10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission File Number – 0-20632

FIRST BANKS, INC.

(Exact name of registrant as specified in its charter)

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

135 North Meramec, Clayton, Missouri 63105

(Address of principal executive offices) (Zip code)

(314) 854-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
8.15% Cumulative Trust Preferred Securities
(issued by First Preferred Capital Trust IV and	New York Stock Exchange
guaranteed by First Banks, Inc.)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [ X ] No

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. [ X ] Yes [ ] No

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

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ X ] Yes [ ] No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

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

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

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

     None of the voting stock of the Company is held by non-affiliates. All of the voting stock of the Company is owned by various trusts, which were established by and for the benefit of Mr. James F. Dierberg, the Company’s Chairman of the Board of Directors, and members of his immediate family.

     At March 26, 2013, there were 23,661 shares of the registrant’s common stock outstanding. There is no public or private market for such common stock.

FIRST BANKS, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	1
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	23
Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 8.	Financial Statements and Supplementary Data	66
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	66
Item 9A.	Controls and Procedures	66
Item 9B.	Other Information	67
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	67
Item 11.	Executive Compensation	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	77
Item 14.	Principal Accounting Fees and Services	78
Part IV
Item 15.	Exhibits, Financial Statement Schedules	78
Signatures		137

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

AND FACTORSTHAT COULD AFFECT FUTURE RESULTS

This Annual Report on Form 10-K contains certain forward-looking statements with respect to our financial condition, results of operations and business. Generally, forward-looking statements may be identified through the use of words such as: “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning or future or conditional terms such as: “will,” “would,” “should,” “could,” “may,” “likely,” “probably,” or “possibly.” Examples of forward-looking statements include, but are not limited to, estimates or projections with respect to our future financial condition and earnings, including the ability of the Company to remain profitable, and expected or anticipated revenues with respect to our results of operations and our business. These forward-looking statements are subject to certain risks and uncertainties, not all of which can be predicted or anticipated. Factors that may cause our actual results to differ materially from those contemplated by the forward-looking statements herein include market conditions as well as conditions affecting the banking industry generally and factors having a specific impact on us, including but not limited to, the following factors whose order is not indicative of likelihood or significance of impact:

• Our ability to raise sufficient capital, absent the successful completion of all or a significant portion of our Capital Plan, as further discussed under “Item 1. Business —Recent Developments and Other Matters – Capital Plan;”

• Our ability to maintain capital at levels necessary or desirable to support our operations;

• The risks associated with implementing our business strategy, including our ability to preserve and access sufficient capital to continue to execute our strategy;

• Regulatory actions that impact First Banks, Inc. and First Bank, including the regulatory agreements entered into among First Banks, Inc., First Bank, the Federal Reserve Bank of St. Louis and the State of Missouri Division of Finance, as further discussed under “Item 1. Business —Supervision and Regulation – Regulatory Agreements;”

• Our ability to comply with the terms of an agreement with our regulators pursuant to which we have agreed to take certain corrective actions to improve our financial condition and results of operations;

• The effects of and changes in trade and monetary and fiscal policies and laws, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the interest rate policies of the Federal Open Market Committee of the Federal Reserve Board of Governors and the U.S. Treasury’s Capital Purchase Program and Troubled Asset Relief Program authorized by the Emergency Economic Stabilization Act of 2008;

• The risks associated with the high concentration of commercial real estate loans in our loan portfolio;

• The decline in commercial and residential real estate sales volume and the likely potential for continuing lack of liquidity in the real estate markets;

• The uncertainties in estimating the fair value of developed real estate and undeveloped land in light of declining demand for such assets and continuing lack of liquidity in the real estate markets;

• Negative developments and disruptions in the credit and lending markets, including the impact of the ongoing credit crisis on our business and on the businesses of our customers as well as other banks and lending institutions with which we have commercial relationships;

• The appropriateness of our allowance for loan losses to absorb the amount of actual losses inherent in our existing loan portfolio;

• The accuracy of assumptions underlying the establishment of our allowance for loan losses and the estimation of values of collateral or cash flow projections and the potential resulting impact on the carrying value of various financial assets and liabilities;

• Credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio including certain large individual loans;

• Possible changes in the creditworthiness of customers and the possible impairment of collectability of loans;

• Liquidity risks;

• Inaccessibility of funding sources on the same or similar terms on which we have historically relied if we are unable to maintain sufficient capital ratios;

• Implementation of the proposed Basel III regulatory capital reforms and changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act will include significant changes to bank capital, leverage and liquidity requirements, as further discussed under “Item 1. Business —Supervision and Regulation – Regulatory Capital Standards and Proposed Basel III Regulatory Capital Reforms;”

• The ability to successfully acquire low cost deposits or alternative funding;

• The effects of increased Federal Deposit Insurance Corporation deposit insurance assessments;

• The effects of the expiration of unlimited Federal Deposit Insurance Corporations deposit insurance on noninterest-bearing transaction accounts over the $250,000 maximum available to depositors;

• Changes in consumer spending, borrowings and savings habits;

• The ability of First Bank to pay dividends to its parent holding company;

• Our ability to pay cash dividends on our preferred stock and interest on our junior subordinated debentures;

• High unemployment and the resulting impact on our customers’ savings rates and their ability to service debt obligations;

• Possible changes in interest rates may increase our funding costs and reduce earning asset yields, thus reducing our margins;

• The impact of possible future goodwill and other material impairment charges;

• The ability to attract and retain senior management experienced in the banking and financial services industry;

• Changes in the economic environment, competition, or other factors that may influence loan demand, deposit flows, the quality of our loan portfolio and loan and deposit pricing;

• The impact on our financial condition of unknown and/or unforeseen liabilities arising from legal or administrative proceedings;

• The threat of future terrorist activities, existing and potential wars and/or military actions related thereto, and domestic responses to terrorism or threats of terrorism;

• Possible changes in general economic and business conditions in the United States in general and particularly in the communities and market segments we serve;

• Volatility and disruption in national and international financial markets;

• Government intervention in the U.S. financial system;

• The impact of laws and regulations applicable to us and changes therein;

• The impact of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;

• The impact of litigation generally and specifically arising out of our efforts to collect outstanding customer loans;

• Competitive conditions in the markets in which we conduct our operations, including competition from banking and non-banking companies with substantially greater resources than us, some of which may offer and develop products and services not offered by us;

• Our ability to control the composition of our loan portfolio without adversely affecting interest income and credit default risk;

• The geographic dispersion of our offices;

• The impact our hedging activities may have on our operating results;

• The highly regulated environment in which we operate; and

• Our ability to respond to changes in technology or an interruption or breach in security of our information systems.

Actual events or our actual future results may differ materially from any forward-looking statement due to these and other risks, uncertainties and significant factors. For a discussion of these and other risk factors that may impact these forward-looking statements, please refer to further discussion under “Item 1A. Risk Factors.” We wish to caution readers of this Annual Report on Form 10-K that the foregoing list of important factors may not be all-inclusive and we specifically decline to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We do not have a duty to and will not update these forward-looking statements. Readers of this Annual Report on Form 10-K should therefore consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on these statements.

PART I

Item 1. Business

General. First Banks, Inc., or we, or the Company, is a registered bank holding company incorporated in Missouri in 1978 and headquartered in St. Louis, Missouri. We operate through our wholly owned subsidiary bank holding company, The San Francisco Company, or SFC, headquartered in St. Louis, Missouri, and SFC’s wholly owned subsidiary bank, First Bank, also headquartered in St. Louis, Missouri. A list of First Bank’s subsidiaries at December 31, 2012 is included as Exhibit 21.1 and incorporated herein by reference. First Bank’s subsidiaries are wholly owned, except FB Holdings, LLC, or FB Holdings, which is 53.23% owned by First Bank and 46.77% owned by First Capital America, Inc., or FCA, a corporation owned and operated by the Company’s Chairman of the Board and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, as further described in Note 20 to our consolidated financial statements. At December 31, 2012, we had assets of $6.51 billion, loans, net of net deferred loan fees, of $2.93 billion, deposits of $5.49 billion and stockholders’ equity of $300.0 million.

First Bank currently operates 144 branch offices in California, Florida, Illinois and Missouri, with 175 automated teller machines, or ATMs, across the four states. Through First Bank, we offer a broad range of financial services, including commercial and personal deposit products, commercial and consumer lending, and many other financial products and services. Commercial and personal deposit products include demand, savings, money market and time deposit accounts. In addition, we market combined basic services for various customer groups, including packaged accounts for more affluent customers, and sweep accounts, lock-box deposits and cash management products for commercial customers. Commercial lending includes commercial, financial and agricultural loans, real estate construction and development loans, commercial real estate loans and small business lending. Consumer lending includes residential real estate, home equity and installment lending. Other financial services include mortgage banking, debit cards, brokerage services, internet banking, remote deposit, ATMs, telephone banking, safe deposit boxes, and trust and private banking services. The revenues generated by First Bank and its subsidiaries consist primarily of interest income generated from our loan and investment security portfolios, service charges and fees generated from deposit products and services, and fees and commissions generated by our mortgage banking and trust and private banking business units. Our extensive line of products and services are offered to customers primarily within our geographic areas, which presently include eastern Missouri, southern Illinois, southern and northern California, and Florida, including Bradenton and the greater Tampa metropolitan area. Primary responsibility for managing our banking units rests with the officers and directors of each unit, but we centralize many of our overall corporate policies, procedures and administrative functions and provide centralized operational support functions for our subsidiaries. This practice allows us to achieve various operating efficiencies while allowing our banking units to focus on customer service.

Capital Structure.

Voting Stock. Various trusts, established by and administered by and for the benefit of Mr. James F. Dierberg and members of his immediate family, own all of our voting stock. Mr. Dierberg and his family, therefore, control our management and policies.

Trust Preferred Securities. We have formed numerous affiliated Delaware or Connecticut business or statutory trusts. These trusts operate as financing entities and were created for the sole purpose of issuing trust preferred securities, and the sole assets of the trusts are our junior subordinated debentures. In conjunction with the formation of our financing entities and their issuance of the trust preferred securities, we issued junior subordinated debentures to each of our financing entities in amounts equivalent to the respective trust preferred securities plus the amount of the common securities of the individual trusts. Prior to August 10, 2009, we paid interest on our junior subordinated debentures to our respective financing entities. In turn, our financing entities paid distributions to the holders of the trust preferred securities. The interest accrued and payable on our junior subordinated debentures is included in interest expense in our consolidated statements of operations. On August 10, 2009, we announced the deferral of our regularly scheduled interest payments on our outstanding junior subordinated debentures relating to our $345.0 million of trust preferred securities beginning with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October 2009. The terms of the junior subordinated debentures and the related trust indentures allow the Company to defer such payments of interest for up to 20 consecutive quarterly periods without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on the Company’s business, financial condition or results of operations. We have deferred such payments for 14 quarterly periods as of December 31, 2012. These deferred payments aggregated $47.7 million at December 31, 2012, as more fully described in Note 12 to our consolidated financial statements. The current 20 consecutive quarterly deferral period ends with the respective payment dates of the trust preferred securities in September and October 2014. The trust preferred securities issued by First Preferred Capital Trust IV are publicly held and traded on the New York Stock Exchange, or NYSE. The remaining trust preferred securities were issued in private placements. The trust preferred securities have no voting rights except in certain limited circumstances. See Note 12 to our consolidated financial statements for further discussion regarding our junior subordinated debentures relating to our trust preferred securities.

United States Department of the Treasury. On December 31, 2008, the Company entered into a Letter Agreement, including a Securities Purchase Agreement – Standard Terms, or Purchase Agreement, with the United States Department of the Treasury, or

1

the U.S. Treasury, pursuant to the Troubled Asset Relief Program’s Capital Purchase Program, or CPP. Under the terms of the Purchase Agreement, on December 31, 2008, we issued to the U.S. Treasury, 295,400 shares of senior preferred stock, or Class C Preferred Stock, and a warrant, or Warrant, to acquire up to 14,784.78478 shares of a separate series of senior preferred stock, or Class D Preferred Stock (at an exercise price of $1.00 per share), for an aggregate purchase price of $295.4 million, pursuant to the standard CPP terms and conditions for non-public companies as described and set forth in the Purchase Agreement and the Warrant. Pursuant to the terms of the Warrant, the U.S. Treasury exercised the Warrant on December 31, 2008 and paid the exercise price by having us withhold, from the shares of Class D Preferred Stock that would otherwise be delivered to the U.S. Treasury upon such exercise, shares of Class D Preferred Stock issuable upon exercise of the Warrant with an aggregate liquidation amount equal in value to the aggregate exercise price of $14,784.78. The senior preferred stock and the Warrant were issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Purchase Agreement contains limitations on certain actions of the Company, including, but not limited to, payment of dividends, redemptions and acquisitions of the Company’s equity securities, and compensation of senior executive officers. In addition, the U.S. Treasury has certain supervisory and oversight duties and responsibilities under the CPP and, pursuant to the terms of the Purchase Agreement, the U.S. Treasury is empowered to unilaterally amend any provision of the Purchase Agreement with the Company to the extent required to comply with any changes in applicable federal statutes. Furthermore, in the event the Company does not pay dividends on the preferred stock issued to the U.S. Treasury for an aggregate of six quarters, the U.S. Treasury has the right to elect two directors to our Board.

On August 10, 2009, we announced the deferral of the payment of cash dividends on our outstanding Class C Preferred Stock and Class D Preferred Stock beginning with the regularly scheduled quarterly dividend payments that would otherwise have been made in August 2009, however we continue to record the declaration of such dividends and the related additional cumulative dividends on our deferred dividend payments in our consolidated financial statements. We have deferred such payments for 14 quarterly periods as of December 31, 2012. These deferred payments aggregated $61.9 million at December 31, 2012, as more fully described in Note 13 to our consolidated financial statements. On July 13, 2011, the U.S. Treasury elected two members to our Board of Directors as a result of our deferral of dividends to the U.S. Treasury for six quarters.

See Note 13 to our consolidated financial statements for further discussion regarding our Class C Preferred Stock and Class D Preferred Stock.

Recent Developments and Other Matters.

Discontinued Operations. On November 21, 2012, we entered into a Branch Purchase and Assumption Agreement that provides for the sale of certain assets and the transfer of certain liabilities associated with eight of our retail branches located in Pinellas County, Florida to HomeBanc National Association (HomeBanc), headquartered in Lake Mary, Florida. Under the terms of the agreement, HomeBanc is to assume approximately $133.4 million of deposits, purchase the premises and equipment and assume the leases associated with these eight retail branches. The transaction, which is subject to certain closing conditions, is expected to be completed during the second quarter of 2013.

We intend to close our two retail branches in Hillsborough County and our single retail branch located in Pasco County, Florida. The closure of these three Northern Florida retail branches is also expected to be completed during the second quarter of 2013. The eight branches being sold and the three branches being closed are collectively defined as the Northern Florida Region. The assets and liabilities associated with the Northern Florida Region are reflected in assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2012 and 2011.

We intend to continue to hold and operate our remaining eight retail branches in Manatee County’s communities of Bradenton, Palmetto and Longboat Key, Florida. These eight branches were previously reported as discontinued operations but were reclassified to continuing operations during the fourth quarter of 2012. The related assets and liabilities associated with these eight retail branches were reclassified from assets and liabilities of discontinued operations to continuing operations in the consolidated balance sheets as of December 31, 2012 and 2011, as further discussed in Note 1 and Note 2 to our consolidated financial statements.

We have applied discontinued operations accounting in accordance with Accounting Standards Codification™, or ASC, Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities associated with our Northern Florida Region as of December 31, 2012 and 2011 and to the operations of our Northern Florida Region, our 14 Northern Illinois retail branches, or Northern Illinois Region, our 24 Chicago retail branches, or Chicago Region, and our 19 Texas retail branches, or Texas Region, in addition to the operations of WIUS, Inc., and its wholly owned subsidiary, WIUS of California, Inc., collectively WIUS, Missouri Valley Partners, Inc., or MVP, and Adrian N. Baker & Company, or ANB, for the years ended December 31, 2012, 2011, 2010, 2009 and 2008, as applicable. All financial information in this Annual Report on Form 10-K is reported on a continuing operations basis, unless otherwise noted. See Note 2 to our consolidated financial statements for further discussion regarding discontinued operations.

2

Capital Plan. We have been working since the beginning of 2008 to strengthen our capital ratios and improve our financial performance. Additionally, on August 10, 2009, we announced the adoption of our Capital Optimization Plan, or Capital Plan, designed to improve our capital ratios and financial performance through certain divestiture activities, asset reductions and expense reductions. We adopted our Capital Plan in order to, among other things, preserve our regulatory capital. A summary of the primary initiatives completed as of December 31, 2012 is shown in the table below. See note 2 to our consolidated financial statements for a discussion of initiatives associated with our Capital Plan that were completed, or are in the process of completion, during the years ended December 31, 2012, 2011, 2010 and 2009.

	Gain (Loss) on Sale			Decrease in Intangible Assets	Decrease in Risk-Weighted Assets	Total Risk- Based Capital Benefit(1)
	(dollars expressed in thousands)
Reduction in Other Risk-Weighted Assets	$	—		—	287,700	25,200
Total 2012 Capital Initiatives	$	—		—	287,700	25,200
Sale of Remaining Northern Illinois Region	$	425		1,558	33,800	4,900
Sale of Edwardsville Branch	263			500	1,400	900
Reduction in Other Risk-Weighted Assets	—			—	877,900	76,800
Total 2011 Capital Initiatives	$	688		2,058	913,100	82,600
Partial Sale of Northern Illinois Region	$	6,355		9,683	141,800	28,500
Sale of Texas Region	4,984			19,962	116,300	35,100
Sale of MVP	(156		)	—	800	(100	)
Sale of Chicago Region	8,414			26,273	342,600	64,700
Sale of Lawrenceville Branch	168			1,000	11,400	2,200
Reduction in Other Risk-Weighted Assets	—			—	2,111,400	184,700
Total 2010 Capital Initiatives	$	19,765		56,918	2,724,300	315,100
Sale of WIUS loans	$	(13,077	)	19,982	146,700	19,700
Sale of restaurant franchise loans	(1,149		)	—	64,400	4,500
Sale of asset-based lending loans	(6,147		)	—	119,300	4,300
Sale of Springfield Branch	309			1,000	900	1,400
Sale of ANB	120			13,013	1,300	13,200
Reduction in Other Risk-Weighted Assets	—			—	1,580,400	138,300
Total 2009 Capital Initiatives	$	(19,944	)	33,995	1,913,000	181,400
Total Completed Capital Initiatives	$	509		92,971	5,838,100	604,300

(1) Calculated as the sum of the gain (loss) on sale plus the reduction in intangible assets plus 8.75% of the reduction in risk-weighted assets.

In addition to the action items identified above with respect to our Capital Plan, we are also focused on the following actions which, if consummated, would further improve our regulatory capital ratios and/or result in a reduction of our risk-weighted assets:

• Successful implementation of the action items contained within our Profit Improvement Plan, as further discussed below;

• Reduction in the overall level of our nonperforming assets and potential problem loans;

• Sale, merger or closure of individual branches or selected branch groupings; and

• Exploration of possible capital planning strategies to increase the overall level of Tier 1 regulatory capital at our holding company.

We believe the successful completion of our Capital Plan would substantially improve our capital position. However, no assurance can be made that we will be able to successfully complete all, or any portion, of our Capital Plan, or that our Capital Plan will not be materially modified in the future. Our decision to implement the Capital Plan reflects the adverse effect that the severe downturn in the commercial and residential real estate markets has had on our financial condition and results of operations. If we are not able to successfully complete substantially all of our Capital Plan, our business, financial condition, including regulatory capital ratios, and results of operations may be materially and adversely affected and our ability to withstand continued adverse economic uncertainty could be threatened.

Strategy. Our strategy emphasizes profitable growth within our market areas, aggressive management of asset quality and liquidity risks, and preservation and enhancement of regulatory capital. We have developed several plans around these actions, including the previously discussed Capital Plan, a Profit Improvement Plan, a Liquidity Plan and an Asset Quality Improvement Plan.

Our Profit Improvement Plan contains several action items regarding revenue enhancement and continued reduction of noninterest expenses including the following:

• Accelerating the reduction of special mention, substandard and nonaccrual loans and other real estate to reduce future provisions for loan losses, increase our net interest income and reduce noninterest expenses associated with these assets,

3

including legal fees, other real estate write-downs and other real estate expenses related to property preservation, taxes, insurance and other items;

• Developing new loan growth strategies, primarily within our commercial and industrial, commercial real estate and residential mortgage segments;

• Re-pricing our deposits to current market interest rates while maintaining appropriate deposit portfolio diversification;

• Utilizing low-yielding short-term investments to complete our divestitures associated with our Capital Plan, and increase our investment securities portfolio;

• Pursuing opportunities to generate noninterest income through sales of other real estate properties, branch offices and other assets;

• Increasing the volume of loans sold in the secondary market in our mortgage division through an expanded sales force and enhanced marketing initiatives; and

• Evaluating opportunities to reduce noninterest expenses as a result of our smaller asset base and lower deposit volumes.

Our Liquidity Plan includes the following actions:

• Maintaining and continuing to generate core deposits, including noninterest-bearing demand, interest-checking, money market and savings deposits;

• Increasing our investment securities portfolio and maintaining appropriate levels of unpledged investment securities; and

• Continuing to maximize potential borrowing relationships with the Federal Home Loan Bank, or FHLB, and the Federal Reserve Bank of St. Louis, or FRB, in the event utilization of these additional alternative funding sources becomes necessary in the future.

Our Asset Quality Improvement Plan includes the following actions intended to reduce the level of our nonperforming assets and loan charge-offs:

• Developing written action plans for all credit relationships over $3.0 million with approval by the Regional President and Regional Credit Officer;

• Actively pursuing troubled debt restructurings to position credits to return to performing status with sustained operating performance;

• Eliminating or significantly reducing the potential exposure to our largest nonperforming credit relationships;

• Pursuing opportunities to generate significant recoveries on previously charged-off loans;

• Modifying one-to-four-family residential real estate loans under the Home Affordable Modification Program, or HAMP, where deemed economically advantageous to our borrowers and us;

• Assessing our commercial real estate portfolio for early risk recognition and identification of potential areas for deteriorating commercial real estate loans, with increased emphasis on non-owner occupied loans;

• Transferring certain nonperforming and potential problem credits to our special asset groups for further review, evaluation and development of appropriate strategies for exiting these relationships or significantly reducing our potential exposure; and

• Further developing additional reporting mechanisms regarding asset quality related matters to assist management in further evaluating and assessing ongoing performance measurements and trends.

We believe the successful completion of the various components of these plans would substantially improve our financial performance and regulatory capital ratios. If we are not able to successfully complete a substantial portion of the action items contained within these plans, our business, financial condition, including our regulatory capital ratios, and results of operations may be materially and adversely affected and our ability to withstand continued adverse economic uncertainty could be threatened.

Lending Activities. As further discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Loans and Allowance for Loan Losses,” our business development efforts have historically been focused on the origination of the following general loan types: commercial, financial and agricultural loans; real estate construction and land development loans; commercial real estate mortgage loans and residential real estate mortgage loans. Our lending strategy emphasizes quality and diversification. Throughout our organization, we employ a common credit underwriting policy. In addition to underwriting based on estimates and projection of financial strength, collateral values and future cash flows, most loans to borrowing entities other than individuals require the guarantee of the parent company or entity sponsor, or in the case of smaller entities, the personal guarantees of the principals.

Commercial, Financial and Agricultural. Our commercial, financial and agricultural loan portfolio was $610.3 million, or 21.3% of total loans held for portfolio, at December 31, 2012, compared to $725.1 million, or 22.3% of total loans held for portfolio, at December 31, 2011. During recent years, we have attempted to further diversify our loan portfolio by increasing our commercial, financial and agricultural lending opportunities. However, certain transactions associated with our Capital Plan during the last four years, including loan sale transactions and reclassifications of loans to discontinued operations, have reduced the percentage

4

of commercial, financial and agricultural loans as a percentage of total loans. The primary component of commercial, financial and agricultural loans is commercial loans, which are made based on the borrowers’ general credit strength and ability to generate cash flows for repayment from income sources. Most of these loans are made on a secured basis, generally involving the use of company equipment, inventory and/or accounts receivable, and, from time to time, real estate, as collateral. Regardless of collateral, substantial emphasis is placed on the borrowers’ ability to generate cash flow sufficient to operate the business and provide coverage of debt servicing requirements. Commercial loans are frequently renewable annually, although some terms may be as long as five years. These loans typically require the borrower to satisfy certain operating covenants appropriate for the specific business, such as profitability, debt service coverage and current asset and leverage ratios, which are generally reported and monitored on a quarterly basis and subject to more detailed annual reviews. Commercial loans are made to customers primarily located in First Bank’s geographic trade areas of California, Missouri and Illinois that are engaged in manufacturing, retailing, wholesaling and service businesses. This portfolio is not concentrated in large specific industry segments that are characterized by sufficient homogeneity that would result in significant concentrations of credit exposure. Rather, it is a highly diversified portfolio that encompasses many industry segments. Within both our real estate and commercial lending portfolios, we strive for the highest degree of diversity that is practicable. We also emphasize the development of other service relationships, particularly deposit accounts, with our commercial borrowers.

Real Estate Construction and Development. Our real estate construction and land development loan portfolio was $175.0 million, or 6.1% of total loans held for portfolio, at December 31, 2012, compared to $250.0 million, or 7.7% of total loans held for portfolio, at December 31, 2011. Real estate construction and land development loans include commitments for construction of both residential and commercial properties. Commercial real estate projects often require commitments for permanent financing from other lenders upon completion of the project and, more typically, may include a short-term amortizing component of the initial financing. Commitments for construction of multi-tenant commercial and retail projects generally require lease commitments from a substantial primary tenant or tenants prior to commencement of construction. We typically engage in multi-phase, multi-tenant projects, as opposed to large vertical projects, that allow us to complete the financing for the projects in phases and limit the number of tenant building starts based upon successful lease and/or sale of the tenant units. We finance some projects for borrowers whose home office is located within our trade area but the particular project may be outside our normal trade area. Although we generally do not engage in developing commercial and residential construction lending business outside of our trade area, certain loans acquired in acquisitions from time to time and certain other loans have been related to projects outside of our trade area. Residential real estate construction and development loans are made based on the cost of land acquisition and development, as well as the construction of the residential units. Although we finance the cost of display units and units held for sale, a substantial portion of the loans for individual residential units have purchase commitments prior to funding. Residential condominium projects are funded as the building construction progresses, but funding of unit finishing is generally based on firm sales contracts.

Commercial Real Estate. Our commercial real estate loan portfolio was $969.7 million, or 33.9% of total loans held for portfolio, at December 31, 2012, compared to $1.23 billion, or 37.7% of total loans held for portfolio, at December 31, 2011. Commercial real estate loans include loans for which the intended source of repayment is rental and other income from the real estate. This includes commercial real estate developed for lease to third parties as well as the owner’s occupancy. The underwriting of owner-occupied commercial real estate loans generally follows the procedures for commercial lending described above, except that the collateral is real estate, and the loan term may be longer. The primary emphasis in underwriting loans for which the source of repayment is the performance of the collateral is the projected cash flow from the real estate and its adequacy to cover the operating costs of the project and the debt service requirements. Secondary emphasis is placed on the appraised value of the real estate, with the requirement that the appraised liquidation value of the collateral must be adequate to repay the debt and related interest in the event the cash flow becomes insufficient to service the debt. Generally, underwriting terms require the loan principal not to exceed 80% of the appraised value of the collateral and the loan maturity not to exceed ten years. Commercial real estate loans are made for commercial office space, retail properties, industrial and warehouse facilities and recreational properties. We typically only finance commercial real estate or rental properties that have lease commitments for a majority of the rentable space.

Residential Real Estate Mortgage. Our one-to-four-family residential real estate mortgage loan portfolio was $986.8 million, or 34.4% of total loans held for portfolio, at December 31, 2012, compared to $902.4 million, or 27.7% of total loans held for portfolio, at December 31, 2011. Residential real estate mortgage loans are primarily loans secured by single-family, owner-occupied properties. These loans include both adjustable rate and fixed rate mortgage loans. We typically originate residential real estate mortgage loans for sale in the secondary mortgage market in the form of a mortgage-backed security or to various private third-party investors, although from time-to-time, we may purchase and/or retain certain originated residential mortgage loans, including home equity loans, in our loan portfolio as directed by management’s business strategies. Our residential real estate mortgage loans are generated through our branch office network as well as our mortgage division and are underwritten in accordance with conforming terms that allow the loans to be sold into the secondary market. We discontinued the origination of Alt A and Sub-prime mortgage loan products in 2007 and do not presently offer these loan products. Servicing rights may either be retained or released with respect to conventional, FHA and VA conforming fixed-rate and conventional adjustable rate residential mortgage loans.

5

Market Areas. As of December 31, 2012, First Bank’s 146 banking facilities were located in California, Florida, Illinois and Missouri. First Bank presently operates in the St. Louis metropolitan area, in eastern Missouri and throughout southern Illinois. First Bank also operates in southern California, including San Diego and the greater Los Angeles metropolitan area, including Ventura County, Riverside County and Orange County; in Santa Barbara County; in northern California, including the greater San Francisco and Sacramento metropolitan areas; and in Florida, including Bradenton and the greater Tampa metropolitan area.

The following table lists the geographic market areas in which First Bank operates, total deposits, deposits as a percentage of total deposits and the number of locations as of December 31, 2012:

Geographic Area	Total Deposits (in millions)		Deposits as a Percentage of Total Deposits		Number of Locations
Southern California	$	1,606.6	28.4	%	40
Northern California	1,278.5		22.6		19
St. Louis, Missouri metropolitan area	1,265.2		22.4		34
Southern Illinois	802.4		14.2		22
Missouri (excluding the St. Louis metropolitan area)	376.5		6.7		12
Florida (1)	318.7		5.6		19
Other	0.6		0.1		—
Total Deposits	$	5,648.5	100.0	%	146

(1) Includes deposits of approximately $155.7 million associated with the sale and closure of branches in our Northern Florida Region, which are expected to be completed in the second quarter of 2013. See Note 2 to our consolidated financial statements for further discussion of discontinued operations.

Competition and Branch Banking. The activities in which First Bank engages are highly competitive. Those activities and the geographic markets served primarily involve competition with other banks, some of which are affiliated with large regional or national holding companies, and other financial services companies. Financial institutions compete based upon interest rates offered on deposit accounts and other credit and service charges, the types of products and quality of services rendered, the convenience of branch facilities, interest rates charged on loans and, in the case of loans to large commercial borrowers, relative lending limits.

Our principal competitors include other commercial banks, savings banks, savings and loan associations, and finance companies, including trust companies, credit unions, mortgage companies, leasing companies, private issuers of debt obligations and suppliers of other investment alternatives, such as securities firms and financial holding companies. Many of our non-bank competitors are not subject to the same degree of regulation as that imposed on bank holding companies, federally insured banks and national or state chartered banks. As a result, such non-bank competitors have advantages over us in providing certain services. We also compete with major multi-bank holding companies, which are significantly larger than us and have greater access to capital and other resources.

Employees. We employed approximately 1,177 full-time equivalent employees at December 31, 2012, exclusive of discontinued operations. None of the employees are subject to a collective bargaining agreement. We consider our relationships with our employees to be good.

Supervision and Regulation.

General. Along with First Bank, we are extensively regulated by federal and state laws and regulations which are designed to protect depositors of First Bank and the safety and soundness of the U.S. banking system, not our debt holders or stockholders. To the extent this discussion refers to statutory or regulatory provisions, it is not intended to summarize all such provisions and is qualified in its entirety by reference to the relevant statutory and regulatory provisions. Changes in applicable laws, regulations or regulatory policies may have a material effect on our business and prospects. We are unable to predict the nature or extent of the effects on our business and earnings that new federal and state legislation or regulation may have. The enactment of the legislation described below has significantly affected the banking industry generally and is likely to have ongoing effects on First Bank and us in the future.

As a registered bank holding company under the Bank Holding Company Act of 1956, as amended, we are subject to regulation and supervision of the Board of Governors of the Federal Reserve System, or Federal Reserve. We file annual reports with the Federal Reserve and provide to the Federal Reserve additional information as it may require. Many of our subsidiaries are also subject to the laws and regulations of both the federal government and the various states in which they conduct business. As an originator of small business loans, we are also regulated by the U.S. Small Business Administration, or SBA.

Regulatory Agreements. On March 24, 2010, the Company, SFC and First Bank entered into a Written Agreement, or Agreement, with the FRB requiring the Company and First Bank to take certain steps intended to improve their overall financial condition. Pursuant to the Agreement, the Company prepared and filed with the FRB a number of specific plans designed to strengthen and/

6

or address the following matters: (i) board oversight over the management and operations of the Company and First Bank; (ii) credit risk management practices; (iii) lending and credit administration policies and procedures; (iv) asset improvement; (v) capital; (vi) earnings and overall financial condition; and (vii) liquidity and funds management.

The Agreement requires, among other things, that the Company and First Bank obtain prior approval from the FRB in order to pay dividends. In addition, the Company must obtain prior approval from the FRB to: (i) take any other form of payment from First Bank representing a reduction in capital of First Bank; (ii) make any distributions of interest, principal or other sums on junior subordinated debentures or trust preferred securities; (iii) incur, increase or guarantee any debt; or (iv) purchase or redeem any shares of the Company’s stock. Pursuant to the terms of the Agreement, the Company and First Bank submitted a written plan to the FRB to maintain sufficient capital at the Company, on a consolidated basis, and at First Bank, on a standalone basis. In addition, the Agreement also provides that the Company and First Bank must notify the FRB if the regulatory capital ratios of either entity fall below those set forth in the capital plans that were accepted by the FRB, and specifically if First Bank falls below the criteria for being well capitalized under the regulatory framework for prompt corrective action. The Company must also notify the FRB before appointing any new directors or senior executive officers or changing the responsibilities of any senior executive officer position. The Agreement also requires the Company and First Bank to comply with certain restrictions regarding indemnification and severance payments. The Agreement is specifically enforceable by the FRB in court.

The Company and First Bank must furnish periodic progress reports to the FRB regarding compliance with the Agreement. As of the date of this filing, the Company and First Bank have provided progress reports and other reports, as required under the Agreement. The Company and First Bank have received, and may receive in the future, additional requests from the FRB regarding compliance with the Agreement, which may include, but are not limited to, updates and modifications to the Company’s Asset Quality Improvement, Profit Improvement and Capital Plans. Management has responded promptly to any such requests and intends to do so in the future. The Agreement will remain in effect until stayed, modified, terminated or suspended by the FRB.

Prior to entering into the Agreement on March 24, 2010, the Company and First Bank had entered into a memorandum of understanding and an informal agreement, respectively, with the FRB and the State of Missouri Division of Finance, or the MDOF. Each of the agreements were characterized by regulatory authorities as informal actions that were neither published nor made publicly available by the agencies and are used when circumstances warrant a milder form of action than a formal supervisory action, such as a written agreement or cease and desist order. The informal agreement with the MDOF is still in place and there have not been any modifications thereto since its inception in September 2008.

Under the terms of the prior memorandum of understanding with the FRB, the Company agreed, among other things, to provide certain information to the FRB including, but not limited to, financial performance updates, notice of plans to materially change its fundamental business and notice to issue trust preferred securities or raise additional equity capital. In addition, the Company agreed not to pay any dividends on its common or preferred stock or make any distributions of interest or other sums on its trust preferred securities without the prior approval of the FRB.

First Bank, under its informal agreement with the MDOF and the FRB, agreed to, among other things, prepare and submit plans and reports to the agencies regarding certain matters including, but not limited to, the performance of First Bank’s loan portfolio. In addition, First Bank agreed not to declare or pay any dividends or make certain other payments without the prior consent of the MDOF and the FRB and to maintain a Tier 1 capital to total assets ratio of no less than 7.00%. As further described in Note 14 to our consolidated financial statements, First Bank’s Tier 1 capital to total assets ratio was 9.20% at December 31, 2012.

While the Company and First Bank intend to take such actions as may be necessary to comply with the requirements of the Agreement with the FRB and informal agreement with the MDOF, there can be no assurance that the Company and First Bank will be able to comply fully with the requirements of the Agreement or that First Bank will be able to comply fully with the provisions of the informal agreement, that compliance with the Agreement and the informal agreement will not be more time consuming or more expensive than anticipated, that compliance with the Agreement and the informal agreement will enable the Company and First Bank to maintain profitable operations, or that efforts to comply with the Agreement and the informal agreement will not have adverse effects on the operations and financial condition of the Company or First Bank. If the Company or First Bank is unable to comply with the terms of the Agreement or the informal agreement, respectively, the Company and First Bank could become subject to various requirements limiting our ability to develop new business lines, mandating additional capital, and/or requiring the sale of certain assets and liabilities. Failure of the Company or First Bank to meet these conditions could lead to further enforcement action by the regulatory agencies. The terms of any such additional regulatory actions, orders or agreements could have a materially adverse effect on our business, financial condition or results of operations.

Bank Holding Company Regulation. The activities of bank holding companies are generally limited to the business of banking, managing or controlling banks, and other activities that the Federal Reserve has determined to be so closely related to banking or managing or controlling banks as to the proper incident thereto. In addition, under the Gramm-Leach-Bliley Act, or GLB Act, which was enacted in November 1999 and is further discussed below, a bank holding company, whose control depository institutions are “well-capitalized” and “well-managed” (as defined in Federal Banking Regulations), and which obtains “satisfactory”

7

Community Reinvestment Act (discussed briefly below) ratings, may declare itself to be a “financial holding company” and engage in a broader range of activities. As of this date, we are not a “financial holding company.”

We are also subject to capital requirements applied on a consolidated basis, which are substantially similar to those required of First Bank (briefly summarized below). The Bank Holding Company Act also requires a bank holding company to obtain approval from the Federal Reserve before:

• Acquiring, directly or indirectly, ownership or control of any voting shares of another bank or bank holding company if, after such acquisition, it would own or control more than 5% of such shares (unless it already owns or controls a majority of such shares);

• Acquiring all or substantially all of the assets of another bank or bank holding company; or

• Merging or consolidating with another bank holding company.

The Federal Reserve will not approve any acquisition, merger or consolidation that would have a substantially anticompetitive result, unless the anti-competitive effects of the proposed transaction are clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served. The Federal Reserve also considers capital adequacy and other financial and managerial factors in reviewing acquisitions and mergers.

Safety and Soundness and Similar Regulations. We are subject to various regulations and regulatory policies directed at the financial soundness of First Bank. These include, but are not limited to: the Federal Reserve’s source of strength policy, which obligates a bank holding company such as us to provide financial and managerial strength to its subsidiary banks; restrictions on the nature and size of certain affiliate transactions between a bank holding company and its subsidiary depository institutions; and restrictions on extensions of credit by its subsidiary banks to executive officers, directors, principal stockholders and the related interests of such persons.

Regulatory Capital Standards and Proposed Basel III Regulatory Capital Reforms. The federal bank regulatory agencies have adopted substantially similar risk-based and leverage capital guidelines for banking organizations. Regulatory capital ratios are determined by classifying assets and specified off-balance sheet obligations and financial instruments into weighted categories, with higher levels of capital being required for categories deemed to represent greater risk. Federal Reserve policy also provides that banking organizations generally, and particularly those that are experiencing internal growth or actively making acquisitions, are expected to maintain capital positions that are substantially above the minimum supervisory levels, without significant reliance on intangible assets.

Under the risk-based capital standard, the minimum consolidated ratio of total capital to risk-adjusted assets required for bank holding companies is 8% and the minimum consolidated ratio of Tier I capital (as described below) to risk-adjusted assets required for bank holding companies is 4%. At least one-half of the total capital must be composed of common equity, retained earnings, qualifying noncumulative perpetual preferred stock, a limited amount of qualifying cumulative perpetual preferred stock and noncontrolling interests in the equity accounts of consolidated subsidiaries, less certain items such as goodwill and certain other intangible assets, which amount is referred to as “Tier I capital.” The remainder may consist of qualifying hybrid capital instruments, perpetual debt, mandatory convertible debt securities, a limited amount of subordinated debt, preferred stock that does not qualify as Tier I capital and a limited amount of loan and lease loss reserves, which amount, together with Tier I capital, is referred to as “Total Risk-Based Capital.”

In addition to the risk-based standard, we are subject to minimum requirements with respect to the ratio of our Tier I capital to our average assets less goodwill and certain other intangible assets, or the Leverage Ratio. Applicable requirements provide for a minimum Leverage Ratio of 3% for bank holding companies that have the highest supervisory rating, while all other bank holding companies must maintain a minimum Leverage Ratio of at least 4% to 5%. The Office of the Comptroller of the Currency and the FDIC have established capital requirements for banks under their respective jurisdictions that are consistent with those imposed by the Federal Reserve on bank holding companies.

As further described in Note 14 to our consolidated financial statements, First Bank was categorized as well capitalized at December 31, 2012 and 2011 under the prompt corrective action provisions of the regulatory capital standards. The Company did not meet the minimum regulatory capital standards established for bank holding companies by the Federal Reserve at December 31, 2012 and 2011.

The federal regulatory authorities’ risk-based capital guidelines are based upon the 1988 capital accord (Basel I) of the Basel Committee on Banking Supervision, or the Basel Committee. The Basel Committee is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each country’s supervisors in determining the supervisory policies and regulations to which they apply. Actions of the Basel Committee have no direct effect on banks in participating countries. In 2004, the Basel Committee published a new capital accord (Basel II) to replace Basel I. Basel II provides two approaches for setting capital standards for credit risk – an internal ratings-based approach tailored

8

to individual institutions’ circumstances and a standardized approach that bases risk weightings on external credit assessments to a much greater extent than permitted in existing risk-based capital guidelines. Basel II also sets capital requirements for operational risk and refines the existing capital requirements for market risk exposures. Basel II applies only to certain large or internationally active banking organizations, or “core banks,” defined as those with consolidated total assets of $250 billion or more or consolidated on-balance sheet foreign exposures of $10 billion or more and, accordingly, currently does not apply to the Company.

In 2009, the U.S. Treasury issued a policy statement, or the Treasury Policy Statement, entitled “Principles for Reforming the U.S. and International Regulatory Capital Framework for Banking Firms,” which contemplates changes to the existing regulatory capital regime involving substantial revisions to major parts of the Basel I and Basel II capital frameworks and affecting all regulated banking organizations and other systemically important institutions. The Treasury Policy Statement calls for, among other things, higher and stronger capital requirements for all banking firms, with changes to the regulatory capital framework to be phased in over a period of several years.

In December 2009, the Basel Committee issued a set of proposals, or the 2009 Capital Proposals, that would significantly revise the definitions of Tier 1 capital and Tier 2 capital. Among other things, the 2009 Capital Proposals would re-emphasize that common equity is the predominant component of Tier 1 capital. Concurrently with the release of the 2009 Capital Proposals, the Basel Committee also released a set of proposals related to liquidity risk exposure, or the 2009 Liquidity Proposals. The 2009 Liquidity Proposals include the implementation of (i) a liquidity coverage ratio, or LCR, designed to ensure that a bank maintains an adequate level of unencumbered, high-quality assets sufficient to meet the bank’s liquidity needs over a 30-day time horizon under an acute liquidity stress scenario and (ii) a net stable funding ratio, or NSFR, designed to promote more medium and long-term funding of the assets and activities of banks over a one-year time horizon.

On June 7, 2012, the Federal Reserve approved proposed rules that would substantially amend the regulatory risk-based capital rules applicable to the Company and First Bank. The proposed rules implement the Basel III regulatory capital reforms, or Basel III, and changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act. “Basel III” refers to two consultative documents released by the Basel Committee on Banking Supervision in December 2009, the rules text released in December 2010, and loss absorbency rules issued in January 2011, which include significant changes to bank capital, leverage and liquidity requirements. Although Basel III is intended to be implemented by institutions with greater than $50 billion in assets, its provisions are likely to be considered by United States banking regulators in developing new regulations applicable to other banks in the United States, including First Bank. The extended comment period for the proposed rules ended on October 22, 2012. Consequently, the proposed rules are currently pending finalization.

The proposed rules include new risk-based capital and leverage ratios, which would be phased in from 2013 to 2019, and would refine the definition of what constitutes “capital” for purposes of calculating those ratios. The proposed new minimum capital level requirements applicable to the Company and First Bank under the proposals would be: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4% for all institutions (unchanged from current rules). The proposed rules would also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement would be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase by that amount each year until fully implemented in January 2019. An institution would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations would establish a maximum percentage of eligible retained income that could be utilized for such actions.

The proposed rules also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which, such as trust preferred securities, would be phased out over time, as further described under “Item 7 —Management's Discussion and Analysis of Financial Condition and Results of Operations – Capital and Dividends.”

The federal bank regulatory agencies also proposed revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including First Bank, if their capital levels begin to show signs of weakness. These revisions would take effect January 1, 2015. Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions would be required to meet the following increased capital level requirements in order to qualify as “well capitalized:” (i) a new common equity Tier 1 capital ratio of 6.5%; (ii) a Tier 1 capital ratio of 8% (increased from 6%); (iii) a total capital ratio of 10% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 5% (increased from 4%).

The proposed rules set forth certain changes for the calculation of risk-weighted assets, which we would be required to utilize beginning January 1, 2015. The standardized approach proposed rule utilizes an increased number of credit risk exposure categories and risk weights, and also addresses: (i) a proposed alternative standard of creditworthiness consistent with Section 939A of the

9

Dodd-Frank Act; (ii) revisions to recognition of credit risk mitigation; (iii) rules for risk weighting of equity exposures and past due loans; (iv) revised capital treatment for derivatives and repo-style transactions; and (v) disclosure requirements for top-tier banking organizations with $50 billion or more in total assets that are not subject to the “advance approach rules” that apply to banks with greater than $250 billion in consolidated assets.

The rules ultimately adopted and made applicable to the Company and First Bank may be different from the Basel III proposed rules as published. We continue to evaluate the potential impact that regulatory proposals may have on our liquidity and capital management strategies, including Basel III and those required under the Dodd-Frank Act, as they continue to progress through the final rule-making process.

Prompt Corrective Action. The FDIC Improvement Act, or FDICIA, requires the federal bank regulatory agencies to take prompt corrective action in respect to depository institutions that do not meet minimum capital requirements. A depository institution’s status under the prompt corrective action provisions depends upon how its capital levels compare to various relevant capital measures and other factors as established by regulation.

The federal regulatory agencies have adopted regulations establishing relevant capital measures and relevant capital levels. Under the regulations, a bank will be:

• “Well capitalized” if it has a total risk-based capital ratio of 10% or greater, a Tier I capital ratio of 6% or greater and a Leverage Ratio of 5% or greater and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure;

• “Adequately capitalized” if it has a total risk-based capital ratio of 8% or greater, a Tier I capital ratio of 4% or greater and a Leverage Ratio of 4% or greater (3% in certain circumstances);

• “Undercapitalized” if it has a total risk-based capital ratio of less than 8%, a Tier I capital ratio of less than 4% or a Leverage Ratio of less than 4% (3% in certain circumstances);

• “Significantly undercapitalized” if it has a total risk-based capital ratio of less than 6%, a Tier I capital ratio of less than 3% or a Leverage Ratio of less than 3%; and

• “Critically undercapitalized” if its tangible equity is equal to or less than 2% of its average quarterly tangible assets.

Under certain circumstances, a depository institution’s primary federal regulatory agency may use its authority to lower the institution’s capital category. The banking agencies are permitted to establish individual minimum capital requirements exceeding the general requirements described above. See further discussion above under “—Regulatory Agreements.” Generally, failing to maintain the status of “well capitalized” or “adequately capitalized” subjects a bank to restrictions and limitations on its business that become progressively more severe as the capital levels decrease.

A bank is prohibited from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the bank would thereafter be “undercapitalized.” Limitations exist for “undercapitalized” depository institutions regarding, among other things, asset growth, acquisitions, branching, new lines of business, acceptance of brokered deposits and borrowings from the Federal Reserve System. These institutions are also required to submit a capital restoration plan that includes a guarantee from the institution’s holding company. “Significantly undercapitalized” depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. The appointment of a receiver or conservator may be required for “critically undercapitalized” institutions.

Dividends. Our primary source of funds in the future is the dividends, if any, paid by First Bank. The ability of First Bank to pay dividends is limited by federal laws, by regulations promulgated by the bank regulatory agencies and by principles of prudent bank management. The dividend limitations are further described in Note 22 to our consolidated financial statements appearing elsewhere in this report. In addition, First Bank has agreed that it will not declare or pay any dividends or make certain other payments to us without the prior consent of the MDOF and the FRB, as previously discussed under “—Regulatory Agreements.”

Federal Deposit Insurance Reform. The FDIC maintains the Deposit Insurance Fund, or the DIF, which was created in 2006. The deposit accounts of First Bank are insured by the DIF to the maximum amount provided by law. This insurance is backed by the full faith and credit of the United States Government. As insurer, the FDIC is authorized to conduct examinations of and to require reporting by DIF-insured institutions. It also may prohibit any DIF-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the DIF. The FDIC also has the authority to take enforcement actions against insured institutions. Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC. We do not know of any practice, condition or violation that might lead to termination of our deposit insurance.

10

The FDIC imposes assessments for deposit insurance on an insured institution on a quarterly basis. The Dodd-Frank Act (as defined and further described below) required the FDIC to establish rules setting insurance premium assessments based on an institution’s total assets minus its tangible equity instead of its deposits. These rules were finalized on February 7, 2011 and set base assessment rates for institutions in Risk Categories II, III and IV at annual rates of 14, 23 and 35 basis points, respectively. The base assessment rate for a Risk Category I institution was set at a range of five to nine basis points. These initial base assessment rates are adjusted to determine an institution’s final assessment rate based on its brokered deposits and unsecured debt. Total base assessment rates after adjustments range from 2.5 to nine basis points for Risk Category I, nine to 24 basis points for Risk Category II, 18 to 33 basis points for Risk Category III, and 30 to 45 basis points for Risk Category IV.

In addition, all institutions with deposits insured by the FDIC are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation, a mixed-ownership government corporation established to recapitalize a predecessor to the DIF. These assessments will continue until the Financing Corporation bonds mature in 2019.

Pursuant to the Dodd-Frank Act, the FDIC has established 2.0% as the designated reserve ratio, or DRR, that is, the ratio of the DIF to insured deposits. The FDIC has adopted a plan under which it will meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Act.

In November 2010 and January 2011, the FDIC, as mandated by Section 343 of the Dodd-Frank Act, adopted rules providing for unlimited deposit insurance for traditional noninterest-bearing transaction accounts and IOLTA accounts for two years beginning on December 31, 2010. This coverage applied to all insured depository institutions, and there was no separate FDIC assessment for the insurance. This coverage expired on December 31, 2012.

Customer Protection. First Bank is also subject to consumer laws and regulations intended to protect consumers in transactions with depository institutions, as well as other laws or regulations affecting customers of financial institutions generally. These laws and regulations mandate various disclosure requirements and substantively regulate the manner in which financial institutions must deal with their customers. First Bank must comply with numerous regulations in this regard and is subject to periodic examinations with respect to its compliance with the requirements.

Community Reinvestment Act. The Community Reinvestment Act of 1977, or CRA, requires that, in connection with examinations of financial institutions within their jurisdiction, the federal banking regulators evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of those financial institutions. These factors are also considered in evaluating mergers, acquisitions and other applications to expand.

The Gramm-Leach-Bliley Act. The GLB Act, enacted in 1999, amended and repealed portions of the Glass-Steagall Act and other federal laws restricting the ability of bank holding companies, securities firms and insurance companies to affiliate with each other and to enter new lines of business. The GLB Act established a comprehensive framework to permit financial companies to expand their activities, including through such affiliations, and to modify the federal regulatory structure governing some financial services activities. The GLB Act also adopted consumer privacy safeguards requiring financial services providers to disclose their policies regarding the privacy of customer information to their customers and, subject to some exceptions, allowing customers to “opt out” of policies permitting such companies to disclose confidential financial information to non-affiliated third parties.

The Sarbanes-Oxley Act. The Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, imposes a myriad of corporate governance and accounting measures designed to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of disclosures under securities laws. All public companies that file periodic reports with the SEC are affected by Sarbanes-Oxley. Sarbanes-Oxley addresses, among other matters: (i) the creation of an independent accounting oversight board to oversee the audit of public companies and auditors who perform such audits; (ii) auditor independence provisions which restrict non-audit services that independent accountants may provide to their audit clients; (iii) additional corporate governance and responsibility measures which require the chief executive officer and chief financial officer to certify financial statements, to forfeit salary and bonuses in certain situations, and protect whistleblowers and informants; (iv) expansion of the audit committee’s authority and responsibility by requiring that the audit committee have direct control of the outside auditor, be able to hire and fire the auditor, and approve all non-audit services; (v) requirements that audit committee members be independent; (vi) disclosure of a code of ethics; and (vii) enhanced penalties for fraud and other violations. The provisions of Sarbanes-Oxley also require that management assess the effectiveness of internal control over financial reporting and that the independent auditor issue an attestation report on management’s report on internal control over financial reporting. As we are a non-accelerated filer, management’s report on internal control over financial reporting was not subject to attestation by the Company’s Independent Registered Public Accounting Firm as of December 31, 2012, as further discussed under “Item 9A — Controls and Procedures.”

The USA Patriot Act. The USA Patriot Act, or Patriot Act, is intended to strengthen the ability of U.S. law enforcement agencies and the intelligence communities to work cohesively to combat terrorism on a variety of fronts. The impact of the Patriot Act on

11

financial institutions is significant and wide ranging. The Patriot Act contains sweeping anti-money laundering and financial transparency laws and imposes various regulations, including standards for verifying client identification at account opening, and rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.

Reserve Requirements; Federal Reserve System and Federal Home Loan Bank System. First Bank is a member of the Federal Reserve System and the Federal Home Loan Bank System. As a member, First Bank is required to hold investments in those systems. First Bank was in compliance with these requirements at December 31, 2012, as further described in Note 1 to our consolidated financial statements.

The Federal Reserve requires all depository institutions to maintain reserves against their transaction accounts and non-personal time deposits. The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy liquidity requirements.

First Bank has established a borrowing relationship with the FRB, which is primarily secured by commercial loans, and provides an additional liquidity facility that may be utilized for contingency purposes. Advances drawn on First Bank’s established borrowing relationship require prior approval of the FRB. First Bank also has established a borrowing relationship with the FHLB of Des Moines. The borrowing relationship is secured by one-to-four-family residential, multi-family residential and commercial real estate loans. First Bank requests advances and/or repays advances from the FHLB based on its current and future projected liquidity needs. Advances from the FHLB require prior approval of the FHLB. See further discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity Management.”

Monetary Policy and Economic Control. The commercial banking business is affected by legislation, regulatory policies and general economic conditions as well as the monetary policies of the Federal Reserve. The instruments of monetary policy available to the Federal Reserve include the following: (i) changes in the discount rate on member bank borrowings and the targeted federal funds rate; (ii) the availability of credit at the discount window; (iii) open market operations; (iv) the imposition of and changes in reserve requirements against deposits of domestic banks; (v) the imposition of and changes in reserve requirements against deposits and assets of foreign branches; and (vi) the imposition of and changes in reserve requirements against certain borrowings by banks and their affiliates.

These monetary policies are used in varying combinations to influence overall growth and distributions of bank loans, investments and deposits, and this use may affect interest rates charged on loans or paid on liabilities. The monetary policies of the Federal Reserve have had a significant effect on the operating results of commercial banks and are expected to do so in the future. Such policies are influenced by various factors, including inflation, unemployment, and short-term and long-term changes in the international trade balance and in the fiscal policies of the U.S. Government. We cannot predict the effect that changes in monetary policy or in the discount rate on member bank borrowings will have on our future business and earnings or those of First Bank.

United States Securities and Exchange Commission. We are also under the jurisdiction of the SEC and certain state securities commissions for matters relating to the offering and sale of our securities. We are subject to disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. The securities issued by one of our affiliated trusts are registered under the Securities Exchange Act of 1934 and are listed on the NYSE under the trading symbol “FBSPrA,” and therefore, we are subject to certain rules and regulations of the NYSE.

United States Department of the Treasury. As further described above under “Item 1 —Business – Capital Structure,” on December 31, 2008, we completed the sale to the U.S. Treasury of $295.4 million of newly-issued non-voting preferred stock as part of the CPP. The U.S. Treasury has certain supervisory and oversight duties and responsibilities under the CPP and, pursuant to the terms of the Purchase Agreement, the U.S. Treasury is empowered to unilaterally amend any provision of the Purchase Agreement with us to the extent required to comply with any changes in applicable federal statutes. In addition, as a result of our deferral of dividends to the U.S. Treasury for an aggregate of six quarters, the U.S. Treasury had the right to elect two directors to our Board. On July 13, 2011, the U.S. Treasury elected two members to our Board of Directors.

SIGTARP. The Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, was established pursuant to Section 121 of the Emergency Economic Stabilization Act of 2008, or EESA, and has the duty, among other things, to conduct, supervise, and coordinate audits and investigations of the purchase, management and sale of assets by the U.S. Treasury under the CPP, including the shares of non-voting preferred shares purchased from us.

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, implements far-reaching changes across the financial regulatory landscape, including provisions that, among other things:

• Provides that debit card interchange fees must be reasonable and proportional to the cost incurred by the issuer with respect to the transaction. This provision is known as the “Durbin Amendment.” In June 2011, the Board of Governors of the Federal

12

Reserve System adopted regulations setting the maximum permissible interchange fee as the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction, with an additional adjustment of up to one cent per transaction if the issuer implements certain fraud-prevention standards. Banks with total assets less than $10 billion, such as First Bank, are not presently impacted by the Durbin Amendment;

• After a three-year phase-in period which began on January 1, 2013, removes trust preferred securities as a permitted component of a holding company’s Tier 1 capital for holding companies with more than $15 billion of assets, and restricts new issuances of trust preferred securities from being included as Tier 1 capital for all holding companies;

• Changes the basis for determining FDIC premiums from deposits to assets less tangible capital, eliminated the ceiling and the size of the DIF and increased the floor applicable to the size of the DIF;

• Creates a new Consumer Financial Protection Bureau that will have rulemaking authority for a wide range of consumer protection laws that would apply to all banks and would have broad powers to supervise and enforce consumer protection laws;

• Provides for new disclosure and other requirements relating to executive compensation and corporate governance;

• Changes standards for federal preemption of state laws related to federally chartered institutions and their subsidiaries;

• Provides mortgage reform provisions regarding a customer’s ability to repay, restricting variable-rate lending by requiring the ability to repay to be determined for variable-rate loans by using the maximum rate that will apply during the first five years of a variable-rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions;

• Creates a financial stability oversight council that will recommend to the Federal Reserve increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity;

• Permanently increases the deposit insurance coverage to $250,000;

• Repeals the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts;

• Requires publicly-traded bank holding companies with assets of $10 billion or more to establish a risk committee responsible for enterprise-wide risk management practices;

• Increases the authority of the Federal Reserve in its regular examinations;

• Requires all bank holding companies to serve as a source of financial strength to their depository institution subsidiaries in the event such subsidiaries suffer from financial distress; and

• Restricts proprietary trading by banks, bank holding companies and others, and their acquisition and retention of ownership interests in and sponsorship of hedge funds and private equity funds.

Many aspects of the Dodd-Frank Act are subject to rulemaking and will take effect over several years, making it difficult to anticipate the overall impact on the operations and financial condition of the Company. Provisions in the legislation that affect deposit insurance assessments and payment of interest on demand deposits could increase the cost associated with deposits. Provisions in the legislation that require revisions to the capital requirements of the Company and First Bank could require the Company and First Bank to seek additional sources of capital in the future.

CPP Related Compensation and Corporate Governance Requirements. The EESA was signed into law in October 2008 and authorized the U.S. Treasury to provide funds to be used to restore liquidity and stability to the U.S. financial system pursuant to the CPP. Under the authority of EESA, the U.S. Treasury instituted the TARP Capital Purchase Program to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy. As noted above, on December 31, 2008, we participated in this program by issuing 295,400 shares of the Company’s Class C Preferred Stock to the U.S. Treasury for a purchase price of $295.4 million in cash and a Warrant to acquire up to 14,784.78478 shares of Class D Preferred Stock at an exercise price of $1.00 per share.

In addition to the restrictions on the Company’s ability to pay dividends on and repurchase its stock, participation in the CPP also includes certain requirements and restrictions regarding compensation that were expanded significantly by the American Recovery and Reinvestment Act of 2009, or ARRA, as implemented by U.S. Treasury’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance. These requirements and restrictions include, among others, the following: (i) a prohibition on paying or accruing bonuses, retention awards and incentive compensation, other than qualifying long-term restricted stock or pursuant to certain preexisting employment contracts, to the Company’s five most highly-compensated employees; (ii) a general prohibition on providing severance benefits, or other benefits due to a change in control of the Company, to the Company’s senior executive officers (“SEOs”) and next five most highly compensated employees; (iii) a requirement to make subject to clawback any bonus, retention award, or incentive compensation paid to any of the SEOs and any of the next 20 most highly compensated employees if such compensation was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria; (iv) a requirement to establish a policy on luxury or excessive expenditures; (v) a requirement to annually provide shareholders with a non-binding advisory “say on pay” vote on executive compensation; (vi) a prohibition on deducting more than $500,000 in annual compensation, including performance-based compensation, to the executives covered under Internal Revenue Code Section 162(m); (vii) a requirement that the compensation committee of the board of directors

13

evaluate and review on a semi-annual basis the risks involved in employee compensation plans; and (viii) a prohibition on providing tax “gross-ups” to the Company’s SEOs and the next 20 most highly compensated employees. These requirements and restrictions will remain applicable to the Company until the U.S. Treasury ceases to own any shares of the Company’s Class C Preferred Stock and Class D Preferred Stock.

Incentive Compensation. In October 2009, the Federal Reserve issued a comprehensive proposal on incentive compensation policies, or the Incentive Compensation Proposal, intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The Incentive Compensation Proposal, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

The scope and content of the U.S. banking regulators’ policies on executive compensation are continuing to develop and are likely to continue evolving in the near future. It cannot be determined at this time whether compliance with such policies will adversely affect our ability to hire, retain and motivate our key employees. See further discussion under Item 11 — Executive Compensation.

Other Future Legislation and Changes in Regulations. In addition to the specific proposals described above, from time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on the financial condition or results of operations of the Company. A change in statutes, regulations or regulatory policies applicable to us or any of our subsidiaries could have a material effect on the Company’s business, financial condition or results of operations.

Item 1A. Risk Factors

Readers of our Annual Report on Form 10-K should consider the risk factors described below in conjunction with the other information included in this Annual Report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, our Selected Financial Data, our consolidated financial statements and the related notes thereto, and the financial and other data contained elsewhere in this report. See also “Special Note Regarding Forward-Looking Statements and Factors that Could Affect Future Results” appearing at the beginning of this report. The order of the risk factors described below is not indicative of likelihood or significance.

Our results of operations, financial condition and business may be materially, adversely affected if we fail to successfully implement our Capital Plan. Our Capital Plan contemplates a number of different strategies intended to reduce our costs, increase our regulatory capital ratios and enable us to withstand and better respond to continuing adverse market conditions. There can be no assurance, however, that we will be able to successfully implement each or every component of our Capital Plan in a timely manner or at all, and a number of events and conditions must occur in order for the plan to achieve its intended effect. If we are not able to successfully complete our Capital Plan, we could be adversely impacted and our ability to withstand continued adverse economic conditions could be threatened.

We could be compelled to seek additional capital in the future, but capital may not be available when it is needed or on acceptable terms. Our holding company, First Banks, did not meet the minimum regulatory capital standards established for bank holdings companies by the Federal Reserve at December 31, 2012. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. A number of financial institutions have raised considerable amounts of capital as a result of deterioration in their results of operations and financial condition arising from turmoil in the mortgage loan market, weak economic conditions, declines in real estate values and other factors, which may diminish our ability to raise additional capital. Our previously announced Capital Plan also contemplates raising additional capital in an effort to improve our capital position.

Our ability to raise additional capital, as part of our Capital Plan or otherwise, will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside of our control (including the response to any offers to current holders of the Company’s securities), and on our financial performance. Accordingly, we cannot be assured of our ability to raise additional capital, as part of our Capital Plan or otherwise, or on terms acceptable to us. If we are unable to raise additional capital, as part of our Capital Plan or otherwise, on terms satisfactory to us, our financial condition, results of operations, business

14

prospects and our regulatory capital ratios and those of First Bank may be materially and adversely affected. If we are unable to raise additional capital, as part of our Capital Plan or otherwise, we may also be subjected to increased regulatory supervision, which could result in the imposition of additional regulatory restrictions on our operations and/or regulatory enforcement actions and could also potentially limit our future growth opportunities. These restrictions could negatively impact our ability to manage or expand our operations in a manner that we may deem beneficial to our stockholders and debt holders and could result in significant increases in our operating expenses or decreases in our revenues.

The proposed Basel III capital rules, if implemented as proposed, may adversely affect our capital adequacy and the costs of conducting business. The Federal Reserve approved proposed rules in June 2012 that would substantially amend the regulatory risk-based capital rules applicable to the Company and First Bank, including significant changes to bank capital, leverage and liquidity requirements, as further described in “Item 1 —Business – Supervision and Regulation – Regulatory Capital Standards and Proposed Basel III Regulatory Capital Reforms.” The proposed rules include new risk-based capital and leverage ratios, which would be phased in from 2013 to 2019, and would refine the definition of what constitutes “capital” for purposes of calculating those ratios. The proposed rules would also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which, such as our $345.0 million of trust preferred securities, would be phased out over time, thereby eliminating trust preferred securities as a form of Tier 1 capital. We would be required to begin amortizing down the Tier 1 capital treatment of our trust preferred securities over 10 years beginning in 2013 with full phase-out of such instruments by January 1, 2022. These proposed capital rules could adversely affect our ability to maintain adequate capital levels based on the amount of our trust preferred securities currently outstanding and could require us to find alternate methods to raise capital, which may adversely impact our financial condition, results of operations and ability to grow.

The Company, SFC and First Bank entered into an Agreement with the Federal Reserve Bank of St. Louis. As further described under “—Supervision and Regulation – Regulatory Agreements,” the Company, SFC and First Bank entered into an Agreement with the FRB. Although we cannot predict the ramifications that would result from the failure to comply with each of the provisions of the Agreement, the failure to comply could have a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, under the Agreement, the Company, SFC and First Bank must receive approval from the FRB prior to paying any dividends on capital stock or making any interest payments on the Company’s outstanding junior subordinated debentures, which represent the source of distributions to holders of trust preferred securities.

We are subject to extensive government regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not security holders. These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes in light of the ongoing performance of and government intervention in the financial services sector. Other changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations. For a further discussion of these matters, see “Item 1. Business —Supervision and Regulation.”

Changes in economic conditions could negatively and materially impact our business. Our business is directly affected by factors such as economic, political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government monetary and fiscal policies and inflation, all of which are beyond our control. A continued deterioration in economic conditions or lack of improvement in economic conditions may result in the following consequences, any of which could negatively and materially impact or continue to negatively and materially impact our business:

• Loan delinquencies may increase or remain at elevated levels;

• Problem assets and foreclosures may increase or remain at elevated levels;

• High unemployment may continue;

• Demand for our products and services may decline;

• Low cost or noninterest bearing deposits may decrease; and

• Collateral pledged to us by our customers for loans made by us, especially residential and commercial real estate property, may decline or continue to decline in value, in turn reducing our customers’ borrowing power, and thereby reducing the value of the underlying assets and collateral associated with our existing loans.

Our emphasis on commercial real estate lending and real estate construction and development lending has increased our credit risk. A substantial portion of our loans are secured by commercial real estate. Commercial real estate and real estate construction

15

and development loans were $969.7 million and $175.0 million, respectively, at December 31, 2012, representing 33.9% and 6.1%, respectively, of our loans held for portfolio. As discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Loans and Allowance for Loan Losses,” we have experienced high levels of nonperforming loans within our real estate construction and development portfolio and commercial real estate portfolio, reflective of declining market conditions surrounding land acquisition and development loans as a result of increased developer inventories, slower lot and home sales, and declining market values. Adverse developments affecting real estate in one or more of our markets could further increase the credit risk associated with our loan portfolio.

Weakness in the real estate market has adversely affected us and may continue to do so. As discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Loans and Allowance for Loan Losses,” we have experienced deterioration within our residential real estate mortgage loan portfolio beginning in early 2007, primarily in our Alt A and sub-prime loan portfolios. Our one-to-four-family residential real estate mortgage loans were $986.8 million at December 31, 2012, representing 34.4% of our loans held for portfolio. The effects of ongoing mortgage market challenges, as well as the ongoing correction in residential real estate market prices and reduced levels of home sales, could result in further price reductions in single family home values, adversely affecting the value of collateral securing mortgage loans held, mortgage loan originations and gains recognized on the sale of mortgage loans. In the event our allowance for loan losses is insufficient to cover such losses, our financial condition and results of operations may be adversely affected.

Our allowance for loan losses may not be sufficient to cover our actual loan losses, which could adversely affect our results of operations or financial condition. As a lender, we are exposed to the risk that our loan customers may not repay their loans according to their contractual terms and that the collateral securing the payment of these loans may be insufficient to assure repayment in full. We have experienced, and may continue to experience, significant loan losses, which could continue to have a material adverse effect on our results of operations. Management makes various assumptions and judgments about the collectability of our loan portfolio, which are based in part on:

• Current economic conditions and their estimated effects on specific borrowers;

• An evaluation of the existing relationships among loans, potential loan losses and the present level of the allowance for loan losses;

• Management’s internal review of the loan portfolio, including existing compliance with established policies and procedures; and

• Results of examinations of our loan portfolio by regulatory agencies.

We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, that represents management’s best estimate of probable incurred loan losses inherent in our loan portfolio. Additional loan losses will likely continue to occur in the future and may occur at a rate greater than we have experienced historically. In determining the amount of the allowance for loan losses, we rely on an analysis of our loan portfolio, experience, and evaluation of general economic, political and regulatory conditions, industry and geographic concentrations, and certain other factors. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and judgment and requires us to make significant estimates of current credit risk and future trends, all of which may undergo material changes. If our assumptions and analysis prove to be incorrect, our current allowance for loan losses may not be sufficient. In addition, adjustments may be necessary to allow for unexpected volatility or deterioration in the local or national economy or other factors such as changes in interest rates that may be beyond our control. In addition, federal and state regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs, based on judgments different than those of management. Any increase in our allowance for loan losses or loan charge-offs could have a material adverse effect on our results of operations.

Our nonperforming loans also impact the sufficiency of our allowance for loan losses. Nonperforming loans totaled $109.9 million as of December 31, 2012. In addition to those loans currently identified and classified as nonperforming loans, management is aware that other possible credit problems may exist with certain borrowers. These include loans that are migrating from grades with lower risks of loss probabilities into grades with higher risks of loss probabilities as performance and potential repayment issues surface. We monitor these loans and adjust the loss rates in our allowance for loan losses accordingly. The most severe of these loans are credits that are classified as substandard loans due to either less than satisfactory performance history, lack of borrower’s paying capacity, or potentially inadequate collateral. Substandard, or potential problem loans, totaled $116.1 million at December 31, 2012. We also make concessions to modify the contractual terms of certain loans when the borrower is experiencing financial difficulty. These modifications are generally made to either prevent a loan from being placed on nonaccrual status or to return a nonaccrual loan to performing status based on the expectations that the borrower can adequately perform in accordance with the modified terms. These loans are classified as performing troubled debt restructurings and totaled $128.9 million at December 31, 2012.

16

We are subject to credit quality risks and our credit policies may not be sufficient to avoid losses. We are subject to the risk of losses resulting from the failure of borrowers, guarantors and related parties to pay interest and principal amounts on their loans. Our credit policies and credit underwriting and monitoring and collection procedures may not prevent losses, particularly during periods in which the local, regional or national economy suffers a general decline. If borrowers fail to repay their loans according to the contractual terms of the loans, our financial condition and results of operations will be adversely affected.

The overall level of our nonperforming assets and potential problem loans has elevated our noninterest expense levels. Our nonperforming assets were $201.9 million and $350.1 million at December 31, 2012 and 2011, respectively. We have incurred, and expect to incur for the foreseeable future, significant expenses associated with collection and foreclosure related matters on loans and taxes, insurance, property preservation and other collection matters on other real estate properties. In addition, we recorded write-downs on other real estate properties of $14.5 million, $16.9 million and $34.7 million for the years ended December 31, 2012, 2011 and 2010, respectively. If the overall level of our nonperforming assets does not decrease, these expense levels will continue to have a material adverse affect on our financial condition and results of operations.

Mortgage loan repurchase obligations or claims from third parties could result in material losses. We have sold significant amounts of residential mortgage loans directly to government-sponsored enterprises, Fannie Mae (FNMA) and Freddie Mac (FHLMC) (collectively, the GSEs), and to investors other than GSEs as whole loans. In connection with these sales, we make or have made various representations and warranties, breaches of which may result in a requirement that we repurchase the mortgage loans, or otherwise make whole or provide other remedies to the counterparties. We have recorded an estimated liability related to possible mortgage repurchase losses of $2.0 million as of December 31, 2012. Our estimated liability for possible loss is based on then-currently available information and is dependent on various factors, including our historical claims and settlement experience, projections of future defaults, and significant judgment and assumptions that are subject to change. As such, the future possible loss related to our representations and warranties may materially change in the future based on factors beyond our control or if actual experiences are different from our assumptions, including, without limitation, estimated repurchase rates, economic conditions, estimated home prices, consumer and counterparty behavior, and a variety of other judgmental factors. Adverse developments with respect to one or more of the assumptions underlying the estimated liability and the corresponding estimated range of possible loss could result in significant increases to future provisions and/or the estimated range of possible loss. If future representations and warranties losses occur in excess of our recorded liability and estimated range of possible loss, such losses could have a material adverse effect on our cash flows, financial condition and results of operations.

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. Liquidity is essential to our business. An inability to raise funds through traditional deposits, brokered deposits, borrowings, the sale of securities or loans and other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities and on terms which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the markets in which our loans are concentrated or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry in light of the recent and ongoing turmoil faced by banking organizations and the continued deterioration and instability in credit markets.

We rely on commercial and retail deposits, advances from the FHLB of Des Moines and other borrowings to fund our operations. Although we have historically been able to replace maturing deposits and advances as necessary, we might not be able to replace such funds in the future if, among other things, our results of operations or financial condition or the results of operations or financial condition of the FHLB of Des Moines or overall market conditions were to change.

There can be no assurance these sources of funds will be adequate for our liquidity needs and we may be compelled to seek additional sources of financing in the future. Likewise, we may seek additional debt in the future to achieve our business objectives. There can be no assurance additional borrowings, if sought, would be available to us or, if available, would be on terms acceptable to us. The ability of banks and holding companies to raise capital or borrow in the debt markets has been negatively affected by recent and ongoing adverse economic trends. If additional financing sources are unavailable or not available on reasonable terms, our financial condition, results of operations and future prospects could be materially adversely affected.

We actively monitor the depository institutions that hold our cash operating account balances. It is possible that access to our cash equivalents will be impacted by adverse conditions in the financial markets. Our emphasis is primarily on safety of principal and we seek to diversify our cash balances among counterparties to minimize exposure to any one of these entities. The financial statements and other relevant data of the counterparties are routinely reviewed as part of our asset/liability management process. Balances in our accounts with financial institutions in the U.S. may exceed the FDIC insurance limits. While we monitor and adjust the balances in our accounts as appropriate, these balances could be impacted if the financial institutions fail and could be subject to other adverse conditions in the financial markets. At December 31, 2012, our cash and cash equivalents totaled $518.8 million, of which $347.8 million was maintained in our cash operating account at the FRB.

17

First Banks, Inc. is a separate and distinct legal entity from its subsidiaries. The Company’s liquidity position is affected by dividends received from our subsidiaries, the amount of cash and other liquid assets on hand, payment of interest and dividends on debt and equity instruments issued by the Company (all of which are presently suspended or deferred), capital contributions the Company makes into its subsidiaries, any redemption of debt for cash issued by the Company, and proceeds we raise through the issuance of debt and/or equity instruments through the Company, if any. The Company’s future liquidity position may be adversely affected if a combination of the following events occurs:

• First Bank continues to be unable or prohibited by its regulators to pay a dividend to the Company sufficient to satisfy the Company’s operating cash flow needs;

• The Company is unable to pay the cumulative deferred interest payments on its outstanding junior subordinated debentures relating to its $345.0 million of trust preferred securities prior to September 2014, thus potentially triggering a payment default or penalty. Such payment default or penalty would have a material adverse effect on our business, financial condition or results of operations;

• We deem it advisable, or are required by the FRB, to use cash maintained by the Company to support the capital position of First Bank;

• First Bank fails to remain “well-capitalized” and, accordingly, First Bank is required to pledge additional collateral against its borrowings and is unable to do so; or

• The Company has difficulty raising cash through the future issuance of debt or equity instruments or by accessing additional sources of credit.

The Company’s financial flexibility may be severely constrained if we are unable to maintain our access to funding or if adequate financing on terms acceptable to us is not available in the marketplace. If we are required to rely more heavily on more expensive funding sources to support our business, our revenues may not increase proportionately to cover our costs. In this case, our operating margins could be materially adversely affected. A lack of liquidity and/or cost-effective funding alternatives could materially adversely affect our business, financial condition and results of operations.

We rely on dividends from our subsidiaries for most of our revenue. The Company is a separate and distinct legal entity from its subsidiaries. We receive substantially all of our revenue from dividends from our subsidiaries. These dividends are the principal source of funds to pay dividends on our preferred stock and interest and principal on our debt. Various federal and/or state laws and regulations limit the amount of dividends that First Bank and certain nonbank subsidiaries may pay to the Company. In the event First Bank is unable to pay dividends, we may not be able to service our debt (including our junior subordinated debentures issued in connection with the issuance of our outstanding trust preferred securities), pay obligations or pay dividends on our preferred stock, including the preferred stock we issued to the U.S. Treasury. The inability to receive dividends from First Bank could have a material adverse effect on our business, financial condition and results of operations. As further described under “Item 1. Business —Supervision and Regulation,” First Bank has agreed not to declare or pay any dividends without the prior consent of the MDOF and the FRB. First Bank did not make any dividend payments during the year ended December 31, 2012.

Our ability to repay our junior subordinated debentures, and our Class C Preferred Stock and Class D Preferred Stock issued under the CPP, could be hindered by the completed and pending divestiture initiatives associated with our Capital Plan. As further described under “Item 1. Recent Developments and Other Matters —Capital Plan,” we have completed, or are in the process of completing, a number of initiatives associated with our Capital Plan, including sales of branch offices, sales of certain loans, sales of nonbank subsidiaries and reductions in our risk-weighted assets. While these transactions were considered necessary by the Company to improve our regulatory capital ratios and preserve our regulatory capital in the short-term, these transactions have also decreased our sources of revenue and could hinder the probability and timing of future repayment of these obligations.

Concern of customers over deposit insurance and the expiration of unlimited FDIC deposit insurance on noninterest-bearing transaction accounts may increase our interest expense, cause a decrease in deposits and affect our liquidity position. With ongoing increased concerns about bank failures, customers increasingly are concerned about the extent to which their deposits are insured by the FDIC. On December 31, 2012, the unlimited deposit insurance for traditional noninterest-bearing transaction accounts and IOLTA accounts that began on December 31, 2010 expired. The reduction in FDIC insurance on these noninterest-bearing transaction accounts to the standard $250,000 maximum available to depositors under the FDIC’s general deposit insurance rules may cause a change in the mix of deposits from noninterest-bearing accounts to interest-bearing accounts, which would increase our cost of funds and negatively impact our results of operations. Customers may withdraw deposits in an effort to ensure that the amount they have on deposit with us is fully insured. Decreases in deposits may adversely affect our liquidity position, funding costs and results of operations.

The Company may be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose us to credit risk

18

in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due to us. Any such losses could have a material adverse affect on our financial condition and results of operations.

Markets have experienced, and may continue to experience, periods of high volatility accompanied by reduced liquidity. Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. Under these extreme conditions, hedging and other risk management strategies may not be as effective at mitigating losses as they would be under more normal market conditions. Moreover, under these conditions, market participants are particularly exposed to trading strategies employed by many market participants simultaneously and on a large scale, such as crowded trades. Our risk management and monitoring processes seek to quantify and mitigate risk to more extreme market moves. Severe market events have historically been difficult to predict, however, and we could realize significant losses if unprecedented extreme market events were to occur, such as the recent conditions in the global financial markets and global economy.

Because of our participation in the CPP under the EESA, we are subject to several restrictions, including restrictions on our ability to declare or pay dividends and repurchase capital stock and trust preferred securities, as well as restrictions on compensation paid to our executive officers. Pursuant to the terms of the Purchase Agreement, our ability to declare or pay dividends on any of our shares is limited. Specifically, we are unable to make any distributions on our trust preferred securities or dividends on pari passu preferred shares if we are in arrears on the payment of dividends on our Class C Preferred Stock and Class D Preferred Stock. In addition, we are not permitted to increase dividends on our common shares above the amount of the last quarterly cash dividend per share declared without the U.S. Treasury’s approval unless all of the Class C Preferred Stock and Class D Preferred Stock has been redeemed or transferred by the U.S. Treasury to unaffiliated third parties. Further, our trust preferred securities and pari passu preferred shares may not be repurchased if we are in arrears on the payment of Class C Preferred Stock and Class D Preferred Stock dividends. The terms of the Purchase Agreement allow the U.S. Treasury to impose additional restrictions, including those on dividends and unilateral amendments required to comply with changes in applicable federal law. We are unable to predict the potential impact of any such amendments.

In addition, pursuant to the terms of the Purchase Agreement, we adopted the U.S. Treasury’s current standards for executive compensation and corporate governance for the period during which the U.S. Treasury holds our equity securities issued pursuant to the Purchase Agreement. These standards generally apply to our executive officers identified in the Summary Compensation Table, as shown under Item 11 —Executive Compensation, and the 20 next most highly compensated employees. The impact of the executive compensation standards may result in the loss of current members of our management team and could adversely affect our ability to compete for talent in the industry.

We expect the U.S. Treasury, our bank regulators and other agencies of the U.S. Government to continue to monitor our use of the CPP proceeds. Our failure to comply with the terms and conditions of the program or the Purchase Agreement may subject us to a regulatory enforcement action or legal proceedings brought by the U.S. Government.

The impact of a potential new shareholder is not known should the U.S. Treasury sell or transfer its shares of our Class C Preferred Stock and Class D Preferred Stock to a third party. As a result of our deferral of dividends to the U.S. Treasury for an aggregate of six quarters, the U.S. Treasury had the right to elect two directors to our Board and did so on July 13, 2011. If the U.S. Treasury sold or transferred its shares of our Class C Preferred Stock and Class D Preferred stock to a third party, the third party may remove the directors elected by the U.S. Treasury and elect two new directors. The impact of a potential new shareholder is not known.

Negative perception could adversely affect our business, impacting our financial condition, results of operations and cash flows. Risk of negative perception or publicity is inherent in any business. Although the Company takes steps to minimize reputation risk in dealing with customers and other constituencies, the Company is inherently exposed to the risk of negative perception by the public and our customers as a result of, but not limited to, our participation in the CPP under the EESA and as a result of actions imposed by our regulators. The risk of negative perception by the public and our customers may adversely affect the Company’s ability to maintain and attract customers and employees.

We could be required to write down goodwill. When we acquire a business, a portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The amount of the purchase price that is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. At December 31, 2012, our goodwill and other identifiable intangible assets were $125.3 million. Under current accounting standards, if we determine goodwill or intangible assets are impaired, we are required to write down the carrying value of these assets. We conduct a review at least annually to determine whether goodwill and other identifiable intangible assets are impaired. We completed such an impairment analysis during the fourth quarter of 2012 and determined our goodwill was not impaired, as further described in Note 6 to our consolidated financial statements. We cannot provide assurance, however, that we will not be required to record an impairment charge in the future. Any additional impairment charge would have an adverse effect on our financial condition and results of operations.

19

Our controls and procedures may fail or be circumvented. Our management regularly reviews and updates the Company’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurance that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, financial condition and results of operations.

The Company’s deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings. The Dodd-Frank Act established 1.35% as the minimum DRR. It is possible that our insurance premiums will increase in the future as a result of the required minimum DRR and/or an increase in our risk assessment rating.

Significant legal actions could subject us to substantial liabilities. We are from time to time subject to claims related to our operations. These claims and legal actions, including supervisory actions by our regulators, could involve monetary claims and significant defense costs. As a result, we may be exposed to substantial liabilities, which could adversely affect our results of operations and financial condition.

The value of securities in the Company’s investment securities portfolio may be negatively affected by continued disruptions in securities markets. The market for some of the investment securities held in our investment portfolio has become extremely volatile over the past five years. Volatile market conditions may detrimentally affect the value of these securities, such as through reduced valuations due to the perception of heightened credit and liquidity risks. There can be no assurance that the declines in market value associated with these disruptions will not result in other-than-temporary impairment of these assets, which could lead to write-downs of the carrying value of these assets that could have a material adverse effect on our net income and capital levels.

Geographic distance between our operations increases operating costs and makes efforts to standardize operations more difficult. We operate banking offices in California, Florida, Illinois and Missouri. The noncontiguous nature of many of our geographic markets increases operating costs and makes it more difficult for us to standardize our business practices and procedures. As a result of our geographic dispersion, we face the following challenges, among others: (a) familiarizing personnel with our business environment, banking practices and customer requirements at geographically dispersed locations; (b) providing administrative support, including accounting, human resources, credit administration, loan servicing, internal audit and credit review at significant distances; and (c) establishing and monitoring compliance with our corporate policies and procedures in different areas.

Decreases in interest rates could have a negative impact on our profitability. Our earnings are principally dependent on our ability to generate net interest income. Net interest income is affected by many factors that are partly or completely beyond our control, including competition, general economic conditions and the policies of regulatory authorities, including the monetary policies of the Federal Reserve. Under our current interest rate risk profile, our net interest income has been and could be negatively affected by a further decline in interest rates, as further discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Interest Rate Risk Management.”

Our interest rate risk hedging activities may not effectively reduce volatility in earnings. To offset the risks associated with the effects of changes in market interest rates, we periodically enter into transactions designed to hedge our interest rate risk. The accounting for such hedging activities under U.S. generally accepted accounting principles, or GAAP, requires our hedging instruments to be recorded at fair value. The effect of certain of our hedging strategies may result in volatility in our quarterly and annual earnings as interest rates change or as the volatility in the underlying derivatives markets increases or decreases. The volatility in earnings is primarily a result of marking to market certain of our hedging instruments and/or modifying our overall hedge position, as further discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Interest Rate Risk Management.”

The financial services business is highly competitive, and we face competitive disadvantages because of our size and the nature of banking regulation. We encounter strong direct competition for deposits, loans and other financial services in all of our market areas. Our larger competitors, which have significantly greater resources, may have advantages over us in providing certain services. Our principal competitors include other commercial banks, savings banks, savings and loan associations, mutual funds, finance companies, trust companies, insurance companies, leasing companies, credit unions, mortgage companies, private issuers of debt obligations and suppliers of other investment alternatives, such as securities firms and financial holding companies. Many of our non-bank competitors are not subject to the same degree of regulation as that imposed on bank holding companies, federally insured banks and national or state chartered banks. As a result, such non-bank competitors may have advantages over us in providing certain services and may make it more difficult for us to achieve our objectives, such as increasing the size of our loan portfolio, attracting customers and implementing our profit and capital improvement plan initiatives.

The repeal of federal prohibitions on payment of interest on demand deposits could increase the Company’s interest expense. All federal prohibitions on the ability of financial institutions to pay interest on demand deposit accounts were repealed as part of the Dodd-Frank Act beginning on July 21, 2011. As a result, some financial institutions have commenced offering interest on demand

20

deposits to compete for customers. The Company continues to monitor interest rates but does not yet know what interest rates other institutions may offer as market interest rates begin to increase in the future. The Company’s interest expense will increase and its net interest margin will decrease if it begins offering interest on demand deposits to attract additional customers or maintain current customers, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

Non-compliance with the USA Patriot Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions. The USA Patriot and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions. Although we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance can be given that these policies and procedures will be effective in preventing violations of these laws and regulations.

We provide treasury management services to money services businesses, which include: check cashers, issuers/sellers of traveler’s checks, money orders and stored value cards, and money transmitters. Money services businesses pose a higher level of risk of compliance with regulatory guidance. We provide treasury management services to the check cashing industry, offering check clearing, monetary instrument, depository, and credit services. We also provide treasury management services to money transmitters. Financial institutions that open and maintain accounts for money services businesses are expected to apply the requirements of the USA Patriot Act and Bank Secrecy Act, as they do with all accountholders, on a risk-assessed basis. As with any category of accountholder, there will be money services businesses that pose little risk of money laundering or lack of compliance with other laws and regulations and those that pose a significant risk. Providing treasury management services to money services businesses represents a significant compliance and regulatory risk, and failure to comply with all statutory and regulatory requirements could result in fines or sanctions.

We may not be able to implement technological change as effectively as our competitors. The financial services industry has undergone in the past and continues to undergo rapid technological change related to delivery and availability of new technology-driven products and services and operating efficiencies that enable financial institutions to better serve customers and to reduce costs. In many instances technological improvements require significant capital expenditures, and many of our larger competitors have significantly greater resources to absorb such capital expenditures than we may have available. As such, we may be at a competitive disadvantage in our ability to retain existing customers and compete for new customers in the marketplace.

We are subject to operational and financial risks associated with our reliance on employees, systems, and counterparties and certain failures. Our business operates in many diverse markets and relies on the ability of our employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from our operations, including, but not limited to, the risk of fraud by employees or persons outside of our Company, unauthorized access to our computer systems, the execution of unauthorized transactions by our employees, errors relating to transaction processing and technology, breaches in internal controls and data security, compliance requirements, and business continuation and disaster recovery. This risk of loss also includes the potential legal actions that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulatory standards, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. Third parties with whom we do business could also be sources of operational risk to us, including risks relating to breakdowns or failures of such parties’ own systems or employees. We could suffer significant regulatory action or consequences, damage to our reputation and financial loss in the event of a breakdown in the internal control system, improper operation of systems, improper employee actions, or if personal, confidential or proprietary customer or client information in our possession were to be mishandled or misused, including situations in which the information is erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or where the information is intercepted or otherwise inappropriately taken by third parties.

A breach in the security of our systems, or those of our third party vendors, could disrupt our business, result in the disclosure of confidential information, damage our reputation and create significant financial and legal exposure. Information security risks for financial institutions have generally increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions and the increased sophistication and activities of organized crime, hackers, terrorists, activists and other external parties. Although we devote significant resources to maintain and regularly upgrade our systems and processes that are designed to protect the security of our computer systems, software, networks and other technology assets, and the confidentiality, integrity and availability of information belonging to the Company and our customers, there is no assurance that our security measures will provide absolute security. In fact, many other financial services institutions and companies engaged in data processing have reported breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage systems, often through the introduction of computer viruses or

21

malware, cyberattacks and other means. Several financial institutions have recently experienced attacks from technically sophisticated and well-resourced third parties that were intended to disrupt normal business activities by making internet banking systems inaccessible to customers for extended time periods. These “denial-of-service” attacks have not breached our data security systems, but require substantial resources to defend, and may affect customer satisfaction and behavior. Despite efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources, including persons who are involved with organized crime or associated with external service providers or who may be linked to terrorist organizations or hostile foreign governments. Those parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. These risks may increase in the future as we continue to increase our mobile payments and other internet-based product offerings and expand our internal usage of web-based products and applications. If our security systems were penetrated or circumvented, it could cause serious negative consequences, including significant disruption of our operations, misappropriation of our confidential information or that of our customers, or damage to our computers or systems and those of our customers and counterparties, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure, and harm to our reputation, all of which could have a material adverse effect on our business, financial condition and results of operations. Cybersecurity and the continued development and enhancement of our internal controls, processes and practices designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a key focus for us. While our policies and procedures are designed to prevent or limit the impact of any such failure, interruption or security breach, there can be no assurance that any such failure, interruption or security breach will not occur. While we closely monitor and evaluate the financial and operational risks associated with reliance on technology and information systems on an ongoing basis and maintain insurance coverage for such risks, any such failure, interruption or security breach could adversely affect our operations and financial condition, including a resulting loss in customer business, damage to our reputation, misappropriation of sensitive information, corruption of data, disruption of internet banking activities or other operations, and possible exposure to regulatory scrutiny and litigation, any of which could have a material adverse affect on our business, financial condition and results of operations.

Severe weather, natural disasters, acts of war or terrorism, and other external events could significantly impact our business. Severe weather, natural disasters, acts of war or terrorism, and other adverse external events could have a significant impact on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue, and/or cause us to incur additional expenses. Changing climate conditions may increase the frequency of natural disasters such as hurricanes, windstorms and other severe weather conditions. Although we have established policies and procedures addressing these types of events, the occurrence of any such event could have a material adverse effect on our business, financial condition and results of operations.

The Company is subject to claims and litigation pertaining to fiduciary responsibility. From time to time, customers make claims and take legal action pertaining to the performance of our fiduciary responsibilities. Whether customer claims and legal action related to the performance of our fiduciary responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us, they may result in significant financial liability and/or adversely affect the market perception of us and our products and services as well as impact customer demand for our products and services. Any financial liability or reputation damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition, results of operations and cash flows.

The Company is exposed to risk of environmental liabilities with respect to properties to which we take title. In the course of our business, we may own or foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or we may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, as the owner or former owner of a contaminated site, we may be subject to common law or contractual claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities, our business, financial condition, cash flows, liquidity and results of operations could be materially and adversely affected.

Item 1B. Unresolved Staff Comments

None.

22

Item 2. Properties

We own our office building, which houses our principal place of business, located at 135 North Meramec, Clayton, Missouri 63105. The property is in good condition and consists of approximately 60,353 square feet, of which approximately 8,810 square feet is currently leased to others. Of our other 145 offices and two operations and administrative facilities at December 31, 2012, 77 are located in buildings that we own and 70 are located in buildings that we lease.

We consider the properties at which we do business to be in good condition generally and suitable for our business conducted at each location. To the extent our properties or those acquired in connection with our acquisition of other entities provide space in excess of that effectively utilized in the operations of First Bank, we seek to lease or sublease any excess space to third parties. Additional information regarding the premises and equipment utilized by First Bank appears in Note 5 to our consolidated financial statements appearing elsewhere in this report.

Item 3. Legal Proceedings

The information required by this item is set forth in Item 8 under Note 24, Contingent Liabilities, to our consolidated financial statements appearing elsewhere in this report and is incorporated herein by reference.

In the ordinary course of business, we and our subsidiaries become involved in legal proceedings, including litigation arising out of our efforts to collect outstanding loans. It is not uncommon for collection efforts to lead to so-called “lender liability” suits in which borrowers may assert various claims against us. From time to time, we are party to other legal matters arising in the normal course of business. While some matters pending against us specify damages claimed by plaintiffs, others do not seek a specified amount of damages or are at very early stages of the legal process. We record a loss accrual for all legal matters for which we deem a loss is probable and can be reasonably estimated. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition or results of operations.

The Company and First Bank entered into agreements with the FRB and MDOF, as further described under “Item 1. Business —Supervision and Regulation – Regulatory Agreements” and in Note 14 to our consolidated financial statements.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

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

Market Information. There is no established public trading market for our common stock. Various trusts, which were established by and are administered by and for the benefit of Mr. James F. Dierberg, our Chairman of the Board, and members of his immediate family, including Mr. Michael Dierberg, our Vice Chairman, own all of our voting stock.

Dividends. We have not paid any dividends on our Common Stock.

On August 10, 2009, we announced the suspension of the payment of cash dividends on our outstanding Class A Convertible Adjustable Rate Preferred Stock and our Class B Non-Convertible Adjustable Rate Preferred Stock beginning with the scheduled dividend payments that would have otherwise been made in September 2009. Prior to this time, we have paid minimal dividends on our Class A Convertible Adjustable Rate Preferred Stock and our Class B Non-Convertible Adjustable Rate Preferred Stock.

On August 10, 2009, we also announced the deferral of dividend payments on our Class C Preferred Stock and Class D Preferred Stock beginning with the regularly scheduled quarterly dividend payments that would otherwise have been made in August 2009, however, we continue to record the declaration of such dividends and the related additional cumulative dividends on our deferred dividend payments in our consolidated financial statements. We have deferred such payments for 14 quarterly periods as of December 31, 2012. In February 2009 and May 2009, we paid the regularly scheduled quarterly dividends on our Class C Preferred Stock and Class D Preferred Stock, which were pre-approved and authorized for payment by the FRB.

Our ability to pay dividends is limited by regulatory requirements and by the receipt of dividend payments from First Bank, which is also subject to regulatory requirements. First Bank has agreed not to declare or pay any dividends or make certain other payments to us without the prior consent of the MDOF and the FRB, as previously discussed under “Item 1. Business —Supervision and Regulation – Regulatory Agreements.” The dividend limitations are further described in Note 13 and Note 22 to our consolidated financial statements appearing elsewhere in this report.

23

Item 6. Selected Financial Data. The selected consolidated financial data set forth below are derived from our consolidated financial statements. This information is qualified by reference to our consolidated financial statements appearing elsewhere in this report. This information should be read in conjunction with such consolidated financial statements, the related notes thereto, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.”

