, 2006. On February 23, 2007, we issued
$25.8 million of variable rate subordinated debentures in a private placement to
First Bank Statutory  Trust VIII, a newly formed  statutory  trust. A portion of
the proceeds from the issuance of these subordinated  debentures was utilized to
fund our acquisition of Royal Oaks. We also assumed $4.1 million of subordinated
debentures with our acquisition of Royal Oaks that Royal Oaks  Bancshares,  Inc.
had  previously  issued to Royal Oaks  Capital  Trust I. On April 22,  2007,  we
repaid in full $25.8 million of variable rate subordinated  debentures that were
issued by First Banks to First Bank Capital Trust, or FBCT, in conjunction  with
the redemption of the cumulative variable rate trust preferred securities issued
by  FBCT,  as  further  described  in  Note  11 to  our  Consolidated  Financial
Statements.

On January 2, 2007, we repaid in full $56.9 million of  subordinated  debentures
in  conjunction  with the December 31, 2006  redemption  of the trust  preferred
securities of our former business trust, First Preferred Capital Trust III. This
payment contributed to a decrease in our accrued expenses and other liabilities,
which  declined  $54.3  million to $75.8  million at June 30,  2007 from  $130.0
million at December 31, 2006.

Stockholders'  equity was $832.3 million and $800.4 million at June 30, 2007 and
December 31, 2006,  respectively.  The increase of $31.9 million is attributable
to: (a) net income of $39.0 million;  (b) a $2.5 million  cumulative effect of a
change in  accounting  principle  recorded in  conjunction  with our adoption of
Financial  Accounting  Standards  Board,  or  FASB,  Interpretation  No.  48  --
Accounting for Uncertainty in Income Taxes, an Interpretation of SFAS No. 109 --
Accounting for Income Taxes, or FIN 48, as further  discussed in Note 1 and Note
12 to our  Consolidated  Financial  Statements;  partially  offset by (c) a $9.3
million  increase in accumulated  other  comprehensive  loss,  comprised of $8.7
million   associated  with  changes  in  unrealized  gains  and  losses  on  our
available-for-sale  investment securities portfolio and $596,000 associated with
changes  in the fair  value of our  derivative  financial  instruments;  and (d)
dividends of $328,000 paid on our Class A and Class B preferred stock.

<PAGE>

                              Results of Operations

Net Income.  Net income was $19.8  million for the three  months  ended June 30,
2007,  compared to $22.1 million for the  comparable  period in 2006. Net income
was $39.0  million  for the six months  ended June 30,  2007,  compared to $51.1
million  for the  comparable  period in 2006.  Our return on average  assets was
0.76% and 0.77% for the three and six months ended June 30, 2007,  respectively,
compared to 0.94% and 1.10% for the  comparable  periods in 2006.  Our return on
average  stockholders'  equity  was 9.50% and 9.56% for the three and six months
ended  June 30,  2007,  respectively,  compared  to 12.35%  and  14.58%  for the
comparable periods in 2006. The decline in earnings for the three and six months
ended  June  30,  2007  reflects  compression  of our net  interest  margin  due
primarily to increased  deposit  costs and  competitive  pressure on loan yields
along with the inverted yield curve, higher noninterest expense levels primarily
related to recent  acquisitions and expansionary de novo branch offices,  and an
increase in our provision for loan losses.

Our net interest  income was $96.8 million and $191.6  million for the three and
six months  ended June 30,  2007,  respectively,  compared to $95.7  million and
$186.5  million for the  comparable  periods in 2006.  Our net  interest  margin
declined  to 4.09% and 4.12% for the three and six months  ended June 30,  2007,
respectively,  compared to 4.41% and 4.36% for the  comparable  periods in 2006,
reflecting declines of 32 and 24 basis points, respectively.  The decline in our
net  interest  margin  primarily  resulted  from an  increase  in higher  priced
deposits driven by highly competitive  pricing within our markets and a shift in
our deposit mix to higher volumes of time deposit accounts and savings and money
market  accounts,  coupled with the inverted yield curve. The average rates paid
on interest-bearing  deposits increased 62 and 75 basis points for the three and
six months  ended June 30, 2007,  respectively,  compared to the same periods in
2006, while the average yield earned on interest-earning assets increased 22 and
38 basis points for the three and six months ended June 30, 2007,  respectively,
compared to the same  periods in 2006,  contributing  to a reduction  in our net
interest  margin.  Average  interest-earning  assets  increased 9.2% and 8.6% to
$9.54  billion  and $9.42  billion,  respectively,  for the three and six months
ended June 30, 2007,  from $8.73  billion and $8.67  billion for the  comparable
periods in 2006. See further discussion under "--Net Interest Income."

Our provision for loan losses increased to $5.5 million and $9.0 million for the
three and six months ended June 30, 2007, respectively, compared to $5.0 million
and $6.0  million  for the  comparable  periods  in 2006.  The  increase  in our
provision  for loan losses was  primarily  driven by loan growth,  increased net
loan  charge-offs  and  deterioration  in asset quality  within our  one-to-four
family  residential  mortgage and real estate  construction and development loan
portfolios, as further discussed under "--Loans and Allowance for Loan Losses."

Noninterest  income was $24.0  million  and $48.6  million for the three and six
months ended June 30, 2007,  respectively,  compared to $25.9  million and $51.4
million  for the  comparable  periods in 2006.  The  decline in our  noninterest
income primarily resulted from a decline in mortgage banking revenues, including
significantly  reduced  gains on loans sold and held for sale,  and  reduced fee
income from our institutional money management  subsidiary.  The overall decline
in  noninterest  income was partially  offset by increased  revenue from service
charges on deposits and customer service fees generated by higher deposit levels
and changes in the overall mix of our deposit  portfolio,  and increased fee and
commission income associated with our insurance brokerage subsidiary acquired in
2006. See further discussion under "--Noninterest Income."

Noninterest  expense was $84.4 million and $170.1  million for the three and six
months ended June 30, 2007,  respectively,  compared to $81.1 million and $155.9
million for the same periods in 2006.  The  significant  expansion of our branch
office   network  and  employee  base   following  the  completion  of  numerous
acquisitions  of banks and branch offices in 2006 and 2007;  the  acquisition of
UPAC, our insurance premium financing  company,  and Adrian Baker, our insurance
brokerage agency, in 2006; and the opening of five de novo branch offices during
the first six months of 2007  contributed  to the  increase  in overall  expense
levels,  specifically  salaries and employee  benefits  expense,  occupancy  and
furniture  and  equipment   expense,   and  amortization  of  intangible  assets
associated  with  these   transactions.   The  increased   expense  levels  were
anticipated and are commensurate with the expansion of our banking franchise. We
continue to closely monitor our noninterest expense levels, and have implemented
certain expense reduction measures and are further evaluating additional expense
reduction  measures  in an effort to reduce our  noninterest  expense  levels in
future periods. See further discussion under "--Noninterest Expense."

Net Interest Income. Net interest income,  expressed on a tax-equivalent  basis,
increased to $97.2 million and $192.5 million for the three and six months ended
June 30, 2007,  respectively,  compared to $96.1 million and $187.3  million for
the comparable  periods in 2006. Our net interest  margin  declined by 32 and 24
basis  points to 4.09% and 4.12%  for the three and six  months  ended  June 30,
2007,  respectively,  from 4.41% and 4.36% for  comparable  periods in 2006. 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,  liabilities
and  stockholders'  equity,  as well as the general level of interest  rates and
changes in interest rates.  Interest income on a  tax-equivalent  basis includes
the  additional  amount of  interest  income  that would have been earned if our
investment in certain tax-exempt interest-earning assets had been made in assets

<PAGE>

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  equivalent  yield
earned on interest-earning  assets and the average rate paid on interest-bearing
liabilities.

The increase in net interest  income  during the three and six months ended June
30, 2007  compared to the same  periods in 2006  reflects an increase in average
interest-earning  assets  provided  by  internal  growth  and our  2006 and 2007
acquisitions,  increasing rates earned on our interest-earning assets, partially
offset by an increase in average interest-bearing liabilities and interest rates
paid on those liabilities.  The decline in our net interest margin was primarily
due to an increase in higher priced  deposits  driven by competitive  conditions
within  our  markets  and a shift in our  deposit  mix that  reflects  increased
average time deposits and savings accounts, in contrast to demand accounts.  The
average rates paid on our  interest-bearing  deposits  increased 62 and 75 basis
points  during  the three and six  months  ended  June 30,  2007,  respectively,
compared to the same  periods in 2006,  whereas the average  yield earned on our
interest-earning  assets  increased 22 and 38 basis points for the three and six
months  ended  June 30,  2007,  respectively,  from the  same  periods  in 2006,
contributing to a reduction of our net interest margin. Average interest-earning
assets increased $802.9 million,  or 9.2%, to $9.54 billion for the three months
ended June 30, 2007,  from $8.73 billion for the comparable  period in 2006, and
average  interest-earning  assets  increased  $749.5 million,  or 8.6%, to $9.42
billion  for the six months  ended June 30,  2007,  from $8.67  billion  for the
comparable  period in 2006. The increase is primarily  attributable to continued
internal loan growth, and  interest-earning  assets provided by our acquisitions
completed in 2006 and 2007,  which  provided  assets,  in  aggregate,  of $794.3
million and $206.9 million,  respectively.  Average interest-bearing liabilities
increased $823.2 million,  or 11.2%, to $8.20 billion for the three months ended
June 30, 2007, from $7.37 billion for the comparable period in 2006, and average
interest-bearing  liabilities  increased  $779.0  million,  or  10.7%,  to $8.09
billion  for the six months  ended June 30,  2007,  from $7.31  billion  for the
comparable period in 2006.

