**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10 - K**

**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(D)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**For      the fiscal year ended December 31, 2007**

**EUROBANCSHARES,      INC.**

| **Commonwealth                of Puerto Rico**                                                             |   | **66-0608955**                                        |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization)                              |   | (I.R.S.                  Employer Identification No.) |
|                                                                                                       |   |                                                  |
| State                Road PR-1, Km. 24.5, Quebrada Arenas Ward, San Juan, Puerto Rico                00926 |
| (Address                of principal executive offices, including zip code)                                |
|                                                                                                       |
| (787)                751-7340                                                                              |
| (Registrant’s                telephone number, including area                code)                   |

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| Securities                registered pursuant to Section 12(b) of the Act:                     |
|------------------------------------------------------------------------------------------------|
|                                                                                           |
| Common                Stock, par value                                                         |
| $0.01                per share                                                                 |
|                                                                                           |
| Securities                registered pursuant to Section 12(g) of the Act:                None |

----

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**Documents      Incorporated by Reference**

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**EUROBANCSHARES,      INC.**

|                                                                                                                                                     |   | PAGE     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|
| PART                I                                                                                                                                    |   | 1        |
| SPECIAL                CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION                                                                      |   |  1  |
| ITEM                1. BUSINESS                                                                                                                          |   |  1  |
| ITEM                1A. RISK FACTORS                                                                                                                |   |  27 |
| ITEM                1B. UNRESOLVED STAFF COMMENTS                                                                                                        |   |  33 |
| ITEM                2. PROPERTIES                                                                                                                        |   |  33 |
| ITEM                3. LEGAL PROCEEDINGS                                                                                                                 |   |  36 |
| ITEM                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                               |   |  36 |
|                                                                                                                                                     |   |          |
| PART                II                                                                                                                                   |   | 36       |
| ITEM                5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND                ISSUER PURCHASES OF EQUITY SECURITIES |   | 36       |
| ITEM                6. SELECTED FINANCIAL DATA                                                                                                           |   | 38       |
| ITEM                7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                OF OPERATION                         |   |  40 |
| ITEM                7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK                                                        |   |  71 |
| ITEM                8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                       |   |  71 |
| ITEM                9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND                FINANCIAL DISCLOSURE                               |   |  72 |
| ITEM                9A. CONTROLS AND PROCEDURES                                                                                                          |   | 72       |
| ITEM                9B. OTHER INFORMATION                                                                                                                |   | 73       |
|                                                                                                                                                     |   |          |
| PART                III                                                                                                                                  |   |  74 |
| ITEM                10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                                               |   |  74 |
| ITEM                11. EXECUTIVE COMPENSATION.                                                                                                     |   |  74 |
| ITEM                12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                AND                RELATED STOCKHOLDER MATTERS     |   |  74 |
| ITEM                13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                   |   |  74 |
| ITEM                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                           |   |  74 |
|                                                                                                                                                     |   |     |
| PART                IV                                                                                                                                   |   |  74 |
| ITEM                15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                                       |   |  74 |

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**PART      I**

**SPECIAL      CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION**

**ITEM      1. **
**Business.**

**Overview**

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**Our      Strategic Plan**

|   | ● | *Focus                on Our Targeted Customers.*                We                focus our time and resources on the following types of customers:                small                and mid-sized businesses, real estate development companies and the                owners, executives and employees of these businesses. In this regard,                we                seek to leverage our business banking relationships by cross-selling                to                the personal financial needs of these business owners, executives                and                employees. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | *Provide                Superior and Convenient Service to Our Customers.*                We                strive to provide superior customer service through convenient access                to                Eurobank’s branches and personalized relationship banking. We have 26                branch offices strategically located within a convenient drive of                approximately 80% of the island’s population. Under our business model, we                provide each commercial customer with its own relationship manager                for all                its banking needs. These relationship managers and our executive                management team regularly visit customers at their places of                business. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | *Hire                and Retain Well-Trained and Qualified Employees.*                We                are continuing to grow our franchise by providing superior customer                service through committed, qualified and relationship-oriented employees.                We seek to hire experienced and qualified employees that prefer our                relationship banking approach. These employees are specifically incited                through our compensation program to leverage our commercial relationships                by cross-selling our products and services to the owners, executives                and                employees of our business                customers. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | *Use                the Lease Financing Business to Mitigate Interest Rate                Risk.*                We                use our lease financing business to mitigate our interest rate risk                by                offsetting the variable rate nature of our commercial loan portfolio                with                a short to medium-term fixed rate                product. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | *De                Novo Branching and Acquisitions.*                We                seek to increase our presence throughout the island through selective                acquisitions and the opening of de novo branches in attractive locations.                Our de novo expansion outside of the San Juan metropolitan market                has                followed Puerto Rico’s primary traffic arteries to areas that have been                growing. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | *Maximize                Growth of our International Banking Entities (IBE).*                Because EBS Overseas, Eurobank’s IBE subsidiary, and EBS International                Bank, a division of Eurobank, are generally not subject to federal                or                Puerto Rico income tax, we will seek to maximize the growth of these                IBEs                as interest rates and applicable law                permit. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Our      De Novo Branch and Acquisition Strategy**

*De      Novo Branches*

*Mergers      and Acquisitions - BankTrust*

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**Products      and Services**

*Commercial      Banking*

*Commercial      and Construction Loans*

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|  **As                  of December 31,** |
|-----------------------------------------------|
| **2007**                                      |   | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                          |   |   |   | **(In                  thousands)** |   |   |   |   |   |
| $1,298,183                                    |   | $ | 1,160,308 |   | $ | 967,049 |   | $ | 786,438 |   | $ | 525,251 |   |

*Consumer      Loans*

*Leasing      Activities*

----

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|                                 |   | **As                of or for the Year Ended December 31,** |    |
|--------------------------------------|--------|-------------------------------------------------------------|---------|
|                                 |   | **2007**                                                    |    | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                 |   | **(In                thousands)**                           |    |
| Originations                         |   | $                                                           | 122,909 |   | $ | 147,352 |   | $ | 230,985 |   | $ | 257,808 |   | $ | 185,321 |   |
| End                of period balance |   | $                                                           | 385,390 |   | $ | 443,311 |   | $ | 487,863 |   | $ | 459,251 |   | $ | 315,935 |   |

*Mortgage      Banking*

|                                   |   | **As                  of or for the Year Ended December 31,**                         |    |
|----------------------------------------|--------|-------------------------------------------------------------------------------------------------|---------|
|                                   |   | **2007**                                                                                        |    | **2006**  |   | **2005**   |   | **2004** |   | **2003** |   |
|                                   |   | **(In                  thousands)**           |    |
| Originations                           |   | $                                                                                               | 56,975  |   | $ | 55,097 |   | $ | 21,112 |   | $ | 28,028 |   | $ | 53,880 |   |
| End                  of period balance |   | $                                                                                               | 106,947 |   | $ | 76,277 |   | $ | 44,841 |   | $ | 51,730 |   | $ | 15,941 |   |

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*Trust      and Wealth Management*

*Municipal      Finance *

*Insurance*

**International      Banking Entities**

*“Supervision      and Regulation — International Banking Center Regulatory      Act.”*

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**Eurobank      Statutory Trust I and II**

*“Note      16 - Notes Payable to Statutory Trusts”*
* *

**Market**

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*“Risks      Relating to the Economic Environment”*
*Provision      for Income Taxes”*

**Environmental      Compliance**

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**Employees**

**Available      Information**

**SUPERVISION      AND REGULATION **

**General**

** **

*“Anti-Terrorism      Legislation”*

----

**EuroBancshares**

*Regulatory      Restrictions on Dividends; Source of Strength*

*Activities      “Closely Related” to Banking*

*de      novo *

*Gramm-Leach      Bliley Act; Financial Holding Companies*

----

|   | ● | states                that the bank holding company elects to become a financial holding                company; |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | ● | provides                the name and head office address of the bank holding company and                each                depository institution controlled by the bank holding                company; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | certifies                that each depository institution controlled by the bank holding company                is                “well-capitalized” as of the date the bank holding company submits its                declaration; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | provides                the capital ratios for all relevant capital measures as of the close                of                the previous quarter for each depository institution controlled by                the                bank holding company; and |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | certifies                that each depository institution controlled by the bank holding company                is                “well managed” as of the date the bank holding company submits its                declaration. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | financial                in nature; |
|--------|---------|-------------------------------------|

|   | ● | incidental                to such financial activity; or |
|--------|---------|----------------------------------------------------------|

|   | ● | complementary                to a financial activity provided it “does not pose a substantial risk to                the safety and soundness of depository institutions or the financial                system generally.” |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Privacy      Policies*

*Safe      and Sound Banking Practices*

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*Annual      Reporting; Examinations*

*Capital      Adequacy Requirements*

*Imposition      of Liability for Undercapitalized Subsidiaries*

----

*Acquisitions      by Bank Holding Companies*

*Control      Acquisitions*

*Cross-guarantees*

*Anti-Terrorism      Legislation*

|   | · | to                conduct enhanced scrutiny of account relationships to guard against                money                laundering and report any suspicious transaction; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | to                ascertain the identity of the nominal and beneficial owners of, and                the                source of funds deposited into, each account as needed to guard against                money laundering and report any suspicious                transactions; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | to                ascertain for any foreign bank, the shares of which are not publicly                traded, the identity of the owners of the foreign bank, and the nature                and                extent of the ownership interest of each such owner; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | to                ascertain whether any foreign bank provides correspondent accounts                to                other foreign banks and, if so, the identity of those foreign banks                and                related due diligence information. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | expeditiously                search its records to determine whether it maintains or has maintained                accounts, or engaged in transactions with individuals or entities,                listed                in a request submitted by the Financial Crimes Enforcement Network                (“FinCEN”); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | notify                FinCEN if an account or transaction is identified; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | designate                a contact person to receive information requests; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | limit                use of information provided by FinCEN to (i) reporting to FinCEN,                (ii)                determining whether to establish or maintain an account or engage                in a                transaction, and (iii) assisting the financial institution in complying                with the Bank Secrecy Act; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | maintain                adequate procedures to protect the security and confidentiality of                FinCEN                requests. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

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*Sarbanes-Oxley      Act of 2002 *

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**Eurobank**

*Transactions      with Affiliates*

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*Loans      to Insiders*

*Dividends*

*FDIC      Capital Requirements*

|   | ● | common                stockholders’                equity (includes common stock and any related surplus, undivided                profits,                disclosed capital reserves that represent a segregation of undivided                profits, and foreign currency translation adjustments; less net unrealized                losses on marketable equity                securities); |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | certain                noncumulative perpetual preferred stock and related surplus;                and |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | ● | minority                interests in the equity capital accounts of consolidated subsidiaries,                and                excludes goodwill and various intangible                assets. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | allowance                for loan and lease losses, up to a maximum of 1.25% of risk-weighted                assets; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | ● | certain                perpetual preferred stock and related surplus; |
|--------|---------|-----------------------------------------------------------------------|

|   | ● | hybrid                capital instruments; |
|--------|---------|--------------------------------------------|

|   | ● | perpetual                debt; |
|--------|---------|--------------------------------|

|   | ● | mandatory                convertible debt securities; |
|--------|---------|-------------------------------------------------------|

|   | ● | term                subordinated debt; |
|--------|---------|----------------------------------------|

|   | ● | intermediate-term                preferred stock; and |
|--------|---------|-------------------------------------------------------|

|   | ● | certain                unrealized holding gains on equity securities. |
|--------|---------|-----------------------------------------------------------------------|

*“The      FDIC Improvement Act.”*

*FIRREA*

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*The      FDIC Improvement Act*

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*Broker      Deposits*

*Federal      Limitations on Activities and Investments*

*FDIC      Deposit Insurance Assessments*

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*Check      Clearing for the 21*
*st*

*      Century Act*

|   | ● | allowing                check truncation without making it                mandatory; |
|--------|---------|--------------------------------------------------------------------------------------|

|   | ● | demanding                that every financial institution communicate to accountholders in                writing                a description of its substitute check processing program and their                rights                under the law; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | legalizing                substitutions for and replacements of paper checks without agreement                from                consumers; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | retaining                in place the previously mandated electronic collection and return                of                checks between financial institutions only when individual agreements                are                in place; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | requiring                that when accountholders request verification, financial institutions                produce the original check (or a copy that accurately represents                the                original) and demonstrate that the account debit was accurate and                valid;                and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | requiring                recrediting of funds to an individual’s account on the next business day                after a consumer proves that the financial institution has                erred. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Community      Reinvestment Act*

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*Consumer      Laws and Regulations*

*Interstate      Branching*

*Federal      Home Loan Bank System*

*i.e.*

**Mortgage      Banking Operations**

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**Puerto      Rico Regulation**

*“Supervision      and Regulation” *

*Puerto      Rico Banking Law*

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*Puerto      Rico Usury Law*

**International      Banking Center Regulatory Act**

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**EuroSeguros,      Inc.**

**Future      Legislation and Economic Policy**

**ITEM      1A. Risk Factors.**

**Risks      Relating to Our Business**

***Our      decisions regarding credit risk could be inaccurate and our allowance for loan      and lease losses may be inadequate, which could materially and adversely affect      our business, financial condition, results of operations, cash flows and/or      future prospects.***

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***We      have a concentration of exposure to a number of individual borrowers and a      significant loss on any one of these credits could materially affect our      financial condition and results of operations.***

***A      significant portion of our leases are secured by automobiles, and the loss      of      purchasers for our leases or a downturn in automobile purchases could have      a      material adverse effect on our business, financial condition, results of      operations, cash flows and/or future prospects.***

***We      rely heavily on short-term funding sources to meet our liquidity needs, such      as      broker deposits and repurchase obligations, which are generally more sensitive      to changes in interest rates and can be adversely affected by local and general      economic conditions.***

***We      have experienced rapid growth in recent years, and we may be unable to      successfully continue to implement our growth strategy, which may adversely      affect our business, financial condition, results of operations, cash flows      and/or future prospects.***

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***We      rely heavily on our management team and the unexpected loss of key officers      could adversely affect our business, financial condition, results of operations,      cash flows and/or future prospects.***

***The      regulatory capital treatment of our junior subordinated debentures and related      trust preferred securities is uncertain.***

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***Eurobank      entered into a Cease and Desist Order with the FDIC regarding its compliance      with anti-money laundering laws and the Bank Secrecy Act.***

**Risks      Relating to an Investment in Our Common Stock**

***Our      common stock has a short trading history and you may not be able to trade our      common stock if an active trading market does not prevail. Additionally, the      price of our common stock may fluctuate      significantly.***

***Our      executive officers and directors own a significant number of shares of our      common stock, allowing management significant control over our corporate      affairs.***

***Your      share ownership may be diluted by the issuance of additional shares of our      common stock in the future.***

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***Future      sales of common stock by existing stockholders may have an adverse impact on      the      market price of our common stock.***

***Holders      of our junior subordinated debentures have rights that are senior to those      of      our stockholders.***

***Holders      of our Series A Preferred Stock have rights senior to those of our common      stockholders.***

***Provisions      of our amended and restated certificate of incorporation and amended and      restated bylaws could delay or prevent a takeover of us by a third      party.***

***We      currently do not intend to pay dividends on our common stock. In addition,      our      future ability to pay dividends is subject to restrictions. As a result, capital      appreciation, if any, of our common stock will be your sole source of gains      for      the foreseeable future.***

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***Your      shares are not an insured deposit.***

**Risks      Relating to the Economic Environment**

***The      ongoing economic crisis in Puerto Rico could adversely affect our business,      financial condition, results of operations, cash flows and/or future      prospects.***

*“Provision      for Income Taxes”*

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**Risks      Related to United States Taxation**

***If      we or any of our subsidiaries are determined to be a passive foreign investment      company, U.S. holders of our stock could be subject to adverse tax      consequences.***

**ITEM      1B. Unresolved Staff Comments.**

**ITEM      2. **
**Properties.**

| **Location(1)**                            |   | **Lease                Expiration Date****(2)** |   | **Owned                or Leased** |
|--------------------------------------------|--------|-------------------------------------------------|--------|------------------------------------|
|                                       |   |                                            |   |                               |
| Main                Office:                |   | N/A                                             |   | Owned(3)                           |
| State                Road PR-1, Km. 24.5   |   |                                            |   |                               |
| Quebrada                Arenas Ward        |   |                                            |   |                               |
| San                Juan, Puerto Rico 00926 |   |                                            |   |                               |

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| **Location(1)**                                                   |   | **Lease                Expiration Date(2)** |   | **Owned                or Leased** |
|-------------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------------------|
|                                                              |   |                                        |   |                               |
| ***Departments***                                                 |   |                                        |   |                               |
| Trust                and Wealth Management:                       |   | N/A                                         |   | Owned(4)                           |
| Mezzanine                                                         |   |                                        |   |                               |
| 270                Muñoz Rivera Avenue                       |   |                                        |   |                               |
| San                Juan, Puerto Rico 00918                        |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| EuroMortgage:                                                     |   |                                        |   |                               |
| State                Road #190                                    |   | 6/30/2007(5)                                |   | Leased(6)                          |
| Lot                #1, Km. 0.7                                    |   |                                        |   |                               |
| La                Cerámica Industrial Park                   |   |                                        |   |                               |
| Carolina,                Puerto Rico 00983                        |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Proof                & Transit and Checking Accounts:         |   |                                        |   |                               |
| Old                Corona Building                                |   | 8/31/2007(5)                                |   | Leased                             |
| Building                #5, Second Floor Local #3                 |   |                                        |   |                               |
| Santurce,                Puerto Rico 00907                        |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Mortgage                Center:                                   |   |                                        |   |                               |
| Urb.                Villa del Rey #33                             |   | 7/31/2008                                   |   | Leased                             |
| Pino                2nd                                      |   |                                        |   |                               |
| Caguas,                Puerto Rico 00725                          |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| ***Branches***                                                    |   |                                        |   |                               |
| Aguadilla                Branch                                   |   | 10/31/2006(7)                               |   | Leased                             |
| State                Road No. PR2, Km. 129.3                      |   |                                        |   |                               |
| Aguadilla,                Puerto Rico 00603                       |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Bayamón                Branch                                |   | 9/30/2017                                   |   | Leased                             |
| Comerío                Avenue, corner of Sierra Bayamón |   |                                        |   |                               |
| Bayamón,                Puerto Rico 00961                    |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Cabo                Rojo Branch                                   |   | 6/1/2027                                    |   | Leased                             |
| State                Road #100, Km. 5.5                           |   |                                        |   |                               |
| Cabo                Rojo, Puerto Rico 00623                       |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Caguas                I Branch                                    |   | 5/31/2007(5)                                |   | Leased                             |
| A-1                Muñoz Rivera Avenue                       |   |                                        |   |                               |
| Caguas,                Puerto Rico 00725                          |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Caguas                II Branch                                   |   | 6/30/2010                                   |   | Leased                             |
| 32                Acosta Street, corner of Ruiz Belvis            |   |                                        |   |                               |
| Caguas,                Puerto Rico 00725                          |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Canóvanas                Branch                              |   | 6/30/2025                                   |   | Leased                             |
| Marginal                PR-3, Km. 20.3                            |   |                                        |   |                               |
| Canóvanas,                Puerto Rico 00729                  |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Carolina                Branch                                    |   | 9/30/2007(5)                                |   | Leased(6)                          |
| State                Road #190                                    |   |                                        |   |                               |
| Lot                #1, Km. 0.7                                    |   |                                        |   |                               |
| La                Cerámica Industrial Park                   |   |                                        |   |                               |
| Carolina,                Puerto Rico 00983                        |   |                                        |   |                               |
|                                                              |   |                                        |   |                               |
| Cayey                Branch                                       |   | 2/28/2029                                   |   | Leased                             |
| State                Road #1, Km. 56.2                            |   |                                        |   |                               |
| Montellano                Ward                                    |   |                                        |   |                               |
| Cayey,                Puerto Rico 00736                           |   |                                        |   |                               |

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| **Location(1)**                                        |   | **Lease                Expiration Date(2)** |   | **Owned                or Leased**  |
|--------------------------------------------------------|--------|---------------------------------------------|--------|------------------------------------------|
|                                                   |   |                                        |   |                                     |
| Cidra                Branch                            |   | 4/30/2006(5)                                |   | Leased                                   |
| Luis                Muñoz Rivera Street           |   |                                        |   |                                     |
| corner                of José de Diego            |   |                                        |   |                                     |
| Cidra,                Puerto Rico 00739                |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Condado                Branch                          |   | 6/30/2021                                   |   | Leased                                   |
| 1408                Magdalena Avenue                   |   |                                        |   |                                     |
| Santurce,                Puerto Rico 00907             |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Eurobank                Plaza                          |   | N/A                                         |   | Owned(3)                                 |
| State                Road PR-1, Km. 24.5               |   |                                        |   |                                     |
| Quebrada                Arenas Ward                    |   |                                        |   |                                     |
| San                Juan, Puerto Rico 00926             |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Fajardo                Branch                          |   | 12/31/2026                                  |   | Leased                                   |
| State                Road #3, Km. 4.5, Ramal 195       |   |                                        |   |                                     |
| Fajardo,                Puerto Rico 00738              |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Hatillo                Branch                          |   | 11/30/2032                                  |   | Leased                                   |
| State                Road No. PR2, Km. 87.0            |   |                                        |   |                                     |
| Hatillo,                Puerto Rico 00659              |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Hato                Rey Branch                         |   | N/A                                         |   | Owned(4)                                 |
| 270                Muñoz Rivera Avenue            |   |                                        |   |                                     |
| San                Juan, Puerto Rico 00918             |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Humacao                Branch                          |   | 5/31/2026                                   |   | Leased                                   |
| Plaza                Mall Lot #3, State Road No. PR52  |   |                                        |   |                                     |
| Corner                State Road No. PR3               |   |                                        |   |                                     |
| Humacao,                Puerto Rico 00791              |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Manatí                Branch                      |   | 8/31/2011                                   |   | Leased                                   |
| State                Road No. PR2, Km. 49.5            |   |                                        |   |                                     |
| Manatí,                Puerto Rico 00674          |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Ponce                Salud Branch                      |   | 5/1/2010                                    |   | Leased                                   |
| Thamar                Building, Salud Street #32       |   |                                        |   |                                     |
| Ponce,                Puerto Rico 00731                |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Ponce                Hostos Branch                     |   | 10/31/2008                                  |   | Leased                                   |
| 26                Hostos Avenue                        |   |                                        |   |                                     |
| Ponce,                Puerto Rico 00731                |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Ponce                Morell Campos Branch              |   | 3/30/2011                                   |   | Leased                                   |
| State                Road #10, Km. 1.5                 |   |                                        |   |                                     |
| Ponce,                Puerto Rico 00731                |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Ponce                Marvesa Branch                    |   | 12/31/2025                                  |   | Leased                                   |
| State                Road 14 Km. 3.4                   |   |                                        |   |                                     |
| Machuelo                Ward                           |   |                                        |   |                                     |
| Ponce,                Puerto Rico 00731                |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| Puerto                Nuevo Branch                     |   | 12/31/2011                                  |   | Leased                                   |
| 1302                Jesús T. Piñero          |   |                                        |   |                                     |
| Corner                de Diego Avenue                  |   |                                        |   |                                     |
| San                Juan, Puerto Rico 00921             |   |                                        |   |                                     |
|                                                   |   |                                        |   |                                     |
| San                Francisco Branch                    |   | 4/30/2011                                   |   | Leased                                   |
| Villas                de San Francisco Shopping Center |   |                                        |   |                                     |
| 85                de Diego Avenue                      |   |                                        |   |                                     |
| Río                Piedras, Puerto Rico 00927     |   |                                        |   |                                     |

----

| **Location(1)**                                        |   | **Lease                Expiration Date****(2)** |   | **Owned                or Leased**  |
|--------------------------------------------------------|--------|-------------------------------------------------|--------|------------------------------------------|
| San                Lorenzo Branch                      |   | 8/01/2008                                       |   | Leased                                   |
| 155                South Luis Muñoz Rivera Street |   |                                            |   |                                     |
| San                Lorenzo, Puerto Rico 00754          |   |                                            |   |                                     |
|                                                   |   |                                            |   |                                     |
| San                Patricio Branch                     |   | 4/30/2014                                       |   | Leased                                   |
| San                Patricio Office Center              |   |                                            |   |                                     |
| 8                Tabonuco Street                       |   |                                            |   |                                     |
| Guaynabo,                Puerto Rico 00969             |   |                                            |   |                                     |
|                                                   |   |                                            |   |                                     |
| Villa                Palmera Branch                    |   | 12/31/2008                                      |   | Leased                                   |
| Eduardo                Conde Avenue                    |   |                                            |   |                                     |
| corner                of Tapia Street                  |   |                                            |   |                                     |
| Santurce,                Puerto Rico 00915             |   |                                            |   |                                     |
|                                                   |   |                                            |   |                                     |
| Mayagüez                Branch                    |   | 11/30/2025                                      |   | Leased                                   |
| State                Road No. PR2, Km. 153.2           |   |                                            |   |                                     |
| Mayagüez,                Puerto Rico 00681        |   |                                            |   |                                     |

----

| (1) |    Asof                  December 31, 2007,                  Eurobank had two real estate properties for future                  branch development, of which one was leased from one of our                  directors; and other two land lots for future expansion of our                  headquarters.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) |                          Most of these leases have options for extensions. In addition,                      several                      have early termination clauses. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) |                      The property owned by EuroBancshares located at State Road PR-1,                  Km. 24.5,                  in San Juan, includes a 57,187 square foot office building that                  consolidates our headquarters, administrative operations, and our                  leasing                  division. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) |                        The property owned by EuroBancshares located at 270 Muñoz Rivera Avenue is                    part of a 180,000 square foot commercial office building. EuroBancshares                    owns a portion of the lobby area on the ground floor where it                    operates a                    branch, the mezzanine where it operates its trust business, and                    also owns                    the first floor of this office building, which is currently vacant.                    Until                    December 2007, our headquarters, as well as other administrative                    departments, were located on the first floor of this office                    building. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) |                        The lease for these locations is expired, but Eurobank continues                    to pay                    rent to the lessor on a month-to-month basis. Eurobank believes                    that the                    lessor will not require Eurobank to vacate the premises in the                    immediate                    future. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) |                            These properties are leased from one of our directors. |
|-----|--------------------------------------------------------------------------------------------------|

| (7) |                            The                        Aguadilla Branch is currently under construction. Once the                        construction is                        finished, the lease term will be twenty years with an option                        to extend the                        contract for two additional terms of five years each. We                        started operating                        the branch in a trailer until construction is                        finished. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM          3. **
**Legal          Proceedings.**

