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, 2008

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

               For the transition period from _______ to ________

                         Commission File Number: 0-20632

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

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

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

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

                                   ----------

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

      Indicate  by check mark  whether  the  registrant  is a large  accelerated
filer, an accelerated  filer, a  non-accelerated  filer, or a smaller  reporting
company.  See the definitions of "large accelerated filer,"  "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

      Large accelerated filer [ ]                 Accelerated filer [ ]
      Non-accelerated filer [X] (Do not check     Smaller reporting company [ ]
      if a smaller reporting company)

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

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

                                                    Shares Outstanding
                   Class                             at July 31, 2008
      -------------------------------               -------------------

      Common Stock, $250.00 par value                     23,661

<PAGE>

                                FIRST BANKS, INC.

                                TABLE OF CONTENTS

                                                                           Page
                                                                          ------

PART I.     FINANCIAL INFORMATION

  ITEM 1.   FINANCIAL STATEMENTS:

            CONSOLIDATED BALANCE SHEETS ...............................     1

            CONSOLIDATED STATEMENTS OF OPERATIONS .....................     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 ....................    21

  ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
               RISK ...................................................    41

  ITEM 4.   CONTROLS AND PROCEDURES ...................................    41

PART II.    OTHER INFORMATION

  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .......    43

  ITEM 5.   OTHER INFORMATION .........................................    43

  ITEM 6.   EXHIBITS ..................................................    43

SIGNATURES ............................................................    44

<PAGE>

                         PART I - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS

                                FIRST BANKS, INC.

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

<TABLE>
<CAPTION>
                                                                                         June 30,    December 31,
                                                                                          2008          2007
                                                                                       -----------   ------------
                                                                                       (unaudited)    (Restated)
<S>                                                                                    <C>           <C>
                                    ASSETS
                                    ------
Cash and cash equivalents:
   Cash and due from banks .........................................................   $   308,633        217,597
   Short-term investments ..........................................................        14,214         14,078
                                                                                       -----------   ------------
      Total cash and cash equivalents ..............................................       322,847        231,675
                                                                                       -----------   ------------
Investment securities:
   Available for sale ..............................................................       671,705      1,000,392
   Held to maturity (fair value of $19,494 and $19,078, respectively) ..............        19,204         18,879
                                                                                       -----------   ------------
      Total investment securities ..................................................       690,909      1,019,271
                                                                                       -----------   ------------
Loans:
   Commercial, financial and agricultural ..........................................     2,601,426      2,382,067
   Real estate construction and development ........................................     1,979,404      2,141,234
   Real estate mortgage ............................................................     4,317,108      4,211,285
   Consumer and installment ........................................................        97,776         97,117
   Loans held for sale .............................................................        60,043         66,079
                                                                                       -----------   ------------
      Total loans ..................................................................     9,055,757      8,897,782
   Unearned discount ...............................................................       (10,643)       (11,598)
   Allowance for loan losses .......................................................      (200,957)      (168,391)
                                                                                       -----------   ------------
      Net loans ....................................................................     8,844,157      8,717,793
                                                                                       -----------   ------------
Bank premises and equipment, net ...................................................       240,449        240,456
Goodwill and other intangible assets ...............................................       312,420        315,651
Bank-owned life insurance ..........................................................       117,753        116,619
Deferred income taxes ..............................................................       132,398        139,277
Other assets .......................................................................       138,813        121,728
                                                                                       -----------   ------------
      Total assets .................................................................   $10,799,746     10,902,470
                                                                                       ===========   ============
                                  LIABILITIES
                                  -----------
Deposits:
   Noninterest-bearing demand ......................................................   $ 1,265,002      1,259,123
   Interest-bearing demand .........................................................       962,975        980,850
   Savings and money market ........................................................     2,929,410      2,716,726
   Time deposits of $100 or more ...................................................     1,293,466      1,546,857
   Other time deposits .............................................................     2,396,430      2,645,637
                                                                                       -----------   ------------
      Total deposits ...............................................................     8,847,283      9,149,193
Other borrowings ...................................................................       593,634        409,616
Notes payable ......................................................................        30,000         39,000
Subordinated debentures ............................................................       353,790        353,752
Deferred income taxes ..............................................................        38,188         48,209
Accrued expenses and other liabilities .............................................        38,226         55,079
Minority interest in subsidiaries ..................................................        90,720          5,544
                                                                                       -----------   ------------
      Total liabilities ............................................................     9,991,841     10,060,393
                                                                                       -----------   ------------
                             STOCKHOLDERS' EQUITY
                             --------------------
Preferred stock:
   $1.00 par value, 5,000,000 shares authorized, no shares issued and
      outstanding ..................................................................            --             --
   Class A convertible, adjustable rate, $20.00 par value, 750,000 shares
      authorized, 641,082 shares issued and outstanding ............................        12,822         12,822
   Class B adjustable rate, $1.50 par value, 200,000 shares
      authorized, 160,505 shares issued and outstanding ............................           241            241
Common stock, $250.00 par value, 25,000 shares authorized, 23,661 shares issued
   and outstanding .................................................................         5,915          5,915
Additional paid-in capital .........................................................         9,685          9,685
Retained earnings ..................................................................       779,537        818,343
Accumulated other comprehensive loss ...............................................          (295)        (4,929)
                                                                                       -----------   ------------
      Total stockholders' equity ...................................................       807,905        842,077
                                                                                       -----------   ------------
      Total liabilities and stockholders' equity ...................................   $10,799,746     10,902,470
                                                                                       ===========   ============
</TABLE>

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

                                        1

<PAGE>

                                FIRST BANKS, INC.

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

<TABLE>
<CAPTION>
                                                                                  Three Months Ended         Six Months Ended
                                                                                       June 30,                  June 30,
                                                                               -----------------------   -----------------------
                                                                                  2008         2007         2008         2007
                                                                               ----------   ----------   ----------   ----------
                                                                                            (Restated)                (Restated)
                                                                                            ----------                ----------
<S>                                                                            <C>          <C>          <C>          <C>
Interest income:
   Interest and fees on loans ..............................................   $  138,142      157,075      290,864      310,085
   Investment securities ...................................................        9,457       17,182       20,877       33,374
   Short-term investments ..................................................          154        2,315          316        4,193
                                                                               ----------   ----------   ----------   ----------
         Total interest income .............................................      147,753      176,572      312,057      347,652
                                                                               ----------   ----------   ----------   ----------
Interest expense:
   Deposits:
      Interest-bearing demand ..............................................        1,321        2,313        3,353        4,929
      Savings and money market .............................................       14,417       20,460       31,944       38,797
      Time deposits of $100 or more ........................................       13,016       18,204       29,785       35,234
      Other time deposits ..................................................       22,728       28,180       50,515       55,970
   Other borrowings ........................................................        3,859        4,869        7,787        9,287
   Notes payable ...........................................................          696          636        1,265        1,544
   Subordinated debentures .................................................        4,933        6,442       11,098       12,345
                                                                               ----------   ----------   ----------   ----------
         Total interest expense ............................................       60,970       81,104      135,747      158,106
                                                                               ----------   ----------   ----------   ----------
         Net interest income ...............................................       86,783       95,468      176,310      189,546
Provision for loan losses ..................................................       84,053        3,417      130,000        6,917
                                                                               ----------   ----------   ----------   ----------
         Net interest income after provision for loan losses ...............        2,730       92,051       46,310      182,629
                                                                               ----------   ----------   ----------   ----------
Noninterest income:
   Service charges on deposit accounts and customer service fees ...........       13,071       11,661       25,173       22,269
   Gain on loans sold and held for sale ....................................          968          120        2,648        2,072
   Net loss on investment securities .......................................       (5,784)      (1,533)      (4,623)      (1,240)
   Bank-owned life insurance investment income .............................          724          999        1,697        1,712
   Investment management income ............................................          686        1,542        2,042        3,052
   Insurance fee and commission income .....................................        1,930        1,868        3,904        3,563
   Net (loss) gain on derivative instruments ...............................       (1,646)        (344)       1,786         (342)
   Gain on extinguishment of term repurchase agreement .....................           --           --        5,000           --
   Other ...................................................................        8,942        5,286       14,375       11,122
                                                                               ----------   ----------   ----------   ----------
         Total noninterest income ..........................................       18,891       19,599       52,002       42,208
                                                                               ----------   ----------   ----------   ----------
Noninterest expense:
   Salaries and employee benefits ..........................................       37,099       43,732       77,669       88,960
   Occupancy, net of rental income .........................................        8,969        8,023       18,914       15,731
   Furniture and equipment .................................................        5,473        4,676       10,902        9,227
   Postage, printing and supplies ..........................................        1,688        1,649        3,334        3,431
   Information technology fees .............................................        9,052        9,189       18,391       18,520
   Legal, examination and professional fees ................................        4,488        2,681        7,302        4,414
   Amortization of intangible assets .......................................        2,785        3,227        5,561        6,153
   Advertising and business development ....................................        1,983        1,670        3,447        3,570
   FDIC insurance ..........................................................        2,066          268        3,013          516
   Charitable contributions ................................................          307        1,462          404        3,378
   Other ...................................................................       10,732        8,134       19,129       16,799
                                                                               ----------   ----------   ----------   ----------
         Total noninterest expense .........................................       84,642       84,711      168,066      170,699
                                                                               ----------   ----------   ----------   ----------
         (Loss) income before (benefit) provision for income taxes
            and minority interest in income of subsidiaries ................      (63,021)      26,939      (69,754)      54,138
(Benefit) provision for income taxes .......................................      (23,137)       9,537      (25,142)      19,283
                                                                               ----------   ----------   ----------   ----------
         (Loss) income before minority interest in income of
            subsidiaries ...................................................      (39,884)      17,402      (44,612)      34,855
Minority interest in income of subsidiaries ................................           33           31          178          101
                                                                               ----------   ----------   ----------   ----------
         Net (loss) income .................................................      (39,917)      17,371      (44,790)      34,754
Preferred stock dividends ..................................................          132          132          328          328
                                                                               ----------   ----------   ----------   ----------
         Net (loss) income available to common stockholders ................   $  (40,049)      17,239      (45,118)      34,426
                                                                               ==========   ==========   ==========   ==========
Basic (loss) earnings per common share .....................................   $(1,692.61)      728.65    (1,906.87)    1,454.99
                                                                               ==========   ==========   ==========   ==========
Diluted (loss) earnings per common share ...................................   $(1,692.61)      722.40    (1,906.87)    1,444.47
                                                                               ==========   ==========   ==========   ==========
Weighted average shares of common stock outstanding ........................       23,661       23,661       23,661       23,661
                                                                               ==========   ==========   ==========   ==========
</TABLE>

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

                                        2

<PAGE>

                                FIRST BANKS, INC.

  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE
                              INCOME - (UNAUDITED)
 Six Months Ended June 30, 2008 and 2007 and Six Months Ended December 31, 2007
             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                                Accu-
                                                         Adjustable Rate                                       mulated
                                                         Preferred Stock                                        Other
                                                        -----------------                                      Compre-      Total
                                                         Class A                     Additional                hensive     Stock-
                                                         Conver-            Common     Paid-In    Retained     Income     holders'
                                                          tible   Class B    Stock     Capital    Earnings     (Loss)      Equity
                                                        --------  -------  --------  ----------  ----------  ----------  ----------
                                                                                                 (Restated)  (Restated)  (Restated)
<S>                                                     <C>       <C>      <C>       <C>         <C>         <C>         <C>
Balances, December 31, 2006 ..........................  $ 12,822      241     5,915       9,685     767,199     (13,092)    782,770
                                                                                                                         ----------
Six months ended June 30, 2007:
   Comprehensive income:
      Net income .....................................        --       --        --          --      34,754          --      34,754
      Other comprehensive income, net of tax:
         Unrealized losses on investment
            securities ...............................        --       --        --          --          --      (8,565)     (8,565)
         Reclassification adjustment for investment
            securities gains included in net income ..        --       --        --          --          --         (94)        (94)
         Derivative instruments:
            Current period transactions ..............        --       --        --          --          --        (596)       (596)
                                                                                                                         ----------
   Total comprehensive income ........................                                                                       25,499
   Cumulative effect of change in accounting
      principle ......................................        --       --        --          --       2,470          --       2,470
   Class A preferred stock dividends, $0.50 per
      share ..........................................        --       --        --          --        (321)         --        (321)
   Class B preferred stock dividends, $0.04 per
      share ..........................................        --       --        --          --          (7)         --          (7)
                                                        --------  -------  --------  ----------  ----------  ----------  ----------
Balances, June 30, 2007 ..............................    12,822      241     5,915       9,685     804,095     (22,347)    810,411
                                                                                                                         ----------
Six months ended December 31, 2007:
   Comprehensive income:
      Net income .....................................        --       --        --          --      14,706          --      14,706
      Other comprehensive income, net of tax:
         Unrealized losses on investment
            securities ...............................        --       --        --          --          --       8,360       8,360
         Reclassification adjustment for investment
            securities losses included in net
            income ...................................        --       --        --          --          --         216         216
         Derivative instruments:
            Current period transactions ..............        --       --        --          --          --       9,744       9,744
                                                                                                                         ----------
   Total comprehensive income ........................                                                                       33,026
   Impact of adoption of SFAS No. 158 ................        --       --        --          --          --        (902)       (902)
   Class A preferred stock dividends, $0.70 per
      share ..........................................        --       --        --          --        (448)         --        (448)
   Class B preferred stock dividends, $0.07 per
      share ..........................................        --       --        --          --         (10)         --         (10)
                                                        --------  -------  --------  ----------  ----------  ----------  ----------
Balances, December 31, 2007 ..........................    12,822      241     5,915       9,685     818,343      (4,929)    842,077
                                                                                                                         ----------
Six months ended June 30, 2008:
   Comprehensive income:
      Net loss .......................................        --       --        --          --     (44,790)         --     (44,790)
      Other comprehensive income, net of tax:
         Unrealized losses on investment
            securities ...............................        --       --        --          --          --      (1,572)     (1,572)
         Reclassification adjustment for investment
            securities losses included in net loss ...        --       --        --          --          --       3,005       3,005
         Derivative instruments:
            Current period transactions ..............        --       --        --          --          --       3,201       3,201
                                                                                                                         ----------
   Total comprehensive loss ..........................                                                                      (40,156)
   Cumulative effect of change in accounting
      principle ......................................        --       --        --          --       6,312          --       6,312
   Class A preferred stock dividends, $0.50 per
      share ..........................................        --       --        --          --        (321)         --        (321)
   Class B preferred stock dividends, $0.04 per
      share ..........................................        --       --        --          --          (7)         --          (7)
                                                        --------  -------  --------  ----------  ----------  ----------  ----------
Balances, June 30, 2008 ..............................  $ 12,822      241     5,915       9,685     779,537        (295)    807,905
                                                        ========  =======  ========  ==========  ==========  ==========  ==========
</TABLE>

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

                                        3
<PAGE>

                                FIRST BANKS, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
                        (dollars expressed in thousands)

<TABLE>
<CAPTION>
                                                                                                     Six Months Ended
                                                                                                         June 30,
                                                                                                  ----------------------
                                                                                                     2008        2007
                                                                                                  ---------   ----------
                                                                                                              (Restated)
<S>                                                                                               <C>         <C>
Cash flows from operating activities:
   Net (loss) income ..........................................................................   $ (44,790)      34,754
   Adjustments to reconcile net (loss) income to net cash provided by operating activities:
      Depreciation and amortization of bank premises and equipment ............................      12,310        9,817
      Amortization of intangible assets .......................................................       5,561        6,153
      Originations of loans held for sale .....................................................    (123,468)    (379,622)
      Proceeds from sales of loans held for sale ..............................................     160,920      397,664
      Payments received on loans held for sale ................................................      12,828       11,506
      Provision for loan losses ...............................................................     130,000        6,917
      (Benefit) provision for current income taxes ............................................     (15,087)      18,308
      (Benefit) provision for deferred income taxes ...........................................     (10,055)         975
      Decrease in accrued interest receivable .................................................      10,215        2,317
      Decrease in accrued interest payable ....................................................      (4,422)      (5,403)
      Proceeds from sales of trading securities ...............................................          --       13,177
      Maturities of trading securities ........................................................          --       16,476
      Purchases of trading securities .........................................................          --      (17,939)
      Gain on loans sold and held for sale ....................................................      (2,648)      (2,072)
      Net loss on investment securities .......................................................       4,623        1,240
      Net (gain) loss on derivative instruments ...............................................      (1,786)         342
      Gain on extinguishment of term repurchase agreement .....................................      (5,000)          --
      Other operating activities, net .........................................................       8,872        2,978
      Minority interest in income of subsidiaries .............................................         178          101
                                                                                                  ---------   ----------
         Net cash provided by operating activities ............................................     138,251      117,689
                                                                                                  ---------   ----------
Cash flows from investing activities:
   Cash paid for acquired entities, net of cash and cash equivalents received .................          --      (14,720)
   Cash paid for earn-out consideration to Adrian N. Baker & Company ..........................      (2,920)      (1,513)
   Proceeds from sales of investment securities available for sale ............................     127,384          487
   Maturities of investment securities available for sale .....................................     186,179      606,058
   Maturities of investment securities held to maturity .......................................       1,216        4,223
   Purchases of investment securities available for sale ......................................     (22,519)    (520,751)
   Purchases of investment securities held to maturity ........................................      (1,557)        (134)
   Proceeds from sale of commercial loans held for sale .......................................       3,421           --
   Net increase in loans ......................................................................    (301,466)    (194,528)
   Recoveries of loans previously charged-off .................................................       3,471        3,546
   Purchases of bank premises and equipment ...................................................     (12,837)     (36,963)
   Cash received for minority interest in FB Holdings, LLC ....................................      85,000           --
   Other investing activities, net ............................................................       8,182        4,088
                                                                                                  ---------   ----------
         Net cash provided by (used in) investing activities ..................................      73,554     (150,207)
                                                                                                  ---------   ----------
Cash flows from financing activities:
   Increase in demand, savings and money market deposits ......................................     200,688      224,746
   Decrease in time deposits ..................................................................    (500,018)     (73,677)
   Increase (decrease) in Federal Home Loan Bank advances .....................................     299,914      (33,283)
   Decrease in federal funds purchased ........................................................     (76,500)          --
   (Decrease) increase in securities sold under agreements to repurchase ......................     (35,389)      62,618
   Advances drawn on notes payable ............................................................      55,000           --
   Repayments of notes payable ................................................................     (64,000)     (30,000)
   Proceeds from issuance of subordinated debentures ..........................................          --       25,774
   Repayments of subordinated debentures ......................................................          --      (82,681)
   Payment of preferred stock dividends .......................................................        (328)        (328)
                                                                                                  ---------   ----------
         Net cash (used in) provided by financing activities ..................................    (120,633)      93,169
                                                                                                  ---------   ----------
         Net increase in cash and cash equivalents ............................................      91,172       60,651
Cash and cash equivalents, beginning of period ................................................     231,675      369,557
                                                                                                  ---------   ----------
Cash and cash equivalents, end of period ......................................................   $ 322,847      430,208
                                                                                                  =========   ==========
Supplemental disclosures of cash flow information:
   Cash paid (received) during the period for:
      Interest on liabilities .................................................................   $ 141,162      163,632
      Income taxes ............................................................................      (5,259)      (7,462)
                                                                                                  =========   ==========
   Noncash investing and financing activities:
      Cumulative effect of change in accounting principle .....................................   $   6,312        2,470
      Loans held for sale transferred to loan portfolio .......................................          --        7,368
      Loans transferred to other real estate ..................................................      17,382        6,400
                                                                                                  =========   ==========
   Business combinations:
      Fair value of tangible assets acquired (noncash) ........................................   $      --      189,275
      Goodwill and other intangible assets recorded with net assets acquired ..................          --       28,557
      Liabilities assumed .....................................................................          --     (201,599)
                                                                                                  =========   ==========
</TABLE>

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

                                        4

<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 Amendment No. 1 to the
2007 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, 2008 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending December 31, 2008.

The consolidated financial statements include the accounts of the parent company
and its  subsidiaries,  giving  effect to the minority  interest,  as more fully
described  below, and in Note 5 to the consolidated  financial  statements.  All
significant intercompany accounts and transactions have been eliminated. Certain
reclassifications  of 2007  amounts  have  been  made  to  conform  to the  2008
presentation.

First Banks operates  through its wholly owned  subsidiary bank holding company,
The San Francisco Company (SFC),  headquartered in St. Louis,  Missouri, and its
wholly owned subsidiary, Coast Financial Holdings, Inc. (CFHI), headquartered in
Bradenton, Florida.

Prior to First Banks'  acquisition  of CFHI on November  30,  2007,  First Bank,
headquartered in St. Louis,  Missouri,  was a wholly owned banking subsidiary of
SFC. On November 30, 2007, First Banks completed its acquisition of CFHI and its
wholly owned banking subsidiary,  Coast Bank of Florida (Coast Bank). The issued
and  outstanding  shares of common stock of Coast Bank were  exchanged for newly
issued and outstanding shares of non-voting Series B common stock of First Bank,
and Coast Bank was  merged  with and into First  Bank.  As a result,  SFC is the
owner of 100% of the voting Series A outstanding shares of common stock of First
Bank and CFHI is the owner of 100% of the non-voting Series B outstanding shares
of common stock of First Bank. Thus, First Bank is 96.82% owned by SFC and 3.18%
owned by CFHI.

First Bank operates through its branch banking offices and  subsidiaries:  First
Bank Business Capital,  Inc.;  Missouri Valley Partners,  Inc. (MVP);  Adrian N.
Baker & Company (ANB);  Universal Premium Acceptance  Corporation and its wholly
owned subsidiary, UPAC of California, Inc. (collectively,  UPAC); Small Business
Loan  Source  LLC (SBLS  LLC) and FB  Holdings,  LLC (FB  Holdings).  All of the
subsidiaries  are wholly owned as of June 30, 2008,  except SBLS LLC,  which was
76.0% owned by First Bank and 24.0% owned by First Capital America,  Inc. (FCA),
and FB  Holdings,  which was 51.02% owned by First Bank and 48.98% owned by FCA,
as further described in Note 5 to the consolidated  financial  statements.  SBLS
LLC and FB Holdings are included in the consolidated  financial  statements with
the minority  ownership  interests  reported in the  liabilities  section of the
consolidated  balance  sheets as  "minority  interest in  subsidiaries"  and the
minority  ownership  interest  of  earnings  or loss,  net of tax,  reported  as
"minority interest in income of subsidiaries" in the consolidated  statements of
operations.

Restatement of Previously Issued Consolidated Interim Financial Statements.

As discussed in Amendment No. 1 to the 2007 Annual Report on Form 10-K, as filed
with the United  States  Securities  and Exchange  Commission  (SEC) on July 30,
2008, the Audit Committee of the Board of Directors (the Audit Committee),  with
the  assistance  of legal  counsel  and other  third  parties,  commissioned  an
investigation  into the  circumstances and possible  irregularities  that led to
certain fraudulent transactions in the Company's mortgage banking division being
improperly  recorded in the Company's  consolidated  financial  statements  (the
Transactions) due to the  circumvention of established  internal  controls.  The
investigation was completed on July 29, 2008.