Interest  income on our loan  portfolio,  expressed on a  tax-equivalent  basis,
increased  to $158.0  million  and $312.0  million  for the three and six months
ended June 30, 2007, respectively, compared to $141.9 million and $273.3 million
for the comparable  periods in 2006.  Average loans,  net of unearned  discount,
increased  $616.2  million and $640.9 million to $7.97 billion and $7.89 billion
for the three and six  months  ended  June 30,  2007,  respectively,  from $7.35
billion and $7.25 billion for the  comparable  periods in 2006. The yield on our
loan portfolio increased 22 and 37 basis points to 7.96% and 7.97% for the three
and six months  ended June 30, 2007,  respectively,  compared to 7.74% and 7.60%
for the same periods in 2006.  The increase in average loans  reflects  internal
growth and our acquisitions  completed in 2006 and 2007, partially offset by the
sale of certain loans in the second quarter of 2007, as further  described under
"--Loans and  Allowance  for Loan  Losses," and a reduction in loans  throughout
2006 related to the securitization of certain of our residential  mortgage loans
held in our loan portfolio,  the sale of certain residential  mortgage and other
loans,   loan  payoffs  and  external   refinancing  of  various  credits.   Our
acquisitions  completed  in  2006  and  2007  provided  loans,  net of  unearned
discount, of $545.1 million and $175.5 million, in aggregate,  respectively,  as
of the dates of  acquisition.  The  increase in average  loans for the first six
months of 2007 compared to the same period in 2006  primarily  resulted from: an
increase  in average  commercial,  financial  and  agricultural  loans of $343.8
million;  an increase in average real estate  construction and development loans
of $251.6  million;  an increase in average real estate  mortgage loans of $35.5
million;  and an increase in average  consumer  and  installment  loans of $19.3
million.

Interest  income on our  investment  securities,  expressed on a  tax-equivalent
basis, increased to $17.4 million and $33.8 million for the three and six months
ended June 30, 2007,  respectively,  compared to $15.1 million and $30.1 million
for the comparable  periods in 2006.  Average  investment  securities were $1.39
billion  and $1.36  billion  for the three and six months  ended June 30,  2007,
respectively,  compared to $1.29  billion and $1.32  billion for the  comparable
periods in 2006. The yield on our  investment  portfolio was 5.00% and 5.01% for
the three and six months  ended June 30, 2007,  respectively,  compared to 4.70%
and 4.60% for the comparable periods in 2006.  Investment securities provided by
our acquisitions completed in 2006 and 2007 were $37.3 million and $4.1 million,
in aggregate, respectively, as of the dates of acquisition. Funds available from
deposit growth were primarily utilized to fund internal loan growth.  Additional
funds  available  from  maturities  of  investment  securities  were utilized to
partially reinvest in higher-yielding  available-for-sale investment securities.
In March 2006 and April 2006, our investment  securities increased $77.1 million
and $61.8 million,  respectively, due to the securitization of $138.9 million of
certain  of  our  residential   mortgage  loans  held  in  our  loan  portfolio.
Additionally,  as further  discussed under "--Interest Rate Risk Management," we
terminated  $150.0 million and $50.0 million of our term  repurchase  agreements
during the first and second  quarters  of 2006,  respectively,  and sold  $200.0
million  of   available-for-sale   investment  securities  associated  with  the
termination of the term repurchase  agreements.  Additionally,  in July 2006, we
entered into a $100.0  million term  repurchase  agreement and purchased  $100.0
million of available-for-sale investment securities associated with the new term
repurchase agreement.
<PAGE>

Interest expense on our interest-bearing deposits increased to $69.2 million and
$134.9  million for the three and six months ended June 30, 2007,  respectively,
compared to $51.6 million and $96.2 million for the comparable  periods in 2006.
Average deposits  increased to $8.72 billion and $8.60 billion for the three and
six months  ended June 30,  2007,  respectively,  from $7.95  billion  and $7.84
billion for the  comparable  periods in 2006.  The increase in average  deposits
reflects internal growth through enhanced product campaigns, and growth provided
by our acquisitions  completed during 2006 and 2007, which provided  deposits of
$475.6 million and $159.1 million, in aggregate,  respectively,  as of the dates
of  acquisition.  The  aggregate  weighted  average  rate  paid  on our  deposit
portfolio  was 3.71% and 3.70% for the three and six months ended June 30, 2007,
respectively,  compared to 3.09% and 2.95% for the  comparable  periods in 2006,
reflecting  increases of 62 and 75 basis points,  respectively.  The increase in
the  aggregate  weighted  average rate paid for these  periods is  reflective of
competitive  pricing  conditions  within our markets,  the rising  interest rate
environment  and a change in the mix of our average  deposits to increased  time
deposits and savings and money market accounts. Average time deposits were $3.87
billion  and $3.85  billion  for the three and six months  ended June 30,  2007,
respectively,  compared to $3.61  billion and $3.48  billion for the  comparable
periods in 2006.  Average  savings and money market  deposits were $2.63 billion
and  $2.54   billion  for  the  three  and  six  months  ended  June  30,  2007,
respectively,  compared  to $2.12  billion for the  comparable  periods in 2006.
Average noninterest-bearing demand deposits were $1.25 billion and $1.24 billion
for the three and six months  ended June 30,  2007,  respectively,  compared  to
$1.26 billion and $1.27 billion for the comparable  periods in 2006, and average
interest-bearing  demand deposits were $959.3 million and $971.5 million for the
three and six  months  ended June 30,  2007,  respectively,  compared  to $961.0
million and $965.5 million for the comparable periods in 2006.

Interest  expense on our other  borrowings was $4.9 million and $9.3 million for
the three and six months  ended June 30,  2007,  respectively,  compared to $3.2
million  and $7.9  million for the  comparable  periods in 2006.  Average  other
borrowings  were $382.6  million and $375.2 million for the three and six months
ended June 30, 2007, respectively, and $311.8 million and $385.8 million for the
comparable  periods in 2006.  The  aggregate  weighted  average rate paid on our
other borrowings was 5.18% and 4.99% for the three and six months ended June 30,
2007,  respectively,  compared to 4.18% and 4.15% for the comparable  periods in
2006.  The  increased  rate paid on our other  borrowings  reflects  the  rising
short-term  interest rate environment.  The decrease in average other borrowings
for the six months  ended June 30,  2007  compared to the same period in 2006 is
primarily  attributable  to the termination of $200.0 million of term repurchase
agreements during the first two quarters of 2006 partially offset by an increase
of $100.0 million  associated with a term  repurchase  agreement that we entered
into in the third quarter of 2006. In addition, we prepaid $35.3 million of FHLB
advances during 2006 that we assumed with certain bank acquisitions.

Interest  expense on our notes  payable was  $636,000  and $1.5  million for the
three and six months ended June 30, 2007, respectively, compared to $1.5 million
and $2.9 million for the comparable  periods in 2006. Our notes payable averaged
$37.9  million  and $47.2  million  for the three and six months  ended June 30,
2007,  respectively,  compared  to  $95.2  million  and  $97.5  million  for the
comparable  periods in 2006.  The  aggregate  weighted  average rate paid on our
notes  payable  was 6.73% and 6.60% for the three and six months  ended June 30,
2007,  respectively,  compared to 6.23% and 5.99% for the comparable  periods in
2006.  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 6.68% and 6.55% for the three and six
months  ended June 30, 2007,  respectively,  compared to 6.17% and 5.93% for the
same periods in 2006. The decrease in our average notes payable is  attributable
to  contractual  payments and additional  prepayments  made on our term loan, as
further described in Note 10 to our Consolidated Financial Statements.