**ITEM          4. **
**Submission          of Matters to a Vote of Security Holders.**

**PART          II**

**ITEM          5. **
**Market          for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases          of Equity Securities.**

**Market          Information**

----

| **Quarter                Ended**  |   | **High** |   | **Low** |   |
|-----------------------------------|--------|----------|--------|---------|--------|
|                              |   |     |   |    |   |
| March                31, 2006     |   | $        | 15.13  |    | $      | 11.64 |   |
| June                30, 2006      |   |     | 12.00  |    |   | 8.35 |   |
| September                30, 2006 |   |     | 9.90   |    |   | 8.47 |   |
| December                31, 2006  |   |     | 9.47   |    |   | 8.50 |   |
|                              |   |     |   |    |   |   |   |
| March                31, 2007     |   |     | 9.06   |    |   | 8.41 |   |
| June                30, 2007      |   |     | 9.23   |    |   | 8.50 |   |
| September                30, 2007 |   |     | 9.07   |    |   | 7.70 |   |
| December                31, 2007  |   |     | 8.06   |    |   | 3.61 |   |

**Dividends**

*“Supervision      and Regulation — EuroBancshares — Regulatory Restrictions on Dividends; Source      of Strength” and “Supervision and Regulation — Eurobank —Dividends.”*

**Securities      Authorized for Issuance Under Equity Compensation Plans**

----

| **Equity                Compensation Plan Information**               |   |
|-----------------------------------------------------------------------|--------|
| **Plan                Category**                                      |   | **Number                of securities to be issued upon exercise of outstanding options,                warrants                and rights****(a)** |   | **Weighted-average                exercise price of outstanding options, warrants and                rights****(b)** |   | **Number                of securities remaining available for future issuance under equity                compensation plans (excluding securities reflected in column                (a))****(c)** |   |
|                                                                  |   |   |   |   |   |   |   |
| Equity                compensation plans approved by security holders |   |   |   |   |   |   |   |
| 2002                Stock Option Plan                                 |   |   | 718,600 |   | $ | 7.95 |   |   | — |   |
| 2005                Stock Option Plan                                 |   |   | 279,970 |   |   | 8.19 |   |   | 400,130 |   |

**ITEM      6. **
**Selected      Financial Data.**

*“Management’s      Discussion and Analysis of Financial Condition and Results of      Operations”*

|                                                                                                     |   | **As                of or for the Year Ended December 31,**  |    |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                                                                     |   | **2007**                                                          |    | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                     |   | **(Dollars                in thousands, except per share data)**  |    |
| **Income                Statement Data:**                                                                |   |                                                              |    |   |   |   |   |   |   |   |   |
| Total                interest income                                                                     |   | $                                                                 | 173,325 |   | $ | 162,146 |   | $ | 133,233 |   | $ | 95,394 |   | $ | 64,949 |   |
| Total                interest expense                                                                    |   |                                                              | 105,470 |   |   | 95,363 |   |   | 64,936 |   |   | 41,481 |   |   | 31,922 |   |
| Net                interest income                                                                       |   |                                                              | 67,855  |   |   | 66,783 |   |   | 68,297 |   |   | 53,913 |   |   | 33,027 |   |
| Provision                for loan and lease losses                                                       |   |                                                              | 25,348  |   |   | 16,903 |   |   | 12,775 |   |   | 7,100 |   |   | 6,451 |   |
| Net                interest income after provision for loan                and lease losses              |   |                                                              | 42,507  |   |   | 49,880 |   |   | 55,522 |   |   | 46,813 |   |   | 26,576 |   |
| Noninterest                income:                                                                       |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                charges and other fees                                                            |   |                                                              | 9,585   |   |   | 8,476 |   |   | 9,069 |   |   | 8,057 |   |   | 5,456 |   |
| Net                loss on non-hedging derivatives                                                       |   |                                                              | — |   |   | — |   |   | (944 | ) |   | — |   |   | — |   |
| Gain                on sale of loans and leases, net                                                     |   |                                                              | 380     |   |   | 401 |   |   | 945 |   |   | 1,395 |   |   | 3,547 |   |
| (Loss)                gain on sale of securities, net                                                    |   |                                                              | — |   |   | (1,092 | ) |   | (301 | ) |   | — |   |   | 707 |   |
| (Loss)                gain on sale of other real estate owned and repossessed                assets, net |   |                                                              | (1,286  | ) |   | 16 |   |   | (1,040 | ) |   | (359 | ) |   | (663 | ) |
| Total                noninterest income                                                                  |   |                                                              | 8,678   |   |   | 7,801 |   |   | 7,729 |   |   | 9,093 |   |   | 9,047 |   |
| Noninterest                expense:                                                                      |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                and benefits                                                                     |   |                                                              | 19,890  |   |   | 17,507 |   |   | 14,727 |   |   | 11,111 |   |   | 8,867 |   |
| Professional                fees                                                                         |   |                                                              | 4,496   |   |   | 4,104 |   |   | 3,912 |   |   | 2,196 |   |   | 1,402 |   |
| Other                noninterest expense                                                                 |   |                                                              | 23,839  |   |   | 21,775 |   |   | 19,005 |   |   | 15,635 |   |   | 12,039 |   |
| Total                noninterest expense                                                                 |   |                                                              | 48,225  |   |   | 43,386 |   |   | 37,644 |   |   | 28,942 |   |   | 22,308 |   |
| Income                before income taxes and extraordinary gain                                         |   |                                                              |    |   |   | 14,295 |   |   | 25,607 |   |   | 26,964 |   |   | 13,315 |   |
| Income                tax (benefit) / expense                                                            |   |                                                              | (249    | ) |   | 6,283 |   |   | 9,077 |   |   | 8,663 |   |   | 3,432 |   |
| Extraordinary                gain(1)                                                                     |   |                                                              | — |   |   | — |   |   | — |   |   | 4,419 |   |   | — |   |
| Net                income                                                                                |   | $                                                                 | 3,209   |   | $ | 8,012 |   | $ | 16,530 |   | $ | 22,720 |   | $ | 9,883 |   |
| **Common                Share Data:**                                                                    |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                per common share — basic:                                                  |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                before extraordinary gain                                                          |   | $                                                                 | 0.13    |   | $ | 0.38 |   | $ | 0.81 |   | $ | 1.08 |   | $ | 0.71 |   |
| Extraordinary                gain                                                                        |   |                                                              | — |   |   | — |   |   | — |   |   | 0.27 |   |   | — |   |
| Net                income                                                                                |   |                                                              | 0.13    |   |   | 0.38 |   |   | 0.81 |   |   | 1.35 |   |   | 0.71 |   |
| Earnings                per common share — diluted:                                                |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                before extraordinary gain                                                          |   |                                                              | 0.13    |   |   | 0.37 |   |   | 0.78 |   |   | 1.04 |   |   | 0.69 |   |
| Extraordinary                gain                                                                        |   |                                                              | — |   |   | — |   |   | — |   |   | 0.26 |   |   | — |   |
| Net                income                                                                                |   |                                                              | 0.13    |   |   | 0.37 |   |   | 0.78 |   |   | 1.30 |   |   | 0.69 |   |

----

|                                                                      |   |   | **As                of or for the Year Ended December 31,**  |   |
|---------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|
|                                                                      |   |   | **2007**                                                          |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|                                                                      |   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends declared                                    |   |   | —                                                           |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Book                value per common share                                |   |   | 8.86                                                              |   |   | 8.32 |   |   | 7.95 |   |   | 7.54 |   |   | 4.67 |   |
| Common                shares outstanding at end of period                 |   |   | 19,093,315                                                        |   |   | 19,123,821 |   |   | 19,398,848 |   |   | 19,564,086 |   |   | 13,947,396 |   |
| Average                diluted shares outstanding                         |   |   | 19,391,638                                                        |   |   | 19,657,559 |   |   | 20,277,799 |   |   | 17,152,261 |   |   | 14,234,168 |   |
| **Balance                Sheet Data (at end of period):**                 |   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                assets                                               |   | $      | 2,751,399                                                         |   | $ | 2,500,920 |   | $ | 2,391,283 |   | $ | 2,102,789 |   | $ | 1,320,934 |   |
| Investment                securities available-for-sale                   |   |   | 707,103                                                           |   |   | 535,159 |   |   | 627,080 |   |   | 555,482 |   |   | 324,938 |   |
| Investment                securities held-to-maturity                     |   |   | 30,845                                                            |   |   | 38,433 |   |   | 42,471 |   |   | 49,504 |   |   | — |   |
| Total                loans and leases, net of unearned                    |   |   | 1,857,219                                                         |   |   | 1,750,838 |   |   | 1,577,196 |   |   | 1,387,613 |   |   | 899,392 |   |
| Allowance                for loan and lease losses                        |   |   | 28,137                                                            |   |   | 18,937 |   |   | 18,188 |   |   | 19,039 |   |   | 9,394 |   |
| Deposits                                                                  |   |   | 1,993,046                                                         |   |   | 1,905,356 |   |   | 1,734,128 |   |   | 1,409,036 |   |   | 984,549 |   |
| Other                borrowings                                           |   |   | 547,492                                                           |   |   | 394,991 |   |   | 475,712 |   |   | 520,206 |   |   | 264,616 |   |
| Total                stockholders’ equity                           |   |   | 179,918                                                           |   |   | 169,878 |   |   | 164,967 |   |   | 158,302 |   |   | 65,075 |   |
| **Performance                Ratios:**                                    |   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return                on average common stockholders’ equity(2)     |   |   | 1.96                                                              | %      |   | 5.19 | % |   | 10.70 | % |   | 18.67 | % |   | 16.50 | % |
| Return                on average assets(3)                                |   |   | 0.13                                                              |   |   | 0.33 |   |   | 0.74 |   |   | 1.03 |   |   | 0.87 |   |
| Net                interest margin(4)                                     |   |   | 2.80                                                              |   |   | 2.86 |   |   | 3.29 |   |   | 3.29 |   |   | 3.15 |   |
| Efficiency                ratio(5)                                        |   |   | 63.48                                                             |   |   | 57.89 |   |   | 47.84 |   |   | 44.44 |   |   | 51.48 |   |
| Loans                and leases to deposits                               |   |   | 93.25                                                             |   |   | 91.89 |   |   | 90.95 |   |   | 98.48 |   |   | 91.35 |   |
| **Asset                Quality Data:**                                    |   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming                loans and leases                             |   | $      | 98,065                                                            |   | $ | 49,978 |   | $ | 36,263 |   | $ | 40,533 |   | $ | 26,758 |   |
| Other                real estate owned and repossessed assets             |   |   | 13,534                                                            |   |   | 13,048 |   |   | 9,517 |   |   | 6,441 |   |   | 6,417 |   |
| Total                nonperforming assets                                 |   |   | 111,599                                                           |   |   | 63,026 |   |   | 45,780 |   |   | 46,974 |   |   | 33,175 |   |
| Nonperforming                assets to total assets                       |   |   | 4.06                                                              | %      |   | 2.52 | % |   | 1.91 | % |   | 2.23 | % |   | 2.51 | % |
| Nonperforming                loans to total loans and leases              |   |   | 5.28                                                              |   |   | 2.85 |   |   | 2.30 |   |   | 2.92 |   |   | 2.98 |   |
| Allowance                for loan and lease losses to nonperforming loans |   |   | 28.69                                                             |   |   | 37.89 |   |   | 50.16 |   |   | 46.97 |   |   | 35.11 |   |
| Allowance                for loan and lease losses to total loans         |   |   | 1.51                                                              |   |   | 1.08 |   |   | 1.15 |   |   | 1.37 |   |   | 1.04 |   |
| Net                charge-offs to average loans                           |   |   | 0.90                                                              |   |   | 0.97 |   |   | 0.92 |   |   | 0.69 |   |   | 0.47 |   |
| **Capital                Ratios:**                                        |   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Leverage                ratio                                             |   |   | 7.55                                                              | %      |   | 7.92 | % |   | 9.35 | % |   | 9.91 | % |   | 6.76 | % |
| Tier                1 risk-based capital                                  |   |   | 9.54                                                              |   |   | 10.25 |   |   | 12.45 |   |   | 12.73 |   |   | 8.30 |   |
| Total                risk-based capital                                   |   |   | 10.79                                                             |   |   | 11.25 |   |   | 13.49 |   |   | 13.94 |   |   | 11.60 |   |
| Tangible                common equity to tangible assets                  |   |   | 6.15                                                              |   |   | 6.44 |   |   | 6.91 |   |   | 7.54 |   |   | 4.93 |   |

----

| (1) | Extraordinary                gain resulting from the negative goodwill on the acquisition of BankTrust                in 2004. The excess of the fair value of the assets acquired over                the                purchase price resulted in a negative goodwill of $5.7 million. The                negative goodwill of BankTrust was allocated between a $4.4 million                extraordinary gain, $670,000 of the fair value of intangible assets,                net                of their tax effect, and the $627,000 of the fair value of the acquired                furniture, fixtures and equipment. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Return                on average common equity is determined by dividing net income before                extraordinary gain by average common                equity. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Return                on average assets is determined by dividing net income before                extraordinary gain by average                assets. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Net                interest margin is determined by dividing net interest income (fully                taxable equivalent) by average interest-earning                assets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | The                efficiency ratio is determined by dividing total noninterest expense                by an                amount equal to net interest income (fully taxable equivalent) plus                noninterest income. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      7. **
**Management’s      Discussion and Analysis of Financial Condition and Results of      Operation.**

*“Selected      Consolidated Financial Data,”*

**Executive      Overview**

***Introduction***

***2007      Key Performance Indicators***

|  | ● | our                total assets grew to $2.751 billion at the end of 2007, representing                an                increase of 10.02%, from $2.501 billion at the end of                2006; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | our                net loans and leases grew to $1.830 billion at the end of 2007,                representing an increase of 5.69%, from $1.732 billion at the end                of                2006; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | our                investment securities grew to $751.3                million at the end of 2007, representing an increase of 30.00%, from                $577.9 million at the end of 2006; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | our                total deposits grew to $1.993 billion at the end of 2007, representing                an                increase of 4.60%, from $1.905 billion at the end of                2006; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | our                nonperforming assets increased to $111.6 million, or by 77.07%, in                2007,                from $63.0 million at the end of                2006; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | our                total revenue grew to $182.0 million in 2007, representing an increase                of                7.09%, from $169.9 million in 2006; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | our                net interest margin and spread on a fully taxable equivalent basis                was                2.80% and 2.29% in 2007, respectively, compared to 2.86% and 2.33%                in                2006; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | our                provision for loan and lease losses grew to $25.3 million in 2007,                representing an increase of 49.96%, from $16.9 million in 2006; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | our                total noninterest expense grew to $48.2 million in 2007, representing                an                increase of 11.15%, from $43.4 million in 2006;                and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | for                2007, we recorded a tax benefit of $249,000, compared to an income                tax                expense of $6.3 million for 2006. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

*“Management’s      Discussion and Analysis of Financial Condition and Results of Operations”*

----

***Critical      Accounting Policies***

*Loans      and Allowance for Loan and Lease Losses*

*“Allowance      for Loan and Lease Losses.”*

----

*Other      Real Estate Owned and Repossessed Assets*

*“Nonperforming      Loans, Leases and Assets.”*

----

**Results      of Operations for the Years Ended December 31, 2007, 2006 and      2005**

***Net      Interest Income and Net Interest Margin***

----

|                                                                                                 |   | **Year                Ended December 31,** |      |
|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|
|                                                                                                 |   | **2007**                                   |      | **2006** |   | **2005** |   |
|                                                                                                 |   | **Average                Balance**         |      | **Interest** |   | **Average                Rate/ Yield****(1)** |   | **Average                Balance** |   | **Interest** |   | **Average                Rate/ Yield****(1)** |   | **Average                Balance** |   | **Interest** |   | **Average                Rate/ Yield****(1)** |   |
|                                                                                                 |   | **(Dollars                in thousands)**  |      |
| ASSETS:                                                                                              |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                assets:                                                              |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loans and leases(2)                                                               |   | $                                          | 1,780,719 |   | $ | 143,360 |   |   | 8.13 | % | $ | 1,643,587 |   | $ | 130,003 |   |   | 8.00 | % | $ | 1,470,256 |   | $ | 107,971 |   |   | 7.41 | % |
| Securities                of U.S. government agencies(3)                                             |   |                                       | 482,605   |       |   | 22,690 |   |   | 6.53 |   |   | 604,606 |   |   | 27,137 |   |   | 6.45 |   |   | 600,461 |   |   | 21,795 |   |   | 5.14 |   |
| Other                investment securities(3)                                                        |   |                                       | 72,919    |   |   | 3,883 |   |   | 7.40 |   |   | 46,083 |   |   | 2,296 |   |   | 7.03 |   |   | 38,811 |   |   | 1,726 |   |   | 6.12 |   |
| Puerto                Rico government obligations(3)                                                 |   |                                       | 8,149     |   |   | 385 |   |   | 6.57 |   |   | 9,397 |   |   | 412 |   |   | 6.29 |   |   | 8,783 |   |   | 352 |   |   | 5.67 |   |
| Securities                purchased under agreements to resell and federal funds                sold |   |                                       | 37,826    |   |   | 2,042 |   |   | 6.14 |   |   | 34,841 |   |   | 1,791 |   |   | 5.57 |   |   | 32,297 |   |   | 1,150 |   |   | 4.19 |   |
| Interest-earning                deposits                                                             |   |                                       | 18,579    |   |   | 964 |   |   | 5.19 |   |   | 9,565 |   |   | 507 |   |   | 5.30 |   |   | 6,767 |   |   | 239 |   |   | 3.53 |   |
| Total                interest-earning assets                                                         |   | $                                          | 2,400,797 |   | $ | 173,324 |   |   | 7.73 | % | $ | 2,348,079 |   | $ | 162,146 |   |   | 7.53 | % | $ | 2,157,375 |   | $ | 133,233 |   |   | 6.69 | % |
| Total                noninterest-earning assets                                                      |   |                                       | 100,660   |   |   |   |   |   |   |   |   | 80,735 |   |   |   |   |   |   |   |   | 77,612 |   |   |   |   |   |   |   |
| TOTAL                ASSETS                                                                          |   | $                                          | 2,501,457 |   |   |   |   |   |   |   | $ | 2,428,814 |   |   |   |   |   |   |   | $ | 2,234,987 |   |   |   |   |   |   |   |
|                                                                                                 |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS’ EQUITY:                                           |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                         |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money                market deposits                                                                 |   | $                                          | 18,361    |   | $ | 532 |   |   | 2.91 | % | $ | 25,470 |   | $ | 584 |   |   | 2.31 | % | $ | 51,787 |   | $ | 1,090 |   |   | 2.13 | % |
| NOW                deposits                                                                          |   |                                       | 47,068    |   |   | 1,169 |   |   | 2.49 |   |   | 46,330 |   |   | 1,035 |   |   | 2.24 |   |   | 46,421 |   |   | 858 |   |   | 1.85 |   |
| Savings                deposits                                                                      |   |                                       | 141,120   |   |   | 3,497 |   |   | 2.48 |   |   | 184,824 |   |   | 4,386 |   |   | 2.37 |   |   | 254,923 |   |   | 5,861 |   |   | 2.30 |   |
| Time                certificates of deposit in denominations of $100,000 or more(4)                  |   |                                       | 1,475,942 |   |   | 75,467 |   |   | 5.52 |   |   | 1,240,403 |   |   | 58,351 |   |   | 5.13 |   |   | 869,054 |   |   | 32,384 |   |   | 3.96 |   |
| Other                time deposits                                                                   |   |                                       | 91,887    |   |   | 4,041 |   |   | 4.37 |   |   | 113,097 |   |   | 4,189 |   |   | 3.71 |   |   | 152,787 |   |   | 4,741 |   |   | 3.11 |   |
| Other                borrowings(5)                                                                   |   |                                       | 397,415   |   |   | 20,794 |   |   | 6.95 |   |   | 499,275 |   |   | 26,818 |   |   | 7.17 |   |   | 548,141 |   |   | 20,002 |   |   | 4.81 |   |
| Total                interest-bearing liabilities                                                    |   | $                                          | 2,171,893 |   | $ | 105,470 |   |   | 5.44 | % | $ | 2,109,399 |   | $ | 95,363 |   |   | 5.20 | % | $ | 1,923,113 |   | $ | 64,936 |   |   | 3.81 | % |
| Noninterest-bearing                liabilities:                                                      |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                deposits                                                          |   |                                       | 119,004   |   |   |   |   |   |   |   |   | 128,551 |   |   |   |   |   |   |   |   | 129,676 |   |   |   |   |   |   |   |
| Other                liabilities                                                                     |   |                                       | 35,735    |   |   |   |   |   |   |   |   | 25,830 |   |   |   |   |   |   |   |   | 16,962 |   |   |   |   |   |   |   |
| Total                noninterest-bearing liabilities                                                 |   |                                       | 154,739   |   |   |   |   |   |   |   |   | 154,381 |   |   |   |   |   |   |   |   | 146,638 |   |   |   |   |   |   |   |
| STOCKHOLDERS’                EQUITY                                                            |   |                                       | 174,825   |   |   |   |   |   |   |   |   | 165,034 |   |   |   |   |   |   |   |   | 165,236 |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY                                      |   | $                                          | 2,501,457 |   |   |   |   |   |   |   | $ | 2,428,814 |   |   |   |   |   |   |   | $ | 2,234,987 |   |   |   |   |   |   |   |
| Net                interest income(6)                                                                |   |                                       |      |   | $ | 67,854 |   |   |   |   |   |   |   | $ | 66,783 |   |   |   |   |   |   |   | $ | 68,297 |   |   |   |   |
| Net                interest spread(7)                                                                |   |                                       |      |   |   |   |   |   | 2.29 | % |   |   |   |   |   |   |   | 2.33 | % |   |   |   |   |   |   |   | 2.88 | % |
| Net                interest margin(8)                                                                |   |                                       |      |   |   |   |   |   | 2.80 | % |   |   |   |   |   |   |   | 2.86 | % |   |   |   |   |   |   |   | 3.29 | % |

----

| (1) | Interest                  yield and expense is calculated on a fully taxable equivalent basis                  assuming a 39% tax rate for the year ended December 31, 2007, a                  43.5% tax                  rate for 2006, and a 41.5% tax rate for                  2005. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                amortization of loan costs (fees) has been included in the calculation                of                interest income. Net loan costs were approximately $838,000, $539,000                and                $780,000 for the years ended December 31, 2007, 2006 and 2005,                respectively. Loans includes nonaccrual loans, which balance as of                the                periods ended December 31, 2007, 2006 and 2005 was $69.0 million,                $37.3                million and $27.7 million, respectively, and are net of the allowance                for                loan and lease losses, deferred fees, unearned income, and related                direct                costs. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Available-for-sale                investments are adjusted for unrealized gain or                loss. |
|-----|--------------------------------------------------------------------------------------------------------|

| (4) | For                2007, interest expense on time certificates of deposit in denominations                of                $100,000 or more was reduced by approximately $616,000 of capitalized                interest on construction in progress. This capitalized interest was                mainly                related to the improvements being performed to our new headquarters                purchased in February 2007. Without the effect of the capitalized                interest                of $616,000, our net interest margin and spread on a fully taxable                basis                for the year ended December 31, 2007 would have been 2.78% and 2.26%,                respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (5) | For                2006, interest expense on other borrowings includes the write-off                of                approximately $626,000 in unamortized placement costs related to                the                redemption of $25.8 million of floating rate junior subordinated                deferrable interest debentures on December 18, 2006, as previously                mentioned. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Net                interest income on a tax equivalent basis was $67.3 million, $67.2                million                and $71.0 million for the years ended December 31, 2007, 2006 and                2005,                respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Represents                the average rate earned on interest-earning assets less the average                rate                paid on interest-bearing liabilities on a fully taxable equivalent                basis. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Represents                net interest income on a fully taxable equivalent basis as a percentage                of                average interest-earning assets. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                 |   | **Year                Ended December 31,**                                                    |   |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|
|                                                                                                 |   | **2007                Over 2006****Increases/(Decreases)****Due                to Change in** |   | **2006                Over 2005****Increases/(Decreases)****Due                to Change in** |   |
|                                                                                                 |   | **Volume**                                                                                    |   | **Rate** |   | **Net** |   | **Volume** |   | **Rate** |   | **Net** |   |
|                                                                                                 |   | **(In                thousands)**                                                             |   |
| INTEREST                EARNED ON:                                                                   |   |                                                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Net                loans(1)                                                                          |   | $                                                                                             | 10,847 |   | $ | 2,510 |   | $ | 13,357 |   | $ | 12,729 |   | $ | 9,303 |   | $ | 22,032 |   |
| Securities                of U.S. government agencies                                                |   |                                                                                          | (5,476 | ) |   | 1,029 |   |   | (4,447 | ) |   | 150 |   |   | 5,192 |   |   | 5,342 |   |
| Other                investment securities                                                           |   |                                                                                          | 1,337  |   |   | 250 |   |   | 1,587 |   |   | 323 |   |   | 247 |   |   | 570 |   |
| Puerto                Rico government obligations                                                    |   |                                                                                          | (55    | ) |   | 28 |   |   | (27 | ) |   | 25 |   |   | 35 |   |   | 60 |   |
| Securities                purchased under agreements to resell and federal funds                sold |   |                                                                                          | 153    |   |   | 98 |   |   | 251 |   |   | 91 |   |   | 550 |   |   | 641 |   |
| Interest-earning                deposits                                                             |   |                                                                                          | 478    |   |   | (21 | ) |   | 457 |   |   | 99 |   |   | 169 |   |   | 268 |   |
| Total                interest-earning assets                                                         |   | $                                                                                             | 7,284  |   | $ | 3,894 |   | $ | 11,178 |   | $ | 13,417 |   | $ | 15,496 |   | $ | 28,913 |   |
| INTEREST                PAID ON:                                                                     |   |                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money                market deposits                                                                 |   | $                                                                                             | (163   | ) | $ | 111 |   | $ | (52 | ) | $ | (554 | ) | $ | 48 |   | $ | (506 | ) |
| NOW                deposits                                                                          |   |                                                                                          | 16     |   |   | 118 |   |   | 134 |   |   | (2 | ) |   | 179 |   |   | 177 |   |
| Savings                deposits                                                                      |   |                                                                                          | (1,037 | ) |   | 148 |   |   | (889 | ) |   | (1,612 | ) |   | 137 |   |   | (1,475 | ) |
| Time                certificates of deposit in denominations of $100,000 or more(2)                  |   |                                                                                          | 11,080 |   |   | 6,036 |   |   | 17,116 |   |   | 13,838 |   |   | 12,129 |   |   | 25,967 |   |
| Other                time deposits                                                                   |   |                                                                                          | (786   | ) |   | 608 |   |   | (178 | ) |   | (1,232 | ) |   | 680 |   |   | (552 | ) |
| Other                borrowings(3)                                                                   |   |                                                                                          | (5,466 | ) |   | (558 | ) |   | (6,204 | ) |   | (1,783 | ) |   | 8,599 |   |   | 6,816 |   |
| Total                interest-bearing liabilities                                                    |   | $                                                                                             | 3,644  |   | $ | 6,463 |   | $ | 10,107 |   | $ | 8,655 |   | $ | 21,772 |   | $ | 30,427 |   |
| Net                interest income                                                                   |   | $                                                                                             | 3,640  |   | $ | (2,569 | ) | $ | 1,071 |   | $ | 4,762 |   | $ | (6,276 | ) | $ | (1,514 | ) |