On May 16, 2008,  management and the Audit Committee determined that the Company
needed to restate its previously issued consolidated  financial statements as of
December 31, 2007 and 2006, and for the years ended December 31, 2007,  2006 and
2005 and each of the quarters in 2007 and 2006, and that these previously issued
consolidated financial statements should no longer be relied upon.  Accordingly,
the Company has restated its previously issued consolidated financial statements
in Amendment No. 1 to its Annual Report on Form 10-K for the year ended December
31, 2007. The Company has not amended any of its other  previously  filed Annual
Reports  on Form 10-K or any  Quarterly  Reports  on Form  10-Q for the  periods
affected by this restatement.

                                        5

<PAGE>

The following table presents the effects of the adjustments made to First Banks'
previously reported consolidated  statements of operations for the three and six
months ended June 30, 2007:

<TABLE>
<CAPTION>
                                                               Three Months Ended                    Six Months Ended
                                                                  June 30, 2007                        June 30, 2007
                                                       ----------------------------------   ----------------------------------
                                                           As                                   As
                                                       Previously                   As      Previously                   As
                                                        Reported    Adjustment   Restated    Reported    Adjustment   Restated
                                                       ----------   ----------   --------   ----------   ----------   --------
                                                               (dollars in thousands, except share and per share data)
<S>                                                    <C>          <C>          <C>        <C>          <C>          <C>
Interest and fees on loans .........................    $157,822        (747)     157,075     311,579      (1,494)     310,085
Total interest income ..............................     177,319        (747)     176,572     349,146      (1,494)     347,652
Interest expense on other borrowings ...............       4,941         (72)       4,869       9,292          (5)       9,287
Interest expense on subordinated debentures ........       5,814         628        6,442      11,748         597       12,345
Total interest expense .............................      80,548         556       81,104     157,514         592      158,106
Net interest income ................................      96,771      (1,303)      95,468     191,632      (2,086)     189,546
Provision for loan losses ..........................       5,500      (2,083)       3,417       9,000      (2,083)       6,917
Net interest income after provision for loan
   losses ..........................................      91,271         780       92,051     182,632          (3)     182,629
Gain on loans sold and held for sale ...............       4,558      (4,438)         120       8,484      (6,412)       2,072
Total noninterest income ...........................      24,037      (4,438)      19,599      48,620      (6,412)      42,208
Occupancy expense, net of rental income ............       7,747         276        8,023      15,168         563       15,731
Total noninterest expense ..........................      84,435         276       84,711     170,136         563      170,699
Income before provision for income taxes and
   minority interest in income of subsidiary .......      30,873      (3,934)      26,939      61,116      (6,978)      54,138
Provision for income taxes .........................      11,092      (1,555)       9,537      22,042      (2,759)      19,283
Income before minority interest in income of
   subsidiaries ....................................      19,781      (2,379)      17,402      39,074      (4,219)      34,855
Net income .........................................      19,750      (2,379)      17,371      38,973      (4,219)      34,754
Net income available to common stockholders ........      19,618      (2,379)      17,239      38,645      (4,219)      34,426
Basic earnings per common share ....................      829.17     (100.52)      728.65    1,633.29     (178.30)    1,454.99
Diluted earnings per common share ..................      821.63      (99.23)      722.40    1,620.45     (175.98)    1,444.47
</TABLE>

Significant  Accounting  Policies.  On  January 1, 2008,  First  Banks  opted to
measure  servicing  rights at fair value as  permitted by Statement of Financial
Accounting  Standards  (SFAS) No. 156 -  Accounting  for  Servicing of Financial
Assets.  The election of this option resulted in the recognition of a cumulative
effect of change in accounting principle of $6.3 million,  which was recorded as
an increase to beginning  retained  earnings,  as further described in Note 3 to
the  consolidated  financial  statements.  As such,  effective  January 1, 2008,
changes in the fair value of mortgage and SBA servicing rights are recognized in
earnings in the period in which the change occurs.

On  January  1,  2008,  First  Banks  implemented  SFAS  No.  157 -  Fair  Value
Measurements for financial and nonfinancial assets and liabilities recognized or
disclosed at fair value in the  financial  statements  on a recurring  basis and
financial  assets  recognized  on a  nonrecurring  basis,  which  did not have a
material  impact on First Banks'  financial  condition or results of  operations
other than certain additional disclosure requirements. SFAS No. 157 defines fair
value,  establishes  a  framework  for  measuring  fair value in U.S.  generally
accepted  accounting  principles,  and  expands  disclosures  about  fair  value
measurements.  SFAS No. 157 applies under other accounting  pronouncements  that
require or permit  fair value  measurements,  and does not  require any new fair
value  measurements.  SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years,  for financial
assets and liabilities and nonfinancial assets and nonfinancial liabilities that
are  recognized  or disclosed  at fair value in the  financial  statements  on a
recurring  basis  (at  least  annually).  Implementation  is  deferred  for  all
nonfinancial  assets  and  nonfinancial   liabilities  that  are  recognized  or
disclosed at fair value in the financial  statements on a nonrecurring  basis to
fiscal years  beginning  after November 15, 2008. For additional  information on
the fair value of financial  assets,  see Note 12 to the consolidated  financial
statements.

                                        6

<PAGE>

(2)   GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets, net of amortization, were comprised of the
following at June 30, 2008 and December 31, 2007:

<TABLE>
<CAPTION>
                                          June 30, 2008           December 31, 2007
                                    ------------------------   -----------------------
                                      Gross                     Gross
                                     Carrying    Accumulated   Carrying    Accumulated
                                      Amount    Amortization    Amount    Amortization
                                    ---------   ------------   --------   ------------
                                             (dollars expressed in thousands)
<S>                                 <C>         <C>            <C>        <C>
Amortized intangible assets:
   Core deposit intangibles .....   $  53,916        (28,562)    53,916        (23,873)
   Customer list intangibles ....      23,320         (3,155)    23,320         (2,408)
   Other intangibles ............       2,385         (1,562)     2,386         (1,437)
                                    ---------   ------------   --------   ------------
      Total .....................   $  79,621        (33,279)    79,622        (27,718)
                                    =========   ============   ========   ============

Unamortized intangible assets:
   Goodwill .....................   $ 266,078                   263,747
                                    =========                  ========
</TABLE>

Amortization  of  intangible  assets was $2.8  million and $5.6  million for the
three and six months  ended June 30,  2008,  respectively,  and $3.2 million and
$6.2 million for the  comparable  periods in 2007.  Amortization  of  intangible
assets,  including  amortization  of core  deposit  intangibles,  customer  list
intangibles and other intangibles has been estimated in the following table, and
does not take into  consideration  any potential  future  acquisitions or branch
office purchases.

                                                (dollars expressed in thousands)
Year ending December 31:
   2008 remaining ......................................   $  5,570
   2009 ................................................      9,280
   2010 ................................................      8,852
   2011 ................................................      6,674
   2012 ................................................      2,459
   2013 ................................................      1,524
   Thereafter ..........................................     11,983
                                                           --------
      Total ............................................   $ 46,342
                                                           ========

Changes in the  carrying  amount of goodwill  for the three and six months ended
June 30, 2008 and 2007 were as follows:

<TABLE>
<CAPTION>
                                              Three Months Ended      Six Months Ended
                                                   June 30,               June 30,
                                              -------------------   -------------------
                                                 2008       2007      2008       2007
                                              ---------   -------   --------   --------
                                                   (dollars expressed in thousands)
<S>                                           <C>         <C>       <C>        <C>
Balance, beginning of period ..............   $ 264,379   252,617    263,747    230,036
Goodwill acquired during the period (1) ...       2,920     1,476      2,920     24,659
Acquisition-related adjustments (2) .......      (1,221)       --       (589)      (602)
                                              ---------   -------   --------   --------
Balance, end of period ....................   $ 266,078   254,093    266,078    254,093
                                              =========   =======   ========   ========
</TABLE>

----------
(1)   Goodwill   acquired   during   2008   pertains  to   additional   earn-out
      consideration  associated  with  the  acquisition  of ANB in  March  2006.
      Goodwill  acquired  during 2007 pertains to the  acquisition of Royal Oaks
      Bancshares,  Inc. in February 2007 and additional  earn-out  consideration
      associated with the acquisition of ANB.
(2)   Acquisition-related  adjustments  include additional  purchase  accounting
      adjustments  for prior  years'  acquisitions  necessary  to  appropriately
      adjust preliminary goodwill recorded at the time of the acquisition, which
      was based upon current  estimates  available at that time,  to reflect the
      receipt of  additional  valuation  data.  Acquisition-related  adjustments
      recorded in 2008 pertain to the  acquisition of CFHI in November 2007; and
      acquisition-related   adjustments   recorded   in  2007   pertain  to  the
      acquisition of San Diego Community Bank in August 2006.

                                        7

<PAGE>

(3)   SERVICING RIGHTS

On January 1, 2008, First Banks opted to measure  servicing rights at fair value
as  permitted  by SFAS No. 156.  The  election  of this  option  resulted in the
recognition  of a cumulative  effect of change in  accounting  principle of $6.3
million,  net of tax,  which was recorded as an increase to  beginning  retained
earnings,  as  further  described  in  Note  1  to  the  consolidated  financial
statements.

Mortgage Banking Activities. At June 30, 2008 and December 31, 2007, First Banks
serviced  mortgage  loans for others  totaling  $1.09 billion and $1.10 billion,
respectively.  Changes in mortgage servicing rights for the three and six months
ended June 30, 2008 and 2007 were as follows:

<TABLE>
<CAPTION>
                                                              Three Months Ended    Six Months Ended
                                                                   June 30,             June 30,
                                                              ------------------   -----------------
                                                                2008       2007      2008      2007
                                                              --------   -------   -------   -------
                                                                 (dollars expressed in thousands)
<S>                                                           <C>        <C>       <C>       <C>
Balance, beginning of period ..............................   $ 14,169     5,407     5,290     5,867
Re-measurement to fair value upon election to measure
   servicing rights at fair value under SFAS No. 156 ......         --        --     9,538        --
Originated mortgage servicing rights ......................        998       322     1,673       655
Change in fair value resulting from changes in valuation
   inputs or assumptions used in valuation model (1) ......      1,235        --       551        --
Other changes in fair value (2) ...........................       (435)       --    (1,085)       --
Amortization ..............................................         --      (725)       --    (1,518)
                                                              --------   -------   -------   -------
Balance, end of period ....................................   $ 15,967     5,004    15,967     5,004
                                                              ========   =======   =======   =======
</TABLE>

----------
(1)   The change in fair value  resulting  from changes in  valuation  inputs or
      assumptions  used in  valuation  model  primarily  reflects  the change in
      discount rates and prepayment speed assumptions,  primarily due to changes
      in interest rates.
(2)   Other   changes   in   fair   value    reflect    changes   due   to   the
      collection/realization of expected cash flows over time.

Other Servicing Activities.  At June 30, 2008 and December 31, 2007, First Banks
serviced  United  States Small  Business  Administration  (SBA) loans for others
totaling  $208.0  million  and  $149.9  million,  respectively.  Changes  in SBA
servicing  rights for the three and six months ended June 30, 2008 and 2007 were
as follows:

<TABLE>
<CAPTION>
                                                              Three Months Ended    Six Months Ended
                                                                   June 30,             June 30,
                                                              ------------------   -----------------
                                                                2008       2007      2008      2007
                                                              -------    -------   -------   -------
                                                                 (dollars expressed in thousands)
<S>                                                           <C>        <C>       <C>       <C>
Balance, beginning of period ..............................   $  9,310     7,795     7,468     8,064
Re-measurement to fair value upon election to measure
   servicing rights at fair value under SFAS No. 156 ......         --        --       905        --
Originated SBA servicing rights ...........................        691       523     2,053       990
Change in fair value resulting from changes in valuation
   inputs or assumptions used in valuation model (1) ......        134        --        15        --
Other changes in fair value (2) ...........................       (379)       --      (685)       --
Amortization ..............................................         --      (403)       --      (816)
Impairment ................................................         --      (295)       --      (618)
                                                              --------   -------   -------   -------
Balance, end of period ....................................   $  9,756     7,620     9,756     7,620
                                                              ========   =======   =======   =======
</TABLE>

----------
(1)   The change in fair value  resulting  from changes in  valuation  inputs or
      assumptions  used in  valuation  model  primarily  reflects  the change in
      discount rates and prepayment speed assumptions,  primarily due to changes
      in interest rates.
(2)   Other   changes   in   fair   value    reflect    changes   due   to   the
      collection/realization of expected cash flows over time.

                                        8

<PAGE>

(4)   EARNINGS (LOSS) PER COMMON SHARE

The following is a reconciliation of basic and diluted earnings (loss) per share
(EPS) for the three and six months ended June 30, 2008 and 2007:

<TABLE>
<CAPTION>
                                                                Income                   Per Share
                                                                (Loss)       Shares       Amount
                                                              ----------   ----------   ----------
                                                    (dollars in thousands, except share and per share data)
<S>                                                           <C>          <C>          <C>
Three months ended June 30, 2008:
   Basic EPS - loss to common stockholders ................   $  (40,049)      23,661   $(1,692.61)
   Effect of dilutive securities:
     Class A convertible preferred stock ..................           --           --          --
                                                              ----------   ----------   ----------
   Diluted EPS - loss to common stockholders ..............   $  (40,049)      23,661   $(1,692.61)
                                                              ==========   ==========   ==========

<CAPTION>
                                                              (Restated)   (Restated)   (Restated)
                                                              ----------   ----------   ----------
<S>                                                           <C>          <C>          <C>
Three months ended June 30, 2007:
   Basic EPS - income available to common stockholders ....   $   17,239       23,661   $   728.65
   Effect of dilutive securities:
     Class A convertible preferred stock ..................          130          382        (6.25)
                                                              ----------   ----------   ----------
   Diluted EPS - income available to common stockholders ..   $   17,369       24,043   $   722.40
                                                              ==========   ==========   ==========

Six months ended June 30, 2008:
   Basic EPS - loss to common stockholders ................   $  (45,118)      23,661   $(1,906.87)
   Effect of dilutive securities:
     Class A convertible preferred stock ..................           --           --           --
                                                              ----------   ----------   ----------
   Diluted EPS - loss to common stockholders ..............   $  (45,118)      23,661   $(1,906.87)
                                                              ==========   ==========   ==========

<CAPTION>
                                                              (Restated)   (Restated)   (Restated)
                                                              ----------   ----------   ----------
<S>                                                           <C>          <C>          <C>
Six months ended June 30, 2007:
   Basic EPS - income available to common stockholders ....   $   34,426       23,661   $ 1,454.99
   Effect of dilutive securities:
     Class A convertible preferred stock ..................          321          394       (10.52)
                                                              ----------   ----------   ----------
   Diluted EPS - income available to common stockholders ..   $   34,747       24,055   $ 1,444.47
                                                              ==========   ==========   ==========
</TABLE>

(5)   TRANSACTIONS WITH RELATED PARTIES

First Services, L.P. (First Services), a limited partnership indirectly owned by
First Banks' Chairman and members of his immediate family,  provides information
technology,  item processing and various related  services to First Banks,  Inc.
and its  subsidiaries.  Fees paid under agreements with First Services were $8.6
million  and $17.2  million  for the three and six months  ended June 30,  2008,
respectively,  and $8.6 million and $17.5 million for the comparable  periods in
2007.  First Services  leases  information  technology and other  equipment from
First  Bank.  First  Services  paid First Bank  rental  fees for the use of that
equipment  of $801,000  and $1.9  million  during the three and six months ended
June 30, 2008,  respectively,  and $885,000 and $2.0 million for the  comparable
periods in 2007. In addition,  First  Services paid  approximately  $463,000 and
$927,000  for the three and six months ended June 30,  2008,  respectively,  and
$441,000 and $882,000 for the comparable periods in 2007, in rental payments for
occupancy of certain First Bank premises from which business is conducted.

First Brokerage America,  L.L.C. (First Brokerage),  a limited liability company
indirectly  owned by First Banks' Chairman and members of his immediate  family,
received  approximately $1.9 million and $3.6 for the three and six months ended
June  30,  2008,  respectively,  and  $1.4  million  and  $2.4  million  for the
comparable   periods  in  2007,  in  gross   commissions  paid  by  unaffiliated
third-party  companies.  The  commissions  received were primarily in connection
with the  sales  of  annuities,  securities  and  other  insurance  products  to
customers of First Bank. First Brokerage paid approximately $75,000 and $120,000
for the three and six months ended June 30, 2008, respectively,  and $53,000 and
$86,000 for the comparable periods in 2007, to First Bank in rental payments for
occupancy  of certain  First Bank  premises  from which  brokerage  business  is
conducted.

In January 2007, First Banks  contributed  48,796 shares of common stock held in
its available-for-sale investment securities portfolio with a fair value of $1.7
million  to  the  Dierberg  Operating  Foundation,   Inc.  (the  Foundation),  a
charitable  foundation  established by First Banks'  Chairman and members of his
immediate  family.  In conjunction with this  transaction,  First Banks recorded
charitable contribution expense of $1.7 million, which was partially offset by a
gain on the contribution of these  available-for-sale  investment  securities of
$147,000,  representing the difference between the cost basis and the fair value
of the common stock on the date of the  contribution.  In addition,  First Banks
recognized  a tax  benefit of $1.0  million  associated  with this  transaction.
During the second quarter of

                                        9

<PAGE>

2007,  First Bank  contributed  $1.3 million in cash to the Foundation,  thereby
bringing the total value of charitable  contributions  to the Foundation to $1.3
million  and $3.0  million  for the three and six months  ended  June 30,  2007,
respectively.  There were no charitable  contributions made to this organization
during the three and six months ended June 30, 2008.

First Bank leases certain of its in-store  branch  offices and automated  teller
machine  (ATM)  sites  from  Dierbergs  Markets,  Inc.,  a grocery  store  chain
headquartered  in St. Louis,  Missouri that is owned and operated by the brother
of First Banks' Chairman and members of his immediate family. Total rent expense
incurred by First Bank under the lease  obligation  contracts  was  $105,000 and
$204,000  for the three and six months ended June 30,  2008,  respectively,  and
$99,000 and $197,000 for the comparable periods in 2007.

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

In June 2005,  SBLS LLC executed a Multi-Party  Agreement by and among SBLS LLC,
First Bank,  Colson Services  Corp.,  fiscal transfer agent for the SBA, and the
SBA, in addition to a Loan and  Security  Agreement  by and among First Bank and
the SBA  (collectively,  the Agreement) that provided a warehouse line of credit
for loan funding purposes. During the first and third quarters of 2007, SBLS LLC
modified the structure of the Agreement with First Bank. In September  2007, the
existing loan under the Agreement  was  refinanced by a Promissory  Note entered
into between  SBLS LLC and First Bank that  provides a $75.0  million  unsecured
revolving line of credit with a maturity date of September 30, 2008. Interest is
payable monthly,  in arrears, on the outstanding loan balances at a current rate
equal to the 30-day London Interbank  Offered Rate (LIBOR) plus 40 basis points.
The balance of advances  outstanding under the Promissory Note was $59.0 million
and $52.3 million at June 30, 2008 and December 31, 2007, respectively. Interest
expense  recorded  by SBLS LLC  under  the  Promissory  Note and  Agreement  was
$431,000  and  $992,000  for the  three  and six  months  ended  June 30,  2008,
respectively,  and $947,000 and $1.9 million for the comparable periods in 2007.
The balance of the advances under the Promissory  Note and the related  interest
expense  recognized by SBLS LLC are eliminated for purposes of the  consolidated
financial statements.

On May 14, 2008,  First Banks formed FB Holdings,  a limited  liability  company
organized  in the state of Missouri  (FB  Holdings).  FB Holdings  operates as a
majority-owned  subsidiary of First Bank and was formed for the primary  purpose
of holding  and  managing  certain  nonperforming  loans and assets to allow the
liquidation of such assets at a time that is more  economically  advantageous to
First  Bank.   During  the  second  quarter  of  2008,  First  Bank  contributed
nonperforming  loans and assets with a fair value of approximately $88.6 million
and FCA  contributed  cash of $85.0 million to FB Holdings.  As a result,  First
Bank owned 51.02% and FCA owned the  remaining  48.98% of FB Holdings as of June
30, 2008. The  contribution of cash by FCA is reflected as minority  interest in
the consolidated financial statements and, consequently, increased the Company's
and First Bank's total risk-based capital ratios.

On May 15, 2008,  First Banks  entered into a Revolving  Credit Note and a Stock
Pledge  Agreement with Investors of America  Limited  Partnership  (Investors of
America,  LP) (the New Credit Agreement),  as further described in Note 9 to the
consolidated financial statements.  Investors of America, LP is a Nevada limited
partnership  that was created by and for the benefit of Mr.  James F.  Dierberg,
First Banks'  Chairman of the Board,  and members of his immediate  family.  The
balance of advances outstanding under the New Credit Agreement was $30.0 million
at June 30, 2008. Interest expense, including commitment fees, recorded by First
Banks under the New Credit  Agreement  was $239,000 for the three and six months
ended June 30, 2008.

First Bank has had in the past, and may have in the future, loan transactions in
the ordinary  course of business  with its  directors  and/or their  affiliates.
These loan  transactions have been on the same terms,  including  interest rates
and collateral, as those prevailing at the time for comparable transactions with
unaffiliated  persons  and  did  not  involve  more  than  the  normal  risk  of
collectability or present other unfavorable features. Loans to directors,  their
affiliates and executive officers of First Banks, Inc. were approximately  $44.5
million and $57.7 million at June 30, 2008 and December 31, 2007,  respectively.
First Bank does not extend credit to its officers or to officers of First Banks,
Inc., except  extensions of credit secured by mortgages on personal  residences,
loans to purchase automobiles, personal credit card accounts and deposit account
overdraft protection under a plan whereby a credit limit has been established in
accordance with First Bank's standard credit criteria.

                                       10

<PAGE>

(6)   REGULATORY CAPITAL

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  First  Banks and First Bank to maintain  minimum  amounts and ratios of
total  and Tier 1 capital  (as  defined  in the  regulations)  to  risk-weighted
assets, and of Tier 1 capital to average assets. Management believes, as of June
30, 2008, First Banks and First Bank were well capitalized. As of June 30, 2008,
the most recent  notification  from First Banks' primary  regulator  categorized
First Banks and First Bank as well  capitalized  under the regulatory  framework
for prompt corrective action. To be categorized as well capitalized, First Banks
and First Bank must maintain  minimum total  risk-based,  Tier 1 risk-based  and
Tier 1 leverage ratios as set forth in the following table.