	As of or For the Year Ended December 31,(1)
	2012			2011		2010		2009		2008
	(dollars expressed in thousands, except share and per share data)
Income Statement Data:
Interest income	$	202,565		233,296		312,468		399,925		535,971
Interest expense	30,088			44,539		76,020		114,092		176,425
Net interest income	172,477			188,757		236,448		285,833		359,546
Provision for loan losses	2,000			69,000		214,000		390,000		368,000
Net interest income (loss) after provision for loan losses	170,477			119,757		22,448		(104,167	)	(8,454	)
Noninterest income	66,206			62,194		78,492		70,763		62,715
Noninterest expense	205,318			230,246		298,639		350,475		252,700
Income (loss) from continuing operations before (benefit) provision for income taxes	31,365			(48,295	)	(197,699	)	(383,879	)	(198,439	)
(Benefit) provision for income taxes	(139		)	(10,654	)	4,114		2,393		18,323
Income (loss) from continuing operations, net of tax	31,504			(37,641	)	(201,813	)	(386,272	)	(216,762	)
(Loss) income from discontinued operations, net of tax	(5,523		)	(6,459	)	3,562		(62,664	)	(71,551	)
Net income (loss)	25,981			(44,100	)	(198,251	)	(448,936	)	(288,313	)
Net loss attributable to noncontrolling interest in subsidiary	(297		)	(2,950	)	(6,514	)	(21,315	)	(1,158	)
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)	(427,621	)	(287,155	)
Dividends Declared and Undeclared:
Preferred stock	$	18,886		17,908		16,980		16,536		786
Common stock	—			—		—		—		—
Ratio of total dividends declared to net income (loss)	71.87		%	(43.52	)%	(8.86	)%	(3.87	)%	(0.27	)%
Earnings (Loss) Per Share and Other Share Data:
Basic and diluted earnings (loss) per common share from continuing operations	$	395.64		(2,369.48	)	(9,114.61	)	(16,262.70	)	(9,145.45	)
Basic and diluted (loss) earnings per common share from discontinued operations	(233.42		)	(272.98	)	150.54		(2,648.40	)	(3,024.01	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661		23,661		23,661
Balance Sheet Data:
Investment securities	$	2,675,280		2,470,704		1,483,659		530,879		564,416
Loans, net of net deferred loan fees	2,930,747			3,284,279		4,492,284		6,608,293		8,592,975
Assets of discontinued operations	6,706			6,913		43,532		518,056		—
Total assets	6,509,126			6,608,913		7,378,128		10,581,996		10,783,154
Total deposits	5,492,847			5,623,055		6,458,415		7,063,973		8,741,520
Other borrowings	26,025			51,170		31,761		767,494		575,133
Subordinated debentures	354,133			354,057		353,981		353,905		353,828
Liabilities of discontinued operations	155,711			174,737		94,184		1,730,264		—
Total stockholders’ equity	299,959			263,671		307,295		522,380		996,355
Earnings Ratios:
Return on average assets	0.40		%	(0.59	)%	(2.20	)%	(4.04	)%	(2.66	)%
Return on average stockholders’ equity	9.22			(13.71	)	(42.36	)	(51.82	)	(32.78	)
Net interest margin (2)	2.81			2.89		2.97		3.18		3.96
Noninterest expense to average assets	3.12			3.29		3.43		3.31		2.34
Tangible noninterest expense to average assets (3)	3.12			3.25		3.39		2.56		2.29
Efficiency ratio (4)	86.02			91.75		94.82		98.28		59.84
Tangible efficiency ratio (4)	86.02			90.54		93.78		76.03		58.49
Asset Quality Ratios:
Allowance for loan losses to loans	3.13		%	4.19	%	4.48	%	4.03	%	2.56	%
Nonaccrual loans to loans	3.75			6.71		8.88		10.46		4.86
Allowance for loan losses to nonaccrual loans	83.37			62.52		50.40		38.55		52.71
Nonperforming assets to loans, other real estate and repossessed assets (5)	6.68			10.26		11.65		12.15		5.87
Net loan charge-offs to average loans	1.56			3.47		5.06		4.62		3.84

24

Selected Financial Data (continued):

	As of or For the Year Ended December 31,(1)
	2012		2011		2010		2009		2008
	(dollars expressed in thousands, except share and per share data)
First Banks, Inc. Capital Ratios: (6)
Average stockholders’ equity to average assets	4.33	%	4.29	%	5.20	%	7.79	%	8.11	%
Total risk-based capital ratio	2.57		1.88		6.29		9.78		12.11
Tier 1 risk-based capital ratio	1.28		0.94		3.15		4.89		8.87
Leverage ratio	0.73		0.56		1.99		3.52		8.04
First Bank Capital Ratios:
Total risk-based capital ratio	17.18	%	14.98	%	12.95	%	10.39	%	11.01	%
Tier 1 risk-based capital ratio	15.92		13.70		11.66		9.11		9.75
Leverage ratio	9.13		8.19		7.40		6.56		8.85

(1) The selected data is presented on a continuing basis.

(2) Net interest margin is the ratio of net interest income (expressed on a tax-equivalent basis) to average interest-earning assets.

(3) Tangible noninterest expense to average assets is the ratio of noninterest expense (excluding goodwill impairment and amortization of intangible assets) to average assets.

(4) Efficiency ratio is noninterest expense to the sum of net interest income and noninterest income. Tangible efficiency ratio is the ratio of noninterest expense (excluding goodwill impairment and amortization of intangible assets) to the sum of net interest income and noninterest income.

(5) Nonperforming assets consist of nonaccrual loans, other real estate and repossessed assets.

(6) The capital ratios at December 31, 2012 and 2011 reflect the implementation of new Federal Reserve rules that became effective on March 31, 2011.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following presents management’s discussion and analysis of our financial condition and results of operations as of the dates and for the periods indicated. This discussion should be read in conjunction with our “Selected Financial Data,” our consolidated financial statements and the related notes thereto, and the other financial data appearing elsewhere in this report. This discussion set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements with respect to our financial condition, results of operations and business. These forward-looking statements are subject to certain risks and uncertainties, not all of which can be predicted or anticipated. Various factors may cause our actual results to differ materially from those contemplated by the forward-looking statements herein. We do not have a duty to and do not undertake any obligation to update these forward-looking statements. Readers of our Annual Report on Form 10-K should therefore consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements. See “Special Note Regarding Forward-Looking Statements and Factors that Could Affect Future Results” appearing at the beginning of this report and “Item 1A – Risk Factors,” appearing elsewhere in this report.

RESULTS OFOPERATIONS

Overview

All financial information in this Annual Report on Form 10-K is reported on a continuing operations basis, unless otherwise noted. See Note 2 to our consolidated financial statements appearing elsewhere in this report for further discussion regarding our discontinued operations.

We recorded net income, including discontinued operations, of $26.3 million for the year ended December 31, 2012, compared to net losses of $41.2 million and $191.7 million for the years ended December 31, 2011 and 2010, respectively. Our results of operations reflect the following:

• Net interest income of $172.5 million for the year ended December 31, 2012, compared to $188.8 million in 2011 and $236.4 million in 2010, which contributed to a decline in our net interest margin to 2.81% for the year ended December 31, 2012, compared to 2.89% in 2011 and 2.97% in 2010;

• A provision for loan losses of $2.0 million for the year ended December 31, 2012, compared to $69.0 million in 2011 and $214.0 million in 2010;

• Noninterest income of $66.2 million for the year ended December 31, 2012, compared to $62.2 million in 2011 and $78.5 million in 2010;

• Noninterest expense of $205.3 million for the year ended December 31, 2012, compared to $230.2 million in 2011 and $298.6 million in 2010;

• A benefit for income taxes of $139,000 for the year ended December 31, 2012, compared to a benefit for income taxes of $10.7 million in 2011 and a provision for income taxes of $4.1 million in 2010;

25

• A net loss from discontinued operations, net of tax, of $5.5 million for the year ended December 31, 2012, compared to a net loss from discontinued operations, net of tax, of $6.5 million in 2011 and net income from discontinued operations, net of tax, of $3.6 million in 2010; and

• A net loss attributable to noncontrolling interest in subsidiary of $297,000 for the year ended December 31, 2012, compared to net losses of $3.0 million in 2011 and $6.5 million in 2010.

Net Interest Income and Average Balance Sheets

The primary source of our income is net interest income. Net interest income is the difference between the interest earned on our interest-earning assets, such as loans and investment securities, and the interest paid on our interest-bearing liabilities, such as deposits and borrowings. The following table sets forth, on a tax-equivalent basis, certain information on a continuing basis relating to our average balance sheets, and reflects the average yield earned on our interest-earning assets, the average cost of our interest-bearing liabilities and the resulting net interest income for the years ended December 31, 2012, 2011 and 2010.

	Years Ended December 31,
	2012						2011					2010
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense	Yield/ Rate		Average Balance		Interest Income/ Expense	Yield/ Rate
	(dollars expressed in thousands)
ASSETS
Interest-earning assets:
Loans: (1) (2) (3)
Taxable	$	3,076,523	143,658		4.67	%	$	3,807,427	184,477	4.85	%	$	5,513,929	281,327	5.10	%
Tax-exempt (4)	2,821		165		5.85		4,024		178	4.42		6,846		503	7.35
Investment securities:
Taxable	2,708,865		56,547		2.09		2,043,048		45,172	2.21		990,479		24,612	2.48
Tax-exempt (4)	9,805		442		4.51		12,143		740	6.09		13,604		915	6.73
FRB and FHLB stock	26,603		1,146		4.31		27,648		1,416	5.12		49,718		2,063	4.15
Short-term investments	325,341		820		0.25		652,195		1,634	0.25		1,403,474		3,544	0.25
Total interest-earning assets	6,149,958		202,778		3.30		6,546,485		233,617	3.57		7,978,050		312,964	3.92
Nonearning assets	429,907						424,082					448,542
Assets of discontinued operations	6,892						21,885					277,132
Total assets	$	6,586,757					$	6,992,452				$	8,703,724
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand	$	937,971	569		0.06	%	$	938,758	1,023	0.11	%	$	901,685	1,409	0.16	%
Savings and money market	1,931,146		3,535		0.18		2,054,452		8,577	0.42		2,083,099		13,959	0.67
Time deposits of $100 or more	507,867		4,153		0.82		648,258		8,068	1.24		859,015		15,257	1.78
Other time deposits	904,971		7,002		0.77		1,117,908		13,233	1.18		1,369,827		24,539	1.79
Total interest-bearing deposits	4,281,955		15,259		0.36		4,759,376		30,901	0.65		5,213,626		55,164	1.06
Other borrowings	33,007		(18	)	(0.05	)	46,991		15	0.03		514,655		7,844	1.52
Subordinated debentures	354,096		14,847		4.19		354,019		13,623	3.85		353,943		13,012	3.68
Total interest-bearing liabilities	4,669,058		30,088		0.64		5,160,386		44,539	0.86		6,082,224		76,020	1.25
Noninterest-bearing liabilities:
Demand deposits	1,305,282						1,166,128					1,148,102
Other liabilities	161,214						129,787					108,761
Liabilities of discontinued operations	166,076						236,017					912,012
Total liabilities	6,301,630						6,692,318					8,251,099
Stockholders’ equity	285,127						300,134					452,625
Total liabilities and stockholders’ equity	$	6,586,757					$	6,992,452				$	8,703,724
Net interest income			172,690						189,078					236,944
Interest rate spread					2.66					2.71					2.67
Net interest margin (5)					2.81	%				2.89	%				2.97	%

(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.

(2) Interest income on loans includes loan fees.

(3) Interest income on loans includes the effects of interest rate swap agreements.

(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustments were $213,000, $321,000 and $496,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

(5) Net interest margin is the ratio of net interest income (expressed on a tax-equivalent basis) to average interest-earning assets.

26

Net interest income is affected by the level and composition of assets, liabilities and stockholders’ equity, as well as the general level of interest rates and changes in interest rates. Interest income on a tax-equivalent basis includes the additional amount of interest income that would have been earned if our investment in certain tax-exempt interest-earning assets had been made in assets subject to federal, state and local income taxes yielding the same after-tax income. Net interest margin is determined by dividing net interest income on a tax-equivalent basis by average interest-earning assets. The interest rate spread is the difference between the average equivalent yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.

Our balance sheet is presently asset sensitive, and as such, our net interest margin has been negatively impacted by the low interest rate environment as our loan portfolio re-prices on an immediate basis; whereas we are unable to immediately re-price our deposit portfolio to current market interest rates, thereby resulting in a compression of our net interest margin. Our asset-sensitive position, coupled with the level of our nonperforming assets, the increased level of average lower-yielding short-term investments and investment securities, the lower level of average loans and the additional interest expense accrued on our regularly scheduled deferred interest payments on our junior subordinated debentures has negatively impacted our net interest income and is expected to continue to impact the level of our net interest income in the future. We continue our efforts to reduce nonperforming and potential problem loans and re-define our overall strategy and business plans with respect to our loan portfolio in light of ongoing changes in market conditions in our markets, focusing on loan growth initiatives to offset the impact of the decrease in nonaccrual loans, problem loans and other loan relationships.

Comparison of 2012 and 2011. Net interest income, expressed on a tax-equivalent basis, decreased$16.4 million to $172.7 million for the year ended December 31, 2012, compared to $189.1 million in 2011. Our net interest margin decreased to 2.81% for the year ended December 31, 2012, from 2.89% in 2011.

We attribute the decrease in our net interest margin and net interest income to a lower average balance of interest-earning assets in addition to a significant change in the mix of our interest-earning assets, which has shifted from loans to investment securities, partially offset by a decrease in interest-bearing liabilities and a decrease in deposit and other borrowing costs. The average yield earned on our interest-earning assets decreased 27 basis points to 3.30% for the year ended December 31, 2012, compared to 3.57% in 2011, while the average rate paid on our interest-bearing liabilities decreased 22 basis points to 0.64% for the year ended December 31, 2012, compared to 0.86% in 2011. Average interest-earning assets decreased$396.5 million to $6.15 billion for the year ended December 31, 2012, compared to $6.55 billion in 2011. Average interest-bearing liabilities decreased$491.3 million to $4.67 billion for the year ended December 31, 2012, compared to $5.16 billion in 2011.

Interest income on our loan portfolio, expressed on a tax-equivalent basis, decreased$40.8 million for the year ended December 31, 2012, as compared to 2011. Average loans decreased$732.1 million to $3.08 billion for the year ended December 31, 2012, from $3.81 billion in 2011. The decrease in average loans primarily reflects a substantial level of loan payoffs and principal payments, reduced loan demand within our markets, loan charge-offs, transfers of loans to other real estate and repossessed assets, and the exit of certain of our problem credit relationships, including the sale of certain special mention, potential problem and nonaccrual loans during the fourth quarter of 2012. The yield on our loan portfolio decreased 17 basis points to 4.67% for the year ended December 31, 2012, compared to 4.84% in 2011. The yield on our loan portfolio continues to be adversely impacted by the historically low prime and LIBOR interest rates, as a significant portion of our loan portfolio is priced to these indices. Furthermore, the yield on our loan portfolio continues to be adversely impacted by the higher levels of average nonaccrual loans, as further discussed under “—Loans and Allowance for Loan Losses.” Our nonaccrual loans decreased our average yield on loans by approximately 23 and 47 basis points in 2012 and 2011, respectively. We continue to focus on loan growth initiatives to offset the impact of the decrease in nonaccrual loans, problem loans and other loan relationships in future periods.

Interest income on our investment securities, expressed on a tax-equivalent basis, increased$11.1 million for the year ended December 31, 2012, as compared to 2011. Average investment securities increased$663.5 million for the year ended December 31, 2012, as compared to 2011. The increase in average investment securities reflects the continued utilization of a portion of our cash and short-term investments to fund gradual and planned increases in our investment securities portfolio in an effort maximize our net interest income and net interest margin while maintaining appropriate liquidity levels and diversification within our investment securities portfolio. The yield earned on our investment securities portfolio decreased 13 basis points to 2.10% for the year ended December 31, 2012, compared to 2.23% in 2011, reflecting significant purchases of investment securities at lower market rates.

Interest income on our short-term investments decreased$814,000 for the year ended December 31, 2012, as compared to 2011. Average short-term investments decreased$326.9 million for the year ended December 31, 2012, as compared to 2011. The yield on our short-term investments was 0.25% for the years ended December 31, 2012 and 2011, reflecting the investment of the majority of funds in our short-term investments in our correspondent bank account with the FRB, which currently earns 0.25%. The decrease in our average short-term investments reflects the utilization of such funds, coupled with funds available from the decline in our loan portfolio, to fund increases in our investment securities portfolio and decreases in our average total deposits. Since 2009, we have built a significant amount of available balance sheet liquidity in anticipation of the expected completion of certain transactions associated with our Capital Plan, as further discussed under “—Liquidity Management” and in Note 2 to our consolidated financial statements. The high level of short-term investments, while necessary to complete certain transactions

27

associated with our Capital Plan and to maintain significant balance sheet liquidity in light of uncertain economic conditions during these periods, has negatively impacted our net interest margin and will negatively impact our net interest margin in future periods until we have the opportunity to further reduce our short-term investments through deployment of such funds into other higher-yielding assets.

Interest expense on our interest-bearing deposits decreased$15.6 million for the year ended December 31, 2012, as compared to 2011. Average total deposits decreased$338.3 million to $5.59 billion for the year ended December 31, 2012, from $5.93 billion in 2011. Average interest-bearing deposits decreased$477.4 million for the year ended December 31, 2012, as compared to 2011. The decrease in average interest-bearing deposits primarily reflects anticipated reductions of higher rate certificates of deposit and promotional money market deposits, partially offset by organic growth through deposit development programs, including marketing campaigns and enhanced product and service offerings. The mix in our deposit portfolio volumes for 2012, as compared to 2011, primarily reflects a shift from time deposits, savings and money market deposits, and interest-bearing demand deposits to noninterest-bearing demand deposits. Decreases in our average time deposits, savings and money market deposits, and interest-bearing deposits of $353.3 million, $123.3 million and $787,000, respectively, for 2012 as compared to 2011, were partially offset by an increase in average noninterest-bearing demand deposits of $139.2 million. The aggregate weighted average rate paid on our interest-bearing deposit portfolio decreased 29 basis points to 0.36% for the year ended December 31, 2012, as compared to 0.65% in 2011, reflecting the re-pricing of certificate of deposit accounts to current market interest rates upon maturity and our efforts to reduce deposit costs across our deposit portfolio, in particular promotional money market deposits. The weighted average rate paid on our time deposit portfolio declined to 0.79% in 2012 from 1.21% in 2011; the weighted average rate paid on our savings and money market deposit portfolio declined to 0.18% in 2012 from 0.42% in 2011; and the weighted average rate paid on our interest-bearing demand deposits declined to 0.06% in 2012 from 0.11% in 2011. Assuming that the prevailing interest rate environment remains relatively stable, we anticipate continued reductions in our deposit costs into 2013.

Interest expense on our junior subordinated debentures increased$1.2 million for the year ended December 31, 2012, as compared to 2011. Average junior subordinated debentures were $354.1 million and $354.0 million for the years ended December 31, 2012 and 2011, respectively. The aggregate weighted average rate paid on our junior subordinated debentures increased to 4.19% for the year ended December 31, 2012, compared to 3.85% in 2011. The aggregate weighted average rates paid and the resulting level of interest expense reflect the LIBOR rates and the impact to the related spreads to LIBOR during the periods, as approximately 79.4% of our junior subordinated debentures are variable rate. The aggregate weighted average rates also reflect additional interest expense accrued on the regularly scheduled deferred interest payments on our junior subordinated debentures of $2.0 million and $1.3 million for the years ended December 31, 2012 and 2011, respectively, as further discussed in Note 12 to our consolidated financial statements. The additional interest expense accrued on the regularly scheduled deferred interest payments increased the weighted average rate paid on our junior subordinated debentures by approximately 58 and 36 basis points in 2012 and 2011, respectively.

Comparison of 2011 and 2010. Net interest income, expressed on a tax-equivalent basis, decreased $47.9 million to $189.1 million for the year ended December 31, 2011, compared to $236.9 million in 2010. Our net interest margin decreased to 2.89% for the year ended December 31, 2011, from 2.97% in 2010.

We attribute the decrease in our net interest margin and net interest income to a lower average balance of interest-earning assets in addition to a significant change in the mix of our interest-earning assets from loans to investment securities, partially offset by a decrease in interest-bearing liabilities and a decrease in the cost of our interest-bearing liabilities. The average yield earned on our interest-earning assets decreased 35 basis points to 3.57% for the year ended December 31, 2011, compared to 3.92% in 2010, while the average rate paid on our interest-bearing liabilities decreased 39 basis points to 0.86% for the year ended December 31, 2011, compared to 1.25% in 2010. Average interest-earning assets decreased $1.43 billion to $6.55 billion for the year ended December 31, 2011, compared to $7.98 billion in 2010. Average interest-bearing liabilities decreased $921.8 million to $5.16 billion for the year ended December 31, 2011, compared to $6.08 billion in 2010.

Interest income on our loan portfolio, expressed on a tax-equivalent basis, decreased $97.2 million for the year ended December 31, 2011, as compared to 2010. Average loans decreased $1.71 billion to $3.81 billion for the year ended December 31, 2011, from $5.52 billion in 2010. The decrease in average loans primarily reflects a substantial level of loan payoffs and principal payments, a decline in loan production and reduced loan demand within our markets, loan charge-offs, transfers of loans to other real estate and repossessed assets and the exit of certain of our problem credit relationships. The yield on our loan portfolio decreased 26 basis points to 4.84% for the year ended December 31, 2011, compared to 5.10% in 2010. The yield on our loan portfolio continues to be adversely impacted by the historically low prime and LIBOR interest rates, as a significant portion of our loan portfolio is priced to these indices. Furthermore, the yield on our loan portfolio continues to be adversely impacted by the higher levels of average nonaccrual loans. Our nonaccrual loans decreased our average yield on loans by approximately 47 and 64 basis points in 2011 and 2010, respectively. An interest adjustment of $1.8 million associated with the amortization of the remaining loan premium related to prior bank acquisitions decreased our average yield on loans by five basis points during 2011. This adjustment was necessitated by an acceleration of loan payoffs within these acquired portfolios. Interest income on our loan

28

portfolio was positively impacted by income associated with our interest rate swap agreements of $5.7 million in 2010. This income ceased during the third quarter of 2010 with the expiration of the amortization period of the unrealized pre-tax gain associated with the termination of our interest rate swap agreements designated as cash flow hedges, as further discussed under “—Interest Rate Risk Management” and in Note 8 to our consolidated financial statements.

Interest income on our investment securities, expressed on a tax-equivalent basis, increased $20.4 million for the year ended December 31, 2011, as compared to 2010. Average investment securities increased $1.05 billion for the year ended December 31, 2011, as compared to 2010. The increase in average investment securities reflects the continued utilization of a portion of our cash and short-term investments to fund gradual and planned increases in our investment securities portfolio in an effort maximize our net interest income and net interest margin while maintaining appropriate liquidity levels and appropriate diversification within our investment securities portfolio. The yield earned on our investment securities portfolio decreased 31 basis points to 2.23% for the year ended December 31, 2011, compared to 2.54% in 2010, reflecting significant purchases of investment securities at lower market rates.

Dividends on our FRB and FHLB stock decreased $647,000 for the year ended December 31, 2011, as compared to 2010. Average FRB and FHLB stock decreased $22.1 million for the year ended December 31, 2011, as compared to 2010. The decrease in average FRB and FHLB stock reflects the net redemption of FRB and FHLB stock during 2010 and 2011 associated with the reduction in our total assets, in addition to the redemption of FHLB stock during 2010 associated with the prepayment of $600.0 million of FHLB advances during 2010. The yield earned on our FRB and FHLB stock was 5.12% for the year ended December 31, 2011, compared to 4.15% in 2010.

Interest income on our short-term investments decreased $1.9 million for the year ended December 31, 2011, as compared to 2010. Average short-term investments decreased $751.3 million for the year ended December 31, 2011, as compared to 2010. The yield on our short-term investments was 0.25% for the years ended December 31, 2011 and 2010, reflecting the investment of the majority of funds in our short-term investments in our correspondent bank account with the FRB, which earned 0.25%. The decrease in our average short-term investments reflects the utilization of such funds, coupled with funds available from the decline in our loan portfolio, to fund increases in our investment securities portfolio, divestitures associated with our Capital Plan, and decreases in our average total deposits. We built a significant amount of available balance sheet liquidity throughout 2009, 2010 and 2011 in anticipation of the expected completion of certain transactions associated with our Capital Plan.

Interest expense on our interest-bearing deposits decreased $24.3 million for the year ended December 31, 2011, as compared to 2010. Average total deposits decreased $436.2 million to $5.93 billion for the year ended December 31, 2011, from $6.36 billion in 2010. Average interest-bearing deposits decreased $454.3 million for the year ended December 31, 2011, as compared to 2010. The decrease in average interest-bearing deposits primarily reflects anticipated reductions of higher rate certificates of deposit and promotional money market deposits, partially offset by organic growth through deposit development programs, including marketing campaigns and enhanced product and service offerings. The mix in our deposit portfolio volumes during 2011 primarily reflects a shift from time deposits and savings and money market deposits to interest-bearing and noninterest-bearing demand deposits. Decreases in our average time deposits and savings and money market deposits of $462.7 million and $28.6 million, respectively, for 2011 as compared to 2010, were partially offset by increases in average interest-bearing demand deposits and noninterest-bearing demand deposits of $37.1 million and $18.0 million, respectively. The aggregate weighted average rate paid on our interest-bearing deposit portfolio decreased 41 basis points to 0.65% for the year ended December 31, 2011, compared to 1.06% in 2010, reflecting the re-pricing of certificate of deposit accounts to current market interest rates upon maturity and our efforts to reduce deposit costs across our deposit portfolio, in particular promotional money market deposits. The weighted average rate paid on our time deposit portfolio declined to 1.21% in 2011 from 1.79% in 2010; the weighted average rate paid on our savings and money market deposit portfolio declined to 0.42% in 2011 from 0.67% in 2010; and the weighted average rate paid on our interest-bearing demand deposits declined to 0.11% in 2011 from 0.16% in 2010.

Interest expense on our other borrowings decreased $7.8 million for the year ended December 31, 2011, as compared to 2010. Average other borrowings decreased $467.7 million for the year ended December 31, 2011, as compared to 2010. Average other borrowings for the year ended December 31, 2011 were comprised solely of daily repurchase agreements utilized by our commercial deposit customers as an alternative deposit product in connection with cash management activities. The decrease in average other borrowings for 2011, as compared to 2010, primarily reflects the prepayment of $600.0 million of our outstanding FHLB advances and the early termination of our $120.0 million term repurchase agreement in 2010. The aggregate weighted average rate paid on our other borrowings decreased to 0.03% for the year ended December 31, 2011, compared to 1.52% in 2010, reflecting the repayment of our higher cost secured borrowings during 2010. See further discussion regarding activity in other borrowings under “—Liquidity Management.”

Interest expense on our junior subordinated debentures increased $611,000 for the year ended December 31, 2011, as compared to 2010. Average junior subordinated debentures were $354.0 million and $353.9 million for the years ended December 31, 2011 and 2010, respectively. The aggregate weighted average rate paid on our junior subordinated debentures increased to 3.85% for the year ended December 31, 2011, compared to 3.68% in 2010. The aggregate weighted average rates paid and the resulting level

29

of interest expense reflect the LIBOR rates and the impact to the related spreads to LIBOR during the periods, as approximately 79.4% of our junior subordinated debentures are variable rate. The aggregate weighted average rates paid also reflect additional interest expense accrued on the regularly scheduled deferred interest payments on our junior subordinated debentures of $1.3 million and $581,000 for the years ended December 31, 2011 and 2010, respectively . The additional interest expense accrued on the regularly scheduled deferred interest payments increased the weighted average rate paid on our junior subordinated debentures by approximately 36 and 16 basis points in 2011 and 2010, respectively.

Rate / Volume

The following table indicates, on a tax-equivalent basis, the changes in interest income and interest expense on a continuing basis that are attributable to changes in average volume and changes in average rates, in comparison with the preceding year. The change in interest due to the combined rate/volume variance has been allocated to rate and volume changes in proportion to the dollar amounts of the change in each.

	Increase (Decrease) Attributable to Change in:
	2012 Compared to 2011							2011 Compared to 2010
	Volume			Rate		Net Change		Volume		Rate		Net Change
	(dollars expressed in thousands)
Interest earned on:
Loans: (1) (2) (3)
Taxable	$	(34,206	)	(6,613	)	(40,819	)	(83,608	)	(13,242	)	(96,850	)
Tax-exempt (4)	(62		)	49		(13	)	(165	)	(160	)	(325	)
Investment securities:
Taxable	13,953			(2,578	)	11,375		23,501		(2,941	)	20,560
Tax-exempt (4)	(127		)	(171	)	(298	)	(93	)	(82	)	(175	)
FRB and FHLB stock	(52		)	(218	)	(270	)	(1,056	)	409		(647	)
Short-term investments	(814		)	—		(814	)	(1,910	)	—		(1,910	)
Total interest income	(21,308		)	(9,531	)	(30,839	)	(63,331	)	(16,016	)	(79,347	)
Interest paid on:
Interest-bearing demand deposits	(1		)	(453	)	(454	)	60		(446	)	(386	)
Savings and money market deposits	(479		)	(4,563	)	(5,042	)	(191	)	(5,191	)	(5,382	)
Time deposits	(3,710		)	(6,436	)	(10,146	)	(7,222	)	(11,273	)	(18,495	)
Other borrowings	(3		)	(30	)	(33	)	(3,766	)	(4,063	)	(7,829	)
Subordinated debentures	3			1,221		1,224		3		608		611
Total interest expense	(4,190		)	(10,261	)	(14,451	)	(11,116	)	(20,365	)	(31,481	)
Net interest income	$	(17,118	)	730		(16,388	)	(52,215	)	4,349		(47,866	)

(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.

(2) Interest income on loans includes loan fees.

(3) Interest income on loans includes the effects of interest rate swap agreements.

(4) Information is presented on a tax-equivalent basis assuming a tax rate rate of 35%.

Net interest income, expressed on a tax-equivalent basis, decreased $16.4 million for year ended December 31, 2012, as compared to 2011, and reflects a decrease due to volume of $17.1 million, partially offset by an increase due to rate of $730,000. Net interest income, expressed on a tax-equivalent basis, decreased $47.9 million for year ended December 31, 2011, as compared to 2010, and reflects a decrease due to volume of $52.2 million, partially offset by an increase due to rate of $4.3 million. The decrease in net interest income, expressed on a tax-equivalent basis, due to volume for 2012 as compared to 2011, and for 2011 as compared to 2010, was primarily driven by a decrease in the volume of loans, partially offset by an increase in the volume of investment securities and a decrease in the volume of interest-bearing deposits. We have been utilizing cash proceeds resulting from loan payoffs to fund gradual and planned increases in our investment securities portfolio in an effort to maximize our net interest income and net interest margin while maintaining appropriate liquidity levels and diversification within our investment securities portfolio and closely monitoring key risk metrics within the investment securities portfolio. Because loans generally have a higher yield than investment securities, the change in our interest-earning asset mix has had a negative impact on our net interest income. The increase in net interest income due to rate was primarily driven by a decline in the cost of our interest-bearing deposits, partially offset by a decrease in our loan and investment securities yields, reflective of overall market conditions and competition during these periods.

Provision for Loan Losses

Comparison of 2012 and 2011. We recorded a provision for loan losses of $2.0 million for the year ended December 31, 2012, compared to $69.0 million in 2011. The decrease in the provision for loan losses for the year ended December 31, 2012, as compared to 2011, was primarily driven by the decrease in our overall level of nonaccrual loans and potential problem loans, a decrease in

30

net loan charge-offs and less severe asset migration to classified asset categories during 2012 than the migration levels experienced during 2011, as further discussed under “—Loans and Allowance for Loan Losses.”

Our nonaccrual loans were $109.9 million at December 31, 2012, compared to $220.3 million at December 31, 2011. The decrease in the overall level of nonaccrual loans during 2012 was primarily driven by resolution of certain nonaccrual loans, including the sale of certain nonaccrual loans, gross loan charge-offs, and transfers to other real estate and repossessed assets exceeding net additions to nonaccrual loans, as further discussed under “—Loans and Allowance for Loan Losses,” and reflects our continued progress with respect to the implementation of our Asset Quality Improvement Plan initiatives, designed to reduce the overall balance of nonaccrual and other potential problem loans and assets.

Our net loan charge-offs decreased to $48.1 million for the year ended December 31, 2012, compared to $132.3 million in 2011. Our net loan charge-offs were 1.56% of average loans in 2012, compared to 3.47% of average loans in 2011. Loan charge-offs were $78.1 million for 2011, compared to $154.6 million in 2011, and loan recoveries were $30.0 million for 2012, compared to $22.3 million in 2011.

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

Comparison of 2011 and 2010. We recorded a provision for loan losses of $69.0 million for the year ended December 31, 2011, compared to $214.0 million in 2010. The decrease in the provision for loan losses for the year ended December 31, 2011, as compared to 2010, was primarily driven by the decrease in our overall level of nonaccrual loans and potential problem loans, a decrease in net loan charge-offs and less severe asset migration to classified asset categories during 2011 than the migration levels experienced during 2010.

Our nonaccrual loans were $220.3 million at December 31, 2011, compared to $398.9 million at December 31, 2010. The decrease in the overall level of nonaccrual loans during 2011 was primarily driven by gross loan charge-offs, transfers to other real estate and repossessed assets and resolution of certain nonaccrual loans exceeding net additions to nonaccrual loans.

Our net loan charge-offs decreased to $132.3 million for the year ended December 31, 2011, compared to $279.1 million in 2010. Our net loan charge-offs were 3.47% of average loans in 2011, compared to 5.06% of average loans in 2010. Loan charge-offs were $154.6 million for 2011, compared to $331.2 million in 2010, and loan recoveries were $22.3 million for 2011, compared to $52.1 million in 2010.

Noninterest Income

Comparison of 2012 and 2011. Noninterest income increased$4.0 million to $66.2 million for the year ended December 31, 2012, from $62.2 million in 2011. The increase in our noninterest income was primarily attributable to increased gains on loans sold and held for sale, reduced declines in the fair value of servicing rights and increased other income, partially offset by lower service charges on deposit accounts and customer service fees, decreased net gains on investment securities and lower loan servicing fees. The following table summarizes noninterest income for the years ended December 31, 2012 and 2011:

	December 31,					Increase (Decrease)
	2012			2011		Amount		%
	(dollars expressed in thousands)
Noninterest income:
Service charges on deposit accounts and customer service fees	$	36,197		39,101		(2,904	)	(7.4	)%
Gain on loans sold and held for sale	12,931			5,176		7,755		149.8
Net gain on investment securities	1,306			5,335		(4,029	)	(75.5	)
Decrease in fair value of servicing rights	(5,475		)	(7,652	)	2,177		28.5
Loan servicing fees	7,403			8,271		(868	)	(10.5	)
Other	13,844			11,963		1,881		15.7
Total noninterest income	$	66,206		62,194		4,012		6.5

Service charges on deposit accounts and customer service fees decreased$2.9 million for the year ended December 31, 2012, as compared to 2011, primarily reflecting reduced non-sufficient funds and returned check fee income on retail and commercial accounts coupled with changes in our deposit mix and certain product modifications designed to enhance overall product offerings to our customer base during these periods.

Gains on loans sold and held for sale increased$7.8 million for the year ended December 31, 2012, as compared to 2011. The increase was primarily attributable to an increase in the volume of mortgage loans originated for sale in the secondary market during 2012 associated with an increase in refinancing volume in our mortgage banking division in addition to higher margins on the loans originated for sale in the secondary market. The gain on the sale of mortgage loans was $12.9 million and $5.2 million

31

for the years ended December 31, 2012 and 2011, respectively. For the years ended December 31, 2012 and 2011, we originated residential mortgage loans totaling $470.1 million and $294.0 million, respectively, and sold residential mortgage loans totaling $435.3 million and $298.5 million, respectively. Gains on loans sold and held for sale for 2011 also include a loss on the sale of SBA loans of $100,000.

Net gains on investment securities decreased$4.0 million for the year ended December 31, 2012, as compared to 2011. Proceeds from sales of available-for-sale investment securities were $315.2 million for the year ended December 31, 2012, as compared to $283.7 million for 2011. The net gains on investment securities reflect sales of certain investment securities during the respective periods to partially fund specific loan purchase transactions and/or reposition the investment securities portfolio based on our ongoing evaluation of liquidity requirements and overall market and economic conditions.

Net losses associated with changes in the fair value of mortgage and SBA servicing rights decreased$2.2 million for the year ended December 31, 2012, as compared to 2011. The changes in the fair value of mortgage and SBA servicing rights during the periods reflect changes in mortgage interest rates and the related changes in estimated prepayment speeds, as well as changes in cash flow assumptions underlying SBA loans serviced for others.

Loan servicing fees decreased$868,000 for the year ended December 31, 2012, as compared to 2011. Loan servicing fees are primarily comprised of fee income generated from the servicing of real estate mortgage loans owned by investors and originated by our mortgage banking division, as well as SBA loans originated to small business concerns, in addition to unused commitment fees received from lending customers. The level of such fees is primarily impacted by the balance of loans serviced and interest shortfall on serviced residential mortgage loans. Interest shortfall represents the difference between the interest collected from a loan servicing customer upon prepayment of the loan and the full month of interest that is required to be remitted to the security owner. The level of fees was also impacted by a decrease in loan servicing fees associated with declining volumes of SBA loans serviced for others and unused commitment fees associated with declining loan and unused commitment amounts.

Other income increased$1.9 million for the year ended December 31, 2012, as compared to 2011. The increase in other income primarily reflects the following:

• Net gains on sales of other real estate and repossessed assets of $2.6 million during 2012, as compared to net losses on sales of other real estate and repossessed assets of $1.3 million in 2011; and

• The receipt of a litigation settlement of $561,000 in the first quarter of 2012; partially offset by

• A loss on the sale of certain bank-owned properties of $1.1 million during 2012;

• Income recognized on Community Reinvestment Act, or CRA, investments of $721,000 during 2012, as compared to $1.1 million in 2011; and

• The recovery of $1.8 million received during 2011 from a suspected fraud loss recognized in 2010.

Comparison of 2011 and 2010. Noninterest income decreased $16.3 million, to $62.2 million for the year ended December 31, 2011, from $78.5 million in 2010. The decrease in our noninterest income was primarily attributable to lower service charges on deposit accounts and customer service fees, reduced gains on loans sold and held for sale, reduced gains on investment securities, a higher decline in the fair value of servicing rights, lower loan servicing fees and decreased other income, partially offset by a reduction in net losses on derivative financial instruments (included in other income). The following table summarizes noninterest income for the years ended December 31, 2011 and 2010:

	December 31,					Increase (Decrease)
	2011			2010		Amount		%
	(dollars expressed in thousands)
Noninterest income:
Service charges on deposit accounts and customer service fees	$	39,101		42,370		(3,269	)	(7.7	)%
Gain on loans sold and held for sale	5,176			9,516		(4,340	)	(45.6	)
Net gain on investment securities	5,335			8,315		(2,980	)	(35.8	)
Decrease in fair value of servicing rights	(7,652		)	(5,558	)	(2,094	)	(37.7	)
Loan servicing fees	8,271			8,783		(512	)	(5.8	)
Other	11,963			15,066		(3,103	)	(20.6	)
Total noninterest income	$	62,194		78,492		(16,298	)	(20.8	)

Service charges on deposit accounts and customer service fees decreased $3.3 million for the year ended December 31, 2011, as compared to 2010, primarily reflecting reduced non-sufficient funds and returned check fee income on retail and commercial accounts coupled with changes in our deposit mix and certain product modifications designed to enhance overall product offerings to our customer base during these periods.

Gains on loans sold and held for sale decreased $4.3 million for the year ended December 31, 2011, as compared to 2010. The decrease was primarily attributable to a decrease in the volume of mortgage loans originated for sale in the secondary market

32

during 2011 associated with the decline in refinancing volume in our mortgage banking division in addition to lower margins on the loans originated for sale in the secondary market. For the years ended December 31, 2011 and 2010, we originated residential mortgage loans totaling $294.0 million and $398.9 million, respectively, and sold residential mortgage loans totaling $298.5 million and $376.2 million, respectively.

Net gains on investment securities decreased $3.0 million for the year ended December 31, 2011, as compared to 2010. During the first quarter of 2011, we reduced our overall number of smaller investment securities holdings, many of which were acquired in previous acquisitions, in an effort to reduce the operational requirements and overall costs associated with maintaining these securities. During the second quarter of 2011, we sold $100.0 million of U.S. Treasury securities at a gain of $592,000. During the third quarter of 2011, we sold $148.5 million of mortgage-backed securities at a gain of $4.1 million. During 2010, we sold investment securities primarily to provide funding to pay off our remaining term secured borrowings, including our FHLB advances and our $120.0 million term repurchase agreement. These investment securities were sold at net gains. Proceeds from sales of available-for-sale investment securities were $283.7 million for the year ended December 31, 2011, as compared to $249.2 million in 2010.

Net losses associated with changes in the fair value of mortgage and SBA servicing rights increased $2.1 million for the year ended December 31, 2011, as compared to 2010. The changes in the fair value of mortgage and SBA servicing rights during the periods reflect changes in mortgage interest rates and the related changes in estimated prepayment speeds, as well as changes in cash flow assumptions underlying SBA loans serviced for others. The higher decline in the fair value of servicing rights during 2011 was primarily attributable to the substantial decrease in mortgage interest rates during 2011 and related increase in loan prepayment speeds resulting from historically low mortgage interest rates.

Loan servicing fees decreased $512,000 for the year ended December 31, 2011, as compared to 2010, and are primarily comprised of fee income generated from the servicing of real estate mortgage loans owned by investors and originated by our mortgage banking division, as well as SBA loans originated to small business concerns, in addition to unused commitment fees received from lending customers. The level of such fees is primarily impacted by the balance of loans serviced and interest shortfall on serviced residential mortgage loans. The decrease in loan servicing fees during 2011 was primarily attributable to a decrease in unused commitment fees of $533,000 for the year ended December 31, 2011, as compared to 2010, driven by the decrease in our loan portfolio and related unused commitments.

Other income decreased $3.1 million for the year ended December 31, 2011, as compared to 2010. The decrease in other income primarily reflects the following:

• Net losses on sales of other real estate and repossessed assets of $1.3 million for the year ended December 31, 2011, compared to net gains on sales of other real estate and repossessed assets of $3.5 million in 2010;

• A loss of $334,000 recognized in the first quarter of 2011 on the sale of our San Jose Branch and a gain of $263,000 recognized in the second quarter of 2011 on the sale of our Edwardsville Branch, compared to a gain of $168,000 recognized in the first quarter of 2010 on the sale of our Lawrenceville, Illinois branch, as further described in Note 2 to our consolidated financial statements; and

• The receipt of a litigation settlement of $2.6 million recognized in the second quarter of 2010; partially offset by

• The recovery of $1.8 million received during 2011 from a suspected fraud loss recognized in 2010;

• Income recognized on CRA investments of $1.1 million during 2011, as compared to $35,000 in 2010; and

• A decrease in net losses on derivative instruments to $193,000 for the year ended December 31, 2011, from $2.9 million in 2010, primarily attributable to changes in fair value and the net interest differential on our interest rate swap agreements.

Noninterest Expense

Comparison of 2012 and 2011. Noninterest expense decreased$24.9 million to $205.3 million for the year ended December 31, 2012, from $230.2 million in 2011. The decrease in our noninterest expense during 2012, as compared to 2011, was primarily attributable to reductions in nearly all expense categories attributable to our profit improvement initiatives and the reduction in our overall asset levels. The following table summarizes noninterest expense for the years ended December 31, 2012 and 2011:

33

	December 31,			Increase (Decrease)
	2012		2011	Amount		%
	(dollars expressed in thousands)
Noninterest expense:
Salaries and employee benefits	$	77,788	79,518	(1,730	)	(2.2	)%
Occupancy, net of rental income, and furniture and equipment	33,409		35,668	(2,259	)	(6.3	)
Postage, printing and supplies	2,721		2,777	(56	)	(2.0	)
Information technology fees	22,446		25,804	(3,358	)	(13.0	)
Legal, examination and professional fees	8,890		12,215	(3,325	)	(27.2	)
Amortization of intangible assets	—		3,024	(3,024	)	(100.0	)
Advertising and business development	2,125		1,868	257		13.8
FDIC insurance	12,436		16,103	(3,667	)	(22.8	)
Write-downs and expenses on other real estate and repossessed assets	18,672		22,983	(4,311	)	(18.8	)
Other	26,831		30,286	(3,455	)	(11.4	)
Total noninterest expense	$	205,318	230,246	(24,928	)	(10.8	)

Salaries and employee benefits expense decreased$1.7 million for the year ended December 31, 2012, as compared to 2011. The overall decrease in salaries and employee benefits expense reflects lower salary expense associated with a decline in the overall level of our full-time equivalent employees, or FTEs, excluding discontinued operations, which decreased 2.9% to 1,177 at December 31, 2012 from 1,212 at December 31, 2011. The decrease in salary expense was partially offset by an increase in benefits expenses, including medical claims and prescription expenses, and expense associated with our nonqualified deferred compensation plan resulting from market value increases in the underlying employee investment accounts in this plan.

Occupancy, net of rental income, and furniture and equipment expense decreased$2.3 million for the year ended December 31, 2012, as compared to 2011. The decrease reflects reduced furniture, fixture and technology equipment expenditures associated with prior expansion and branch renovation activities and certain branch closures completed in conjunction with profit improvement initiatives. In addition, occupancy expense, net of rental income, includes a $787,000 decrease in rent expense during the first quarter of 2012 associated with the transfer of a lease obligation to an unaffiliated third party and the related reversal of the corresponding straight-line rent liability.

Information technology fees decreased$3.4 million for the year ended December 31, 2012, as compared to 2011. The decrease in information technology fees is primarily due to the implementation of certain profit improvement initiatives and related fee reductions with First Services, L.P. As more fully described in Note 20 to our consolidated financial statements, First Services, L.P., a limited partnership indirectly owned by our Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, provides information technology and various operational support services to our subsidiaries and us. Information technology fees also include fees paid to outside servicers associated with our mortgage lending, trust and small business lending divisions as well as our payroll processing department.

Legal, examination and professional fees decreased$3.3 million for the year ended December 31, 2012, as compared to 2011. The decrease in legal, examination and professional fees reflects a decrease in legal expenses associated with loan collection activities, divestiture activities and litigation matters in comparison to the level of such expenses during 2011. We anticipate legal, examination and professional fees to remain at higher-than-historical levels during 2013, primarily as a result of elevated levels of legal and professional fees associated with ongoing collection efforts on commercial and consumer problem loans as well as ongoing matters associated with our Capital Plan, as further described under “Item 1 —Business – Recent Developments and Other Matters – Capital Plan.”

Amortization of intangible assets was $3.0 million for the year ended December 31, 2011, and reflects the amortization of core deposit intangibles associated with prior acquisitions. Our core deposit intangibles became fully amortized during 2011.

Advertising and business development expense increased$257,000 for the year ended December 31, 2012, as compared to 2011, reflecting increased advertising during 2012 as compared to 2011. We expect these expenses to increase over time as we further market our products and services throughout our geographic market areas.

FDIC insurance expense decreased$3.7 million for the year ended December 31, 2012, as compared to 2011. Prior to April 1, 2011, the FDIC’s assessment base for the calculation of insurance premium assessments was an institution’s average deposits. The Dodd-Frank Wall Street Reform and Consumer Protection Act required the FDIC to establish rules setting insurance premium assessments based on an institution’s average consolidated assets minus its average tangible equity instead of its deposits. The change in the assessment base had the impact of reducing the level of our FDIC insurance expense beginning with the second quarter of 2011. The decrease in FDIC insurance expense is also reflective of our reduced level of deposits and total assets during 2012 as compared to 2011 and a reduction in our assessment rate effective October 2, 2012.

34

Write-downs and expenses on other real estate and repossessed assets decreased$4.3 million for the year ended December 31, 2012, as compared to 2011. Write-downs related to the revaluation of certain other real estate properties and repossessed assets were $14.5 million in 2012, as compared to $16.9 million in 2011. Other real estate and repossessed asset expenses, exclusive of write-downs, such as taxes, insurance, and repairs and maintenance, were $4.2 million in 2012 as compared to $6.1 million in 2011, reflecting a decrease in the balance of other real estate and repossessed assets and the sale of certain properties that required higher operating expenditures. The balance of our other real estate and repossessed assets decreased to $92.0 million at December 31, 2012, from $129.9 million at December 31, 2011. The overall higher-than-historical level of expenses on other real estate and repossessed assets is associated with ongoing foreclosure activity, including current and delinquent real estate taxes paid on other real estate properties, as well as other property preservation related expenses. We expect the level of write-downs and expenses on our other real estate and repossessed assets to continue to remain at elevated levels in the near term as a result of the high level of our other real estate and repossessed assets and the expected future transfer of certain of our nonaccrual loans into our other real estate portfolio.

Other expense decreased$3.5 million for the year ended December 31, 2012, as compared to 2011. Other expense encompasses numerous general and administrative expenses including communications, insurance, freight and courier services, correspondent bank charges, loan expenses, miscellaneous losses and recoveries, memberships and subscriptions, transfer agent fees, sales taxes, travel, meals and entertainment, overdraft losses and other nonrecurring expenses. The decrease in the overall level of other expense during 2012, as compared to 2011, is reflective of the following:

• Amortization expense and losses associated with CRA investments of $1.2 million during 2012, as compared to $2.3 million in 2011;

• Loan expenses related to collection matters of $3.6 million during 2012, as compared to $5.3 million in 2011;

• A reduction in overdraft losses, net of recoveries, to $678,000 in 2012, as compared to $1.2 million in 2011;

• Write-downs of bank-owned facilities to estimated fair value less costs to sell of $150,000 during 2012, as compared to $2.6 million in 2011, associated with space consolidation initiatives; and

• Profit improvement initiatives and management’s efforts to reduce overall expense levels; partially offset by

• An expense of $2.3 million associated with a fair value adjustment on bank-owned facilities of eight of our Florida branches previously reported as discontinued operations that were reclassified to continuing operations during the fourth quarter of 2012; and

• Accruals and cash payments associated with repurchase losses in our Mortgage Division, resulting in expense of $2.3 million during 2012, as compared to $1.3 million in 2011.

Comparison of 2011 and 2010. Noninterest expense decreased $68.4 million to $230.2 million for the year ended December 31, 2011, from $298.6 million in 2010. The decrease in our noninterest expense during 2011, as compared to 2010, was primarily attributable to reductions in nearly all expense categories attributable to our profit improvement initiatives and the decrease in our total assets. The following table summarizes noninterest expense for the years ended December 31, 2011 and 2010:

	December 31,			Increase (Decrease)
	2011		2010	Amount		%
	(dollars expressed in thousands)
Noninterest expense:
Salaries and employee benefits	$	79,518	84,101	(4,583	)	(5.4	)%
Occupancy, net of rental income, and furniture and equipment	35,668		40,477	(4,809	)	(11.9	)
Postage, printing and supplies	2,777		3,379	(602	)	(17.8	)
Information technology fees	25,804		27,745	(1,941	)	(7.0	)
Legal, examination and professional fees	12,215		13,818	(1,603	)	(11.6	)
Amortization of intangible assets	3,024		3,292	(268	)	(8.1	)
Advertising and business development	1,868		1,479	389		26.3
FDIC insurance	16,103		21,664	(5,561	)	(25.7	)
Write-downs and expenses on other real estate and repossessed assets	22,983		44,662	(21,679	)	(48.5	)
Other	30,286		58,022	(27,736	)	(47.8	)
Total noninterest expense	$	230,246	298,639	(68,393	)	(22.9	)

Salaries and employee benefits expense decreased $4.6 million for the year ended December 31, 2011, as compared to 2010. The overall decrease in salaries and employee benefits expense is reflective of the completion of certain staff reductions in 2010 and 2011. Our total full-time equivalent employees or FTEs, excluding discontinued operations, decreased to 1,212 at December 31, 2011, from 1,347 at December 31, 2010, representing a decrease of 10.0%. The overall reduction in salaries and employee benefits expense was partially offset by an increase in our 401(k) matching contribution, resulting from the reinstatement of our 401(k) matching contribution in the first quarter of 2011 following the elimination of our matching contribution in April 2009.

Occupancy, net of rental income, and furniture and equipment expense decreased $4.8 million for the year ended December 31, 2011, as compared to 2010. The decrease reflects reduced furniture, fixture and technology equipment expenditures associated

35

with prior expansion and branch renovation activities and certain branch closures completed in conjunction with profit improvement initiatives.

Postage, printing and supplies expense decreased $602,000 for the year ended December 31, 2011, as compared to 2010, primarily reflecting decreases in office supplies expenses as a result of profit improvement initiatives.

Information technology fees decreased $1.9 million for the year ended December 31, 2011, as compared to 2010. The decrease in information technology fees is primarily due to the implementation of certain profit improvement initiatives and negotiated fee reductions with First Services, L.P, as previously discussed. Information technology fees also include fees paid to outside servicers associated with our mortgage lending, trust and small business lending divisions as well as our payroll processing department.

Legal, examination and professional fees decreased $1.6 million for the year ended December 31, 2011, as compared to 2010. The decrease in legal, examination and professional fees reflects a decrease in legal expenses associated with loan collection activities, divestiture activities and litigation matters in comparison to the level of such expenses during 2010.

Amortization of intangible assets decreased $268,000 for the year ended December 31, 2011, as compared to 2010, reflecting a decrease in the amortization of core deposit intangibles associated with prior acquisitions. Our core deposit intangibles became fully amortized during 2011.

Advertising and business development expense increased $389,000 for the year ended December 31, 2011, as compared to 2010, reflecting increased advertising during 2011 as compared to 2010.

FDIC insurance expense decreased $5.6 million for the year ended December 31, 2011, as compared to 2010. Prior to April 1, 2011, the FDIC’s assessment base for the calculation of insurance premium assessments was an institution’s average deposits. The Dodd-Frank Act required the FDIC to establish rules setting insurance premium assessments based on an institution’s average consolidated assets minus its average tangible equity instead of its deposits. The change in the assessment base had the impact of reducing the level of our FDIC insurance expense beginning with the second quarter of 2011, as previously discussed. The decrease in FDIC insurance expense is also reflective of our lower level of deposits and total assets during 2011 as compared to 2010.

Write-downs and expenses on other real estate and repossessed assets decreased $21.7 million for the year ended December 31, 2011, as compared to 2010. Write-downs related to the revaluation of certain other real estate properties and repossessed assets were $16.9 million in 2011, as compared to $34.7 million in 2010. Other real estate and repossessed asset expenses, exclusive of write-downs, such as taxes, insurance, and repairs and maintenance, were $6.1 million in 2011 as compared to $10.0 million in 2010, reflecting a decrease in the balance of other real estate and repossessed assets and the sale of certain properties that required higher operating expenditures. The balance of our other real estate and repossessed assets decreased to $129.9 million at December 31, 2011, from $140.7 million at December 31, 2010. The overall higher-than-historical level of expenses on other real estate and repossessed assets is associated with ongoing foreclosure activity, including current and delinquent real estate taxes paid on other real estate properties, as well as other property preservation related expenses.

Other expense decreased $27.7 million for the year ended December 31, 2011, as compared to 2010. The decrease in the overall level of other expense during 2011, as compared to 2010, is reflective of the following:

• An operating loss of $13.6 million during 2010 resulting from suspected fraud involving a customer relationship;

• Prepayment penalties of $5.1 million associated with the prepayment of all of our outstanding FHLB advances during 2010;

• A fee of $5.5 million paid during 2010 associated with the early termination of our $120.0 million term repurchase agreement;

• Payments related to litigation matters of $3.5 million in 2010;

• The establishment of a specific reserve on an unfunded letter of credit of $2.4 million in 2010;

• A reduction in overdraft losses, net of recoveries, to $1.2 million in 2011, as compared to $1.6 million in 2010; and

• Profit improvement initiatives and management’s efforts to reduce overall expense levels; partially offset by

• Write-downs of bank-owned facilities to estimated fair value less costs to sell of $2.6 million associated with space consolidation initiatives completed during 2011; and

• An increase in expenses associated with CRA investments to $2.3 million in 2011, as compared to $1.5 million in 2010.

(Benefit) Provision for Income Taxes.

Comparison of 2012 and 2011. We recorded a benefit for income taxes of $139,000 and $10.7 million for the years ended December 31, 2012 and 2011, respectively. The benefit for income taxes during 2012 and 2011 reflects the establishment of a full deferred tax asset valuation allowance during 2008 and the resulting inability to record tax benefits on our net loss in 2011 due to existing federal and state net operating loss carryforwards on which the realization of the related tax benefits is not presently “more

36

likely than not,” as further described in Note 17 to our consolidated financial statements. The deferred tax asset valuation allowance was primarily established as a result of our three-year cumulative operating loss for the years ended December 31, 2008, 2007 and 2006, after considering all available objective evidence and potential tax planning strategies related to the amount of the deferred tax assets that are “more likely than not” to be realized.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expenses. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and changes in accounting policies and incorporate assumptions including the amount of future state and federal pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts and future taxable income and are consistent with the plans and estimates we are using to manage the underlying business. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss).

After analysis of all available positive and negative evidence, we believe it is reasonably possible to reverse a portion, or all, of our deferred tax asset valuation allowance in the future. Historical and forecasted positive evidence includes: pre-tax operating income for the year ended December 31, 2012; forecasted cumulative pre-tax operating income for the three years ending December 31, 2013; continued improvement in asset quality metrics; and certain other relevant factors. Any determination to reverse a portion, or all, of our deferred tax asset valuation allowance would be subject to ongoing evaluation with our advisors and subject to changes in circumstances and then-current available information.

The benefit for income taxes during 2011 also reflects the recognition of an intraperiod tax allocation between other comprehensive income and loss from continuing operations, resulting in a benefit for income taxes of $11.6 million during the third quarter of 2011 and a provision for income taxes of $1.1 million during the fourth quarter of 2011. This intraperiod tax allocation was primarily driven by market appreciation in our investment securities portfolio during the third quarter of 2011 and a subsequent decline in the fair value of our investment securities portfolio during the fourth quarter of 2011.

Comparison of 2011 and 2010. We recorded a benefit for income taxes of $10.7 million for the year ended December 31, 2011, compared to a provision for income taxes of $4.1 million for the year ended December 31, 2010. The (benefit) provision for income taxes during 2011 and 2010 reflects the establishment of a full deferred tax asset valuation allowance during 2008, as previously discussed.

The benefit for income taxes during 2011 also reflects a benefit for income taxes of $10.5 million related to an intraperiod tax allocation between other comprehensive income and loss from continuing operations, as previously discussed.

The provision for income taxes for 2010 also reflects a provision for income taxes of $6.8 million related to the establishment of a deferred tax asset valuation allowance regarding the unrealized gain on certain interest rate swap agreements that were designated as cash flow hedges on certain of our loans. These interest rate swap agreements were terminated in December 2008, and as a result, the unrealized gain at the date of termination of $20.8 million was being amortized as an increase to interest and fees on loans in the consolidated statements of operations over the remaining terms of the respective interest rate swap agreements, which had contractual maturity dates through September 2010. During the third quarter of 2010, we recorded a provision for income taxes of $6.8 million related to the expiration of the amortization period of the unrealized gain on the interest rate swap agreements with a corresponding increase to accumulated other comprehensive income. The provision for income taxes also reflects a $2.1 million benefit related to the expiration of the statute of limitations and the related reversal of certain reserves on a number of uncertain tax positions, and expense of $240,000 related to the termination of our remaining BOLI policies.

The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013 and includes provisions that are effective for the 2012 tax year. ASC Topic 740, which is more fully described in Note 17 to our consolidated financial statements, requires that any change in tax law be recognized at the date of enactment, which, in this case, would be the annual or interim period that includes January 2, 2013. The impact of this new tax law is not expected to have a material impact on our consolidated financial statements or results of operations.

The level of our (benefit) provision for income taxes and the deferred tax asset valuation allowance are more fully described in Note 17 to our consolidated financial statements.

(Loss) Income from Discontinued Operations, Net of Tax

We recorded a loss from discontinued operations, net of tax, of $5.5 million for the year ended December 31, 2012, compared to a loss from discontinued operations, net of tax, of $6.5 million in 2011 and income from discontinued operations, net of tax, of

37

$3.6 million in 2010. The (loss) income from discontinued operations, net of tax, for 2012, 2011 and 2010 is reflective of the following:

• A gain of $425,000 during the second quarter of 2011 associated with the sale of our remaining Northern Illinois Region on May 13, 2011 after the write-off of goodwill and intangible assets allocated to the Northern Illinois Region of $1.6 million;

• A gain of $6.4 million during the third quarter of 2010 associated with the sale of a portion of our Northern Illinois Region during September 2010 after the write-off of goodwill and intangible assets allocated to the Northern Illinois Region of $9.7 million;

• A gain of $5.0 million during the second quarter of 2010 associated with the sale of our Texas Region on April 30, 2010 after the write-off of goodwill and intangible assets allocated to the Texas Region of $20.0 million;

• A loss of $156,000 during the second quarter of 2010 associated with the sale of MVP on April 15, 2010;

• A gain of $8.4 million during the first quarter of 2010 associated with the sale of our Chicago Region on February 19, 2010 after the write-off of goodwill and intangible assets allocated to the Chicago Region of $26.3 million; and

• Other income (loss) from all discontinued operations during the respective periods, as further described in Note 2 to our consolidated financial statements.

See Note 2 to our consolidated financial statements for further discussion of discontinued operations.

Net Loss Attributable to Noncontrolling Interest in Subsidiary

The net loss attributable to noncontrolling interest in subsidiary was $297,000 for the year ended December 31, 2012, compared to $3.0 million in 2011, and was comprised of the noncontrolling interest in the net losses of FB Holdings. The decrease is primarily reflective of increased gains on the sale of other real estate properties and reduced expenses and write-downs on other real estate properties associated with the reduction of loan and other real estate balances in FB Holdings during 2012 as compared to 2011.

The net loss attributable to noncontrolling interest in subsidiary was $3.0 million for the year ended December 31, 2011, compared to $6.5 million in 2010, and was comprised of the noncontrolling interest in the net losses of FB Holdings. The decrease is primarily reflective of lower collection and other real estate related expenses primarily resulting from lower balances of nonaccrual loans and other real estate in FB Holdings during 2011 as compared to 2010.

Noncontrolling interest in our subsidiaries is more fully described in Note 1 and Note 20 to our consolidated financial statements.

FINANCIAL CONDITION

Total assets decreased$99.8 million to $6.51 billion at December 31, 2012, from $6.61 billion at December 31, 2011. The decrease in our total assets was attributable to decreases in our loans, bank premises and equipment and other real estate and repossessed assets, partially offset by increases in our cash and short-term investments, our investment securities portfolio and our deferred income taxes.

Cash and cash equivalents, which are comprised of cash and short-term investments, increased$45.7 million to $518.8 million at December 31, 2012, from $473.1 million at December 31, 2011. The majority of funds in our short-term investments were maintained in our correspondent bank account with the FRB, as further discussed under “—Liquidity Management.” The increase in our cash and cash equivalents was primarily attributable to the following:

• A decrease in loans of $337.2 million, exclusive of the loan purchase and sale transactions discussed below, loan charge-offs and transfers of loans to other real estate and repossessed assets;

• Sales of certain special mention, potential problem and nonaccrual loans during 2012 resulting in net proceeds of $55.1 million;

• Recoveries of loans previously charged off of $30.0 million;

• Sales of other real estate and repossessed assets resulting in the receipt of cash proceeds from these sales of approximately $48.5 million; and

• Cash generated by operating earnings.

These increases in cash and cash equivalents were partially offset by:

• Payments associated with a net increase in our investment securities portfolio of $189.9 million, as further discussed below;

• A purchase of $141.0 million of seasoned, performing one-to-four-family residential real estate loans in September 2012;

• A decrease in our deposit balances of $130.2 million; and

• A net decrease in our other borrowings of $25.1 million, consisting of changes in our daily repurchase agreements utilized by customers as an alternative deposit product.

38

Investment securities increased$204.6 million to $2.68 billion at December 31, 2012, from $2.47 billion at December 31, 2011. The net increase in our investment securities during 2012 reflects the utilization of excess cash and cash equivalents to fund gradual and planned increases in our investment securities portfolio in a continued effort to maximize net interest income and net interest margin while maintaining appropriate liquidity levels, and an increase in the fair value adjustment of our available-for-sale investment securities of $20.6 million during 2012 primarily resulting from a decrease in market interest rates during the period, partially offset by the sale of $106.8 million of mortgage-backed securities during the third quarter of 2012 to partially fund the purchase of the one-to-four-family residential mortgage loans, as further described below. On June 30, 2012, we reclassified $729.1 million of available-for-sale investment securities to held-to-maturity investment securities, as further described in Note 3 to our consolidated financial statements and under “—Liquidity Management.”

Loans, net of net deferred loan fees, decreased$353.5 million to $2.93 billion at December 31, 2012, from $3.28 billion at December 31, 2011. The decrease reflects the sale of $69.3 million of special mention, potential problem and nonaccrual loans resulting in net loan charge-offs of $14.5 million, other loan charge-offs of $63.6 million, transfers of loans to other real estate and repossessed assets of $24.2 million, overall continued low loan demand within our markets and other net loan activity of $337.2 million, including significant principal repayments and/or payoffs on nonperforming, potential problem and other loans in addition to loan runoff in problem loans and loans in markets we previously exited. These decreases were partially offset by the purchase of $141.0 million of seasoned, performing one-to-four-family residential real estate loans in September 2012, as further discussed under “—Loans and Allowance for Loan Losses.”

Bank premises and equipment, net of depreciation and amortization, decreased$9.7 million to $127.5 million at December 31, 2012, from $137.2 million at December 31, 2011. The decrease is primarily attributable to depreciation and amortization of $12.1 million and write-downs of certain bank-owned facilities of $3.5 million, including a write-down of $2.3 million associated with a fair value adjustment on bank-owned facilities of eight of our Florida branches previously reported as discontinued operations that were reclassified to continuing operations during the fourth quarter of 2012. These decreases were partially offset by net purchases of premises and equipment of $5.9 million.

Goodwill and other intangible assets were $125.3 million at December 31, 2012 and 2011, and reflect the allocation of $700,000 of goodwill associated with our Florida Region to assets of discontinued operations at December 31, 2012 and 2011.

Deferred income taxes increased$9.9 million to $29.0 million at December 31, 2012, from $19.1 million at December 31, 2011. The net increase in deferred income taxes is comprised of a reduction in gross deferred tax assets of $5.5 million and a reduction in the Company’s deferred tax asset valuation allowance of $15.4 million, as more fully described in Note 17 to our consolidated financial statements.

Other real estate and repossessed assets decreased$37.9 million to $92.0 million at December 31, 2012, from $129.9 million at December 31, 2011. The decrease in other real estate and repossessed assets was primarily attributable to the sale of other real estate properties and repossessed assets with a carrying value of $45.9 million at a net gain of $2.6 million, and write-downs of other real estate properties and repossessed assets of $14.5 million primarily attributable to declining real estate values on certain properties. These decreases were partially offset by foreclosures and additions to other real estate and repossessed assets aggregating $24.2 million, as further discussed under “—Loans and Allowance for Loan Losses.”

Other assets decreased$5.0 million to $68.0 million at December 31, 2012, from $73.0 million at December 31, 2011, and are primarily comprised of accrued interest receivable, servicing rights, derivative instruments and miscellaneous other receivables.

Assets and liabilities of discontinued operations were $6.7 million and $155.7 million, respectively, at December 31, 2012, as compared to assets and liabilities of discontinued operations of $6.9 million and $174.7 million, respectively, at December 31, 2011, and represent the assets and liabilities of a portion of our Florida Region expected to be sold during the second quarter of 2013. See Note 2 to our consolidated financial statements for further discussion of discontinued operations.

Deposits decreased$130.2 million to $5.49 billion at December 31, 2012, from $5.62 billion at December 31, 2011. The decrease reflects reductions of higher rate certificates of deposit and money market deposits, partially offset by an increase in demand deposits of $203.1 million attributable to organic growth through our deposit development programs and seasonal fluctuations. Time deposits and savings and money market deposits decreased $248.7 million and $84.6 million, respectively, reflecting our efforts to exit unprofitable relationships to reduce overall deposit costs and improve First Bank’s leverage ratio.

Other borrowings, which are comprised of daily securities sold under agreements to repurchase (in connection with cash management activities of our commercial deposit customers), decreased$25.1 million to $26.0 million at December 31, 2012, from $51.2 million at December 31, 2011, reflecting changes in customer balances associated with this product segment.

Deferred income taxes increased$9.9 million to $36.2 million at December 31, 2012, from $26.3 million at December 31, 2011. The net increase in deferred income taxes is primarily attributable to an increase in deferred tax liabilities associated with the

39

increase in the fair value of our available-for-sale investment securities portfolio, as more fully described in Note 17 to our consolidated financial statements.

Accrued expenses and other liabilities increased$28.3 million to $144.3 million at December 31, 2012, from $116.0 million at December 31, 2011. The increase was primarily attributable to an increase in dividends payable on our Class C Fixed Rate Cumulative Perpetual Preferred Stock, or Class C Preferred Stock, and our Class D Fixed Rate Cumulative Perpetual Preferred Stock, or Class D Preferred Stock, of $18.9 million to $61.9 million at December 31, 2012, and an increase in accrued interest payable on our junior subordinated debentures of $14.8 million to $47.9 million at December 31, 2012, as further discussed in Notes 12 and 13 to our consolidated financial statements.

Stockholders’ equity, including noncontrolling interest in subsidiary, increased$36.3 million to $300.0 million at December 31, 2012, from $263.7 million at December 31, 2011. The increase primarily reflects net income, including discontinued operations, of $26.3 million and a net increase in accumulated other comprehensive income of $29.2 million primarily associated with an increase in unrealized gains on available-for-sale investment securities resulting from the decrease in market interest rates experienced during 2012, partially offset by dividends declared of $18.9 million on our Class C Preferred Stock and our Class D Preferred Stock.

Investment Securities

We classify the securities within our investment portfolio as available for sale or held to maturity. Our investment securities portfolio consists primarily of securities designated as available for sale.

Our investment securities increased$204.6 million to $2.68 billion at December 31, 2012, from $2.47 billion at December 31, 2011. The increase in our investment securities portfolio in 2012 was primarily attributable to the utilization of excess cash and cash equivalents to fund gradual and planned increases in our investment securities portfolio in a continued effort to maximize our net interest income and net interest margin while maintaining appropriate liquidity levels and appropriate diversification within our investment securities portfolio, in addition to an increase in the fair value adjustment of our available-for-sale investment securities of $20.6 million during 2012 resulting from a decrease in market interest rates. The increase was partially offset by the sale of $106.8 million of mortgage-backed securities during the third quarter of 2012 to partially fund the purchase of the one-to-four-family residential mortgage loans, as previously discussed. Funds available from cash and cash equivalents and reductions in our loan portfolio, in addition to the reinvestment of funds available from maturities and/or calls of investment securities of $791.7 million and sales of available-for-sale investment securities of $315.2 million, were utilized to purchase investment securities of $1.30 billion during 2012.

Our investment securities increased $987.0 million to $2.47 billion at December 31, 2011, from $1.48 billion at December 31, 2010. The increase in our investment securities portfolio in 2011 was primarily attributable to the utilization of a portion of our cash and cash equivalents to fund gradual and planned increases in our investment securities portfolio in a continued effort to maximize our net interest income and net interest margin while maintaining appropriate liquidity levels and appropriate diversification within our investment securities portfolio, in addition to an increase in the fair value adjustment of our available-for-sale investment securities of $29.6 million during 2011 resulting from a decrease in market interest rates. Funds available from cash and cash equivalents and reductions in our loan portfolio, in addition to the reinvestment of funds available from maturities and/or calls of investment securities of $342.8 million and sales of available-for-sale investment securities of $283.7 million, were utilized to purchase investment securities of $1.59 billion during 2011. Purchases of investment securities during 2011 included $193.0 million of corporate securities, primarily representing large financial institutions.

Additional information regarding our investment securities portfolio is more fully described in Note 3 to our consolidated financial statements.

40

Loans and Allowance for Loan Losses

Loan Portfolio Composition. Loans, net of net deferred loan fees, represented 45.0% of our assets as of December 31, 2012, compared to 49.7% of our assets at December 31, 2011. Loans, net of net deferred loan fees, decreased$353.5 million to $2.93 billion at December 31, 2012 from $3.28 billion at December 31, 2011. The following table summarizes the composition of our loan portfolio by portfolio segment and the percent of each portfolio segment to the total portfolio as of the dates presented:

	December 31,
	2012					2011					2010					2009					2008
	Amount			%		Amount			%		Amount			%		Amount			%		Amount			%
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	610,301		21.3	%	$	725,195		22.3	%	$	1,045,832		23.5	%	$	1,692,922		25.8	%	$	2,575,505		30.1	%
Real estate construction and development	174,979			6.1		249,987			7.7		490,766			11.1		1,052,922			16.0		1,572,212			18.4
Real estate mortgage:
One-to-four-family residential loans	986,767			34.4		902,438			27.7		1,050,895			23.7		1,279,166			19.5		1,553,366			18.1
Multi-family residential loans	103,684			3.6		127,356			3.9		178,289			4.0		223,044			3.4		220,404			2.6
Commercial real estate loans	969,680			33.9		1,225,538			37.7		1,642,920			37.0		2,269,372			34.6		2,562,598			30.0
Consumer and installment	19,262			0.7		23,596			0.7		33,623			0.8		56,029			0.8		77,877			0.9
Net deferred loan fees	(59		)	—		(942		)	—		(4,511		)	(0.1	)	(7,846		)	(0.1	)	(7,707		)	(0.1	)
Total loans, excluding loans held for sale	2,864,614			100.0	%	3,253,168			100.0	%	4,437,814			100.0	%	6,565,609			100.0	%	8,554,255			100.0	%
Loans held for sale	66,133					31,111					54,470					42,684					38,720
Total loans	$	2,930,747				$	3,284,279				$	4,492,284				$	6,608,293				$	8,592,975

The following table summarizes the composition of our loan portfolio by geographic region and/or business segment at December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Mortgage Division	$	582,021	404,761
Florida	65,582		85,633
Northern California	383,519		497,434
Southern California	922,191		998,976
Chicago	122,508		190,610
Missouri	528,168		613,417
Texas	41,951		99,873
First Bank Business Capital, Inc.	—		19,496
Northern and Southern Illinois	212,177		278,541
Other	72,630		95,538
Total	$	2,930,747	3,284,279

We attribute the net decrease in our loan portfolio in 2012 primarily to:

• A decrease of $114.9 million, or 15.8%, in our commercial, financial and agricultural portfolio, reflecting gross loan charge-offs of $17.4 million, low loan demand within our markets and our efforts to reduce the overall level of our special mention, potential problem and nonaccrual loans within this portfolio segment, including the sale of $19.4 million of potential problem and nonaccrual loans during 2012;

• A decrease of $75.0 million, or 30.0%, in our real estate construction and development portfolio, primarily attributable to gross loan charge-offs of $12.2 million, transfers to other real estate and repossessed assets of $10.0 million, the sale of $5.3 million of potential problem and nonaccrual loans, and other loan activity reflective of our efforts to reduce the overall level of our special mention, potential problem and nonaccrual loans within this portfolio segment. The following table summarizes the composition of our real estate construction and development portfolio by region as of December 31, 2012 and 2011:

41

	December 31,
	2012		2011
	(dollars expressed in thousands)
Northern California	$	30,388	51,968
Southern California	88,893		99,517
Chicago	21,024		30,105
Missouri	9,791		18,096
Texas	9,927		24,850
Florida	378		1,398
Northern and Southern Illinois	8,260		17,210
Other	6,318		6,843
Total	$	174,979	249,987

We have reduced our exposure to our real estate construction and development portfolio over the past several years due primarily to weak economic conditions and declines in real estate values in certain of our market areas which resulted in higher levels of charge-offs and foreclosures during these periods. As a result of our efforts to reduce our exposure to this portfolio segment, we decreased the portfolio balance by $1.97 billion, or 91.8%, from $2.14 billion at December 31, 2007 to $175.0 million at December 31, 2012. Of the remaining portfolio balance of $175.0 million, $32.2 million, or 18.4%, of these loans were on nonaccrual status as of December 31, 2012, including an $18.6 million loan in our Northern California region, and $81.4 million, or 46.5%, of these loans were considered potential problem loans, including a $68.4 million loan relationship in our Southern California region, as further discussed below;

• An increase of $84.3 million, or 9.3%, in our one-to-four-family residential real estate loan portfolio primarily attributable to the purchase of $141.0 million of seasoned, performing one-to-four-family residential real estate loans from another financial institution on September 28, 2012 and new loan production, partially offset by gross loan charge-offs of $21.8 million, transfers to other real estate of $7.4 million and principal payments. The following table summarizes the composition of our one-to-four-family residential real estate loan portfolio as of December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
One-to-four-family residential real estate:
Bank portfolio	$	122,338	165,578
Mortgage Division portfolio, excluding Florida	427,759		269,097
Florida Mortgage Division portfolio	82,212		97,818
Home equity portfolio	354,458		369,945
Total	$	986,767	902,438

Our Bank portfolio consists of mortgage loans originated to customers from our retail branch banking network. The decrease in this portfolio of $43.2 million, or 26.1%, during 2012 is primarily attributable to principal payments resulting from an increasing volume of loan refinancings and the low mortgage interest rate environment. As of December 31, 2012, approximately $8.5 million, or 7.0%, of this portfolio is considered impaired, consisting of nonaccrual loans of $6.9 million and performing troubled debt restructurings, or performing TDRs, of $1.6 million.

Our Mortgage Division portfolio, excluding Florida, consists of both prime mortgage loans and Alt A and sub-prime mortgage loans that were originated prior to our discontinuation of Alt A and sub-prime loan products in 2007. The increase in this portfolio of $158.7 million, or 59.0%, during 2012 is primarily attributable to the purchase of $141.0 million of seasoned, performing one-to-four-family residential real estate loans from another financial institution on September 28, 2012 and the addition of approximately $67.6 million of new loan production into this portfolio, consisting of jumbo adjustable rate and 10 and 15-year fixed rate mortgages; partially offset by principal payments, gross loan charge-offs of $10.0 million and transfers to other real estate. As of December 31, 2012, approximately $88.2 million, or 20.6%, of this portfolio is considered impaired, consisting of nonaccrual loans of $17.2 million and performing TDRs of $71.0 million, including loans modified in the Home Affordable Modification Program, or HAMP, of $64.2 million.

Our Florida Mortgage Division portfolio, the majority of which was acquired in November 2007 through our acquisition of Coast Bank, consists primarily of prime mortgage loans and Alt A mortgage loans. The decrease in this portfolio of $15.6 million, or 16.0%, is primarily attributable to principal payments, gross loan charge-offs of $3.1 million and transfers to other real estate. As of December 31, 2012, approximately $9.9 million, or 12.0%, of this portfolio is considered impaired, consisting of performing TDRs of $7.3 million, including loans modified in HAMP of $5.5 million, and nonaccrual loans of $2.6 million. Our Mortgage Division portfolio, excluding Florida, and our Florida Mortgage Division portfolio are collectively defined as our Mortgage Division portfolio unless otherwise noted.

42

Our home equity portfolio consists of loans originated to customers from our retail branch banking network. The decrease in this portfolio of $15.5 million, or 4.2%, during 2012 is primarily attributable to gross loan charge-offs of $5.0 million, in addition to principal payments and ordinary and seasonal fluctuations experienced within this loan product type. As of December 31, 2012, approximately $8.7 million, or 2.4%, of this portfolio is on nonaccrual status;

• A decrease of $23.7 million, or 18.6%, in our multi-family residential real estate portfolio primarily attributable to reduced loan demand within our markets as well as our efforts to reduce the overall level of our special mention, potential problem and nonaccrual loans within this portfolio segment, including the payoff of a $15.4 million special mention credit in our Southern Illinois region in the third quarter of 2012, and gross loan charge-offs of $2.4 million. As of December 31, 2012, approximately $35.0 million, or 33.8%, of this portfolio is considered impaired, consisting of nonaccrual loans of $6.8 million and performing TDRs of $28.2 million, consisting solely of one loan relationship in our Chicago region restructured during the fourth quarter of 2012.

• A decrease of $255.9 million, or 20.9%, in our commercial real estate portfolio primarily attributable to gross loan charge-offs of $23.9 million, transfers to other real estate of $6.7 million, reduced loan demand within our markets and our efforts to reduce the overall level of our special mention, potential problem and nonaccrual loans within this portfolio segment, including the sale of $43.9 million of special mention, potential problem and nonaccrual loans and the payoff of a $17.0 million non-owner occupied performing TDR in our Northern California region in the second quarter of 2012. The following table summarizes the composition of our commercial real estate portfolio by loan type as of December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Farmland	$	17,784	19,322
Owner occupied	552,983		686,081
Non-owner occupied	398,913		520,135
Total	$	969,680	1,225,538

Our non-owner occupied portfolio constitutes approximately 41.1% of our commercial real estate portfolio at December 31, 2012. As of December 31, 2012, $13.7 million, or 3.4%, of our non-owner occupied segment is considered impaired, consisting of nonaccrual loans of $7.9 million and performing TDRs of $5.8 million. The following table summarizes the composition of our non-owner occupied loan portfolio by region as of December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Northern California	$	120,247	146,808
Southern California	174,494		213,394
Chicago	4,149		19,918
Missouri	60,981		77,449
Texas	14,203		27,639
Florida	7,122		10,233
Northern and Southern Illinois	15,921		22,803
Other	1,796		1,891
Total	$	398,913	520,135

• A decrease of $4.3 million, or 18.4%, in our consumer and installment portfolio, reflecting portfolio runoff and reduced loan demand within our markets; and

• An increase of $35.0 million, or 112.6%, in our loans held for sale portfolio primarily resulting from an increase in origination volumes and the timing of subsequent sales into the secondary mortgage market.

We attribute the net decrease in our loan portfolio in 2011 primarily to:

• A decrease of $320.6 million, or 30.7%, in our commercial, financial and agricultural portfolio, reflecting gross loan charge-offs of $46.3 million and portfolio runoff associated with a decline in internal production, low loan demand within our markets and our efforts to reduce the overall level of our special mention, potential problem and nonaccrual loans within this portfolio segment;

• A decrease of $240.8 million, or 49.1%, in our real estate construction and development portfolio, primarily attributable to gross loan charge-offs of $35.5 million, transfers to other real estate and repossessed assets of $28.2 million and other loan activity reflective of our efforts to reduce the overall level of our special mention, potential problem and nonaccrual

43

loans within this portfolio segment, including the sale of a $43.7 million special mention loan in our Texas region during the second quarter of 2011. The following table summarizes the composition of our real estate construction and development portfolio by region as of December 31, 2011 and 2010:

	December 31,
	2011		2010
	(dollars expressed in thousands)
Northern California	$	51,968	64,647
Southern California	99,517		157,306
Chicago	30,105		44,166
Missouri	18,096		62,012
Texas	24,850		128,794
Florida	1,398		3,799
Northern and Southern Illinois	17,210		28,721
Other	6,843		1,321
Total	$	249,987	490,766

Of the remaining portfolio balance of $250.0 million, $71.2 million, or 28.5%, of these loans were on nonaccrual status as of December 31, 2011 and $97.2 million, or 38.9%, of these loans were considered potential problem loans, as further discussed below;

• A decrease of $148.5 million, or 14.1%, in our one-to-four-family residential real estate loan portfolio primarily attributable to gross loan charge-offs of $31.4 million, transfers to other real estate of $14.4 million and principal payments. The following table summarizes the composition of our one-to-four-family residential real estate loan portfolio as of December 31, 2011 and 2010:

	December 31,
	2011		2010
	(dollars expressed in thousands)
One-to-four-family residential real estate:
Bank portfolio	$	165,578	239,363
Mortgage Division portfolio, excluding Florida	269,097		286,584
Florida Mortgage Division portfolio	97,818		125,369
Home equity portfolio	369,945		399,579
Total	$	902,438	1,050,895

The decrease in our Bank portfolio of $73.8 million, or 30.8%, during 2011 is primarily attributable to principal payments, including the payoff of a single $10.0 million loan relationship during the first quarter of 2011, primarily resulting from an increasing volume of loan refinancings and the mortgage interest rate environment. As of December 31, 2011, approximately $14.7 million, or 8.9%, of our Bank portfolio is on nonaccrual status.

The decrease in our Mortgage Division portfolio of $17.5 million, or 6.1%, during 2011 is primarily attributable to principal payments, gross charge-offs of $12.4 million and transfers to other real estate; partially offset by the addition of approximately $17.6 million of new loan production into this portfolio, consisting of jumbo adjustable rate and 10 and 15-year fixed rate mortgages. As of December 31, 2011, approximately $90.2 million, or 33.5%, of this portfolio is considered impaired, consisting of nonaccrual loans of $13.9 million and performing TDRs of $76.3 million, including those loans modified in HAMP, of $68.7 million.

The decrease in our Florida Mortgage Division portfolio of $27.6 million, or 22.0%, is primarily attributable to principal payments, gross charge-offs of $6.7 million and transfers to other real estate. As of December 31, 2011, approximately $9.2 million, or 9.4%, of this portfolio is considered impaired, consisting of performing TDRs of $6.3 million, including loans modified in HAMP of $4.3 million, and nonaccrual loans of $2.9 million.

The decrease in our home equity portfolio of $29.6 million, or 7.4%, during 2011 is primarily attributable to gross loan charge-offs of $7.7 million, in addition to principal payments and ordinary and seasonal fluctuations experienced within this loan product type. As of December 31, 2011, approximately $6.9 million, or 1.9%, of this portfolio is on nonaccrual status;

• A decrease of $50.9 million, or 28.6%, in our multi-family residential real estate portfolio primarily attributable to gross loan charge-offs of $3.1 million, portfolio runoff associated with a decline in internal production, reduced loan demand within our markets as well as our efforts to reduce the overall level of our special mention, potential problem and nonaccrual loans within this portfolio segment;

44

• A decrease of $417.4 million, or 25.4%, in our commercial real estate portfolio primarily attributable to gross loan charge-offs of $38.0 million, transfers to other real estate of $24.1 million and our efforts to reduce our exposure to commercial real estate in the current economic environment. The following table summarizes the composition of our commercial real estate portfolio by loan type as of December 31, 2011 and 2010:

	December 31,
	2011		2010
	(dollars expressed in thousands)
Farmland	$	19,322	36,735
Owner occupied	686,081		798,842
Non-owner occupied	520,135		807,343
Total	$	1,225,538	1,642,920

Within our commercial real estate portfolio, we experienced the most distress in our non-owner occupied portfolio, which constitutes approximately 42.4% of our commercial real estate portfolio at December 31, 2011. As of December 31, 2011, $44.8 million, or 8.6%, of our non-owner occupied segment is considered impaired, consisting of performing TDRs of $21.7 million and nonaccrual loans of $23.1 million. The following table summarizes the composition of our non-owner occupied loan portfolio by region as of December 31, 2011 and 2010:

	December 31,
	2011		2010
	(dollars expressed in thousands)
Northern California	$	146,808	208,127
Southern California	213,394		305,287
Chicago	19,918		27,907
Missouri	77,449		149,106
Texas	27,639		61,258
Florida	10,233		13,338
Northern and Southern Illinois	22,803		24,990
Other	1,891		17,330
Total	$	520,135	807,343

The decrease in non-owner occupied loans in our Southern California region of $91.9 million includes the payoff of a single credit relationship in the amount of $29.0 million in the second quarter of 2011;

• A decrease of $10.0 million, or 29.8%, in our consumer and installment portfolio, reflecting gross loan charge-offs of $457,000 and portfolio runoff associated with a decline in internal production and reduced loan demand within our markets;

• A decrease of $23.4 million, or 42.9%, in our loans held for sale portfolio primarily resulting from a decrease in origination volumes and subsequent sales into the secondary mortgage market; and

• A decrease of $3.6 million, or 79.1%, in our net deferred loan fees, primarily attributable to an unearned discount of $6.8 million associated with the sale of the $43.7 million real estate construction and development loan in our Texas region as discussed above.

Loans at December 31, 2012 mature as follows:

			Over One Year Through Five Years		Over Five Years
	One Year or Less		Fixed Rate	Floating Rate	Fixed Rate	Floating Rate	Total
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	156,835	139,199	210,569	41,439	62,259	610,301
Real estate construction and development	126,804		28,660	13,017	181	6,317	174,979
Real estate mortgage:
One-to-four-family residential loans	23,172		44,640	38,781	283,006	597,168	986,767
Multi-family residential loans	7,407		53,645	6,918	26,064	9,650	103,684
Commercial real estate loans	131,750		420,535	184,155	118,094	115,146	969,680
Consumer and installment and net deferred loan fees	3,626		13,245	2,141	121	70	19,203
Loans held for sale	66,133		—	—	—	—	66,133
Total loans	$	515,727	699,924	455,581	468,905	790,610	2,930,747

45

The following table summarizes the components of changes in our loan portfolio, net of net deferred loan fees, for the five years ended December 31, 2012:

	Increase (Decrease) For the Year Ended December 31,
	2012			2011		2010		2009		2008
	(dollars expressed in thousands)
Internal loan volume (decrease) increase	$	(337,206	)	(868,141	)	(1,339,445	)	(749,712	)	184,743
Loans purchased (1)	141,048			—		—		—		—
Loans and leases sold (2)	(55,081		)	(115,296	)	(245,420	)	(308,034	)	(37,643	)
Loans transferred to assets held for sale	—			—		(794	)	(14,382	)	—
Loans transferred to discontinued operations (3)	—			—		(40,265	)	(416,245	)	—
Loans charged-off	(78,070		)	(154,627	)	(331,196	)	(352,723	)	(331,021	)
Loans transferred to other real estate and repossessed assets	(24,223		)	(69,941	)	(158,889	)	(143,586	)	(109,288	)
Total decrease in loan portfolio	$	(353,532	)	(1,208,005	)	(2,116,009	)	(1,984,682	)	(293,209	)

(1) Loans purchased for 2012 consist of $141.0 million of seasoned, performing one-to-four-family residential real estate loans purchased for our Mortgage Banking portfolio from another financial institution.

(2) Loans and leases sold for 2012 primarily reflects the sale of special mention, potential problem and nonaccrual loans, resulting in net loan charge-offs of $14.5 million. Loans and leases sold for 2011 include loans associated with the sale of the remaining portion of our Northern Illinois Region of $37.5 million, loans associated with our Edwardsville Branch of $667,000 and other commercial loan sales of $77.1 million. Loans and leases sold for 2010 include loans associated with the partial sale of our Northern Illinois Region of $137.4 million and other commercial loan sales of $108.0 million. Loans and leases sold for 2009 include loans associated with WIUS, our former asset based lending subsidiary and restaurant franchise loans of $141.3 million, $101.5 million and $64.4 million, respectively, in addition to loans associated with our Springfield Branch of $887,000. See Note 2 to our consolidated financial statements for further discussion of discontinued operations.

(3) Loans transferred to discontinued operations for 2010 include loans associated with our Northern Illinois Region of $40.3 million. Loans transferred to discontinued operations for 2009 include loans associated with our Chicago Region, Texas Region and WIUS of $311.3 million, $103.4 million and $1.5 million, respectively. See Note 2 to our consolidated financial statements for further discussion of discontinued operations.

Nonperforming Assets. Nonperforming assets include nonaccrual loans, other real estate and repossessed assets. The following table presents the categories of nonperforming assets and certain ratios as of the dates presented:

	December 31,
	2012			2011		2010		2009		2008
	(dollars expressed in thousands)
Nonperforming Assets: (1)
Nonaccrual loans:
Commercial, financial and agricultural	$	19,050		55,340		67,365		41,408		40,647
Real estate construction and development	32,152			71,244		134,244		407,077		270,444
One-to-four-family residential real estate:
Bank portfolio	6,910			14,690		14,479		13,500		10,996
Mortgage Division portfolio	19,780			16,778		33,386		94,433		69,122
Home equity portfolio	8,671			6,940		7,122		4,303		3,022
Multi-family residential	6,761			7,975		12,960		14,734		545
Commercial real estate	16,520			47,262		129,187		115,312		23,009
Consumer and installment	28			22		165		337		—
Total nonaccrual loans	109,872			220,251		398,908		691,104		417,785
Other real estate and repossessed assets	91,995			129,896		140,665		126,911		92,218
Total nonperforming assets	$	201,867		350,147		539,573		818,015		510,003
Loans, net of net deferred loan fees	$	2,930,747		3,284,279		4,492,284		6,608,293		8,592,975
Performing troubled debt restructurings	$	128,917		126,442		112,903		54,336		24,641
Loans past due 90 days or more and still accruing	$	1,090		2,744		5,523		3,807		7,094
Ratio of:
Allowance for loan losses to loans	3.13		%	4.19	%	4.48	%	4.03	%	2.56	%
Nonaccrual loans to loans	3.75			6.71		8.88		10.46		4.86
Allowance for loan losses to nonaccrual loans	83.37			62.52		50.40		38.55		52.71
Nonperforming assets to loans, other real estate and repossessed assets	6.68			10.26		11.65		12.15		5.87

(1) During the first quarter of 2010, the Company modified its definition of nonperforming assets to exclude performing TDRs because these loans were performing in accordance with the current or modified terms. Prior periods have been adjusted for this reclassification.

Our nonperforming assets, consisting of nonaccrual loans, other real estate and repossessed assets, were $201.9 million, $350.1 million and $539.6 million at December 31, 2012, 2011 and 2010, respectively.

46

We attribute the $110.4 million, or 50.1%, net decrease in our nonaccrual loans during the year ended December 31, 2012 to the following:

• A decrease in nonaccrual loans of $36.3 million, or 65.6%, in our commercial, financial and agricultural portfolio, primarily driven by gross loan charge-offs of $17.4 million, the sale of $15.0 million of nonaccrual loans, including a $10.2 million nonaccrual loan in our First Bank Business Capital, Inc. subsidiary resulting in a charge-off of $601,000 during the first quarter of 2012, and payments received, partially offset by additions to nonaccrual loans during the year;

• A decrease in nonaccrual loans of $39.1 million, or 54.9%, in our real estate construction and development loan portfolio driven by gross loan charge-offs of $12.2 million, transfers to other real estate of $10.0 million, the sale of $3.5 million of nonaccrual loans, and payments received, partially offset by additions to nonaccrual loans during the year. Nonaccrual real estate construction and development loans at December 31, 2012 include a single loan in our Northern California region with a recorded investment of $18.6 million. Although the level of deterioration in this portfolio is slowing due in part to the decline in the total portfolio balance, as previously discussed, we continue to experience deterioration as a result of weak economic conditions and declines in real estate values in certain of our market areas, and we expect these trends to continue until market conditions stabilize in our primary market areas;

• A decrease in nonaccrual loans of $3.0 million, or 7.9%, in our one-to-four-family residential real estate loan portfolio driven by gross loan charge-offs of $21.8 million, transfers to other real estate of $7.4 million and payments received, partially offset by additions to nonaccrual loans during the year. We continue to modify loans under HAMP where deemed economically advantageous to our borrowers and us;

• A decrease in nonaccrual loans of $1.2 million, or 15.2%, in our multi-family residential loan portfolio primarily driven by gross loan charge-offs of $2.4 million and payments received, partially offset by additions to nonaccrual loans during the year; and

• A decrease in nonaccrual loans of $30.7 million, or 65.0%, in our commercial real estate portfolio primarily driven by gross loan charge-offs of $23.9 million, transfers to other real estate of $6.7 million, the sale of $11.1 million of nonaccrual loans, and payments received, partially offset by additions to nonaccrual loans during the year.

The decrease in other real estate and repossessed assets of $37.9 million, or 29.2%, during 2012 was primarily driven by the sale of other real estate properties with an aggregate carrying value of $45.9 million at a net gain of $2.6 million and write-downs of other real estate and repossessed assets of $14.5 million attributable to declining real estate values on certain properties, partially offset by foreclosures and other additions to other real estate aggregating $24.2 million. Of the $92.0 million of other real estate and repossessed assets at December 31, 2012, $77.7 million consisted of collateral with the most recent appraisal date being in 2012. The remaining $14.3 million of other real estate and repossessed assets at December 31, 2012 consisted of collateral with the most recent appraisal date being in 2011, 2010 and 2009 of $11.7 million, $2.6 million and $4,000, respectively.

The following table summarizes the composition of our nonperforming assets by region / business segment at December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Mortgage Division	$	22,507	22,137
Florida	2,308		5,819
Northern California	25,661		42,370
Southern California	62,130		85,233
Chicago	18,126		37,760
Missouri	36,411		60,578
Texas	9,194		40,025
First Bank Business Capital, Inc.	—		11,411
Northern and Southern Illinois	13,362		28,931
Other	12,168		15,883
Total nonperforming assets	$	201,867	350,147

During 2012, we experienced a decline in nonperforming assets in all of our regions, with the exception of our Mortgage Division, as a result of payment and sales activity on loans, sales of other real estate properties, charge-offs of loans and write-downs of other real estate properties. We have been successful in reducing our overall level of nonperforming assets as a result of the completion of several initiatives in our Asset Quality Improvement Plan.

We attribute the $178.7 million, or 44.8%, net decrease in our nonaccrual loans during the year ended December 31, 2011 to the following:

47

• A decrease in nonaccrual loans of $12.0 million, or 17.9%, in our commercial, financial and agricultural portfolio, primarily driven by gross loan charge-offs of $46.3 million and payments received, partially offset by additions to nonaccrual loans during the year, including one credit in our First Bank Business Capital, Inc. subsidiary with a recorded investment of $10.6 million;

• A decrease in nonaccrual loans of $63.0 million, or 46.9%, in our real estate construction and development loan portfolio driven by gross loan charge-offs of $35.5 million, transfers to other real estate and repossessed assets of $28.2 million and payments received, partially offset by additions to nonaccrual loans during the year. Nonaccrual construction and development loans at December 31, 2011 include a single loan in our Northern California region with a recorded investment of $19.7 million and a single loan in our Texas region with a recorded investment of $8.8 million;

• A decrease in nonaccrual loans of $16.6 million, or 49.7%, in our one-to-four-family residential real estate Mortgage Division loan portfolio primarily driven by gross loan charge-offs of $19.1 million, transfers to other real estate of $9.3 million and payments received, partially offset by additions to nonaccrual loans during the year driven by current market conditions and the overall deterioration of Alt A and sub-prime residential mortgage loan products experienced throughout the mortgage banking industry;

• A decrease in nonaccrual loans of $5.0 million, or 38.5%, in our multi-family residential loan portfolio primarily driven by gross loan charge-offs of $3.1 million, transfers to other real estate of $1.4 million and payments received, partially offset by new additions to nonaccrual loans during the year resulting from continued weak economic conditions and declines in real estate values; and

• A decrease in nonaccrual loans of $81.9 million, or 63.4%, in our commercial real estate portfolio primarily driven by gross loan charge-offs of $38.0 million, transfers to other real estate of $24.1 million and payments received, partially offset by new additions to nonaccrual loans during the year resulting from continued weak economic conditions and declines in real estate values. During the second quarter of 2011, a single $29.0 million nonaccrual credit relationship in our Southern California region was repaid.

The decrease in other real estate and repossessed assets of $10.8 million, or 7.7%, during 2011 was primarily driven by the sale of other real estate properties with an aggregate carrying value of $66.6 million at a net loss of $1.3 million and write-downs of other real estate and repossessed assets of $16.9 million attributable to declining real estate values on certain properties, partially offset by foreclosures and other additions to other real estate and repossessed assets aggregating $76.4 million.

As of December 31, 2012, 2011 and 2010, loans identified by management as TDRs aggregating $40.0 million, $40.8 million $26.2 million, respectively, were on nonaccrual status and were classified as nonperforming loans.

While we continue our efforts to reduce nonperforming and potential problem loans, we expect the unstable market conditions associated with our loan portfolio to continue, which will likely continue to impact the overall level of our nonperforming and potential problem loans, loan charge-offs, provision for loan losses and other real estate and repossessed assets balances.

Performing Troubled Debt Restructurings. The following table presents the categories of performing TDRs as of December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	—	4,264
Real estate construction and development	10,031		12,014
Real estate mortgage:
One-to-four-family residential	79,905		82,629
Multi-family residential	28,240		3,166
Commercial real estate	10,741		24,369
Total performing troubled debt restructurings	$	128,917	126,442

The increase in performing TDRs of $2.5 million, or 2.0%, during 2012 was primarily attributable to the modification of the contractual terms of a $28.2 million multi-family residential loan relationship in our Chicago region during the fourth quarter of 2012, partially offset by the payoff of a $17.0 million commercial real estate loan in our Northern California region during the second quarter of 2012 and other payment activity. We are closely monitoring the $28.2 million loan relationship in our Chicago region. While facts and circumstances are subject to change in the future, the borrower continues to service this obligation in accordance with the existing terms and conditions of the credit agreement as of December 31, 2012.

