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, 2004

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

               For the transition period from _______ to ________

                           Commission File No. 0-20632

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

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

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

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

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

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

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

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

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

         Indicate  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, 2004
                   -----                             ------------------

     Common Stock, $250.00 par value                       23,661


<PAGE>

<TABLE>
<CAPTION>



                                                           FIRST BANKS, INC.

                                                           TABLE OF CONTENTS





                                                                                                             Page
                                                                                                             ----

PART I.         FINANCIAL INFORMATION

   ITEM 1.      FINANCIAL STATEMENTS:

<S>             <C>                                                                                            <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.............................................................    14

   ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................................    32

   ITEM 4.      CONTROLS AND PROCEDURES...................................................................    33

PART II.        OTHER INFORMATION

   ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K..........................................................    34

SIGNATURES................................................................................................    35

</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,
                                                                                               2004         2003
                                                                                               ----         ----
                                                                                            (unaudited)

                                                    ASSETS
                                                    ------
Cash and cash equivalents:
<S>                                                                                        <C>             <C>
     Cash and due from banks.............................................................. $  166,376      179,802
     Short-term investments...............................................................     41,339       33,735
                                                                                           ----------    ---------
          Total cash and cash equivalents.................................................    207,715      213,537
                                                                                           ----------    ---------

Investment securities:
     Available for sale...................................................................  1,234,275    1,038,787
     Held to maturity (fair value of $27,282 and $11,341, respectively)...................     27,310       10,927
                                                                                           ----------    ---------
          Total investment securities.....................................................  1,261,585    1,049,714
                                                                                           ----------    ---------
Loans:
     Commercial, financial and agricultural...............................................  1,391,668    1,407,626
     Real estate construction and development.............................................  1,183,414    1,063,889
     Real estate mortgage.................................................................  2,605,890    2,582,264
     Lease financing......................................................................      9,585       67,282
     Consumer and installment.............................................................     55,273       71,652
     Loans held for sale..................................................................    164,928      145,746
                                                                                           ----------    ---------
          Total loans.....................................................................  5,410,758    5,338,459
     Unearned discount....................................................................    (11,375)     (10,384)
     Allowance for loan losses............................................................   (120,966)    (116,451)
                                                                                           ----------    ---------
          Net loans.......................................................................  5,278,417    5,211,624
                                                                                           ----------    ---------

Derivative instruments....................................................................     13,356       49,291
Bank premises and equipment, net of accumulated depreciation and amortization.............    130,365      136,739
Goodwill..................................................................................    145,255      145,548
Bank-owned life insurance.................................................................     99,870       97,521
Deferred income taxes.....................................................................    105,970      102,844
Other assets..............................................................................     81,543      100,122
                                                                                           ----------    ---------
          Total assets.................................................................... $7,324,076    7,106,940
                                                                                           ==========    =========

                                                  LIABILITIES
                                                  -----------
Deposits:
     Noninterest-bearing demand........................................................... $1,059,045    1,034,367
     Interest-bearing demand .............................................................    815,189      843,001
     Savings..............................................................................  2,146,332    2,128,683
     Time deposits of $100 or more........................................................    475,533      436,439
     Other time deposits..................................................................  1,459,828    1,519,125
                                                                                           ----------    ---------
          Total deposits..................................................................  5,955,927    5,961,615
Other borrowings..........................................................................    532,548      273,479
Note payable..............................................................................         --       17,000
Subordinated debentures...................................................................    206,795      209,320
Deferred income taxes.....................................................................     24,613       41,683
Accrued expenses and other liabilities....................................................     48,245       54,028
                                                                                           ----------    ---------
          Total liabilities...............................................................  6,768,128    6,557,125
                                                                                           ----------    ---------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

Preferred stock:
<S>                                                                                               <C>          <C>
     $1.00 par value, 5,000,000 shares authorized, no shares issued and outstanding.......         --          --
     Class A convertible, adjustable rate, $20.00 par value, 750,000
       shares authorized, 641,082 shares issued and outstanding...........................     12,822       12,822
     Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
       160,505 shares issued and outstanding..............................................        241          241
Common stock, $250.00 par value, 25,000 shares authorized,
     23,661 shares issued and outstanding.................................................      5,915        5,915
Additional paid-in capital................................................................      5,910        5,910
Retained earnings.........................................................................    539,658      495,714
Accumulated other comprehensive income (loss).............................................     (8,598)      29,213
                                                                                           ----------    ---------
          Total stockholders' equity......................................................    555,948      549,815
                                                                                           ----------    ---------
          Total liabilities and stockholders' equity...................................... $7,324,076    7,106,940
                                                                                           ==========    =========

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,
                                                                           -------------------    ----------------
                                                                              2004      2003       2004     2003
                                                                              ----      ----       ----     ----
Interest income:
<S>                                                                        <C>          <C>       <C>       <C>
     Interest and fees on loans........................................... $  83,755    89,680    167,975   180,292
     Investment securities................................................    12,693     8,489     24,314    17,249
     Short-term investments...............................................       137       312        423       754
                                                                           ---------  --------   --------  --------
          Total interest income...........................................    96,585    98,481    192,712   198,295
                                                                           ---------  --------   --------  --------
Interest expense:
     Deposits:
       Interest-bearing demand............................................       824     1,478      1,791     3,151
       Savings............................................................     4,593     5,785      9,370    12,571
       Time deposits of $100 or more......................................     3,039     3,336      5,995     7,021
       Other time deposits................................................     8,173    11,088     16,660    23,282
     Other borrowings.....................................................       757       519      1,401     1,121
     Note payable.........................................................        64        50        169       186
     Subordinated debentures..............................................     3,529     5,212      7,067    10,787
                                                                           ---------  --------   --------  --------
          Total interest expense..........................................    20,979    27,468     42,453    58,119
                                                                           ---------  --------   --------  --------
          Net interest income.............................................    75,606    71,013    150,259   140,176
Provision for loan losses.................................................     3,000    10,000     15,750    21,000
                                                                           ---------  --------   --------  --------
          Net interest income after provision for loan losses.............    72,606    61,013    134,509   119,176
                                                                           ---------  --------   --------  --------
Noninterest income:
     Service charges on deposit accounts and customer service fees........     9,792     9,005     18,741    17,649
     Gain on mortgage loans sold and held for sale........................     3,961     3,552      8,190     8,132
     Net gain on sales of available-for-sale investment securities........        --       307         --     6,566
     Gain on sales of branches, net of expenses...........................       630        --      1,020        --
     Bank-owned life insurance investment income..........................     1,276     1,433      2,619     2,704
     Other................................................................     4,445     4,628     10,093     9,421
                                                                           ---------  --------   --------  --------
          Total noninterest income........................................    20,104    18,925     40,663    44,472
                                                                           ---------  --------   --------  --------
Noninterest expense:
     Salaries and employee benefits.......................................    28,203    24,994     55,889    48,255
     Occupancy, net of rental income......................................     4,433     5,549      9,070    10,483
     Furniture and equipment..............................................     4,290     4,535      8,703     9,104
     Postage, printing and supplies.......................................     1,221     1,292      2,543     2,598
     Information technology fees..........................................     7,992     8,409     15,988    16,442
     Legal, examination and professional fees.............................     1,688     2,165      3,251     3,771
     Amortization of intangibles associated with the
        purchase of subsidiaries..........................................       658       658      1,316     1,190
     Communications.......................................................       399       668        864     1,273
     Advertising and business development.................................     1,324       925      2,605     2,234
     Other................................................................     5,197     8,350      7,778    15,782
                                                                           ---------  --------   --------  --------
          Total noninterest expense.......................................    55,405    57,545    108,007   111,132
                                                                           ---------  --------   --------  --------
          Income before provision for income taxes........................    37,305    22,393     67,165    52,516
Provision for income taxes................................................    11,302     7,693     22,893    18,785
                                                                           ---------  --------   --------  --------
          Net income......................................................    26,003    14,700     44,272    33,731
Preferred stock dividends.................................................       132       132        328       328
                                                                           ---------  --------   --------  --------
          Net income available to common stockholders..................... $  25,871    14,568     43,944    33,403
                                                                           =========  ========   ========  ========

Basic earnings per common share........................................... $1,093.42    615.70   1,857.23  1,411.74
                                                                           =========  ========   ========  ========

Diluted earnings per common share......................................... $1,074.06    606.04   1,827.13  1,390.06
                                                                           =========  ========   ========  ========

Weighted average 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, 2004 and 2003 and Six Months Ended December 31, 2003
                                 (dollars expressed in thousands, except per share data)



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

<S>                                                <C>          <C>    <C>       <C>     <C>      <C>       <C>      <C>
Consolidated balances, December 31, 2002.........  $12,822      241    5,915     5,910            433,689   60,464   519,041
Six months ended June 30, 2003:
    Comprehensive income:
      Net income.................................       --       --       --        --   33,731    33,731       --    33,731
      Other comprehensive loss, net of tax:
        Unrealized losses on securities, net of
          reclassification adjustment (1)........       --       --       --        --   (6,288)       --   (6,288)   (6,288)
        Derivative instruments:
          Current period transactions............       --       --       --        --   (7,639)       --   (7,639)   (7,639)
                                                                                        -------
      Comprehensive income.......................                                        19,804
                                                                                        =======
    Class A preferred stock dividends,
      $0.50 per share............................       --       --       --        --               (321)      --      (321)
    Class B preferred stock dividends,
      $0.04 per share............................       --       --       --        --                 (7)      --        (7)
                                                   -------    -----    -----     -----            -------  -------   -------

Consolidated balances, June 30, 2003.............   12,822      241    5,915     5,910            467,092   46,537   538,517
Six months ended December 31, 2003:
    Comprehensive income:
      Net income.................................       --       --       --        --   29,080    29,080       --    29,080
      Other comprehensive loss, net of tax:
        Unrealized losses on securities, net of
          reclassification adjustment (1)........       --       --       --        --   (3,698)       --   (3,698)   (3,698)
        Derivative instruments:
          Current period transactions............       --       --       --        --  (13,626)       --  (13,626)  (13,626)
                                                                                        -------
      Comprehensive income.......................                                        11,756
                                                                                        =======
    Class A preferred stock dividends,
      $0.70 per share............................       --       --       --        --               (448)      --      (448)
    Class B preferred stock dividends,
      $0.07 per share............................       --       --       --        --                (10)      --       (10)
                                                   -------    -----    -----     -----            -------  -------   -------

Consolidated balances, December 31, 2003.........   12,822      241    5,915     5,910            495,714   29,213   549,815
Six months ended June 30, 2004:
    Comprehensive income:
      Net income.................................       --       --       --        --   44,272    44,272       --    44,272
      Other comprehensive loss, net of tax:
        Unrealized losses on securities, net of
          reclassification adjustment (1)........       --       --       --        --  (19,116)       --  (19,116)  (19,116)
        Derivative instruments:
          Current period transactions............       --       --       --        --  (18,695)       --  (18,695)  (18,695)
                                                                                        -------
      Comprehensive income.......................                                         6,461
                                                                                        =======
    Class A preferred stock dividends,
      $0.50 per share............................       --       --       --        --               (321)      --      (321)
    Class B preferred stock dividends,
      $0.04 per share............................       --       --       --        --                 (7)      --        (7)
                                                   -------    -----    -----     -----            -------  -------   -------

Consolidated balances, June 30, 2004.............  $12,822      241    5,915     5,910            539,658   (8,598)  555,948
                                                   =======    =====    =====     =====            =======  =======   =======
<PAGE>
</TABLE>

-------------------------
(1) Disclosure of reclassification adjustment:
<TABLE>
<CAPTION>

                                                                        Three Months Ended Six Months Ended  Six Months Ended
                                                                             June 30,          June 30,        December 31,
                                                                        -----------------   ---------------
                                                                          2004      2003    2004      2003         2003
                                                                          ----      ----    ----      ----         ----

<S>                                                                    <C>          <C>    <C>       <C>          <C>
     Unrealized losses on investment securities arising
        during the period.................... ......................... $(24,607)   (430)  (19,116)  (2,020)      (2,271)
     Less reclassification adjustment for gains included
        in net income..................................................       --     200        --    4,268        1,427
                                                                        --------    ----   -------   ------       ------
     Unrealized losses on investment securities........................ $(24,607)   (630)  (19,116)  (6,288)      (3,698)
                                                                        ========    ====   =======   ======       ======

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,
                                                                                            -----------------------
                                                                                               2004           2003
                                                                                               ----           ----
Cash flows from operating activities:
<S>                                                                                         <C>              <C>
     Net income.........................................................................    $  44,272        33,731
     Adjustments to reconcile net income to net cash used in operating activities:
       Depreciation and amortization of bank premises and equipment.....................        9,451         9,713
       Amortization, net of accretion...................................................        8,708        11,706
       Originations and purchases of loans held for sale................................     (588,123)   (1,190,559)
       Proceeds from sales of loans held for sale.......................................      461,514     1,112,660
       Provision for loan losses........................................................       15,750        21,000
       Provision for income taxes.......................................................       22,893        18,785
       Payments of income taxes.........................................................      (24,231)      (18,804)
       Decrease in accrued interest receivable..........................................          595         2,820
       Interest accrued on liabilities..................................................       42,453        58,119
       Payments of interest on liabilities..............................................      (42,699)      (60,629)
       Gain on mortgage loans sold and held for sale....................................       (8,190)       (8,132)
       Net gain on sales of available-for-sale investment securities....................           --        (6,566)
       Gain on sales of branches, net of expenses.......................................       (1,020)           --
       Other operating activities, net..................................................       (2,477)        4,950
                                                                                            ---------    ----------
          Net cash used in operating activities.........................................      (61,104)      (11,206)
                                                                                            ---------    ----------

Cash flows from investing activities:
     Cash received for acquired entities, net of cash
       and cash equivalents paid........................................................           --        14,870
     Proceeds from sales of investment securities available for sale....................           --         3,251
     Maturities of investment securities available for sale.............................      250,867       721,971
     Maturities of investment securities held to maturity...............................        2,126         3,024
     Purchases of investment securities available for sale..............................     (429,267)     (326,616)
     Purchases of investment securities held to maturity................................      (18,523)         (102)
     Net (increase) decrease in loans...................................................      (15,809)       21,830
     Recoveries of loans previously charged-off.........................................       13,539        10,317
     Purchases of bank premises and equipment...........................................       (3,565)       (1,858)
     Other investing activities, net....................................................       12,513         4,369
                                                                                            ---------    ----------
          Net cash (used in) provided by investing activities...........................     (188,119)      451,056
                                                                                            ---------    ----------

Cash flows from financing activities:
     Increase (decrease) in demand and savings deposits.................................       23,751       (38,337)
     Decrease in time deposits..........................................................       (2,738)     (212,505)
     Decrease in federal funds purchased................................................           --       (55,000)
     Decrease in Federal Home Loan Bank advances........................................           --        (3,165)
     Increase (decrease) in securities sold under agreements to repurchase..............      259,069       (11,617)
     Advances drawn on note payable.....................................................           --        34,500
     Repayments of note payable.........................................................      (17,000)       (7,000)
     Proceeds from issuance of subordinated debentures..................................           --        70,932
     Payments for redemptions of subordinated debentures................................           --      (136,341)
     Cash paid for sales of branches, net of cash
       and cash equivalents sold........................................................      (19,353)           --
     Payment of preferred stock dividends...............................................         (328)         (328)
                                                                                            ---------    ----------
          Net cash provided by (used in) financing activities...........................      243,401      (358,861)
                                                                                            ---------    ----------
          Net (decrease) increase in cash and cash equivalents..........................       (5,822)       80,989
Cash and cash equivalents, beginning of period..........................................      213,537       203,251
                                                                                            ---------    ----------
Cash and cash equivalents, end of period................................................    $ 207,715       284,240
                                                                                            =========    ==========

Noncash investing and financing activities:
     Loans transferred to other real estate.............................................    $   2,498        10,850
                                                                                            =========    ==========

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 2003
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, 2004 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending December 31, 2004.

         The  consolidated  financial  statements  include the accounts of First
Banks,  Inc. and its  subsidiaries.  All significant  intercompany  accounts and
transactions  have been eliminated.  Certain  reclassifications  of 2003 amounts
have been made to conform to the 2004 presentation.

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

(2)      ACQUISITIONS, INTEGRATION COSTS AND OTHER CORPORATE TRANSACTIONS

         First Banks and Small Business Loan Source, Inc. (SBLS),  headquartered
in Houston,  Texas,  entered into an Asset Purchase Agreement on March 26, 2004,
and subsequently  entered into an Amended and Restated Asset Purchase  Agreement
on July 27, 2004, that provides for First Bank to purchase  substantially all of
the assets and  assume  certain  liabilities  of SBLS in  exchange  for cash and
certain payments contingent on future valuations. The transaction is expected to
be completed  during the third  quarter of 2004,  subject to the approval of the
United  States Small  Business  Administration  (SBA) and the  expiration of the
waiting period under the Hart-Scott-Rodino  Antitrust  Improvements Act of 1976.
SBLS reported assets of approximately $49.5 million,  including $30.4 million of
SBA loans, at June 30, 2004.

         On April 9, 2004,  First Banks and Continental  Mortgage  Corporation -
Delaware  (CMC),  entered  into an  Agreement  and Plan of  Reorganization  that
provided for First Banks to acquire CMC and its wholly owned banking subsidiary,
Continental Community Bank and Trust Company (CCB). As further discussed in Note
11  to  the  Consolidated  Financial  Statements,   First  Banks  completed  its
acquisition of CMC and CCB on July 30, 2004.

         First Banks accrues certain costs  associated with its  acquisitions as
of the respective  consummation  dates.  Essentially  all of these accrued costs
relate either to adjustments to the staffing levels of the acquired  entities or
to the  anticipated  termination  of information  technology or item  processing
contracts of the acquired entities prior to their stated contractual  expiration
dates.  The most  significant  costs  incurred  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 various time
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  applicable  consummation  date.  The  accrued
severance balance of $1.1 million identified in the following table is comprised
of  contractual   obligations  under  salary  continuation  agreements  to  nine
individuals  with  original  terms  ranging from three to 15 years and remaining
terms ranging from  approximately  six months to 12 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 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 data  processing  conversions  of the
respective entities.



<PAGE>


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

                                                                                             Severance
                                                                                             ---------
                                                                                 (dollars expressed in thousands)

<S>                                                                                           <C>
         Balance at December 31, 2003.....................................................    $ 1,412
         Six Months Ended June 30, 2004:
           Payments.......................................................................       (332)
                                                                                              -------
         Balance at June 30, 2004.........................................................    $ 1,080
                                                                                              =======
</TABLE>

         On February 6, 2004, First Bank completed its divestiture of one branch
office in rural Missouri. This branch divestiture resulted in a reduction of the
deposit base of approximately $8.4 million,  and a pre-tax gain of approximately
$390,000, which is included in noninterest income.

         On April 16, 2004,  First Bank completed its  divestiture of one branch
office in southern Illinois.  This branch divestiture resulted in a reduction of
the  deposit  base  of  approximately  $15.0  million,  and a  pre-tax  gain  of
approximately $630,000, which is included in noninterest income.

         On June 30,  2004,  First  Bank  completed  the  sale of a  significant
portion of the leases in its commercial leasing portfolio.  The sale reduced the
Company's  commercial  leasing portfolio by approximately  $33.1 million to $9.6
million at June 30, 2004.  No gain or loss was recorded on the  transaction.  In
conjunction  with  the  transaction,  First  Bank  established  a  $2.0  million
liability  associated with related recourse obligations for certain leases sold,
as further discussed in Note 10 to the Consolidated Financial Statements.

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

         Intangible assets associated with the purchase of subsidiaries,  net of
amortization,  were comprised of the following at June 30, 2004 and December 31,
2003:
<TABLE>
<CAPTION>

                                                        June 30, 2004                December 31, 2003
                                                ----------------------------    ---------------------------
                                                   Gross                          Gross
                                                 Carrying       Accumulated     Carrying       Accumulated
                                                  Amount       Amortization      Amount       Amortization
                                                  ------       ------------      ------       ------------
                                                             (dollars expressed in thousands)

     Amortized intangible assets:
<S>                                              <C>               <C>            <C>              <C>
         Core deposit intangibles..............  $  17,391         (5,478)        17,391           (4,233)
         Goodwill associated with
           purchases of branch offices.........      2,210           (932)         2,210             (861)
                                                 ---------      ---------       --------         --------
              Total............................  $  19,601         (6,410)        19,601           (5,094)
                                                 =========      =========       ========         ========

     Unamortized intangible assets:
         Goodwill associated with the
           purchase of subsidiaries............  $ 143,977                       144,199
                                                 =========                      ========
</TABLE>
<PAGE>

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  and branch offices was $658,000 and $1.3 million for the three and
six months ended June 30, 2004, respectively,  and $658,000 and $1.2 million for
the comparable periods in 2003.  Amortization of intangibles associated with the
purchase of subsidiaries, including amortization of core deposit intangibles and
branch  purchases,  has been estimated  through 2009 in the following table, and
does not take into  consideration  any potential  future  acquisitions or branch
purchases.
<TABLE>
<CAPTION>

                                                                        (dollars expressed in thousands)

         Year ending December 31:
<S>                                                                                  <C>
             2004 Remaining......................................................    $ 1,316
             2005................................................................      2,632
             2006................................................................      2,632
             2007................................................................      2,632
             2008................................................................      2,632
             2009 ...............................................................        726
                                                                                     -------
                Total............................................................    $12,570
                                                                                     =======
</TABLE>

         Changes in the carrying amount of goodwill for the three and six months
ended June 30, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                                    Three Months Ended               Six Months Ended
                                                                         June 30,                        June 30,
                                                                 ------------------------          ---------------------
                                                                    2004            2003             2004          2003
                                                                    ----            ----             ----          ----
                                                                               (dollars expressed in thousands)

<S>                                                              <C>             <C>               <C>           <C>
           Balance, beginning of period......................... $ 145,513       141,102           145,548       140,112
           Goodwill acquired during period......................        --            --                --         1,026
           Acquisition-related adjustments......................      (222)        1,101              (222)        1,101
           Amortization - purchases of branch offices...........       (36)          (36)              (71)          (72)
                                                                 ---------      --------          --------      --------
           Balance, end of period............................... $ 145,255       142,167           145,255       142,167
                                                                 =========      ========          ========      ========
</TABLE>

 (4)     MORTGAGE BANKING ACTIVITIES

         At June 30, 2004 and December 31, 2003,  First Banks serviced loans for
others  amounting to $1.10 billion and $1.22 billion,  respectively.  Borrowers'
escrow  balances  held by First  Banks on such loans were $8.3  million and $4.7
million at June 30, 2004 and December 31, 2003, respectively.