At June 30, 2008 and December 31, 2007,  First Banks' and First Bank's  required
and actual capital ratios were as follows:

<TABLE>
<CAPTION>
                                                                      Actual
                                               -----------------------------------------------------      For         To be Well
                                                     June 30, 2008             December 31, 2007        Capital   Capitalized Under
                                               -------------------------   -------------------------   Adequacy   Prompt Corrective
                                                  Amount         Ratio        Amount         Ratio     Purposes   Action Provisions
                                               ------------   ----------   ------------   ----------   --------   -----------------
                                                                            (Restated)    (Restated)
                                                          (dollars expressed in thousands)
<S>                                            <C>            <C>          <C>            <C>          <C>        <C>
Total capital (to risk-weighted assets):
   First Banks .............................   $  1,036,966        10.25%  $  1,008,253         9.84%       8.0%        10.0%
   First Bank ..............................      1,048,786        10.37      1,023,990        10.01        8.0         10.0

Tier 1 capital (to risk-weighted assets):
   First Banks .............................        743,239         7.35        811,432         7.92        4.0          6.0
   First Bank ..............................        921,386         9.11        895,571         8.75        4.0          6.0

Tier 1 capital (to average assets):
   First Banks .............................        743,239         7.12        811,432         7.99        3.0          5.0
   First Bank ..............................        921,386         8.84        895,571         8.85        3.0          5.0
</TABLE>

In March 2005,  the Board of Governors of the Federal  Reserve  System  (Federal
Reserve) adopted a final rule,  Risk-Based  Capital  Standards:  Trust Preferred
Securities and the Definition of Capital, which allows for the continued limited
inclusion of trust preferred securities in Tier 1 capital. The Federal Reserve's
final rule limits restricted core capital elements to 25% of the sum of all core
capital elements,  including  restricted core capital elements,  net of goodwill
less any associated  deferred tax liability.  Amounts of restricted core capital
elements in excess of these limits may  generally be included in Tier 2 capital.
Specifically,  amounts of qualifying  trust preferred  securities and cumulative
perpetual  preferred  stock in excess of the 25% limit may be included in Tier 2
capital,  but will be limited,  together with subordinated debt and limited-life
preferred stock, to 50% of Tier 1 capital. In addition,  the final rule provides
that in the last five years before the maturity of the  underlying  subordinated
note, the outstanding amount of the associated trust preferred  securities is to
be  excluded  from Tier 1 capital  and  included  in Tier 2 capital,  subject to
one-fifth  amortization  per  year.  The final  rule  provides  for a  five-year
transition   period,   ending  March  31,  2009,  for  the  application  of  the
quantitative  limits.  Until March 31, 2009, the aggregate  amount of qualifying
cumulative  perpetual preferred stock and qualifying trust preferred  securities
that may be  included  in Tier 1  capital  is  limited  to 25% of the sum of the
following  core  capital  elements:   qualifying  common  stockholders'  equity,
qualifying  noncumulative and cumulative  perpetual preferred stock,  qualifying
minority  interest  in the equity  accounts  of  consolidated  subsidiaries  and
qualifying  trust  preferred  securities.  First Banks has  determined  that the
Federal  Reserve's  final  rules  that  will be  effective  in  March  2009,  if
implemented as of June 30, 2008,  would have reduced First Banks' Tier 1 capital
(to  risk-weighted  assets) and Tier 1 capital (to average  assets) to 6.47% and
6.27%,  respectively,  and  would  not  have an  impact  on  total  capital  (to
risk-weighted assets).

                                       11

<PAGE>

(7)   BUSINESS SEGMENT RESULTS

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

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

<TABLE>
<CAPTION>
                                                                                 Corporate, Other
                                                                                 and Intercompany
                                                     First Bank                  Reclassifications           Consolidated Totals
                                          -------------------------------   --------------------------   ---------------------------
                                             June 30,       December 31,      June 30,    December 31,     June 30,     December 31,
                                               2008             2007            2008          2007           2008           2007
                                          --------------   --------------   -----------   ------------   ------------   ------------
                                                             (Restated)                    (Restated)                    (Restated)
                                                                         (dollars expressed in thousands)
<S>                                       <C>              <C>              <C>           <C>            <C>            <C>
Balance sheet information:

Investment securities .................   $      672,119          997,486        18,790         21,785        690,909      1,019,271
Loans, net of unearned discount .......        9,045,114        8,886,184            --             --      9,045,114      8,886,184
Goodwill and other intangible assets ..          312,420          315,651            --             --        312,420        315,651
Total assets ..........................       10,768,050       10,872,602        31,696         29,868     10,799,746     10,902,470
Deposits ..............................        8,870,686        9,164,868       (23,403)       (15,675)     8,847,283      9,149,193
Other borrowings ......................          593,634          409,616            --             --        593,634        409,616
Notes payable .........................               --               --        30,000         39,000         30,000         39,000
Subordinated debentures ...............               --               --       353,790        353,752        353,790        353,752
Stockholders' equity ..................        1,149,347        1,203,008      (341,442)      (360,931)       807,905        842,077
                                          ==============   ==============   ===========   ============   ============   ============
</TABLE>

                                       12

<PAGE>

<TABLE>
<CAPTION>
                                                                                 Corporate, Other
                                                                                 and Intercompany
                                                      First Bank                 Reclassifications          Consolidated Totals
                                            ------------------------------   ------------------------   ---------------------------
                                                  Three Months Ended             Three Months Ended          Three Months Ended
                                                       June 30,                       June 30,                    June 30,
                                            ------------------------------   ------------------------   ---------------------------
                                                  2008            2007          2008          2007          2008           2007
                                            ---------------   ------------   ----------   -----------   ------------   ------------
                                                               (Restated)                  (Restated)                   (Restated)
                                                                        (dollars expressed in thousands)
<S>                                         <C>               <C>            <C>          <C>           <C>            <C>
Income statement information:

Interest income ..........................  $       147,531        176,330          222           242        147,753        176,572
Interest expense .........................           55,353         74,051        5,617         7,053         60,970         81,104
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Net interest income ...................           92,178        102,279       (5,395)       (6,811)        86,783         95,468
Provision for loan losses ................           84,053          3,417           --            --         84,053          3,417
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Net interest income after provision
     for loan losses .....................            8,125         98,862       (5,395)       (6,811)         2,730         92,051
                                            ---------------   ------------   ----------   -----------   ------------   ------------
Noninterest income .......................           25,435         19,742       (6,544)         (143)        18,891         19,599
Amortization of intangible assets ........            2,785          3,227           --            --          2,785          3,227
Other noninterest expense ................           79,840         81,450        2,017            34         81,857         81,484
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Income (loss) before provision
     (benefit) for income taxes and
     minority interest in income
     of subsidiaries .....................          (49,065)        33,927      (13,956)       (6,988)       (63,021)        26,939
Provision (benefit) for income taxes .....          (18,239)        11,994       (4,898)       (2,457)       (23,137)         9,537
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Income (loss) before minority
     interest in income of
     subsidiaries ........................          (30,826)        21,933       (9,058)       (4,531)       (39,884)        17,402
Minority interest in income
     of subsidiaries .....................               33             31           --            --             33             31
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Net income (loss) .....................  $       (30,859)        21,902       (9,058)       (4,531)       (39,917)        17,371
                                            ===============   ============   ==========   ===========   ============   ============
</TABLE>

<TABLE>
<CAPTION>
                                                                                 Corporate, Other
                                                                                 and Intercompany
                                                      First Bank                 Reclassifications          Consolidated Totals
                                            ------------------------------   ------------------------   ---------------------------
                                                   Six Months Ended              Six Months Ended            Six Months Ended
                                                       June 30,                      June 30,                    June 30,
                                            ------------------------------   ------------------------   ---------------------------
                                                  2008            2007          2008          2007          2008           2007
                                            ---------------   ------------   ----------   -----------   ------------   ------------
                                                               (Restated)                  (Restated)                   (Restated)
                                                                        (dollars expressed in thousands)
<S>                                         <C>               <C>            <C>          <C>           <C>            <C>
Income statement information:

Interest income ..........................  $       311,579        347,152          478           500        312,057        347,652
Interest expense .........................          123,413        144,319       12,334        13,787        135,747        158,106
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Net interest income ...................          188,166        202,833      (11,856)      (13,287)       176,310        189,546
Provision for loan losses ................          130,000          6,917           --            --        130,000          6,917
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Net interest income after provision
     for loan losses .....................           58,166        195,916      (11,856)      (13,287)        46,310        182,629
                                            ---------------   ------------   ----------   -----------   ------------   ------------
Noninterest income .......................           58,732         42,384       (6,730)         (176)        52,002         42,208
Amortization of intangible assets ........            5,561          6,153           --            --          5,561          6,153
Other noninterest expense ................          158,331        161,627        4,174         2,919        162,505        164,546
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Income (loss) before provision
     (benefit) for income taxes and
     minority interest in income
     of subsidiaries .....................          (46,994)        70,520      (22,760)      (16,382)       (69,754)        54,138
Provision (benefit) for income taxes .....          (17,152)        25,405       (7,990)       (6,122)       (25,142)        19,283
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Income (loss) before minority
     interest in income of
     subsidiaries ........................          (29,842)        45,115      (14,770)      (10,260)       (44,612)        34,855
Minority interest in income
     of subsidiaries .....................              178            101           --            --            178            101
                                            ---------------   ------------   ----------   -----------   ------------   ------------
   Net income (loss) .....................  $       (30,020)        45,014      (14,770)      (10,260)       (44,790)        34,754
                                            ===============   ============   ==========   ===========   ============   ============
</TABLE>

                                       13

<PAGE>

(8)   OTHER BORROWINGS

Other  borrowings  were comprised of the following at June 30, 2008 and December
31, 2007:

<TABLE>
<CAPTION>
                                                        June 30,        December 31,
                                                          2008              2007
                                                     --------------   ---------------
                                                                         (Restated)
                                                     (dollars expressed in thousands)
<S>                                                  <C>              <C>
Securities sold under agreements to repurchase:
   Daily .........................................   $      172,863          198,766
   Monthly .......................................               --           33,493
   Term ..........................................          120,000          100,000
Federal funds purchased ..........................               --           76,500
Federal Home Loan Bank (FHLB) advances (1) .......          300,771              857
                                                     --------------   --------------
     Total .......................................   $      593,634          409,616
                                                     ==============   ==============
</TABLE>

----------
(1)  In January 2008,  First Bank entered into two $100.0  million FHLB advances
     that mature in January 2009 and July 2009 at fixed  interest rates of 3.16%
     and 2.53%, respectively, and in May 2008, First Banks entered into a $100.0
     million FHLB advance that matures in November 2008 at a fixed interest rate
     of 2.23%.

The maturity dates,  par amounts,  interest rates and interest rate floor strike
prices  on First  Bank's  term  repurchase  agreements  as of June 30,  2008 and
December 31, 2007 were as follows:

<TABLE>
<CAPTION>
                                                     Interest         Interest Rate Floor
     Maturity Date               Par Amount            Rate              Strike Price
     -------------           ------------------   --------------      -------------------
                             (dollars expressed
                                in thousands)
<S>                          <C>                  <C>                 <C>
June 30, 2008:
   April 12, 2012 (1) .....  $          120,000        3.36%                   --
                             ==================

December 31, 2007:
   October 12, 2010 (1) ...  $          100,000   LIBOR - 0.5100% (2)        4.50% (2)
                             ==================
</TABLE>

----------
(1)   On March 31,  2008,  First  Bank  restructured  its  $100.0  million  term
      repurchase agreement.  The primary modifications were to: (a) increase the
      borrowing  amount to $120.0  million;  (b) extend the  maturity  date from
      October 12, 2010 to April 12, 2012;  (c) convert the interest  rate from a
      variable rate to a fixed rate of 3.36%, with interest to be paid quarterly
      beginning on April 12, 2008; and (d) terminate the embedded  interest rate
      floor  agreements  contained within the term repurchase  agreement.  These
      modifications  resulted  in a  pre-tax  gain of $5.0  million,  which  was
      recorded  as  noninterest   income  in  the  consolidated   statements  of
      operations.
(2)   The interest rate paid on the term  repurchase  agreement was based on the
      three-month  LIBOR plus the spread  amount  shown  minus a floating  rate,
      subject to a 0% floor,  equal to two times the  differential  between  the
      three-month  LIBOR and the strike price shown,  if the  three-month  LIBOR
      fell  below the  strike  price  associated  with the  interest  rate floor
      agreement.

(9)   NOTES PAYABLE

On May 15,  2008,  First  Banks  entered  into  the New  Credit  Agreement  with
Investors of America,  LP, as further  described  in Note 5 to the  consolidated
financial  statements.  The New Credit  Agreement  provides for a $30.0  million
secured  revolving  line of credit to be utilized  for general  working  capital
needs and capital  investments in subsidiaries.  Advances  outstanding under the
New Credit  Agreement  bear  interest  at the  three-month  LIBOR plus 300 basis
points.  Interest  is payable on  outstanding  advances on the first day of each
month (in  arrears)  and the  aggregate  principal  balance  of all  outstanding
advances and any accrued interest thereon is due and payable in full on June 30,
2009,  the maturity date of the New Credit  Agreement.  The maturity date of the
New Credit  Agreement may be  accelerated at the option of Investors of America,
LP if an event of default  under the New Credit  Agreement  has occurred and has
not been cured to the  satisfaction  of  Investors  of America,  LP. The default
provisions of the New Credit  Agreement are normal and customary for  agreements
of this type.  In the event the  maturity  date is  accelerated,  the  aggregate
principal  balance of all outstanding  advances and any accrued interest thereon
would become  immediately  due and payable in full. The New Credit  Agreement is
secured by First Banks'  ownership  interest in all of the capital stock of both
SFC and CFHI.

First Banks received an advance of the entire $30.0 million under the New Credit
Agreement  on May 15, 2008 and utilized the proceeds of the advance to terminate
and repay in full all of the obligations  under its then existing secured credit
agreement  with a group of  unaffiliated  financial  institutions,  as discussed
below.

                                       14

<PAGE>

On May 19, 2008, First Banks entered into a Termination  Agreement regarding its
then existing  secured credit  agreement with a group of unaffiliated  financial
institutions  (the Former Credit  Agreement).  In accordance  with the terms and
conditions of the Termination  Agreement,  First Banks repaid in full all of its
then existing  obligations  associated  with the Former Credit  Agreement in the
aggregate  amount of $58.1  million,  including  the accrued  interest  and fees
thereon. First Banks repaid in full its obligations with existing cash reserves,
dividends from First Bank, and advances  under the New Credit  Agreement.  First
Banks did not incur any significant or unusual early termination penalties under
the terms and conditions of the  Termination  Agreement or recognize any gain or
loss upon termination.

Notes payable were  comprised of the following at June 30, 2008 and December 31,
2007:

                                              June 30,   December 31,
                                                2008         2007
                                              --------   ------------
                                         (dollars expressed in thousands)

Term loans ...........................        $     --      19,000
Revolving credit .....................          30,000      20,000
                                              --------     -------
   Total .............................        $ 30,000      39,000
                                              ========     =======

During the six months  ended June 30, 2008,  First Banks made  payments of $64.0
million on the outstanding  principal balance of the notes payable and had drawn
advances of $55.0 million on revolving credit notes, in aggregate.

(10)  SUBORDINATED DEBENTURES

First Banks has formed or assumed  various  affiliated  Delaware or  Connecticut
statutory and business trusts  (collectively,  the Trusts) that were created for
the sole purpose of issuing  trust  preferred  securities.  The trust  preferred
securities  were  issued in  private  placements,  with the  exception  of First
Preferred  Capital  Trust  IV,  which  was  issued  in a  publicly  underwritten
offering. First Banks owns all of the common securities of the Trusts. The gross
proceeds of the offerings  were used by the Trusts to purchase  variable rate or
fixed rate subordinated debentures from First Banks. The subordinated debentures
are the sole asset of the Trusts.  In connection  with the issuance of the trust
preferred securities,  First Banks made certain guarantees and commitments that,
in the aggregate,  constitute a full and unconditional  guarantee by First Banks
of the  obligations of the Trusts under the trust  preferred  securities.  First
Banks'  distributions  accrued on the subordinated  debentures were $5.0 million
and  $11.1   million  for  the  three  and  six  months  ended  June  30,  2008,
respectively,  and $5.8 million and $11.7 million for the comparable  periods in
2007,  and are included in interest  expense in the  consolidated  statements of
operations.  The structure of the trust preferred securities currently satisfies
the regulatory  requirements for inclusion,  subject to certain limitations,  in
First Banks' capital base.

                                       15

<PAGE>

A summary of the  subordinated  debentures  issued to the Trusts in  conjunction
with the trust preferred  securities offerings at June 30, 2008 and December 31,
2007 were as follows:

<TABLE>
<CAPTION>
                                                                                                                  Subordinated
                                                                                                                   Debentures
                                                                                                  Trust      -----------------------
                                              Maturity              Call            Interest    Preferred    June 30,   December 31,
     Name of Trust       Issuance Date          Date              Date (1)          Rate (2)    Securities     2008         2007
--------------------    --------------   ------------------   ------------------   ----------   ----------   --------   ------------
<S>                     <C>              <C>                  <C>                  <C>          <C>          <C>        <C>
Variable Rate
-------------
First Bank Statutory
   Trust II             September 2004   September 20, 2034   September 20, 2009   + 205.0 bp    $ 20,000    $ 20,619     $ 20,619
Royal Oaks Capital
   Trust I               October 2004      January 7, 2035      January 7, 2010    + 240.0 bp       4,000       4,124        4,124
First Bank Statutory
   Trust III             November 2004    December 15, 2034    December 15, 2009   + 218.0 bp      40,000      41,238       41,238
First Bank Statutory
   Trust IV               March 2006       March 15, 2036       March 15, 2011     + 142.0 bp      40,000      41,238       41,238
First Bank Statutory
   Trust V                April 2006       June 15, 2036         June 15, 2011     + 145.0 bp      20,000      20,619       20,619
First Bank Statutory
   Trust VI (3a)           June 2006        July 7, 2036         July 7, 2011      + 165.0 bp      25,000      25,774       25,774
First Bank Statutory
   Trust VII (3b)        December 2006    December 15, 2036    December 15, 2011   + 185.0 bp      50,000      51,547       51,547
First Bank Statutory
   Trust VIII (3c)       February 2007     March 30, 2037       March 30, 2012     + 161.0 bp      25,000      25,774       25,774
First Bank Statutory
   Trust X                August 2007    September 15, 2037   September 15, 2012   + 230.0 bp      15,000      15,464       15,464
First Bank Statutory
   Trust IX (3d)        September 2007    December 15, 2037    December 15, 2012   + 225.0 bp      25,000      25,774       25,774
First Bank Statutory
   Trust XI             September 2007    December 15, 2037    December 15, 2012   + 285.0 bp      10,000      10,310       10,310

Fixed Rate
----------
First Bank Statutory
   Trust                  March 2003       March 20, 2033       March 20, 2008        8.10%        25,000      25,774       25,774
First Preferred
   Capital Trust IV       April 2003        June 30, 2033        June 30, 2008        8.15%        46,000      47,423       47,423
</TABLE>

----------
(1)   The  subordinated  debentures are callable at the option of First Banks on
      the call date  shown at 100% of the  principal  amount  plus  accrued  and
      unpaid interest.
(2)   The interest  rates paid on the trust  preferred  securities  are based on
      either  a  variable  rate or a  fixed  rate.  The  variable  rate  for the
      outstanding subordinated debentures is based on the three-month LIBOR plus
      the basis point spread shown.
(3)   In March 2008,  First Banks  executed four interest rate swap  agreements,
      which have been designated as cash flow hedges, to effectively convert the
      interest payments on these  subordinated  debentures from variable rate to
      fixed rate to the respective call dates as follows:
      (a)   $25.0 million  notional  amount with a maturity date of July 7, 2011
            that  converts the interest  rate from a variable rate of LIBOR plus
            165 basis points to a fixed rate of 4.40%;
      (b)   $50.0 million  notional  amount with a maturity date of December 15,
            2011 that  converts the interest  rate from a variable rate of LIBOR
            plus 185 basis points to a fixed rate of 4.905%;
      (c)   $25.0 million notional amount with a maturity date of March 30, 2012
            that  converts the interest  rate from a variable rate of LIBOR plus
            161 basis points to a fixed rate of 4.71%; and
      (d)   $25.0 million  notional  amount with a maturity date of December 15,
            2012 that  converts the interest  rate from a variable rate of LIBOR
            plus 225 basis points to a fixed rate of 5.565%.

(11)  INCOME TAXES

On January 1, 2007, First Banks implemented Financial Accounting Standards Board
Interpretation  No.  48 --  Accounting  for  Uncertainty  in  Income  Taxes,  an
Interpretation  of SFAS No. 109 --  Accounting  for Income  Taxes (FIN 48).  The
implementation  of FIN 48 resulted in the recognition of a cumulative  effect of
change  in  accounting  principle  of $2.5  million,  which was  recorded  as an
increase to beginning retained earnings.

At June 30, 2008 and December 31, 2007, First Banks' liability for uncertain tax
positions,  excluding  interest  and  penalties,  was  $12.8  million  and $12.2
million,  respectively. The total amount of unrecognized tax benefits that would
affect the  effective  tax rate were $1.8  million and $1.7  million at June 30,
2008 and December 31, 2007,  respectively.  During the six months ended June 30,
2008, First Banks recorded additional  liabilities for unrecognized tax benefits
of $929,000 that, if  recognized,  would decrease the provision for income taxes
by $112,000,  net of the federal tax  benefit.  During the six months ended June
30, 2008,  First Banks reduced its liability  for  unrecognized  tax benefits by
$346,000 as a result of the receipt of a no change  letter in the first  quarter
of 2008  following the close of an  examination  of the 2004 federal  income tax
return.

In accordance with FIN 48, it is First Banks' policy to separately  disclose any
interest or penalties  arising from the  application  of federal or state income
taxes.  Interest  related to  unrecognized  tax benefits is included in interest
expense and  penalties  related to  unrecognized  tax  benefits  are included in
noninterest  expense.  At June 30, 2008 and December 31, 2007,  interest accrued
for unrecognized tax positions was $1.9 million and $1.4 million,  respectively.
The amount of interest expense  recognized during the three and six months ended
June 30, 2008 was $279,000 and $430,000, respectively,  compared to $281,000 and
$470,000  for the  comparable  periods  in 2007.  There  were no  penalties  for
unrecognized  tax positions  accrued at June 30, 2008 and December 31, 2007, nor
did First Banks  recognize  any expense for  penalties  during the three and six
months ended June 30, 2008 and 2007.

First Banks continually  evaluates the unrecognized tax benefits associated with
its  uncertain  tax  positions.   It  is  reasonably  possible  that  the  total
unrecognized  tax benefits as of June 30, 2008 could  decrease by  approximately
$1.3  million  during  the  remainder  of the year,  as a result of the lapse of
statutes of  limitations  and potential  settlements  with the federal and state
taxing  authorities,  of which the impact to the  provision  for income taxes is

                                       16

<PAGE>

estimated to be approximately $537,000. It is also reasonably possible that this
decrease could be  substantially  offset by new matters  arising during the same
period.

First  Banks  files  consolidated  and  separate  income tax returns in the U.S.
federal  jurisdiction  and in various state  jurisdictions.  Management of First
Banks  believes the accrual for tax  liabilities  is adequate for all open audit
years based on its  assessment of many factors,  including  past  experience and
interpretations of tax law applied to the facts of each matter.  This assessment
relies on estimates and  assumptions.  First Banks'  federal  income tax returns
through 2004 have been examined by the Internal  Revenue  Service.  First Banks'
current estimate of the resolution of various state examinations is reflected in
accrued income taxes;  however,  final settlement of the examinations or changes
in First Banks' estimate may result in future income tax expense or benefit.

(12)  FAIR VALUE DISCLOSURES

On January 1, 2008,  First  Banks  implemented  SFAS No. 157 for  financial  and
nonfinancial  assets and  liabilities  that are  recognized or disclosed at fair
value in the  consolidated  financial  statements on a recurring basis (at least
annually).   Implementation  was  deferred  for  all  nonfinancial   assets  and
nonfinancial  liabilities  that are recognized or disclosed at fair value in the
consolidated  financial  statements  on a  nonrecurring  basis to  fiscal  years
beginning after November 15, 2008.  First Banks applied the deferral to goodwill
and other intangible assets and other real estate owned.