----

| (1) | The                amortization of loan costs (fees) has been included in the calculation                of                interest income. Net loan costs were approximately $838,000, $539,000                and                $780,000 for the years ended December 31, 2007, 2006 and 2005,                respectively. Loans includes nonaccrual loans, which balance as of                the                periods ended December 31, 2007, 2006 and 2005 was $69.0 million,                $37.3                million and $27.7 million, respectively, and are net of the allowance                for                loan and lease losses, deferred fees, unearned income, and related                direct                costs. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | For                2007, interest expense on time certificates of deposit in denominations                of                $100,000 or more was reduced by approximately $616,000 of capitalized                interest on construction in progress. This capitalized interest was                mainly                related to the improvements being performed to our new headquarters                purchased in February 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | For                2006, interest expense on other borrowings includes the write-off                of                approximately $626,000 in unamortized placement costs related to                the                redemption of $25.8 million of floating rate junior subordinated                deferrable interest debentures on December 18, 2006, as previously                mentioned. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Provision      for Loan and Lease Losses***

*“Allowance      for Loan and Lease Losses.”*

*“Allowance      for Loan and Lease Losses”*

***Noninterest      Income***

|                                                                                                                                                     |   | **Year                Ended December 31,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                                                                                                     |   | **2007**                                   |   | **2006**  |   | **2005**  |   |
|                                                                                                                                                     |   | Amount                                          |   | % |   | Amount |   | % |   | Amount |   | % |   |
|                                                                                                                                                     |   | **(Dollars                in thousands)**       |   |
| Service                charges and other fees                                                                                                            |   | $                                               | 9,584  |   |   | 110.4 | % | $ | 8,476 |   |   | 108.7 | % | $ | 9,069 |   |   | 117.4 | % |
| Loss                on sale of non-hedging derivatives, net                                                                                              |   |                                            | -      |   |   | - |   |   | - |   |   | - |   |   | (944 | ) |   | (12.2 | ) |
| Gain                on sale of loans and leases, net                                                                                                     |   |                                            | 380    |   |   | 4.4 |   |   | 401 |   |   | 5.1 |   |   | 945 |   |   | 12.2 |   |
| Loss                on sale of securities, net                                                                                                           |   |                                            | -      |   |   | - |   |   | (1,092 | ) |   | (14.0 | ) |   | (301 | ) |   | (3.9 | ) |
| (Loss)                gain on sale of other real estate owned, repossessed assets, and                on                disposition of other assets, net |   |                                            | (1,286 | ) |   | (14.8 | ) |   | 16 |   |   | 0.2 |   |   | (1,040 | ) |   | (13.5 | ) |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                noninterest income                                                                                                                  |   | $                                               | 8,678  |   |   | 100.0 | % | $ | 7,801 |   |   | 100.0 | % | $ | 7,729 |   |   | 100.0 | % |

----

*“Nonperforming      Loans, Leases and Assets.”*

----

***Noninterest      Expense***

|                                                                         |   | **Year                Ended December 31,** |   |
|------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                         |   | **2007**                                        |   | **2006** |   | **2005** |   |
|                                                                         |   | Amount%                                         |   |   |   | Amount% |   |   |   | Amount% |   |   |   |
|                                                                         |   | **(Dollars                in thousands)**       |   |
| Salaries                and employee benefits                                |   | $                                               | 19,890 |   |   | 41.1 | % | $ | 17,507 |   |   | 40.3 | % | $ | 14,727 |   |   | 39.2 | % |
| Occupancy                and equipment                                       |   |                                            | 10,899 |   |   | 22.6 |   |   | 9,565 |   |   | 22.0 |   |   | 8,555 |   |   | 22.7 |   |
| Professional                services, including directors’ fees        |   |                                            | 4,496  |   |   | 9.3 |   |   | 4,104 |   |   | 9.5 |   |   | 3,912 |   |   | 10.4 |   |
| Office                supplies                                               |   |                                            | 1,375  |   |   | 2.9 |   |   | 1,394 |   |   | 3.2 |   |   | 1,163 |   |   | 3.1 |   |
| Other                real estate owned and other repossessed assets expenses |   |                                            | 2,340  |   |   | 4.9 |   |   | 2,290 |   |   | 5.3 |   |   | 1,096 |   |   | 2.9 |   |
| Promotion                and advertising                                     |   |                                            | 1,492  |   |   | 3.1 |   |   | 1,200 |   |   | 2.8 |   |   | 686 |   |   | 1.8 |   |
| Lease                expenses                                                |   |                                            | 507    |   |   | 1.1 |   |   | 776 |   |   | 1.8 |   |   | 862 |   |   | 2.3 |   |
| Insurance                                                                    |   |                                            | 1,865  |   |   | 3.9 |   |   | 1,053 |   |   | 2.4 |   |   | 1,095 |   |   | 2.9 |   |
| Municipal                and other taxes                                     |   |                                            | 1,837  |   |   | 3.8 |   |   | 1,657 |   |   | 3.8 |   |   | 1,674 |   |   | 4.4 |   |
| Commissions                and service fees credit and debit cards           |   |                                            | 1,445  |   |   | 3.0 |   |   | 1,324 |   |   | 3.1 |   |   | 1,364 |   |   | 3.6 |   |
| Other                noninterest expense                                     |   |                                            | 2,079  |   |   | 4.3 |   |   | 2,516 |   |   | 5.8 |   |   | 2,509 |   |   | 6.7 |   |
| Total                noninterest expense                                     |   | $                                               | 48,225 |   |   | 100.0 | % | $ | 43,386 |   |   | 100.0 | % | $ | 37,643 |   |   | 100.0 | % |

----

***Provision      for Income Taxes***

----

----

**Financial      Condition**

*“Note      2(z) - Recently Issued Accounting Standards”*

***Short-Term      Investments and Interest-bearing Deposits in Other Financial      Institutions***

***Investment      Securities***

----

|                                                |   | **Available-for-Sale**                    |    | **Held-to-Maturity**                             |   | **Other                Investments** |   | **Total**                                        |    |
|-----------------------------------------------------|--------|-------------------------------------------|---------|--------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------------------|---------|
|                                                |   |  **Amortized****Cost**               |    |  **Estimated****Fair                Value** |   |  **Amortized****Cost**          |   |  **Estimated****Fair                Value** |    |  **Amortized****Cost** |   |  **Estimated****Fair                Value** |   |  **Amortized****Cost** |   |  **Estimated****Fair                Value** |   |
|                                                |   | **(Dollars                in thousands)** |    |
| **December                31, 2007:**               |   |                                      |    |                                             |   |                                 |   |                                             |    |   |   |   |   |   |   |   |   |
| U.S.                government agencies obligations |   | $                                         | 129,020 |                                             | $      | 129,398                              |   | $                                                | 2,775   |   | $ | 2,762 |   | $ | — |   | $ | — |   | $ | 131,795 |   | $ | 132,160 |   |
| Collateralized                mortgage obligations  |   |                                      | 404,804 |                                             |   | 404,856                              |   |                                             | 23,421  |   |   | 23,092 |   |   | — |   |   | — |   |   | 428,225 |   |   | 427,948 |   |
| Mortgage-backed                securities           |   |                                      | 163,552 |                                             |   | 164,390                              |   |                                             | 4,649   |   |   | 4,598 |   |   | — |   |   | — |   |   | 168,201 |   |   | 168,988 |   |
| State                and municipal obligations      |   |                                      | 5,616   |                                             |   | 5,716                                |   |                                             | — |   |   | — |   |   | — |   |   | — |   |   | 5,616 |   |   | 5,716 |   |
| US                Corporate Notes                   |   |                                      | 3,000   |                                             |   | 2,744                                |   |                                             | — |   |   | — |   |   | — |   |   | — |   |   | 3,000 |   |   | 2,744 |   |
| Other                investments                    |   |                                      | — |                                             |   | —                              |   |                                             | — |   |   | — |   |   | 13,354 |   |   | 13,354 |   |   | 13,354 |   |   | 13,354 |   |
| Total                                               |   | $                                         | 705,992 |                                             | $      | 707,104                              |   | $                                                | 30,845  |   | $ | 30,452 |   | $ | 13,354 |   | $ | 13,354 |   | $ | 750,191 |   | $ | 750,910 |   |
| **December                31, 2006:**               |   |                                      |    |                                             |   |                                 |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies obligations |   | $                                         | 178,533 |                                             | $      | 176,255                              |   | $                                                | 3,165   |   | $ | 3,072 |   | $ | — |   | $ | — |   | $ | 181,698 |   | $ | 179,327 |   |
| Collateralized                mortgage obligations  |   |                                      | 305,044 |                                             |   | 300,192                              |   |                                             | 29,878  |   |   | 29,142 |   |   | — |   |   | — |   |   | 334,922 |   |   | 329,333 |   |
| Mortgage-backed                securities           |   |                                      | 49,628  |                                             |   | 49,149                               |   |                                             | 5,390   |   |   | 5,260 |   |   | — |   |   | — |   |   | 55,018 |   |   | 54,409 |   |
| State                and municipal obligations      |   |                                      | 9,518   |                                             |   | 9,563                                |   |                                             | — |   |   | — |   |   | — |   |   | — |   |   | 9,518 |   |   | 9,563 |   |
| Other                investments                    |   |                                      | — |                                             |   | —                              |   |                                             | — |   |   | — |   |   | 4,329 |   |   | 4,329 |   |   | 4,329 |   |   | 4,329 |   |
| Total                                               |   | $                                         | 542,723 |                                             | $      | 535,159                              |   | $                                                | 38,433  |   | $ | 37,474 |   | $ | 4,329 |   | $ | 4,329 |   | $ | 585,485 |   | $ | 576,962 |   |
| **December                31, 2005:**               |   |                                      |    |                                             |   |                                 |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies obligations |   | $                                         | 230,892 |                                             | $      | 227,081                              |   | $                                                | 3,763   |   | $ | 3,663 |   | $ | — |   | $ | — |   | $ | 234,655 |   | $ | 230,744 |   |
| Collateralized                mortgage obligations  |   |                                      | 333,154 |                                             |   | 327,399                              |   |                                             | 32,386  |   |   | 31,590 |   |   | — |   |   | — |   |   | 365,540 |   |   | 358,989 |   |
| Mortgage-backed                securities           |   |                                      | 65,560  |                                             |   | 64,779                               |   |                                             | 6,322   |   |   | 6,158 |   |   | — |   |   | — |   |   | 71,882 |   |   | 70,937 |   |
| State                and municipal obligations      |   |                                      | 7,902   |                                             |   | 7,821                                |   |                                             | — |   |   | — |   |   | — |   |   | — |   |   | 7,902 |   |   | 7,821 |   |
| Other                investments                    |   |                                      | — |                                             |   | —                              |   |                                             | — |   |   | — |   |   | 10,652 |   |   | 10,652 |   |   | 10,652 |   |   | 10,652 |   |
| Total                                               |   | $                                         | 637,508 |                                             | $      | 627,080                              |   | $                                                | 42,471  |   | $ | 41,411 |   | $ | 10,652 |   | $ | 10,652 |   | $ | 690,631 |   | $ | 679,143 |   |
|                                                |   |                                      |    |                                             |   |                                 |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|  | · | the                purchase of $315.2 million in mortgage-backed securities and $3.0                million                in corporate debt; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | prepayments                of approximately $104.7 million on mortgage-backed securities and                FHLB                obligations; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | $52.7                million in a FNMA note and various US and Puerto Rico government                agencies                obligations that matured or were called-back during the                year; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | prepayments                for approximately $100.4 million of mortgage backed                securities; |
|--|--------|-----------------------------------------------------------------------------------------------------------|

|  | · | the                purchase of $55.4 million in mortgage backed securities, $30.0 million                in                US government agencies obligations and FHLB stocks, and $5.0 million                of                Puerto Rico Agency Notes; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a                $50.1 million sale of FHLB and mortgage backed securities available                for                sale with an average book yield of 3.64% at the time of sale, which                were sold in December 2006 in an effort to improve our net interest                margin                resulting in a net loss on sale of investments of $1.1 million, as                previously mentioned;                and |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a                decrease of $38.3 million in US government agencies obligations due                to                monthly principal prepayments and maturity of FHLB, FNMA & FHLMC                obligations and the redemption of FHLB                stocks. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Investment      Portfolio — Maturity and Yields***

|                                                     |   | **Year                ended December 31, 2007**                 |    |
|----------------------------------------------------------|--------|-----------------------------------------------------------------|---------|
|                                                     |   |                **Within** **One                Year** |    |  **After                One but Within Five Years** |   |  **After                Five but Within Ten Years** |   |  **After                Ten Years** |   |                **Total** |   |
|                                                     |   | **Amount**                                                      |    | **Yield****(4)** |   | **Amount** |   | **Yield****(4)** |   | **Amount** |   | **Yield****(4)** |   | **Amount** |   | **Yield****(4)** |   | **Amount** |   | **Yield****(4)** |   |
|                                                     |   | **(Dollars                in thousands)**                       |
| **Investments                available-for-sale:**(1)(2) |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies obligations      |   | $                                                               | 122,233 |   |   | 4.68 | % | $ | 7,165 |   |   | 5.23 | % | $ | — |   |   | — | % | $ | — |   |   | — | % | $ | 129,398 |   |   | 4.71 | % |
| Mortgage                backed securities(3)             |   |                                                            | 2,554   |   |   | 4.33 |   |   | 23,759 |   |   | 4.92 |   |   | 116,668 |   |   | 5.22 |   |   | 21,408 |   |   | 6.08 |   |   | 164,390 |   |   | 5.28 |   |
| Collateral                mortgage obligations(3)        |   |                                                            | 25,411  |   |   | 4.02 |   |   | 246,576 |   |   | 4.97 |   |   | 132,869 |   |   | 5.58 |   |   | — |   |   | — |   |   | 404,856 |   |   | 5.11 |   |
| State                & political subdivisions        |   |                                                            | 795     |   |   | 6.11 |   |   | 4,921 |   |   | 4.72 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 5,716 |   |   | 4.91 |   |
| US                Corporate Notes                        |   |                                                            | 2,744   |   |   | 6.79 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 2,744 |   |   | 6.79 |   |
| Total                investments available-for-sale      |   | $                                                               | 153,737 |   |   | 4.61 | % | $ | 282,421 |   |   | 4.97 | % | $ | 249,537 |   |   | 5.41 | % | $ | 21,408 |   |   | 6.08 | % | $ | 707,104 |   |   | 5.08 | % |
|                                                     |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Investments                held-to-maturity:**(2)      |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies obligations      |   | $                                                               | — |   |   | — | % | $ | 2,775 |   |   | 3.95 | % | $ | — |   |   | — | % | $ | — |   |   | — | % | $ | 2,775 |   |   | 3.95 | % |
| Mortgage                backed securities(3)             |   |                                                            | — |   |   | — |   |   | — |   |   | — |   |   | 4,649 |   |   | 5.03 |   |   | — |   |   | — |   |   | 4,649 |   |   | 5.03 | % |
| Collateral                mortgage obligations(3)        |   |                                                            | 7,284   |   |   | 4.00 |   |   | 2,806 |   |   | 4.29 |   |   | 13,391 |   |   | 5.05 |   |   | — |   |   | — |   |   | 23,421 |   |   | 4.63 |   |
| Total                investments held-to-maturity        |   | $                                                               | 7,284   |   |   | 4.00 | % | $ | 5,581 |   |   | 4.12 | % | $ | 17,980 |   |   | 5.04 | % | $ | — |   |   | — | % | $ | 30,845 |   |   | 4.63 | % |
|                                                     |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                Investments:**                    |   |                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FHLB                stock                                |   |                                                            | 12,744  |   |   | 8.05 | % |   | — |   |   | — | % |   | — |   |   | — | % |   | — |   |   | — | % |   | 12,744 |   |   | 8.05 | % |
| Investment                in statutory trust             |   |                                                            | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 610 |   |   | 8.11 |   |   | 610 |   |   | 8.11 |   |
| Total                other investments                   |   | $                                                               | 12,744  |   |   | 8.05 | % | $ | — |   |   | — | % | $ | — |   |   | — | % | $ | 610 |   |   | 8.11 | % | $ | 13,354 |   |   | 8.05 | % |
| Total                investments                         |   | $                                                               | 173,765 |   |   | 4.83 | % | $ | 288,002 |   |   | 4.95 | % | $ | 267,517 |   |   | 5.39 | % | $ | 22,018 |   |   | 6.14 | % | $ | 751,303 |   |   | 5.11 | % |

----

| (1) | Based                on estimated fair value. |
|-----|-----------------------------------------------|

| (2) | Almost                all of our income from investments in securities is tax exempt because                99.83% of these securities are held in our IBEs. The yields shown                in the                above table are not calculated on a fully taxable equivalent                basis. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Maturities                of mortgage-backed securities and collateralized mortgage obligations,                or                CMOs, are based on anticipated lives of the underlying mortgages,                not                contractual maturities. CMO maturities are based on cash flow (or                payment)                windows derived from broker market                consensus. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Represents                the present value of the expected future cash flows of each instrument                discounted at the estimated market rate offered by other instruments                that                are currently being traded in the market with similar credit quality,                expected maturity and cash flows. For other investments, it represents                the                last dividend received. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Other      Investments***

|                            |   | **Year                Ended December 31,** |   |
|---------------------------------|--------|--------------------------------------------|--------|
| **Type**                        |   | **2007**                                   |   | **2006** |   | **2005** |   |
|                            |   | **(In                thousands)**          |   |
| Statutory                trusts |   | $                                          | 610    |   | $ | 611 |   | $ | 1,382 |   |
| FHLB                stock       |   |                                       | 12,744 |   |   | 3,718 |   |   | 9,270 |   |
| Total                           |   | $                                          | 13,354 |   | $ | 4,329 |   | $ | 10,652 |   |
|                            |   |                                       |   |   |   |   |   |   |   |   |

***Loan      and Lease Portfolio***

|                                                           |   | **Year                Ended December 31,** |      |
|----------------------------------------------------------------|--------|--------------------------------------------|-----------|
|                                                           |   | **2007**                                   |      | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                                           |   | **(In                thousands)**          |      |
| Real                estate secured                             |   | $                                          | 900,036   |   | $ | 813,615 |   | $ | 658,123 |   | $ | 516,542 |   | $ | 317,491 |   |
| Leases                                                         |   |                                       | 385,390   |   |   | 443,311 |   |   | 487,863 |   |   | 459,251 |   |   | 315,935 |   |
| Other                commercial and industrial                 |   |                                       | 302,530   |   |   | 297,512 |   |   | 272,205 |   |   | 243,603 |   |   | 177,989 |   |
| Consumer                                                       |   |                                       | 57,745    |   |   | 60,682 |   |   | 63,980 |   |   | 74,755 |   |   | 26,592 |   |
| Real                estate - construction                      |   |                                       | 203,344   |   |   | 126,241 |   |   | 82,468 |   |   | 79,334 |   |   | 47,370 |   |
| Other                loans(1)                                  |   |                                       | 6,850     |   |   | 5,015 |   |   | 5,336 |   |   | 6,134 |   |   | 4,236 |   |
| Gross                loans and leases                          |   | $                                          | 1,855,895 |   | $ | 1,746,376 |   | $ | 1,569,975 |   | $ | 1,379,619 |   | $ | 889,613 |   |
| Plus:                Deferred loan costs, net                  |   |                                       | 2,366     |   |   | 4,880 |   |   | 7,442 |   |   | 6,480 |   |   | 4,707 |   |
| Total                loans, including deferred loan costs, net |   | $                                          | 1,858,261 |   | $ | 1,751,256 |   | $ | 1,577,417 |   | $ | 1,386,099 |   | $ | 894,320 |   |
| Less:                Unearned income                           |   |                                       | (1,042    | ) |   | (1,297 | ) |   | (1,157 | ) |   | (1,170 | ) |   | (1,774 | ) |
| Total                loans, net of unearned income             |   | $                                          | 1,857,219 |   | $ | 1,749,959 |   | $ | 1,576,260 |   | $ | 1,384,929 |   | $ | 892,546 |   |
| Less:                Allowance for loan and lease losses       |   |                                       | (28,137   | ) |   | (18,937 | ) |   | (18,188 | ) |   | (19,039 | ) |   | (9,394 | ) |
| Loans,                net                                      |   | $                                          | 1,829,082 |   | $ | 1,731,022 |   | $ | 1,558,072 |   | $ | 1,365,890 |   | $ | 883,152 |   |

----

| (1) | Other                loans are comprised of overdrawn deposit accounts. |
|-----|-------------------------------------------------------------------------|

----

----

|                                                 |   | **As                of December 31, 2007**                   |    |
|-------------------------------------------------|--------|--------------------------------------------------------------|---------|
|                                            |   |                                                         |    | **Over                1 Year****through                5 Years** |   | **Over                5 Years** |   |   |   |
|                                            |   | **One                Year****or                Less****(1)** |    | **Fixed****Rate** |   | **Floating                or Adjustable Rate** |   | **Fixed****Rate** |   | **Floating                or Adjustable Rate** |   | **Total** |   |
|                                            |   | **(In                thousands)**                            |    |
| Real                estate — construction |   | $                                                            | 228,765 |   | $ | 283 |   | $ | 2,470 |   | $ | 532 |   | $ | - |   | $ | 232,050 |   |
| Real                estate — secured      |   |                                                         | 246,775 |   |   | 198,878 |   |   | 224,188 |   |   | 132,240 |   |   | 14,158 |   |   | 816,239 |   |
| Other                commercial and industrial  |   |                                                         | 229,046 |   |   | 24,229 |   |   | 31,199 |   |   | 1,970 |   |   | 11,301 |   |   | 297,715 |   |
| Consumer                                        |   |                                                         | 7,314   |   |   | 15,398 |   |   | 1,719 |   |   | 32,378 |   |   | 152 |   |   | 56,961 |   |
| Leases                                          |   |                                                         | 16,487  |   |   | 335,496 |   |   | - |   |   | 28,914 |   |   | - |   |   | 380,897 |   |
| Other                loans                      |   |                                                         | 5,727   |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 5,727 |   |
| Total                                           |   | $                                                            | 734,114 |   | $ | 574,284 |   | $ | 259,576 |   | $ | 196,004 |   | $ | 25,611 |   | $ | 1,789,589 |   |

----

| (1) | Maturities                are based upon contract dates. Demand loans are included in the one                year                or less category and totaled $539.7 million as of December 31,                2007. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Nonperforming      Loans, Leases and Assets***

|                                                                                                                     |   | **As                of December 31,**     |    |
|--------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                                                                     |   | **2007**                                  |    | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                     |   | **(Dollars                in thousands)** |    |
| Loans                contractually past due 90 days or more but still accruing                interest                   |   | $                                         | 29,075  |   | $ | 12,723 |   | $ | 8,560 |   | $ | 8,365 |   | $ | 9,700 |   |
| Nonaccrual                loans                                                                                          |   |                                      | 68,990  |   |   | 37,255 |   |   | 27,703 |   |   | 32,168 |   |   | 17,058 |   |
| Total                nonperforming loans                                                                                 |   |                                      | 98,065  |   |   | 49,978 |   |   | 36,263 |   |   | 40,533 |   |   | 26,758 |   |
| Other                real estate owned                                                                                   |   |                                      | 8,125   |   |   | 3,629 |   |   | 1,542 |   |   | 2,875 |   |   | 2,774 |   |
| Other                repossessed assets                                                                                  |   |                                      | 5,409   |   |   | 9,419 |   |   | 7,975 |   |   | 3,566 |   |   | 3,643 |   |
| Total                nonperforming assets                                                                                |   | $                                         | 111,599 |   | $ | 63,026 |   | $ | 45,780 |   | $ | 46,974 |   | $ | 33,175 |   |
| Nonperforming                loans to total loans and leases, net of unearned                                            |   |                                      | 5.28    | % |   | 2.85 | % |   | 2.30 | % |   | 2.92 | % |   | 2.98 | % |
| Nonperforming                assets to total loans and leases, net of unearned, plus repossessed                property |   |                                      | 5.96    |   |   | 3.57 |   |   | 2.89 |   |   | 3.37 |   |   | 3.66 |   |
| Nonperforming                assets to total assets                                                                      |   |                                      | 4.06    |   |   | 2.52 |   |   | 1.91 |   |   | 2.23 |   |   | 2.51 |   |
| Allowance                for loan and lease losses to nonperforming loans                                                |   |                                      | 28.69   |   |   | 37.89 |   |   | 50.16 |   |   | 46.97 |   |   | 35.11 |   |

----

----

***Allowance      for Loan and Lease Losses***

----

|   | · | credit                quality; |
|--------|--------|--------------------------------|

|   | · | sufficiency                of credit and collateral documentation; |
|--------|--------|--------------------------------------------------------------------|

|   | · | proper                lien perfection; |
|--------|--------|----------------------------------------|

|   | · | appropriate                approval by the loan officer and the loan                committees; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | adherence                to any loan agreement covenants; and |
|--------|--------|---------------------------------------------------------------|

|   | · | compliance                with internal policies and procedures and laws and                regulations. |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | effects                of any changes in lending policies and procedures, including those                for                underwriting, collection, charge-offs, and                recoveries; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in the experience, ability and depth of our lending management and                staff; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | concentrations                of credit that might affect loss experience across one or more components                of the portfolio; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | levels                of, and trends in, delinquencies and nonaccruals; and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | national                and local economic business trends and conditions. |
|--------|--------|----------------------------------------------------------------------------|

*Accounting      by Creditors for Impairment of a Loan (“SFAS No. 114”)*
*Accounting      by Creditors for Impairment of a Loan - Income Recognition and      Disclosures*