         Changes in mortgage  servicing  rights,  net of  amortization,  for the
periods indicated were as follows:
<TABLE>
<CAPTION>

                                                                    Three Months Ended                Six Months Ended
                                                                         June 30,                         June 30,
                                                                   --------------------             --------------------
                                                                     2004         2003               2004          2003
                                                                     ----         ----               ----          ----
                                                                              (dollars expressed in thousands)

<S>                                                               <C>            <C>                <C>           <C>
           Balance, beginning of period........................   $ 13,960       15,678             15,408        14,882
           Originated mortgage servicing rights................        465        2,521                819         4,494
           Amortization........................................     (1,892)      (1,220)            (3,694)       (2,397)
                                                                  --------      -------            -------       -------
           Balance, end of period..............................   $ 12,533       16,979             12,533        16,979
                                                                  ========      =======            =======       =======
</TABLE>
<PAGE>

         The fair value of mortgage  servicing  rights was  approximately  $17.2
million  and $18.2  million at June 30, 2004 and 2003,  respectively,  and $18.3
million at December 31, 2003. The excess of the fair value of mortgage servicing
rights over the carrying value was  approximately  $4.7 million and $1.2 million
at June 30, 2004 and 2003, respectively, and $2.9 million at December 31, 2003.

         Amortization of mortgage  servicing  rights has been estimated  through
2008 in the following table:
<TABLE>
<CAPTION>

                                                                       (dollars expressed in thousands)

        Year ending December 31:
<S>         <C>                                                                    <C>
            2004 Remaining......................................................   $  2,112
            2005................................................................      4,072
            2006................................................................      3,477
            2007................................................................      2,112
            2008................................................................        760
                                                                                   --------
                 Total..........................................................   $ 12,533
                                                                                   ========
</TABLE>

 (5)     EARNINGS PER COMMON SHARE

         The following is a reconciliation of the basic and diluted earnings per
share computations for the periods indicated:
<TABLE>
<CAPTION>


                                                                               Income         Shares        Per Share
                                                                             (numerator)   (denominator)     Amount
                                                                             -----------   -------------     ------
                                                                      (dollars in thousands, except share and per share data)
     Three months ended June 30, 2004:
<S>                                                                          <C>               <C>         <C>
         Basic EPS - income available to common stockholders.............    $  25,871         23,661      $ 1,093.42
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          128            546          (19.36)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  25,999         24,207      $ 1,074.06
                                                                             =========        =======      ==========

     Three months ended June 30, 2003:
         Basic EPS - income available to common stockholders.............    $  14,568         23,661      $   615.70
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          128            588           (9.66)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  14,696         24,249      $   606.04
                                                                             =========        =======      ==========

     Six months ended June 30, 2004:
         Basic EPS - income available to common stockholders.............    $  43,944         23,661      $ 1,857.23
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          321            565          (30.10)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  44,265         24,226      $ 1,827.13
                                                                             =========        =======      ==========

     Six months ended June 30, 2003:
         Basic EPS - income available to common stockholders.............    $  33,403         23,661      $ 1,411.74
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          321            600          (21.68)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  33,724         24,261      $ 1,390.06
                                                                             =========        =======      ==========
</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  and  various  related   services  to  First  Banks,   Inc.  and  its
subsidiaries.  Fees paid under agreements with First Services, L.P. decreased to
$6.6 million and $13.3 million for the three and six months ended June 30, 2004,
respectively,  from $7.0 million and $13.7 million for the comparable periods in
2003. First Services,  L.P. recorded reduced  information  technology costs as a
result of the  renegotiation  of vendor  service  contracts  and passed the cost
reduction through to First Banks,  Inc. and its  subsidiaries.  During the three
months ended June 30, 2004 and 2003,  First Services,  L.P. paid First Bank $1.1
million and $1.0 million, respectively, and during the six months ended June 30,
2004 and 2003, First Services, L.P. paid First Banks $2.2 million in rental fees
for the use of data processing and other equipment owned by First Banks.
<PAGE>

         First Brokerage  America,  L.L.C., a limited liability company which is
indirectly  owned by First Banks' Chairman and members of his immediate  family,
received  approximately  $876,000  and $1.8 million for the three and six months
ended  June 30,  2004,  respectively,  and  $725,000  and $1.6  million  for the
comparable  periods  in 2003 in  commissions  paid by  unaffiliated  third-party
companies.  The commissions received were primarily in connection with the sales
of  annuities,  securities  and other  insurance  products to customers of First
Bank.

         First Title Guaranty LLC (First  Title),  a limited  liability  company
established and administered by and for the benefit of First Banks' Chairman and
members of his immediate family,  received  approximately  $105,000 and $204,000
for the three and six months ended June 30, 2004, respectively, and $138,000 and
$251,000  for  the  comparable  periods  in  2003 in  commissions  for  policies
purchased  by  First  Banks  or  customers  of  First  Bank  from  unaffiliated,
third-party insurers.

         First  Bank  has had in the  past,  and may  have in the  future,  loan
transactions   in  the  ordinary  course  of  business  with  its  directors  or
affiliates.  These  loan  transactions  have been on the same  terms,  including
interest rates and  collateral,  as those  prevailing at the time for comparable
transactions with unaffiliated  persons and did not involve more than the normal
risk  of  collectibility  or  present  other  unfavorable  features.   Loans  to
directors,  their  affiliates and executive  officers of First Banks,  Inc. were
approximately  $28.3 million and $20.0 million at June 30, 2004 and December 31,
2003,  respectively.  First Bank does not extend  credit to its  officers  or to
officers  of First  Banks,  Inc.,  except for  extensions  of credit  secured by
mortgages on personal  residences,  loans to purchase  automobiles  and personal
credit card accounts.

(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' consolidated 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  I  capital  (as  defined  in the  regulations)  to
risk-weighted  assets,  and of Tier I  capital  to  average  assets.  Management
believes,  as of June 30,  2004,  First  Banks  and  First  Bank  were each well
capitalized.

         As of June 30,  2004,  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 I  risk-based  and Tier I leverage  ratios as set forth in the
table below.
<TABLE>
<CAPTION>

         At June 30, 2004 and December  31, 2003,  First Banks' and First Bank's
required and actual capital ratios were as follows:

                                                               Actual                                     To Be Well
                                                       ------------------------                        Capitalized Under
                                                       June 30,    December 31,      For Capital       Prompt Corrective
                                                        2004           2003       Adequacy Purposes    Action Provisions
                                                        ----           ----       -----------------    -----------------

     Total capital (to risk-weighted assets):
<S>                                                      <C>           <C>               <C>                 <C>
              First Banks.............................   10.84%        10.27%            8.0%                10.0%
              First Bank..............................   10.66         10.41             8.0                 10.0

     Tier 1 capital (to risk-weighted assets):
              First Banks.............................    9.26          8.46             4.0                  6.0
              First Bank..............................    9.40          9.15             4.0                  6.0

     Tier 1 capital (to average assets):
              First Banks.............................    8.31          7.62             3.0                  5.0
              First Bank..............................    8.55          8.22             3.0                  5.0
</TABLE>
<PAGE>

         On May 6, 2004,  the Board of Governors of the Federal  Reserve  System
(the Board)  requested  public  comment on newly proposed rules that would allow
bank  holding  companies to retain trust  preferred  securities  in their Tier 1
capital,  subject  to  stricter  quantitative  and  qualitative  standards.  The
proposed  rules  would  implement  several  significant  changes to the  current
regulatory  capital  rules.  Under the proposal,  the aggregate  amount of trust
preferred securities and certain other core capital elements would be limited to
25% of Tier 1 capital, net of goodwill. Additionally, qualifying trust preferred
securities  and Class C minority  interest  in excess of the 25% limit  would be
allowable in Tier 2 capital,  but limited,  together with  subordinated debt and
limited-life  preferred stock, to 50% of Tier 1 capital. The proposed rules also
provide  that  in  the  last  five  years  before  maturity  of  the  underlying
subordinated note, the associated trust preferred securities would be treated as
limited-life  preferred stock, at one-fifth  amortization per year, and would be
excluded from Tier 1 capital and included in Tier 2 capital,  subject,  together
with subordinated debt and other limited-life preferred stock, to a limit of 50%
of Tier 1 capital.  The public  comment period on the newly proposed rules ended
on July 11,  2004.  First  Banks is  awaiting  further  guidance  from the Board
pending the outcome of the newly proposed  rules,  and is continuing to evaluate
the  proposed  changes  and  their  overall  impact on the  Company's  financial
condition and results of operations.  Management expects that  implementation of
the Board's  proposed  rules,  as currently  stated,  would reduce the Company's
regulatory capital ratios.  However,  management believes its regulatory capital
levels  will  continue  to  meet  the  well  capitalized  thresholds  under  the
regulatory  framework for prompt  corrective  action if the rules are adopted in
the form proposed.

(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 both consumer and commercial
loans.  Consumer  lending  includes  residential  real  estate,  home equity and
installment  lending.  Commercial  lending  includes  commercial,  financial and
agricultural loans, real estate  construction and development loans,  commercial
real  estate  loans,  asset-based  loans and trade  financing.  Other  financial
services   include   mortgage   banking,   debit  cards,   brokerage   services,
credit-related insurance, internet banking, automated teller machines, telephone
banking,  safe deposit boxes and trust,  private banking and institutional money
management  services.  The revenues generated by First Bank consist primarily of
interest income, generated from the loan and investment security portfolios, and
service charges and fees, generated from the deposit products and services.  The
geographic  areas  include  eastern  Missouri,  Illinois,  southern and northern
California and Houston, Dallas, Irving, McKinney and Denton, Texas. The products
and services are offered to customers  primarily within First Bank's  respective
geographic areas.

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



<PAGE>
<TABLE>
<CAPTION>

         The business segment results are summarized as follows:

                                                                           Corporate, Other
                                                                           and Intercompany
                                                 First Bank              Reclassifications (1)        Consolidated Totals
                                            ------------------------   ------------------------    --------------------------
                                             June 30,   December 31,   June 30,    December 31,      June 30,   December 31,
                                               2004         2003         2004          2003            2004         2003
                                               ----         ----         ----          ----            ----         ----
                                                                   (dollars expressed in thousands)
Balance sheet information:

<S>                                       <C>           <C>              <C>            <C>        <C>           <C>
Investment securities...................  $1,254,679    1,042,809        6,906          6,905      1,261,585     1,049,714
Loans, net of unearned discount.........   5,399,383    5,328,075           --             --      5,399,383     5,328,075
Goodwill................................     145,255      145,548           --             --        145,255       145,548
Total assets............................   7,313,573    7,097,635       10,503          9,305      7,324,076     7,106,940
Deposits................................   5,965,870    5,977,042       (9,943)       (15,427)     5,955,927     5,961,615
Note payable............................          --           --           --         17,000             --        17,000
Subordinated debentures.................          --           --      206,795        209,320        206,795       209,320
Stockholders' equity....................     750,915      766,397     (194,967)      (216,582)       555,948       549,815
                                           =========    =========     ========       ========       ========     =========

                                                                           Corporate, Other
                                                                           and Intercompany
                                                  First Bank             Reclassifications (1)       Consolidated Totals
                                           -----------------------     -----------------------      --------------------
                                              Three Months Ended          Three Months Ended          Three Months Ended
                                                   June 30,                    June 30,                    June 30,
                                           -----------------------     -----------------------     -----------------------
                                              2004          2003         2004           2003          2004           2003
                                              ----          ----         ----           ----          ----           ----

Income statement information:

Interest income.........................   $  96,446       98,168          139            313         96,585        98,481
Interest expense........................      17,399       22,278        3,580          5,190         20,979        27,468
                                           ---------    ---------     --------       --------       --------     ---------
     Net interest income................      79,047       75,890       (3,441)        (4,877)        75,606        71,013
Provision for loan losses...............       3,000       10,000           --             --          3,000        10,000
                                           ---------    ---------     --------       --------       --------     ---------
     Net interest income after
       provision for loan losses........      76,047       65,890       (3,441)        (4,877)        72,606        61,013
                                           ---------    ---------     --------       --------       --------     ---------
Noninterest income......................      20,250       18,856         (146)            69         20,104        18,925
Noninterest expense.....................      54,388       55,991        1,017          1,554         55,405        57,545
                                           ---------    ---------     --------       --------       --------     ---------
     Income before provision for
       income taxes...............            41,909       28,755       (4,604)        (6,362)        37,305        22,393
Provision for income taxes..............      15,706       10,410       (4,404)        (2,717)        11,302         7,693
                                           ---------    ---------     --------       --------       --------     ---------
     Net income.........................   $  26,203       18,345         (200)        (3,645)        26,003        14,700
                                           =========    =========     ========       ========       ========     =========


<PAGE>

                                                                           Corporate, Other
                                                                           and Intercompany
                                                  First Bank             Reclassifications (1)       Consolidated Totals
                                           -----------------------     -----------------------     ------------------------
                                               Six Months Ended            Six Months Ended            Six Months Ended
                                                   June 30,                    June 30,                    June 30,
                                           -----------------------     -----------------------     ------------------------
                                              2004         2003          2004           2003         2004            2003
                                              ----         ----          ----           ----         ----            ----

Income statement information:

Interest income..........................  $ 192,433      197,696          279            599        192,712       198,295
Interest expense.........................     35,246       47,282        7,207         10,837         42,453        58,119
                                           ---------      -------      -------       --------       --------     ---------
     Net interest income.................    157,187      150,414       (6,928)       (10,238)       150,259       140,176
Provision for loan losses................     15,750       21,000           --             --         15,750        21,000
                                           ---------      -------      -------       --------       --------     ---------
     Net interest income after
       provision for loan losses.........    141,437      129,414       (6,928)       (10,238)       134,509       119,176
                                           ---------      -------      -------       --------       --------     ---------
Noninterest income.......................     40,969       38,385         (306)         6,087         40,663        44,472
Noninterest expense......................    105,905      109,206        2,102          1,926        108,007       111,132
                                           ---------      -------      -------       --------       --------     ---------
     Income before provision for
       income taxes......................     76,501       58,593       (9,336)        (6,077)        67,165        52,516
Provision for income taxes...............     28,950       20,893       (6,057)        (2,108)        22,893        18,785
                                           ---------      -------       ------       --------       --------     ---------
     Net income..........................  $  47,551       37,700       (3,279)        (3,969)        44,272        33,731
                                           =========      =======      =======       ========       ========     =========
------------------
(1)  Corporate and other includes $2.3 million and $3.4 million of interest expense on subordinated debentures, after  applicable
     income tax benefit of $1.2 million and $1.8 million for the three months ended June 30, 2004 and 2003, respectively. For the
     six months  ended  June 30, 2004 and 2003, corporate and other includes $4.6 million and $7.0 million of interest expense on
     subordinated debentures, after applicable income tax benefits of $2.5 million and $3.8 million, respectively.

</TABLE>

 (9)     OTHER BORROWINGS

         Other  borrowings  were comprised of the following at June 30, 2004 and
December 31, 2003:
<TABLE>
<CAPTION>

                                                                                     June 30,        December 31,
                                                                                       2004              2003
                                                                                  ---------------  ----------------
                                                                                  (dollars expressed in thousands)

         Securities sold under agreements to repurchase:
<S>                                                                                  <C>                <C>
              Daily...............................................................   $ 175,548          166,479
              Term................................................................     350,000          100,000
         Federal Home Loan Bank borrowings........................................       7,000            7,000
                                                                                     ---------          -------
                  Total other borrowings..........................................   $ 532,548          273,479
                                                                                     =========          =======
</TABLE>

         In conjunction with First Banks' interest rate risk management program,
First Banks  entered  into the  following  transactions  with the  objective  of
stabilizing net interest income over time:

         >>    Effective  January 12,  2004,  First Banks  consummated  a $150.0
               million three-year  reverse  repurchase  agreement under a master
               repurchase  agreement  with a single  unaffiliated  third  party.
               Interest is paid  quarterly and is equivalent to the  three-month
               London  Interbank  Offering  Rate minus  0.8350%  plus a floating
               amount equal to the differential  between the three-month  London
               Interbank  Offing Rate reset in arrears  and the strike  price of
               3.50%, if the three-month London Interbank Offering Rate reset in
               arrears exceeds 3.50%. The underlying  securities associated with
               the reverse  repurchase  agreement are callable  U.S.  Government
               agency  securities  and  are  not  under  First  Banks'  physical
               control.  In  conjunction  with  this  transaction,  First  Banks
               purchased  $150.0  million of  callable  U.S.  Government  agency
               securities.
<PAGE>

         >>    Effective  June 14,  2004,  First  Banks  consummated  two  $50.0
               million three-year  reverse repurchase  agreements under a master
               repurchase  agreement  with a single  unaffiliated  third  party.
               Interest is paid  quarterly and is equivalent to the  three-month
               London   Interbank   Offering   Rate   minus   0.60%  and  0.61%,
               respectively,  plus a floating  amount equal to the  differential
               between the  three-month  London  Interbank  Offing Rate reset in
               arrears and the strike price of 5.00%, if the three-month  London
               Interbank  Offering  Rate reset in  arrears  exceeds  5.00%.  The
               underlying  securities  associated  with the  reverse  repurchase
               agreements are callable U.S. Government agency securities and are
               not under First Banks'  physical  control.  In  conjunction  with
               these  transactions,  First  Banks  purchased  $100.0  million of
               callable U.S. Government agency securities.

(10)     CONTINGENT LIABILITIES

         In October  2000,  First Banks  entered  into two  continuing  guaranty
contracts.  For value  received,  and for the purpose of inducing a pension fund
and its  trustees  and a welfare  fund and its  trustees  (the Funds) to conduct
business with Missouri Valley Partners,  Inc. (MVP), First Bank's  institutional
investment  management  subsidiary,  First Banks irrevocably and unconditionally
guaranteed payment of and promised to pay to each of the Funds any amounts up to
the sum of $5.0 million to the extent MVP is liable to the Funds for a breach of
the Investment  Management Agreements (including the Investment Policy Statement
and  Investment  Guidelines),  by and  between  MVP and  the  Funds  and/or  any
violation of the Employee  Retirement  Income  Security Act by MVP  resulting in
liability  to  the  Funds.  The  guaranties  are  continuing  guaranties  of all
obligations  that may arise for  transactions  occurring prior to termination of
the Investment  Management  Agreements and are co-existent  with the term of the
Investment Management  Agreements.  The Investment Management Agreements have no
specified  term but may be  terminated  at any time upon  written  notice by the
Trustees or, at First  Banks'  option,  upon thirty days  written  notice to the
Trustees. In the event of termination of the Investment  Management  Agreements,
such  termination  shall  have no effect on the  liability  of First  Banks with
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,
2004 and  December 31,  2003,  First Banks had not recorded a liability  for the
obligations  associated  with these guaranty  contracts,  as the likelihood that
First Banks will be required to make payments under the contracts is remote.

         On June 30, 2004,  as further  discussed in Note 2 to the  Consolidated
Financial  Statements,  First Bank  recorded a  liability  of $2.0  million  for
recourse  obligations  related to the completion of the sale of a portion of its
commercial  leasing  portfolio.  For value  received,  First  Bank,  as  seller,
indemnified  the buyer of certain  leases from any  liability or loss  resulting
from defaults  subsequent to the transaction sale. First Bank's  indemnification
for the recourse obligations is limited to a specified percentage,  ranging from
15% to 25%, of the aggregate  lease  purchase  price of specific pools of leases
sold.

<PAGE>


(11)     SUBSEQUENT EVENTS

         On July 30, 2004, First Banks completed its acquisition of CMC, and its
wholly owned banking  subsidiary,  CCB,  acquiring all of the outstanding common
stock of CMC in exchange  for $4.2  million in cash.  In  addition,  First Banks
redeemed in full all of the outstanding  subordinated  promissory  notes of CMC,
including accumulated accrued and unpaid interest, of $4.5 million in aggregate.
The transaction was funded through internally generated funds. CMC, through CCB,
operated two banking offices in the Chicago  suburban  communities of Aurora and
Villa  Park.  At the time of the  transaction,  CMC had $140.7  million in total
assets, $73.9 million in loans, net of unearned discount,  and $100.8 million in
deposits.  The  transaction  was  accounted  for  using the  purchase  method of
accounting.  Goodwill  was  approximately  $1.9  million  and the  core  deposit
intangibles,  which are amortized over seven years  utilizing the  straight-line
method,  were approximately  $2.0 million.  CMC was merged with and into SFC and
CCB was merged with and into First Bank.

         On August 12, 2004,  First Banks entered into a first  amendment to its
revolving credit line with a group of unaffiliated financial  institutions.  The
material  changes in the First  Amendment to Secured  Credit  Agreement  (Credit
Agreement)  are  amendments  to the  termination  date  and an  increase  in the
revolving  credit  line and  letter of credit  facility.  The  Credit  Agreement
provides a $75.0 million  revolving  credit line and a $25.0  million  letter of
credit facility. Interest is payable on outstanding principal loan balances at a
floating  rate  equal to either  the  lender's  prime  rate or, at First  Banks'
option,  the London  Interbank  Offering  Rate plus a margin  determined  by the
outstanding  loan  balances and First Banks' net income for the  preceding  four
calendar quarters.  If the loan balances  outstanding under the revolving credit
line are  accruing at the prime  rate,  interest  is paid  monthly.  If the loan
balances  outstanding under the revolving credit line are accruing at the London
Interbank  Offering  Rate,  interest is payable based on the one, two,  three or
six-month  London Interbank  Offering Rate, as selected by First Banks.  Amounts
may be borrowed under the Credit  Agreement until August 11, 2005, at which time
the principal and interest  outstanding is due and payable. The Credit Agreement
requires  maintenance of certain  minimum capital ratios for First Banks and its
subsidiary bank, certain maximum nonperforming assets ratios for First Banks and
its  subsidiary  bank and a minimum  return on assets ratio for First Banks.  In
addition, it prohibits the payment of dividends on First Banks' common stock and
contains additional  covenants.  Loans under the Credit Agreement are secured by
First Banks' ownership interest in the capital stock of its subsidiaries.