Potential Problem Loans. As of December 31, 2012 and 2011, loans aggregating $116.1 million and $233.5 million, respectively, which were not classified as nonperforming assets or performing TDRs, were identified by management as having potential

48

credit problems, or potential problem loans. These loans are generally defined as loans having an internally assigned grade of substandard and loans in the Mortgage Division which are 30-89 days past due. The following table presents the categories of our potential problem loans as of December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	8,423	32,851
Real estate construction and development	81,364		97,158
Real estate mortgage:
One-to-four-family residential	11,664		13,797
Multi-family residential	773		28,789
Commercial real estate	13,868		60,876
Total potential problem loans	$	116,092	233,471

Potential problem loans decreased $117.4 million, or 50.3%, during 2012. The decrease in potential problem loans is primarily attributable to loan sales of $21.7 million, the reclassification to performing TDRs of a $28.2 million loan relationship in our Chicago region during the fourth quarter of 2012, as previously discussed, upgrades of certain potential problem loans to special mention status and transfers to nonaccrual status, in addition to payment activity. Potential problem loans at December 31, 2012 include a $68.4 million real estate construction and development credit relationship in our Southern California region. We are continuing to closely monitor this loan relationship. Based on recent valuations of the underlying collateral securing this loan relationship, we have determined that it is currently adequately secured. While facts and circumstances are subject to change in the future, the borrower continues to service this obligation in accordance with the existing terms and conditions of the credit agreement as of December 31, 2012.

The following table summarizes the composition of our potential problem loans by region / business segment at December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Mortgage Division	$	6,627	4,429
Florida	4,443		8,100
Northern California	860		3,507
Southern California	88,690		113,682
Chicago	1,835		41,720
Missouri	7,391		28,349
Texas	842		3,359
First Bank Business Capital, Inc.	—		6,114
Northern and Southern Illinois	4,775		20,922
Other	629		3,289
Total potential problem loans	$	116,092	233,471

During 2012, we experienced a decline in potential problem loans in most of our regions as a result of payment activity, upgrades of certain loans to special mention status from potential problem status, transfers to nonaccrual and performing TDR status and the sale of certain potential problem loans, as previously discussed. We have been successful in reducing the overall level of our potential problem loans as a result of the completion of several initiatives in our Asset Quality Improvement Plan.

Our credit risk management policies and procedures, as further described under “—Allowance for Loan Losses,” focus on identifying potential problem loans. Potential problem loans may be identified by the assigned lender, the credit administration department or the internal credit review department. Specifically, the originating loan officers have primary responsibility for monitoring and overseeing their respective credit relationships, including, but not limited to: (a) periodic reviews of financial statements; (b) periodic site visits to inspect and evaluate loan collateral; (c) ongoing communication with primary borrower representatives; and (d) appropriately monitoring and adjusting the risk rating of the respective credit relationships should ongoing conditions or circumstances associated with the relationship warrant such adjustments. In addition, in the current severely weakened economic environment, our credit administration department and our internal credit review department are reviewing all loans with credit exposure over certain thresholds in loan portfolio segments in which we, or other financial institutions, have experienced significant loan charge-offs, such as real estate construction and development and one-to-four-family residential real estate loans, and on loan portfolio segments that appear to be most likely to generate additional loan charge-offs in the future, such as commercial real estate. We include adversely rated credits, including potential problem loans, on our monthly loan watch list. Loans on our watch list require regular detailed loan status reports prepared by the responsible officer which are discussed in formal meetings with internal credit review and credit administration staff members that are

49

generally conducted on a quarterly basis. The primary purpose of these meetings is to closely monitor these loan relationships and further develop, modify and oversee appropriate action plans with respect to the ultimate and timely resolution of the individual loan relationships.

Each loan is assigned an FDIC collateral code at the time of origination which provides management with information regarding the nature and type of the underlying collateral supporting all individual loans, including potential problem loans. Upon identification of a potential problem loan, management makes a determination of the value of the underlying collateral via a third party appraisal and/or an assessment of value from our internal appraisal review department. The estimated value of the underlying collateral is a significant factor in the risk rating and allowance for loan losses allocation assigned to potential problem loans.

Potential problem loans are regularly evaluated for impaired loan status by lenders, the credit administration department and the internal credit review department. When management makes the determination that a loan should be considered impaired, an initial specific reserve is allocated to the impaired loan, if necessary, until the loan is charged down to the appraised value of the underlying collateral, typically within 30 to 90 days of becoming impaired. In the current economic environment, management typically utilizes appraisals performed no earlier than 180 days prior to the charge-off, and in most cases, appraisals utilized are dated within 60 days of the charge-off. As such, management typically addresses collateral shortfalls through charge-offs as opposed to recording specific reserves on individual loans. Once a loan is charged down to the appraised value of the underlying collateral, management regularly monitors the carrying value of the loan for any additional deterioration and records additional reserves or charge-offs as necessary. As a general guideline, management orders new appraisals on any impaired loan or other real estate property in which the most recent appraisal is more than 18 months old; however, management also orders new appraisals on impaired loans or other real estate properties if management determines new appraisals are prudent based on many different factors, such as a rapid change in market conditions in a particular region.

We continue our efforts to reduce nonperforming and potential problem loans and re-define our overall strategy and business plans with respect to our loan portfolio as deemed necessary in light of ongoing and dramatic changes in market conditions in the markets in which we operate.

Allowance for Loan Losses. Our allowance for loan losses decreased to $91.6 million at December 31, 2012, compared to $137.7 million and $201.0 million at December 31, 2011 and 2010, respectively. The decrease in our allowance for loan losses of $46.1 million during 2012 was primarily attributable to the decrease in nonaccrual loans of $110.4 million, the decrease in potential problem loans of $117.4 million and the $353.5 milliondecrease in the overall level of our loan portfolio.

Our allowance for loan losses as a percentage of loans, net of net deferred loan fees, was 3.13%, 4.19% and 4.48% at December 31, 2012, 2011 and 2010, respectively. The decrease in the allowance for loan losses as a percentage of loans, net of net deferred loan fees, during 2012 was primarily attributable to the decrease in our nonaccrual and potential problem loans, which generally require a higher allowance for loan losses relative to the amount of the loans than the remainder of the loan portfolio, in addition to a decrease in our historical net loan charge-off experience as a result of declining charge-off levels for the years ended December 31, 2012 and 2011, as compared to the years ended December 31, 2010, 2009 and 2008.

Our allowance for loan losses as a percentage of nonaccrual loans was 83.37%, 62.52% and 50.40% at December 31, 2012, 2011 and 2010, respectively. The increase in the allowance for loan losses as a percentage of nonaccrual loans during 2012 was primarily attributable to the decrease in nonaccrual loans, a portion of which did not carry a specific allowance for loan losses as these loans had been charged down to the estimated fair value of the related collateral less estimated costs to sell.

50

The following table is a summary of the changes in the allowance for loan losses for the five years ended December 31, 2012:

	As of or For the Years Ended December 31,
	2012			2011		2010		2009		2008
	(dollars expressed in thousands)
Allowance for loan losses, beginning of year	$	137,710		201,033		266,448		220,214		168,391
Allowance for loan losses allocated to loans sold	—			—		(321	)	(4,725	)	—
Total	137,710			201,033		266,127		215,489		168,391
Loans charged-off:
Commercial, financial and agricultural	(17,410		)	(46,256	)	(52,072	)	(104,648	)	(21,931	)
Real estate construction and development	(12,244		)	(35,459	)	(143,394	)	(122,303	)	(236,715	)
Real estate mortgage:
One-to-four-family residential loans:
Bank portfolio	(3,699		)	(4,561	)	(5,274	)	(5,820	)	(9,209	)
Mortgage Division portfolio	(13,095		)	(19,086	)	(47,525	)	(71,528	)	(54,796	)
Home equity portfolio	(5,020		)	(7,708	)	(9,409	)	(6,298	)	(3,241	)
Multi-family residential loans	(2,435		)	(3,126	)	(9,266	)	(508	)	(19	)
Commercial real estate loans	(23,856		)	(37,974	)	(63,259	)	(40,255	)	(3,244	)
Consumer and installment	(311		)	(457	)	(997	)	(1,363	)	(1,866	)
Total	(78,070		)	(154,627	)	(331,196	)	(352,723	)	(331,021	)
Recoveries of loans previously charged-off:
Commercial, financial and agricultural	12,886			6,962		37,776		1,983		7,226
Real estate construction and development	5,659			6,694		5,256		2,065		5,705
Real estate mortgage:
One-to-four-family residential loans:
Bank portfolio	1,090			570		331		539		500
Mortgage Division portfolio	3,544			2,903		4,634		2,930		626
Home equity portfolio	554			512		264		62		54
Multi-family residential loans	44			562		14		5		5
Commercial real estate loans	5,982			3,787		3,370		5,843		401
Consumer and installment	203			314		457		255		327
Total	29,962			22,304		52,102		13,682		14,844
Net loans charged-off	(48,108		)	(132,323	)	(279,094	)	(339,041	)	(316,177	)
Provision for loan losses	2,000			69,000		214,000		390,000		368,000
Allowance for loan losses, end of year	$	91,602		137,710		201,033		266,448		220,214
Loans outstanding, net of net deferred loan fees:
Average	$	3,079,344		3,811,451		5,520,775		7,333,973		8,239,601
End of year	2,930,747			3,284,279		4,492,284		6,608,293		8,592,975
End of year, excluding loans held for sale	2,864,614			3,253,168		4,437,814		6,565,609		8,554,255
Ratio of allowance for loan losses to loans outstanding:
Average	2.97		%	3.61	%	3.64	%	3.63	%	2.67	%
End of year	3.13			4.19		4.48		4.03		2.56
End of year, excluding loans held for sale	3.20			4.23		4.53		4.06		2.57
Ratio of net charge-offs to average loans outstanding	1.56			3.47		5.06		4.62		3.84
Ratio of current year recoveries to preceding year’s charge-offs	19.38			6.73		14.77		4.13		22.66

Our net loan charge-offs were $48.1 million, $132.3 million and $279.1 million for the years ended December 31, 2012, 2011 and 2010, respectively. Our net loan charge-offs as a percentage of average loans were 1.56%, 3.47% and 5.06% for the years ended December 31, 2012, 2011 and 2010, respectively.

The decrease in our net loan charge-off levels in 2012, as compared to 2011, is primarily attributable to the following:

• A decrease in net loan charge-offs associated with our commercial, financial and agricultural portfolio of $34.8 million to $4.5 million in 2012, compared to $39.3 million in 2011. Net loan charge-offs for 2012 included aggregate charge-offs of $2.5 million associated with the sale of $19.4 million of loans. Net loan charge-offs for 2011 included charge-offs of $7.3 million on a First Bank Business Capital, Inc. loan, $4.1 million on a loan in our Missouri region, $3.9 million on a loan in our Texas region and $3.4 million on a loan in our Northern California region;

• A decrease in net loan charge-offs associated with our real estate construction and development portfolio of $22.2 million to $6.6 million in 2012, compared to $28.8 million in 2011. Net loan charge-offs for 2011 included charge-offs of $5.7 million and $3.6 million, or $9.3 million in aggregate, on two loans in our Missouri region. Although the overall level of charge-offs has declined with the significant decrease in the balance of loans in our real estate construction and development portfolio, we continue to experience significant distress and unstable market conditions throughout certain

51

of our market areas, resulting in continued high levels of developer inventories, slower lot and home sales and declining real estate values;

• A decrease in net loan charge-offs associated with our one-to-four-family residential loan portfolio of $10.7 million in 2012 to $16.6 million in 2012, compared to $27.4 million in 2011. Net loan charge-offs in our Mortgage Division portfolio decreased $6.6 million to $9.6 million in 2012, compared to $16.2 million in 2011, reflective of the continued decline in our portfolio balance of Alt A and subprime loans; and

• A decrease in net loan charge-offs associated with our commercial real estate portfolio of $16.3 million to $17.9 million in 2012, compared to $34.2 million in 2011, primarily attributable to the declining portfolio balance, in particular our non-owner occupied commercial real estate portfolio, and decreases in nonaccrual and potential problem loans. Net loan charge-offs for 2012 included aggregate charge-offs of $11.2 million associated with the sale of $43.9 million of loans. During 2011, we recorded loan charge-offs of $4.6 million and $4.0 million, or $8.6 million in aggregate, on two loans in our Northern California region and $5.3 million on a loan in our Southern California region.

Changes in our net loan charge-off levels in 2011 are primarily attributable to the following:

• An increase in net loan charge-offs associated with our commercial, financial and agricultural portfolio of $25.0 million to $39.3 million in 2011, compared to $14.3 million in 2010. Specifically in this portfolio, during 2011, we recorded charge-offs of $7.3 million on a First Bank Business Capital, Inc. loan, $4.1 million on a loan in our Missouri region, $3.9 million on a loan in our Texas region and $3.4 million on a loan in our Northern California region. During 2010, we recorded a $25.0 million recovery on a single loan in our Southern California region whereby we had previously recorded aggregate charge-offs of $30.0 million during 2009 on the same credit;

• A decrease in net loan charge-offs of $109.4 million associated with our real estate construction and development portfolio to $28.8 million in 2011, compared to $138.1 million in 2010. Net loan charge-offs for 2011 included charge-offs of $5.7 million and $3.6 million, or $9.3 million in aggregate, on two loans in our Missouri region. Net loan charge-offs for 2010 include charge-offs of $24.5 million, $11.5 million and $7.5 million, or $43.5 million in aggregate, on three loans in our Southern California region and a $9.7 million charge-off on a loan in our St. Louis region;

• A decrease in net loan charge-offs of $29.6 million associated with our one-to-four-family residential loan portfolio to $27.4 million in 2011, compared to $57.0 million in 2010. These net loan charge-offs primarily consist of $16.2 million associated with our Mortgage Division one-to-four-family residential mortgage portfolio in 2011, compared to $42.9 million in 2010. The decrease in net loan charge-offs in our Mortgage Division in 2011 is reflective of the declining portfolio balance and the substantial decrease in nonaccrual loans and performing TDRs throughout 2010 and 2011, in addition to improving delinquency trends; and

• A decrease in net loan charge-offs of $25.7 million associated with our commercial real estate portfolio to $34.2 million in 2011, compared to $59.9 million in 2010, primarily attributable to the declining portfolio balance, in particular our non-owner occupied commercial real estate portfolio, and decreases in nonaccrual and potential problem loans. During 2011, we recorded loan charge-offs of $4.6 million and $4.0 million, or $8.6 million in aggregate, on two loans in our Northern California region and $5.3 million on a loan in our Southern California region. During 2010, we recorded loan charge-offs of $7.3 million and $2.8 million on two loans in our Southern California region.

The following table summarizes the composition of our net loan charge-offs by region / business segment for the years ended December 31, 2012 and 2011:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Mortgage Division	$	9,551	16,182
Florida	2,863		3,910
Northern California	6,099		26,647
Southern California	8,729		20,405
Chicago	5,666		6,913
Missouri	6,083		23,960
Texas	1,794		14,003
First Bank Business Capital, Inc.	1,180		6,708
Northern and Southern Illinois	4,163		6,855
Other	1,980		6,740
Total net loan charge-offs	$	48,108	132,323

52

As discussed above, the decrease in net loan charge-offs in our Mortgage Division is reflective of the declining portfolio balance of Alt A and subprime loans. The decrease in net loan charge-offs in our Northern California region was primarily attributable to charge-offs of $3.4 million on a commercial, financial and agricultural loan and $8.6 million on two commercial real estate loans during 2011. The decrease in net loan charge-offs in our Southern California region was primarily attributable to the resolution and declining balance of nonaccrual loans in this region and a charge-off of $5.3 million on a commercial real estate loan during 2011. The decrease in net loan charge-offs in our Missouri region was primarily attributable to a recovery of $3.2 million on a commercial, financial and agricultural loan during the third quarter of 2012 and charge-offs of $4.1 million on a commercial, financial and agricultural loan and $9.3 million on two real estate construction and development loans during 2011. The decrease in net charge-offs in our Texas Region was primarily attributable to charge-offs of $3.9 million on a commercial, financial and agricultural loan during 2011 in addition to the declining portfolio balance and decrease in nonaccrual loans in this region throughout 2011 and 2012.

We continue to closely monitor our loan portfolio and address the ongoing challenges posed by the severely weakened economic environment that has directly impacted and continues to impact many of our market segments. Specifically, we continue to focus on loan portfolio segments in which we have experienced significant loan charge-offs, such as real estate construction and development and one-to-four-family residential, and on loan portfolio segments that could generate additional loan charge-offs in the future, such as commercial real estate and commercial and industrial. We consider these factors in our overall assessment of the adequacy of our allowance for loan losses.

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

We record charge-offs on nonperforming loans typically within 30 to 90 days of the credit relationship reaching nonperforming loan status. We measure impairment and the resulting charge-off amount based primarily on third party appraisals. As such, rather than carrying specific reserves on nonperforming loans, we generally recognize a loan loss through a charge to the allowance for loan losses once the credit relationship reaches nonperforming loan status.

The allocation of the allowance for loan losses by loan category is a result of the application of our risk rating system augmented by historical loss data by loan type and other qualitative analysis. Consequently, the distribution of the allowance for loan losses will change from period to period due to the following factors:

• Changes in the aggregate loan balances by loan category;

• Changes in the identified risk in individual loans in our loan portfolio over time, excluding those homogeneous categories of loans such as consumer and installment loans and residential real estate mortgage loans for which risk ratings are changed based on payment performance;

• Changes in historical loss data as a result of recent charge-off experience by loan type; and

• Changes in qualitative factors such as changes in economic conditions, the volume of nonaccrual and potential problem loans by loan category and geographical location, and changes in the value of the underlying collateral for collateral-dependent loans.

53

The following table is a summary of the allocation of the allowance for loan losses for the five years ended December 31, 2012:

	2012				2011				2010				2009				2008
	Amount		Percent of Category of Loans to Total Loans		Amount		Percent of Category of Loans to Total Loans		Amount		Percent of Category of Loans to Total Loans		Amount		Percent of Category of Loans to Total Loans		Amount		Percent of Category of Loans to Total Loans
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	13,572	20.8	%	$	27,243	22.1	%	$	28,000	23.3	%	$	42,533	25.6	%	$	56,592	30.0	%
Real estate construction and development	14,434		6.0		24,868		7.6		58,439		10.9		90,006		15.9		72,840		18.3
Real estate mortgage:
One-to-four-family residential loans	38,897		33.7		50,864		27.5		60,762		23.4		78,593		19.4		37,742		18.0
Multi-family residential loans	4,252		3.5		4,851		3.9		5,158		4.0		5,108		3.4		4,243		2.6
Commercial real estate loans	20,048		33.1		29,448		37.3		47,880		36.6		49,189		34.4		47,663		29.8
Consumer and installment	399		0.6		436		0.7		794		0.6		1,019		0.7		342		0.8
Loans held for sale	—		2.3		—		0.9		—		1.2		—		0.6		792		0.5
Total	$	91,602	100.0	%	$	137,710	100.0	%	$	201,033	100.0	%	$	266,448	100.0	%	$	220,214	100.0	%

A summary of the allowance for loan losses to loans by category as of December 31, 2012 and 2011 is as follows:

	December 31,
	2012		2011
Commercial, financial and agricultural	2.22	%	3.76	%
Real estate construction and development	8.25		9.95
Real estate mortgage:
One-to-four-family residential loans	3.94		5.64
Multi-family residential loans	4.10		3.81
Commercial real estate loans	2.07		2.40
Consumer and installment	2.08		1.92
Total	3.13		4.19

The changes in the percentage of the allocated allowance for loan losses to loans in these portfolio segments are reflective of changes in the overall level of special mention loans, potential problem loans, performing TDRs and nonaccrual loans within each of these portfolio segments, in addition to other qualitative and quantitative factors. Specifically, the decrease in the percentage of the allowance for loan losses to commercial, financial and agricultural loans is primarily due to the decrease in nonaccrual and potential problem loans to total loans in this category to 3.1% and 1.4%, respectively, at December 31, 2012, as compared to 7.6% and 4.5%, respectively, at December 31, 2011. The decrease in this ratio for real estate construction and development loans is primarily due to the decrease in nonaccrual loans to total loans in this category to 18.4% at December 31, 2012, as compared to 28.5% at December 31, 2011, partially offset by the increase in potential problem loans to total loans in this category to 46.5% at December 31, 2012, as compared to 38.9% at December 31, 2011. The decrease in this ratio for one-to-four family residential loans is primarily due to the decrease in nonaccrual loans and performing TDRs to total loans in this category to 3.6% and 8.1%, respectively, at December 31, 2012, as compared to 4.3% and 9.2%, respectively, at December 31, 2011. The increase in this ratio for multi-family residential loans is primarily due to the increase in nonaccrual loans to total loans to 6.5% at December 31, 2012, as compared to 6.3% at December 31, 2011. The decrease in this ratio for commercial real estate loans is primarily due to the decrease in nonaccrual and potential problem loans to total loans in this category to 1.7% and 1.4%, respectively, at December 31, 2012, as compared to 3.9% and 5.0%, respectively, at December 31, 2011.

54

Deposits

Deposits are the primary source of funds for First Bank. Our deposits consist principally of core deposits from our local market areas, including individual and corporate customers. The following table sets forth the distribution of our average deposit accounts for the years ended December 31, 2012, 2011 and 2010, and the weighted average interest rates paid on each category of deposits:

	Years Ended December 31,
	2012						2011						2010
	Amount		Percent of Deposits		Rate		Amount		Percent of Deposits		Rate		Amount		Percent of Deposits		Rate
	(dollars expressed in thousands)
Noninterest-bearing demand	$	1,305,282	23.4	%	—	%	$	1,166,128	19.7	%	—	%	$	1,148,102	18.1	%	—	%
Interest-bearing demand	937,971		16.8		0.06		938,758		15.8		0.11		901,685		14.2		0.16
Savings and money market	1,931,146		34.5		0.18		2,054,452		34.7		0.42		2,083,099		32.7		0.67
Time deposits	1,412,838		25.3		0.79		1,766,166		29.8		1.21		2,228,842		35.0		1.79
Total average deposits	$	5,587,237	100.0	%			$	5,925,504	100.0	%			$	6,361,728	100.0	%

Capital and Dividends

On December 31, 2008, the Company issued: (a) 295,400 shares of Class C Fixed Rate Cumulative Perpetual Preferred Stock, par value $1.00 per share, and liquidation preference of $1,000.00 per share; and (b) 14,770 shares of Class D Fixed Rate Cumulative Perpetual Preferred Stock, par value $1.00 per share, and liquidation preference of $1,000.00 per share, to the U.S. Treasury pursuant to the Company’s participation in the CPP program, as further described in “Item 1 —Business – Ownership Structure” and in Note 13 to our consolidated financial statements. The Class C and Class D cumulative perpetual preferred stock qualify as Tier 1 capital. Dividends on our Class C and Class D cumulative perpetual preferred stock, which currently carry annual dividend rates of 5.00% and 9.00%, respectively, were payable quarterly, beginning in February 2009. The dividends on our Class C cumulative perpetual preferred stock of 5.00% increases to 9.00% per annum on and after February 15, 2014.

The redemption of any of our preferred stock requires the prior approval of the Federal Reserve. As previously discussed under “Item 1 —Business – Supervision and Regulation – Regulatory Agreements,” under the terms of the Agreement with the FRB, we have agreed, among other things, not to declare and pay any dividends on our common or preferred stock or to make any distributions of interest, or other sums, on our trust preferred securities without the prior approval of the FRB.

On August 10, 2009, we elected to defer the regularly scheduled interest payments on our outstanding junior subordinated debentures relating to the Company’s $345.0 million of trust preferred securities in accordance with the terms of such securities. The deferral election began with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October 2009, as further described in Note 12 to our consolidated financial statements. Under the terms of such securities, we may defer such payments for up to 20 consecutive quarterly periods without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on our business, financial condition or results of operations. We have deferred such payments for 14 quarterly periods as of December 31, 2012. We have deferred $43.8 million of our regularly scheduled interest payments as of December 31, 2012, and in conjunction with these deferred interest payments, we also accrued and deferred additional interest expense of $3.9 million as of December 31, 2012. The current 20 consecutive quarterly deferral period ends with the respective payment dates of the trust preferred securities in September and October 2014. During the deferral period, the respective trusts have suspended the declaration and payment of dividends on the trust preferred securities. During the deferral period, we may not, among other things and with limited exceptions, pay cash dividends on or repurchase our common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures.

We also suspended the payment of cash dividends on our outstanding common stock and preferred stock beginning with the regularly scheduled quarterly dividend payments on the preferred stock that would otherwise have been made in August and September 2009, as further described in Note 13 to our consolidated financial statements. We have deferred such payments for 14 quarterly periods as of December 31, 2012. Prior to August 10, 2009, we declared and paid $6.0 million of dividend payments on our Class C Preferred Stock and our Class D Preferred Stock. We subsequently declared and deferred an additional $51.7 million and $4.6 million of regularly scheduled dividend payments on our Class C Preferred Stock and our Class D Preferred Stock, respectively, as of December 31, 2012, and, in conjunction with these deferred dividend payments, we also declared and deferred an additional $4.8 million and $808,000 of cumulative dividends on our deferred Class C Preferred Stock and Class D Preferred Stock dividend payments, respectively, as of December 31, 2012.

55

Effective August 10, 2009, we also suspended the declaration of dividends on our Class A Convertible, Adjustable Rate Preferred Stock and our Class B Adjustable Rate Preferred Stock. Prior to that time, we declared and paid relatively small dividends on our Class A and Class B preferred stock.

The Company’s and First Bank’s capital ratios at December 31, 2012 and 2011 were as follows:

	December 31,
	2012	2011
First Bank:
Total Capital Ratio	17.18%	14.98%
Tier 1 Ratio	15.92	13.70
Leverage Ratio	9.13	8.19
First Banks, Inc.:
Total Capital Ratio	2.57	1.88
Tier 1 Ratio	1.28	0.94
Leverage Ratio	0.73	0.56

First Bank was categorized as well capitalized at December 31, 2012 and 2011 under the prompt corrective action provisions of the regulatory capital standards. The Company did not meet the minimum regulatory capital standards established for bank holding companies by the Federal Reserve at December 31, 2012 and 2011. First Bank’s and our actual and required capital ratios are further described in Note 14 to our consolidated financial statements. First Bank’s Tier 1 capital to total assets ratio of 9.20% at December 31, 2012 exceeded the 7.00% minimum level required under the terms of the informal agreement with the MDOF. As previously discussed under “Item 1 —Business – Recent Developments and Other Matters – Capital Plan,” in August 2009, we announced the adoption of our Capital Plan, in order to, among other things, preserve and enhance our regulatory capital. The successful completion of all or any portion of our Capital Plan is not assured, and no assurance can be made that our Capital Plan will not be materially modified in the future. If we are not able to complete substantially all of our Capital Plan, our regulatory capital ratios may be materially and adversely affected and our ability to withstand continued adverse economic conditions could be threatened.

As of December 31, 2012, we had 13 affiliated Delaware or Connecticut statutory and business trusts that were created for the sole purpose of issuing trust preferred securities. As further described in Note 12 to our consolidated financial statements, the sole assets of the statutory and business trusts are our junior subordinated debentures. A summary of the outstanding trust preferred securities issued by our affiliated statutory and business trusts, and our related junior subordinated debentures issued to the respective trusts in conjunction with the trust preferred securities offerings as of December 31, 2012, is as follows:

Name of Trust	Date of Trust Formation	Type of Offering	Interest Rate	Preferred Securities		Subordinated Debentures
First Preferred Capital Trust IV	January 2003	Publicly Underwritten	8.15%	$	46,000,000	$	47,422,700
First Bank Statutory Trust	March 2003	Private Placement	8.10%	25,000,000		25,774,000
First Bank Statutory Trust II	September 2004	Private Placement	Variable	20,000,000		20,619,000
Royal Oaks Capital Trust I	October 2004	Private Placement	Variable	4,000,000		4,124,000
First Bank Statutory Trust III	November 2004	Private Placement	Variable	40,000,000		41,238,000
First Bank Statutory Trust IV	February 2006	Private Placement	Variable	40,000,000		41,238,000
First Bank Statutory Trust V	April 2006	Private Placement	Variable	20,000,000		20,619,000
First Bank Statutory Trust VI	June 2006	Private Placement	Variable	25,000,000		25,774,000
First Bank Statutory Trust VII	December 2006	Private Placement	Variable	50,000,000		51,547,000
First Bank Statutory Trust VIII	February 2007	Private Placement	Variable	25,000,000		25,774,000
First Bank Statutory Trust X	August 2007	Private Placement	Variable	15,000,000		15,464,000
First Bank Statutory Trust IX	September 2007	Private Placement	Variable	25,000,000		25,774,000
First Bank Statutory Trust XI	September 2007	Private Placement	Variable	10,000,000		10,310,000

For regulatory reporting purposes, the trust preferred securities are eligible for inclusion, subject to certain limitations, in our Tier 1 and Tier 2 capital. Because of these limitations, as of December 31, 2012, $333.3 million of trust preferred securities were not eligible for inclusion in our Tier 1 capital. Of the $333.3 million not eligible for inclusion in our Tier 1 capital, $23.4 million was eligible for inclusion in our Tier 2 capital and $309.9 million was not eligible for inclusion in our Tier 2 capital.

On June 7, 2012, the Federal Reserve approved proposed rules that would substantially amend the regulatory risk-based capital rules applicable to the Company and First Bank, as further described in “Item 1 —Business – Supervision and Regulation – Regulatory Capital Standards and Proposed Basel III Regulatory Capital Reforms.” The proposed rules implement Basel III and changes required by the Dodd-Frank Act, which include significant changes to bank capital, leverage and liquidity requirements. The proposed rules include new risk-based capital and leverage ratios, which would be phased in from 2013 to 2019, and would refine the definition of what constitutes “capital” for purposes of calculating those ratios. The proposed rules also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity,

56

unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which, such as trust preferred securities, would be phased out over time. The proposed rules will eliminate trust preferred securities as a form of Tier 1 capital and will begin amortizing down the Tier 1 capital treatment of trust preferred securities over 10 years beginning on January 1, 2013 with full phase-out of these instruments occurring on January 1, 2022 for all insured depository institutions and bank holding companies with assets over $500 million. The proposed rules will require the Tier 1 capital treatment of trust preferred securities to be amortized over three years beginning on January 1, 2013 with full phaseout occurring on January 1, 2016 for bank holding companies with assets of $15 billion or more.

In January, 2011, we, the holder of 100% of the outstanding common stock of First Preferred Capital Trust IV, or the Trust, successfully completed a consent solicitation from the holders of the 8.15% cumulative trust preferred securities of the Trust, and entered into certain amendments that were approved in the consent solicitation. We solicited the consents in order to increase our capital planning flexibility under the terms of the documents and the provisions of the indentures, guarantee agreements and trust agreements relating to our other tranches of trust preferred securities. The amendments provide an opportunity for the Company to seek to improve its capital position and decrease its level of indebtedness during a period in which it is deferring interest payments in accordance with the terms of the indenture. Thus, as a result of the successful completion of the consent solicitation, the Company believes it is better positioned to consider certain potential capital planning strategies to improve the regulatory capital ratios of First Banks, Inc. and further strengthen the Company’s overall financial position.

INTERESTRATERISKMANAGEMENT

The maintenance of a satisfactory level of net interest income is a primary factor in our ability to achieve acceptable income levels. However, the maturity and repricing characteristics of our loan and investment portfolios may differ significantly from those within our deposit structure. The nature of the loan and deposit markets within which we operate, and our objectives for business development within those markets at any point in time, influence these characteristics. In addition, the ability of borrowers to repay loans and the possibility of depositors withdrawing funds prior to stated maturity dates introduces divergent option characteristics that fluctuate as interest rates change. These factors cause various elements of our balance sheet to react in different manners and at different times relative to changes in interest rates, potentially leading to increases or decreases in net interest income over time. Depending upon the direction and magnitude of interest rate movements and their effect on the specific components of our balance sheet, the effects on net interest income can be substantial. Consequently, it is critical that we establish effective control over our exposure to changes in interest rates. We strive to manage our interest rate risk by:

• Maintaining an Asset Liability Committee, or ALCO, responsible to our Board of Directors and Executive Management, to review the overall interest rate risk management activity and approve actions taken to reduce risk;

• Employing a financial simulation model to determine our exposure to changes in interest rates;

• Coordinating the lending, investing and deposit-generating functions to control the assumption of interest rate risk; and

• Utilizing various financial instruments, including derivatives, to offset inherent interest rate risk should it become excessive.

The objective of these procedures is to limit the adverse impact that changes in interest rates may have on our net interest income.

The ALCO has overall responsibility for the effective management of interest rate risk and the approval of policy guidelines. The ALCO includes our President and Chief Executive Officer, Chief Financial Officer, Controller, Chief Investment Officer, Chief Credit Officer, Executive Vice President of Retail Banking, Director of Risk Management and Audit, and certain other senior officers. The Asset Liability Management Group, which monitors interest rate risk, supports the ALCO, prepares analyses for review by the ALCO and implements actions that are either specifically directed by the ALCO or established by policy guidelines.

In managing sensitivity, we strive to reduce the adverse impact on earnings by managing interest rate risk within internal policy constraints. Our policy is to manage exposure to potential risks associated with changing interest rates by maintaining a balance sheet posture in which annual net interest income is not significantly impacted by reasonably possible near-term changes in interest rates. To measure the effect of interest rate changes, we project our net income over a two-year horizon on a pro forma basis. The analysis assumes various scenarios for increases and decreases in interest rates including both instantaneous and gradual, and parallel and non-parallel, shifts in the yield curve, in varying amounts. For purposes of arriving at reasonably possible near-term changes in interest rates, we include scenarios based on actual changes in interest rates, which have occurred over a two-year period, simulating both a declining and rising interest rate scenario.

We are “asset-sensitive,” indicating that our assets would generally re-price with changes in interest rates more rapidly than our liabilities, and our simulation model indicates a loss of projected net interest income should interest rates decline. While a decline in interest rates of less than 50 basis points was projected to have a relatively minimal impact on our net interest income, an instantaneous parallel decline in the interest yield curve of 50 basis points indicates a pre-tax projected loss of approximately 7.0% of net interest income, based on assets and liabilities at December 31, 2012. At December 31, 2012, we remain in an asset-sensitive position and thus, remain subject to a higher level of risk in a declining interest rate environment. Although we do not anticipate

57

that instantaneous shifts in the yield curve, as projected in our simulation model, are likely, these are indications of the effects that changes in interest rates would have over time. Our asset-sensitive position, coupled with the effect of significant declines in interest rates that began in late 2007 and continued throughout 2008 and 2009 to historically low levels that remain prevalent in the current marketplace, and the overall level of our nonperforming assets, has negatively impacted our net interest income and is expected to continue to impact the level of our net interest income throughout the near future.

We also prepare and review a more traditional interest rate sensitivity position in conjunction with the results of our simulation model. The following table presents the projected maturities and periods to repricing of our rate sensitive assets and liabilities as of December 31, 2012, adjusted to account for anticipated prepayments:

	Three Months or Less			Over Three through Six Months		Over Six through Twelve Months		Over One through Five Years	Over Five Years	Total
	(dollars expressed in thousands)
Interest-earning assets:
Loans (1)	$	1,536,011		220,242		333,443		747,482	93,569	2,930,747
Investment securities	157,460			177,317		234,036		1,348,763	757,704	2,675,280
FRB and FHLB stock	27,329			—		—		—	—	27,329
Short-term investments	404,005			—		—		—	—	404,005
Total interest-earning assets	$	2,124,805		397,559		567,479		2,096,245	851,273	6,037,361
Interest-bearing liabilities:
Interest-bearing demand deposits	$	370,247		230,153		150,100		110,073	140,093	1,000,666
Money market deposits	1,606,543			—		—		—	—	1,606,543
Savings deposits	46,534			38,322		32,847		46,534	109,491	273,728
Time deposits	378,858			296,730		351,749		257,289	101	1,284,727
Other borrowings	26,025			—		—		—	—	26,025
Subordinated debentures	282,480			—		—		—	71,653	354,133
Total interest-bearing liabilities	$	2,710,687		565,205		534,696		413,896	321,338	4,545,822
Interest-sensitivity gap:
Periodic	$	(585,882	)	(167,646	)	32,783		1,682,349	529,935	1,491,539
Cumulative	(585,882		)	(753,528	)	(720,745	)	961,604	1,491,539
Ratio of interest-sensitive assets to interest-sensitive liabilities:
Periodic	0.78			0.70		1.06		5.06	2.65	1.33
Cumulative	0.78			0.77		0.81		1.23	1.33

(1) Loans are presented net of net deferred loan fees.

Management made certain assumptions in preparing the foregoing table. These assumptions included:

• Loans will repay at projected repayment rates;

• Mortgage-backed securities, included in investment securities, will repay at projected repayment rates;

• Interest-bearing demand accounts and savings deposits will behave in a projected manner with regard to their interest rate sensitivity; and

• Fixed maturity deposits will not be withdrawn prior to maturity.

A significant variance in actual results from one or more of these assumptions could materially affect the results reflected in the foregoing table.

We were in an overall asset-sensitive position of $1.49 billion, or 22.9% of our total assets at December 31, 2012. We were in an overall liability-sensitive position on a cumulative basis through the twelve-month time horizon of $720.7 million, or 11.1% of our total assets at December 31, 2012.

The interest-sensitivity position is one of several measurements of the impact of interest rate changes on net interest income. Its usefulness in assessing the effect of potential changes in net interest income varies with the constant change in the composition of our assets and liabilities and changes in interest rates. For this reason, we place greater emphasis on our simulation model for monitoring our interest rate risk exposure.

As previously discussed, we utilize derivative instruments to assist in our management of interest rate sensitivity by modifying the repricing, maturity and option characteristics of certain assets and liabilities. We also sell interest rate swap agreement contracts to certain customers who wish to modify their interest rate sensitivity. We offset the interest rate risk of these swap agreements by simultaneously purchasing matching interest rate swap agreement contracts with offsetting pay/receive rates from other financial institutions. Because of the matching terms of the offsetting contracts, the net effect of the changes in the fair value of the paired swaps is minimal.

58

The derivative financial instruments we held as of December 31, 2012 and 2011 are summarized as follows:

	December 31,
	2012			2011
	Notional Amount		Credit Exposure	Notional Amount	Credit Exposure
	(dollars expressed in thousands)
Interest rate swap agreements	$	—	—	50,000	—
Customer interest rate swap agreements	12,149		115	47,240	441
Interest rate lock commitments	59,932		1,837	38,985	1,381
Forward commitments to sell mortgage-backed securities	107,700		—	58,800	—

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

The earnings associated with our derivative instruments reflect the interest rate environment during these periods as well as the overall level of our derivative instruments throughout these periods. For the year ended December 31, 2010, we realized net interest income on our derivative financial instruments of $5.7 million, comprised of amortization associated with a deferred gain on the previous termination of certain of our interest rate swap agreements. In December 2008, we terminated certain of our interest rate swap agreements that were designated as cash flow hedges on certain of our loans, and recorded a gain of $20.8 million, in aggregate, which was being amortized as an increase to interest and fees on loans in the consolidated statements of operations over the remaining terms of the respective interest rate swap agreements, which had contractual maturity dates of September 2009 and September 2010.

We recorded net losses on derivative instruments, which are included in noninterest income in the consolidated statements of operations, of $40,000, $193,000 and $2.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. The net losses on derivative instruments were attributable to changes in the fair value and the net interest differential on our interest rate swap agreements previously designated as cash flow hedges on our junior subordinated debentures. In 2009, we recorded a cumulative fair value adjustment of $4.6 million on our interest rate swap agreements designated as cash flow hedges on our junior subordinated debentures that was reclassified from accumulated other comprehensive loss to net loss on derivative instruments as a result of the discontinuation of hedge accounting treatment following the announcement of the deferral of interest payments on the underlying trust preferred securities in August 2009. In conjunction with the discontinuation of hedge accounting, the net interest differential on these interest rate swap agreements, which was previously recorded as interest expense on junior subordinated debentures in the consolidated statements of operations, was recorded as a net reduction of noninterest income effective August 2009. We have no remaining interest rate swap agreements at December 31, 2012 with the exception of customer interest rate swap agreements.

Our derivative financial instruments are more fully described in Note 8 to our consolidated financial statements.

LIQUIDITYMANAGEMENT

First Bank. Our liquidity is the ability to maintain a cash flow that is adequate to fund operations, service debt obligations and meet obligations and other commitments on a timely basis. First Bank receives funds for liquidity from customer deposits, loan payments, maturities of loans and investments, sales of investments and earnings before provision for loan losses. In addition, we may avail ourselves of other sources of funds by issuing certificates of deposit in denominations of $100,000 or more (including certificates issued through the Certificate of Deposit Account Registry Service, or CDARS program), selling securities under agreements to repurchase, and utilizing borrowings from the FHLB, the FRB and other borrowings.

As a financial intermediary, we are subject to liquidity risk. We closely monitor our liquidity position through our Liquidity Management Committee and we continue to implement actions deemed necessary to maintain an appropriate level of liquidity in light of ongoing unstable market conditions, changes in loan funding needs, operating and debt service requirements, current deposit trends and events that may occur in conjunction with our Capital Plan. We continue to seek opportunities to improve our overall liquidity position, and we maintain an efficient collateral management process that allows us to maximize our overall collateral position related to our alternative borrowing sources. In conjunction with our liquidity management process, we analyze and manage short-term and long-term liquidity through an ongoing review of internal funding sources, projected cash flows from loans, securities and customer deposits, internal and competitor deposit pricing structures and maturity profiles of current borrowing sources. We utilize planning, management reporting and adverse stress scenarios to monitor sources and uses of funds on a daily basis to assess cash levels to ensure adequate funds are available to meet normal business operating requirements and to supplement liquidity needs to meet unusual demands for funds that may result from an unexpected change in customer deposit levels or potential planned or unexpected liquidity events that may arise from time to time.

59

First Bank has built a significant amount of available balance sheet liquidity since 2009 in anticipation of the expected completion of certain transactions associated with our Capital Plan, as further described under “Item 1 —Business – Recent Developments and Other Matters – Capital Plan.” We continue to maintain a significant amount of available balance sheet liquidity, as reflected by the increase in our cash and short-term investments and our investment securities portfolio during 2012, in anticipation of the expected completion of the sale of a portion of our Florida branches in the second quarter of 2013 and to provide funds for future loan growth initiatives to offset the impact of the decrease in nonaccrual loans, problem loans and other loan relationships, as previously discussed. Our cash and cash equivalents were $518.8 million and $473.1 million at December 31, 2012 and 2011, respectively. The majority of funds were maintained in our correspondent bank account with the FRB. The increase in our cash and cash equivalents of $45.7 million is further discussed under “—Financial Condition.”

Our unpledged investment securities increased$180.8 million to $2.42 billion at December 31, 2012, compared to $2.24 billion at December 31, 2011, and are mostly comprised of highly liquid and readily marketable available-for-sale securities. The combined level of cash and cash equivalents and unpledged investment securities provided us with total available liquidity of $2.94 billion and $2.71 billion at December 31, 2012 and 2011, respectively. As such, despite significant cash outflows to support transactions associated with our Capital Plan and the prepayment of $720.0 million of secured term borrowings during 2010, we have maintained available liquidity of $2.94 billion, or 45.2% of total assets, at December 31, 2012 and $2.71 billion, or 41.1% of total assets, at December 31, 2011. Our ability to maintain strong liquidity was achieved by a substantial shift in our balance sheet from loans to short-term investments and investment securities while substantially maintaining our deposit levels, exclusive of transactions resulting from our Capital Plan and planned reductions in higher-rate, single-service time deposits in recent periods. Our loan-to-deposit ratio decreased to 53.4% at December 31, 2012 from 58.4% at December 31, 2011, while the ratio of our cash and cash equivalents and investment securities to total assets increased to 49.1% at December 31, 2012 from 44.5% at December 31, 2011.

On September 28, 2012, we purchased $141.0 million of seasoned, performing one-to-four-family residential real estate loans from another financial institution in an effort to deploy a portion of our substantial balance sheet liquidity into higher earning alternatives that began contributing to net interest margin in the fourth quarter of 2012. The loan purchase was partially funded through the sale of certain available-for-sale investment securities, as previously discussed.

On June 30, 2012, we reclassified certain of our available-for-sale investment securities to held-to-maturity investment securities at their respective fair values, which totaled $729.1 million in aggregate, as further described in Note 3 to the consolidated financial statements. The net gross unrealized gain on these available-for-sale investment securities at the time of transfer was $11.7 million, in aggregate, and was recorded as additional premium on the investment securities and is being amortized over the remaining lives of the respective securities. The unrealized gain included as a component of accumulated other comprehensive income was $6.8 million at June 30, 2012, net of tax of $4.9 million. The amortization of the unrealized gain reported in stockholders’ equity is being amortized as an adjustment to interest income on investment securities over the remaining lives of the respective securities. Consequently, the combined amortization of the additional premium and the unrealized gain have no impact on interest income on investment securities. The determination of the reclassification was made by management based on our current and expected future liquidity levels and the resulting intent to hold those investment securities to maturity.

During 2012, we reduced our aggregate funds acquired from other sources of funds by $110.4 million to $486.8 million at December 31, 2012, from $597.2 million at December 31, 2011. These other sources of funds include certificates of deposit of $100,000 or more and other borrowings, which are comprised of daily securities sold under agreements to repurchase. The decrease was attributable to a reduction in certificates of deposit of $100,000 or more of $85.3 million and a decrease in our daily repurchase agreements of $25.1 million. The reduction in certificates of deposit of $100,000 or more was primarily attributable to a planned reduction of higher rate, single-service certificate of deposit relationships in an effort to utilize a portion of our current available liquidity and improve First Bank’s leverage ratio. The following table presents the maturity structure of these other sources of funds at December 31, 2012:

	Certificates of Deposit of $100,000 or More		Other Borrowings	Total
	(dollars expressed in thousands)
Three months or less	$	137,982	26,025	164,007
Over three months through six months	108,062		—	108,062
Over six months through twelve months	125,281		—	125,281
Over twelve months	89,466		—	89,466
Total	$	460,791	26,025	486,816

In addition to these sources of funds, First Bank has established a borrowing relationship with the FRB. This borrowing relationship, which is secured primarily by commercial loans, provides an additional liquidity facility that may be utilized for contingency liquidity purposes. Advances drawn on First Bank’s established borrowing relationship require the prior approval of the FRB. First Bank did not have any FRB borrowings outstanding at December 31, 2012 or 2011.

60

First Bank also has a borrowing relationship with the FHLB. First Bank’s borrowing capacity through its relationship with the FHLB was approximately $363.2 million and $370.7 million at December 31, 2012 and 2011, respectively. The borrowing relationship is secured by one-to-four-family residential, multi-family residential and commercial real estate loans. The reduction in First Bank’s borrowing capacity with the FHLB during 2012 primarily resulted from the corresponding decrease in the loan portfolio during this period, as further described under “—Loans and Allowance for Loan Losses.” First Bank requests advances and/or repays advances from the FHLB based on its current and future projected liquidity needs. All borrowing requests require approval from the FHLB. First Bank did not have any FHLB advances outstanding at December 31, 2012 or 2011.

As a means of further contingency funding, First Bank may use broker dealers to acquire deposits to fund both short-term and long-term funding needs, including brokered money market accounts, and has available funding, subject to certain limits, through the CDARS program. Exclusive of the CDARS program, First Bank does not currently utilize broker dealers to acquire deposits.

We believe First Bank has sufficient liquidity to meet its current and future near-term liquidity needs; however, no assurance can be made that First Bank’s liquidity position will not be materially, adversely affected in the future.

First Banks, Inc. First Banks, Inc. is a separate and distinct legal entity from its subsidiaries. The Company’s liquidity position is affected by dividends received from its subsidiaries and the amount of cash and other liquid assets on hand, payment of interest and dividends on debt and equity instruments issued by the Company (all of which are presently suspended or deferred), capital contributions the Company makes into its subsidiaries, any redemption of debt for cash issued by the Company, and proceeds the Company raises through the issuance of debt and/or equity instruments, if any. The Company’s unrestricted cash totaled $2.7 million and $2.8 million at December 31, 2012 and 2011, respectively. The Company had restricted cash of $2.0 million at December 31, 2011, which became unrestricted in February 2012.

In March 2011, the Company entered into a Revolving Credit Note and a Stock Pledge Agreement with Investors of America Limited Partnership, or Investors of America, LP, as further described in Note 11 and Note 20 to our consolidated financial statements. The agreement provided for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which had an interest rate of LIBOR plus 300 basis points, was intended to supplement, if necessary, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses. There were no balances outstanding under this borrowing arrangement during the period from its inception in March 2011 to its maturity date on December 31, 2012.

On March 20, 2013, the Company entered into a new Revolving Credit Note and a Stock Pledge Agreement with Investors of America, LP, as further described in Note 25 to our consolidated financial statements. The agreement provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which has a maturity date of March 31, 2014 and an interest rate of LIBOR plus 300 basis points, is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company’s existing cash resources become insufficient in the future.

We cannot be assured of our ability to access future liquidity through debt markets. As further described under “Item 1A – Risk Factors,” the Company’s ability to access debt markets on terms satisfactory to us will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside of our control, and on our financial performance.

Additional long-term funding is provided by our junior subordinated debentures, as further described in Note 12 to our consolidated financial statements. As of December 31, 2012, we had 13 affiliated Delaware or Connecticut statutory and business trusts that were created for the sole purpose of issuing trust preferred securities. The sole assets of the statutory and business trusts are our junior subordinated debentures.

We agreed, among other things, not to pay any dividends on our common or preferred stock or make any distributions of interest or other sums on our trust preferred securities without the prior approval of the FRB, as previously discussed under “Item 1 —Business – Supervision and Regulation – Regulatory Agreements.”

In August 2009, we announced the deferral of our regularly scheduled interest payments on our outstanding junior subordinated debentures relating to our $345.0 million of trust preferred securities beginning with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October 2009. The terms of the junior subordinated debentures and the related trust indentures allow us to defer such payments of interest for up to 20 consecutive quarterly periods without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on our business, financial condition or results of operations. During the deferral period, we may not, among other things and with limited exceptions, pay cash dividends on or repurchase our common stock or preferred stock nor make any payment on outstanding debt obligations that ranks equally with or junior to our junior subordinated debentures. Accordingly, we also suspended the payment of cash dividends on our outstanding common stock and preferred stock beginning with the regularly scheduled quarterly dividend payments on our preferred stock that would otherwise have been made in August and September 2009, as further described under “—Capital and Dividends,” and in Note 13 to our consolidated financial statements.

61

The Company’s financial position may be adversely affected if it experiences increased liquidity needs if any of the following events occur:

• First Bank continues to be unable or prohibited by its regulators to pay a dividend to the Company sufficient to satisfy the Company’s operating cash flow needs. The Company’s ability to receive future dividends from First Bank to assist the Company in meeting its operating requirements, both on a short-term and long-term basis, is currently subject to regulatory approval, as further described above and under “Item 1 —Business – Supervision and Regulation – Regulatory Agreements;”

• We deem it advisable, or are required by regulatory authorities, to use cash maintained by the Company to support the capital position of First Bank;

• First Bank fails to remain “well-capitalized” and, accordingly, First Bank is required to pledge additional collateral against its borrowings and is unable to do so. As discussed above, First Bank has no outstanding borrowings at December 31, 2012, with the exception of $26.0 million of daily repurchase agreements utilized by customers as an alternative deposit product, and has substantial borrowing capacity through its relationship with the FHLB, as previously discussed; or

• The Company has difficulty raising cash through the future issuance of debt or equity instruments or by accessing additional sources of credit.

The Company’s financial flexibility may be severely constrained if we are unable to maintain our access to funding or if adequate financing on terms acceptable to us is not available in the marketplace. If we are required to rely more heavily on more expensive funding sources to support our business, our revenues may not increase proportionately to cover our costs. In this case, our operating margins would likely be materially adversely affected. A lack of liquidity and/or cost-effective funding alternatives could materially adversely affect our business, financial condition and results of operations.

Other Commitments and Contractual Obligations. We have entered into long-term leasing arrangements and other commitments and contractual obligations in conjunction with our ongoing operating activities. The required payments under such leasing arrangements, other commitments and contractual obligations at December 31, 2012 were as follows:

	Less Than 1 Year		1-3 Years	3-5 Years	Over 5 Years	Total (1)
	(dollars expressed in thousands)
Operating leases (2)	$	8,979	12,880	7,679	12,765	42,303
Certificates of deposit (3)	1,026,809		230,363	27,454	101	1,284,727
Other borrowings	26,025		—	—	—	26,025
Subordinated debentures (4)	—		—	—	354,133	354,133
Preferred stock issued under the CPP (4) (5)	—		—	—	310,170	310,170
Other contractual obligations	474		7	2	—	483
Total	$	1,062,287	243,250	35,135	677,169	2,017,841

(1) Amounts exclude ASC Topic 740 unrecognized tax liabilities of $1.1 million and related accrued interest expense of $116,000 for which the timing of payment of such liabilities cannot be reasonably estimated as of December 31, 2012.

(2) Amounts exclude operating leases associated with discontinued operations of $1.0 million, $2.1 million, $1.8 million and $2.9 million for less than 1 year, 1-3 years, 3-5 years and over 5 years, respectively, or a total of $7.8 million.

(3) Amounts exclude the related accrued interest expense on certificates of deposit of $540,000 as of December 31, 2012.

(4) Amounts exclude the accrued interest expense on junior subordinated debentures and the accrued dividends declared on preferred stock issued under the CPP of $47.9 million and $61.9 million, respectively, as of December 31, 2012. As further described under “Item 1 —Business – Supervision and Regulation – Regulatory Agreements,” we currently may not make any distributions of interest or other sums on our junior subordinated debentures and related underlying trust preferred securities without the prior approval of the FRB.

(5) Represents amounts payable upon redemption of the Class C Preferred Stock and the Class D Preferred Stock issued under the CPP of $295.4 million and $14.8 million, respectively.

CRITICALACCOUNTINGPOLICIES

Our financial condition and results of operations presented in our consolidated financial statements, notes to our consolidated financial statements, selected consolidated and other financial data appearing elsewhere in this report, and management’s discussion and analysis of financial condition and results of operations are, to a large degree, dependent upon our accounting policies. The selection and application of our accounting policies involve judgments, estimates and uncertainties that are susceptible to change.

We have identified the following accounting policies that we believe are the most critical to the understanding of our financial condition and results of operations. These critical accounting policies require management’s most difficult, subjective and complex judgments about matters that are inherently uncertain. In the event that different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of a materially different financial condition and/or results of operations could be a reasonable likelihood. The impact and any associated risks related to our critical accounting policies on our business operations is discussed throughout “—Management’s Discussion and Analysis of Financial Condition and Results of Operations,”

62

where such policies affect our reported and expected financial results. A detailed discussion of the application of these and other accounting policies is summarized in Note 1 to our consolidated financial statements appearing elsewhere in this report.

Allowance for Loan Losses. We maintain an allowance for loan losses at a level we consider appropriate to provide for probable losses in our loan portfolio. The determination of our allowance for loan losses requires management to make significant judgments and estimates based upon a periodic analysis of our loans held for portfolio and held for sale considering, among other factors, current economic conditions, loan portfolio composition, past loan loss experience, independent appraisals, the fair value of underlying loan collateral, our customers’ ability to repay their loans and selected key financial ratios. If actual events prove the estimates and assumptions we used in determining our allowance for loan losses were incorrect, we may need to make additional provisions for loan losses. Any increases in our allowance for loan losses will result in a decrease in net income and capital, and may have a material adverse effect on our financial condition and results of operations. For further discussion, refer to “—Loans and Allowance for Loan Losses,” “Item 1A – Risk Factors” and Note 4 to our consolidated financial statements appearing elsewhere in this report.

Deferred Tax Assets. We recognize deferred tax assets for the estimated future tax effects of temporary differences, net operating loss carryforwards and tax credits. We recognize deferred tax assets subject to management’s judgment based upon available evidence that realization is more likely than not. Our deferred tax assets are reduced, if necessary, by a deferred tax asset valuation allowance. In the event that we determine we would not be able to realize all or part of our deferred tax assets in the future, we would need to adjust the recorded value of our deferred tax assets, which would result in a direct charge to our provision for income taxes in the period in which such determination is made. For further discussion, refer to “—(Benefit) Provision for Income Taxes,” and Note 1 and Note 17 to our consolidated financial statements appearing elsewhere in this report.

Goodwill and Other Intangible Assets / Business Combinations. The determination of the fair value of the assets and liabilities acquired, as well as the returns on investment that may be achieved, requires management to make significant judgments and estimates based upon detailed analyses of the existing and future economic value of such assets and liabilities and/or the related income streams, including the resulting intangible assets. If actual events prove the estimates and assumptions we used in determining the fair values of the acquired assets and liabilities or the projected income streams were incorrect, we may need to make additional adjustments to the recorded values of such assets and liabilities, which could result in increased volatility in our reported earnings. In addition, we may need to make additional adjustments to the recorded value of our intangible assets, which may impact our reported earnings and directly impacts our regulatory capital levels. For further discussion, refer to Note 2, Note 6 and Note 14 to our consolidated financial statements appearing elsewhere in this report.

Our annual impairment testing date for goodwill and other intangible assets is December 31. In addition, a goodwill impairment assessment is performed if an event occurs or circumstances change that would make it more likely than not that the fair value of our single reporting unit is below its carrying value. We have the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that our indefinite-lived intangible assets are impaired. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the indefinite-lived intangible assets are impaired, then we are not required to take further action. However, if we conclude otherwise, then we are required to determine the fair value of the indefinite-lived intangible assets and perform the quantitative impairment test by comparing the fair value with the carrying amount. We also have the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test but will be able to resume performing the qualitative assessment in any subsequent period. The goodwill impairment test is a two-step process which requires us to make assumptions regarding fair value. Our policy allows management to make the determination of fair value using internal cash flow models or by engaging independent third parties. The first step consists of estimating the fair value of the reporting unit using a number of factors, including projected future operating results and business plans, economic projections, anticipated future cash flows, discount rates, and comparable marketplace fair value data from within a comparable industry grouping. We compare the estimated fair value of our reporting unit to the carrying value, which includes allocated goodwill. If the estimated fair value is less than the carrying value, the second step is completed to compute the impairment amount by determining the “implied fair value” of goodwill. This determination requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any remaining unallocated fair value represents the “implied fair value” of goodwill, which is compared to the corresponding carrying value to compute the goodwill impairment amount, if any. Although we believe our estimates of fair value are reasonable, many of the factors used in assessing fair value and the allocation of estimated fair value to the assets and liabilities of our reporting unit are outside the control of management, and it is reasonably likely that assumptions and estimates may change in future periods. These changes may result in future impairment that may materially affect the carrying value of our assets and our results of operations.

Due to the ongoing uncertainty regarding market conditions, which may continue to negatively impact the performance of our reporting unit, management will continue to monitor the goodwill impairment indicators and evaluate the carrying amount of our goodwill, if necessary. Events and circumstances that could trigger the need for interim impairment testing include:

• A significant change in legal factors or in the business climate;

63

• An adverse action or assessment by a regulator;

• Unanticipated competition;

• A loss of key personnel;

• A more-likely-than-not expectation that our reporting unit or a significant portion of our reporting unit will be sold or otherwise disposed of; and

• The testing for recoverability of a significant asset group within a reporting unit.

For further discussion, refer to “Item 1A – Risk Factors,” “—Noninterest Expense,” and Note 1 and Note 6 to our consolidated financial statements appearing elsewhere in this report.

EFFECTS OFNEWACCOUNTINGSTANDARDS

In January 2010, the FASB issued ASU No. 2010-06 –Fair Value Measurements and Disclosures (ASC Topic 820) – Improving Disclosures about Fair Value Measurements. This ASU amends certain disclosure requirements of Subtopic 820-10, providing additional disclosures for transfers in and out of Levels I and II and for activity in Level III and clarifies certain other existing disclosure requirements including the level of disaggregation and disclosures around inputs and valuation techniques. The final amendments of this ASU were effective for annual or interim periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activity for purchases, sales, issuances, and settlements on a gross basis. This requirement was effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The amended ASU does not require disclosures for earlier periods presented for comparative purposes at initial adoption. We implemented the disclosure requirements under this ASU on January 1, 2010, except for the disclosure requirement to provide the Level 3 activity for purchases, sales, issuances, and settlements on a gross basis, which we implemented on January 1, 2011. The implementation of the new disclosure requirements did not have a material impact on our consolidated financial statements or the disclosures presented in our consolidated financial statements.

In July 2010, the FASB issued ASU No. 2010-20 –Receivables (ASC Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This ASU requires expanded credit risk disclosures intended to provide investors with greater transparency regarding the allowance for credit losses and the credit quality of financing receivables. Under this ASU, companies will be required to provide more information about the credit quality of their financing receivables in the disclosures to financial statements, such as aging information, credit quality indicators, changes in the allowance for credit losses, and the nature and extent of troubled debt restructurings and their effect on the allowance for credit losses. Both new and existing disclosures must be disaggregated by portfolio segment or class based on the level of disaggregation that management uses when assessing its allowance for credit losses and managing its credit exposure. The disclosures as of the end of a reporting period were effective for interim and annual periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period were effective for interim and annual reporting periods beginning on or after December 15, 2010. We implemented the disclosure requirements under this ASU for the reporting period ended December 31, 2010, except for the requirement to provide disclosures about activity that occurs during a reporting period, which we implemented on January 1, 2011. The implementation of the new disclosure requirements did not have a material impact on our consolidated financial statements.

In April 2011, the FASB issued ASU No. 2011-02 –Receivables (ASC Topic 310)–A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. The provisions of this ASU: provide additional guidance related to determining whether a creditor has granted a concession; include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant; prohibit creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower; and add factors for creditors to use in determining whether a borrower is experiencing financial difficulties. The provisions of this ASU were effective for the Company’s reporting period ended September 30, 2011. We adopted the requirements of this ASU on July 1, 2011, and applied this guidance to restructurings occurring on or after January 1, 2011. The new guidance did not impact our financial condition, results of operations or the number of TDRs identified.

In May 2011, the FASB issued ASU 2011-04 -Fair Value Measurement (ASC Topic 820)-Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU provides a consistent definition of fair value and common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards, or IFRS. This ASU eliminates wording differences used to describe the requirements for measuring fair value and for disclosure information about fair value measurements between GAAP and IFRS, clarifies the application of existing fair value measurement requirements, and changes certain principles or requirements for measuring fair value or for disclosing information about fair value measurements. The provisions of this ASU were effective for interim and annual periods beginning on or after December 15, 2011, and should be applied prospectively. We adopted the requirements of this ASU on January 1, 2012, which did not have a material impact on our consolidated financial statements or results of operations or the disclosures presented in our consolidated financial statements.

64

In June 2011, the FASB issued ASU 2011-05 -Comprehensive Income (ASC Topic 220)-Presentation of Comprehensive Income. This ASU requires companies to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments of this ASU were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and were required to be applied retrospectively. We adopted the requirements of this ASU on January 1, 2012 and presented the components of net income and other comprehensive income in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12 -Comprehensive Income (ASC Topic 220)-Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU No. 2011-05 that deferred the provisions in ASU 2011-05 related to the presentation of reclassification adjustments out of accumulated other comprehensive income to allow the FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. This ASU reinstated the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of ASU 2011-05, and did not have an material impact on our consolidated financial statements or results of operations.

In February 2013, the FASB issued ASU 2013-02 -Comprehensive Income (ASC Topic 220)-Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires an entity to provide, either on the face of the statement where net income is presented or in the notes to financial statements, information about the amounts reclassified out of accumulated other comprehensive income by component. An entity is required to include significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. Amounts not required under GAAP to be reclassified in their entirety to net income are required to be cross-referenced to other disclosures required under GAAP that provide additional detail on those amounts. The amendments of this ASU are effective for interim and annual periods beginning after December 15, 2012, and are required to be applied prospectively. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements or results of operations.

In September 2011, the FASB issued ASU 2011-08 -Intangibles-Goodwill and Other (ASC Topic 350)-Testing of Goodwill for Impairment. ASU 2011-08 amends ASC Topic 350 to give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 is effective for annual and interim impairment tests beginning after December 15, 2011. We adopted the requirements of this ASU on January 1, 2012, which did not have a material impact on our consolidated financial statements or results of operations.

In July 2012, the FASB issued ASU 2012-02 - Intangibles - Goodwill and Other (Topic 350) -Testing Indefinite-Lived Intangible Assets for Impairment. The provisions of this ASU permit an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other Than Goodwill. This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements or results of operations.

In October 2012, the FASB issued ASU 2012-06 - Business Combinations (Topic 805) - Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution (a consensus of the FASB Emerging Issues Task Force). This ASU clarifies the applicable guidance for subsequently measuring an indemnification asset recognized as a result of a government-assisted acquisition of a financial institution. Under this ASU, when a reporting entity recognizes an indemnification asset as a result of a government-assisted acquisition of a financial institution and, subsequently, a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). This ASU is effective for interim and annual periods beginning after December 15, 2012, and is required to be applied prospectively. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements or results of operations.

65

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The quantitative and qualitative disclosures about market risk are included under “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Risk Management” appearing on pages 57 through 59 of this report.

Effects of Inflation. Inflation affects financial institutions less than other types of companies. Financial institutions make relatively few significant asset acquisitions that are directly affected by changing prices. Instead, the assets and liabilities are primarily monetary in nature. Consequently, interest rates are more significant to the performance of financial institutions than the effect of general inflation levels. While a relationship exists between the inflation rate and interest rates, we believe this is generally manageable through our asset-liability management program.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data appear on pages 79 through 134 of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, including our President and Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective as of December 31, 2012 to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the President and Chief Executive Officer and the Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and our directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in circumstances or that the degree of compliance with the policies and procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Based on that assessment, management concluded that, as of December 31, 2012, the Company’s internal control over financial reporting is effective based on the criteria established in COSO’s Internal Control – Integrated Framework.

66

This annual report does not include an attestation report of the Company’s Independent Registered Public Accounting Firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s Independent Registered Public Accounting Firm.

Item 9B. Other Information

On March 20, 2013, the Company entered into a Revolving Credit Note and a Stock Pledge Agreement with Investors of America, LP, a limited partnership that was created by and for the benefit of the Company’s Chairman and members of his immediate family. The agreement provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs, as further described in Note 11 and Note 25 to our consolidated financial statements, which descriptions are incorporated herein by reference to Exhibits 10.15 and 10.16 of this report.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Board of Directors and Committees of the Board

Our Board of Directors consists of nine members. The Board determined that Messrs. Blake, Cooper, Poelker, Rounsaville, Steward and Yaeger are independent. Each of our directors identified in the following table was elected to serve a one-year term and until his successor has been duly qualified for office.

Name	Age	Director Since	Principal Occupation(s) During Last Five Years and Directorships of Public Companies
James F. Dierberg	75	1979	Chairman of the Board of Directors of First Banks, Inc. since 1988; Chief Executive Officer of First Banks, Inc. from 1988 to April 2003; President of First Banks, Inc. from 1979 to 1992 and from 1994 to October 1999.
Terrance M. McCarthy	58	2003	President and Chief Executive Officer of First Banks, Inc. since April 2007; Senior Executive Vice President and Chief Operating Officer of First Banks, Inc. from August 2002 to March 2007; Chairman of the Board of Directors of First Bank since January 2003; President and Chief Executive Officer of First Bank from August 2002 to June 2007 and since April 22, 2009; Executive Vice President of First Bank from June 2007 to April 22, 2009. The Board and voting shareholders considered these qualifications, in addition to his prior service as Chief Operating Officer of the Company and President of First Bank, and his current position and experience with the Company and the banking industry, in making a determination that Mr. McCarthy should be a nominee for director of the Company.
Allen H. Blake (1)	70	2008	Director of First Banks, Inc. since December 2008 and from 1988 to March 2007; Director of First Bank since December 2008; Prior to Mr. Blake’s announcement of his retirement and resignation of his positions at First Banks, Inc., effective March 31, 2007, Mr. Blake served in the following positions: President of First Banks, Inc. from October 1999 to March 2007; Chief Executive Officer of First Banks, Inc. from April 2003 to March 2007; and Chief Financial Officer of First Banks, Inc. from 1984 to September 1999 and from May 2001 to August 2005. The Board and voting shareholders considered these qualifications, in addition to his significant financial and accounting expertise, prior service as Chief Executive Officer and Chief Financial Officer of the Company and experience with the Company and the banking industry, in making a determination that Mr. Blake should be a nominee for director of the Company.
James A. Cooper (1)(2)	57	2008	Senior Managing Partner of Thompson Street Capital Partners, a private equity firm with investments in middle-market manufacturing, service and distribution businesses, in St. Louis, Missouri, since 2000; Director of Thermon Group Holdings, Inc. and Thermon Holding Corporation from April 2010 to May 2012. The Board and voting shareholders considered these qualifications, in addition to his investment management expertise, financial expertise and stature in the local community, in making a determination that Mr. Cooper should be a nominee for director of the Company.
Michael J. Dierberg (3)	42	2011	Vice Chairman of First Banks, Inc. since January 2012; Director of First Banks, Inc. from May 2011 to January 2012 and from July 2001 to July 2004; General Counsel of First Banks, Inc. from June 2002 to July 2004; Prior to rejoining First Banks, Inc. as a Director, Mr. Dierberg served as an attorney for the United States Department of Justice in Washington, D.C. from July 2004 to June 2010. The Board and voting shareholders considered these qualifications, in addition to his experience with the Company and the banking industry, in making a determination that Mr. Dierberg should be a nominee for director of the Company.
John S. Poelker (1)(4)	70	2011	President of The Poelker Consultancy, Inc., a corporation that provides strategic and financial management advisory and consulting services to the banking industry and other financial services companies, since 2005; Executive Vice President and Chief Financial Officer of State Bank Financial Corporation, a bank holding company in Atlanta, Georgia, from March 2011 to October 2011; Chief Executive Officer of Beach First National Bank in Myrtle Beach, South Carolina, from February 2010 to April 2010; President and Chief Executive Officer of State Bank of Georgia in Fayetteville, Georgia, from December 2009 to February 2010; President and Chief Executive Officer of Georgian Bancorporation and Georgian Bank in Atlanta, Georgia, from July 2009 to September 2009; Executive Vice President and Chief Financial Officer of Old National Bancorp in Evansville, Indiana, from 1998 to 2005; Director of First Charter Corporation from 2006 to 2008; Director of Capmark Financial Group, Inc. since September 2011.

67

(continued)

Name	Age	Director Since	Principal Occupation(s) During Last Five Years and Directorships of Public Companies
Guy Rounsaville, Jr. (2)(4)	69	2011	Former Director of Diversity at Allen Matkins Leck Gamble Mallory & Natsis LLP, a law firm based in California, from September 2009 to June 2012; Deputy General Counsel of Bank of America from October 2007 to March 2008; General Counsel and Corporate Secretary of LaSalle Bank Corporation and ABN AMRO’s North American Region from November 2006 to October 2007; Executive Vice President and General Counsel of VISA International from 2001 to October 2006; General Counsel of Wells Fargo Bank, N.A. and Wells Fargo & Company from 1969 to 1998; Director of Medley Capital Corporation from 2010 to November 2011; Director of Tri-Valley Bank; Director of United American Bank.
David L. Steward (2)	61	2000	Chairman of the Board of Directors of World Wide Technology Holding Co., Inc., an electronic procurement and logistics company in the information technology industry, in St. Louis, Missouri, since 1990; Director of Centene Corporation. The Board and voting shareholders considered these qualifications, in addition to his significant management expertise and stature in the local community, in making a determination that Mr. Steward should be a nominee for director of the Company.
Douglas H. Yaeger (1)	64	2000	Prior to Mr. Yaeger’s retirement on February 1, 2012, Mr. Yaeger served in the following positions: Chairman of the Board of Directors, President and Chief Executive Officer of The Laclede Group, Inc., an exempt public utility holding company in St. Louis, Missouri, since its inception in October 2000; Chairman of the Board of Directors, President and Chief Executive Officer of Laclede Gas Company since 1999. The Board and voting shareholders considered these qualifications, in addition to his financial expertise, public company managerial experience and stature in the local community, in making a determination that Mr. Yaeger should be a nominee for director of the Company.

(1) Member of the Audit Committee. Mr. John S. Poelker serves as Chairman of the Audit Committee and the Audit Committee Financial Expert.

(2) Member of the Compensation Committee. Mr. James A. Cooper serves as Chairman of the Compensation Committee.

(3) Mr. Michael J. Dierberg is the son of Mr. James F. Dierberg and was appointed an executive officer of the Company effective January 25, 2013. See Item 12. Security Ownership of Certain Beneficial Owners and Management.

(4) Elected to the Board of Directors by the U.S. Treasury as the sole holder of the Company’s Class C Preferred Stock and Class D Preferred Stock.

Committees of the Board of Directors

Audit Committee. Four members of our Board of Directors currently serve on the Audit Committee, all of whom the Board of Directors determined to be independent. The Audit Committee assists the Board of Directors in fulfilling the Board’s oversight responsibilities with respect to the quality and integrity of the consolidated financial statements, financial reporting process and systems of internal controls. The Audit Committee also assists the Board of Directors in monitoring the independence and performance of the independent auditors, the internal audit department and the operation of ethics programs. The Audit Committee operates under a written charter adopted by the Board of Directors.

The members of the Audit Committee as of March 26, 2013 were Messrs. Blake, Cooper, Poelker and Yaeger. Mr. Poelker serves as Chairman of the Audit Committee and the Audit Committee Financial Expert.

Compensation Committee. In accordance with the requirements of the EESA, as amended by the ARRA, the Board of Directors maintains a Compensation Committee comprised solely of directors determined to be independent. The members of the Compensation Committee as of March 26, 2013 were Messrs. Cooper, Rounsaville and Steward. Mr. Cooper serves as Chairman of the Compensation Committee. The Compensation Committee, governed by a written charter adopted by the Board of Directors, oversees the compensation of the executive officers of the Company and reviews compensation and benefit packages and programs for the Company’s employees generally and reviews the Company’s compliance with the requirements of the EESA and regulations thereunder.

Audit Committee Report

The Audit Committee is responsible for oversight of our financial reporting process on behalf of the Board of Directors. Management has primary responsibility for our financial statements and financial reporting, including internal controls, subject to the oversight of the Audit Committee and the Board of Directors. In fulfilling its responsibilities, the Audit Committee reviewed the audited consolidated financial statements with management and discussed the acceptability of the accounting principles used, the reasonableness of significant judgments made and the clarity of the disclosures.

The Audit Committee reviewed with the Independent Registered Public Accounting Firm, who is responsible for planning and carrying out a proper audit and expressing an opinion on the conformity of our audited consolidated financial statements with U.S. generally accepted accounting principles, their judgments as to the acceptability of the accounting principles we use, and such other matters as are required to be discussed with the Audit Committee by Statement on Auditing Standards No. 114, The Auditor’s Communication With Those Charged With Governances. In addition, the Audit Committee discussed with the Independent Registered Public Accounting Firm its independence from management and the Company, including the matters required by Public Company Accounting Oversight Board, or PCAOB, Rule 3526, Communication with Audit Committees Concerning Independence, and the Audit Committee considered the compatibility of non-audit services provided by the Independent Registered Public

68

Accounting Firm with the firm’s independence. KPMG LLP has provided the Audit Committee with the written disclosures and letter required by Standard No. 1 of the Independence Standards Board.

The Audit Committee discussed with our Internal Audit Department and Independent Registered Public Accounting Firm the overall scope and plans for their respective audits. The Audit Committee met with the Internal Audit Department and Independent Registered Public Accounting Firm with and without management present to discuss the results of their examinations, their evaluations of our internal controls and the overall quality of our financial reporting.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report on Form 10-K as of and for the year ended December 31, 2012 for filing with the SEC.

Audit Committee

John S. Poelker, Chairman of the Audit Committee

Allen H. Blake

James A. Cooper

Douglas H. Yaeger

Code of Ethics for Principal Executive Officer and Financial Professionals

The Board of Directors has approved a Code of Ethics for Principal Executive Officer and Financial Professionals that covers the Chief Executive Officer, the Chief Financial Officer, the Chief Credit Officer, the Chief Investment Officer, the Controller, the Director of Taxes, and all professionals serving in a Corporate Finance, Accounting, Treasury, Tax or Investor Relations role. These individuals are also subject to the policies and procedures adopted by the Company that govern the conduct of all of its employees. The Code of Ethics for Principal Executive Officer and Financial Professionals is included as an exhibit to this Annual Report on Form 10-K. The Company intends to post on its website at www.firstbanks.com any amendment to or waiver from any provision in the Code of Ethics for Principal Executive Officers and Financial Professionals that applies to the Chief Executive Officer, Chief Financial Officer, Controller or other person performing similar functions and that relate to any element of the standards enumerated in the SEC rules.

Code of Conduct for Employees, Officers and Directors

The Board of Directors has approved a Code of Conduct applicable to all employees, officers and directors of the Company that addresses conflicts of interest, honesty and fair dealing, accounting and auditing matters, political activities and application and enforcement of the Code of Conduct. The Code of Conduct is available on the Company’s website, www.firstbanks.com, under “About us.”

69

Executive Officers

Our executive officers, each of whom was elected to the office(s) indicated by the Board of Directors, as of March 26, 2013, were as follows:

Name	Age	Current First Banks, Inc. Office(s) Held	Principal Occupation(s) During Last Five Years
James F. Dierberg	75	Chairman of the Board of Directors.	See “Item 10 – Directors, Executive Officers and Corporate Governance – Board of Directors.”
Terrance M. McCarthy	58	President, Chief Executive Officer and Director; Chairman of the Board of Directors, President and Chief Executive Officer of First Bank.	See “Item 10 – Directors, Executive Officers and Corporate Governance – Board of Directors.”
Michael J. Dierberg (1)	42	Vice Chairman of the Board of Directors.	See “Item 10 – Directors, Executive Officers and Corporate Governance – Board of Directors.”
F. Christopher McLaughlin	59	Executive Vice President; Director of Retail Banking and Director of Sales, Marketing and Products; Executive Vice President, Director of Retail Banking and Director of First Bank.	Executive Vice President, Director of Retail Banking and Director of Sales, Marketing and Products of First Banks, Inc. and First Bank since April 2007; Executive Vice President and Director of Sales, Marketing and Products of First Banks, Inc. and First Bank from September 2003 to March 2007; Director of First Bank since October 2004.
Gary S. Pratte	65	Executive Vice President and Chief Credit Officer; Executive Vice President, Chief Credit Officer and Director of First Bank.	Executive Vice President and Chief Credit Officer of First Banks, Inc. since May 2011; Executive Vice President and Chief Credit Officer of First Bank since April 2011; Director of First Bank since April 2011; Executive Vice President and Acting Chief Credit Officer of First Banks, Inc. from August 2010 to May 2011, and of First Bank from August 2010 to April 2011; Executive Vice President and Senior Regional Credit Officer of First Bank from April 2007 to August 2010; Senior Vice President and Senior Regional Credit Officer of First Bank from March 2001 to April 2007.
Lisa K. Vansickle	45	Executive Vice President and Chief Financial Officer; Executive Vice President, Chief Financial Officer, Secretary and Director of First Bank.	Executive Vice President and Chief Financial Officer of First Banks, Inc. since April 2010; Senior Vice President and Chief Financial Officer of First Banks, Inc. from April 2007 to April 2010; Senior Vice President and Controller of First Banks, Inc. from January 2001 to April 2007; Executive Vice President, Chief Financial Officer, Secretary and Director of First Bank since May 2010. Senior Vice President, Secretary and Director of First Bank from July 2001 to May 2010.

(1) Mr. Michael J. Dierberg was appointed an executive officer of the Company effective January 25, 2013. See Item 12. Security Ownership of Certain Beneficial Owners and Management.

Item 11. Executive Compensation

Compensation Discussion and Analysis. The compensation program of the Company and its affiliates (collectively referred to only in this Item 11 as the “Company”) is reflective of its ownership structure and its participation in the CPP under the EESA. As outlined in the stock ownership table included in “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” all of our voting stock is owned by various trusts, established by and administered by and for the benefit of Mr. James F. Dierberg, our Chairman of the Board, and members of his immediate family, including Mr. Michael J. Dierberg, our Vice Chairman. Therefore, we do not use equity awards in our compensation program. As a participant in the CPP, we are subject to certain corporate governance and executive compensation standards applicable to all CPP participants as required by the ARRA and rules adopted thereunder, as further described below.

Capital Purchase Program – Executive Compensation and Governance Requirements. As a result of our participation in the CPP, we became subject to certain restrictions on executive compensation set forth in Section 111 of the EESA and the Purchase Agreement entered into by the Company and the U.S. Treasury. Subsequently, the ARRA was signed into law and included a provision that amended Section 111 of the EESA and directed the U.S. Treasury to establish specified standards on executive compensation and corporate governance. The U.S. Treasury published its Interim Final Rule on TARP Standards for Compensation and Corporate Governance (sometimes referred to as the Interim Final Rule). As amended, Section 111 of the EESA and the Interim Final Rule established the following standards applicable to the Company as a result of its participation in the CPP (“CPP Rules”):

• A prohibition on paying bonuses, retention awards and incentive compensation, other than pursuant to certain preexisting employment contracts, to our named executive officers identified in the Summary Compensation Table, below (the “Senior Executive Officers” or “SEOs”), and the ten next most highly-compensated employees;

• A prohibition on the payment of “golden parachute payments” to our SEOs and the five next most highly compensated employees upon their termination of employment or a change in control of the Company;

70

• A requirement to “clawback” any bonus, retention award or incentive compensation paid to an SEO and/or any of the twenty (20) next most highly compensated employees if such bonus, retention award, or incentive compensation was based on statements of earnings, revenues, gains or other criteria later found to be materially inaccurate;

• A requirement to establish a policy on luxury or excessive expenditures;

• A prohibition on deducting more than $500,000 in annual compensation paid to each of the SEOs;

• A prohibition on tax gross-ups to the SEOs and the twenty (20) next most highly compensated employees;

• A requirement to disclose to the U.S. Treasury any perquisite with a total value for the year in excess of $25,000 paid or provided to an SEO or any of the twenty (20) next most highly compensated employees;

• A requirement to disclose to the U.S. Treasury whether the Company, Board or Compensation Committee has retained a compensation consultant and the types of services provided by the consultant and its affiliates, whether or not such services were compensation-related;

• A requirement that the Compensation Committee evaluate and review with our senior risk officers at least every six (6) months the SEO compensation plans to limit any features in such plans that would encourage SEOs to take “unnecessary and excessive risks” that could threaten the value of the Company;

• A requirement that the Compensation Committee review at least every six (6) months the Company’s employee compensation plans to identify and eliminate any provisions in such plans that encourage the manipulation of reported earnings to enhance the compensation of any employee;

• A requirement that the Compensation Committee evaluate and review with our senior risk officers at least every six (6) months the risks involved in the Company’s employee compensation plans and how to limit the risks posed to the Company by such plans;

• A requirement that the Compensation Committee provide a certification that it has conducted the foregoing reviews; and

• A requirement that the Chief Executive Officer and the Chief Financial Officer provide written certifications of compliance with all of the foregoing requirements.

The SEOs for 2012 were the named executive officers identified in the Company’s Form 10-K for the fiscal year ended December 31, 2011, and were Messrs. James F. Dierberg, Terrance M. McCarthy, F. Christopher McLaughlin, Gary S. Pratte, and Ms. Lisa K. Vansickle. The SEOs for 2013 are the named executive officers identified in the Summary Compensation Table, below. The CPP Rules apply during the period in which any of the CPP capital securities remain outstanding and held by the U.S. Treasury. The Company has entered into agreements with each of the named executive officers under which the officer acknowledges and agrees to the relevant compensation restrictions set forth under the CPP Rules.

Compensation Objective. The objective of our executive compensation policies and practices is to attract and retain talented key executives that will contribute to the achievement of strategic goals and the growth and success of the Company in order to enhance the long-term value of the Company. Compensation is based upon the achievement of corporate goals and objectives, as established by key corporate executives and reported to the Board of Directors. Rewards for performance are designed to motivate the continued strong performance of key executives on a long-term basis.

Our executive compensation program is designed to reward the achievement of financial results in accordance with our corporate goals and objectives within the limits of our ownership structure and the CPP Rules. The current elements of our executive compensation program include a base salary and a benefits program including health insurance, 401(k) plan, time away benefits and life insurance which are offered to all of our employees. Our executive compensation programs are cash-based and do not include any other forms of non-cash compensation. We do not provide the named executive officers with employment contracts or severance agreements, and consequently, we are under no obligation to make additional payments to any of the named executive officers in the event of severance, change in control, retirement or resignation.

The Compensation Committee and management intend to monitor the Company’s overall compensation program to determine what actions may be necessary to continue to fulfill its compensation objectives while complying with the CPP Rules which have effectively eliminated performance based incentives for our SEOs and the ten (10) next most highly compensated employees. Historically, the Company, as a family owned company, has compensated its executive officers conservatively while maintaining key talent without using extravagant compensation packages or perquisites to reward executive officers. The Compensation Committee intends to continue to apply these long-held philosophies in setting future compensation within the limits of the CPP Rules and any other applicable regulations.

Salary. The base salaries of the executive officers are generally established in March of each year and are dependent upon the evaluation of certain factors and, in part, on subjective considerations. The level of base salaries of executive officers is designed to reward the officer’s performance based upon an evaluation of the following factors: (i) the performance of the Company and the achievement of corporate goals and objectives, considering general business and industry conditions, among other factors, and the contributions of specific executives towards the overall performance; (ii) each executive officer’s areas of responsibility and the Company’s performance in those areas; and (iii) the level of compensation paid to comparable executives by other financial

71

institutions of comparable size in the market areas in which we operate to ensure we maintain a competitive compensation package. Our corporate goals and objectives provide particular measurements to which the Compensation Committee and executive management assign significance, such as net income, organic and external growth in target market areas, expense control, net interest margin, credit quality, and regulatory examination results. In 2012, the Compensation Committee considered these factors and suggestions of the Chairman of the Board and the Chief Executive Officer, without assigning a specific weight to any particular factor, and evaluated the appropriate base salary and related annual salary increases of the SEOs. Base salaries of executive officers are reviewed on an ongoing basis and are generally adjusted on an annual basis, and may be further adjusted periodically as a result of significant changes in responsibility, employment market conditions, and other factors.

The challenge for management and the Board of Directors is to motivate, retain and reward key personnel through the current economic environment with compensation tools limited by the CPP Rules while recognizing the Company’s performance. Mr. Dierberg receives a fee of $144,000 for serving as Chairman of the Board of Directors. The base salary of Mr. McCarthy, which was increased in 2011 by 15.0% due to the significance of his responsibilities, was increased by 5.2% in 2012. The base salaries of Ms. Vansickle, Mr. McLaughlin and Mr. Pratte were increased in 2012 by 6.3%, 3.8% and 3.6%, respectively.

Bonuses. The CPP Rules prohibit paying bonuses to the SEOs and the next ten (10) most highly compensated employees, and in compliance with this prohibition, the compensation structure for the SEOs and the next ten (10) most highly compensated employees does not contemplate payment of bonuses. The SEOs have not received a bonus since 2007, except Mr. Pratte who received awards in 2008 and 2009 under incentive plans that Mr. Pratte participated in prior to the time he became a named executive officer. Mr. Pratte’s participation in those incentive plans terminated at the time he became a named executive officer.

Deferred Compensation. We offer the opportunity to defer a portion of compensation under a Nonqualified Deferred Compensation Plan, or NQDC Plan, to the executive officers and other key employees to promote retention by providing a long-term savings opportunity on a tax-deferred basis. We elected to suspend the availability of deferrals under the NQDC Plan in 2010 and 2011 but reinstated the availability of such deferrals beginning in January 2012. Although the NQDC Plan allows the Company to credit the accounts of any participant with discretionary contributions, no such discretionary contributions have been made since the NQDC Plan’s inception. The Company has not and will not make any discretionary contributions to the accounts of the SEOs and the next ten (10) most highly compensated employees during the period the Company is subject to the CPP Rules because such contributions are considered “bonus payments” and therefore prohibited.

Executive Compensation. The following table sets forth certain information regarding compensation earned by the named executive officers for the years ended December 31, 2012, 2011 and 2010:

SUMMARY COMPENSATION TABLE

Name and Principal Position(s)	Year	Salary(1)		Bonus(1)	All Other Compensation (2)		Total(1)
James F. Dierberg	2012	$	—	—	149,800	(3)	149,800
Chairman of the Board of Directors	2011	—		—	149,800	(3)	149,800
	2010	—		—	144,000	(3)	144,000
Terrance M. McCarthy	2012	593,700		—	10,000		603,700
President and Chief Executive Officer	2011	556,200		—	9,800		566,000
	2010	500,000		—	—		500,000
Lisa K. Vansickle	2012	250,600		—	9,700		260,300
Executive Vice President and Chief Financial Officer	2011	237,500		—	9,500		247,000
	2010	230,000		—	—		230,000
F. Christopher McLaughlin	2012	267,100		—	10,000		277,100
Executive Vice President, Director of Retail Banking,	2011	257,500		—	9,800		267,300
and Director of Sales, Marketing and Products	2010	250,000		—	—		250,000
Gary S. Pratte	2012	282,100		—	9,900		292,000
Executive Vice President and Chief Credit Officer	2011	273,700		—	9,800		283,500
	2010	227,700		—	—		227,700

(1) Salary and bonus reported for Ms. Vansickle and Messrs. Dierberg, McCarthy, McLaughlin and Pratte did not include any amounts deferred in our NQDC Plan, except as further described herein. Salary and bonus reported for Mr. McCarthy for 2012 include amounts deferred in our NQDC Plan of $59,400, as further described below and in Note 21 to our consolidated financial statements. Earnings by the named executive officers on their NQDC Plan balances did not include any above-market or preferential earnings.

(2) All other compensation reported reflects 401(k) employer match contributions, as further described in Note 21 to our consolidated financial statements, with the exception of the amounts reported for Mr. Dierberg, as further described below. The Company did not offer employer matching contributions in 2010.

(3) All other compensation reported for Mr. Dierberg for 2012, 2011 and 2010 reflects director compensation of $144,000 and 401(k) employer match contributions of $5,800 for 2012 and 2011.

72

Nonqualified Deferred Compensation. Officers that meet certain position and base salary criteria and non-employee directors are eligible to participate in our NQDC Plan. Participants are allowed to defer, on an annual basis, up to 25% of their salary and up to 100% of their bonus payments, and hypothetically invest in various investment options available in the NQDC Plan that are selected by the participant and may be changed by the participant at any time. These investment options mirror the investment options that we offer through our 401(k) plan and include various investment funds such as equity funds, international stock funds, capital appreciation funds, money market funds, bond funds, mid-cap value funds and growth funds. However, as previously discussed, we suspended the availability of deferrals to the NQDC Plan in 2010 and 2011 but reinstated the availability of such deferrals beginning in January 2012.

The NQDC Plan allows for us to credit the deferred compensation accounts of any participant with discretionary contributions; however, we have not made any such discretionary contributions under the NQDC Plan since its inception. Any such contributions, if made, would vest over a five-year period. Earnings or losses on participant account balances resulting from the participant’s investment choices are credited or charged to the participant accounts on a monthly basis. We recognize these earnings or losses in our consolidated statements of operations on a monthly basis. In the event of retirement, payment of the vested portion of the participant’s deferred compensation account balance is either made through a single lump sum payment or annual payments over five or ten years, subject to election by the participant. Payment of the vested portion of the participant’s deferred compensation account balance is made through a single lump sum payment in the event the participant terminates his or her employment for reasons other than retirement.

The following table sets forth certain information regarding nonqualified deferred compensation earned by the named executive officers for the year ended December 31, 2012:

NONQUALIFIED DEFERRED COMPENSATION TABLE

Name and Principal Position(s)	Executive Contributions in Last Fiscal Year(1)		Aggregate Earnings in Last Fiscal Year(2)	Aggregate Withdrawals / Distributions in Last Fiscal Year	Aggregate Balance at December 31, 2012(3)
James F. Dierberg	$	—	69,400	—	532,700
Chairman of the Board of Directors
Terrance M. McCarthy	59,400		102,900	—	978,400
President and Chief Executive Officer
Lisa K. Vansickle	—		5,700	—	48,600
Executive Vice President and Chief Financial Officer
Gary S. Pratte	—		6,900	—	85,200
Executive Vice President and Chief Credit Officer

(1) All executive contributions represent the deferral of base salary and/or bonus payments reflected in the “Summary Compensation Table.” We did not make any discretionary contributions under the NQDC Plan as of and for the year ended December 31, 2012. In addition, Mr. McLaughlin has not elected to participate in the NQDC Plan.

(2) Earnings by the named executive officers on their NQDC Plan balances did not include any above-market or preferential earnings.

(3) Represents deferrals of cash consideration from prior years, as previously reported as compensation in the Company’s previously filed Annual Reports on Form 10-K, and the cumulative earnings on the original deferred amounts and the participant’s 2012 activity.

Potential Payments upon Termination. Upon termination of employment, the executive officers will receive payments of the vested portion of the executive’s deferred compensation account balance under our NQDC Plan as previously described above.

73

Compensation of Directors. The following table sets forth compensation earned by the named directors for the year ended December 31, 2012:

DIRECTOR COMPENSATION TABLE

Name	Total Fees Earned or Paid in Cash
James F. Dierberg (1)	$	144,000
Allen H. Blake (2)	46,000
James A. Cooper (3)	36,000
John S. Poelker (4)(7)	37,750
Guy Rounsaville, Jr. (5)(7)	33,000
David L. Steward	27,000
Douglas H. Yaeger (6)	36,250

(1) Director compensation for Mr. Dierberg is also included in the “Summary Compensation Table.”

(2) Mr. Blake received fees of $31,000 for the Company’s board and committee meetings attended and fees of $15,000 for First Bank board and committee meetings attended.

(3) Mr. Cooper serves as Chairman of the Compensation Committee.

(4) Mr. John S. Poelker was elected Chairman of the Audit Committee on January 27, 2012 and also serves as the Audit Committee Financial Expert.

(5) Mr. Guy Rounsaville, Jr. was elected to the Compensation Committee on January 27, 2012.

(6) Mr. Yaeger served as Chairman of the Audit Committee and the Audit Committee Financial Expert until January 27, 2012.

(7) Excludes reimbursement of travel expenses.

Mr. James F. Dierberg received an annual fee of $144,000, paid semi-monthly, for his service as Chairman of the Board of Directors during 2012. Messrs. Michael Dierberg and McCarthy do not receive remuneration other than salary for serving on our Board of Directors. Mr. Michael Dierberg was appointed as an executive officer of the Company, effective January 25, 2013. Directors who are neither our employees nor employees of any of our subsidiaries receive cash remuneration for their services as directors. Non-employee directors received a fee of $3,000 for each Board meeting attended, a fee of $3,750 per calendar quarter as a retainer for their service as members of the Board of Directors and a fee of $1,000 for each Audit Committee and Compensation Committee meeting attended. In addition, the Chairmen of the Audit Committee and Compensation Committee received a fee of $5,000 for their service as Chairmen. Mr. Blake, as a non-employee Director of First Bank, also received a fee of $1,000 for each monthly First Bank Board meeting attended and a fee of $500 for each monthly meeting attended of the Company’s Enterprise Risk Management Committee. The Enterprise Risk Management Committee is a committee of the Company’s management in which Mr. Blake and Mr. Michael Dierberg participate.

Prior to 2010 and beginning in January 2012, our non-employee directors were also eligible to defer payment of all or a portion of their compensation through contributions to our NQDC Plan. Earnings by the directors on their NQDC Plan balances did not include any above-market or preferential earnings. Our directors do not receive any other compensation, and there are no arrangements for amounts to be paid to directors upon resignation or any other termination of such director or a change in control of the Company. The Audit Committee, the Compensation Committee and the Compliance Committee are currently the only committees of our Board of Directors.

Compensation Committee Interlocks and Insider Participation. The Compensation Committee is comprised solely of independent directors and no members of the Compensation Committee are current or former officers or employees of the Company. See further information regarding transactions with related parties in Note 20 to our consolidated financial statements appearing on pages 128 through 129 of this report.

Compensation Committee Report.

The Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed such with management. Based on such review and discussions, the Compensation Committee recommended the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2012 for filing with the SEC.

In addition, the Compensation Committee certifies that (i) it has reviewed with the Company’s senior risk officers the SEO compensation arrangements and has made all reasonable efforts to ensure that such arrangements do not encourage SEOs to take unnecessary and excessive risks that threaten the value of the Company; (ii) it has reviewed with senior risk officers the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to the Company; and (iii) it has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of the Company.

74

Review of Risk Associated with Compensation Plans. Our senior risk officers conducted two assessments of our compensation plans in 2012 and reviewed and discussed each assessment and the compensation plans with the Compensation Committee. The senior risk officers recommended, and the Compensation Committee approved such recommendation, that the review of all compensation plans maintained by the Company focus on incentive based compensation plans. The senior risk officers, with the approval of the Compensation Committee, reviewed the Company’s non-incentive based compensation plans, such as the Company’s NQDC Plan, and broad-based welfare and benefit plans that do not discriminate in scope and terms of operation and determined that such plans do not present opportunities for employees to take excessive and unnecessary risks.

SEO Compensation Plans. The components of our executive compensation program are base salary, the NQDC Plan, and qualified benefit plans available to other employees of the Company. Based on the assessment of the compensation plans and the lack of any incentive compensation, the Compensation Committee determined that our executive compensation program does not encourage the SEOs to take unnecessary and excessive risks that threaten the value of the Company.

Employee Compensation Plans. The Company maintains and administers multiple compensation and bonus plans for employees of the Company. The bonus plans reward employees, other than the SEOs and the next ten (10) most highly compensated employees, for measurable performance throughout the Company. These bonus plans are reviewed on a regular basis and have terms and conditions that enable us to adjust potential payments based on management’s discretion and consideration of certain factors, including, but not limited to, credit quality. Although the “clawback” requirement under the CPP Rules, discussed above, affects only the SEOs and the twenty (20) next most highly compensated employees, we have ensured that all compensation plans provide the Company a clawback right in the event incentive compensation is paid based upon incorrect or fraudulent information. We also require that any new compensation plans are risk assessed and approved by our Enterprise Risk Management Committee comprised of certain directors and executive officers. In addition, to address the risk of potentially encouraging employees to focus on short-term results rather than long-term value creation, we continue to evaluate, and where practical, implement an extended payment schedule for our compensation plans.

Further, in light of the level of oversight and controls surrounding the Company’s compensation plans and incentive compensation plans, and the lack of any equity-based compensation plans, the Compensation Committee has determined that the compensation plans for all employees do not contain any features that would encourage the manipulation of reported earnings to enhance the compensation of any employee.