Interest  expense on our  subordinated  debentures  was $5.8  million  and $11.7
million for the three and six months ended June 30, 2007, respectively, compared
to $5.7 million and $11.4 million for the  comparable  periods in 2006.  Average
subordinated debentures were $308.4 million and $309.2 million for the three and
six months ended June 30,  2007,  respectively,  compared to $276.5  million and
$253.4  million  for the  comparable  periods in 2006.  The  aggregate  weighted
average  rate paid on our  subordinated  debentures  was 7.56% and 7.66% for the
three and six months  ended June 30, 2007,  respectively,  compared to 8.30% and
9.05% for the  comparable  periods in 2006.  The change in volumes  and  average
rates  paid  reflects:  (a) the  issuance  of $139.2  million of  variable  rate
subordinated  debentures  in private  placements  during 2006 through four newly
formed statutory  trusts,  partially offset by the repayment of $56.9 million of
9.0% fixed rate  subordinated  debentures on December 31, 2006; (b) the issuance
of $25.8 million of variable rate subordinated debentures in a private placement
through a newly formed  statutory  trust that we completed on February 23, 2007;
and (c) the repayment of $25.8 million of variable rate subordinated  debentures
on April 22, 2007.  Although we have  increased the overall level of outstanding
subordinated  debentures,  we have  significantly  reduced  the  cost  of  these
long-term  borrowings  through  the  refinancing  of  certain  higher  fixed and
variable rate issues.



<PAGE>
The following table sets forth, on a tax-equivalent  basis,  certain information
relating to our average balance sheets, and reflects the average yield earned on
interest-earning  assets, the average cost of our  interest-bearing  liabilities
and the resulting net interest income for the periods presented.
<TABLE>
<CAPTION>
                                           Three Months Ended June 30,                         Six Months Ended June 30,
                              --------------------------------------------------  --------------------------------------------------
                                         2007                     2006                       2007                     2006
                              ------------------------- ------------------------  ------------------------- ------------------------
                                         Interest                 Interest                   Interest                 Interest
                                Average  Income/ Yield/  Average  Income/ Yield/    Average  Income/ Yield/  Average  Income/ Yield/
                                Balance  Expense  Rate   Balance  Expense  Rate     Balance  Expense  Rate   Balance  Expense  Rate
                                -------  -------  ----   -------  -------  ----     -------  -------  ----   -------  -------  ----
                                                                    (dollars expressed in thousands)
            ASSETS
            ------

Interest-earning assets:
<S>                           <C>          <C>    <C>   <C>        <C>     <C>    <C>         <C>     <C>   <C>        <C>     <C>
   Loans (1)(2)(3)(4)........ $ 7,966,082 158,041 7.96% $7,349,881 141,876 7.74%  $ 7,894,765 311,967 7.97% $7,253,904 273,337 7.60%
   Investment securities (4).   1,394,677  17,400 5.00   1,289,270  15,112 4.70     1,362,127  33,824 5.01   1,320,108  30,145 4.60
   Short-term investments....     175,158   2,315 5.30      93,877   1,147 4.90       162,451   4,193 5.20      95,819   2,270 4.78
                              ----------- -------       ---------- -------        ----------- -------       ---------- -------
         Total interest-
           earning assets....   9,535,917 177,756 7.48   8,733,028 158,135 7.26     9,419,343 349,984 7.49   8,669,831 305,752 7.11
                                          -------                  -------                    -------                  -------
Nonearning assets............     870,747                  726,127                    853,380                  716,081
                              -----------               ----------                -----------               ----------
         Total assets........ $10,406,664               $9,459,155                $10,272,723               $9,385,912
                              ===========               ==========                ===========               ==========

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

Interest-bearing liabilities:
   Interest-bearing deposits:
     Interest-bearing demand
       deposits.............. $   959,300   2,313 0.97% $  960,951   1,947 0.81%  $   971,471   4,929 1.02% $  965,467   3,775 0.79%
     Savings deposits........   2,634,607  20,460 3.11   2,119,269  12,255 2.32     2,536,496  38,797 3.08   2,124,351  23,438 2.22
     Time deposits of $100
       or more...............   1,478,324  18,204 4.94   1,315,690  14,258 4.35     1,452,159  35,234 4.89   1,247,926  25,814 4.17
     Other time deposits.....   2,396,534  28,180 4.72   2,295,087  23,146 4.05     2,397,226  55,970 4.71   2,235,407  43,180 3.90
                              ----------- -------       ---------- -------        ----------- -------       ---------- -------
         Total interest-
           bearing deposits..   7,468,765  69,157 3.71   6,690,997  51,606 3.09     7,357,352 134,930 3.70   6,573,151  96,207 2.95
   Other borrowings..........     382,557   4,941 5.18     311,753   3,246 4.18       375,172   9,292 4.99     385,839   7,941 4.15
   Notes payable (5).........      37,906     636 6.73      95,154   1,477 6.23        47,198   1,544 6.60      97,536   2,897 5.99
   Subordinated
     debentures (3)..........     308,387   5,814 7.56     276,493   5,722 8.30       309,217  11,748 7.66     253,366  11,374 9.05
                              ----------- -------       ---------- -------        ----------- -------       ---------- -------
         Total interest-
           bearing
           liabilities.......   8,197,615  80,548 3.94   7,374,397  62,051 3.37     8,088,939 157,514 3.93   7,309,892 118,419 3.27
                                          -------                  -------                    -------                  -------
Noninterest-bearing
  liabilities:
   Demand deposits...........   1,251,213                1,262,590                  1,237,840                1,266,847
   Other liabilities.........     124,013                  104,851                    123,573                  102,695
                              -----------               ----------                -----------               ----------
         Total liabilities...   9,572,841                8,741,838                  9,450,352                8,679,434
Stockholders' equity.........     833,823                  717,317                    822,371                  706,478
                              -----------               ----------                -----------               ----------
         Total liabilities
           and stockholders'
           equity............ $10,406,664               $9,459,155                $10,272,723               $9,385,912
                              ===========               ==========                ===========               ==========

Net interest income..........              97,208                   96,084                    192,470                  187,333
                                          =======                  =======                    =======                  =======
Interest rate spread.........                     3.54                     3.89                       3.56                     3.84
Net interest margin (6)......                     4.09%                    4.41%                      4.12%                    4.36%
                                                  ====                     ====                       ====                     ====
------------------
(1)  For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2)  Interest income on loans includes loan fees.
(3)  Interest income and interest expense include the effects of interest rate swap agreements.
(4)  Information  is  presented  on  a  tax-equivalent  basis  assuming  a  tax  rate  of  35%. The tax-equivalent adjustments were
     approximately  $437,000  and  $838,000  for  the  three  and six months ended June 30, 2007, and $404,000 and $787,000 for the
     comparable periods in 2006, respectively.
(5)  Interest expense on our notes payable includes commitment, arrangement and renewal fees. Exclusive of these fees, the interest
     rates  paid  were  6.68%  and  6.55% for  the three and six months ended June 30, 2007, and 6.17% and 5.93% for the comparable
     periods in 2006, respectively.
(6)  Net interest  margin  is  the  ratio  of net interest income (expressed on a tax-equivalent basis) to average interest-earning
     assets.

</TABLE>


<PAGE>


Provision  for Loan  Losses.  We  recorded  provisions  for loan  losses of $5.5
million  and $9.0  million  for the three and six months  ended  June 30,  2007,
respectively,  compared  to $5.0  million and $6.0  million  for the  comparable
periods in 2006.  The increase in our  provision  for loan losses was  primarily
driven  by  growth  within  our  loan  portfolio  during  2007,  increased  loan
charge-offs  in the first  and  second  quarters  of 2007  compared  to the same
periods in 2006, and  deterioration  in asset quality within certain segments of
our loan  portfolio,  primarily  our  one-to-four  family  residential  mortgage
portfolio  and real estate  construction  and  development  loan  portfolio,  as
further discussed under "--Loans and Allowance for Loan Losses."

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

Noninterest  Income.  Noninterest income was $24.0 million and $48.6 million for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$25.9 million and $51.4 million for the comparable periods in 2006.  Noninterest
income consists  primarily of service  charges on deposit  accounts and customer
service fees, mortgage-banking revenues, investment management income, insurance
fee and commission income and other income.

Service charges on deposit accounts and customer service fees were $11.7 million
and  $22.3   million  for  the  three  and  six  months  ended  June  30,  2007,
respectively,  in  comparison  to  $11.0  million  and  $21.2  million  for  the
comparable periods in 2006. The increase in service charges and customer service
fees was primarily attributable to increased deposit account balances associated
with internal  growth and our  acquisitions of banks completed in 2006 and 2007,
as  further  described  under  "--Financial  Condition"  and  in  Note  2 to our
Consolidated Financial Statements,  in addition to changes in the overall mix of
our deposit portfolio. The increase is also attributable to pricing increases on
certain service charges and customer  service fees instituted to reflect current
market conditions.