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

                                     General

         We are a registered  bank holding  company  incorporated in Missouri in
1978 and headquartered in St. Louis County,  Missouri.  Through the operation of
our subsidiaries,  we offer a broad array of financial  services to consumer and
commercial  customers.  We operate  through  our wholly  owned  subsidiary  bank
holding  company,  The  San  Francisco  Company,  or SFC,  headquartered  in San
Francisco,  California,  and its  wholly  owned  subsidiary  bank,  First  Bank,
headquartered in St. Louis County,  Missouri.  First Bank currently operates 147
branch offices in California, Illinois, Missouri and Texas. At June 30, 2004, we
had total assets of $7.32 billion,  loans,  net of unearned  discount,  of $5.40
billion,  total  deposits  of $5.96  billion and total  stockholders'  equity of
$555.9 million.

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

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

                               Financial Condition

         Total assets were $7.32  billion and $7.11 billion at June 30, 2004 and
December  31,  2003,  respectively,  an  increase of 3.06%.  The $217.1  million
increase in total assets is primarily  attributable  to increases in  investment
securities and loans, net of unearned  discount,  which were primarily funded by
increases in other borrowings.  Investment  securities increased $211.9 million,
or 20.18%,  to $1.26 billion at June 30, 2004 from $1.05 billion at December 31,
2003,  reflecting  purchases of $447.8 million and maturities of $253.0 million.
Loans,  net of unearned  discount,  increased  $71.3 million to $5.40 billion at
June 30, 2004 from $5.33  billion at December 31, 2003,  and the  allowance  for
loan losses  increased to $121.0 million at June 30, 2004 from $116.5 million at
December 31, 2003, as further  discussed  under  "--Loans and Allowance for Loan
Losses." The overall  increase in total assets was  partially  offset by a $35.9
million  decline  in our  derivative  instruments  to $13.4  million  from $49.3

<PAGE>

million  due to a decline  in the fair  value of  certain  derivative  financial
instruments,  particularly  $600.0 million notional amount of interest rate swap
agreements  designated  as cash flow hedges which will mature in September  2004
and the  maturity  of  $200.0  million  notional  amount of  interest  rate swap
agreements,  as further  discussed under  "--Interest Rate Risk  Management." In
addition, other assets decreased $18.6 million to $81.5 million at June 30, 2004
from $100.1 million at December 31, 2003. This decrease primarily results from a
$9.2  million  net  decrease  in other real estate, as further  discussed  under
"--Loans and Allowance for Loan Losses," and a $2.9 million decrease in mortgage
servicing rights.

         Total deposits  reflected a slight decrease of $5.7 million,  or 0.10%,
from  December  31,  2003 to $5.96  billion at June 30,  2004.  The  decrease is
primarily  attributable  to the divestiture of two Midwest branch offices during
the first and second  quarters of 2004,  which  resulted  in a reduction  of our
deposit base of approximately  $23.4 million.  This decrease is partially offset
by an increase in deposits due to the  expansion of our banking  franchise  with
the  opening  of two de novo  branch  offices,  one in West  St.  Louis  County,
Missouri and one in Houston, Texas. In addition, our continued deposit marketing
efforts and efforts to further develop multiple account  relationships  with our
customers,  in addition to slightly  higher  deposit rates on certain  products,
have  contributed  to deposit growth despite  continued  aggressive  competition
within our market areas and an anticipated  level of attrition  associated  with
ongoing low deposit  rates.  The deposit mix reflects our  continued  efforts to
restructure  the  composition of our deposit base as the majority of our deposit
development programs are directed toward increased transaction accounts, such as
demand and savings accounts, rather than higher-yielding time deposits.

         Other borrowings increased $259.1 million to $532.5 million at June 30,
2004 from $273.5  million at  December  31,  2003.  The  increase  is  primarily
attributable  to $250.0  million of term  securities  sold under  agreements  to
repurchase that we entered into during the first and second quarters of 2004, as
further discussed in Note 9 to our Consolidated  Financial Statements.  Our note
payable was fully repaid in April 2004  through  dividends  from our  subsidiary
bank,  resulting in a decrease of $17.0  million  since  December 31, 2003.  Our
subordinated  debentures  decreased  $2.5 million to $206.8  million at June 30,
2004 from $209.3  million at  December  31,  2003.  This  decrease is  primarily
attributable  to a  decrease  in the  fair  value  of  our  interest  rate  swap
agreements  that are  designated  as fair  value  hedges and  utilized  to hedge
certain issues of our subordinated debentures. The decrease was partially offset
by the continued  amortization  of debt issuance  costs that  contributed  to an
increase in our subordinated debentures during the first six months of 2004.

         Our  deferred  income tax  liability  decreased  from $41.7  million at
December  31,  2003  to  $24.6  million  at  June  30,  2004,  and is  primarily
attributable to taxes associated with changes in our unrealized gains and losses
on  available-for-sale  investment  securities  and  changes  in our  derivative
financial instruments.

         Stockholders'  equity was $555.9 million and $549.8 million at June 30,
2004 and  December  31,  2003,  respectively,  reflecting  an  increase  of $6.1
million. The increase is primarily  attributable to net income of $44.3 million,
partially offset by a $37.8 million decrease in accumulated other  comprehensive
income. The decrease in accumulated other  comprehensive  income is comprised of
$19.1 million  associated with the change in our unrealized  gains and losses on
available-for-sale  investment  securities and $18.7 million associated with the
change in our derivative  financial  instruments.  The decrease is reflective of
changes in prevailing  interest  rates as well as a decline in the fair value of
our  derivative  financial  instruments,  specifically  associated  with  $600.0
million notional amount of our interest rate swap agreements, designated as cash
flow hedges, which will mature in September 2004.

                              Results of Operations

Net Income

         Net income was $26.0  million  and $44.3  million for the three and six
months ended June 30, 2004,  respectively,  compared to $14.7  million and $33.7
million for the comparable  periods in 2003.  Results for the three months ended
June 30, 2004 reflect increased net interest income and noninterest income and a
reduced provision for loan losses and noninterest expenses,  partially offset by
an increased  provision for income taxes.  Results for the six months ended June
30, 2004 over the  comparable  period in 2003  reflect  increased  net  interest
income  and  reduced  provisions  for  loan  losses  and  noninterest  expenses,
partially offset by a decline in noninterest  income and an increased  provision
for income taxes. Our return on average assets was 1.43% and 1.22% for the three
and six months  ended June 30, 2004,  respectively,  compared to 0.82% and 0.95%
for the comparable periods in 2003. Our return on average  stockholders'  equity
was  18.21%  and  15.72%  for the  three and six  months  ended  June 30,  2004,
respectively,  compared to 11.03% and 12.82% for the comparable periods in 2003.
Included in the first quarter of 2003 was a  nonrecurring  gain of $6.3 million,
before  applicable  income  taxes,  relating  to the  exchange  of  part  of our
investment  in Allegiant  Bancorp,  Inc.,  or  Allegiant,  for a 100%  ownership
interest in Bank of Ste. Genevieve, or BSG, located in Ste. Genevieve, Missouri.

<PAGE>

The  increase in earnings in 2004  continues  to reflect our  adaptation  to the
current  interest  rate  environment  and weak  economic  conditions  that  have
prevailed  in recent  years.  Our  ongoing  efforts  to improve  asset  quality,
maintain an  acceptable  net interest  margin in the current low  interest  rate
environment,  improve our noninterest  income and control operating expenses are
reflected in our financial  performance.  We experienced continued growth of net
interest income primarily  resulting from the earnings on our interest rate swap
agreements  that were entered into in  conjunction  with our interest  rate risk
management program to mitigate the effects of decreasing  interest rates as well
as a $63.1  million net  reduction  in our  subordinated  debentures  during the
second quarter of 2003. However,  prevailing low interest rates,  generally weak
loan demand and overall  economic  conditions  continue to exert pressure on our
net  interest  income.  Our overall  asset  quality  levels  have  substantially
improved  during  the  second  quarter  of 2004,  resulting  in a $19.1  million
reduction  in  nonperforming  assets since  December  31,  2003.  We also sold a
majority of the leases in our commercial  leasing  portfolio on June 30, 2004 to
further reduce our  outstanding  balances  within this segment of our portfolio,
consistent  with our  business  strategy  initiated  in late 2002 to reduce  our
commercial  leasing  activities.  Residual  problems in our loan  portfolio that
primarily resulted from weak economic conditions in our markets remain a primary
focus of  management  as we continue our ongoing  efforts to further  reduce our
nonperforming  asset levels. Due to economic  conditions within our markets,  we
experienced    higher-than-historical   levels   of   loan   charge-offs,   loan
delinquencies  and  nonperforming  loans in 2003, which resulted in an increased
provision for loan losses.  Although we have realized a substantial reduction in
nonperforming  assets in 2004,  we  continue  to  monitor  our loan and  leasing
portfolios and focus on asset quality and related  challenges  stemming from the
current  economic  environment,  including weak loan demand and lower prevailing
interest rates.

         Noninterest  income was $20.1  million and $40.7  million for the three
and six months ended June 30, 2004, respectively, in comparison to $18.9 million
and $44.5 million for the  comparable  periods in 2003. The decrease for the six
months ended June 30, 2004 is primarily due to a nonrecurring  $6.3 million gain
recorded in the first quarter of 2003 on the exchange of part of our  investment
in the common stock of Allegiant for a 100% ownership interest in BSG. Excluding
this  transaction,  noninterest  income for the six months  ended June 30,  2004
increased  $2.5  million,  or 6.41%,  over the  comparable  period in 2003.  The
increase is  attributable to increased  service charges on deposit  accounts and
customer service fees,  increased portfolio  management fees associated with our
institutional money management subsidiary, gains, net of expenses, recognized on
the sale of two Midwest branch  banking  offices and a decrease in losses on the
valuation or sale of certain assets, primarily related to our commercial leasing
portfolio. This increase was partially offset by reduced loan servicing fees.

         Noninterest  expense was $55.4 million and $108.0 million for the three
and six months ended June 30, 2004, respectively, in comparison to $57.5 million
and $111.1  million for the comparable  periods in 2003.  Our efficiency  ratio,
which is defined as the ratio of noninterest  expense to the sum of net interest
income and noninterest  income,  improved to 57.89% and 56.57% for the three and
six months  ended June 30,  2004,  respectively,  from 63.98% and 60.19% for the
comparable  periods in 2003.  The  decrease in  noninterest  expense  reflects a
reduction in expenses and losses, net of gains, on other real estate,  primarily
related  to a $2.7  million  gain  recorded  in  February  2004 on the sale of a
residential  and  recreational  development  property that was  foreclosed on in
January  2003,  as further  discussed  under  "--Loans  and  Allowance  for Loan
Losses." The decrease  also  reflects a reduction in  write-downs  on commercial
operating  leases as well as a decrease in occupancy and furniture and equipment
expenses,  primarily related to a lease termination  obligation  incurred in the
second quarter of 2003. The decrease in noninterest expense was partially offset
by an increase in salary and employee  benefit costs  associated  with generally
higher salary and employee benefit costs associated with employing and retaining
qualified  personnel,  offset by a decrease  in the  allocation  of direct  loan
origination  costs from salaries and benefits expense to gains on loans sold and
held for sale.  This resulted from the slowdown in the volume of mortgage  loans
originated  and sold  coupled  with an increase in the volume of mortgage  loans
originated  that we retained in our loan portfolio,  as further  discussed under
"--Loans and Allowance for Loan Losses."
<PAGE>

Net Interest Income

         Net interest income  (expressed on a tax equivalent basis) increased to
$75.9  million and $150.9  million  for the three and six months  ended June 30,
2004,  respectively,  compared  to $71.4  million  and  $140.9  million  for the
comparable  periods  in  2003,  reflecting  an  increase  of  6.35%  and  7.08%,
respectively.  Net  interest  margin  improved 13 basis  points to 4.56% for the
three months ended June 30, 2004, from 4.43% for the comparable  period in 2003.
Net interest  margin  improved 16 basis points to 4.56% for the six months ended
June 30,  2004,  from  4.40% for the  comparable  period in 2003.  We credit the
increase in net interest  income  primarily to lower rates on deposits and other
borrowings,  the earnings on our interest rate swap agreements that were entered
into in conjunction  with our interest rate risk management  program to mitigate
the  effects  of  decreasing   interest  rates,   increased  average  investment
securities  with  higher  yields  and a  $63.1  million  net  reduction  in  our
outstanding   subordinated  debentures  in  2003.  As  further  discussed  under
"--Interest Rate Risk Management," our derivative financial  instruments used to
hedge our interest rate risk contributed  $15.4 million and $31.7 million to net
interest income for the three and six months ended June 30, 2004,  respectively,
compared to $15.8 million and $30.8 million for the comparable  periods in 2003.
Average interest-earning assets increased to $6.70 billion and $6.65 billion for
the three and six months ended June 30, 2004,  respectively,  from $6.46 billion
for the three and six months  ended June 30,  2003.  The  increase is  primarily
attributable to our acquisition of BSG on March 31, 2003,  which provided assets
of $115.1 million. In addition,  the decline in prevailing interest rates led to
the early redemption of $136.3 million of subordinated debentures, issued during
1997 and 1998,  in the second  quarter of 2003 and the issuance of $73.2 million
of additional  subordinated  debentures at lower interest rates, while providing
replacement regulatory capital through the associated trust preferred securities
issued by our financing  business and statutory trusts. In March 2003, we issued
$25.8 million of subordinated  debentures to First Bank Statutory  Trust, and in
April  2003,  we  issued  $47.4  million  of  subordinated  debentures  to First
Preferred  Capital  Trust  IV.  These  transactions,  coupled  with  the  use of
additional  derivative  financial  instruments,  have  allowed  us to reduce our
overall expense associated with our subordinated debentures. However, prevailing
low interest  rates,  generally  weak loan  demand,  increased  competition  and
overall  economic  conditions  continue to exert  pressure  on our net  interest
margin.

         Average investment  securities were $1.26 billion and $1.21 billion for
the three and six months ended June 30, 2004,  respectively,  in  comparison  to
$950.7 million and $959.8 million for the comparable  periods in 2003. The yield
on our  investment  portfolio  increased  to 4.11% for the three and six  months
ended June 30, 2004,  compared to 3.68% and 3.73% for the comparable  periods in
2003,  respectively.  Funds available from  maturities of investment  securities
were used to  purchase  additional  investment  securities  during the first six
months  of  2004,  including  purchases  of  $250.0  million  of  callable  U.S.
Government  agency  securities.  These  securities  represented  the  underlying
securities  associated with $250.0 million, in aggregate,  of three-year reverse
repurchase agreements under a master repurchase agreement that we consummated in
the first and second  quarters of 2004,  as further  described  in Note 9 to our
Consolidated Financial Statements.

         Average loans, net of unearned  discount,  were $5.38 billion and $5.35
billion for the three and six months ended June 30, 2004, respectively, compared
to  $5.39  billion  and  $5.38  billion  for the  comparable  periods  in  2003,
reflecting decreases of $19.5 million and $23.1 million, respectively. The yield
on our loan portfolio  decreased to 6.27% and 6.32% for the three and six months
ended  June  30,  2004,  respectively,  compared  to  6.68%  and  6.77%  for the
comparable  periods in 2003. We attribute the decline in the average balance and
yields primarily to increased competition and general economic conditions within
our market  areas  resulting  in  continued  weak loan demand and  decreases  in
prevailing  interest  rates.  The reduced level of interest income earned on our
loan  portfolio  was  partially  mitigated by the earnings  associated  with our
interest  rate  swap   agreements.   Mortgage   loans  held  for  sale  declined
approximately  $162.8  million due to a slowdown in overall  loan  volumes  that
began in the fourth quarter of 2003 as well as  management's  business  strategy
decision  in  mid-2003  to retain a portion  of new  residential  mortgage  loan
production  in our  portfolio  to offset  continued  weak  loan  demand in other
sectors of our loan  portfolio.  This  decision  contributed  to an  increase in
average  real  estate  mortgage  loan  volumes  retained  in  our  portfolio  of
approximately  $147.8 million.  Average real estate construction and development
loans increased  approximately  $80.7 million  primarily as a result of seasonal
increases  on existing and  available  credit  lines.  Average  lease  financing
volumes  decreased  approximately  $64.7 million  primarily  resulting  from our
business  strategy  initiated  in late 2002 to  reduce  our  commercial  leasing
activities and the sale of a significant  portion of the remaining leases in our
commercial  leasing  portfolio in June 2004, as further discussed under "--Loans
and Allowance for Loan Losses."
<PAGE>

         Average  deposits  decreased to $6.01 billion and $6.00 billion for the
three and six months ended June 30, 2004,  respectively,  from $6.05 billion and
$6.07 billion for the  comparable  periods in 2003. For the three and six months
ended June 30, 2004,  the  aggregate  weighted  average rate paid on our deposit
portfolio  decreased 36 basis  points and 45 basis  points to 1.36%,  and 1.37%,
respectively, compared to 1.72% and 1.82% for the comparable periods in 2003. We
attribute  the decline in rates paid  primarily to rates paid on our savings and
time deposits,  which have continued to decline in conjunction with the interest
rate reductions  previously  discussed.  The earnings associated with certain of
our  interest  rate  swap  agreements  designated  as  fair  value  hedges  also
contributed  to the  reduction  in  deposit  rates  paid on our  time  deposits.
However, the continued  competitive  pressures on our deposit pricing within our
market  areas  precluded  us from fully  reflecting  the general  interest  rate
decreases  in our deposit  pricing  while still  providing  an adequate  funding
source for our loan  portfolio.  The change in average  deposit mix reflects our
continued  efforts to  restructure  the  composition  of our deposit base as the
majority of our deposit  development  programs  are  directed  toward  increased
transactional  accounts,  such as demand and savings accounts,  rather than time
deposits,  and  emphasize  attracting  more than one account  relationship  with
customers.  Average demand and savings  deposits  increased to $4.07 billion and
$4.06  billion for the three and six months ended June 30,  2004,  respectively,
from $3.98 billion and $3.96 billion for the comparable periods in 2003. Average
total time  deposits  decreased to $1.93 billion and $1.94 billion for the three
and six months ended June 30, 2004,  respectively,  from $2.07 billion and $2.11
billion for the comparable periods in 2003.

         Average other borrowings increased to $439.1 million and $413.9 million
for the three and six months  ended June 30,  2004,  respectively,  compared  to
$173.1  million  and $177.2  million  for the  comparable  periods in 2003.  The
aggregate weighted average rate paid on our other borrowings was 0.69% and 0.68%
for the three and six months  ended June 30,  2004,  respectively,  compared  to
1.20% and 1.28% for the comparable periods in 2003, reflecting reductions in the
current interest rate  environment.  The increase in average other borrowings is
primarily   attributable  to  $250.0  million  of  term  securities  sold  under
agreements to repurchase that we consummated during 2004 as further described in
Note 9 to our Consolidated Financial Statements.

         The aggregate weighted average rate paid on our note payable was 23.66%
and 7.20%  for the  three and six  months  ended  June 30,  2004,  respectively,
compared to 52.36% and 17.44% for the comparable  periods in 2003. The unusually
high weighted average rates paid reflect commitment,  arrangement and other fees
paid on our secured credit  agreement.  Amounts  outstanding under our revolving
line of credit with a group of unaffiliated financial institutions bear interest
at the  lead  bank's  corporate  base  rate or,  at our  option,  at the  London
Interbank Offering Rate plus a margin determined by the outstanding  balance and
our profitability for the preceding four calendar quarters.  Thus, our revolving
credit line  represents  a  relatively  high-cost  funding  source as  increased
advances have the effect of increasing the weighted  average rate of non-deposit
liabilities. However, the borrowing level for these periods has been minimal.

         Average subordinated  debentures were $209.0 million and $210.0 million
for the three and six months  ended June 30,  2004,  respectively,  compared  to
$295.8  million  and $288.9  million  for the  comparable  periods in 2003.  The
aggregate  weighted average rate paid on our  subordinated  debentures was 6.79%
and 6.77% for the three and six months  ended June 30, 2004,  respectively,  and
7.07% and 7.53% for the  comparable  periods  in 2003.  Interest  expense on our
subordinated  debentures was $3.5 million and $7.1 million for the three and six
months  ended June 30,  2004,  respectively,  compared to $5.2 million and $10.8
million  for the  comparable  periods  in 2003.  As  previously  discussed,  the
decrease  for 2004  primarily  reflects  the  redemption  of $136.3  million  of
subordinated  debentures  and the  issuance  of $73.2  million  of  subordinated
debentures  at lower  interest  rates,  as well as the  earnings  impact  of our
interest rate swap agreements as further  discussed under  "--Interest Rate Risk
Management."



<PAGE>


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

                                             Three Months Ended June 30,                        Six Months Ended June 30,
                                --------------------------------------------------- -----------------------------------------------
                                           2004                       2003                     2004                   2003
                                -------------------------- ------------------------ ------------------------ ----------------------
                                            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).......... $5,375,102 83,861  6.27% $5,394,650 89,803  6.68% $5,354,228 168,189 6.32% $5,377,314 180,540  6.77%
   Investment securities (4)...  1,263,191 12,894  4.11     950,672  8,734  3.68   1,208,927  24,725 4.11     959,786  17,732  3.73
   Federal funds sold
      and other................     58,164    137  0.95     111,365    312  1.12      90,461     423 0.94     127,416     754  1.19
                                 --------- ------        ---------- ------        ---------- -------       ---------- -------
        Total interest-earning
          assets...............  6,696,457 96,892  5.82   6,456,687 98,849  6.14   6,653,616 193,337 5.84   6,464,516 199,026  6.21
                                           ------                   ------                   -------                  -------
Nonearning assets..............    631,260                  712,851                  641,890                  717,658
                                ----------               ----------               ----------               ----------
        Total assets........... $7,327,717               $7,169,538               $7,295,506               $7,182,174
                                ==========               ==========               ==========               ==========

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

Interest-bearing liabilities:
   Interest-bearing deposits:
     Interest-bearing demand
       deposits................ $  854,874    824  0.39% $  866,540  1,478  0.68% $  861,793   1,791 0.42% $  853,487   3,151  0.74%
     Savings deposits..........  2,143,816  4,593  0.86   2,115,298  5,785  1.10   2,152,863   9,370 0.88   2,141,369  12,571  1.18
     Time deposits of $100
       or more (3).............    459,164  3,039  2.66     418,893  3,336  3.19     448,791   5,995 2.69     438,131   7,021  3.23
     Other time deposits (3)...  1,474,899  8,173  2.23   1,654,476 11,088  2.69   1,489,267  16,660 2.25   1,672,850  23,282  2.81
                                ---------- ------        ---------- ------        ---------- -------       ---------- -------
        Total interest-bearing
          deposits.............  4,932,753 16,629  1.36   5,055,207 21,687  1.72   4,952,714  33,816 1.37   5,105,837  46,025  1.82
   Other borrowings............    439,070    757  0.69     173,068    519  1.20     413,932   1,401 0.68     177,247   1,121  1.28
   Note payable (5)............      1,088     64 23.66         383     50 52.36       4,717     169 7.20       2,151     186 17.44
   Subordinated debentures (3).    209,036  3,529  6.79     295,788  5,212  7.07     209,963   7,067 6.77     288,851  10,787  7.53
                                ---------- ------        ---------- ------        ---------- -------       ---------- -------
        Total interest-bearing
          liabilities..........  5,581,947 20,979  1.51   5,524,446 27,468  1.99   5,581,326  42,453 1.53   5,574,086  58,119  2.10
                                           ------                   ------                   -------                  -------
Noninterest-bearing liabilities:
   Demand deposits.............  1,073,988                  994,395                1,047,866                  960,771
   Other liabilities...........     97,585                  116,351                   99,955                  116,621
                                ----------               ----------               ----------               ----------
        Total liabilities......  6,753,520                6,635,192                6,729,147                6,651,478
Stockholders' equity...........    574,197                  534,346                  566,359                  530,696
                                ----------               ----------               ----------               ----------
        Total liabilities and
          stockholders' equity. $7,327,717               $7,169,538               $7,295,506               $7,182,174
                                ==========               ==========               ==========               ==========

Net interest income............            75,913                   71,381                   150,884                  140,907
                                           ======                   ======                   =======                  =======
Interest rate spread...........                    4.31                     4.15                     4.31                      4.11
Net interest margin (6)........                    4.56%                    4.43%                    4.56%                     4.40%
                                                  =====                    =====                    =====                     =====
--------------------
(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
    $307,000 and $625,000 for the three and six months ended June 30, 2004, and  $368,000 and $731,000 for the comparable periods in
    2003, respectively.
(5) Interest expense on the note payable includes commitment, arrangement and renewal fees.
(6) Net interest margin is the ratio of net interest income  (expressed on  a  tax-equivalent  basis)  to  average  interest-earning
    assets.