In accordance with SFAS No. 157, financial assets and financial liabilities that
are measured at fair value  subsequent to initial  recognition  are grouped into
three  levels of inputs or  assumptions  that market  participants  would use in
pricing  the  asset  or  liability,  including  assumptions  about  risk and the
reliability of assumptions  used to determine fair value. The three input levels
are as follows:

   Level 1 Inputs - Valuation  is based on quoted  prices in active  markets for
                    identical instruments in active markets.

   Level 2 Inputs - Valuation is based on quoted prices for similar  instruments
                    in active  markets;  quoted  prices for identical or similar
                    instruments   in   markets   that   are  not   active;   and
                    model-derived  valuations  whose  inputs are  observable  or
                    whose significant value drivers are observable.

   Level 3 Inputs - Valuation is generated from model-based  techniques that use
                    at least one  significant  assumption  not observable in the
                    market. These unobservable  assumptions reflect estimates of
                    assumptions  that market  participants  would use in pricing
                    the asset or liability.  Valuation techniques include use of
                    option  pricing  models,  discounted  cash flow  models  and
                    similar techniques.

The following describes valuation methodologies used to measure different assets
and liabilities at fair value.

Available-for-sale   investment   securities.    Available-for-sale   investment
securities are recorded at fair value on a recurring  basis.  Available-for-sale
investment securities included in Level 1 are valued using quoted market prices.
Where quoted market prices are  unavailable,  the fair value included in Level 2
is based on  quoted  market  prices  of  comparable  instruments  obtained  from
independent  pricing vendors based on recent trading activity and other relevant
information.

Loans  held for sale.  Loans  held for sale are  carried at the lower of cost or
market value, which is determined on an individual loan basis. The fair value is
based on the prices  secondary  markets are offering for portfolios with similar
characteristics.  The  Company  classifies  loans  held  for sale  subjected  to
nonrecurring fair value adjustments as nonrecurring Level 2.

Loans.  The Company  does not record  loans at fair value on a recurring  basis.
However,  from time to time, a loan is considered  impaired and an allowance for
loan losses is  established.  A loan is considered  impaired when it is probable
that payment of principal and interest  will not be made in accordance  with the
contractual terms of the loan agreement.  Once a loan is identified as impaired,
management  measures  impairment in accordance with SFAS No. 114 - Accounting by
Creditors for  Impairment of a Loan.  When  measuring  impairment,  the expected
future cash flows of an impaired  loan are  discounted  at the loan's  effective
interest  rate.  Additionally,   impairment  is  measured  by  reference  to  an
observable  market price, if one exists, or the fair value of the collateral for
a  collateral-dependent  loan.  Regardless of the historical  measurement method
used, First Banks measures  impairment based on the fair value of the collateral
when foreclosure is probable. Additionally, impairment of a restructured loan is
measured  by  discounting  the total  expected  future  cash flows at the loan's
effective  rate of  interest  as  stated  in the  original  loan  agreement.  In
accordance with Statement of Position 03-3, Accounting for Certain Loans or Debt
Securities  Acquired in a Transfer,  acquired  impaired  loans are classified as
nonaccrual  loans and are  initially  measured  at fair value with no  allocated
allowance  for loan  losses.  An  allowance  for loan  losses is recorded to the
extent there is

                                       17

<PAGE>

further credit deterioration  subsequent to acquisition date. In accordance with
SFAS No. 157, impaired loans where an allowance is established based on the fair
value of collateral require classification in the fair value hierarchy. When the
fair value of the collateral is based on an observable market price or a current
appraised value, the Company  classifies the impaired loan as nonrecurring Level
2. When an appraised  value is not available or management  determines  the fair
value of the collateral is further  impaired below the appraised value and there
is no  observable  market  price,  the Company  classifies  the impaired loan as
nonrecurring Level 3.

Derivative instruments. Substantially all derivative instruments utilized by the
Company are traded in  over-the-counter  markets  where quoted market prices are
not readily available.  Derivative  instruments  utilized by the Company include
interest rate swap agreements,  interest rate floor and cap agreements, interest
rate  lock   commitments  and  forward   commitments  to  sell   mortgage-backed
securities.  For these  derivative  instruments,  fair  value is based on market
observable  inputs  utilizing  pricing systems and valuation  models,  and where
applicable,   the  values  are   compared  to  the  market   values   calculated
independently  by the  respective  counterparties.  The Company  classifies  its
derivative instruments as Level 2.

Servicing  rights.  Servicing  rights are valued based on valuation  models that
utilize  assumptions  based  on  the  predominant  risk  characteristics  of the
underlying loans,  including principal balance,  interest rate, weighted average
life,  cost to service and estimated  prepayment  speeds.  The valuation  models
estimate the present value of estimated future net servicing income. The Company
classifies its servicing rights as Level 3.

Nonqualified  Deferred  Compensation Plan. The Company's  nonqualified  deferred
compensation  plan is recorded at fair value on a recurring  basis. The unfunded
plan  allows   participants  to  hypothetically   invest  in  various  specified
investment  options such as equity  funds,  international  stock funds,  capital
appreciation  funds,  money market  funds,  bond funds,  mid-cap value funds and
growth funds. The nonqualified  deferred  compensation  plan liability is valued
based on  quoted  market  prices  of the  underlying  investments.  The  Company
classifies its nonqualified deferred compensation plan liability as Level 1.

Assets and  liabilities  measured at fair value on a recurring  basis as of June
30, 2008 are reflected in the following table:

<TABLE>
<CAPTION>
                                                                          Fair Value Measurements
                                                               -------------------------------------------
                                                                               June 30, 2008
                                                               -------------------------------------------

                                                                Level 1     Level 2   Level 3   Fair Value
                                                               ---------   --------   -------   ----------
                                                                     (dollars expressed in thousands)
<S>                                                            <C>          <C>       <C>       <C>
Assets:
   Available-for-sale investment securities ................   $  10,279    661,426        --      671,705
   Derivative instruments ..................................          --     17,791        --       17,791
   Servicing rights ........................................          --         --    25,723       25,723
                                                               ---------   --------   -------   ----------
      Total ................................................   $  10,279    679,217    25,723      715,219
                                                               =========   ========   =======   ==========
Liabilities:
   Nonqualified deferred compensation plan .................   $   9,212         --        --        9,212
                                                               =========   ========   =======   ==========
</TABLE>

The  following  table  presents  the  changes  in Level 3 assets  measured  on a
recurring basis for the three and six months ended June 30, 2008:

<TABLE>
<CAPTION>
                                                                               Servicing Rights
                                                                       --------------------------------
                                                                        Three Months      Six Months
                                                                            Ended            Ended
                                                                        June 30, 2008    June 30, 2008
                                                                       --------------   ---------------
                                                                       (dollars expressed in thousands)
<S>                                                                    <C>               <C>
Balance, beginning of period .......................................   $       23,479            12,758
   Impact of election to measure servicing
      rights at fair value under SFAS No. 156 ......................               --            10,443
   Total gains or losses (realized/unrealized):
      Included in earnings (1) .....................................              555            (1,204)
      Included in other comprehensive income .......................               --                --
   Purchases, issuances and settlements ............................            1,689             3,726
   Transfers in and/or out of level 3 ..............................               --                --
                                                                       --------------   ---------------
Balance, end of period .............................................   $       25,723            25,723
                                                                       ==============   ===============
</TABLE>

----------
(1)   Gains or losses  (realized/unrealized) are included in other income in the
      consolidated statements of operations.

                                       18

<PAGE>

From time to time,  First  Banks  measures  certain  assets  at fair  value on a
nonrecurring  basis. These include assets that are measured at the lower of cost
or market value that were  recognized at fair value below cost at the end of the
period.  Assets  measured at fair value on a  nonrecurring  basis as of June 30,
2008 are reflected in the following table:

<TABLE>
<CAPTION>
                                                                          Fair Value Measurements
                                                               -------------------------------------------
                                                                              June 30, 2008
                                                               -------------------------------------------

                                                                Level 1     Level 2   Level 3   Fair Value
                                                               ---------   --------   -------   ----------
                                                                     (dollars expressed in thousands)
<S>                                                            <C>          <C>       <C>       <C>
Assets:
   Loans held for sale .....................................   $      --     60,043        --       60,043
   Loans ...................................................          --    114,940   184,540      299,480
                                                               ---------   --------   -------   ----------
      Total ................................................   $      --    174,983   184,540      359,523
                                                               =========   ========   =======   ==========
</TABLE>

(13)  CONTINGENT LIABILITIES

In October 2000, First Banks entered into two continuing guaranty contracts. For
value received,  and for the purpose of inducing a pension fund and its trustees
and a welfare fund and its trustees  (the Funds) to conduct  business  with MVP,
First  Bank's  institutional  investment  management  subsidiary,   First  Banks
irrevocably  and  unconditionally  guaranteed  payment of and promised to pay to
each of the Funds any amounts up to the sum of $5.0 million to the extent MVP is
liable  to the  Funds  for a  breach  of the  Investment  Management  Agreements
(including the Investment  Policy Statement and Investment  Guidelines),  by and
between MVP and the Funds and/or any violation of the Employee Retirement Income
Security Act by MVP  resulting in liability  to the Funds.  The  guaranties  are
continuing  guaranties  of all  obligations  that  may  arise  for  transactions
occurring prior to termination of the Investment  Management  Agreements and are
coexistent with the term of the Investment Management Agreements. The Investment
Management  Agreements  have no specified term but may be terminated at any time
upon written notice by the Trustees or, at First Banks' option, upon thirty days
written  notice to the Trustees.  In the event of  termination of the Investment
Management Agreements, such termination shall have no effect on the liability of
First Banks with respect to obligations  incurred before such  termination.  The
obligations  of First Banks are joint and several with those of MVP. First Banks
does not have any recourse provisions that would enable it to recover from third
parties  any  amounts  paid under the  contracts  nor does First  Banks hold any
assets as  collateral  that,  upon  occurrence  of a required  payment under the
contract, could be liquidated to recover all or a portion of the amount(s) paid.
At June 30, 2008 and December 31, 2007, First Banks had not recorded a liability
for the obligations  associated with these guaranty  contracts as the likelihood
that First  Banks will be  required  to make  payments  under the  contracts  is
remote.

CFHI  Securities  Litigation.  Prior to  acquisition  by First  Banks,  CFHI and
certain of its present and former  officers  were named as  defendants  in three
purported class action  complaints filed in the United States District Court for
the Middle District of Florida, Tampa Division (the "Court") alleging violations
of the federal  securities  laws, the first of which was filed with the Court on
March 20, 2007 (the "Securities  Actions").  On June 22, 2007, the Court entered
an order pursuant to which the Court (i)  consolidated  the Securities  Actions,
with the matter  proceeding  under the docket for Grand Lodge of Pennsylvania v.
Brian P. Peters, et al., Case No.  8:07-cv-429-T-26-EAJ  and (ii) appointed Troy
Ratcliff  and  Daniel  Altenburg  (the  "Lead  Plaintiffs")  as lead  plaintiffs
pursuant to the provisions of the Private  Securities  Litigation  Reform Act of
1995.

Subsequently,  on or  about  August  24,  2007,  the  Lead  Plaintiffs  filed  a
consolidated  amended  class action  complaint  (the "Amended  Complaint").  The
Amended  Complaint  added as defendants  (i) the then current  members of CFHI's
Board of Directors,  (ii) one former member of CFHI's Board of Directors,  (iii)
the  underwriters of CFHI's October 5, 2005 public offering of common stock, and
(iv) CFHI's external auditors.

The Amended Complaint was brought on behalf of a putative class of purchasers of
CFHI's common stock  between  January 21, 2005 and January 22, 2007. In general,
the Amended  Complaint  alleges  that  CFHI's SEC filings and public  statements
contained    misstatements    and   omissions    regarding    its    residential
construction-to-permanent lending operations and, more specifically, regarding a
home builder and its affiliates and that CFHI's  financial  statements  violated
U.S. generally  accepted  accounting  principles.  The Amended Complaint asserts
claims under Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the  Securities  Exchange  Act of 1934 and Rule  10b-5  promulgated
thereunder.  On August 30,  2007,  the Lead  Plaintiffs  filed a notice with the
Court  voluntarily  dismissing  their  claims  against Anne V. Lee and Justin D.
Locke without prejudice.

Other.  In the  ordinary  course of business,  First Banks and its  subsidiaries
become  involved  in  legal   proceedings  other  than  those  discussed  above.
Management, in consultation with legal counsel, believes the ultimate resolution

                                       19

<PAGE>

of these  proceedings  will not have a material  adverse effect on the financial
condition or results of operations of First Banks and/or its subsidiaries.

(14)  SUBSEQUENT EVENTS

In July 2008,  First Bank  contributed  cash of $9.0  million and  nonperforming
loans with a fair value of  approximately  $6.5 million and FCA contributed cash
of $15.0 million to FB Holdings.  As a result,  First Bank currently owns 51.01%
and FCA owns the remaining 48.99% of FB Holdings, as further described in Note 5
to the consolidated financial statements.

On August 11, 2008,  First Banks entered into a First Amended  Revolving  Credit
Note (the New Amended Credit  Agreement) with Investors of America,  LP. The New
Amended Credit Agreement  modified the existing Revolving Credit Note to provide
that First Banks receive the prior written  consent of Investors of America,  LP
for any advance that would cause the aggregate  outstanding  principal amount to
exceed $10.0 million. In addition,  in July 2008, First Banks repaid in full its
outstanding  balance  under the New Amended  Credit  Agreement in the  aggregate
amount of $30.0 million, including the accrued interest thereon.

                                       20

<PAGE>

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

The  discussion set forth in  Management's  Discussion and Analysis of Financial
Condition and Results of Operations contains certain forward-looking  statements
with respect to our financial  condition,  results of  operations  and business.
Generally, forward-looking statements may be identified through the use of words
such as: "believe,"  "expect,"  "anticipate,"  "intend," "plan,"  "estimate," or
words of  similar  meaning  or  future or  conditional  terms  such as:  "will,"
"would," "should," "could," "may," "likely," "probably," or "possibly." Examples
of  forward-looking  statements  include,  but are not limited to,  estimates or
projections  with  respect to our future  financial  condition,  and expected or
anticipated revenues with respect to our results of operations and our business.
These forward-looking statements are subject to certain risks and uncertainties,
not all of which can be  predicted  or  anticipated.  Factors that may cause our
actual   results  to  differ   materially   from  those   contemplated   by  the
forward-looking   statements   herein  include  market  conditions  as  well  as
conditions  affecting  the  banking  industry  generally  and  factors  having a
specific  impact on us,  including but not limited to:  fluctuations in interest
rates and in the economy,  including the threat of future terrorist  activities,
existing  and  potential  wars and/or  military  actions  related  thereto,  and
domestic responses to terrorism or threats of terrorism;  the impact of laws and
regulations  applicable  to us and  changes  therein;  the impact of  accounting
pronouncements  applicable to us and changes therein;  competitive conditions in
the  markets in which we conduct  our  operations,  including  competition  from
banking and non-banking  companies with substantially greater resources than us,
some of which may offer and develop products and services not offered by us; our
ability to control  the  composition  of our loan  portfolio  without  adversely
affecting interest income; the credit risk associated with consumers who may not
repay loans;  the geographic  dispersion of our offices;  the impact our hedging
activities may have on our operating results;  the highly regulated  environment
in which we operate;  and our ability to respond to changes in technology.  With
regard to our efforts to grow  through  acquisitions,  factors that could affect
the accuracy or  completeness of  forward-looking  statements  contained  herein
include:  our ability to consummate  pending  acquisitions;  the  competition of
larger  acquirers with greater  resources;  fluctuations  in the prices at which
acquisition targets may be available for sale; the impact of making acquisitions
without  using our common stock;  and possible  asset  quality  issues,  pending
litigation,  unknown  liabilities  and/or integration issues with the businesses
that we have acquired.  For discussion of these and other risk factors, refer to
Amendment No. 1 to our 2007 Annual Report on Form 10-K, as filed with the United
States  Securities  and Exchange  Commission  on July 30, 2008. We do not have a
duty to and will not update these  forward-looking  statements.  Readers of this
Quarterly  Report  on Form  10-Q  should  therefore  consider  these  risks  and
uncertainties in evaluating forward-looking statements and should not place undo
reliance on these statements.

                                     General

We are a registered  bank holding  company  incorporated in Missouri in 1978 and
headquartered  in St.  Louis,  Missouri.  We operate  through  our wholly  owned
subsidiary  bank  holding   company,   The  San  Francisco   Company,   or  SFC,
headquartered  in St.  Louis,  Missouri;  our wholly  owned  subsidiary  holding
company,  Coast Financial Holdings,  Inc., or CFHI,  headquartered in Bradenton,
Florida;   and  SFC's   majority-owned   subsidiary   bank,   First  Bank,  also
headquartered  in St. Louis,  Missouri.  First Bank operates  through its branch
banking offices and its subsidiaries, as listed below:

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

First Bank's subsidiaries are wholly owned except SBLS LLC, which is 76.0% owned
by First Bank and 24.0% owned by First  Capital  America,  Inc.,  or FCA, and FB
Holdings,  which was 51.02%  owned by First  Bank and 48.98%  owned by FCA as of
June 30, 2008.

At June 30,  2008,  we had  assets of $10.80  billion,  loans,  net of  unearned
discount,  of $9.05 billion,  deposits of $8.85 billion and stockholders' equity
of $807.9  million,  and we  currently  operate  217 branch  banking  offices in
California, Florida, Illinois, Missouri and Texas.

Through  First Bank,  we offer a broad range of  financial  services,  including
commercial and personal deposit products,  commercial and consumer lending,  and
many other  financial  products and services.  Commercial  and personal  deposit
products include demand,  savings,  money market and time deposit  accounts.  In
addition,  we market  combined  basic  services  for  various  customer  groups,
including  packaged  accounts for more affluent  customers,  and sweep accounts,
lock-box  deposits  and  cash  management  products  for  commercial  customers.
Commercial lending includes  commercial,  financial and agricultural loans, real
estate construction and development

                                       21

<PAGE>

loans, commercial real estate loans, small business lending,  asset-based loans,
trade  financing and insurance  premium  financing.  Consumer  lending  includes
residential real estate,  home equity and installment  lending.  Other financial
services include mortgage banking,  debit cards,  brokerage  services,  employee
benefit and commercial and personal insurance services, internet banking, remote
deposit,  automated teller machines,  telephone banking, safe deposit boxes, and
trust, private banking and institutional money management services. The revenues
generated  by First Bank and its  subsidiaries  consist  primarily  of  interest
income,  generated from the loan and  investment  security  portfolios,  service
charges and fees  generated  from deposit  products and  services,  and fees and
commissions  generated by our mortgage banking,  insurance,  and trust,  private
banking and institutional money management business units. Our extensive line of
products and services are offered to customers  primarily  within our geographic
areas,  which  include  eastern  Missouri,   Illinois,   including  the  Chicago
metropolitan area, southern and northern California,  Houston and Dallas, Texas,
and Florida's Manatee,  Pinellas,  Hillsborough and Pasco counties. Certain loan
products,  including small business loans and insurance premium financing loans,
are available nationwide through SBLS LLC and UPAC, respectively.

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

   Restatement of Previously Issued Consolidated Interim Financial Statements

As  discussed  in Amendment  No. 1 to our 2007 Annual  Report on Form 10-K,  the
Audit  Committee  of our Board of  Directors  (the  Audit  Committee),  with the
assistance  of  legal  counsel  and  other  third   parties,   commissioned   an
investigation  into the  circumstances and possible  irregularities  that led to
certain   fraudulent   transactions  in  our  mortgage  banking  division  being
improperly  recorded  in  our  consolidated  financial  statements  due  to  the
circumvention of established internal controls.  The investigation was completed
on July 29, 2008.

On May 16, 2008, management and the Audit Committee determined that we needed to
restate our previously issued consolidated  financial  statements as of December
31, 2007 and 2006, and for the years ended December 31, 2007,  2006 and 2005 and
restate  certain  financial  information as of December 31, 2005, 2004 and 2003,
and for the years ended  December  31, 2004 and 2003 and each of the quarters in
2007  and  2006,  and  that  these  previously  issued  consolidated   financial
statements  should no longer be relied upon.  Accordingly,  we have restated our
previously issued  consolidated  financial  statements in Amendment No. 1 to our
Annual  Report on Form 10-K for the year ended  December 31,  2007.  We have not
amended our previously filed Annual Reports on Form 10-K or Quarterly Reports on
Form  10-Q  for  the  periods  affected  by  this  restatement.   The  financial
information  presented  herein as of December 31, 2007 and for the three and six
months ended June 30, 2007 has been  restated as set forth in Amendment No. 1 to
our 2007 Annual Report on Form 10-K.

                               Financial Condition

Total assets were $10.80 billion at June 30, 2008, compared to $10.90 billion at
December 31, 2007.  The decrease in our total assets was primarily  attributable
to a decrease in our available-for-sale investment securities,  partially offset
by organic loan growth and an increase in cash and  short-term  investments  and
other assets.

Cash and cash equivalents  increased $91.2 million to $322.8 million at June 30,
2008,  compared to $231.7 million at December 31, 2007. The increase in cash and
cash  equivalents was primarily due to the decrease in investment  securities as
further discussed below.

Loans,  net of unearned  discount,  increased $158.9 million to $9.05 billion at
June 30,  2008,  from $8.89  billion at December 31,  2007,  reflecting  organic
growth, partially offset by net loan charge-offs, and the sales of approximately
$10.8 million of our small business loans in March 2008 and approximately  $24.0
million of our residential  mortgage loans in April 2008. The loan growth during
the quarter was primarily  associated  with our commercial  and industrial  loan
portfolio,  commensurate  with our  strategy  of reducing  our  exposure to real
estate loans in light of current market  conditions,  as further discussed under
"--Loans and Allowance for Loan Losses."

Investment  securities  decreased  $328.4  million to $690.9 million at June 30,
2008, from $1.02 billion at December 31, 2007.  Funds provided by maturities and
sales of investment  securities  were  primarily  utilized to fund internal loan
growth. The decrease reflects  maturities and/or calls of investment  securities
of $187.4  million and sales of investment  securities of $127.4 million for the
six months ended June 30, 2008.

Other assets  increased  $17.1 million to $138.8 million at June 30, 2008,  from
$121.7 million at December 31, 2007.  The increase  resulted from an increase in
the fair value of servicing rights and derivative instruments, and increased

                                       22

<PAGE>

other  real  estate  owned  balances   associated  with   substantially   higher
foreclosure  activity,  partially  offset  by a  decrease  in  accrued  interest
receivable.

Deposits  decreased $301.9 million to $8.85 billion at June 30, 2008, from $9.15
billion at December 31, 2007.  During the first six months of 2008,  we achieved
organic growth in savings and money market  deposits of $212.7  million  through
our deposit  development  programs,  including  marketing campaigns coupled with
enhanced product and service offerings.  However,  continued anticipated run-off
of higher rate certificates of deposit resulted in a significant decrease in our
time deposits of $502.6 million,  comprised of $331.7 million and $170.9 million
during the first and second quarters of 2008,  respectively.  The Florida region
accounted for $189.1 million of the decline in our  certificates  of deposit and
was anticipated as part of our planned post-acquisition  strategy to improve the
net interest margin in this region. Deposit growth, which is our primary funding
source for loans, was replaced with other borrowings.