----

|                                                                                                                            |   | **Year                Ended December 31,** |      |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|
|                                                                                                                            |   | **2007**                                   |      | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                            |   | **(Dollars                in thousands)**  |      |
| Average                total loans and leases outstanding during period                                                         |   | $                                          | 1,804,099 |   | $ | 1,663,330 |   | $ | 1,487,850 |   | $ | 1,217,723 |   | $ | 842,033 |   |
| Total                loans and leases outstanding at end of period, including loans held                for                sale |   |                                       | 1,858,579 |   |   | 1,750,838 |   |   | 1,577,196 |   |   | 1,387,613 |   |   | 899,392 |   |
| Allowance                for loan and lease losses:                                                                             |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                at beginning of period                                                                                 |   |                                       | 18,937    |   |   | 18,188 |   |   | 19,039 |   |   | 9,394 |   |   | 6,918 |   |
| Charge-offs:                                                                                                                    |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate — secured                                                                                      |   |                                       | 372       |   |   | 685 |   |   | - |   |   | 5 |   |   | - |   |
| Commercial                and industrial                                                                                        |   |                                       | 3,122     |   |   | 3,050 |   |   | 4,848 |   |   | 3,329 |   |   | 966 |   |
| Consumer                                                                                                                        |   |                                       | 1,699     |   |   | 1,978 |   |   | 2,600 |   |   | 1,196 |   |   | 1,347 |   |
| Leases                                                                                                                          |   |                                       | 12,680    |   |   | 12,927 |   |   | 8,991 |   |   | 5,806 |   |   | 2,715 |   |
| Other                loans                                                                                                      |   |                                       | 398       |   |   | 149 |   |   | 150 |   |   | 164 |   |   | 37 |   |
| Total                charge-offs                                                                                                |   |                                       | 18,271    |   |   | 18,789 |   |   | 16,589 |   |   | 10,500 |   |   | 5,065 |   |
| Recoveries:                                                                                                                     |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate — secured                                                                                      |   |                                       | 52        |   |   | 11 |   |   | - |   |   | - |   |   | - |   |
| Commercial                and industrial                                                                                        |   |                                       | 319       |   |   | 534 |   |   | 486 |   |   | 154 |   |   | 160 |   |
| Consumer                                                                                                                        |   |                                       | 319       |   |   | 465 |   |   | 256 |   |   | 233 |   |   | 254 |   |
| Leases                                                                                                                          |   |                                       | 1,410     |   |   | 1,604 |   |   | 2,210 |   |   | 1,741 |   |   | 675 |   |
| Other                loans                                                                                                      |   |                                       | 23        |   |   | 21 |   |   | 11 |   |   | 15 |   |   | 1 |   |
| Total                recoveries                                                                                                 |   |                                       | 2,123     |   |   | 2,635 |   |   | 2,963 |   |   | 2,143 |   |   | 1,090 |   |
| Net                loan and lease charge-offs                                                                                   |   |                                       | 16,148    |   |   | 16,154 |   |   | 13,626 |   |   | 8,357 |   |   | 3,975 |   |
| Provision                for loan and lease losses                                                                              |   |                                       | 25,348    |   |   | 16,903 |   |   | 12,775 |   |   | 7,100 |   |   | 6,451 |   |
| Allowance                of acquired bank — BankTrust (2004)                                                              |   |                                       | -         |   |   | - |   |   | - |   |   | 10,902 |   |   | - |   |
| Allowance                at end of period                                                                                       |   | $                                          | 28,137    |   | $ | 18,937 |   | $ | 18,188 |   | $ | 19,039 |   | $ | 9,394 |   |
| Ratios:                                                                                                                         |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loan and lease charge-offs to average total loans                                                            |   |                                       | .90       | % |   | 0.97 | % |   | 0.92 | % |   | 0.69 | % |   | 0.47 | % |
| Allowance                for loan and lease losses to total loans at end of period                                              |   |                                       | 1.51      |   |   | 1.08 |   |   | 1.15 |   |   | 1.37 |   |   | 1.04 |   |
| Net                loan and lease charge-offs to allowance for loan losses at end of                period                      |   |                                       | 57.39     |   |   | 85.30 |   |   | 74.92 |   |   | 43.89 |   |   | 42.31 |   |
| Net                loan and lease charge-offs to provision for loan and lease                losses                             |   |                                       | 63.71     |   |   | 95.57 |   |   | 106.66 |   |   | 117.70 |   |   | 61.62 |   |
|                                                                                                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                     |   | **As                of December 31,**     |    |
|----------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                     |   | **2007**                                  |    | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
|                                                     |   | **Amt.**                                  |    | **Loan                Category to Gross****Loans****(1)** |   | **Amt.** |   | **Loan                Category to Gross****Loans****(1)** |   | **Amt.** |   | **Loan                Category to Gross****Loans****(1)** |   | **Amt.** |   | **Loan                Category to Gross****Loans****(1)** |   | **Amt.** |   | **Loan                Category to Gross****Loans****(1)** |   |
|                                                     |   | **(Dollars                in thousands)** |    |
| **Allocated:**                                           |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate — construction          |   | $                                         | 1,263   |   |   | 10.96 | % | $ | 610 |   |   | 7.23 | % | $ | 714 |   |   | 5.25 | % | $ | 1,200 |   |   | 5.75 | % | $ | 464 |   |   | 5.32 | % |
| Real                estate — secured               |   |                                      | 1,301   |   |   | 48.49 |   |   | 525 |   |   | 46.60 |   |   | 1,137 |   |   | 41.92 |   |   | 1,997 |   |   | 37.44 |   |   | 1,212 |   |   | 35.69 |   |
| Commercial                and industrial                 |   |                                      | 12,760  |   |   | 16.30 |   |   | 4,836 |   |   | 17.03 |   |   | 4,597 |   |   | 17.34 |   |   | 6,470 |   |   | 17.66 |   |   | 4,067 |   |   | 20.01 |   |
| Consumer                                                 |   |                                      | 1,520   |   |   | 3.11 |   |   | 1,433 |   |   | 3.47 |   |   | 1,499 |   |   | 4.08 |   |   | 3,239 |   |   | 5.42 |   |   | 750 |   |   | 2.99 |   |
| Leases                                                   |   |                                      | 11,041  |   |   | 20.77 |   |   | 11,089 |   |   | 25.38 |   |   | 9,701 |   |   | 31.07 |   |   | 3,815 |   |   | 33.29 |   |   | 1,950 |   |   | 35.51 |   |
| Other                loans                               |   |                                      | 252     |   |   | 0.37 |   |   | 436 |   |   | 0.29 |   |   | 212 |   |   | 0.34 |   |   | 134 |   |   | 0.44 |   |   | 21 |   |   | 0.48 |   |
| Unallocated                                         |   |                                      | — |   |   | — |   |   | 8 |   |   | — |   |   | 328 |   |   | — |   |   | 2,184 |   |   | — |   |   | 930 |   |   | — |   |
| Total                allowance for loan and lease losses |   | $                                         | 28,137  |   |   | 100.00 | % | $ | 18,937 |   |   | 100.00 | % | $ | 18,188 |   |   | 100.00 | % | $ | 19,039 |   |   | 100.00 | % | $ | 9,394 |   |   | 100.00 | % |

----

***Nonearning      Assets***

----

***Deposits***

|                                                                                               |   | **Year                Ended December 31,** |      |
|----------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|
|                                                                                               |   | **2007**                                   |      | **2006** |   | **2005** |   |
|                                                                                               |   | **Average                Balance**         |      | **Percent                of Deposits** |   | **Average                Rate** |   | **Average                Balance** |   | **Percent                of Deposits** |   | **Average                Rate** |   | **Average                Balance** |   | **Percent                of Deposits** |   | **Average                Rate** |   |
|                                                                                               |   | **(Dollars                in thousands)**  |      |
| Noninterest-bearing                demand deposits                                                 |   | $                                          | 119,004   |   |   | 6.29 | % |   | - | % | $ | 128,551 |   |   | 7.39 | % |   | - | % | $ | 129,676 |   |   | 8.62 | % |   | - | % |
| Money                market deposits                                                               |   |                                       | 18,361    |   |   | 0.97 |   |   | 2.90 |   |   | 25,470 |   |   | 1.46 |   |   | 2.29 |   |   | 51,787 |   |   | 3.44 |   |   | 2.10 |   |
| NOW                deposits                                                                        |   |                                       | 47,068    |   |   | 2.49 |   |   | 2.23 |   |   | 46,330 |   |   | 2.66 |   |   | 2.23 |   |   | 46,421 |   |   | 3.09 |   |   | 1.85 |   |
| Savings                deposits                                                                    |   |                                       | 141,120   |   |   | 7.45 |   |   | 2.48 |   |   | 184,824 |   |   | 10.63 |   |   | 2.37 |   |   | 254,923 |   |   | 16.94 |   |   | 2.30 |   |
| Time                certificates of deposit in denominations of $100,000 or                more    |   |                                       | 236,057   |   |   | 12.47 |   |   | 5.01 |   |   | 205,510 |   |   | 11.82 |   |   | 4.30 |   |   | 202,099 |   |   | 13.43 |   |   | 3.24 |   |
| Broker                certificates of deposits in denominations of $100,000 or                more |   |                                       | 1,239,885 |   |   | 65.49 |   |   | 5.13 |   |   | 1,034,893 |   |   | 59.54 |   |   | 4.78 |   |   | 666,955 |   |   | 44.33 |   |   | 3.87 |   |
| Other                time deposits                                                                 |   |                                       | 91,887    |   |   | 4.85 |   |   | 4.37 |   |   | 113,097 |   |   | 6.50 |   |   | 3.70 |   |   | 152,787 |   |   | 10.15 |   |   | 3.10 |   |
| Total                deposits                                                                      |   | $                                          | 1,836,382 |   |   | 100.00 | % |   |   |   | $ | 1,738,675 |   |   | 100.00 | % |   |   |   | $ | 1,504,648 |   |   | 100.00 | % |   |   |   |
|                                                                                               |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                 |   | **As                of December 31,** |      |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                                                                 |   | **2007**                              |      | **2006** |   | **2005** |   |
|                                                                                                 |   | **(In                thousands)**     |      |
| Interest                bearing deposits:                                                            |   |                                  |      |   |   |   |   |
| Now                and money market                                                                  |   | $                                     | 60,893    |   | $ | 62,673 |   | $ | 70,962 |   |
| Savings                                                                                              |   |                                  | 131,604   |   |   | 156,069 |   |   | 223,665 |   |
| Broker                certificates of deposits in denominations of less                than $100,000 |   |                                  | 104       |   |   | 707 |   |   | 2,972 |   |
| Broker                certificates of deposits in denominations of $100,000                or more   |   |                                  | 1,336,456 |   |   | 1,225,449 |   |   | 964,233 |   |
| Time                certificates of deposits in denominations of $100,000                or more     |   |                                  | 251,361   |   |   | 224,741 |   |   | 203,708 |   |
| Other                time deposits in denominations of less                than $100,000 and IRAs    |   |                                  | 92,545    |   |   | 95,396 |   |   | 121,950 |   |
| Total                interest bearing deposits                                                       |   | $                                     | 1,872,963 |   | $ | 1,765,035 |   | $ | 1,587,490 |   |
| Plus:                non interest bearing deposits                                                   |   |                                  | 120,083   |   |   | 140,321 |   |   | 146,638 |   |
| Total                deposits                                                                        |   | $                                     | 1,993,046 |   | $ | 1,905,356 |   | $ | 1,734,128 |   |

|                                                |   | **As                of December 31,** |      |
|-----------------------------------------------------|--------|---------------------------------------|-----------|
|                                                |   | **2007**                              |      | **2006** |   | **2005** |   |
|                                                |   | **(In                thousands)**     |      |
| Three                months or less                 |   | $                                     | 360,168   |   | $ | 547,837 |   | $ | 421,582 |   |
| Over                three months through six months |   |                                  | 318,440   |   |   | 294,784 |   |   | 250,982 |   |
| Over                six months through 12 months    |   |                                  | 195,976   |   |   | 188,691 |   |   | 184,880 |   |
| Over                12 months                       |   |                                  | 713,233   |   |   | 418,878 |   |   | 310,497 |   |
| Total                                               |   | $                                     | 1,587,817 |   | $ | 1,450,190 |   | $ | 1,167,941 |   |

***Other      Sources of Funds***

----

|                                                                           |   | **Year                Ended December 31,** |    |
|--------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                           |   | **2007**                                   |    | **2006** |   | **2005** |   |
|                                                                           |   | **(Dollars                in thousands)**  |    |
| Balance                at period-end                                           |   | $                                          | 496,419 |   | $ | 365,664 |   | $ | 419,860 |   |
| Average                monthly aggregate balance outstanding during the period |   |                                       | 372,935 |   |   | 432,459 |   |   | 489,110 |   |
| Maximum                aggregate balance outstanding at any month-end          |   |                                       | 496,419 |   |   | 501,182 |   |   | 614,650 |   |
| Weighted                average interest rate for the year                     |   |                                       | 5.04    | % |   | 4.94 | % |   | 3.33 | % |
| Weighted                average interest rate for the last month of the year   |   |                                       | 4.60    | % |   | 5.27 | % |   | 4.25 | % |
|                                                                           |   |                                       |    |   |   |   |   |   |   |   |

*FHLB      Advances*

|                                                                         |   | **Year                Ended December 31,** |   |
|------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                         |   | **2007**                                   |   | **2006** |   | **2005** |   |
|                                                                         |   | **(Dollars                in thousands)**  |   |
| Balance                at period-end                                         |   | $                                          | 30,454 |   | $ | 8,707 |   | $ | 8,759 |   |
| Average                balance during the period                             |   |                                       | 3,668  |   |   | 19,016 |   |   | 10,059 |   |
| Maximum                amount outstanding at any month-end                   |   |                                       | 30,454 |   |   | 121,292 |   |   | 10,404 |   |
| Weighted                average interest rate for the year                   |   |                                       | 5.26   | % |   | 5.06 | % |   | 4.93 | % |
| Weighted                average interest rate for the last month of the year |   |                                       | 4.64   | % |   | 5.51 | % |   | 5.37 | % |
|                                                                         |   |                                       |   |   |   |   |   |   |   |   |

*Notes      Payable to Statutory Trusts*

*“*
*Eurobank      Statutory Trust I and II*
*”*
*“Note      16 - Notes Payable to Statutory Trusts”*

***Capital      Resources and Capital Adequacy Requirements***

----

|  | · | During                2007, a total of 254,862 stock options were exercised for the aggregate                exercise price of $1.1 million, as follows: 250,862 on February 23,                2007                at an aggregate exercise price of $1.1 million; and 4,000 stock options                on                July 10, 2007 at an aggregate exercise price of                $20,000. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Between                the second and third quarter of 2007, we repurchased 285,368 shares                for                $2.5 million in connection with a stock repurchase program approved                by the                Board of Directors in May 2007, which was completed in September                2007. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | In                an effort to improve our net interest margin, on December 18, 2006,                we                redeemed $25.8 million of floating rate junior subordinated deferrable                interest debentures bearing an interest rate of 8.99% at the time                of                redemption,                upon which Eurobank Statutory Trust I, one of our non-banking                subsidiaries, redeemed $25.0 million in trust preferred securities.                Up to                December 18, 2006, we included                these trust-preferred securities as part of our tier 1                capital. We                believe that remaining supplemental capital raised in connection                with the                issuance of trust preferred securities from Eurobank Statutory Trust                II                will allow us to achieve and maintain our status as a well-capitalized                institution and to sustain our continued loan growth. For                more detail on notes payable to statutory trusts please refer to                *“Note                16 - Notes Payable to Statutory Trusts”*                to                our consolidated financial                statements. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | During                2006, a total of 213,450 options were exercised for the aggregate                exercise                price of $879,765, as follows: 7,000 options on September 13, 2006                at an                aggregate exercise price of $44,390; 56,450 options on June 30, 2006                at an                aggregate exercise price of $336,625; and 150,000 options on February                27,                2006 at an aggregate exercise price of $498,750. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | During                2006 and 2005, we repurchased 488,477 shares for $5.5 million and                163,550                shares for $1.9 million, respectively, upon a stock repurchase program                approved by our board of directors in October 2005, respectively,                which                expired in October 2006. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | On                November, 18, 2005, we recorded 1,688 for $22,000 shares as treasury                stock                as a result of a payment in lieu of foreclosure from a former                borrower. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Risk      Factors,*

----

|                                                    |   |   **Actual**                    |    |  **For                Minimum Capital****Adequacy                Purposes**  |   | **To                Be Well Capitalized****Under                Prompt Corrective****Action                Provision**  |   |
|---------------------------------------------------------|--------|-------------------------------------------|---------|----------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------|--------|
|                                               |   |  **Amount                Is**        |    |  **Ratio                Is**                                                      |   | **Amount****Must                Be**                                                                                    |   | **Ratio****Must                Be**  |   | **Amount****Must                Be**  |   | **Ratio****Must                Be**  |   |
|                                                    |   | **(Dollars                in thousands)** |    |
| **As                of December 31, 2007:**             |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |
| Total                Capital (to Risk Weighted Assets)  |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   | $                                         | 224,873 |                                                                                   |   | 10.79                                                                                                                        | %      | $ | ≥                166,720 |   |   | ≥                8.00 | % |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 224,137 |                                                                                   |   | 10.76                                                                                                                        |   |   | ≥                166,719 |   |   | ≥                8.00 |   |   | ≥                208,399 |   |   | ≥                10.00 | % |
| Tier                1 Capital (to Risk Weighted Assets) |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   |                                      | 198,793 |                                                                                   |   | 9.54                                                                                                                         |   |   | ≥                83,360 |   |   | ≥                4.00 |   |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 198,057 |                                                                                   |   | 9.50                                                                                                                         |   |   | ≥                83,360 |   |   | ≥                4.00 |   |   | ≥                125,039 |   |   | ≥                6.00 |   |
| Leverage                (to average assets)             |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   |                                      | 198,793 |                                                                                   |   | 7.55                                                                                                                         |   |   | ≥                105,308 |   |   | ≥                4.00 |   |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 198,057 |                                                                                   |   | 7.52                                                                                                                         |   |   | ≥                105,282 |   |   | ≥                4.00 |   |   | ≥                131,603 |   |   | ≥                5.00 |   |
| **As                of December 31, 2006:**             |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                Capital (to Risk Weighted Assets)  |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   | $                                         | 216,673 |                                                                                   |   | 11.25                                                                                                                        | %      | $ | ≥                154,038 |   |   | ≥                8.00 | % |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 198,179 |                                                                                   |   | 10.29                                                                                                                        |   |   | ≥                154,045 |   |   | ≥                8.00 |   |   | ≥                192,556 |   |   | ≥                10.00 | % |
| Tier                1 Capital (to Risk Weighted Assets) |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   |                                      | 197,366 |                                                                                   |   | 10.25                                                                                                                        |   |   | ≥                77,019 |   |   | ≥                4.00 |   |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 178,871 |                                                                                   |   | 9.29                                                                                                                         |   |   | ≥                77,023 |   |   | ≥                4.00 |   |   | ≥                115,534 |   |   | ≥                6.00 |   |
| Leverage                (to average assets)             |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   |                                      | 197,366 |                                                                                   |   | 7.92                                                                                                                         |   |   | ≥                99,679 |   |   | ≥                4.00 |   |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 178,871 |                                                                                   |   | 7.18                                                                                                                         |   |   | ≥                99,637 |   |   | ≥                4.00 |   |   | ≥                124,546 |   |   | ≥                5.00 |   |
| **As                of December 31, 2005:**             |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                Capital (to Risk Weighted Assets)  |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   | $                                         | 238,570 |                                                                                   |   | 13.49                                                                                                                        | %      | $ | ≥                141,479 |   |   | ≥                8.00 | % |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 190,070 |                                                                                   |   | 10.72                                                                                                                        |   |   | ≥                141,836 |   |   | ≥                8.00 |   |   | ≥                177,295 |   |   | ≥                10.00 | % |
| Tier                1 Capital (to Risk Weighted Assets) |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   |                                      | 220,157 |                                                                                   |   | 12.45                                                                                                                        |   |   | ≥                70,740 |   |   | ≥                4.00 |   |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 151,657 |                                                                                   |   | 8.55                                                                                                                         |   |   | ≥                70,918 |   |   | ≥                4.00 |   |   | ≥                106,377 |   |   | ≥                6.00 |   |
| Leverage                (to average assets)             |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EuroBancshares,                Inc                      |   |                                      | 220,157 |                                                                                   |   | 9.35                                                                                                                         |   |   | ≥                94,199 |   |   | ≥                4.00 |   |   | N/A |   |   |   |   |
| Eurobank                                                |   |                                      | 151,657 |                                                                                   |   | 6.44                                                                                                                         |   |   | ≥                94,172 |   |   | ≥                4.00 |   |   | ≥                117,714 |   |   | ≥                5.00 |   |
|                                                    |   |                                      |    |                                                                                   |   |                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |

***Liquidity      Management***

----

----

**Impact      of Inflation and Changing Prices **

***Quantitative      and Qualitative Disclosure About Market Risk***

*“Note      15 - Derivative Financial Instruments”*

----

|                                          |   | **Change                in Future****Net                Interest Income Gradual****Raising                Rate Scenario - Year 1** |   |
|-----------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                          |   | **At                December 31, 2007**                                                                                       |   |
| **Change                in Interest Rates**   |   | **Dollar****Change**                                                                                                               |   | **Percentage                Change** |   |
|                                          |   | **(Dollars                in thousands)**                                                                                          |   |
| +200                basis points over year 1  |   | $                                                                                                                                  | 292    |   |   | 0.39 | % |
| +100                basis points over year 1  |   |                                                                                                                               | 503    |   |   | 0.68 |   |
| -                100 basis points over year 1 |   |                                                                                                                               | (609   | ) |   | (0.82 | ) |
| -                200 basis points over year 1 |   |                                                                                                                               | (2,059 | ) |   | (2.77 | ) |

|                                          |   | **Change                in Future****Net                Interest Income Rate****Shock                Scenario - Year 2** |   |
|-----------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|
|                                          |   | **At                December 31, 2007**                                                                             |   |
| **Change                in Interest Rates**   |   | **Dollar****Change**                                                                                                     |   | **Percentage                Change** |   |
|                                          |   | **(Dollars                in thousands)**                                                                                |   |
| +200                basis points over year 2  |   | $                                                                                                                        | 1,382  |   |   | 1.86 | % |
| +100                basis points over year 2  |   |                                                                                                                     | 3,072  |   |   | 4.13 |   |
| -                100 basis points over year 2 |   |                                                                                                                     | 4,640  |   |   | 6.24 |   |
| -                200 basis points over year 2 |   |                                                                                                                     | 744    |   |   | 1.00 |   |

***Aggregate      Contractual Obligations***

|                                             |   | **As                of December 31, 2007**         |    |
|--------------------------------------------------|--------|---------------------------------------------------------|---------|
|                                             |   | **Less                than****One                Year** |    | **Over                One Year to****Three                Years** |   | **Over                Three Years****to                Five Years** |   |  **Over                Five Years** |   |
|                                             |   | **(In                thousands)**                       |    |
| FHLB                advances                     |   | $                                                       | 30,000  |   | $ | — |   | $ | — |   | $ | 454 |   |
| Notes                payable to statutory trusts |   |                                                    | — |   |   | — |   |   | — |   |   | 20,619 |   |
| Operating                leases                  |   |                                                    | 1,742   |   |   | 3,138 |   |   | 2,779 |   |   | 16,145 |   |
| Total                                            |   | $                                                       | 31,742  |   | $ | 3,138 |   | $ | 2,779 |   | $ | 37,218 |   |

----

***Off-Balance      Sheet Arrangements***

*“Note      26 — Financial Instruments with Off-Balance-Sheet Risk” *

***Recent      Accounting Pronouncements***

*“Note      2(z) - Recently Issued Accounting Standards”*

**ITEM      7A. Quantitative and Qualitative Disclosures About Market      Risk.**

*“Management’s      Discussion and Analysis of Financial Condition and Results of      Operations”*

**ITEM      8. **
**Financial      Statements and Supplementary Data.**

***Quarterly      Selected Financial Data (Unaudited)***

|                                                 |   | **Year                  ended December 31, 2007** |       |
|------------------------------------------------------|--------|---------------------------------------------------|------------|
|                                                 |   | **Fourth**                                        |       | **Third** |   | **Second**  |   | **First **  |   |
|                                                 |   | **quarter**                                       |       | **quarter** |   | **quarter** |   | **quarter** |   |
| Interest                  income                     |   | $                                                 | 44,327,194 |   | $ | 43,734,653 |   | $ | 42,949,603 |   | $ | 42,313,742 |   |
| Interest                  exp ense                   |   |                                              | 28,084,689 |   |   | 26,624,695 |   |   | 25,507,208 |   |   | 25,253,744 |   |
| Net                  interest income                 |   |                                              | 16,242,505 |   |   | 17,109,958 |   |   | 17,442,395 |   |   | 17,059,998 |   |
| Provision                  for loan and lease losses |   |                                              | 6,881,000  |   |   | 9,594,000 |   |   | 3,594,000 |   |   | 5,279,000 |   |
| Net                  interest income                 |   |                                              |       |   |   |   |   |   |   |   |   |   |   |
| after                  provision                     |   |                                              |       |   |   |   |   |   |   |   |   |   |   |
| for                  loan and lease losses           |   |                                              | 9,361,505  |   |   | 7,515,958 |   |   | 13,848,395 |   |   | 11,780,998 |   |
| Total                  other income                  |   |                                              | 2,410,272  |   |   | 2,212,540 |   |   | 2,132,675 |   |   | 1,922,710 |   |
| Total                  other exp enses               |   |                                              | 11,488,227 |   |   | 12,341,740 |   |   | 12,265,054 |   |   | 12,129,823 |   |
| Income                  before                       |   |                                              |       |   |   |   |   |   |   |   |   |   |   |
| income                  taxes                        |   |                                              | 283,550    |   |   | (2,613,242 | ) |   | 3,716,016 |   |   | 1,573,885 |   |
| Income                  (benefit) tax                |   |                                              | (218,428   | ) |   | (1,378,559 | ) |   | 1,088,265 |   |   | 259,848 |   |
| Net                  income (loss)                   |   | $                                                 | 501,978    |   | $ | (1,234,683 | ) | $ | 2,627,751 |   | $ | 1,314,037 |   |
| Earnings                  (loss) per share:          |   |                                              |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                                |   | $                                                 | 0.02       |   | $ | (0.07 | ) | $ | 0.13 |   | $ | 0.06 |   |
| Diluted                                              |   | $                                                 | 0.02       |   | $ | (0.07 | ) | $ | 0.12 |   | $ | 0.06 |   |