</TABLE>

<PAGE>


Provision for Loan Losses

         The  provision  for loan losses was $3.0 million and $15.8  million for
the three and six months  ended June 30, 2004,  respectively,  compared to $10.0
million  and  $21.0  million  for the  comparable  periods  in  2003.  Net  loan
charge-offs  were $5.4  million  and $10.8  million for the three and six months
ended June 30, 2004,  respectively,  compared to $10.8 million and $13.3 million
for the  comparable  periods in 2003. In 2003,  we continued to  experience  the
higher level of problem  loans and related loan  charge-offs  and past due loans
that we began  to  experience  in early  2002.  This  was a result  of  economic
conditions  within  our  markets,  additional  problems  identified  in  certain
acquired loan portfolios and continuing  deterioration in our commercial leasing
portfolio,  particularly  the segment of the  portfolio  relating to the airline
industry.  These factors  necessitated higher provisions for loan losses than in
prior periods.  The reduced provision during the second quarter of 2004 resulted
from an overall  improvement  in asset quality and a reduction in  nonperforming
loans,  primarily resulting from significant loan payoffs.  Nonperforming assets
were $67.4 million at June 30, 2004, reflecting a substantial decline from $90.2
million at March 31, 2004,  $86.5 million at December 31, 2003 and $83.2 million
at June 30, 2003.  The decrease in  nonperforming  assets during 2004  primarily
reflects transactions  associated with three significant customer relationships:
(a) the sale of a residential  and  recreational  development  property that was
foreclosed  on  in  January  2003  with  a  carrying   value  of  $9.2  million,
representing  approximately  83.0% of total other real estate assets at the time
of sale;  (b) a $13.9 million  commercial  credit  relationship  in the southern
California  region that had been downgraded to nonaccrual  status in March 2004,
for which a $3.9  million  charge-off  and a $10.0  million  cash  payment  were
recorded in the second  quarter of 2004;  and (c) the sale of a $7.3 million St.
Louis region commercial  credit  relationship in the second quarter of 2004 that
had been on nonaccrual status, as further discussed under "--Loans and Allowance
for Loan Losses." Our  allowance for loan losses was $121.0  million at June 30,
2004,  compared to $124.9 million at March 31, 2004,  $116.5 million at December
31, 2003 and $107.8 million at June 30, 2003.  Management expects  nonperforming
loans  to  remain  at  somewhat  elevated  levels  throughout  most of 2004  and
considers  this in its overall  assessment  of the adequacy of the allowance for
loan losses.

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

Noninterest Income

         Noninterest  income was $20.1  million and $40.7  million for the three
and six months ended June 30, 2004, respectively, in comparison to $18.9 million
and  $44.5  million  for the  comparable  periods  in 2003.  Noninterest  income
consists  primarily of service charges on deposit  accounts and customer service
fees,  mortgage-banking  revenues,  net  gains on  sales  of  available-for-sale
investment securities,  investment income on bank owned life insurance and other
miscellaneous  income. The reduction experienced in the first six months of 2004
is primarily  attributable  to a $6.3 million gain recorded in March 2003 on the
exchange of common stock of Allegiant,  as further  discussed  below.  Excluding
this nonrecurring  transaction in the first quarter of 2003,  noninterest income
for the three and six months  ended June 30, 2004  increased  $1.2  million,  or
6.23%, and $2.5 million, or 6.41%, respectively,  from the comparable periods in
2003.

         Service charges on deposit accounts and customer service fees were $9.8
million  and $18.7  million  for the three and six months  ended June 30,  2004,
respectively, in comparison to $9.0 million and $17.6 million for the comparable
periods in 2003.  The increase in service  charges and customer  service fees is
primarily  attributable  to  increased  demand  deposit  account  balances,  our
acquisition  of BSG  completed in March 2003,  additional  products and services
available and utilized by our retail and commercial customers,  and increases in
non-sufficient  fund and  returned  check fee rates  that  became  effective  in
December 2003.

         The gain on mortgage  loans sold and held for sale was $4.0 million and
$8.2 million for the three and six months ended June 30, 2004, respectively,  in
comparison to $3.6 million and $8.1 million for the comparable  periods in 2003.
The  slowdown  in the  volume of  mortgage  loans  originated  and sold that was
initially  experienced  in the  fourth  quarter  of  2003  continued  into  2004
resulting in reduced gains on mortgage loans sold and held for sale.  However, a
decrease in the  allocation of direct loan  origination  costs from salaries and
benefits  as a result  of a change in the  fallout  percentage  resulted  in the
overall net increase for the periods noted.  The fallout  percentage  represents
the  percentage  of the  number of loan  applications  that do not result in the
ultimate  origination of a loan divided by the total number of loan applications
received.

         In March 2003,  we  recorded a $6.3  million  nonrecurring  gain on the
exchange of 974,150  shares of our Allegiant  common stock for a 100%  ownership
interest  in BSG.  There  were  no net  gains  on  sales  of  available-for-sale
investment securities for the six months ended June 30, 2004.
<PAGE>
         Gains,  net of  expenses,  on the sale of two  Midwest  branch  banking
offices totaled $1.0 million for the six months ended June 30, 2004.  There were
no sales of  branch  banking  offices  for the  comparable  period  in 2003.  On
February 6, 2004, we sold one of our Missouri branch banking offices,  resulting
in a $390,000  gain, net of expenses,  upon  consummation  of this  transaction.
Additionally,  on April 16, 2004, we sold one of our Illinois  banking  offices,
resulting  in a  $630,000  gain,  net  of  expenses,  upon  consummation  of the
transaction.

         Other income was $4.4  million and $10.1  million for the three and six
months ended June 30, 2004, respectively, in comparison to $4.6 million and $9.4
million for the comparable  periods in 2003. We attribute the primary components
of the fluctuations in 2004 to:

         >>    increased  portfolio   management  fee  income  of  $1.1  million
               associated with our Institutional Money Management division;

         >>    a net  decrease  in losses on the  valuation  or sale of  certain
               assets of $694,000,  primarily related to our commercial  leasing
               portfolio.  Net  losses  for 2004 were  $438,000  and  included a
               $750,000   write-down  on   repossessed   jet  engine   equipment
               associated with our commercial  leasing business.  Net losses for
               2003 of $1.1  million  primarily  related to the  disposition  of
               fixed assets,  including  approximately $419,000 in losses on the
               disposal of leasing equipment;

         >>    an increase in income  associated  with standby letters of credit
               of $431,000;

         >>    an increase of $408,000 in fees from fiduciary activities; and

         >>    our acquisition of BSG completed during 2003; partially offset by

         >>    net losses on  derivative  instruments  in 2004  compared  to net
               gains on derivative instruments in 2003 resulting from changes in
               the fair value of our interest  rate cap  agreements,  fair value
               hedges  and  underlying   hedged   liabilities.   Net  losses  on
               derivative  instruments  were $487,000 and $455,000 for the three
               and six months ended June 30, 2004, respectively, compared to net
               gains on derivative  instruments of $419,000 and $426,000 for the
               comparable periods in 2003;

         >>    a decline of $503,000 in loan servicing fees. The net decrease is
               primarily  attributable  to  increased  amortization  of mortgage
               servicing rights,  offset by a lower level of interest  shortfall
               and an increase in fees from loans serviced for others.  Interest
               shortfall is the difference between the interest collected from a
               loan-servicing  customer  upon  prepayment of the loan and a full
               month's  interest that is required to be remitted to the security
               owner;

         >>    a decline  of  $465,000  in  rental  income  associated  with our
               reduced commercial leasing activities; and

         >>    a decline of $148,000 in brokerage revenue  primarily  associated
               with overall market conditions and reduced customer demand.

Noninterest Expense

         Noninterest  expense was $55.4 million and $108.0 million for the three
and six months ended June 30, 2004, respectively, in comparison to $57.5 million
and $111.1  million for the comparable  periods in 2003.  Our  efficiency  ratio
improved to 57.89% and 56.57% for the three and six months  ended June 30, 2004,
respectively,  from 63.98% and 60.19% for the  comparable  periods in 2003.  The
decrease in  noninterest  expense  primarily  reflects a decline in expenses and
losses,  net of gains,  on other real estate owned and a decrease in write-downs
on various  operating leases  associated with our commercial  leasing  business,
partially offset by an increase in salaries and employee benefits expense. These
expenses and losses are included in other expense in our consolidated statements
of income as further discussed below.

         Salaries and employee benefits were $28.2 million and $55.9 million for
the three and six months ended June 30, 2004,  respectively,  in  comparison  to
$25.0 million and $48.3 million for the comparable periods in 2003. We attribute
the overall increase to increased  salary and benefit  expenses  associated with
our acquisition of BSG in 2003 and generally  higher salary and employee benefit
costs associated with employing and retaining qualified personnel.  The increase
is also attributable to a lower allocation of direct loan origination costs from
salaries and benefits  expense to gains on mortgage loans sold and held for sale
due to a  slowdown  in  the  volume  of  mortgage  loans  originated  and  sold,
management's decision to retain a portion of new mortgage loan production in our
real  estate  mortgage  portfolio  in  mid-2003  and a  change  in  the  fallout
percentage associated with the allocation.
<PAGE>

         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $8.7  million and $17.8  million for the three and six months ended June
30, 2004, respectively, in comparison to $10.1 million and $19.6 million for the
comparable periods in 2003. The decrease is partially  attributable to decreased
rent expense  associated with various lease  terminations  in 2003,  including a
$1.0 million lease termination obligation recorded in the second quarter of 2003
associated with the relocation of our San  Francisco-based  loan  administration
department to southern  California  and a $200,000  lease buyout on a California
branch facility  recorded in the first quarter of 2003.  However,  these overall
expenses   remain  at  relatively   higher  levels  and  are   attributable   to
acquisitions,  technology  expenditures for equipment,  continued  expansion and
renovation of various corporate and branch offices and the relocation of certain
branches and operational areas.

         Information technology fees were $8.0 million and $16.0 million for the
three and six months ended June 30, 2004,  respectively,  in  comparison to $8.4
million and $16.4  million  for the  comparable  periods in 2003.  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  operational  support
services to our  subsidiaries  and us. We attribute  the level of fees to growth
and  technological   advancements   consistent  with  our  product  and  service
offerings, continued expansion and upgrades to technological equipment, networks
and communication channels, offset by expense reductions resulting from the data
processing  conversion of BSG completed in 2003 and the  achievement  of certain
efficiencies associated with the implementation of certain technology projects.

         Legal,  examination  and  professional  fees were $1.7 million and $3.3
million  for the three and six months  ended  June 30,  2004,  respectively,  in
comparison to $2.2 million and $3.8 million for the comparable  periods in 2003.
The  continued   expansion  of  overall   corporate   activities,   the  ongoing
professional  services  utilized  by  certain  of  our  acquired  entities,  and
increased legal fees associated with commercial loan  documentation,  collection
efforts and certain defense  litigation costs related to acquired  entities have
all  contributed  to the overall  expense  levels in 2003 and 2004.  The overall
decrease in these fees in 2004 is  primarily  associated  with higher legal fees
paid in 2003 related to an ongoing lawsuit that reached final  resolution in the
second quarter of 2004.

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was  $658,000  and $1.3 million for the three and six months ended
June 30, 2004, respectively,  in comparison to $658,000 and $1.2 million for the
comparable  periods in 2003.  The  increase  for the first six months of 2004 is
solely attributable to core deposit intangibles  associated with our acquisition
of BSG in March 2003.

         Communications  and  advertising  and  business   development  expenses
remained  consistent  at $1.7  million  and $3.5  million  for the three and six
months  ended June 30,  2004,  respectively,  compared to $1.6  million and $3.5
million for the  comparable  periods in 2003.  We continue our efforts to manage
these expenses through renegotiation of contracts, enhanced focus on advertising
and promotional  activities in markets that offer greater  benefits,  as well as
ongoing cost containment efforts.  The recent expansion of our sales,  marketing
and product  group is  expected  to  contribute  to higher  expenditures  and is
consistent with our continued  focus on expanding our banking  franchise and the
products and services available to our customers.

         Other  expense was $5.2  million and $7.8 million for the three and six
months  ended June 30, 2004,  respectively,  in  comparison  to $8.4 million and
$15.8 million for the  comparable  periods in 2003.  Other  expense  encompasses
numerous  general  and  administrative  expenses  including  travel,  meals  and
entertainment,  insurance,  freight and  courier  services,  correspondent  bank
charges,  miscellaneous  losses and  recoveries,  expenses  on other real estate
owned,  memberships and subscriptions,  transfer agent fees and sales taxes. The
decrease is primarily attributable to:

         >>    a decrease of $4.6  million on  expenditures  and losses,  net of
               gains, on other real estate. In February 2004, we recorded a $2.7
               million  gain  on the  sale  of a  residential  and  recreational
               development property that was transferred to other real estate in
               January 2003, as further  discussed  under "--Loans and Allowance
               for Loan  Losses,"  as well as  approximately  $390,000  in gains
               recorded  on the sale of two  additional  holdings  of other real
               estate.  Net  expenditures on other real estate for the first six
               months  of  2003  were  $1.5  million  and   primarily   included
               expenditures associated with the operation of the residential and
               recreational  development property that was sold in February 2004
               as well as a $200,000  expenditure  associated  with an unrelated
               residential   real  estate  property   located  in  the  northern
               California region; and

         >>    a $3.6  million  decrease  in  write-downs  on various  operating
               leases associated with our commercial leasing business, primarily
               as a result of reductions in estimated  residual values.  For the
               first six months of 2004,  we recorded  write-downs  of $187,000,
               compared  to $3.7  million  for the  comparable  period  in 2003;
               partially offset by
<PAGE>

         >>    expenses  associated with our acquisition  completed during 2003;
               and

         >>    continued growth and expansion of our banking franchise.

Provision for Income Taxes

         The  provision for income taxes was $11.3 million and $22.9 million for
the three and six months ended June 30, 2004,  respectively,  in  comparison  to
$7.7 million and $18.8 million for the comparable periods in 2003. The effective
tax rate was 30.30% and 34.08% for the three and six months ended June 30, 2004,
respectively,  in comparison to 34.35% and 35.77% for the comparable  periods in
2003.  The decrease in the effective tax rate is primarily  attributable  to the
reversal of a $2.8 million tax reserve that was no longer deemed  necessary as a
result  of  the  resolution  of  a  potential  tax  liability.   Excluding  this
transaction,  the effective tax rate was 37.80% and 38.25% for the three and six
months ended June 30, 2004,  reflecting  higher taxable income and the merger of
our two bank  charters on March 31, 2003,  which has resulted in higher  taxable
income allocations in states where we file separate state tax returns.

                          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 instruments we
held as of June 30, 2004 and December 31, 2003 are summarized as follows:
<TABLE>
<CAPTION>

                                                                      June 30, 2004             December 31, 2003
                                                                ------------------------    ------------------------
                                                                  Notional      Credit       Notional       Credit
                                                                   Amount      Exposure       Amount       Exposure
                                                                   ------      --------       ------       --------
                                                                            (dollars expressed in thousands)

<S>                                                             <C>              <C>        <C>               <C>
         Cash flow hedges.....................................  $1,100,000       2,825      1,250,000         2,857
         Fair value hedges....................................     276,200      10,992        326,200        12,614
         Interest rate cap agreements.........................     450,000          --        450,000            --
         Interest rate lock commitments.......................      13,800          --         15,500            --
         Forward commitments to sell
           mortgage-backed securities.........................      42,000          --         58,500            --
                                                                ==========      ======      =========       =======
</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.

         During the three and six months  ended June 30,  2004,  we realized net
interest  income on our  derivative  financial  instruments of $15.4 million and
$31.7  million,  respectively,  in comparison to $15.8 million and $30.8 million
for the comparable  periods in 2003. The increase is primarily  attributable  to
interest  income  associated with the additional swap agreements that we entered
into  during  March,  April and July 2003 as well as the  continued  decline  in
prevailing  interest  rates  in 2003.  We  recorded  net  losses  on  derivative
instruments,  which are  included  in  noninterest  income  in our  consolidated
statements  of income,  of $487,000  and  $455,000  for the three and six months
ended June 30, 2004,  respectively,  in  comparison  to net gains on  derivative
instruments  of $419,000 and $426,000 for the  comparable  periods in 2003.  The
decrease in 2004  reflects  changes in the fair value of our  interest  rate cap
agreements, fair value hedges and the underlying hedged liabilities.

Cash Flow Hedges

         During  September  2000,  March 2001,  April 2001,  March 2002 and July
2003, we entered into interest rate swap  agreements of $600.0  million,  $200.0
million,  $175.0  million,  $150.0 million and $200.0 million  notional  amount,
respectively,  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.  The  underlying  hedged  assets are certain  loans within our
commercial loan portfolio.  The swap  agreements,  which have been designated as
cash flow hedges,  provide for us to receive a fixed rate of interest and pay an
adjustable  rate of interest  equivalent  to the weighted  average prime lending
rate minus 2.70%, 2.82%, 2.82%, 2.80% and 2.85%, respectively.  The terms of the
swap agreements provide for us to pay and receive interest on a quarterly basis.
In November  2001,  we  terminated  $75.0  million  notional  amount of the swap
agreements  originally  entered into in April 2001,  which would have expired in
April  2006,  in order to  appropriately  modify our overall  hedge  position in
accordance  with our interest rate risk  management  program.  In addition,  the
$150.0 million notional amount swap agreement that we entered into in March 2002

<PAGE>

matured on March 14, 2004. The amount receivable by us under the swap agreements
was $3.8  million  and $3.9  million at June 30,  2004 and  December  31,  2003,
respectively,  and the  amount  payable  by us  under  the swap  agreements  was
$967,000 and $1.1 million at June 30, 2004 and December 31, 2003, 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, 2004 and December 31, 2003 were as follows:
<TABLE>
<CAPTION>

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

         June 30, 2004:
<S>                                                            <C>               <C>           <C>       <C>
             September 20, 2004..............................  $  600,000        1.30%         6.78%     $   6,742
             March 21, 2005..................................     200,000        1.18          5.24          4,556
             April 2, 2006...................................     100,000        1.18          5.45          4,029
             July 31, 2007...................................     200,000        1.15          3.08         (3,873)
                                                               ----------                                ---------
                                                               $1,100,000        1.24          5.71      $  11,454
                                                               ==========       =====         =====      =========

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

Fair Value Hedges

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

         >>    During  January  2001,  we entered  into $50.0  million  notional
               amount of  three-year  interest rate swap  agreements  and $150.0
               million   notional   amount  of  five-year   interest  rate  swap
               agreements  that  provide  for us to  receive  a  fixed  rate  of
               interest and pay an adjustable rate of interest equivalent to the
               three-month London Interbank Offering Rate. The underlying hedged
               liabilities  are a portion of our other time deposits.  The terms
               of the  swap  agreements  provide  for us to  pay  interest  on a
               quarterly basis and receive  interest on a semiannual  basis. The
               amount  receivable  by us  under  the  swap  agreements  was $3.9
               million and $5.2  million at June 30, 2004 and December 31, 2003,
               respectively,  and  the  amount  payable  by us  under  the  swap
               agreements  was  $375,000  and  $537,000  at June  30,  2004  and
               December  31,  2003,   respectively.   In  September   2003,   we
               discontinued  hedge  accounting  treatment  on the $50.0  million
               notional  amount of three-year  swap  agreements  entered into in
               January  2001  due to the  loss of our  highly  correlated  hedge
               positions  between the swap agreements and the underlying  hedged
               liabilities.   Consequently,   the  related  $1.3  million  basis
               adjustment of the underlying hedged liabilities was recorded as a
               reduction of interest expense over the remaining weighted average
               maturity of the underlying hedged liabilities. This $50.0 million
               notional swap agreement matured in January 2004.