Other  borrowings,  which are comprised of securities  sold under  agreements to
repurchase,  Federal  Home Loan  Bank,  or FHLB,  advances,  and  federal  funds
purchased, increased $184.0 million to $593.6 million at June 30, 2008, compared
to $409.6 million at December 31, 2007. In light of unstable market  conditions,
increased loan funding needs and current deposit trends, we implemented  several
strategies during 2008 to improve our liquidity position,  including  increasing
our outstanding  FHLB borrowings by $300.0 million,  as further  discussed under
"--Liquidity."  In addition,  our term  repurchase  agreements  increased  $20.0
million as a result of the  restructuring  of a term  repurchase  agreement,  as
further  described  in  Note 8 to our  consolidated  financial  statements.  The
increase in other  borrowings was partially offset by: a decrease in our monthly
repurchase  agreement  of  $33.5  million  resulting  from  the  payoff  of this
borrowing  in May 2008;  a  decrease  in daily  repurchase  agreements  of $25.9
million; and a decrease in federal funds purchased of $76.5 million.

Our notes  payable  were $30.0  million  and $39.0  million at June 30, 2008 and
December 31, 2007, respectively.  During the second quarter of 2008, we received
an advance of $30.0 million under a new secured revolving line of credit with an
affiliated  entity and utilized  the  proceeds of the advance to  terminate  and
repay in full all of the obligations  under our existing secured credit facility
with a group of unaffiliated  financial  institutions,  as further  described in
Note 9 to our consolidated financial statements.

Accrued expenses and other liabilities  decreased $16.9 million to $38.2 million
at June 30, 2008, from $55.1 million at December 31, 2007. The decrease resulted
from decreases in accrued interest payable, accrued federal income taxes payable
and other miscellaneous accrued expenses and liabilities.

Minority  interest in  subsidiaries  increased $85.2 million to $90.7 million at
June 30, 2008, from $5.5 million at December 31, 2007. The increase is primarily
due to FCA's  contribution  of cash of $85.0 million into FB Holdings during the
second  quarter of 2008,  as  further  described  in Note 5 to our  consolidated
financial  statements.  As of June 30,  2008,  First  Bank  owned  51.02%  of FB
Holdings and FCA owned the remaining 48.98%.

Stockholders'  equity was $807.9 million and $842.1 million at June 30, 2008 and
December 31, 2007,  respectively,  reflecting a decrease of $34.2 million during
the first six months of 2008. The decrease was primarily  attributable  to a net
loss of $44.8  million and  dividends  paid on our Class A and Class B preferred
stock  of  $328,000,  partially  offset  by  (a)  a  $4.6  million  increase  in
accumulated other  comprehensive  income,  comprised of $1.4 million  associated
with changes in unrealized gains and losses on our available-for-sale investment
securities  portfolio and $3.2 million associated with changes in the fair value
of our  derivative  financial  instruments;  and (b) a $6.3  million  cumulative
effect  adjustment of a change in accounting  principle  recorded in conjunction
with our  election to measure  servicing  rights at fair value as  permitted  by
Statement of Financial Accounting Standards,  or SFAS, No. 156 -- Accounting for
Servicing of Financial  Assets, as further discussed in Note 1 and Note 3 to our
consolidated financial statements.

                              Results of Operations

Net Income.  We recorded a net loss of $39.9  million and $44.8  million for the
three and six months ended June 30, 2008,  respectively,  compared to net income
of $17.4  million and $34.8  million  for the  comparable  periods in 2007.  The
change in our earnings for these periods was primarily driven by the following:

      o     An increase in the  provision  for loan losses to $84.1  million and
            $130.0  million  for the three and six months  ended June 30,  2008,
            respectively,  compared  to $3.4  million  and $6.9  million for the
            comparable periods in 2007;

      o     A decline in net interest  income and net interest  margin.  Our net
            interest  margin  declined  to 3.55% and 3.60% for the three and six
            months  ended June 30,  2008,  respectively,  compared  to 4.03% and
            4.08%  for the  comparable  periods  in 2007,  and our net  interest
            income declined to $86.8 million and $176.3 million

                                       23

<PAGE>

            for the three and six  months  ended  June 30,  2008,  respectively,
            compared  to $95.5  million and $189.5  million  for the  comparable
            periods in 2007;

      o     Noninterest  income of $18.9 million and $52.0 million for the three
            and six months ended June 30, 2008, respectively,  compared to $19.6
            million and $42.2 million for the comparable periods in 2007;

      o     A  decrease  in  noninterest  expense  to $84.6  million  and $168.1
            million  for  the  three  and  six  months   ended  June  30,  2008,
            respectively,  compared to $84.7 million and $170.7  million for the
            comparable periods in 2007; and

      o     A benefit for income  taxes of $23.1  million and $25.1  million for
            the three and six months ended June 30, 2008, respectively, compared
            to a provision  for income taxes of $9.5  million and $19.3  million
            for the comparable periods in 2007.

The increase in our provision for loan losses for the three and six months ended
June 30,  2008 was  primarily  driven  by  increased  net loan  charge-offs,  an
increase  in  nonperforming  loans,  and higher  levels of problem  loans in our
one-to-four family residential real estate and construction and land development
loan  portfolios,  as further  discussed  under  "--Loans and Allowance for Loan
Losses."

The decline in our net interest income and our net interest margin was primarily
attributable  to an increase in nonaccrual  loans of $147.7  million during 2008
and the 325 basis point decrease, in aggregate,  in the prime lending rate, from
the third  quarter of 2007 through the second  quarter of 2008. We are currently
in an asset-sensitive  position, and as such, interest rate cuts by the Board of
Governors of the Federal Reserve System,  or Federal Reserve,  have an immediate
short-term  negative  effect on our net interest  income and net interest margin
until we can fully  re-price our  deposits to reflect  current  market  interest
rates. See further discussion under "--Net Interest Income."

The  increase  in our  noninterest  income  for the  first  six  months  of 2008
primarily  resulted  from  a  pre-tax  gain  of  $5.0  million  recorded  on the
extinguishment  of a term  repurchase  agreement;  a net gain of $1.8 million on
derivative  instruments  compared to a net loss of $342,000 in the prior period;
income  from the sale of tax  credits of $1.8  million  compared  to zero in the
prior period;  and increased  service  charges on deposits and customer  service
fees of $2.9 million.  This increase was partially  offset by an increase in net
losses on investment securities,  primarily attributable to other-than-temporary
impairment of $6.4 million recognized in June 2008 on a single equity investment
in the common  stock of a bank holding  company.  See further  discussion  under
"--Noninterest Income."

The decrease in  noninterest  expense  primarily  resulted  from  reductions  in
salaries and employee benefits expense attributable to decreased staffing levels
in our mortgage  banking  division  and the  completion  of certain  other staff
reductions  in 2007 and the first six  months of 2008 as well as a  decrease  in
charitable   contributions  expense.  This  decrease  was  partially  offset  by
increases in occupancy and furniture and equipment expenses;  legal, examination
and  professional  fees;  FDIC  insurance;   and  other  expenses.  See  further
discussion under "--Noninterest Expense."

The change in the (benefit)  provision for income taxes primarily  resulted from
decreased earnings, as further discussed under "--Provision for Income Taxes."

Net Interest Income. Net interest income,  expressed on a tax-equivalent  basis,
decreased to $87.1 million and $177.0 million for the three and six months ended
June 30, 2008,  respectively,  compared to $95.9 million and $190.4  million for
the comparable  periods in 2007. Our net interest  margin  declined to 3.55% and
3.60% for the three and six months ended June 30, 2008,  respectively,  compared
to 4.03% and 4.08% for the comparable  periods in 2007.  Net interest  income is
the difference between interest earned on our  interest-earning  assets, such as
loans and  investment  securities,  and  interest  paid on our  interest-bearing
liabilities, such as deposits and borrowings. Net interest income is affected by
the level and  composition  of assets and  liabilities,  as well as the  general
level of interest rates and changes in interest rates. Interest income expressed
on a tax-equivalent basis includes the additional amount of interest income that
would have been earned if our investment in certain tax-exempt  interest-earning
assets had been made in assets subject to federal,  state and local income taxes
yielding  the same  after-tax  income.  Net  interest  margin is  determined  by
dividing  net  interest  income  computed on a  tax-equivalent  basis by average
interest-earning  assets. The interest rate spread is the difference between the
average  tax-equivalent yield earned on interest-earning  assets and the average
rate paid on interest-bearing liabilities.

The decline in our net  interest  margin and net  interest  income is  primarily
attributable  to the decrease in the prime  lending rate that began in September
2007 and  continued  through  April 2008.  Throughout  this period,  the Federal
Reserve  decreased the targeted  federal funds rate,  resulting in reductions in
the prime lending rate totaling 325 basis points in aggregate. Our balance sheet
is currently asset sensitive, and as such, our net interest margin is negatively
impacted  with each  interest  rate cut as our loan  portfolio  re-prices  on an
immediate basis; whereas we are unable to

                                       24

<PAGE>

immediately  re-price our deposit  portfolio to current market  interest  rates,
thereby resulting in a compression of our net interest margin. The average rates
paid on our interest-bearing  deposits decreased 98 and 67 basis points to 2.73%
and 3.03%  for the  three and six  months  ended  June 30,  2008,  respectively,
compared  to 3.71% and 3.70% for the same  periods  in 2007,  while the  average
yield earned on our  interest-earning  assets decreased 142 and 110 basis points
to  6.03%  and  6.36%  for the  three  and  six  months  ended  June  30,  2008,
respectively,  compared  to  7.45%  and  7.46%  for the  same  periods  in 2007,
resulting in a reduction of our net interest  margin.  Average  interest-earning
assets increased to $9.87 billion and $9.89 billion for the three and six months
ended June 30, 2008, respectively,  from $9.54 billion and $9.42 billion for the
comparable  periods in 2007,  reflecting  increases of $333.1 million and $470.9
million,  respectively.  The increase is primarily attributable to internal loan
growth and  interest-earning  assets provided by our  acquisitions  completed in
2007,  partially offset by net loan charge-offs and reductions in our short-term
investments and our investment  securities portfolio.  Average  interest-bearing
liabilities  increased to $8.60  billion and $8.64 billion for the three and six
months ended June 30, 2008,  respectively,  from $8.22 billion and $8.12 billion
for the comparable periods in 2007.

Interest  income on our loan  portfolio,  expressed on a  tax-equivalent  basis,
decreased  to $138.3  million  and $291.2  million  for the three and six months
ended June 30, 2008, respectively, compared to $157.3 million and $310.5 million
for the comparable  periods in 2007.  Average loans,  net of unearned  discount,
increased $1.08 billion and $1.10 billion to $9.05 billion and $9.00 billion for
the three and six months ended June 30, 2008,  respectively,  from $7.97 billion
and $7.89 billion for the  comparable  periods in 2007.  The increase in average
loans primarily reflects internal growth and our acquisitions completed in 2007,
partially  offset  by net loan  charge-offs.  The  yield  on our loan  portfolio
decreased  177 and 142  basis  points  to 6.15%  and 6.51% for the three and six
months  ended June 30, 2008,  respectively,  compared to 7.92% and 7.93% for the
comparable  periods in 2007,  reflecting  decreases  in the prime  lending  rate
throughout  the  latter  part of 2007 and the  first  two  quarters  of 2008,  a
significant  increase  in the  average  amount of  nonaccrual  loans  during the
respective periods, and competitive pressures on loan yields within our markets;
partially offset by an increase in interest income  associated with our interest
rate swap  agreements.  The prime lending rate decreased 100 basis points during
2007,  from 8.25% at  December  31,  2006 to 7.25% at  December  31,  2007,  and
decreased an additional  225 basis points during the first six months of 2008 to
5.00% at June 30, 2008.  Our interest  rate swap  agreements  contributed  to an
increase  in  interest  income on our loan  portfolio  of $3.0  million and $4.8
million  for the three and six months  ended  June 30,  2008,  respectively,  in
contrast to a decrease in interest  income on our loan portfolio of $1.4 million
and $2.8 million for the comparable periods in 2007.

Interest  income on our  investment  securities,  expressed on a  tax-equivalent
basis,  was $9.6  million and $21.2  million for the three and six months  ended
June 30, 2008, respectively, compared to $17.4 million and $33.8 million for the
comparable periods in 2007.  Average  investment  securities were $791.2 million
and  $866.8  million  for  the  three  and  six  months  ended  June  30,  2008,
respectively,  compared to $1.39  billion and $1.36  billion for the  comparable
periods in 2007. The reduction in our average investment securities reflects the
utilization of funds  provided by maturities and sales of investment  securities
to primarily fund organic growth within our loan portfolio.  The yield earned on
our investment  portfolio was 4.90% and 4.93% for the three and six months ended
June 30,  2008,  respectively,  compared  to 5.00% and 5.01% for the  comparable
periods in 2007. Funds provided by maturities and sales of investment securities
were primarily utilized to fund internal loan growth.

Interest income on our short-term  investments was $154,000 and $316,000 for the
three and six months ended June 30, 2008, respectively, compared to $2.3 million
and  $4.2  million  for the  comparable  periods  in  2007.  Average  short-term
investments  were $31.8  million and $25.0  million for the three and six months
ended June 30, 2008, respectively, compared to $175.2 million and $162.5 million
for the  comparable  periods in 2007,  reflecting  the  utilization of available
short-term  investments  to fund organic  loan  growth.  The yield earned on our
short-term  investments  was 1.95% and 2.54% for the three and six months  ended
June 30,  2008,  respectively,  compared  to 5.30% and 5.20% for the  comparable
periods in 2007,  reflecting  current market conditions and the reduced interest
rate environment.

Interest expense on our interest-bearing deposits decreased to $51.5 million and
$115.6  million for the three and six months ended June 30, 2008,  respectively,
compared to $69.2 million and $134.9 million for the comparable periods in 2007.
Average  interest-bearing  deposits increased to $7.59 billion and $7.68 billion
for the three and six months  ended June 30,  2008,  respectively,  compared  to
$7.47 billion and $7.36 billion for the comparable periods in 2007. The increase
in average  interest-bearing  deposits  reflects organic growth through enhanced
product  marketing  campaigns  during the  periods,  and growth  provided by our
acquisitions  completed during 2007. The aggregate weighted average rate paid on
our  deposit  portfolio  was 2.73% and 3.03% for the three and six months  ended
June 30, 2008,  compared to 3.71% and 3.70% for the comparable  periods in 2007.
The decrease in the  aggregate  weighted  average rate paid for these periods is
primarily  reflective of the declining interest rate environment.  Specifically,
the weighted average rate paid on our time deposit  portfolio  declined to 3.84%
and 4.14% for the three and six months ended June 30, 2008,  respectively,  from
4.80% and 4.78% for the comparable periods in 2007, and

                                       25

<PAGE>

the average rate paid on our savings and money market deposit portfolio declined
to  2.02%  and  2.30%  for the  three  and  six  months  ended  June  30,  2008,
respectively, from 3.11% and 3.08% for the comparable periods in 2007. We expect
the weighted average rate paid on our deposit portfolio to further decline as we
continue to reduce overall  deposit rates to reflect  current market  conditions
and as our time deposits mature and re-price at current market rates.

Interest  expense on our other  borrowings was $3.9 million and $7.8 million for
the three and six months  ended June 30,  2008,  respectively,  compared to $4.9
million and $9.3 million for the same periods in 2007.  Average other borrowings
were $611.6  million and $571.4  million for the three and six months ended June
30, 2008,  respectively,  compared to $409.2  million and $401.2 million for the
same  periods in 2007.  The  aggregate  weighted  average rate paid on our other
borrowings was 2.54% and 2.74% for the three and six months ended June 30, 2008,
respectively,  compared to 4.77% and 4.67% for the  comparable  periods in 2007.
The decrease in the weighted average rate paid on our other borrowings  reflects
the reduction in  short-term  interest  rates during the periods,  as previously
discussed.  The increase in average  other  borrowings  is  primarily  due to an
additional  $300.0  million of FHLB  advances  entered into during the first six
months  of 2008,  and an  increase  in our term  repurchase  agreement  of $20.0
million, partially offset by the termination of a $100.0 million term repurchase
agreement in August 2007, as further discussed under "--Liquidity" and in Note 8
to our consolidated financial statements.

Interest  expense on our notes  payable was  $696,000  and $1.3  million for the
three and six months ended June 30, 2008, respectively, compared to $636,000 and
$1.5 million for the  comparable  periods in 2007.  Our notes  payable  averaged
$42.5  million  and $41.0  million  for the three and six months  ended June 30,
2008,  respectively,  compared  to  $37.9  million  and  $47.2  million  for the
comparable  periods in 2007.  The  aggregate  weighted  average rate paid on our
notes  payable  was 6.58% and 6.20% for the three and six months  ended June 30,
2008,  respectively,  compared to 6.73% and 6.60% for the comparable  periods in
2007,  reflecting the reduction in short-term interest rates during the periods,
partially offset by an increase in fees paid on our notes payable.  The weighted
average rate paid on our notes payable includes unused  commitment,  arrangement
and renewal fees. Exclusive of these fees, the weighted average rate paid on our
notes  payable  was 4.60% and 4.63% for the three and six months  ended June 30,
2008,  respectively,  compared to 6.68% and 6.55% for the same  periods in 2007.
The  decrease  in our average  notes  payable  during the  periods is  primarily
attributable to contractual payments and additional prepayments made on our term
loan and advances on our term and revolving  credit loans, as further  described
in Note 5 and Note 9 to our consolidated financial statements.

Interest  expense on our  subordinated  debentures  was $4.9  million  and $11.1
million for the three and six months ended June 30, 2008, respectively, compared
to $6.4 million and $12.3 million for the  comparable  periods in 2007.  Average
subordinated  debentures  were $353.8 million for the three and six months ended
June 30, 2008,  compared to $308.4  million and $309.2 million for the three and
six months ended June 30, 2007,  respectively.  The aggregate  weighted  average
rate paid on our  subordinated  debentures was 5.61% and 6.31% for the three and
six months  ended June 30, 2008,  respectively,  compared to 8.38% and 8.05% for
the comparable periods in 2007,  reflecting the reduction in short-term interest
rates  during  the  periods as $282.5  million,  or 79.4%,  of our  subordinated
debentures  are  variable  rate.  The  change in volume and  average  rates paid
reflects the issuance of $77.3 million of variable rate subordinated  debentures
during 2007 through four newly formed statutory trusts,  partially offset by the
repayment of $25.8  million of variable  rate  subordinated  debentures in April
2007, as further described in Note 10 to our consolidated  financial statements.
In addition,  in March 2008, we entered into four interest rate swap  agreements
designated  as cash flow  hedges to  effectively  convert the  interest  rate on
$125.0 million of our variable rate  subordinated  debentures to a blended fixed
rate of interest of  approximately  4.90%, as further  discussed under "Interest
Rate Risk Management" and in Note 10 to our consolidated financial statements.

                                       26

<PAGE>

The following table sets forth, on a tax-equivalent  basis,  certain information
relating to our average balance sheets, and reflects the average yield earned on
our   interest-earning   assets,  the  average  cost  of  our   interest-bearing
liabilities  and the resulting net interest  income for the three and six months
ended June 30, 2008 and 2007.

<TABLE>
<CAPTION>
                                                                                       Three Months Ended June 30,
                                                                  -----------------------------------------------------------------
                                                                                2008                        2007 (Restated)
                                                                  -------------------------------   -------------------------------
                                                                                Interest                          Interest
                                                                    Average      Income/   Yield/     Average      Income/   Yield/
                                                                    Balance      Expense    Rate      Balance      Expense    Rate
                                                                  -----------   --------   ------   -----------   --------   ------
                                                                                    (dollars expressed in thousands)
<S>                                                               <C>           <C>        <C>      <C>           <C>        <C>
                    ASSETS
                    ------

Interest-earning assets:
   Loans (1)(2)(3)(4) .........................................   $ 9,046,080    138,290     6.15%  $ 7,966,082    157,294     7.92%
   Investment securities (4) ..................................       791,206      9,635     4.90     1,394,677     17,400     5.00
   Short-term investments .....................................        31,770        154     1.95       175,158      2,315     5.30
                                                                  -----------   --------            -----------   --------
         Total interest-earning assets ........................     9,869,056    148,079     6.03     9,535,917    177,009     7.45
                                                                                --------                          --------
Nonearning assets .............................................       904,886                           870,747
                                                                  -----------                       -----------
         Total assets .........................................   $10,773,942                       $10,406,664
                                                                  ===========                       ===========

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

Interest-bearing liabilities:
   Interest-bearing deposits:
      Interest-bearing demand .................................   $   972,832      1,321     0.55%  $   959,300      2,313     0.97%
      Savings and money market ................................     2,872,992     14,417     2.02     2,634,607     20,460     3.11
      Time deposits of $100 or more ...........................     1,333,043     13,016     3.93     1,478,324     18,204     4.94
      Other time deposits .....................................     2,409,569     22,728     3.79     2,396,534     28,180     4.72
                                                                  -----------   --------            -----------   --------
         Total interest-bearing deposits ......................     7,588,436     51,482     2.73     7,468,765     69,157     3.71
   Other borrowings ...........................................       611,619      3,859     2.54       409,232      4,869     4.77
   Notes payable (5) ..........................................        42,525        696     6.58        37,906        636     6.73
   Subordinated debentures ....................................       353,781      4,933     5.61       308,387      6,442     8.38
                                                                  -----------   --------            -----------   --------
         Total interest-bearing liabilities ...................     8,596,361     60,970     2.85     8,224,290     81,104     3.96
                                                                                --------                          --------
Noninterest-bearing liabilities:
   Demand deposits ............................................     1,225,073                         1,251,213
   Other liabilities ..........................................       112,121                           124,013
                                                                  -----------                       -----------
         Total liabilities ....................................     9,933,555                         9,599,516
Stockholders' equity ..........................................       840,387                           807,148
                                                                  -----------                       -----------
         Total liabilities and stockholders' equity ...........   $10,773,942                       $10,406,664
                                                                  ===========                       ===========

Net interest income ...........................................                   87,109                            95,905
                                                                                ========                          ========
Interest rate spread ..........................................                              3.18                              3.49
Net interest margin (6) .......................................                              3.55%                             4.03%
                                                                                           ======                            ======
<PAGE>

<CAPTION>
                                                                                      Six Months Ended June 30,
                                                                  -----------------------------------------------------------------
                                                                                2008                         2007 (Restated)
                                                                  -------------------------------   -------------------------------
                                                                                Interest                          Interest
                                                                    Average      Income/   Yield/     Average      Income/   Yield/
                                                                    Balance      Expense    Rate      Balance      Expense    Rate
                                                                  -----------   --------   ------   -----------   --------   ------
                                                                                    (dollars expressed in thousands)
<S>                                                               <C>           <C>        <C>      <C>           <C>        <C>
                    ASSETS
                    ------

Interest-earning assets:
   Loans (1)(2)(3)(4) .........................................   $ 8,998,416    291,182     6.51%  $ 7,894,765    310,473     7.93%
   Investment securities (4) ..................................       866,807     21,237     4.93     1,362,127     33,824     5.01
   Short-term investments .....................................        24,991        316     2.54       162,451      4,193     5.20
                                                                  -----------   --------            -----------   --------
         Total interest-earning assets ........................     9,890,214    312,735     6.36     9,419,343    348,490     7.46
                                                                                --------                          --------
Nonearning assets .............................................       918,862                           853,380
                                                                  -----------                       -----------
         Total assets .........................................   $10,809,076                       $10,272,723
                                                                  ===========                       ===========

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

Interest-bearing liabilities:
   Interest-bearing deposits:
      Interest-bearing demand .................................   $   985,914      3,353     0.68%  $   971,471      4,929     1.02%
      Savings and money market ................................     2,791,048     31,944     2.30     2,536,496     38,797     3.08
      Time deposits of $100 or more ...........................     1,415,813     29,785     4.23     1,452,159     35,234     4.89
      Other time deposits .....................................     2,484,457     50,515     4.09     2,397,226     55,970     4.71
                                                                  -----------   --------            -----------   --------
         Total interest-bearing deposits ......................     7,677,232    115,597     3.03     7,357,352    134,930     3.70
   Other borrowings ...........................................       571,417      7,787     2.74       401,240      9,287     4.67
   Notes payable (5) ..........................................        40,999      1,265     6.20        47,198      1,544     6.60
   Subordinated debentures ....................................       353,771     11,098     6.31       309,217     12,345     8.05
                                                                  -----------   --------            -----------   --------
         Total interest-bearing liabilities ...................     8,643,419    135,747     3.16     8,115,007    158,106     3.93
                                                                                --------                          --------
Noninterest-bearing liabilities:
   Demand deposits ............................................     1,210,424                         1,237,840
   Other liabilities ..........................................       112,478                           123,573
                                                                  -----------                       -----------
         Total liabilities ....................................     9,966,321                         9,476,420
Stockholders' equity ..........................................       842,755                           796,303
                                                                  -----------                       -----------
         Total liabilities and stockholders' equity ...........   $10,809,076                       $10,272,723
                                                                  ===========                       ===========

Net interest income ...........................................                  176,988                           190,384
                                                                                ========                          ========
Interest rate spread ..........................................                              3.20                              3.53
Net interest margin (6) .......................................                              3.60%                             4.08%
                                                                                           ======                            ======
</TABLE>

----------
(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 includes the effects of interest rate swap agreements.
(4)   Information is presented on a tax-equivalent  basis assuming a tax rate of
      35%.  The  tax-equivalent  adjustments  were  approximately  $326,000  and
      $678,000 for the three and six months  ended June 30,  2008,  and $437,000
      and $838,000 for the comparable periods in 2007, respectively.
(5)   Interest expense on our notes payable includes commitment, arrangement and
      renewal fees.  Exclusive of these fees, the interest rates paid were 4.60%
      and 4.63% for the three and six months ended June 30, 2008,  and 6.68% and
      6.55% for the comparable periods in 2007, respectively.
(6)   Net interest  margin is the ratio of net interest  income  (expressed on a
      tax-equivalent basis) to average interest-earning assets.