----

|                                                 |   |  **Year                  ended December 31, 2006** |       |
|------------------------------------------------------|--------|---------------------------------------------------------|------------|
|                                                 |   | **Fourth**                                              |       | **Third** |   | **Second** |   | **First** |   |
|                                                 |   | **quarter**                                             |       | **quarter** |   | **quarter** |   | **quarter** |   |
| Interest                  income                     |   | $                                                       | 42,699,853 |   | $ | 41,895,851 |   | $ | 39,767,141 |   | $ | 37,782,974 |   |
| Interest                  expense                    |   |                                                    | 26,898,186 |   |   | 25,315,546 |   |   | 22,750,837 |   |   | 20,398,777 |   |
| Net                  interest income                 |   |                                                    | 15,801,667 |   |   | 16,580,305 |   |   | 17,016,304 |   |   | 17,384,197 |   |
| Provision                  for loan and lease losses |   |                                                    | 5,274,000  |   |   | 4,849,000 |   |   | 3,390,000 |   |   | 3,390,000 |   |
| Net                  interest income                 |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| after                  provision                     |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| for                  loan and lease losses           |   |                                                    | 10,527,667 |   |   | 11,731,305 |   |   | 13,626,304 |   |   | 13,994,197 |   |
| Total                  other income                  |   |                                                    | 1,109,307  |   |   | 1,778,375 |   |   | 2,546,822 |   |   | 2,366,049 |   |
| Total                  other expenses                |   |                                                    | 10,280,554 |   |   | 11,476,456 |   |   | 10,506,820 |   |   | 11,058,573 |   |
| Income                  before                       |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| income                  taxes                        |   |                                                    | 1,356,420  |   |   | 2,033,224 |   |   | 5,666,306 |   |   | 5,301,673 |   |
| Income                  tax                          |   |                                                    | 1,347,299  |   |   | 514,732 |   |   | 2,386,467 |   |   | 2,035,487 |   |
| Net                  income                          |   | $                                                       | 9,121      |   | $ | 1,518,492 |   | $ | 3,279,839 |   | $ | 3,266,186 |   |
|                                                 |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  earnings per share:          |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                                |   | $                                                       | (0.01      | ) | $ | 0.07 |   | $ | 0.16 |   | $ | 0.16 |   |
| Diluted                                              |   | $                                                       | (0.01      | ) | $ | 0.07 |   | $ | 0.16 |   | $ | 0.15 |   |

|                                                 |   |  **Year                  ended December 31, 2005** |       |
|------------------------------------------------------|--------|---------------------------------------------------------|------------|
|                                                 |   | **Fourth**                                              |       | **Third** |   | **S                  econd** |   | **First** |   |
|                                                 |   | **quarter**                                             |       | **quarter** |   | **quarter** |   | **quarter** |   |
| Interest                  income                     |   | $                                                       | 36,832,404 |   | $ | 34,713,785 |   | $ | 31,889,460 |   | $ | 29,796,832 |   |
| Interest                  expense                    |   |                                                    | 19,143,116 |   |   | 17,622,676 |   |   | 14,684,896 |   |   | 13,485,061 |   |
| Net                  interest income                 |   |                                                    | 17,689,288 |   |   | 17,091,109 |   |   | 17,204,564 |   |   | 16,311,771 |   |
| Provision                  for loan and lease losses |   |                                                    | 6,435,000  |   |   | 3,015,000 |   |   | 2,075,000 |   |   | 1,250,000 |   |
| Net                  interest income                 |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| after                  provision                     |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| for                  loan and lease losses           |   |                                                    | 11,254,288 |   |   | 14,076,109 |   |   | 15,129,564 |   |   | 15,061,771 |   |
| Total                  other income                  |   |                                                    | 1,794,212  |   |   | 2,467,971 |   |   | 2,566,147 |   |   | 900,802 |   |
| Total                  other expenses                |   |                                                    | 10,174,718 |   |   | 9,329,967 |   |   | 9,274,042 |   |   | 8,864,546 |   |
| Income                  before                       |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| income                  taxes                        |   |                                                    | 2,873,782  |   |   | 7,214,113 |   |   | 8,421,669 |   |   | 7,098,027 |   |
| Income                  tax                          |   |                                                    | 1,200,410  |   |   | 2,417,003 |   |   | 3,127,004 |   |   | 2,332,811 |   |
| Net                  income                          |   | $                                                       | 1,673,372  |   | $ | 4,797,110 |   | $ | 5,294,665 |   | $ | 4,765,216 |   |
|                                                 |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per share:                 |   |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                                |   | $                                                       | 0.08       |   | $ | 0.24 |   | $ | 0.26 |   | $ | 0.23 |   |
| Diluted                                              |   | $                                                       | 0.07       |   | $ | 0.23 |   | $ | 0.25 |   | $ | 0.23 |   |

**ITEM      9. **
**Changes      in and Disagreements With Accountants on Accounting and Financial      Disclosure.**

**ITEM      9A. Controls and Procedures.**
** **

*a)      Disclosure Controls and Procedures*

----

*(b)      Management’s Report on Internal Control Over Financial      Reporting*

|   | · | Pertain                to the maintenance of records that, in reasonable detail, accurately                and                fairly reflect the transactions and dispositions of the assets of                EuroBancshares; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide                reasonable assurance that transactions are recorded as necessary                to permit                preparation of financial statements in accordance with generally                accepted                accounting principles, and that receipts and expenditures of                EuroBancshares are being made only in accordance with authorizations                of                management and directors of EuroBancshares;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide                reasonable assurance regarding prevention or timely detection of                unauthorized acquisition, use or disposition of EuroBancshares’ assets                that could have a material effect on the financial                statements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*(c)      Changes in Internal Control Over Financial Reporting*

*(d)      Report of Independent Registered Public Accounting Firm.*

**ITEM      9B. Other Information.**

----

**PART      III**

**ITEM      10. **
**Directors      and Executive Officers of the Registrant.**

**ITEM      11. **
**Executive      Compensation.**

**ITEM      12. **
**Security      Ownership of Certain Beneficial Owners and Management and Related Stockholder      Matters.**

**ITEM      13. **
**Certain      Relationships and Related Transactions.**

**ITEM      14. **
**Principal      Accountant Fees and Services.**

**PART      IV**

**ITEM      15. **
**Exhibits      and Financial Statement Schedules.**

**Financial      Statements**

----

**Financial      Statement Schedules**

**Exhibits**

| **Exhibit                Number** |   | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                               |   | Amended                and Restated Certificate of Incorporation of EuroBancshares, Inc.                (incorporated herein by reference to Exhibit 3.1 to the Registration                Statement on Form S-1 (File No. 333-115510) previously filed by                EuroBancshares, Inc. on May 5, 2004)                                                                                                                                                                                                                                                                                                                                    |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.2                               |   | Amended                and Restated Bylaws of EuroBancshares, Inc. (incorporated herein                by                reference to Exhibit 3.2 to the Registration Statement on Form S-1                (File                No. 333-115510) previously filed by EuroBancshares, Inc. on May 5,                2004)                                                                                                                                                                                                                                                                                                                            |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.3                               |   | Certificate                of Designation of EuroBancshares, Inc. Noncumulative Preferred Stock,                Series A (incorporated herein by reference to Exhibit 3.3 to the                Registration Statement on Form S-1 (File No. 333-115510) previously                filed                by EuroBancshares, Inc. on May 5, 2004)                                                                                                                                                                                                                                                                                               |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.1                               |   | Specimen                stock certificate representing EuroBancshares, Inc. Common Stock                (incorporated herein by reference to Exhibit 4.1 to the Registration                Statement on Form S-1 (File No. 333-115510) previously filed by                EuroBancshares, Inc. on August 2, 2004)                                                                                                                                                                                                                                                                                                                                 |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.2                               |   | Specimen                stock certificate representing EuroBancshares, Inc. Preferred Stock                (incorporated herein by reference to Exhibit 4.2 to the Annual Report                on                Form 10-K (File No. 000-50872) previously filed by EuroBancshares,                Inc. on March 31, 2005                                                                                                                                                                                                                                                                                                               |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.3                               |   | Indenture,                dated as of December 19, 2002, between EuroBancshares, Inc. and U.S.                Bank                National Association (f/k/a State Street Bank & Trust Company of                Connecticut, National Association) (incorporated herein by reference                to                Exhibit 4.5 to the Registration Statement on Form S-1 (File No.                333-115510) previously filed by EuroBancshares, Inc. on May 5,                2004)                                                                                                                                                     |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.4                               |   | Amended                and Restated Declaration of Trust, dated as of December 19, 2002,                by and                among EuroBancshares, Inc. and U.S. Bank National Association (f/k/a                State                Street Bank & Trust Company of Connecticut, National Association), and                Jose Martinez Recondo, Isabella Arrillaga, as Administrators (incorporated                herein by reference to Exhibit 4.6 to the Registration Statement                on Form                S-1 (File No. 333-115510) previously filed by EuroBancshares, Inc.                on May                5, 2004) |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.5                               |   | Guarantee                Agreement, dated as of December 19, 2002, between EuroBancshares,                Inc. and                U.S. Bank National Association (f/k/a State Street Bank & Trust                Company of Connecticut, National Association) (incorporated herein                by                reference to Exhibit 4.7 to the Registration Statement on Form S-1                (File                No. 333-115510) previously filed by EuroBancshares, Inc. on May 5,                2004)                                                                                                                            |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.1†                       |   | EuroBancshares,                Inc. 2002 Stock Option Plan (incorporated herein by reference to                Exhibit                10.1 to the Registration Statement on Form S-1 (File No. 333-115510)                previously filed by EuroBancshares, Inc. on May 5,                2004)                                                                                                                                                                                                                                                                                                                                                  |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.2†                       |   | Form                of EuroBancshares, Inc. Incentive Stock Option Award Agreement                (incorporated herein by reference to Exhibit 10.2 to the Registration                Statement on Form S-1 (File No. 333-115510) previously filed by                EuroBancshares, Inc. on May 5, 2004)                                                                                                                                                                                                                                                                                                                                         |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.3†                       |   | Form                of EuroBancshares, Inc. Non-Qualified Stock Option Award Agreement                (incorporated herein by reference to Exhibit 10.3 to the Registration                Statement on Form S-1 (File No. 333-115510) previously filed by                EuroBancshares, Inc. on May 5,                2004)                                                                                                                                                                                                                                                                                                                      |

----

| **Exhibit                Number** |   | **Description                of Exhibit** |
|-----------------------------------|--------|-------------------------------------------|

| 10.4† |   | 2005                Stock Option Plan for EuroBancshares, Inc., dated May 12, 2005                (incorporated herein by reference to Exhibit 10.1 to the Current                Report on Form 8-K (File No. 000-50872) previously filed by                EuroBancshares, Inc. on June 2, 2005)                                                                                                                          |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.5† |   | Change                in Control Agreement, dated as of March 14, 2007, between EuroBancshares,                Inc., Eurobank and Mr. Rafael Arrillaga-Torréns, Jr. (incorporated herein                by reference to Exhibit 10.3 to the Current Report on Form 8-K (File                No.                000-50872) previously filed by EuroBancshares, Inc. on March 16,                2007)                                       |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.6† |   | Change                in Control Agreement, dated as of March 14, 2007, between EuroBancshares,                Inc., Eurobank and Ms. Yadira R. Mercado (incorporated herein by                reference                to Exhibit 10.4 to the Current Report on Form 8-K (File No. 000-50872)                previously filed by EuroBancshares, Inc. on March 16,                2007)                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.7† |   | Eurobank                Master Trust Retirement Plan Program (incorporated herein by reference                to                Exhibit 10.5 to the Registration Statement on Form S-1 (File No.                333-115510) previously filed by EuroBancshares, Inc. on May 5,                2004)                                                                                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.8† |   | Form                of EuroBancshares, Inc. Restricted Stock Purchase Agreement (incorporated                herein by reference to Exhibit 10.6 to the Registration Statement                on Form                S-1 (File No. 333-115510) previously filed by EuroBancshares, Inc.                on May                5, 2004)                                                                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.9† |   | Agreement                and Plan of Merger, dated as of September 6, 2002, by and among                EuroBancshares, Inc. and Banco Financiero de Puerto Rico (incorporated                herein by reference to Exhibit 10.7 to the Registration Statement                on Form                S-1 (File No. 333-115510) previously filed by EuroBancshares, Inc.                on May                5, 2004)                          |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.10       |   | Agreement                and Plan of Merger, dated as of February 24, 2004, by and among                EuroBancshares, Inc., Eurobank, and The Bank & Trust of Puerto Rico                (incorporated herein by reference to Exhibit 2 to the Registration                Statement on Form S-1 (File No. 333-115510) previously filed by                EuroBancshares, Inc. on May 5, 2004)                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.11       |   | Stipulation                and Consent to the Issuance of a Cease and Desist Order dated as                of March                13, 2007, Eurobank, the Board of Directors of Eurobank and the FDIC                (incorporated by reference to Exhibit 10.1 to the Current Report                on Form                8-K (File No. 000-50872) previously filed by EuroBancshares, Inc.                on March                16, 2007) |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.12       |   | Order                to Cease and Desist Order dated as of March 15, 2007 (incorporated                by                reference to Exhibit 10.2 to the Current Report on Form 8-K (File                No.                000-50872) previously filed by EuroBancshares, Inc. on March 16,                2007)                                                                                                                              |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.13       |   | Master                Servicing Agreement, dated as of August 6, 2007, by and among                EuroBancshares, Inc. and Telefónica Empresas (incorporated by reference to                Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-50872)                previously filed by EuroBancshares, Inc. on November 9,                2007)                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.14       |   | Joint                Account Agreement, dated as of January 2, 2008, by and among Eurobank                and                Oppenheimer & Co., Inc. (incorporated by reference to Exhibit 1.1 to                the Current Report on Form 8-K (File No. 000-50872) previously filed                by                EuroBancshares, Inc. on January 7, 2008)                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 21          |   | List                of Subsidiaries of EuroBancshares, Inc. (incorporated herein by reference                to Exhibit 21 to the Registration Statement on Form S-1 (File No.                333-115510) previously filed by EuroBancshares, Inc. on May 5,                2004)                                                                                                                                                               |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 23.1*       |   | Consent                of Crowe Chizek and Company LLP, independent registered public accounting                firm                                                                                                                                                                                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.1*       |   | Rule                13a-14(a) Certification of Chief Executive                Officer.                                                                                                                                                                                                                                                                                                                                                          |

----

| **Exhibit                Number** |   | **Description                of Exhibit** |
|-----------------------------------|--------|-------------------------------------------|

| 31.2*  |   | Rule                13a-14(a) Certification of Chief Financial Officer.                                                                                                                                        |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                           |
| 32.1*  |   | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002. |
|   |   |                                                                                                                                                                                                           |
| 32.2*  |   | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002. |

----

|                 |                                                                                                                                       |                                                     |
|----------------------|--------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|
|                 | EUROBANCSHARES, INC.                                                                                                                       |
|            |                                                                                                                                  |                                                |
| Date: March 13, 2008 | By:                                                                                                                              | /s/ Rafael              Arrillaga-Torréns, Jr. |
|                 | Rafael                Arrillaga Torréns, Jr.Chairman                of the Board, President and ChiefExecutive                Officer |

|                 |                                                                                                                                                                                    |                                                           |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|
| Date: March 13, 2008 | By:                                                                                                                                                                           | /s/ Rafael              Arrillaga-Torréns, Jr.  |
|                 | Rafael                Arrillaga Torréns, Jr.Chairman                of the Board, President and ChiefExecutive                Officer (principal executive                officer) |

|                 |                                                                                                                                                                             |                                                             |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|
| Date: March 13, 2008 | By:                                                                                                                                                                    | /s/ Yadira              R.              Mercado   |
|                 | Yadira                R. MercadoExecutive                Vice President and Chief Financial Officer(principal                financial officer and principal accounting officer) |

|                 |                                                 |                                                           |
|----------------------|------------------------------------------------------|----------------------------------------------------------------|
| Date: March 13, 2008 | By:                                        | /s/ Pedro              Feliciano Benítez   |
|                 | Pedro                Feliciano Benítez Director |

|                 |                                                                   |                                                                  |
|----------------------|------------------------------------------------------------------------|-----------------------------------------------------------------------|
| Date: March 13, 2008 | By:                                                          | /s/ Juan              Ramón Gómez-Cuétara Aguilar |
|                 | Juan                Ramón Gómez-Cuétara AguilarDirector |

|                 |                                                  |                                                             |
|----------------------|-------------------------------------------------------|------------------------------------------------------------------|
| Date: March 13, 2008 | By:                                         | /s/ Antonio              R. Pavía Bibiloni   |
|                 | Antonio                R. Pavía BibiloniDirector |

|                 |                                                           |                                                                      |
|----------------------|----------------------------------------------------------------|---------------------------------------------------------------------------|
| Date: March 13, 2008 | By:                                                  | /s/ Plácido              González Córdova   |
|                 | Plácido                González CórdovaDirector |

|                 |                                                  |                                                                          |
|----------------------|-------------------------------------------------------|-------------------------------------------------------------------------------|
| Date: March 13, 2008 | By:                                         | /s/ Luis              F.              Hernández Santana   |
|                 | Luis                F. Hernández SantanaDirector |

|                 |                                               |                                              |
|----------------------|----------------------------------------------------|---------------------------------------------------|
| Date: March 13, 2008 | By:                                      | /s/ Ricardo              Levy Echeandía |
|                 | Ricardo                Levy EcheandíaDirector |

|                 |                                              |                                                         |
|----------------------|---------------------------------------------------|--------------------------------------------------------------|
| Date: March 13, 2008 | By:                                     | /s/ Jaime              Sifre Rodríguez   |
|                 | Jaime                Sifre RodríguezDirector |

|                 |                                         |                                        |
|----------------------|----------------------------------------------|---------------------------------------------|
| Date: March 13, 2008 | By:                                | /s/ William              Torres Torres |
|                 | William                Torres TorresDirector |

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

**CONSOLIDATED      FINANCIAL STATEMENTS**

| INDEX                                                                                                                                                                                                                         |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                                                                                                                                          |   | PAGE   |   |
|                                                                                                                                                                                                                               |   |   |   |
| CONSOLIDATED                      FINANCIAL STATEMENTS                                                                                                                                                                        |   |   |        |   |
|                                                                                                                                                                                                                          |   |   |   |   |
| REPORT                  OF INDEPENDENT REGISTERED PUBLIC                  ACCOUNTING FIRM                                                                                                                                     |   |   | F-1    |   |
|                                                                                                                                                                                                                          |   |   |   |   |
| CONSOLIDATED                  BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006                                                                                                                                                 |   |   | F-2    |   |
|                                                                                                                                                                                                                          |   |   |   |   |
| CONSOLIDATED                    STATEMENTS OF INCOME FOR EACH OF THE YEARS IN THE                    TWO-YEAR                    PERIOD ENDED DECEMBER 31, 2007                                                               |   |   | F-3    |   |
|                                                                                                                                                                                                                          |   |   |   |   |
| CONSOLIDATED                      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE                      INCOME FOR EACH OF THE YEARS IN THE TWO-YEAR PERIOD ENDED DECEMBER                      31, 2007 |   |   | F-4    |   |
|                                                                                                                                                                                                                          |   |   |   |   |
| CONSOLIDATED                      STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS IN THE TWO-YEAR                      PERIOD ENDED DECEMBER 31, 2007                                                                          |   |   | F-5    |   |
|                                                                                                                                                                                                                          |   |   |   |   |
| NOTES                  TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                                                   |   |   | F-6    |   |

----

**Report      of Independent Registered Public Accounting Firm**

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

|                                                                                              |   |   | **2007**  |   |   | **2006**  |   |
|---------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|----------------|--------|
| **Assets**                                                                                        |   |   |           |   |   |           |   |
| Cash                and due from banks                                                            |   | $      | 15,866,221     |   | $      | 25,527,489     |   |
| Interest                bearing deposits                                                          |   |   | 32,306,909     |   |   | 49,050,368     |   |
| Securities                purchased under agreements to resell                                    |   |   | 19,879,008     |   |   | 51,191,323     |   |
| Investment                securities available for sale                                           |   |   | 707,103,432    |   |   | 535,159,009    |   |
| Investment                securities held to maturity                                             |   |   | 30,845,218     |   |   | 38,432,820     |   |
| Other                investments                                                                  |   |   | 13,354,300     |   |   | 4,329,200      |   |
| Loans                held for sale                                                                |   |   | 1,359,494      |   |   | 879,000        |   |
| Loans,                net of allowance for loan and lease losses                                  |   |   |           |   |   |           |   |
| of                $28,137,104 in 2007 and $18,936,841 in 2006                                     |   |   | 1,829,082,008  |   |   | 1,731,022,290  |   |
| Accrued                interest receivable                                                        |   |   | 18,136,489     |   |   | 15,760,852     |   |
| Customers’                liability on acceptances                                          |   |   | 430,767        |   |   | 1,561,736      |   |
| Premises                and equipment, net                                                        |   |   | 33,083,169     |   |   | 14,889,456     |   |
| Other                assets                                                                       |   |   | 49,951,898     |   |   | 33,116,690     |   |
| Total                assets                                                                       |   | $      | 2,751,398,913  |   | $      | 2,500,920,233  |   |
| **Liabilities                and Stockholders’ Equity**                                     |   |   |           |   |   |           |   |
| Deposits:                                                                                         |   |   |           |   |   |           |   |
| Noninterest                bearing                                                                |   | $      | 120,082,912    |   | $      | 140,321,373    |   |
| Interest                bearing                                                                   |   |   | 1,872,963,402  |   |   | 1,765,034,834  |   |
| Total                deposits                                                                     |   |   | 1,993,046,314  |   |   | 1,905,356,207  |   |
| Securities                sold under agreements to repurchase                                     |   |   | 496,419,250    |   |   | 365,664,250    |   |
| Acceptances                outstanding                                                            |   |   | 430,767        |   |   | 1,561,736      |   |
| Advances                from Federal Home Loan Bank                                               |   |   | 30,453,926     |   |   | 8,707,420      |   |
| Note                payable to Statutory Trust                                                    |   |   | 20,619,000     |   |   | 20,619,000     |   |
| Accrued                interest payable                                                           |   |   | 17,371,698     |   |   | 18,047,074     |   |
| Accrued                expenses and other liabilities                                             |   |   | 13,139,809     |   |   | 11,086,705     |   |
|                                                                                              |   |   | 2,571,480,764  |   |   | 2,331,042,392  |   |
| Stockholders’                equity:                                                        |   |   |           |   |   |           |   |
| Preferred                stock:                                                                   |   |   |           |   |   |           |   |
| Preferred                stock Series A, $0.01 par value. Authorized 20,000,000                   |   |   |           |   |   |           |   |
| shares;                issued and outstanding 430,537 in 2007 and 2006                            |   |   | 4,305          |   |   | 4,305          |   |
| Capital                paid in excess of par value                                                |   |   | 10,759,120     |   |   | 10,759,120     |   |
| Common                stock:                                                                      |   |   |           |   |   |           |   |
| Common                stock, $0.01 par value. Authorized 150,000,000                              |   |   |           |   |   |           |   |
| shares;                issued: 20,032,398 shares in 2007 and 19,777,536 shares in                 |   |   |           |   |   |           |   |
| 2006;                outstanding: 19,093,315 shares in 2007 and 19,123,821 in                2006 |   |   | 200,324        |   |   | 197,775        |   |
| Capital                paid in excess of par value                                                |   |   | 107,936,531    |   |   | 106,539,383    |   |
| Retained                earnings:                                                                 |   |   |           |   |   |           |   |
| Reserve                fund                                                                       |   |   | 8,029,106      |   |   | 7,553,381      |   |
| Undivided                profits                                                                  |   |   | 61,789,048     |   |   | 59,800,495     |   |
| Treasury                stock, 939,083 shares in 2007                                             |   |   |           |   |   |           |   |
| and                653,715 shares in 2006, at cost                                                |   |   | (9,910,458     | )      |   | (7,410,711     | )      |
| Accumulated                other comprehensive gain (loss)                                        |   |   | 1,110,173      |   |   | (7,565,907     | )      |
| Total                stockholders’ equity                                                   |   |   | 179,918,149    |   |   | 169,877,841    |   |
| Total                liabilities and stockholders’ equity                                   |   | $      | 2,751,398,913  |   | $      | 2,500,920,233  |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                                                                              |   |  **2007** |        | **2006** |   |
|---------------------------------------------------------------------------------------------------|--------|----------------|-------------|----------|--------|
| Interest                  income:                                                                 |   |      |        |     |   |
| Loans,                  including fees                                                            |   | $              | 143,360,450 |     | $      | 130,003,150 |   |
| Investment                  securities:                                                           |   |           |        |     |   |   |   |
| Taxable                                                                                           |   |           | 12,152      |     |   | 371,546 |   |
| Exempt                                                                                            |   |           | 26,946,714  |     |   | 29,474,276 |   |
| Interest-bearing                  deposits, securities purchased                                  |   |           |        |     |   |   |   |
| under                  agreements to resell, and other                                            |   |           | 3,005,875   |     |   | 2,297,448 |   |
| Total                  interest income                                                            |   |           | 173,325,191 |     |   | 162,146,420 |   |
| Interest                  expense:                                                                |   |           |        |     |   |   |   |
| Deposits                                                                                          |   |           | 84,675,999  |     |   | 68,545,152 |   |
| Securities                  sold under agreements to repurchase,                                  |   |           |        |     |   |   |   |
| notes                  payable, and other                                                         |   |           | 20,794,338  |     |   | 26,818,196 |   |
| Total                  interest expense                                                           |   |           | 105,470,337 |     |   | 95,363,348 |   |
| Net                  interest income                                                              |   |           | 67,854,854  |     |   | 66,783,072 |   |
| Provision                  for loan and lease losses                                              |   |           | 25,348,000  |     |   | 16,903,000 |   |
| Net                  interest income after provision for loan                                     |   |           |        |     |   |   |   |
| and                  lease losses                                                                 |   |           | 42,506,854  |     |   | 49,880,072 |   |
| Noninterest                  income:                                                              |   |           |        |     |   |   |   |
| Service                  charges - fees and other                                                 |   |           | 9,584,533   |     |   | 8,475,600 |   |
| Net                  loss on sale of securities                                                   |   |           | —     |     |   | (1,091,627 | ) |
| Net                  (loss) gain on sale of other real estate owned,                  repossessed |   |           |        |     |   |   |   |
| assets,                  and on disposition of other assets                                       |   |           | (1,285,958  | )        |   | 16,092 |   |
| Net                  gain on sale of loans                                                        |   |           | 379,622     |     |   | 400,489 |   |
| Total                  noninterest income                                                         |   |           | 8,678,197   |     |   | 7,800,554 |   |
| Noninterest                  expense:                                                             |   |           |        |     |   |   |   |
| Salaries                  and employee benefits                                                   |   |           | 19,890,373  |     |   | 17,506,822 |   |
| Occupancy                                                                                         |   |           | 7,827,087   |     |   | 6,999,087 |   |
| Furniture,                  fixtures and equipment                                                |   |           | 3,071,901   |     |   | 2,565,949 |   |
| Professional                  services                                                            |   |           | 4,496,283   |     |   | 4,104,442 |   |
| Municipal                  and other taxes                                                        |   |           | 1,836,783   |     |   | 1,657,111 |   |
| Commissions                  and service fees                                                     |   |           | 1,444,949   |     |   | 1,324,487 |   |
| Office                  supplies                                                                  |   |           | 1,375,022   |     |   | 1,393,948 |   |
| Insurance                                                                                         |   |           | 1,865,353   |     |   | 1,052,922 |   |
| Promotional                                                                                       |   |           | 1,492,240   |     |   | 1,199,574 |   |
| Other                                                                                             |   |           | 4,924,851   |     |   | 5,581,389 |   |
| Total                  noninterest expense                                                        |   |           | 48,224,842  |     |   | 43,385,731 |   |
| Income                  before income taxes                                                       |   |           | 2,960,209   |     |   | 14,294,895 |   |
| Provision                  for income taxes                                                       |   |           | (248,874    | )        |   | 6,283,010 |   |
| Net                  income                                                                       |   | $              | 3,209,083   |     | $      | 8,011,885 |   |
|                                                                                              |   |           |        |     |   |   |   |
| Earnings                  per share:                                                              |   |           |        |     |   |   |   |
| Basic:                                                                                            |   | $              | 0.13        |     | $      | 0.38 |   |
|                                                                                              |   |           |        |     |   |   |   |
| Diluted:                                                                                          |   | $              | 0.13        |     | $      | 0.37 |   |