The gain on loans sold and held for sale was $4.6  million and $8.5  million for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$6.1 million and $12.9 million for the comparable  periods in 2006. We primarily
attribute  the  decrease  to: (a) a decrease  in the  volume of  mortgage  loans
originated and subsequently sold in the secondary market;  (b) an $851,000 gain,
before  applicable  income taxes,  recorded on the sale of  approximately  $13.4
million of certain repurchased and other residential mortgage loans on April 27,
2007, compared to a $1.7 million gain, before applicable income taxes,  recorded
on the  sale  of  certain  nonperforming  loans  in  March  2006;  and  (c)  the
recognition of $1.2 million and $927,000 of income in March 2006 and April 2006,
respectively,  generated from the  capitalization  of mortgage  servicing rights
pertaining to the  securitization  and transfer to our  investment  portfolio of
$77.1 million and $61.8 million,  respectively,  of  residential  mortgage loans
held in our loan portfolio,  as further  described in Note 4 to our Consolidated
Financial Statements. As further discussed under "--Loans and Allowance for Loan
Losses," we discontinued  the  origination  and sale in the secondary  market of
sub-prime  loans in the  first  quarter  of 2007,  and as such,  we  expect  the
discontinuation  of these  activities  will reduce the amount of future gains on
loans  sold  and  held  for  sale,  in  comparison  to  the  level  that  we had
historically  generated through the origination and sale of these sub-prime loan
products. Historically, approximately 40% of our origination and sale volume has
been related to sub-prime loan products.

We recorded a net loss on investment securities of $1.5 million and $1.2 million
for the three and six months ended June 30, 2007, respectively, in comparison to
a net loss on  investment  securities  of $1.2  million and $4.0 million for the
comparable  periods in 2006. The net loss in 2007 primarily  resulted from a net
loss of $1.5  million and $1.4  million for the three and six months  ended June
30, 2007, respectively,  related to changes in the fair value of securities held
in our trading portfolio.  We liquidated our remaining trading portfolio in July
2007, and as such, there will be no impact to noninterest  income related to the
trading  portfolio  subsequent  to July  2007.  The net  loss in 2006  primarily
resulted from:  (a) sales of certain  available-for-sale  investment  securities
associated  with the full  termination  of three $50.0  million term  repurchase
agreements  during  the first  quarter  of 2006,  and the  termination  of $50.0
million of a $150.0 million term repurchase  agreement in April 2006,  resulting
in a net  loss of  $2.7  million,  in  aggregate,  as  further  described  under
"--Interest  Rate  Risk  Management;"  and (b) a net loss of  $907,000  and $1.3
million for the three and six months ended June 30, 2006, respectively,  related
to changes in the fair value of securities held in our trading portfolio.

Bank-owned  life insurance  investment  income was $999,000 and $1.7 million for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$652,000 and $1.8 million for the comparable periods in 2006, reflecting changes
in the  performance  of the  underlying  investments  surrounding  the insurance
contracts  attributable  to the portfolio mix of investments  and overall market
conditions during the respective periods.

Investment   management  income  generated  by  MVP,  our  institutional   money
management  subsidiary,  was $1.5 million and $3.1 million for the three and six
months ended June 30, 2007, respectively, in comparison to $2.3 million and $4.6
million  for the  comparable  periods in 2006,  reflecting  decreased  portfolio
management  fee income  associated  with  changes  in the level of assets  under
management.
<PAGE>

Insurance fee and  commission  income  generated by Adrian Baker,  our insurance
brokerage  agency  acquired in March 2006, was $1.9 million and $3.6 million for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$1.8 million for the comparable periods in 2006.

Other  income was $4.9  million  and $10.8  million for the three and six months
ended June 30,  2007,  respectively,  in  comparison  to $5.2  million and $13.0
million for the comparable  periods in 2006. We primarily  attribute the decline
in other income for the six months ended June 30, 2007 to:

     >>   a decrease of $1.6  million in gains on sales of other real estate for
          the six months  ended June 30, 2007 in  comparison  to the  comparable
          period  in  2006,  primarily  attributable  to a gain of $1.5  million
          recognized  on the sale of a parcel of other  real  estate in  January
          2006;

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

     >>   an increase in net losses on our derivative financial instruments,  as
          further discussed under  "--Interest Rate Risk Management;"  partially
          offset by

     >>   an  increase  of  $810,000 in  recoveries  of certain  loan  principal
          balances  that  had  been  previously  charged-off  by  the  financial
          institutions prior to their acquisition by First Banks.


Noninterest  Expense.  Noninterest  expense was $84.4 million and $170.1 million
for the three and six months ended June 30, 2007, respectively, in comparison to
$81.1  million  and $155.9  million  for the  comparable  periods  in 2006.  Our
efficiency  ratio was 69.89% and 70.82% for the three and six months  ended June
30, 2007,  respectively,  in comparison to 66.68% and 65.51% for the  comparable
periods in 2006. The increase in noninterest expense was primarily  attributable
to our de novo branch openings and our acquisitions  completed in 2006 and 2007,
which contributed to increased salaries and employee benefits expense, occupancy
and furniture and equipment  expense and amortization of intangible  assets,  as
well as increases in other expense.

Salaries and employee  benefits  expense was $43.7 million and $89.0 million for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$42.6 million and $82.1 million for the comparable periods in 2006. We attribute
the  overall  increase  to  higher  salaries  and  employee   benefits  expenses
associated  with an aggregate of 18 additional  branch offices  acquired in 2006
and 2007, our acquisitions of Adrian Baker and UPAC in 2006, five de novo branch
offices  opened in 2007 and generally  higher salary and employee  benefit costs
associated with employing and retaining qualified personnel.  We expect salaries
and employee  benefits expense  associated with our mortgage banking division to
decline in future  periods as a result of expense  reduction  measures  taken by
management in light of the  discontinuation  of the  origination and sale in the
secondary  market of sub-prime  loans,  as further  discussed under "--Loans and
Allowance for Loan Losses."

Occupancy,  net of rental income,  and furniture and equipment expense was $12.4
million  and $24.4  million  for the three and six months  ended June 30,  2007,
respectively,  in  comparison  to  $10.5  million  and  $20.7  million  for  the
comparable  periods in 2006.  The  increase  reflects  higher  levels of expense
resulting from our de novo branch openings and acquisitions in 2006 and 2007, as
discussed  above,  as  well  as  increased  technology  equipment  expenditures,
continued  expansion  and  renovation of certain  corporate and branch  offices,
increased expenses  associated with the purchase and/or lease of properties that
will be utilized for future branch office locations,  and increased depreciation
expense associated with acquisitions and capital expenditures.

Information  technology  and item  processing  fees were $9.2  million and $18.5
million  for the three and six months  ended  June 30,  2007,  respectively,  in
comparison to $9.2 million and $18.3 million for the comparable periods in 2006.
As more fully  described  in Note 6 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
banking and trust  divisions,  and Adrian  Baker,  MVP,  SBLS LLC and UPAC.  The
relatively  stable  level of these fees in 2007 is primarily  attributable  to a
reduction  in  the  number  of  acquisitions  completed  coupled  with  enhanced
automation of certain services,  including remote deposit,  branch capture,  and
electronic image exchange, which has significantly contributed to reduced manual
processes and reduced costs  associated with these services  partially offset by
depreciation  associated  with the related  capital  expenditures  necessary  to
support the enhanced delivery channels.
<PAGE>

Legal,  examination and professional fees were $2.7 million and $4.4 million for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$2.4 million and $4.5 million for the comparable  periods in 2006. The continued
expansion of overall corporate  activities,  the ongoing  professional  services
utilized  by  certain  of our  acquired  entities,  and the level of legal  fees
associated with certain  litigation  matters have all contributed to the overall
expense levels in 2006 and 2007.

Amortization  of  intangible  assets was $3.2  million and $6.2  million for the
three and six months ended June 30, 2007,  respectively,  in  comparison to $1.7
million  and  $3.2  million  for the  comparable  periods  in 2006,  as  further
described in Note 3 to our Consolidated  Financial Statements.  The increase was
attributable  to core  deposit  intangibles  associated  with  our  acquisitions
completed  in 2006 and  2007,  in  addition  to the  customer  list  intangibles
associated with our  acquisitions of Adrian Baker and UPAC in March 2006 and May
2006, respectively.

Charitable contributions expense was $1.5 million and $3.4 million for the three
and six months ended June 30, 2007, respectively,  in comparison to $1.7 million
and $3.3 million for the comparable periods in 2006. Our charitable contribution
expense levels are primarily  attributable to charitable  contributions  made to
the Dierberg Operating Foundation,  Inc., a charitable foundation established by
our Chairman and members of his immediate family, as further described in Note 6
to our Consolidated Financial Statements.