                                       27

<PAGE>

The following table indicates, on a tax-equivalent basis, the change in interest
income and interest expense that is attributable to the change in average volume
and change in average rates, for the three and six months ended June 30, 2008 as
compared to the three and six months ended June 30, 2007. The change in interest
due to the combined  rate/volume  variance has been allocated to rate and volume
changes in proportion to the dollar amounts of the change in each.

<TABLE>
<CAPTION>
                                                               Increase (Decrease) Attributable to Change in:
                                                        ----------------------------------------------------------
                                                             Three Months Ended              Six Months Ended
                                                                June 30, 2008                  June 30, 2008
                                                         Compared to 2007 (Restated)   Compared to 2007 (Restated)
                                                        ----------------------------   ---------------------------
                                                                               Net                           Net
                                                         Volume      Rate     Change    Volume     Rate     Change
                                                        --------   -------   -------   -------   -------   -------
                                                                   (dollars expressed in thousands)
<S>                                                     <C>        <C>       <C>       <C>       <C>       <C>
Interest earned on:
   Loans: (1)(2)(3)
      Taxable .......................................   $ 19,426   (38,227)  (18,801)   40,554   (59,644)  (19,090)
      Tax-exempt (4) ................................        (59)     (144)     (203)       (6)     (195)     (201)
   Investment securities:
      Taxable .......................................     (7,189)     (461)   (7,650)  (11,690)     (639)  (12,329)
      Tax-exempt (4) ................................       (137)       22      (115)     (295)       37      (258)
   Short-term investments ...........................     (1,219)     (942)   (2,161)   (2,416)   (1,461)   (3,877)
                                                        --------   -------   -------   -------   -------   -------
         Total interest income ......................     10,822   (39,752)  (28,930)   26,147   (61,902)  (35,755)
                                                        --------   -------   -------   -------   -------   -------
Interest paid on:
   Interest-bearing demand deposits .................         32    (1,024)     (992)       73    (1,649)   (1,576)
   Savings and money market deposits ................      1,698    (7,741)   (6,043)    3,655   (10,508)   (6,853)
   Time deposits ....................................     (1,551)   (9,089)  (10,640)    1,228   (12,132)  (10,904)
   Other borrowings .................................      1,820    (2,830)   (1,010)    3,152    (4,652)   (1,500)
   Notes payable (5) ................................         75       (15)       60      (191)      (88)     (279)
   Subordinated debentures ..........................        847    (2,356)   (1,509)    1,647    (2,894)   (1,247)
                                                        --------   -------   -------   -------   -------   -------
         Total interest expense .....................      2,921   (23,055)  (20,134)    9,564   (31,923)  (22,359)
                                                        --------   -------   -------   -------   -------   -------
         Net interest income ........................   $  7,901   (16,697)   (8,796)   16,583   (29,979)  (13,396)
                                                        ========   =======   =======   =======   =======   =======
</TABLE>

----------
(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 includes the effect of interest rate swap agreements.
(4)   Information is presented on a tax-equivalent  basis assuming a tax rate of
      35%.
(5)   Interest expense on our notes payable includes commitment, arrangement and
      renewal fees.

Provision  for Loan  Losses.  We recorded a  provision  for loan losses of $84.1
million for the three months ended June 30, 2008,  compared to $45.9 million for
the three  months  ended  March 31, 2008 and $3.4  million for the three  months
ended June 30, 2007.  Our provision  for loan losses was $130.0  million for the
first six months of 2008,  compared to $6.9 million for the comparable period in
2007. The increase in our provision for loan losses for the three and six months
ended June 30, 2008 was primarily driven by increased net loan  charge-offs,  an
increase  in  nonperforming  loans,  and higher  levels of problem  loans in our
one-to-four family residential real estate and construction and land development
loan  portfolios,  as further  discussed  under  "--Loans and Allowance for Loan
Losses." We expect the provision for loan losses to remain at elevated levels in
the near  term as a result  of  continued  distress  in our  one-to-four  family
residential  real estate and  construction  and land development loan portfolios
coupled  with highly  unstable  market  conditions  in certain  sectors of these
portfolios.

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 $18.9 million and $52.0 million for
the three and six months  ended June 30, 2008,  respectively,  compared to $19.6
million and $42.2 million for the comparable periods in 2007. Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees, mortgage-banking revenues, investment management income, insurance fee and
commission  income,  net gains (losses) on investment  securities and derivative
instruments, and other income.

Service charges on deposit accounts and customer service fees increased to $13.1
million  and $25.2  million  for the three and six months  ended June 30,  2008,
respectively, from $11.7 million and $22.3 million for the comparable periods in
2007.  The increase in service  charges and  customer  service fees is primarily
attributable to: (a) higher deposit volumes  associated with internal growth and
our  acquisitions  of  banks  completed  in 2007,  as  further  described  under
"--Financial  Condition,"  as well as changes in the  overall mix of our deposit
portfolio from time deposits to increased savings and money market deposits; (b)
increased  cardholder  interchange  income primarily due to an increase in debit
card usage by our customer base; (c) increased fee income from customer  service
charges

                                       28

<PAGE>

for  non-sufficient  funds and returned checks from our commercial  deposit base
resulting from our newly implemented  overdraft privilege program and efforts to
control fee waivers;  and (d) pricing  increases on certain  service charges and
customer service fees instituted to reflect current market conditions.

Gain on loans sold and held for sale  increased to $968,000 and $2.6 million for
the three and six months ended June 30, 2008,  respectively,  in  comparison  to
$120,000 and $2.1 million for the  comparable  periods in 2007.  The increase in
2008 is  primarily  attributable  to a decrease  in  repurchase  obligations  on
mortgage loans sold with  recourse.  For the three and six months ended June 30,
2007, we established  recourse  reserves of $3.2 million which had the effect of
decreasing our gain on sale by this amount. Gain on loans sold and held for sale
for 2008 also  reflects a pre-tax gain of $504,000  recognized  in March 2008 on
the sale of  approximately  $10.8  million of our small  business  loans.  These
increases  were  partially  offset by a  significant  decrease  in the volume of
mortgage  loans  originated and  subsequently  sold in the secondary  market,  a
pre-tax  loss  of  $804,000  on the  sale  of  approximately  $24.0  million  of
residential  real estate  mortgage  loans in April 2008,  and a pre-tax  gain of
$851,000  recorded in April 2007 on the sale of  approximately  $13.4 million of
certain repurchased and other residential mortgage loans.

We recorded net losses on investment securities of $5.8 million and $4.6 million
for the three and six months ended June 30, 2008, respectively, in comparison to
net losses of $1.5 million and $1.2 million for the comparable  periods in 2007.
In June 2008, we recognized  other-than-temporary  impairment of $6.4 million on
an equity  investment  in the common stock of a single  company in the financial
services industry. The  other-than-temporary  impairment was primarily caused by
economic  events  impacting  the  financial  services  industry as a whole,  and
represented  the  difference  between  our cost  basis and the fair value of the
equity security as of June 30, 2008. The other-than-temporary impairment of $6.4
million  was  partially  offset  by a  pre-tax  gain of  approximately  $867,000
recognized  on the  sale  of  $81.5  million  of  available-for-sale  investment
securities in March 2008.

Bank owned life  insurance  investment  income was $724,000 and $1.7 million for
the three and six months ended June 30, 2008,  respectively,  in  comparison  to
$999,000 and $1.7 million for the  comparable  periods in 2007, and reflects the
return on the  performance of the  underlying  investments  associated  with the
insurance  contracts,  which is  directly  correlated  to the  portfolio  mix of
investments,  the  crediting  rate  associated  with the  embedded  stable value
protection program, and overall market conditions.

Investment   management  income  generated  by  MVP,  our  institutional   money
management  subsidiary,  was  $686,000  and $2.0  million  for the three and six
months ended June 30, 2008, respectively, in comparison to $1.5 million and $3.1
million for the same periods in 2007,  reflecting decreased portfolio management
fee income  associated  with a decline in the level of assets  under  management
primarily  attributable  to the loss of a single  large  customer  in the fourth
quarter of 2007 and current market conditions.

Insurance fee and  commission  income  generated by Adrian Baker,  our insurance
brokerage agency, was $1.9 million and $3.9 million for the three and six months
ended June 30,  2008,  respectively,  in  comparison  to $1.9  million  and $3.6
million for the same periods in 2007,  primarily  reflecting  increased customer
volumes.

We  recorded  net  losses  of $1.6  million  and net  gains of $1.8  million  on
derivative  instruments  for the  three  and six  months  ended  June 30,  2008,
respectively, in comparison to net losses of $344,000 and $342,000 for the three
and six  months  ended  June 30,  2007,  respectively.  The net gain for the six
months ended June 30, 2008 is primarily  attributable to the net increase in the
fair value of our interest  rate floor  agreements as a result of the decline in
forward  rates  resulting  from the Federal  Reserve  interest rate cuts through
April 2008. In May 2008, we terminated  our $300.0  million  interest rate floor
agreements to modify our overall hedge position in accordance  with our interest
rate risk management  program,  as further described under "--Interest Rate Risk
Management."  We did not  incur any  gains or  losses  in  conjunction  with the
termination of our interest rate floor agreements.

We recorded a gain of $5.0 million on the  extinguishment of our term repurchase
agreement  in the first  quarter of 2008.  In March 2008,  we  restructured  our
$100.0 million term repurchase agreement,  as further discussed in Note 8 to our
consolidated  financial  statements.  The  primary  modifications  were to:  (a)
increase the borrowing  amount to $120.0  million;  (b) extend the maturity date
from  October 12, 2010 to April 12, 2012;  (c) convert the interest  rate from a
variable rate to a fixed rate of 3.36%; and (d) terminate the embedded  interest
rate floor  agreements  contained  within the term repurchase  agreement.  These
modifications resulted in the recognition of the pre-tax gain of $5.0 million.

Other  income was $8.9  million  and $14.4  million for the three and six months
ended June 30,  2008,  respectively,  in  comparison  to $5.3  million and $11.1
million for the  comparable  periods in 2007.  The increase in 2008 is primarily
attributable to the following:

      o     A net  increase in mortgage and other  servicing  rights of $555,000
            for the three months ended June 30, 2008,  compared to net decreases
            in  mortgage  servicing  rights of $1.2  million  for the six months
            ended June 30, 2008, and $1.4 million and $3.0 million for the three
            and six  months  ended  June  30,  2007,  respectively.  As  further
            discussed under "--Effects of New Accounting  Standards," on January
            1, 2008, we opted to

                                       29

<PAGE>

            measure  our  servicing   rights  at  fair  value.   As  such,   the
            fluctuations  in 2008, as compared to 2007,  reflect  changes in the
            fair value of our servicing rights in comparison to amortization and
            impairment recognized in 2007;

      o     Recoveries  of  certain  loan  principal   balances  that  had  been
            previously charged off by the financial  institutions prior to their
            acquisition  by First  Banks of  $686,000  and $1.5  million for the
            three and six months ended June 30,  2008,  compared to $215,000 and
            $1.1 million for the same periods in 2007;

      o     A gain of $1.8  million for the three and six months  ended June 30,
            2008  recognized  on the sale of various  state tax credits in April
            2008; and

      o     A gain recognized in March 2008 on the Visa, Inc., or Visa,  initial
            public offering of $743,000,  representing the cash payment received
            in exchange  for a portion of our  membership  interest in Visa as a
            result of Visa's initial public offering.

Noninterest  Expense.  Noninterest  expense was $84.6 million and $168.1 million
for the three and six months ended June 30, 2008, respectively, in comparison to
$84.7  million  and $170.7  million  for the  comparable  periods  in 2007.  Our
efficiency  ratio was 80.10% and 73.61% for the three and six months  ended June
30, 2008, respectively, compared to 73.62% and 73.66% for the comparable periods
in 2007.  The decrease in  noninterest  expense was  primarily  attributable  to
certain profit improvement  initiatives that we implemented  throughout 2007 and
the first two quarters of 2008.

Salaries and employee  benefits  expense was $37.1 million and $77.7 million for
the three and six months ended June 30, 2008,  respectively,  in  comparison  to
$43.7 million and $89.0 million for the comparable periods in 2007. We attribute
the overall  decrease  in  salaries  and  employee  benefits  expense to reduced
staffing  levels  within our mortgage  banking  division and the  completion  of
certain other staff  reductions in 2007 and the first two quarters of 2008.  Our
total full-time  equivalent employees (FTEs) decreased to approximately 2,340 at
June  30,  2008,  from  2,530 at June  30,  2007,  representing  a  decrease  of
approximately  7.5%. We reduced our FTEs by 7.5% despite  adding an aggregate of
26 additional branch offices through acquisitions in 2007 and an aggregate of 10
de novo branches  opened in 2007 and 2008. The decrease in salaries and employee
benefits expense is also reflective of reduced  incentive  compensation  expense
resulting from the  significant  decline in our earnings  between the comparable
periods.

Occupancy,  net of rental income,  and furniture and equipment expense was $14.4
million  and $29.8  million  for the three and six months  ended June 30,  2008,
respectively,  in  comparison  to  $12.7  million  and  $25.0  million  for  the
comparable  periods in 2007.  The  increase in 2008  reflects  higher  levels of
expense resulting from our de novo activities and acquisitions in 2007 and 2008,
as discussed  above,  as well as increased  technology  equipment  expenditures,
continued expansion and renovation of certain branch offices, increased expenses
associated  with the purchase and/or lease of properties that are expected to be
utilized for future branch office locations, and depreciation expense associated
with acquisitions and capital expenditures.

Information  technology  and item  processing  fees were $9.1  million and $18.4
million  for the three and six months  ended  June 30,  2008,  respectively,  in
comparison  to $9.2 million and $18.5  million for the same periods in 2007.  As
more fully described in Note 5 to our consolidated  financial statements,  First
Services,  L.P.,  a limited  partnership  indirectly  owned by our  Chairman and
members of his immediate  family,  provides  information  technology and various
operational support services to our subsidiaries and us. Information  technology
fees also include fees paid to outside  servicers  associated  with our mortgage
lending and trust divisions,  our small business lending and institutional money
management subsidiaries, and Adrian Baker and UPAC.

Legal,  examination and professional fees were $4.5 million and $7.3 million for
the three and six months ended June 30, 2008,  respectively,  in  comparison  to
$2.7 million and $4.4 million for the same periods in 2007, primarily reflecting
an  increase  in  professional  fees  resulting  from  internal  investigations,
including  the  investigation  commissioned  by the  Audit  Committee  regarding
certain matters  associated with the mortgage banking division and the resulting
restatement of our consolidated  financial  statements,  as further discussed in
Note 1 to our consolidated financial statements. The increased professional fees
were also  attributable  to higher  legal  expenses  related to  collection  and
foreclosure efforts on problem loans and ongoing litigation  matters,  including
those assumed through the acquisition of Coast Bank of Florida.

Amortization  of  intangible  assets was $2.8  million and $5.6  million for the
three and six months ended June 30, 2008,  respectively,  in  comparison to $3.2
million and $6.2  million for the same periods in 2007,  primarily  reflecting a
decrease in amortization expense on core deposit intangibles.

Advertising and business  development  expense was $2.0 million and $3.4 million
for the three and six months ended June 30, 2008, respectively, in comparison to
$1.7 million and $3.6 million for the same periods in 2007, primarily reflecting
a marketing  campaign in the second  quarter of 2008  associated  with  expanded
deposit product and service offerings.

                                       30
<PAGE>

FDIC  insurance  expense was $2.1 million and $3.0 million for the three and six
months ended June 30, 2008, respectively, in comparison to $268,000 and $516,000
for the comparable  periods in 2007. We had built up several  million dollars of
credits  through  previous  acquisitions  that  were  utilized  to  offset  FDIC
insurance premiums over the past several quarters and have now been depleted. As
such,  beginning  in the third  quarter of 2008,  we expect  our FDIC  insurance
premiums to approximate $2.1 million per quarter based on current premium rates.
We further  anticipate  that  premium  rates will likely  increase in the future
based on recent developments within the banking industry,  including the failure
of certain financial institutions.

Charitable contributions expense was $307,000 and $404,000 for the three and six
months ended June 30, 2008, respectively, in comparison to $1.5 million and $3.4
million  for the same  periods  in 2007,  reflecting  a decrease  in  charitable
contributions  made to the  Dierberg  Operating  Foundation,  Inc., a charitable
foundation  established by our Chairman and members of his immediate  family, as
further described in Note 5 to our consolidated financial statements.

Other  expense was $10.7  million and $19.1 million for the three and six months
ended June 30,  2008,  respectively,  in  comparison  to $8.1  million and $16.8
million for the comparable periods in 2007. Other expense  encompasses  numerous
general and administrative expenses including communications, insurance, freight
and courier  services,  correspondent  bank  charges,  miscellaneous  losses and
recoveries,  expenses on other real estate owned, memberships and subscriptions,
transfer  agent  fees,  sales  taxes and travel,  meals and  entertainment.  The
increase in other expense was primarily  attributable to an increase in expenses
associated  with continued  growth and expansion of our banking  franchise,  and
increases of $1.1 million and $1.5 million in other real estate  write-downs and
expenses  to $1.3  million and $1.9  million for the three and six months  ended
June  30,  2008,  respectively,  compared  to  $182,000  and  $351,000  for  the
comparable  periods in 2007. We expect the level of write-downs  and expenses on
other real estate to remain at  elevated  levels in the near term as a result of
the increase in our other real estate owned, which increased to $20.0 million at
June 30, 2008, from $11.2 million and $8.0 million at December 31, 2007 and June
30, 2007, respectively.

Provision for Income Taxes. The provision (benefit) for income taxes reflects an
income tax  benefit of $23.1  million  and $25.1  million  for the three and six
months ended June 30, 2008, respectively, compared to an income tax provision of
$9.5 million and $19.3 million for the comparable periods in 2007. Our effective
tax rate was 36.7% and 36.0% for the three and six months  ended June 30,  2008,
respectively,  compared to 35.4% and 35.6% for the  comparable  periods in 2007.
The decrease in income taxes is primarily  attributable  to our reduced level of
earnings.

                          Interest Rate Risk Management

We utilize  derivative  financial  instruments  to assist in our  management  of
interest  rate  sensitivity  by modifying  the  re-pricing,  maturity and option
characteristics  of certain assets and  liabilities.  The  derivative  financial
instruments  we held as of June 30, 2008 and December 31, 2007 are summarized as
follows:

<TABLE>
<CAPTION>
                                                      June 30, 2008       December 31, 2007
                                                  --------------------   -------------------
                                                   Notional    Credit    Notional    Credit
                                                    Amount    Exposure    Amount    Exposure
                                                  ---------   --------   --------   --------
                                                       (dollars expressed in thousands)
<S>                                               <C>         <C>        <C>        <C>
Cash flow hedges - loans ......................   $ 400,000      5,645    400,000      5,271
Cash flow hedges - subordinated debentures ....     125,000         --         --         --
Interest rate floor agreements ................          --         --    300,000      1,699
Interest rate cap agreements ..................     400,000         58    400,000         50
Interest rate lock commitments ................       8,000        162      3,000         23
Forward commitments to sell
   mortgage-backed securities .................      40,000        731     55,000         40
                                                  =========   ========   ========   ========
</TABLE>

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

For the three and six months  ended June 30,  2008,  we  realized  net  interest
income  of $2.9  million  and  $4.7  million,  respectively,  on our  derivative
financial instruments, whereas for the three and six months ended June 30, 2007,
we realized net interest expense of $1.4 million and $2.8 million, respectively,
on our derivative financial instruments.  The increase in net interest income is
primarily  attributable  to the  decline in the prime  lending  rate,  which has
significantly  reduced our cost associated with these  instruments.  We recorded
net  losses  of  $1.6  million  and net  gains  of $1.8  million  on  derivative
instruments for the three and six months ended June 30, 2008,  respectively,  in
comparison  to net losses of $344,000  and $342,000 for the three and six months
ended June 30,  2007,  respectively.  These net gains and losses are included in
noninterest income in our consolidated statements of operations.  The net

                                       31

<PAGE>

losses and net gains on our derivative  instruments  reflect changes in the fair
value of our interest  rate floor and interest rate cap  agreements,  as further
discussed  below.  On May  9,  2008,  we  terminated  our  interest  rate  floor
agreements to modify our overall hedge position in accordance  with our interest
rate risk management program.

Our asset-sensitive position,  coupled with the effect of reductions in interest
rates from  September  2007 through April 2008, as further  discussed  under "--
Results of Operations," has negatively impacted our net interest income and will
continue to impact the level of our net interest  income over time, as reflected
in our net  interest  margin for the three and six months ended June 30, 2008 as
compared to the comparable  period in 2007, and further  discussed under "-- Net
Interest Income."