         >>    During May 2002, we entered into $55.2 million notional amount of
               interest  rate swap  agreements  that provide for us to receive a
               fixed rate of  interest  and pay an  adjustable  rate of interest
               equivalent to the three-month London Interbank Offering Rate plus
               2.30%.  During June 2002, we entered into $86.3 million and $46.0
               million  notional  amount,  respectively,  of interest  rate swap
               agreements  that  provide  for us to  receive  a  fixed  rate  of
               interest and pay an adjustable rate of interest equivalent to the
               three-month  London Interbank Offering Rate plus 2.75% and 1.97%,
               respectively.  The underlying hedged liabilities are a portion of
               our  subordinated  debentures.  The terms of the swap  agreements
               provide for us to pay and receive  interest on a quarterly basis.
               There  were no  amounts  receivable  or payable by us at June 30,
               2004 or December  31, 2003.  The $86.3  million  notional  amount
               interest rate swap  agreement was called by its  counterparty  in
               November  2002  resulting  in  final   settlement  of  this  swap
               agreement  in  December  2002.  In  addition,  the $46.0  million
               notional  amount  interest rate swap  agreement was called by its
               counterparty  on May 14, 2003  resulting in final  settlement  of
               this swap  agreement on June 30, 2003.  There was no gain or loss
               recorded as a result of these transactions.
<PAGE>

         >>    During March 2003 and April 2003,  we entered into $25.0  million
               and $46.0 million notional amount, respectively, of interest rate
               swap  agreements  that  provide for us to receive a fixed rate of
               interest and pay an adjustable rate of interest equivalent to the
               three-month  London Interbank Offering Rate plus 2.55% and 2.58%,
               respectively.  The underlying hedged liabilities are a portion of
               our  subordinated  debentures.  The terms of the swap  agreements
               provide for us to pay and receive  interest on a quarterly basis.
               There  were no  amounts  receivable  or payable by us at June 30,
               2004 or December 31, 2003.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our interest  rate swap  agreements  designated  as fair value
hedges as of June 30, 2004 and December 31, 2003 were as follows:
<TABLE>
<CAPTION>

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

         June 30, 2004:
<S>                                                             <C>              <C>           <C>        <C>
             January 9, 2006..................................  $ 150,000        1.14%         5.51%      $  6,096
             December 31, 2031................................     55,200        3.41          9.00          1,246
             March 20, 2033...................................     25,000        3.66          8.10         (1,944)
             June 30, 2033....................................     46,000        3.69          8.15         (3,502)
                                                                ---------                                 --------
                                                                $ 276,200        2.25          6.88       $  1,896
                                                                =========       =====         =====       ========

         December 31, 2003:
             January 9, 2004 (1)..............................  $  50,000        1.15%         5.37%      $     --
             January 9, 2006..................................    150,000        1.15          5.51          9,932
             December 31, 2031................................     55,200        3.44          9.00          2,499
             March 20, 2033...................................     25,000        3.69          8.10         (1,270)
             June 30, 2033....................................     46,000        3.72          8.15         (2,008)
                                                                ---------                                 --------
                                                                $ 326,200        2.10          6.65       $  9,153
                                                                =========       =====         =====       ========
             ---------------
             (1)Hedge accounting treatment was discontinued in September 2003 as further discussed above.
</TABLE>

Interest Rate Cap Agreements

         In  conjunction  with our interest rate swap  agreements  designated as
cash flow hedges that mature in  September  2004,  we also  entered  into $450.0
million  notional amount of four-year  interest rate cap agreements to limit the
net interest  expense  associated  with our interest rate swap agreements in the
event of a rising rate scenario. The interest rate cap agreements provide for us
to  receive  a  quarterly   adjustable  rate  of  interest   equivalent  to  the
differential  between the  three-month  London  Interbank  Offering Rate and the
strike price of 7.50% should the  three-month  London  Interbank  Offering  Rate
exceed the strike  price.  At June 30, 2004 and December 31, 2003,  the carrying
value of these  interest  rate cap  agreements,  which is included in derivative
instruments in the consolidated balance sheets, was zero.

Pledged Collateral

         At June 30, 2004 and December 31, 2003, we had a $5.0 million letter of
credit  issued on our  behalf to the  counterparty  and had  pledged  investment
securities  available  for sale with a carrying  value of $231,000 and $229,000,
respectively,  in connection with our interest rate swap agreements. At June 30,
2004 and December 31,  2003,  we had pledged cash of $5.1 million and  $700,000,
respectively,   as  collateral  in  connection   with  our  interest  rate  swap
agreements.  At June 30, 2004 and  December 31,  2003,  we had accepted  cash of
$15.9 million and $51.3 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.  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.



<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 were 86.7% and 87.2% of
total  interest  income  for the  three  and six  months  ended  June 30,  2004,
respectively,  in  comparison to 91.1% and 90.9% for the  comparable  periods in
2003. Total loans, net of unearned discount,  increased $71.3 million, or 1.34%,
to $5.40 billion,  or 73.7% of total assets, at June 30, 2004, compared to $5.33
billion,  or 75.0% of total assets, at December 31, 2003. The continued low loan
demand from our  commercial  customers  during  2004,  indicative  of  increased
competition and the current  economic  conditions  prevalent  within most of our
markets,  contributed to a modest increase in total loans.  The overall increase
in loans, net of unearned discount, is primarily attributable to:

         >>    an increase of $119.5 million in our real estate construction and
               development portfolio resulting primarily from seasonal increases
               on existing and available credit lines;

         >>    an  increase  of  $23.6  million  in  our  real  estate  mortgage
               portfolio   primarily   associated  with  management's   business
               strategy decision in mid 2003 to retain a portion of the new loan
               production  in our  real  estate  mortgage  portfolio  to  offset
               continued   weak  loan  demand  in  other  sectors  of  our  loan
               portfolio; and

         >>    an  increase  of $19.2  million in loans held for sale  resulting
               from the timing of loan sales in the secondary  mortgage  market,
               offset  by  a  combination  of  management's   business  strategy
               decision in  mid-2003 to retain a portion of the new  residential
               mortgage loan  production in our portfolio,  as discussed  above,
               and an overall slowdown in loan origination  volumes  experienced
               during the  fourth  quarter of 2003 and  continuing  through  the
               first six months of 2004; partially offset by

         >>    a decrease  of $16.0  million in our  commercial,  financial  and
               agricultural  portfolio,  primarily  related  to two  significant
               commercial credits as further discussed below;

         >>    a  decrease  of $57.7  million in our lease  financing  portfolio
               primarily resulting from the sale of a significant portion of our
               commercial   leasing   portfolio,   reducing  the   portfolio  by
               approximately $33.1 million to $9.6 million on June 30, 2004; the
               remaining   decline   in   balance   was   consistent   with  the
               discontinuation  of our New Mexico based leasing operation during
               2002,  the  transfer  of all  responsibilities  for the  existing
               portfolio  to a new leasing  staff in St.  Louis,  Missouri and a
               change in our  overall  business  strategy  resulting  in reduced
               commercial leasing activities; and

         >>    a decrease of $17.3  million in  consumer  and  installment  loan
               volumes,  reflecting  the continued  decline of new loans and the
               repayment of principal on our existing portfolio  consistent with
               our objectives of  de-emphasizing  consumer lending and expanding
               commercial lending.



<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, 2004 and December 31, 2003:
<TABLE>
<CAPTION>

                                                                                   June 30,        December 31,
                                                                                     2004              2003
                                                                                     ----              ----
                                                                                (dollars expressed in thousands)

         Commercial, financial and agricultural:
<S>                                                                              <C>                  <C>
              Nonaccrual.....................................................    $    19,592          26,876
         Real estate construction and development:
              Nonaccrual.....................................................          7,560           6,402
         Real estate mortgage:
           One-to-four family residential:
              Nonaccrual.....................................................         16,864          21,611
              Restructured...................................................             12              13
           Multi-family residential loans:
              Nonaccrual.....................................................            138             804
           Commercial real estate loans:
              Nonaccrual.....................................................         17,925          13,994
         Lease financing:
              Nonaccrual.....................................................          3,167           5,328
         Consumer and installment:
              Nonaccrual.....................................................            264             336
                                                                                 -----------      ----------
                  Total nonperforming loans..................................         65,522          75,364
         Other real estate...................................................          1,913          11,130
                                                                                 -----------      ----------
                  Total nonperforming assets.................................    $    67,435          86,494
                                                                                 ===========      ==========

         Loans, net of unearned discount.....................................    $ 5,399,383       5,328,075
                                                                                 ===========      ==========

         Loans past due 90 days or more and still accruing...................    $     2,551           2,776
                                                                                 ===========      ==========

         Ratio of:
              Allowance for loan losses to loans.............................           2.24%           2.19%
              Nonperforming loans to loans...................................           1.21            1.41
              Allowance for loan losses to nonperforming loans...............         184.62          154.52
              Nonperforming assets to loans and other real estate............           1.25            1.62
                                                                                 ===========      ==========
</TABLE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
certain  restructured  loans, were $65.5 million at June 30, 2004, in comparison
to $87.4 million at March 31, 2004, $75.4 million at December 31, 2003 and $68.0
million  at June 30,  2003.  Other  real  estate  owned was $1.9  million,  $2.9
million,  $11.1  million and $15.1  million at June 30,  2004,  March 31,  2004,
December  31,  2003 and  June  30,  2003,  respectively.  Nonperforming  assets,
consisting  of  nonperforming  loans and other  real  estate  owned,  were $67.4
million at June 30, 2004,  compared to $90.2  million at March 31,  2004,  $86.5
million at December 31, 2003 and $83.2  million at June 30, 2003.  The 22.0% net
decrease in  nonperforming  assets  during the first six months of 2004 reflects
the following significant changes:

         >>    On  February  9, 2004,  we sold a  residential  and  recreational
               development  property  that had been  held as other  real  estate
               since  January  2003.  Prior  to  foreclosure,  the  real  estate
               construction and development  loan had been on nonaccrual  status
               due to significant  financial  difficulties,  inadequate  project
               financing,  project  delays and weak project  management.  At the
               time of sale,  the property had a carrying value of $9.2 million,
               representing  approximately  83.0% of our total other real estate
               assets.  We recorded a gain,  before  applicable income taxes, of
               approximately $2.7 million on the sale of this property;

         >>    In March 2004, we downgraded a $13.9  million  commercial  credit
               relationship  in the  southern  California  region to  nonaccrual
               status,  representing  approximately 15.9% of nonperforming loans
               at March 31, 2004.  On April 29, 2004, we recorded a $3.9 million
               charge-off  on this  credit  relationship  as a result of workout
               negotiations  with the borrower and on May 7, 2004, the remaining
               net balance of $10.0  million was  refinanced  by an  independent
               third  party,  resulting  in our receipt of a cash payment on the
               remaining net balance of this credit relationship;


<PAGE>



         >>    On  January 5, 2004,  we funded a $5.3  million  letter of credit
               associated with a commercial credit relationship in the St. Louis
               region.  Additionally,  in January  2004,  we recorded a $750,000
               charge-off  on  this  credit   relationship  and  downgraded  the
               remaining  balance  to  nonaccrual  status,  bringing  the  total
               commercial   credit   relationship   on   nonaccrual   status  to
               approximately $7.3 million. On April 30, 2004, we sold the entire
               $7.3 million  commercial  credit  relationship  to an independent
               third party for $9.6 million and recorded a $2.3 million recovery
               of previously recorded charge-offs; and

         >>    On June 30, 2004, we completed the sale of a significant  portion
               of our commercial  leasing  portfolio,  reducing the portfolio by
               $33.1 million to $9.6 million.  The level of nonperforming  loans
               related to the remaining lease portfolio was $3.2 million at June
               30,  2004,  compared  to $3.1  million,  $5.3  million  and $10.9
               million at March 31,  2004,  December 31, 2003 and June 30, 2003,
               respectively.

         Loan charge-offs were $12.8 million and $24.3 million for the three and
six months ended June 30, 2004, respectively, in comparison to $14.9 million and
$23.7  million for the  comparable  periods in 2003.  Loan  charge-offs,  net of
recoveries,  were $5.4  million  and $10.8  million for the three and six months
ended June 30, 2004,  respectively,  in  comparison  to $10.8  million and $13.3
million for the  comparable  periods in 2003. Our allowance for loan losses as a
percentage of loans,  net of unearned  discount,  decreased to 2.24% at June 30,
2004 from 2.34% at March 31,  2004,  and  increased  from 2.19% at December  31,
2003, and our allowance for loan losses as a percentage of  nonperforming  loans
increased  to  184.62% at June 30,  2004,  from  142.94%  at March 31,  2004 and
154.52% at December 31, 2003.  The allowance for loan losses was $121.0  million
at June 30, 2004,  compared to $124.9 million at March 31, 2004,  $116.5 million
at December 31, 2003 and $107.8  million at June 30,  2003.  As reflected in the
table below, a $1.0 million  specific  reserve was  established in December 2003
for the  estimated  loss  associated  with the $5.3 million  unfunded  letter of
credit.  As discussed above,  the letter of credit was subsequently  funded as a
loan on January 5, 2004,  and the  related  $1.0  million  specific  reserve was
transferred to the allowance for loan losses. In addition,  on June 30, 2004, we
transferred  approximately  $1.5 million from the allowance for loan losses to a
contingent liability related to recourse obligations associated with the sale of
certain  leases in our commercial  leasing  portfolio,  as further  described in
Footnote 2 and Footnote 10 to our Consolidated Financial Statements. We continue
to closely  monitor  our loan and  leasing  portfolios  and  address the ongoing
challenges posed by the current  economic  environment,  including  reduced loan
demand  within our  markets and lower  prevailing  interest  rates.  Despite the
improvement  in  nonperforming   assets  during  the  second  quarter  of  2004,
nonperforming  assets  continue  to  remain at  somewhat  elevated  levels  that
initially  began in late  2001  with the  decline  in  economic  conditions.  We
anticipate the level of nonperforming  assets to remain at these elevated levels
throughout  most of 2004 and  consider  this in our  overall  assessment  of the
adequacy of the allowance for loan losses.

         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
the  portfolio.  Factors are applied to the loan  portfolio for each category of
loan risk to determine acceptable levels of allowance for loan losses. We derive
these  factors  from our actual  loss  experience  and from  published  national
surveys of norms in the industry.  In addition,  a quarterly  evaluation of each
lending unit is performed based on certain  factors,  such as lending  personnel
experience,  recent credit reviews,  geographic and credit  concentrations,  and
other factors. The allowance is adjusted for incremental risk factors identified
for individual  segments  within the loan portfolio.  Based on this  evaluation,
additional  provisions  may be required due to the perceived  risk of particular
portfolios. The calculated allowance required for the portfolio is then compared
to the actual  allowance  balance  to  determine  the  provisions  necessary  to
maintain  the  allowance  at  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
change in the portfolio,  including growth, composition,  the ratio of net loans
to total assets and the economic  conditions of the regions in which we operate.
Based on this quantitative and qualitative analysis,  provisions are made to the
allowance for loan losses.  Such  provisions  are reflected in our  consolidated
statements of income.



<PAGE>


         The following  table is a summary of our loan loss  experience  for the
three and six months ended June 30, 2004 and 2003:
<TABLE>
<CAPTION>

                                                                Three Months Ended           Six Months Ended
                                                                     June 30,                    June 30,
                                                              ----------------------        -------------------
                                                                2004          2003           2004          2003
                                                                ----          ----           ----          ----
                                                                       (dollars expressed in thousands)

<S>                                                           <C>           <C>             <C>           <C>
         Allowance for loan losses, beginning of period.....  $ 124,871     108,696         116,451       99,439
         Acquired allowances for loan losses................         --          --              --          757
         Other adjustments (1)(2)...........................     (1,479)         --            (479)          --
                                                              ---------    --------        ---------    --------
                                                                123,392     108,696         115,972      100,196
                                                              ---------    --------        --------     --------
         Loans charged-off..................................    (12,801)    (14,928)        (24,295)     (23,665)
         Recoveries of loans previously charged-off.........      7,375       4,080          13,539       10,317
                                                              ---------    --------        --------     --------
         Net loan charge-offs...............................     (5,426)    (10,848)        (10,756)     (13,348)
                                                              ---------    --------        --------     --------
         Provision for loan losses..........................      3,000      10,000          15,750       21,000
                                                              ---------    --------        --------     --------
         Allowance for loan losses, end of period...........  $ 120,966     107,848         120,966      107,848
                                                              =========    ========        ========     ========
         ---------------
         (1)   In December 2003, we established a $1.0 million  specific reserve for estimated  losses  on a $5.3 million  letter of
               credit that was recorded in accrued  and other liabilities in our consolidated balance sheets.  On January  5,  2004,
               the letter of credit was fully  funded as a loan.  Consequently,  the  related  $1.0  million   specific  reserve was
               reclassified   from  accrued  and  other liabilities to the allowance for loan losses.
         (2)   On June 30, 2004, we reclassified $1.5 million from the allowance for loan losses to accrued and other liabilities to
               establish a specific reserve associated with the lease portfolio sale and  related  recourse  obligations for certain
               leases sold.
</TABLE>

                                    Liquidity

         Our  liquidity  is the ability to maintain a cash flow that is adequate
to fund  operations,  service debt  obligations and meet other  commitments on a
timely basis.  First Bank receives funds for liquidity  from customer  deposits,
loan payments,  maturities of loans and  investments,  sales of investments  and
earnings.  In  addition,  we may avail  ourselves  of other  sources of funds by
issuing  certificates of deposit in denominations of $100,000 or more, borrowing
federal funds,  selling  securities under agreements to repurchase and utilizing
borrowings from the Federal Home Loan Bank and other  borrowings,  including our
revolving  credit line.  The  aggregate  funds  acquired from these sources were
$1.01  billion  and  $726.9  million at June 30,  2004 and  December  31,  2003,
respectively.

         The  following  table  presents the  maturity  structure of these other
sources of funds, which consists of certificates of deposit of $100,000 or more,
other borrowings and our note payable, at June 30, 2004:
<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.....................................    $174,255            175,548           349,803
         Over three months through six months.....................      59,670                 --            59,670
         Over six months through twelve months....................      85,743                 --            85,743
         Over twelve months.......................................     155,865            357,000           512,865
                                                                      --------           --------         ---------
              Total...............................................    $475,533            532,548         1,008,081
                                                                      ========           ========         =========
</TABLE>

         In addition to these  sources of funds,  First Bank has  established  a
borrowing   relationship   with  the  Federal   Reserve  Bank.   This  borrowing
relationship,  which is secured by  commercial  loans,  provides  an  additional
liquidity  facility that may be utilized for contingency  purposes.  At June 30,
2004 and December 31, 2003, First Bank's borrowing  capacity under the agreement
was approximately $809.2 million and $909.3 million,  respectively. In addition,
First Bank's borrowing  capacity through its relationship  with the Federal Home
Loan Bank was  approximately  $460.7 million and $449.5 million at June 30, 2004
and  December 31,  2003,  respectively.  Exclusive of the Federal Home Loan Bank
advances  outstanding  of $7.0  million at June 30, 2004 and  December 31, 2003,
First  Bank  had  no  amounts   outstanding  under  either  of  these  borrowing
arrangements at June 30, 2004 and December 31, 2003.



<PAGE>


         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, 2004 are as
follows:
<TABLE>
<CAPTION>

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

<S>                                                          <C>                <C>          <C>          <C>
         Operating leases..................................  $    4,435         20,119       21,161       45,715
         Certificates of deposit...........................   1,204,489        730,621          251    1,935,361
         Other borrowings..................................     175,548        356,000        1,000      532,548
         Subordinated debentures...........................          --             --      206,795      206,795
         Other contractual obligations.....................         586          2,717           29        3,332
                                                             ----------     ----------     --------    ---------
              Total........................................  $1,385,058      1,109,457      229,236    2,723,751
                                                             ==========     ==========     ========    =========
</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.

                       Effects of New Accounting Standards

         In December 2003, the Financial  Accounting  Standards  Board, or FASB,
issued FASB Interpretation No. 46,  Consolidation of Variable Interest Entities,
an  interpretation  of ARB No. 51, a  revision  to FASB  Interpretation  No. 46,
Consolidation  of  Variable  Interest  Entities  issued in  January  2003.  This
Interpretation   is  intended  to  achieve  more   consistent   application   of
consolidation  policies  to  variable  interest  entities  and,  thus to improve
comparability  between enterprises engaged in similar activities even if some of
those  activities  are  conducted  through  variable  interest   entities.   The
provisions of this Interpretation are effective for financial  statements issued
for fiscal years ending after  December 15, 2003. We have several  statutory and
business trusts that were formed for the sole purpose of issuing trust preferred
securities.  On December 31, 2003, we implemented FASB Interpretation No. 46, as
amended,  which  resulted  in the  deconsolidation  of our  five  statutory  and
business  trusts.  The  implementation  of this  Interpretation  had no material
effect  on  our  consolidated  financial  position  or  results  of  operations.
Furthermore, in July 2003, the Board of Governors of the Federal Reserve System,
or Board,  issued a supervisory  letter  instructing  bank holding  companies to
continue to include the trust  preferred  securities in their Tier I capital for
regulatory capital purposes, subject to applicable limits, until notice is given
to  the  contrary.  As  discussed  in  Note  7  to  our  Consolidated  Financial
Statements,  the Board  requested  public  comment on newly  proposed rules that
would allow bank holding companies to retain trust preferred securities in their
Tier 1 capital,  subject to stricter  quantitative  and  qualitative  standards,
which would result in a reduction of our regulatory capital ratios

         On July 27, 2004, the FASB's  Derivatives  Implementation  Group issued
guidance on  Statement  of  Financial  Accounting  Standards,  or SFAS,  No. 133
Implementation  Issue No. G25,  or DIG Issue G25.  DIG Issue G25  clarifies  the
FASB's  position on the ability of entities to hedge the variability in interest
receipts or overall changes in cash flows on a group of prime-rate  based loans.
The new guidance permits the use of the  first-payments-received  technique in a
cash  flow  hedge  of  the   variable   prime-rate   based  or  other   variable
non-benchmark-rate-based interest payments for a rolling portfolio of prepayable
interest-bearing  loans,  provided  the  hedging  relationship  meets  all other
conditions in FASB Statement No. 133, Accounting for Derivative  Instruments and
Hedging Activities,  for cash flow hedge accounting. If a pre-existing cash flow
hedging  relationship  has  identified  the  hedged  transactions  in  a  manner
inconsistent  with the guidance in DIG Issue G25, the hedging  relationship must
be  de-designated  at the effective date, as further  discussed  below,  and any
derivative  gains  or  losses  in  other  comprehensive  income  related  to the
de-designated  hedging relationships should be accounted for under paragraphs 31
and 32 under SFAS No. 133. We  currently  have  pre-existing  cash flow  hedging
relationships  that are  inconsistent  with the guidance in DIG Issue G25. As of
June 30,  2004,  our other  comprehensive  income  included a $7.4  million gain
attributable to these  pre-existing  cash flow hedging  relationships.  However,
$4.4  million of this gain is  attributable  to hedges that will mature prior to
the effective date of the  implementation  of DIG Issue G25. We may  be required
to de-designate  the remaining  specific hedging  relationships  and accrete the
associated  gain  into  noninterest  income  over  the  remaining  lives  of the
respective hedging  relationships.  The guidance from DIG Issue G25 is effective
for the fiscal quarter  beginning  after August 9, 2004 and should be applied to
all hedging  relationships as of the effective date. We are currently evaluating
the  requirements of the guidance from the FASB on DIG Issue G25 and the overall
impact on our consolidated financial statements or results of operations.