----

**EUROBANCSHARES,          INC. AND SUBSIDIARIES**

|                                                                                                     |   | **2007** |        | **2006** |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|-------------|----------|--------|
| Preferred                  stock:                                                                        |   |     |        |     |   |
| Balance                  at beginning of period                                                          |   | $        | 4,305       |     | $      | 4,305 |   |
| Issuance                  of preferred stock                                                             |   |     | —     |     |   | — |   |
| Balance                  at end of period                                                                |   |     | 4,305       |     |   | 4,305 |   |
| Capital                  paid in excess of par value - preferred stock:                                  |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | 10,759,120  |     |   | 10,759,120 |   |
| Issuance                  of preferred stock                                                             |   |     | —     |     |   | — |   |
| Balance                  at end of period                                                                |   |     | 10,759,120  |     |   | 10,759,120 |   |
| Common                  stock:                                                                           |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | 197,775     |     |   | 195,641 |   |
| Issuance                  of common stock and exercised stock options                                    |   |     | 2,549       |     |   | 2,134 |   |
| Balance                  at end of period                                                                |   |     | 200,324     |     |   | 197,775 |   |
| Capital                  paid in excess of par value - common stock:                                     |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | 106,539,383 |     |   | 105,508,402 |   |
| Issuance                  of common stock and exercised stock options                                    |   |     | 1,146,330   |     |   | 877,630 |   |
| Stock                  based compensation                                                                |   |     | 250,818     |     |   | 153,351 |   |
| Balance                  at end of period                                                                |   |     | 107,936,531 |     |   | 106,539,383 |   |
| Reserve                  fund:                                                                           |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | 7,553,381   |     |   | 6,528,519 |   |
| Transfer                  from undivided profits                                                         |   |     | 475,725     |     |   | 1,024,862 |   |
| Balance                  at end of period                                                                |   |     | 8,029,106   |     |   | 7,553,381 |   |
| Undivided                  profits:                                                                      |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | 59,800,495  |     |   | 54,348,750 |   |
| Cumulative                  effect on initial adoption of SAB 108                                        |   |     | —     |     |   | (790,473 | ) |
| Net                  income                                                                              |   |     | 3,209,083   |     |   | 8,011,885 |   |
| Preferred                  stock dividends ($1.73 in 2007 and 2006 per share)                            |   |     | (744,805    | )        |   | (744,805 | ) |
| Transfer                  to reserve fund                                                                |   |     | (475,725    | )        |   | (1,024,862 | ) |
| Balance                  at end of period                                                                |   |     | 61,789,048  |     |   | 59,800,495 |   |
| Treasury                  stock                                                                          |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | (7,410,711  | )        |   | (1,946,052 | ) |
| Purchase                  of common stock                                                                |   |     | (2,499,747  | )        |   | (5,464,659 | ) |
| Balance                  at end of period                                                                |   |     | (9,910,458  | )        |   | (7,410,711 | ) |
| Accumulated                  other comprehensive income (loss), net of taxes:                            |   |     |        |     |   |   |   |
| Balance                  at beginning of period                                                          |   |     | (7,565,907  | )        |   | (10,431,650 | ) |
| Unrealized                  net gain (loss) on investment securities available for                  sale |   |     | 8,676,080   |     |   | 2,865,743 |   |
| Balance                  at end of period                                                                |   |     | 1,110,173   |     |   | (7,565,907 | ) |
| Total                  stockholders’ equity                                                        |   | $        | 179,918,149 |     | $      | 169,877,841 |   |
|                                                                                                     |   |     |        |     |   |   |   |
| Comprehensive                  income:                                                                   |   |     |        |     |   |   |   |
| Net                  income                                                                              |   | $        | 3,209,083   |     | $      | 8,011,885 |   |
| Other                  comprehensive income, net of tax:                                                 |   |     |        |     |   |   |   |
| Unrealized                  net gain on investment securities available for sale                         |   |     | 8,676,080   |     |   | 1,774,116 |   |
| Reclassification                  adjustment for realized loss included in net income                    |   |     | —     |     |   | 1,091,627 |   |
| Unrealized                  net gain on investments securities                                           |   |     |        |     |   |   |   |
| available                  for sale                                                                      |   |     | 8,676,080   |     |   | 2,865,743 |   |
| Comprehensive                  income                                                                    |   | $        | 11,885,163  |     | $      | 10,877,628 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

**Consolidated        Statements of Cash Flows**

**Years        ended December 31, 2007 and 2006**

|                                                                                                                                    |   | **2007** |         | **2006** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------------|----------|--------|
| Cash                flows from operating activities:                                                                                    |   |     |         |     |   |
| Net                income                                                                                                               |   | $        | 3,209,083    |     | $      | 8,011,885 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:                         |   |     |         |     |   |   |   |
| Depreciation                and amortization                                                                                            |   |     | 3,020,286    |     |   | 3,762,194 |   |
| Provision                for loan and lease losses                                                                                      |   |     | 25,348,000   |     |   | 16,903,000 |   |
| Stock-based                employee compensation                                                                                        |   |     | 250,817      |     |   | 153,351 |   |
| Deferred                tax and purchase of tax credits (benefit) provision                                                             |   |     | (4,636,938   | )        |   | (1,059,470 | ) |
| Net                loss on sale of securities                                                                                           |   |     | —      |     |   | 1,091,627 |   |
| Net                gain on sale of loans                                                                                                |   |     | (379,622     | )        |   | (400,489 | ) |
| Net                loss (gain) on sale of repossessed assets and on disposition of other                assets                          |   |     | 1,285,958    |     |   | (16,092 | ) |
| Net                amortization of premiums and accretion of discount on investment                securities                           |   |     | 5,197,465    |     |   | 2,556,010 |   |
| Valuation                expense of repossesed assets                                                                                   |   |     | 1,349,112    |     |   | 1,295,771 |   |
| Decrease                in deferred loan costs                                                                                          |   |     | 2,513,927    |     |   | 2,561,702 |   |
| Net                effect of adjustment by SAB 108                                                                                      |   |     | —      |     |   | (790,473 | ) |
| Write-off                notes payable to statutory trust placement costs                                                               |   |     | —      |     |   | 625,842 |   |
| Origination                of loans held for sale                                                                                       |   |     | (17,003,663  | )        |   | (13,836,775 | ) |
| Proceeds                from sale of loans held for sale                                                                                |   |     | 17,387,492   |     |   | 14,237,263 |   |
| Increase                in accrued interest receivable                                                                                  |   |     | (2,375,637   | )        |   | (781,068 | ) |
| Net                decrease (increase) in other assets                                                                                  |   |     | (1,941,420   | )        |   | 8,354,522 |   |
| Increase                in accrued interest payable, accrued expenses, and other                liabilities                             |   |     | 1,377,672    |     |   | 13,584,441 |   |
| Net                cash provided by operating activities                                                                                |   |     | 34,602,533   |     |   | 56,253,241 |   |
|                                                                                                                                    |   |     |         |     |   |   |   |
| Cash                flows from investing actitivies:                                                                                    |   |     |         |     |   |   |   |
| Net                decrease in securities purchased under agreements to                resell                                           |   |     | 31,312,315   |     |   | 2,941,350 |   |
| Net                decrease (increase) in interest-bearing deposits                                                                     |   |     | 16,743,459   |     |   | (28,277,197 | ) |
| Proceeds                from sale of investment securities available for sale                                                           |   |     | —      |     |   | 48,992,897 |   |
| Purchases                of investment securities available for sale                                                                    |   |     | (318,188,058 | )        |   | (89,194,907 | ) |
| Proceeds                from principal payments and maturities of investment securities available                for sale               |   |     | 149,866,240  |     |   | 131,490,329 |   |
| Proceeds                from principal payments, maturities, and calls of investment securities                held to maturity         |   |     | 7,443,335    |     |   | 3,887,363 |   |
| Purchase                of Federal Home Loan Bank Stocks                                                                                |   |     | (14,802,500  | )        |   | (1,175,200 | ) |
| Proceeds                    from principal payments and maturities of Federal Home Loan Bank                    Stocks                  |   |     | 5,775,900    |     |   | 6,727,000 |   |
| Net                increase in loans                                                                                                    |   |     | (140,543,978 | )        |   | (207,802,256 | ) |
| Proceeds                from sale of other assets                                                                                       |   |     | 782,944      |     |   | 761,740 |   |
| Capital                expenditures                                                                                                     |   |     | (20,749,454  | )        |   | (6,020,879 | ) |
| Net                cash used in investing activities                                                                                    |   |     | (282,359,797 | )        |   | (137,669,760 | ) |
|                                                                                                                                    |   |     |         |     |   |   |   |
| Cash                flows from financing activities:                                                                                    |   |     |         |     |   |   |   |
| Net                increase in deposits                                                                                                 |   |     | 87,690,107   |     |   | 171,228,061 |   |
| Increase                (decrease) in securities sold under agreements to repurchase and                other                borrowings |   |     | 130,755,000  |     |   | (54,895,675 | ) |
| Net                increase (decrease) in Federal Home Loan Bank Advances                                                               |   |     | 21,746,506   |     |   | (51,206 | ) |
| Repayment                of note payable to trust                                                                                       |   |     | —      |     |   | (25,000,000 | ) |
| Dividends                paid to preferred stockholders                                                                                 |   |     | (744,750     | )        |   | (745,762 | ) |
| Net                proceeds from issuance of common stock                                                                               |   |     | 1,148,880    |     |   | 879,764 |   |
| Purchase                of common stock                                                                                                 |   |     | (2,499,747   | )        |   | (5,464,659 | ) |
| Net                cash provided by financing activities                                                                                |   |     | 238,095,996  |     |   | 85,950,523 |   |
|                                                                                                                                    |   |     |         |     |   |   |   |
| Net                (decrease) increase in cash and due from banks                                                                       |   |     | (9,661,268   | )        |   | 4,534,004 |   |
| Cash                and cash due from banks beginning balance                                                                           |   |     | 25,527,489   |     |   | 20,993,485 |   |
| Cash                and due from banks ending balance                                                                                   |   | $        | 15,866,221   |     | $      | 25,527,489 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(1)** | **Organization** |
|---------|------------------|

| **(2)** | **Summary                of Significant Accounting                Policies** |
|---------|------------------------------------------------------------------------------|

|  | ***(a)*** | ***Principles                    of                    Consolidation*** |
|--|-----------|-------------------------------------------------------------------------|

|  | ***(b)*** | ***Due                from banks and Cash Flow*** |
|--|-----------|--------------------------------------------------------|

|  | ***(c)*** | ***Securities                Purchased under Agreements to                Resell*** |
|--|-----------|-------------------------------------------------------------------------------------|

|  | ***(d)*** | ***Investment                Securities Available for                Sale*** |
|--|-----------|------------------------------------------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(e)*** | ***Investment                Securities Held to                Maturity*** |
|--|-----------|----------------------------------------------------------------------------|

|  | ***(f)*** | ***Other                Investments*** |
|--|-----------|----------------------------------------|

|  | ***(g)*** | ***Loans                Held for Sale*** |
|--|-----------|------------------------------------------|

|  | ***(h)*** | ***Loans                and Allowance for Loan and Lease                Losses*** |
|--|-----------|-----------------------------------------------------------------------------------|

*Accounting      for Contingencies*
*Accounting      by Creditors for Impairment of a Loan*
*Accounting      by Creditors for Impairment of a Loan - Income Recognition and      Disclosures*

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(i)*** | ***Lease                Financing*** |
|--|-----------|--------------------------------------|

*Accounting      for Leases*

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(j)*** | ***Transfer                of Financial Assets*** |
|--|-----------|---------------------------------------------------|

|  | · | Derecognizes                all assets sold; |
|--|--------|----------------------------------------------|

|  | · | Recognizes                all assets obtained and liabilities incurred in consideration as                proceeds                of the sale; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Initially                measures, at fair value, assets obtained and liabilities incurred                in a                sale; and |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Recognizes                in earnings any gain or loss on the                sale. |
|--|--------|------------------------------------------------------------------------------------|

|  | ***(k)*** | ***Premises                and Equipment*** |
|--|-----------|---------------------------------------------|

|  | ***(l)*** | ***Other                Real Estate and Repossessed                Assets*** |
|--|-----------|------------------------------------------------------------------------------|

|  | ***(m)*** | ***Trust                Services*** |
|--|-----------|-------------------------------------|

|  | ***(n)*** | ***Securities                Sold under Agreements to                Repurchase*** |
|--|-----------|------------------------------------------------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(o)*** | ***Income                Taxes*** |
|--|-----------|-----------------------------------|

|  | ***(p)*** | ***Reserve                Fund*** |
|--|-----------|-----------------------------------|

|  | ***(q)*** | ***Interest                Income*** |
|--|-----------|--------------------------------------|

|  | ***(r)*** | ***Loan                Origination and Commitment                Fees*** |
|--|-----------|--------------------------------------------------------------------------|

|  | ***(s)*** | ***Earnings                Per Share*** |
|--|-----------|-----------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(t)*** | ***Supplementary                Cash Flow Information*** |
|--|-----------|----------------------------------------------------------|

|                                             |   | **2007** |        | **2006** |   |
|--------------------------------------------------|--------|----------|-------------|----------|--------|
| Cash                  paid during the years for: |   |     |        |     |   |
| Interest                                         |   | $        | 106,146,000 |     | $      | 86,580,000 |   |
| Income                  taxes                    |   |     | 4,335,000   |     |   | 4,067,000 |   |
| Noncash                  transactions:           |   |     |        |     |   |   |   |
| Repossessed                  assets acquired     |   |     |        |     |   |   |   |
| through                  foreclosure of loans    |   | $        | 36,366,000  |     | $      | 48,650,000 |   |
| Financing                  of repossessed assets |   |     | 25,186,000  |     |   | 29,460,000 |   |

|  | ***(u)*** | ***Stock                Option Plan*** |
|--|-----------|----------------------------------------|

|  | ***(v)*** | ***Comprehensive                Income*** |
|--|-----------|-------------------------------------------|

|  | ***(w)*** | ***Impairment                of Long-Lived Assets*** |
|--|-----------|------------------------------------------------------|

|  | ***(x)*** | ***Derivative                Instruments and Hedging                Activities*** |
|--|-----------|-----------------------------------------------------------------------------------|

*Accounting      for Derivative Instruments and Certain Hedging Activities*

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(y)*** | ***Business                Segments*** |
|--|-----------|----------------------------------------|

|  | ***(z)*** | ***Recently                Issued Accounting                Standards*** |
|--|-----------|--------------------------------------------------------------------------|

*Accounting      for Uncertainty in Income Taxes - an interpretation of FASB Statement No.      109*
*Accounting      for Income Taxes*

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

*Accounting      for Contingencies*

*Fair      Value Measurements*

*Accounting      for Nonrefundable Fees and Costs Associated with originating or Acquiring Loans      and Initial Direct Costs of Leases*
*Financial      Accounting Standards No. 13*
*Accounting      for Leases *
*Accounting      for Operating Leases with Scheduled Rent Increases *

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

*The      Fair Value Option for Financial Assets and Financial      Liabilities*
*Accounting      for Certain Investments in Debt and Equity Securities*

*Share      Based Payment*

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

| **(3)** | **Securities                Purchased Under Agreements to                Resell** |
|---------|-----------------------------------------------------------------------------------|

|                                                         |   | **2007** |       | **2006** |   |
|--------------------------------------------------------------|--------|----------|------------|----------|--------|
| Amount                  outstanding at year-end              |   | $        | 19,879,008 |     | $      | 51,191,323 |   |
| Maximum                  aggregate balance outstanding       |   |     |       |     |   |   |   |
| at                  any month-end                            |   |     | 61,649,614 |     |   | 51,191,323 |   |
| Average                  monthly aggregate balance           |   |     |       |     |   |   |   |
| outstanding                  during the year                 |   |     | 32,870,163 |     |   | 30,904,690 |   |
| Weighted                  average interest rate for the year |   |     | 5.49       | %        |   | 5.29 | % |
| Weighted                  average interest rate at year-end  |   |     | 5.22       | %        |   | 5.58 | % |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(4)** | **Investment                Securities Available for                Sale** |
|---------|----------------------------------------------------------------------------|

|                                           |   |  **2007** |        |
|------------------------------------------------|--------|----------------|-------------|
|                                           |   | **Amortized**  |        | **Gross                  unrealized** |   | **Gross                  unrealized** |   | **Fair** |   |
|                                           |   | **cost**       |        | **gains** |   | **losses** |   | **value** |   |
| Commonwealth                  of Puerto        |   |           |        |   |   |   |   |   |   |
| Rico                  obligations:             |   |           |        |   |   |   |   |   |   |
| Less                  than one year            |   | $              | 775,336     |   | $ | 20,068 |   | $ | (140 | ) | $ | 795,264 |   |
| One                  through five years        |   |           | 4,840,524   |   |   | 79,974 |   |   | - |   |   | 4,920,498 |   |
| Federal                  Farm Credit Bonds:    |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Less                  than one year            |   |           | 27,454,067  |   |   | 251,882 |   |   | - |   |   | 27,705,949 |   |
| Federal                  Home Loan Bank notes: |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Less                  than one year            |   |           | 84,447,295  |   |   | 32,284 |   |   | (19,739 | ) |   | 84,459,840 |   |
| One                  through five years        |   |           | 7,119,149   |   |   | 46,537 |   |   | - |   |   | 7,165,686 |   |
| Federal                  National Mortgage     |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Association                  notes:            |   |           |        |   |   |   |   |   |   |   |   |   |   |
| One                  through five years        |   |           | 10,000,000  |   |   | 66,900 |   |   | - |   |   | 10,066,900 |   |
| US                  Corporate Note             |   |           |        |   |   |   |   |   |   |   |   |   |   |
| One                  through five years        |   |           | 3,000,000   |   |   | - |   |   | (256,500 | ) |   | 2,743,500 |   |
| Mortgage-backed                  securities    |   |           | 568,355,302 |   |   | 3,349,482 |   |   | (2,458,989 | ) |   | 569,245,795 |   |
| Total                                          |   | $              | 705,991,673 |   | $ | 3,847,127 |   | $ | (2,735,368 | ) | $ | 707,103,432 |   |

|                                           |   |  **2006** |        |
|------------------------------------------------|--------|----------------|-------------|
|                                           |   | **Amortized**  |        | **Gross                  unrealized** |   | **Gross                  unrealized** |   | **Fair** |   |
|                                           |   | **cost**       |        | **gains** |   | **losses** |   | **value** |   |
| Commonwealth                  of Puerto        |   |           |        |   |   |   |   |   |   |
| Rico                  obligations:             |   |           |        |   |   |   |   |   |   |
| Less                  than one year            |   | $              | 4,116,192   |   | $ | 14,056 |   | $ | (39,760 | ) | $ | 4,090,488 |   |
| One                  through five years        |   |           | 5,401,713   |   |   | 71,851 |   |   | (1,110 | ) |   | 5,472,454 |   |
| Federal                  Farm Credit Bonds:    |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Less                  than one year            |   |           | 30,319,617  |   |   | - |   |   | (383,179 | ) |   | 29,936,438 |   |
| One                  through five years        |   |           | 19,994,263  |   |   | - |   |   | (311,883 | ) |   | 19,682,380 |   |
| Federal                  Home Loan Bank notes: |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Less                  than one year            |   |           | 20,885,000  |   |   | - |   |   | (218,738 | ) |   | 20,666,262 |   |
| One                  through five years        |   |           | 79,419,623  |   |   | - |   |   | (1,375,610 | ) |   | 78,044,013 |   |
| Five                  to ten years             |   |           | 7,922,971   |   |   | - |   |   | (71,985 | ) |   | 7,850,986 |   |
| Federal                  National Mortgage     |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Association                  notes:            |   |           |        |   |   |   |   |   |   |   |   |   |   |
| One                  through five years        |   |           | 19,991,659  |   |   | 83,491 |   |   | - |   |   | 20,075,150 |   |
| Mortgage-backed                  securities    |   |           | 354,672,013 |   |   | 412,557 |   |   | (5,743,732 | ) |   | 349,340,838 |   |
| Total                                          |   | $              | 542,723,051 |   | $ | 581,955 |   | $ | (8,145,997 | ) | $ | 535,159,009 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                             |   |  **2007**                           |       |
|--------------------------------------------------|--------|------------------------------------------|------------|
|                                             |   | **Less                  than 12 months** |       | **12                  months or more** |   | **Total** |   |
|                                             |   | **Unrealized**                           |       | **Fair** |   | **Unrealized** |   | **Fair** |   | **Unrealized** |   | **Fair** |   |
|                                             |   | **losses**                               |       | **value** |   | **losses** |   | **value** |   | **losses** |   | **value** |   |
| U.S.                  agency debt securities     |   | $                                        | -          |   | $ | - |   | $ | (19,739 | ) | $ | 13,240,261 |   | $ | (19,739 | ) | $ | 13,240,261 |   |
| State                  and municipal obligations |   |                                     | (140       | ) |   | 200,196 |   |   | - |   |   | - |   |   | (140 | ) |   | 200,196 |   |
| US                  Corporate Note               |   |                                     | (256,500   | ) |   | 2,743,500 |   |   | - |   |   | - |   |   | (256,500 | ) |   | 2,743,500 |   |
| Mortgage-backed                  securities      |   |                                     | (804,224   | ) |   | 78,237,438 |   |   | (1,654,765 | ) |   | 136,618,716 |   |   | (2,458,989 | ) |   | 214,856,154 |   |
|                                             |   | $                                        | (1,060,864 | ) | $ | 81,181,134 |   | $ | (1,674,504 | ) | $ | 149,858,977 |   | $ | (2,735,368 | ) | $ | 231,040,111 |   |

|                                             |   |  **2006**                           |     |
|--------------------------------------------------|--------|------------------------------------------|----------|
|                                             |   | **Less                  than 12 months** |     | **12                  months or more** |   | **Total** |   |
|                                             |   | **Unrealized**                           |     | **Fair** |   | **Unrealized** |   | **Fair** |   | **Unrealized** |   | **Fair** |   |
|                                             |   | **losses**                               |     | **value** |   | **losses** |   | **value** |   | **losses** |   | **value** |   |
| U.S.                  agency debt securities     |   | $                                        | (71,985  | ) | $ | 7,850,986 |   | $ | (2,289,410 | ) | $ | 148,329,093 |   | $ | (2,361,395 | ) | $ | 156,180,079 |   |
| State                  and municipal obligations |   |                                     | (10,563  | ) |   | 770,325 |   |   | (30,307 | ) |   | 2,480,885 |   |   | (40,870 | ) |   | 3,251,210 |   |
| Mortgage-backed                  securities      |   |                                     | (243,756 | ) |   | 50,655,419 |   |   | (5,499,976 | ) |   | 250,971,704 |   |   | (5,743,732 | ) |   | 301,627,123 |   |
|                                             |   | $                                        | (326,304 | ) | $ | 59,276,730 |   | $ | (7,819,693 | ) | $ | 401,781,682 |   | $ | (8,145,997 | ) | $ | 461,058,412 |   |

|   | · | ***U.S.                Agency Debt Securities***                -                The unrealized losses on investments in U.S. agency debt securities                were caused by interest rate increases. The contractual terms of                these                investments do not permit the issuer to settle the securities at                a price                less than the par value of the investment. Because the Company has                the                ability and intent to hold these investments until a market price                recovery                or maturity, these investments are not considered other-than-temporarily                impaired. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | ***Mortgage-Backed                Securities***                -                The unrealized losses on investments in mortgage-backed securities                were                caused by interest rate increases. The company has mortgage-backed                securities that were issued by private corporations and by U.S. government                enterprise. The contractual cash flows of the securities issued by                a U.S.                government enterprise are guaranteed by the U.S. government sponsored                enterprise issuing the securities. It is expected that the securities                would not be settled at a price less than the par value of the investment.                Because the decline in fair value is attributable to changes in interest                rates and not credit quality, and because the Company has the ability                and                intent to hold these investments until a market price recovery or                maturity, these investments are not considered other-than-temporarily                impaired. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | ***US                Corporate Notes***-                The unrealized losses on investments in U.S. corporate notes were                caused                primarily by changes in interest rate expectations. It is expected                that                the securities would not settle at a price less than the par value                of the                investment. Because the decline in fair value is attributable to                changes                in interest rates and not credit quality, and because the Company                has the                ability and intent to hold these investments until a market price                recovery                or maturity, these investments are not considered other-than-temporary                impaired. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(5)** | **Investment                Securities Held to                Maturity** |
|---------|--------------------------------------------------------------------------|