Other  expense was $8.4  million and $17.3  million for the three and six months
ended June 30,  2007,  respectively,  in  comparison  to $8.8  million and $16.5
million for the comparable periods in 2006. Other expense  encompasses  numerous
general and administrative expenses including communications, insurance, freight
and courier  services,  correspondent  bank  charges,  miscellaneous  losses and
recoveries,  expenses on other real estate owned, memberships and subscriptions,
transfer  agent  fees,  sales  taxes and travel,  meals and  entertainment.  The
decrease and  increase in other  expense for the three and six months ended June
30, 2007,  respectively,  in comparison to the  comparable  periods in 2006, was
primarily attributable to:

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

     >>   a $470,000 loss recognized on a liquidation  sale of residential  real
          estate and personal  property of an SBA guaranteed  loan in June 2006;
          and

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

We  continue  to  closely  monitor  our  noninterest  expense  levels,  and have
implemented  certain  expense  reduction  measures  and are  further  evaluating
additional  expense  reduction  measures in an effort to reduce our  noninterest
expenses levels in future periods.

Provision for Income Taxes. The provision for income taxes was $11.1 million and
$22.0 million, representing an effective income tax rate of 35.9% and 36.1%, for
the three and six months ended June 30, 2007,  respectively,  in  comparison  to
$13.5 million and $25.2 million,  representing  an effective  income tax rate of
38.0% and 33.1%, respectively,  for the comparable periods in 2006. The decrease
in our provision  for income taxes  primarily  reflects our decreased  earnings,
partially  offset by the reversal of a federal tax reserve of $2.5 million and a
state tax  reserve of  $748,000  in the first  quarter of 2006,  as they were no
longer deemed necessary due to the resolution of a potential tax liability.


                          Interest Rate Risk Management

We utilize  derivative  financial  instruments  to assist in our  management  of
interest  rate  sensitivity  by  modifying  the  repricing,  maturity and option
characteristics  of certain assets and  liabilities.  The  derivative  financial
instruments  we held as of June 30, 2007 and December 31, 2006 are summarized as
follows:
<TABLE>
<CAPTION>
                                                            June 30, 2007              December 31, 2006
                                                        ---------------------       -----------------------
                                                         Notional     Credit          Notional      Credit
                                                          Amount     Exposure          Amount      Exposure
                                                          ------     --------          ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                     <C>            <C>             <C>           <C>
         Cash flow hedges.............................  $ 600,000      4,313           600,000       4,369
         Interest rate floor agreements...............    300,000         63           300,000         376
         Interest rate cap agreements.................    400,000        111           400,000         139
         Interest rate lock commitments...............      3,700         --             5,900          --
         Forward commitments to sell
           mortgage-backed securities.................     57,000         --            54,000          --
                                                        =========     ======          ========      ======
</TABLE>

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

For the three and six months  ended June 30,  2007,  we  realized  net  interest
expense  of $1.4  million  and $2.8  million,  respectively,  on our  derivative
financial  instruments,  in comparison  to net interest  expense of $990,000 and
$2.3  million for the  comparable  periods in 2006.  We  recorded  net losses on
derivative  instruments,  which  are  included  in  noninterest  income  in  the
consolidated  statements  of income,  of $344,000 and $342,000 for the three and
six months ended June 30, 2007,  respectively,  in  comparison  to net losses of
$3,000 and $69,000 for the comparable  periods in 2006. The net losses  recorded
for the three and six months ended June 30, 2007 reflect changes in the value of
our interest rate floor agreements  entered into in September 2005 and 2006, and
changes  in the  value of our  interest  rate  cap  agreements  entered  into in
September  2006. The net losses recorded for the three and six months ended June
30,  2006  reflect  changes in the value of our  interest  rate floor  agreement
entered into in September 2005.

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

     >>   In July 2003,  we entered  into an  interest  rate swap  agreement  of
          $200.0  million  notional  amount.  The  underlying  hedged assets are
          certain variable rate loans within our commercial loan portfolio.  The
          swap agreement provides for us to receive a fixed rate of interest and
          pay an adjustable rate of interest  equivalent to the weighted average
          prime  lending  rate  minus  2.85%.  The  terms of the swap  agreement
          provide for us to pay and receive  interest on a quarterly  basis. The
          interest rate swap agreement matured on July 31, 2007.

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

The amount  receivable by us under the swap agreements was $6.9 million and $7.0
million at June 30, 2007 and  December 31,  2006,  respectively,  and the amount
payable by us under the swap  agreements  was $2.6  million and $2.7  million at
June 30, 2007 and December 31, 2006, respectively.

The maturity dates, notional amounts,  interest rates paid and received and fair
value of our interest rate swap agreements  designated as cash flow hedges as of
June 30, 2007 and December 31, 2006 were as follows:
<TABLE>
<CAPTION>

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

         June 30, 2007:
<S>                                                    <C>              <C>            <C>        <C>
             July 31, 2007...........................  $ 200,000        5.40%          3.08%      $   (431)
             September 18, 2009......................    200,000        5.39           5.20         (1,003)
             September 20, 2010......................    200,000        5.39           5.20         (1,641)
                                                       ---------                                  --------
                                                       $ 600,000        5.39           4.49       $ (3,075)
                                                       =========       =====          =====       ========

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

Interest  Rate Floor  Agreements.  In September  2005,  we entered into a $100.0
million notional amount three-year  interest rate floor agreement in conjunction
with our  interest  rate  risk  management  program.  The  interest  rate  floor
agreement provides for us 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,  we  entered  into a $200.0  million  notional  amount  three-year
interest rate floor agreement in conjunction  with the  restructuring  of one of
our $100.0 million term repurchase  agreements,  as further  described below, to
further stabilize net interest income in the event of a declining rate scenario.

<PAGE>

The  interest  rate  floor  agreement  provides  for us to  receive a  quarterly
adjustable rate of interest  equivalent to the  differential  between the strike
price of 4.00% and the three-month  LIBOR should the three-month  LIBOR equal or
fall  below  the  strike  price.  The fair  value  of the  interest  rate  floor
agreements,  which is  included  in other  assets  in our  consolidated  balance
sheets,  was  $63,000  and  $376,000 at June 30,  2007 and  December  31,  2006,
respectively.

Interest Rate Floor Agreements Embedded in Term Repurchase  Agreements.  We have
term repurchase  agreements under master repurchase agreements with unaffiliated
third  parties,  as further  described in Note 9 to our  Consolidated  Financial
Statements.  The  underlying  securities  associated  with the  term  repurchase
agreements are  mortgage-backed  securities and callable U.S.  Government agency
securities  and are  held by  other  financial  institutions  under  safekeeping
agreements.  The term repurchase agreements were entered into with the objective
of  stabilizing  net  interest  income  over time,  further  protecting  our net
interest  margin  against  changes in interest  rates and providing  funding for
security purchases.  The interest rate floor agreements included within the term
repurchase  agreements  represent  embedded  derivative  instruments  which,  in
accordance with existing accounting literature governing derivative instruments,
are not  required  to be  separated  from the  term  repurchase  agreements  and
accounted for separately as a derivative financial instrument. As such, the term
repurchase  agreements  are reflected in other  borrowings  in our  consolidated
balance sheets and the related interest expense is reflected as interest expense
on other borrowings in our consolidated statements of income.

In February 2006, we terminated our two $50.0 million term repurchase agreements
with maturity  dates of June 14, 2007, and recognized a $1.6 million loss on the
sale of $100.0 million of  available-for-sale  investment  securities associated
with the  termination  of the term  repurchase  agreements;  in March  2006,  we
terminated our $50.0 million term  repurchase  agreement with a maturity date of
August 1, 2007,  and  recognized a $746,000 loss on the sale of $50.0 million of
available-for-sale  investment securities associated with the termination of the
term repurchase agreement; and in April 2006, we terminated $50.0 million of the
$150.0  million term  repurchase  agreement  with a maturity date of January 12,
2007,  and  recognized  a  $310,000  loss  on  the  sale  of  $50.0  million  of
available-for-sale  investment securities associated with the termination of the
term repurchase agreement.  Our termination  transactions completed in the first
and second  quarters of 2006  resulted in a reduction  of $200.0  million of our
term repurchase  agreements,  the recognition of a $2.7 million loss on the sale
of  $200.0  million  of  investment  securities  held in our  available-for-sale
investment   portfolio,   and  prepayment  penalties  of  $306,000  incurred  in
conjunction  with  the  early  termination  of the term  repurchase  agreements.
Additionally,  in August 2006, we restructured the remaining $100.0 million term
repurchase  agreement  to extend the  maturity  date to October  12, 2010 and to
modify the pricing structure, including the interest rate floor strike price. We
did not incur any costs associated with the restructuring of the agreement.

In July  2006,  we  entered  into a $100.0  million  four-year  term  repurchase
agreement under a master repurchase  agreement with an unaffiliated third party,
as further  described in Note 9 to our Consolidated  Financial  Statements.  The
underlying  securities  associated with the term  repurchase  agreement are U.S.
Government agency collateralized  mortgage obligation securities and are held by
other financial institutions under a safekeeping agreement.