Compensation Committee

James A. Cooper, Chairman of the Compensation Committee

Guy Rounsaville, Jr.

David L. Steward

75

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

The following table sets forth, as of March 26, 2013, certain information with respect to the beneficial ownership of all classes of our capital stock by each person known to us to be the beneficial owner of more than five percent of the outstanding shares of the respective classes of our stock:

Title of Class and Name of Owner	Number of Shares Owned		Percent of Class	Percent of Total Voting Power
Common Stock ($250.00 par value):
James F. Dierberg II Family Trust (1)	7,714.677	(2)	32.605%	*
Ellen C. Dierberg Family Trust (1)	7,714.676	(2)	32.605	*
Michael J. Dierberg Family Trust (1)	4,255.319	(2)	17.985	*
Michael J. Dierberg Irrevocable Trust (1)	3,459.358	(2)	14.621	*
First Trust (Mary W. Dierberg and First Bank, Trustees) (1)	516.830	(3)	2.184	*
Class A Convertible Adjustable Rate Preferred Stock ($20.00 par value):
James F. Dierberg, Trustee of the James F. Dierberg Living Trust (1)	641,082	(4)(5)	100%	77.7%
Class B Non-Convertible Adjustable Rate Preferred Stock ($1.50 par value):
James F. Dierberg, Trustee of the James F. Dierberg Living Trust (1)	160,505	(5)	100%	19.4%
Class C Fixed Rate Cumulative Perpetual Preferred Stock ($1.00 par value):
United States Department of the Treasury	295,400	(6)	100%	0.0%
Class D Fixed Rate Cumulative Perpetual Preferred Stock ($1.00 par value):
United States Department of the Treasury	14,770	(6)	100%	0.0%
All executive officers and directors other than Mr. James F. Dierberg and members of his immediate family	0		0%	0.0%

* Represents less than 1.0%.

1. Each of the above-named trustees and beneficial owners are United States citizens, and the business address for each such individual is 135 North Meramec, Clayton, Missouri 63105. Mr. James F. Dierberg, our Chairman of the Board, and Mrs. Mary W. Dierberg, are husband and wife, and Messrs. James F. Dierberg II and Michael J. Dierberg, our Vice Chairman, and Ms. Ellen D. Milne, are their adult children.

2. Due to the relationship between Mr. James F. Dierberg, his wife and their children, Mr. Dierberg is deemed to share voting and investment power over these shares.

3. Due to the relationship between Mr. James F. Dierberg, his wife and First Bank, Mr. Dierberg is deemed to share voting and investment power over these shares.

4. Convertible into common stock, based on the appraised value of the common stock at the date of conversion.

5. Sole voting and investment power.

6. Shares were issued to the U.S. Treasury on December 31, 2008 pursuant to the CPP. The holders of the Class C Preferred Stock and the Class D Preferred Stock have no voting rights except in certain limited circumstances. As a result of our deferral of dividends on the preferred stock issued to the U.S. Treasury for an aggregate of six quarters, the U.S. Treasury had the right to elect two directors to our Board of Directors. As further described in “Item 10 – Directors, Executive Officers and Corporate Governance,” on July 13, 2011, the U.S. Treasury elected two members to our Board of Directors, effective immediately. The address of the U.S. Treasury is 1500 Pennsylvania Avenue, NW, Room 2312, Washington, D.C. 20220.

The following table sets forth, as of March 26, 2013, certain information with respect to the beneficial ownership of all classes of the capital securities of our subsidiary, FB Holdings, by each of our directors and named executive officers:

Title of Class and Name of Owner	Percent of Membership Interests Owned
Membership Interests
First Bank (1)	53.23%
First Capital America, Inc. (1)	46.77%

(1)       See further discussion of the membership interests of FB Holdings in Note 20 to our consolidated financial statements.

76

Item 13. Certain Relationships and Related Transactions, and Director Independence

Review and Approval of Related Person Transactions. We review all relationships and transactions in which we and our directors and executive officers and their immediate family members and entities in which such persons have a significant interest are participants to determine whether such persons have a direct or indirect material interest. Our management collects information from the executive officers and the directors regarding the related person transactions and determines whether we or a related person has a direct or indirect material interest in the transaction. If we determine that a transaction is directly or indirectly material to us or a related person, then the transaction is disclosed in accordance with applicable requirements. In addition, the Audit Committee of our Board of Directors reviews and approves or ratifies any related person transaction that is required to be so disclosed. In the event that a member of the Audit Committee is a related person to such a transaction, such member may not participate in the discussion or vote regarding approval or ratification of the transaction.

Related Person Transactions. Outside of normal customer relationships, no directors, executive officers or shareholders holding over 5% of our voting securities, and no corporations or firms with which such persons or entities are associated, currently maintain or have maintained since the beginning of the last full fiscal year, any significant business or personal relationship with our subsidiaries or us, other than that which arises by virtue of such position or ownership interest in our subsidiaries or us, except as set forth in “Item 11 – Executive Compensation – Compensation of Directors,” or as described in the following paragraphs.

First Bank has had in the past, and may have in the future, loan transactions and related banking services in the ordinary course of business with our directors and/or their affiliates. These loan transactions have been made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated persons and, except as described below, did not involve more than the normal risk of collectability or present other unfavorable features. First Bank does not extend credit to our officers or to officers of First Bank, except extensions of credit secured by mortgages on personal residences, loans to purchase automobiles and personal credit card accounts.

Loans to directors, their affiliates and executive officers of the Company at December 31, 2011 included a $15.6 million multi-family real estate loan to a limited liability company which was 50% owned by the brother-in-law of Mr. Douglas H. Yaeger, a director of the Company. The loan had been paid as agreed and was not reported as past due, nonaccrual or restructured as of December 31, 2011. However, based on then current economic and financial considerations, management had classified this loan as special mention in our loan watch list as of December 31, 2011. On September 28, 2012, the then current balance of $15.4 million was repaid in full. Loans to directors, their affiliates and executive officers of the Company at December 31, 2011 also included two credit relationships aggregating $1.2 million to companies which were approximately 16% owned by the brother-in-law of Mr. Yaeger, including a $328,000 credit relationship that was 60 - 89 days past due. Both loans had been classified by management as problem loans in our loan watch list as of December 31, 2011 and were subsequently placed on nonaccrual status during 2012. On December 14, 2012, First Bank sold these nonaccrual loans for an aggregate purchase price of $785,000 to a company partially owned by the brother-in-law of Mr. Yaeger.

Certain of our shareholders, directors and officers and their respective affiliates have deposit accounts and related banking services with First Bank. It is First Bank’s policy not to permit any of its officers or directors or their affiliates to overdraw their respective deposit accounts. Deposit account overdraft protection may be approved for persons or entities under a plan whereby a credit limit has been established in accordance with First Bank’s standard credit criteria.

Transactions with related parties, including transactions with affiliated persons and entities, are described in Note 20 to our consolidated financial statements on pages 128 through 129 of this report, which descriptions are incorporated by reference herein, and in Note 11 and Note 25 to our consolidated financial statements.

Director Independence. Our Board of Directors has determined that Messrs. Allen H. Blake, James A. Cooper, John S. Poelker, Guy Rounsaville, Jr., David L. Steward and Douglas H. Yaeger have no material relationship with us and each is independent. Our Audit Committee of the Board of Directors and our Compensation Committee are comprised solely of independent directors. In order to be considered independent, our Board of Directors must determine that a director does not have any direct or indirect material relationship with us as provided under the rules of the NYSE. In making such a determination, the Board of Directors considers all relationships between us, or any of our subsidiaries, and the director, or any of his immediate family members, or any entity with which the director or any of his immediate family members is affiliated by reason of being a partner, officer or significant shareholder thereof. In assessing the independence of our directors, the Board of Directors considered all relationships between us and our directors based primarily upon responses of the directors to questions posed through a directors’ and officers’ questionnaire. The Board of Directors considered each of the related person transactions discussed above in making its independence determination.

The Company has preferred securities of only one of its capital trusts listed on the NYSE and, pursuant to the General Application section of NYSE Rule 303A, is not subject to NYSE Rule 303A.01 requiring a majority of independent directors. Messrs. James

77

F. Dierberg, Michael J. Dierberg and Terrance M. McCarthy are not independent because they are each current executive officers of the Company.

Item 14. Principal Accounting Fees and Services

Fees of Independent Registered Public Accounting Firm

During 2012 and 2011, KPMG LLP served as our Independent Registered Public Accounting Firm and provided services to our affiliates and us. The following table sets forth fees for professional audit services rendered by KPMG LLP for the audit of our consolidated financial statements and other audit services in 2012 and 2011:

	2012		2011
Audit fees (1)	$	633,000	583,500
Audit related fees	—		—
Tax fees (2)	62,532		31,309
All other fees	—		—
Total	$	695,532	614,809

(1) For 2012 and 2011, audit fees include the audit of the consolidated financial statements of the Company, as well as services provided for reporting requirements under FDICIA and mortgage banking activities, which are included in the audit fees of the Company, as these services are closely related to the audit of the Company’s consolidated financial statements. Audit fees also include other accounting and reporting consultations. On an accrual basis, audit fees for 2012 and 2011 were $598,000 and $578,500, respectively.

(2) For 2012 and 2011, tax fees consist of tax filing, compliance and other advisory services.

Policy Regarding the Approval of Independent Auditor Provision of Audit and Non-Audit Services

Consistent with the SEC requirements regarding auditor independence, the Audit Committee recognizes the importance of maintaining the independence, in fact and appearance, of our independent auditors. As such, the Audit Committee has adopted a policy for pre-approval of all audit and permissible non-audit services provided by our independent auditors. Under the policy, the Audit Committee, or its designated member, must pre-approve services prior to commencement of the specified service. The requests for pre-approval are submitted to the Audit Committee or its designated member by the Director of Risk Management and Audit with a statement as to whether in his/her view the request is consistent with the SEC’s rules on auditor independence. The Audit Committee reviews the pre-approval requests and the fees paid for such services at their regularly scheduled quarterly meetings or at special meetings.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)	1.	Financial Statements and Supplementary Data – The financial statements and supplementary data filed as part of this Report are included in Item 8.
	2.	Financial Statement Schedules – These schedules are omitted for the reason they are not required or are not applicable.
	3.	Exhibits – The exhibits are listed in the index of exhibits required by Item 601 of Regulation S-K at Item (b) below and are incorporated herein by reference.
(b)	The index of required exhibits is included beginning on page 138 of this Report.
(c)	Not Applicable.

78

FIRST BANKS, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

First Banks, Inc.:

We have audited the accompanying consolidated balance sheets of First Banks, Inc. and subsidiaries (the Company) as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Banks, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

St. Louis, Missouri

March 26, 2013

79

FIRST BANKS, INC.

CONSOLIDATED BALANCE SHEETS

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

	December 31,
	2012			2011
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	114,841		101,822
Short-term investments	404,005			371,318
Total cash and cash equivalents	518,846			473,140
Investment securities:
Available for sale	2,043,727			2,457,887
Held to maturity (fair value of $637,024 and $13,424, respectively)	631,553			12,817
Total investment securities	2,675,280			2,470,704
Loans:
Commercial, financial and agricultural	610,301			725,195
Real estate construction and development	174,979			249,987
Real estate mortgage	2,060,131			2,255,332
Consumer and installment	19,262			23,596
Loans held for sale	66,133			31,111
Net deferred loan fees	(59		)	(942	)
Total loans	2,930,747			3,284,279
Allowance for loan losses	(91,602		)	(137,710	)
Net loans	2,839,145			3,146,569
Federal Reserve Bank and Federal Home Loan Bank stock	27,329			27,078
Bank premises and equipment, net	127,520			137,199
Goodwill and other intangible assets	125,267			125,267
Deferred income taxes	29,042			19,121
Other real estate and repossessed assets	91,995			129,896
Other assets	67,996			73,026
Assets of discontinued operations	6,706			6,913
Total assets	$	6,509,126		6,608,913
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,327,183		1,225,622
Interest-bearing demand	1,000,666			899,114
Savings and money market	1,880,271			1,964,905
Time deposits of $100 or more	460,791			546,045
Other time deposits	823,936			987,369
Total deposits	5,492,847			5,623,055
Other borrowings	26,025			51,170
Subordinated debentures	354,133			354,057
Deferred income taxes	36,182			26,261
Accrued expenses and other liabilities	144,269			115,962
Liabilities of discontinued operations	155,711			174,737
Total liabilities	6,209,167			6,345,242
STOCKHOLDERS’ EQUITY
First Banks, Inc. stockholders’ equity:
Preferred stock:
Class A convertible, adjustable rate, $20.00 par value, 750,000 shares authorized, 641,082 shares issued and outstanding	12,822			12,822
Class B adjustable rate, $1.50 par value, 200,000 shares authorized, 160,505 shares issued and outstanding	241			241
Class C fixed rate, cumulative, perpetual, $1.00 par value, 295,400 shares authorized, issued and outstanding	291,757			288,203
Class D fixed rate, cumulative, perpetual, $1.00 par value, 14,770 shares authorized, issued and outstanding	17,343			17,343
Common stock, $250.00 par value, 25,000 shares authorized, 23,661 shares issued and outstanding	5,915			5,915
Additional paid-in capital	12,480			12,480
Retained deficit	(179,513		)	(183,351	)
Accumulated other comprehensive income	45,259			16,066
Total First Banks, Inc. stockholders’ equity	206,304			169,719
Noncontrolling interest in subsidiary	93,655			93,952
Total stockholders’ equity	299,959			263,671
Total liabilities and stockholders’ equity	$	6,509,126		6,608,913

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

80

FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Years Ended December 31,
	2012			2011		2010
Interest income:
Interest and fees on loans	$	143,765		184,593		281,654
Investment securities:
Taxable	56,547			45,172		24,612
Nontaxable	287			481		595
Federal Reserve Bank and Federal Home Loan Bank stock	1,146			1,416		2,063
Short-term investments	820			1,634		3,544
Total interest income	202,565			233,296		312,468
Interest expense:
Deposits:
Interest-bearing demand	569			1,023		1,409
Savings and money market	3,535			8,577		13,959
Time deposits of $100 or more	4,153			8,068		15,257
Other time deposits	7,002			13,233		24,539
Other borrowings	(18		)	15		7,844
Subordinated debentures	14,847			13,623		13,012
Total interest expense	30,088			44,539		76,020
Net interest income	172,477			188,757		236,448
Provision for loan losses	2,000			69,000		214,000
Net interest income after provision for loan losses	170,477			119,757		22,448
Noninterest income:
Service charges on deposit accounts and customer service fees	36,197			39,101		42,370
Gain on loans sold and held for sale	12,931			5,176		9,516
Net gain on investment securities	1,306			5,335		8,315
Decrease in fair value of servicing rights	(5,475		)	(7,652	)	(5,558	)
Loan servicing fees	7,403			8,271		8,783
Other	13,844			11,963		15,066
Total noninterest income	66,206			62,194		78,492
Noninterest expense:
Salaries and employee benefits	77,788			79,518		84,101
Occupancy, net of rental income	21,911			23,887		26,675
Furniture and equipment	11,498			11,781		13,802
Postage, printing and supplies	2,721			2,777		3,379
Information technology fees	22,446			25,804		27,745
Legal, examination and professional fees	8,890			12,215		13,818
Amortization of intangible assets	—			3,024		3,292
Advertising and business development	2,125			1,868		1,479
FDIC insurance	12,436			16,103		21,664
Write-downs and expenses on other real estate and repossessed assets	18,672			22,983		44,662
Other	26,831			30,286		58,022
Total noninterest expense	205,318			230,246		298,639
Income (loss) from continuing operations, before (benefit) provision for income taxes	31,365			(48,295	)	(197,699	)
(Benefit) provision for income taxes	(139		)	(10,654	)	4,114
Net income (loss) from continuing operations, net of tax	31,504			(37,641	)	(201,813	)
(Loss) income from discontinued operations, net of tax	(5,523		)	(6,459	)	3,562
Net income (loss)	25,981			(44,100	)	(198,251	)
Less: net loss attributable to noncontrolling interest in subsidiary	(297		)	(2,950	)	(6,514	)
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)
Preferred stock dividends declared and undeclared	18,886			17,908		16,980
Accretion of discount on preferred stock	3,554			3,466		3,381
Net income (loss) available to common stockholders	$	3,838		(62,524	)	(212,098	)
Basic and diluted earnings (loss) per common share from continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Basic and diluted (loss) earnings per common share from discontinued operations	(233.42		)	(272.98	)	150.54
Basic and diluted earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661

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

81

FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars expressed in thousands)

	Years Ended December 31,
	2012			2011		2010
Net income (loss)	$	25,981		(44,100	)	(198,251	)
Other comprehensive income:
Unrealized gains on available-for-sale investment securities, net of tax	17,420			22,676		4,764
Reclassification adjustment for available-for-sale investment securities gains included in net income (loss), net of tax	(758		)	(3,461	)	(5,378	)
Amortization of net unrealized gain associated with reclassification of available-for-sale investment securities to held-to-maturity investment securities, net of tax	(913		)	—		—
Reclassification adjustment for deferred tax asset valuation allowance on investment securities	15,014			(119	)	(331	)
Change in unrealized gains on derivative instruments, net of tax	—			—		(3,734	)
Reclassification adjustment for deferred tax asset valuation allowance on derivative instruments	—			—		4,806
Amortization of net loss related to pension liability, net of tax	(911		)	(413	)	(4	)
Reclassification adjustment for deferred tax asset valuation allowance on pension liability	(659		)	(299	)	23
Other comprehensive income	29,193			18,384		146
Comprehensive income (loss)	55,174			(25,716	)	(198,105	)
Comprehensive loss attributable to noncontrolling interest in subsidiary	(297		)	(2,950	)	(6,514	)
Comprehensive income (loss) attributable to First Banks, Inc.	$	55,471		(22,766	)	(191,591	)

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

82

FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’EQUITY

THREE YEARS ENDED DECEMBER 31, 2012

(dollars expressed in thousands)

	First Banks, Inc. Stockholders’ Equity
	Preferred Stock		Common Stock	Additional Paid-In Capital	Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interest		Total Stockholders’ Equity
Balance, January 1, 2010	$	311,762	5,915	12,480	91,271		(2,464	)	103,416		522,380
Net loss	—		—	—	(191,737	)	—		(6,514	)	(198,251	)
Other comprehensive income	—		—	—	—		146		—		146
Accretion of discount on preferred stock	3,381		—	—	(3,381	)	—		—		—
Preferred stock dividends declared	—		—	—	(16,980	)	—		—		(16,980	)
Balance, December 31, 2010	315,143		5,915	12,480	(120,827	)	(2,318	)	96,902		307,295
Net loss	—		—	—	(41,150	)	—		(2,950	)	(44,100	)
Other comprehensive income	—		—	—	—		18,384		—		18,384
Accretion of discount on preferred stock	3,466		—	—	(3,466	)	—		—		—
Preferred stock dividends declared	—		—	—	(17,908	)	—		—		(17,908	)
Balance, December 31, 2011	318,609		5,915	12,480	(183,351	)	16,066		93,952		263,671
Net income	—		—	—	26,278		—		(297	)	25,981
Other comprehensive income	—		—	—	—		29,193		—		29,193
Accretion of discount on preferred stock	3,554		—	—	(3,554	)	—		—		—
Preferred stock dividends declared	—		—	—	(18,886	)	—		—		(18,886	)
Balance, December 31, 2012	$	322,163	5,915	12,480	(179,513	)	45,259		93,655		299,959

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

83

FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars expressed in thousands)

	Years Ended December 31,
	2012			2011		2010
Cash flows from operating activities:
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)
Net loss attributable to noncontrolling interest in subsidiary	(297		)	(2,950	)	(6,514	)
Less: net (loss) income from discontinued operations	(5,523		)	(6,459	)	3,562
Net income (loss) from continuing operations	31,504			(37,641	)	(201,813	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of bank premises and equipment	12,079			13,445		16,537
Amortization of intangible assets	—			3,024		3,292
Amortization and accretion of investment securities	17,412			11,934		6,267
Originations of loans held for sale	(470,119		)	(274,254	)	(396,855	)
Proceeds from sales of loans held for sale	442,476			301,343		385,109
Provision for loan losses	2,000			69,000		214,000
(Benefit) provision for current income taxes	(32		)	181		(437	)
Provision (benefit) for deferred income taxes	6,638			(23,521	)	(70,845	)
(Decrease) increase in deferred tax asset valuation allowance	(6,745		)	12,686		75,396
Decrease in accrued interest receivable	4,000			3,884		5,732
Increase in accrued interest payable	12,106			7,890		4,079
Gain on loans sold and held for sale	(12,931		)	(5,176	)	(9,516	)
Net gain on investment securities	(1,306		)	(5,335	)	(8,315	)
Decrease in fair value of servicing rights	5,475			7,652		5,558
Write-downs on other real estate and repossessed assets	14,510			16,922		34,680
Other operating activities, net	4,356			20,945		11,785
Net cash provided by operating activities – continuing operations	61,423			122,979		74,654
Net cash used in operating activities – discontinued operations	(5,241		)	(6,626	)	(5,083	)
Net cash provided by operating activities	56,182			116,353		69,571
Cash flows from investing activities:
Net cash paid for sale of assets and liabilities of discontinued operations, net of cash and cash equivalents sold	—			(51,339	)	(1,400,472	)
Cash paid for sale of branches, net of cash and cash equivalents sold	—			(16,256	)	(8,408	)
Proceeds from sales of investment securities available for sale	315,238			283,713		249,209
Maturities and calls of investment securities available for sale	684,639			341,179		189,887
Maturities and calls of investment securities held to maturity	107,061			1,660		2,418
Purchases of investment securities available for sale	(1,296,857		)	(1,587,313	)	(1,419,739	)
Purchases of investment securities held to maturity	—			(3,450	)	—
Net (purchases) redemptions of Federal Reserve Bank and Federal Home Loan Bank stock	(251		)	3,043		34,955
Proceeds from sales of commercial loans	55,081			65,867		107,414
Cash paid for purchase of one-to-four-family residential real estate loans	(141,048		)	—		—
Net decrease in loans	367,233			884,010		1,309,598
Recoveries of loans previously charged-off	29,962			22,304		52,102
Purchases of bank premises and equipment	(5,906		)	(5,170	)	(4,024	)
Net proceeds from sales of other real estate and repossessed assets	48,531			65,398		108,321
Proceeds from termination of bank-owned life insurance policy	—			—		25,957
Other investing activities, net	295			2,109		3,621
Net cash provided by (used in) investing activities – continuing operations	163,978			5,755		(749,161	)
Net cash (used in) provided by investing activities – discontinued operations	(92		)	3,030		50,052
Net cash provided by (used in) investing activities	163,886			8,785		(699,109	)

84

FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

	Years Ended December 31,
	2012			2011			2010
Cash flows from financing activities:
Increase (decrease) in demand, savings and money market deposits	118,479			(86,668		)	83,838
Decrease in time deposits	(248,687		)	(528,795		)	(189,783		)
Repayments of Federal Home Loan Bank advances	—			—			(600,000		)
(Decrease) increase in other borrowings	(25,145		)	19,416			(134,958		)
Net cash used in financing activities – continuing operations	(155,353		)	(596,047		)	(840,903		)
Net cash used in financing activities – discontinued operations	(19,009		)	(51,709		)	(50,052		)
Net cash used in financing activities	(174,362		)	(647,756		)	(890,955		)
Net increase (decrease) in cash and cash equivalents	45,706			(522,618		)	(1,520,493		)
Cash and cash equivalents, beginning of year	473,140			995,758			2,516,251
Cash and cash equivalents, end of year	$	518,846		$	473,140		$	995,758
Supplemental disclosures of cash flow information:
Cash paid for interest on liabilities	$	17,982		$	36,649		$	71,941
Cash received for income taxes	(661		)	(239		)	(1,873		)
Noncash investing and financing activities:
Reclassification of investment securities from available for sale to held to maturity	$	729,142		$	—		$	—
Loans transferred to other real estate and repossessed assets	24,223			$	69,941		$	158,889
Bank premises and equipment transferred to other real estate and repossessed assets	—			6,537			—

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

85

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASISOF PRESENTATIONAND SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The accompanying consolidated financial statements of First Banks, Inc. and subsidiaries (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and conform to predominant practices within the banking industry. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

Certain reclassifications of 2011 and 2010 amounts have been made to conform to the 2012 presentation, including the reclassification of the Company’s investment in the common securities of its various affiliated statutory and business trusts (collectively, the Trusts) that were created for the sole purpose of issuing trust preferred securities, as further described in Note 12 to the consolidated financial statements. The investment in the common securities of the Trusts was reclassified from available-for-sale investment securities to other assets and the dividend income accrued on the common securities of the Trusts was reclassified from interest income on investment securities to other income. The reclassifications were applied retrospectively to all periods presented.

Principles of Consolidation. The consolidated financial statements include the accounts of the parent company and its subsidiaries, giving effect to the noncontrolling interest in subsidiaries, as more fully described below and in Note 20 to the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated.

All financial information is reported on a continuing operations basis, unless otherwise noted. See Note 2 to the consolidated financial statements for a discussion regarding discontinued operations.

The Company operates through its wholly owned subsidiary bank holding company, The San Francisco Company (SFC), headquartered in St. Louis, Missouri, and SFC’s wholly owned subsidiary bank, First Bank, also headquartered in St. Louis, Missouri. First Bank operates through its branch banking offices and subsidiaries: First Bank Business Capital, Inc.; FB Holdings, LLC (FB Holdings); Small Business Loan Source LLC; ILSIS, Inc.; FBIN, Inc.; SBRHC, Inc.; HVIIHC, Inc.; FBSA Missouri, Inc.; FBSA California, Inc.; NT Resolution Corporation; and LC Resolution Corporation. All of the subsidiaries are wholly owned as of December 31, 2012, except FB Holdings, which is 53.23% owned by First Bank and 46.77% owned by First Capital America, Inc. (FCA), a corporation owned and operated by the Company’s Chairman of the Board and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, as further described in Note 20 to the consolidated financial statements. FB Holdings is included in the consolidated financial statements with the noncontrolling ownership interest reported as a component of stockholders’ equity in the consolidated balance sheets as “noncontrolling interest in subsidiary” and the earnings or loss, net of tax, attributable to the noncontrolling ownership interest, reported as “net loss attributable to noncontrolling interest in subsidiary” in the consolidated statements of operations.

Significant Accounting Policies:

Cash and Cash Equivalents. Cash, due from banks and short-term investments, which include federal funds sold and interest-bearing deposits, are considered to be cash and cash equivalents for purposes of the consolidated statements of cash flows. Interest-bearing deposits were $404.0 million and $371.3 million at December 31, 2012 and 2011, respectively. The Company did not have any federal funds sold outstanding at December 31, 2012 and 2011. First Bank is required to maintain certain daily reserve balances on hand in accordance with regulatory requirements. These reserve balances maintained in accordance with such requirements were $14.6 million and $13.1 million at December 31, 2012 and 2011, respectively.

Federal Reserve Bank and Federal Home Loan Bank Stock. First Bank is a member of the Federal Reserve Bank of St. Louis (FRB) system and the Federal Home Loan Bank (FHLB) system and maintains investments in FRB and FHLB stock. These investments are recorded at cost, which represents redemption value. The investment in FRB stock is maintained at a minimum of 6% of First Bank’s capital stock and capital surplus. The investment in FHLB of Des Moines stock is maintained at an amount equal to 0.12% of First Bank’s total assets as of December 31 of the preceding year, up to a maximum of $10.0 million, plus 4.45% of advances. Investments in FRB and FHLB of Des Moines stock were $19.4 million and $7.9 million, respectively, at December 31, 2012, and $18.3 million and $8.8 million, respectively, at December 31, 2011.

Investment Securities. The classification of investment securities as available for sale or held to maturity is determined at the date of purchase. Investment securities designated as available for sale, which represent any security that the Company has no immediate plan to sell but which may be sold in the future under different circumstances, are stated at fair value. Realized gains and losses are included in noninterest income, based on the amortized cost of the individual security sold. Unrealized gains and losses, net of related income tax effects, are recorded in accumulated other comprehensive income (loss). All previous fair value adjustments included in the separate component of accumulated other comprehensive income (loss) are reversed upon sale. Premiums and

86

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

discounts incurred relative to the par value of securities purchased are amortized or accreted, respectively, on the level-yield method taking into consideration the level of current and anticipated prepayments. Investment securities designated as held to maturity, which represent any security that the Company has the positive intent and ability to hold to maturity, are stated at cost, net of amortization of premiums and accretion of discounts computed on the level-yield method taking into consideration the level of current and anticipated prepayments. Any reclassification of available-for-sale investment securities to held-to-maturity investment securities are recorded at fair value, and the gross unrealized gain or loss on available-for-sale investment securities at the time of transfer is recorded as additional premium or discount on the securities and amortized over the remaining lives of the respective securities. A decline in the fair value of any available-for-sale or held-to-maturity investment security below its carrying value that is deemed to be other than temporary results in a reduction in the cost basis of the carrying value to fair value. The other-than-temporary impairment, which is not expected to be reversed, is charged to noninterest income and a new cost basis is established. When determining other-than-temporary impairment, consideration is given as to whether the Company has the ability and intent to hold the investment security until a market price recovery and whether evidence indicating the carrying value of the investment security is recoverable outweighs evidence to the contrary.

Loans Held for Portfolio. Loans held for portfolio are carried at cost, adjusted for amortization of premiums and accretion of discounts using the interest method. Interest and fees on loans are recognized as income using the interest method. Loan origination fees and costs are deferred and accreted to interest income over the estimated life of the loans using the interest method. Loans held for portfolio are stated at cost as the Company has the ability and it is management’s intention to hold them to maturity.

The accrual of interest on loans is discontinued when it appears that interest or principal may not be paid in a timely manner in the normal course of business or once principal or interest payments become 90 days past due under the contractual terms of the loan agreement. Generally, payments received on nonaccrual and impaired loans are recorded as principal reductions. Interest income is recognized after all delinquent principal has been repaid or an improvement in the condition of the loan has occurred that warrants resumption of interest accruals.

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the loan agreement. Loans on nonaccrual status and restructured loans are considered to be impaired loans. When measuring impairment, the expected future cash flows of an impaired loan are discounted at the loan’s effective interest rate. Alternatively, impairment is measured by reference to an observable market price, if one exists, or the fair value of the collateral for a collateral-dependent loan. Regardless of the historical measurement method used, the Company measures impairment based on the fair value of the collateral when foreclosure is probable.

A loan is classified as a troubled debt restructuring when all of the following conditions are present: (i) the borrower is experiencing financial difficulty, (ii) the Company makes a concession to the original contractual loan terms, and (iii) the Company would not consider the concessions but for economic or legal reasons related to the borrower’s financial difficulty. These concessions may include, but are not limited to, rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses. A loan that is modified at a market rate of interest may no longer be classified as a troubled debt restructuring in the calendar year subsequent to the restructuring if it is in compliance with the modified terms. Performance prior to the restructuring is considered when assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of the restructuring or after a shorter performance period.

Acquired impaired loans are classified as nonaccrual loans and are initially measured at fair value with no allocated allowance for loan losses. An allowance for loan losses is recorded to the extent there is further credit deterioration subsequent to the acquisition date.

Loans Held for Sale. Loans held for sale are comprised of residential mortgage loans held for sale in the secondary mortgage market, frequently in the form of a mortgage-backed security, U.S. Small Business Administration (SBA) loans awaiting sale of the guaranteed portion to the SBA, and commercial real estate loans which may be identified for sale to specific buyers to achieve credit or loan concentration objectives. One-to-four-family residential mortgage loans held for sale are carried at fair value on a recurring basis. The determination of fair value is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information. Other loans held for sale, primarily SBA loans, are carried at the lower of cost or market value, which is determined on an individual loan basis. The amount by which cost exceeds market value is recorded in a valuation allowance as a reduction of loans held for sale. Changes in the valuation allowance are reflected as part of the gain on loans sold and held for sale in the consolidated statements of operations in the periods in which the changes occur. Gains or losses on the sale of loans held for sale are determined on a specific identification basis and reflect the difference between the value received upon sale and the carrying value of the loans held for sale, including any recourse reserve established for potential repurchase obligations. Loans held for sale transferred to loans held for portfolio or available-for-sale investment securities are transferred at fair value.

87

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Loan Servicing Income. Loan servicing income is included in noninterest income and represents fees earned for servicing real estate mortgage loans owned by investors and originated by First Bank’s mortgage banking operation, as well as SBA loans to small business concerns. These fees are net of federal agency guarantee fees and interest shortfall. Such fees are generally calculated on the outstanding principal balance of the loans serviced and are recorded as income when earned.

Allowance for Loan Losses. The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company’s allowance for loan loss methodology follows the accounting guidance set forth in GAAP and the Interagency Policy Statement on the Allowance for Loan and Lease Losses, which was jointly issued by the Company’s regulatory agencies. Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, substandard loans, special mention loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified problem loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance for loan losses reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss and recovery experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate determination of the appropriate level of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. The Company monitors whether or not the allowance for loan loss allocation model, as a whole, calculates an appropriate level of allowance for loan losses that moves in direct correlation to the general macroeconomic and loan portfolio conditions the Company experiences over time.

The Company’s allowance for loan losses consists of three elements: (i) specific valuation allowances based on probable losses on impaired loans; (ii) historical valuation allowances determined based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances based on general economic conditions and other risk factors both internal and external to the Company.

The specific valuation allowances established for probable losses on impaired loans are based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flows, as well as evaluation of legal options available to the Company. The amount of impairment is measured based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the fair value of the underlying collateral less applicable selling costs, or the observable market price of the loan. If foreclosure is probable or the loan is collateral dependent, impairment is measured using the fair value of the loan’s collateral, less estimated costs to sell. Large groups of homogeneous loans, such as residential mortgage, home equity and consumer and installment loans, are aggregated and collectively evaluated for impairment.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are updated on a quarterly basis based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool.

The components of the general valuation allowances include (i) additional reserves allocated to specific loan portfolio segments as a result of applying a qualitative adjustment factor to the base historical loss allocation; (ii) additional reserves allocated to specific geographical regions where negative trends are being experienced; and (iii) additional reserves established based on consideration of trends in past due loans, potential problem loans, performing troubled debt restructurings and nonaccrual loans and other qualitative and quantitative factors both internal and external to the Company which could affect potential credit losses.

Management believes that the level of the Company’s allowance for loan losses is appropriate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions.

88

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Company to modify its allowance for loan losses based on their judgment about information available to them at the time of their examination.

Derivative Instruments and Hedging Activities. The Company utilizes derivative instruments and hedging strategies to assist in the management of interest rate sensitivity and to modify the repricing, maturity and option characteristics of certain assets and liabilities. The Company uses such derivative instruments solely to reduce its interest rate risk exposure. First Bank also offers interest rate swap agreement contracts to certain customers who wish to modify their interest rate sensitivity positions. First Bank offsets the interest rate risk of these swap agreements by simultaneously purchasing matching interest rate swap agreement contracts with offsetting pay/receive rates from other financial institutions.

Derivative instruments are recorded in the consolidated balance sheets and measured at fair value. At inception of a non-customer derivative transaction, the Company designates the derivative instrument as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedges) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedges). For all hedging relationships, the Company documents the hedging relationship and its risk-management objectives and strategy for entering into the hedging relationship including the hedging instrument, the hedged item(s), the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method the Company will utilize to measure hedge ineffectiveness. This process also includes linking all derivative instruments that are designated as fair value hedges or cash flow hedges to the underlying assets and liabilities or to specific firm commitments or forecasted transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of the hedged item(s). The Company discontinues hedge accounting prospectively when it is determined that the derivative instrument is no longer effective in offsetting changes in the fair value or cash flows of the hedged item(s), the derivative instrument expires or is sold, terminated, or exercised, the derivative instrument is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative instrument as a hedging transaction is no longer appropriate.

A summary of the Company’s accounting policies for its derivative instruments and hedging activities is as follows:

• Interest Rate Swap Agreements – Cash Flow Hedges. Interest rate swap agreements designated as cash flow hedges are accounted for at fair value. The effective portion of the change in the cash flow hedge’s gain or loss is initially reported as a component of other comprehensive income (loss) and subsequently reclassified into interest income or interest expense when the underlying transaction affects earnings. The ineffective portion of the change in the cash flow hedge’s gain or loss is recorded in noninterest income on each monthly measurement date. The net interest differential is recognized as an adjustment to interest income or interest expense of the related asset or liability being hedged. In the event of early termination or ineffectiveness, the gain or loss on the cash flow hedge would continue to be reported as a component of other comprehensive income (loss) until the underlying transaction affects earnings.

• Interest Rate Swap Agreements – Fair Value Hedges. Interest rate swap agreements designated as fair value hedges are accounted for at fair value. Changes in the fair value of the swap agreements are recognized currently in noninterest income. The change in the fair value of the underlying hedged item is recognized as an adjustment to the carrying amount of the underlying hedged item and is also reflected currently in noninterest income. All changes in fair value are measured on a monthly basis. The net interest differential is recognized as an adjustment to interest income or interest expense of the related asset or liability being hedged. In the event of early termination or ineffectiveness, the net proceeds received or paid on the interest rate swap agreements are recognized immediately in noninterest income and the future net interest differential, if any, is recognized prospectively in noninterest income. The cumulative change in the fair value of the underlying hedged item is deferred and amortized or accreted to interest income or interest expense over the weighted average life of the related asset or liability. If, however, the underlying hedged item is repaid, the cumulative change in the fair value of the underlying hedged item is recognized immediately in noninterest income.

• Customer Interest Rate Swap Agreement Contracts. Derivative instruments are offered to customers to assist in hedging their risks of adverse changes in interest rates. First Bank serves as an intermediary between its customers and the financial markets. Each contract between First Bank and its customers is offset by a contract between First Bank and various counterparties. These contracts do not qualify for hedge accounting. Customer interest rate swap agreement contracts are carried at fair value. Changes in the fair value are recognized in noninterest income on a monthly basis. Each customer contract is paired with an offsetting contract, and as such, there is no significant impact to net income (loss).

• Interest Rate Lock Commitments. Commitments to originate loans for subsequent sale in the secondary market (interest rate lock commitments), which primarily consist of commitments to originate fixed rate residential mortgage loans, are recorded at fair value. Fair values are based upon quoted market prices. The value of loan servicing rights is also incorporated

89

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

into fair value measurements for mortgage loan commitments. Changes in the fair value of interest rate lock commitments are recognized in noninterest income on a monthly basis.

• Forward Commitments to Sell Mortgage-Backed Securities. Forward commitments to sell mortgage-backed securities are recorded at fair value. Changes in the fair value of forward commitments to sell mortgage-backed securities are recognized in noninterest income on a monthly basis.

Bank Premises and Equipment, Net. Bank premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated using the straight-line method over the shorter of the useful life of the related asset or the term of the lease. Bank premises and improvements are depreciated over five to 40 years and equipment is depreciated over three to seven years.

Goodwill and Other Intangible Assets. Goodwill and other intangible assets primarily consist of goodwill and, prior to December 31, 2011, core deposit intangibles. Goodwill and intangible assets with indefinite useful lives are not amortized, but instead tested at least annually for impairment. Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. The Company amortized its core deposit intangibles on a straight-line basis over the estimated periods to be benefited, which had been estimated at five to seven years.

The Company has the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible assets are impaired as a basis for determining whether it is necessary to perform a quantitative impairment test. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible assets are impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. The Company will be able to resume performing the qualitative assessment in any subsequent period.

The goodwill impairment test is a two-step process which requires the Company to make assumptions regarding fair value. The Company’s policy allows management to make the determination of fair value using internal cash flow models or by engaging independent third parties. The first step consists of estimating the fair value of the reporting unit using a number of factors, including projected future operating results and business plans, economic projections, anticipated future cash flows, discount rates, and comparable marketplace fair value data from within a comparable industry grouping. The Company compares the estimated fair value of its reporting unit to the carrying value, which includes allocated goodwill. If the estimated fair value is less than the carrying value, the second step is completed to compute the impairment amount by determining the “implied fair value” of goodwill. This determination requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any remaining unallocated fair value represents the “implied fair value” of goodwill, which is compared to the corresponding carrying value to compute the goodwill impairment amount, if any. Adverse changes in the economic environment, operations of the reporting unit, or other factors could result in a decline in the implied fair value of goodwill which could result in future goodwill impairment. See Note 6 to the consolidated financial statements for further discussion.

Servicing Rights. The Company has mortgage servicing rights and SBA servicing rights, which are measured at fair value as permitted by ASC Topic 860 – Accounting for Servicing of Financial Assets. Changes in the fair value of mortgage and SBA servicing rights are recognized in earnings in the period in which the change occurs and such changes are reflected in other noninterest income in the consolidated statements of operations. Servicing rights are valued based on valuation models that utilize assumptions based on the predominant risk characteristics of the underlying loans, including size, interest rate, weighted average life, cost to service and estimated prepayment speeds. The valuation models estimate the present value of estimated future net servicing income.

Mortgage and SBA servicing rights are capitalized upon the sale of the underlying loan at estimated fair value. The fair value of mortgage and SBA servicing rights fluctuates based on changes in interest rates and certain other assumptions utilized to value the mortgage and SBA servicing rights. The value is adversely affected when interest rates decline which normally causes loan prepayments to increase. The determination of the fair value of the mortgage and SBA servicing rights is performed monthly based upon an independent third party valuation. The valuation analysis is prepared using stratifications of the mortgage and SBA servicing rights based on the predominant risk characteristics of the underlying loans, including size, interest rate, weighted average original term, weighted average remaining term and estimated prepayment speeds.

Other Real Estate and Repossessed Assets. Other real estate and repossessed assets, consisting of real estate and other assets acquired through foreclosure or deed in lieu of foreclosure, are stated at the lower of cost or fair value less applicable selling costs. The excess of cost over fair value of the property at the date of acquisition is charged to the allowance for loan losses. Subsequent

90

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

reductions in carrying value, to reflect current fair value or costs incurred in maintaining the other real estate and repossessed assets, are charged to noninterest expense as incurred.

Income Taxes. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in the tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are then recorded to reduce deferred tax assets to the amounts management concludes are more-likely-than-not to be realized. The Company and its eligible subsidiaries file a consolidated federal income tax return and unitary or consolidated state income tax returns in all applicable states.

The Company’s policy is to separately disclose any interest or penalties arising from the application of federal or state income taxes. Interest related to unrecognized tax benefits is included in interest expense and penalties related to unrecognized tax benefits are included in noninterest expense.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. Management of the Company believes the accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. This assessment relies on estimates and assumptions.

Noncontributory Defined Benefit Pension Plan. The Company has a noncontributory defined benefit pension plan covering certain former employees of a bank holding company acquired by the Company in 1994 (the Plan) and subsequently merged with and into the Company on December 31, 2002. The Company discontinued the accumulation of benefits under the Plan in 1994, and as such, there is no longer any service cost being accrued by Plan participants. The Company records annual amounts relating to the Plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality rates, and assumed rates of return. The Company reviews these assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when deemed appropriate. The funded status of the Plan is recognized as a net asset or liability and changes in the Plan’s funded status are recognized through other comprehensive income to the extent those changes are not included in the net periodic cost.

Financial Instruments With Off-Balance Sheet Risk. A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that conveys or imposes on an entity the contractual right or obligation to either receive or deliver cash or another financial instrument. The Company utilizes financial instruments to reduce the interest rate risk arising from its financial assets and liabilities. These instruments involve, in varying degrees, elements of interest rate risk and credit risk in excess of the amount recognized in the consolidated balance sheets. “Interest rate risk” is defined as the possibility that interest rates may move unfavorably from the perspective of the Company due to maturity and/or interest rate adjustment timing differences between interest-earning assets and interest-bearing liabilities. The risk that a counterparty to an agreement entered into by the Company may default is defined as “credit risk.”

The Company is a party to commitments to extend credit and commercial and standby letters of credit in the normal course of business to meet the financing needs of its customers. These commitments involve, in varying degrees, elements of interest rate risk and credit risk in excess of the amount reflected in the consolidated balance sheets.

Earnings (Loss) Per Common Share. Basic earnings (loss) per common share (EPS) are computed by dividing the income (loss) available to common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the year. The computation of dilutive EPS is similar except the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares had been issued. In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred dividends.

NOTE 2 - DISCONTINUED OPERATIONS

Discontinued Operations. The assets and liabilities associated with the transactions described (and defined) below were previously reported in the First Bank segment and were sold, or are expected to be sold, as part of the Company’s Capital Optimization Plan (Capital Plan). The Company applied discontinued operations accounting in accordance with ASC Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities associated with the Northern Florida Region as of December 31, 2012 and 2011, and to the operations of First Bank’s Northern Florida, Northern Illinois, Chicago and Texas Regions, in addition to the operations of WIUS and MVP, for the years ended December 31, 2012, 2011 and 2010, as applicable. The Company did not allocate any consolidated interest that is not directly attributable to or related to discontinued operations. All financial information in the consolidated financial statements and notes to the consolidated financial statements is reported on a continuing operations basis, unless otherwise noted.

91

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Northern Florida Region. On November 21, 2012, First Bank entered into a Branch Purchase and Assumption Agreement that provides for the sale of certain assets and the transfer of certain liabilities associated with eight of First Bank’s retail branches located in Pinellas County, Florida to HomeBanc National Association (HomeBanc), headquartered in Lake Mary, Florida. Under the terms of the agreement, HomeBanc is to assume approximately $133.4 million of deposits, purchase the premises and equipment and assume the leases associated with these eight retail branches. The transaction, which is subject to certain closing conditions, is expected to be completed during the second quarter of 2013. The transaction is not expected to result in a significant gain or loss.

First Bank also announced its intention to close its two retail branches in Hillsborough County and its single retail branch located in Pasco County. The closure of these three Northern Florida retail branches is also expected to be completed during the second quarter of 2013. The eight branches being sold and three branches being closed are collectively defined as the Northern Florida Region. The assets and liabilities associated with the Northern Florida Region are reflected in assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2012 and 2011.

First Bank intends to continue to hold and operate its remaining eight retail branches in Manatee County’s communities of Bradenton, Palmetto and Longboat Key, Florida. These eight branches were previously reported as discontinued operations but were reclassified to continuing operations during the fourth quarter of 2012. The related assets and liabilities associated with these eight retail branches were reclassified from assets and liabilities of discontinued operations to continuing operations in the consolidated balance sheets as of December 31, 2012 and 2011. Upon reclassification of the assets of these branches from assets of discontinued operations to continuing operations, the assets were recorded at the lower of their carrying amount and their fair value at the time of the Company’s change in its intent to continue to hold and operate the branches. As a result of the Company’s change in its intent to hold and operate these branches, the Company recorded a write-down of $2.3 million during the fourth quarter of 2012 associated with a fair value adjustment on the premises and equipment of these branches, which is included in other noninterest expense in the consolidated statements of operations.

Northern Illinois Region. During 2010, First Bank entered into three Branch Purchase and Assumption Agreements that provided for the sale of certain assets and the transfer of certain liabilities associated with 14 of First Bank’s branch banking offices in Northern Illinois, as further described below.

On December 21, 2010, First Bank entered into a Branch Purchase and Assumption Agreement with United Community Bank (United Community) that provided for the sale of certain assets and the transfer of certain liabilities associated with First Bank’s three retail branches in Pittsfield, Roodhouse and Winchester, Illinois to United Community. The transaction was completed on May 13, 2011. Under the terms of the agreement, United Community assumed $92.2 million of deposits associated with these branches for a weighted average premium of approximately 2.4%, or $2.2 million. United Community also purchased $37.5 million of loans as well as certain other assets at par value, including premises and equipment, associated with these branches.

On June 7, 2010, First Bank entered into a Branch Purchase and Assumption Agreement with Bank of Springfield that provided for the sale of certain assets and the transfer of certain liabilities of First Bank’s branch banking office located in Jacksonville, Illinois (Jacksonville Branch) to Bank of Springfield. The transaction was completed on September 24, 2010. Under the terms of the agreement, Bank of Springfield assumed $28.9 million of deposits associated with the Jacksonville Branch for a premium of approximately 4.00%, or $1.2 million. Bank of Springfield also purchased $2.2 million of loans as well as certain other assets at par value, including premises and equipment, associated with the Jacksonville Branch.

On May 7, 2010, First Bank entered into a Branch Purchase and Assumption Agreement with First Mid-Illinois Bank & Trust, N.A. (First Mid-Illinois) that provided for the sale of certain assets and the transfer of certain liabilities associated with 10 of First Bank’s retail branches in Peoria, Galesburg, Quincy, Bartonville, Knoxville and Bloomington, Illinois to First Mid-Illinois. The transaction was completed on September 10, 2010. Under the terms of the agreement, First Mid-Illinois assumed $336.0 million of deposits for a premium of 4.77%, or $15.6 million. First Mid-Illinois also purchased $135.2 million of loans as well as certain other assets at par value, including premises and equipment, associated with these branches.

The 14 branches in the transactions with United Community, Bank of Springfield and First Mid-Illinois are collectively defined as the Northern Illinois Region (Northern Illinois Region). The Bank of Springfield and First Mid-Illinois transactions, in the aggregate, resulted in a gain of $6.4 million, after the write-off of goodwill and intangible assets of $9.7 million allocated to the Northern Illinois Region, during the third quarter of 2010. The United Community transaction resulted in a gain of $425,000, after the write-off of goodwill and intangible assets of $1.6 million allocated to the Northern Illinois Region, during the second quarter of 2011.

Missouri Valley Partners, Inc. On March 5, 2010, First Bank entered into a Stock Purchase Letter Agreement that provided for the sale of First Bank’s subsidiary, Missouri Valley Partners, Inc. (MVP) to Stifel Financial Corp. The transaction was completed

92

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

on April 15, 2010. Under the terms of the agreement, First Bank sold all of the capital stock of MVP for a purchase price of $515,000. The transaction resulted in a loss of $156,000 during the second quarter of 2010.

Texas Region. On February 8, 2010, First Bank entered into a Purchase and Assumption Agreement with Prosperity Bank (Prosperity), headquartered in Houston, Texas, that provided for the sale of certain assets and the transfer of certain liabilities of First Bank’s Texas franchise (Texas Region) to Prosperity. The transaction was completed on April 30, 2010. Under the terms of the agreement, Prosperity assumed substantially all of the deposits associated with First Bank’s 19 Texas retail branches which totaled $492.2 million, for a premium of 5.50%, or $26.9 million. Prosperity also purchased $96.7 million of loans as well as certain other assets, including premises and equipment, associated with First Bank’s Texas Region. The transaction resulted in a gain of $5.0 million, after the write-off of goodwill and intangible assets of $20.0 million allocated to the Texas Region, during the second quarter of 2010.

WIUS, Inc. and WIUS of California, Inc. On December 3, 2009, First Bank and Universal Premium Acceptance Corporation, predecessor to WIUS, Inc., and its wholly owned subsidiary, WIUS of California, Inc. (collectively, WIUS), entered into a Purchase and Sale Agreement that provided for the sale of certain assets and the transfer of certain liabilities of WIUS to PFS Holding Company, Inc., Premium Financing Specialists, Inc., Premium Financing Specialists of California, Inc. and Premium Financing Specialists of the South, Inc. (collectively, PFS). Under the terms of the agreement, PFS purchased $141.3 million of loans as well as certain other assets, including premises and equipment, associated with WIUS, and assumed certain other liabilities associated with WIUS upon completion of the transaction on December 31, 2009. In conjunction with this transaction, WIUS sold $1.5 million of additional loans to PFS on February 26, 2010. On August 31, 2010, First Bank sold all of the capital stock of WIUS to an unrelated third party for a purchase price of $100,000, which resulted in a loss of $29,000 during the third quarter of 2010.

Chicago Region. On November 11, 2009, First Bank entered into a Purchase and Assumption Agreement that provided for the sale of certain assets and the transfer of certain liabilities of First Bank’s Chicago franchise (Chicago Region) to FirstMerit Bank, N.A. (FirstMerit). The transaction was completed on February 19, 2010. Under the terms of the agreement, FirstMerit assumed substantially all of the deposits associated with First Bank’s 24 Chicago retail branches which totaled $1.20 billion, for a premium of 3.50%, or $42.1 million. FirstMerit also purchased $301.2 million of loans as well as certain other assets, including premises and equipment, associated with First Bank’s Chicago Region. The transaction resulted in a gain of $8.4 million, after the write-off of goodwill and intangible assets of $26.3 million allocated to the Chicago Region, during the first quarter of 2010.

Assets and liabilities of discontinued operations at December 31, 2012 and 2011 were as follows:

	December 31, 2012		December 31, 2011
	Florida		Florida
	(dollars expressed in thousands)
Cash and due from banks	$	1,139	1,018
Total loans	—		—
Bank premises and equipment, net	4,837		5,165
Goodwill and other intangible assets	700		700
Other assets	30		30
Assets of discontinued operations	$	6,706	6,913
Deposits:
Noninterest-bearing demand	$	12,488	9,103
Interest-bearing demand	10,480		8,198
Savings and money market	67,686		86,983
Time deposits of $100 or more	27,034		24,242
Other time deposits	37,964		46,123
Total deposits	155,652		174,649
Other borrowings	—		12
Accrued expenses and other liabilities	59		76
Liabilities of discontinued operations	$	155,711	174,737

93

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Loss from discontinued operations, net of tax, for the year ended December 31, 2012 was as follows:

	Florida
	(dollars expressed in thousands)
Year ended December 31, 2012:
Interest income:
Interest and fees on loans	$	—
Interest expense:
Interest on deposits	972
Net interest loss	(972		)
Provision for loan losses	—
Net interest loss after provision for loan losses	(972		)
Noninterest income:
Service charges and customer service fees	467
Other	13
Total noninterest income	480
Noninterest expense:
Salaries and employee benefits	2,279
Occupancy, net of rental income	1,760
Furniture and equipment	278
Legal, examination and professional fees	5
FDIC insurance	358
Other	351
Total noninterest expense	5,031
Loss from operations of discontinued operations	(5,523		)
Benefit for income taxes	—
Net loss from discontinued operations, net of tax	$	(5,523	)

Loss from discontinued operations, net of tax, for the year ended December 31, 2011 was as follows:

	Florida			Northern Illinois	Total
	(dollars expressed in thousands)
Year ended December 31, 2011:
Interest income:
Interest and fees on loans	$	—		895	895
Interest expense:
Interest on deposits	2,160			261	2,421
Net interest (loss) income	(2,160		)	634	(1,526	)
Provision for loan losses	—			—	—
Net interest (loss) income after provision for loan losses	(2,160		)	634	(1,526	)
Noninterest income:
Service charges and customer service fees	411			259	670
Other	8			5	13
Total noninterest income	419			264	683
Noninterest expense:
Salaries and employee benefits	2,325			357	2,682
Occupancy, net of rental income	1,746			68	1,814
Furniture and equipment	431			29	460
Legal, examination and professional fees	1			6	7
Amortization of intangible assets	63			—	63
FDIC insurance	469			100	569
Other	379			67	446
Total noninterest expense	5,414			627	6,041
(Loss) income from operations of discontinued operations	(7,155		)	271	(6,884	)
Net gain on sale of discontinued operations	—			425	425
Benefit for income taxes	—			—	—
Net (loss) income from discontinued operations, net of tax	$	(7,155	)	696	(6,459	)

94

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income from discontinued operations, net of tax, for the year ended December 31, 2010 was as follows:

	Florida			Northern Illinois	Chicago		Texas		WIUS		MVP		Total
	(dollars expressed in thousands)
Year ended December 31, 2010:
Interest income:
Interest and fees on loans	$	—		9,629	2,391		1,816		33		—		13,869
Interest expense:
Interest on deposits	3,305			4,232	2,550		1,796		—		—		11,883
Other borrowings	—			—	—		3		(2	)	—		1
Total interest expense	3,305			4,232	2,550		1,799		(2	)	—		11,884
Net interest (loss) income	(3,305		)	5,397	(159	)	17		35		—		1,985
Provision for loan losses	—			—	—		—		—		—		—
Net interest (loss) income after provision for loan losses	(3,305		)	5,397	(159	)	17		35		—		1,985
Noninterest income:
Service charges and customer service fees	400			2,500	523		1,192		—		—		4,615
Investment management income	—			—	—		—		—		787		787
Other	5			30	254		161		—		(1	)	449
Total noninterest income	405			2,530	777		1,353		—		786		5,851
Noninterest expense:
Salaries and employee benefits	2,325			3,403	2,137		2,843		32		517		11,257
Occupancy, net of rental income	1,734			1,115	606		1,148		—		59		4,662
Furniture and equipment	652			365	178		345		—		17		1,557
Legal, examination and professional fees	—			62	123		111		153		115		564
Amortization of intangible assets	33			319	—		—		—		—		352
FDIC insurance	636			1,650	292		478		—		—		3,056
Other	345			709	424		860		184		29		2,551
Total noninterest expense	5,725			7,623	3,760		5,785		369		737		23,999
(Loss) income from operations of discontinued operations	(8,625		)	304	(3,142	)	(4,415	)	(334	)	49		(16,163	)
Net gain (loss) on sale of discontinued operations	—			6,355	8,414		4,984		(29	)	(156	)	19,568
Benefit for income taxes	—			—	—		—		(157	)	—		(157	)
Net (loss) income from discontinued operations, net of tax	$	(8,625	)	6,659	5,272		569		(206	)	(107	)	3,562

95

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 - INVESTMENTS IN DEBTAND EQUITY SECURITIES

Securities Available for Sale. The amortized cost, contractual maturity, gross unrealized gains and losses and fair value of investment securities available for sale at December 31, 2012 and 2011 were as follows:

	Maturity									Total Amortized Cost	Gross Unrealized				Weighted Average Yield
	1 Year or Less			1-5 Years		5-10 Years		After 10 Years			Gains	Losses		Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Carrying value:
U.S. Government sponsored agencies	$	10,051		80,328		—		213,892		304,271	6,304	(146	)	310,429	1.42	%
Residential mortgage-backed	364			24,014		219,286		1,251,917		1,495,581	38,983	(497	)	1,534,067	2.32
Commercial mortgage-backed	—			—		806		—		806	109	—		915	4.86
State and political subdivisions	985			3,579		201		—		4,765	164	—		4,929	4.05
Corporate notes	—			137,090		49,704		—		186,794	6,192	(621	)	192,365	3.13
Equity investments	—			—		—		1,000		1,000	22	—		1,022	2.54
Total	$	11,400		245,011		269,997		1,466,809		1,993,217	51,774	(1,264	)	2,043,727	2.26
Fair value:
Debt securities	$	11,476		251,558		275,251		1,504,420
Equity securities	—			—		—		1,022
Total	$	11,476		251,558		275,251		1,505,442
Weighted average yield	2.01		%	2.17	%	2.65	%	2.21	%
December 31, 2011:
Carrying value:
U.S. Government sponsored agencies	$	1,000		231,691		107,019		—		339,710	2,107	—		341,817	1.75	%
Residential mortgage-backed	—			2,726		64,309		1,821,209		1,888,244	36,908	(232	)	1,924,920	2.27
Commercial mortgage-backed	—			—		818		—		818	92	—		910	4.86
State and political subdivisions	310			4,088		786		—		5,184	226	—		5,410	4.00
Corporate Notes	—			122,941		65,088		5,000		193,029	—	(9,216	)	183,813	3.28
Equity investments	—			—		—		1,000		1,000	17	—		1,017	2.83
Total	$	1,310		361,446		238,020		1,827,209		2,427,985	39,350	(9,448	)	2,457,887	2.28
Fair value:
Debt securities	$	1,314		357,194		236,824		1,861,538
Equity securities	—			—		—		1,017
Total	$	1,314		357,194		236,824		1,862,555
Weighted average yield	2.93		%	2.07	%	2.56	%	2.28	%

96

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Securities Held to Maturity. The amortized cost, contractual maturity, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31, 2012 and 2011 were as follows:

	Maturity									Total Amortized Cost	Gross Unrealized				Weighted Average Yield
	1 Year or Less			1-5 Years		5-10 Years		After 10 Years			Gains	Losses		Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Carrying value:
U.S. Government sponsored agencies	$	—		—		52,582		—		52,582	269	—		52,851	1.63	%
Residential mortgage-backed	—			—		108,420		466,863		575,283	6,142	(614	)	580,811	1.82
State and political subdivisions	826			1,099		252		1,511		3,688	51	(377	)	3,362	1.89
Total	$	826		1,099		161,254		468,374		631,553	6,462	(991	)	637,024	1.80
Fair value:
Debt securities	$	836		1,129		164,433		470,626
Weighted average yield	2.56		%	3.40	%	1.77	%	1.81	%
December 31, 2011:
Carrying value:
Residential mortgage-backed	$	—		—		728		615		1,343	116	—		1,459	5.06	%
Commercial mortgage-backed	—			6,310		—		—		6,310	447	—		6,757	5.16
State and political subdivisions	1,372			2,004		254		1,534		5,164	44	—		5,208	4.20
Total	$	1,372		8,314		982		2,149		12,817	607	—		13,424	4.76
Fair value:
Debt securities	$	1,387		8,768		1,056		2,213
Weighted average yield	2.55		%	4.67	%	4.60	%	6.61	%

Proceeds from sales of available-for-sale investment securities were $315.2 million, $283.7 million and $249.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. Proceeds from calls of investment securities were $277.2 million, $56.0 million and $2.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. Gross realized gains and gross realized losses on investment securities for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Gross realized gains on sales of available-for-sale securities	$	1,675		5,286		8,350
Gross realized losses on sales of available-for-sale securities	(374		)	(1	)	(31	)
Other-than-temporary impairment	(2		)	(3	)	(4	)
Gross realized gains on calls of investment securities	7			53		—
Net realized gain on investment securities	$	1,306		5,335		8,315

Investment securities with a carrying value of approximately $257.6 million and $228.9 million at December 31, 2012 and 2011, respectively, were pledged in connection with deposits of public and trust funds, securities sold under agreements to repurchase and for other purposes as required by law.

On June 30, 2012, the Company reclassified certain of its available-for-sale investment securities to held-to-maturity investment securities at their respective fair values, which totaled $729.1 million, in aggregate. The determination of the reclassification was made by management based on the Company’s current and expected future liquidity levels and the resulting intent to hold such investment securities to maturity. The net gross unrealized gain on these available-for-sale investment securities at the time of transfer of $11.7 million, in aggregate, was recorded as additional premium on the securities and is being amortized over the remaining lives of the respective securities, as further described in Note 13 to the consolidated financial statements.

97

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2012 and 2011, were as follows:

	Less than 12 months				12 months or more			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(dollars expressed in thousands)
December 31, 2012:
Available for sale:
U.S. Government sponsored agencies	$	20,018	(146	)	—	—		20,018	(146	)
Residential mortgage-backed	125,449		(441	)	270	(56	)	125,719	(497	)
Corporate notes	—		—		17,675	(621	)	17,675	(621	)
Total	$	145,467	(587	)	17,945	(677	)	163,412	(1,264	)
Held to maturity:
Residential mortgage-backed	$	66,011	(614	)	—	—		66,011	(614	)
State and political subdivisions	1,133		(377	)	—	—		1,133	(377	)
Total	$	67,144	(991	)	—	—		67,144	(991	)
December 31, 2011:
Available for sale:
Residential mortgage-backed	$	67,395	(126	)	22,349	(106	)	89,744	(232	)
Corporate notes	173,813		(9,216	)	—	—		173,813	(9,216	)
Total	$	241,208	(9,342	)	22,349	(106	)	263,557	(9,448	)

The Company does not believe that the investment securities that were in an unrealized loss position at December 31, 2012 and 2011 are other-than-temporarily impaired. The unrealized losses on the investment securities were primarily attributable to fluctuations in interest rates. It is expected that the securities would not be settled at a price less than the amortized cost. Because the decline in fair value is attributable to changes in interest rates and not credit loss, and because the Company does not intend to sell these investments and it is more likely than not that the Company will not be required to sell these securities before the anticipated recovery of the remaining amortized cost basis or maturity, these investments are not considered other-than-temporarily impaired. The unrealized losses for residential mortgage-backed securities for 12 months or more at December 31, 2012 and 2011 included nine and 11 securities, respectively. The unrealized losses for corporate notes for 12 months or more at December 31, 2012 included six securities.

NOTE 4 - LOANSAND ALLOWANCEFOR LOAN LOSSES

The following table summarizes the composition of the loan portfolio at December 31, 2012 and 2011:

	2012			2011
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	610,301		725,195
Real estate construction and development	174,979			249,987
Real estate mortgage:
One-to-four-family residential	986,767			902,438
Multi-family residential	103,684			127,356
Commercial real estate	969,680			1,225,538
Consumer and installment	19,262			23,596
Loans held for sale	66,133			31,111
Net deferred loan fees	(59		)	(942	)
Loans, net of net deferred loan fees	$	2,930,747		3,284,279

The Company's loan portfolio is primarily comprised of residential and commercial real estate loans, and commercial, financial and agricultural loans. The Company primarily lends to borrowers within its primary market areas of California, Florida, southern Illinois and eastern Missouri. The Company maintains a diversified portfolio with limited industry concentrations of credit risk. Real estate lending constitutes the only significant concentration of credit risk. Real estate loans comprised approximately 79% and 77% of the loan portfolio at December 31, 2012 and 2011, respectively, of which 46% and 37%, respectively, were made to consumers in the form of residential real estate mortgages and home equity lines of credit. First Bank also offers residential real

98

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

estate mortgage loans with terms that require interest only payments. At December 31, 2012, the balance of such loans, all of which were held for portfolio, was approximately $25.3 million, of which approximately 5.1% were delinquent. At December 31, 2011, the balance of such loans, all of which were held for portfolio, was approximately $40.2 million, of which approximately 14.5% were delinquent. In general, the Company is a secured lender. At December 31, 2012 and 2011, 99.0% of the loan portfolio was collateralized. Collateral is required in accordance with the normal credit evaluation process based upon the creditworthiness of the customer and the credit risk associated with the particular transaction. First Bank also originates certain one-to-four-family residential mortgage loans for sale in the secondary market. First Bank has a repurchase obligation on these loans in the event of fraud or, on certain loans, early payment default. The early payment default provisions generally range from four months to one year after sale of the loan in the secondary market. First Bank has not sold any one-to-four-family residential mortgage loans into the secondary market with early payment default provisions since 2007.

Loans to directors, their affiliates and executive officers of the Company were approximately $9.1 million and $23.4 million at December 31, 2012 and 2011, respectively, as further described in Note 20 to the consolidated financial statements.

Loans with a carrying value of approximately $1.17 billion and $1.40 billion at December 31, 2012 and 2011, respectively, were pledged as collateral under borrowing arrangements with the FRB and the FHLB. At December 31, 2012 and 2011, First Bank had no outstanding advances under these borrowing arrangements.

Aging of Loans. The following table presents the aging of loans by loan classification at December 31, 2012 and 2011:

	30-59 Days		60-89 Days	Recorded Investment > 90 Days Accruing	Nonaccrual	Total Past Due	Current	Total Loans
	(dollars expressed in thousands)
December 31, 2012:
Commercial, financial and agricultural	$	1,180	322	—	19,050	20,552	589,749	610,301
Real estate construction and development	93		—	—	32,152	32,245	142,734	174,979
One-to-four-family residential:
Bank portfolio	1,871		1,121	874	6,910	10,776	111,562	122,338
Mortgage Division portfolio	6,264		4,375	—	19,780	30,419	479,552	509,971
Home equity	2,494		1,221	216	8,671	12,602	341,856	354,458
Multi-family residential	—		629	—	6,761	7,390	96,294	103,684
Commercial real estate	66		693	—	16,520	17,279	952,401	969,680
Consumer and installment	174		43	—	28	245	18,958	19,203
Loans held for sale	—		—	—	—	—	66,133	66,133
Total	$	12,142	8,404	1,090	109,872	131,508	2,799,239	2,930,747
December 31, 2011:
Commercial, financial and agricultural	$	1,602	2,085	1,095	55,340	60,122	665,073	725,195
Real estate construction and development	170		3,033	—	71,244	74,447	175,540	249,987
One-to-four-family residential:
Bank portfolio	4,506		2,577	362	14,690	22,135	143,443	165,578
Mortgage Division portfolio	5,994		1,571	—	16,778	24,343	342,572	366,915
Home equity	3,990		2,151	856	6,940	13,937	356,008	369,945
Multi-family residential	—		118	—	7,975	8,093	119,263	127,356
Commercial real estate	3,888		7,092	427	47,262	58,669	1,166,869	1,225,538
Consumer and installment	396		192	4	22	614	22,040	22,654
Loans held for sale	—		—	—	—	—	31,111	31,111
Total	$	20,546	18,819	2,744	220,251	262,360	3,021,919	3,284,279

Under the Company’s loan policy, loans are placed on nonaccrual status once principal or interest payments become 90 days past due. However, individual loan officers may submit written requests for approval to continue the accrual of interest on loans that become 90 days past due. These requests may be submitted for approval consistent with the authority levels provided in the Company’s credit approval policies, and they are only granted if an expected near term future event, such as a pending renewal or expected payoff, exists at the time the loan becomes 90 days past due. If the expected near term future event does not occur as anticipated, the loan is then placed on nonaccrual status.

Credit Quality Indicators. The Company’s credit management policies and procedures focus on identifying, measuring and controlling credit exposure. These procedures employ a lender-initiated system of rating credits, which is ratified in the loan approval process and subsequently tested in internal credit reviews, external audits and regulatory bank examinations. The system

99

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

requires the rating of all loans at the time they are originated or acquired, except for homogeneous categories of loans, such as residential real estate mortgage loans and consumer loans. These homogeneous loans are assigned an initial rating based on the Company’s experience with each type of loan. The Company adjusts the ratings of the homogeneous loans based on payment experience subsequent to their origination.

The Company includes adversely rated credits, including loans requiring close monitoring that would not normally be considered classified credits by the Company’s regulators, on its monthly loan watch list. Loans may be added to the Company’s watch list for reasons that are temporary and correctable, such as the absence of current financial statements of the borrower or a deficiency in loan documentation. Loans may also be added to the Company’s watch list whenever any adverse circumstance is detected which might affect the borrower’s ability to comply with the contractual terms of the loan. The delinquency of a scheduled loan payment, deterioration in the borrower’s financial condition identified in a review of periodic financial statements, a decrease in the value of the collateral securing the loan, or a change in the economic environment within which the borrower operates could initiate the addition of a loan to the Company’s watch list. Loans on the Company’s watch list require periodic detailed loan status reports prepared by the responsible officer which are discussed in formal meetings with credit review and credit administration staff members. Upgrades and downgrades of loan risk ratings may be initiated by the responsible loan officer. However, upgrades of risk ratings associated with significant credit relationships and/or problem credit relationships may only be made with the concurrence of appropriate regional credit officers.

Under the Company’s risk rating system, special mention loans are those loans that do not currently expose the Company to sufficient risk to warrant classification as substandard, troubled debt restructuring (TDR) or nonaccrual, but possess weaknesses that deserve management’s close attention. Substandard loans include those loans characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. A loan is classified as a TDR when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs which are accruing interest are classified as performing TDRs. Loans classified as TDRs which are not accruing interest are classified as nonperforming TDRs and are included with all other nonaccrual loans for presentation purposes. Loans classified as nonaccrual have all the weaknesses inherent in those loans classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following tables present the credit exposure of the loan portfolio by internally assigned credit grade and payment activity as of December 31, 2012 and 2011:

Commercial Loan Portfolio Credit Exposure by Internally Assigned Credit Grade	Commercial and Industrial		Real Estate Construction and Development	Multi-family	Commercial Real Estate	Total
			(dollars expressed in thousands)
December 31, 2012:
Pass	$	572,248	45,356	67,690	858,101	1,543,395
Special mention	10,580		6,076	220	70,450	87,326
Substandard	8,423		81,364	773	13,868	104,428
Performing troubled debt restructuring	—		10,031	28,240	10,741	49,012
Nonaccrual	19,050		32,152	6,761	16,520	74,483
Total	$	610,301	174,979	103,684	969,680	1,858,644
December 31, 2011:
Pass	$	606,998	57,594	68,748	973,553	1,706,893
Special mention	25,742		11,977	18,678	119,478	175,875
Substandard	32,851		97,158	28,789	60,876	219,674
Performing troubled debt restructuring	4,264		12,014	3,166	24,369	43,813
Nonaccrual	55,340		71,244	7,975	47,262	181,821
Total	$	725,195	249,987	127,356	1,225,538	2,328,076

100

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio Credit Exposure by Internally Assigned Credit Grade	Bank Portfolio		Home Equity	Total
	(dollars expressed in thousands)
December 31, 2012:
Pass	$	107,625	342,321	449,946
Special mention	4,405		216	4,621
Substandard	1,787		3,250	5,037
Performing troubled debt restructuring	1,611		—	1,611
Nonaccrual	6,910		8,671	15,581
Total	$	122,338	354,458	476,796
December 31, 2011:
Pass	$	131,973	358,801	490,774
Special mention	12,797		954	13,751
Substandard	6,118		3,250	9,368
Nonaccrual	14,690		6,940	21,630
Total	$	165,578	369,945	535,523

One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio Credit Exposure by Payment Activity	Mortgage Division Portfolio		Consumer and Installment	Total
	(dollars expressed in thousands)
December 31, 2012:
Pass	$	405,270	19,175	424,445
Substandard	6,627		—	6,627
Performing troubled debt restructuring	78,294		—	78,294
Nonaccrual	19,780		28	19,808
Total	$	509,971	19,203	529,174
December 31, 2011:
Pass	$	263,079	22,632	285,711
Substandard	4,429		—	4,429
Performing troubled debt restructuring	82,629		—	82,629
Nonaccrual	16,778		22	16,800
Total	$	366,915	22,654	389,569

Impaired Loans. Loans deemed to be impaired include performing TDRs and nonaccrual loans. Impaired loans with outstanding balances equal to or greater than $500,000 are evaluated individually for impairment. For these loans, the Company measures the level of impairment based on the present value of the estimated projected cash flows or the estimated value of the collateral. If the current valuation is lower than the current book balance of the loan, the amount of the difference is evaluated for possible charge-off. In instances where management determines that a charge-off is not appropriate, a specific reserve is established for the individual loan in question. This specific reserve is included as a part of the overall allowance for loan losses.

The following tables present the recorded investment, unpaid principal balance, related allowance for loan losses, average recorded investment and interest income recognized while on impaired status for impaired loans without a related allowance for loan losses and for impaired loans with a related allowance for loan losses by loan classification at December 31, 2012 and 2011:

101

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	Recorded Investment		Unpaid Principal Balance	Related Allowance for Loan Losses	Average Recorded Investment	Interest Income Recognized
	(dollars expressed in thousands)
December 31, 2012:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	6,451	24,287	—	12,369	215
Real estate construction and development	39,706		74,044	—	59,094	561
Real estate mortgage:
Bank portfolio	1,611		1,690	—	2,166	32
Mortgage Division portfolio	10,255		22,102	—	10,308	—
Home equity portfolio	1,382		1,507	—	1,232	—
Multi-family residential	33,709		37,206	—	13,682	280
Commercial real estate	18,808		24,279	—	35,959	1,160
Consumer and installment	—		—	—	—	—
	111,922		185,115	—	134,810	2,248
With A Related Allowance Recorded:
Commercial, financial and agricultural	12,599		19,255	676	24,157	—
Real estate construction and development	2,477		10,221	1,452	3,687	114
Real estate mortgage:
Bank portfolio	6,910		8,655	284	9,288	—
Mortgage Division portfolio	87,819		96,931	11,574	88,277	2,050
Home equity portfolio	7,289		8,188	1,784	6,500	—
Multi-family residential	1,292		1,403	1,138	524	—
Commercial real estate	8,453		12,909	1,043	16,161	11
Consumer and installment	28		28	1	51	—
	126,867		157,590	17,952	148,645	2,175
Total:
Commercial, financial and agricultural	19,050		43,542	676	36,526	215
Real estate construction and development	42,183		84,265	1,452	62,781	675
Real estate mortgage:
Bank portfolio	8,521		10,345	284	11,454	32
Mortgage Division portfolio	98,074		119,033	11,574	98,585	2,050
Home equity portfolio	8,671		9,695	1,784	7,732	—
Multi-family residential	35,001		38,609	1,138	14,206	280
Commercial real estate	27,261		37,188	1,043	52,120	1,171
Consumer and installment	28		28	1	51	—
	$	238,789	342,705	17,952	283,455	4,423

102

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	Recorded Investment		Unpaid Principal Balance	Related Allowance for Loan Losses	Average Recorded Investment	Interest Income Recognized
	(dollars expressed in thousands)
December 31, 2011:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	20,494	53,140	—	25,294	336
Real estate construction and development	62,524		113,412	—	80,230	72
Real estate mortgage:
Bank portfolio	3,274		5,030	—	3,291	—
Mortgage Division portfolio	10,250		22,541	—	11,352	—
Home equity portfolio	196		198	—	210	—
Multi-family residential	7,961		8,378	—	8,358	92
Commercial real estate	45,452		61,766	—	59,613	435
Consumer and installment	1		1	—	2	—
	150,152		264,466	—	188,350	935
With A Related Allowance Recorded:
Commercial, financial and agricultural	39,110		64,867	5,475	48,270	—
Real estate construction and development	20,734		39,832	3,432	26,605	183
Real estate mortgage:
Bank portfolio	11,416		12,926	796	11,473	—
Mortgage Division portfolio	89,157		98,118	15,324	98,739	2,306
Home equity portfolio	6,744		7,657	1,388	7,212	—
Multi-family residential	3,180		5,281	335	3,339	—
Commercial real estate	26,179		34,073	3,875	34,335	168
Consumer and installment	21		21	4	60	—
	196,541		262,775	30,629	230,033	2,657
Total:
Commercial, financial and agricultural	59,604		118,007	5,475	73,564	336
Real estate construction and development	83,258		153,244	3,432	106,835	255
Real estate mortgage:
Bank portfolio	14,690		17,956	796	14,764	—
Mortgage Division portfolio	99,407		120,659	15,324	110,091	2,306
Home equity portfolio	6,940		7,855	1,388	7,422	—
Multi-family residential	11,141		13,659	335	11,697	92
Commercial real estate	71,631		95,839	3,875	93,948	603
Consumer and installment	22		22	4	62	—
	$	346,693	527,241	30,629	418,383	3,592

Recorded investment represents the Company’s investment in its impaired loans reduced by cumulative charge-offs recorded against the allowance for loan losses on these same loans. At December 31, 2012 and 2011, the Company had recorded charge-offs of $103.9 million and $180.5 million, respectively, on its impaired loans, representing the difference between the unpaid principal balance and the recorded investment reflected in the tables above. The unpaid principal balance represents the principal amount contractually owed to the Company by the borrowers on the impaired loans.

The Company had $238.8 million and $346.7 million of impaired loans, consisting of loans on nonaccrual status and performing TDRs, at December 31, 2012 and 2011, respectively. Interest on impaired loans that would have been recorded under the original terms of the loans was $21.7 million, $34.2 million and $46.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. Of these amounts, $6.0 million, $8.0 million and $14.2 million was recorded as interest income on such loans in 2012, 2011 and 2010, respectively. The average recorded investment in impaired loans was $283.5 million, $418.4 million and $619.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. The amount of interest income recognized during the time these loans were impaired was $4.4 million, $3.6 million and $5.9 million in 2012, 2011 and 2010, respectively.

Troubled Debt Restructurings. In the ordinary course of business, the Company modifies loan terms across loan types, including both consumer and commercial loans, for a variety of reasons. Modifications to consumer loans may include, but are not limited to, changes in interest rate, maturity, amortization and financial covenants. In the original underwriting, loan terms are established that represent the then current and projected financial condition of the borrower. Over any period of time, modifications to these loan terms may be required due to changes in the original underwriting assumptions. These changes may include the financial covenants of the borrower as well as underwriting standards.

Loan modifications are generally performed at the request of the borrower, whether commercial or consumer, and may include reduction in interest rates, changes in payments and maturity date extensions. Although the Company does not have formal,

103

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

standardized loan modification programs for its commercial or consumer loan portfolios, it addresses loan modifications on a case-by-case basis and also participates in the U.S. Treasury’s Home Affordable Modification Program (HAMP). HAMP gives qualifying homeowners an opportunity to refinance into more affordable monthly payments, with the U.S. Treasury compensating the Company for a portion of the reduction in monthly amounts due from borrowers participating in this program. At December 31, 2012 and 2011, the Company had $75.7 million and $75.9 million, respectively, of modified loans in the HAMP program.

For a loan modification to be classified as a TDR, all of the following conditions must be present: (1) the borrower is experiencing financial difficulty, (2) the Company makes a concession to the original contractual loan terms and (3) the Company would not consider the concessions but for economic or legal reasons related to the borrower’s financial difficulty. Modifications of loan terms to borrowers experiencing financial difficulty are made in an attempt to protect as much of the investment in the loan as possible. These modifications are generally made to either prevent a loan from becoming nonaccrual or to return a nonaccrual loan to performing status based on the expectations that the borrower can adequately perform in accordance with the modified terms.

The determination of whether a modification should be classified as a TDR requires significant judgment after taking into consideration all facts and circumstances surrounding the transaction. No single characteristic or factor, taken alone, is determinative of whether a modification should be classified as a TDR. The fact that a single characteristic is present is not considered sufficient to overcome the preponderance of contrary evidence. Assuming all of the TDR criteria are met, the Company considers one or more of the following concessions to the loan terms to represent a TDR: (1) a reduction of the stated interest rate, (2) an extension of the maturity date or dates at a stated interest rate lower than the current market rate for a new loan with similar terms or (3) forgiveness of principal or accrued interest.

Loans renegotiated at a rate equal to or greater than that of a new loan with comparable risk at the time the contract is modified are excluded from TDR classification in the calendar years subsequent to the renegotiation if the loan is in compliance with the modified terms for at least six months.

The Company does not accrue interest on any TDRs unless it believes collection of all principal and interest under the modified terms is reasonably assured. Generally, six months of consecutive payment performance by the borrower under the restructured terms is required before a TDR is returned to accrual status. However, the period could vary depending upon the individual facts and circumstances of the loan. TDRs accruing interest are classified as performing TDRs. The following table presents the categories of performing TDRs as of December 31, 2012 and 2011:

	2012		2011
	(dollars expressed in thousands)
Performing Troubled Debt Restructurings:
Commercial, financial and agricultural	$	—	4,264
Real estate construction and development	10,031		12,014
Real estate mortgage:
One-to-four-family residential	79,905		82,629
Multi-family residential	28,240		3,166
Commercial real estate	10,741		24,369
Total	$	128,917	126,442

The Company does not accrue interest on TDRs which have been modified for a period less than six months or are not in compliance with the modified terms. These loans are considered nonperforming TDRs and are included with other nonaccrual loans for classification purposes. The following table presents the categories of loans considered nonperforming TDRs as of December 31, 2012 and 2011:

	2012		2011
	(dollars expressed in thousands)
Nonperforming Troubled Debt Restructurings:
Commercial, financial and agricultural	$	1,004	1,344
Real estate construction and development	26,557		25,603
Real estate mortgage:
One-to-four-family residential	7,105		6,205
Multi-family residential	2,482		—
Commercial real estate	2,862		7,605
Total	$	40,010	40,757

104

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Both performing and nonperforming TDRs are considered to be impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses or provided for as a specific reserve within the allowance for loan losses. The allowance for loan losses allocated to TDRs was $9.5 million and $12.8 million at December 31, 2012 and 2011, respectively.

The following tables present loans classified as TDRs that were modified during the years ended December 31, 2012 and 2011:

	2012					2011
	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(dollars expressed in thousands)
Loan Modifications as Troubled Debt Restructurings:
Commercial, financial and agricultural	2	$	1,108	$	873	3	$	1,945	$	1,945
Real estate construction and development	4	6,263		5,670		8	42,784		38,166
Real estate mortgage:
One-to-four-family residential	50	9,049		8,992		118	23,607		22,377
Multi-family residential	2	28,280		28,280		1	4,964		3,209
Commercial real estate	3	9,965		9,965		5	34,113		26,890

The following tables present TDRs that defaulted within 12 months of modification during the years ended December 31, 2012 and 2011:

	2012			2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(dollars expressed in thousands)
Troubled Debt Restructurings That Subsequently Defaulted:
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate construction and development	3	1,364		1	460
Real estate mortgage:
One-to-four-family residential	57	12,437		45	9,523
Multi-family residential	—	—		—	—
Commercial real estate	—	—		1	1,144

Upon default of a TDR, which is considered to be 90 days or more past due under the modified terms, impairment is measured based on the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses or provided for as a specific reserve within the allowance for loan losses.

Allowance for Loan Losses. Changes in the allowance for loan losses for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	137,710		201,033		266,448
Allowance for loan losses allocated to loans sold	—			—		(321	)
	137,710			201,033		266,127
Loans charged-off	(78,070		)	(154,627	)	(331,196	)
Recoveries of loans previously charged-off	29,962			22,304		52,102
Net loans charged-off	(48,108		)	(132,323	)	(279,094	)
Provision for loan losses	2,000			69,000		214,000
Balance, end of year	$	91,602		137,710		201,033

105

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table represents a summary of changes in the allowance for loan losses by portfolio segment for the years ended December 31, 2012 and 2011:

	Commercial and Industrial			Real Estate Construction and Development		One-to- Four-Family Residential		Multi- Family Residential		Commercial Real Estate		Consumer and Installment		Total
	(dollars expressed in thousands)
Year Ended December 31, 2012:
Allowance for loan losses:
Beginning balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710
Charge-offs	(17,410		)	(12,244	)	(21,814	)	(2,435	)	(23,856	)	(311	)	(78,070	)
Recoveries	12,886			5,659		5,188		44		5,982		203		29,962
Provision (benefit) for loan losses	(9,147		)	(3,849	)	4,659		1,792		8,474		71		2,000
Ending balance	$	13,572		14,434		38,897		4,252		20,048		399		91,602
Year Ended December 31, 2011:
Allowance for loan losses:
Beginning balance	$	28,000		58,439		60,762		5,158		47,880		794		201,033
Charge-offs	(46,256		)	(35,459	)	(31,355	)	(3,126	)	(37,974	)	(457	)	(154,627	)
Recoveries	6,962			6,694		3,985		562		3,787		314		22,304
Provision (benefit) for loan losses	38,537			(4,806	)	17,472		2,257		15,755		(215	)	69,000
Ending balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710

The following table represents a summary of the impairment method used by loan category at December 31, 2012 and 2011:

	Commercial and Industrial		Real Estate Construction and Development	One-to- Four-Family Residential	Multi- Family Residential	Commercial Real Estate	Consumer and Installment	Total
	(dollars expressed in thousands)
Ending Balance at December 31, 2012:
Allowance for loan losses:
Impaired loans individually evaluated for impairment	$	75	121	3,187	33	182	—	3,598
Impaired loans collectively evaluated for impairment	601		1,331	10,455	1,105	861	1	14,354
All other loans collectively evaluated for impairment	12,896		12,982	25,255	3,114	19,005	398	73,650
Total	$	13,572	14,434	38,897	4,252	20,048	399	91,602
Financing receivables:
Impaired loans individually evaluated for impairment	$	7,884	39,155	16,843	34,636	20,965	—	119,483
Impaired loans collectively evaluated for impairment	11,166		3,028	98,423	365	6,296	28	119,306
All other loans collectively evaluated for impairment	591,251		132,796	871,501	68,683	942,419	19,175	2,625,825
Total	$	610,301	174,979	986,767	103,684	969,680	19,203	2,864,614
Ending Balance at December 31, 2011:
Allowance for loan losses:
Impaired loans individually evaluated for impairment	$	4,276	1,752	3,170	110	2,430	—	11,738
Impaired loans collectively evaluated for impairment	1,199		1,680	14,338	225	1,445	4	18,891
All other loans collectively evaluated for impairment	21,768		21,436	33,356	4,516	25,573	432	107,081
Total	$	27,243	24,868	50,864	4,851	29,448	436	137,710
Financing receivables:
Impaired loans individually evaluated for impairment	$	40,527	76,475	16,836	11,141	64,190	—	209,169
Impaired loans collectively evaluated for impairment	19,077		6,783	104,201	—	7,441	22	137,524
All other loans collectively evaluated for impairment	665,591		166,729	781,401	116,215	1,153,907	22,632	2,906,475
Total	$	725,195	249,987	902,438	127,356	1,225,538	22,654	3,253,168

106

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5 – BANK PREMISES AND EQUIPMENT, NET

Bank premises and equipment, net of accumulated depreciation and amortization, were comprised of the following at December 31, 2012 and 2011:

	2012			2011
	(dollars expressed in thousands)
Land	$	33,324		34,211
Buildings and improvements	134,428			136,728
Furniture, fixtures and equipment	99,116			102,776
Leasehold improvements	12,014			12,012
Construction in progress	1,878			672
Total	280,760			286,399
Accumulated depreciation and amortization	(153,240		)	(149,200	)
Bank premises and equipment, net	$	127,520		137,199

The Company capitalized interest cost of $31,000, $23,000 and $42,000 during the years ended December 31, 2012, 2011 and 2010, respectively.

Depreciation and amortization expense for the years ended December 31, 2012, 2011 and 2010 was $12.1 million, $13.4 million and $16.5 million, respectively.

The Company leases land, office properties and equipment under operating leases. Certain of the leases contain renewal options and escalation clauses. Total rent expense was $11.5 million, $13.0 million and $14.5 million for the years ended December 31, 2012, 2011 and 2010, respectively. Future minimum lease payments under non-cancellable operating leases extend through 2027 as follows:

	(dollars expressed in thousands)
Year ending December 31(1):
2013	$	8,979
2014	7,330
2015	5,550
2016	4,766
2017	2,913
Thereafter	12,765
Total future minimum lease payments	$	42,303

(1) Amounts exclude future minimum lease payments under non-cancellable operating leases associated with assets and liabilities of discontinued operations of $1.0 million, $1.1 million, $1.0 million, $900,000 and $900,000 for the years ended December 31,2013, 2014, 2015, 2016 and 2017, respectively, and $2.9 million thereafter, or a total of $7.8 million.

The Company also leases to unrelated parties a portion of its banking facilities. Rental income associated with these leases was $4.1 million, $4.4 million and $5.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.

NOTE 6 – GOODWILLAND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets, net of amortization, were comprised of goodwill of $125.3 million at December 31, 2012 and 2011. First Bank did not record goodwill impairment for the years ended December 31, 2012, 2011 and 2010. Amortization of intangible assets was zero, $3.0 million and $3.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. Core deposit intangibles became fully amortized in 2011. Changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 were as follows:

	2012		2011
	(dollars expressed in thousands)
Balance, beginning of year	$	125,267	125,967
Goodwill allocated to discontinued operations (1)	—		(700	)
Balance, end of year	$	125,267	125,267

(1) Goodwill allocated to discontinued operations during 2011 pertains to the Florida Region, as further discussed in Note 2 to the consolidated financial statements.

107

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company allocated goodwill to the various sale transactions, as discussed in Note 2 to the consolidated financial statements, based on the relative fair values of the business and operations to be disposed of and the portion of the First Bank segment that will be retained. The Company allocated goodwill to the sale of the Florida Region of $700,000, which is included in assets of discontinued operations at December 31, 2012 and 2011.

The Company’s annual measurement date for its goodwill impairment test is December 31. The Company operates as a single reporting unit. The Company engaged an independent valuation firm to assist management in computing the fair value estimate for the impairment assessment by utilizing two separate valuation methodologies and applying a weighted average to each methodology in order to determine the fair value of the reporting unit. The two separate valuation methodologies utilized in the valuation of the Company’s implied goodwill were the “Income Approach” and the “Market Approach.”

Income Approach – The Income Approach indicates the fair market value of the common stock of a business based on the present value of the cash flows that the business can be expected to generate in the future. This approach is generally considered to be the most theoretically correct method of valuation since it explicitly considers the future benefits associated with owning the business. The Income Approach is typically applied using the Discounted Cash Flow Method. The Discounted Cash Flow Method is comprised of four steps:

1. Project future cash flows for a certain discrete projection period;

2. Discount these cash flows to present value at a rate of return that considers the relative risk of achieving the cash flows and the time value of money;

3. Estimate the residual value of cash flows subsequent to the discrete projection period; and

4. Combine the present value of the residual cash flows with the discrete projection period cash flows to indicate the fair market value of invested capital on a marketable basis.

Any interest-bearing debt (or non-operating assets) is then subtracted (or added) to arrive at the fair market value of equity of the business.

Market Approach – The Market Approach uses the price at which shares of similar companies are traded or exchanged to estimate the fair market value of the company’s equity. The advantage of the Market Approach is that it is believed to reflect the effect of most of the principal valuation factors identified in the Discounted Cash Flow Method discussed above. Market prices of publicly traded companies and actual merger and acquisition transactions are believed to incorporate the effects on value of earnings, cash generation, and stockholders’ equity while also recognizing general economic conditions, the position of the industry in the economy, and the position of the company in its industry. Within the Market Approach, two valuation methods are commonly used: the Publicly Traded Guideline Company Method and the Recent Transactions Method. The Publicly Traded Guideline Company Method consists of identifying similar public companies and developing multiples of the total capitalization of each similar public company to certain income statement and/or balance sheet items. These multiples are then weighted and applied to similar income statement and balance sheet items of the Company. The Recent Transactions Method is based on actual prices paid in mergers and acquisitions for similar public and private companies. Ratios of the total purchase price paid to certain income statement and/or balance sheet items are generally developed for each comparable transaction if the data is available. These ratios are then applied to similar income statement and balance sheet items of the Company.

For purposes of completing the Company’s annual goodwill impairment test, the specific valuation methodologies utilized were the following:

• The Income Approach utilizing the Discounted Cash Flow Method; and

• The Market Approach utilizing (i) the Publicly Traded Guideline Company Method, focusing on a comparison of publicly-traded financial institutions as guideline companies based on size, geography and performance metrics, including the average price to tangible book value of comparable businesses, and (ii) the Recent Transactions Method, focusing on recent transactions and key transaction metrics, including price to the last-twelve-months earnings multiples.

As of December 31, 2012, the Income Approach utilizing the Discounted Cash Flow Method and applying a discount rate of 15.0% to the projected cash flows was weighted at 60.0% and each of the two Market Approaches was weighted at 20.0%. The Market Approach was given a relatively lower weighting primarily as a result of the Company’s previous lack of profitability, which required price to the last-twelve-months earnings multiples to be applied to longer-term projected future earnings.

Taking into account the independent third party valuation performed as of December 31, 2012, the Company concluded that the estimated fair value of its reporting unit exceeded its carrying value by approximately $42.9 million at December 31, 2012. As such, the results of Step 1 of the two-step goodwill impairment test, as further described in Note 1 to the consolidated financial statements, did not require the Company to proceed to Step 2 of the goodwill impairment test, and accordingly, the Company did not record goodwill impairment for the year ended December 31, 2012.

108

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of December 31, 2011, the Income Approach utilizing the Discounted Cash Flow Method and applying a discount rate of 23.0% to the projected cash flows was weighted at 60.0% and each of the two Market Approaches was weighted at 20.0%. The Market Approach was given a relatively lower weighting primarily as a result of the Company’s previous lack of profitability, which required price to the last-twelve-months earnings multiples to be applied to longer-term projected future earnings.

Taking into account the independent third party valuation performed as of December 31, 2011, the Company concluded that the carrying value of its reporting unit exceeded its estimated fair value by approximately $35.5 million at December 31, 2011. Consequently, the results of Step 1 of the two-step goodwill impairment test required the Company to proceed to Step 2 of the goodwill impairment test, as further described below.

Because the carrying value of the reporting unit exceeded the estimated fair value at December 31, 2011, the Company engaged the same independent valuation firm to assist management in computing the fair value of the reporting unit’s assets and liabilities in order to determine the implied fair value of the reporting unit’s goodwill at December 31, 2011, as required by Step 2 of the two-step goodwill impairment test.

Step 2 of the goodwill impairment test compared the implied fair value of goodwill with the carrying value of goodwill. The implied fair value of goodwill is determined in the same manner as the determination of the amount of goodwill recognized in a business combination. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. The fair value allocated to all of the assets and liabilities of the reporting unit requires significant judgment, especially for those assets and liabilities that are not measured on a recurring basis such as certain types of loans. The excess of the estimated fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill.

The material assumptions utilized in the annual goodwill impairment testing for purposes of calculating the implied fair value of the reporting unit’s goodwill at December 31, 2011 were as follows:

• Determination of the estimated fair value of loans – The estimated fair value assigned to loans significantly affected the determination of the implied fair value of the reporting unit’s goodwill at December 31, 2011. The implied fair value of a reporting unit’s goodwill will generally increase if the estimated fair value of the reporting unit’s loans is less than the carrying value of the reporting unit’s loans. The estimated fair value of the reporting unit’s loans was derived from discounted cash flow analyses. Loans were grouped into loan pools based on similar characteristics such as maturity, payment type and payment frequency, and rate type and underlying index. These cash flow calculations include assumptions for prepayment estimates over the loan’s remaining life, considerations for the current interest rate environment compared to the weighted average rate of the loan portfolio, a credit risk component based on the historical and expected performance of each loan portfolio stratum and a liquidity adjustment related to the current market environment. The estimated fair value of loans held for portfolio was $303.6 million less than the carrying value at December 31, 2011. To the extent any of these assumptions change in the future, the implied fair value of the reporting unit’s goodwill could change materially. A decrease in the discount rate utilized in deriving the estimated fair value of the reporting unit’s loans would decrease the implied fair value of goodwill.

• Determination of the estimated fair value of deposits, including the core deposit intangible – The estimated fair value assigned to the core deposit intangible, or the reporting unit’s deposit base, also significantly affected the determination of the implied fair value of the reporting unit’s goodwill at December 31, 2011. The implied fair value of a reporting unit’s goodwill will generally decrease by the estimated fair value assigned to the reporting unit’s core deposit intangible. The estimated fair value of the core deposit intangible was derived from discounted cash flow analyses with considerations for estimated deposit runoff, cost of the deposit base, interest costs, net maintenance costs and the cost of alternative funds. The resulting estimate of the fair value of the core deposit intangible represents the present value of the difference in cash flows between maintaining the existing deposits and obtaining alternative funds over the life of the deposit base. There were no significant changes in the estimate of fair value of the core deposit intangible at December 31, 2011 as compared to December 31, 2010. To the extent any of these assumptions used to determine the estimated fair value of the core deposit intangible change in the future, the implied fair value of the reporting unit’s goodwill could change materially.

Management then compared the implied fair value of the reporting unit’s goodwill, taking into account the analyses of the independent valuation firm, of $231.2 million as of December 31, 2011 with its carrying value of $125.3 million as of December 31, 2011. Taking into account the results of the goodwill impairment analyses performed for the year ended December 31, 2011, the Company did not record goodwill impairment for the year ended December 31, 2011, primarily reflecting the estimated discount on loans held for portfolio (i.e. excess of carrying value over estimated fair value) exceeding the amount by which the carrying value of the reporting unit exceeded its fair value.