<PAGE>



         In March 2004, the Securities and Exchange  Commission,  or SEC, issued
Staff  Accounting  Bulletin No. 105 -- Application  of Accounting  Principles to
Loan Commitments,  or SAB 105, which provides guidance regarding the application
of generally accepted accounting principles to loan commitments accounted for as
derivative instruments. Through specific guidance on valuation-recognition model
inputs to measure loan  commitments  accounted for at fair value, SAB 105 limits
the opportunity for recognition of an asset related to a commitment to originate
a mortgage  loan that will be held for sale prior to funding.  SAB 105  requires
that  the  measurement  of fair  value  include  only  differences  between  the
guaranteed  interest rate in the loan  commitment  and a market  interest  rate,
excluding any expected future cash flows related to the customer relationship or
loan servicing.  SAB 105 is effective for all mortgage loan commitments that are
accounted  for as derivative  instruments  that are entered into after March 31,
2004, and permits  continued use of previously  applied  accounting  policies to
loan commitments entered into on or before March 31, 2004. The implementation of
SAB 105 did not have a material impact on our consolidated  financial statements
or results of operations.



<PAGE>


       ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At December 31, 2003, our risk management  program's  simulation  model
indicated a loss of projected  net interest  income in the event of a decline in
interest  rates.  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  7.9% of net interest income,  based on
assets and  liabilities  at December 31, 2003. At June 30, 2004, 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  income
associated  with our  interest  rate swap  agreements  offset by  reductions  in
prevailing  interest  rates  throughout  2002 and 2003,  is reflected in our net
interest  margin for the three and six months ended June 30, 2004 as compared to
the  comparable  periods  in 2003 and  further  discussed  under  "--Results  of
Operations."  During  the  three  and  six  months  ended  June  30,  2004,  our
asset-sensitive  position  and overall  susceptibility  to market risks have not
changed materially.




<PAGE>


                        ITEM 4 - CONTROLS AND PROCEDURES

         Within the 90-day  period prior to the filing date of this report,  our
Chief Executive Officer evaluated the effectiveness of our "disclosure  controls
and  procedures"  (as  defined  in  rules  13a-14(c)  and  15d-14(c)  under  the
Securities  Exchange Act of 1934) and  concluded on the basis of the  evaluation
that, as of the date of such evaluation,  our disclosure controls and procedures
were effective.  There have been no significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of that evaluation.




<PAGE>


                           Part II - OTHER INFORMATION

                    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K


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

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

                  10.3        Service  Agreement by and between  First Services,
                              L.P. and First Banks,  Inc.,  dated  May 1, 2004 -
                              filed herewith.

                  10.4        Service Agreement by and between  First  Services,
                              L.P. and  First  Bank,  dated  May 1, 2004 - filed
                              herewith.

                  10.5        Service Agreement by and between First Banks, Inc.
                              and  First  Services,  L.P.,  dated  May 1, 2004 -
                              filed herewith.


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

                  32          Section 1350 Certifications - filed herewith.

(b)      We filed a Current Report on Form 8-K on April 23, 2004. Item 12 of the
         report  referenced  a  press  release  announcing  First  Banks, Inc.'s
         financial results for the three months ended March 31, 2004.  A copy of
         the press release was included as Exhibit 99.2.


<PAGE>


                                   SIGNATURES


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



                              FIRST BANKS, INC.



August 13, 2004               By: /s/ Allen H. Blake
                                  --------------------------------------------
                                      Allen H. Blake
                                      President, Chief Executive Officer and
                                      Chief Financial Officer
                                      (Principal Executive Officer and Principal
                                      Financial and Accounting Officer)


<PAGE>

                                                                    Exhibit 10.3
                                SERVICE AGREEMENT

         THIS  SERVICE  AGREEMENT  is made and entered into as of the 1st day of
May, 2004, by and between FIRST SERVICES,  L.P., a Missouri Limited  Partnership
and FIRST BANKS,  INC., a bank holding  company duly  organized  and existing by
virtue of the laws of the State of Missouri.

         WHEREAS,  FIRST BANKS,  INC. and FIRST  SERVICES,  L.P.  entered into a
Service Agreement dated October 15, 2001; and

         WHEREAS, said Service Agreement was assigned to First Services, L.P. on
or about October 15, 2001; and

         WHEREAS, FIRST SERVICES, L.P. and FIRST BANKS, INC. desire to amend and
restate said Service Agreement in its entirety.

         NOW,  THEREFORE,  for and in  consideration  of the mutual promises and
covenants  contained  herein,  and the sum of Ten Dollars ($10.00) in hand paid,
each to the other, the receipt and sufficiency of which is hereby  acknowledged,
the parties agree as follows:

   I      TERMINATION AND REVOCATION

         The  Parties  hereto  hereby  revoke,  cancel  and  hold for naught the
         Service Agreement dated October 15, 2001, and  hereby substitute in its
         place the Service Agreement herein contained.

   II     SERVICES

          A.   First  Services,  L.P.  shall  furnish  First  Banks,  Inc.  data
               processing  services  selected  by  First  Banks,  Inc.  from the
               Product and Price Schedule as per  Attachment 1, attached  hereto
               and incorporated herein by reference thereto. Additional services
               may be selected upon prior written notice to First Services, L.P.
               at First Services, L.P.'s then current list price by executing an
               amended Summary Page.
          B.   First  Services,   L.P.  will  provide  conversion  and  training
               services  for the fees  specified  from  the  Product  and  Price
               Schedule  (Attachment  1).  Classroom  training  in the  use  and
               operation  of the  system  for the  number of First  Banks,  Inc.
               personnel mutually agreed upon in the conversion planning process
               will be provided at a training  facility  mutually  agreed  upon.
               Conversion services are those activities designed to transfer the
               processing   of  First  Banks,   Inc.'s  data  from  its  present
               processing company to First Services, L.P.

<PAGE>

          C.   First  Services,  L.P. will also provide  Network Support Service
               consisting  of  communication   line  monitoring  and  diagnostic
               equipment and support personnel to discover,  diagnose, repair or
               report line problems to the appropriate  telephone  company.  The
               fee for this  service  is also  listed on the  Product  and Price
               Schedule (Attachment 1).
          D.   First  Services,  L.P.  shall upon  request  act as First  Banks,
               Inc.'s designated  representative to arrange for the purchase and
               installation   of  data  lines  necessary  to  access  the  First
               Services, L.P. system. Where requested,  additional dial-up lines
               and  equipment  to be utilized  as a backup to the  regular  data
               lines may also be ordered. First Services,  L.P. shall bill First
               Banks,  Inc. for the actual  charges  incurred for the data lines
               and  for  the  maintenance  of the  modems  and  other  interface
               devices.
          E.   First Services,  L.P. will provide e-mail,  Internet and Intranet
               capabilities at a fee listed on the Product and Pricing  Schedule
               (Attachment 1).
          F.   Processing  priorities will be determined by mutual  agreement of
               the parties hereto.

   III.   TERM

         The  term of this Agreement  shall be twelve (12) months  commencing on
         May 1, 2004. Upon expiration,  the  Agreement will automatically  renew
         for  successive  t erms of twelve (12) months each unless  either party
         shall have provided  written  notice to the other at least  one-hundred
         eighty (180) days prior to  the expiration of the then current term, of
         its intent not to renew.  In the event of termination,  First Services,
         L.P.  shall provide a reasonable  time  allowance to allow First Banks,
         Inc. to convert to another system.

   IV.    SOFTWARE / FIRMWARE

         Unmodified  third  party  software  or   firmware ("Software")  may  be
         supplied as part of the Agreement.  All such Software shall be provided
         subject to Software License Agreements.

   V.     PRICE AND PAYMENT

          A.   Fees for First  Services,  L.P.'s  services  are set forth on the
               Product  and  Price  Schedule  (Attachment  1)  including,  where
               applicable,  minimum  monthly  charges and payment  schedules for
               one-time fees.
          B.   Standard  Fees  shall be  invoiced  no later  than the  fifteenth
               (15th) of each month for the then current month. Terms of payment
               shall be net cash.

<PAGE>

          C.   The Base Service  Charge listed on the Product and Price Schedule
               (Attachment  1) shall not change more than twice a year.  The fee
               schedule  shall be reviewed  annually to ensure fair market value
               in  pricing.  Comparisons  will  be made  with  peers  and  other
               providers of similar  services.  New products and services may be
               added as they become available and will be priced accordingly.
          D.   This above  limitation shall not apply to pass-thru  expenses.  A
               pass-thru  expense  is a charge  for goods or  services  by First
               Services,  L.P.  on First  Banks,  Inc.'s  behalf  that are to be
               billed to First Banks, Inc. without mark-up.
          E.   The fees listed on the Product and Price Schedule  (Attachment 1)
               do  not  include  and  First  Banks,   Inc.  is  responsible  for
               furnishing  transportation or transmission of information between
               First Services, L.P.'s data center and First Banks, Inc.'s sites.
               Where First Banks, Inc. has elected to have First Services,  L.P.
               provide  Telecommunication  Services,  the price for the Services
               will be provided and billed as a pass-thru expense.
          F.   Network  Support  Service  Fees and Local  Network Feed are based
               upon services  rendered  from First  Services,  L.P.'s  premises.
               Off-premise  support will be provided  upon First  Banks,  Inc.'s
               request on an as available basis at First  Services,  L.P.'s then
               current charges for time and materials,  plus  reasonable  travel
               and living expenses.

   VI.    CLIENT OBLIGATIONS

          A.   First  Banks,  Inc.  shall be solely  responsible  for the input,
               transmission  or delivery of all information and data required by
               First  Services,  L.P. to perform the services except where First
               Banks,  Inc. has  retained  First  Services,  L.P. to handle such
               responsibilities  on its behalf.  The data shall be provided in a
               format and manner approved by First  Services,  L.P. First Banks,
               Inc.  will  provide  at its own  expense  or  procure  from First
               Services,  L.P., all equipment,  computer software  communication
               lines  and  interface   devices  required  to  access  the  First
               Services,  L.P.  System.  If First  Banks,  Inc.  has  elected to
               provide such items itself,  First  Services,  L.P.  shall provide
               First  Banks,  Inc.  with  a list  of  compatible  equipment  and
               software.
          B.   First Banks,  Inc. shall designate  appropriate First Banks, Inc.
               personnel  for  training in the use of the First  services,  L.P.
               System,  shall allow First Services,  L.P. access to First Banks,
               Inc.'s sites during  normal  business  hours for  conversion  and
               shall  cooperate  with  First  services,  L.P.  personnel  in the
               conversion and implementation of the services.
          C.   First Banks, Inc. shall comply with any operating instructions on
               the use of the First Services,  L.P.  reports  furnished by First
               Services,  L.P. for accuracy and shall work with First  Services,

<PAGE>

               L.P. to  reconcile  any out of balance  conditions.  First Banks,
               Inc. shall determine and be responsible for the  authenticity and
               accuracy of all information and data submitted to First Services,
               L.P.
          D.   First  Banks,  Inc.  shall  furnish or, if First  Services,  L.P.
               agrees to so furnish,  reimburse First Services, L.P. for courier
               services applicable to the services requested.

   VII.   GENERAL ADMINISTRATION

         First Services,  L.P. is continually reviewing and modifying the  First
         Services,  L.P. system to improve service and  to comply  with  federal
         government regulations  applicable  to the data  utilized in  providing
         services to First  Banks, Inc. First  Services, L.P. reserves the right
         to make  changes  in  the  service,  including,  but   not  limited  to
         operating  procedures,  security  procedures,  the  type  of  equipment
         resident at and the location of First Services, L.P.'s data center.

   VIII.  CLIENT CONFIDENTIAL INFORMATION

          A.   First  Services,  L.P.  shall  treat  all  information  and  data
               relating  to  First  Banks,  Inc.'s  business  provided  to First
               Services,  L.P. by First Banks, Inc., or information  relating to
               First  Banks,   Inc.'s  customers,   as  confidential  and  shall
               safe-guard First Banks,  Inc.'s  information with the same degree
               of care  used to  protect  First  Services,  L.P.'s  confidential
               information.  First  Services,  L.P. and First Banks,  Inc. agree
               that  master  and  transaction   data  files  are  owned  by  and
               constitute  property of First Banks,  Inc. data and records shall
               be subject to  regulation  and  examination  by State and Federal
               supervisory  agencies to the same  extent as if such  information
               were on First Banks,  Inc.'s  premises.  First  Services,  L.P.'s
               obligations under this Section VIII shall survive the termination
               or expiration of this Agreement.
          B.   First  Services,  L.P.  agrees now and at all times in the future
               that all such  confidential  information  shall be held in strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably  require access to such  information.  First Services,
               L.P. may use such  confidential  information  only in  connection
               with  its   performance   under  this   Agreement.   Confidential
               information  shall be returned to First Banks,  Inc. or destroyed
               upon First Banks,  Inc.'s request once the services  contemplated
               by this Agreement have been completed or upon termination of this
               Agreement.
          C.   First Services,  L.P. shall maintain  adequate backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce First Banks, Inc.'s records and data. In the event of a

<PAGE>

               service  disruption due to reasons beyond First Services,  L.P.'s
               control,  First  Services  L.P.  shall use  diligent  efforts  to
               mitigate the effects of such an occurrence.
          D.   First Services,  L.P. shall  establish and maintain  policies and
               procedures  to  insure   compliance  with  this  section.   First
               Services,  L.P. agrees to permit First Banks, Inc. to audit First
               Services,  L.P.'s  compliance  with this section  during  regular
               business hours upon reasonable notice to First Services, L.P. The
               provisions of this section shall survive any  termination of this
               Agreement.

   IX.    FIRST SERVICES, L.P. CONFIDENTIAL INFORMATION

          A.   First Banks,  Inc. shall not use or disclose to any third persons
               any  confidential  information  concerning  First Services,  L.P.
               Confidential information is that which relates to First Services,
               L.P.'s software, research, development, trade secrets or business
               affairs  including,  but not limited to, the terms and conditions
               of this Agreement but does not include  information in the public
               domain through no fault of First Banks, Inc. First Banks,  Inc.'s
               obligations  under this Section IX shall survive the  termination
               or expiration of this Agreement.
          B.   First Services,  L.P.'s system contains  information and computer
               software that is  proprietary  and  confidential  information  of
               First Services,  L.P., its suppliers and licensees.  First Banks,
               Inc. agrees not to attempt to circumvent the devices  employed by
               First  Services,  L.P.  to prevent  unauthorized  access to First
               Services, L.P.'s system.

   X.     WARRANTIES

         First Services,  L.P. will accurately process First Banks,  Inc.'s work
         provided that First Banks, Inc. supplies accurate data  and follows the
         procedures described in First  Services,  L.P.'s user manuals,  notices
         and advices.  First  Services,  L.P. personnel  will  exercise due care
         in the processing of First Banks, Inc.'s work. In the event of an error
         caused  by  First   Services, L.P.'s personnel,  programs or equipment,
         First  Services,  L.P.  shall  correct  the  data  and/or reprocess the
         affected report at no additional cost to First Banks, Inc.

   XI.    LIMITATION OF LIABILITY

         IN NO EVENT  SHALL FIRST SERVICES, L.P. BE LIABLE FOR LOSS OF GOODWILL,
         OR  FOR  SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
         FROM  FIRST BANKS, INC.'S  USE  OF  FIRST SERVICES, L.P.'S SERVICES, OR
         FIRST  SERVICES,  L.P.'S SUPPLY  OF  EQUIPMENT  OR  SOFTWARE UNDER THIS
         AGREEMENT,  REGARDLESS  OF  WHETHER  SUCH  CLAIM  ARISES  IN TORT OR IN

<PAGE>

         CONTRACT. FIRST  SERVICES, L.P.'S  AGGREGATE  LIABILITY FOR ANY AND ALL
         CAUSES OF ACTION RELATING TO SERVICES PERFORMED HEREUNDER OR ANY DAMAGE
         OR LOSS INCURRED  OR  SUSTAINED  BY  FIRST BANKS, INC. RELATING TO THIS
         AGREEMENT AND THE SERVICES PERFORMED HEREUNDER SHALL BE LIMITED TO THE
         AMOUNT OF TOTAL FEES PAID BY FIRST BANKS, INC. TO  FIRST SERVICES, L.P.
         IN THE THREE (3) MONTH PERIOD PRECEDING THE  DATE  THE  CLAIM  ACCRUED.
         FIRST SERVICES, L.P.'S AGGREGATE LIABILITY FOR A DEFAULT RELATING TO
         EQUIPMENT OR SOFTWARE SHALL BE  LIMITED  TO  THE  AMOUNT PAID  FOR  THE
         EQUIPMENT OR SOFTWARE.

   XII.   PERFORMANCE STANDARDS

          A.   On-Line  Availability  -  First  Services,   L.P.'s  standard  of
               performance  shall be on-line  availability  of the system 98% of
               the time that it is scheduled to be so available over a three (3)
               month  period  (the   "Measurement   Period").   Actual   on-line
               performance will be calculated monthly by comparing the number of
               hours  which the system was  scheduled  to be  operational  on an
               on-line basis with the number of hours, or a portion thereof,  it
               was actually  operational  on an on-line  basis.  Downtime may be
               caused by operator  error,  hardware  malfunction or failure,  or
               environmental failures such as loss of power or air conditioning.
               Downtime caused by reasons beyond First Services,  L.P.'s control
               should not be considered in the statistics.
          B.   Report   Availability  -  First  Services,   L.P.'s  standard  of
               performance for report  availability  shall be that, over a three
               (3) month period, ninety-five percent (95%) of all Critical Daily
               Reports  shall be available  for remote  printing on time without
               significant  errors.  A Critical Daily Report shall mean priority
               group reports,  which First Services,  L.P. and First Banks, Inc.
               have mutually  agreed upon in writing,  are necessary to properly
               account for the previous day's activity and properly notify First
               Banks,  Inc. of  overdraft,  NSF or return  items.  A significant
               error is one that impairs First Banks, Inc.'s ability to properly
               account for the previous days activity  and/or  properly  account
               for overdraft,  NSF or return items.  Actual  performance will be
               calculated  monthly by comparing the total number of First Banks,
               Inc. reports scheduled to be available from First Services,  L.P.
               to the number of reports which were available on time and without
               error.
          C.   Exclusive  Remedy - In the  event  that  First  Services,  L.P.'s
               performance  fails to meet the  standards  listed  above and such
               failure  is not the  result  of  First  Banks,  Inc.'s  error  or
               omission,  First Banks, Inc.'s sole and exclusive remedy for such
               default  shall  be the  right  to  terminate  this  Agreement  in
               accordance  with the provisions of this  paragraph.  In the event
               that  First  Services,  L.P.  fails to  achieve  any  performance
               standards,   alone  or  in   combination,   for  the   prescribed
               measurement   period,   First  Banks,  Inc.  shall  notify  First
               Services, L.P. of its intent to terminate this Agreement if First

<PAGE>

               Services,  L.P.  fails to restore  performance  to the  committed
               levels.  First  Services,  L.P.  shall advise  First Banks,  Inc.
               promptly upon correction of the system  deficiencies (in no event
               shall  corrective  action  exceed sixty (60) days from the notice
               date) and shall begin an additional  measurement  period.  Should
               First  Services,  L.P.  fail to achieve the required  performance
               standards during the re-measurement period, First Banks, Inc. may
               terminate this Agreement and First Services, L.P. shall cooperate
               with First Banks, Inc. to achieve an orderly  transition to First
               Banks,  Inc.'s replacement  processing system.  First Banks, Inc.
               may also  terminate  this  Agreement  if First  Services,  L.P.'s
               performance   for  the  same   standard  is  below  the  relevant
               performance standard for more than two (2) measurement periods in
               any  consecutive  twelve  (12)  months  or for more than five (5)
               measurement periods during the term of this Agreement. During the
               period  of  transition,  First  Banks,  Inc.  shall pay only such
               charges  as are  incurred  for  monthly  fees  until  the date of
               deconversion.  First Services, L.P. shall not charge First Banks,
               Inc. for services relating to First Banks, Inc.'s deconversion.
          D.   Audit - First  Banks,  Inc.  shall  have  the  right  to  perform
               reasonable  audits,  at its cost,  upon giving  written notice to
               First Services, L.P. of its intent to do so. First Services, L.P.
               shall  provide,  upon  request,  financial  information  to First
               Banks, Inc.

   XIII.  BUSINESS CONTINUITY / DISASTER RECOVERY

          A.   A  disaster  shall  mean  any  unplanned   interruption   of  the
               operations of or inaccessibility to the First Services, L.P. data
               center  which  appears  in  First  Services,   L.P.'s  reasonable
               judgment to require  relocation of  processing to an  alternative
               site. First Services, L.P. shall notify First Banks, Inc. as soon
               as  possible  after it deems a service  outage to be a  disaster.
               First  Services,  L.P.  shall move the processing of First Banks,
               Inc.'s critical  services to an alternative  processing center as
               expeditiously as possible.  First Services,  L.P. shall work with
               First Banks,  Inc. to define those services deemed as critical to
               the operation,  revenue, and capital preservation of First Banks,
               Inc. First Banks,  Inc. shall  maintain  adequate  records of all
               transactions during the period of service  interruption and shall
               have  personnel  available to assist  First  Services,  L.P.,  in
               implementing the switch over to the alternative  processing site.
               During a disaster, non-critical,  optional or on-request services
               shall be  provided  by First  Services,  L.P.  only to the extent
               there is adequate capacity at the alternate center and only after
               stabilizing the provision of critical services.
<PAGE>

          B.   First  Services,  L.P.  shall  work with  First  Banks,  Inc.  to
               establish a plan for alternative data communications in the event
               of a  disaster.  First  Banks,  Inc.  shall  be  responsible  for
               furnishing any additional communications equipment and data lines
               required under the adopted plan.
          C.   First Services,  L.P. shall test the Business  Continuity Plan by
               conducting,  at least, one annual test. First Banks,  Inc. agrees
               to  participate  in and assist  First  Services,  L.P.  with such
               testing.  Test  results  will be made  available  to First Banks,
               Inc.'s  regulators,  internal  and external  auditors,  and (upon
               request) to First Banks, Inc.'s insurance underwriters.
          D.   First Banks, Inc.  understands and agrees the Business Continuity
               Plan is designed to minimize but not eliminate  risks  associated
               with a disaster  affecting  First  Services,  L.P.'s data center.
               First  Services,  L.P.  does not  warrant  that  service  will be
               uninterrupted  or error  free in the event of a  disaster.  First
               Banks,  Inc.  maintains  responsibility  for  adopting a business
               continuity  plan  relating to  disasters  affecting  First Banks,
               Inc.'s  facilities  and  for  securing  resources   necessary  to
               properly  protect First Banks,  Inc.'s revenues in the event of a
               disaster.