Interest  Rate Cap  Agreements.  In  September  2006,  we entered  into a $200.0
million  notional  amount  three-year  interest  rate cap agreement and a $200.0
million  notional  amount  four-year  interest rate cap agreement in conjunction
with the interest  rate swap  agreements  designated as cash flow hedges that we
entered  into in  September  2006,  as  previously  described,  to limit the net
interest expense  associated with our interest rate swap agreements in the event
of a rising  rate  scenario.  The  $200.0  million  notional  amount  three-year
interest  rate cap agreement  provides for us to receive a quarterly  adjustable
rate of interest  equivalent to the differential  between the three-month  LIBOR
and the strike  price of 7.00%  should the  three-month  LIBOR exceed the strike
price. The $200.0 million notional amount four-year  interest rate cap agreement
provides for us to receive a quarterly adjustable rate of interest equivalent to
the  differential  between the  three-month  LIBOR and the strike price of 7.50%
should the  three-month  LIBOR  exceed the strike  price.  The fair value of the
interest  rate  cap  agreements,  which  is  included  in  other  assets  in our
consolidated  balance  sheets,  was  $111,000  and $139,000 at June 30, 2007 and
December 31, 2006, respectively.

Pledged Collateral. At June 30, 2007 and December 31, 2006, we had accepted cash
of $1.4 million and $4.2 million, respectively, as collateral in connection with
our interest rate swap agreements.

Interest Rate Lock  Commitments / Forward  Commitments  to Sell  Mortgage-Backed
Securities.  Derivative  financial  instruments issued by us consist of interest
rate lock commitments to originate  fixed-rate loans to be sold.  Commitments to
originate  fixed-rate loans consist  primarily of residential real estate loans.
These net loan  commitments  and loans  held for sale are  hedged  with  forward
contracts to sell mortgage-backed  securities.  The fair value of these interest
rate lock  commitments,  which is included in other  assets in our  consolidated
balance  sheets,  was $216,000  and  ($17,000) at June 30, 2007 and December 31,
2006, respectively.
<PAGE>

                      Loans and Allowance for Loan Losses

Interest earned on our loan portfolio  represents the principal source of income
for First Bank.  Interest and fees on loans represented 89.0% and 89.2% of total
interest income for the three and six months ended June 30, 2007,  respectively,
in comparison to 89.9% and 89.5% for the comparable  periods in 2006. Loans, net
of unearned  discount,  increased  $322.1 million to $7.99 billion,  or 76.2% of
assets,  at June 30, 2007,  compared to $7.67  billion,  or 75.5% of assets,  at
December  31, 2006.  The overall  increase in loans,  net of unearned  discount,
during  the first six months of 2007  reflects  internal  loan  growth of $160.0
million and our acquisition of Royal Oaks, which provided loans, net of unearned
discount, of $175.5 million, partially offset by the sale of approximately $13.4
million  of  certain  repurchased  and  other  residential  mortgage  loans.  We
primarily attribute the net increase in our loan portfolio to:

          >>   an increase of $147.4  million in our  commercial,  financial and
               agricultural  portfolio due to continued internal loan production
               growth and $45.1 million of loans provided by our  acquisition of
               Royal Oaks;

          >>   an increase of $120.0 million in our real estate construction and
               development   portfolio   resulting   primarily   from  new  loan
               originations and seasonal  fluctuations on existing and available
               credit lines,  as well as $54.8 million of loans  provided by our
               acquisition of Royal Oaks; and

          >>   an  increase  of  $63.8  million  in  our  real  estate  mortgage
               portfolio,  primarily  attributable  to: (a) loans totaling $70.6
               million  provided by our  acquisition  of Royal  Oaks;  and (b) a
               modest increase in internal loan growth;  partially offset by (c)
               the   transfer  of   approximately   $17.5   million  of  certain
               repurchased  and other  residential  mortgage  loans to our loans
               held for sale portfolio in March 2007; partially offset by

          >>   a decrease of $19.0 million in our loans held for sale portfolio,
               reflecting:  (a) the timing of loan  originations  and subsequent
               sales  in  the   secondary   mortgage   market,   including   the
               discontinuation   of   originations   and   sales  of   sub-prime
               residential  mortgage  loan products in the first quarter of 2007
               in light of the overall deterioration  experienced throughout the
               mortgage  banking  industry;  (b) the  transfer of  approximately
               $17.5  million  of  certain  repurchased  and  other  residential
               mortgage  loans to our  loans  held for sale  portfolio  in March
               2007, as discussed above;  partially offset by (c) the completion
               of the sale of approximately $13.4 million of the repurchased and
               other  residential  mortgage loans that were  classified as loans
               held for sale at March 31,  2007,  resulting in a pre-tax gain of
               approximately  $851,000.  In addition,  in the second  quarter of
               2007, we received payoffs on a portion of the loans held for sale
               at  March  31,  2007  of  approximately  $1.1  million.  We  also
               transferred  approximately  $2.6  million  of loans that were not
               ultimately  included  in  the  sale  back  into  our  residential
               mortgage loan portfolio.



<PAGE>


Nonperforming assets include nonaccrual loans, restructured loans and other real
estate. The following table presents the categories of nonperforming assets and
certain ratios as of June 30, 2007 and December 31, 2006:


<TABLE>
<CAPTION>
                                                                               June 30,    December 31,
                                                                                 2007          2006
                                                                                 ----          ----
                                                                          (dollars expressed in thousands)

         Commercial, financial and agricultural:
<S>                                                                          <C>                <C>
              Nonaccrual...................................................  $    8,280         9,879
         Real estate construction and development:
              Nonaccrual...................................................      21,016        13,344
         Real estate mortgage:
              One-to-four family residential:
                  Nonaccrual...............................................      27,219        18,885
                  Restructured.............................................           8             9
              Multi-family residential loans:
                  Nonaccrual...............................................         168           272
              Commercial real estate loans:
                  Nonaccrual...............................................       6,352         6,260
         Consumer and installment:
              Nonaccrual...................................................         425            81
                                                                             ----------    ----------
                    Total nonperforming loans..............................      63,468        48,730
         Other real estate.................................................       8,040         6,433
                                                                             ----------    ----------
                    Total nonperforming assets.............................  $   71,508        55,163
                                                                             ==========    ==========

         Loans, net of unearned discount...................................  $7,988,576     7,666,481
                                                                             ==========    ==========

         Loans past due 90 days or more and still accruing.................  $    4,387         5,653
                                                                             ==========    ==========

         Ratio of:
           Allowance for loan losses to loans..............................        1.79%         1.90%
           Nonperforming loans to loans....................................        0.79          0.64
           Allowance for loan losses to nonperforming loans................      225.19        299.05
           Nonperforming assets to loans and other real estate.............        0.89          0.72
                                                                             ==========    ==========
</TABLE>

Nonperforming  loans,  consisting of loans on nonaccrual status and restructured
loans,  were $63.5 million at June 30, 2007,  compared to $62.5 million at March
31, 2007, $48.7 million at December 31, 2006 and $73.0 million at June 30, 2006.
Nonperforming  loans were 0.79% of loans, net of unearned discount,  at June 30,
2007, compared to 0.79%, 0.64% and 0.96% of loans, net of unearned discount,  at
March 31, 2007,  December 31, 2006 and June 30, 2006,  respectively.  Other real
estate  owned was $8.0 million  $8.5  million,  $6.4 million and $5.5 million at
June  30,  2007,  March  31,  2007,   December  31,  2006  and  June  30,  2006,
respectively.  Our nonperforming  assets,  consisting of nonperforming loans and
other real estate owned, were $71.5 million at June 30, 2007,  compared to $71.0
million,  $55.2 million and $78.5  million at March 31, 2007,  December 31, 2006
and June 30,  2006,  respectively.  Our loans past due 90 days or more and still
accruing interest were $4.4 million, $4.2 million, $5.7 million and $5.7 million
at June 30,  2007,  March  31,  2007,  December  31,  2006  and  June 30,  2006,
respectively.