109

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company believes the estimates and assumptions utilized in the annual goodwill impairment tests are reasonable. However, further deterioration in the outlook for credit quality or other factors could impact the estimated fair value of the reporting unit as determined under Step 1 of the goodwill impairment test. A decrease in the estimated fair value of the reporting unit would decrease the implied fair value of goodwill as further determined under Step 2 of the goodwill impairment test.

Due to the current economic environment and the uncertainties regarding the impact on the Company, there can be no assurance that the Company’s estimates and assumptions made for the purposes of the goodwill impairment testing will prove to be accurate predictions in the future. Adverse changes in the economic environment, the Company’s operations, or other factors could result in a decline in the implied fair value of the reporting unit, which could result in the recognition of future goodwill impairment that may materially affect the carrying value of the reporting unit’s assets and its related operating results.

NOTE 7 – SERVICING RIGHTS

Mortgage Banking Activities. At December 31, 2012 and 2011, the Company serviced mortgage loans for others totaling $1.27 billion and $1.25 billion, respectively. Borrowers’ escrow balances held by the Company on such loans were $7.9 million and $8.0 million at December 31, 2012 and 2011, respectively. Changes in mortgage servicing rights for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	9,077		12,150
Originated mortgage servicing rights	4,887			3,450
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model (1)	(2,089		)	(4,280	)
Other changes in fair value (2)	(2,723		)	(2,243	)
Balance, end of year	$	9,152		9,077

(1) The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

Other Servicing Activities. At December 31, 2012 and 2011, the Company serviced SBA loans for others totaling $159.6 million and $178.5 million, respectively. Changes in SBA servicing rights for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	6,303		7,432
Originated SBA servicing rights	—			—
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model (1)	434			150
Other changes in fair value (2)	(1,097		)	(1,279	)
Balance, end of year	$	5,640		6,303

(1) The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

NOTE 8 – DERIVATIVE INSTRUMENTS

The Company utilizes derivative instruments to assist in the management of interest rate sensitivity by modifying the repricing, maturity and option characteristics of certain assets and liabilities. The following table summarizes derivative instruments held by the Company, their notional amount, estimated fair values and their location in the consolidated balance sheets at December 31, 2012 and 2011:

110

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

				Derivatives in Other Assets				Derivatives in Other Liabilities
	Notional Amount			Fair Value Gain (Loss)				Fair Value Loss
	2012		2011	2012		2011		2012		2011
	(dollars expressed in thousands)
Derivative Instruments not Designated as Hedging Instruments:
Interest rate swap agreements	$	—	50,000	—		—		—		(807	)
Customer interest rate swap agreements	12,149		47,240	87		370		(87	)	(307	)
Interest rate lock commitments	59,932		38,985	1,837		1,381		—		—
Forward commitments to sell mortgage-backed securities	107,700		58,800	(305	)	(729	)	—		—
Total	$	179,781	195,025	1,619		1,022		(87	)	(1,114	)

The notional amounts of derivative instruments do not represent amounts exchanged by the parties and, therefore, are not a measure of the Company’s credit exposure through its use of these instruments. Credit exposure on interest rate swaps, which represents the loss the Company would incur in the event the counterparties failed completely to perform according to the terms of the derivative instruments and the collateral held to support the credit exposure was of no value, is limited to the net fair value and related accrued interest receivable reduced by the amount of collateral pledged by the counterparty. The Company had not pledged any assets as collateral in connection with its interest rate swap agreements at December 31, 2012 and 2011. Collateral requirements are monitored on a daily basis and adjusted as necessary.

For the year ended December 31, 2010, the Company realized net interest income of $5.7 million on its derivative instruments. The Company also recorded net losses on derivative instruments, which are included in noninterest income in the statements of operations, of $40,000, $193,000 and $2.9 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Interest Rate Swap Agreements. The Company entered into certain interest rate swap agreements with the objective of stabilizing the long-term cost of capital and cash flow and, accordingly, net interest expense on junior subordinated debentures to the respective call dates of certain junior subordinated debentures. The terms of the swap agreements provided for the Company to pay and receive interest on a quarterly basis. The amount receivable and payable by the Company under these swap agreements was $36,000 and $72,000, respectively, at December 31, 2011.

The maturity dates, notional amounts, interest rates paid and received and fair value of the Company’s interest rate swap agreements as of December 31, 2011 were as follows:

Maturity Date	Notional Amount		Interest Rate Paid		Interest Rate Received		Fair Value
	(dollars expressed in thousands)
December 31, 2011:
March 30, 2012	$	25,000	4.71	%	2.19	%	$	(159	)
December 15, 2012	25,000		5.57		2.80		(648		)
	$	50,000	5.14		2.50		$	(807	)

Customer Interest Rate Swap Agreements. First Bank offers interest rate swap agreements to certain customers to assist in hedging their risks of adverse changes in interest rates. First Bank serves as an intermediary between its customers and the financial markets. Each interest rate swap agreement between First Bank and its customers is offset by an interest rate swap agreement between First Bank and various counterparties. These interest rate swap agreements do not qualify for hedge accounting treatment. Changes in the fair value of customer interest rate swap agreements are recognized in noninterest income on a monthly basis. Each customer contract is paired with an offsetting contract, and as such, there is no significant impact to net income (loss). The notional amount of these interest rate swap agreement contracts at December 31, 2012 and 2011 was $12.1 million and $47.2 million, respectively.

Interest Rate Lock Commitments / Forward Commitments to Sell Mortgage-Backed Securities. Derivative instruments issued by the Company consist of interest rate lock commitments to originate fixed-rate loans to be sold. Commitments to originate fixed-rate loans consist primarily of residential real estate loans. These net loan commitments and loans held for sale are hedged with forward contracts to sell mortgage-backed securities, which expire in March 2013. The fair value of the interest rate lock commitments, which is included in other assets in the consolidated balance sheets, was an unrealized gain of $1.8 million and $1.4 million at December 31, 2012 and 2011, respectively. The fair value of the forward contracts to sell mortgage-backed securities, which is included in other assets in the consolidated balance sheets, was an unrealized loss of $305,000 and $729,000 at December 31, 2012 and 2011, respectively. Changes in the fair value of interest rate lock commitments and forward commitments to sell mortgage-backed securities are recognized in noninterest income on a monthly basis.

111

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes amounts included in the consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 related to interest rate swap agreements designated as cash flow hedges:

Derivative Instruments Designated as Hedging Instruments:	2012		2011	2010
	(dollars expressed in thousands)
Interest Rate Swap Agreements - Loans:
Interest and fees on loans	$	—	—	5,745

The Company previously had interest rate swap agreements designated as cash flow hedges with a contractual maturity date of September 20, 2010. These interest rate swap agreements were terminated in December 2008, and as a result, the unrealized gain at the date of termination of $20.8 million was being amortized as an increase to interest and fees on loans in the consolidated statements of operations over the remaining terms of the respective interest rate swap agreements, which had contractual maturity dates through September 2010. The amount of the pre-tax gain amortized as an increase to interest and fees on loans was $5.7 million for the year ended December 31, 2010.

The following table summarizes amounts included in the consolidated statements of operations for the years December 31, 2012, 2011 and 2010 related to non-hedging derivative instruments:

Derivative Instruments Not Designated as Hedging Instruments:	Location of Gain (Loss) Recognized in Operations on Derivatives	Amount of Gain (Loss) Recognized in Operations on Derivatives
		2012			2011		2010
		(dollars expressed in thousands)
Interest rate swap agreements – subordinated debentures	Other noninterest income	$	(43	)	(194	)	(2,929	)
Customer interest rate swap agreements	Other noninterest income	3			1		4
Interest rate lock commitments	Gain on loans sold and held for sale	456			1,105		(93	)
Forward commitments to sell mortgage-backed securities	Gain on loans sold and held for sale	424			(2,267	)	891

NOTE 9 – MATURITIESOF TIME DEPOSITS

A summary of maturities of time deposits of $100,000 or more and other time deposits as of December 31, 2012 is as follows:

	Time Deposits of $100,000 or More		Other Time Deposits	Total
	(dollars expressed in thousands)
Year ending December 31:
2013	$	371,325	655,484	1,026,809
2014	62,251		117,272	179,523
2015	16,883		33,957	50,840
2016	4,026		5,574	9,600
2017	6,306		11,548	17,854
Thereafter	—		101	101
Total	$	460,791	823,936	1,284,727

NOTE 10 – OTHER BORROWINGS

Other borrowings were comprised solely of daily securities sold under agreement to repurchase of $26.0 million and $51.2 million at December 31, 2012 and 2011, respectively. First Bank had no outstanding FHLB advances as of and for the years ended December 31, 2012 and 2011.

The average balance of other borrowings was $33.0 million and $47.0 million, and the maximum month-end balance of other borrowings was $57.7 million and $59.6 million for the years ended December 31, 2012 and 2011, respectively.

The average rates paid on other borrowings during the years ended December 31, 2012, 2011 and 2010 were (0.05)%, 0.03% and 1.52%, respectively. The negative average rate paid on other borrowings during the year ended December 31, 2012 resulted from the reversal of accrued interest related to unrecognized tax benefits associated with FASB Interpretation No. 48, as more fully discussed in Note 17 to the consolidated financial statements. Interest expense on securities sold under agreements to repurchase was $33,000, $82,000 and $3.6 million for the years ended December 31, 2012, 2011 and 2010, respectively. Interest expense on FHLB advances was $5.4 million for the year ended December 31, 2010.

112

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11 – NOTES PAYABLE

On March 24, 2011, the Company entered into a Revolving Credit Note and a Stock Pledge Agreement (the Credit Agreement) with Investors of America Limited Partnership (Investors of America, LP), a Nevada limited partnership created by and for the benefit of the Company’s Chairman and members of his immediate family, as further described in Note 20 to the consolidated financial statements. The Credit Agreement provided for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which had an interest rate of the London Interbank Offered Rate (LIBOR) plus 300 basis points, was intended to supplement, if necessary, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses. There were no balances outstanding under this Credit Agreement during the period from its inception in March 2011 to its maturity date on December 31, 2012.

On March 20, 2013, the Company entered into a new Revolving Credit Note and a Stock Pledge Agreement (the New Credit Agreement) with Investors of America LP, as further described in Note 25 to our consolidated financial statements. The agreement provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which has a maturity date of March 31, 2014 and an interest rate of LIBOR plus 300 basis points, is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company’s existing cash resources become insufficient in the future.

NOTE 12 – SUBORDINATED DEBENTURES

As of December 31, 2012, the Company had 13 affiliated Delaware or Connecticut statutory and business trusts (collectively, the Trusts) that were created for the sole purpose of issuing trust preferred securities. The trust preferred securities were issued in private placements, with the exception of First Preferred Capital Trust IV, which was issued in a publicly underwritten offering. The Company owns all of the common securities of the Trusts. The sole assets of the statutory and business trusts are the Company's junior subordinated debentures. The gross proceeds of the offerings were used by the Trusts to purchase variable rate or fixed rate junior subordinated debentures from the Company. In connection with the issuance of the trust preferred securities, the Company made certain guarantees and commitments that, in the aggregate, constitute a full and unconditional guarantee by the Company of the obligations of the Trusts under the trust preferred securities. The following is a summary of the junior subordinated debentures issued to the Trusts in conjunction with the trust preferred securities offerings at December 31, 2012 and 2011:

Name of Trust	Issuance Date	Maturity Date	Call Date(1)	Interest Rate(2)		Trust Preferred Securities		Subordinated Debentures
						(dollars expressed in thousands)
Variable Rate
First Bank Statutory Trust II	September 2004	September 20, 2034	September 20, 2009	+205.0	bp	$	20,000	$	20,619
Royal Oaks Capital Trust I	October 2004	January 7, 2035	January 7, 2010	+240.0	bp	4,000		4,124
First Bank Statutory Trust III	November 2004	December 15, 2034	December 15, 2009	+218.0	bp	40,000		41,238
First Bank Statutory Trust IV	March 2006	March 15, 2036	March 15, 2011	+142.0	bp	40,000		41,238
First Bank Statutory Trust V	April 2006	June 15, 2036	June 15, 2011	+145.0	bp	20,000		20,619
First Bank Statutory Trust VI	June 2006	July 7, 2036	July 7, 2011	+165.0	bp	25,000		25,774
First Bank Statutory Trust VII	December 2006	December 15, 2036	December 15, 2011	+185.0	bp	50,000		51,547
First Bank Statutory Trust VIII	February 2007	March 30, 2037	March 30, 2012	+161.0	bp	25,000		25,774
First Bank Statutory Trust X	August 2007	September 15, 2037	September 15, 2012	+230.0	bp	15,000		15,464
First Bank Statutory Trust IX	September 2007	December 15, 2037	December 15, 2012	+225.0	bp	25,000		25,774
First Bank Statutory Trust XI	September 2007	December 15, 2037	December 15, 2012	+285.0	bp	10,000		10,310
Fixed Rate
First Bank Statutory Trust	March 2003	March 20, 2033	March 20, 2008	8.10%		25,000		25,774
First Preferred Capital Trust IV	April 2003	June 30, 2033	June 30, 2008	8.15%		46,000		47,423

(1) The junior subordinated debentures are callable at the option of the Company on the call date shown at 100% of the principal amount plus accrued and unpaid interest.

(2) The interest rates paid on the trust preferred securities are based on either a variable rate or a fixed rate. The variable rate is based on the three-month LIBOR plus the basis point spread shown.

The Company’s distributions accrued on the junior subordinated debentures were $14.8 million, $13.5 million and $12.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, and are included in interest expense in the consolidated statements of operations. Deferred issuance costs associated with the Company’s junior subordinated debentures are included as a reduction of junior subordinated debentures in the consolidated balance sheets and are amortized on a straight-line basis to the maturity date of the respective junior subordinated debentures. The structure of the trust preferred securities currently satisfies the

113

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

regulatory requirements for inclusion, subject to certain limitations, in the Company’s capital base, as further discussed in Note 14 to the consolidated financial statements.

In August 2009, the Company announced the deferral of its regularly scheduled interest payments on its outstanding junior subordinated debentures relating to its $345.0 million of trust preferred securities beginning with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October 2009. The terms of the junior subordinated debentures and the related trust indentures allow the Company to defer such payments of interest for up to 20 consecutive quarterly periods without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on the Company’s business, financial condition or results of operations. The Company has deferred such payments for 14 quarterly periods as of December 31, 2012. The current 20 consecutive quarterly deferral period ends with the respective payment dates of the trust preferred securities in September and October 2014. During the deferral period, the respective trusts will suspend the declaration and payment of dividends on the trust preferred securities. During the deferral period, the Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures. Accordingly, the Company also suspended the payment of cash dividends on its outstanding common stock and preferred stock beginning with the regularly scheduled quarterly dividend payments on the preferred stock that would otherwise have been made in August and September 2009, as further described in Note 13 to the consolidated financial statements. The Company has deferred $43.8 million and $31.0 million of its regularly scheduled interest payments as of December 31, 2012 and 2011, respectively. In addition, the Company has accrued additional interest expense of $3.9 million and $1.9 million as of December 31, 2012 and 2011, respectively, on the regularly scheduled deferred interest payments based on the interest rate in effect for each junior subordinated note issuance in accordance with the respective terms of the underlying agreements.

Under its agreement with the FRB, the Company agreed, among other things, to provide certain information to the FRB, including, but not limited to, prior notice regarding the issuance of additional trust preferred securities. The Company also agreed not to make any distributions of interest or other sums on its outstanding trust preferred securities without the prior approval of the FRB, as further described in Note 14 to the consolidated financial statements.

On January 26, 2011, the Company, the holder of 100% of the outstanding common stock of First Preferred Capital Trust IV (the Trust), successfully completed a consent solicitation from the holders of the 8.15% cumulative trust preferred securities of the Trust, and entered into certain amendments that were approved in the consent solicitation. The Company solicited the consents in order to increase its capital planning flexibility under the terms of the documents and the provisions of the indentures, guarantee agreements and trust agreements relating to the Company’s other tranches of trust preferred securities. The amendments provide an opportunity for the Company to seek to improve its capital position and decrease its level of indebtedness during a period in which it is deferring interest payments in accordance with the terms of the indenture.

NOTE 13 – STOCKHOLDERS’ EQUITY

Common Stock. There is no established public trading market for the Company’s common stock. Various trusts, which were established by and are administered by and for the benefit of the Company’s Chairman of the Board and members of his immediate family (including Mr. Michael Dierberg, Vice Chairman of the Company), own all of the voting stock of the Company.

Preferred Stock. The Company has four classes of preferred stock outstanding. The Class A preferred stock is convertible into shares of common stock at a rate based on the ratio of the par value of the preferred stock to the current market value of the common stock at the date of conversion, to be determined by independent appraisal at the time of conversion. Shares of Class A preferred stock may be redeemed by the Company at any time at 105.0% of par value. The Class B preferred stock may not be redeemed or converted. The holders of the Class A and Class B preferred stock have full voting rights. Dividends on the Class A and Class B preferred stock are adjustable quarterly based on the highest of the Treasury Bill Rate or the Ten Year Constant Maturity Rate for the two-week period immediately preceding the beginning of the quarter. This rate shall not be less than 6.0% nor more than 12.0% on the Class A preferred stock, or less than 7.0% nor more than 15.0% on the Class B preferred stock. Effective August 10, 2009, the Company suspended the declaration of dividends on its Class A and Class B preferred stock.

On December 31, 2008, the Company issued 295,400 shares of Class C Fixed Rate Cumulative Perpetual Preferred Stock (Class C Preferred Stock) and 14,770 shares of Class D Fixed Rate Cumulative Perpetual Preferred Stock (Class D Preferred Stock) to the United States Department of the Treasury (U.S. Treasury) in conjunction with the U.S. Treasury’s Troubled Asset Relief Program’s Capital Purchase Program (CPP). The Class C Preferred Stock has a par value of $1.00 per share and a liquidation preference of $1,000 per share. The holders of the Class C Preferred Stock have no voting rights except in certain limited circumstances. The Class C Preferred Stock carries an annual dividend rate equal to 5% for the first five years and the annual dividend rate increases to 9% per annum on and after February 15, 2014, payable quarterly in arrears beginning February 15, 2009. The Class D Preferred Stock has a par value of $1.00 per share and a liquidation preference of $1,000 per share. The holders

114

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

of the Class D Preferred Stock have no voting rights except in certain limited circumstances. The Class D Preferred Stock carries an annual dividend rate equal to 9%, payable quarterly in arrears beginning February 15, 2009. The Class C Preferred Stock and the Class D Preferred Stock qualify as Tier 1 capital. Effective February 17, 2009, the Class C Preferred Stock and the Class D Preferred Stock may be redeemed at any time without penalty and without the need to raise new capital, subject to the U.S. Treasury’s consultation with the Company’s primary regulatory agency. The Class D Preferred Stock may not be redeemed until all of the outstanding shares of the Class C Preferred Stock have been redeemed. In addition, the U.S. Treasury has certain supervisory and oversight duties and responsibilities under the CPP and, pursuant to the terms of the agreement governing the issuance of the Class C Preferred Stock and the Class D Preferred Stock to the U.S. Treasury (Purchase Agreement), the U.S. Treasury is empowered to unilaterally amend any provision of the Purchase Agreement with the Company to the extent required to comply with any changes in applicable federal statutes. As a result of the Company’s deferral of dividends to the U.S. Treasury for an aggregate of six quarters, the U.S. Treasury had the right to elect two directors to the Company’s Board. On July 13, 2011, the U.S. Treasury elected two members to the Company’s Board of Directors.

The Company allocated the total proceeds received under the CPP of $295.4 million to the Class C Preferred Stock and the Class D Preferred Stock based on the relative fair values of the respective classes of preferred stock at the time of issuance. The discount on the Class C Preferred Stock of $17.3 million is being accreted to retained earnings on a level-yield basis over five years. Accretion of the discount on the Class C Preferred Stock was $3.6 million, $3.5 million and $3.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

The redemption of any issue of preferred stock requires the prior approval of the Federal Reserve. Furthermore, the Purchase Agreement that the Company entered into with the U.S. Treasury contains limitations on certain actions of the Company, including, but not limited to, payment of dividends and redemptions and acquisitions of the Company’s equity securities. In addition, the Company, under its agreement with the FRB, has agreed, among other things, to provide certain information to the FRB including, but not limited to, notice of plans to materially change its fundamental business and notice to raise additional equity capital. Furthermore, the Company agreed not to pay any dividends on its common or preferred stock without the prior approval of the FRB, as further described in Note 14 to the consolidated financial statements.

In conjunction with the deferral of its regularly scheduled interest payments on its outstanding junior subordinated debentures on August 10, 2009, as further described in Note 12 to the consolidated financial statements, the Company also began suspending the payment of cash dividends on its outstanding preferred stock beginning with the regularly scheduled quarterly dividend payments on the preferred stock that would otherwise have been made in August and September 2009. The Company has deferred such payments for 14 quarterly periods as of December 31, 2012. Consequently, the Company has suspended the declaration of dividends on its Class A and Class B preferred stock, but continues to declare and accumulate dividends on its Class C Preferred Stock and its Class D Preferred Stock. The Company has declared and deferred $56.3 million and $40.2 million of its regularly scheduled dividend payments on its Class C Preferred Stock and Class D Preferred Stock at December 31, 2012 and 2011, respectively, and has declared and accrued an additional $5.6 million and $2.8 million of cumulative dividends on such deferred dividend payments at December 31, 2012 and 2011, respectively.

On June 30, 2012, the Company reclassified certain of its available-for-sale investment securities to held-to-maturity investment securities at their respective fair values, which totaled $729.1 million, in aggregate, as further described in Note 3 to the consolidated financial statements. The gross unrealized gain on these available-for-sale investment securities at the time of transfer was $11.7 million. The unrealized gain included as a component of accumulated other comprehensive income was $6.8 million at June 30, 2012, net of tax of $4.9 million. The fair value adjustment at the time of transfer of $11.7 million was recorded as additional premium on the investment securities, and is being amortized as an adjustment to interest income on investment securities over the remaining lives of the respective securities. The amortization of the unrealized gain reported in stockholders’ equity is also being amortized as an adjustment to interest income on investment securities over the remaining lives of the respective securities. Consequently, the combined amortization of the additional premium and the unrealized gain have no net impact on interest income on investment securities.

Other comprehensive income of $29.2 million, $18.4 million and $146,000, as presented in the consolidated statements of changes in stockholders’ equity, is reflected net of income tax expense (benefit) of $8.0 million, $10.1 million and $(2.3) million for the years ended December 31, 2012, 2011 and 2010, respectively.

NOTE 14 – REGULATORY CAPITAL AND OTHER REGULATORY MATTERS

Regulatory Capital. The Company and First Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the operations and financial condition of the Company and First Bank. Under these capital requirements, the Company and First Bank must meet specific capital guidelines

115

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and First Bank to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets.

The Company did not meet the minimum regulatory capital standards established for bank holding companies by the Federal Reserve at December 31, 2012 and 2011. The Company must maintain minimum total regulatory, Tier 1 regulatory and Tier 1 leverage ratios as set forth in the table below in order to meet the minimum capital adequacy standards.

First Bank was categorized as well capitalized at December 31, 2012 and 2011 under the prompt corrective action provisions of the regulatory capital standards. First Bank must maintain minimum total regulatory, Tier 1 regulatory and Tier 1 leverage ratios as set forth in the table below in order to be categorized as well capitalized. In addition, First Bank is currently required to maintain its Tier 1 capital to total assets ratio at no less than 7.00% in accordance with the provisions of its informal agreement entered into with the State of Missouri Division of Finance (MDOF), as further described below. First Bank’s Tier 1 capital to total assets ratio of 9.20% and 8.37% at December 31, 2012 and 2011, respectively, exceeded the 7.00% minimum level required under the terms of the informal agreement with the MDOF.

At December 31, 2012 and 2011, the Company and First Bank’s required and actual capital ratios were as follows:

	Actual								For Capital Adequacy Purposes	To be Well Capitalized Under Prompt Corrective Action Provisions
	2012				2011
	Amount		Ratio		Amount		Ratio
	(dollars expressed in thousands)
Total capital (to risk-weighted assets):
First Banks, Inc.	$	93,542	2.57	%	$	73,830	1.88	%	8.0%	N/A
First Bank	626,177		17.18		588,860		14.98		8.0	10.0%
Tier 1 capital (to risk-weighted assets):
First Banks, Inc.	46,771		1.28		36,915		0.94		4.0	N/A
First Bank	580,026		15.92		538,592		13.70		4.0	6.0
Tier 1 capital (to average assets):
First Banks, Inc.	46,771		0.73		36,915		0.56		4.0	N/A
First Bank	580,026		9.13		538,592		8.19		4.0	5.0

As noted above, the Company’s capital ratios are below the minimum regulatory capital standards established for bank holding companies, and therefore, the Company could be subject to additional actions by regulators that could have a direct material effect on the operations and financial condition of the Company and First Bank.

Regulatory Agreements. On March 24, 2010, the Company, SFC and First Bank entered into a Written Agreement (Agreement) with the FRB requiring the Company and First Bank to take certain steps intended to improve their overall financial condition. Pursuant to the Agreement, the Company prepared and filed with the FRB a number of specific plans designed to strengthen and/or address the following matters: (i) board oversight over the management and operations of the Company and First Bank; (ii) credit risk management practices; (iii) lending and credit administration policies and procedures; (iv) asset improvement; (v) capital; (vi) earnings and overall financial condition; and (vii) liquidity and funds management.

The Agreement requires, among other things, that the Company and First Bank obtain prior approval from the FRB in order to pay dividends. In addition, the Company must obtain prior approval from the FRB to: (i) take any other form of payment from First Bank representing a reduction in capital of First Bank; (ii) make any distributions of interest, principal or other sums on junior subordinated debentures or trust preferred securities; (iii) incur, increase or guarantee any debt; or (iv) purchase or redeem any shares of the Company’s stock. Pursuant to the terms of the Agreement, the Company and First Bank submitted a written plan to the FRB to maintain sufficient capital at the Company, on a consolidated basis, and at First Bank, on a standalone basis. In addition, the Agreement also provides that the Company and First Bank must notify the FRB if the regulatory capital ratios of either entity fall below those set forth in the capital plans that were accepted by the FRB, and specifically if First Bank falls below the criteria for being well capitalized under the regulatory framework for prompt corrective action. The Company must also notify the FRB before appointing any new directors or senior executive officers or changing the responsibilities of any senior executive officer

116

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

position. The Agreement also requires the Company and First Bank to comply with certain restrictions regarding indemnification and severance payments. The Agreement is specifically enforceable by the FRB in court.

The Company and First Bank must furnish periodic progress reports to the FRB regarding compliance with the Agreement. As of the date of this filing, the Company and First Bank have provided progress reports and other reports, as required under the Agreement. The Company and First Bank have received, and may receive in the future, additional requests from the FRB regarding compliance with the Agreement, which may include, but are not limited to, updates and modifications to the Company’s Asset Quality Improvement, Profit Improvement and Capital Plans. Management has responded promptly to any such requests and intends to do so in the future. The Agreement will remain in effect until stayed, modified, terminated or suspended by the FRB.

The description of the Agreement above represents a summary and is qualified in its entirety by the full text of the Agreement which is incorporated herein by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the United States Securities and Exchange Commission on March 25, 2010.

Prior to entering into the Agreement on March 24, 2010, the Company and First Bank had entered into a memorandum of understanding and an informal agreement, respectively, with the FRB and the MDOF. Each of the agreements were characterized by regulatory authorities as informal actions that were neither published nor made publicly available by the agencies and are used when circumstances warrant a milder form of action than a formal supervisory action, such as a written agreement or cease and desist order. The informal agreement with the MDOF is still in place and there have not been any modifications thereto since its inception in September 2008.

Under the terms of the prior memorandum of understanding with the FRB, the Company agreed, among other things, to provide certain information to the FRB including, but not limited to, financial performance updates, notice of plans to materially change its fundamental business and notice to issue trust preferred securities or raise additional equity capital. In addition, the Company agreed not to pay any dividends on its common or preferred stock or make any distributions of interest or other sums on its trust preferred securities without the prior approval of the FRB.

First Bank, under its informal agreement with the MDOF and the FRB, agreed to, among other things, prepare and submit plans and reports to the agencies regarding certain matters including, but not limited to, the performance of First Bank’s loan portfolio. In addition, First Bank agreed not to declare or pay any dividends or make certain other payments without the prior consent of the MDOF and the FRB and to maintain a Tier 1 capital to total assets ratio of no less than 7.00%.

While the Company and First Bank intend to take such actions as may be necessary to comply with the requirements of the Agreement with the FRB and informal agreement with the MDOF, there can be no assurance that the Company and First Bank will be able to comply fully with the requirements of the Agreement or that First Bank will be able to comply fully with the provisions of the informal agreement, that compliance with the Agreement and the informal agreement will not be more time consuming or more expensive than anticipated, that compliance with the Agreement and the informal agreement will enable the Company and First Bank to maintain profitable operations, or that efforts to comply with the Agreement and the informal agreement will not have adverse effects on the operations and financial condition of the Company or First Bank. If the Company or First Bank is unable to comply with the terms of the Agreement or the informal agreement, respectively, the Company and First Bank could become subject to various requirements limiting the ability to develop new business lines, mandating additional capital, and/or requiring the sale of certain assets and liabilities. Failure of the Company or First Bank to meet these conditions could lead to further enforcement action by the regulatory agencies. The terms of any such additional regulatory actions, orders or agreements could have a materially adverse effect on the Company’s business, financial condition or results of operations.

Capital Plan. On August 10, 2009, the Company announced the adoption of a Capital Plan designed to improve its regulatory capital ratios and financial performance through certain divestiture activities, asset reductions and other profit improvement initiatives. The Capital Plan was adopted in order to, among other things, preserve and enhance the Company’s regulatory capital.

The successful completion of all or any portion of the Capital Plan is not assured, and no assurance can be made that the Capital Plan will not be materially modified in the future. The decision to implement the Capital Plan reflects the adverse effect that the severe downturn in the commercial and residential real estate markets has had on the Company’s financial condition and results of operations. If the Company is not able to complete substantially all of the Capital Plan, its business, financial condition, including regulatory capital ratios, and results of operations may be materially and adversely affected and its ability to withstand continued adverse economic conditions could be threatened.

NOTE15–FAIRVALUEDISCLOSURES

In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” financial assets and financial liabilities that are measured at fair value subsequent to initial recognition are grouped into three levels of inputs or assumptions that market participants

117

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

would use in pricing the asset or liability, including assumptions about risk and the reliability of assumptions used to determine fair value. The three input levels of the valuation hierarchy are as follows:

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

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

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

The following describes valuation methodologies used to measure financial assets and financial liabilities at fair value, as well as the general classification of such financial instruments pursuant to the valuation hierarchy:

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

Loans held for sale. Mortgage loans held for sale are carried at fair value on a recurring basis. The determination of fair value is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information. Other loans held for sale are carried at the lower of cost or market value, which is determined on an individual loan basis. The fair value is based on the prices secondary markets are offering for portfolios with similar characteristics. The Company classifies mortgage loans held for sale subjected to recurring fair value adjustments as recurring Level 2. The Company classifies other loans held for sale subjected to nonrecurring fair value adjustments as nonrecurring Level 2.

Impaired loans. The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans are considered impaired when, in the judgment of management based on current information and events, it is probable that payment of all amounts due under the contractual terms of the loan agreement will not be collected. Acquired impaired loans are classified as nonaccrual loans and are initially measured at fair value with no allocated allowance for loan losses. An allowance for loan losses is recorded to the extent there is further credit deterioration subsequent to the acquisition date. In accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Once a loan is identified as impaired, management measures the impairment in accordance with ASC Topic 310-10-35, “Receivables.” Impairment is measured by reference to an observable market price, if one exists, the expected future cash flows of an impaired loan discounted at the loan’s effective interest rate, or the fair value of the collateral for a collateral-dependent loan. In most cases, the Company measures fair value based on the value of the collateral securing the loan. Collateral may be in the form of real estate or personal property, including equipment and inventory. The vast majority of the collateral is real estate. The value of the collateral is determined based on third party appraisals as well as internal estimates. These measurements are classified as nonrecurring Level 3.

Other real estate and repossessed assets. Certain other real estate and repossessed assets, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan losses based upon the estimated fair value of the other real estate. The fair value of other real estate, upon initial recognition, is estimated using Level 3 inputs based on third party appraisals, and where applicable, discounted based on management’s judgment taking into account current market conditions, distressed or forced sale price comparisons and other factors in effect at the time of valuation. The Company classifies other real estate and repossessed assets subjected to nonrecurring fair value adjustments as Level 3.

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

Servicing rights. The valuation of mortgage and SBA servicing rights is performed by an independent third party. The valuation models estimate the present value of estimated future net servicing income, using market-based discount rate assumptions, and utilize assumptions based on the predominant risk characteristics of the underlying loans, including principal balance, interest rate, weighted average life, and certain unobservable inputs, including cost to service, estimated prepayment speed rates and default

118

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

rates. Changes in the fair value of servicing rights occur primarily due to the realization of expected cash flows, as well as changes in valuation inputs and assumptions. Significant increases (decreases) in any of the unobservable inputs would result in a significantly lower (higher) fair value of the servicing rights. The Company classifies its servicing rights as Level 3.

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

Items Measured on a Recurring Basis. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011 are reflected in the following table:

	Fair Value Measurements
	Level 1		Level 2		Level 3	Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Assets:
Available-for-sale investment securities:
U.S. Government sponsored agencies	$	—	310,429		—	310,429
Residential mortgage-backed	—		1,534,067		—	1,534,067
Commercial mortgage-backed	—		915		—	915
State and political subdivisions	—		4,929		—	4,929
Corporate notes	—		192,365		—	192,365
Equity investments	1,022		—		—	1,022
Mortgage loans held for sale	—		66,133		—	66,133
Derivative instruments:
Customer interest rate swap agreements	—		87		—	87
Interest rate lock commitments	—		1,837		—	1,837
Forward commitments to sell mortgage-backed securities	—		(305	)	—	(305	)
Servicing rights	—		—		14,792	14,792
Total	$	1,022	2,110,457		14,792	2,126,271
Liabilities:
Derivative instruments:
Interest rate swap agreements	$	—	—		—	—
Customer interest rate swap agreements	—		87		—	87
Nonqualified deferred compensation plan	6,443		—		—	6,443
Total	$	6,443	87		—	6,530
December 31, 2011:
Assets:
Available-for-sale investment securities:
U.S. Government sponsored agencies	$	—	341,817		—	341,817
Residential mortgage-backed	—		1,924,920		—	1,924,920
Commercial mortgage-backed	—		910		—	910
State and political subdivisions	—		5,410		—	5,410
Corporate notes	—		183,813		—	183,813
Equity investments	1,017		—		—	1,017
Mortgage loans held for sale	—		31,111		—	31,111
Derivative instruments:
Customer interest rate swap agreements	—		370		—	370
Interest rate lock commitments	—		1,381		—	1,381
Forward commitments to sell mortgage-backed securities	—		(729	)	—	(729	)
Servicing rights	—		—		15,380	15,380
Total	$	1,017	2,489,003		15,380	2,505,400
Liabilities:
Derivative instruments:
Interest rate swap agreements	$	—	807		—	807
Customer interest rate swap agreements	—		307		—	307
Nonqualified deferred compensation plan	6,531		—		—	6,531
Total	$	6,531	1,114		—	7,645

There were no transfers between Levels 1 and 2 of the fair value hierarchy for the years ended December 31, 2012 and 2011.

119

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table presents the changes in Level 3 assets measured on a recurring basis for the years ended December 31, 2012 and 2011:

	Servicing Rights
	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	15,380		19,582
Total gains or losses (realized/unrealized):
Included in earnings (1)	(5,475		)	(7,652	)
Included in other comprehensive income (loss)	—			—
Issuances	4,887			3,450
Transfers in and/or out of level 3	—			—
Balance, end of year	$	14,792		15,380

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

Items Measured on a Nonrecurring Basis. From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis as of December 31, 2012 and 2011 are reflected in the following table:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Assets:
Impaired loans:
Commercial, financial and agricultural	$	—	—	18,374	18,374
Real estate construction and development	—		—	40,731	40,731
Real estate mortgage:
Bank portfolio	—		—	8,237	8,237
Mortgage Division portfolio	—		—	86,500	86,500
Home equity portfolio	—		—	6,887	6,887
Multi-family residential	—		—	33,863	33,863
Commercial real estate	—		—	26,218	26,218
Consumer and installment	—		—	27	27
Other real estate and repossessed assets	—		—	91,995	91,995
Total	$	—	—	312,832	312,832
December 31, 2011:
Assets:
Impaired loans:
Commercial, financial and agricultural	$	—	—	54,129	54,129
Real estate construction and development	—		—	79,826	79,826
Real estate mortgage:
Bank portfolio	—		—	13,894	13,894
Mortgage Division portfolio	—		—	84,083	84,083
Home equity portfolio	—		—	5,552	5,552
Multi-family residential	—		—	10,806	10,806
Commercial real estate	—		—	67,756	67,756
Consumer and installment	—		—	18	18
Other real estate and repossessed assets	—		—	129,896	129,896
Total	$	—	—	445,960	445,960

Non-Financial Assets and Non-Financial Liabilities. Certain non-financial assets measured at fair value on a nonrecurring basis include other real estate (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment.

120

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Other real estate and repossessed assets measured at fair value upon initial recognition totaled $24.2 million, $69.9 million and $158.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. In addition to other real estate and repossessed assets measured at fair value upon initial recognition, the Company recorded write-downs to the balance of other real estate and repossessed assets of $14.5 million, $16.9 million and $34.7 million to noninterest expense for the years ended December 31, 2012, 2011 and 2010, respectively. Other real estate and repossessed assets were $92.0 million at December 31, 2012 compared to $129.9 million at December 31, 2011.

Fair Value of Financial Instruments. The fair value of financial instruments is management’s estimate of the values at which the instruments could be exchanged in a transaction between willing parties. These estimates are subjective and may vary significantly from amounts that would be realized in actual transactions. In addition, other significant assets are not considered financial assets including deferred income tax assets, bank premises and equipment and goodwill and other intangible assets. Furthermore, the income taxes that would be incurred if the Company were to realize any of the unrealized gains or unrealized losses indicated between the estimated fair values and corresponding carrying values could have a significant effect on the fair value estimates and have not been considered in any of the estimates.

The following summarizes the methods and assumptions used in estimating the fair value of all other financial instruments:

Cash and cash equivalents and accrued interest receivable. The carrying values reported in the consolidated balance sheets approximate fair value.

Held-to-maturity investment securities. The fair value of held-to-maturity investment securities is based on quoted market prices where available. If quoted market prices are not available, the fair value is based on quoted market prices of comparable instruments. The Company classifies its held-to-maturity investment securities as Level 2.

Loans. The fair value of loans held for portfolio uses an exit price concept and reflects discounts the Company believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial and industrial, real estate construction and development, commercial real estate, one-to-four-family residential real estate, home equity and consumer and installment. The fair value of loans is estimated by discounting the future cash flows, utilizing assumptions for prepayment estimates over the loans’ remaining life and considerations for the current interest rate environment compared to the weighted average rate of the loan portfolio. The fair value analysis also includes other assumptions to estimate fair value, intended to approximate those factors a market participant would use in an orderly transaction, with adjustments for discount rates, interest rates, liquidity, and credit spreads, as appropriate. The Company classifies its loans held for portfolio as Level 3.

FRB and FHLB stock. The carrying values reported in the consolidated balance sheets for FRB and FHLB stock, which are carried at cost, represent redemption value and approximate fair value.

Assets of discontinued operations. The carrying values reported in the consolidated balance sheets for assets of discontinued operations approximate fair value. The Company classifies its assets of discontinued operations as Level 2.

Deposits. The fair value of deposits payable on demand with no stated maturity (i.e., noninterest-bearing and interest-bearing demand, and savings and money market accounts) is considered equal to their respective carrying amounts as reported in the consolidated balance sheets. The fair value of demand deposits does not include the benefit that results from the low-cost funding provided by deposit liabilities compared to the cost of borrowing funds in the market. The fair value disclosed for time deposits is estimated utilizing a discounted cash flow calculation that applies interest rates currently being offered on similar deposits to a schedule of aggregated monthly maturities of time deposits. If the estimated fair value is lower than the carrying value, the carrying value is reported as the fair value of time deposits. The Company classifies its time deposits as Level 3.

Other borrowings and accrued interest payable. The carrying values reported in the consolidated balance sheets for variable rate borrowings approximate fair value. The fair value of fixed rate borrowings is based on quoted market prices where available. If quoted market prices are not available, the fair value is based on discounting contractual maturities using an estimate of current market rates for similar instruments. The Company classifies its other borrowings, comprised of securities sold under agreement to repurchase, as Level 1. The carrying values reported in the consolidated balance sheets for accrued interest payable approximate fair value.

Subordinated debentures. The fair value of subordinated debentures is based on quoted market prices of comparable instruments. The Company classifies its subordinated debentures as Level 3.

Liabilities of discontinued operations. The fair value of liabilities of discontinued operations reflects the negotiated purchase price at which the liabilities could be exchanged in a transaction between willing parties, as further described in Note 2 to the consolidated financial statements. The Company classifies its liabilities of discontinued operations as Level 2.

121

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Off-Balance Sheet Financial Instruments. The fair value of commitments to extend credit, standby letters of credit and financial guarantees is based on estimated probable credit losses. The Company classifies its off-balance sheet financial instruments as Level 3.

The estimated fair value of the Company’s financial instruments at December 31, 2012 and 2011 were as follows:

	December 31, 2012									December 31, 2011
	Carrying Value			Estimated Fair Value						Carrying Value		Estimated Fair Value
				Level 1	Level 2	Level 3		Total
	(dollars expressed in thousands)
Financial Assets:
Cash and cash equivalents	$	518,846		518,846	—	—		518,846		473,140		473,140
Investment securities:
Available for sale	2,043,727			1,022	2,042,705	—		2,043,727		2,457,887		2,457,887
Held to maturity	631,553			—	637,024	—		637,024		12,817		13,424
Loans held for portfolio	2,773,012			—	—	2,572,256		2,572,256		3,115,458		2,811,866
Loans held for sale	66,133			—	66,133	—		66,133		31,111		31,111
FRB and FHLB stock	27,329			27,329	—	—		27,329		27,078		27,078
Derivative instruments	1,619			—	1,619	—		1,619		1,022		1,022
Accrued interest receivable	18,284			18,284	—	—		18,284		21,050		21,050
Assets of discontinued operations	6,706			—	6,706	—		6,706		6,913		6,913
Financial Liabilities:
Deposits:
Noninterest-bearing demand	$	1,327,183		1,327,183	—	—		1,327,183		1,225,622		1,225,622
Interest-bearing demand	1,000,666			1,000,666	—	—		1,000,666		899,114		899,114
Savings and money market	1,880,271			1,880,271	—	—		1,880,271		1,964,905		1,964,905
Time deposits	1,284,727			—	—	1,286,730		1,286,730		1,533,414		1,536,824
Other borrowings	26,025			26,025	—	—		26,025		51,170		51,170
Derivative instruments	87			—	87	—		87		1,114		1,114
Accrued interest payable	48,541			48,541	—	—		48,541		34,343		34,343
Subordinated debentures	354,133			—	—	254,984		254,984		354,057		204,502
Liabilities of discontinued operations	155,711			—	155,711	—		155,711		174,737		174,737
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	$	(2,779	)	—	—	(2,779	)	(2,779	)	(2,785	)	(2,785	)

NOTE16–CREDITCOMMITMENTS

The Company is a party to commitments to extend credit and commercial and standby letters of credit in the normal course of business to meet the financing needs of its customers. These instruments involve, in varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The interest rate risk associated with these credit commitments relates primarily to the commitments to originate fixed-rate loans. As more fully described in Note 8 to the consolidated financial statements, the interest rate risk of the commitments to originate fixed-rate loans has been hedged with forward commitments to sell mortgage-backed securities. The credit risk amounts are equal to the contractual amounts, assuming the amounts are fully advanced and the collateral or other security is of no value. The Company uses the same credit policies in granting commitments and conditional obligations as it does for on-balance sheet items.

Commitments to extend fixed and variable rate credit, and commercial and standby letters of credit, at December 31, 2012 and 2011 were as follows:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Commitments to extend credit	$	667,215	683,186
Commercial and standby letters of credit	59,075		65,993
Total	$	726,290	749,179

122

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant, equipment, income-producing commercial properties or single-family residential properties. In the event of nonperformance, the Company may obtain and liquidate the collateral to recover amounts paid under its guarantees on these financial instruments.

Commercial and standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Most letters of credit extend for less than one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Upon issuance of the commitments, the Company typically holds marketable securities, certificates of deposit, inventory, real property or other assets as collateral supporting those commitments for which collateral is deemed necessary. The standby letters of credit at December 31, 2012 expire, at various dates, within five years.

Standby letters of credit issued by the FHLB on First Bank’s behalf were $25.0 million and $28.6 million at December 31, 2012 and 2011, respectively.

The reserve for letters of credit and unfunded loan commitments was $2.8 million at December 31, 2012 and 2011.

NOTE17–INCOMETAXES

The (benefit) provision for income taxes from continuing operations for the years ended December 31, 2012, 2011 and 2010 consists of the following:

	2012			2011		2010
	(dollars expressed in thousands)
Current (benefit) provision for income taxes:
Federal	$	—		902		(366	)
State	(32		)	(721	)	(71	)
	(32		)	181		(437	)
Deferred benefit for income taxes:
Federal	5,615			(16,129	)	(56,871	)
State	1,023			(7,392	)	(13,974	)
	6,638			(23,521	)	(70,845	)
(Decrease) increase in deferred tax asset valuation allowance	(6,745		)	12,686		75,396
Total	$	(139	)	(10,654	)	4,114

The effective rates of federal income taxes for the years ended December 31, 2012, 2011 and 2010 differ from the federal statutory rates of taxation as follows:

	Years Ended December 31,
	2012					2011					2010
	Amount			Percent		Amount			Percent		Amount			Percent
	(dollars expressed in thousands)
Income (loss) from continuing operations before benefit (provision) for income taxes and noncontrolling interest in loss of subsidiaries	$	31,365				$	(48,295	)			$	(197,699	)
Provision (benefit) for income taxes calculated at federal statutory income tax rates	$	10,978		35.0	%	$	(16,904	)	35.0	%	$	(69,195	)	35.0	%
Effects of differences in tax reporting:
Tax-exempt interest income, net of tax preference adjustment	(135		)	(0.4	)	(203		)	0.4		(308		)	0.2
State income taxes	645			2.1		(4,800		)	9.9		(9,125		)	4.6
Bank owned life insurance, net of premium	11			—		10			—		3,144			(1.6	)
Noncontrolling investment in flow-through entity	104			0.3		1,033			(2.1	)	2,280			(1.2	)
Amortization of intangibles	—			—		175			(0.3	)	350			(0.2	)
(Decrease) increase in deferred tax asset valuation allowance, net of federal benefit	(11,811		)	(37.7	)	20,614			(42.7	)	70,668			(35.8	)
Reclassification of deferred tax asset valuation allowance from accumulated other comprehensive income to provision for income taxes	—			—		(10,466		)	21.7		6,816			(3.4	)
Expiration of net operating loss carryforwards	643			2.1		34			—		5			—
Other, net	(574		)	(1.8	)	(147		)	0.2		(521		)	0.3
(Benefit) provision for income taxes	$	(139	)	(0.4	)%	$	(10,654	)	22.1	%	$	4,114		(2.1	)%

123

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 were as follows:

	December 31,
	2012			2011
	(dollars expressed in thousands)
Deferred tax assets:
Federal net operating loss carryforwards	$	209,190		188,726
State net operating loss carryforwards	65,882			58,326
Allowance for loan losses	37,825			56,649
Loans held for sale	2,032			1,745
Alternative minimum and general business tax credits	19,146			17,326
Interest on nonaccrual loans	12,551			15,359
Deferred compensation	3,573			3,593
Core deposit intangibles	2,706			3,111
Partnership and corporate investments	7,908			12,052
Deferred loan charge-offs and other fraud losses	4,341			13,875
Other real estate and repossessed assets	22,666			22,665
Accrued contingent liabilities	2,870			3,632
Depreciation on bank premises and equipment	1,202			486
State taxes	682			—
Other	12,692			13,205
Gross deferred tax assets	405,266			410,750
Valuation allowance	(376,224		)	(391,629	)
Deferred tax assets, net of valuation allowance	29,042			19,121
Deferred tax liabilities:
Servicing rights	2,632			2,418
Net fair value adjustment for available-for-sale investment securities	21,214			10,466
Deferred gain on reclassification of investment securities from available for sale to held to maturity	4,265			—
Equity investments	5,364			5,366
State taxes	—			4,577
Net deferred loan fees	1,903			2,779
Other	804			655
Deferred tax liabilities	36,182			26,261
Net deferred tax liabilities	$	(7,140	)	(7,140	)

The realization of the Company’s net deferred tax assets is based on the expectation of future taxable income and the utilization of tax planning strategies. The Company has a full valuation allowance against its net deferred tax assets at December 31, 2012 and 2011. The deferred tax asset valuation allowance was recorded in accordance with ASC Topic 740, “Income Taxes.” Under ASC Topic 740, the Company is required to assess whether it is “more likely than not” that some portion or all of its deferred tax assets will not be realized. Pursuant to ASC Topic 740, concluding that a deferred tax asset valuation allowance is not required is difficult when there is significant evidence which is objective and verifiable, such as the lack of recoverable taxes, excess of reversing deductible differences over reversing taxable differences and cumulative losses in recent years. If, in the future, the Company generates taxable income on a sustained basis, management may conclude the deferred tax asset valuation allowance is no longer required, which would result in the reversal of a portion or all of the deferred tax asset valuation allowance, which would be reflected as a benefit for income taxes in the consolidated statements of operations.

Changes in the deferred tax asset valuation allowance for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	391,629		370,125		295,067
Reversal of deferred tax asset valuation allowance to provision for income taxes	(643		)	(115	)	(1,189	)
(Decrease) increase in deferred tax asset valuation allowance to provision for income taxes	(468		)	31,621		73,928
(Decrease) increase in deferred tax asset valuation allowance to accumulated other comprehensive income (loss)	(14,294		)	(10,002	)	2,319
Balance, end of year	$	376,224		391,629		370,125

At December 31, 2012 and 2011, the Company’s unrecognized tax benefits for uncertain tax positions, excluding interest and penalties, were $1.1 million and $1.2 million, respectively. A reconciliation of the beginning and ending balance of these unrecognized tax benefits for the years ended December 31, 2012 and 2011 is as follows:

124

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	1,194		1,276
Additions:
Tax positions taken during the current year	217			232
Tax positions taken during the prior year	—			—
Reductions:
Tax positions taken during the prior year	(14		)	(8	)
Allocated to discontinued operations	—			—
Lapse of statute of limitations	(271		)	(306	)
Balance, end of year	$	1,126		1,194

At December 31, 2012 and 2011, the total amount of unrecognized tax benefits that would affect the provision for income taxes, prior to the consideration of the deferred tax asset valuation allowance, was $740,000 and $784,000, respectively. It is the Company’s policy to separately disclose any interest or penalties arising from the application of federal or state income taxes. Interest related to unrecognized tax benefits is included in interest expense and penalties related to unrecognized tax benefits are included in noninterest expense. At December 31, 2012 and 2011, interest accrued for uncertain tax positions was $116,000 and $136,000, respectively. The Company recorded a reduction to interest expense of $20,000, $44,000 and $1.0 million related to unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010, respectively. There were no penalties for uncertain tax positions accrued at December 31, 2012 and 2011, nor did the Company recognize any expense for such penalties in 2012, 2011 and 2010.

The Company continually evaluates the unrecognized tax benefits associated with its uncertain tax positions. It is reasonably possible that the total unrecognized tax benefits as of December 31, 2012 could decrease by approximately $234,000 by December 31, 2013 as a result of the lapse of statutes of limitations or potential settlements with the federal and state taxing authorities, of which the impact to the provision for income taxes, prior to the consideration of the deferred tax asset valuation allowance, is estimated to be approximately $153,000. It is also reasonably possible that this decrease could be substantially offset by new matters arising during the same period.

The Company files consolidated and separate income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. Management of the Company believes the accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. This assessment relies on estimates and assumptions. The Company’s federal income tax returns through 2008 have been examined by the IRS. Years subsequent to 2008 could contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing or inclusion of revenue and expenses. The Company has recorded a tax benefit only for those positions that meet the “more likely than not” standard. The Company’s current estimate of the resolution of various state examinations, none of which are in process, is reflected in accrued income taxes; however, final settlement of the examinations or changes in the Company’s estimate may result in future income tax expense or benefit.

The Company is no longer subject to U.S. federal and Illinois income tax examination for the years prior to 2009 and is no longer subject to California, Florida, Missouri and various other state income tax examination by the tax authorities for the years prior to 2008. The Company had a federal tax examination for tax years through 2008, which was closed during 2010, and a California tax examination for the 2004 and 2005 tax years, which was closed during 2008. An Illinois tax examination of the 2007 and 2008 tax years was completed during 2011 with no changes to the returns as originally filed. A California tax examination for the 2005 and 2006 tax years was completed during 2012 with no changes to the amended returns as filed. The Company is currently under examination of the 2007 and 2008 tax years for its Texas returns. While the statute of limitations for the 2008 tax year has expired for the majority of the states in which the Company is subject to income tax, the Company generated net operating loss carryforwards in 2008 which, if realized, are subject to examination in order to validate the net operating loss carryforward. Thus, while closed, the 2008 tax year for these states is still subject to examination. The statute of limitations will expire for 2008 when the statute of limitations expires for the year the net operating loss carryforward is realized.

The Company recorded a benefit for income taxes of $10.5 million during the year ended December 31, 2011 related to an intraperiod tax allocation between other comprehensive income and loss from continuing operations, primarily driven by market appreciation in the Company’s investment securities portfolio.

The Company had an accumulated other comprehensive loss of $6.8 million related to the establishment of a deferred tax asset valuation allowance regarding the unrealized gain on certain interest rate swap agreements that were designated as cash flow hedges on certain loans, as further described in Note 8 to the consolidated financial statements. In the third quarter of 2010, the Company recorded a provision for incomes taxes of $6.8 million related to the expiration of the amortization period of the unrealized gain on the interest rate swap agreements with a corresponding increase to accumulated other comprehensive income.

125

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At December 31, 2012 and 2011, the accumulation of prior years’ earnings representing tax bad debt deductions was $29.8 million. If these tax bad debt reserves were charged for losses other than bad debt losses, the Company would be required to recognize taxable income in the amount of the charge. It is not contemplated that such tax-restricted retained earnings will be used in a manner that would create federal income tax liabilities.

At December 31, 2012 and 2011, for federal income tax purposes, the Company had net operating loss carryforwards of approximately $597.7 million and $539.2 million, respectively. At December 31, 2012, the Company’s federal net operating loss carryforwards expire as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013 – 2016	$	—
2017 – 2020	5,256
2021 – 2026	43,105
2028 – 2032	549,325
Total	$	597,686

At December 31, 2012 and 2011, for state income tax purposes, the Company had net operating loss carryforwards of approximately $786.4 million and $702.8 million, respectively, and a related deferred tax asset of $65.9 million and $58.3 million, respectively. The state net operating loss carryforwards are primarily from the states of California, Florida, Illinois and Missouri and expire from 2019 to 2032.

NOTE18–EARNINGS(LOSS)PERCOMMONSHARE

The following is a reconciliation of basic and diluted income (loss) per share for the years ended December 31, 2012, 2011 and 2010:

	Years Ended December 31,
	2012			2011		2010
	(dollars in thousands, except share and per share data)
Basic:
Net income (loss) from continuing operations attributable to First Banks, Inc.	$	31,801		(34,691	)	(195,299	)
Preferred stock dividends declared and undeclared	(18,886		)	(17,908	)	(16,980	)
Accretion of discount on preferred stock	(3,554		)	(3,466	)	(3,381	)
Net income (loss) from continuing operations attributable to common stockholders	9,361			(56,065	)	(215,660	)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523		)	(6,459	)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	$	3,838		(62,524	)	(212,098	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661
Basic earnings (loss) per common share – continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Basic (loss) earnings per common share – discontinued operations	$	(233.42	)	(272.98	)	150.54
Basic earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)
Diluted:
Net income (loss) from continuing operations attributable to common stockholders	$	9,361		(56,065	)	(215,660	)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523		)	(6,459	)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	3,838			(62,524	)	(212,098	)
Effect of dilutive securities – Class A convertible preferred stock	—			—		—
Diluted income (loss) available to First Banks, Inc. common stockholders	$	3,838		(62,524	)	(212,098	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661
Effect of dilutive securities – Class A convertible preferred stock	—			—		—
Weighted average diluted shares of common stock outstanding	23,661			23,661		23,661
Diluted earnings (loss) per common share – continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Diluted (loss) earnings per common share – discontinued operations	$	(233.42	)	(272.98	)	150.54
Diluted earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)

126

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE19–BUSINESSSEGMENTRESULTS

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

The business segment results are consistent with the Company’s internal reporting system and, in all material respects, with GAAP and practices predominant in the banking industry. Such principles and practices are summarized in Note 1 to the consolidated financial statements. The business segment results are summarized as follows:

	First Bank				Corporate, Other and Intercompany Reclassifications						Consolidated Totals
	2012		2011	2010	2012		2011		2010		2012	2011	2010
	(dollars expressed in thousands)
Balance sheet information:
Investment securities	$	2,675,280	2,470,704	1,483,659	—		—		—		2,675,280	2,470,704	1,483,659
Loans, net of net deferred loan fees	2,930,747		3,284,279	4,492,284	—		—		—		2,930,747	3,284,279	4,492,284
FRB and FHLB stock	27,329		27,078	30,121	—		—		—		27,329	27,078	30,121
Goodwill and other intangible assets	125,267		125,267	129,054	—		—		—		125,267	125,267	129,054
Assets held for sale	—		—	2,266	—		—		—		—	—	2,266
Assets of discontinued operations	6,706		6,913	43,532	—		—		—		6,706	6,913	43,532
Total assets	6,495,226		6,593,515	7,361,706	13,900		15,398		16,422		6,509,126	6,608,913	7,378,128
Deposits	5,495,624		5,625,889	6,462,068	(2,777	)	(2,834	)	(3,653	)	5,492,847	5,623,055	6,458,415
Other borrowings	26,025		51,170	31,761	—		—		—		26,025	51,170	31,761
Subordinated debentures	—		—	—	354,133		354,057		353,981		354,133	354,057	353,981
Liabilities held for sale	—		—	23,406	—		—		—		—	—	23,406
Liabilities of discontinued operations	155,711		174,737	94,184	—		—		—		155,711	174,737	94,184
Stockholders’ equity	751,252		680,625	693,458	(451,293	)	(416,954	)	(386,163	)	299,959	263,671	307,295

127

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

	First Bank							Corporate, Other and Intercompany Reclassifications						Consolidated Totals
	2012			2011		2010		2012		2011		2010		2012		2011		2010
	(dollars expressed in thousands)
Income statement information:
Interest income	$	202,444		233,211		312,333		121		85		135		202,565		233,296		312,468
Interest expense	15,250			30,927		63,027		14,838		13,612		12,993		30,088		44,539		76,020
Net interest income(loss)	187,194			202,284		249,306		(14,717	)	(13,527	)	(12,858	)	172,477		188,757		236,448
Provision for loan losses	2,000			69,000		214,000		—		—		—		2,000		69,000		214,000
Net interest income(loss) afterprovision for loan losses	185,194			133,284		35,306		(14,717	)	(13,527	)	(12,858	)	170,477		119,757		22,448
Noninterest income	65,801			61,975		78,453		405		219		39		66,206		62,194		78,492
Amortization ofintangible assets	—			3,024		3,292		—		—		—		—		3,024		3,292
Other noninterestexpense	203,808			227,600		294,708		1,510		(378	)	639		205,318		227,222		295,347
Income (loss) from continuingoperations beforeprovision(benefit)for income taxes	47,187			(35,365	)	(184,241	)	(15,822	)	(12,930	)	(13,458	)	31,365		(48,295	)	(197,699	)
Provision (benefit) forincome taxes	230			(10,608	)	4,286		(369	)	(46	)	(172	)	(139	)	(10,654	)	4,114
Net income (loss) from continuingoperations, net of tax	46,957			(24,757	)	(188,527	)	(15,453	)	(12,884	)	(13,286	)	31,504		(37,641	)	(201,813	)
(Loss) income from discontinued operations,net of tax	(5,523		)	(6,459	)	3,562		—		—		—		(5,523	)	(6,459	)	3,562
Net income (loss)	41,434			(31,216	)	(184,965	)	(15,453	)	(12,884	)	(13,286	)	25,981		(44,100	)	(198,251	)
Net loss attributable tononcontrolling interestin subsidiary	(297		)	(2,950	)	(6,514	)	—		—		—		(297	)	(2,950	)	(6,514	)
Net income (loss) attributable toFirst Banks, Inc.	$	41,731		(28,266	)	(178,451	)	(15,453	)	(12,884	)	(13,286	)	26,278		(41,150	)	(191,737	)

NOTE 20 – TRANSACTIONS WITH RELATED PARTIES

Outside of normal customer relationships, no directors or officers of the Company, no shareholders holding over 5% of the Company’s voting securities and no corporations or firms with which such persons or entities are associated currently maintain or have maintained, since the beginning of the last full fiscal year, any significant business or personal relationships with the Company or its subsidiaries, other than that which arises by virtue of such position or ownership interest in the Company or its subsidiaries, except as described in the following paragraphs.

First Services, L.P. First Services, L.P. (First Services), a limited partnership indirectly owned by the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, provides information technology, item processing and various related services to the Company and First Bank. Fees paid under agreements with First Services were $21.1 million, $24.5 million and $26.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. First Services leases information technology and other equipment from First Bank. First Services paid First Bank rental fees for the use of such equipment of $1.3 million, $1.9 million and $2.5 million during the years ended December 31, 2012, 2011 and 2010, respectively. In addition, First Services paid $1.8 million, $1.8 million and $1.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, in rental payments to First Bank for occupancy of certain First Bank premises from which business is conducted.

First Services entered into an Affiliate Services Agreement with the Company and First Bank effective January 2009. The Affiliate Services Agreement relates to various services provided to First Services, including certain human resources, payroll, employee benefit and training services, accounting services, insurance services and vendor payment processing services. Fees accrued under the Affiliate Services Agreement by First Services were $183,000, $177,000 and $157,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

First Brokerage America, L.L.C. First Brokerage America, L.L.C. (First Brokerage), a limited liability company indirectly owned by the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, received approximately $4.3 million, $5.3 million and $5.0 million for the years ended December 31, 2012, 2011 and 2010, respectively, in gross commissions paid by unaffiliated third-party companies. The commissions received primarily resulted from sales of annuities, securities and other insurance products to customers of First Bank. First Brokerage paid approximately $401,000, $491,000 and $312,000 for the years ended December 31, 2012, 2011 and 2010, respectively, to First Bank in rental payments for occupancy of certain First Bank premises from which brokerage business is conducted.

Dierbergs Markets, Inc. First Bank leases certain of its in-store branch offices and automated teller machine (ATM) sites from Dierbergs Markets, Inc., a grocery store chain headquartered in St. Louis, Missouri that is owned and operated by the brother of

128

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the Company’s Chairman and members of his immediate family. Total rent expense incurred by First Bank under the lease obligation contracts was $498,000, $474,000 and $462,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

First Capital America, Inc. / FB Holdings, LLC. The Company formed FB Holdings, a limited liability company organized in the state of Missouri, in May 2008. FB Holdings operates as a majority-owned subsidiary of First Bank and was formed for the primary purpose of holding and managing certain nonperforming loans and assets to allow the liquidation of such assets at a time that is more economically advantageous to First Bank and to permit an efficient vehicle for the investment of additional capital by the Company’s sole owner of its Class A and Class B preferred stock. First Bank contributed cash of $9.0 million and nonperforming loans and assets with a fair value of approximately $133.3 million and FCA, a corporation owned by the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, contributed cash of $125.0 million to FB Holdings during 2008. As a result, First Bank owned 53.23% and FCA owned the remaining 46.77% of FB Holdings as of December 31, 2012. The contribution of cash by FCA is reflected as a component of stockholders’ equity in the consolidated balance sheets and, consequently, increased the Company’s and First Bank’s regulatory capital ratios under then-existing regulatory guidelines, subject to certain limitations.

FB Holdings receives various services provided by First Bank, including loan servicing and special assets services as well as various other financial, legal, human resources and property management services. Fees paid under the agreement by FB Holdings to First Bank were $124,000, $194,000 and $321,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Investors of America Limited Partnership. In March 2011, the Company entered into a $5.0 million Credit Agreement with Investors of America, LP, as further described in Note 11 to the consolidated financial statements. Investors of America, LP is a Nevada limited partnership that was created by and for the benefit of the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company. There were no balances outstanding under this Credit Agreement during the period from its inception in March 2011 to its maturity date on December 31, 2012.

On March 20, 2013, the Company entered into a New Credit Agreement with Investors of America, LP, as further described in Note 25 to the consolidated financial statements.

Loans to Directors and/or their Affiliates. First Bank has had in the past, and may have in the future, loan transactions in the ordinary course of business with its directors and/or their affiliates. These loan transactions have been made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated persons and, except as described below, did not involve more than the normal risk of collectability or present other unfavorable features. Loans to directors, their affiliates and executive officers of the Company were $9.1 million and $23.4 million at December 31, 2012 and 2011, respectively. First Bank does not extend credit to its officers or to officers of the Company, except extensions of credit secured by mortgages on personal residences, loans to purchase automobiles, personal credit card accounts and deposit account overdraft protection under a plan whereby a credit limit has been established in accordance with First Bank’s standard credit criteria.

Loans to directors, their affiliates and executive officers of the Company at December 31, 2011 included a $15.6 million multi-family real estate loan to a limited liability company which was 50% owned by the brother-in-law of Mr. Douglas H. Yaeger, a director of the Company. The loan had been paid as agreed and was not reported as past due, nonaccrual or restructured as of December 31, 2011. However, based on current economic and financial considerations, management had classified this loan as special mention in the Company’s loan watch list as of December 31, 2011. On September 28, 2012, the then current balance of $15.4 million was repaid in full.

Loans to directors, their affiliates and executive officers of the Company at December 31, 2011 also included two credit relationships aggregating $1.2 million to companies which were approximately 16% owned by the brother-in-law of Mr. Yaeger, including a $328,000 credit relationship that was 60 - 89 days past due. Both loans had been classified by management as problem loans in the Company’s loan watch list as of December 31, 2011 and were subsequently placed on nonaccrual status during 2012. On December 14, 2012, First Bank sold these nonaccrual loans for an aggregate purchase price of $785,000 to a company partially owned by the brother-in-law of Mr. Yaeger.

Depositary Accounts of Directors and/or their Affiliates. Certain directors and/or their affiliates maintain funds on deposit with First Bank in the ordinary course of business. These deposit transactions include demand, savings and time accounts, and have been established on the same terms, including interest rates, as those prevailing at the time for comparable transactions with unaffiliated persons.

129

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 21 – EMPLOYEE BENEFITS

401(k) Plan. The Company’s 401(k) plan is a self-administered savings and incentive plan covering substantially all employees. Employer match contributions are determined annually under the plan by the Company’s Board of Directors. Employee contributions were limited to $17,000 of gross compensation for 2012. Total employer contributions under the plan were $2.3 million, $2.3 million and zero for the years ended December 31, 2012, 2011 and 2010, respectively. The plan assets are held and managed under a trust agreement with First Bank’s trust department.

Nonqualified Deferred Compensation Plan. The Company’s nonqualified deferred compensation plan (the NQDC Plan), which covers a select group of employees, is administered by an independent third party. The NQDC Plan is exempt from the participation, vesting, funding and fiduciary requirements of the Employee Retirement Income Security Act of 1974. Although the NQDC Plan allows the Company to credit the accounts of any participant with discretionary contributions, no such discretionary contributions have been made since the NQDC Plan’s inception. Participants may contribute from 1% to 25% of their salary and up to 100% of their bonuses on a pre-tax basis. The Company elected to suspend the availability of deferrals under the NQDC Plan for the years ended December 31, 2011 and 2010 but reinstated the availability of such deferrals beginning in January 2012.

Balances outstanding under the NQDC Plan, which are reflected in accrued and other liabilities in the consolidated balance sheets, were $6.4 million and $6.5 million at December 31, 2012 and 2011, respectively. The Company recognized salaries and employee benefits expense related to the NQDC Plan of $614,000 and $685,000 for the years ended December 31, 2012 and 2010, respectively, resulting from net earnings incurred by participants on the underlying investments in the plan. The Company recognized a decrease in salaries and employee benefits expense related to the NQDC Plan of $64,000 for the year ended December 31, 2011 resulting from net losses incurred by participants on the underlying investments in the plan.

Noncontributory Defined Benefit Pension Plan. The Company has a noncontributory defined benefit pension plan covering certain current and former employees of a bank holding company acquired by the Company in 1994 and subsequently merged with and into the Company on December 31, 2002. The Company discontinued the accumulation of benefits under the Plan in 1994, and as such, there is no longer any service cost being accrued by Plan participants.

A summary of the Plan’s change in the projected benefit obligation and change in the fair value of Plan assets for the years ended December 31, 2012 and 2011 and amounts recognized in the Company’s consolidated balance sheets as of December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	12,467		12,334
Interest cost	516			587
Actuarial loss	1,765			970
Benefit payments	(761		)	(1,424	)
Projected benefit obligation at end of year	$	13,987		12,467
Change in Fair Value of Plan Assets:
Fair value at beginning of year	$	8,848		9,210
Actual return on plan assets	666			774
Employer contributions	666			288
Benefit payments	(761		)	(1,424	)
Fair value at end of year	$	9,419		8,848
Amount Recognized in Consolidated Balance Sheets:
Accrued pension liability	$	4,568		3,619
Amounts Recognized in Accumulated Other Comprehensive Income:
Loss	$	(5,940	)	(4,370	)
Deferred tax liability	2,396			1,737
Loss, net of tax	$	(3,544	)	(2,633	)

The Company’s accrued pension liability of $4.6 million and $3.6 million at December 31, 2012 and 2011, respectively, represents the difference between the fair value of the Plan assets and the projected benefit obligation of the Plan, and is reflected in accrued expenses and other liabilities in the consolidated balance sheets.

130

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table reflects the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2012 and 2011:

	2012		2011
Discount rate	4.28	%	4.93	%
Expected long-term rate of return on Plan assets	7.00		7.00

The discount rate used to determine benefit obligations was 3.31% and 4.28% for the years ended December 31, 2012 and 2011, respectively.

A summary of the components of net periodic benefit cost for the years ended December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Interest cost	$	516		587
Expected return on Plan assets	(617		)	(625	)
Amortization of net actuarial loss	145			109
Net periodic benefit cost	$	44		71

Amounts recognized in accumulated other comprehensive income consist of:

	2012			2011
	(dollars expressed in thousands)
Net loss	$	1,715		821
Amortization of net actuarial loss	(145		)	(109	)
Total recognized in accumulated other comprehensive income	$	1,570		712

The Plan’s investment strategy is focused on maximizing asset returns. The target allocations for Plan assets are 52% fixed income, 40% equity securities and 8% cash. Asset allocations can fluctuate between acceptable ranges commensurate with market volatility. Debt securities include U.S. Treasuries, investment-grade corporate bonds of companies from diversified industries and mortgage-backed securities. Equity securities primarily include investments in large capitalization companies located in the United States.

The fair value of Plan assets at December 31, 2012 and 2011 was comprised of the following:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
Plan Assets - December 31, 2012:
Cash and cash equivalents	$	361	—	—	361
Equity securities	—		3,959	—	3,959
Debt securities	—		4,603	—	4,603
Other	—		496	—	496
Total	$	361	9,058	—	9,419
Plan Assets - December 31, 2011:
Cash and cash equivalents	$	287	—	—	287
Equity securities	—		3,635	—	3,635
Debt securities	—		4,463	—	4,463
Other	—		463	—	463
Total	$	287	8,561	—	8,848

Equity and debt securities included in Level 1 are valued using quoted market prices. Where quoted market prices are unavailable, the fair value of equity and debt securities included in Level 2 is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information.

131

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company expects to contribute $360,000 to the Plan in 2013. Pension benefit payments are expected to be paid to Plan participants by the Plan as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013	$	821
2014	834
2015	849
2016	849
2017	844
2018 – 2022	4,256

NOTE 22 – DISTRIBUTION OF EARNINGS OF FIRST BANK

First Bank is restricted by various state and federal regulations as to the amount of dividends that are available for payment to the Company. Under the most restrictive of these requirements, the payment of dividends is limited in any calendar year to the net profit of the current year combined with the retained net profits of the preceding two years. Permission must be obtained for dividends exceeding these amounts. Based on the current level of earnings, permission must be obtained for any payment of dividends from First Bank to the Company. Furthermore, First Bank, under its agreement with the MDOF and the FRB, has agreed, among other things, not to declare or pay any dividends or make certain other payments without the prior consent of the MDOF and the FRB, as further described in Note 14 to the consolidated financial statements.

NOTE 23 – PARENT COMPANY ONLY FINANCIAL INFORMATION

Condensed balance sheets of First Banks, Inc. as of December 31, 2012 and 2011 and condensed statements of operations and cash flows for the years ended December 31, 2012, 2011 and 2010 are shown below:

CONDENSED BALANCE SHEETS

	December 31,
	2012		2011
	(dollars expressed in thousands)
Assets
Cash deposited in First Bank (unrestricted cash)	$	2,744	2,801
Cash deposited in unaffiliated financial institution (restricted cash)	—		2,008
Total cash	2,744		4,809
Investment in common securities - TRuPS	10,678		10,678
Investment in subsidiaries	657,838		586,899
Other assets	3,583		3,067
Total assets	$	674,843	605,453
Liabilities and Stockholders’ Equity
Subordinated debentures	$	354,133	354,057
Derivative instruments	—		807
Accrued interest payable	47,878		33,179
Dividends payable	61,931		43,045
Accrued expenses and other liabilities	4,597		4,646
Total liabilities	468,539		435,734
First Banks, Inc. stockholders’ equity	206,304		169,719
Total liabilities and stockholders’ equity	$	674,843	605,453

132

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

CONDENSED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2012			2011		2010
	(dollars expressed in thousands)
Income:
Management fees from subsidiaries	$	3		28		193
Net loss on derivative instruments	(43		)	(194	)	(2,929	)
Other	578			509		3,123
Total income	538			343		387
Expense:
Interest	14,847			13,623		13,012
Other	1,506			(374	)	809
Total expense	16,353			13,249		13,821
Loss before benefit for income taxes and equity in undistributed earnings (losses) of subsidiaries	(15,815		)	(12,906	)	(13,434	)
Benefit for income taxes	(348		)	(46	)	(171	)
Loss before equity in undistributed earnings (losses) of subsidiaries	(15,467		)	(12,860	)	(13,263	)
Equity in undistributed earnings (losses) of subsidiaries	41,745			(28,290	)	(178,474	)
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)

CONDENSEDSTATEMENTSOFCASHFLOWS

	Years Ended December 31,
	2012			2011		2010
	(dollars expressed in thousands)
Cash flows from operating activities:
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net (income) loss of subsidiaries	(41,745		)	28,290		178,474
Other, net	15,410			12,042		6,012
Net cash used in operating activities	(57		)	(818	)	(7,251	)
Cash flows from investing activities:
Decrease in available-for-sale investment securities	—			—		3,570
Net cash provided by investing activities	—			—		3,570
Cash flows from financing activities:
Capital contributions to subsidiaries	—			—		(100	)
Payment of preferred stock dividends	—			—		—
Net cash used in financing activities	—			—		(100	)
Net decrease in unrestricted cash	(57		)	(818	)	(3,781	)
Unrestricted cash, beginning of year	2,801			3,619		7,400
Unrestricted cash, end of year	$	2,744		2,801		3,619
Noncash investing activities:
Cash paid for interest	$	—		—		—

The parent company’s unrestricted cash was $2.7 million and $2.8 million at December 31, 2012 and 2011, respectively. The parent company’s restricted cash of $2.0 million at December 31, 2011 was returned in February 2012, thereby increasing the parent company’s unrestricted cash. On March 24, 2011, the Company entered into a Credit Agreement that provided for a $5.0 million secured revolving line of credit to be utilized for general working capital needs, as further described in Note 11 and Note 20 to the consolidated financial statements. There were no balances outstanding under the Credit Agreement during the period from its inception in March 2011 to its maturity date on December 31, 2012. On March 20, 2013, the Company entered into a New Credit Agreement that provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs, as further described in Note 25 to the consolidated financial statements. This borrowing arrangement is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company's existing cash resources become insufficient in the future.

The Company’s obligations related to interest payments on its outstanding junior subordinated debentures relating to its $345.0 million of trust preferred securities and dividends on Class C Preferred Stock and Class D Preferred Stock have been deferred.

133

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company has until September 2014 to pay the cumulative deferred interest payments on its outstanding junior subordinated debentures without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on the Company’s business, financial condition and/or results of operations.

NOTE 24 – CONTINGENT LIABILITIES

In the ordinary course of business, the Company and its subsidiaries become involved in legal proceedings, including litigation arising out of the Company’s efforts to collect outstanding loans. It is not uncommon for collection efforts to lead to so-called “lender liability” suits in which borrowers may assert various claims against the Company. From time to time, the Company is party to other legal matters arising in the normal course of business. While some matters pending against the Company specify damages claimed by plaintiffs, others do not seek a specified amount of damages or are at very early stages of the legal process. The Company records a loss accrual for all legal matters for which it deems a loss is probable and can be reasonably estimated. Management, after consultation with legal counsel, believes the ultimate resolution of these existing proceedings is not reasonably likely to have a material adverse effect on the business, financial condition or results of operations of the Company and/or its subsidiaries and the range of possible additional loss in excess of amounts accrued is not material.

The Company and First Bank have entered into agreements with the FRB and MDOF, as further described in Note 14 to the consolidated financial statements.

NOTE 25 – SUBSEQUENT EVENTS

On March 20, 2013, the Company entered into a New Credit Agreement with Investors of America, LP, as further described in Note 11 to our consolidated financial statements. The agreement provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which has a maturity date of March 31, 2014 and an interest rate of LIBOR plus 300 basis points, is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company’s existing cash resources become insufficient in the future.

134

FIRST BANKS, INC.

QUARTERLY CONDENSED FINANCIAL DATA —UNAUDITED

	2012 Quarter Ended
	March 31			June 30		September 30		December 31
	(dollars expressed in thousands, except per share data)
Interest income	$	52,341		51,608		50,536		48,080
Interest expense	8,285			7,738		7,314		6,751
Net interest income	44,056			43,870		43,222		41,329
Provision for loan losses	2,000			—		—		—
Net interest income after provision for loan losses	42,056			43,870		43,222		41,329
Noninterest income	17,104			15,914		16,696		16,492
Noninterest expense	50,746			51,100		50,016		53,456
Income from continuing operations before provision (benefit) for income taxes	8,414			8,684		9,902		4,365
Provision (benefit) for income taxes	95			121		(138	)	(217	)
Net income from continuing operations, net of tax	8,319			8,563		10,040		4,582
Loss from discontinued operations before benefit for income taxes	(1,481		)	(1,440	)	(1,351	)	(1,251	)
Benefit for income taxes	—			—		—		—
Loss from discontinued operations, net of tax	(1,481		)	(1,440	)	(1,351	)	(1,251	)
Net income	6,838			7,123		8,689		3,331
Less: net (loss) income attributable to noncontrolling interest in subsidiary	(60		)	(385	)	216		(68	)
Net income attributable to First Banks, Inc.	$	6,898		7,508		8,473		3,399
Basic and diluted earnings (loss) per common share:
Earnings (loss) per common share from continuing operations	$	121.23		142.63		176.57		(44.79	)
Loss per common share from discontinued operations	$	(62.60	)	(60.85	)	(57.09	)	(52.88	)
Earnings (loss) per common share	$	58.63		81.78		119.48		(97.67	)

	2011 Quarter Ended
	March 31			June 30		September 30		December 31
	(dollars expressed in thousands, except per share data)
Interest income	$	62,169		58,997		56,701		55,429
Interest expense	13,092			11,840		10,458		9,149
Net interest income	49,077			47,157		46,243		46,280
Provision for loan losses	10,000			23,000		19,000		17,000
Net interest income after provision for loan losses	39,077			24,157		27,243		29,280
Noninterest income	14,120			15,196		16,979		15,899
Noninterest expense	57,462			55,917		56,785		60,082
Loss from continuing operations before provision (benefit) for income taxes	(4,265		)	(16,564	)	(12,563	)	(14,903	)
Provision (benefit) for income taxes	52			72		(11,581	)	803
Net loss from continuing operations, net of tax	(4,317		)	(16,636	)	(982	)	(15,706	)
Loss from discontinued operations before benefit for income taxes	(1,766		)	(1,340	)	(1,760	)	(1,593	)
Benefit for income taxes	—			—		—		—
Loss from discontinued operations, net of tax	(1,766		)	(1,340	)	(1,760	)	(1,593	)
Net loss	(6,083		)	(17,976	)	(2,742	)	(17,299	)
Less: net income (loss) attributable to noncontrolling interest in subsidiary	65			(927	)	(668	)	(1,420	)
Net loss attributable to First Banks, Inc.	$	(6,148	)	(17,049	)	(2,074	)	(15,879	)
Basic and diluted loss per common share:
Loss per common share from continuing operations	$	(406.77	)	(888.37	)	(240.62	)	(833.72	)
Loss per common share from discontinued operations	$	(74.64	)	(56.63	)	(74.39	)	(67.32	)
Loss per common share	$	(481.41	)	(945.00	)	(315.01	)	(901.04	)

135

FIRST BANKS, INC.

INVESTOR INFORMATION

FIRST BANKS, INC. TRUST PREFERRED SECURITIES

The preferred securities of First Preferred Capital Trust IV are traded on the New York Stock Exchange with the ticker symbol “FBSPrA.” The preferred securities of First Preferred Capital Trust IV are represented by a global security that has been deposited with and registered in the name of The Depository Trust Company, New York, New York (DTC). The beneficial ownership interests of these preferred securities are recorded through the DTC book-entry system. The high and low preferred securities prices and the dividends declared for 2012 and 2011 are summarized as follows:

First Preferred Capital Trust IV (Issue Date – April 2003) – FBSPrA

	2012			Distributions Declared(1)		2011			Distributions Declared (1)
	High		Low			High		Low
First quarter	$	18.18	9.90	$	0.509375	$	14.20	9.72	$	0.509375
Second quarter	21.40		16.75	0.509375		13.25		10.27	0.509375
Third quarter	23.65		18.81	0.509375		12.00		7.20	0.509375
Fourth quarter	24.48		22.70	0.509375		9.85		6.70	0.509375
				$	2.037500				$	2.037500

(1) Amounts exclude the additional accrued interest on any cumulative unpaid dividends following the announcement of the deferral of such dividend payments in August 2009.

FOR INFORMATION CONCERNING FIRST BANKS, INC., PLEASE CONTACT:

Terrance M. McCarthy President and Chief Executive Officer 135 North Meramec Mail Code – M1-821-014 Clayton, Missouri 63105 Telephone – (314) 854-4600 www.firstbanks.com Lisa K. Vansickle Executive Vice President and Chief Financial Officer 135 North Meramec Mail Code – M1-821-014 Clayton, Missouri 63105 Telephone – (314) 854-4600 www.firstbanks.com

TRANSFER AGENT:

Computershare Investor Services, LLC
2 North LaSalle Street
Chicago, Illinois 60602
Telephone – (312) 588-4990www.computershare.com

136

SIGNATURES

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

FIRST BANKS, INC.
By:	/s/	Terrance M. McCarthy
		Terrance M. McCarthy
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: March 26, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Signatures	Title	Date
/s/ James F. Dierberg	Chairman of the Board of Directors	March 26, 2013
James F. Dierberg
/s/ Michael J. Dierberg	Vice Chairman of the Board of Directors	March 26, 2013
Michael J. Dierberg
/s/ Terrance M. McCarthy	Director and President	March 26, 2013
Terrance M. McCarthy	and Chief Executive Officer
	(Principal Executive Officer)
/s/ Allen H. Blake	Director	March 26, 2013
Allen H. Blake
/s/ James A. Cooper	Director	March 26, 2013
James A. Cooper
/s/ John S. Poelker	Director	March 26, 2013
John S. Poelker
/s/ Guy Rounsaville, Jr.	Director	March 26, 2013
Guy Rounsaville, Jr.
/s/ David L. Steward	Director	March 26, 2013
David L. Steward
/s/ Douglas H. Yaeger	Director	March 26, 2013
Douglas H. Yaeger
/s/ Lisa K. Vansickle	Executive Vice President	March 26, 2013
Lisa K. Vansickle	and Chief Financial Officer
	(Principal Financial and Accounting Officer)

137

INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Restated Articles of Incorporation of the Company, as amended (incorporated herein by reference to Exhibit 3(i) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1993).
3.2	Certificate of Designation of First Banks, Inc. with respect to Class C Fixed Rate Cumulative Perpetual Preferred Stock dated as of December 24, 2008 (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K dated December 31, 2008).
3.3	Certificate of Designation of First Banks, Inc. with respect to Class D Fixed Rate Cumulative Perpetual Preferred Stock dated as of December 24, 2008 (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K dated December 31, 2008).
3.4	By-Laws of the Company (incorporated herein by reference to Exhibit 3.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-1, File No. 33-50576, dated September 15, 1992).
4.1	Instruments defining the rights of security holders, including indentures. The registrant hereby agrees to furnish to the Commission upon request copies of instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries; no issuance of debt exceeds 10% of the assets of the registrant and its subsidiaries on a consolidated basis.
4.2	Warrant to Purchase Shares of First Banks, Inc. Class D Fixed Rate Cumulative Perpetual Preferred Stock dated as of December 31, 2008 (incorporated herein by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K dated December 31, 2008).
10.1	Shareholders’ Agreement by and among James F. Dierberg II and Mary W. Dierberg, Trustees under the Living Trust of James F. Dierberg II, dated July 24, 1989, Michael James Dierberg and Mary W. Dierberg, Trustees under the Living Trust of Michael James Dierberg, dated July 24, 1989; Ellen C. Dierberg and Mary W. Dierberg, Trustees under the Living Trust of Ellen C. Dierberg dated July 17, 1992, and First Banks, Inc. (incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1, File No 33-50576, dated August 6, 1992).
10.2	Comprehensive Banking System License and Service Agreement dated as of July 24, 1991, by and between the Company and FiServ CIR, Inc. (incorporated herein by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1, File No. 33-50576, dated August 6, 1992).
10.3	AFS Customer Agreement by and between First Banks, Inc. and Advanced Financial Solutions, Inc., dated  January 29, 2004 (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).
10.4	Management Services Agreement by and between First Banks, Inc. and First Bank, dated February 28, 2004 (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).
10.5	Service Agreement by and between First Services, L.P. and First Banks, Inc., dated May 1, 2004 (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).
10.6	Service Agreement by and between First Services, L.P. and First Bank, dated May 1, 2004 (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).
10.7	Service Agreement by and between First Banks, Inc. and First Services, L.P., dated May 1, 2004 (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).
10.8*	First Banks, Inc. Nonqualified Deferred Compensation Plan, as amended (incorporated herein by reference to Exhibit 5.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).
10.9	Letter Agreement including the Securities Purchase Agreement – Standard Terms incorporated therein, between First Banks, Inc. and the United States Department of the Treasury, dated as of December 31, 2008 (as amended by the Side Letter Agreement between First Banks, Inc. and the United States Department of the Treasury, dated as of December 31, 2008, and included herein as Exhibit 10.10) (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 31, 2008).
10.10	Side Letter Agreement between First Banks, Inc. and the United States Department of the Treasury, dated as of December 31, 2008 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 31, 2008).

138

10.11	Written Agreement by and among First Banks, Inc., The San Francisco Company, First Bank and the Federal Reserve Bank of St. Louis, dated as of March 24, 2010 (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).
10.12	Revolving Credit Note, dated as of March 24, 2011, by and between First Banks, Inc. and Investors of America Limited Partnership (incorporated herein by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).
10.13	Stock Pledge Agreement, dated as of March 24, 2011, by and between First Banks, Inc. and Investors of America Limited Partnership (incorporated herein by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).
10.14*	First Bank Salary Phantom Stock Plan and Form of Phantom Unit Award Agreement (incorporated herein by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011).
10.15	Revolving Credit Note, dated as of March 20, 2013, by and between First Banks, Inc. and Investors of America Limited Partnership – filed herewith.
10.16	Stock Pledge Agreement, dated as of March 20, 2013, by and between First Banks, Inc. and Investors of America Limited Partnership – filed herewith.
10.17*	Form of TARP Restricted Employee Agreement executed annually by each executive officer named in the Company’s Annual report on Form 10-K – filed herewith.
14.1	Code of Ethics for Principal Executive Officer and Financial Professionals, as amended (incorporated herein by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008).
21.1	Subsidiaries of the Company – filed herewith.
31.1	Rule 13a-14(a) / 15d-14(a) Certifications of Chief Executive Officer – filed herewith.
31.2	Rule 13a-14(a) / 15d-14(a) Certifications of Chief Financial Officer – filed herewith.
32.1	Section 1350 Certifications of Chief Executive Officer – furnished herewith.
32.2	Section 1350 Certifications of Chief Financial Officer – furnished herewith.
99.1	EESA Section 111(b)(4) Certification of Chief Executive Officer – furnished herewith.
99.2	EESA Section 111(b)(4) Certification of Chief Financial Officer – furnished herewith.
101	Financial information from the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Changes in Stockholders’ Equity (iv) Consolidated Statements of Comprehensive Income (Loss); (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements – furnished herewith.
+	Pursuant to Item 601(b)(2), the registrant undertakes to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.
*	Exhibits designated by an asterisk in the Index to Exhibits relate to management contracts and/or compensatory plans or arrangements.

139

EX-10.15

EXHIBIT 10.15

REVOLVING CREDIT NOTE

$5,000,000.00	St. Louis, Missouri
	March 20, 2013

1.FOR VALUE RECEIVED, the undersigned, FIRST BANKS, INC., a Missouri corporation (“Borrower”), hereby promises to pay to the order of INVESTORS OF AMERICA LIMITED PARTNERSHIP, a Nevada limited partnership (“Lender”), on March 31, 2014, or earlier if the principal amount hereof is accelerated pursuant to Section 9 below (the “Maturity Date”), the principal sum of Five Million Dollars ($5,000,000) or, if less, the amount of all unpaid advances (each, an “Advance;” and collectively, “Advances”) made by Lender to Borrower under this Revolving Credit Note (this “Note”). The aggregate principal amount of Advances which Lender shall be committed to have outstanding under this Note at any one time shall not exceed Five Million Dollars ($5,000,000); which amount may be borrowed, paid, re-borrowed and repaid, in whole or in part, subject to the terms and conditions of this Note referred to below.

2.Borrower shall give Lender oral or written notice (a “Notice of Borrowing”) by noon (St. Louis time) on the second Business Day prior to the date of each Advance to be made to Borrower, specifying: (a) the date of such Advance, which shall be a Business Day; and (b) the aggregate principal amount of such Advance. A Notice of Borrowing shall not be revocable by Borrower. Subject to the terms and conditions of this Note, provided that Lender has received the Notice of Borrowing, Lender shall (unless Lender determines that any applicable condition specified in this Note has not been satisfied) make the applicable Advance to Borrower not later than 2:30 p.m. (St. Louis time) on the Business Day specified in said Notice of Borrowing. If Lender makes a new Advance under this Note on a day on which Borrower is required to or has elected to repay all or any part of an outstanding Advance, Lender shall apply the proceeds of its new Advance to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by Lender to Borrower, or remitted by Borrower to Lender, as the case may be.

3.Interest on each Advance under this Note shall accrue at an annual rate equal to the LIBOR Rate. Interest on each Advance hereunder shall be payable monthly in arrears on the first (1^st) day of each month commencing on the first such date after such Advance is made and on the Maturity Date. Lender's internal records of applicable interest rates shall be determinative in the absence of manifest error. From and after the Maturity Date, whether by reason of acceleration or otherwise, interest shall accrue and be payable on demand on the outstanding principal balance of this Note at an annual rate equal to Five Percent (5%) over and above the LIBOR Rate. If Borrower fails to make any payment of any principal of, or interest on, this Note when the same shall become due and payable, whether by reason of maturity, acceleration or otherwise, in addition to all of the other rights and remedies of Lender under this Note and/or at law or in equity, Borrower shall pay Lender on demand with respect to each such late payment a late fee in an amount equal to Five Percent (5%) of the amount of each such late payment. Interest shall be computed on the basis of a year consisting of 360 days and paid for actual days elapsed.

4.Borrower shall make each payment of principal of, and interest on, this Note and all other amounts payable under this Note not later than 12:00 noon (St. Louis time) on the date when due, in Federal or other immediately available funds to Lender at 600 James S. McDonnell Boulevard, Hazelwood, Missouri 63042, or such other address as Lender may from time to time specify in writing. Any such payment received by Lender after 12:00 noon (St. Louis time) shall be deemed to have been paid on the next succeeding Business Day. Whenever any payment of principal of, or interest on, this Note shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon, at the then applicable rate, shall be payable for such extended time. The acceptance by Lender of any payment of principal or interest due under this Note after the date it is due shall not be held to establish a custom or waive any rights of Lender to enforce prompt payment of any further payments or otherwise.

5.Borrower shall have the right to prepay all or any portion from time to time of the unpaid principal of this Note prior to the Maturity Date, provided that on each prepayment date, Borrower shall pay to the order of Lender all accrued and unpaid interest on the principal portion of this Note being prepaid to and including the date of such prepayment.

6.Borrower hereby represents and warrants to Lender that (a) the execution, delivery and performance by Borrower of this Note (i) have been duly authorized by all necessary corporate action on the part of Borrower, (ii) require no consent, approval or authorization of, action by or in respect of or filing or recording with any governmental or regulatory body, instrumentality, authority, agency or official or any other person or entity except such as have already been obtained, and (iii) do not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under or result in any violation of, Borrower's Articles of Incorporation, By-Laws, any applicable law, rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory body, instrumentality, authority, agency or official or any agreement, document or instrument to which Borrower is a party or by which Borrower or any of its property or assets is bound or to which Borrower or any of its property or assets is subject, (b) this Note has been duly executed and delivered by Borrower and constitutes the legal, valid and binding obligation of Borrower and is enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (c) no part of the proceeds of this Note will be used for personal, family or household purposes, and (d) Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended) and no part of the proceeds of any Advance under this Note will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately (i) to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock, or to refund or repay indebtedness originally incurred for such purpose or (ii) for any purpose which entails a violation of, or which is inconsistent with, the provisions of any of the Regulations of the Board of Governors of the Federal Reserve System, including, without limitation, Regulations U, T and X thereof, as amended.

7.Borrower hereby covenants and agrees to provide to Lender, upon Lender's written request, each quarterly Bank Holding Company Performance Report filed by Borrower with the Board of Directors of the Federal Reserve System.

8.This Note is described in and secured by the Stock Pledge Agreement dated the date hereof , executed by Borrower in favor of Lender, as the same may from time to time be amended, modified, extended, renewed or restated (the “Stock Pledge Agreement”), pursuant to which Borrower shall pledge to Lender as security for this Note all of the shares of the outstanding common stock of The San Francisco Company, a Delaware corporation, as more particularly described therein (the “Pledged Shares”).

9.If any of the following events (each an “Event of Default;” and collectively, “Events of Default”) shall occur:

(a) Borrower shall fail to make any payment of any principal of, interest on or other amount due under, this Note within five (5) days after the same shall become due and payable, whether by reason of demand, maturity, acceleration or otherwise;

(b) any representation or warranty made by Borrower in this Note shall prove to have been untrue or incorrect in any material respect when made;

(c) Borrower shall fail to perform or observe any other term, covenant or provision contained in this Note and such failure shall remain unremedied for thirty (30) days after the earlier of (i) written notice of default is given to Borrower by Lender or (ii) an officer of Borrower obtaining knowledge of such failure;

(d) Borrower shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code or any other Federal, state or foreign bankruptcy, insolvency, receivership, liquidation or similar law, (ii) consent to the institution of, or fail to contravene in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official of itself, himself or herself or a substantial part of its property or assets, (iv) file an answer admitting the material allegations of a petition filed against itself in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or failure generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing;

- 2 -

(e) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Borrower, or of a substantial part of the property or assets of Borrower, under Title 11 of the United States Code or any other Federal, state or foreign bankruptcy, insolvency, receivership, liquidation or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official of Borrower or of a substantial part of the property or assets of Borrower or (iii) the winding up or liquidation of Borrower; and any such proceeding or petition shall continue undismissed for thirty (30) consecutive days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for thirty (30) consecutive days;

(f) dissolution, termination of existence or operations, merger, consolidation or transfer of a substantial part of the property or assets of Borrower;

(g) an injunction, attachment or judgment shall be issued against any of the property or assets of Borrower which could reasonably be expected to have a material adverse effect on such property or assets;

(h) Borrower shall become insolvent in either the equity or bankruptcy sense of the term;

(i) Borrower shall have a judgment entered against it by a court having jurisdiction in the premises, and such judgment shall not be appealed in good faith (and execution of such judgment stayed during such appeal) or satisfied by Borrower within thirty (30) days after the entry of such judgment;

(j) any “Event of Default” (as defined therein) shall occur under or within the meaning of the Stock Pledge Agreement;

(k) the Stock Pledge Agreement shall at any time for any reason cease to be in full force and effect or shall be declared to be null and void by a court of competent jurisdiction, or if the validity or enforceability thereof shall be contested or denied by any of parties thereto, or if Borrower shall deny that it has any further liability or obligation thereunder or if Borrower shall fail to comply with or observe any of the terms, provisions or conditions contained in the Stock Pledge Agreement;

(l) Borrower shall be declared by Lender to be in default on, or pursuant to the terms of, (i) any other present or future obligation to Lender, including, without limitation, any other loan, line of credit, revolving credit, guaranty or letter of credit reimbursement obligation or (ii) any other present or future agreement purporting to convey to Lender a lien or encumbrance upon, or a security interest in, any of the property or assets of Borrower; or

(m) any default or event of default shall occur under or within the meaning of any other agreement, document or instrument heretofore, now or hereafter executed by Borrower with or in favor of Lender;

then, and in each such event (other than an event described in clauses (d) or (e) above), Lender may, at its option, declare the entire outstanding principal balance of this Note and all accrued and unpaid interest thereon to be immediately due and payable, whereupon all of such outstanding principal balance and accrued and unpaid interest shall become and be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, and Lender may exercise any and all other rights and remedies which it may have under the Stock Pledge Agreement (including foreclosure of the Pledged Shares) and/or at law or in equity; provided, however, that upon the occurrence of any event described in clauses (d) or (e) above, the entire outstanding principal balance of this Note and all accrued and unpaid interest thereon shall automatically become immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, and Lender may exercise any and all other rights and remedies which it may have under the Stock Pledge Agreement (including foreclosure of the Pledged Shares) and/or at law or in equity.