   XIV.   DEFAULT

          A.   In the event  that  First  Banks,  Inc.  is  thirty  (30) days in
               arrears in making any  payment  required,  or in the event of any
               other material  default by either First  Services,  L.P. or First
               Banks,  Inc. in the performance of their  obligations  hereunder,
               the affected party shall have the right to give written notice to
               the  other  of the  default  and its  intent  to  terminate  this
               Agreement stating with reasonable particularity the nature of the
               claimed  default.  This Agreement  shall terminate if the default
               has not been cured within a reasonable  time with a minimum being
               thirty (30) days from the effective date of the notice.
          B.   Upon the expiration of this Agreement, or its termination,  First
               Services,  L.P. shall furnish to First Banks, Inc. such copies of
               First Banks,  Inc.'s data files as First Banks,  Inc. may request
               in machine readable format along with such other  information and
               assistance  as or is  reasonable  and  customary  to enable First
               Banks,  Inc. to deconvert from the First Services,  L.P.  system.
               First Banks,  Inc. shall reimburse  First Services,  L.P. for the
               production of data records and other services at First  Services,
               L.P.'s then current fees for such services.


<PAGE>



   XV.    INSURANCE

         First  Services,  L.P.   carries   Comprehensive    General   Liability
         insurance,  Commercial  Crime Insurance  covering  Employee Dishonesty,
         all-risk  replacement  cost  coverage  on all  equipment  used at First
         Services,  L.P.'s data center and Worker Compensation coverage on First
         Services,  L.P.  employees  wherever  located  in the United States. In
         addition,  First Services, L.P. carries coverage for  computer/computer
         related  theft.  First Banks,  Inc.  shall carry adequate  insurance to
         cover  liability  for  source documents while in transit and in case of
         data loss through errors and omissions.

   XVI.   GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement in whole or in part without the consent of First Banks,
               Inc. and/or First Services,  L.P., provided,  however, that First
               Services,  L.P. may  subcontract any or all of the services to be
               performed  under this  Agreement  without the written  consent of
               First Banks,  Inc. Any such  subcontractors  shall be required to
               comply with all of the  applicable  terms and  conditions of this
               Agreement.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.
          C.   First  Services,  L.P.  agrees the Federal Reserve Bank, and FDIC
               will have the authority and  responsibility  pursuant to the Bank
               Service  Corporation Act, 12 U.S.C.  1867(c) relating to services
               performed by contract or  otherwise.  First  Services,  L.P. also
               agrees that its  services  shall be subject to  oversight  by the
               Federal Reserve Bank, FDIC or state banking departments as may be
               applicable under laws and regulations  pertaining to First Banks,
               Inc.'s and shall, if applicable, provide the Federal Reserve Bank
               and FDIC with a copy of First Services,  L.P.'s current audit and
               financial statements and a copy of any current third party review
               report when a review has been performed.
          D.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.

<PAGE>

          E.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party shall have designated in writing.

                     First Services, L.P.                First Banks, Inc.
                     600 James S. McDonnell Blvd.        135 North Meramec
                     Hazelwood, MO  63042                Clayton, MO 63105

          F.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          G.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.
          H.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          I.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.

IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Banks, Inc.                               First Services, L.P.
135 North Meramec                               600 James S. McDonnell Boulevard
Clayton, Missouri 63105                         Hazelwood, Missouri 63042

BY: /s/Allen H. Blake                           BY: /s/Steven L. Schlansky
   ----------------------------------             ------------------------------
       Allen H. Blake                                  Steven L. Schlansky
       President and                                   Vice President
       Chief Executive Officer


<PAGE>


                                                                    Attachment A
                              First Services, L.P.
                           Product and Price Schedule
                              EFFECTIVE MAY 1, 2004

USER BASED SERVICES
-------------------

WAN / LAN                                         $32.00 per user
Technical Support                                 $60.00 per user
Help Desk                                         $15.00 per user
Microsoft Application Licenses - Delete           $20.00 per user
Email                                             $10.00 per user
Web (Internet) Access                             $20.00 per user
Dial-In (Remote) Access                           $30.00 per user
Information Security                              $33.00 per user

         User Based Services include:
         Network Technical Support                  Network Infrastructure
         Technical Support                          Security Monitoring
         Help Desk                                  MS Word - Delete
         MS Excel -Delete                           MS Access - Delete
         MS Powerpoint - Delete                     Anti-Virus
         Email usage                                Web usage
         Dial-In Access capability                  User/Password Administration
         Access Control

BRANCH BASED SERVICES
---------------------

Support Data Connections
         MAN                                   $6,000.00 per location
Branch Data Connections
         Branches                              $1,000.00 per location
ATM Connections
         ATM Connections                         $100.00 per location
         Dierbergs Market ATM                    $700.00 per location
Contingency Planning/Disaster Recovery           $300.00 per location
Branch Courier Routes                            $900.00 per location

         Branch Based Services include:
         Data Communication Lines
         Contingency Planning
         Disaster Recovery Exercises
         Courier Service
<PAGE>
                              First Services, L.P.
                           Product and Price Schedule
                              EFFECTIVE MAY 1, 2004


ACCOUNT / ITEM / TRANSACTION BASED SERVICES
-------------------------------------------

Accounts Processed
         DDA                                         .700
         Savings                                     .650
         Time                                        .650
         Loan                                        .700

         Accounts Processed Based Services Include:

         Collection System (Cyber Resources)        ACH Origination
         Recovery System (Cyber Resources)          ATM/Debit Card Processing
         Organizational Profitability (IPS)         General Ledger
         Asset/Liability (Bankware)                 Loan Tracking (Baker Hill)
         Fixed Asset Interface                      Optical System (RVI)
         Loan Spread Sheet (Baker Hill)             Interactive Voice
         MCIF (Okra)                                Credit Scoring (Fair Issac)
         Card Management System                     Loan Documentation (FTI/CFI)
         Business Online Banking (BOB)              Wire Transfer (Fundtech)
         Retail Online Banking                      Commercial Analysis
         Marketing Website                          Accounts Payable Interface
         Bank Audit                                 Long Distance Management
         NOW Reclassification                       Teller (Encore)
         Charge Back System                         Platform (Encore)
         Remote Laser Printing                      Call Center (Encore)
         Automated Reconciliation System (ARP)      Query Report Writer
         Mortgage (Unify)                           Forms and Supplies
         Currency Transaction Reporting             Year-end Processing

CBS, Platform, Internet Maintenance                  .130
ATM/Debit Cards Supported                            .100
Statements Produced
         DDA                                         .300
         Savings                                     .100
         Time                                        .020
         Loans                                       .150
         Year End                                  $1.00
         5498                                      $1.00

Transactions Processed
         Proof Items                                 .040     per item
         POD and EFT items                           .014     per item
         Inclearing and Transmission items           .014     per item
         Wire Activity                             $5.00      per item
         BOB / Firstlink                          $30.00      per customer
         ACH Activity                                .042     per item
         Research Requests                        $15.00      per item
         Adjustments Processed                    $15.00      per item



<PAGE>


                              First Services, L.P.
                           Product and Price Schedule
                              Effective May 1, 2004
<TABLE>
<CAPTION>

         Transactions Processed Base Services Include:
<S>     <C>                                 <C>                                 <C>
         MICR Rejects                       Serial Sort                         Teller Adjustments
         Transit Float Analysis             Microfilming                        Deposit Corrections
         Endorsement Services               Forms and Supplies                  Check Truncation
         Exception Item Sort                Statement Sort                      Interest Check Mailings
         Statement Enclosures               Notice Mailings

Lockbox Support
         Lockbox Transactions                        .450
         Postage                                     As incurred
         Copies                                      .080
Mail Services                                    $500.00

APPLICATION/PROJECT BASED SERVICES
----------------------------------

Information Systems
         Core Systems                         $11,000.00
         Commercial Systems                    $9,800.00
         Retail Systems                        $9,800.00
         Corporate                             $9,800.00
Technology Services
         Server Support                        $9,800.00
         Internet / Intranet                   $9,800.00
Technology Planning/Support
         Project Office/Planning               $9,800.00
         Database Support                      $9,800.00
         Asset Mgmt./Tech. Purchasing          $5,000.00
Acquisition/New Business Services              $9,800.00
Deposit Services
         Operations Support                    $5,000.00
         IRA Support                           $3,000.00
         Bookkeeping                           $3,500.00
         Recon/Appl. Balancing                 $2,500.00
         Records Management                    $5,500.00

         Application/Project Based Services Include:
                  Production problem support                                    Application Q/A
                  Application software upgrades/releases                        Project Management
                  Project Office tracking and reporting                         Acquisition Conversions
                  Branch De-conversions                                         Mergers
                  Equipment quotes, orders, and delivery                        Asset tracking
                  Invoice payment

         Deposit Services includes:
                  Returns                   Large Item Notification             Signature Verification
                  Chargebacks               Kiting                              Savings Bonds
                  Unposted Items            OFAC                                American Express
                  NSF Notices               Year-End Notifications

</TABLE>

<PAGE>



                                                                    Exhibit 10.4
                                SERVICE AGREEMENT

         THIS  SERVICE  AGREEMENT  is made and entered into as of the 1st day of
May, 2004, by and between FIRST SERVICES,  L.P., a Missouri Limited  Partnership
and FIRST BANK, a banking  institution  duly organized and existing by virtue of
the laws of the State of Missouri.

         WHEREAS,  FIRST BANK and FIRST  SERVICES,  L.P.  entered into a Service
Agreement dated December 30, 2002; and

         WHEREAS, said Service Agreement was assigned to First Services, L.P. on
or about December 30, 2002; and

         WHEREAS,  FIRST  SERVICES,  L.P.  and  FIRST  BANK  desire to amend and
restate said Service Agreement in its entirety.

         NOW,  THEREFORE,  for and in  consideration  of the mutual promises and
covenants  contained  herein,  and the sum of Ten Dollars ($10.00) in hand paid,
each to the other, the receipt and sufficiency of which is hereby  acknowledged,
the parties agree as follows:

   I.     TERMINATION AND REVOCATION

         The  Parties  hereto  hereby  revoke,  cancel  and hold for  naught the
         Service  Agreement  dated December 30, 2002, and  hereby  substitute in
         its place the Service Agreement herein contained.

   II.    SERVICES

          A.   First Services, L.P. shall furnish First Bank data processing and
               item processing  services selected by First Bank from the Product
               and Price  Schedule  as per  Attachment  1,  attached  hereto and
               incorporated herein by reference thereto. Additional services may
               be selected upon prior written notice to First Services,  L.P. at
               First  Services,  L.P.'s then  current list price by executing an
               amended Summary Page.
          B.   First  Services,   L.P.  will  provide  conversion  and  training
               services  for the fees  specified  from  the  Product  and  Price
               Schedule  (Attachment  1).  Classroom  training  in the  use  and
               operation  of the system  for the number of First Bank  personnel
               mutually agreed upon in the conversion  planning  process will be
               provided at a training facility mutually agreed upon.  Conversion
               services are those activities designed to transfer the processing
               of First Bank's data from its present processing company to First
               Services, L.P.
<PAGE>
          C.   First  Services,  L.P. will also provide  Network Support Service
               consisting  of  communication   line  monitoring  and  diagnostic
               equipment and support personnel to discover,  diagnose, repair or
               report line problems to the appropriate  telephone  company.  The
               fee for this  service  is also  listed on the  Product  and Price
               Schedule (Attachment 1).
          D.   First  Services,  L.P.  shall upon  request  act as First  Bank's
               designated   representative  to  arrange  for  the  purchase  and
               installation   of  data  lines  necessary  to  access  the  First
               Services, L.P. system. Where requested,  additional dial-up lines
               and  equipment  to be utilized  as a backup to the  regular  data
               lines may also be ordered. First Services,  L.P. shall bill First
               Bank for the actual  charges  incurred for the data lines and for
               the maintenance of the modems and other interface devices.
          E.   First Services, L.P. will provide and support an Internet Banking
               application  capability,  at a fee  listed  on  the  Product  and
               Pricing Schedule (Attachment 1). First Services, L.P. will ensure
               access to this system by employees  and those  customers who meet
               the  requirements  established by the First Bank Internet Banking
               Group.  Any request for access that is denied will be resolved by
               mutual agreement of the parties hereto.
          F.   First Services,  L.P. will provide e-mail,  Internet and Intranet
               capabilities at a fee listed on the Product and Pricing  Schedule
               (Attachment 1).
          G.   Processing  priorities will be determined by mutual  agreement of
               the parties hereto.
          H.   In addition,  First Services,  L.P.  acknowledges that First Bank
               acts as a correspondent  bank to certain affiliate banks and that
               as part of its duties  hereunder  First  Services,  L.P.  will be
               performing  certain  services for First Bank which are  necessary
               because of its status as a correspondent bank.

   III.   TERM

         The term of  this  Agreement  shall be sixty (60) months  commencing on
         May  1, 2004. Upon expiration,  the Agreement will automatically  renew
         for  successive  terms  of sixty (60) months each unless  either  party
         shall  have provided  written notice to the other at least  one-hundred
         eighty (180) days  prior to the expiration of the then current term, of
         its  intent not to renew. In the event of termination,  First Services,
         L.P. shall  provide a reasonable  time allowance to allow First Bank to
         convert to another system.



<PAGE>


   IV.    SOFTWARE / FIRMWARE

         Unmodified  third  party  software  or  firmware  ("Software")  may  be
         supplied  as part of the Agreement. All such Software shall be provided
         subject to Software License Agreements.

   V.     PRICE AND PAYMENT

          A.   Fees for First  Services,  L.P.'s  services  are set forth on the
               Product  and  Price  Schedule  (Attachment  1)  including,  where
               applicable,  minimum  monthly  charges and payment  schedules for
               one-time fees.
          B.   Standard  Fees  shall be  invoiced  no later  than the  fifteenth
               (15th) of each month for the then current month. Terms of payment
               shall be net cash.
          C.   The Base Service  Charge listed on the Product and Price Schedule
               (Attachment  1) shall not change more than twice a year.  The fee
               schedule  shall be reviewed  annually to ensure fair market value
               in  pricing.  Comparisons  will  be made  with  peers  and  other
               providers of similar  services.  New products and services may be
               added as they become available and will be priced accordingly.
          D.   This above  limitation shall not apply to pass-thru  expenses.  A
               pass-thru  expense  is a charge  for goods or  services  by First
               Services,  L.P. on First  Bank's  behalf that are to be billed to
               First Bank without mark-up.
          E.   The fees listed on the Product and Price Schedule  (Attachment 1)
               do not  include  and First  Bank is  responsible  for  furnishing
               transportation  or  transmission  of  information  between  First
               Services,   L.P.'s  data  center,   First  Bank's  site  and  any
               applicable  clearing house,  regulatory agency or Federal Reserve
               Bank.  Where First Bank has elected to have First Services,  L.P.
               provide  Telecommunication  Services,  the price for the Services
               will be provided and billed as a pass-thru expense.
          F.   Network  Support  Service  Fees and Local  Network Fees are based
               upon services  rendered  from First  Services,  L.P.'s  premises.
               Off-premise support will be provided upon First Bank's request on
               an as  available  basis at First  Services,  L.P.'s then  current
               charges for time and materials, plus reasonable travel and living
               expenses.
          G.   First Services,  L.P.'s Price Schedule for First Bank shall allow
               for a discount from the Product and Price Schedule (Attachment 1)
               in return for the use by First Services, L.P. of certain computer
               hardware, software and equipment owned by First Bank. The monthly
               discount is determined by adding the monthly  depreciation of the
               assets  used,  a reasonable  cost of funds  factor,  said cost of
               funds  factor may be changed  from time to time with the  written
               consent  of  the  parties  hereto,  and a  market  value  mark-up

<PAGE>

               adjustment. In the event of termination of this Agreement,  First
               Services,  L.P. maintains first right of refusal to purchase said
               assets, from First Bank, at the then current market value.

   VI.    CLIENT OBLIGATIONS

          A.   First   Bank   shall  be  solely   responsible   for  the  input,
               transmission  or delivery of all information and data required by
               First  Services,  L.P. to perform the services except where First
               Bank  has   retained   First   Services,   L.P.  to  handle  such
               responsibilities  on its behalf.  The data shall be provided in a
               format and manner  approved by First  Services,  L.P.  First Bank
               will provide at its own expense or procure  from First  Services,
               L.P., all equipment,  computer software  communication  lines and
               interface  devices  required to access the First  Services,  L.P.
               System.  If First Bank has elected to provide such items  itself,
               First  Services,  L.P.  shall  provide  First Bank with a list of
               compatible equipment and software.
          B.   First Bank shall designate  appropriate  First Bank personnel for
               training in the use of the First  services,  L.P.  System,  shall
               allow First  Services,  L.P.  access to First Bank's sites during
               normal  business hours for  conversion  and shall  cooperate with
               First   services,   L.P.   personnel   in  the   conversion   and
               implementation of the services.
          C.   First Bank shall comply with any  operating  instructions  on the
               use of the  First  Services,  L.P.  reports  furnished  by  First
               Services,  L.P. for accuracy and shall work with First  Services,
               L.P. to reconcile any out of balance conditions. First Bank shall
               determine and be responsible for the authenticity and accuracy of
               all information and data submitted to First Services, L.P.
          D.   First Bank shall furnish or, if First Services, L.P. agrees to so
               furnish,  reimburse  First  Services,  L.P. for courier  services
               applicable to the services requested.

   VII.   GENERAL ADMINISTRATION

         First Services,  L.P. is continually reviewing and modifying the  First
         Services,  L.P.  system to improve  service and to comply with  federal
         government  regulations  applicable  to the data utilized in  providing
         services to First Bank.  First  Services,  L.P.  reserves the  right to
         make changes in the service,  including,  but not limited to  operating
         procedures, security procedures, the type of equipment resident  at and
         the location of First Services, L.P.'s data center.



<PAGE>


   VIII.  CLIENT CONFIDENTIAL INFORMATION

          A.   First  Services,  L.P.  shall  treat  all  information  and  data
               relating to First  Bank's  business  provided to First  Services,
               L.P.  by First Bank,  or  information  relating  to First  Bank's
               customers,  as  confidential  and shall  safe-guard  First Bank's
               information  with the same  degree of care used to protect  First
               Services, L.P.'s confidential  information.  First Services, L.P.
               and First Bank agree that master and  transaction  data files are
               owned by and  constitute  property of First Bank data and records
               shall be  subject  to  regulation  and  examination  by State and
               Federal  supervisory  agencies  to the  same  extent  as if  such
               information were on First Bank's premises. First Services, L.P.'s
               obligations under this Section VIII shall survive the termination
               or expiration of this Agreement.
          B.   First  Services,  L.P.  agrees now and at all times in the future
               that all such  confidential  information  shall be held in strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably  require access to such  information.  First Services,
               L.P. may use such  confidential  information  only in  connection
               with  its   performance   under  this   Agreement.   Confidential
               information  shall be  returned to First Bank or  destroyed  upon
               First  Bank's  request  once the  services  contemplated  by this
               Agreement  have  been  completed  or  upon  termination  of  this
               Agreement.
          C.   First Services,  L.P. shall maintain  adequate backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce  First  Bank's  records  and  data.  In the  event of a
               service  disruption due to reasons beyond First Services,  L.P.'s
               control,  First  Services  L.P.  shall use  diligent  efforts  to
               mitigate the effects of such an occurrence.
          D.   First Services,  L.P. shall  establish and maintain  policies and
               procedures  to  insure   compliance  with  this  section.   First
               Services,  L.P.  agrees  to  permit  First  Bank to  audit  First
               Services,  L.P.'s  compliance  with this section  during  regular
               business hours upon reasonable notice to First Services, L.P. The
               provisions of this section shall survive any  termination of this
               Agreement.

   IX.    FIRST SERVICES, L.P. CONFIDENTIAL INFORMATION

          A.   First Bank shall not use or  disclose  to any third  persons  any
               confidential   information   concerning   First  Services,   L.P.
               Confidential information is that which relates to First Services,
               L.P.'s software, research, development, trade secrets or business
               affairs  including,  but not limited to, the terms and conditions
               of this Agreement but does not include  information in the public
               domain  through no fault of First  Bank.  First Bank  obligations
               under this Section IX shall survive the termination or expiration
               of this agreement.

<PAGE>

          B.   First Services,  L.P.'s system contains  information and computer
               software that is  proprietary  and  confidential  information  of
               First  Services,  L.P., its suppliers and  licensees.  First Bank
               agrees not to attempt to circumvent the devices employed by First
               Services,  L.P. to prevent unauthorized access to First Services,
               L.P.'s system.

   X.     WARRANTIES

         First  Services,  L.P.  will  accurately  process  First  Bank's   work
         provided  that First  Bank  supplies  accurate  data and  follows   the
         procedures described in First Services,  L.P.'s user manuals,   notices
         and advices. First Services,  L.P. personnel will exercise due  care in
         the  processing  of First Bank's work. In the event of an error  caused
         by First  Services,  L.P.'s  personnel,  programs or equipment,   First
         Services,  L.P.  shall correct the data and/or  reprocess the  affected
         report at no additional cost to First Bank.


   XI.    LIMITATION OF LIABILITY

         IN NO EVENT SHALL FIRST SERVICES, L.P. BE LIABLE FOR LOSS OF  GOODWILL,
         OR FOR SPECIAL, INDIRECT,  INCIDENTAL OR CONSEQUENTIAL DAMAGES  ARISING
         FROM FIRST BANK'S USE OF FIRST  SERVICES,  L.P.'S  SERVICES,  OR  FIRST
         SERVICES, L.P.'S SUPPLY OF EQUIPMENT OR SOFTWARE UNDER THIS  AGREEMENT,
         REGARDLESS OF WHETHER SUCH CLAIM ARISES IN TORT OR IN  CONTRACT.  FIRST
         SERVICES,  L.P.'S AGGREGATE LIABILITY FOR ANY AND ALL  CAUSES OF ACTION
         RELATING  TO  SERVICES  PERFORMED  HEREUNDER  OR ANY   DAMAGE  OR  LOSS
         INCURRED OR SUSTAINED BY FIRST BANK RELATING TO THIS AGREEMENT AND  THE
         SERVICES  PERFORMED  HEREUNDER SHALL BE LIMITED TO THE AMOUNT OF  TOTAL
         FEES PAID BY FIRST BANK TO FIRST SERVICES, L.P. IN THE THREE (3)  MONTH
         PERIOD  PRECEDING THE DATE THE CLAIM ACCRUED.  FIRST SERVICES,   L.P.'S
         AGGREGATE  LIABILITY  FOR A DEFAULT  RELATING TO EQUIPMENT OR  SOFTWARE
         SHALL BE LIMITED TO THE AMOUNT PAID FOR THE EQUIPMENT OR SOFTWARE.