Nonperforming  loans at June 30, 2007  increased  $950,000,  or 1.5%,  and $14.7
million,  or 30.2%, from nonperforming  loans at March 31, 2007 and December 31,
2006,  respectively.  Nonperforming loans decreased $9.6 million, or 13.1%, from
nonperforming  loans at June 30, 2006.  The increase in the overall level of our
nonperforming  loans during the first six months of 2007 primarily resulted from
an increase of $8.3 million in our one-to-four family residential  mortgage loan
portfolio  to $27.2  million  at June 30,  2007,  compared  to $18.9  million at
December  31,  2006.   This  increase  was  driven  by  repurchases  of  certain
residential  mortgage loans sold with  recourse,  primarily due to early payment
default,  that were placed back into our one-to-four family residential mortgage
loan portfolio,  and the overall deterioration of sub-prime products experienced
throughout  the mortgage  banking  industry.  Our  involvement  in the sub-prime
market had been limited to the origination and subsequent sale of these loans in
the secondary  market,  and historically  represented  approximately  40% of our
mortgage banking loan origination and sale volumes.  During the first quarter of
2007, we discontinued  loan  originations of this product following a decline in
bid prices and in market  liquidity for these loan  products.  In March 2007, we
entered into a  commitment  to sell certain  repurchased  and other  residential
mortgage loans that were either nonperforming loans or were deemed by management
to be problem credits.  Subsequent to recording loan charge-offs to reduce these
loans to the lower of cost or estimated  fair value at the time of transfer,  as
further discussed below, we transferred  approximately  $17.5 million of certain
repurchased  and  other  residential  mortgage  loans to our held for sale  loan
portfolio.  In April 2007, we completed the sale of approximately  $13.4 million

<PAGE>

of these  loans,  received  payoffs  on a portion  of the loans held for sale at
March 31, 2007 of approximately $1.1 million, and transferred approximately $2.6
million of loans  that were not  ultimately  included  in the sale back into our
residential mortgage loan portfolio.  These transactions  resulted in a decrease
in nonperforming loans of approximately  $11.5 million,  in aggregate.  However,
this decrease in nonperforming loans was offset by further  deterioration within
our residential  mortgage portfolio during the second quarter of 2007, including
additional repurchases of certain residential mortgage loans sold with recourse.
Repurchases  of  mortgage  loans sold with  recourse  were  approximately  $17.2
million  and $21.5  million  for the three and six months  ended June 30,  2007,
respectively.  Our recourse  risk on sub-prime  loan products that we previously
sold in the secondary market expires throughout the remainder of 2007.

The increase in nonperforming loans during the first six months of 2007 was also
attributable to an increase of $7.7 million within our real estate  construction
and development  portfolio to $21.0 million at June 30, 2007,  compared to $13.3
million at December 31, 2006,  resulting  from a slowdown in home sales and real
estate  values in many of our markets.  The decrease in the overall level of our
nonperforming  loans from June 30, 2006  reflects  our efforts to improve  asset
quality through the sale of nonperforming loans and loan payoffs, as well as the
strengthening of certain credit relationships.

We recorded net loan charge-offs of $4.7 million and $14.7 million for the three
and  six  months  ended  June  30,  2007,  respectively,  compared  to net  loan
charge-offs  of $1.2  million and net loan  recoveries  of $2.1  million for the
comparable periods in 2006. The increased level of net loan charge-offs recorded
for the six months  ended June 30,  2007  reflect  $8.7  million of  charge-offs
associated  with our one-to-four  family  residential  portfolio,  of which $4.3
million was recorded in conjunction with the transfer of certain repurchased and
other  residential  mortgage  loans to our  loans  held for sale  portfolio  and
subsequent sale in April 2007, as previously discussed. Net loan charge-offs for
the first six  months of 2007 also  include a  charge-off  of $2.5  million on a
residential  development and construction credit relationship and a $1.5 million
charge-off on a commercial credit relationship. Net loan recoveries recorded for
the six months  ended June 30, 2006  reflect a loan  recovery of $5.0 million on
the payoff of a single  nonperforming loan in the first quarter of 2006. Our net
loan  charge-offs as a percentage of average loans were 0.19% for the six months
ended June 30,  2007,  representing  a  significant  increase  from our net loan
recoveries  as a  percentage  of average  loans of 0.03% for the same  period in
2006.

Each  month,  the credit  administration  department  provides  management  with
detailed  lists of loans on the watch  list and  summaries  of the  entire  loan
portfolio by risk rating. These are coupled with analyses of changes in the risk
profile  of the  portfolio,  changes in  past-due  and  nonperforming  loans and
changes  in watch  list and  classified  loans over  time.  In this  manner,  we
continually  monitor the overall  increases or decreases in the level of risk in
our loan portfolio.  Factors are applied to the loan portfolio for each category
of loan risk to determine  acceptable  levels of allowance  for loan losses.  In
addition,  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.  The calculated  allowance required for the portfolio is
then  compared to the actual  allowance  balance to  determine  the  adjustments
necessary  to maintain  the  allowance  at an  appropriate  level.  In addition,
management exercises a certain degree of judgment in its analysis of the overall
adequacy of the allowance for 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 income.
<PAGE>

Changes in the allowance for loan losses for the three and six months ended June
30, 2007 and 2006 were as follows:

<TABLE>
<CAPTION>
                                                             Three Months Ended         Six Months Ended
                                                                  June 30,                  June 30,
                                                           ----------------------    ----------------------
                                                              2007        2006          2007        2006
                                                              ----        ----          ----        ----
                                                                   (dollars expressed in thousands)

<S>                                                        <C>           <C>          <C>          <C>
         Balance, beginning of period...................   $142,148      140,235      145,729      135,330
         Acquired allowance for loan losses.............         --        3,368        2,925        3,944
                                                           --------     --------     --------     --------
                                                            142,148      143,603      148,654      139,274
                                                           --------     --------     --------     --------
         Loans charged-off..............................     (6,563)      (2,896)     (18,278)      (6,341)
         Recoveries of loans previously charged-off.....      1,837        1,676        3,546        8,450
                                                           --------     --------     --------     --------
           Net loan (charge-offs) recoveries............     (4,726)      (1,220)     (14,732)       2,109
                                                           --------     --------     --------     --------
         Provision for loan losses......................      5,500        5,000        9,000        6,000
                                                           --------     --------     --------     --------
         Balance, end of period.........................   $142,922      147,383      142,922      147,383
                                                           ========     ========     ========     ========
</TABLE>

Our allowance for loan losses was $142.9  million at June 30, 2007,  compared to
$142.1  million,  $145.7 million and $147.4 million at March 31, 2007,  December
31, 2006 and June 30, 2006,  respectively,  representing 1.79%, 1.79%, 1.90% and
1.94% of loans, net of unearned discount,  respectively.  Our allowance for loan
losses as a  percentage  of  nonperforming  loans was 225.19% at June 30,  2007,
compared to 227.37%,  299.05% and 201.81% at March 31,  2007,  December 31, 2006
and June 30, 2006, respectively.  Our allowance for loan losses at June 30, 2007
includes $2.9 million of balances  acquired in conjunction  with our acquisition
of Royal Oaks. We continue to closely monitor our loan portfolio and address the
ongoing  challenges  posed  by  the  current  economic  environment  and  market
conditions,  including  reduced  loan  demand,  highly  competitive  markets and
pricing  within  certain  sectors of our loan  portfolio.  We also  continue  to
closely  monitor  our level of  nonperforming  loans in an effort to continue to
reduce  the  overall  level of  nonperforming  loans in our loan  portfolio.  We
consider  these  factors  in  our  overall  assessment  of the  adequacy  of the
allowance for loan losses.


<PAGE>

                                    Liquidity

Our  liquidity  is the  ability to maintain a cash flow that is adequate to fund
operations,  service debt obligations and meet obligations and other commitments
on a timely basis. We receive funds for liquidity from customer  deposits,  loan
payments,  maturities  of  loans  and  investments,  sales  of  investments  and
earnings.  In  addition,  we may avail  ourselves  of other  sources of funds by
issuing  certificates of deposit in denominations of $100,000 or more, borrowing
federal funds,  selling  securities under agreements to repurchase and utilizing
borrowings from the FHLB and other  borrowings,  including our term loan and our
revolving  credit line.  The  aggregate  funds  acquired from these sources were
$1.95  billion  and  $1.86  billion  at June 30,  2007 and  December  31,  2006,
respectively.

The following  table  presents the maturity  structure of these other sources of
funds,  which consists of  certificates of deposit of $100,000 or more and other
borrowings, including our notes payable, at June 30, 2007:
<TABLE>
<CAPTION>

                                                      Certificates of Deposit     Other
                                                        of $100,000 or More     Borrowings         Total
                                                        -------------------     ----------         -----
                                                                   (dollars expressed in thousands)

<S>                                                         <C>                  <C>               <C>
         Three months or less.............................  $  523,988           236,029           760,017
         Over three months through six months.............     376,100             8,000           384,100
         Over six months through twelve months............     430,163            10,000           440,163
         Over twelve months...............................     144,859           215,942           360,801
                                                            ----------          --------        ----------
              Total.......................................  $1,475,110           469,971         1,945,081
                                                            ==========          ========        ==========
</TABLE>

In addition to these  sources of funds,  First Bank has  established a borrowing
relationship  with  the  Federal  Reserve  Bank  of St.  Louis.  This  borrowing
relationship,  which is secured by  commercial  loans,  provides  an  additional
liquidity  facility that may be utilized for contingency  purposes.  At June 30,
2007 and December 31, 2006, First Bank's borrowing  capacity under the agreement
was approximately $559.5 million and $639.1 million,  respectively. In addition,
First  Bank's  borrowing  capacity  through its  relationship  with the FHLB was
approximately  $729.9  million and $666.0  million at June 30, 2007 and December
31, 2006,  respectively.  We had FHLB advances  outstanding  of $3.9 million and
$4.0 million at June 30, 2007 and December 31, 2006, respectively,  all of which
represent advances assumed in conjunction with various acquisitions.