10.In the event that any payment of any principal of, interest on or other amount due under, this Note shall not be paid when due after taking into account any notice, grace or cure periods, whether by reason of maturity, acceleration or otherwise, and this Note is placed in the hands of an attorney or attorneys for collection or for foreclosure of the Pledged Shares, or if this Note is placed in the hands of an attorney or attorneys for representation of Lender in connection with bankruptcy or insolvency proceedings relating to or affecting this Note, Borrower hereby promises to pay to the order of Lender, in addition to all other amounts otherwise due on, under or in respect of this Note, the costs and expenses of such collection, foreclosure and representation, including, without limitation, reasonable

- 3 -

attorneys' fees and expenses (whether or not litigation shall be commenced in aid thereof). All parties hereto expressly waive presentment, demand for payment, notice of dishonor, protest and notice of protest.

11.Borrower hereby agrees to pay or reimburse Lender upon demand for (i) all out-of-pocket costs and expenses including, without limitation, reasonable attorneys' fees and expenses, incurred by Lender in connection with the preparation, negotiation, execution and administration of this Note, the Stock Pledge Agreement, and any and all other agreements, documents and instruments relating to this Note (collectively, the “Loan Documents”), (ii) all search, recording and filing fees incurred by Lender in connection with this Note and the other Loan Documents, (iii) all out-of-pocket costs and expenses, including, without limitation, reasonable attorneys' fees and expenses, incurred by Lender in connection with the preparation of any waiver or consent under any of the Loan Documents or any amendment, modification, extension, renewal and/or restatement of any of the Loan Documents or any Event of Default under this Note; and (iv) if an Event of Default under this Note occurs, all out-of-pocket costs and expenses, including, without limitation, reasonable attorneys' fees and expenses, incurred by Lender in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom. Borrower further agrees to pay or reimburse Lender for any stamp or other taxes which may be payable with respect to the execution, delivery, recording and/or filing of this Note or any of the other Loan Documents. All of the obligations of Borrower under this paragraph shall survive the satisfaction and payment of this Note.

12.To the extent that Lender receives any payment on account of Borrower's obligations under this Note and any such payment(s) or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, subordinated and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy act, state or Federal law, common law or equitable cause, then, to the extent of such payment(s) received, Borrower's obligations under this Note or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment(s) had not been received by Lender and applied on account of Borrower's obligations under this Note.

13.BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, EASTERN DIVISION, AS LENDER MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, (B) AGREES THAT ALL CLAIMS IN RESPECT TO ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF HIS PRESENT OR SUBSEQUENT DOMICILES. BORROWER (AND BY ITS ACCEPTANCE HEREOF, LENDER) HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH BORROWER AND LENDER ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS NOTE.

14.This Note may not be changed, nor may any term, condition or Event of Default be waived, modified or discharged orally but only by an agreement in writing, signed by Lender. No failure or delay by Lender in exercising any right, remedy, power or privilege under this Note shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. In addition, Lender may, without notice to and without releasing the liability of Borrower, add or release one or more parties or release any collateral or security for this Note in whole or in part.

15.This notice is provided pursuant to Section 432.047 R.S.Mo. As used herein, “creditor” means Lender and “this writing” means this Note and the other Loan Documents. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. This Note embodies the entire agreement and understanding between Borrower and Lender and supersedes all prior agreements and understandings (oral or written) relating to the subject matter hereof.

- 4 -

16.This Note shall be governed by and construed in accordance with the substantive laws of the State of Missouri (without reference to conflict of law principles).

17.Certain definitions applicable to this Note are attached hereto and incorporated by reference as Exhibit A.

Borrower:
FIRST BANKS, INC.
By:	/s/	Terrance M. McCarthy
		Terrance M. McCarthy
		President and Chief Executive Officer

- 5 -

Exhibit A

(Definitions)

Business Day shall mean any day (other than a Saturday or Sunday) on which commercial banks are open for business in St. Louis, Missouri.

Eurodollar Business Day shall mean any Business Day on which commercial bank(s) are open for international business (including dealings in dollar deposits) in London.

LIBOR Base Rate shall mean an annual rate (rounded upwards, if necessary, to the next higher 1/16 of 1%) equal to the three-month British Bankers' Association interest settlement rates for U.S. Dollar deposits, as published by Bloomberg Financial Services, Dow Jones Market Service, Telerate, Reuters or any other service from time to time used by Lender.

LIBOR Margin shall mean Three Percent (3.0%).

LIBOR Rate shall mean the sum of the LIBOR Base Rate plus the LIBOR Margin. The LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the LIBOR Base Rate.

EX-10.16

EXHIBIT 10.16

STOCK PLEDGE AGREEMENT

1.As collateral security for the payment of any and all indebtedness (principal, interest, fees, collection costs and expenses and other amounts), liabilities and obligations of the undersigned, FIRST BANKS, INC., a Missouri corporation (“Debtor”), to INVESTORS OF AMERICA LIMITED PARTNERSHIP, a Nevada limited partnership (“Secured Party”) evidenced by or arising under the Revolving Credit Note dated the date hereof, executed by Debtor, and payable to the order of Secured Party in the principal amount of up to $5,000,000.00 (the “Note”) (each, a “Liability;” and collectively, “Liabilities”), Debtor hereby pledges and delivers to Secured Party and grants Secured Party a security interest in and a lien upon the following:

(a) 100 shares of common stock of The San Francisco Company, a Delaware corporation (“SF Company”), set forth and described on Collateral Schedule #1 attached hereto and incorporated herein by reference (the “Pledged Shares”) and the certificates representing the Pledged Shares, and all dividends, cash, instruments, stock, securities and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares,

(b) all additional shares of any class of capital stock of SF Company from time to time acquired by Debtor in any manner (the “Additional Shares”), and the certificates representing such Additional Shares, and all dividends, cash, instruments, stock, securities and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Additional Shares,

(c) all other rights appurtenant to the property described in clauses (a) and (b) above (including, without limitation, voting rights) and

(d) all cash and noncash proceeds of any and all of the foregoing (collectively, the “Collateral”).

Certificates representing the Pledged Shares set forth on Collateral Schedule #1 attached hereto, accompanied by proper instruments of assignment duly executed in blank by Debtor, are herewith being delivered to Secured Party. Promptly upon Debtor's acquisition of any Additional Shares, Debtor will (i) deliver to Secured Party the certificates representing such Additional Shares together with proper instruments of assignment duly executed in blank by Debtor and (ii) amend Collateral Schedule #1 to include such Additional Shares.

2.Debtor hereby covenants and agrees that (a) with respect to all shares of any class of capital stock of SF Company pledged to Secured Party contemporaneously with the execution of or pursuant to this Stock Pledge Agreement (this “Agreement”), or at any time hereafter, if any stock dividends, stock splits, reclassifications, adjustments or other changes are made in the capital structure of SF Company (whether as a result of a reorganization, recapitalization, share split up, merger, transfer, consolidation or otherwise), all new, additional or substituted securities issued with respect to any of such shares by reason of any such change shall be subject to Secured Party's security interest and immediately delivered to Secured Party, which shall hold such shares or securities so issued as additional Collateral, (b) if any warrants, options or other rights now or hereafter exist with respect to any of the Pledged Shares, any of the Additional Shares or any of the other Collateral, Debtor has and hereafter shall immediately so advise Secured Party of the existence of such warrants, options and rights, all such warrants, options and rights shall be subject to Secured Party's security interest and all stock or securities issued pursuant to the exercise of any such warrant, option or right shall be subject to Secured Party's security interest and immediately delivered to Secured Party, which shall hold such shares or securities as additional Collateral, (c) Debtor shall immediately pledge and deliver to Secured Party any and all shares of any class of capital stock of SF Company now owned or hereafter acquired by Debtor and (d) Debtor shall not, without the prior written consent of Secured Party, (i) sell, assign or otherwise transfer or pledge any of the Pledged Shares, any of the Additional Shares or any of the other Collateral, (ii) create or permit any other lien or encumbrance upon, or any other security interest in, any of the Pledged Shares, any of the Additional Shares or any of the other Collateral or (iii) grant any option or right with respect to any of the Pledged Shares, any of the Additional Shares or any of the other Collateral.

3.Debtor hereby represents and warrants to Secured Party that:

(a)Debtor is the sole legal, beneficial and record owner of all of the Collateral pledged hereunder and none of the Collateral pledged hereunder is or will be subject to any security interests, liens, encumbrances, charges, claims, warrants, options, proxies, restrictions on transfer, resale or other disposition, restrictions on voting rights, preferences and/or other preferential arrangements of any kind or nature whatsoever (except those in favor of Secured Party under this Agreement);

(b)the Pledged Shares have been duly authorized and validly issued by SF Company and are fully paid and non-assessable;

(c)Debtor has all requisite corporate power and authority to (i) pledge, assign, grant a security interest in, transfer and deliver the Collateral to Secured Party in the manner hereby done or contemplated and (ii) execute, deliver and perform all of its obligations under this Agreement;

(d)this Agreement has been duly authorized, executed and delivered by Debtor and constitutes the legal, valid and binding obligation of Debtor, enforceable in accordance with its terms;

(e)no consent, approval, authorization or other order of any governmental or regulatory agency, authority, body or official or any other third party is or will be required for the execution, delivery and/or performance of this Agreement by Debtor or the delivery by Debtor of the Collateral to Secured Party as provided herein except such as have already been obtained;

(f)the execution, delivery and performance by Debtor of this Agreement do not and will not (i) violate any provision of the Articles of Incorporation or Bylaws of Debtor or any law, rule, regulation (including, without limitation, Regulations U and X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Debtor, (ii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, document or instrument to which Debtor is a party or by which it or its properties may be bound or affected, or (iii) result in or require the creation or imposition of any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature upon or with respect to any of the property or assets of Debtor (other than in favor of Secured Party as provided for in this Agreement);

(g)upon the execution of this Agreement, Secured Party will have a valid and enforceable security interest in the Collateral. So long as Secured Party has possession of the certificates representing the Pledged Shares, Secured Party's security interest in the Pledged Shares and the proceeds thereof will be perfected and have a first priority; and

(h)the authorized capital stock of SF Company consists solely of 1,000 shares of common stock, $0.10 par value, and no shares of preferred stock. As of the date hereof, (i) there are 100 shares of common stock of SF Company issued and outstanding; (ii) Debtor is the sole legal, beneficial and record owner of all of such shares, representing all of the issued and outstanding shares of common stock of SF Company; and (iii) the Pledged Shares consist of all of the outstanding shares of capital stock of SF Company. The Pledged Shares are subject to no security interests, liens, encumbrances, warrants, options, proxies, restrictions on transfer, resale or other disposition or restrictions on voting rights (except those in favor of Secured Party). As of the date hereof, there are no warrants or options, or any agreements to issue any warrants or options, outstanding with respect to any class of capital stock of SF Company.

4.Debtor hereby covenants and agrees that: (a) it will not cause or permit SF Company to (i) authorize or issue any new types, varieties or classes of capital stock or any bonds or debentures, subordinated or otherwise, or any stock warrants or options, (ii) authorize or issue any additional shares of any existing class of capital stock or (iii) declare any stock dividends or stock splits or take any other action which could, directly or indirectly, decrease Debtor's ownership interest in such corporation; and (b) without the prior written consent of Secured Party, (i) it will not cause or permit SF Company to amend or otherwise change its Articles or Certificate of Incorporation or its Bylaws in any manner which could affect any of the voting or other rights of any of the shares of capital stock of SF Company now owned or hereafter acquired by Debtor and (ii) it will not take or cause or permit SF Company to take any other action which could, directly or indirectly, affect the voting rights of Debtor with respect to any shares of capital stock of SF Company now owned or hereafter acquired by Debtor.

5.So long as no Event of Default (as hereinafter defined) under this Agreement has occurred and is continuing, notwithstanding any other provision of this Agreement to the contrary:

(a)Debtor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Shares or any part thereof for any purpose not inconsistent with the terms of this Agreement or the terms of the Note; provided, however, that (i) Debtor shall not exercise or refrain from exercising any such right if such action could reasonably be expected to have an adverse effect on the value of the Pledged Shares or any part thereof

- 2 -

and (ii) Debtor shall not exercise or refrain from exercising any such right in a manner which would authorize or effect (A) the dissolution or liquidation, in whole or in part, of SF Company, (B) the consolidation or merger of SF Company with or into any corporation or other entity unless SF Company is the surviving entity, (C) the sale, disposition or encumbrance of all or substantially all of the property or assets of SF Company, (D) any change in the authorized capital of SF Company, (E) the issuance of any additional shares of any class of capital stock of SF Company or (F) the alteration of the voting rights with respect to any class of capital stock of SF Company; and

(b)Debtor shall be entitled to collect and use for its proper corporate purposes all cash dividends (except cash dividends paid or payable in respect of the total or partial liquidation of SF Company) paid on the Pledged Shares; provided, however, that until actually paid, all rights to such dividends shall remain subject to the security interest created by this Agreement. All dividends (other than cash dividends governed by the immediately preceding sentence) and all other distributions in respect of any of the Pledged Shares or any of the other Collateral, whenever paid or made, shall be delivered to Secured Party and held by it subject to the security interest created by this Agreement.

6.If any one or more of the following events (each, an “Event of Default”) shall occur and be continuing:

(a) Debtor shall fail to make any payment of any principal of, or interest on, any of the Liabilities as and when the same shall become due and payable taking into account any applicable notice, grace or cure periods, whether by reason of demand, maturity, acceleration or otherwise;

(b) Debtor shall fail to perform or observe any term, provision, covenant or agreement contained in this Agreement and any such failure shall remain unremedied for thirty (30) days after the earlier of (i) written notice of default is given to Debtor by Secured Party or (ii) an officer of Debtor obtaining knowledge of such default;

(c) any representation or warranty made by Debtor in this Agreement shall prove to be untrue or incorrect in any material respect;

(d) if the shares of common stock of SF Company then pledged by Debtor to Secured Party pursuant to this Agreement shall at any time constitute less than all of the then issued and outstanding shares of common stock of SF Company; or

(e) any “Event of Default” (as defined therein) shall occur under or within the meaning of the Note;

then Secured Party may, at its option, (A) declare the principal of and interest on any or all of the Liabilities to be immediately due and payable, (B) exercise all voting rights with respect to the Collateral, (C) appropriate and apply toward the payment and discharge of any such Liability, moneys on deposit or otherwise held by Secured Party for the account of, to the credit of or belonging to Debtor, (D) sell or cause to be sold any Collateral, (E) have transferred to or registered in the name of Secured Party, or its nominee or nominees, any Collateral and thereafter to exercise all rights with respect thereto as the absolute owner thereof, without notice or liability to Debtor, except to account for money or property actually received by Secured Party; provided, however, that Secured Party may treat all cash proceeds as additional Collateral and such proceeds need not be applied to the reduction of the Liabilities of Debtor unless Secured Party so elects, (F) in Secured Party's name, or in the name of Debtor, demand, sue for, collect and receive money, securities or other property which may at any time be payable or receivable on account of or in exchange for any of the Collateral, or make any compromise or settlement that Secured Party considers desirable with respect thereto or renew or extend the time of payment or otherwise modify the terms of any obligation included in the Collateral; provided, however, that it is expressly agreed that Secured Party shall not be obligated to take any step to preserve rights against prior parties on any of the Collateral, and that reasonable care of the Collateral shall not include the taking of any such step and (G) exercise any or all of the rights and remedies of a Secured Party under the Uniform Commercial Code of the State of Missouri, as from time to time amended (the “Code”), or other applicable law. Any sale of Collateral may be made without demand of performance and any requirement of the Code for reasonable notice to Debtor shall be met if such notice is mailed, postage prepaid, to Debtor at its address as it appears herein or as last shown on the records of Secured Party at least five (5) business days before the time of sale, disposition or other event giving rise to the notice. Debtor acknowledges and agrees that it shall be reasonable for Secured Party to sell the Collateral on credit for present or future delivery without any assumption of any credit risk. In case of a public sale, notice published by Secured Party for ten (10) days in a newspaper of general circulation in the City or County where the sale is to be held shall be sufficient. The proceeds of any sale, or sales, of Collateral shall be applied by Secured Party in the following order: (1) to expenses, including attorneys' fees and expenses actually incurred, arising from the enforcement of any of the provisions hereof, or of the Liabilities or of any actual or attempted sale; (2) to the payment

- 3 -

or the reduction of any of the Liabilities of Debtor to Secured Party with the right of Secured Party to distribute or allocate such proceeds in such order and manner as Secured Party shall elect, and its determination with respect to such allocation shall be conclusive; and (3) to the payment of any surplus remaining after payment of the amounts mentioned, to Debtor or to whomsoever may be lawfully entitled thereto. If any deficiency arises upon any such sale or sales, Debtor agrees to pay the amount of such deficiency promptly upon demand with interest. Notwithstanding that Secured Party may continue to hold the Collateral and regardless of the value thereof, Debtor shall be and remain liable for the payment in full of the principal of, and interest on, any balance of the Liabilities and expenses at any time unpaid.

7.Secured Party shall have no duties or obligations with respect to the Collateral except that while the Collateral is in Secured Party's possession, Secured Party's obligation with respect to the same shall be limited to preserving the physical condition of the same.

8.At any time, whether prior to or after the occurrence of an Event of Default under this Agreement, Secured Party may, at its option, but shall not be obligated to, surrender or deliver, without further liability on the part of Secured Party to account therefor, all or any part of the Collateral to or upon the written order of Debtor, permit substitutions therefor or additions thereto, and accept the receipt of Debtor for any Collateral, or proceeds thereof, which receipt shall be a full and complete discharge of Secured Party with respect to the Collateral so delivered and proceeds so paid. Upon payment in full by Debtor of all Liabilities, Secured Party will deliver to Debtor all certificates and indorsements relating to the Pledged Shares.

9.The rights and powers of Secured Party under this Agreement (a) are cumulative and do not exclude any other right which Secured Party may have independent of this Agreement and (b) may be exercised or not exercised at the discretion of Secured Party (i) without regard to any rights of Debtor, (ii) without forfeiture or waiver because of any delay in the exercising thereof, (iii) without imposing any liability on Secured Party for so exercising or failing to exercise and (iv) in the event of a single or partial exercise thereof, without precluding further exercise thereof. No delay or omission on the part of Secured Party in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder and no waiver shall be construed as a bar to or waiver of any right or remedy in the future. The rights and powers of Secured Party under this Agreement shall inure to the benefit of its successors and assigns and any assignee of any Liability secured hereby. Any and all liabilities and obligations of Debtor under this Agreement shall be binding upon the successors and assigns of Debtor.

10.Debtor agrees to do such further acts and things and to execute and deliver such additional conveyances, assignments, agreements and instruments (including, but not limited to, one or more financing statements pursuant to the Uniform Commercial Code) as Secured Party may at any time reasonably request in connection with the administration or enforcement of this Agreement or related to the Collateral or any part thereof or in order to better assure and confirm to Secured Party its rights, powers and remedies hereunder. Effective upon the occurrence of and during the continuance of an Event of Default, Debtor hereby makes, constitutes and appoints Secured Party the true and lawful agent and attorney-in-fact of Debtor with full power of substitution to execute, endorse and deliver such agreements, documents and instruments and to take such other action in the name and on behalf of Debtor as may be necessary or appropriate to carry out the intent of this Agreement, including, without limitation, the grant of the security interest granted under this Agreement, and to perfect and protect the security interest granted to Secured Party in respect of the Collateral and Secured Party's rights created under this Agreement, which power of attorney is irrevocable during the term of this Agreement. Debtor hereby consents and agrees that the issuers of or obligors in respect of the Collateral or any registrar or transfer agent for any of the Collateral shall be entitled to accept the provisions hereof as conclusive evidence of the right of Secured Party to effect any transfer pursuant to this Agreement, notwithstanding any other notice or direction or the contrary heretofore or hereafter given by Debtor or any other person (unless consented to in writing by Secured Party) to any such issuers or obligors or to any such registrar or transfer agent.

11.Except as otherwise specified in this Agreement, any notice, request, demand, consent or other communication under this Agreement shall be in writing and delivered in person, or sent by registered or certified mail, return receipt requested and postage prepaid, or transmitted by facsimile, if to Debtor at 135 N. Meramec, Clayton, MO 63105, Attention: Terrance M. McCarthy or Lisa K. Vansickle, (314) 854-5454 (FAX), or if to Secured Party at 135 N. Meramec, Clayton, MO 63105, Attention: James F. Dierberg, (314) 854-5454 (FAX) and 600 James S. McDonnell Blvd., Hazelwood, MO 63042, Attention: Marilyn A. Callahan, (314) 592-6647 (FAX) or at such other address as either party may designate as its address for communications hereunder by notice so given. Such notices shall be deemed effective on the day on which delivered, if delivered in person, on the third (3^rd) business day after the day on which mailed, if sent by registered or certified mail, or when with answerback confirmation received if sent by facsimile.

- 4 -

12.The terms of this Agreement, the pledge of Collateral hereunder and the security interest created by this Agreement are continuing and shall apply to the Liabilities. Debtor may not revoke or terminate this Agreement unless and until (a) all of the Liabilities shall have been indefeasibly paid in full in cash, (b) the Note shall have been terminated and (c) Secured Party shall have no further commitment or obligation to make advances or extend credit to Debtor, whether under the Note or otherwise.

13.If claim is ever made on Secured Party for repayment or recovery of any amount or amounts received by Secured Party in payment or on account of any of the Liabilities (including payment under a guaranty or from application of collateral) and Secured Party repays all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body having jurisdiction over Secured Party or any property of Secured Party or (b) any settlement or compromise of any such claim effected by Secured Party with any such claimant (including, without limitation, Debtor), then and in such event Debtor agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor, notwithstanding any cancellation of any note or other instrument or agreement evidencing such Liabilities or of this Agreement, and this Agreement shall continue to be effective or be reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered to the same extent as if such amount had never originally been received by Secured Party except to the extent such judgment, decree, order, settlement or compromise were caused by the gross negligence or intentional misconduct of Secured Party. This Agreement shall continue to be effective or be reinstated, as the case may be, if (i) at any time any payment of any of the Liabilities is rescinded or must otherwise be returned by Secured Party upon the insolvency, bankruptcy or reorganization of Debtor or otherwise, all as though such payment had not been made or (ii) this Agreement is released in consideration of a payment of money or transfer of property or grant of a security interest by Debtor or any other person or entity and such payment, transfer or grant is rescinded or must otherwise be returned by Secured Party upon the insolvency, bankruptcy or reorganization of such person or entity or otherwise, all as though such payment, transfer or grant had not been made.

14.This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Missouri (without reference to conflict of law principles); provided, however, that the perfection and effect of the perfection or nonperfection of the security interests and liens created by this Agreement shall in all respects be governed, construed, applied and enforced in accordance with the substantive laws of the applicable jurisdictions.

15.DEBTOR IRREVOCABLY AGREES THAT, SUBJECT TO SECURED PARTY'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN THE COUNTY OF ST. LOUIS, STATE OF MISSOURI. DEBTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT IN ACCORDANCE WITH THIS SECTION. DEBTOR AND BY ITS ACKNOWLEDGEMENT BELOW, SECURED PARTY, IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND SECURED PARTY ARE PARTIES.

This Agreement executed by Debtor in favor of Secured Party as of March 20, 2013.

(SIGNATURES ON FOLLOWING PAGE)

- 5 -

SIGNATURE PAGE

STOCK PLEDGE AGREEMENT

Debtor:
FIRST BANKS, INC.
By:	/s/	Terrance M. McCarthy
		Terrance M. McCarthy
		President and Chief Executive Officer

Acknowledged by and agreed to by Secured Party as of March 20, 2013:

Secured Party:
INVESTORS OF AMERICA LIMITED PARTNERSHIP
By:	/s/	James F. Dierberg
		James F. Dierberg
		President of First Securities America, Inc.,
		General Partner of Investors of America Limited Partnership

- 6 -

COLLATERAL SCHEDULE #1

Description of Stock Pledged	Stock Certificate Number(s)
100 shares of Common Stock of The San Francisco Company	The San Francisco Company Stock Certificate No. SFC 002A, issued in the name of First Banks, Inc.

EX-10.17

EXHIBIT 10.17

TARP RESTRICTED EMPLOYEE AGREEMENT (“A” Form)

THIS AGREEMENT is made as of the _____ day of _______, 20__ (the “Effective Date”), by and between the Company (as defined below), and _______________,a resident of the State of ____________ (the “Executive”).

The Company has entered into an agreement (the “Participation Agreement”) with the United States Department of Treasury (the “Treasury”) that provides for the Company's participation in the Treasury's Troubled Asset Relief Program (“TARP”). If the Company does not participate or ceases at any time to participate in TARP, this Agreement shall be of no further force and effect.

As a condition of receiving such financial assistance, the Company is required to comply with the compensation requirements established by the TARP Guidance (as defined below) and applicable to entities receiving assistance through TARP. The requirements of this Agreement shall apply to the Executive from the first day of the TARP Covered Period (as defined below) through the earlier of the last day of the TARP Covered Period or the date the Executive ceases to be a Senior Executive Officer (as defined below) and/or Other Highly Compensated Employee (as defined below), except as otherwise contemplated by the TARP Guidance. To comply with these requirements, and in consideration of the benefits that the Executive will receive as a result of the Company's participation in TARP and for other good and valuable consideration the sufficiency of which the Executive hereby acknowledges, the parties agree as follows:

1. No Golden Parachute Payments. The Company is prohibited from making, and the Executive shall not be entitled to receive, a Golden Parachute Payment during the TARP Covered Period if the Executive is a Senior Executive Officer or Other Highly Compensated Employee at the date the Golden Parachute Payment would otherwise be paid. For purposes of this Agreement, the date the Golden Parachute Payment would otherwise be paid is the date of the Executive's departure or the change in control event that gives rise to the payment, even if any portion of the payment would be paid after the TARP Covered Period.

2. Recovery of Bonus and Incentive Compensation. Any bonus, retention award, or incentive compensation paid to the Executive during the TARP Covered Period is subject to recovery or “clawback” by the Company if the payments were based on statements of earnings, revenues, gains, or other criteria that are later found to be materially inaccurate and at the time the bonus, retention award or incentive compensation was paid the Executive was a Senior Executive Officer or Other Highly Compensated Employee. The Executive agrees to return promptly any such bonus, retention award, or incentive compensation identified by the Company. If the Executive fails to properly return such bonus, retention award, or incentive compensation, the Executive hereby agrees that the amount of such bonus, retention award, or incentive compensation may be deducted from any and all other compensation owed to the Executive. The Executive acknowledges that the Company may take appropriate disciplinary action (up to, and including, termination of employment) if the Executive fails to return such bonus, retention award, or incentive compensation.

3. Prohibition on Tax Gross-Ups. The Company is prohibited from formally or informally providing a right to a gross-up to any Senior Executive Officer or any Other Highly Compensated Employees during the TARP Covered Period. This includes, but is not limited to, a right to a gross-up that is given to the Executive during the TARP Covered Period, even if the gross-up is actually paid at a future date. A “gross-up” is any reimbursement of taxes owed with respect to any compensation (other than tax equalization agreements for employees subject to tax from a non-U.S. jurisdiction).

4. Limitation of Bonus, Retention Award, and Incentive Compensation. The Company is prohibiting payment or accrual of any bonus, retention award, or incentive compensation during the TARP Covered Period if the Executive, at the time of such payment or accrual, is an Other Highly Compensated Employee of the Company. This prohibition does not apply to any bonus payment required to be paid pursuant to a written employment agreement between the Executive and the Company if such agreement was executed on or before February 11, 2009, and has not been materially modified after February 11, 2009.

5. Limitation of Compensation Encouraging Risks and Manipulation. The Company is prohibited from paying or accruing compensation that includes incentives for Senior Executive Officers to take unnecessary and excessive risks that threaten the value of the Company, or maintaining any Benefit Plan that encourages manipulation of the Company's reported earnings to enhance the compensation of the Executive or any other employee of the Company. To the extent any such compensation is paid or accrued under an arrangement that is later determined to contain such incentives, the Executive waives any right to such compensation, and, if such compensation has already been delivered to the Executive, the Executive agrees to repay such amount to the Company. To the extent any Benefit Plan in which the Executive participates encourages such unnecessary and excessive risks or manipulation, the Executive hereby acknowledges that any such Benefit Plan (or portion thereof) and the obligations thereunder shall be void or, to the extent permitted by the TARP Guidance, shall be modified in a manner compliant with the TARP Guidance.

6. Additional TARP Provisions. The Company and the Executive acknowledge that additional or modified restrictions, whether the result of legislative activity and/or rules and regulations promulgated by the Treasury, may affect the compensation practices of companies that participate in TARP. To the extent that such additional or modified restrictions impose additional limitations or requirements on the compensation or benefits that would otherwise be payable to the Executive, the Executive specifically agrees that such limitations and requirements shall apply to him and to the Benefit Plans under which such compensation or benefits are provided, and the Executive agrees to enter into any modification to this Agreement to further reflect such limitations and restrictions to the extent that the Company requests Executive do so.

7. Compensation Program Amendments. Each of the Company's existing compensation, bonus, incentive and other benefit plans, arrangements and agreements (including golden parachute, severance and employment agreements) (collectively, “Benefit Plans”) with respect to the Executive is hereby amended to the extent necessary to give effect to Paragraphs 1 through 6. In addition, any Benefit Plans with respect to the Executive that are established or amended hereafter, but during the TARP Covered Period, shall be deemed to incorporate, and shall be interpreted to give effect to, Paragraphs 1 through 6 of this Agreement. Paragraphs 1 through 7 of this Agreement are intended to, and will be interpreted, administered and construed to, comply with the TARP Guidance (and, to the maximum extent consistent with the preceding, to permit operation of the Benefit Plans in accordance with their terms before giving effect to this Agreement).

8. Definitions and Interpretation. As used herein, the following capitalized terms shall have the following meanings:

(a) “Company” means First Banks, Inc. and any entities treated as a single employer with it under the TARP Guidance.

(b) “TARP Covered Period” means the period during which any obligation of the Company arising from financial assistance provided under the TARP remains outstanding; provided, however, that

2

the TARP Covered Period shall not include any period during which the federal government only holds warrants to purchase common stock of the Company.

(c) “TARP Guidance” means (i) EESA and any successive legislation amending or superseding EESA, (ii) all rules and regulations now or hereafter promulgated by the responsible agencies of the United States government under EESA, including without limitation the interim final rules issued by the Treasury on June 15, 2009 and adopted at 31 CFR Part 30, and (iii) to the extent not inconsistent with the provisions of (i) or (ii), any applicable restrictions in any prior securities purchase agreement with the Treasury.

(d) “EESA” means the Emergency Economic Stabilization Act of 2008 as implemented by guidance or regulation issued by the Department of the Treasury and as published in the Federal Register on October 20, 2008, and as amended by the American Recovery and Reinvestment Act of 2009.

(e) “Golden Parachute Payment” means a “golden parachute payment” as defined in the TARP Guidance.

(f) “Other Highly Compensated Employee” means:

(i) with respect to Paragraph 1 of this Agreement, the next five (5) Most Highly Compensated Employees (as defined in the TARP Guidance) of the Company after the Senior Executive Officers;

(ii) with respect to Paragraphs 2 and 3 of this Agreement, the next twenty (20) Most Highly Compensated Employees of the Company after the Senior Executive Officers; and

(iii) with respect to Paragraph 4 of this Agreement, the next ten (10) Most Highly Compensated Employees of the Company after the Senior Executive Officers.

(g) “Senior Executive Officer” means the Company's “senior executive officers” as defined in the TARP Guidance.

9. Restricted Obligations Void. Any obligations of the Company to the Executive that are prohibited or otherwise restricted by the terms of this Agreement shall be rendered null and void at the time the prohibition or restriction first becomes effective and the Executive shall have no rights with respect to such obligations thereafter, whether during or following the TARP Covered Period.

10. Prior Agreement. This Agreement constitutes the entire and final agreement of the parties on the subject matter of this Agreement, and supersedes all prior understandings and agreements relating to the subject matter of this Agreement.

11. Miscellaneous. To the extent not subject to federal law, this Agreement will be governed by and construed in accordance with the laws of Missouri. This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original. A signature transmitted by facsimile will be deemed an original signature.

3

The parties have executed this Agreement as of the date first set forth above.

THE COMPANY:

FIRST BANKS, INC.

By:

Title:

On behalf of all entities constituting the

Company.

4

EX-21.1

EXHIBIT 21.1

FIRST BANKS, INC.

SUBSIDIARIES

(As of December 31, 2012)

The following is a list of our subsidiaries and the jurisdiction of incorporation or organization:

Name of Subsidiary	Jurisdiction of Incorporation or Organization
The San Francisco Company	Delaware
First Bank	Missouri
FB Holdings, LLC (1)	Missouri
FBIN, Inc.	Nevada
FBSA California, Inc.	Missouri
FBSA Missouri, Inc.	Missouri
First Bank Business Capital, Inc.	Missouri
First Land Trustee Corp.	Missouri
HVIIHC, Inc.	Missouri
ILSIS, Inc.	Missouri
LC Resolution Corporation	Missouri
NT Resolution Corporation	Missouri
SBRHC, Inc.	Missouri
Small Business Loan Source LLC	Nevada

______________________

(1) First Bank owned 53.23% of FB Holdings, LLC at December 31, 2012.

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS REQUIRED BY

RULE 13a-14(a) OR RULE 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Terrance M. McCarthy, certify that:

1. I have reviewed this Annual Report on Form 10-K (the “Report”) of First Banks, Inc. (the “Registrant”);

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

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

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

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

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

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

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

Date: March 26, 2013

FIRST BANKS, INC.
By:	/s/	Terrance M. McCarthy
		Terrance M. McCarthy
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS REQUIRED BY

RULE 13a-14(a) OR RULE 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Lisa K. Vansickle, certify that:

1. I have reviewed this Annual Report on Form 10-K (the “Report”) of First Banks, Inc. (the “Registrant”);

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

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

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

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

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

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

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

Date: March 26, 2013

FIRST BANKS, INC.
By:	/s/	Lisa K. Vansickle
		Lisa K. Vansickle
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350

I, Terrance M. McCarthy, President and Chief Executive Officer of First Banks, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2012 (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: March 26, 2013

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

EX-32.2

EXHIBIT 32.2

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350

I, Lisa K. Vansickle, Executive Vice President and Chief Financial Officer of First Banks, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2012 (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: March 26, 2013

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

EX-99.1

EXHIBIT 99.1

PEO Certifications

I, Terrance M. McCarthy, certify, based on my knowledge, that:

(i)The compensation committee (the “Committee”) of First Banks, Inc. (the “Company”) has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to the Company;

(ii)The Committee has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of the Company and has identified any features of the employee compensation plans that pose risks to the Company and has limited those features to ensure that the Company is not unnecessarily exposed to risks;

(iii)The Committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of the Company to enhance the compensation of an employee, and has limited any such features;

(iv)The Committee will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v)The Committee will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

(A)SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of the Company;

(B)Employee compensation plans that unnecessarily expose the Company to risks; and

(C)Employee compensation plans that could encourage the manipulation of reported earnings of the Company to enhance the compensation of an employee;

(vi)The Company has required that bonus payments to SEOs and any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii)The Company has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to an SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(viii)The Company has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period;

(ix)The Company and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to this policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

(x)The Company will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi)The Company will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii)The Company will disclose whether the Company, the board of directors of the Company, or the Committee has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

EXHIBIT 99.1

(xiii)The Company has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(xiv)The Company has substantially complied with all other requirements related to employee compensation that are provided in the agreement between the Company and Treasury, including any amendments;

(xv)The Company has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi)I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 U.S.C. 1001.)

Date: March 26, 2013

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

EX-99.2

EXHIBIT 99.2

PEO Certifications

I, Lisa K. Vansickle, certify, based on my knowledge, that:

(i)The compensation committee (the “Committee”) of First Banks, Inc. (the “Company”) has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to the Company;

(ii)The Committee has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of the Company and has identified any features of the employee compensation plans that pose risks to the Company and has limited those features to ensure that the Company is not unnecessarily exposed to risks;

(iii)The Committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of the Company to enhance the compensation of an employee, and has limited any such features;

(iv)The Committee will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v)The Committee will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

(A)SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of the Company;

(B)Employee compensation plans that unnecessarily expose the Company to risks; and

(C)Employee compensation plans that could encourage the manipulation of reported earnings of the Company to enhance the compensation of an employee;

(vi)The Company has required that bonus payments to SEOs and any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii)The Company has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to an SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(viii)The Company has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period;

(ix)The Company and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to this policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

(x)The Company will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi)The Company will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii)The Company will disclose whether the Company, the board of directors of the Company, or the Committee has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

EXHIBIT 99.2

(xiii)The Company has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(xiv)The Company has substantially complied with all other requirements related to employee compensation that are provided in the agreement between the Company and Treasury, including any amendments;

(xv)The Company has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi)I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 U.S.C. 1001.)

Date: March 26, 2013

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

XML

SERVICING RIGHTS (Tables)

12 Months Ended

Dec. 31, 2012

Servicing Rights [Abstract]

Schedule of Servicing Assets at Fair Value

Changes in mortgage servicing rights for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	9,077		12,150
Originated mortgage servicing rights	4,887			3,450
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model (1)	(2,089		)	(4,280	)
Other changes in fair value (2)	(2,723		)	(2,243	)
Balance, end of year	$	9,152		9,077

(1) The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

Changes in SBA servicing rights for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	6,303		7,432
Originated SBA servicing rights	—			—
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model (1)	434			150
Other changes in fair value (2)	(1,097		)	(1,279	)
Balance, end of year	$	5,640		6,303

(1) The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

XML

EMPLOYEE BENEFITS (Schedule of Net Benefit Costs) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Interest cost	$ 516	$ 587
Expected return on Plan assets	(617)	(625)
Amortization of net actuarial loss	145	109
Net periodic benefit cost	$ 44	$ 71

XML

DISCONTINUED OPERATIONS (Textual) (Details) (USD $)	3 Months Ended		3 Months Ended	12 Months Ended	3 Months Ended			0 Months Ended	3 Months Ended	0 Months Ended			3 Months Ended		0 Months Ended
	Dec. 31, 2012 Bradenton, Palmetto, Longboat Key Florida offices	Dec. 31, 2010 Northern Illinois Region offices contracts	Sep. 30, 2010 Northern Illinois Region First	Dec. 31, 2010 Northern Illinois Region First	Jun. 30, 2011 Northern Illinois Region Second	Dec. 31, 2012 Hillsborough County offices	Dec. 31, 2012 Northern Florida offices	Apr. 15, 2010 Missouri Valley Partners, Inc.	Jun. 30, 2010 Missouri Valley Partners, Inc.	Aug. 31, 2010 WIUS, Inc. and WIUS of California, Inc.	Feb. 26, 2010 WIUS, Inc. and WIUS of California, Inc.	Dec. 31, 2009 WIUS, Inc. and WIUS of California, Inc.	Sep. 30, 2010 WIUS, Inc. and WIUS of California, Inc.	Nov. 21, 2012 HomeBanc National Association offices	May 13, 2011 United Community Bank offices	Sep. 24, 2010 Bank of Springfield	Sep. 10, 2010 First Mid-Illinois Bank & Trust, N.A. offices	Apr. 30, 2010 Prosperity Bank offices	Feb. 19, 2010 FirstMerit Bank, N.A. offices
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Branch Offices to Be Sold Pursuant to Sales Agreement		14												8
Deposits Assumed														$ 133,400,000	$ 92,200,000	$ 28,900,000	$ 336,000,000	$ 492,200,000	$ 1,200,000,000
Number of Branch Offices to Be Closed						2	3
Number of Branches Reclassified from Discontinued to Continuing Operations	8
Impairment of Long-Lived Assets Held-for-use	2,300,000
Number of Sales Agreements Entered Into		3
Number of Branch Offices Sold		14													3		10	19	24
Deposits Assumed, Assumption Premium Proceeds, Percent of Assumed Deposits															2.40%	4.00%	4.77%	5.50%	3.50%
Deposits Assumed, Assumption Premium Proceeds															2,200,000	1,200,000	15,600,000	26,900,000	42,100,000
Proceeds from Sale and Collection of Loans Held-for-sale											1,500,000	141,300,000			37,500,000	2,200,000	135,200,000	96,700,000	301,200,000
Gain (Loss) on Sale of Branch Offices				6,400,000	425,000				(156,000)				(29,000)					5,000,000	8,400,000
Goodwill and Intangible Asset Impairment			9,700,000		1,600,000													20,000,000	26,300,000
Proceeds from Divestiture of Businesses								$ 515,000		$ 100,000

XML

BUSINESS SEGMENT RESULTS (Tables)

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Schedule of Business Segment Results

The business segment results are summarized as follows:

	First Bank				Corporate, Other and Intercompany Reclassifications						Consolidated Totals
	2012		2011	2010	2012		2011		2010		2012	2011	2010
	(dollars expressed in thousands)
Balance sheet information:
Investment securities	$	2,675,280	2,470,704	1,483,659	—		—		—		2,675,280	2,470,704	1,483,659
Loans, net of net deferred loan fees	2,930,747		3,284,279	4,492,284	—		—		—		2,930,747	3,284,279	4,492,284
FRB and FHLB stock	27,329		27,078	30,121	—		—		—		27,329	27,078	30,121
Goodwill and other intangible assets	125,267		125,267	129,054	—		—		—		125,267	125,267	129,054
Assets held for sale	—		—	2,266	—		—		—		—	—	2,266
Assets of discontinued operations	6,706		6,913	43,532	—		—		—		6,706	6,913	43,532
Total assets	6,495,226		6,593,515	7,361,706	13,900		15,398		16,422		6,509,126	6,608,913	7,378,128
Deposits	5,495,624		5,625,889	6,462,068	(2,777	)	(2,834	)	(3,653	)	5,492,847	5,623,055	6,458,415
Other borrowings	26,025		51,170	31,761	—		—		—		26,025	51,170	31,761
Subordinated debentures	—		—	—	354,133		354,057		353,981		354,133	354,057	353,981
Liabilities held for sale	—		—	23,406	—		—		—		—	—	23,406
Liabilities of discontinued operations	155,711		174,737	94,184	—		—		—		155,711	174,737	94,184
Stockholders’ equity	751,252		680,625	693,458	(451,293	)	(416,954	)	(386,163	)	299,959	263,671	307,295

	First Bank							Corporate, Other and Intercompany Reclassifications						Consolidated Totals
	2012			2011		2010		2012		2011		2010		2012		2011		2010
	(dollars expressed in thousands)
Income statement information:
Interest income	$	202,444		233,211		312,333		121		85		135		202,565		233,296		312,468
Interest expense	15,250			30,927		63,027		14,838		13,612		12,993		30,088		44,539		76,020
Net interest income(loss)	187,194			202,284		249,306		(14,717	)	(13,527	)	(12,858	)	172,477		188,757		236,448
Provision for loan losses	2,000			69,000		214,000		—		—		—		2,000		69,000		214,000
Net interest income(loss) afterprovision for loan losses	185,194			133,284		35,306		(14,717	)	(13,527	)	(12,858	)	170,477		119,757		22,448
Noninterest income	65,801			61,975		78,453		405		219		39		66,206		62,194		78,492
Amortization ofintangible assets	—			3,024		3,292		—		—		—		—		3,024		3,292
Other noninterestexpense	203,808			227,600		294,708		1,510		(378	)	639		205,318		227,222		295,347
Income (loss) from continuingoperations beforeprovision(benefit)for income taxes	47,187			(35,365	)	(184,241	)	(15,822	)	(12,930	)	(13,458	)	31,365		(48,295	)	(197,699	)
Provision (benefit) forincome taxes	230			(10,608	)	4,286		(369	)	(46	)	(172	)	(139	)	(10,654	)	4,114
Net income (loss) from continuingoperations, net of tax	46,957			(24,757	)	(188,527	)	(15,453	)	(12,884	)	(13,286	)	31,504		(37,641	)	(201,813	)
(Loss) income from discontinued operations,net of tax	(5,523		)	(6,459	)	3,562		—		—		—		(5,523	)	(6,459	)	3,562
Net income (loss)	41,434			(31,216	)	(184,965	)	(15,453	)	(12,884	)	(13,286	)	25,981		(44,100	)	(198,251	)
Net loss attributable tononcontrolling interestin subsidiary	(297		)	(2,950	)	(6,514	)	—		—		—		(297	)	(2,950	)	(6,514	)
Net income (loss) attributable toFirst Banks, Inc.	$	41,731		(28,266	)	(178,451	)	(15,453	)	(12,884	)	(13,286	)	26,278		(41,150	)	(191,737	)

XML

SUBSEQUENT EVENTS (Details) (Investors Of America Limited Partnership, USD $) In Millions, unless otherwise specified	Mar. 24, 2011	Mar. 20, 2013 Revolving Credit Facility Parent Company Subsequent Event
Subsequent Event [Line Items]
Revolving credit note borrowing capacity	$ 5.0	$ 5.0
Spread on LIBOR, percentage		3.00%

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Impairment Method by Loan Category) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	$ 3,598	$ 11,738
Ending balance: impaired loans collectively evaluated for impairment	14,354	18,891
Ending balance: all other loans collectively evaluated for impairment	73,650	107,081
Ending balance: Total	91,602	137,710	201,033	266,448
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	119,483	209,169
Ending balance: impaired loans collectively evaluated for impairment	119,306	137,524
Ending balance: all other loans collectively evaluated for impairment	2,625,825	2,906,475
Ending balance: Total	2,864,614	3,253,168
Commercial and Industrial
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	75	4,276
Ending balance: impaired loans collectively evaluated for impairment	601	1,199
Ending balance: all other loans collectively evaluated for impairment	12,896	21,768
Ending balance: Total	13,572	27,243	28,000
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	7,884	40,527
Ending balance: impaired loans collectively evaluated for impairment	11,166	19,077
Ending balance: all other loans collectively evaluated for impairment	591,251	665,591
Ending balance: Total	610,301	725,195
Real Estate Construction and Development
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	121	1,752
Ending balance: impaired loans collectively evaluated for impairment	1,331	1,680
Ending balance: all other loans collectively evaluated for impairment	12,982	21,436
Ending balance: Total	14,434	24,868	58,439
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	39,155	76,475
Ending balance: impaired loans collectively evaluated for impairment	3,028	6,783
Ending balance: all other loans collectively evaluated for impairment	132,796	166,729
Ending balance: Total	174,979	249,987
One-to- Four-Family Residential
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	3,187	3,170
Ending balance: impaired loans collectively evaluated for impairment	10,455	14,338
Ending balance: all other loans collectively evaluated for impairment	25,255	33,356
Ending balance: Total	38,897	50,864	60,762
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	16,843	16,836
Ending balance: impaired loans collectively evaluated for impairment	98,423	104,201
Ending balance: all other loans collectively evaluated for impairment	871,501	781,401
Ending balance: Total	986,767	902,438
Multi- Family Residential
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	33	110
Ending balance: impaired loans collectively evaluated for impairment	1,105	225
Ending balance: all other loans collectively evaluated for impairment	3,114	4,516
Ending balance: Total	4,252	4,851	5,158
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	34,636	11,141
Ending balance: impaired loans collectively evaluated for impairment	365	0
Ending balance: all other loans collectively evaluated for impairment	68,683	116,215
Ending balance: Total	103,684	127,356
Commercial Real Estate
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	182	2,430
Ending balance: impaired loans collectively evaluated for impairment	861	1,445
Ending balance: all other loans collectively evaluated for impairment	19,005	25,573
Ending balance: Total	20,048	29,448	47,880
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	20,965	64,190
Ending balance: impaired loans collectively evaluated for impairment	6,296	7,441
Ending balance: all other loans collectively evaluated for impairment	942,419	1,153,907
Ending balance: Total	969,680	1,225,538
Consumer and Installment
Allowance for loan losses:
Ending balance: impaired loans individually evaluated for impairment	0	0
Ending balance: impaired loans collectively evaluated for impairment	1	4
Ending balance: all other loans collectively evaluated for impairment	398	432
Ending balance: Total	399	436	794
Financing receivables:
Ending balance: impaired loans individually evaluated for impairment	0	0
Ending balance: impaired loans collectively evaluated for impairment	28	22
Ending balance: all other loans collectively evaluated for impairment	19,175	22,632
Ending balance: Total	$ 19,203	$ 22,654

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES (Securities Available for Sale) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	$ 11,400	$ 1,310
Carrying value: Maturity, 1-5 Years	245,011	361,446
Carrying value: Maturity, 5-10 Years	269,997	238,020
Carrying value: Maturity, After 10 Years	1,466,809	1,827,209
Carrying value: Total Amortized Cost	1,993,217	2,427,985
Carrying value: Gross Unrealized Gains	51,774	39,350
Carrying value: Gross Unrealized Losses	(1,264)	(9,448)
Carrying value: Fair Value	2,043,727	2,457,887
Carrying value: Weighted Average Yield	2.26%	2.28%
Fair Value: Maturity, 1 Year or Less	11,476	1,314
Fair value: Maturity, 1-5 Years	251,558	357,194
Fair value: Maturity, 5-10 Years	275,251	236,824
Fair value: Maturity, After 10 Years	1,505,442	1,862,555
Weighted average yield, Maturity, 1 Year or Less	2.01%	2.93%
Weighted average yield, Maturity, 1-5 Years	2.17%	2.07%
Weighted average yield, Maturity, 5-10 Years	2.65%	2.56%
Weighted average yield, Maturity, After 10 Years	2.21%	2.28%
U.S. Government sponsored agencies
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	10,051	1,000
Carrying value: Maturity, 1-5 Years	80,328	231,691
Carrying value: Maturity, 5-10 Years	0	107,019
Carrying value: Maturity, After 10 Years	213,892	0
Carrying value: Total Amortized Cost	304,271	339,710
Carrying value: Gross Unrealized Gains	6,304	2,107
Carrying value: Gross Unrealized Losses	(146)	0
Carrying value: Fair Value	310,429	341,817
Carrying value: Weighted Average Yield	1.42%	1.75%
Residential mortgage-backed
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	364	0
Carrying value: Maturity, 1-5 Years	24,014	2,726
Carrying value: Maturity, 5-10 Years	219,286	64,309
Carrying value: Maturity, After 10 Years	1,251,917	1,821,209
Carrying value: Total Amortized Cost	1,495,581	1,888,244
Carrying value: Gross Unrealized Gains	38,983	36,908
Carrying value: Gross Unrealized Losses	(497)	(232)
Carrying value: Fair Value	1,534,067	1,924,920
Carrying value: Weighted Average Yield	2.32%	2.27%
Commercial mortgage-backed
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	0	0
Carrying value: Maturity, 1-5 Years	0	0
Carrying value: Maturity, 5-10 Years	806	818
Carrying value: Maturity, After 10 Years	0	0
Carrying value: Total Amortized Cost	806	818
Carrying value: Gross Unrealized Gains	109	92
Carrying value: Gross Unrealized Losses	0	0
Carrying value: Fair Value	915	910
Carrying value: Weighted Average Yield	4.86%	4.86%
State and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	985	310
Carrying value: Maturity, 1-5 Years	3,579	4,088
Carrying value: Maturity, 5-10 Years	201	786
Carrying value: Maturity, After 10 Years	0	0
Carrying value: Total Amortized Cost	4,765	5,184
Carrying value: Gross Unrealized Gains	164	226
Carrying value: Gross Unrealized Losses	0	0
Carrying value: Fair Value	4,929	5,410
Carrying value: Weighted Average Yield	4.05%	4.00%
Corporate notes
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	0	0
Carrying value: Maturity, 1-5 Years	137,090	122,941
Carrying value: Maturity, 5-10 Years	49,704	65,088
Carrying value: Maturity, After 10 Years	0	5,000
Carrying value: Total Amortized Cost	186,794	193,029
Carrying value: Gross Unrealized Gains	6,192	0
Carrying value: Gross Unrealized Losses	(621)	(9,216)
Carrying value: Fair Value	192,365	183,813
Carrying value: Weighted Average Yield	3.13%	3.28%
Equity investments
Schedule of Available-for-sale Securities [Line Items]
Carrying value: Maturity, 1 Year or Less	0	0
Carrying value: Maturity, 1-5 Years	0	0
Carrying value: Maturity, 5-10 Years	0	0
Carrying value: Maturity, After 10 Years	1,000	1,000
Carrying value: Total Amortized Cost	1,000	1,000
Carrying value: Gross Unrealized Gains	22	17
Carrying value: Gross Unrealized Losses	0	0
Carrying value: Fair Value	1,022	1,017
Carrying value: Weighted Average Yield	2.54%	2.83%
Debt securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value: Maturity, 1 Year or Less	11,476	1,314
Fair value: Maturity, 1-5 Years	251,558	357,194
Fair value: Maturity, 5-10 Years	275,251	236,824
Fair value: Maturity, After 10 Years	1,504,420	1,861,538
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value: Maturity, 1 Year or Less	0	0
Fair value: Maturity, 1-5 Years	0	0
Fair value: Maturity, 5-10 Years	0	0
Fair value: Maturity, After 10 Years	$ 1,022	$ 1,017

XML

SERVICING RIGHTS (Textual) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Mortgage Banking
Servicing Assets at Fair Value [Line Items]
Servicing portfolio	$ 1,270.0	$ 1,250.0
Escrow deposit liabilities	7.9	8.0
SBA
Servicing Assets at Fair Value [Line Items]
Servicing portfolio	$ 159.6	$ 178.5

XML

INCOME TAXES (Operating Loss Carryforwards, Expiration Years) (Details) (Internal Revenue Service (IRS), USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Internal Revenue Service (IRS)
Schedule of Income Taxes [Line Items]
2013 – 2016	$ 0
2017 – 2020	5,256
2021 – 2026	43,105
2028 – 2032	549,325
Operating loss carryforwards	$ 597,686	$ 539,200

XML

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The (benefit) provision for income taxes from continuing operations for the years ended December 31, 2012, 2011 and 2010 consists of the following:

	2012			2011		2010
	(dollars expressed in thousands)
Current (benefit) provision for income taxes:
Federal	$	—		902		(366	)
State	(32		)	(721	)	(71	)
	(32		)	181		(437	)
Deferred benefit for income taxes:
Federal	5,615			(16,129	)	(56,871	)
State	1,023			(7,392	)	(13,974	)
	6,638			(23,521	)	(70,845	)
(Decrease) increase in deferred tax asset valuation allowance	(6,745		)	12,686		75,396
Total	$	(139	)	(10,654	)	4,114

Schedule of Effective Income Tax Rate Reconciliation

The effective rates of federal income taxes for the years ended December 31, 2012, 2011 and 2010 differ from the federal statutory rates of taxation as follows:

	Years Ended December 31,
	2012					2011					2010
	Amount			Percent		Amount			Percent		Amount			Percent
	(dollars expressed in thousands)
Income (loss) from continuing operations before benefit (provision) for income taxes and noncontrolling interest in loss of subsidiaries	$	31,365				$	(48,295	)			$	(197,699	)
Provision (benefit) for income taxes calculated at federal statutory income tax rates	$	10,978		35.0	%	$	(16,904	)	35.0	%	$	(69,195	)	35.0	%
Effects of differences in tax reporting:
Tax-exempt interest income, net of tax preference adjustment	(135		)	(0.4	)	(203		)	0.4		(308		)	0.2
State income taxes	645			2.1		(4,800		)	9.9		(9,125		)	4.6
Bank owned life insurance, net of premium	11			—		10			—		3,144			(1.6	)
Noncontrolling investment in flow-through entity	104			0.3		1,033			(2.1	)	2,280			(1.2	)
Amortization of intangibles	—			—		175			(0.3	)	350			(0.2	)
(Decrease) increase in deferred tax asset valuation allowance, net of federal benefit	(11,811		)	(37.7	)	20,614			(42.7	)	70,668			(35.8	)
Reclassification of deferred tax asset valuation allowance from accumulated other comprehensive income to provision for income taxes	—			—		(10,466		)	21.7		6,816			(3.4	)
Expiration of net operating loss carryforwards	643			2.1		34			—		5			—
Other, net	(574		)	(1.8	)	(147		)	0.2		(521		)	0.3
(Benefit) provision for income taxes	$	(139	)	(0.4	)%	$	(10,654	)	22.1	%	$	4,114		(2.1	)%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 were as follows:

	December 31,
	2012			2011
	(dollars expressed in thousands)
Deferred tax assets:
Federal net operating loss carryforwards	$	209,190		188,726
State net operating loss carryforwards	65,882			58,326
Allowance for loan losses	37,825			56,649
Loans held for sale	2,032			1,745
Alternative minimum and general business tax credits	19,146			17,326
Interest on nonaccrual loans	12,551			15,359
Deferred compensation	3,573			3,593
Core deposit intangibles	2,706			3,111
Partnership and corporate investments	7,908			12,052
Deferred loan charge-offs and other fraud losses	4,341			13,875
Other real estate and repossessed assets	22,666			22,665
Accrued contingent liabilities	2,870			3,632
Depreciation on bank premises and equipment	1,202			486
State taxes	682			—
Other	12,692			13,205
Gross deferred tax assets	405,266			410,750
Valuation allowance	(376,224		)	(391,629	)
Deferred tax assets, net of valuation allowance	29,042			19,121
Deferred tax liabilities:
Servicing rights	2,632			2,418
Net fair value adjustment for available-for-sale investment securities	21,214			10,466
Deferred gain on reclassification of investment securities from available for sale to held to maturity	4,265			—
Equity investments	5,364			5,366
State taxes	—			4,577
Net deferred loan fees	1,903			2,779
Other	804			655
Deferred tax liabilities	36,182			26,261
Net deferred tax liabilities	$	(7,140	)	(7,140	)

Deferred Tax Asset Valuation Allowance Rollforward

Changes in the deferred tax asset valuation allowance for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	391,629		370,125		295,067
Reversal of deferred tax asset valuation allowance to provision for income taxes	(643		)	(115	)	(1,189	)
(Decrease) increase in deferred tax asset valuation allowance to provision for income taxes	(468		)	31,621		73,928
(Decrease) increase in deferred tax asset valuation allowance to accumulated other comprehensive income (loss)	(14,294		)	(10,002	)	2,319
Balance, end of year	$	376,224		391,629		370,125

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending balance of these unrecognized tax benefits for the years ended December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	1,194		1,276
Additions:
Tax positions taken during the current year	217			232
Tax positions taken during the prior year	—			—
Reductions:
Tax positions taken during the prior year	(14		)	(8	)
Allocated to discontinued operations	—			—
Lapse of statute of limitations	(271		)	(306	)
Balance, end of year	$	1,126		1,194

Federal Net Operating Loss Carryforwards, Expiration Years

At December 31, 2012, the Company’s federal net operating loss carryforwards expire as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013 – 2016	$	—
2017 – 2020	5,256
2021 – 2026	43,105
2028 – 2032	549,325
Total	$	597,686

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Basis of Presentation.

Basis of Presentation. The accompanying consolidated financial statements of First Banks, Inc. and subsidiaries (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and conform to predominant practices within the banking industry. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

Principles of Consolidation.

Principles of Consolidation. The consolidated financial statements include the accounts of the parent company and its subsidiaries, giving effect to the noncontrolling interest in subsidiaries, as more fully described below and in Note 20 to the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated.

All financial information is reported on a continuing operations basis, unless otherwise noted. See Note 2 to the consolidated financial statements for a discussion regarding discontinued operations.

Cash and Cash Equivalents.

Cash and Cash Equivalents. Cash, due from banks and short-term investments, which include federal funds sold and interest-bearing deposits, are considered to be cash and cash equivalents for purposes of the consolidated statements of cash flows. Interest-bearing deposits were $404.0 million and $371.3 million at December 31, 2012 and 2011, respectively. The Company did not have any federal funds sold outstanding at December 31, 2012 and 2011. First Bank is required to maintain certain daily reserve balances on hand in accordance with regulatory requirements. These reserve balances maintained in accordance with such requirements were $14.6 million and $13.1 million at December 31, 2012 and 2011, respectively.

Federal Reserve Bank and Federal Home Loan Bank Stock.

Federal Reserve Bank and Federal Home Loan Bank Stock. First Bank is a member of the Federal Reserve Bank of St. Louis (FRB) system and the Federal Home Loan Bank (FHLB) system and maintains investments in FRB and FHLB stock. These investments are recorded at cost, which represents redemption value. The investment in FRB stock is maintained at a minimum of 6% of First Bank’s capital stock and capital surplus. The investment in FHLB of Des Moines stock is maintained at an amount equal to 0.12% of First Bank’s total assets as of December 31 of the preceding year, up to a maximum of $10.0 million, plus 4.45% of advances. Investments in FRB and FHLB of Des Moines stock were $19.4 million and $7.9 million, respectively, at December 31, 2012, and $18.3 million and $8.8 million, respectively, at December 31, 2011.

Investment Securities.

Investment Securities. The classification of investment securities as available for sale or held to maturity is determined at the date of purchase. Investment securities designated as available for sale, which represent any security that the Company has no immediate plan to sell but which may be sold in the future under different circumstances, are stated at fair value. Realized gains and losses are included in noninterest income, based on the amortized cost of the individual security sold. Unrealized gains and losses, net of related income tax effects, are recorded in accumulated other comprehensive income (loss). All previous fair value adjustments included in the separate component of accumulated other comprehensive income (loss) are reversed upon sale. Premiums and discounts incurred relative to the par value of securities purchased are amortized or accreted, respectively, on the level-yield method taking into consideration the level of current and anticipated prepayments. Investment securities designated as held to maturity, which represent any security that the Company has the positive intent and ability to hold to maturity, are stated at cost, net of amortization of premiums and accretion of discounts computed on the level-yield method taking into consideration the level of current and anticipated prepayments. Any reclassification of available-for-sale investment securities to held-to-maturity investment securities are recorded at fair value, and the gross unrealized gain or loss on available-for-sale investment securities at the time of transfer is recorded as additional premium or discount on the securities and amortized over the remaining lives of the respective securities. A decline in the fair value of any available-for-sale or held-to-maturity investment security below its carrying value that is deemed to be other than temporary results in a reduction in the cost basis of the carrying value to fair value. The other-than-temporary impairment, which is not expected to be reversed, is charged to noninterest income and a new cost basis is established. When determining other-than-temporary impairment, consideration is given as to whether the Company has the ability and intent to hold the investment security until a market price recovery and whether evidence indicating the carrying value of the investment security is recoverable outweighs evidence to the contrary.

Loans Held for Portfolio.

Loans Held for Portfolio. Loans held for portfolio are carried at cost, adjusted for amortization of premiums and accretion of discounts using the interest method. Interest and fees on loans are recognized as income using the interest method. Loan origination fees and costs are deferred and accreted to interest income over the estimated life of the loans using the interest method. Loans held for portfolio are stated at cost as the Company has the ability and it is management’s intention to hold them to maturity.

The accrual of interest on loans is discontinued when it appears that interest or principal may not be paid in a timely manner in the normal course of business or once principal or interest payments become 90 days past due under the contractual terms of the loan agreement. Generally, payments received on nonaccrual and impaired loans are recorded as principal reductions. Interest income is recognized after all delinquent principal has been repaid or an improvement in the condition of the loan has occurred that warrants resumption of interest accruals.

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the loan agreement. Loans on nonaccrual status and restructured loans are considered to be impaired loans. When measuring impairment, the expected future cash flows of an impaired loan are discounted at the loan’s effective interest rate. Alternatively, impairment is measured by reference to an observable market price, if one exists, or the fair value of the collateral for a collateral-dependent loan. Regardless of the historical measurement method used, the Company measures impairment based on the fair value of the collateral when foreclosure is probable.

A loan is classified as a troubled debt restructuring when all of the following conditions are present: (i) the borrower is experiencing financial difficulty, (ii) the Company makes a concession to the original contractual loan terms, and (iii) the Company would not consider the concessions but for economic or legal reasons related to the borrower’s financial difficulty. These concessions may include, but are not limited to, rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses. A loan that is modified at a market rate of interest may no longer be classified as a troubled debt restructuring in the calendar year subsequent to the restructuring if it is in compliance with the modified terms. Performance prior to the restructuring is considered when assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of the restructuring or after a shorter performance period.

Acquired impaired loans are classified as nonaccrual loans and are initially measured at fair value with no allocated allowance for loan losses. An allowance for loan losses is recorded to the extent there is further credit deterioration subsequent to the acquisition date.

Loans Held for Sale.

Loans Held for Sale. Loans held for sale are comprised of residential mortgage loans held for sale in the secondary mortgage market, frequently in the form of a mortgage-backed security, U.S. Small Business Administration (SBA) loans awaiting sale of the guaranteed portion to the SBA, and commercial real estate loans which may be identified for sale to specific buyers to achieve credit or loan concentration objectives. One-to-four-family residential mortgage loans held for sale are carried at fair value on a recurring basis. The determination of fair value is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information. Other loans held for sale, primarily SBA loans, are carried at the lower of cost or market value, which is determined on an individual loan basis. The amount by which cost exceeds market value is recorded in a valuation allowance as a reduction of loans held for sale. Changes in the valuation allowance are reflected as part of the gain on loans sold and held for sale in the consolidated statements of operations in the periods in which the changes occur. Gains or losses on the sale of loans held for sale are determined on a specific identification basis and reflect the difference between the value received upon sale and the carrying value of the loans held for sale, including any recourse reserve established for potential repurchase obligations. Loans held for sale transferred to loans held for portfolio or available-for-sale investment securities are transferred at fair value.

Loan Servicing Income.

Loan Servicing Income. Loan servicing income is included in noninterest income and represents fees earned for servicing real estate mortgage loans owned by investors and originated by First Bank’s mortgage banking operation, as well as SBA loans to small business concerns. These fees are net of federal agency guarantee fees and interest shortfall. Such fees are generally calculated on the outstanding principal balance of the loans serviced and are recorded as income when earned.

Allowance for Loan Losses.

Allowance for Loan Losses. The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company’s allowance for loan loss methodology follows the accounting guidance set forth in GAAP and the Interagency Policy Statement on the Allowance for Loan and Lease Losses, which was jointly issued by the Company’s regulatory agencies. Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, substandard loans, special mention loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified problem loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance for loan losses reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss and recovery experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate determination of the appropriate level of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. The Company monitors whether or not the allowance for loan loss allocation model, as a whole, calculates an appropriate level of allowance for loan losses that moves in direct correlation to the general macroeconomic and loan portfolio conditions the Company experiences over time.

The Company’s allowance for loan losses consists of three elements: (i) specific valuation allowances based on probable losses on impaired loans; (ii) historical valuation allowances determined based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances based on general economic conditions and other risk factors both internal and external to the Company.

The specific valuation allowances established for probable losses on impaired loans are based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flows, as well as evaluation of legal options available to the Company. The amount of impairment is measured based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the fair value of the underlying collateral less applicable selling costs, or the observable market price of the loan. If foreclosure is probable or the loan is collateral dependent, impairment is measured using the fair value of the loan’s collateral, less estimated costs to sell. Large groups of homogeneous loans, such as residential mortgage, home equity and consumer and installment loans, are aggregated and collectively evaluated for impairment.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are updated on a quarterly basis based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool.

The components of the general valuation allowances include (i) additional reserves allocated to specific loan portfolio segments as a result of applying a qualitative adjustment factor to the base historical loss allocation; (ii) additional reserves allocated to specific geographical regions where negative trends are being experienced; and (iii) additional reserves established based on consideration of trends in past due loans, potential problem loans, performing troubled debt restructurings and nonaccrual loans and other qualitative and quantitative factors both internal and external to the Company which could affect potential credit losses.

Management believes that the level of the Company’s allowance for loan losses is appropriate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Company to modify its allowance for loan losses based on their judgment about information available to them at the time of their examination.

Derivative Instruments and Hedging Activities.

Derivative Instruments and Hedging Activities. The Company utilizes derivative instruments and hedging strategies to assist in the management of interest rate sensitivity and to modify the repricing, maturity and option characteristics of certain assets and liabilities. The Company uses such derivative instruments solely to reduce its interest rate risk exposure. First Bank also offers interest rate swap agreement contracts to certain customers who wish to modify their interest rate sensitivity positions. First Bank offsets the interest rate risk of these swap agreements by simultaneously purchasing matching interest rate swap agreement contracts with offsetting pay/receive rates from other financial institutions.

Derivative instruments are recorded in the consolidated balance sheets and measured at fair value. At inception of a non-customer derivative transaction, the Company designates the derivative instrument as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedges) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedges). For all hedging relationships, the Company documents the hedging relationship and its risk-management objectives and strategy for entering into the hedging relationship including the hedging instrument, the hedged item(s), the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method the Company will utilize to measure hedge ineffectiveness. This process also includes linking all derivative instruments that are designated as fair value hedges or cash flow hedges to the underlying assets and liabilities or to specific firm commitments or forecasted transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of the hedged item(s). The Company discontinues hedge accounting prospectively when it is determined that the derivative instrument is no longer effective in offsetting changes in the fair value or cash flows of the hedged item(s), the derivative instrument expires or is sold, terminated, or exercised, the derivative instrument is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative instrument as a hedging transaction is no longer appropriate.

A summary of the Company’s accounting policies for its derivative instruments and hedging activities is as follows:

• Interest Rate Swap Agreements – Cash Flow Hedges. Interest rate swap agreements designated as cash flow hedges are accounted for at fair value. The effective portion of the change in the cash flow hedge’s gain or loss is initially reported as a component of other comprehensive income (loss) and subsequently reclassified into interest income or interest expense when the underlying transaction affects earnings. The ineffective portion of the change in the cash flow hedge’s gain or loss is recorded in noninterest income on each monthly measurement date. The net interest differential is recognized as an adjustment to interest income or interest expense of the related asset or liability being hedged. In the event of early termination or ineffectiveness, the gain or loss on the cash flow hedge would continue to be reported as a component of other comprehensive income (loss) until the underlying transaction affects earnings.

• Interest Rate Swap Agreements – Fair Value Hedges. Interest rate swap agreements designated as fair value hedges are accounted for at fair value. Changes in the fair value of the swap agreements are recognized currently in noninterest income. The change in the fair value of the underlying hedged item is recognized as an adjustment to the carrying amount of the underlying hedged item and is also reflected currently in noninterest income. All changes in fair value are measured on a monthly basis. The net interest differential is recognized as an adjustment to interest income or interest expense of the related asset or liability being hedged. In the event of early termination or ineffectiveness, the net proceeds received or paid on the interest rate swap agreements are recognized immediately in noninterest income and the future net interest differential, if any, is recognized prospectively in noninterest income. The cumulative change in the fair value of the underlying hedged item is deferred and amortized or accreted to interest income or interest expense over the weighted average life of the related asset or liability. If, however, the underlying hedged item is repaid, the cumulative change in the fair value of the underlying hedged item is recognized immediately in noninterest income.

• Customer Interest Rate Swap Agreement Contracts. Derivative instruments are offered to customers to assist in hedging their risks of adverse changes in interest rates. First Bank serves as an intermediary between its customers and the financial markets. Each contract between First Bank and its customers is offset by a contract between First Bank and various counterparties. These contracts do not qualify for hedge accounting. Customer interest rate swap agreement contracts are carried at fair value. Changes in the fair value are recognized in noninterest income on a monthly basis. Each customer contract is paired with an offsetting contract, and as such, there is no significant impact to net income (loss).

• Interest Rate Lock Commitments. Commitments to originate loans for subsequent sale in the secondary market (interest rate lock commitments), which primarily consist of commitments to originate fixed rate residential mortgage loans, are recorded at fair value. Fair values are based upon quoted market prices. The value of loan servicing rights is also incorporated into fair value measurements for mortgage loan commitments. Changes in the fair value of interest rate lock commitments are recognized in noninterest income on a monthly basis.

• Forward Commitments to Sell Mortgage-Backed Securities. Forward commitments to sell mortgage-backed securities are recorded at fair value. Changes in the fair value of forward commitments to sell mortgage-backed securities are recognized in noninterest income on a monthly basis.

Bank Premises and Equipment, Net.

Bank Premises and Equipment, Net. Bank premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated using the straight-line method over the shorter of the useful life of the related asset or the term of the lease. Bank premises and improvements are depreciated over five to 40 years and equipment is depreciated over three to seven years.

Goodwill and Other Intangible Assets.

Goodwill and Other Intangible Assets. Goodwill and other intangible assets primarily consist of goodwill and, prior to December 31, 2011, core deposit intangibles. Goodwill and intangible assets with indefinite useful lives are not amortized, but instead tested at least annually for impairment. Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. The Company amortized its core deposit intangibles on a straight-line basis over the estimated periods to be benefited, which had been estimated at five to seven years.

The Company has the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible assets are impaired as a basis for determining whether it is necessary to perform a quantitative impairment test. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible assets are impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. The Company will be able to resume performing the qualitative assessment in any subsequent period.

The goodwill impairment test is a two-step process which requires the Company to make assumptions regarding fair value. The Company’s policy allows management to make the determination of fair value using internal cash flow models or by engaging independent third parties. The first step consists of estimating the fair value of the reporting unit using a number of factors, including projected future operating results and business plans, economic projections, anticipated future cash flows, discount rates, and comparable marketplace fair value data from within a comparable industry grouping. The Company compares the estimated fair value of its reporting unit to the carrying value, which includes allocated goodwill. If the estimated fair value is less than the carrying value, the second step is completed to compute the impairment amount by determining the “implied fair value” of goodwill. This determination requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any remaining unallocated fair value represents the “implied fair value” of goodwill, which is compared to the corresponding carrying value to compute the goodwill impairment amount, if any. Adverse changes in the economic environment, operations of the reporting unit, or other factors could result in a decline in the implied fair value of goodwill which could result in future goodwill impairment. See Note 6 to the consolidated financial statements for further discussion.

Servicing Rights.

Servicing Rights. The Company has mortgage servicing rights and SBA servicing rights, which are measured at fair value as permitted by ASC Topic 860 – Accounting for Servicing of Financial Assets. Changes in the fair value of mortgage and SBA servicing rights are recognized in earnings in the period in which the change occurs and such changes are reflected in other noninterest income in the consolidated statements of operations. Servicing rights are valued based on valuation models that utilize assumptions based on the predominant risk characteristics of the underlying loans, including size, interest rate, weighted average life, cost to service and estimated prepayment speeds. The valuation models estimate the present value of estimated future net servicing income.

Mortgage and SBA servicing rights are capitalized upon the sale of the underlying loan at estimated fair value. The fair value of mortgage and SBA servicing rights fluctuates based on changes in interest rates and certain other assumptions utilized to value the mortgage and SBA servicing rights. The value is adversely affected when interest rates decline which normally causes loan prepayments to increase. The determination of the fair value of the mortgage and SBA servicing rights is performed monthly based upon an independent third party valuation. The valuation analysis is prepared using stratifications of the mortgage and SBA servicing rights based on the predominant risk characteristics of the underlying loans, including size, interest rate, weighted average original term, weighted average remaining term and estimated prepayment speeds.

Other Real Estate and Repossessed Assets.

Other Real Estate and Repossessed Assets. Other real estate and repossessed assets, consisting of real estate and other assets acquired through foreclosure or deed in lieu of foreclosure, are stated at the lower of cost or fair value less applicable selling costs. The excess of cost over fair value of the property at the date of acquisition is charged to the allowance for loan losses. Subsequent reductions in carrying value, to reflect current fair value or costs incurred in maintaining the other real estate and repossessed assets, are charged to noninterest expense as incurred.

Income Taxes.

Income Taxes. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in the tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are then recorded to reduce deferred tax assets to the amounts management concludes are more-likely-than-not to be realized. The Company and its eligible subsidiaries file a consolidated federal income tax return and unitary or consolidated state income tax returns in all applicable states.

The Company’s policy is to separately disclose any interest or penalties arising from the application of federal or state income taxes. Interest related to unrecognized tax benefits is included in interest expense and penalties related to unrecognized tax benefits are included in noninterest expense.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. Management of the Company believes the accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. This assessment relies on estimates and assumptions.

Noncontributory Defined Benefit Pension Plan.

Noncontributory Defined Benefit Pension Plan. The Company has a noncontributory defined benefit pension plan covering certain former employees of a bank holding company acquired by the Company in 1994 (the Plan) and subsequently merged with and into the Company on December 31, 2002. The Company discontinued the accumulation of benefits under the Plan in 1994, and as such, there is no longer any service cost being accrued by Plan participants. The Company records annual amounts relating to the Plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality rates, and assumed rates of return. The Company reviews these assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when deemed appropriate. The funded status of the Plan is recognized as a net asset or liability and changes in the Plan’s funded status are recognized through other comprehensive income to the extent those changes are not included in the net periodic cost.

Financial Instruments With Off-Balance Sheet Risk.

Financial Instruments With Off-Balance Sheet Risk. A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that conveys or imposes on an entity the contractual right or obligation to either receive or deliver cash or another financial instrument. The Company utilizes financial instruments to reduce the interest rate risk arising from its financial assets and liabilities. These instruments involve, in varying degrees, elements of interest rate risk and credit risk in excess of the amount recognized in the consolidated balance sheets. “Interest rate risk” is defined as the possibility that interest rates may move unfavorably from the perspective of the Company due to maturity and/or interest rate adjustment timing differences between interest-earning assets and interest-bearing liabilities. The risk that a counterparty to an agreement entered into by the Company may default is defined as “credit risk.”

The Company is a party to commitments to extend credit and commercial and standby letters of credit in the normal course of business to meet the financing needs of its customers. These commitments involve, in varying degrees, elements of interest rate risk and credit risk in excess of the amount reflected in the consolidated balance sheets.

Earnings (Loss) Per Common Share.

Earnings (Loss) Per Common Share. Basic earnings (loss) per common share (EPS) are computed by dividing the income (loss) available to common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the year. The computation of dilutive EPS is similar except the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares had been issued. In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred dividends.

XML

DERIVATIVE INSTRUMENTS (Schedule of Derivative Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Interest rate swap agreements
Derivatives, Fair Value [Line Items]
Notional Amount		$ 50,000
Derivative Liabilities		(807)
Not Designated As Hedging Instrument
Derivatives, Fair Value [Line Items]
Notional Amount	179,781	195,025
Not Designated As Hedging Instrument | Interest rate lock commitments
Derivatives, Fair Value [Line Items]
Notional Amount	59,932	38,985
Not Designated As Hedging Instrument | Forward commitments to sell mortgage-backed securities
Derivatives, Fair Value [Line Items]
Notional Amount	107,700	58,800
Not Designated As Hedging Instrument | Interest rate swap agreements
Derivatives, Fair Value [Line Items]
Notional Amount	0	50,000
Not Designated As Hedging Instrument | Customer interest rate swap agreements
Derivatives, Fair Value [Line Items]
Notional Amount	12,149	47,240
Not Designated As Hedging Instrument | Other Assets
Derivatives, Fair Value [Line Items]
Derivative Assets	1,619	1,022
Not Designated As Hedging Instrument | Other Assets | Interest rate lock commitments
Derivatives, Fair Value [Line Items]
Derivative Assets	1,837	1,381
Not Designated As Hedging Instrument | Other Assets | Forward commitments to sell mortgage-backed securities
Derivatives, Fair Value [Line Items]
Derivative Assets	(305)	(729)
Not Designated As Hedging Instrument | Other Assets | Interest rate swap agreements
Derivatives, Fair Value [Line Items]
Derivative Assets	0	0
Not Designated As Hedging Instrument | Other Assets | Customer interest rate swap agreements
Derivatives, Fair Value [Line Items]
Derivative Assets	87	370
Not Designated As Hedging Instrument | Other Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liabilities	(87)	(1,114)
Not Designated As Hedging Instrument | Other Liabilities | Interest rate lock commitments
Derivatives, Fair Value [Line Items]
Derivative Liabilities	0	0
Not Designated As Hedging Instrument | Other Liabilities | Forward commitments to sell mortgage-backed securities
Derivatives, Fair Value [Line Items]
Derivative Liabilities	0	0
Not Designated As Hedging Instrument | Other Liabilities | Interest rate swap agreements
Derivatives, Fair Value [Line Items]
Derivative Liabilities	0	(807)
Not Designated As Hedging Instrument | Other Liabilities | Customer interest rate swap agreements
Derivatives, Fair Value [Line Items]
Derivative Liabilities	$ (87)	$ (307)

XML

PARENT COMPANY ONLY FINANCIAL INFORMATION (CONDENSED STATEMENTS OF OPERATIONS) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income:
Loss on available-for-sale investment securities	$ (374)	$ (1)	$ (31)
Expense:
Interest	30,088	44,539	76,020
Income (loss) from continuing operations before provision (benefit) for income taxes	31,365	(48,295)	(197,699)
Benefit for income taxes	(139)	(10,654)	4,114
Net income (loss) attributable to First Banks, Inc.	26,278	(41,150)	(191,737)
Parent Company
Income:
Management fees from subsidiaries	3	28	193
Net loss on derivative instruments	(43)	(194)	(2,929)
Other	578	509	3,123
Total income	538	343	387
Expense:
Interest	14,847	13,623	13,012
Other	1,506	(374)	809
Total expense	16,353	13,249	13,821
Income (loss) from continuing operations before provision (benefit) for income taxes	(15,815)	(12,906)	(13,434)
Benefit for income taxes	(348)	(46)	(171)
Loss before equity in undistributed earnings (losses) of subsidiaries	(15,467)	(12,860)	(13,263)
Equity in undistributed earnings (losses) of subsidiaries	41,745	(28,290)	(178,474)
Net income (loss) attributable to First Banks, Inc.	$ 26,278	$ (41,150)	$ (191,737)

XML

BANK PREMISES AND EQUIPMENT, NET (Future Minimum Operating Lease Payments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Operating Leased Assets [Line Items]
2013	$ 8,979	[1]
2014	7,330	[1]
2015	5,550	[1]
2016	4,766	[1]
2017	2,913	[1]
Thereafter	12,765	[1]
Total future minimum lease payments	42,303	[1]
Segment, Discontinued Operations
Operating Leased Assets [Line Items]
2013	1,000
2014	1,100
2015	1,000
2016	900
2017	900
Thereafter	2,900
Total future minimum lease payments	$ 7,800

[1] Amounts exclude future minimum lease payments under non-cancellable operating leases associated with assets and liabilities of discontinued operations of $1.0 million, $1.1 million, $1.0 million, $900,000 and $900,000 for the years ended December 31, 2013, 2014, 2015, 2016 and 2017, respectively, and $2.9 million thereafter, or a total of $7.8 million.

XML

STOCKHOLDERS' EQUITY (Details Textual) (USD $)	12 Months Ended					12 Months Ended									0 Months Ended			12 Months Ended
	Dec. 31, 2012 class quarters	Dec. 31, 2011	Dec. 31, 2010	Jun. 30, 2012	Dec. 31, 2012 Preferred Class A	Dec. 31, 2012 Preferred Class A Minimum	Dec. 31, 2012 Preferred Class A Maximum	Dec. 31, 2012 Preferred Class B Minimum	Dec. 31, 2012 Preferred Class B Maximum	Dec. 31, 2012 Preferred Class C	Dec. 31, 2011 Preferred Class C	Dec. 31, 2010 Preferred Class C	Dec. 31, 2008 Preferred Class C U.S. Treasury's Troubled Asset Relief Program's Capital Purchase Program	Dec. 31, 2008 Preferred Class D U.S. Treasury's Troubled Asset Relief Program's Capital Purchase Program	Jun. 13, 2011 Preferred Class C & D [Member] directors	Dec. 31, 2008 Preferred Class C & D [Member] U.S. Treasury's Troubled Asset Relief Program's Capital Purchase Program	Dec. 31, 2011 Preferred Class C & D [Member] Minimum quarters	Dec. 31, 2012 Accumulated Other Comprehensive Income (Loss)	Dec. 31, 2011 Accumulated Other Comprehensive Income (Loss)	Dec. 31, 2010 Accumulated Other Comprehensive Income (Loss)	Dec. 31, 2008 First five years Preferred Class C U.S. Treasury's Troubled Asset Relief Program's Capital Purchase Program	Dec. 31, 2008 On or after February 15, 2014 Preferred Class C U.S. Treasury's Troubled Asset Relief Program's Capital Purchase Program	Dec. 31, 2012 Regularly scheduled dividend payments Preferred Class C & D [Member]	Dec. 31, 2011 Regularly scheduled dividend payments Preferred Class C & D [Member]	Dec. 31, 2012 Cumulative dividends on unpaid regular dividends Preferred Class C & D [Member]	Dec. 31, 2011 Cumulative dividends on unpaid regular dividends Preferred Class C & D [Member]
Class of Stock [Line Items]
Number of classes of preferred stock	4
Redemption price, percentage of par value					105.00%
Preferred stock, percentage dividend rate						6.00%	12.00%	7.00%	15.00%					9.00%							5.00%	9.00%
Preferred stock, par value (in dollars per share)													$ 1.00	$ 1.00
Preferred stock, shares issued													295,400	14,770
Preferred stock, liquidation preference (in dollars per share)													$ 1,000	$ 1,000
Preferred stock dividend rate period										5 years
Preferred stock, dividend payment terms													Class C Preferred Stock carries an annual dividend rate equal to 5% for the first five years and the annual dividend rate increases to 9% per annum on and after February 15, 2014, payable quarterly in arrears beginning February 15, 2009.	Class D Preferred Stock carries an annual dividend rate equal to 9%, payable quarterly in arrears beginning February 15, 2009
Dividend deferral, conferral of right to elect directors (number of directors)															2
Dividend deferral, number of directors elected															2
Preferred stock																$ 295,400,000
Discount on issuance of preferred stock										17,300,000
Preferred stock discount, accretion period										5 years
Number of quarterly periods that dividends have been deferred on preferred stock	14																6
Accretion of discount on preferred stock										3,554,000	3,466,000	3,381,000
Dividends declared and deferred																							56,300,000	40,200,000	5,600,000	2,800,000
Reclassification of investment securities from available for sale to held to maturity	729,142,000	0	0	729,100,000
Gross unrealized gain on securities reclassified from available-for-sale to held-to-maturity				11,700,000
Gross unrealized gain on reclassification, net of taxes				6,800,000
Tax effect of reclassification adjustment				4,900,000
Other comprehensive income	29,193,000	18,384,000	146,000															29,193,000	18,384,000	146,000
Other comprehensive income, tax	$ 8,000,000	$ 10,100,000	$ (2,300,000)

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES (Gross Realized Gains and Losses) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Gross realized gains on sales of available-for-sale securities	$ 1,675	$ 5,286	$ 8,350
Gross realized losses on sales of available-for-sale securities	(374)	(1)	(31)
Other-than-temporary impairment	(2)	(3)	(4)
Gross realized gains on calls of investment securities	7	53	0
Net realized gain on investment securities	$ 1,306	$ 5,335	$ 8,315

XML

TRANSACTIONS WITH RELATED PARTIES (Narrative 2) (Details) (USD $)		1 Months Ended	12 Months Ended							0 Months Ended
	Jan. 26, 2011	May 31, 2008 FB Holdings, LLC	Dec. 31, 2012 FB Holdings, LLC	Dec. 31, 2011 FB Holdings, LLC	Dec. 31, 2010 FB Holdings, LLC	Dec. 31, 2008 First Capital America, Inc.	Dec. 31, 2012 First Capital America, Inc.	Dec. 31, 2012 First Bank	Mar. 24, 2011 Investors Of America Limited Partnership	Dec. 14, 2012 Individual Single Credit Relationships and Loans	Dec. 31, 2012 Individual Single Credit Relationships and Loans	Sep. 28, 2012 Individual Single Credit Relationships and Loans	Dec. 31, 2011 Individual Single Credit Relationships and Loans	Dec. 31, 2011 Limited Liability Company Owned by Related Party Individual	Dec. 31, 2011 Credit Relationships to Companies Owned by Related Party Individual
Related Party Transaction [Line Items]
Proceeds from contributions from parent		$ 9,000,000
Contribution of assets from parent		133,300,000
Proceeds from contributions from affiliates						125,000,000
Noncontrolling interest, ownership percentage by parent							46.77%	53.23%
Service fees received from affiliate			124,000	194,000	321,000
Revolving credit note borrowing capacity									5,000,000
Loans and leases receivable, related parties											9,100,000		23,400,000
Mortgage loans on real estate													15,600,000
Individual ownership percentage	100.00%													50.00%	16.00%
Repayment of mortgage loans on real estate												15,400,000
Line of credit facility, amount outstanding													1,200,000
Credit relationship, 60 to 89 days past due													328,000
Proceeds from sale of loans receivable										$ 785,000

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Goodwill and other intangible assets	$ 125,267,000	$ 125,267,000	$ 125,967,000
Amortization of intangible assets	0	3,024,000	3,292,000
Goodwill impairment valuation discount rate	15.00%	23.00%
Goodwill impairment valuation income approach weighted rate	60.00%	60.00%
Goodwill impairment valuation market approach weighted rate	20.00%	20.00%
Goodwill impairment valuation excess of the fair value of the reporting unit over its carrying value	42,900,000
Goodwill impairment valuation excess of carrying value of reporting unit over fair value		35,500,000
Goodwill impairment valuation estimated discount on loans held for portfolio		303,600,000
Goodwill impairment valuation implied fair value of reporting unit's goodwill		231,200,000
Goodwill, reporting unit carrying value		125,300,000
Florida
Goodwill, written off related to sale of usiness unit	$ 700,000

XML

NOTES PAYABLE (Textual) (Details) (Investors Of America Limited Partnership, USD $) In Millions, unless otherwise specified	Mar. 24, 2011	Mar. 20, 2013 Subsequent Event Parent Company Revolving Credit Facility
Line of Credit Facility [Line Items]
Revolving credit note borrowing capacity	$ 5.0	$ 5.0
Spread on LIBOR, percentage		3.00%

XML

DERIVATIVE INSTRUMENTS (Schedule of Cash Flow Hedging Instruments, Location in Statements) (Details ) (Cash Flow Hedging, Interest rate swap agreements, Designated as Hedging Instrument, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Derivative Instruments, Gain (Loss) [Line Items]
Interest and fees on loans	$ 0	$ 0	$ 5,745

XML

SUBORDINATED DEBENTURES (Summary Of Junior Subordinated Debentures Issued To Trusts) (Details) (USD $) In Thousands, unless otherwise specified				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 First Bank Statutory Trust II		Dec. 31, 2012 First Bank Statutory Trust II London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 Royal Oaks Capital Trust I		Dec. 31, 2012 Royal Oaks Capital Trust I London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust III		Dec. 31, 2012 First Bank Statutory Trust III London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust IV		Dec. 31, 2012 First Bank Statutory Trust IV London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust V		Dec. 31, 2012 First Bank Statutory Trust V London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust VI		Dec. 31, 2012 First Bank Statutory Trust VI London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust VII		Dec. 31, 2012 First Bank Statutory Trust VII London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust VIII		Dec. 31, 2012 First Bank Statutory Trust VIII London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust X		Dec. 31, 2012 First Bank Statutory Trust X London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust IX		Dec. 31, 2012 First Bank Statutory Trust IX London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust XI		Dec. 31, 2012 First Bank Statutory Trust XI London Interbank Offered Rate (LIBOR)		Dec. 31, 2012 First Bank Statutory Trust		Dec. 31, 2012 First Preferred Capital Trust IV
Issuance Date				Sep. 01, 2004				Oct. 01, 2004				Nov. 01, 2004				Mar. 01, 2006				Apr. 01, 2006				Jun. 01, 2006				Dec. 01, 2006				Feb. 01, 2007				Aug. 01, 2007				Sep. 01, 2007				Sep. 01, 2007				Mar. 01, 2003		Apr. 01, 2003
Maturity Date				Sep. 20, 2034				Jan. 07, 2035				Dec. 15, 2034				Mar. 15, 2036				Jun. 15, 2036				Jul. 07, 2036				Dec. 15, 2036				Mar. 30, 2037				Sep. 15, 2037				Dec. 15, 2037				Dec. 15, 2037				Mar. 20, 2033		Jun. 30, 2033
Call Date				Sep. 20, 2009	[1]			Jan. 07, 2010	[1]			Dec. 15, 2009	[1]			Mar. 15, 2011	[1]			Jun. 15, 2011	[1]			Jul. 07, 2011	[1]			Dec. 15, 2011	[1]			Mar. 30, 2012	[1]			Sep. 15, 2012	[1]			Dec. 15, 2012	[1]			Dec. 15, 2012	[1]			Mar. 20, 2008	[1]	Jun. 30, 2008	[1]
Interest Rate						2.05%	[2]			2.40%	[2]			2.18%	[2]			1.42%	[2]			1.45%	[2]			1.65%	[2]			1.85%	[2]			1.61%	[2]			2.30%	[2]			2.25%	[2]			2.85%	[2]
Stated interest rate																																																8.10%	[2]	8.15%	[2]
Trust Preferred Securities				$ 20,000				$ 4,000				$ 40,000				$ 40,000				$ 20,000				$ 25,000				$ 50,000				$ 25,000				$ 15,000				$ 25,000				$ 10,000				$ 25,000		$ 46,000
Subordinated Debentures	$ 354,133	$ 354,057	$ 353,981	$ 20,619				$ 4,124				$ 41,238				$ 41,238				$ 20,619				$ 25,774				$ 51,547				$ 25,774				$ 15,464				$ 25,774				$ 10,310				$ 25,774		$ 47,423

[1] The junior subordinated debentures are callable at the option of the Company on the call date shown at 100% of the principal amount plus accrued and unpaid interest.

[2] The interest rates paid on the trust preferred securities are based on either a variable rate or a fixed rate. The variable rate is based on the three-month LIBOR plus the basis point spread shown.

XML

SERVICING RIGHTS (Schedule of Servicing Assets at Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Mortgage Banking
Servicing Assets at Fair Value [Line Items]
Balance, beginning of year	$ 9,077		$ 12,150
Originated servicing rights	4,887		3,450
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model	(2,089)	[1]	(4,280)	[1]
Other changes in fair value	(2,723)	[2]	(2,243)	[2]
Balance, end of year	9,152		9,077
SBA
Servicing Assets at Fair Value [Line Items]
Balance, beginning of year	6,303		7,432
Originated servicing rights	0		0
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model	434	[1]	150	[1]
Other changes in fair value	(1,097)	[2]	(1,279)	[2]
Balance, end of year	$ 5,640		$ 6,303

[1] The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

[2] Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, gross, consumer, real estate, required interest only payments	$ 25,300,000	$ 40,200,000
Delinquency percent, residential real estate mortgages that require interest only payments as a percentage of total residential real estate mortgages that require interest only payments	5.10%	14.50%
Percent of total loan portfolio collateralized	99.00%	99.00%
Loans pledged as collateral	1,170,000,000	1,400,000,000
Impaired financing receivable individually evaluated for impairment	119,483,000	209,169,000
Loan and leases receivable, impaired	238,800,000	346,700,000
Loans and leases receivable, troubled debt, interest income under original terms not recorded	21,700,000	34,200,000	46,300,000
Loans and leases receivable, impaired, troubled debt, interest income	6,000,000	8,000,000	14,200,000
Loans and leases receivable, impaired, average recorded investment	283,500,000	418,400,000	619,400,000
Loans and leases receivable, impaired, troubled debt, interest income recognized during term of impairment	4,400,000	3,600,000	5,900,000
Allowance allocated to troubled debt restructurings	17,952,000	30,629,000
Minimum
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired financing receivable individually evaluated for impairment	500,000
Real Estate Construction and Development
Financing Receivable, Allowance for Credit Losses [Line Items]
Total real estate loans as a percentage of total loan portfolio	79.00%	77.00%
Impaired financing receivable individually evaluated for impairment	39,155,000	76,475,000
Allowance allocated to troubled debt restructurings	1,452,000	3,432,000
Residential Real Estate Mortgages, Home Equity Lines of Credit
Financing Receivable, Allowance for Credit Losses [Line Items]
Residential real estate mortgages and home equity lines of credit as a percentage of total real estate loans	46.00%	37.00%
Impaired Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing receivable, allowance for credit losses, accumulated write-downs	103,900,000	180,500,000
Hamp Program
Financing Receivable, Allowance for Credit Losses [Line Items]
Troubled debt restructurings under HAMP program	75,700,000	75,900,000
Troubled Debt Restructurings
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to troubled debt restructurings	$ 9,500,000	$ 12,800,000

XML

EARNINGS (LOSS) PER COMMON SHARE

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER COMMON SHARE

EARNINGS(LOSS)PERCOMMONSHARE

The following is a reconciliation of basic and diluted income (loss) per share for the years ended December 31, 2012, 2011 and 2010:

	Years Ended December 31,
	2012			2011		2010
	(dollars in thousands, except share and per share data)
Basic:
Net income (loss) from continuing operations attributable to First Banks, Inc.	$	31,801		(34,691	)	(195,299	)
Preferred stock dividends declared and undeclared	(18,886		)	(17,908	)	(16,980	)
Accretion of discount on preferred stock	(3,554		)	(3,466	)	(3,381	)
Net income (loss) from continuing operations attributable to common stockholders	9,361			(56,065	)	(215,660	)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523		)	(6,459	)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	$	3,838		(62,524	)	(212,098	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661
Basic earnings (loss) per common share – continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Basic (loss) earnings per common share – discontinued operations	$	(233.42	)	(272.98	)	150.54
Basic earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)
Diluted:
Net income (loss) from continuing operations attributable to common stockholders	$	9,361		(56,065	)	(215,660	)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523		)	(6,459	)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	3,838			(62,524	)	(212,098	)
Effect of dilutive securities – Class A convertible preferred stock	—			—		—
Diluted income (loss) available to First Banks, Inc. common stockholders	$	3,838		(62,524	)	(212,098	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661
Effect of dilutive securities – Class A convertible preferred stock	—			—		—
Weighted average diluted shares of common stock outstanding	23,661			23,661		23,661
Diluted earnings (loss) per common share – continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Diluted (loss) earnings per common share – discontinued operations	$	(233.42	)	(272.98	)	150.54
Diluted earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)

XML

PARENT COMPANY ONLY FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

CONDENSED BALANCE SHEETS

CONDENSED BALANCE SHEETS

	December 31,
	2012		2011
	(dollars expressed in thousands)
Assets
Cash deposited in First Bank (unrestricted cash)	$	2,744	2,801
Cash deposited in unaffiliated financial institution (restricted cash)	—		2,008
Total cash	2,744		4,809
Investment in common securities - TRuPS	10,678		10,678
Investment in subsidiaries	657,838		586,899
Other assets	3,583		3,067
Total assets	$	674,843	605,453
Liabilities and Stockholders’ Equity
Subordinated debentures	$	354,133	354,057
Derivative instruments	—		807
Accrued interest payable	47,878		33,179
Dividends payable	61,931		43,045
Accrued expenses and other liabilities	4,597		4,646
Total liabilities	468,539		435,734
First Banks, Inc. stockholders’ equity	206,304		169,719
Total liabilities and stockholders’ equity	$	674,843	605,453

CONDENSED STATEMENTS OF OPERATIONS

CONDENSED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2012			2011		2010
	(dollars expressed in thousands)
Income:
Management fees from subsidiaries	$	3		28		193
Net loss on derivative instruments	(43		)	(194	)	(2,929	)
Other	578			509		3,123
Total income	538			343		387
Expense:
Interest	14,847			13,623		13,012
Other	1,506			(374	)	809
Total expense	16,353			13,249		13,821
Loss before benefit for income taxes and equity in undistributed earnings (losses) of subsidiaries	(15,815		)	(12,906	)	(13,434	)
Benefit for income taxes	(348		)	(46	)	(171	)
Loss before equity in undistributed earnings (losses) of subsidiaries	(15,467		)	(12,860	)	(13,263	)
Equity in undistributed earnings (losses) of subsidiaries	41,745			(28,290	)	(178,474	)
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)

CONDENSED STATEMENTS OF CASH FLOWS

CONDENSEDSTATEMENTSOFCASHFLOWS

	Years Ended December 31,
	2012			2011		2010
	(dollars expressed in thousands)
Cash flows from operating activities:
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net (income) loss of subsidiaries	(41,745		)	28,290		178,474
Other, net	15,410			12,042		6,012
Net cash used in operating activities	(57		)	(818	)	(7,251	)
Cash flows from investing activities:
Decrease in available-for-sale investment securities	—			—		3,570
Net cash provided by investing activities	—			—		3,570
Cash flows from financing activities:
Capital contributions to subsidiaries	—			—		(100	)
Payment of preferred stock dividends	—			—		—
Net cash used in financing activities	—			—		(100	)
Net decrease in unrestricted cash	(57		)	(818	)	(3,781	)
Unrestricted cash, beginning of year	2,801			3,619		7,400
Unrestricted cash, end of year	$	2,744		2,801		3,619
Noncash investing activities:
Cash paid for interest	$	—		—		—

XML

SUBORDINATED DEBENTURES (Tables)

12 Months Ended

Dec. 31, 2012

Subordinated Borrowings [Abstract]

Summary Of Junior Subordinated Debentures Issued To Trusts

The following is a summary of the junior subordinated debentures issued to the Trusts in conjunction with the trust preferred securities offerings at December 31, 2012 and 2011:

Name of Trust	Issuance Date	Maturity Date	Call Date(1)	Interest Rate(2)		Trust Preferred Securities		Subordinated Debentures
						(dollars expressed in thousands)
Variable Rate
First Bank Statutory Trust II	September 2004	September 20, 2034	September 20, 2009	+205.0	bp	$	20,000	$	20,619
Royal Oaks Capital Trust I	October 2004	January 7, 2035	January 7, 2010	+240.0	bp	4,000		4,124
First Bank Statutory Trust III	November 2004	December 15, 2034	December 15, 2009	+218.0	bp	40,000		41,238
First Bank Statutory Trust IV	March 2006	March 15, 2036	March 15, 2011	+142.0	bp	40,000		41,238
First Bank Statutory Trust V	April 2006	June 15, 2036	June 15, 2011	+145.0	bp	20,000		20,619
First Bank Statutory Trust VI	June 2006	July 7, 2036	July 7, 2011	+165.0	bp	25,000		25,774
First Bank Statutory Trust VII	December 2006	December 15, 2036	December 15, 2011	+185.0	bp	50,000		51,547
First Bank Statutory Trust VIII	February 2007	March 30, 2037	March 30, 2012	+161.0	bp	25,000		25,774
First Bank Statutory Trust X	August 2007	September 15, 2037	September 15, 2012	+230.0	bp	15,000		15,464
First Bank Statutory Trust IX	September 2007	December 15, 2037	December 15, 2012	+225.0	bp	25,000		25,774
First Bank Statutory Trust XI	September 2007	December 15, 2037	December 15, 2012	+285.0	bp	10,000		10,310
Fixed Rate
First Bank Statutory Trust	March 2003	March 20, 2033	March 20, 2008	8.10%		25,000		25,774
First Preferred Capital Trust IV	April 2003	June 30, 2033	June 30, 2008	8.15%		46,000		47,423

(1) The junior subordinated debentures are callable at the option of the Company on the call date shown at 100% of the principal amount plus accrued and unpaid interest.