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

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

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

The amount receivable by us under these swap agreements was $6.0 million at June
30, 2008 and  December  31,  2007 and the amount  payable by us under these swap
agreements  was  $309,000  and  $683,000 at June 30, 2008 and December 31, 2007,
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 on
certain loans as of June 30, 2008 and December 31, 2007 were as follows:

<TABLE>
<CAPTION>
                                                Notional   Interest Rate   Interest Rate     Fair
                Maturity Date                    Amount        Paid           Received       Value
                -------------                  ---------   -------------   -------------     -----
                                                         (dollars expressed in thousands)
<S>                                            <C>         <C>             <C>             <C>
June 30, 2008:
   September 18, 2009 ......................   $ 200,000        2.14%           5.20%      $  4,916
   September 20, 2010 ......................     200,000        2.14            5.20          8,038
                                               ---------                                   --------
                                               $ 400,000        2.14            5.20       $ 12,954
                                               =========       =====           =====       ========

December 31, 2007:
   September 18, 2009 ......................   $ 200,000        4.39%           5.20%      $  4,585
   September 20, 2010 ......................     200,000        4.39            5.20          7,331
                                               ---------                                   --------
                                               $ 400,000        4.39            5.20       $ 11,916
                                               =========       =====           =====       ========
</TABLE>

Cash Flow  Hedges -  Subordinated  Debentures.  We  entered  into the  following
interest rate swap  agreements,  which have been designated as cash flow hedges,
with the objective of  stabilizing  our long-term cost of capital and cash flow,
and  accordingly,  net interest  income on our  subordinated  debentures  to the
respective call dates of certain subordinated debentures:

      o     In March 2008, we entered into the following four interest rate swap
            agreements totaling $125.0 million notional amount, in aggregate, to
            effectively  convert  the  interest  rate on $125.0  million  of our
            subordinated debentures from a variable rate to a blended fixed rate
            of interest  of  approximately  4.90%:  (a) $25.0  million  notional
            amount  with a  maturity  date of July 7,  2011;  (b) $50.0  million
            notional amount with a maturity date of December 15, 2011; (c) $25.0
            million  notional amount with a maturity date of March 30, 2012; and
            (d) $25.0 million  notional  amount with a maturity date of December
            15,  2012.  These  swap  agreements  provide  for us to  receive  an
            adjustable  rate of interest  equivalent to the  three-month  London
            Interbank  Offered  Rate,  or LIBOR,  plus 1.65%,  1.85%,  1.61% and
            2.25%, respectively,  and pay a fixed rate of interest. The terms of
            the swap agreements  provide for us to pay and receive interest on a
            quarterly basis.

                                       32

<PAGE>

The amount receivable by us under these swap agreements was $409,000 at June 30,
2008, and the amount  payable by us under these swap  agreements was $423,000 at
June 30, 2008.

The maturity dates, notional amounts,  interest rates paid and received and fair
value of our interest  rate swap  agreements  designated  as cash flow hedges on
certain subordinated debentures as of June 30, 2008 were as follows:

<TABLE>
<CAPTION>
                                                Notional   Interest Rate   Interest Rate     Fair
                Maturity Date                    Amount        Paid           Received       Value
                -------------                  ---------   -------------   -------------     -----
                                                         (dollars expressed in thousands)
<S>                                            <C>         <C>             <C>             <C>
July 7, 2011 ...............................   $  25,000        4.40%           4.36%      $    793
December 15, 2011 ..........................      50,000        4.91            4.63          1,476
March 30, 2012 .............................      25,000        4.71            4.41            793
December 15, 2012 ..........................      25,000        5.57            5.03            824
                                               ---------                                   --------
                                               $ 125,000        4.90            4.61       $  3,886
                                               =========       =====           =====       ========
</TABLE>

Interest  Rate Floor  Agreements.  In September  2005,  we entered into a $100.0
million notional amount three-year  interest rate floor agreement in conjunction
with our  interest  rate  risk  management  program.  The  interest  rate  floor
agreement provided for us to receive a quarterly fixed rate of interest of 5.00%
should the  three-month  LIBOR equal or fall below the strike price of 2.00%. In
August  2006,  we  entered  into a $200.0  million  notional  amount  three-year
interest rate floor agreement in conjunction  with the  restructuring  of one of
our $100.0 million term repurchase  agreements,  as further  described below, to
further stabilize net interest income in the event of a declining rate scenario.
The  interest  rate  floor  agreement  provided  for us to  receive a  quarterly
adjustable rate of interest  equivalent to the  differential  between the strike
price of 4.00% and the three-month  LIBOR should the three-month  LIBOR equal or
fall below the strike price.  On May 9, 2008,  we  terminated  our interest rate
floor  agreements  to modify our overall hedge  position in accordance  with our
interest rate risk management  program.  We did not incur any gains or losses in
conjunction with the termination of our interest rate floor agreements. The fair
value of the interest rate floor agreements,  which was included in other assets
in our consolidated balance sheets, was $1.7 million at December 31, 2007.

Interest Rate Floor Agreements Embedded in Term Repurchase Agreements. We have a
term  repurchase   agreement  under  a  master  repurchase   agreement  with  an
unaffiliated  third party,  as further  described in Note 8 to our  consolidated
financial  statements.  The  underlying  securities  associated  with  the  term
repurchase agreement are agency  collateralized  mortgage obligation  securities
and are held by other financial institutions under safekeeping  agreements.  The
term repurchase agreement was entered into with the objective of stabilizing net
interest  income over time,  further  protecting our net interest margin against
changes in interest  rates and  providing  funding for  security  purchases.  At
December 31,  2007,  the term  repurchase  agreement  had a borrowing  amount of
$100.0  million,  a maturity  date of October 12, 2010,  and interest rate floor
agreements  included within the term  repurchase  agreement,  which  represented
embedded  derivative  instruments  that, in accordance with existing  accounting
literature governing derivative  instruments,  were not required to be separated
from the term repurchase  agreement and accounted for separately as a derivative
financial  instrument.  On March 31, 2008, we  restructured  our existing $100.0
million  term  repurchase  agreement.  The  primary  modifications  were to: (a)
increase the borrowing amount from $100.0 million to $120.0 million;  (b) extend
the  maturity  date from  October  12, 2010 to April 12,  2012;  (c) convert the
interest rate from a variable  rate tied to LIBOR to a fixed rate of 3.36%;  and
(d) terminate the embedded  interest rate floor agreements  contained within the
term repurchase  agreement.  These  modifications  resulted in a pre-tax gain of
$5.0  million,  which is reflected  in  noninterest  income in our  consolidated
statements of operations.  The term  repurchase  agreement is reflected in other
borrowings in our  consolidated  balance sheets and the related interest expense
is  reflected  as  interest  expense  on other  borrowings  in our  consolidated
statements of operations.

Interest  Rate Cap  Agreements.  In  September  2006,  we entered  into a $200.0
million  notional  amount  three-year  interest  rate cap agreement and a $200.0
million  notional  amount  four-year  interest rate cap agreement in conjunction
with the interest  rate swap  agreements  designated as cash flow hedges that we
entered  into in  September  2006,  as  previously  described,  to limit the net
interest expense  associated with our interest rate swap agreements in the event
of a rising  rate  scenario.  The  $200.0  million  notional  amount  three-year
interest  rate cap agreement  provides for us to receive a quarterly  adjustable
rate of interest  equivalent to the differential  between the three-month  LIBOR
and the strike  price of 7.00%  should the  three-month  LIBOR exceed the strike
price. The $200.0 million notional amount four-year  interest rate cap agreement
provides for us to receive a quarterly adjustable rate of interest equivalent to
the  differential  between the  three-month  LIBOR and the strike price of 7.50%
should the  three-month  LIBOR  exceed the strike  price.  The fair value of the
interest  rate  cap  agreements,  which  is  included  in  other  assets  in our
consolidated  balance  sheets,  was  $58,000  and  $50,000 at June 30,  2008 and
December 31, 2007, respectively.

                                       33
<PAGE>

Pledged Collateral. At June 30, 2008 and December 31, 2007, we had accepted cash
of $18.4 million and $21.4  million,  respectively,  as collateral in connection
with our interest rate swap agreements. At June 30, 2008, we had pledged cash of
$1.0 million as collateral in connection with our interest rate swap agreements.

Interest Rate Lock  Commitments / Forward  Commitments  to Sell  Mortgage-Backed
Securities.  Derivative  financial  instruments issued by us consist of interest
rate lock commitments to originate  fixed-rate loans to be sold.  Commitments to
originate  fixed-rate loans consist  primarily of residential real estate loans.
These net loan  commitments  and loans  held for sale are  hedged  with  forward
contracts to sell mortgage-backed  securities,  which expire in August 2008. The
fair value of the  interest  rate lock  commitments,  which is included in other
assets in our consolidated  balance sheets, was $162,000 and $23,000 at June 30,
2008  and  December  31,  2007,  respectively.  The fair  value  of the  forward
contracts to sell mortgage-backed securities,  which is included in other assets
in our  consolidated  balance sheets,  was $731,000 and $40,000 at June 30, 2008
and December 31, 2007, respectively.

                       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 93.5% and 93.2% of our total
interest income for the three and six months ended June 30, 2008,  respectively,
in comparison to 89.0% and 89.2% for the comparable  periods in 2007. Loans, net
of unearned  discount,  increased to $9.05 billion,  or 83.8% of our assets,  at
June 30, 2008,  compared to $8.89 billion,  or 81.5% of our assets,  at December
31, 2007. The following  table  summarizes the composition of our loan portfolio
at June 30, 2008 and December 31, 2007:

<TABLE>
<CAPTION>
                                                                    June 30,       December 31,
                                                                      2008             2007
                                                                ---------------    -------------
                                                                                     (Restated)
                                                                (dollars expressed in thousands)
<S>                                                             <C>                <C>
Commercial, financial and agricultural ......................   $     2,601,426        2,382,067
Real estate construction and development ....................         1,979,404        2,141,234
Real estate mortgage:
   One-to-four family residential ...........................         1,601,249        1,602,575
   Multi-family residential .................................           190,323          177,246
   Commercial real estate ...................................         2,525,536        2,431,464
Consumer and installment, net of unearned discount ..........            87,133           85,519
Loans held for sale .........................................            60,043           66,079
                                                                ---------------    -------------
   Loans, net of unearned discount ..........................   $     9,045,114        8,886,184
                                                                ===============    =============
</TABLE>

The overall  increase in loans, net of unearned  discount,  during the first six
months of 2008 is primarily attributable to the following:

      o     An  increase  of $219.4  million in our  commercial,  financial  and
            agricultural  portfolio  primarily  attributable  to  internal  loan
            production  growth,  partially  offset by the sale of the guaranteed
            portion of  approximately  $10.8 million of our small business loans
            in March 2008, which resulted in a pre-tax gain of $504,000; and

      o     An increase of $94.1 million in our commercial real estate portfolio
            primarily attributable to internal loan production growth; partially
            offset by

      o     A decrease  of $161.8  million in our real estate  construction  and
            development portfolio primarily  attributable to internal efforts to
            decrease our exposure to real estate  construction  and  development
            loans, and increased charge-offs recorded on certain existing loans,
            as further discussed below.

The overall  change in the mix of our loan  portfolio is  commensurate  with our
strategy of reducing our exposure to real estate,  particularly construction and
land  development,  in the  current  economic  environment  in which many of our
market sectors have experienced  significant  declines in real estate values. We
are  redeploying  the proceeds  from the net decrease in  construction  and land
development loans into commercial, financial and agricultural loans.

                                       34

<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, 2008 and December 31, 2007:

<TABLE>
<CAPTION>
                                                                    June 30,       December 31,
                                                                      2008             2007
                                                                ---------------    -------------
                                                                                    (Restated)
                                                                (dollars expressed in thousands)
<S>                                                             <C>                <C>
Commercial, financial and agricultural:
      Nonaccrual ............................................   $         8,711            5,916
Real estate construction and development:
      Nonaccrual ............................................           257,916          151,812
Real estate mortgage:
      One-to-four family residential:
         Nonaccrual .........................................            70,749           32,931
         Restructured .......................................            16,984                7
      Multi-family residential:
         Nonaccrual .........................................               141               --
      Commercial real estate:
         Nonaccrual .........................................            12,023           11,294
Consumer and installment:
      Nonaccrual ............................................               394              263
                                                                ---------------    -------------
            Total nonperforming loans .......................           366,918          202,223
Other real estate ...........................................            20,039           11,225
                                                                ---------------    -------------
            Total nonperforming assets ......................   $       386,957          213,448
                                                                ===============    =============

Loans, net of unearned discount .............................   $     9,045,114        8,886,184
                                                                ===============    =============

Loans past due 90 days or more and still accruing ...........   $        14,485           26,753
                                                                ===============    =============

Ratio of:
   Allowance for loan losses to loans .......................              2.22%            1.89%
   Nonperforming loans to loans .............................              4.06             2.28
   Allowance for loan losses to nonperforming loans .........             54.77            83.27
   Nonperforming assets to loans and other real estate ......              4.27             2.40
                                                                ===============    =============
</TABLE>

Nonperforming  loans,  consisting of loans on nonaccrual status and restructured
loans, were $366.9 million at June 30, 2008, compared to $236.8 million at March
31, 2008 and $202.2 million at December 31, 2007. Nonperforming loans were 4.06%
of loans,  net of unearned  discount,  at June 30,  2008,  compared to 2.63% and
2.28% of loans,  net of unearned  discount,  at March 31, 2008 and  December 31,
2007, respectively. Other real estate owned was $20.0 million, $13.2 million and
$11.2  million  at June  30,  2008,  March  31,  2008  and  December  31,  2007,
respectively.  Nonperforming assets, consisting of nonperforming loans and other
real estate  owned,  were $387.0  million at June 30,  2008,  compared to $250.0
million at March 31, 2008, and $213.4  million at December 31, 2007.  Loans past
due 90 days or more and still  accruing  interest were $14.5 million at June 30,
2008,  compared to $23.6 million at March 31, 2008 and $26.8 million at December
31, 2007.

Nonperforming  loans at June 30, 2008 increased $164.7 million,  or 81.4%,  from
nonperforming  loans at December 31, 2007.  The following  table  summarizes the
composition  of our  nonperforming  loans as of June 30, 2008 and  December  31,
2007:

<TABLE>
<CAPTION>
                                                                    June 30,       December 31,
                                                                      2008             2007
                                                                ---------------    -------------
                                                                (dollars expressed in thousands)
<S>                                                             <C>                <C>
Northern California real estate .............................   $       117,310           99,234
Mortgage banking division ...................................            74,815           27,727
Florida, excluding mortgage banking division ................            46,862           37,718
Southern California real estate .............................            49,118               --
Chicago real estate .........................................            20,510               --
Metro St. Louis, Missouri real estate .......................            15,057            5,000
Texas real estate ...........................................            11,832            6,533
Other .......................................................            31,414           26,011
                                                                ---------------    -------------
   Total nonperforming loans ................................   $       366,918          202,223
                                                                ===============    =============
</TABLE>

                                       35

<PAGE>

We attribute the increase in our nonperforming loans to the following:

      o     An increase in one-to-four  family  residential  nonaccrual loans of
            $37.8 million,  primarily due to an increase of $30.1 million in our
            mortgage banking division. One-to-four family residential nonaccrual
            loans in our  Florida  region  increased  $16.0  million,  from $7.4
            million at  December  31,  2007 to $23.4  million at June 30,  2008,
            accounting  for  approximately  53.1% of the total  increase  in our
            mortgage  banking  division.  Net loan  charge-offs  of  one-to-four
            family  residential  loans were $12.3  million and $23.5 million for
            the three and six months ended June 30, 2008, respectively, of which
            $9.4  million  and  $19.2  million  relate to our  mortgage  banking
            division. We continue to experience deterioration in our one-to-four
            family residential portfolio as a result of weak economic conditions
            in the nationwide  housing markets and significant  declines in real
            estate values, particularly in Florida and California;

      o     An increase in  one-to-four  family  restructured  loans  during the
            first six months of 2008 of $17.0 million.  Throughout the first six
            months of 2008,  our  mortgage  banking  division  has  restructured
            certain  one-to-four  family residential  mortgage loans,  primarily
            located in California and Florida,  whereby the contractual interest
            rate was  reduced  over a certain  time  period.  At the time of the
            restructuring, the individual loans were in full compliance with the
            terms of the original loan contracts; and

      o     An increase in real estate  construction and development  nonaccrual
            loans of $106.1 million.  Real estate  construction  and development
            nonaccrual loans in Northern California increased $18.1 million from
            $99.2  million at December  31,  2007 to $117.3  million at June 30,
            2008. Real estate construction and development nonaccrual loans also
            increased   throughout   our  other  regions,   including   Southern
            California and Chicago, which experienced increases of $49.1 million
            and $20.5 million, respectively. Our Southern California and Chicago
            regions did not have any  nonaccrual  loans at December 31, 2007. We
            recorded net  charge-offs  of $50.5 million and $67.9 million on our
            real estate  construction  and development loan portfolio during the
            three and six months ended June 30, 2008, of which $41.4 million and
            $57.3   million   relates  to  the   Northern   California   region,
            respectively.  We continue to experience  deterioration  in our real
            estate  construction  and development  portfolio as a result of weak
            economic conditions and significant  declines in real estate values,
            particularly in California.

We expect the  declining  and unstable  market  conditions  associated  with our
one-to-four  family  residential  mortgage  loan  portfolio  and our real estate
construction and development portfolio,  particularly in Northern California and
Florida,  to continue in the near term, which will likely increase the amount of
our nonperforming loans, loan charge-offs and provision for loan losses.

The  outstanding  balance  and  carrying  amount of impaired  loans  acquired in
acquisitions was $57.9 million and $30.4 million at June 30, 2008, respectively,
and $84.9  million and $46.0  million at December  31,  2007,  respectively.  We
recorded impaired loans acquired in acquisitions  during the year ended December
31, 2007 of $45.7  million at the time of  acquisition.  Changes in the carrying
amount of impaired loans acquired in  acquisitions  for the three and six months
ended June 30, 2008 were as follows:

                                                Three Months      Six Months
                                                   Ended            Ended
                                               June 30, 2008    June 30, 2008
                                              ---------------  ----------------
                                               (dollars expressed in thousands)

Balance, beginning of period ...............   $      42,067             46,003
Transfers to other real estate .............          (2,883)            (5,206)
Loans charged-off ..........................          (3,672)            (5,060)
Payments and settlements ...................          (5,129)            (5,354)
                                               -------------   ----------------
Balance, end of period .....................   $      30,383             30,383
                                               =============   ================

There was no allowance  for loan losses  related to these loans at June 30, 2008
and December 31, 2007. As the loans were classified as nonaccrual  loans,  there
was no accretable yield related to these loans at June 30, 2008 and December 31,
2007.

                                       36

<PAGE>

Changes in the allowance for loan losses for the three and six months ended June
30, 2008 and 2007 were as follows:

<TABLE>
<CAPTION>
                                                     Three Months Ended         Six Months Ended
                                                           June 30,                 June 30,
                                                   ----------------------    -----------------------
                                                      2008       2007           2008         2007
                                                   ---------   ----------    ----------   ----------
                                                               (Restated)                 (Restated)
                                                           (dollars expressed in thousands)
<S>                                                <C>         <C>           <C>          <C>
Balance, beginning of period ...................   $ 185,184      142,148       168,391      145,729
Acquired allowance for loan losses .............          --           --            --        2,925
                                                   ---------   ----------    ----------   ----------
                                                     185,184      142,148       168,391      148,654
                                                   ---------   ----------    ----------   ----------
Loans charged-off ..............................     (69,566)      (4,480)     (100,905)     (16,195)
Recoveries of loans previously charged-off .....       1,286        1,837         3,471        3,546
                                                   ---------   ----------    ----------   ----------
   Net loan charge-offs ........................     (68,280)      (2,643)      (97,434)     (12,649)
                                                   ---------   ----------    ----------   ----------
Provision for loan losses ......................      84,053        3,417       130,000        6,917
                                                   ---------   ----------    ----------   ----------
Balance, end of period .........................   $ 200,957      142,922       200,957      142,922
                                                   =========   ==========    ==========   ==========
</TABLE>

We recorded  net loan  charge-offs  of $68.3  million and $97.4  million for the
three and six months  ended June 30,  2008,  compared to $2.6  million and $12.6
million for the comparable  periods in 2007. Net loan  charge-offs  recorded for
the three and six months ended June 30, 2008  included  $41.4  million and $57.3
million of net loan  charge-offs  associated  with our Northern  California real
estate construction and development portfolio, compared to zero and $2.5 million
for the  comparable  periods in 2007.  We continue to  experience  distress  and
declining   conditions  within  our  Northern  California  real  estate  market,
resulting in further increased developer inventories, slower lot and home sales,
and substantially declining market values. Net loan charge-offs recorded for the
three and six months  ended June 30, 2008 also  include  $9.4  million and $19.2
million of net loan charge-offs  associated with our mortgage banking  division,
compared to $3.2  million and $8.7 million for the  comparable  periods in 2007.
Our annualized  net loan  charge-offs as a percentage of average loans was 2.18%
for the first six months of 2008, compared to 0.32% for the comparable period in
2007.

Our  allowance  for loan  losses was $201.0  million  at June 30,  2008,  $185.2
million  at March 31,  2008,  and $168.4  million  at  December  31,  2007.  Our
allowance  for loan losses as a percentage of loans,  net of unearned  discount,
was 2.22% at June 30, 2008,  2.05% at March 31, 2008,  and 1.89% at December 31,
2007.  The  increase  in  this  ratio  is  primarily  due  to  the  increase  in
nonperforming  and other problem loans throughout the three and six months ended
June 30,  2008,  which has led to a  provision  for loan losses in excess of net
charge-offs to reserve for probable losses in the loan portfolio.

Our allowance for loan losses as a percentage of nonperforming loans was 54.77%,
78.20%,  and 83.27% at June 30,  2008,  March 31,  2008,  and December 31, 2007,
respectively.  The decrease in this ratio is primarily  due to $84.6  million of
nonperforming  loans being  contributed from First Bank into FB Holdings,  which
was formed during the second quarter of 2008, as further  described in Note 5 to
our  consolidated  financial  statements.  These loans were contributed by First
Bank to FB  Holdings  at  estimated  fair  value,  and as such,  have no related
allowance  for loan losses  allocation  at June 30, 2008.  Net loan  charge-offs
associated with the loans  contributed to FB Holdings were  approximately  $45.3
million  and $61.2  million  for the three and six months  ended June 30,  2008,
respectively, of which $41.4 million and $57.3 million, respectively,  relate to
our Northern  California real estate  portfolio.  We continue to closely monitor
our loan  portfolio  and address the ongoing  challenges  posed by the  economic
environment,  including highly competitive markets within certain sectors of our
loan portfolio and significantly declining real estate values.

Each  month,  the credit  administration  department  provides  management  with
detailed  lists of loans on the watch  list and  summaries  of the  entire  loan
portfolio by risk rating. These are coupled with analyses of changes in the risk
profile  of the  portfolio,  changes in  past-due  and  nonperforming  loans and
changes  in watch  list and  classified  loans over  time.  In this  manner,  we
continually  monitor the overall  increases or decreases in the level of risk in
our loan portfolio.  Factors are applied to the loan portfolio for each category
of loan risk to  determine  acceptable  levels  of  allowance  for loan  losses.
Furthermore,   management  has  implemented  additional  procedures  to  analyze
concentrations  in our real estate  portfolio  in light of current  economic and
market  conditions.  These  procedures  include  monthly  meetings with our real
estate  groups and  enhanced  reporting  to track land,  lot,  construction  and
finished  inventory  levels within our real estate  construction and development
portfolio. In addition, a quarterly evaluation of each lending unit is performed
based on certain factors,  such as lending personnel  experience,  recent credit
reviews,  loan  concentrations  and  other  factors.  Based on this  evaluation,
changes to the  allowance  for loan losses may be required due to the  perceived
risk of  particular  portfolios.  In  addition,  management  exercises a certain
degree of judgment in its analysis of the overall  adequacy of the allowance for
loan losses. In its analysis, management considers the changes in the portfolio,
including growth,  composition,  the ratio of net loans to total assets, and the
economic  conditions  of  the  regions  in  which  we  operate.  Based  on  this
quantitative and qualitative

                                       37

<PAGE>

analysis,   adjustments  are  made  to  the  allowance  for  loan  losses.  Such
adjustments are reflected in our consolidated statements of operations.