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 June 30, 2007 were as follows:
<TABLE>
<CAPTION>

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

<S>                                                <C>            <C>        <C>        <C>         <C>
         Operating leases........................  $   15,440     27,161     16,104     41,671      100,376
         Certificates of deposit (2).............   3,392,663    366,611     89,527     11,504    3,860,305
         Other borrowings (2)....................     234,029        133    200,809         --      434,971
         Notes payable (2)(3)....................      20,000     15,000         --         --       35,000
         Subordinated debentures (2).............          --         --         --    302,166      302,166
         Other contractual obligations...........         607        207        136        111        1,061
                                                   ----------   --------   --------   --------   ----------
              Total..............................  $3,662,739    409,112    306,576    355,452    4,733,879
                                                   ==========   ========   ========   ========   ==========
         -------------------
         (1)  Amounts exclude FIN 48 unrecognized  tax  liabilities  of $12.1 million  and  related  accrued
              interest expense of $1.4 million for which the timing of payment of such liabilities cannot be
              reasonably estimated as of June 30, 2007.
         (2)  Amounts exclude the related interest expense accrued on these obligations as of June 30, 2007.
         (3)  On August 8, 2007, First Banks entered into a $125.0 million Secured Credit Agreement to renew
              and modify its existing credit  agreement, as further described  in Note 10 and Note 14 to our
              Consolidated Financial Statements.
</TABLE>

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





<PAGE>


                       Effects of New Accounting Standards

In February 2006, the FASB issued Statement of Financial  Accounting  Standards,
or SFAS,  No. 155 -- Accounting  For Certain Hybrid  Financial  Instruments,  an
amendment of SFAS No. 133 -- Accounting For Derivative  Instruments  and Hedging
Activities  and SFAS No. 140. SFAS No. 155 allows  entities to remeasure at fair
value a hybrid  financial  instrument that contains an embedded  derivative that
otherwise  would require  bifurcation  from the host  instrument,  if the holder
irrevocably  elects to account for the whole  instrument  on a fair value basis.
Subsequent  changes in the fair value of the  instrument  would be recognized in
earnings.  In January 2007, the FASB posted to its website  revisions to certain
SFAS No. 133  implementation  issues that were  affected by the issuance of SFAS
No. 155 and SFAS No. 156 (discussed  below).  These  revisions  provide a narrow
scope exception for securitized  interests in prepayable  financial  assets that
only contain an embedded  derivative that results from the embedded call options
in the underlying  prepayable financial assets if certain criteria are met. SFAS
No. 155 is effective for financial instruments acquired, issued, or subject to a
remeasurement  event occurring after the beginning of the first fiscal year that
begins after September 15, 2006. Early adoption is permitted as of the beginning
of the  fiscal  year  unless the entity has  already  issued  interim  financial
statements  during that fiscal year. We  implemented  SFAS No. 155 on January 1,
2007, which did not have a material impact on our financial condition or results
of operations.

In March 2006,  the FASB  issued  SFAS No. 156 -  Accounting  for  Servicing  of
Financial  Assets.  SFAS No. 156, an amendment of FASB SFAS No. 140 - Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities,  addresses the recognition and measurement of separately recognized
servicing  assets and  liabilities  and  allows  mark-to-market  accounting  for
servicing  rights  resulting  in  reporting  that is similar to fair value hedge
accounting, but without the effort and system costs needed to identify effective
hedging  instruments  and  document  hedging  relationships.  SFAS  No.  156  is
effective for fiscal years beginning after September 15, 2006. Early adoption is
permitted as of the  beginning of an entity's  fiscal year unless the entity has
already  issued  interim  financial  statements  during  that  fiscal  year.  We
implemented  SFAS No.  156 on  January  1,  2007,  which did not have a material
impact on our financial condition or results of operations.

In June 2006,  the FASB issued FIN 48 -- Accounting  for  Uncertainty  in Income
Taxes, an  Interpretation of SFAS No. 109 -- Accounting for Income Taxes. FIN 48
clarifies the accounting for uncertainty in income taxes in financial statements
and prescribes a recognition  threshold and measurement  attribute for financial
statement  recognition and measurement of a tax position taken or expected to be
taken. FIN 48 also provides guidance on derecognition,  classification, interest
and penalties,  accounting in interim periods, disclosure and transition. FIN 48
is effective for fiscal years  beginning after December 15, 2006. We implemented
FIN 48 on  January 1, 2007,  as further  described  in Note 1 and Note 12 to our
Consolidated Financial Statements.

In September 2006, the FASB issued SFAS No. 157 - Fair Value Measurements.  SFAS
No. 157 defines fair value,  establishes a framework for measuring fair value in
U.S. generally accepted  accounting  principles,  and expands  disclosures about
fair  value   measurements.   SFAS  No.  157  applies  under  other   accounting
pronouncements  that  require or permit  fair value  measurements,  and does not
require any new fair value  measurements.  SFAS No. 157 is effective  for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years.  Early  adoption is permitted as of the  beginning of an entity's  fiscal
year unless the entity has already issued interim  financial  statements  during
that fiscal year. We are currently  evaluating the  requirements of SFAS No. 157
to determine their impact on our financial condition and results of operations.

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





<PAGE>


      ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


At December 31, 2006, 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 rates more rapidly than our liabilities.  While a decline in interest
rates of less than 100 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 100 basis points  indicated a pre-tax  projected loss of
approximately  3.7% of net interest  income,  based on assets and liabilities at
December 31, 2006. At June 30, 2007, 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 reduced income associated with our
interest rate swap  agreements and increases in prevailing  interest  rates,  is
reflected in our net interest margin for the three and six months ended June 30,
2007 as compared to the comparable  period in 2006 and further  discussed  under
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations -- Results of Operations."

During  the  first  quarter  of 2007,  we  discontinued  our  activities  in the
sub-prime  residential  mortgage  market in  response to  increased  market risk
experienced  within the industry  associated with these product lines.  While we
are susceptible to the risk of future  repurchases of loans  associated with the
sales of these loans, we believe such risk will decline throughout the remainder
of 2007.  Our reduced  activities  within the sub-prime  market will also likely
result in a decline in our future noninterest income, as further discussed under
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations -- Results of Operations."

During  the  three and six  months  ended  June 30,  2007,  our  asset-sensitive
position and overall susceptibility to market risks have not changed materially.



                        ITEM 4 - CONTROLS AND PROCEDURES

Our Chief Executive  Officer and our Chief Financial  Officer have evaluated the
effectiveness  of our "disclosure  controls and procedures" (as defined in Rules
13a-15(e)  and  15d-15(e)  under the  Securities  Exchange  Act of 1934,  or the
Exchange Act), as of the end of the period covered by this report. Based on such
evaluation,  our Chief Executive  Officer and our Chief  Financial  Officer have
concluded that, as of the end of such period, the Company's  disclosure controls
and  procedures  are  effective  in  recording,   processing,   summarizing  and
reporting,  on a timely  basis,  information  required  to be  disclosed  by the
Company in the reports that it files or submits  under the Exchange  Act.  There
have not been any  changes in the  Company's  internal  control  over  financial
reporting (as such term is defined in Rules  13a-15(f)  and 15d-15(f)  under the
Exchange Act) during the 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.



<PAGE>


                           PART II - OTHER INFORMATION


          ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the May 3, 2007 Annual Meeting of Shareholders of First Banks,  Messrs. James
F. Dierberg, Gordon A. Gundaker, Terrance M. McCarthy, Steven F. Schepman, David
L.  Steward and  Douglas H.  Yaeger,  constituting  all of the  directors,  were
unanimously re-elected.


                                ITEM 6 - EXHIBITS

The exhibits are numbered in  accordance  with the Exhibit  Table of Item 601 of
Regulation S-K.

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

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

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

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

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


<PAGE>


                                   SIGNATURES


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



Date:  August 13, 2007

                                   FIRST BANKS, INC.


                                   By: /s/ Terrance M. McCarthy
                                      ------------------------------------------
                                           Terrance M. McCarthy
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


                                   By: /s/ Lisa K. Vansickle
                                      ------------------------------------------
                                           Lisa K. Vansickle
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and Accounting
                                           Officer)