(2) The interest rates paid on the trust preferred securities are based on either a variable rate or a fixed rate. The variable rate is based on the three-month LIBOR plus the basis point spread shown.

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Goodwill [Roll Forward]
Balance, beginning of year	$ 125,267		$ 125,967
Goodwill allocated to discontinued operations	0	[1]	(700)	[1]
Balance, end of year	$ 125,267		$ 125,267

[1] Goodwill allocated to discontinued operations during 2011 pertains to the Florida Region, as further discussed in Note 2 to the consolidated financial statements.

XML

CREDIT COMMITMENTS (Schedule of Credit Commitments and Standby Letters of Credit) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	$ 726,290	$ 749,179
Commitments to extend credit
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	667,215	683,186
Commercial and standby letters of credit
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	$ 59,075	$ 65,993

XML

BANK PREMISES AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Bank Premises and Equipment

Bank premises and equipment, net of accumulated depreciation and amortization, were comprised of the following at December 31, 2012 and 2011:

	2012			2011
	(dollars expressed in thousands)
Land	$	33,324		34,211
Buildings and improvements	134,428			136,728
Furniture, fixtures and equipment	99,116			102,776
Leasehold improvements	12,014			12,012
Construction in progress	1,878			672
Total	280,760			286,399
Accumulated depreciation and amortization	(153,240		)	(149,200	)
Bank premises and equipment, net	$	127,520		137,199

Future Minimum Operating Lease Payments

Future minimum lease payments under non-cancellable operating leases extend through 2027 as follows:

	(dollars expressed in thousands)
Year ending December 31(1):
2013	$	8,979
2014	7,330
2015	5,550
2016	4,766
2017	2,913
Thereafter	12,765
Total future minimum lease payments	$	42,303

(1) Amounts exclude future minimum lease payments under non-cancellable operating leases associated with assets and liabilities of discontinued operations of $1.0 million, $1.1 million, $1.0 million, $900,000 and $900,000 for the years ended December 31,2013, 2014, 2015, 2016 and 2017, respectively, and $2.9 million thereafter, or a total of $7.8 million.

XML

DISCONTINUED OPERATIONS (Discontinued Operations Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets of discontinued operations	$ 6,706	$ 6,913	$ 43,532
Deposits:
Liabilities of discontinued operations	155,711	174,737	94,184
Florida
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash and due from banks	1,139	1,018
Total loans	0	0
Bank premises and equipment, net	4,837	5,165
Goodwill and other intangible assets	700	700
Other assets	30	30
Assets of discontinued operations	6,706	6,913
Deposits:
Noninterest-bearing demand	12,488	9,103
Interest-bearing demand	10,480	8,198
Savings and money market	67,686	86,983
Time deposits of $100 or more	27,034	24,242
Other time deposits	37,964	46,123
Total deposits	155,652	174,649
Other borrowings	0	12
Accrued expenses and other liabilities	59	76
Liabilities of discontinued operations	$ 155,711	$ 174,737

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Modified Troubled Debt Restructurings That Subsequently Defaulted) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012 contracts	Dec. 31, 2011 contracts
Commercial, financial and agricultural
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0
Recorded Investment	$ 0	$ 0
Real estate construction and development
Financing Receivable, Modifications [Line Items]
Number of Contracts	3	1
Recorded Investment	1,364	460
One-to-four-family residential
Financing Receivable, Modifications [Line Items]
Number of Contracts	57	45
Recorded Investment	12,437	9,523
Multi-family residential
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0
Recorded Investment	0	0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	1
Recorded Investment	$ 0	$ 1,144

XML

EMPLOYEE BENEFITS (Schedule of Assumptions Used) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Discount rate	4.28%	4.93%
Expected long-term rate of return on Plan assets	7.00%	7.00%

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Aging of Loans by Loan Classification) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	$ 12,142	$ 20,546
60-89 Days	8,404	18,819
Recorded Investment 90 Days Past Due And Accruing	1,090	2,744
Nonaccrual	109,872	220,251
Total Past Due	131,508	262,360
Current	2,799,239	3,021,919
Total loans	2,930,747	3,284,279	4,492,284
Commercial, financial and agricultural
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	1,180	1,602
60-89 Days	322	2,085
Recorded Investment 90 Days Past Due And Accruing	0	1,095
Nonaccrual	19,050	55,340
Total Past Due	20,552	60,122
Current	589,749	665,073
Total loans	610,301	725,195
Real estate construction and development
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	93	170
60-89 Days	0	3,033
Recorded Investment 90 Days Past Due And Accruing	0	0
Nonaccrual	32,152	71,244
Total Past Due	32,245	74,447
Current	142,734	175,540
Total loans	174,979	249,987
Bank portfolio
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	1,871	4,506
60-89 Days	1,121	2,577
Recorded Investment 90 Days Past Due And Accruing	874	362
Nonaccrual	6,910	14,690
Total Past Due	10,776	22,135
Current	111,562	143,443
Total loans	122,338	165,578
Mortgage Division portfolio
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	6,264	5,994
60-89 Days	4,375	1,571
Recorded Investment 90 Days Past Due And Accruing	0	0
Nonaccrual	19,780	16,778
Total Past Due	30,419	24,343
Current	479,552	342,572
Total loans	509,971	366,915
Home equity
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	2,494	3,990
60-89 Days	1,221	2,151
Recorded Investment 90 Days Past Due And Accruing	216	856
Nonaccrual	8,671	6,940
Total Past Due	12,602	13,937
Current	341,856	356,008
Total loans	354,458	369,945
Multi-family residential
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	0	0
60-89 Days	629	118
Recorded Investment 90 Days Past Due And Accruing	0	0
Nonaccrual	6,761	7,975
Total Past Due	7,390	8,093
Current	96,294	119,263
Total loans	103,684	127,356
Commercial real estate
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	66	3,888
60-89 Days	693	7,092
Recorded Investment 90 Days Past Due And Accruing	0	427
Nonaccrual	16,520	47,262
Total Past Due	17,279	58,669
Current	952,401	1,166,869
Total loans	969,680	1,225,538
Consumer and installment
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	174	396
60-89 Days	43	192
Recorded Investment 90 Days Past Due And Accruing	0	4
Nonaccrual	28	22
Total Past Due	245	614
Current	18,958	22,040
Total loans	19,203	22,654
Loans held for sale
Schedule of Aging of Loans by Loan Classification [Line Items]
30-59 Days	0	0
60-89 Days	0	0
Recorded Investment 90 Days Past Due And Accruing	0	0
Nonaccrual	0	0
Total Past Due	0	0
Current	66,133	31,111
Total loans	$ 66,133	$ 31,111

XML

EARNINGS (LOSS) PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share Reconciliation

The following is a reconciliation of basic and diluted income (loss) per share for the years ended December 31, 2012, 2011 and 2010:

	Years Ended December 31,
	2012			2011		2010
	(dollars in thousands, except share and per share data)
Basic:
Net income (loss) from continuing operations attributable to First Banks, Inc.	$	31,801		(34,691	)	(195,299	)
Preferred stock dividends declared and undeclared	(18,886		)	(17,908	)	(16,980	)
Accretion of discount on preferred stock	(3,554		)	(3,466	)	(3,381	)
Net income (loss) from continuing operations attributable to common stockholders	9,361			(56,065	)	(215,660	)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523		)	(6,459	)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	$	3,838		(62,524	)	(212,098	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661
Basic earnings (loss) per common share – continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Basic (loss) earnings per common share – discontinued operations	$	(233.42	)	(272.98	)	150.54
Basic earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)
Diluted:
Net income (loss) from continuing operations attributable to common stockholders	$	9,361		(56,065	)	(215,660	)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523		)	(6,459	)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	3,838			(62,524	)	(212,098	)
Effect of dilutive securities – Class A convertible preferred stock	—			—		—
Diluted income (loss) available to First Banks, Inc. common stockholders	$	3,838		(62,524	)	(212,098	)
Weighted average shares of common stock outstanding	23,661			23,661		23,661
Effect of dilutive securities – Class A convertible preferred stock	—			—		—
Weighted average diluted shares of common stock outstanding	23,661			23,661		23,661
Diluted earnings (loss) per common share – continuing operations	$	395.64		(2,369.48	)	(9,114.61	)
Diluted (loss) earnings per common share – discontinued operations	$	(233.42	)	(272.98	)	150.54
Diluted earnings (loss) per common share	$	162.22		(2,642.46	)	(8,964.07	)

XML

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

Discontinued Operations. The assets and liabilities associated with the transactions described (and defined) below were previously reported in the First Bank segment and were sold, or are expected to be sold, as part of the Company’s Capital Optimization Plan (Capital Plan). The Company applied discontinued operations accounting in accordance with ASC Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities associated with the Northern Florida Region as of December 31, 2012 and 2011, and to the operations of First Bank’s Northern Florida, Northern Illinois, Chicago and Texas Regions, in addition to the operations of WIUS and MVP, for the years ended December 31, 2012, 2011 and 2010, as applicable. The Company did not allocate any consolidated interest that is not directly attributable to or related to discontinued operations. All financial information in the consolidated financial statements and notes to the consolidated financial statements is reported on a continuing operations basis, unless otherwise noted.

Northern Florida Region. On November 21, 2012, First Bank entered into a Branch Purchase and Assumption Agreement that provides for the sale of certain assets and the transfer of certain liabilities associated with eight of First Bank’s retail branches located in Pinellas County, Florida to HomeBanc National Association (HomeBanc), headquartered in Lake Mary, Florida. Under the terms of the agreement, HomeBanc is to assume approximately $133.4 million of deposits, purchase the premises and equipment and assume the leases associated with these eight retail branches. The transaction, which is subject to certain closing conditions, is expected to be completed during the second quarter of 2013. The transaction is not expected to result in a significant gain or loss.

First Bank also announced its intention to close its two retail branches in Hillsborough County and its single retail branch located in Pasco County. The closure of these three Northern Florida retail branches is also expected to be completed during the second quarter of 2013. The eight branches being sold and three branches being closed are collectively defined as the Northern Florida Region. The assets and liabilities associated with the Northern Florida Region are reflected in assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2012 and 2011.

First Bank intends to continue to hold and operate its remaining eight retail branches in Manatee County’s communities of Bradenton, Palmetto and Longboat Key, Florida. These eight branches were previously reported as discontinued operations but were reclassified to continuing operations during the fourth quarter of 2012. The related assets and liabilities associated with these eight retail branches were reclassified from assets and liabilities of discontinued operations to continuing operations in the consolidated balance sheets as of December 31, 2012 and 2011. Upon reclassification of the assets of these branches from assets of discontinued operations to continuing operations, the assets were recorded at the lower of their carrying amount and their fair value at the time of the Company’s change in its intent to continue to hold and operate the branches. As a result of the Company’s change in its intent to hold and operate these branches, the Company recorded a write-down of $2.3 million during the fourth quarter of 2012 associated with a fair value adjustment on the premises and equipment of these branches, which is included in other noninterest expense in the consolidated statements of operations.

Northern Illinois Region. During 2010, First Bank entered into three Branch Purchase and Assumption Agreements that provided for the sale of certain assets and the transfer of certain liabilities associated with 14 of First Bank’s branch banking offices in Northern Illinois, as further described below.

On December 21, 2010, First Bank entered into a Branch Purchase and Assumption Agreement with United Community Bank (United Community) that provided for the sale of certain assets and the transfer of certain liabilities associated with First Bank’s three retail branches in Pittsfield, Roodhouse and Winchester, Illinois to United Community. The transaction was completed on May 13, 2011. Under the terms of the agreement, United Community assumed $92.2 million of deposits associated with these branches for a weighted average premium of approximately 2.4%, or $2.2 million. United Community also purchased $37.5 million of loans as well as certain other assets at par value, including premises and equipment, associated with these branches.

On June 7, 2010, First Bank entered into a Branch Purchase and Assumption Agreement with Bank of Springfield that provided for the sale of certain assets and the transfer of certain liabilities of First Bank’s branch banking office located in Jacksonville, Illinois (Jacksonville Branch) to Bank of Springfield. The transaction was completed on September 24, 2010. Under the terms of the agreement, Bank of Springfield assumed $28.9 million of deposits associated with the Jacksonville Branch for a premium of approximately 4.00%, or $1.2 million. Bank of Springfield also purchased $2.2 million of loans as well as certain other assets at par value, including premises and equipment, associated with the Jacksonville Branch.

On May 7, 2010, First Bank entered into a Branch Purchase and Assumption Agreement with First Mid-Illinois Bank & Trust, N.A. (First Mid-Illinois) that provided for the sale of certain assets and the transfer of certain liabilities associated with 10 of First Bank’s retail branches in Peoria, Galesburg, Quincy, Bartonville, Knoxville and Bloomington, Illinois to First Mid-Illinois. The transaction was completed on September 10, 2010. Under the terms of the agreement, First Mid-Illinois assumed $336.0 million of deposits for a premium of 4.77%, or $15.6 million. First Mid-Illinois also purchased $135.2 million of loans as well as certain other assets at par value, including premises and equipment, associated with these branches.

The 14 branches in the transactions with United Community, Bank of Springfield and First Mid-Illinois are collectively defined as the Northern Illinois Region (Northern Illinois Region). The Bank of Springfield and First Mid-Illinois transactions, in the aggregate, resulted in a gain of $6.4 million, after the write-off of goodwill and intangible assets of $9.7 million allocated to the Northern Illinois Region, during the third quarter of 2010. The United Community transaction resulted in a gain of $425,000, after the write-off of goodwill and intangible assets of $1.6 million allocated to the Northern Illinois Region, during the second quarter of 2011.

Missouri Valley Partners, Inc. On March 5, 2010, First Bank entered into a Stock Purchase Letter Agreement that provided for the sale of First Bank’s subsidiary, Missouri Valley Partners, Inc. (MVP) to Stifel Financial Corp. The transaction was completed on April 15, 2010. Under the terms of the agreement, First Bank sold all of the capital stock of MVP for a purchase price of $515,000. The transaction resulted in a loss of $156,000 during the second quarter of 2010.

Texas Region. On February 8, 2010, First Bank entered into a Purchase and Assumption Agreement with Prosperity Bank (Prosperity), headquartered in Houston, Texas, that provided for the sale of certain assets and the transfer of certain liabilities of First Bank’s Texas franchise (Texas Region) to Prosperity. The transaction was completed on April 30, 2010. Under the terms of the agreement, Prosperity assumed substantially all of the deposits associated with First Bank’s 19 Texas retail branches which totaled $492.2 million, for a premium of 5.50%, or $26.9 million. Prosperity also purchased $96.7 million of loans as well as certain other assets, including premises and equipment, associated with First Bank’s Texas Region. The transaction resulted in a gain of $5.0 million, after the write-off of goodwill and intangible assets of $20.0 million allocated to the Texas Region, during the second quarter of 2010.

WIUS, Inc. and WIUS of California, Inc. On December 3, 2009, First Bank and Universal Premium Acceptance Corporation, predecessor to WIUS, Inc., and its wholly owned subsidiary, WIUS of California, Inc. (collectively, WIUS), entered into a Purchase and Sale Agreement that provided for the sale of certain assets and the transfer of certain liabilities of WIUS to PFS Holding Company, Inc., Premium Financing Specialists, Inc., Premium Financing Specialists of California, Inc. and Premium Financing Specialists of the South, Inc. (collectively, PFS). Under the terms of the agreement, PFS purchased $141.3 million of loans as well as certain other assets, including premises and equipment, associated with WIUS, and assumed certain other liabilities associated with WIUS upon completion of the transaction on December 31, 2009. In conjunction with this transaction, WIUS sold $1.5 million of additional loans to PFS on February 26, 2010. On August 31, 2010, First Bank sold all of the capital stock of WIUS to an unrelated third party for a purchase price of $100,000, which resulted in a loss of $29,000 during the third quarter of 2010.

Chicago Region. On November 11, 2009, First Bank entered into a Purchase and Assumption Agreement that provided for the sale of certain assets and the transfer of certain liabilities of First Bank’s Chicago franchise (Chicago Region) to FirstMerit Bank, N.A. (FirstMerit). The transaction was completed on February 19, 2010. Under the terms of the agreement, FirstMerit assumed substantially all of the deposits associated with First Bank’s 24 Chicago retail branches which totaled $1.20 billion, for a premium of 3.50%, or $42.1 million. FirstMerit also purchased $301.2 million of loans as well as certain other assets, including premises and equipment, associated with First Bank’s Chicago Region. The transaction resulted in a gain of $8.4 million, after the write-off of goodwill and intangible assets of $26.3 million allocated to the Chicago Region, during the first quarter of 2010.

Assets and liabilities of discontinued operations at December 31, 2012 and 2011 were as follows:

	December 31, 2012		December 31, 2011
	Florida		Florida
	(dollars expressed in thousands)
Cash and due from banks	$	1,139	1,018
Total loans	—		—
Bank premises and equipment, net	4,837		5,165
Goodwill and other intangible assets	700		700
Other assets	30		30
Assets of discontinued operations	$	6,706	6,913
Deposits:
Noninterest-bearing demand	$	12,488	9,103
Interest-bearing demand	10,480		8,198
Savings and money market	67,686		86,983
Time deposits of $100 or more	27,034		24,242
Other time deposits	37,964		46,123
Total deposits	155,652		174,649
Other borrowings	—		12
Accrued expenses and other liabilities	59		76
Liabilities of discontinued operations	$	155,711	174,737

Loss from discontinued operations, net of tax, for the year ended December 31, 2012 was as follows:

	Florida
	(dollars expressed in thousands)
Year ended December 31, 2012:
Interest income:
Interest and fees on loans	$	—
Interest expense:
Interest on deposits	972
Net interest loss	(972		)
Provision for loan losses	—
Net interest loss after provision for loan losses	(972		)
Noninterest income:
Service charges and customer service fees	467
Other	13
Total noninterest income	480
Noninterest expense:
Salaries and employee benefits	2,279
Occupancy, net of rental income	1,760
Furniture and equipment	278
Legal, examination and professional fees	5
FDIC insurance	358
Other	351
Total noninterest expense	5,031
Loss from operations of discontinued operations	(5,523		)
Benefit for income taxes	—
Net loss from discontinued operations, net of tax	$	(5,523	)

Loss from discontinued operations, net of tax, for the year ended December 31, 2011 was as follows:

	Florida			Northern Illinois	Total
	(dollars expressed in thousands)
Year ended December 31, 2011:
Interest income:
Interest and fees on loans	$	—		895	895
Interest expense:
Interest on deposits	2,160			261	2,421
Net interest (loss) income	(2,160		)	634	(1,526	)
Provision for loan losses	—			—	—
Net interest (loss) income after provision for loan losses	(2,160		)	634	(1,526	)
Noninterest income:
Service charges and customer service fees	411			259	670
Other	8			5	13
Total noninterest income	419			264	683
Noninterest expense:
Salaries and employee benefits	2,325			357	2,682
Occupancy, net of rental income	1,746			68	1,814
Furniture and equipment	431			29	460
Legal, examination and professional fees	1			6	7
Amortization of intangible assets	63			—	63
FDIC insurance	469			100	569
Other	379			67	446
Total noninterest expense	5,414			627	6,041
(Loss) income from operations of discontinued operations	(7,155		)	271	(6,884	)
Net gain on sale of discontinued operations	—			425	425
Benefit for income taxes	—			—	—
Net (loss) income from discontinued operations, net of tax	$	(7,155	)	696	(6,459	)

Income from discontinued operations, net of tax, for the year ended December 31, 2010 was as follows:

	Florida			Northern Illinois	Chicago		Texas		WIUS		MVP		Total
	(dollars expressed in thousands)
Year ended December 31, 2010:
Interest income:
Interest and fees on loans	$	—		9,629	2,391		1,816		33		—		13,869
Interest expense:
Interest on deposits	3,305			4,232	2,550		1,796		—		—		11,883
Other borrowings	—			—	—		3		(2	)	—		1
Total interest expense	3,305			4,232	2,550		1,799		(2	)	—		11,884
Net interest (loss) income	(3,305		)	5,397	(159	)	17		35		—		1,985
Provision for loan losses	—			—	—		—		—		—		—
Net interest (loss) income after provision for loan losses	(3,305		)	5,397	(159	)	17		35		—		1,985
Noninterest income:
Service charges and customer service fees	400			2,500	523		1,192		—		—		4,615
Investment management income	—			—	—		—		—		787		787
Other	5			30	254		161		—		(1	)	449
Total noninterest income	405			2,530	777		1,353		—		786		5,851
Noninterest expense:
Salaries and employee benefits	2,325			3,403	2,137		2,843		32		517		11,257
Occupancy, net of rental income	1,734			1,115	606		1,148		—		59		4,662
Furniture and equipment	652			365	178		345		—		17		1,557
Legal, examination and professional fees	—			62	123		111		153		115		564
Amortization of intangible assets	33			319	—		—		—		—		352
FDIC insurance	636			1,650	292		478		—		—		3,056
Other	345			709	424		860		184		29		2,551
Total noninterest expense	5,725			7,623	3,760		5,785		369		737		23,999
(Loss) income from operations of discontinued operations	(8,625		)	304	(3,142	)	(4,415	)	(334	)	49		(16,163	)
Net gain (loss) on sale of discontinued operations	—			6,355	8,414		4,984		(29	)	(156	)	19,568
Benefit for income taxes	—			—	—		—		(157	)	—		(157	)
Net (loss) income from discontinued operations, net of tax	$	(8,625	)	6,659	5,272		569		(206	)	(107	)	3,562

XML

EMPLOYEE BENEFITS (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined contribution plan, maximum annual contribution per employee, amount	$ 17,000
Defined contribution plan, employer discretionary contribution amount	2,300,000	2,300,000	0
Deferred compensation arrangement with individual, recorded liability	6,400,000	6,500,000
Deferred compensation arrangement with individual, compensation expense	614,000	64,000	685,000
Pension and other postretirement defined benefit plans, liabilities	4,568,000	3,619,000
Defined benefit plan, assumptions used calculating benefit obligation, discount rate	3.31%	4.28%
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract]
Amortization of net actuarial loss	145,000	109,000
Defined benefit plan, estimated future employer contributions in next fiscal year	$ 360,000
Minimum
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Deferred compensation arrangement with individual, employee contribution, percent of salary	1.00%
Maximum
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Deferred compensation arrangement with individual, employee contribution, percent of salary	25.00%
Deferred compensation arrangement with individual, employee contribution, percent of bonus	100.00%
Fixed Income Investments
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations	52.00%
Equity Securities
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations	40.00%
Cash
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations	8.00%

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Financing Receivable Credit Quality Indicators) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	$ 2,930,747	$ 3,284,279	$ 4,492,284
Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	1,858,644	2,328,076
One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	476,796	535,523
One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	529,174	389,569
Commercial and Industrial | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	610,301	725,195
Real Estate Construction and Development
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	174,979	249,987
Real Estate Construction and Development | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	174,979	249,987
Multi-family
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	103,684	127,356
Multi-family | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	103,684	127,356
Commercial Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	969,680	1,225,538
Commercial Real Estate | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	969,680	1,225,538
Bank Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	122,338	165,578
Bank Portfolio | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	122,338	165,578
Home Equity
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	354,458	369,945
Home Equity | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	354,458	369,945
Mortgage Division Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	509,971	366,915
Mortgage Division Portfolio | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	509,971	366,915
Consumer and Installment
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	19,203	22,654
Consumer and Installment | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	19,203	22,654
Pass | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	1,543,395	1,706,893
Pass | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	449,946	490,774
Pass | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	424,445	285,711
Pass | Commercial and Industrial | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	572,248	606,998
Pass | Real Estate Construction and Development | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	45,356	57,594
Pass | Multi-family | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	67,690	68,748
Pass | Commercial Real Estate | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	858,101	973,553
Pass | Bank Portfolio | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	107,625	131,973
Pass | Home Equity | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	342,321	358,801
Pass | Mortgage Division Portfolio | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	405,270	263,079
Pass | Consumer and Installment | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	19,175	22,632
Special mention | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	87,326	175,875
Special mention | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	4,621	13,751
Special mention | Commercial and Industrial | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	10,580	25,742
Special mention | Real Estate Construction and Development | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	6,076	11,977
Special mention | Multi-family | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	220	18,678
Special mention | Commercial Real Estate | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	70,450	119,478
Special mention | Bank Portfolio | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	4,405	12,797
Special mention | Home Equity | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	216	954
Substandard | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	104,428	219,674
Substandard | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	5,037	9,368
Substandard | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	6,627	4,429
Substandard | Commercial and Industrial | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	8,423	32,851
Substandard | Real Estate Construction and Development | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	81,364	97,158
Substandard | Multi-family | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	773	28,789
Substandard | Commercial Real Estate | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	13,868	60,876
Substandard | Bank Portfolio | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	1,787	6,118
Substandard | Home Equity | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	3,250	3,250
Substandard | Mortgage Division Portfolio | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	6,627	4,429
Substandard | Consumer and Installment | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	0	0
Performing troubled debt restructuring | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	49,012	43,813
Performing troubled debt restructuring | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	1,611
Performing troubled debt restructuring | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	78,294	82,629
Performing troubled debt restructuring | Commercial and Industrial | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	0	4,264
Performing troubled debt restructuring | Real Estate Construction and Development | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	10,031	12,014
Performing troubled debt restructuring | Multi-family | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	28,240	3,166
Performing troubled debt restructuring | Commercial Real Estate | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	10,741	24,369
Performing troubled debt restructuring | Bank Portfolio | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	1,611
Performing troubled debt restructuring | Home Equity | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	0
Performing troubled debt restructuring | Mortgage Division Portfolio | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	78,294	82,629
Performing troubled debt restructuring | Consumer and Installment | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	0	0
Nonaccrual | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	74,483	181,821
Nonaccrual | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	15,581	21,630
Nonaccrual | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	19,808	16,800
Nonaccrual | Commercial and Industrial | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	19,050	55,340
Nonaccrual | Real Estate Construction and Development | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	32,152	71,244
Nonaccrual | Multi-family | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	6,761	7,975
Nonaccrual | Commercial Real Estate | Commercial Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	16,520	47,262
Nonaccrual | Bank Portfolio | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	6,910	14,690
Nonaccrual | Home Equity | One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	8,671	6,940
Nonaccrual | Mortgage Division Portfolio | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	19,780	16,778
Nonaccrual | Consumer and Installment | One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and leases receivable, net of deferred income	$ 28	$ 22

XML

REGULATORY CAPITAL AND OTHER REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

Schedule of required and actual capital ratios

At December 31, 2012 and 2011, the Company and First Bank’s required and actual capital ratios were as follows:

	Actual								For Capital Adequacy Purposes	To be Well Capitalized Under Prompt Corrective Action Provisions
	2012				2011
	Amount		Ratio		Amount		Ratio
	(dollars expressed in thousands)
Total capital (to risk-weighted assets):
First Banks, Inc.	$	93,542	2.57	%	$	73,830	1.88	%	8.0%	N/A
First Bank	626,177		17.18		588,860		14.98		8.0	10.0%
Tier 1 capital (to risk-weighted assets):
First Banks, Inc.	46,771		1.28		36,915		0.94		4.0	N/A
First Bank	580,026		15.92		538,592		13.70		4.0	6.0
Tier 1 capital (to average assets):
First Banks, Inc.	46,771		0.73		36,915		0.56		4.0	N/A
First Bank	580,026		9.13		538,592		8.19		4.0	5.0

XML

DISTRIBUTION OF EARNINGS OF FIRST BANK

12 Months Ended

Dec. 31, 2012

Disclosure of Restrictions on Dividends, Loans and Advances Disclosure [Abstract]

DISTRIBUTION OF EARNINGS OF FIRST BANK

DISTRIBUTION OF EARNINGS OF FIRST BANK

First Bank is restricted by various state and federal regulations as to the amount of dividends that are available for payment to the Company. Under the most restrictive of these requirements, the payment of dividends is limited in any calendar year to the net profit of the current year combined with the retained net profits of the preceding two years. Permission must be obtained for dividends exceeding these amounts. Based on the current level of earnings, permission must be obtained for any payment of dividends from First Bank to the Company. Furthermore, First Bank, under its agreement with the MDOF and the FRB, has agreed, among other things, not to declare or pay any dividends or make certain other payments without the prior consent of the MDOF and the FRB, as further described in Note 14 to the consolidated financial statements.

XML

EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

401(k) Plan. The Company’s 401(k) plan is a self-administered savings and incentive plan covering substantially all employees. Employer match contributions are determined annually under the plan by the Company’s Board of Directors. Employee contributions were limited to $17,000 of gross compensation for 2012. Total employer contributions under the plan were $2.3 million, $2.3 million and zero for the years ended December 31, 2012, 2011 and 2010, respectively. The plan assets are held and managed under a trust agreement with First Bank’s trust department.

Nonqualified Deferred Compensation Plan. The Company’s nonqualified deferred compensation plan (the NQDC Plan), which covers a select group of employees, is administered by an independent third party. The NQDC Plan is exempt from the participation, vesting, funding and fiduciary requirements of the Employee Retirement Income Security Act of 1974. Although the NQDC Plan allows the Company to credit the accounts of any participant with discretionary contributions, no such discretionary contributions have been made since the NQDC Plan’s inception. Participants may contribute from 1% to 25% of their salary and up to 100% of their bonuses on a pre-tax basis. The Company elected to suspend the availability of deferrals under the NQDC Plan for the years ended December 31, 2011 and 2010 but reinstated the availability of such deferrals beginning in January 2012.

Balances outstanding under the NQDC Plan, which are reflected in accrued and other liabilities in the consolidated balance sheets, were $6.4 million and $6.5 million at December 31, 2012 and 2011, respectively. The Company recognized salaries and employee benefits expense related to the NQDC Plan of $614,000 and $685,000 for the years ended December 31, 2012 and 2010, respectively, resulting from net earnings incurred by participants on the underlying investments in the plan. The Company recognized a decrease in salaries and employee benefits expense related to the NQDC Plan of $64,000 for the year ended December 31, 2011 resulting from net losses incurred by participants on the underlying investments in the plan.

Noncontributory Defined Benefit Pension Plan. The Company has a noncontributory defined benefit pension plan covering certain current and former employees of a bank holding company acquired by the Company in 1994 and subsequently merged with and into the Company on December 31, 2002. The Company discontinued the accumulation of benefits under the Plan in 1994, and as such, there is no longer any service cost being accrued by Plan participants.

A summary of the Plan’s change in the projected benefit obligation and change in the fair value of Plan assets for the years ended December 31, 2012 and 2011 and amounts recognized in the Company’s consolidated balance sheets as of December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	12,467		12,334
Interest cost	516			587
Actuarial loss	1,765			970
Benefit payments	(761		)	(1,424	)
Projected benefit obligation at end of year	$	13,987		12,467
Change in Fair Value of Plan Assets:
Fair value at beginning of year	$	8,848		9,210
Actual return on plan assets	666			774
Employer contributions	666			288
Benefit payments	(761		)	(1,424	)
Fair value at end of year	$	9,419		8,848
Amount Recognized in Consolidated Balance Sheets:
Accrued pension liability	$	4,568		3,619
Amounts Recognized in Accumulated Other Comprehensive Income:
Loss	$	(5,940	)	(4,370	)
Deferred tax liability	2,396			1,737
Loss, net of tax	$	(3,544	)	(2,633	)

The Company’s accrued pension liability of $4.6 million and $3.6 million at December 31, 2012 and 2011, respectively, represents the difference between the fair value of the Plan assets and the projected benefit obligation of the Plan, and is reflected in accrued expenses and other liabilities in the consolidated balance sheets.

The following table reflects the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2012 and 2011:

	2012		2011
Discount rate	4.28	%	4.93	%
Expected long-term rate of return on Plan assets	7.00		7.00

The discount rate used to determine benefit obligations was 3.31% and 4.28% for the years ended December 31, 2012 and 2011, respectively.

A summary of the components of net periodic benefit cost for the years ended December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Interest cost	$	516		587
Expected return on Plan assets	(617		)	(625	)
Amortization of net actuarial loss	145			109
Net periodic benefit cost	$	44		71

Amounts recognized in accumulated other comprehensive income consist of:

	2012			2011
	(dollars expressed in thousands)
Net loss	$	1,715		821
Amortization of net actuarial loss	(145		)	(109	)
Total recognized in accumulated other comprehensive income	$	1,570		712

The Plan’s investment strategy is focused on maximizing asset returns. The target allocations for Plan assets are 52% fixed income, 40% equity securities and 8% cash. Asset allocations can fluctuate between acceptable ranges commensurate with market volatility. Debt securities include U.S. Treasuries, investment-grade corporate bonds of companies from diversified industries and mortgage-backed securities. Equity securities primarily include investments in large capitalization companies located in the United States.

The fair value of Plan assets at December 31, 2012 and 2011 was comprised of the following:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
Plan Assets - December 31, 2012:
Cash and cash equivalents	$	361	—	—	361
Equity securities	—		3,959	—	3,959
Debt securities	—		4,603	—	4,603
Other	—		496	—	496
Total	$	361	9,058	—	9,419
Plan Assets - December 31, 2011:
Cash and cash equivalents	$	287	—	—	287
Equity securities	—		3,635	—	3,635
Debt securities	—		4,463	—	4,463
Other	—		463	—	463
Total	$	287	8,561	—	8,848

Equity and debt securities included in Level 1 are valued using quoted market prices. Where quoted market prices are unavailable, the fair value of equity and debt securities included in Level 2 is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information.

The Company expects to contribute $360,000 to the Plan in 2013. Pension benefit payments are expected to be paid to Plan participants by the Plan as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013	$	821
2014	834
2015	849
2016	849
2017	844
2018 – 2022	4,256

XML

INCOME TAXES (Schedule of Effective Income Tax Rate Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Income (loss) from continuing operations before benefit (provision) for income taxes and noncontrolling interest in loss of subsidiaries	$ 31,365	$ (48,295)	$ (197,699)
Provision (benefit) for income taxes calculated at federal statutory income tax rates	10,978	(16,904)	(69,195)
Provision (benefit) for income taxes calculated at federal statutory income tax rates, percent	35.00%	35.00%	35.00%
Effects of differences in tax reporting:
Tax-exempt interest income, net of tax preference adjustment	(135)	(203)	(308)
Tax-exempt interest income, net of tax preference adjustment, percent	(0.40%)	0.40%	0.20%
State income taxes	645	(4,800)	(9,125)
State income taxes, percent	2.10%	9.90%	4.60%
Bank owned life insurance, net of premium	11	10	3,144
Bank owned life insurance, net of premium, percent	0.00%	0.00%	(1.60%)
Noncontrolling investment in flow-through entity	104	1,033	2,280
Noncontrolling investment in flow-through entity, percent	0.30%	(2.10%)	(1.20%)
Amortization of intangibles	0	175	350
Amortization of intangibles, percent	0.00%	(0.30%)	(0.20%)
(Decrease) increase in deferred tax asset valuation allowance, net of federal benefit	(11,811)	20,614	70,668
(Decrease) increase in deferred tax asset valuation allowance, net of federal benefit, percent	(37.70%)	(42.70%)	(35.80%)
Reclassification of deferred tax asset valuation allowance from accumulated other comprehensive income to provision for income taxes	0	(10,466)	6,816
Reclassification of deferred tax asset valuation allowance from accumulated other comprehensive income to provision for income taxes, percent	0.00%	21.70%	(3.40%)
Expiration of net operating loss carryforwards	643	34	5
Expiration of net operating loss carryforwards, percent	2.10%	0.00%	0.00%
Other, net	(574)	(147)	(521)
Other, net, percent	(1.80%)	0.20%	0.30%
(Benefit) provision for income taxes	$ (139)	$ (10,654)	$ 4,114
(Benefit) provision for income taxes, percent	(0.40%)	22.10%	(2.10%)

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES (Securities Held to Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Carrying value: Maturity, 1 Year or Less	$ 826	$ 1,372
Carrying value: Maturity, 1-5 Years	1,099	8,314
Carrying value: Maturity, 5-10 Years	161,254	982
Carrying value: Maturity, After 10 Years	468,374	2,149
Carrying value: Total Amortized Cost	631,553	12,817
Carrying value: Gross Unrealized Gains	6,462	607
Carrying value: Gross Unrealized Losses	(991)	0
Carrying value: Fair Value	637,024	13,424
Carrying value: Weighted Average Yield	1.80%	4.76%
Weighted average yield, Maturity, 1 Year or Less	2.56%	2.55%
Weighted average yield, Maturity, 1-5 Years	3.40%	4.67%
Weighted average yield, Maturity, 5-10 Years	1.77%	4.60%
Weighted average yield, Maturity, After 10 Years	1.81%	6.61%
U.S. Government sponsored agencies
Carrying value: Maturity, 1 Year or Less	0
Carrying value: Maturity, 1-5 Years	0
Carrying value: Maturity, 5-10 Years	52,582
Carrying value: Maturity, After 10 Years	0
Carrying value: Total Amortized Cost	52,582
Carrying value: Gross Unrealized Gains	269
Carrying value: Gross Unrealized Losses	0
Carrying value: Fair Value	52,851
Carrying value: Weighted Average Yield	1.63%
Residential mortgage-backed
Carrying value: Maturity, 1 Year or Less	0	0
Carrying value: Maturity, 1-5 Years	0	0
Carrying value: Maturity, 5-10 Years	108,420	728
Carrying value: Maturity, After 10 Years	466,863	615
Carrying value: Total Amortized Cost	575,283	1,343
Carrying value: Gross Unrealized Gains	6,142	116
Carrying value: Gross Unrealized Losses	(614)	0
Carrying value: Fair Value	580,811	1,459
Carrying value: Weighted Average Yield	1.82%	5.06%
Commercial mortgage-backed
Carrying value: Maturity, 1 Year or Less		0
Carrying value: Maturity, 1-5 Years		6,310
Carrying value: Maturity, 5-10 Years		0
Carrying value: Maturity, After 10 Years		0
Carrying value: Total Amortized Cost		6,310
Carrying value: Gross Unrealized Gains		447
Carrying value: Gross Unrealized Losses		0
Carrying value: Fair Value		6,757
Carrying value: Weighted Average Yield		5.16%
State and political subdivisions
Carrying value: Maturity, 1 Year or Less	826	1,372
Carrying value: Maturity, 1-5 Years	1,099	2,004
Carrying value: Maturity, 5-10 Years	252	254
Carrying value: Maturity, After 10 Years	1,511	1,534
Carrying value: Total Amortized Cost	3,688	5,164
Carrying value: Gross Unrealized Gains	51	44
Carrying value: Gross Unrealized Losses	(377)	0
Carrying value: Fair Value	3,362	5,208
Carrying value: Weighted Average Yield	1.89%	4.20%
Debt securities
Fair Value: Maturity, 1 Year or Less	836	1,387
Fair value: Maturity, 1-5 Years	1,129	8,768
Fair value: Maturity, 5-10 Years	164,433	1,056
Fair value: Maturity, After 10 Years	$ 470,626	$ 2,213

XML

FAIR VALUE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011 are reflected in the following table:

	Fair Value Measurements
	Level 1		Level 2		Level 3	Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Assets:
Available-for-sale investment securities:
U.S. Government sponsored agencies	$	—	310,429		—	310,429
Residential mortgage-backed	—		1,534,067		—	1,534,067
Commercial mortgage-backed	—		915		—	915
State and political subdivisions	—		4,929		—	4,929
Corporate notes	—		192,365		—	192,365
Equity investments	1,022		—		—	1,022
Mortgage loans held for sale	—		66,133		—	66,133
Derivative instruments:
Customer interest rate swap agreements	—		87		—	87
Interest rate lock commitments	—		1,837		—	1,837
Forward commitments to sell mortgage-backed securities	—		(305	)	—	(305	)
Servicing rights	—		—		14,792	14,792
Total	$	1,022	2,110,457		14,792	2,126,271
Liabilities:
Derivative instruments:
Interest rate swap agreements	$	—	—		—	—
Customer interest rate swap agreements	—		87		—	87
Nonqualified deferred compensation plan	6,443		—		—	6,443
Total	$	6,443	87		—	6,530
December 31, 2011:
Assets:
Available-for-sale investment securities:
U.S. Government sponsored agencies	$	—	341,817		—	341,817
Residential mortgage-backed	—		1,924,920		—	1,924,920
Commercial mortgage-backed	—		910		—	910
State and political subdivisions	—		5,410		—	5,410
Corporate notes	—		183,813		—	183,813
Equity investments	1,017		—		—	1,017
Mortgage loans held for sale	—		31,111		—	31,111
Derivative instruments:
Customer interest rate swap agreements	—		370		—	370
Interest rate lock commitments	—		1,381		—	1,381
Forward commitments to sell mortgage-backed securities	—		(729	)	—	(729	)
Servicing rights	—		—		15,380	15,380
Total	$	1,017	2,489,003		15,380	2,505,400
Liabilities:
Derivative instruments:
Interest rate swap agreements	$	—	807		—	807
Customer interest rate swap agreements	—		307		—	307
Nonqualified deferred compensation plan	6,531		—		—	6,531
Total	$	6,531	1,114		—	7,645

Schedule of changes in Level 3 assets measured on a recurring basis

The following table presents the changes in Level 3 assets measured on a recurring basis for the years ended December 31, 2012 and 2011:

	Servicing Rights
	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	15,380		19,582
Total gains or losses (realized/unrealized):
Included in earnings (1)	(5,475		)	(7,652	)
Included in other comprehensive income (loss)	—			—
Issuances	4,887			3,450
Transfers in and/or out of level 3	—			—
Balance, end of year	$	14,792		15,380

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

Schedule of assets measured at fair value on a nonrecurring basis

Assets measured at fair value on a nonrecurring basis as of December 31, 2012 and 2011 are reflected in the following table:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Assets:
Impaired loans:
Commercial, financial and agricultural	$	—	—	18,374	18,374
Real estate construction and development	—		—	40,731	40,731
Real estate mortgage:
Bank portfolio	—		—	8,237	8,237
Mortgage Division portfolio	—		—	86,500	86,500
Home equity portfolio	—		—	6,887	6,887
Multi-family residential	—		—	33,863	33,863
Commercial real estate	—		—	26,218	26,218
Consumer and installment	—		—	27	27
Other real estate and repossessed assets	—		—	91,995	91,995
Total	$	—	—	312,832	312,832
December 31, 2011:
Assets:
Impaired loans:
Commercial, financial and agricultural	$	—	—	54,129	54,129
Real estate construction and development	—		—	79,826	79,826
Real estate mortgage:
Bank portfolio	—		—	13,894	13,894
Mortgage Division portfolio	—		—	84,083	84,083
Home equity portfolio	—		—	5,552	5,552
Multi-family residential	—		—	10,806	10,806
Commercial real estate	—		—	67,756	67,756
Consumer and installment	—		—	18	18
Other real estate and repossessed assets	—		—	129,896	129,896
Total	$	—	—	445,960	445,960

Schedule of estimated fair value of financial instruments

The estimated fair value of the Company’s financial instruments at December 31, 2012 and 2011 were as follows:

	December 31, 2012									December 31, 2011
	Carrying Value			Estimated Fair Value						Carrying Value		Estimated Fair Value
				Level 1	Level 2	Level 3		Total
	(dollars expressed in thousands)
Financial Assets:
Cash and cash equivalents	$	518,846		518,846	—	—		518,846		473,140		473,140
Investment securities:
Available for sale	2,043,727			1,022	2,042,705	—		2,043,727		2,457,887		2,457,887
Held to maturity	631,553			—	637,024	—		637,024		12,817		13,424
Loans held for portfolio	2,773,012			—	—	2,572,256		2,572,256		3,115,458		2,811,866
Loans held for sale	66,133			—	66,133	—		66,133		31,111		31,111
FRB and FHLB stock	27,329			27,329	—	—		27,329		27,078		27,078
Derivative instruments	1,619			—	1,619	—		1,619		1,022		1,022
Accrued interest receivable	18,284			18,284	—	—		18,284		21,050		21,050
Assets of discontinued operations	6,706			—	6,706	—		6,706		6,913		6,913
Financial Liabilities:
Deposits:
Noninterest-bearing demand	$	1,327,183		1,327,183	—	—		1,327,183		1,225,622		1,225,622
Interest-bearing demand	1,000,666			1,000,666	—	—		1,000,666		899,114		899,114
Savings and money market	1,880,271			1,880,271	—	—		1,880,271		1,964,905		1,964,905
Time deposits	1,284,727			—	—	1,286,730		1,286,730		1,533,414		1,536,824
Other borrowings	26,025			26,025	—	—		26,025		51,170		51,170
Derivative instruments	87			—	87	—		87		1,114		1,114
Accrued interest payable	48,541			48,541	—	—		48,541		34,343		34,343
Subordinated debentures	354,133			—	—	254,984		254,984		354,057		204,502
Liabilities of discontinued operations	155,711			—	155,711	—		155,711		174,737		174,737
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	$	(2,779	)	—	—	(2,779	)	(2,779	)	(2,785	)	(2,785	)

XML

PARENT COMPANY ONLY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

PARENT COMPANY ONLY FINANCIAL INFORMATION

PARENT COMPANY ONLY FINANCIAL INFORMATION

Condensed balance sheets of First Banks, Inc. as of December 31, 2012 and 2011 and condensed statements of operations and cash flows for the years ended December 31, 2012, 2011 and 2010 are shown below:

CONDENSED BALANCE SHEETS

	December 31,
	2012		2011
	(dollars expressed in thousands)
Assets
Cash deposited in First Bank (unrestricted cash)	$	2,744	2,801
Cash deposited in unaffiliated financial institution (restricted cash)	—		2,008
Total cash	2,744		4,809
Investment in common securities - TRuPS	10,678		10,678
Investment in subsidiaries	657,838		586,899
Other assets	3,583		3,067
Total assets	$	674,843	605,453
Liabilities and Stockholders’ Equity
Subordinated debentures	$	354,133	354,057
Derivative instruments	—		807
Accrued interest payable	47,878		33,179
Dividends payable	61,931		43,045
Accrued expenses and other liabilities	4,597		4,646
Total liabilities	468,539		435,734
First Banks, Inc. stockholders’ equity	206,304		169,719
Total liabilities and stockholders’ equity	$	674,843	605,453

CONDENSED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2012			2011		2010
	(dollars expressed in thousands)
Income:
Management fees from subsidiaries	$	3		28		193
Net loss on derivative instruments	(43		)	(194	)	(2,929	)
Other	578			509		3,123
Total income	538			343		387
Expense:
Interest	14,847			13,623		13,012
Other	1,506			(374	)	809
Total expense	16,353			13,249		13,821
Loss before benefit for income taxes and equity in undistributed earnings (losses) of subsidiaries	(15,815		)	(12,906	)	(13,434	)
Benefit for income taxes	(348		)	(46	)	(171	)
Loss before equity in undistributed earnings (losses) of subsidiaries	(15,467		)	(12,860	)	(13,263	)
Equity in undistributed earnings (losses) of subsidiaries	41,745			(28,290	)	(178,474	)
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)

CONDENSEDSTATEMENTSOFCASHFLOWS

	Years Ended December 31,
	2012			2011		2010
	(dollars expressed in thousands)
Cash flows from operating activities:
Net income (loss) attributable to First Banks, Inc.	$	26,278		(41,150	)	(191,737	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net (income) loss of subsidiaries	(41,745		)	28,290		178,474
Other, net	15,410			12,042		6,012
Net cash used in operating activities	(57		)	(818	)	(7,251	)
Cash flows from investing activities:
Decrease in available-for-sale investment securities	—			—		3,570
Net cash provided by investing activities	—			—		3,570
Cash flows from financing activities:
Capital contributions to subsidiaries	—			—		(100	)
Payment of preferred stock dividends	—			—		—
Net cash used in financing activities	—			—		(100	)
Net decrease in unrestricted cash	(57		)	(818	)	(3,781	)
Unrestricted cash, beginning of year	2,801			3,619		7,400
Unrestricted cash, end of year	$	2,744		2,801		3,619
Noncash investing activities:
Cash paid for interest	$	—		—		—

The parent company’s unrestricted cash was $2.7 million and $2.8 million at December 31, 2012 and 2011, respectively. The parent company’s restricted cash of $2.0 million at December 31, 2011 was returned in February 2012, thereby increasing the parent company’s unrestricted cash. On March 24, 2011, the Company entered into a Credit Agreement that provided for a $5.0 million secured revolving line of credit to be utilized for general working capital needs, as further described in Note 11 and Note 20 to the consolidated financial statements. There were no balances outstanding under the Credit Agreement during the period from its inception in March 2011 to its maturity date on December 31, 2012. On March 20, 2013, the Company entered into a New Credit Agreement that provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs, as further described in Note 25 to the consolidated financial statements. This borrowing arrangement is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company's existing cash resources become insufficient in the future.

The Company’s obligations related to interest payments on its outstanding junior subordinated debentures relating to its $345.0 million of trust preferred securities and dividends on Class C Preferred Stock and Class D Preferred Stock have been deferred. The Company has until September 2014 to pay the cumulative deferred interest payments on its outstanding junior subordinated debentures without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on the Company’s business, financial condition and/or results of operations.

XML

CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

CONTINGENT LIABILITIES

CONTINGENT LIABILITIES

In the ordinary course of business, the Company and its subsidiaries become involved in legal proceedings, including litigation arising out of the Company’s efforts to collect outstanding loans. It is not uncommon for collection efforts to lead to so-called “lender liability” suits in which borrowers may assert various claims against the Company. From time to time, the Company is party to other legal matters arising in the normal course of business. While some matters pending against the Company specify damages claimed by plaintiffs, others do not seek a specified amount of damages or are at very early stages of the legal process. The Company records a loss accrual for all legal matters for which it deems a loss is probable and can be reasonably estimated. Management, after consultation with legal counsel, believes the ultimate resolution of these existing proceedings is not reasonably likely to have a material adverse effect on the business, financial condition or results of operations of the Company and/or its subsidiaries and the range of possible additional loss in excess of amounts accrued is not material.

The Company and First Bank have entered into agreements with the FRB and MDOF, as further described in Note 14 to the consolidated financial statements.

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASISOF PRESENTATIONAND SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The accompanying consolidated financial statements of First Banks, Inc. and subsidiaries (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and conform to predominant practices within the banking industry. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

Certain reclassifications of 2011 and 2010 amounts have been made to conform to the 2012 presentation, including the reclassification of the Company’s investment in the common securities of its various affiliated statutory and business trusts (collectively, the Trusts) that were created for the sole purpose of issuing trust preferred securities, as further described in Note 12 to the consolidated financial statements. The investment in the common securities of the Trusts was reclassified from available-for-sale investment securities to other assets and the dividend income accrued on the common securities of the Trusts was reclassified from interest income on investment securities to other income. The reclassifications were applied retrospectively to all periods presented.

Principles of Consolidation. The consolidated financial statements include the accounts of the parent company and its subsidiaries, giving effect to the noncontrolling interest in subsidiaries, as more fully described below and in Note 20 to the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated.

All financial information is reported on a continuing operations basis, unless otherwise noted. See Note 2 to the consolidated financial statements for a discussion regarding discontinued operations.

The Company operates through its wholly owned subsidiary bank holding company, The San Francisco Company (SFC), headquartered in St. Louis, Missouri, and SFC’s wholly owned subsidiary bank, First Bank, also headquartered in St. Louis, Missouri. First Bank operates through its branch banking offices and subsidiaries: First Bank Business Capital, Inc.; FB Holdings, LLC (FB Holdings); Small Business Loan Source LLC; ILSIS, Inc.; FBIN, Inc.; SBRHC, Inc.; HVIIHC, Inc.; FBSA Missouri, Inc.; FBSA California, Inc.; NT Resolution Corporation; and LC Resolution Corporation. All of the subsidiaries are wholly owned as of December 31, 2012, except FB Holdings, which is 53.23% owned by First Bank and 46.77% owned by First Capital America, Inc. (FCA), a corporation owned and operated by the Company’s Chairman of the Board and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, as further described in Note 20 to the consolidated financial statements. FB Holdings is included in the consolidated financial statements with the noncontrolling ownership interest reported as a component of stockholders’ equity in the consolidated balance sheets as “noncontrolling interest in subsidiary” and the earnings or loss, net of tax, attributable to the noncontrolling ownership interest, reported as “net loss attributable to noncontrolling interest in subsidiary” in the consolidated statements of operations.

Significant Accounting Policies:

Cash and Cash Equivalents. Cash, due from banks and short-term investments, which include federal funds sold and interest-bearing deposits, are considered to be cash and cash equivalents for purposes of the consolidated statements of cash flows. Interest-bearing deposits were $404.0 million and $371.3 million at December 31, 2012 and 2011, respectively. The Company did not have any federal funds sold outstanding at December 31, 2012 and 2011. First Bank is required to maintain certain daily reserve balances on hand in accordance with regulatory requirements. These reserve balances maintained in accordance with such requirements were $14.6 million and $13.1 million at December 31, 2012 and 2011, respectively.

Federal Reserve Bank and Federal Home Loan Bank Stock. First Bank is a member of the Federal Reserve Bank of St. Louis (FRB) system and the Federal Home Loan Bank (FHLB) system and maintains investments in FRB and FHLB stock. These investments are recorded at cost, which represents redemption value. The investment in FRB stock is maintained at a minimum of 6% of First Bank’s capital stock and capital surplus. The investment in FHLB of Des Moines stock is maintained at an amount equal to 0.12% of First Bank’s total assets as of December 31 of the preceding year, up to a maximum of $10.0 million, plus 4.45% of advances. Investments in FRB and FHLB of Des Moines stock were $19.4 million and $7.9 million, respectively, at December 31, 2012, and $18.3 million and $8.8 million, respectively, at December 31, 2011.

Investment Securities. The classification of investment securities as available for sale or held to maturity is determined at the date of purchase. Investment securities designated as available for sale, which represent any security that the Company has no immediate plan to sell but which may be sold in the future under different circumstances, are stated at fair value. Realized gains and losses are included in noninterest income, based on the amortized cost of the individual security sold. Unrealized gains and losses, net of related income tax effects, are recorded in accumulated other comprehensive income (loss). All previous fair value adjustments included in the separate component of accumulated other comprehensive income (loss) are reversed upon sale. Premiums and discounts incurred relative to the par value of securities purchased are amortized or accreted, respectively, on the level-yield method taking into consideration the level of current and anticipated prepayments. Investment securities designated as held to maturity, which represent any security that the Company has the positive intent and ability to hold to maturity, are stated at cost, net of amortization of premiums and accretion of discounts computed on the level-yield method taking into consideration the level of current and anticipated prepayments. Any reclassification of available-for-sale investment securities to held-to-maturity investment securities are recorded at fair value, and the gross unrealized gain or loss on available-for-sale investment securities at the time of transfer is recorded as additional premium or discount on the securities and amortized over the remaining lives of the respective securities. A decline in the fair value of any available-for-sale or held-to-maturity investment security below its carrying value that is deemed to be other than temporary results in a reduction in the cost basis of the carrying value to fair value. The other-than-temporary impairment, which is not expected to be reversed, is charged to noninterest income and a new cost basis is established. When determining other-than-temporary impairment, consideration is given as to whether the Company has the ability and intent to hold the investment security until a market price recovery and whether evidence indicating the carrying value of the investment security is recoverable outweighs evidence to the contrary.

Loans Held for Portfolio. Loans held for portfolio are carried at cost, adjusted for amortization of premiums and accretion of discounts using the interest method. Interest and fees on loans are recognized as income using the interest method. Loan origination fees and costs are deferred and accreted to interest income over the estimated life of the loans using the interest method. Loans held for portfolio are stated at cost as the Company has the ability and it is management’s intention to hold them to maturity.

The accrual of interest on loans is discontinued when it appears that interest or principal may not be paid in a timely manner in the normal course of business or once principal or interest payments become 90 days past due under the contractual terms of the loan agreement. Generally, payments received on nonaccrual and impaired loans are recorded as principal reductions. Interest income is recognized after all delinquent principal has been repaid or an improvement in the condition of the loan has occurred that warrants resumption of interest accruals.

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the loan agreement. Loans on nonaccrual status and restructured loans are considered to be impaired loans. When measuring impairment, the expected future cash flows of an impaired loan are discounted at the loan’s effective interest rate. Alternatively, impairment is measured by reference to an observable market price, if one exists, or the fair value of the collateral for a collateral-dependent loan. Regardless of the historical measurement method used, the Company measures impairment based on the fair value of the collateral when foreclosure is probable.

A loan is classified as a troubled debt restructuring when all of the following conditions are present: (i) the borrower is experiencing financial difficulty, (ii) the Company makes a concession to the original contractual loan terms, and (iii) the Company would not consider the concessions but for economic or legal reasons related to the borrower’s financial difficulty. These concessions may include, but are not limited to, rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses. A loan that is modified at a market rate of interest may no longer be classified as a troubled debt restructuring in the calendar year subsequent to the restructuring if it is in compliance with the modified terms. Performance prior to the restructuring is considered when assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of the restructuring or after a shorter performance period.

Acquired impaired loans are classified as nonaccrual loans and are initially measured at fair value with no allocated allowance for loan losses. An allowance for loan losses is recorded to the extent there is further credit deterioration subsequent to the acquisition date.

Loans Held for Sale. Loans held for sale are comprised of residential mortgage loans held for sale in the secondary mortgage market, frequently in the form of a mortgage-backed security, U.S. Small Business Administration (SBA) loans awaiting sale of the guaranteed portion to the SBA, and commercial real estate loans which may be identified for sale to specific buyers to achieve credit or loan concentration objectives. One-to-four-family residential mortgage loans held for sale are carried at fair value on a recurring basis. The determination of fair value is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information. Other loans held for sale, primarily SBA loans, are carried at the lower of cost or market value, which is determined on an individual loan basis. The amount by which cost exceeds market value is recorded in a valuation allowance as a reduction of loans held for sale. Changes in the valuation allowance are reflected as part of the gain on loans sold and held for sale in the consolidated statements of operations in the periods in which the changes occur. Gains or losses on the sale of loans held for sale are determined on a specific identification basis and reflect the difference between the value received upon sale and the carrying value of the loans held for sale, including any recourse reserve established for potential repurchase obligations. Loans held for sale transferred to loans held for portfolio or available-for-sale investment securities are transferred at fair value.

Loan Servicing Income. Loan servicing income is included in noninterest income and represents fees earned for servicing real estate mortgage loans owned by investors and originated by First Bank’s mortgage banking operation, as well as SBA loans to small business concerns. These fees are net of federal agency guarantee fees and interest shortfall. Such fees are generally calculated on the outstanding principal balance of the loans serviced and are recorded as income when earned.

Allowance for Loan Losses. The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company’s allowance for loan loss methodology follows the accounting guidance set forth in GAAP and the Interagency Policy Statement on the Allowance for Loan and Lease Losses, which was jointly issued by the Company’s regulatory agencies. Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, substandard loans, special mention loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified problem loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance for loan losses reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss and recovery experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate determination of the appropriate level of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. The Company monitors whether or not the allowance for loan loss allocation model, as a whole, calculates an appropriate level of allowance for loan losses that moves in direct correlation to the general macroeconomic and loan portfolio conditions the Company experiences over time.

The Company’s allowance for loan losses consists of three elements: (i) specific valuation allowances based on probable losses on impaired loans; (ii) historical valuation allowances determined based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances based on general economic conditions and other risk factors both internal and external to the Company.

The specific valuation allowances established for probable losses on impaired loans are based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flows, as well as evaluation of legal options available to the Company. The amount of impairment is measured based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the fair value of the underlying collateral less applicable selling costs, or the observable market price of the loan. If foreclosure is probable or the loan is collateral dependent, impairment is measured using the fair value of the loan’s collateral, less estimated costs to sell. Large groups of homogeneous loans, such as residential mortgage, home equity and consumer and installment loans, are aggregated and collectively evaluated for impairment.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are updated on a quarterly basis based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool.

The components of the general valuation allowances include (i) additional reserves allocated to specific loan portfolio segments as a result of applying a qualitative adjustment factor to the base historical loss allocation; (ii) additional reserves allocated to specific geographical regions where negative trends are being experienced; and (iii) additional reserves established based on consideration of trends in past due loans, potential problem loans, performing troubled debt restructurings and nonaccrual loans and other qualitative and quantitative factors both internal and external to the Company which could affect potential credit losses.

Management believes that the level of the Company’s allowance for loan losses is appropriate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Company to modify its allowance for loan losses based on their judgment about information available to them at the time of their examination.

Derivative Instruments and Hedging Activities. The Company utilizes derivative instruments and hedging strategies to assist in the management of interest rate sensitivity and to modify the repricing, maturity and option characteristics of certain assets and liabilities. The Company uses such derivative instruments solely to reduce its interest rate risk exposure. First Bank also offers interest rate swap agreement contracts to certain customers who wish to modify their interest rate sensitivity positions. First Bank offsets the interest rate risk of these swap agreements by simultaneously purchasing matching interest rate swap agreement contracts with offsetting pay/receive rates from other financial institutions.

Derivative instruments are recorded in the consolidated balance sheets and measured at fair value. At inception of a non-customer derivative transaction, the Company designates the derivative instrument as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedges) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedges). For all hedging relationships, the Company documents the hedging relationship and its risk-management objectives and strategy for entering into the hedging relationship including the hedging instrument, the hedged item(s), the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method the Company will utilize to measure hedge ineffectiveness. This process also includes linking all derivative instruments that are designated as fair value hedges or cash flow hedges to the underlying assets and liabilities or to specific firm commitments or forecasted transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of the hedged item(s). The Company discontinues hedge accounting prospectively when it is determined that the derivative instrument is no longer effective in offsetting changes in the fair value or cash flows of the hedged item(s), the derivative instrument expires or is sold, terminated, or exercised, the derivative instrument is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative instrument as a hedging transaction is no longer appropriate.

A summary of the Company’s accounting policies for its derivative instruments and hedging activities is as follows:

• Interest Rate Swap Agreements – Cash Flow Hedges. Interest rate swap agreements designated as cash flow hedges are accounted for at fair value. The effective portion of the change in the cash flow hedge’s gain or loss is initially reported as a component of other comprehensive income (loss) and subsequently reclassified into interest income or interest expense when the underlying transaction affects earnings. The ineffective portion of the change in the cash flow hedge’s gain or loss is recorded in noninterest income on each monthly measurement date. The net interest differential is recognized as an adjustment to interest income or interest expense of the related asset or liability being hedged. In the event of early termination or ineffectiveness, the gain or loss on the cash flow hedge would continue to be reported as a component of other comprehensive income (loss) until the underlying transaction affects earnings.

• Interest Rate Swap Agreements – Fair Value Hedges. Interest rate swap agreements designated as fair value hedges are accounted for at fair value. Changes in the fair value of the swap agreements are recognized currently in noninterest income. The change in the fair value of the underlying hedged item is recognized as an adjustment to the carrying amount of the underlying hedged item and is also reflected currently in noninterest income. All changes in fair value are measured on a monthly basis. The net interest differential is recognized as an adjustment to interest income or interest expense of the related asset or liability being hedged. In the event of early termination or ineffectiveness, the net proceeds received or paid on the interest rate swap agreements are recognized immediately in noninterest income and the future net interest differential, if any, is recognized prospectively in noninterest income. The cumulative change in the fair value of the underlying hedged item is deferred and amortized or accreted to interest income or interest expense over the weighted average life of the related asset or liability. If, however, the underlying hedged item is repaid, the cumulative change in the fair value of the underlying hedged item is recognized immediately in noninterest income.

• Customer Interest Rate Swap Agreement Contracts. Derivative instruments are offered to customers to assist in hedging their risks of adverse changes in interest rates. First Bank serves as an intermediary between its customers and the financial markets. Each contract between First Bank and its customers is offset by a contract between First Bank and various counterparties. These contracts do not qualify for hedge accounting. Customer interest rate swap agreement contracts are carried at fair value. Changes in the fair value are recognized in noninterest income on a monthly basis. Each customer contract is paired with an offsetting contract, and as such, there is no significant impact to net income (loss).

• Interest Rate Lock Commitments. Commitments to originate loans for subsequent sale in the secondary market (interest rate lock commitments), which primarily consist of commitments to originate fixed rate residential mortgage loans, are recorded at fair value. Fair values are based upon quoted market prices. The value of loan servicing rights is also incorporated into fair value measurements for mortgage loan commitments. Changes in the fair value of interest rate lock commitments are recognized in noninterest income on a monthly basis.

• Forward Commitments to Sell Mortgage-Backed Securities. Forward commitments to sell mortgage-backed securities are recorded at fair value. Changes in the fair value of forward commitments to sell mortgage-backed securities are recognized in noninterest income on a monthly basis.

Bank Premises and Equipment, Net. Bank premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated using the straight-line method over the shorter of the useful life of the related asset or the term of the lease. Bank premises and improvements are depreciated over five to 40 years and equipment is depreciated over three to seven years.

Goodwill and Other Intangible Assets. Goodwill and other intangible assets primarily consist of goodwill and, prior to December 31, 2011, core deposit intangibles. Goodwill and intangible assets with indefinite useful lives are not amortized, but instead tested at least annually for impairment. Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. The Company amortized its core deposit intangibles on a straight-line basis over the estimated periods to be benefited, which had been estimated at five to seven years.

The Company has the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible assets are impaired as a basis for determining whether it is necessary to perform a quantitative impairment test. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible assets are impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. The Company will be able to resume performing the qualitative assessment in any subsequent period.

The goodwill impairment test is a two-step process which requires the Company to make assumptions regarding fair value. The Company’s policy allows management to make the determination of fair value using internal cash flow models or by engaging independent third parties. The first step consists of estimating the fair value of the reporting unit using a number of factors, including projected future operating results and business plans, economic projections, anticipated future cash flows, discount rates, and comparable marketplace fair value data from within a comparable industry grouping. The Company compares the estimated fair value of its reporting unit to the carrying value, which includes allocated goodwill. If the estimated fair value is less than the carrying value, the second step is completed to compute the impairment amount by determining the “implied fair value” of goodwill. This determination requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any remaining unallocated fair value represents the “implied fair value” of goodwill, which is compared to the corresponding carrying value to compute the goodwill impairment amount, if any. Adverse changes in the economic environment, operations of the reporting unit, or other factors could result in a decline in the implied fair value of goodwill which could result in future goodwill impairment. See Note 6 to the consolidated financial statements for further discussion.

Servicing Rights. The Company has mortgage servicing rights and SBA servicing rights, which are measured at fair value as permitted by ASC Topic 860 – Accounting for Servicing of Financial Assets. Changes in the fair value of mortgage and SBA servicing rights are recognized in earnings in the period in which the change occurs and such changes are reflected in other noninterest income in the consolidated statements of operations. Servicing rights are valued based on valuation models that utilize assumptions based on the predominant risk characteristics of the underlying loans, including size, interest rate, weighted average life, cost to service and estimated prepayment speeds. The valuation models estimate the present value of estimated future net servicing income.

Mortgage and SBA servicing rights are capitalized upon the sale of the underlying loan at estimated fair value. The fair value of mortgage and SBA servicing rights fluctuates based on changes in interest rates and certain other assumptions utilized to value the mortgage and SBA servicing rights. The value is adversely affected when interest rates decline which normally causes loan prepayments to increase. The determination of the fair value of the mortgage and SBA servicing rights is performed monthly based upon an independent third party valuation. The valuation analysis is prepared using stratifications of the mortgage and SBA servicing rights based on the predominant risk characteristics of the underlying loans, including size, interest rate, weighted average original term, weighted average remaining term and estimated prepayment speeds.

Other Real Estate and Repossessed Assets. Other real estate and repossessed assets, consisting of real estate and other assets acquired through foreclosure or deed in lieu of foreclosure, are stated at the lower of cost or fair value less applicable selling costs. The excess of cost over fair value of the property at the date of acquisition is charged to the allowance for loan losses. Subsequent reductions in carrying value, to reflect current fair value or costs incurred in maintaining the other real estate and repossessed assets, are charged to noninterest expense as incurred.

Income Taxes. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in the tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are then recorded to reduce deferred tax assets to the amounts management concludes are more-likely-than-not to be realized. The Company and its eligible subsidiaries file a consolidated federal income tax return and unitary or consolidated state income tax returns in all applicable states.

The Company’s policy is to separately disclose any interest or penalties arising from the application of federal or state income taxes. Interest related to unrecognized tax benefits is included in interest expense and penalties related to unrecognized tax benefits are included in noninterest expense.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. Management of the Company believes the accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. This assessment relies on estimates and assumptions.

Noncontributory Defined Benefit Pension Plan. The Company has a noncontributory defined benefit pension plan covering certain former employees of a bank holding company acquired by the Company in 1994 (the Plan) and subsequently merged with and into the Company on December 31, 2002. The Company discontinued the accumulation of benefits under the Plan in 1994, and as such, there is no longer any service cost being accrued by Plan participants. The Company records annual amounts relating to the Plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality rates, and assumed rates of return. The Company reviews these assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when deemed appropriate. The funded status of the Plan is recognized as a net asset or liability and changes in the Plan’s funded status are recognized through other comprehensive income to the extent those changes are not included in the net periodic cost.

Financial Instruments With Off-Balance Sheet Risk. A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that conveys or imposes on an entity the contractual right or obligation to either receive or deliver cash or another financial instrument. The Company utilizes financial instruments to reduce the interest rate risk arising from its financial assets and liabilities. These instruments involve, in varying degrees, elements of interest rate risk and credit risk in excess of the amount recognized in the consolidated balance sheets. “Interest rate risk” is defined as the possibility that interest rates may move unfavorably from the perspective of the Company due to maturity and/or interest rate adjustment timing differences between interest-earning assets and interest-bearing liabilities. The risk that a counterparty to an agreement entered into by the Company may default is defined as “credit risk.”

The Company is a party to commitments to extend credit and commercial and standby letters of credit in the normal course of business to meet the financing needs of its customers. These commitments involve, in varying degrees, elements of interest rate risk and credit risk in excess of the amount reflected in the consolidated balance sheets.

Earnings (Loss) Per Common Share. Basic earnings (loss) per common share (EPS) are computed by dividing the income (loss) available to common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the year. The computation of dilutive EPS is similar except the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares had been issued. In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred dividends.

XML

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On March 20, 2013, the Company entered into a New Credit Agreement with Investors of America, LP, as further described in Note 11 to our consolidated financial statements. The agreement provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which has a maturity date of March 31, 2014 and an interest rate of LIBOR plus 300 basis points, is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company’s existing cash resources become insufficient in the future.

XML

DERIVATIVE INSTRUMENTS (Textual) (Details) (USD $)	12 Months Ended								12 Months Ended																	1 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 Interest rate swap agreements	Dec. 31, 2012 Not Designated As Hedging Instrument	Dec. 31, 2011 Not Designated As Hedging Instrument	Dec. 31, 2012 Not Designated As Hedging Instrument Interest rate swap agreements	Dec. 31, 2011 Not Designated As Hedging Instrument Interest rate swap agreements	Dec. 31, 2012 Not Designated As Hedging Instrument Customer interest rate swap agreements	Dec. 31, 2011 Not Designated As Hedging Instrument Customer interest rate swap agreements	Dec. 31, 2010 Not Designated As Hedging Instrument Customer interest rate swap agreements	Dec. 31, 2012 Not Designated As Hedging Instrument Other Assets	Dec. 31, 2011 Not Designated As Hedging Instrument Other Assets	Dec. 31, 2012 Not Designated As Hedging Instrument Other Assets Interest rate swap agreements	Dec. 31, 2011 Not Designated As Hedging Instrument Other Assets Interest rate swap agreements	Dec. 31, 2012 Not Designated As Hedging Instrument Other Assets Customer interest rate swap agreements	Dec. 31, 2011 Not Designated As Hedging Instrument Other Assets Customer interest rate swap agreements	Dec. 31, 2012 Not Designated As Hedging Instrument Interest rate lock commitments	Dec. 31, 2011 Not Designated As Hedging Instrument Interest rate lock commitments	Dec. 31, 2012 Not Designated As Hedging Instrument Interest rate lock commitments Other Assets	Dec. 31, 2011 Not Designated As Hedging Instrument Interest rate lock commitments Other Assets	Dec. 31, 2012 Not Designated As Hedging Instrument Forward commitments to sell mortgage-backed securities	Dec. 31, 2011 Not Designated As Hedging Instrument Forward commitments to sell mortgage-backed securities	Dec. 31, 2012 Not Designated As Hedging Instrument Forward commitments to sell mortgage-backed securities Other Assets	Dec. 31, 2011 Not Designated As Hedging Instrument Forward commitments to sell mortgage-backed securities Other Assets	Dec. 31, 2008 Cash Flow Hedging Interest rate swap agreements	Dec. 31, 2012 Cash Flow Hedging Interest rate swap agreements Designated as Hedging Instrument	Dec. 31, 2011 Cash Flow Hedging Interest rate swap agreements Designated as Hedging Instrument	Dec. 31, 2010 Cash Flow Hedging Interest rate swap agreements Designated as Hedging Instrument
Derivative [Line Items]
Derivative instruments, gain reclassified from accumulated OCI into income, effective portion																											$ 0	$ 0	$ 5,745,000
Net loss on derivative instruments	40,000	193,000	2,900,000						(3,000)	(1,000)	(4,000)
Interest receivable				36,000
Interest payable				72,000
Pretax gain (loss) on termination of cash flow hedge, deferred																										20,800,000
Notional amount				50,000,000	179,781,000	195,025,000	0	50,000,000	12,149,000	47,240,000								59,932,000	38,985,000			107,700,000	58,800,000
Derivative assets												$ 1,619,000	$ 1,022,000	$ 0	$ 0	$ 87,000	$ 370,000			$ 1,837,000	$ 1,381,000			$ (305,000)	$ (729,000)

XML

EMPLOYEE BENEFITS (Pension Plan Assets Measured at Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 9,419	$ 8,848	$ 9,210
Fair Value Measurements, Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	361	287
Fair Value Measurements, Level 2
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	9,058	8,561
Fair Value Measurements, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value Measurements, Fair Value
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	9,419	8,848
Cash and cash equivalents | Fair Value Measurements, Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	361	287
Cash and cash equivalents | Fair Value Measurements, Level 2
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Cash and cash equivalents | Fair Value Measurements, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Cash and cash equivalents | Fair Value Measurements, Fair Value
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	361	287
Equity securities | Fair Value Measurements, Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Equity securities | Fair Value Measurements, Level 2
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3,959	3,635
Equity securities | Fair Value Measurements, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Equity securities | Fair Value Measurements, Fair Value
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3,959	3,635
Debt securities | Fair Value Measurements, Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Debt securities | Fair Value Measurements, Level 2
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	4,603	4,463
Debt securities | Fair Value Measurements, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Debt securities | Fair Value Measurements, Fair Value
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	4,603	4,463
Other | Fair Value Measurements, Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Other | Fair Value Measurements, Level 2
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	496	463
Other | Fair Value Measurements, Level 3
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Other | Fair Value Measurements, Fair Value
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 496	$ 463

XML

DERIVATIVE INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table summarizes derivative instruments held by the Company, their notional amount, estimated fair values and their location in the consolidated balance sheets at December 31, 2012 and 2011:

				Derivatives in Other Assets				Derivatives in Other Liabilities
	Notional Amount			Fair Value Gain (Loss)				Fair Value Loss
	2012		2011	2012		2011		2012		2011
	(dollars expressed in thousands)
Derivative Instruments not Designated as Hedging Instruments:
Interest rate swap agreements	$	—	50,000	—		—		—		(807	)
Customer interest rate swap agreements	12,149		47,240	87		370		(87	)	(307	)
Interest rate lock commitments	59,932		38,985	1,837		1,381		—		—
Forward commitments to sell mortgage-backed securities	107,700		58,800	(305	)	(729	)	—		—
Total	$	179,781	195,025	1,619		1,022		(87	)	(1,114	)

Schedule of Interest Rate Derivatives

The maturity dates, notional amounts, interest rates paid and received and fair value of the Company’s interest rate swap agreements as of December 31, 2011 were as follows:

Maturity Date	Notional Amount		Interest Rate Paid		Interest Rate Received		Fair Value
	(dollars expressed in thousands)
December 31, 2011:
March 30, 2012	$	25,000	4.71	%	2.19	%	$	(159	)
December 15, 2012	25,000		5.57		2.80		(648		)
	$	50,000	5.14		2.50		$	(807	)

Schedule of Cash Flow Hedging Instruments, Location in Statements

The following table summarizes amounts included in the consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 related to interest rate swap agreements designated as cash flow hedges:

Derivative Instruments Designated as Hedging Instruments:	2012		2011	2010
	(dollars expressed in thousands)
Interest Rate Swap Agreements - Loans:
Interest and fees on loans	$	—	—	5,745

The following table summarizes amounts included in the consolidated statements of operations for the years December 31, 2012, 2011 and 2010 related to non-hedging derivative instruments:

Derivative Instruments Not Designated as Hedging Instruments:	Location of Gain (Loss) Recognized in Operations on Derivatives	Amount of Gain (Loss) Recognized in Operations on Derivatives
		2012			2011		2010
		(dollars expressed in thousands)
Interest rate swap agreements – subordinated debentures	Other noninterest income	$	(43	)	(194	)	(2,929	)
Customer interest rate swap agreements	Other noninterest income	3			1		4
Interest rate lock commitments	Gain on loans sold and held for sale	456			1,105		(93	)
Forward commitments to sell mortgage-backed securities	Gain on loans sold and held for sale	424			(2,267	)	891

XML

DISCONTINUED OPERATIONS (Discontinued Operations Income Statement) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest income:
Interest and fees on loans		$ 895	$ 13,869
Interest expense:
Interest on deposits		2,421	11,883
Other borrowings			1
Total interest expense			11,884
Net interest (loss) income		(1,526)	1,985
Provision for loan losses		0	0
Net interest (loss) income after provision for loan losses		(1,526)	1,985
Noninterest income:
Service charges and customer service fees		670	4,615
Investment management income			787
Other		13	449
Total noninterest income		683	5,851
Noninterest expense:
Salaries and employee benefits		2,682	11,257
Occupancy, net of rental income		1,814	4,662
Furniture and equipment		460	1,557
Legal, examination and professional fees		7	564
Amortization of intangible assets		63	352
FDIC insurance		569	3,056
Other		446	2,551
Total noninterest expense		6,041	23,999
(Loss) income from operations of discontinued operations		(6,884)	(16,163)
Net gain (loss) on sale of discontinued operations		425	19,568
Benefit for income taxes		0	(157)
Net (loss) income from discontinued operations, net of tax		(6,459)	3,562
Florida
Interest income:
Interest and fees on loans	0	0	0
Interest expense:
Interest on deposits	972	2,160	3,305
Other borrowings			0
Total interest expense			3,305
Net interest (loss) income	(972)	(2,160)	(3,305)
Provision for loan losses	0	0	0
Net interest (loss) income after provision for loan losses	(972)	(2,160)	(3,305)
Noninterest income:
Service charges and customer service fees	467	411	400
Investment management income			0
Other	13	8	5
Total noninterest income	480	419	405
Noninterest expense:
Salaries and employee benefits	2,279	2,325	2,325
Occupancy, net of rental income	1,760	1,746	1,734
Furniture and equipment	278	431	652
Legal, examination and professional fees	5	1	0
Amortization of intangible assets		63	33
FDIC insurance	358	469	636
Other	351	379	345
Total noninterest expense	5,031	5,414	5,725
(Loss) income from operations of discontinued operations	(5,523)	(7,155)	(8,625)
Net gain (loss) on sale of discontinued operations		0	0
Benefit for income taxes	0	0	0
Net (loss) income from discontinued operations, net of tax	(5,523)	(7,155)	(8,625)
Northern Illinois
Interest income:
Interest and fees on loans		895	9,629
Interest expense:
Interest on deposits		261	4,232
Other borrowings			0
Total interest expense			4,232
Net interest (loss) income		634	5,397
Provision for loan losses		0	0
Net interest (loss) income after provision for loan losses		634	5,397
Noninterest income:
Service charges and customer service fees		259	2,500
Investment management income			0
Other		5	30
Total noninterest income		264	2,530
Noninterest expense:
Salaries and employee benefits		357	3,403
Occupancy, net of rental income		68	1,115
Furniture and equipment		29	365
Legal, examination and professional fees		6	62
Amortization of intangible assets		0	319
FDIC insurance		100	1,650
Other		67	709
Total noninterest expense		627	7,623
(Loss) income from operations of discontinued operations		271	304
Net gain (loss) on sale of discontinued operations		425	6,355
Benefit for income taxes		0	0
Net (loss) income from discontinued operations, net of tax		696	6,659
Chicago
Interest income:
Interest and fees on loans			2,391
Interest expense:
Interest on deposits			2,550
Other borrowings			0
Total interest expense			2,550
Net interest (loss) income			(159)
Provision for loan losses			0
Net interest (loss) income after provision for loan losses			(159)
Noninterest income:
Service charges and customer service fees			523
Investment management income			0
Other			254
Total noninterest income			777
Noninterest expense:
Salaries and employee benefits			2,137
Occupancy, net of rental income			606
Furniture and equipment			178
Legal, examination and professional fees			123
Amortization of intangible assets			0
FDIC insurance			292
Other			424
Total noninterest expense			3,760
(Loss) income from operations of discontinued operations			(3,142)
Net gain (loss) on sale of discontinued operations			8,414
Benefit for income taxes			0
Net (loss) income from discontinued operations, net of tax			5,272
Texas
Interest income:
Interest and fees on loans			1,816
Interest expense:
Interest on deposits			1,796
Other borrowings			3
Total interest expense			1,799
Net interest (loss) income			17
Provision for loan losses			0
Net interest (loss) income after provision for loan losses			17
Noninterest income:
Service charges and customer service fees			1,192
Investment management income			0
Other			161
Total noninterest income			1,353
Noninterest expense:
Salaries and employee benefits			2,843
Occupancy, net of rental income			1,148
Furniture and equipment			345
Legal, examination and professional fees			111
Amortization of intangible assets			0
FDIC insurance			478
Other			860
Total noninterest expense			5,785
(Loss) income from operations of discontinued operations			(4,415)
Net gain (loss) on sale of discontinued operations			4,984
Benefit for income taxes			0
Net (loss) income from discontinued operations, net of tax			569
WIUS
Interest income:
Interest and fees on loans			33
Interest expense:
Interest on deposits			0
Other borrowings			(2)
Total interest expense			(2)
Net interest (loss) income			35
Provision for loan losses			0
Net interest (loss) income after provision for loan losses			35
Noninterest income:
Service charges and customer service fees			0
Investment management income			0
Other			0
Total noninterest income			0
Noninterest expense:
Salaries and employee benefits			32
Occupancy, net of rental income			0
Furniture and equipment			0
Legal, examination and professional fees			153
Amortization of intangible assets			0
FDIC insurance			0
Other			184
Total noninterest expense			369
(Loss) income from operations of discontinued operations			(334)
Net gain (loss) on sale of discontinued operations			(29)
Benefit for income taxes			(157)
Net (loss) income from discontinued operations, net of tax			(206)
MVP
Interest income:
Interest and fees on loans			0
Interest expense:
Interest on deposits			0
Other borrowings			0
Total interest expense			0
Net interest (loss) income			0
Provision for loan losses			0
Net interest (loss) income after provision for loan losses			0
Noninterest income:
Service charges and customer service fees			0
Investment management income			787
Other			(1)
Total noninterest income			786
Noninterest expense:
Salaries and employee benefits			517
Occupancy, net of rental income			59
Furniture and equipment			17
Legal, examination and professional fees			115
Amortization of intangible assets			0
FDIC insurance			0
Other			29
Total noninterest expense			737
(Loss) income from operations of discontinued operations			49
Net gain (loss) on sale of discontinued operations			(156)
Benefit for income taxes			0
Net (loss) income from discontinued operations, net of tax			$ (107)

XML

BANK PREMISES AND EQUIPMENT, NET (Bank Premises and Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 280,760	$ 286,399
Accumulated depreciation and amortization	(153,240)	(149,200)
Bank premises and equipment, net	127,520	137,199
Land
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	33,324	34,211
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	134,428	136,728
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	99,116	102,776
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	12,014	12,012
Construction in progress
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 1,878	$ 672

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 114,841	$ 101,822
Short-term investments	404,005	371,318
Total cash and cash equivalents	518,846	473,140
Investment securities:
Available for sale	2,043,727	2,457,887
Held to maturity (fair value of $637,024 and $13,424, respectively)	631,553	12,817
Total investment securities	2,675,280	2,470,704
Loans:
Commercial, financial and agricultural	610,301	725,195
Real estate construction and development	174,979	249,987
Real estate mortgage	2,060,131	2,255,332
Consumer and installment	19,262	23,596
Loans held for sale	66,133	31,111
Net deferred loan fees	(59)	(942)
Total loans	2,930,747	3,284,279
Allowance for loan losses	(91,602)	(137,710)
Net loans	2,839,145	3,146,569
Federal Reserve Bank and Federal Home Loan Bank stock	27,329	27,078
Bank premises and equipment, net	127,520	137,199
Goodwill and other intangible assets	125,267	125,267
Deferred income taxes	29,042	19,121
Other real estate and repossessed assets	91,995	129,896
Other assets	67,996	73,026
Assets of discontinued operations	6,706	6,913
Total assets	6,509,126	6,608,913
Deposits:
Noninterest-bearing demand	1,327,183	1,225,622
Interest-bearing demand	1,000,666	899,114
Savings and money market	1,880,271	1,964,905
Time deposits of $100 or more	460,791	546,045
Other time deposits	823,936	987,369
Total deposits	5,492,847	5,623,055
Other borrowings	26,025	51,170
Subordinated debentures	354,133	354,057
Deferred income taxes	36,182	26,261
Accrued expenses and other liabilities	144,269	115,962
Liabilities of discontinued operations	155,711	174,737
Total liabilities	6,209,167	6,345,242
STOCKHOLDERS’ EQUITY
Common stock, $250.00 par value, 25,000 shares authorized, 23,661 shares issued and outstanding	5,915	5,915
Additional paid-in capital	12,480	12,480
Retained deficit	(179,513)	(183,351)
Accumulated other comprehensive income	45,259	16,066
Total First Banks, Inc. stockholders’ equity	206,304	169,719
Noncontrolling interest in subsidiary	93,655	93,952
Total stockholders’ equity	299,959	263,671
Total liabilities and stockholders’ equity	6,509,126	6,608,913
Class A convertible, adjustable rate, $20.00 par value, 750,000 shares authorized, 641,082 shares issued and outstanding
STOCKHOLDERS’ EQUITY
Preferred stock:	12,822	12,822
Class B adjustable rate, $1.50 par value, 200,000 shares authorized, 160,505 shares issued and outstanding
STOCKHOLDERS’ EQUITY
Preferred stock:	241	241
Class C fixed rate, cumulative, perpetual, $1.00 par value, 295,400 shares authorized, issued and outstanding
STOCKHOLDERS’ EQUITY
Preferred stock:	291,757	288,203
Class D fixed rate, cumulative, perpetual, $1.00 par value, 14,770 shares authorized, issued and outstanding
STOCKHOLDERS’ EQUITY
Preferred stock:	$ 17,343	$ 17,343

XML

CREDIT COMMITMENTS (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Schedule of Credit Commitments and Standby Letters of Credit

Commitments to extend fixed and variable rate credit, and commercial and standby letters of credit, at December 31, 2012 and 2011 were as follows:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Commitments to extend credit	$	667,215	683,186
Commercial and standby letters of credit	59,075		65,993
Total	$	726,290	749,179

XML

FAIR VALUE DISCLOSURES (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value Disclosures [Abstract]
Loans transferred to other real estate and repossessed assets	$ 24,223	$ 69,941	$ 158,889
Write-downs on other real estate and repossessed assets	14,510	16,922	34,680
Other real estate and repossessed assets	$ 91,995	$ 129,896

XML

EMPLOYEE BENEFITS (Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]
Net loss	$ 1,715	$ 821
Amortization of net actuarial loss	(145)	(109)
Total recognized in accumulated other comprehensive income	$ 1,570	$ 712

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	First Banks, Inc. Stockholders’ Equity, Preferred Stock	First Banks, Inc. Stockholders’ Equity, Common Stock	First Banks, Inc. Stockholders’ Equity, Additional Paid-In Capital	First Banks, Inc. Stockholders’ Equity, Retained Earnings (Deficit)	First Banks, Inc. Stockholders’ Equity, Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest
Balance at Dec. 31, 2009	$ 522,380	$ 311,762	$ 5,915	$ 12,480	$ 91,271	$ (2,464)	$ 103,416
Net income (loss)	(198,251)				(191,737)		(6,514)
Other comprehensive income	146					146
Accretion of discount on preferred stock		3,381			(3,381)
Preferred stock dividends declared	(16,980)				(16,980)
Balance at Dec. 31, 2010	307,295	315,143	5,915	12,480	(120,827)	(2,318)	96,902
Net income (loss)	(44,100)				(41,150)		(2,950)
Other comprehensive income	18,384					18,384
Accretion of discount on preferred stock		3,466			(3,466)
Preferred stock dividends declared	(17,908)				(17,908)
Balance at Dec. 31, 2011	263,671	318,609	5,915	12,480	(183,351)	16,066	93,952
Net income (loss)	25,981				26,278		(297)
Other comprehensive income	29,193					29,193
Accretion of discount on preferred stock		3,554			(3,554)
Preferred stock dividends declared	(18,886)				(18,886)
Balance at Dec. 31, 2012	$ 299,959	$ 322,163	$ 5,915	$ 12,480	$ (179,513)	$ 45,259	$ 93,655

XML

FAIR VALUE DISCLOSURES (Details 2) (Nonrecurring, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 312,832	$ 445,960
Commercial, financial and agricultural
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	18,374	54,129
Real estate construction and development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	40,731	79,826
Bank portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	8,237	13,894
Mortgage Division portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	86,500	84,083
Home equity portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	6,887	5,552
Multi-family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	33,863	10,806
Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	26,218	67,756
Consumer and installment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	27	18
Other real estate and repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	91,995	129,896
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Commercial, financial and agricultural
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Real estate construction and development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Bank portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Mortgage Division portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Home equity portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Multi-family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Consumer and installment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Other real estate and repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Commercial, financial and agricultural
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Real estate construction and development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Bank portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Mortgage Division portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Home equity portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Multi-family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Consumer and installment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Other real estate and repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	312,832	445,960
Fair Value, Inputs, Level 3 | Commercial, financial and agricultural
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	18,374	54,129
Fair Value, Inputs, Level 3 | Real estate construction and development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	40,731	79,826
Fair Value, Inputs, Level 3 | Bank portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	8,237	13,894
Fair Value, Inputs, Level 3 | Mortgage Division portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	86,500	84,083
Fair Value, Inputs, Level 3 | Home equity portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	6,887	5,552
Fair Value, Inputs, Level 3 | Multi-family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	33,863	10,806
Fair Value, Inputs, Level 3 | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	26,218	67,756
Fair Value, Inputs, Level 3 | Consumer and installment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	27	18
Fair Value, Inputs, Level 3 | Other real estate and repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 91,995	$ 129,896

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Jun. 30, 2012
Proceeds from sales of investment securities available for sale	$ 315,238,000	$ 283,713,000	$ 249,209,000
Proceeds from calls of investment securities	277,200,000	56,000,000	2,400,000
Securities pledged as collateral	257,600,000	228,900,000
Reclassification of investment securities from available for sale to held to maturity	729,142,000	0	0	729,100,000
Gross unrealized gain on securities reclassified from available-for-sale to held-to-maturity				$ 11,700,000
Residential mortgage-backed
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of securities	9	11
Corporate notes
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of securities	6

XML

INCOME TAXES (Schedule of Components of Income Tax Expense (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current (benefit) provision for income taxes:
Federal	$ 0	$ 902	$ (366)
State	(32)	(721)	(71)
Total current (benefit) provision for income taxes	(32)	181	(437)
Deferred benefit for income taxes:
Federal	5,615	(16,129)	(56,871)
State	1,023	(7,392)	(13,974)
Total deferred benefit for income taxes	6,638	(23,521)	(70,845)
(Decrease) increase in deferred tax asset valuation allowance	(6,745)	12,686	75,396
(Benefit) provision for income taxes	$ (139)	$ (10,654)	$ 4,114

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES (Tables)

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Securities Available for Sale

The amortized cost, contractual maturity, gross unrealized gains and losses and fair value of investment securities available for sale at December 31, 2012 and 2011 were as follows:

	Maturity									Total Amortized Cost	Gross Unrealized				Weighted Average Yield
	1 Year or Less			1-5 Years		5-10 Years		After 10 Years			Gains	Losses		Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Carrying value:
U.S. Government sponsored agencies	$	10,051		80,328		—		213,892		304,271	6,304	(146	)	310,429	1.42	%
Residential mortgage-backed	364			24,014		219,286		1,251,917		1,495,581	38,983	(497	)	1,534,067	2.32
Commercial mortgage-backed	—			—		806		—		806	109	—		915	4.86
State and political subdivisions	985			3,579		201		—		4,765	164	—		4,929	4.05
Corporate notes	—			137,090		49,704		—		186,794	6,192	(621	)	192,365	3.13
Equity investments	—			—		—		1,000		1,000	22	—		1,022	2.54
Total	$	11,400		245,011		269,997		1,466,809		1,993,217	51,774	(1,264	)	2,043,727	2.26
Fair value:
Debt securities	$	11,476		251,558		275,251		1,504,420
Equity securities	—			—		—		1,022
Total	$	11,476		251,558		275,251		1,505,442
Weighted average yield	2.01		%	2.17	%	2.65	%	2.21	%
December 31, 2011:
Carrying value:
U.S. Government sponsored agencies	$	1,000		231,691		107,019		—		339,710	2,107	—		341,817	1.75	%
Residential mortgage-backed	—			2,726		64,309		1,821,209		1,888,244	36,908	(232	)	1,924,920	2.27
Commercial mortgage-backed	—			—		818		—		818	92	—		910	4.86
State and political subdivisions	310			4,088		786		—		5,184	226	—		5,410	4.00
Corporate Notes	—			122,941		65,088		5,000		193,029	—	(9,216	)	183,813	3.28
Equity investments	—			—		—		1,000		1,000	17	—		1,017	2.83
Total	$	1,310		361,446		238,020		1,827,209		2,427,985	39,350	(9,448	)	2,457,887	2.28
Fair value:
Debt securities	$	1,314		357,194		236,824		1,861,538
Equity securities	—			—		—		1,017
Total	$	1,314		357,194		236,824		1,862,555
Weighted average yield	2.93		%	2.07	%	2.56	%	2.28	%

Securities Held to Maturity

The amortized cost, contractual maturity, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31, 2012 and 2011 were as follows:

	Maturity									Total Amortized Cost	Gross Unrealized				Weighted Average Yield
	1 Year or Less			1-5 Years		5-10 Years		After 10 Years			Gains	Losses		Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Carrying value:
U.S. Government sponsored agencies	$	—		—		52,582		—		52,582	269	—		52,851	1.63	%
Residential mortgage-backed	—			—		108,420		466,863		575,283	6,142	(614	)	580,811	1.82
State and political subdivisions	826			1,099		252		1,511		3,688	51	(377	)	3,362	1.89
Total	$	826		1,099		161,254		468,374		631,553	6,462	(991	)	637,024	1.80
Fair value:
Debt securities	$	836		1,129		164,433		470,626
Weighted average yield	2.56		%	3.40	%	1.77	%	1.81	%
December 31, 2011:
Carrying value:
Residential mortgage-backed	$	—		—		728		615		1,343	116	—		1,459	5.06	%
Commercial mortgage-backed	—			6,310		—		—		6,310	447	—		6,757	5.16
State and political subdivisions	1,372			2,004		254		1,534		5,164	44	—		5,208	4.20
Total	$	1,372		8,314		982		2,149		12,817	607	—		13,424	4.76
Fair value:
Debt securities	$	1,387		8,768		1,056		2,213
Weighted average yield	2.55		%	4.67	%	4.60	%	6.61	%

Gross Realized Gains and Losses

Gross realized gains and gross realized losses on investment securities for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Gross realized gains on sales of available-for-sale securities	$	1,675		5,286		8,350
Gross realized losses on sales of available-for-sale securities	(374		)	(1	)	(31	)
Other-than-temporary impairment	(2		)	(3	)	(4	)
Gross realized gains on calls of investment securities	7			53		—
Net realized gain on investment securities	$	1,306		5,335		8,315

Gross Unrealized Losses

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2012 and 2011, were as follows:

	Less than 12 months				12 months or more			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(dollars expressed in thousands)
December 31, 2012:
Available for sale:
U.S. Government sponsored agencies	$	20,018	(146	)	—	—		20,018	(146	)
Residential mortgage-backed	125,449		(441	)	270	(56	)	125,719	(497	)
Corporate notes	—		—		17,675	(621	)	17,675	(621	)
Total	$	145,467	(587	)	17,945	(677	)	163,412	(1,264	)
Held to maturity:
Residential mortgage-backed	$	66,011	(614	)	—	—		66,011	(614	)
State and political subdivisions	1,133		(377	)	—	—		1,133	(377	)
Total	$	67,144	(991	)	—	—		67,144	(991	)
December 31, 2011:
Available for sale:
Residential mortgage-backed	$	67,395	(126	)	22,349	(106	)	89,744	(232	)
Corporate notes	173,813		(9,216	)	—	—		173,813	(9,216	)
Total	$	241,208	(9,342	)	22,349	(106	)	263,557	(9,448	)

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Troubled Debt Restructurings On Non Performing Financing Receivables) (Details) (Nonperforming Troubled Debt Restructurings, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	$ 40,010	$ 40,757
Commercial, financial and agricultural
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	1,004	1,344
Real estate construction and development
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	26,557	25,603
One-to-four-family residential
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	7,105	6,205
Multi-family residential
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	2,482	0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	$ 2,862	$ 7,605

XML

FAIR VALUE DISCLOSURES

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

FAIRVALUEDISCLOSURES

In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” financial assets and financial liabilities that are measured at fair value subsequent to initial recognition are grouped into three levels of inputs or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the reliability of assumptions used to determine fair value. The three input levels of the valuation hierarchy are as follows:

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

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

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

The following describes valuation methodologies used to measure financial assets and financial liabilities at fair value, as well as the general classification of such financial instruments pursuant to the valuation hierarchy:

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

Loans held for sale. Mortgage loans held for sale are carried at fair value on a recurring basis. The determination of fair value is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information. Other loans held for sale are carried at the lower of cost or market value, which is determined on an individual loan basis. The fair value is based on the prices secondary markets are offering for portfolios with similar characteristics. The Company classifies mortgage loans held for sale subjected to recurring fair value adjustments as recurring Level 2. The Company classifies other loans held for sale subjected to nonrecurring fair value adjustments as nonrecurring Level 2.