   XII.   PERFORMANCE STANDARDS

          A.   On-Line  Availability  -  First  Services,   L.P.'s  standard  of
               performance  shall be on-line  availability  of the system 98% of
               the time that it is scheduled to be so available over a three (3)
               month  period  (the   "Measurement   Period").   Actual   on-line
               performance will be calculated monthly by comparing the number of
               hours  which the system was  scheduled  to be  operational  on an
               on-line basis with the number of hours, or a portion thereof,  it
               was actually  operational  on an on-line  basis.  Downtime may be
               caused by operator  error,  hardware  malfunction or failure,  or

<PAGE>

               environmental failures such as loss of power or air conditioning.
               Downtime caused by reasons beyond First Services,  L.P.'s control
               should not be considered in the statistics.
          B.   Report   Availability  -  First  Services,   L.P.'s  standard  of
               performance for report  availability  shall be that, over a three
               (3) month period, ninety-five percent (95%) of all Critical Daily
               Reports  shall be available  for remote  printing on time without
               significant  errors.  A Critical Daily Report shall mean priority
               group  reports,  which First  Services,  L.P. and First Bank have
               mutually  agreed  upon in  writing,  are  necessary  to  properly
               account for the previous day's activity and properly notify First
               Bank of overdraft,  NSF or return items.  A significant  error is
               one that impairs First Bank's ability to properly account for the
               previous day's activity  and/or  properly  account for overdraft,
               NSF or  return  items.  Actual  performance  will  be  calculated
               monthly  by  comparing  the total  number of First  Bank  reports
               scheduled to be available from First Services, L.P. to the number
               of reports which were available on time and without error.
          C.   Exclusive  Remedy - In the  event  that  First  Services,  L.P.'s
               performance  fails to meet the  standards  listed  above and such
               failure  is not the  result of First  Bank's  error or  omission,
               First Bank's sole and exclusive  remedy for such default shall be
               the right to  terminate  this  Agreement in  accordance  with the
               provisions of this  paragraph.  In the event that First Services,
               L.P.  fails to achieve  any  performance  standards,  alone or in
               combination,  for the prescribed  measurement period,  First Bank
               shall notify First Services, L.P. of its intent to terminate this
               Agreement if First Services, L.P. fails to restore performance to
               the committed  levels.  First  Services,  L.P. shall advise First
               Bank promptly upon correction of the system  deficiencies  (in no
               event shall  corrective  action  exceed  sixty (60) days from the
               notice date) and shall begin an  additional  measurement  period.
               Should  First  Services,   L.P.  fail  to  achieve  the  required
               performance  standards during the  re-measurement  period,  First
               Bank may terminate this Agreement and First Services,  L.P. shall
               cooperate  with First Bank to  achieve an orderly  transition  to
               First Bank's replacement  processing system.  First Bank may also
               terminate this Agreement if First  Services,  L.P.'s  performance
               for the same standard is below the relevant  performance standard
               for more  than two (2)  measurement  periods  in any  consecutive
               twelve (12) months or for more than five (5) measurement  periods
               during  the  term  of  this  Agreement.   During  the  period  of
               transition,  First  Bank  shall  pay  only  such  charges  as are
               incurred for monthly fees until the date of  deconversion.  First
               Services,  L.P. shall not charge First Bank for services relating
               to First Bank's deconversion.
          D.   Audit - First Bank  shall  have the right to  perform  reasonable
               audits,  at  its  cost,  upon  giving  written  notice  to  First
               Services, L.P. of its intent to do so. First Services, L.P. shall
               provide, upon request, financial information to First Bank.
<PAGE>

   XIII.  BUSINESS CONTINUITY / DISASTER RECOVERY

          A.   A  disaster  shall  mean  any  unplanned   interruption   of  the
               operations of or inaccessibility to the First Services, L.P. data
               center  which  appears  in  First  Services,   L.P.'s  reasonable
               judgment to require  relocation of  processing to an  alternative
               site.  First  Services,  L.P.  shall notify First Bank as soon as
               possible after it deems a service outage to be a disaster.  First
               Services, L.P. shall move the processing of First Bank's critical
               services to an alternative  processing center as expeditiously as
               possible.  First  Services,  L.P.  shall  work with First Bank to
               define  those  services  deemed  as  critical  to the  operation,
               revenue, and capital preservation of First Bank. First Bank shall
               maintain  adequate records of all transactions  during the period
               of service  interruption  and shall have  personnel  available to
               assist First Services,  L.P., in implementing  the switch over to
               the alternative processing site. During a disaster, non-critical,
               optional  or  on-request  services  shall  be  provided  by First
               Services,  L.P. only to the extent there is adequate  capacity at
               the alternate center and only after  stabilizing the provision of
               critical services.
          B.   First  Services,  L.P.  shall work with First Bank to establish a
               plan  for  alternative  data  communications  in the  event  of a
               disaster.  First Bank shall be  responsible  for  furnishing  any
               additional communications equipment and data lines required under
               the adopted plan.
          C.   First Services,  L.P. shall test the Business  Continuity Plan by
               conducting,  at least,  one annual  test.  First  Bank  agrees to
               participate in and assist First Services, L.P. with such testing.
               Test results will be made  available to First Bank's  regulators,
               internal  and  external  auditors,  and (upon  request)  to First
               Bank's insurance underwriters.
          D.   First Bank understands and agrees the Business Continuity Plan is
               designed to minimize but not eliminate  risks  associated  with a
               disaster  affecting  First  Services,  L.P.'s data center.  First
               Services,   L.P.   does  not  warrant   that   service   will  be
               uninterrupted  or error  free in the event of a  disaster.  First
               Bank maintains  responsibility for adopting a business continuity
               plan relating to disasters  affecting First Bank's facilities and
               for securing resources necessary to properly protect First Bank's
               revenues in the event of a disaster.


<PAGE>



   XIV.   DEFAULT

          A.   In the event that  First  Bank is thirty  (30) days in arrears in
               making  any  payment  required,  or in the  event  of  any  other
               material default by either First Services,  L.P. or First Bank in
               the  performance  of their  obligations  hereunder,  the affected
               party shall have the right to give written notice to the other of
               the default and its intent to terminate  this  Agreement  stating
               with reasonable  particularity the nature of the claimed default.
               This Agreement  shall terminate if the default has not been cured
               within a  reasonable  time with a minimum  being thirty (30) days
               from the effective date of the notice.
          B.   Upon the expiration of this Agreement, or its termination,  First
               Services,  L.P.  shall furnish to First Bank such copies of First
               Bank's data files as First Bank may  request in machine  readable
               format along with such other  information and assistance as or is
               reasonable  and customary to enable First Bank to deconvert  from
               the First Services, L.P. system. First Bank shall reimburse First
               Services,  L.P.  for the  production  of data  records  and other
               services at First  Services,  L.P.'s then  current  fees for such
               services.

   XV.    INSURANCE

         First  Services,   L.P.  carries   Comprehensive   General    Liability
         insurance,  Commercial Crime Insurance  covering Employee   Dishonesty,
         all-risk  replacement  cost  coverage on all  equipment  used  at First
         Services, L.P.'s data center and Worker Compensation coverage  on First
         Services,  L.P.  employees  wherever located in the United  States.  In
         addition,  First Services, L.P. carries coverage for  computer/computer
         related  theft.  First Bank shall carry  adequate  insurance  to  cover
         liability  for source  documents  while in transit and in case of  data
         loss through errors and omissions.

   XVI.   GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement  in whole or in part  without the consent of First Bank
               and/or  First  Services,  L.P.,  provided,  however,  that  First
               Services,  L.P. may  subcontract any or all of the services to be
               performed  under this  Agreement  without the written  consent of
               First Bank. Any such  subcontractors  shall be required to comply
               with  all  of  the  applicable   terms  and  conditions  of  this
               Agreement.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.

<PAGE>

          C.   First  Services,  L.P.  agrees the Federal Reserve Bank, and FDIC
               will have the authority and  responsibility  pursuant to the Bank
               Service  Corporation Act, 12 U.S.C.  1867(c) relating to services
               performed by contract or  otherwise.  First  Services,  L.P. also
               agrees that its  services  shall be subject to  oversight  by the
               Federal Reserve Bank, FDIC or state banking departments as may be
               applicable  under laws and  regulations  pertaining to First Bank
               and shall,  if applicable,  provide the Federal  Reserve Bank and
               FDIC  with a copy of First  Services,  L.P.'s  current  audit and
               financial statements and a copy of any current third party review
               report when a review has been performed.
          D.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.
          E.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party shall have designated in writing.

                     First Services, L.P.                 First Bank
                     600 James S. McDonnell Blvd.         11901 Olive Blvd.
                     Hazelwood, MO  63042                 Creve Coeur, MO 63141

          F.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          G.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.
          H.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          I.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.



<PAGE>


IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Bank                                  First Services, L.P.
11901 Olive Boulevard                       600 James S. McDonnell Boulevard
Creve Coeur, Missouri 63141                 Hazelwood, Missouri 63042


BY:/s/ Terrance M. McCarthy                 BY:/s/ Steven L. Schlansky
   -----------------------------               --------------------------
       Terrance M. McCarthy                        Steven L. Schlansky
       President and                               Vice President
       Chief Executive Officer


<PAGE>


                                                                    Attachment A
                              First Services, L.P.
                           Product and Price Schedule
                              Effective May 1, 2004

USER BASED SERVICES
-------------------

WAN / LAN                                         $32.00 per user
Technical Support                                 $60.00 per user
Help Desk                                         $15.00 per user
Microsoft Application Licenses - Delete           $20.00 per user
Email                                             $10.00 per user
Web (Internet) Access                             $20.00 per user
Dial-In (Remote) Access                           $30.00 per user
Information Security                              $33.00 per user

         User Based Services include:
         Network Technical Support                  Network Infrastructure
         Technical Support                          Security Monitoring
         Help Desk                                  MS Word - Delete
         MS Excel -Delete                           MS Access - Delete
         MS Powerpoint - Delete                     Anti-Virus
         Email usage                                Web usage
         Dial-In Access capability                  User/Password Administration
         Access Control

BRANCH BASED SERVICES
---------------------

Support Data Connections
         MAN                                   $6,000.00 per location
Branch Data Connections
         Branches                              $1,000.00 per location
ATM Connections
         ATM Connections                         $100.00 per location
         Dierbergs Market ATM                    $700.00 per location
Contingency Planning/Disaster Recovery           $300.00 per location
Branch Courier Routes                            $900.00 per location

         Branch Based Services include:
         Data Communication Lines
         Contingency Planning
         Disaster Recovery Exercises
         Courier Service


<PAGE>

                              First Services, L.P.
                           Product and Price Schedule
                              Effective May 1, 2004

ACCOUNT / ITEM / TRANSACTION BASED SERVICES
-------------------------------------------

Accounts Processed
         DDA                                         .700
         Savings                                     .650
         Time                                        .650
         Loan                                        .700

         Accounts Processed Based Services Include:
         Collection System (Cyber Resources)        ACH Origination
         Recovery System (Cyber Resources)          ATM/Debit Card Processing
         Organizational Profitability (IPS)         General Ledger
         Asset/Liability (Bankware)                 Loan Tracking (Baker Hill)
         Fixed Asset Interface                      Optical System (RVI)
         Loan Spread Sheet (Baker Hill)             Interactive Voice
         MCIF (Okra)                                Credit Scoring (Fair Issac)
         Card Management System                     Loan Documentation (FTI/CFI)
         Business Online Banking (BOB)              Wire Transfer (Fundtech)
         Retail Online Banking                      Commercial Analysis
         Marketing Website                          Accounts Payable Interface
         Bank Audit                                 Long Distance Management
         NOW Reclassification                       Teller (Encore)
         Charge Back System                         Platform (Encore)
         Remote Laser Printing                      Call Center (Encore)
         Automated Reconciliation System (ARP)      Query Report Writer
         Mortgage (Unify)                           Forms and Supplies
         Currency Transaction Reporting             Year-end Processing

CBS, Platform, Internet Maintenance                  .130
ATM/Debit Cards Supported                            .100
Statements Produced
         DDA                                         .300
         Savings                                     .100
         Time                                        .020
         Loans                                       .150
         Year End                                  $1.00
         5498                                      $1.00

Transactions Processed
         Proof Items                                 .040     per item
         POD and EFT items                           .014     per item
         Inclearing and Transmission items           .014     per item
         Wire Activity                             $5.00      per item
         BOB / Firstlink                          $30.00      per customer
         ACH Activity                                .042     per item
         Research Requests                        $15.00      per item
         Adjustments Processed                    $15.00      per item
<PAGE>

                              First Services, L.P.
                           Product and Price Schedule
                              Effective May 1, 2004

         Transactions Processed Base Services Include:
<TABLE>
<CAPTION>
<S>     <C>                                 <C>                                 <C>
         MICR Rejects                       Serial Sort                         Teller Adjustments
         Transit Float Analysis             Microfilming                        Deposit Corrections
         Endorsement Services               Forms and Supplies                  Check Truncation
         Exception Item Sort                Statement Sort                      Interest Check Mailings
         Statement Enclosures               Notice Mailings

Lockbox Support
         Lockbox Transactions                        .450
         Postage                                     As incurred
         Copies                                      .080
Mail Services                                    $500.00

APPLICATION/PROJECT BASED SERVICES
----------------------------------

Information Systems
         Core Systems                         $11,000.00
         Commercial Systems                    $9,800.00
         Retail Systems                        $9,800.00
         Corporate                             $9,800.00
Technology Services
         Server Support                        $9,800.00
         Internet / Intranet                   $9,800.00
Technology Planning/Support
         Project Office/Planning               $9,800.00
         Database Support                      $9,800.00
         Asset Mgmt./Tech. Purchasing          $5,000.00
Acquisition/New Business Services              $9,800.00
Deposit Services
         Operations Support                    $5,000.00
         IRA Support                           $3,000.00
         Bookkeeping                           $3,500.00
         Recon/Appl. Balancing                 $2,500.00
         Records Management                    $5,500.00

         Application/Project Based Services Include:
                  Production problem support                                    Application Q/A
                  Application software upgrades/releases                        Project Management
                  Project Office tracking and reporting                         Acquisition Conversions
                  Branch De-conversions                                         Mergers
                  Equipment quotes, orders, and delivery                        Asset tracking
                  Invoice payment

         Deposit Services includes:
                  Returns                   Large Item Notification             Signature Verification
                  Chargebacks               Kiting                              Savings Bonds
                  Unposted Items            OFAC                                American Express
                  NSF Notices               Year-End Notifications

</TABLE>



<PAGE>



                                                                    Exhibit 10.5

                                SERVICE AGREEMENT

         THIS  SERVICE  AGREEMENT  is made and entered into as of the 1st day of
May,  2004,  by and between  FIRST  BANKS,  INC.,  a bank  holding  company duly
organized  and existing by virtue of the laws of the State of Missouri and FIRST
SERVICES, L.P., a Missouri Limited Partnership.

         WHEREAS,  FIRST BANKS,  INC. and FIRST  SERVICES,  L.P.  entered into a
Service Agreement dated December 15, 2002; and

         WHEREAS, said Service Agreement was assigned to First Banks, Inc. on or
about December 15, 2002; and

         WHEREAS, FIRST SERVICES, L.P. and FIRST BANKS, INC. desire to amend and
restate said Service Agreement in its entirety.

         NOW,  THEREFORE,  for and in  consideration  of the mutual promises and
covenants  contained  herein,  and the sum of Ten Dollars ($10.00) in hand paid,
each to the other, the receipt and sufficiency of which is hereby  acknowledged,
the parties agree as follows:

   I.     TERMINATION AND REVOCATION

         The   Parties  hereto  hereby  revoke,  cancel  and hold for naught the
         Service  Agreement  dated  December 15, 2002, and hereby  substitute in
         its  place the Service Agreement herein contained.

   II.    SERVICES

          A.   First Banks,  Inc.  shall  furnish  First  Services,  L.P.  Human
               Resources services.  These services include  recruitment/employee
               relation's  assistance  and payroll and benefits  administration.
               The cost of these  services will be allocated to First  Services,
               L.P. by First Banks,  Inc.,  based on a mutually agreed corporate
               allocation method.
          B.   First Banks,  Inc. shall furnish First  Services,  L.P.  Training
               services.  These services  include  internal courses and in-house
               vendor courses. In addition,  First Banks, Inc. shall provide the
               use of training  facilities  for large groups.  The cost of these
               services will be charged to First Services,  L.P. by First Banks,
               Inc., based on a published quarterly course catalog.
          C.   First  Banks,  Inc.  will  provide  Financial  Services  to First
               Services, L.P. This includes accounting, tax, and audit services.
               The cost of these  services will be allocated to First  Services,
               L.P. by First Banks,  Inc.,  based on a mutually agreed corporate
               allocation method.

<PAGE>

          D.   First Banks,  Inc. will provide  First  Services,  L.P.  Property
               Management  services.  These services include occupancy and other
               space-related  requirements.  The cost of these  services will be
               allocated to First Services,  L.P. by First Banks, Inc., based on
               a mutually agreed corporate allocation method.
          E.   Priority  of  services  offered  will  be  determined  by  mutual
               agreement of the parties hereto.

   III.   TERM

         The  term of this Agreement  shall be twelve (12) months  commencing on
         May  1, 2004. Upon expiration,  the Agreement will automatically  renew
         for   successive  terms of twelve (12) months each unless  either party
         shall  have provided  written notice to the other at least  one-hundred
         eighty  (180) days prior to the expiration of the then current term, of
         its  intent not to renew.  In the event of  termination,  First  Banks,
         Inc.  shall   provide  a  reasonable  time  allowance  to  allow  First
         Services, L.P. to obtain services from another provider.

   IV.    PRICE AND PAYMENT

          A.   Fees  for the  First  Banks,  Inc.  services  will be  based on a
               mutually agreed corporate  allocation method.  This allocation of
               expense will occur on a monthly basis.

   V.     GENERAL ADMINISTRATION

         First  Banks, Inc. is continually  reviewing and modifying the services
         it  provides to First  Services,  L.P. First Banks,  Inc.  reserves the
         right to make changes to these services, as needed.

   VI.    CLIENT CONFIDENTIAL INFORMATION

          A.   First Banks,  Inc. shall treat all  information and data relating
               to First Services,  L.P as confidential and shall safeguard First
               Services L.P.'s  information with the same degree of care used to
               protect First Banks, Inc.'s confidential information. First Banks
               Inc.'s  obligations  under  this  Section  VI shall  survive  the
               termination or expiration of this Agreement.
          B.   First Banks,  Inc. agrees now and at all times in the future that
               all  such  confidential  information  shall  be  held  in  strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably require access to such information.  First Banks, Inc.
               may use such confidential information only in connection with its
               performance under this Agreement.  Confidential information shall
               be  returned  to First  Services,  L.P or  destroyed  upon  First
               Services,  L.P.'s request once the services  contemplated by this
               Agreement  have  been  completed  or  upon  termination  of  this
               Agreement.

<PAGE>

          C.   First Banks,  Inc.  shall  maintain  adequate  backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce First  Services,  L.P.'s records and data. In the event
               of a service disruption due to reasons beyond First Banks, Inc.'s
               control, First Banks, Inc. shall use diligent efforts to mitigate
               the effects of such an occurrence.
          D.   First Banks,  Inc.  shall  establish  and  maintain  policies and
               procedures to insure  compliance with this section.  First Banks,
               Inc. agrees to permit First  Services,  L.P to audit First Banks,
               Inc.'s compliance with this section during regular business hours
               upon  reasonable  notice to First Banks,  Inc. The  provisions of
               this section shall survive any termination of this Agreement.

   VII.    GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement in whole or in part without the consent of First Banks,
               Inc. and First Services, L.P.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.
          C.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.
          D.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party shall have designated in writing.

                    First Services, L.P.              First Banks, Inc.
                    600 James S. McDonnell Blvd.      135 North Meramec
                    Hazelwood, MO  63042              Clayton, MO 63105

          E.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          F.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.

<PAGE>

          G.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          H.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.

IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Banks, Inc.                               First Services, L.P.
135 North Meramec                               600 James S. McDonnell Boulevard
Clayton, Missouri 63105                         Hazelwood, Missouri 63042

BY:/s/ Allen H. Blake                           BY:/s/ Steven L. Schlansky
   ---------------------------------               -----------------------------
       Allen H. Blake                                  Steven L. Schlansky
       President and                                   Vice President
       Chief Executive Officer



<PAGE>


                                                                      EXHIBIT 31

                           CERTIFICATIONS REQUIRED BY
                      RULE 13a-14(a) (17 CFR 240.13a-14(a))
                    OR RULE 15d-14(a) (17 CFR 240.15d-14(a))
                     OF THE SECURITIES EXCHANGE ACT OF 1934

I, Allen H. Blake, certify that:

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

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

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

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

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

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

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

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

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

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


Date:  August 13, 2004         By:/s/ Allen H. Blake
                                     -------------------------------------------
                                      Allen H. Blake
                                      President, Chief Executive Officer and
                                      Chief Financial Officer
                                      (Principal Executive Officer and Principal
                                      Financial and Accounting Officer)


<PAGE>


                                                                      EXHIBIT 32


                           CERTIFICATIONS REQUIRED BY
                      RULE 13a-14(b) (17 CFR 240.13a-4(b))
                    OR RULE 15d-14(b) (17 CFR 240.15d-14(b))
                        AND SECTION 1350 OF CHAPTER 63 OF
               TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350)


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

         (1)   The  Quarterly  Report  on  Form  10-Q  of the  Company  for  the
               quarterly  period ended June 30, 2004 (the Report) fully complies
               with  the   requirements  of  Sections  13(a)  or  15(d)  of  the
               Securities Exchange Act of 1934; and

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


Date:  August 13, 2004       By:  /s/ Allen H. Blake
                                 -----------------------------------------------
                                      Allen H. Blake
                                      President, Chief Executive Officer and
                                      Chief Financial Officer
                                      (Principal Executive Officer and Principal
                                      Financial and Accounting Officer)