|                                         |   |  **2007** |       |
|----------------------------------------------|--------|----------------|------------|
|                                         |   | **Amortized**  |       | **Gross                  unrealized** |   | **Gross                  unrealized** |   | **Fair** |   |
|                                         |   | **cost**       |       | **gains** |   | **losses** |   | **value** |   |
| U.S.                  agency debt securities |   | $              | 2,774,712  |   | $ | - |   | $ | (12,717 | ) | $ | 2,761,995 |   |
| Mortgage-backed                  securities  |   |           | 28,070,506 |   |   | 16,983 |   |   | (397,558 | ) |   | 27,689,931 |   |
| Total                                        |   | $              | 30,845,218 |   | $ | 16,983 |   | $ | (410,275 | ) | $ | 30,451,926 |   |

|                                         |   |   **2006** |       |
|----------------------------------------------|--------|----------------------|------------|
|                                         |   |  **Amortized**  |       |  **Gross                  unrealized** |   |  **Gross                  unrealized** |   |  **Fair** |   |
|                                         |   |  **cost**       |       |  **gains** |   |  **losses** |   | **value** |   |
| U.S.                  agency debt securities |   | $                    | 3,164,937  |   | $ | - |   | $ | (93,402 | ) | $ | 3,071,535 |   |
| Mortgage-backed                  securities  |   |                 | 35,267,883 |   |   | - |   |   | (865,645 | ) |   | 34,402,238 |   |
| Total                                        |   | $                    | 38,432,820 |   | $ | - |   | $ | (959,047 | ) | $ | 37,473,773 |   |

|                                         |   |  **2007**                           |   |
|----------------------------------------------|--------|------------------------------------------|--------|
|                                         |   | **Less                  than 12 months** |   | **12                  months or more** |   | **Total** |   |
|                                         |   | **Unrealized**                           |   | **Fair** |   | **Unrealized** |   | **Fair** |   | **Unrealized** |   | **Fair** |   |
|                                         |   | **losses**                               |   | **value** |   | **losses** |   | **value** |   | **losses** |   | **value** |   |
| U.S.                  agency debt securities |   | $                                        | -      |   | $ | - |   | $ | (12,717 | ) | $ | 2,761,995 |   | $ | (12,717 | ) | $ | 2,761,995 |   |
| Mortgage-backed                  securities  |   |                                     | -      |   |   | - |   |   | (397,558 | ) |   | 23,477,416 |   |   | (397,558 | ) |   | 23,477,416 |   |
|                                              |   | $                                        | -      |   | $ | - |   | $ | (410,275 | ) | $ | 26,239,411 |   | $ | (410,275 | ) | $ | 26,239,411 |   |

|                                         |   |   **2006**                           |   |
|----------------------------------------------|--------|------------------------------------------------|--------|
|                                         |   | **Less                  than 12 months**  |   | **12                  months or more** |   |  **Total** |   |
|                                         |   |  **Unrealized**                      |   |  **Fair** |   |  **Unrealized** |   |  **Fair** |   |  **Unrealized** |   |  **Fair** |   |
|                                         |   |  **losses**                          |   |  **value** |   |  **losses** |   |  **value** |   |  **losses** |   |  **value** |   |
| U.S.                  agency debt securities |   | $                                              | -      |   | $ | - |   | $ | (93,402 | ) | $ | 3,071,535 |   | $ | (93,402 | ) | $ | 3,071,535 |   |
| Mortgage-backed                  securities  |   |                                           | -      |   |   | - |   |   | (865,645 | ) |   | 34,402,238 |   |   | (865,645 | ) |   | 34,402,238 |   |
|                                         |   | $                                              | -      |   | $ | - |   | $ | (959,047 | ) | $ | 37,473,773 |   | $ | (959,047 | ) | $ | 37,473,773 |   |

|   | · | ***U.S.                Agency Debt Securities***                -                The unrealized losses on investments in U.S. agency debt securities                were caused by interest rate increases. The contractual terms of                these                investments do not permit the issuer to settle the securities at                a price                less than the par value of the investment. Because the Company has                the                ability and intent to hold these investments until a market price                recovery                or maturity, these investments are not considered other-than-temporarily                impaired. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ***Mortgage-Backed                Securities -***The                unrealized losses on investments in mortgage-backed securities were                caused                by interest rate increases. The company has mortgage-backed securities                that were issued by private corporations and by U.S. government                enterprise. The contractual cash flows of the securities issued by                a U.S.                government enterprise are guaranteed by the U.S. government sponsored                enterprise issuing the securities. It is expected that the securities                would not be settled at a price less than the par value of the investment.                Because the decline in fair value is attributable to changes in interest                rates and not credit quality, and because the Company has the ability                and                intent to hold these investments until a market price recovery or                maturity, these investments are not considered other-than-temporarily                impaired. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(6)** | **Other                Investments** |
|---------|--------------------------------------|

|                                                     |   | **2007** |       | **2006** |   |
|----------------------------------------------------------|--------|----------|------------|----------|--------|
| FHLB                  stock, at cost                     |   | $        | 12,744,300 |     | $      | 3,717,700 |   |
| Investment                  in statutory trust (note 16) |   |     | 610,000    |     |   | 611,500 |   |
| Other                  investments                       |   | $        | 13,354,300 |     | $      | 4,329,200 |   |

| **(7)** | **Pledged                Assets** |
|---------|-----------------------------------|

| **Asset                    pledged**          |   | **Carrying                    value** |        | **Items                    secured/collateralized** |   |
|-----------------------------------------------|--------|---------------------------------------|-------------|-----------------------------------------------------|--------|
| Securities                                    |   | $                                     | 54,366,946  |                                                |   | Deposits                    of public funds |   |
| Commercial                    loans           |   |                                  |        |                                                |   |   |   |
| guaranteed                    by the Small    |   |                                  |        |                                                |   |   |   |
| Business                    Administration    |   |                                  | 593,003     |                                                |   | Deposits                    of public funds |   |
| Residential                    mortgage loans |   |                                  | 43,605,510  |                                                |   | Advances                    from Federal Home Loan Bank |   |
| Securities                                    |   |                                  | 119,548     |                                                |   | Assets                    pledged with Commissioner of Financial Institutions of the Commonwealth                    of                    Puerto Rico for IRA Trust |   |
| Securities                                    |   |                                  | 897,346     |                                                |   | Assets                    pledged with Commissioner of Financial Institutions of the Commonwealth                    of                    Puerto Rico for the Trust and the International Banking Entity                    operations |   |
| Securities                                    |   |                                  | 277,471     |                                                |   | Assets                    pledged with the Federal Reserve Bank for Treasury, tax, and                    loan                    account |   |
| Securities                                    |   |                                  | 12,149,259  |                                                |   | Assets                    pledged with the Federal Reserve Bank for Discount Window |   |
| Securities                                    |   |                                  | 3,881,284   |                                                |   | Assets                    pledged for derivatives contracts |   |
| Securities                                    |   |                                  | 530,865,654 |                                                |   | Securities                    sold under agreements to repurchase |   |

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

| **(8)** | **Loans,                  Net** |
|---------|---------------------------------|

|                                                  |   | **2007** |          | **2006** |   |
|-------------------------------------------------------|--------|----------|---------------|----------|--------|
| Loans                  secured by real estate:        |   |     |          |     |   |
| Commercial                  and industrial            |   | $        | 792,308,856   |     | $      | 736,555,175 |   |
| Construction                                          |   |     | 203,344,272   |     |   | 126,241,190 |   |
| Residential                  mortgage                 |   |     | 106,947,204   |     |   | 76,277,339 |   |
| Consumer                                              |   |     | 779,610       |     |   | 782,456 |   |
|                                                  |   |     | 1,103,379,942 |     |   | 939,856,160 |   |
| Commercial                  and industrial            |   |     | 302,530,197   |     |   | 297,511,599 |   |
| Consumer                                              |   |     | 57,745,127    |     |   | 60,682,410 |   |
| Lease                  financing contracts            |   |     | 385,390,263   |     |   | 443,310,627 |   |
| Overdrafts                                            |   |     | 6,849,655     |     |   | 5,015,183 |   |
|                                                  |   |     | 1,855,895,184 |     |   | 1,746,375,979 |   |
| Deferred                  loan origination costs, net |   |     | 2,365,896     |     |   | 4,879,823 |   |
| Unearned                  finance charges             |   |     | (1,041,968    | )        |   | (1,296,671 | ) |
| Allowance                  for loan and lease losses  |   |     | (28,137,104   | )        |   | (18,936,841 | ) |
|                                                  |   |     |          |     |   |   |   |
| Loans,                  net                           |   | $        | 1,829,082,008 |     | $      | 1,731,022,290 |   |

|                                                     |   | **2007** |        | **2006** |   |
|----------------------------------------------------------|--------|----------|-------------|----------|--------|
| Installments                  lease payments             |   | $        | 319,370,361 |     | $      | 374,415,877 |   |
| Contractual                  residual payments           |   |     | 66,019,902  |     |   | 68,894,750 |   |
| Minimum                  lease payments                  |   |     | 385,390,263 |     |   | 443,310,627 |   |
| Deferred                  origination costs, net         |   |     | 3,463,530   |     |   | 5,609,852 |   |
| Less                  unearned income (equipment leases) |   |     | (1,041,968  | )        |   | (1,296,671 | ) |
|                                                     |   | $        | 387,811,825 |     | $      | 447,623,808 |   |

| Years                  ending December 31: |   |   |        |
|--------------------------------------------|--------|--------|-------------|
| 2008                                       |   | $      | 106,289,049 |   |
| 2009                                       |   |   | 105,285,442 |   |
| 2010                                       |   |   | 87,833,919  |   |
| 2011                                       |   |   | 53,466,271  |   |
| 2012                                       |   |   | 28,979,293  |   |
| Thereafter                                 |   |   | 3,536,289   |   |
|                                       |   | $      | 385,390,263 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                                             |   | **2007** |       | **2006** |   |
|------------------------------------------------------------------|--------|----------|------------|----------|--------|
| Impaired                    loans with related allowance         |   | $        | 32,147,000 |     | $      | 11,878,000 |   |
| Impaired                    loans that did not require allowance |   |     | 52,283,000 |     |   | 27,319,000 |   |
| Total                    impaired loans                          |   | $        | 84,430,000 |     | $      | 39,197,000 |   |
| Allowance                    for impaired loans                  |   | $        | 9,538,000  |     | $      | 2,219,000 |   |

|                                                  |   | **2007** |       | **2006** |   |
|-------------------------------------------------------|--------|----------|------------|----------|--------|
| Average                  investment in impaired loans |   | $        | 61,234,000 |     | $      | 27,640,000 |   |
| Interest                  income recognized on        |   |     |       |     |   |   |   |
| impaired                  loans                       |   |     | 1,961,000  |     |   | 1,041,000 |   |

|                                                       |   | **2007** |       | **2006** |   |
|------------------------------------------------------------|--------|----------|------------|----------|--------|
| Loans                    contractually past due 90 days or |   |     |       |     |   |
| more                    but still accruing interest        |   | $        | 29,075,000 |     | $      | 12,723,000 |   |
| Non                    accrual loans                       |   |     | 68,990,000 |     |   | 37,255,000 |   |
| Total                    non perfoming loans               |   | $        | 98,065,000 |     | $      | 49,978,000 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(9)** | **Allowance                        for Loan and Lease                        Losses** |
|---------|---------------------------------------------------------------------------------------|

|                                                 |   | **2007** |        | **2006** |   |
|------------------------------------------------------|--------|----------|-------------|----------|--------|
| Balance                  at beginning of year        |   | $        | 18,936,841  |     | $      | 18,188,130 |   |
| Provision                  for loan and lease losses |   |     | 25,348,000  |     |   | 16,903,000 |   |
| Loans                  and leases charged-off        |   |     | (18,270,875 | )        |   | (18,789,323 | ) |
| Recoveries                                           |   |     | 2,123,139   |     |   | 2,635,034 |   |
| Balance                  at end of year              |   | $        | 28,137,104  |     | $      | 18,936,841 |   |

| **(10)** | **Premises                and Equipment, Net** |
|----------|------------------------------------------------|

|                                                       |   | **Estimated**                     |                     |     |   |        |   |
|------------------------------------------------------------|--------|-----------------------------------|--------------------------|----------|--------|-------------|--------|
|                                                       |   | **useful                  lives** |                     |     |   |        |   |
|                                                       |   | **(years)**                       |                     | **2007** |   | **2006**    |   |
| Land                                                       |   |                              |                     |     | $      | 4,899,328   |   | $ | 850,738 |   |
| Building                                                   |   |                              | 40                       |     |   | 18,930,167  |   |   | 6,498,507 |   |
| Leasehold                  improvements                    |   |                              | 5                  to 20 |     |   | 9,015,413   |   |   | 7,646,256 |   |
| Furniture,                  fixtures, and equipment        |   |                              | 2                  to 5  |     |   | 13,835,040  |   |   | 11,074,966 |   |
| Construction                  in progress                  |   |                              |                     |     |   | 193,848     |   |   | 616,131 |   |
|                                                       |   |                              |                     |     |   | 46,873,796  |   |   | 26,686,598 |   |
| Accumulated                  depreciation and amortization |   |                              |                     |     |   | (13,790,627 | )      |   | (11,797,142 | ) |
|                                                       |   |                              |                     |     | $      | 33,083,169  |   | $ | 14,889,456 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(11)** | **Other                Assets** |
|----------|---------------------------------|

|                                                                           |   | **2007** |       | **2006** |   |
|--------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
| Deferred                  tax assets, net (note 19)                            |   | $        | 10,898,071 |     | $      | 6,260,855 |   |
| Merchant                  credit card items in process of collection           |   |     | 2,416,934  |     |   | 1,854,919 |   |
| Auto                  insurance claims receivable on repossessed vehicles      |   |     | 1,148,782  |     |   | 1,864,326 |   |
| Accounts                  receivable                                           |   |     | 8,828,058  |     |   | 1,146,465 |   |
| Other                  real estate, net of valuation allowance of $120,857 and |   |     |       |     |   |   |   |
| $41,894                  in 2007 and 2006, respectively                        |   |     | 8,124,572  |     |   | 3,628,971 |   |
| Other                  repossessed assets, net of valuation allowance of       |   |     |       |     |   |   |   |
| $565,767                  and $799,104 in 2007 and 2006, respectively          |   |     | 5,409,451  |     |   | 9,418,811 |   |
| Prepaid                  expenses and deposits                                 |   |     | 6,766,081  |     |   | 7,772,760 |   |
| Fair                  value option                                             |   |     | 3,950,000  |     |   | — |   |
| Other                                                                          |   |     | 2,409,951  |     |   | 1,169,583 |   |
|                                                                           |   | $        | 49,951,898 |     | $      | 33,116,690 |   |

|                                        |   | **2007** |       | **2006** |   |
|---------------------------------------------|--------|----------|------------|----------|--------|
| Balance,                  beginning of year |   | $        | 799,104    |     | $      | 1,216,087 |   |
| Provision                  for losses       |   |     | 1,252,576  |     |   | 1,262,726 |   |
| Net                  charge-offs            |   |     | (1,485,913 | )        |   | (1,679,709 | ) |
| Balance,                  end of year       |   | $        | 565,767    |     | $      | 799,104 |   |

| **(12)** | **Deposits** |
|----------|--------------|

|                                          |   | **2007** |          | **2006** |   |
|-----------------------------------------------|--------|----------|---------------|----------|--------|
| Noninterest                  bearing deposits |   | $        | 120,082,912   |     | $      | 140,321,373 |   |
| Interest-bearing                  deposits:   |   |     |          |     |   |   |   |
| NOW                  & Money Market       |   |     | 60,893,298    |     |   | 62,672,648 |   |
| Savings                                       |   |     | 131,604,327   |     |   | 156,069,357 |   |
| Regular                  CD's & IRAS      |   |     | 92,544,566    |     |   | 95,396,084 |   |
| Jumbo                  CD's                   |   |     | 251,360,899   |     |   | 224,741,161 |   |
| Brokered                  deposits            |   |     | 1,336,560,312 |     |   | 1,226,155,584 |   |
|                                          |   |     | 1,872,963,402 |     |   | 1,765,034,834 |   |
| Total                  Deposits               |   | $        | 1,993,046,314 |     | $      | 1,905,356,207 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                    |   | Under                  $100,000 |       | Over                  $100,000 |   | Total         |   |
|-----------------------------------------|--------|---------------------------------|------------|--------------------------------|--------|---------------|--------|
|                                    |   |                            |       |                           |   |          |   |
| 2008                                    |   | $                               | 76,302,504 |                           | $      | 874,583,870   |   | $ | 950,886,374 |   |
| 2009                                    |   |                            | 6,962,622  |                           |   | 400,877,163   |   |   | 407,839,785 |   |
| 2010                                    |   |                            | 4,072,158  |                           |   | 174,825,947   |   |   | 178,898,105 |   |
| 2011                                    |   |                            | 1,573,113  |                           |   | 73,797,110    |   |   | 75,370,223 |   |
| 2012                                    |   |                            | 1,805,826  |                           |   | 36,029,377    |   |   | 37,835,203 |   |
| Thereafter                              |   |                            | 1,620,561  |                           |   | 31,925,000    |   |   | 33,545,561 |   |
|                                    |   |                            | 92,336,785 |                           |   | 1,592,038,467 |   |   | 1,684,375,252 |   |
| Net                  premium (discount) |   |                            | 144,700    |                           |   | (4,221,330    | )      |   | (4,076,630 | ) |
|                                    |   | $                               | 92,481,485 |                           | $      | 1,587,817,137 |   | $ | 1,680,298,622 |   |

| **(13)** | **Securities                Sold Under Agreements to                Repurchase** |
|----------|----------------------------------------------------------------------------------|

|                                                         |   | **2007** |        | **2006** |   |
|--------------------------------------------------------------|--------|----------|-------------|----------|--------|
| Amount                  outstanding at year-end              |   | $        | 496,419,250 |     | $      | 365,664,250 |   |
| Maximum                  aggregate balance outstanding       |   |     |        |     |   |   |   |
| at                  any month-end                            |   |     | 496,419,250 |     |   | 501,182,250 |   |
| Average                  aggregate balance outstanding       |   |     |        |     |   |   |   |
| during                  the year                             |   |     | 372,934,957 |     |   | 432,458,830 |   |
| Weighted                  average interest rate for the year |   |     | 5.04        | %        |   | 4.94 | % |
| Weighted                  average interest rate at year-end  |   |     | 4.60        | %        |   | 5.27 | % |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                                  |   |  **2007** |        |
|-------------------------------------------------------|--------|----------------|-------------|
|                                                  |   |           |        | **Amortized** |   |   |   | **Weighted** |   |
|                                                  |   | **Borrowing**  |        | **cost                  of** |   | **Fair                  value** |   | **average** |   |
|                                                  |   | **balance**    |        | **collateral** |   | **of                  collateral** |   | **interest                  rate** |   |
| Obligation                  of U.S. government        |   |           |        |   |   |   |   |   |   |
| agencies                  and corporations:           |   |           |        |   |   |   |   |   |   |
| Within                  30 days                       |   | $              | 87,402,044  |   | $ | 88,676,804 |   | $ | 88,809,268 |   |   | 4.76 | % |
| After                  90 days                        |   |           | 18,390,328  |   |   | 29,846,444 |   |   | 29,884,030 |   |   | 4.37 | % |
|                                                  |   |           | 105,792,372 |   |   | 118,523,248 |   |   | 118,693,298 |   |   |   |   |
| Mortgage-backed                  securities:          |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Within                  30 days                       |   |           | 64,700,750  |   |   | 61,687,720 |   |   | 61,767,766 |   |   | 4.54 | % |
| After                  90 days                        |   |           | 54,351,699  |   |   | 60,795,878 |   |   | 61,010,975 |   |   | 3.88 | % |
|                                                  |   |           | 119,052,449 |   |   | 122,483,598 |   |   | 122,778,741 |   |   |   |   |
| Collateralized                  mortgage obligations: |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Within                  30 days                       |   |           | 57,616,456  |   |   | 50,649,887 |   |   | 50,730,968 |   |   | 4.89 | % |
| After                  90 days                        |   |           | 213,957,973 |   |   | 236,277,295 |   |   | 235,986,355 |   |   | 4.20 | % |
|                                                  |   |           | 271,574,429 |   |   | 286,927,182 |   |   | 286,717,323 |   |   |   |   |
|                                                  |   | $              | 496,419,250 |   | $ | 527,934,028 |   | $ | 528,189,362 |   |   | 4.40 | % |

|                                                    |   |  **2006** |        |
|---------------------------------------------------------|--------|----------------|-------------|
|                                                    |   |           |        | **Amortized** |   |   |   | **Weighted** |   |
|                                                    |   | **Borrowing**  |        | **cost                    of** |   | **Fair                    value** |   | **average** |   |
|                                                    |   | **balance**    |        | **collateral** |   | **of                    collateral** |   | **interest                    rate** |   |
| Obligation                    of U.S. government        |   |           |        |   |   |   |   |   |   |
| agencies                    and corporations:           |   |           |        |   |   |   |   |   |   |
| Within                    30 days                       |   | $              | 62,538,705  |   | $ | 67,514,240 |   | $ | 66,521,653 |   |   | 5.33 | % |
| After                    30 to 90 days                  |   |           | 68,506,987  |   |   | 69,989,635 |   |   | 69,196,170 |   |   | 5.33 | % |
| After                    90 days                        |   |           | 12,875,612  |   |   | 15,242,634 |   |   | 15,146,484 |   |   | 5.12 | % |
|                                                    |   |           | 143,921,304 |   |   | 152,746,509 |   |   | 150,864,307 |   |   |   |   |
| Mortgage-backed                    securities:          |   |           |        |   |   |   |   |   |   |   |   |   |   |
| After                    30 to 90 days                  |   |           | 525,565     |   |   | 593,748 |   |   | 591,138 |   |   | 5.44 | % |
| After                    90 days                        |   |           | 28,440,074  |   |   | 37,579,646 |   |   | 37,190,244 |   |   | 4.91 | % |
|                                                    |   |           | 28,965,639  |   |   | 38,173,395 |   |   | 37,781,383 |   |   |   |   |
| Collateralized                    mortgage obligations: |   |           |        |   |   |   |   |   |   |   |   |   |   |
| Within                    30 days                       |   |           | 35,930,545  |   |   | 68,512,290 |   |   | 67,425,239 |   |   | 5.33 | % |
| After                    30 to 90 days                  |   |           | 28,362,448  |   |   | 40,259,058 |   |   | 39,784,285 |   |   | 5.41 | % |
| After                    90 days                        |   |           | 128,484,314 |   |   | 176,606,918 |   |   | 173,219,241 |   |   | 4.79 | % |
|                                                    |   |           | 192,777,307 |   |   | 285,378,266 |   |   | 280,428,764 |   |   |   |   |
|                                                    |   | $              | 365,664,250 |   | $ | 476,298,169 |   | $ | 469,074,454 |   |   | 5.11 | % |

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

| **(14)** | **Advances                from Federal Home Loan Bank                (FHLB)** |
|----------|-------------------------------------------------------------------------------|

| **Maturity** |   | **Interest                  rate range** |                            | **2007** |   | **2006**   |   |
|--------------|--------|------------------------------------------|---------------------------------|----------|--------|------------|--------|
|         |   |                                     |                            |     |   |       |   |
| 2007         |   |                                     | 5.20%                  to 5.45% |     | $      | —    |   | $ | 8,200,000 |   |
| 2008         |   |                                     | 4.51%                           |     |   | 30,000,000 |   |   | — |   |
| 2014         |   |                                     | 4.38%                           |     |   | 453,926    |   |   | 507,420 |   |
|         |   |                                     |                            |     | $      | 30,453,926 |   | $ | 8,707,420 |   |

| **(15)** | **Derivative                Financial Instruments** |
|----------|-----------------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                            |   | **2007**     |       |  **2006**                  |   |
|-------------------------------------------------|--------|--------------|------------|---------------------------------|--------|
|                                            |   | **Notional** |       |                            |   | **Notional** |   |    |   |
|                                            |   | **amount**   |       | **Fair                  value** |   | **amount** |   |  **Fair                  value** |   |
|                                            |   |         |       |                            |   |   |   |    |   |
| Libor-Rate                  interest rate swaps |   | $            | 30,800,000 |                            | $      | (415,176 | ) | $ | 30,800,000 |   | $ | (1,236,093 | ) |
|                                            |   | $            | 30,800,000 |                            | $      | (415,176 | ) | $ | 30,800,000 |   | $ | (1,236,093 | ) |
|                                            |   |         |       |                            |   |   |   |   |   |   |   |   |   |
| Purchased                  Option               |   | $            | 25,000,000 |                            | $      | 3,950,000 |   | $ | - |   | $ | - |   |
|                                            |   | $            | 25,000,000 |                            | $      | 3,950,000 |   | $ | - |   | $ | - |   |
|                                            |   |         |       |                            |   |   |   |   |   |   |   |   |   |
| Written                  Option                 |   | $            | 25,000,000 |                            | $      | (3,950,000 | ) | $ | - |   | $ | - |   |
|                                            |   | $            | 25,000,000 |                            | $      | (3,950,000 | ) | $ | - |   | $ | - |   |

| **(16)** | **Note                Payable to Statutory Trust** |
|----------|----------------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(17)** | **Commitments                and Contingencies** |
|----------|--------------------------------------------------|

|                                       |   | **Minimum**  |       | **Estimated** |   |      |   |
|--------------------------------------------|--------|--------------|------------|---------------|--------|-----------|--------|
|                                       |   | **lease**    |       | **lease**     |   |      |   |
|                                       |   | **payments** |       | **income**    |   | **Net**   |   |
| Years                  ending December 31: |   |         |       |          |   |      |   |
| 2008                                       |   | $            | 1,742,000  |          | $      | 235,000   |   | $ | 1,507,000 |   |
| 2009                                       |   |         | 1,592,000  |          |   | 255,000   |   |   | 1,337,000 |   |
| 2010                                       |   |         | 1,547,000  |          |   | 255,000   |   |   | 1,292,000 |   |
| 2011                                       |   |         | 1,456,000  |          |   | 276,000   |   |   | 1,180,000 |   |
| 2012                                       |   |         | 1,322,000  |          |   | —   |   |   | 1,322,000 |   |
| Thereafter                                 |   |         | 16,145,000 |          |   | —   |   |   | 16,145,000 |   |
|                                       |   | $            | 23,804,000 |          | $      | 1,021,000 |   | $ | 22,783,000 |   |

| **(18)** | **Sale                of Receivables** |
|----------|----------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(19)** | **Income                Taxes** |
|----------|---------------------------------|