                                    Liquidity

Our  liquidity  is the  ability to maintain a cash flow that is adequate to fund
operations,  service debt obligations and meet obligations and other commitments
on a timely basis. We receive funds for liquidity from customer  deposits,  loan
payments,  maturities  of  loans  and  investments,  sales  of  investments  and
earnings.  In  addition,  we may avail  ourselves  of other  sources of funds by
issuing  certificates of deposit in denominations of $100,000 or more, borrowing
federal funds,  selling  securities under agreements to repurchase and utilizing
borrowings from the FHLB and other borrowings. The aggregate funds acquired from
these sources were $1.92 billion and $2.00 billion at June 30, 2008 and December
31, 2007, respectively.

The following  table  presents the maturity  structure of these other sources of
funds,  which consists of  certificates of deposit of $100,000 or more and other
borrowings, including our notes payable, at June 30, 2008:

<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 ....................   $               608,993      202,890     811,883
Over three months through six months ....                   311,175      100,000     411,175
Over six months through twelve months ...                   257,040      100,000     357,040
Over twelve months ......................                   116,258      220,744     337,002
                                            -----------------------   ----------   ---------
   Total ................................   $             1,293,466      623,634   1,917,100
                                            =======================   ==========   =========
</TABLE>

In addition to these  sources of funds,  First Bank has  established a borrowing
relationship  with  the  Federal  Reserve  Bank  of St.  Louis.  This  borrowing
relationship,  which is secured by  commercial  loans,  provides  an  additional
liquidity  facility that may be utilized for contingency  purposes.  At June 30,
2008 and December 31, 2007, First Bank's borrowing  capacity under the agreement
was approximately $1.65 billion and $523.3 million, respectively.

In addition,  First Bank's borrowing  capacity through its relationship with the
FHLB was  approximately  $804.1  million and $672.3 million at June 30, 2008 and
December 31, 2007,  respectively.  We had FHLB  advances  outstanding  of $300.8
million at June 30,  2008,  compared  to  $857,000 at  December  31,  2007.  The
increase  during the six months ended June 30, 2008  resulted  from three $100.0
million FHLB advances drawn by First Bank that mature in November 2008,  January
2009 and July 2009. In July 2008, we entered into a $100.0  million FHLB advance
that matures in February 2009 at a fixed rate of 2.92%.

Our  loan-to-deposit  ratio  increased  to 102.2% at June 30, 2008 from 97.1% at
December  31,  2007.  As a  result  of this  increase,  we  implemented  certain
strategies  during  the  first  six  months  of 2008 to  improve  our  liquidity
position,  including the additional FHLB borrowings, as discussed above, as well
as  increasing  the  availability  of our borrowing  relationship  with both the
Federal  Reserve Bank of St. Louis and the FHLB  through  additional  collateral
availability.   We  are  continuing  to  closely  monitor   liquidity  and  take
appropriate  actions  deemed  necessary  to  maintain  an  appropriate  level of
liquidity in light of unstable market conditions,  increased loan funding needs,
operating and debt service requirements, and current deposit trends.

In addition to our owned  banking  facilities,  we have entered  into  long-term
leasing  arrangements to support our ongoing  activities.  The required payments
under such commitments and other obligations at June 30, 2008 were as follows:

<TABLE>
<CAPTION>
                                     Less than       1-3       3-5      Over
                                      1 Year        Years     Years    5 Years   Total (1)
                                    -----------    -------   -------   -------   ---------
                                               (dollars expressed in thousands)
<S>                                 <C>            <C>       <C>       <C>       <C>
Operating leases ................   $    16,907     27,753    19,272    49,551     113,483
Certificates of deposit (2) .....     3,275,306    363,559    49,397     1,634   3,689,896
Other borrowings (2) ............       372,890    100,744   120,000        --     593,634
Notes payable (2) ...............        30,000         --        --        --      30,000
Subordinated debentures (2) .....            --         --        --   353,790     353,790
Other contractual obligations ...         1,320(3)     128       136        43       1,627
                                    -----------    -------   -------   -------   ---------
   Total ........................   $ 3,696,423    492,184   188,805   405,018   4,782,430
                                    ===========    =======   =======   =======   =========
</TABLE>

----------
(1)   Amounts exclude FIN 48  unrecognized  tax liabilities of $12.8 million and
      related accrued  interest  expense of $1.9 million for which the timing of
      payment of such liabilities cannot be reasonably  estimated as of June 30,
      2008.
(2)   Amounts exclude the related interest expense accrued on these  obligations
      as of June 30, 2008.
(3)   Includes  an  accrued   expense   related  to  our   remaining   estimated
      indemnification  obligation, as a member bank, to share certain litigation
      costs of Visa.

                                       38

<PAGE>

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

                       Effects of New Accounting Standards

In March 2006,  the FASB  issued  SFAS No. 156 -  Accounting  for  Servicing  of
Financial  Assets.  SFAS No. 156, an amendment of FASB SFAS No. 140 - Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities,  addresses the recognition and measurement of separately recognized
servicing  assets and  liabilities  and  allows  mark-to-market  accounting  for
servicing  rights  resulting  in  reporting  that is similar to fair value hedge
accounting, but without the effort and system costs needed to identify effective
hedging  instruments  and  document  hedging  relationships.  SFAS  No.  156  is
effective for fiscal years beginning after September 15, 2006. Early adoption is
permitted as of the  beginning of an entity's  fiscal year unless the entity has
already  issued  interim  financial  statements  during  that  fiscal  year.  We
implemented  SFAS No.  156 on  January  1,  2007,  which did not have a material
impact on our financial condition or results of operations.  On January 1, 2008,
we opted to measure  servicing rights at fair value. The election of this option
resulted in the  recognition  of a cumulative  effect of a change in  accounting
principle  of $6.3  million,  which was  recorded as an  increase  to  beginning
retained earnings, as further described in Note 1 and Note 3 to our consolidated
financial statements.

In September 2006, the FASB issued SFAS No. 157 - Fair Value Measurements.  SFAS
No. 157 defines fair value,  establishes a framework for measuring fair value in
U.S. generally accepted  accounting  principles,  and expands  disclosures about
fair  value   measurements.   SFAS  No.  157  applies  under  other   accounting
pronouncements  that  require or permit  fair value  measurements,  and does not
require any new fair value  measurements.  SFAS No. 157 is effective  for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years,  for  financial  assets  and  liabilities  and  nonfinancial  assets  and
nonfinancial  liabilities  that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). Implementation is
deferred  for all  nonfinancial  assets and  nonfinancial  liabilities  that are
recognized  or  disclosed  at  fair  value  in  the  financial  statements  on a
nonrecurring  basis to fiscal years  beginning  after  November 15, 2008.  Early
adoption is permitted as of the beginning of an entity's  fiscal year unless the
entity has already issued interim financial  statements during that fiscal year.
We  implemented  SFAS No. 157 related to financial  assets and  liabilities  and
nonfinancial  assets  and  nonfinancial   liabilities  that  are  recognized  or
disclosed at fair value in our consolidated  financial statements on a recurring
basis (at least  annually)  on January  1,  2008,  which did not have a material
impact on our financial  condition or results of  operations  other than certain
additional disclosure requirements.

In  September  2006,  the FASB issued SFAS No. 158 - Employers'  Accounting  for
Defined Benefit Pension and Other  Postretirement  Plans.  SFAS No. 158 requires
companies to recognize the overfunded or underfunded status of a defined benefit
postretirement  plan as a net asset or  liability  in the  balance  sheet and to
recognize changes in the funded status of the plan through  comprehensive income
in the year in which the  changes  occur.  The funded  status is measured as the
difference  between the fair value of the plan assets and the benefit obligation
as of the date of the company's fiscal year end. Effective December 31, 2007, we
adopted the recognition and disclosure  provisions of SFAS No. 158, resulting in
a cumulative  effect of change in  accounting  principle of $902,000,  which was
recorded as a decrease to accumulated  other  comprehensive  loss as of December
31, 2007. We have not yet adopted the  measurement  date  provisions of SFAS No.
158, which become effective for us as of December 31, 2008;  however,  we do not
anticipate the adoption of the  measurement  date  provisions of SFAS No. 158 to
have a material effect on our consolidated financial statements.

In  February  2007,  the FASB  issued  SFAS No. 159 - The Fair Value  Option for
Financial Assets and Financial  Liabilities,  including an amendment of SFAS No.
115. SFAS No. 159 provides entities with an option to report selected  financial
assets and  liabilities at fair value in an effort to reduce both  complexity in
accounting for financial  instruments  and the volatility in earnings  caused by
measuring related assets and liabilities differently.  SFAS No. 159 is effective
for fiscal years beginning after November 15, 2007. Retrospective application is
not allowed.  Early  adoption is  permitted  as of the  beginning of an entity's
fiscal year that begins on or before November 15, 2007, provided the entity also
elects  to adopt all of the  provisions  of SFAS No.  157 at the early  adoption
date.  We  implemented  SFAS No. 159 on  January  1, 2008,  which did not have a
material impact on our financial condition or results of operations.

In November 2007, the SEC issued SEC Staff Accounting Bulletin,  or SAB, No. 109
- Written Loan Commitments Recorded at Fair Value Through Earnings.  SAB No. 109
requires fair value measurements of derivative loan commitments or other written
loan  commitments  recorded  through earnings to include the expected net future
cash  flows  related  to the  associated  servicing  of the  loan.  SAB No.  109
supersedes  SAB  No.  105  -  Application  of  Accounting   Principles  to  Loan
Commitments,  which applied only to derivative loan commitments accounted for at
fair value through  earnings,  and broadens its  application to all written loan
commitments that are accounted for at fair value through  earnings.  SAB No. 109
also states that internally developed intangible assets should not be

                                       39
<PAGE>

recorded as part of the fair value of a derivative loan commitment.  SAB No. 109
is effective on a prospective  basis to derivative  loan  commitments  issued or
modified in fiscal  quarters  beginning  after December 15, 2007. We implemented
SAB No.  109 on January  1,  2008,  which did not have a material  impact on our
financial condition or results of operations.

In December 2007, the FASB issued SFAS No. 141(R) - Business Combinations.  SFAS
No. 141(R) will  significantly  change how entities apply the acquisition method
to business  combinations.  The most significant  changes affecting how entities
will account for business  combinations  under SFAS No. 141(R) include:  (a) the
acquisition  date will be the date the acquirer  obtains  control;  (b) all (and
only)  identifiable  assets acquired,  liabilities  assumed,  and noncontrolling
interests in the acquiree will be stated at fair value on the acquisition  date;
(c) assets or  liabilities  arising from  noncontractual  contingencies  will be
measured at their acquisition date fair value only if it is more likely than not
that they meet the definition of an asset or liability on the acquisition  date;
(d) adjustments  subsequently  made to the provisional  amounts  recorded on the
acquisition date will be made  retroactively  during a measurement period not to
exceed one year; (e)  acquisition-related  restructuring  costs that do not meet
the  criteria in SFAS No. 146 -  Accounting  for Costs  Associated  with Exit or
Disposal Activities, will be expensed as incurred; (f) transaction costs will be
expensed as incurred;  (g) reversals of deferred income tax valuation allowances
and income tax  contingencies  will be recognized in earnings  subsequent to the
measurement  period;  and (h) the  allowance for loan losses of an acquiree will
not be permitted to be recognized by the acquirer. Additionally, SFAS No. 141(R)
will  require new and modified  disclosures  surrounding  subsequent  changes to
acquisition-related  contingencies,  contingent  consideration,   noncontrolling
interests, acquisition-related transaction costs, fair values and cash flows not
expected  to  be  collected  for  acquired  loans,  and  an  enhanced   goodwill
rollforward.  SFAS  No.  141(R)  is  effective  for  all  business  combinations
completed on or after  January 1, 2009.  Early  adoption is not  permitted.  For
business  combinations  in which the  acquisition  date was before the effective
date, the provisions of SFAS No. 141(R) will apply to the subsequent  accounting
for deferred income tax valuation  allowances and income tax  contingencies  and
will  require any changes in those  amounts to be recorded in  earnings.  We are
currently  evaluating the impact that SFAS No. 141(R) will have on our financial
condition,  results of operations and the disclosures  that will be presented in
our consolidated financial statements.

In December  2007,  the FASB issued SFAS No. 160 -  Noncontrolling  Interests in
Consolidated  Financial  Statements,  an  Amendment  of ARB  51.  SFAS  No.  160
establishes new accounting and reporting standards for noncontrolling  interests
in a subsidiary and for the  deconsolidation of a subsidiary.  SFAS No. 160 will
require  entities  to  classify  noncontrolling  interests  as  a  component  of
stockholders'  equity and will require subsequent changes in ownership interests
in a subsidiary to be accounted for as an equity transaction. Additionally, SFAS
No.  160 will  require  entities  to  recognize  a gain or loss upon the loss of
control of a subsidiary and to remeasure any ownership interest retained at fair
value on that date. SFAS No. 160 also requires expanded disclosures that clearly
identify and  distinguish  between the interests of the parent and the interests
of the noncontrolling  owners.  SFAS No. 160 is effective on a prospective basis
for fiscal years, and interim periods within those fiscal years, beginning on or
after   December  15,  2008,   except  for  the   presentation   and  disclosure
requirements,  which are required to be applied retrospectively.  Early adoption
is not permitted.  We are currently  evaluating the requirements of SFAS No. 160
to determine their impact on our financial condition,  results of operations and
the disclosures that will be presented in our consolidated financial statements.

In March  2008,  the FASB  issued SFAS No. 161 -  Disclosures  about  Derivative
Instruments  and Hedging  Activities,  an Amendment of SFAS No. 133 - Accounting
for  Derivative  Instruments  and  Hedging  Activities.  SFAS No.  161  requires
entities to provide  greater  transparency  about (a) how and why an entity uses
derivative instruments,  (b) how derivative instruments and related hedged items
are  accounted for under No. SFAS 133 and its related  interpretations,  and (c)
how derivative instruments and related hedged items affect an entity's financial
position,  results of operations and cash flows. To meet those objectives,  SFAS
No.  161  requires  (1)  qualitative  disclosures  about  objectives  for  using
derivatives by primary underlying risk exposure and by purpose or strategy (fair
value hedge, cash flow hedge, and non-hedges),  (2) information about the volume
of derivative  activity in a flexible  format that the preparer  believes is the
most  relevant and  practicable,  (3) tabular  disclosures  about  balance sheet
location  and  gross  fair  value  amounts  of  derivative  instruments,  income
statement and other  comprehensive  income  location of gain and loss amounts on
derivative   instruments  by  type  of  contract,   and  (4)  disclosures  about
credit-risk related contingent features in derivative  agreements.  SFAS No. 161
is  effective  for  financial  statements  issued for fiscal  years and  interim
periods  beginning  after  November 15, 2008.  We are currently  evaluating  the
requirements of SFAS No. 161 to determine  their impact on the disclosures  that
will be presented in our consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162 - The Hierarchy of Generally  Accepted
Accounting  Principles.  SFAS No.  162  identifies  the  sources  of  accounting
principles  and the framework  for  selecting  the  principles to be used in the
preparation  of  financial  statements  of  nongovernmental  entities  that  are
presented in conformance with U.S. generally accepted accounting principles. The
hierarchical  guidance  provided  by  SFAS  No.  162 is not  expected  to have a
significant impact on our consolidated financial statements.

                                       40

<PAGE>

       ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At December 31, 2007, our risk management program's simulation model indicated a
loss of projected net interest  income should  interest  rates  decline.  We are
"asset-sensitive,"  indicating  that our assets  would  generally  reprice  with
changes in interest rates more rapidly than our liabilities,  and our simulation
model  indicates a loss of projected net interest  income should  interest rates
decline.  While a decline in  interest  rates of less than 100 basis  points was
projected to have a relatively  minimal  impact on our net interest  income,  an
instantaneous  parallel  decline in the interest yield curve of 100 basis points
indicated a pre-tax projected loss of approximately 3.9% of net interest income,
based on assets and  liabilities  at December  31, 2007.  At June 30,  2008,  we
remain in an  "asset-sensitive"  position and thus,  remain  subject to a higher
level of risk in a  declining  interest  rate  environment.  Although  we do not
anticipate  that  instantaneous  shifts in the yield curve as  projected  in our
simulation  model are likely,  these are indications of the effects that changes
in interest rates would have over time.

Our asset-sensitive position, coupled with the effect of recent cuts in interest
rates in late 2007 and in the first four months of 2008, has negatively impacted
our net  interest  income  and will  continue  to  impact  the  level of our net
interest income over time, as reflected in our net interest margin for the three
and six months  ended June 30,  2008 as compared  to the  comparable  periods in
2007,  and further  discussed  under  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operations -- Results of Operations."

                        ITEM 4 - CONTROLS AND PROCEDURES

Except for the changes noted below,  there was no change in our internal control
over  financial  reporting  (as such  term is  defined  in Rules  13a-15(f)  and
15d-15(f)  under the Exchange  Act) during the quarter  ended June 30, 2008 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.

As  reported  in  Amendment  No.  1 to our  2007  Annual  Report  on Form  10-K,
management  identified  material  weaknesses in internal  control over financial
reporting at our mortgage banking  division.  Specifically,  we did not maintain
sufficient  anti-fraud  controls for the mortgage banking division which allowed
the former President of our mortgage  banking  division to intentionally  effect
certain  transactions  and  journal  entries  to  omit  a  repurchase  agreement
obligation,  including  the related  interest  expense  thereon,  and  overstate
mortgage banking revenues.

The  following  material  weaknesses  were  identified  related to our  internal
control over financial reporting:

      o     We did not maintain appropriate oversight and supervision of certain
            operational  and  accounting   personnel  in  the  mortgage  banking
            division;

      o     We did not  maintain a  sufficient  complement  of  personnel in our
            mortgage  banking  division with an appropriate  level of accounting
            knowledge, experience and training necessary to properly account for
            certain complex  transactions  associated with the operations of the
            mortgage banking division; and

      o     We did not maintain effective controls over the recording of journal
            entries   necessary   to  properly   account  for  certain   complex
            transactions  associated with the operations of the mortgage banking
            division. Specifically,  effective controls were not designed and in
            place to provide  reasonable  assurance  that  journal  entries were
            prepared with sufficient  supporting  documentation and reviewed and
            approved to provide  reasonable  assurance of the  completeness  and
            accuracy of the journal entries recorded.

As a  result  of  these  material  weaknesses,  management  concluded  that  the
Company's  disclosure  controls and procedures were not effective as of December
31, 2007.

As of the  date of this  report,  we have  implemented  additional  measures  to
address the aforementioned material weaknesses, including the following:

      o     Changed  the  oversight  and  supervision  of  the  operational  and
            accounting  personnel in the mortgage  banking  division through the
            establishment of a direct reporting line to the Company's  President
            and Chief Executive Officer and Chief Financial Officer;

      o     Centralized  and  realigned  certain  areas  of  responsibility  and
            functions previously handled within the mortgage banking division;

      o     Instituted  increased  segregation  of duties  controls  within  the
            Company's mortgage banking division; and

      o     Examined the methods in which  internal  controls were  circumvented
            and developed measures to strengthen such controls.

                                       41

<PAGE>

In  addition,  the  individual  directly  responsible  for the  omission  of the
repurchase agreement obligation, including the related interest expense thereon,
and an overstatement  of mortgage banking revenues was terminated  subsequent to
December 31, 2007 and prior to the identification of the material weaknesses.

We will continue to evaluate the  effectiveness  of our remediation  process and
the actions taken to date as summarized above.

Our President and Chief Executive  Officer and our Chief Financial  Officer have
evaluated the  effectiveness  of our  "disclosure  controls and  procedures" (as
defined in Rules  13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of
1934, or the Exchange  Act), as of the end of the period covered by this report.
Based on such  evaluation,  our  President and Chief  Executive  Officer and our
Chief Financial  Officer have concluded that, as of the end of such period,  the
Company's  disclosure  controls and  procedures  are not effective in recording,
processing,  summarizing and reporting, on a timely basis,  information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act as a result of the material  weaknesses  outlined above.  Under the
direction of our President and Chief  Executive  Officer and our Chief Financial
Officer,  we are further  evaluating our disclosure  controls and procedures and
internal control over financial reporting,  including  modifications to controls
currently planned and being implemented,  with the intent to fully remediate the
material weaknesses in our internal control over financial reporting.

                                       42

<PAGE>

                           PART II - OTHER INFORMATION


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

At the April 25, 2008 Annual  Meeting of  Shareholders  of First Banks,  Messrs.
James F. Dierberg, Gordon A. Gundaker, Terrance M. McCarthy, Steven F. Schepman,
David L. Steward and Douglas H. Yaeger,  constituting all of the directors, were
unanimously re-elected.


                           ITEM 5 - OTHER INFORMATION

(a)   On May 15, 2008,  First Banks  entered into a Revolving  Credit Note and a
Stock Pledge Agreement with Investors of America, LP, which provided for a $30.0
million  secured  revolving  line of credit to be utilized  for general  working
capital needs and capital investments in subsidiaries, as previously reported on
a Current  Report on Form 8-K filed on May 21, 2008.  On August 11, 2008,  First
Banks  entered  into a First  Amended  Revolving  Credit Note with  Investors of
America,  LP. Investors of America,  LP is a Nevada limited partnership that was
created  by and for the  benefit of Mr.  James F.  Dierberg,  Chairman  of First
Banks'  Board of  Directors,  and  members of his  immediate  family.  The First
Amended  Revolving  Credit Note replaced the  Revolving  Credit Note, as further
described in Note 14 to our consolidated financial statements,  and modified the
Revolving  Credit  Note to provide  that First Banks  receive the prior  written
consent of  Investors  of  America,  LP for any  advance  that  would  cause the
aggregate outstanding principal amount to exceed $10.0 million.


                                ITEM 6 - EXHIBITS

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

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

         5.1        First Banks, Inc.  Non-Qualified Deferred Compensation Plan,
                    as Amended - filed herewith.

        10.1        First Amended  Revolving Credit Note, dated as of August 11,
                    2008,  by and between  First Banks,  Inc.  and  Investors of
                    America Limited Partnership - filed herewith.

        10.2        Stock Pledge  Agreement,  dated as of May 15,  2008,  by and
                    between First Banks,  Inc. and Investors of America  Limited
                    Partnership - filed herewith.

        10.3        Termination  Agreement,  dated  as of May 19,  2008,  by and
                    among First  Banks,  Inc.  and Wells  Fargo  Bank,  National
                    Association,  as Agent, JP Morgan Chase Bank, N.A.,  LaSalle
                    Bank National Association, The Northern Trust Company, Union
                    Bank of  California,  N.A. and Fifth Third Bank  (Chicago) -
                    filed herewith.

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

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

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

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

                                       43

<PAGE>

                                   SIGNATURES

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

Date: August 13, 2008

                       FIRST BANKS, INC.

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

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

                                       44