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

|                                                          |   | **2007** |     | **2006** |   |
|---------------------------------------------------------------|--------|----------|----------|----------|--------|
| Income                  tax (benefit) expense from operations |   | $        | (248,874 | )        | $      | 6,283,010 |   |
| Stockholders'                  equity for unrealized gain     |   |     |     |     |   |   |   |
| on                  investment securities                     |   |     | 278      |     |   | 1,654 |   |
|                                                          |   | $        | (248,596 | )        | $      | 6,284,664 |   |

|                                               |   | **2007** |       | **2006** |   |
|----------------------------------------------------|--------|----------|------------|----------|--------|
| Current                  tax provision             |   | $        | 4,388,064  |     | $      | 7,342,480 |   |
| Deferred                  tax provision            |   |     | (4,636,938 | )        |   | (683,744 | ) |
| Benefit                  from purchased tax credit |   |     | —    |     |   | (375,726 | ) |
| Total                  income tax provision        |   | $        | (248,874   | )        | $      | 6,283,010 |   |

|                                                   |   |   | **2007**          |   |   | **2006**                |   |
|--------------------------------------------------------|--------|--------|------------------------|--------|--------|------------------------------|--------|
|                                                   |   |   | **Amount**   |   |   | **Rate**           |   |   | **Amount**  |   |   | **Rate**  |   |
| Income                    tax at statutory rate        |   | $      | 1,154,482              |   |   | 39.00%                       |   | $ | 6,218,279 |   |   | 43.50 | % |
| Net                    (benefit) expense of tax-exempt |   |   |                   |   |   |                         |   |   |   |   |   |   |   |
| interest                    income, including          |   |   |                   |   |   |                         |   |   |   |   |   |   |   |
| International                    banking entities      |   |   | (1,543,510             | )      |   | (52.14                       | )      |   | 156,713 |   |   | 1.10 |   |
| Benefits                    from purchase of tax       |   |   |                   |   |   |                         |   |   |   |   |   |   |   |
| credits                    at discount                 |   |   | -                      |   |   | -                            |   |   | (375,726 | ) |   | (2.63 | ) |
| Non                    deductible Stock based          |   |   |                   |   |   |                         |   |   |   |   |   |   |   |
| compensation                                           |   |   | 95,940                 |   |   | 3.24                         |   |   | 66,708 |   |   | 0.47 |   |
| (Allowance)                    disallowance of         |   |   |                   |   |   |                         |   |   |   |   |   |   |   |
| certain                    expenses for tax            |   |   |                   |   |   |                         |   |   |   |   |   |   |   |
| purposes                    and other items            |   |   | 44,214                 |   |   | 1.49                         |   |   | 217,036 |   |   | 1.51 |   |
|                                                   |   | $      | (248,874               | )      |   | (8.41)%                    $ |   |   | 6,283,010 |   |   | 43.95 | % |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                                              |   | **2007** |       | **2006** |   |
|-------------------------------------------------------------------|--------|----------|------------|----------|--------|
| Deferred                  tax assets:                             |   |     |       |     |   |
| Allowance                  for loan and lease losses              |   | $        | 10,973,471 |     | $      | 7,385,368 |   |
| Unrealized                  loss on securities available for sale |   |     | 1,586      |     |   | 1,864 |   |
| Other                  temporary differences                      |   |     | 1,061,016  |     |   | 1,283,014 |   |
| Deferred                  tax assets                              |   |     | 12,036,073 |     |   | 8,670,246 |   |
| Deferred                  tax liabilities:                        |   |     |       |     |   |   |   |
| Deferred                  loan origination costs, net             |   |     | (922,699   | )        |   | (1,903,131 | ) |
| Servicing                  assets                                 |   |     | (47,203    | )        |   | (196,711 | ) |
| Fair                  value adjustments on loans                  |   |     | (168,100   | )        |   | (309,549 | ) |
| Deferred                  tax liabilities                         |   |     | (1,138,002 | )        |   | (2,409,391 | ) |
| Net                  deferred tax asset                           |   | $        | 10,898,071 |     | $      | 6,260,855 |   |

|                                              |   | **2007** |       | **2006** |    |
|---------------------------------------------------|--------|----------|------------|----------|---------|
| Balance                  at the beginning of year |   | $        | 6,260,855  |     | $  | 5,070,074 |   |
| Deferred                  tax benefit             |   |     | 4,636,938  |     |    | 683,744 |   |
| Amount                  charged to retained       |   |     |       |     |    |   |   |
| earnings                  - SAB 108               |   |     | -          |     |    | 505,383 |   |
| Effect                  of FAS 115 in other       |   |     |       |     |    |   |   |
| comprehensive                  income             |   |     | 278        |     |    | 1,654 |   |
| Balance                  at the end of year       |   | $        | 10,898,071 |     | $       | 6,260,855 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(20)** | **Stock                Transactions** |
|----------|---------------------------------------|

|        |   | **Number                  of** |    | **Exercise** |   |      |   |
|-------------|--------|--------------------------------|---------|--------------|--------|-----------|--------|
| **Date**    |   | **shares**                     |    | **Price**    |   | **Total** |   |
|        |   |                           |    |         |   |      |   |
| February-07 |   |                           | 250,862 |         | $      | 4.50      |   | $ | 1,128,880 |   |
| July-07     |   |                           | 4,000   |         |   | 5.00      |   |   | 20,000 |   |
|        |   |                           | 254,862 |         |   |      |   | $ | 1,148,880 |   |

| **(21)** | **Preferred                Stock** |
|----------|------------------------------------|

| **(22)** | **Stock                Option Plan** |
|----------|--------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                                 |   | **2007** |   | **2006** |   |
|------------------------------------------------------|--------|----------|--------|----------|--------|
| Expected                  life of options (in years) |   |     | 6.04   |     |   | 6.26 |   |
| Expected                  volatility                 |   |     | 37.14  | %        |   | 39.28 | % |
| Expected                  dividends                  |   |     | 0.00   | %        |   | 0.00 | % |
| Risk-                  free rate                     |   |     | 3.96   | %        |   | 4.60 | % |

|                                           |   |       |      |         |   | **Weighthed**   |   |          |   |
|------------------------------------------------|--------|------------|-----------|--------------|--------|-----------------|--------|---------------|--------|
|                                           |   |       |      | **Weighted** |   | **average**     |   |          |   |
|                                           |   |       |      | **average**  |   | **remaining**   |   | **Aggregate** |   |
|                                           |   |       |      | **exercise** |   | **contractual** |   | **intrinsic** |   |
|                                           |   | **Shares** |      | **price**    |   | **term**        |   | **value**     |   |
| Options                  outstanding January 1 |   |       | 1,063,162 |         | $      | 7.72            |   |          |   |   |   |   |   |
| Granted                                        |   |       | 201,170   |         |   | 5.84            |   |          |   |   |   |   |   |
| Exercised                                      |   |       | (254,862  | )            |   | 4.51            |   |          |   |   |   |   |   |
| Forfeited                                      |   |       | (10,900   | )            |   | 21.00           |   |          |   |   |   |   |   |
| Outstanding                  at end of year    |   |       | 998,570   |         | $      | 8.02            |   |          | 3.10   |   | $ | — |   |
| Exercisable                  at end of year    |   |       | 805,630   |         | $      | 7.92            |   |          | 1.63   |   | $ | — |   |

|                                                            |   | **2007** |      | **2006** |   |
|-----------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                                            |   |     |      |     |   |
| Intrinsic                  value of options exercised           |   | $        | 1,043,134 |     | $      | 1,579,530 |   |
| Cash                  received from option exercises            |   |     | 1,148,880 |     |   | 879,764 |   |
| Tax                  benefit realized from option exercises     |   |     | -         |     |   | - |   |
| Weighted                  average fair value of options granted |   |     | 2.53      |     |   | 5.65 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(23)** | **Earnings                Per Share** |
|----------|---------------------------------------|

|                                                         |   | **2007** |       | **2006** |   |
|--------------------------------------------------------------|--------|----------|------------|----------|--------|
|                                                         |   |     |       |     |   |
| Net                  income before extraordinary item        |   |     |       |     |   |
| and                  preferred stock dividends               |   | $        | 3,209,083  |     | $      | 8,011,885 |   |
| Dividend                  declared to preferred shareholders |   |     | (744,805   | )        |   | (744,805 | ) |
| Net                  income available to                     |   |     |       |     |   |   |   |
| common                  shareholders                         |   | $        | 2,464,278  |     | $      | 7,267,080 |   |
|                                                         |   |     |       |     |   |   |   |
| Weighted                  average number of common           |   |     |       |     |   |   |   |
| shares                  outstanding applicable to            |   |     |       |     |   |   |   |
| basic                  earnings per share                    |   |     | 19,212,801 |     |   | 19,217,178 |   |
| Effect                  of dilutive securities               |   |     | 178,837    |     |   | 440,381 |   |
| Adjusted                  weighted average                   |   |     |       |     |   |   |   |
| number                  of common shares                     |   |     |       |     |   |   |   |
| outstanding                  applicable to                   |   |     |       |     |   |   |   |
| diluted                  earnings per share                  |   |     | 19,391,639 |     |   | 19,657,559 |   |
|                                                         |   |     |       |     |   |   |   |
| Basic                  earnings per share:                   |   |     |       |     |   |   |   |
| Net                  income                                  |   | $        | 0.13       |     | $      | 0.38 |   |
|                                                         |   |     |       |     |   |   |   |
| Diluted                  earnings per share:                 |   |     |       |     |   |   |   |
| Net                  income                                  |   | $        | 0.13       |     | $      | 0.37 |   |

| **(24)** | **Employees’                Benefit Plan** |
|----------|--------------------------------------------------|

| **(25)** | **Related-Party                Transactions** |
|----------|-----------------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                          |   | **Executive**                    |     |                                 |   |          |   | **Principal**                    |      |      |   |
|-----------------------------------------------|--------|----------------------------------|----------|--------------------------------------|--------|---------------|--------|----------------------------------|-----------|-----------|--------|
|                                          |   | **officers**                     |     |                                 |   |          |   | **shareholders**                 |      |      |   |
|                                          |   | **and                  related** |     | **Directors                  and**   |   |          |   | **and                  related** |      |      |   |
|                                          |   | **parties**                      |     | **related                  parties** |   | **Employees** |   | **parties**                      |      | **Total** |   |
| Balance                  at December 31, 2005 |   | $                                | 398,486  |                                 | $      | 3,078,086     |   | $                                | 1,662,536 |      | $      | — |   | $ | 5,139,108 |   |
| Additions                                     |   |                             | 115,626  |                                 |   | 3,103,758     |   |                             | 2,262,566 |      |   |   |   |   | 5,481,950 |   |
| Reductions                                    |   |                             | (334,397 | )                                    |   | (920,636      | )      |                             | (979,568  | )         |   |   |   |   | (2,234,601 | ) |
| Balance                  at December 31, 2006 |   |                             | 179,715  |                                 |   | 5,261,208     |   |                             | 2,945,534 |      |   | — |   |   | 8,386,457 |   |
| Additions                                     |   |                             | 35,928   |                                 |   | 6,960,624     |   |                             | 708,470   |      |   |   |   |   | 7,705,022 |   |
| Reductions                                    |   |                             | (85,980  | )                                    |   | (1,848,412    | )      |                             | (856,693  | )         |   |   |   |   | (2,791,085 | ) |
| Balance                  at December 31, 2007 |   | $                                | 129,663  |                                 | $      | 10,373,420    |   | $                                | 2,797,311 |      | $      | — |   | $ | 13,300,394 |   |

| **(26)** | **Financial                Instruments with Off-Balance-Sheet                Risk** |
|----------|-------------------------------------------------------------------------------------|

|                                                                     |   | **2007** |        | **2006** |   |
|--------------------------------------------------------------------------|--------|----------|-------------|----------|--------|
| Financial                  instruments whose contract amounts represent  |   |     |        |     |   |
| credit                  risk - stand-by and commercial letters of credit |   | $        | 15,066,000  |     | $      | 9,351,000 |   |
| Commitments                  to extend credit, approved loans not yet    |   |     |        |     |   |   |   |
| disbursed,                  and unused lines of credit:                  |   |     |        |     |   |   |   |
| Variable                  rate                                           |   |     | 221,111,000 |     |   | 276,204,000 |   |
| Fixed                  rate                                              |   |     | 30,270,000  |     |   | 23,156,000 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

| **(27)** | **Fair                Value of Financial                Instruments** |
|----------|-----------------------------------------------------------------------|

*Disclosure      about Derivative Financial Instruments and Fair Value of Financial      Instruments*

|  | ***(a)*** | ***Cash                and Due from Banks, Interest-Bearing Deposits, and Securities Purchased                under Agreements to Resell*** |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------|

|  | ***(b)*** | ***Investment                Securities*** |
|--|-----------|--------------------------------------------|

|  | ***(c)*** | ***Other                Investments*** |
|--|-----------|----------------------------------------|

|  | ***(d)*** | ***Loans                and Loans Held for                Sale*** |
|--|-----------|-------------------------------------------------------------------|

|  | ***(e)*** | ***Accrued                Interest Receivable*** |
|--|-----------|--------------------------------------------------|

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**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|  | ***(f)*** | ***Deposits*** |
|--|-----------|----------------|

|  | ***(g)*** | ***Securities                Sold under Agreements to                Repurchase*** |
|--|-----------|------------------------------------------------------------------------------------|

|  | ***(h)*** | ***Advances                from Federal Home Loan                Bank*** |
|--|-----------|--------------------------------------------------------------------------|

|  | ***(i)*** | ***Note                Payable to Statutory                Trust*** |
|--|-----------|---------------------------------------------------------------------|

|  | ***(j)*** | ***Accrued                Interest Payable*** |
|--|-----------|-----------------------------------------------|

|  | ***(k)*** | ***Derivatives*** |
|--|-----------|-------------------|

|  | ***(l)*** | ***Commitments                to Extend Credit and Letters of                Credit*** |
|--|-----------|----------------------------------------------------------------------------------------|

|  | ***(m)*** | ***Limitations*** |
|--|-----------|-------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                               |   |  **2007**     |          | **2006**                        |   |
|----------------------------------------------------|--------|--------------------|---------------|---------------------------------|--------|
|                                               |   |  **Carrying** |          |                            |   | **Carrying** |   |   |   |
|                                               |   |  **amount**   |          | **Fair                  value** |   | **amount** |   | **Fair                  value** |   |
| Financial                  assets:                 |   |          |          |                            |   |   |   |   |   |
| Cash                  and due from banks           |   | $                  | 15,866,221    |                            | $      | 15,866,221 |   |  $ | 25,527,489 |   |  $ | 25,527,489 |   |
| Interest-bearing                  deposits         |   |               | 32,306,909    |                            |   | 32,306,909 |   |   | 49,050,368 |   |   | 49,050,368 |   |
| Securities                  purchased under        |   |               |          |                            |   |   |   |   |   |   |   |   |   |
| agreements                  to resell              |   |               | 19,879,008    |                            |   | 19,879,008 |   |   | 51,191,323 |   |   | 51,191,323 |   |
| Investment                  securities             |   |               |          |                            |   |   |   |   |   |   |   |   |   |
| available                  for sale                |   |               | 707,103,432   |                            |   | 707,103,432 |   |   | 535,159,009 |   |   | 535,159,009 |   |
| Investment                  securities             |   |               |          |                            |   |   |   |   |   |   |   |   |   |
| held                  to maturity                  |   |               | 30,845,218    |                            |   | 30,451,926 |   |   | 38,432,820 |   |   | 37,473,773 |   |
| Other                  investments                 |   |               | 13,354,300    |                            |   | 13,354,300 |   |   | 4,329,200 |   |   | 4,329,200 |   |
| Loans                  held for sale               |   |               | 1,359,494     |                            |   | 1,359,494 |   |   | 879,000 |   |   | 879,000 |   |
| Loans,                  net                        |   |               | 1,829,082,008 |                            |   | 1,819,152,795 |   |   | 1,731,022,290 |   |   | 1,717,238,967 |   |
| Derivatives                  - Purchased Option    |   |               | 3,950,000     |                            |   | 3,950,000 |   |   | — |   |   | — |   |
| Accrued                  interest receivable       |   |               | 18,136,489    |                            |   | 18,136,489 |   |   | 15,760,852 |   |   | 15,760,852 |   |
|                                               |   |               |          |                            |   |   |   |   |   |   |   |   |   |
| Financial                  liabilities:            |   |               |          |                            |   |   |   |   |   |   |   |   |   |
| Deposits                                           |   |               | 1,993,046,314 |                            |   | 2,013,817,980 |   |   | 1,905,356,207 |   |   | 1,900,249,949 |   |
| Securities                  sold under             |   |               |          |                            |   |   |   |   |   |   |   |   |   |
| agreements                  to repurchase          |   |               | 496,419,250   |                            |   | 495,224,506 |   |   | 365,664,250 |   |   | 363,509,336 |   |
| Advances                  from FHLB                |   |               | 30,453,926    |                            |   | 30,445,061 |   |   | 8,707,420 |   |   | 8,663,848 |   |
| Note                  payable to statutory trust   |   |               | 20,619,000    |                            |   | 20,627,779 |   |   | 20,619,000 |   |   | 20,619,000 |   |
| Accrued                  interest payable          |   |               | 17,371,698    |                            |   | 17,371,698 |   |   | 18,047,074 |   |   | 18,047,074 |   |
| Derivatives                  - Interest Rate Swaps |   |               | 415,176       |                            |   | 415,176 |   |   | 1,236,093 |   |   | 1,236,093 |   |
| Derivatives                  - Written Option      |   |               | 3,950,000     |                            |   | 3,950,000 |   |   | — |   |   | — |   |

| **(28)** | **Significant                Group Concentrations of Credit                Risk** |
|----------|-----------------------------------------------------------------------------------|

| **(29)** | **Regulatory                Matters** |
|----------|---------------------------------------|

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

|                                                 |   | **2007**     |    |
|------------------------------------------------------|--------|--------------|---------|
|                                                 |   |         |    |   |   |   |   |   |   | **Well** |   |
|                                                 |   | **Required** |    |   |   | **Actual** |   |   |   | **capitalized** |   |
|                                                 |   | **amount**   |    | **Ratio** |   | **amount** |   | **Ratio** |   | **ratio** |   |
| Total                  Capital (to risk-weighted     |   |         |    |   |   |   |   |   |   |   |   |
| assets):                                             |   |         |    |   |   |   |   |   |   |   |   |
| Consolidated                                         |   | $            | 166,720 |   |   | 8.00 | % | $ | 224,873 |   |   | 10.79 | % |   | N/A |   |
| Eurobank                                             |   |         | 166,719 |   |   | 8.00 | % |   | 224,137 |   |   | 10.76 | % |   | >                  10.00 | % |
| Tier                  I Capital (to risk-weighted    |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| assets):                                             |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                         |   |         | 83,360  |   |   | 4.00 | % |   | 198,793 |   |   | 9.54 | % |   | N/A |   |
| Eurobank                                             |   |         | 83,360  |   |   | 4.00 | % |   | 198,057 |   |   | 9.50 | % |   | >                  6.00 | % |
| Tier                  I Capital (to average assets): |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                         |   |         | 105,308 |   |   | 4.00 | % |   | 198,793 |   |   | 7.55 | % |   | N/A |   |
| Eurobank                                             |   |         | 105,282 |   |   | 4.00 | % |   | 198,057 |   |   | 7.52 | % |   | >                  5.00 | % |
|                                                 |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                 |   | **2006**     |    |
|------------------------------------------------------|--------|--------------|---------|
|                                                 |   |         |    |   |   |   |   |   |   | **Well** |   |
|                                                 |   | **Required** |    |   |   | **Actual** |   |   |   | **capitalized** |   |
|                                                 |   | **amount**   |    | **Ratio** |   | **amount** |   | **Ratio** |   | **ratio** |   |
| Total                  Capital (to risk-weighted     |   |         |    |   |   |   |   |   |   |   |   |
| assets):                                             |   |         |    |   |   |   |   |   |   |   |   |
| Consolidated                                         |   | $            | 154,038 |   |   | 8.00 | % |  $ | 216,673 |   |   | 11.25 | % |   | N/A |   |
| Eurobank                                             |   |         | 154,045 |   |   | 8.00 | % |   | 198,179 |   |   | 10.29 | % |   | >                  10.00 | % |
| Tier                  I Capital (to risk-weighted    |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| assets):                                             |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                         |   |         | 77,019  |   |   | 4.00 | % |   | 197,366 |   |   | 10.25 | % |   | N/A |   |
| Eurobank                                             |   |         | 77,023  |   |   | 4.00 | % |   | 178,871 |   |   | 9.29 | % |   | >                  6.00 | % |
| Tier                  I Capital (to average assets): |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                         |   |         | 99,679  |   |   | 4.00 | % |   | 197,366 |   |   | 7.92 | % |   | N/A |   |
| Eurobank                                             |   |         | 99,637  |   |   | 4.00 | % |   | 178,871 |   |   | 7.18 | % |   | >                  5.00 | % |

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

| **(30)** | **Parent                Company Financial                Information** |
|----------|------------------------------------------------------------------------|

|                                                               |   | **2007**                        |    | **2006** |   |
|--------------------------------------------------------------------|--------|---------------------------------|---------|----------|--------|
|                                                               |   | (In                  thousands) |    |
| **Assets**                                                         |   |                            |    |     |   |
| Dividend                  receivable from non bank subsidiaries    |   | $                               | 1       |     | $      | 1 |   |
| Dividend                  receivable from Eurobank                 |   |                            | 27      |     |   | 17,998 |   |
| Investment                  in Eurobank                            |   |                            | 199,182 |     |   | 171,384 |   |
| Investment                  in other subsidiaries                  |   |                            | 1,356   |     |   | 1,141 |   |
| Prepaid                  expenses                                  |   |                            | 9       |     |   | 8 |   |
| Total                  assets                                      |   | $                               | 200,575 |     | $      | 190,532 |   |
|                                                               |   |                            |    |     |   |   |   |
| **Liabilities                  and Stockholders' Equity**          |   |                            |    |     |   |   |   |
| Due                  to non bank subsidiary                        |   | $                               | 10      |     | $      | 10 |   |
| Notes                  payable to subsidiaries                     |   |                            | 20,619  |     |   | 20,619 |   |
| Accrued                  interest payable to non bank subsidiaries |   |                            | 28      |     |   | 25 |   |
| Total                  liabilities                                 |   |                            | 20,657  |     |   | 20,654 |   |
|                                                               |   |                            |    |     |   |   |   |
| Stockholders'                  equity                              |   |                            | 179,918 |     |   | 169,878 |   |
| Total                  liabilities and stockholders' equity        |   | $                               | 200,575 |     | $      | 190,532 |   |

----

**EUROBANCSHARES,        INC. AND SUBSIDIARIES**

**Condensed        Statement of Income:**

|                                                              |   | **Year                  ended December 31** |   |
|-------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                              |   | **2007**                                    |   | **2006** |   |
|                                                              |   | (In                  thousands)             |   |
|                                                              |   |                                        |   |   |   |
| Income:                                                           |   |                                        |   |   |   |
| Interest                  on note receivable from Eurobank        |   | $                                           | -      |   | $ | 1,399 |   |
| Dividend                  from preferred stocks of                |   |                                        |   |   |   |   |   |
| Eurobank                                                          |   |                                        | 1,740  |   |   | 2,407 |   |
| Dividend                  income from non bank subsidiaries       |   |                                        | 54     |   |   | 118 |   |
| Total                  interest income                            |   |                                        | 1,794  |   |   | 3,924 |   |
| Interest                  on note payable to                      |   |                                        |   |   |   |   |   |
| subsidiaries                                                      |   |                                        | 1,794  |   |   | 3,924 |   |
| Net                  interest income                              |   |                                        | -      |   |   | - |   |
| Equity                  in undistributed earnings of subsidiaries |   |                                        | 3,231  |   |   | 8,026 |   |
| Noninterest                  expense                              |   |                                        | 22     |   |   | 14 |   |
| Earnings                  before income taxes                     |   |                                        | 3,209  |   |   | 8,012 |   |
| Provision                  for income taxes                       |   |                                        | -      |   |   | - |   |
| Net                  income                                       |   | $                                           | 3,209  |   | $ | 8,012 |   |

----

**EUROBANCSHARES,      INC. AND SUBSIDIARIES**

**Condensed      Statements of Cash Flows:**

|                                                                |   | **Year                ended December 31** |    |
|---------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                |   | **2007**                                  |    | **2006** |   |
|                                                                |   | (In                thousands)             |    |
| Cash                flows from operating activities:                |   |                                      |    |   |   |
| Net                income                                           |   | $                                         | 3,209   |   | $ | 8,012 |   |
| Adjustments                to reconcile net income to net           |   |                                      |    |   |   |   |   |
| cash                (used in) provided by operating activities:     |   |                                      |    |   |   |   |   |
| Equity                in net earnings of subsidiaries               |   |                                      | (3,232  | ) |   | (8,026 | ) |
| (Increase)                decrease in accrued interest and dividend |   |                                      |    |   |   |   |   |
| receivable                from subsidiaries                         |   |                                      | (3      | ) |   | 79 |   |
| Increase                in prepaid expenses                         |   |                                      | (2      | ) |   | (3 | ) |
| Increase                (decrease) in accrued interest              |   |                                      |    |   |   |   |   |
| payable                to subsidiaries                              |   |                                      | 3       |   |   | (79 | ) |
| Net                cash used in operating activities                |   |                                      | (24     | ) |   | (17 | ) |
|                                                                |   |                                      |    |   |   |   |   |
| Cash                flows from investing activities:                |   |                                      |    |   |   |   |   |
| Advance                to Subsidiary                                |   |                                      | (1,149  | ) |   | (880 | ) |
| Decrease                in due from Eurobank                        |   |                                      | 3,276   |   |   | 31,228 |   |
| Net                cash provided by investing activities            |   |                                      | 2,127   |   |   | 30,348 |   |
|                                                                |   |                                      |    |   |   |   |   |
| Cash                flows from financing activities:                |   |                                      |    |   |   |   |   |
| Decrease                in due to Eurobank                          |   |                                      | (7      | ) |   | — |   |
| Dividends                on preferred stocks                        |   |                                      | (745    | ) |   | (746 | ) |
| Repayment                of Trust Preferred Securities              |   |                                      | — |   |   | (25,000 | ) |
| Proceeds                from issuance of common stock               |   |                                      | 1,149   |   |   | 880 |   |
| Purchase                and retirement of common stock              |   |                                      | (2,500  | ) |   | (5,465 | ) |
| Net                cash used in financing activities                |   |                                      | (2,103  | ) |   | (30,331 | ) |
|                                                                |   |                                      |    |   |   |   |   |
| Net                increase (decrease) in cash and                  |   |                                      |    |   |   |   |   |
| cash                equivalents                                     |   |                                      | — |   |   | — |   |
| Cash                and cash equivalents, beginning of year         |   |                                      | — |   |   | — |   |
| Cash                and cash equivalents, end of year               |   | $                                         | — |   | $ | — |   |

----