Impaired loans. The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans are considered impaired when, in the judgment of management based on current information and events, it is probable that payment of all amounts due under the contractual terms of the loan agreement will not be collected. Acquired impaired loans are classified as nonaccrual loans and are initially measured at fair value with no allocated allowance for loan losses. An allowance for loan losses is recorded to the extent there is further credit deterioration subsequent to the acquisition date. In accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Once a loan is identified as impaired, management measures the impairment in accordance with ASC Topic 310-10-35, “Receivables.” Impairment is measured by reference to an observable market price, if one exists, the expected future cash flows of an impaired loan discounted at the loan’s effective interest rate, or the fair value of the collateral for a collateral-dependent loan. In most cases, the Company measures fair value based on the value of the collateral securing the loan. Collateral may be in the form of real estate or personal property, including equipment and inventory. The vast majority of the collateral is real estate. The value of the collateral is determined based on third party appraisals as well as internal estimates. These measurements are classified as nonrecurring Level 3.

Other real estate and repossessed assets. Certain other real estate and repossessed assets, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan losses based upon the estimated fair value of the other real estate. The fair value of other real estate, upon initial recognition, is estimated using Level 3 inputs based on third party appraisals, and where applicable, discounted based on management’s judgment taking into account current market conditions, distressed or forced sale price comparisons and other factors in effect at the time of valuation. The Company classifies other real estate and repossessed assets subjected to nonrecurring fair value adjustments as Level 3.

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

Servicing rights. The valuation of mortgage and SBA servicing rights is performed by an independent third party. The valuation models estimate the present value of estimated future net servicing income, using market-based discount rate assumptions, and utilize assumptions based on the predominant risk characteristics of the underlying loans, including principal balance, interest rate, weighted average life, and certain unobservable inputs, including cost to service, estimated prepayment speed rates and default rates. Changes in the fair value of servicing rights occur primarily due to the realization of expected cash flows, as well as changes in valuation inputs and assumptions. Significant increases (decreases) in any of the unobservable inputs would result in a significantly lower (higher) fair value of the servicing rights. The Company classifies its servicing rights as Level 3.

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

Items Measured on a Recurring Basis. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011 are reflected in the following table:

	Fair Value Measurements
	Level 1		Level 2		Level 3	Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Assets:
Available-for-sale investment securities:
U.S. Government sponsored agencies	$	—	310,429		—	310,429
Residential mortgage-backed	—		1,534,067		—	1,534,067
Commercial mortgage-backed	—		915		—	915
State and political subdivisions	—		4,929		—	4,929
Corporate notes	—		192,365		—	192,365
Equity investments	1,022		—		—	1,022
Mortgage loans held for sale	—		66,133		—	66,133
Derivative instruments:
Customer interest rate swap agreements	—		87		—	87
Interest rate lock commitments	—		1,837		—	1,837
Forward commitments to sell mortgage-backed securities	—		(305	)	—	(305	)
Servicing rights	—		—		14,792	14,792
Total	$	1,022	2,110,457		14,792	2,126,271
Liabilities:
Derivative instruments:
Interest rate swap agreements	$	—	—		—	—
Customer interest rate swap agreements	—		87		—	87
Nonqualified deferred compensation plan	6,443		—		—	6,443
Total	$	6,443	87		—	6,530
December 31, 2011:
Assets:
Available-for-sale investment securities:
U.S. Government sponsored agencies	$	—	341,817		—	341,817
Residential mortgage-backed	—		1,924,920		—	1,924,920
Commercial mortgage-backed	—		910		—	910
State and political subdivisions	—		5,410		—	5,410
Corporate notes	—		183,813		—	183,813
Equity investments	1,017		—		—	1,017
Mortgage loans held for sale	—		31,111		—	31,111
Derivative instruments:
Customer interest rate swap agreements	—		370		—	370
Interest rate lock commitments	—		1,381		—	1,381
Forward commitments to sell mortgage-backed securities	—		(729	)	—	(729	)
Servicing rights	—		—		15,380	15,380
Total	$	1,017	2,489,003		15,380	2,505,400
Liabilities:
Derivative instruments:
Interest rate swap agreements	$	—	807		—	807
Customer interest rate swap agreements	—		307		—	307
Nonqualified deferred compensation plan	6,531		—		—	6,531
Total	$	6,531	1,114		—	7,645

There were no transfers between Levels 1 and 2 of the fair value hierarchy for the years ended December 31, 2012 and 2011.

The following table presents the changes in Level 3 assets measured on a recurring basis for the years ended December 31, 2012 and 2011:

	Servicing Rights
	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	15,380		19,582
Total gains or losses (realized/unrealized):
Included in earnings (1)	(5,475		)	(7,652	)
Included in other comprehensive income (loss)	—			—
Issuances	4,887			3,450
Transfers in and/or out of level 3	—			—
Balance, end of year	$	14,792		15,380

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

Items Measured on a Nonrecurring Basis. From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis as of December 31, 2012 and 2011 are reflected in the following table:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Assets:
Impaired loans:
Commercial, financial and agricultural	$	—	—	18,374	18,374
Real estate construction and development	—		—	40,731	40,731
Real estate mortgage:
Bank portfolio	—		—	8,237	8,237
Mortgage Division portfolio	—		—	86,500	86,500
Home equity portfolio	—		—	6,887	6,887
Multi-family residential	—		—	33,863	33,863
Commercial real estate	—		—	26,218	26,218
Consumer and installment	—		—	27	27
Other real estate and repossessed assets	—		—	91,995	91,995
Total	$	—	—	312,832	312,832
December 31, 2011:
Assets:
Impaired loans:
Commercial, financial and agricultural	$	—	—	54,129	54,129
Real estate construction and development	—		—	79,826	79,826
Real estate mortgage:
Bank portfolio	—		—	13,894	13,894
Mortgage Division portfolio	—		—	84,083	84,083
Home equity portfolio	—		—	5,552	5,552
Multi-family residential	—		—	10,806	10,806
Commercial real estate	—		—	67,756	67,756
Consumer and installment	—		—	18	18
Other real estate and repossessed assets	—		—	129,896	129,896
Total	$	—	—	445,960	445,960

Non-Financial Assets and Non-Financial Liabilities. Certain non-financial assets measured at fair value on a nonrecurring basis include other real estate (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment.

Other real estate and repossessed assets measured at fair value upon initial recognition totaled $24.2 million, $69.9 million and $158.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. In addition to other real estate and repossessed assets measured at fair value upon initial recognition, the Company recorded write-downs to the balance of other real estate and repossessed assets of $14.5 million, $16.9 million and $34.7 million to noninterest expense for the years ended December 31, 2012, 2011 and 2010, respectively. Other real estate and repossessed assets were $92.0 million at December 31, 2012 compared to $129.9 million at December 31, 2011.

Fair Value of Financial Instruments. The fair value of financial instruments is management’s estimate of the values at which the instruments could be exchanged in a transaction between willing parties. These estimates are subjective and may vary significantly from amounts that would be realized in actual transactions. In addition, other significant assets are not considered financial assets including deferred income tax assets, bank premises and equipment and goodwill and other intangible assets. Furthermore, the income taxes that would be incurred if the Company were to realize any of the unrealized gains or unrealized losses indicated between the estimated fair values and corresponding carrying values could have a significant effect on the fair value estimates and have not been considered in any of the estimates.

The following summarizes the methods and assumptions used in estimating the fair value of all other financial instruments:

Cash and cash equivalents and accrued interest receivable. The carrying values reported in the consolidated balance sheets approximate fair value.

Held-to-maturity investment securities. The fair value of held-to-maturity investment securities is based on quoted market prices where available. If quoted market prices are not available, the fair value is based on quoted market prices of comparable instruments. The Company classifies its held-to-maturity investment securities as Level 2.

Loans. The fair value of loans held for portfolio uses an exit price concept and reflects discounts the Company believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial and industrial, real estate construction and development, commercial real estate, one-to-four-family residential real estate, home equity and consumer and installment. The fair value of loans is estimated by discounting the future cash flows, utilizing assumptions for prepayment estimates over the loans’ remaining life and considerations for the current interest rate environment compared to the weighted average rate of the loan portfolio. The fair value analysis also includes other assumptions to estimate fair value, intended to approximate those factors a market participant would use in an orderly transaction, with adjustments for discount rates, interest rates, liquidity, and credit spreads, as appropriate. The Company classifies its loans held for portfolio as Level 3.

FRB and FHLB stock. The carrying values reported in the consolidated balance sheets for FRB and FHLB stock, which are carried at cost, represent redemption value and approximate fair value.

Assets of discontinued operations. The carrying values reported in the consolidated balance sheets for assets of discontinued operations approximate fair value. The Company classifies its assets of discontinued operations as Level 2.

Deposits. The fair value of deposits payable on demand with no stated maturity (i.e., noninterest-bearing and interest-bearing demand, and savings and money market accounts) is considered equal to their respective carrying amounts as reported in the consolidated balance sheets. The fair value of demand deposits does not include the benefit that results from the low-cost funding provided by deposit liabilities compared to the cost of borrowing funds in the market. The fair value disclosed for time deposits is estimated utilizing a discounted cash flow calculation that applies interest rates currently being offered on similar deposits to a schedule of aggregated monthly maturities of time deposits. If the estimated fair value is lower than the carrying value, the carrying value is reported as the fair value of time deposits. The Company classifies its time deposits as Level 3.

Other borrowings and accrued interest payable. The carrying values reported in the consolidated balance sheets for variable rate borrowings approximate fair value. The fair value of fixed rate borrowings is based on quoted market prices where available. If quoted market prices are not available, the fair value is based on discounting contractual maturities using an estimate of current market rates for similar instruments. The Company classifies its other borrowings, comprised of securities sold under agreement to repurchase, as Level 1. The carrying values reported in the consolidated balance sheets for accrued interest payable approximate fair value.

Subordinated debentures. The fair value of subordinated debentures is based on quoted market prices of comparable instruments. The Company classifies its subordinated debentures as Level 3.

Liabilities of discontinued operations. The fair value of liabilities of discontinued operations reflects the negotiated purchase price at which the liabilities could be exchanged in a transaction between willing parties, as further described in Note 2 to the consolidated financial statements. The Company classifies its liabilities of discontinued operations as Level 2.

Off-Balance Sheet Financial Instruments. The fair value of commitments to extend credit, standby letters of credit and financial guarantees is based on estimated probable credit losses. The Company classifies its off-balance sheet financial instruments as Level 3.

The estimated fair value of the Company’s financial instruments at December 31, 2012 and 2011 were as follows:

	December 31, 2012									December 31, 2011
	Carrying Value			Estimated Fair Value						Carrying Value		Estimated Fair Value
				Level 1	Level 2	Level 3		Total
	(dollars expressed in thousands)
Financial Assets:
Cash and cash equivalents	$	518,846		518,846	—	—		518,846		473,140		473,140
Investment securities:
Available for sale	2,043,727			1,022	2,042,705	—		2,043,727		2,457,887		2,457,887
Held to maturity	631,553			—	637,024	—		637,024		12,817		13,424
Loans held for portfolio	2,773,012			—	—	2,572,256		2,572,256		3,115,458		2,811,866
Loans held for sale	66,133			—	66,133	—		66,133		31,111		31,111
FRB and FHLB stock	27,329			27,329	—	—		27,329		27,078		27,078
Derivative instruments	1,619			—	1,619	—		1,619		1,022		1,022
Accrued interest receivable	18,284			18,284	—	—		18,284		21,050		21,050
Assets of discontinued operations	6,706			—	6,706	—		6,706		6,913		6,913
Financial Liabilities:
Deposits:
Noninterest-bearing demand	$	1,327,183		1,327,183	—	—		1,327,183		1,225,622		1,225,622
Interest-bearing demand	1,000,666			1,000,666	—	—		1,000,666		899,114		899,114
Savings and money market	1,880,271			1,880,271	—	—		1,880,271		1,964,905		1,964,905
Time deposits	1,284,727			—	—	1,286,730		1,286,730		1,533,414		1,536,824
Other borrowings	26,025			26,025	—	—		26,025		51,170		51,170
Derivative instruments	87			—	87	—		87		1,114		1,114
Accrued interest payable	48,541			48,541	—	—		48,541		34,343		34,343
Subordinated debentures	354,133			—	—	254,984		254,984		354,057		204,502
Liabilities of discontinued operations	155,711			—	155,711	—		155,711		174,737		174,737
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	$	(2,779	)	—	—	(2,779	)	(2,779	)	(2,785	)	(2,785	)

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Composition of the Loan Portfolio

The following table summarizes the composition of the loan portfolio at December 31, 2012 and 2011:

	2012			2011
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	610,301		725,195
Real estate construction and development	174,979			249,987
Real estate mortgage:
One-to-four-family residential	986,767			902,438
Multi-family residential	103,684			127,356
Commercial real estate	969,680			1,225,538
Consumer and installment	19,262			23,596
Loans held for sale	66,133			31,111
Net deferred loan fees	(59		)	(942	)
Loans, net of net deferred loan fees	$	2,930,747		3,284,279

Aging of Loans by Loan Classification

The following table presents the aging of loans by loan classification at December 31, 2012 and 2011:

	30-59 Days		60-89 Days	Recorded Investment > 90 Days Accruing	Nonaccrual	Total Past Due	Current	Total Loans
	(dollars expressed in thousands)
December 31, 2012:
Commercial, financial and agricultural	$	1,180	322	—	19,050	20,552	589,749	610,301
Real estate construction and development	93		—	—	32,152	32,245	142,734	174,979
One-to-four-family residential:
Bank portfolio	1,871		1,121	874	6,910	10,776	111,562	122,338
Mortgage Division portfolio	6,264		4,375	—	19,780	30,419	479,552	509,971
Home equity	2,494		1,221	216	8,671	12,602	341,856	354,458
Multi-family residential	—		629	—	6,761	7,390	96,294	103,684
Commercial real estate	66		693	—	16,520	17,279	952,401	969,680
Consumer and installment	174		43	—	28	245	18,958	19,203
Loans held for sale	—		—	—	—	—	66,133	66,133
Total	$	12,142	8,404	1,090	109,872	131,508	2,799,239	2,930,747
December 31, 2011:
Commercial, financial and agricultural	$	1,602	2,085	1,095	55,340	60,122	665,073	725,195
Real estate construction and development	170		3,033	—	71,244	74,447	175,540	249,987
One-to-four-family residential:
Bank portfolio	4,506		2,577	362	14,690	22,135	143,443	165,578
Mortgage Division portfolio	5,994		1,571	—	16,778	24,343	342,572	366,915
Home equity	3,990		2,151	856	6,940	13,937	356,008	369,945
Multi-family residential	—		118	—	7,975	8,093	119,263	127,356
Commercial real estate	3,888		7,092	427	47,262	58,669	1,166,869	1,225,538
Consumer and installment	396		192	4	22	614	22,040	22,654
Loans held for sale	—		—	—	—	—	31,111	31,111
Total	$	20,546	18,819	2,744	220,251	262,360	3,021,919	3,284,279

Financing Receivable Credit Quality Indicators

The following tables present the credit exposure of the loan portfolio by internally assigned credit grade and payment activity as of December 31, 2012 and 2011:

Commercial Loan Portfolio Credit Exposure by Internally Assigned Credit Grade	Commercial and Industrial		Real Estate Construction and Development	Multi-family	Commercial Real Estate	Total
			(dollars expressed in thousands)
December 31, 2012:
Pass	$	572,248	45,356	67,690	858,101	1,543,395
Special mention	10,580		6,076	220	70,450	87,326
Substandard	8,423		81,364	773	13,868	104,428
Performing troubled debt restructuring	—		10,031	28,240	10,741	49,012
Nonaccrual	19,050		32,152	6,761	16,520	74,483
Total	$	610,301	174,979	103,684	969,680	1,858,644
December 31, 2011:
Pass	$	606,998	57,594	68,748	973,553	1,706,893
Special mention	25,742		11,977	18,678	119,478	175,875
Substandard	32,851		97,158	28,789	60,876	219,674
Performing troubled debt restructuring	4,264		12,014	3,166	24,369	43,813
Nonaccrual	55,340		71,244	7,975	47,262	181,821
Total	$	725,195	249,987	127,356	1,225,538	2,328,076

One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio Credit Exposure by Internally Assigned Credit Grade	Bank Portfolio		Home Equity	Total
	(dollars expressed in thousands)
December 31, 2012:
Pass	$	107,625	342,321	449,946
Special mention	4,405		216	4,621
Substandard	1,787		3,250	5,037
Performing troubled debt restructuring	1,611		—	1,611
Nonaccrual	6,910		8,671	15,581
Total	$	122,338	354,458	476,796
December 31, 2011:
Pass	$	131,973	358,801	490,774
Special mention	12,797		954	13,751
Substandard	6,118		3,250	9,368
Nonaccrual	14,690		6,940	21,630
Total	$	165,578	369,945	535,523

One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio Credit Exposure by Payment Activity	Mortgage Division Portfolio		Consumer and Installment	Total
	(dollars expressed in thousands)
December 31, 2012:
Pass	$	405,270	19,175	424,445
Substandard	6,627		—	6,627
Performing troubled debt restructuring	78,294		—	78,294
Nonaccrual	19,780		28	19,808
Total	$	509,971	19,203	529,174
December 31, 2011:
Pass	$	263,079	22,632	285,711
Substandard	4,429		—	4,429
Performing troubled debt restructuring	82,629		—	82,629
Nonaccrual	16,778		22	16,800
Total	$	366,915	22,654	389,569

Impaired Financing Receivables

The following tables present the recorded investment, unpaid principal balance, related allowance for loan losses, average recorded investment and interest income recognized while on impaired status for impaired loans without a related allowance for loan losses and for impaired loans with a related allowance for loan losses by loan classification at December 31, 2012 and 2011:

	Recorded Investment		Unpaid Principal Balance	Related Allowance for Loan Losses	Average Recorded Investment	Interest Income Recognized
	(dollars expressed in thousands)
December 31, 2012:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	6,451	24,287	—	12,369	215
Real estate construction and development	39,706		74,044	—	59,094	561
Real estate mortgage:
Bank portfolio	1,611		1,690	—	2,166	32
Mortgage Division portfolio	10,255		22,102	—	10,308	—
Home equity portfolio	1,382		1,507	—	1,232	—
Multi-family residential	33,709		37,206	—	13,682	280
Commercial real estate	18,808		24,279	—	35,959	1,160
Consumer and installment	—		—	—	—	—
	111,922		185,115	—	134,810	2,248
With A Related Allowance Recorded:
Commercial, financial and agricultural	12,599		19,255	676	24,157	—
Real estate construction and development	2,477		10,221	1,452	3,687	114
Real estate mortgage:
Bank portfolio	6,910		8,655	284	9,288	—
Mortgage Division portfolio	87,819		96,931	11,574	88,277	2,050
Home equity portfolio	7,289		8,188	1,784	6,500	—
Multi-family residential	1,292		1,403	1,138	524	—
Commercial real estate	8,453		12,909	1,043	16,161	11
Consumer and installment	28		28	1	51	—
	126,867		157,590	17,952	148,645	2,175
Total:
Commercial, financial and agricultural	19,050		43,542	676	36,526	215
Real estate construction and development	42,183		84,265	1,452	62,781	675
Real estate mortgage:
Bank portfolio	8,521		10,345	284	11,454	32
Mortgage Division portfolio	98,074		119,033	11,574	98,585	2,050
Home equity portfolio	8,671		9,695	1,784	7,732	—
Multi-family residential	35,001		38,609	1,138	14,206	280
Commercial real estate	27,261		37,188	1,043	52,120	1,171
Consumer and installment	28		28	1	51	—
	$	238,789	342,705	17,952	283,455	4,423

	Recorded Investment		Unpaid Principal Balance	Related Allowance for Loan Losses	Average Recorded Investment	Interest Income Recognized
	(dollars expressed in thousands)
December 31, 2011:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	20,494	53,140	—	25,294	336
Real estate construction and development	62,524		113,412	—	80,230	72
Real estate mortgage:
Bank portfolio	3,274		5,030	—	3,291	—
Mortgage Division portfolio	10,250		22,541	—	11,352	—
Home equity portfolio	196		198	—	210	—
Multi-family residential	7,961		8,378	—	8,358	92
Commercial real estate	45,452		61,766	—	59,613	435
Consumer and installment	1		1	—	2	—
	150,152		264,466	—	188,350	935
With A Related Allowance Recorded:
Commercial, financial and agricultural	39,110		64,867	5,475	48,270	—
Real estate construction and development	20,734		39,832	3,432	26,605	183
Real estate mortgage:
Bank portfolio	11,416		12,926	796	11,473	—
Mortgage Division portfolio	89,157		98,118	15,324	98,739	2,306
Home equity portfolio	6,744		7,657	1,388	7,212	—
Multi-family residential	3,180		5,281	335	3,339	—
Commercial real estate	26,179		34,073	3,875	34,335	168
Consumer and installment	21		21	4	60	—
	196,541		262,775	30,629	230,033	2,657
Total:
Commercial, financial and agricultural	59,604		118,007	5,475	73,564	336
Real estate construction and development	83,258		153,244	3,432	106,835	255
Real estate mortgage:
Bank portfolio	14,690		17,956	796	14,764	—
Mortgage Division portfolio	99,407		120,659	15,324	110,091	2,306
Home equity portfolio	6,940		7,855	1,388	7,422	—
Multi-family residential	11,141		13,659	335	11,697	92
Commercial real estate	71,631		95,839	3,875	93,948	603
Consumer and installment	22		22	4	62	—
	$	346,693	527,241	30,629	418,383	3,592

Troubled Debt Restructurings On Performing Financing Receivables

The following table presents the categories of performing TDRs as of December 31, 2012 and 2011:

	2012		2011
	(dollars expressed in thousands)
Performing Troubled Debt Restructurings:
Commercial, financial and agricultural	$	—	4,264
Real estate construction and development	10,031		12,014
Real estate mortgage:
One-to-four-family residential	79,905		82,629
Multi-family residential	28,240		3,166
Commercial real estate	10,741		24,369
Total	$	128,917	126,442

Troubled Debt Restructurings On Non Performing Financing Receivables

The following table presents the categories of loans considered nonperforming TDRs as of December 31, 2012 and 2011:

	2012		2011
	(dollars expressed in thousands)
Nonperforming Troubled Debt Restructurings:
Commercial, financial and agricultural	$	1,004	1,344
Real estate construction and development	26,557		25,603
Real estate mortgage:
One-to-four-family residential	7,105		6,205
Multi-family residential	2,482		—
Commercial real estate	2,862		7,605
Total	$	40,010	40,757

Modified Troubled Debt Restructurings

The following tables present loans classified as TDRs that were modified during the years ended December 31, 2012 and 2011:

	2012					2011
	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(dollars expressed in thousands)
Loan Modifications as Troubled Debt Restructurings:
Commercial, financial and agricultural	2	$	1,108	$	873	3	$	1,945	$	1,945
Real estate construction and development	4	6,263		5,670		8	42,784		38,166
Real estate mortgage:
One-to-four-family residential	50	9,049		8,992		118	23,607		22,377
Multi-family residential	2	28,280		28,280		1	4,964		3,209
Commercial real estate	3	9,965		9,965		5	34,113		26,890

Modified Troubled Debt Restructurings That Subsequently Defaulted

The following tables present TDRs that defaulted within 12 months of modification during the years ended December 31, 2012 and 2011:

	2012			2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(dollars expressed in thousands)
Troubled Debt Restructurings That Subsequently Defaulted:
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate construction and development	3	1,364		1	460
Real estate mortgage:
One-to-four-family residential	57	12,437		45	9,523
Multi-family residential	—	—		—	—
Commercial real estate	—	—		1	1,144

Allowance for Credit Losses on Financing Receivables

Changes in the allowance for loan losses for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	137,710		201,033		266,448
Allowance for loan losses allocated to loans sold	—			—		(321	)
	137,710			201,033		266,127
Loans charged-off	(78,070		)	(154,627	)	(331,196	)
Recoveries of loans previously charged-off	29,962			22,304		52,102
Net loans charged-off	(48,108		)	(132,323	)	(279,094	)
Provision for loan losses	2,000			69,000		214,000
Balance, end of year	$	91,602		137,710		201,033

Allowance For Credit Losses On Financing Receivables By Portfolio Segments

The following table represents a summary of changes in the allowance for loan losses by portfolio segment for the years ended December 31, 2012 and 2011:

	Commercial and Industrial			Real Estate Construction and Development		One-to- Four-Family Residential		Multi- Family Residential		Commercial Real Estate		Consumer and Installment		Total
	(dollars expressed in thousands)
Year Ended December 31, 2012:
Allowance for loan losses:
Beginning balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710
Charge-offs	(17,410		)	(12,244	)	(21,814	)	(2,435	)	(23,856	)	(311	)	(78,070	)
Recoveries	12,886			5,659		5,188		44		5,982		203		29,962
Provision (benefit) for loan losses	(9,147		)	(3,849	)	4,659		1,792		8,474		71		2,000
Ending balance	$	13,572		14,434		38,897		4,252		20,048		399		91,602
Year Ended December 31, 2011:
Allowance for loan losses:
Beginning balance	$	28,000		58,439		60,762		5,158		47,880		794		201,033
Charge-offs	(46,256		)	(35,459	)	(31,355	)	(3,126	)	(37,974	)	(457	)	(154,627	)
Recoveries	6,962			6,694		3,985		562		3,787		314		22,304
Provision (benefit) for loan losses	38,537			(4,806	)	17,472		2,257		15,755		(215	)	69,000
Ending balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710

Impairment Method by Loan Category

The following table represents a summary of the impairment method used by loan category at December 31, 2012 and 2011:

	Commercial and Industrial		Real Estate Construction and Development	One-to- Four-Family Residential	Multi- Family Residential	Commercial Real Estate	Consumer and Installment	Total
	(dollars expressed in thousands)
Ending Balance at December 31, 2012:
Allowance for loan losses:
Impaired loans individually evaluated for impairment	$	75	121	3,187	33	182	—	3,598
Impaired loans collectively evaluated for impairment	601		1,331	10,455	1,105	861	1	14,354
All other loans collectively evaluated for impairment	12,896		12,982	25,255	3,114	19,005	398	73,650
Total	$	13,572	14,434	38,897	4,252	20,048	399	91,602
Financing receivables:
Impaired loans individually evaluated for impairment	$	7,884	39,155	16,843	34,636	20,965	—	119,483
Impaired loans collectively evaluated for impairment	11,166		3,028	98,423	365	6,296	28	119,306
All other loans collectively evaluated for impairment	591,251		132,796	871,501	68,683	942,419	19,175	2,625,825
Total	$	610,301	174,979	986,767	103,684	969,680	19,203	2,864,614
Ending Balance at December 31, 2011:
Allowance for loan losses:
Impaired loans individually evaluated for impairment	$	4,276	1,752	3,170	110	2,430	—	11,738
Impaired loans collectively evaluated for impairment	1,199		1,680	14,338	225	1,445	4	18,891
All other loans collectively evaluated for impairment	21,768		21,436	33,356	4,516	25,573	432	107,081
Total	$	27,243	24,868	50,864	4,851	29,448	436	137,710
Financing receivables:
Impaired loans individually evaluated for impairment	$	40,527	76,475	16,836	11,141	64,190	—	209,169
Impaired loans collectively evaluated for impairment	19,077		6,783	104,201	—	7,441	22	137,524
All other loans collectively evaluated for impairment	665,591		166,729	781,401	116,215	1,153,907	22,632	2,906,475
Total	$	725,195	249,987	902,438	127,356	1,225,538	22,654	3,253,168

XML

CREDIT COMMITMENTS (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]
Federal Home Loan Bank, standby letters of credit issued	$ 25,000,000	$ 28,600,000
Federal Home Loan Bank, letter of credit term	5 years
Carrying Value
Loss Contingencies [Line Items]
Reserve for letters of credit and unfunded loan commitments	$ 2,779,000	$ 2,785,000

XML

INCOME TAXES

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOMETAXES

The (benefit) provision for income taxes from continuing operations for the years ended December 31, 2012, 2011 and 2010 consists of the following:

	2012			2011		2010
	(dollars expressed in thousands)
Current (benefit) provision for income taxes:
Federal	$	—		902		(366	)
State	(32		)	(721	)	(71	)
	(32		)	181		(437	)
Deferred benefit for income taxes:
Federal	5,615			(16,129	)	(56,871	)
State	1,023			(7,392	)	(13,974	)
	6,638			(23,521	)	(70,845	)
(Decrease) increase in deferred tax asset valuation allowance	(6,745		)	12,686		75,396
Total	$	(139	)	(10,654	)	4,114

The effective rates of federal income taxes for the years ended December 31, 2012, 2011 and 2010 differ from the federal statutory rates of taxation as follows:

	Years Ended December 31,
	2012					2011					2010
	Amount			Percent		Amount			Percent		Amount			Percent
	(dollars expressed in thousands)
Income (loss) from continuing operations before benefit (provision) for income taxes and noncontrolling interest in loss of subsidiaries	$	31,365				$	(48,295	)			$	(197,699	)
Provision (benefit) for income taxes calculated at federal statutory income tax rates	$	10,978		35.0	%	$	(16,904	)	35.0	%	$	(69,195	)	35.0	%
Effects of differences in tax reporting:
Tax-exempt interest income, net of tax preference adjustment	(135		)	(0.4	)	(203		)	0.4		(308		)	0.2
State income taxes	645			2.1		(4,800		)	9.9		(9,125		)	4.6
Bank owned life insurance, net of premium	11			—		10			—		3,144			(1.6	)
Noncontrolling investment in flow-through entity	104			0.3		1,033			(2.1	)	2,280			(1.2	)
Amortization of intangibles	—			—		175			(0.3	)	350			(0.2	)
(Decrease) increase in deferred tax asset valuation allowance, net of federal benefit	(11,811		)	(37.7	)	20,614			(42.7	)	70,668			(35.8	)
Reclassification of deferred tax asset valuation allowance from accumulated other comprehensive income to provision for income taxes	—			—		(10,466		)	21.7		6,816			(3.4	)
Expiration of net operating loss carryforwards	643			2.1		34			—		5			—
Other, net	(574		)	(1.8	)	(147		)	0.2		(521		)	0.3
(Benefit) provision for income taxes	$	(139	)	(0.4	)%	$	(10,654	)	22.1	%	$	4,114		(2.1	)%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 were as follows:

	December 31,
	2012			2011
	(dollars expressed in thousands)
Deferred tax assets:
Federal net operating loss carryforwards	$	209,190		188,726
State net operating loss carryforwards	65,882			58,326
Allowance for loan losses	37,825			56,649
Loans held for sale	2,032			1,745
Alternative minimum and general business tax credits	19,146			17,326
Interest on nonaccrual loans	12,551			15,359
Deferred compensation	3,573			3,593
Core deposit intangibles	2,706			3,111
Partnership and corporate investments	7,908			12,052
Deferred loan charge-offs and other fraud losses	4,341			13,875
Other real estate and repossessed assets	22,666			22,665
Accrued contingent liabilities	2,870			3,632
Depreciation on bank premises and equipment	1,202			486
State taxes	682			—
Other	12,692			13,205
Gross deferred tax assets	405,266			410,750
Valuation allowance	(376,224		)	(391,629	)
Deferred tax assets, net of valuation allowance	29,042			19,121
Deferred tax liabilities:
Servicing rights	2,632			2,418
Net fair value adjustment for available-for-sale investment securities	21,214			10,466
Deferred gain on reclassification of investment securities from available for sale to held to maturity	4,265			—
Equity investments	5,364			5,366
State taxes	—			4,577
Net deferred loan fees	1,903			2,779
Other	804			655
Deferred tax liabilities	36,182			26,261
Net deferred tax liabilities	$	(7,140	)	(7,140	)

The realization of the Company’s net deferred tax assets is based on the expectation of future taxable income and the utilization of tax planning strategies. The Company has a full valuation allowance against its net deferred tax assets at December 31, 2012 and 2011. The deferred tax asset valuation allowance was recorded in accordance with ASC Topic 740, “Income Taxes.” Under ASC Topic 740, the Company is required to assess whether it is “more likely than not” that some portion or all of its deferred tax assets will not be realized. Pursuant to ASC Topic 740, concluding that a deferred tax asset valuation allowance is not required is difficult when there is significant evidence which is objective and verifiable, such as the lack of recoverable taxes, excess of reversing deductible differences over reversing taxable differences and cumulative losses in recent years. If, in the future, the Company generates taxable income on a sustained basis, management may conclude the deferred tax asset valuation allowance is no longer required, which would result in the reversal of a portion or all of the deferred tax asset valuation allowance, which would be reflected as a benefit for income taxes in the consolidated statements of operations.

Changes in the deferred tax asset valuation allowance for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	391,629		370,125		295,067
Reversal of deferred tax asset valuation allowance to provision for income taxes	(643		)	(115	)	(1,189	)
(Decrease) increase in deferred tax asset valuation allowance to provision for income taxes	(468		)	31,621		73,928
(Decrease) increase in deferred tax asset valuation allowance to accumulated other comprehensive income (loss)	(14,294		)	(10,002	)	2,319
Balance, end of year	$	376,224		391,629		370,125

At December 31, 2012 and 2011, the Company’s unrecognized tax benefits for uncertain tax positions, excluding interest and penalties, were $1.1 million and $1.2 million, respectively. A reconciliation of the beginning and ending balance of these unrecognized tax benefits for the years ended December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	1,194		1,276
Additions:
Tax positions taken during the current year	217			232
Tax positions taken during the prior year	—			—
Reductions:
Tax positions taken during the prior year	(14		)	(8	)
Allocated to discontinued operations	—			—
Lapse of statute of limitations	(271		)	(306	)
Balance, end of year	$	1,126		1,194

At December 31, 2012 and 2011, the total amount of unrecognized tax benefits that would affect the provision for income taxes, prior to the consideration of the deferred tax asset valuation allowance, was $740,000 and $784,000, respectively. It is the Company’s policy to separately disclose any interest or penalties arising from the application of federal or state income taxes. Interest related to unrecognized tax benefits is included in interest expense and penalties related to unrecognized tax benefits are included in noninterest expense. At December 31, 2012 and 2011, interest accrued for uncertain tax positions was $116,000 and $136,000, respectively. The Company recorded a reduction to interest expense of $20,000, $44,000 and $1.0 million related to unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010, respectively. There were no penalties for uncertain tax positions accrued at December 31, 2012 and 2011, nor did the Company recognize any expense for such penalties in 2012, 2011 and 2010.

The Company continually evaluates the unrecognized tax benefits associated with its uncertain tax positions. It is reasonably possible that the total unrecognized tax benefits as of December 31, 2012 could decrease by approximately $234,000 by December 31, 2013 as a result of the lapse of statutes of limitations or potential settlements with the federal and state taxing authorities, of which the impact to the provision for income taxes, prior to the consideration of the deferred tax asset valuation allowance, is estimated to be approximately $153,000. It is also reasonably possible that this decrease could be substantially offset by new matters arising during the same period.

The Company files consolidated and separate income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. Management of the Company believes the accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. This assessment relies on estimates and assumptions. The Company’s federal income tax returns through 2008 have been examined by the IRS. Years subsequent to 2008 could contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing or inclusion of revenue and expenses. The Company has recorded a tax benefit only for those positions that meet the “more likely than not” standard. The Company’s current estimate of the resolution of various state examinations, none of which are in process, is reflected in accrued income taxes; however, final settlement of the examinations or changes in the Company’s estimate may result in future income tax expense or benefit.

The Company is no longer subject to U.S. federal and Illinois income tax examination for the years prior to 2009 and is no longer subject to California, Florida, Missouri and various other state income tax examination by the tax authorities for the years prior to 2008. The Company had a federal tax examination for tax years through 2008, which was closed during 2010, and a California tax examination for the 2004 and 2005 tax years, which was closed during 2008. An Illinois tax examination of the 2007 and 2008 tax years was completed during 2011 with no changes to the returns as originally filed. A California tax examination for the 2005 and 2006 tax years was completed during 2012 with no changes to the amended returns as filed. The Company is currently under examination of the 2007 and 2008 tax years for its Texas returns. While the statute of limitations for the 2008 tax year has expired for the majority of the states in which the Company is subject to income tax, the Company generated net operating loss carryforwards in 2008 which, if realized, are subject to examination in order to validate the net operating loss carryforward. Thus, while closed, the 2008 tax year for these states is still subject to examination. The statute of limitations will expire for 2008 when the statute of limitations expires for the year the net operating loss carryforward is realized.

The Company recorded a benefit for income taxes of $10.5 million during the year ended December 31, 2011 related to an intraperiod tax allocation between other comprehensive income and loss from continuing operations, primarily driven by market appreciation in the Company’s investment securities portfolio.

The Company had an accumulated other comprehensive loss of $6.8 million related to the establishment of a deferred tax asset valuation allowance regarding the unrealized gain on certain interest rate swap agreements that were designated as cash flow hedges on certain loans, as further described in Note 8 to the consolidated financial statements. In the third quarter of 2010, the Company recorded a provision for incomes taxes of $6.8 million related to the expiration of the amortization period of the unrealized gain on the interest rate swap agreements with a corresponding increase to accumulated other comprehensive income.

At December 31, 2012 and 2011, the accumulation of prior years’ earnings representing tax bad debt deductions was $29.8 million. If these tax bad debt reserves were charged for losses other than bad debt losses, the Company would be required to recognize taxable income in the amount of the charge. It is not contemplated that such tax-restricted retained earnings will be used in a manner that would create federal income tax liabilities.

At December 31, 2012 and 2011, for federal income tax purposes, the Company had net operating loss carryforwards of approximately $597.7 million and $539.2 million, respectively. At December 31, 2012, the Company’s federal net operating loss carryforwards expire as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013 – 2016	$	—
2017 – 2020	5,256
2021 – 2026	43,105
2028 – 2032	549,325
Total	$	597,686

At December 31, 2012 and 2011, for state income tax purposes, the Company had net operating loss carryforwards of approximately $786.4 million and $702.8 million, respectively, and a related deferred tax asset of $65.9 million and $58.3 million, respectively. The state net operating loss carryforwards are primarily from the states of California, Florida, Illinois and Missouri and expire from 2019 to 2032.

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Allowance for Credit Losses on Financing Receivables) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Receivables [Abstract]
Balance, beginning of year	$ 137,710	$ 201,033	$ 266,448
Allowance for loan losses allocated to loans sold	0	0	(321)
Allowance for loan losses, net of losses allocated to loans sold	137,710	201,033	266,127
Loans charged-off	(78,070)	(154,627)	(331,196)
Recoveries of loans previously charged-off	29,962	22,304	52,102
Net loans charged-off	(48,108)	(132,323)	(279,094)
Provision for loan losses	2,000	69,000	214,000
Balance, end of year	$ 91,602	$ 137,710	$ 201,033

XML

TRANSACTIONS WITH RELATED PARTIES (Narrative 1) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
First Services L.P.
Service fees paid	$ 21,100,000	$ 24,500,000	$ 26,200,000
First Services L.P. | Affiliate Services Agreement
Fees receivable	183,000	177,000	157,000
First Services L.P. | Equipment
Proceeds from rental payments	1,300,000	1,900,000	2,500,000
First Services L.P. | Premises
Payments for rent	1,800,000	1,800,000	1,900,000
First Brokerage America L.L.C.
Commissions received from unaffliated third party companies	4,300,000	5,300,000	5,000,000
First Brokerage America L.L.C. | Premises
Proceeds from rental payments	401,000	491,000	312,000
Dierbergs Markets, Inc.
Rent expense	$ 498,000	$ 474,000	$ 462,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities:
Net income (loss) attributable to First Banks, Inc.	$ 26,278	$ (41,150)	$ (191,737)
Net loss attributable to noncontrolling interest in subsidiary	(297)	(2,950)	(6,514)
Less: net (loss) income from discontinued operations	(5,523)	(6,459)	3,562
Net income (loss) from continuing operations	31,504	(37,641)	(201,813)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of bank premises and equipment	12,079	13,445	16,537
Amortization of intangible assets	0	3,024	3,292
Amortization and accretion of investment securities	17,412	11,934	6,267
Originations of loans held for sale	(470,119)	(274,254)	(396,855)
Proceeds from sales of loans held for sale	442,476	301,343	385,109
Provision for loan losses	2,000	69,000	214,000
(Benefit) provision for current income taxes	(32)	181	(437)
Provision (benefit) for deferred income taxes	6,638	(23,521)	(70,845)
(Decrease) increase in deferred tax asset valuation allowance	(6,745)	12,686	75,396
Decrease in accrued interest receivable	4,000	3,884	5,732
Increase in accrued interest payable	12,106	7,890	4,079
Gain on loans sold and held for sale	(12,931)	(5,176)	(9,516)
Net gain on investment securities	(1,306)	(5,335)	(8,315)
Decrease in fair value of servicing rights	5,475	7,652	5,558
Write-downs on other real estate and repossessed assets	14,510	16,922	34,680
Other operating activities, net	4,356	20,945	11,785
Net cash provided by operating activities – continuing operations	61,423	122,979	74,654
Net cash used in operating activities – discontinued operations	(5,241)	(6,626)	(5,083)
Net cash provided by operating activities	56,182	116,353	69,571
Cash flows from investing activities:
Net cash paid for sale of assets and liabilities of discontinued operations, net of cash and cash equivalents sold	0	(51,339)	(1,400,472)
Cash paid for sale of branches, net of cash and cash equivalents sold	0	(16,256)	(8,408)
Proceeds from sales of investment securities available for sale	315,238	283,713	249,209
Maturities and calls of investment securities available for sale	684,639	341,179	189,887
Maturities and calls of investment securities held to maturity	107,061	1,660	2,418
Purchases of investment securities available for sale	(1,296,857)	(1,587,313)	(1,419,739)
Purchases of investment securities held to maturity	0	(3,450)	0
Net (purchases) redemptions of Federal Reserve Bank and Federal Home Loan Bank stock	(251)	3,043	34,955
Proceeds from sales of commercial loans	55,081	65,867	107,414
Cash paid for purchase of one-to-four-family residential real estate loans	(141,048)	0	0
Net decrease in loans	367,233	884,010	1,309,598
Recoveries of loans previously charged-off	29,962	22,304	52,102
Purchases of bank premises and equipment	(5,906)	(5,170)	(4,024)
Net proceeds from sales of other real estate and repossessed assets	48,531	65,398	108,321
Proceeds from termination of bank-owned life insurance policy	0	0	25,957
Other investing activities, net	295	2,109	3,621
Net cash provided by (used in) investing activities – continuing operations	163,978	5,755	(749,161)
Net cash (used in) provided by investing activities – discontinued operations	(92)	3,030	50,052
Net cash provided by (used in) investing activities	163,886	8,785	(699,109)
Cash flows from financing activities:
Increase (decrease) in demand, savings and money market deposits	118,479	(86,668)	83,838
Decrease in time deposits	(248,687)	(528,795)	(189,783)
Repayments of Federal Home Loan Bank advances	0	0	(600,000)
(Decrease) increase in other borrowings	(25,145)	19,416	(134,958)
Net cash used in financing activities – continuing operations	(155,353)	(596,047)	(840,903)
Net cash used in financing activities – discontinued operations	(19,009)	(51,709)	(50,052)
Net cash used in financing activities	(174,362)	(647,756)	(890,955)
Net increase (decrease) in cash and cash equivalents	45,706	(522,618)	(1,520,493)
Cash and cash equivalents, beginning of year	473,140	995,758	2,516,251
Cash and cash equivalents, end of year	518,846	473,140	995,758
Supplemental disclosures of cash flow information:
Cash paid for interest on liabilities	17,982	36,649	71,941
Cash received for income taxes	(661)	(239)	(1,873)
Noncash investing and financing activities:
Reclassification of investment securities from available for sale to held to maturity	729,142	0	0
Loans transferred to other real estate and repossessed assets	24,223	69,941	158,889
Bank premises and equipment transferred to other real estate and repossessed assets	$ 0	$ 6,537	$ 0

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) [Parenthetical] (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Held-to-maturity securities, fair value (in dollars)	$ 637,024	$ 13,424
Common stock, par value (in dollars per share)	$ 250	$ 250
Common stock, shares authorized	25,000	25,000
Common stock, shares issued	23,661	23,661
Common stock, shares outstanding	23,661	23,661
Class A Convertible Adjustable Rate Preferred Stock
Preferred stock, par value (in dollars per share)	$ 20	$ 20
Preferred stock, shares authorized	750,000	750,000
Preferred stock, shares issued	641,082	641,082
Preferred stock, shares outstanding	641,082	641,082
Class B Adjustable Rate Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1.50	$ 1.50
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	160,505	160,505
Preferred stock, shares outstanding	160,505	160,505
Class C Fixed Rate Cumulative Perpetual Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	295,400	295,400
Preferred stock, shares issued	295,400	295,400
Preferred stock, shares outstanding	295,400	295,400
Class D Fixed Rate Cumulative Perpetual Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	14,770	14,770
Preferred stock, shares issued	14,770	14,770
Preferred stock, shares outstanding	14,770	14,770

XML

OTHER BORROWINGS

12 Months Ended

Dec. 31, 2012

Other Borrowings [Abstract]

OTHER BORROWINGS

OTHER BORROWINGS

Other borrowings were comprised solely of daily securities sold under agreement to repurchase of $26.0 million and $51.2 million at December 31, 2012 and 2011, respectively. First Bank had no outstanding FHLB advances as of and for the years ended December 31, 2012 and 2011.

The average balance of other borrowings was $33.0 million and $47.0 million, and the maximum month-end balance of other borrowings was $57.7 million and $59.6 million for the years ended December 31, 2012 and 2011, respectively.

The average rates paid on other borrowings during the years ended December 31, 2012, 2011 and 2010 were (0.05)%, 0.03% and 1.52%, respectively. The negative average rate paid on other borrowings during the year ended December 31, 2012 resulted from the reversal of accrued interest related to unrecognized tax benefits associated with FASB Interpretation No. 48, as more fully discussed in Note 17 to the consolidated financial statements. Interest expense on securities sold under agreements to repurchase was $33,000, $82,000 and $3.6 million for the years ended December 31, 2012, 2011 and 2010, respectively. Interest expense on FHLB advances was $5.4 million for the year ended December 31, 2010.

XML

INCOME TAXES (Schedule of Unrecognized Tax Benefits Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance, beginning of year	$ 1,194	$ 1,276
Additions: Tax positions taken during the current year	217	232
Additions: Tax positions taken during the prior year	0	0
Reductions: Tax positions taken during the prior year	(14)	(8)
Reductions: Allocated to discontinued operations	0	0
Reductions: Lapse of statute of limitations	(271)	(306)
Balance, end of year	$ 1,126	$ 1,194

XML

FAIR VALUE DISCLOSURES (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Total gains or losses (realized/unrealized):
Included in earnings	$ 5,475		$ 7,652		$ 5,558
Fair Value, Inputs, Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of year	15,380		19,582
Total gains or losses (realized/unrealized):
Included in earnings	(5,475)	[1]	(7,652)	[1]
Included in other comprehensive income (loss)	0		0
Issuances	4,887		3,450
Transfers in and/or out of level 3	0		0
Balance, end of year	$ 14,792		$ 15,380

[1] Gains or losses (realized/unrealized) are included in noninterest income in the consolidated statements of operations.

XML

REGULATORY CAPITAL AND OTHER REGULATORY MATTERS (Details Textual)	Dec. 31, 2012	Dec. 31, 2011
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 capital to total assets, percentage	9.20%	8.37%
Minimum
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 capital to total assets, percentage	7.00%

XML

PARENT COMPANY ONLY FINANCIAL INFORMATION (CONDENSED STATEMENTS OF CASH FLOWS) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
Net income (loss) attributable to First Banks, Inc.	$ 26,278	$ (41,150)	$ (191,737)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Other, net	4,356	20,945	11,785
Net cash provided by operating activities	56,182	116,353	69,571
Cash flows from investing activities:
Net cash provided by (used in) investing activities	163,886	8,785	(699,109)
Cash flows from financing activities:
Net cash used in financing activities	(174,362)	(647,756)	(890,955)
Net increase (decrease) in cash and cash equivalents	45,706	(522,618)	(1,520,493)
Cash and cash equivalents, beginning of year	473,140	995,758	2,516,251
Cash and cash equivalents, end of year	518,846	473,140	995,758
Noncash investing activities:
Cash paid for interest	17,982	36,649	71,941
Parent Company
Condensed Financial Statements, Captions [Line Items]
Net income (loss) attributable to First Banks, Inc.	26,278	(41,150)	(191,737)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net (income) loss of subsidiaries	(41,745)	28,290	178,474
Other, net	15,410	12,042	6,012
Net cash provided by operating activities	(57)	(818)	(7,251)
Cash flows from investing activities:
Decrease in available-for-sale investment securities	0	0	3,570
Net cash provided by (used in) investing activities	0	0	3,570
Cash flows from financing activities:
Capital contributions to subsidiaries	0	0	(100)
Payment of preferred stock dividends	0	0	0
Net cash used in financing activities	0	0	(100)
Net increase (decrease) in cash and cash equivalents	(57)	(818)	(3,781)
Cash and cash equivalents, beginning of year	2,801	3,619	7,400
Cash and cash equivalents, end of year	2,744	2,801	3,619
Noncash investing activities:
Cash paid for interest	$ 0	$ 0	$ 0

XML

DOCUMENT AND ENTITY INFORMATION (USD $)	12 Months Ended
	Dec. 31, 2012	Mar. 26, 2013
Document and Entity Informaion [Abstract]
Entity Registrant Name	FIRST BANKS, INC
Entity Central Index Key	0000710507
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Trading Symbol	fbspra
Entity Common Stock, Shares Outstanding		23,661
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2012
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	Yes
Entity Current Reporting Status	Yes
Entity Public Float		$ 0

XML

NOTES PAYABLE

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTES PAYABLE

On March 24, 2011, the Company entered into a Revolving Credit Note and a Stock Pledge Agreement (the Credit Agreement) with Investors of America Limited Partnership (Investors of America, LP), a Nevada limited partnership created by and for the benefit of the Company’s Chairman and members of his immediate family, as further described in Note 20 to the consolidated financial statements. The Credit Agreement provided for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which had an interest rate of the London Interbank Offered Rate (LIBOR) plus 300 basis points, was intended to supplement, if necessary, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses. There were no balances outstanding under this Credit Agreement during the period from its inception in March 2011 to its maturity date on December 31, 2012.

On March 20, 2013, the Company entered into a new Revolving Credit Note and a Stock Pledge Agreement (the New Credit Agreement) with Investors of America LP, as further described in Note 25 to our consolidated financial statements. The agreement provides for a $5.0 million secured revolving line of credit to be utilized for general working capital needs. This borrowing arrangement, which has a maturity date of March 31, 2014 and an interest rate of LIBOR plus 300 basis points, is intended to supplement, on a contingent basis, the parent company’s overall level of unrestricted cash to cover the parent company’s projected operating expenses should the parent company’s existing cash resources become insufficient in the future.

XML

DERIVATIVE INSTRUMENTS (Schedule of Interest Rate Derivatives) (Details) (Interest rate swap agreements, USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Derivative [Line Items]
Notional Amount	$ 50,000
Interest Rate Paid	5.14%
Interest Rate Received	2.50%
Fair Value	(807)
Maturity Date March 30, 2012
Derivative [Line Items]
Notional Amount	25,000
Interest Rate Paid	4.71%
Interest Rate Received	2.19%
Fair Value	(159)
Maturity Date December 15, 2012
Derivative [Line Items]
Notional Amount	25,000
Interest Rate Paid	5.57%
Interest Rate Received	2.80%
Fair Value	$ (648)

XML

REGULATORY CAPITAL AND OTHER REGULATORY MATTERS (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
First Banks, Inc.
Total capital (to risk-weighted assets):
Total capital	$ 93,542	$ 73,830
Total capital to risk-weighted assets, percentage	2.57%	1.88%
Total capital required for capital adequacy purposes, percentage	8.00%
Tier 1 capital (to risk-weighted assets):
Tier 1 capital	46,771	36,915
Tier 1 capital to risk-weighted assets, percentage	1.28%	0.94%
Tier 1 capital required for capital adequacy purposes, percentage	4.00%
Tier 1 capital (to average assets):
Tier 1 capital	46,771	36,915
Tier 1 capital to average assets, percentage	0.73%	0.56%
Tier 1 capital required for capital adequacy purposes, percentage	4.00%
First Bank
Total capital (to risk-weighted assets):
Total capital	626,177	588,860
Total capital to risk-weighted assets, percentage	17.18%	14.98%
Total capital required for capital adequacy purposes, percentage	8.00%
Total capital required to be well capitalized under prompt corrective action provisions, percentage	10.00%
Tier 1 capital (to risk-weighted assets):
Tier 1 capital	580,026	538,592
Tier 1 capital to risk-weighted assets, percentage	15.92%	13.70%
Tier 1 capital required for capital adequacy purposes, percentage	4.00%
Tier 1 capital required to be well capitalized under prompt corrective action provisions, percentage	6.00%
Tier 1 capital (to average assets):
Tier 1 capital	$ 580,026	$ 538,592
Tier 1 capital to average assets, percentage	9.13%	8.19%
Tier 1 capital required for capital adequacy purposes, percentage	4.00%
Tier 1 capital required to be well capitalized under prompt corrective action provisions, percentage	5.00%

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest income:
Interest and fees on loans	$ 143,765	$ 184,593	$ 281,654
Investment securities:
Taxable	56,547	45,172	24,612
Nontaxable	287	481	595
Federal Reserve Bank and Federal Home Loan Bank stock	1,146	1,416	2,063
Short-term investments	820	1,634	3,544
Total interest income	202,565	233,296	312,468
Deposits:
Interest-bearing demand	569	1,023	1,409
Savings and money market	3,535	8,577	13,959
Time deposits of $100 or more	4,153	8,068	15,257
Other time deposits	7,002	13,233	24,539
Other borrowings	(18)	15	7,844
Subordinated debentures	14,847	13,623	13,012
Total interest expense	30,088	44,539	76,020
Net interest income	172,477	188,757	236,448
Provision for loan losses	2,000	69,000	214,000
Net interest income after provision for loan losses	170,477	119,757	22,448
Noninterest income:
Service charges on deposit accounts and customer service fees	36,197	39,101	42,370
Gain on loans sold and held for sale	12,931	5,176	9,516
Net gain on investment securities	1,306	5,335	8,315
Decrease in fair value of servicing rights	(5,475)	(7,652)	(5,558)
Loan servicing fees	7,403	8,271	8,783
Other	13,844	11,963	15,066
Total noninterest income	66,206	62,194	78,492
Noninterest expense:
Salaries and employee benefits	77,788	79,518	84,101
Occupancy, net of rental income	21,911	23,887	26,675
Furniture and equipment	11,498	11,781	13,802
Postage, printing and supplies	2,721	2,777	3,379
Information technology fees	22,446	25,804	27,745
Legal, examination and professional fees	8,890	12,215	13,818
Amortization of intangible assets	0	3,024	3,292
Advertising and business development	2,125	1,868	1,479
FDIC insurance	12,436	16,103	21,664
Write-downs and expenses on other real estate and repossessed assets	18,672	22,983	44,662
Other	26,831	30,286	58,022
Total noninterest expense	205,318	230,246	298,639
Income (loss) from continuing operations, before (benefit) provision for income taxes	31,365	(48,295)	(197,699)
(Benefit) provision for income taxes	(139)	(10,654)	4,114
Net income (loss) from continuing operations, net of tax	31,504	(37,641)	(201,813)
(Loss) income from discontinued operations, net of tax	(5,523)	(6,459)	3,562
Net income (loss)	25,981	(44,100)	(198,251)
Less: net loss attributable to noncontrolling interest in subsidiary	(297)	(2,950)	(6,514)
Net income (loss) attributable to First Banks, Inc.	26,278	(41,150)	(191,737)
Preferred stock dividends declared and undeclared	18,886	17,908	16,980
Net income (loss) available to common stockholders	$ 3,838	$ (62,524)	$ (212,098)
Basic and diluted earnings (loss) per common share from continuing operations (in dollars per share)	$ 395.64	$ (2,369.48)	$ (9,114.61)
Basic and diluted (loss) earnings per common share from discontinued operations (in dollars per share)	$ (233.42)	$ (272.98)	$ 150.54
Basic and diluted earnings (loss) per common share (in dollars per share)	$ 162.22	$ (2,642.46)	$ (8,964.07)
Weighted average shares of common stock outstanding (in shares)	23,661	23,661	23,661

XML

BANK PREMISES AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

BANK PREMISES AND EQUIPMENT, NET

BANK PREMISES AND EQUIPMENT, NET

Bank premises and equipment, net of accumulated depreciation and amortization, were comprised of the following at December 31, 2012 and 2011:

	2012			2011
	(dollars expressed in thousands)
Land	$	33,324		34,211
Buildings and improvements	134,428			136,728
Furniture, fixtures and equipment	99,116			102,776
Leasehold improvements	12,014			12,012
Construction in progress	1,878			672
Total	280,760			286,399
Accumulated depreciation and amortization	(153,240		)	(149,200	)
Bank premises and equipment, net	$	127,520		137,199

The Company capitalized interest cost of $31,000, $23,000 and $42,000 during the years ended December 31, 2012, 2011 and 2010, respectively.

Depreciation and amortization expense for the years ended December 31, 2012, 2011 and 2010 was $12.1 million, $13.4 million and $16.5 million, respectively.

The Company leases land, office properties and equipment under operating leases. Certain of the leases contain renewal options and escalation clauses. Total rent expense was $11.5 million, $13.0 million and $14.5 million for the years ended December 31, 2012, 2011 and 2010, respectively. Future minimum lease payments under non-cancellable operating leases extend through 2027 as follows:

	(dollars expressed in thousands)
Year ending December 31(1):
2013	$	8,979
2014	7,330
2015	5,550
2016	4,766
2017	2,913
Thereafter	12,765
Total future minimum lease payments	$	42,303

(1) Amounts exclude future minimum lease payments under non-cancellable operating leases associated with assets and liabilities of discontinued operations of $1.0 million, $1.1 million, $1.0 million, $900,000 and $900,000 for the years ended December 31,2013, 2014, 2015, 2016 and 2017, respectively, and $2.9 million thereafter, or a total of $7.8 million.

The Company also leases to unrelated parties a portion of its banking facilities. Rental income associated with these leases was $4.1 million, $4.4 million and $5.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOANSAND ALLOWANCEFOR LOAN LOSSES

The following table summarizes the composition of the loan portfolio at December 31, 2012 and 2011:

	2012			2011
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	610,301		725,195
Real estate construction and development	174,979			249,987
Real estate mortgage:
One-to-four-family residential	986,767			902,438
Multi-family residential	103,684			127,356
Commercial real estate	969,680			1,225,538
Consumer and installment	19,262			23,596
Loans held for sale	66,133			31,111
Net deferred loan fees	(59		)	(942	)
Loans, net of net deferred loan fees	$	2,930,747		3,284,279

The Company's loan portfolio is primarily comprised of residential and commercial real estate loans, and commercial, financial and agricultural loans. The Company primarily lends to borrowers within its primary market areas of California, Florida, southern Illinois and eastern Missouri. The Company maintains a diversified portfolio with limited industry concentrations of credit risk. Real estate lending constitutes the only significant concentration of credit risk. Real estate loans comprised approximately 79% and 77% of the loan portfolio at December 31, 2012 and 2011, respectively, of which 46% and 37%, respectively, were made to consumers in the form of residential real estate mortgages and home equity lines of credit. First Bank also offers residential real estate mortgage loans with terms that require interest only payments. At December 31, 2012, the balance of such loans, all of which were held for portfolio, was approximately $25.3 million, of which approximately 5.1% were delinquent. At December 31, 2011, the balance of such loans, all of which were held for portfolio, was approximately $40.2 million, of which approximately 14.5% were delinquent. In general, the Company is a secured lender. At December 31, 2012 and 2011, 99.0% of the loan portfolio was collateralized. Collateral is required in accordance with the normal credit evaluation process based upon the creditworthiness of the customer and the credit risk associated with the particular transaction. First Bank also originates certain one-to-four-family residential mortgage loans for sale in the secondary market. First Bank has a repurchase obligation on these loans in the event of fraud or, on certain loans, early payment default. The early payment default provisions generally range from four months to one year after sale of the loan in the secondary market. First Bank has not sold any one-to-four-family residential mortgage loans into the secondary market with early payment default provisions since 2007.

Loans to directors, their affiliates and executive officers of the Company were approximately $9.1 million and $23.4 million at December 31, 2012 and 2011, respectively, as further described in Note 20 to the consolidated financial statements.

Loans with a carrying value of approximately $1.17 billion and $1.40 billion at December 31, 2012 and 2011, respectively, were pledged as collateral under borrowing arrangements with the FRB and the FHLB. At December 31, 2012 and 2011, First Bank had no outstanding advances under these borrowing arrangements.

Aging of Loans. The following table presents the aging of loans by loan classification at December 31, 2012 and 2011:

	30-59 Days		60-89 Days	Recorded Investment > 90 Days Accruing	Nonaccrual	Total Past Due	Current	Total Loans
	(dollars expressed in thousands)
December 31, 2012:
Commercial, financial and agricultural	$	1,180	322	—	19,050	20,552	589,749	610,301
Real estate construction and development	93		—	—	32,152	32,245	142,734	174,979
One-to-four-family residential:
Bank portfolio	1,871		1,121	874	6,910	10,776	111,562	122,338
Mortgage Division portfolio	6,264		4,375	—	19,780	30,419	479,552	509,971
Home equity	2,494		1,221	216	8,671	12,602	341,856	354,458
Multi-family residential	—		629	—	6,761	7,390	96,294	103,684
Commercial real estate	66		693	—	16,520	17,279	952,401	969,680
Consumer and installment	174		43	—	28	245	18,958	19,203
Loans held for sale	—		—	—	—	—	66,133	66,133
Total	$	12,142	8,404	1,090	109,872	131,508	2,799,239	2,930,747
December 31, 2011:
Commercial, financial and agricultural	$	1,602	2,085	1,095	55,340	60,122	665,073	725,195
Real estate construction and development	170		3,033	—	71,244	74,447	175,540	249,987
One-to-four-family residential:
Bank portfolio	4,506		2,577	362	14,690	22,135	143,443	165,578
Mortgage Division portfolio	5,994		1,571	—	16,778	24,343	342,572	366,915
Home equity	3,990		2,151	856	6,940	13,937	356,008	369,945
Multi-family residential	—		118	—	7,975	8,093	119,263	127,356
Commercial real estate	3,888		7,092	427	47,262	58,669	1,166,869	1,225,538
Consumer and installment	396		192	4	22	614	22,040	22,654
Loans held for sale	—		—	—	—	—	31,111	31,111
Total	$	20,546	18,819	2,744	220,251	262,360	3,021,919	3,284,279

Under the Company’s loan policy, loans are placed on nonaccrual status once principal or interest payments become 90 days past due. However, individual loan officers may submit written requests for approval to continue the accrual of interest on loans that become 90 days past due. These requests may be submitted for approval consistent with the authority levels provided in the Company’s credit approval policies, and they are only granted if an expected near term future event, such as a pending renewal or expected payoff, exists at the time the loan becomes 90 days past due. If the expected near term future event does not occur as anticipated, the loan is then placed on nonaccrual status.

Credit Quality Indicators. The Company’s credit management policies and procedures focus on identifying, measuring and controlling credit exposure. These procedures employ a lender-initiated system of rating credits, which is ratified in the loan approval process and subsequently tested in internal credit reviews, external audits and regulatory bank examinations. The system requires the rating of all loans at the time they are originated or acquired, except for homogeneous categories of loans, such as residential real estate mortgage loans and consumer loans. These homogeneous loans are assigned an initial rating based on the Company’s experience with each type of loan. The Company adjusts the ratings of the homogeneous loans based on payment experience subsequent to their origination.

The Company includes adversely rated credits, including loans requiring close monitoring that would not normally be considered classified credits by the Company’s regulators, on its monthly loan watch list. Loans may be added to the Company’s watch list for reasons that are temporary and correctable, such as the absence of current financial statements of the borrower or a deficiency in loan documentation. Loans may also be added to the Company’s watch list whenever any adverse circumstance is detected which might affect the borrower’s ability to comply with the contractual terms of the loan. The delinquency of a scheduled loan payment, deterioration in the borrower’s financial condition identified in a review of periodic financial statements, a decrease in the value of the collateral securing the loan, or a change in the economic environment within which the borrower operates could initiate the addition of a loan to the Company’s watch list. Loans on the Company’s watch list require periodic detailed loan status reports prepared by the responsible officer which are discussed in formal meetings with credit review and credit administration staff members. Upgrades and downgrades of loan risk ratings may be initiated by the responsible loan officer. However, upgrades of risk ratings associated with significant credit relationships and/or problem credit relationships may only be made with the concurrence of appropriate regional credit officers.

Under the Company’s risk rating system, special mention loans are those loans that do not currently expose the Company to sufficient risk to warrant classification as substandard, troubled debt restructuring (TDR) or nonaccrual, but possess weaknesses that deserve management’s close attention. Substandard loans include those loans characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. A loan is classified as a TDR when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs which are accruing interest are classified as performing TDRs. Loans classified as TDRs which are not accruing interest are classified as nonperforming TDRs and are included with all other nonaccrual loans for presentation purposes. Loans classified as nonaccrual have all the weaknesses inherent in those loans classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following tables present the credit exposure of the loan portfolio by internally assigned credit grade and payment activity as of December 31, 2012 and 2011:

Commercial Loan Portfolio Credit Exposure by Internally Assigned Credit Grade	Commercial and Industrial		Real Estate Construction and Development	Multi-family	Commercial Real Estate	Total
			(dollars expressed in thousands)
December 31, 2012:
Pass	$	572,248	45,356	67,690	858,101	1,543,395
Special mention	10,580		6,076	220	70,450	87,326
Substandard	8,423		81,364	773	13,868	104,428
Performing troubled debt restructuring	—		10,031	28,240	10,741	49,012
Nonaccrual	19,050		32,152	6,761	16,520	74,483
Total	$	610,301	174,979	103,684	969,680	1,858,644
December 31, 2011:
Pass	$	606,998	57,594	68,748	973,553	1,706,893
Special mention	25,742		11,977	18,678	119,478	175,875
Substandard	32,851		97,158	28,789	60,876	219,674
Performing troubled debt restructuring	4,264		12,014	3,166	24,369	43,813
Nonaccrual	55,340		71,244	7,975	47,262	181,821
Total	$	725,195	249,987	127,356	1,225,538	2,328,076

One-to-Four-Family Residential Mortgage Bank and Home Equity Loan Portfolio Credit Exposure by Internally Assigned Credit Grade	Bank Portfolio		Home Equity	Total
	(dollars expressed in thousands)
December 31, 2012:
Pass	$	107,625	342,321	449,946
Special mention	4,405		216	4,621
Substandard	1,787		3,250	5,037
Performing troubled debt restructuring	1,611		—	1,611
Nonaccrual	6,910		8,671	15,581
Total	$	122,338	354,458	476,796
December 31, 2011:
Pass	$	131,973	358,801	490,774
Special mention	12,797		954	13,751
Substandard	6,118		3,250	9,368
Nonaccrual	14,690		6,940	21,630
Total	$	165,578	369,945	535,523

One-to-Four-Family Residential Mortgage Division and Consumer and Installment Loan Portfolio Credit Exposure by Payment Activity	Mortgage Division Portfolio		Consumer and Installment	Total
	(dollars expressed in thousands)
December 31, 2012:
Pass	$	405,270	19,175	424,445
Substandard	6,627		—	6,627
Performing troubled debt restructuring	78,294		—	78,294
Nonaccrual	19,780		28	19,808
Total	$	509,971	19,203	529,174
December 31, 2011:
Pass	$	263,079	22,632	285,711
Substandard	4,429		—	4,429
Performing troubled debt restructuring	82,629		—	82,629
Nonaccrual	16,778		22	16,800
Total	$	366,915	22,654	389,569

Impaired Loans. Loans deemed to be impaired include performing TDRs and nonaccrual loans. Impaired loans with outstanding balances equal to or greater than $500,000 are evaluated individually for impairment. For these loans, the Company measures the level of impairment based on the present value of the estimated projected cash flows or the estimated value of the collateral. If the current valuation is lower than the current book balance of the loan, the amount of the difference is evaluated for possible charge-off. In instances where management determines that a charge-off is not appropriate, a specific reserve is established for the individual loan in question. This specific reserve is included as a part of the overall allowance for loan losses.

The following tables present the recorded investment, unpaid principal balance, related allowance for loan losses, average recorded investment and interest income recognized while on impaired status for impaired loans without a related allowance for loan losses and for impaired loans with a related allowance for loan losses by loan classification at December 31, 2012 and 2011:

	Recorded Investment		Unpaid Principal Balance	Related Allowance for Loan Losses	Average Recorded Investment	Interest Income Recognized
	(dollars expressed in thousands)
December 31, 2012:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	6,451	24,287	—	12,369	215
Real estate construction and development	39,706		74,044	—	59,094	561
Real estate mortgage:
Bank portfolio	1,611		1,690	—	2,166	32
Mortgage Division portfolio	10,255		22,102	—	10,308	—
Home equity portfolio	1,382		1,507	—	1,232	—
Multi-family residential	33,709		37,206	—	13,682	280
Commercial real estate	18,808		24,279	—	35,959	1,160
Consumer and installment	—		—	—	—	—
	111,922		185,115	—	134,810	2,248
With A Related Allowance Recorded:
Commercial, financial and agricultural	12,599		19,255	676	24,157	—
Real estate construction and development	2,477		10,221	1,452	3,687	114
Real estate mortgage:
Bank portfolio	6,910		8,655	284	9,288	—
Mortgage Division portfolio	87,819		96,931	11,574	88,277	2,050
Home equity portfolio	7,289		8,188	1,784	6,500	—
Multi-family residential	1,292		1,403	1,138	524	—
Commercial real estate	8,453		12,909	1,043	16,161	11
Consumer and installment	28		28	1	51	—
	126,867		157,590	17,952	148,645	2,175
Total:
Commercial, financial and agricultural	19,050		43,542	676	36,526	215
Real estate construction and development	42,183		84,265	1,452	62,781	675
Real estate mortgage:
Bank portfolio	8,521		10,345	284	11,454	32
Mortgage Division portfolio	98,074		119,033	11,574	98,585	2,050
Home equity portfolio	8,671		9,695	1,784	7,732	—
Multi-family residential	35,001		38,609	1,138	14,206	280
Commercial real estate	27,261		37,188	1,043	52,120	1,171
Consumer and installment	28		28	1	51	—
	$	238,789	342,705	17,952	283,455	4,423

	Recorded Investment		Unpaid Principal Balance	Related Allowance for Loan Losses	Average Recorded Investment	Interest Income Recognized
	(dollars expressed in thousands)
December 31, 2011:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	20,494	53,140	—	25,294	336
Real estate construction and development	62,524		113,412	—	80,230	72
Real estate mortgage:
Bank portfolio	3,274		5,030	—	3,291	—
Mortgage Division portfolio	10,250		22,541	—	11,352	—
Home equity portfolio	196		198	—	210	—
Multi-family residential	7,961		8,378	—	8,358	92
Commercial real estate	45,452		61,766	—	59,613	435
Consumer and installment	1		1	—	2	—
	150,152		264,466	—	188,350	935
With A Related Allowance Recorded:
Commercial, financial and agricultural	39,110		64,867	5,475	48,270	—
Real estate construction and development	20,734		39,832	3,432	26,605	183
Real estate mortgage:
Bank portfolio	11,416		12,926	796	11,473	—
Mortgage Division portfolio	89,157		98,118	15,324	98,739	2,306
Home equity portfolio	6,744		7,657	1,388	7,212	—
Multi-family residential	3,180		5,281	335	3,339	—
Commercial real estate	26,179		34,073	3,875	34,335	168
Consumer and installment	21		21	4	60	—
	196,541		262,775	30,629	230,033	2,657
Total:
Commercial, financial and agricultural	59,604		118,007	5,475	73,564	336
Real estate construction and development	83,258		153,244	3,432	106,835	255
Real estate mortgage:
Bank portfolio	14,690		17,956	796	14,764	—
Mortgage Division portfolio	99,407		120,659	15,324	110,091	2,306
Home equity portfolio	6,940		7,855	1,388	7,422	—
Multi-family residential	11,141		13,659	335	11,697	92
Commercial real estate	71,631		95,839	3,875	93,948	603
Consumer and installment	22		22	4	62	—
	$	346,693	527,241	30,629	418,383	3,592

Recorded investment represents the Company’s investment in its impaired loans reduced by cumulative charge-offs recorded against the allowance for loan losses on these same loans. At December 31, 2012 and 2011, the Company had recorded charge-offs of $103.9 million and $180.5 million, respectively, on its impaired loans, representing the difference between the unpaid principal balance and the recorded investment reflected in the tables above. The unpaid principal balance represents the principal amount contractually owed to the Company by the borrowers on the impaired loans.

The Company had $238.8 million and $346.7 million of impaired loans, consisting of loans on nonaccrual status and performing TDRs, at December 31, 2012 and 2011, respectively. Interest on impaired loans that would have been recorded under the original terms of the loans was $21.7 million, $34.2 million and $46.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. Of these amounts, $6.0 million, $8.0 million and $14.2 million was recorded as interest income on such loans in 2012, 2011 and 2010, respectively. The average recorded investment in impaired loans was $283.5 million, $418.4 million and $619.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. The amount of interest income recognized during the time these loans were impaired was $4.4 million, $3.6 million and $5.9 million in 2012, 2011 and 2010, respectively.

Troubled Debt Restructurings. In the ordinary course of business, the Company modifies loan terms across loan types, including both consumer and commercial loans, for a variety of reasons. Modifications to consumer loans may include, but are not limited to, changes in interest rate, maturity, amortization and financial covenants. In the original underwriting, loan terms are established that represent the then current and projected financial condition of the borrower. Over any period of time, modifications to these loan terms may be required due to changes in the original underwriting assumptions. These changes may include the financial covenants of the borrower as well as underwriting standards.

Loan modifications are generally performed at the request of the borrower, whether commercial or consumer, and may include reduction in interest rates, changes in payments and maturity date extensions. Although the Company does not have formal, standardized loan modification programs for its commercial or consumer loan portfolios, it addresses loan modifications on a case-by-case basis and also participates in the U.S. Treasury’s Home Affordable Modification Program (HAMP). HAMP gives qualifying homeowners an opportunity to refinance into more affordable monthly payments, with the U.S. Treasury compensating the Company for a portion of the reduction in monthly amounts due from borrowers participating in this program. At December 31, 2012 and 2011, the Company had $75.7 million and $75.9 million, respectively, of modified loans in the HAMP program.

For a loan modification to be classified as a TDR, all of the following conditions must be present: (1) the borrower is experiencing financial difficulty, (2) the Company makes a concession to the original contractual loan terms and (3) the Company would not consider the concessions but for economic or legal reasons related to the borrower’s financial difficulty. Modifications of loan terms to borrowers experiencing financial difficulty are made in an attempt to protect as much of the investment in the loan as possible. These modifications are generally made to either prevent a loan from becoming nonaccrual or to return a nonaccrual loan to performing status based on the expectations that the borrower can adequately perform in accordance with the modified terms.

The determination of whether a modification should be classified as a TDR requires significant judgment after taking into consideration all facts and circumstances surrounding the transaction. No single characteristic or factor, taken alone, is determinative of whether a modification should be classified as a TDR. The fact that a single characteristic is present is not considered sufficient to overcome the preponderance of contrary evidence. Assuming all of the TDR criteria are met, the Company considers one or more of the following concessions to the loan terms to represent a TDR: (1) a reduction of the stated interest rate, (2) an extension of the maturity date or dates at a stated interest rate lower than the current market rate for a new loan with similar terms or (3) forgiveness of principal or accrued interest.

Loans renegotiated at a rate equal to or greater than that of a new loan with comparable risk at the time the contract is modified are excluded from TDR classification in the calendar years subsequent to the renegotiation if the loan is in compliance with the modified terms for at least six months.

The Company does not accrue interest on any TDRs unless it believes collection of all principal and interest under the modified terms is reasonably assured. Generally, six months of consecutive payment performance by the borrower under the restructured terms is required before a TDR is returned to accrual status. However, the period could vary depending upon the individual facts and circumstances of the loan. TDRs accruing interest are classified as performing TDRs. The following table presents the categories of performing TDRs as of December 31, 2012 and 2011:

	2012		2011
	(dollars expressed in thousands)
Performing Troubled Debt Restructurings:
Commercial, financial and agricultural	$	—	4,264
Real estate construction and development	10,031		12,014
Real estate mortgage:
One-to-four-family residential	79,905		82,629
Multi-family residential	28,240		3,166
Commercial real estate	10,741		24,369
Total	$	128,917	126,442

The Company does not accrue interest on TDRs which have been modified for a period less than six months or are not in compliance with the modified terms. These loans are considered nonperforming TDRs and are included with other nonaccrual loans for classification purposes. The following table presents the categories of loans considered nonperforming TDRs as of December 31, 2012 and 2011:

	2012		2011
	(dollars expressed in thousands)
Nonperforming Troubled Debt Restructurings:
Commercial, financial and agricultural	$	1,004	1,344
Real estate construction and development	26,557		25,603
Real estate mortgage:
One-to-four-family residential	7,105		6,205
Multi-family residential	2,482		—
Commercial real estate	2,862		7,605
Total	$	40,010	40,757

Both performing and nonperforming TDRs are considered to be impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses or provided for as a specific reserve within the allowance for loan losses. The allowance for loan losses allocated to TDRs was $9.5 million and $12.8 million at December 31, 2012 and 2011, respectively.

The following tables present loans classified as TDRs that were modified during the years ended December 31, 2012 and 2011:

	2012					2011
	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(dollars expressed in thousands)
Loan Modifications as Troubled Debt Restructurings:
Commercial, financial and agricultural	2	$	1,108	$	873	3	$	1,945	$	1,945
Real estate construction and development	4	6,263		5,670		8	42,784		38,166
Real estate mortgage:
One-to-four-family residential	50	9,049		8,992		118	23,607		22,377
Multi-family residential	2	28,280		28,280		1	4,964		3,209
Commercial real estate	3	9,965		9,965		5	34,113		26,890

The following tables present TDRs that defaulted within 12 months of modification during the years ended December 31, 2012 and 2011:

	2012			2011
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(dollars expressed in thousands)
Troubled Debt Restructurings That Subsequently Defaulted:
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate construction and development	3	1,364		1	460
Real estate mortgage:
One-to-four-family residential	57	12,437		45	9,523
Multi-family residential	—	—		—	—
Commercial real estate	—	—		1	1,144

Upon default of a TDR, which is considered to be 90 days or more past due under the modified terms, impairment is measured based on the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses or provided for as a specific reserve within the allowance for loan losses.

Allowance for Loan Losses. Changes in the allowance for loan losses for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	137,710		201,033		266,448
Allowance for loan losses allocated to loans sold	—			—		(321	)
	137,710			201,033		266,127
Loans charged-off	(78,070		)	(154,627	)	(331,196	)
Recoveries of loans previously charged-off	29,962			22,304		52,102
Net loans charged-off	(48,108		)	(132,323	)	(279,094	)
Provision for loan losses	2,000			69,000		214,000
Balance, end of year	$	91,602		137,710		201,033

The following table represents a summary of changes in the allowance for loan losses by portfolio segment for the years ended December 31, 2012 and 2011:

	Commercial and Industrial			Real Estate Construction and Development		One-to- Four-Family Residential		Multi- Family Residential		Commercial Real Estate		Consumer and Installment		Total
	(dollars expressed in thousands)
Year Ended December 31, 2012:
Allowance for loan losses:
Beginning balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710
Charge-offs	(17,410		)	(12,244	)	(21,814	)	(2,435	)	(23,856	)	(311	)	(78,070	)
Recoveries	12,886			5,659		5,188		44		5,982		203		29,962
Provision (benefit) for loan losses	(9,147		)	(3,849	)	4,659		1,792		8,474		71		2,000
Ending balance	$	13,572		14,434		38,897		4,252		20,048		399		91,602
Year Ended December 31, 2011:
Allowance for loan losses:
Beginning balance	$	28,000		58,439		60,762		5,158		47,880		794		201,033
Charge-offs	(46,256		)	(35,459	)	(31,355	)	(3,126	)	(37,974	)	(457	)	(154,627	)
Recoveries	6,962			6,694		3,985		562		3,787		314		22,304
Provision (benefit) for loan losses	38,537			(4,806	)	17,472		2,257		15,755		(215	)	69,000
Ending balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710

The following table represents a summary of the impairment method used by loan category at December 31, 2012 and 2011:

	Commercial and Industrial		Real Estate Construction and Development	One-to- Four-Family Residential	Multi- Family Residential	Commercial Real Estate	Consumer and Installment	Total
	(dollars expressed in thousands)
Ending Balance at December 31, 2012:
Allowance for loan losses:
Impaired loans individually evaluated for impairment	$	75	121	3,187	33	182	—	3,598
Impaired loans collectively evaluated for impairment	601		1,331	10,455	1,105	861	1	14,354
All other loans collectively evaluated for impairment	12,896		12,982	25,255	3,114	19,005	398	73,650
Total	$	13,572	14,434	38,897	4,252	20,048	399	91,602
Financing receivables:
Impaired loans individually evaluated for impairment	$	7,884	39,155	16,843	34,636	20,965	—	119,483
Impaired loans collectively evaluated for impairment	11,166		3,028	98,423	365	6,296	28	119,306
All other loans collectively evaluated for impairment	591,251		132,796	871,501	68,683	942,419	19,175	2,625,825
Total	$	610,301	174,979	986,767	103,684	969,680	19,203	2,864,614
Ending Balance at December 31, 2011:
Allowance for loan losses:
Impaired loans individually evaluated for impairment	$	4,276	1,752	3,170	110	2,430	—	11,738
Impaired loans collectively evaluated for impairment	1,199		1,680	14,338	225	1,445	4	18,891
All other loans collectively evaluated for impairment	21,768		21,436	33,356	4,516	25,573	432	107,081
Total	$	27,243	24,868	50,864	4,851	29,448	436	137,710
Financing receivables:
Impaired loans individually evaluated for impairment	$	40,527	76,475	16,836	11,141	64,190	—	209,169
Impaired loans collectively evaluated for impairment	19,077		6,783	104,201	—	7,441	22	137,524
All other loans collectively evaluated for impairment	665,591		166,729	781,401	116,215	1,153,907	22,632	2,906,475
Total	$	725,195	249,987	902,438	127,356	1,225,538	22,654	3,253,168

XML

CREDIT COMMITMENTS

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

CREDIT COMMITMENTS

CREDITCOMMITMENTS

The Company is a party to commitments to extend credit and commercial and standby letters of credit in the normal course of business to meet the financing needs of its customers. These instruments involve, in varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The interest rate risk associated with these credit commitments relates primarily to the commitments to originate fixed-rate loans. As more fully described in Note 8 to the consolidated financial statements, the interest rate risk of the commitments to originate fixed-rate loans has been hedged with forward commitments to sell mortgage-backed securities. The credit risk amounts are equal to the contractual amounts, assuming the amounts are fully advanced and the collateral or other security is of no value. The Company uses the same credit policies in granting commitments and conditional obligations as it does for on-balance sheet items.

Commitments to extend fixed and variable rate credit, and commercial and standby letters of credit, at December 31, 2012 and 2011 were as follows:

	December 31,
	2012		2011
	(dollars expressed in thousands)
Commitments to extend credit	$	667,215	683,186
Commercial and standby letters of credit	59,075		65,993
Total	$	726,290	749,179

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant, equipment, income-producing commercial properties or single-family residential properties. In the event of nonperformance, the Company may obtain and liquidate the collateral to recover amounts paid under its guarantees on these financial instruments.

Commercial and standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Most letters of credit extend for less than one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Upon issuance of the commitments, the Company typically holds marketable securities, certificates of deposit, inventory, real property or other assets as collateral supporting those commitments for which collateral is deemed necessary. The standby letters of credit at December 31, 2012 expire, at various dates, within five years.

Standby letters of credit issued by the FHLB on First Bank’s behalf were $25.0 million and $28.6 million at December 31, 2012 and 2011, respectively.

The reserve for letters of credit and unfunded loan commitments was $2.8 million at December 31, 2012 and 2011.

XML

SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2012

Subordinated Borrowings [Abstract]

SUBORDINATED DEBENTURES

SUBORDINATED DEBENTURES

As of December 31, 2012, the Company had 13 affiliated Delaware or Connecticut statutory and business trusts (collectively, the Trusts) that were created for the sole purpose of issuing trust preferred securities. The trust preferred securities were issued in private placements, with the exception of First Preferred Capital Trust IV, which was issued in a publicly underwritten offering. The Company owns all of the common securities of the Trusts. The sole assets of the statutory and business trusts are the Company's junior subordinated debentures. The gross proceeds of the offerings were used by the Trusts to purchase variable rate or fixed rate junior subordinated debentures from the Company. In connection with the issuance of the trust preferred securities, the Company made certain guarantees and commitments that, in the aggregate, constitute a full and unconditional guarantee by the Company of the obligations of the Trusts under the trust preferred securities. The following is a summary of the junior subordinated debentures issued to the Trusts in conjunction with the trust preferred securities offerings at December 31, 2012 and 2011:

Name of Trust	Issuance Date	Maturity Date	Call Date(1)	Interest Rate(2)		Trust Preferred Securities		Subordinated Debentures
						(dollars expressed in thousands)
Variable Rate
First Bank Statutory Trust II	September 2004	September 20, 2034	September 20, 2009	+205.0	bp	$	20,000	$	20,619
Royal Oaks Capital Trust I	October 2004	January 7, 2035	January 7, 2010	+240.0	bp	4,000		4,124
First Bank Statutory Trust III	November 2004	December 15, 2034	December 15, 2009	+218.0	bp	40,000		41,238
First Bank Statutory Trust IV	March 2006	March 15, 2036	March 15, 2011	+142.0	bp	40,000		41,238
First Bank Statutory Trust V	April 2006	June 15, 2036	June 15, 2011	+145.0	bp	20,000		20,619
First Bank Statutory Trust VI	June 2006	July 7, 2036	July 7, 2011	+165.0	bp	25,000		25,774
First Bank Statutory Trust VII	December 2006	December 15, 2036	December 15, 2011	+185.0	bp	50,000		51,547
First Bank Statutory Trust VIII	February 2007	March 30, 2037	March 30, 2012	+161.0	bp	25,000		25,774
First Bank Statutory Trust X	August 2007	September 15, 2037	September 15, 2012	+230.0	bp	15,000		15,464
First Bank Statutory Trust IX	September 2007	December 15, 2037	December 15, 2012	+225.0	bp	25,000		25,774
First Bank Statutory Trust XI	September 2007	December 15, 2037	December 15, 2012	+285.0	bp	10,000		10,310
Fixed Rate
First Bank Statutory Trust	March 2003	March 20, 2033	March 20, 2008	8.10%		25,000		25,774
First Preferred Capital Trust IV	April 2003	June 30, 2033	June 30, 2008	8.15%		46,000		47,423

(1) The junior subordinated debentures are callable at the option of the Company on the call date shown at 100% of the principal amount plus accrued and unpaid interest.

(2) The interest rates paid on the trust preferred securities are based on either a variable rate or a fixed rate. The variable rate is based on the three-month LIBOR plus the basis point spread shown.

The Company’s distributions accrued on the junior subordinated debentures were $14.8 million, $13.5 million and $12.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, and are included in interest expense in the consolidated statements of operations. Deferred issuance costs associated with the Company’s junior subordinated debentures are included as a reduction of junior subordinated debentures in the consolidated balance sheets and are amortized on a straight-line basis to the maturity date of the respective junior subordinated debentures. The structure of the trust preferred securities currently satisfies the regulatory requirements for inclusion, subject to certain limitations, in the Company’s capital base, as further discussed in Note 14 to the consolidated financial statements.

In August 2009, the Company announced the deferral of its regularly scheduled interest payments on its outstanding junior subordinated debentures relating to its $345.0 million of trust preferred securities beginning with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October 2009. The terms of the junior subordinated debentures and the related trust indentures allow the Company to defer such payments of interest for up to 20 consecutive quarterly periods without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on the Company’s business, financial condition or results of operations. The Company has deferred such payments for 14 quarterly periods as of December 31, 2012. The current 20 consecutive quarterly deferral period ends with the respective payment dates of the trust preferred securities in September and October 2014. During the deferral period, the respective trusts will suspend the declaration and payment of dividends on the trust preferred securities. During the deferral period, the Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures. Accordingly, the Company also suspended the payment of cash dividends on its outstanding common stock and preferred stock beginning with the regularly scheduled quarterly dividend payments on the preferred stock that would otherwise have been made in August and September 2009, as further described in Note 13 to the consolidated financial statements. The Company has deferred $43.8 million and $31.0 million of its regularly scheduled interest payments as of December 31, 2012 and 2011, respectively. In addition, the Company has accrued additional interest expense of $3.9 million and $1.9 million as of December 31, 2012 and 2011, respectively, on the regularly scheduled deferred interest payments based on the interest rate in effect for each junior subordinated note issuance in accordance with the respective terms of the underlying agreements.

Under its agreement with the FRB, the Company agreed, among other things, to provide certain information to the FRB, including, but not limited to, prior notice regarding the issuance of additional trust preferred securities. The Company also agreed not to make any distributions of interest or other sums on its outstanding trust preferred securities without the prior approval of the FRB, as further described in Note 14 to the consolidated financial statements.

On January 26, 2011, the Company, the holder of 100% of the outstanding common stock of First Preferred Capital Trust IV (the Trust), successfully completed a consent solicitation from the holders of the 8.15% cumulative trust preferred securities of the Trust, and entered into certain amendments that were approved in the consent solicitation. The Company solicited the consents in order to increase its capital planning flexibility under the terms of the documents and the provisions of the indentures, guarantee agreements and trust agreements relating to the Company’s other tranches of trust preferred securities. The amendments provide an opportunity for the Company to seek to improve its capital position and decrease its level of indebtedness during a period in which it is deferring interest payments in accordance with the terms of the indenture.

XML

MATURITIES OF TIME DEPOSITS (Maturities of Time Deposits) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Deposit Liabilities [Line Items]
2013	$ 1,026,809
2014	179,523
2015	50,840
2016	9,600
2017	17,854
Thereafter	101
Total	1,284,727
Time Deposits of $100,000 or More
Deposit Liabilities [Line Items]
2013	371,325
2014	62,251
2015	16,883
2016	4,026
2017	6,306
Thereafter	0
Total	460,791
Other Time Deposits
Deposit Liabilities [Line Items]
2013	655,484
2014	117,272
2015	33,957
2016	5,574
2017	11,548
Thereafter	101
Total	$ 823,936

XML

DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

The Company utilizes derivative instruments to assist in the management of interest rate sensitivity by modifying the repricing, maturity and option characteristics of certain assets and liabilities. The following table summarizes derivative instruments held by the Company, their notional amount, estimated fair values and their location in the consolidated balance sheets at December 31, 2012 and 2011:

				Derivatives in Other Assets				Derivatives in Other Liabilities
	Notional Amount			Fair Value Gain (Loss)				Fair Value Loss
	2012		2011	2012		2011		2012		2011
	(dollars expressed in thousands)
Derivative Instruments not Designated as Hedging Instruments:
Interest rate swap agreements	$	—	50,000	—		—		—		(807	)
Customer interest rate swap agreements	12,149		47,240	87		370		(87	)	(307	)
Interest rate lock commitments	59,932		38,985	1,837		1,381		—		—
Forward commitments to sell mortgage-backed securities	107,700		58,800	(305	)	(729	)	—		—
Total	$	179,781	195,025	1,619		1,022		(87	)	(1,114	)

The notional amounts of derivative instruments do not represent amounts exchanged by the parties and, therefore, are not a measure of the Company’s credit exposure through its use of these instruments. Credit exposure on interest rate swaps, which represents the loss the Company would incur in the event the counterparties failed completely to perform according to the terms of the derivative instruments and the collateral held to support the credit exposure was of no value, is limited to the net fair value and related accrued interest receivable reduced by the amount of collateral pledged by the counterparty. The Company had not pledged any assets as collateral in connection with its interest rate swap agreements at December 31, 2012 and 2011. Collateral requirements are monitored on a daily basis and adjusted as necessary.

For the year ended December 31, 2010, the Company realized net interest income of $5.7 million on its derivative instruments. The Company also recorded net losses on derivative instruments, which are included in noninterest income in the statements of operations, of $40,000, $193,000 and $2.9 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Interest Rate Swap Agreements. The Company entered into certain interest rate swap agreements with the objective of stabilizing the long-term cost of capital and cash flow and, accordingly, net interest expense on junior subordinated debentures to the respective call dates of certain junior subordinated debentures. The terms of the swap agreements provided for the Company to pay and receive interest on a quarterly basis. The amount receivable and payable by the Company under these swap agreements was $36,000 and $72,000, respectively, at December 31, 2011.

The maturity dates, notional amounts, interest rates paid and received and fair value of the Company’s interest rate swap agreements as of December 31, 2011 were as follows:

Maturity Date	Notional Amount		Interest Rate Paid		Interest Rate Received		Fair Value
	(dollars expressed in thousands)
December 31, 2011:
March 30, 2012	$	25,000	4.71	%	2.19	%	$	(159	)
December 15, 2012	25,000		5.57		2.80		(648		)
	$	50,000	5.14		2.50		$	(807	)

Customer Interest Rate Swap Agreements. First Bank offers interest rate swap agreements to certain customers to assist in hedging their risks of adverse changes in interest rates. First Bank serves as an intermediary between its customers and the financial markets. Each interest rate swap agreement between First Bank and its customers is offset by an interest rate swap agreement between First Bank and various counterparties. These interest rate swap agreements do not qualify for hedge accounting treatment. Changes in the fair value of customer interest rate swap agreements are recognized in noninterest income on a monthly basis. Each customer contract is paired with an offsetting contract, and as such, there is no significant impact to net income (loss). The notional amount of these interest rate swap agreement contracts at December 31, 2012 and 2011 was $12.1 million and $47.2 million, respectively.

Interest Rate Lock Commitments / Forward Commitments to Sell Mortgage-Backed Securities. Derivative instruments issued by the Company consist of interest rate lock commitments to originate fixed-rate loans to be sold. Commitments to originate fixed-rate loans consist primarily of residential real estate loans. These net loan commitments and loans held for sale are hedged with forward contracts to sell mortgage-backed securities, which expire in March 2013. The fair value of the interest rate lock commitments, which is included in other assets in the consolidated balance sheets, was an unrealized gain of $1.8 million and $1.4 million at December 31, 2012 and 2011, respectively. The fair value of the forward contracts to sell mortgage-backed securities, which is included in other assets in the consolidated balance sheets, was an unrealized loss of $305,000 and $729,000 at December 31, 2012 and 2011, respectively. Changes in the fair value of interest rate lock commitments and forward commitments to sell mortgage-backed securities are recognized in noninterest income on a monthly basis.

The following table summarizes amounts included in the consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 related to interest rate swap agreements designated as cash flow hedges:

Derivative Instruments Designated as Hedging Instruments:	2012		2011	2010
	(dollars expressed in thousands)
Interest Rate Swap Agreements - Loans:
Interest and fees on loans	$	—	—	5,745

The Company previously had interest rate swap agreements designated as cash flow hedges with a contractual maturity date of September 20, 2010. These interest rate swap agreements were terminated in December 2008, and as a result, the unrealized gain at the date of termination of $20.8 million was being amortized as an increase to interest and fees on loans in the consolidated statements of operations over the remaining terms of the respective interest rate swap agreements, which had contractual maturity dates through September 2010. The amount of the pre-tax gain amortized as an increase to interest and fees on loans was $5.7 million for the year ended December 31, 2010.

The following table summarizes amounts included in the consolidated statements of operations for the years December 31, 2012, 2011 and 2010 related to non-hedging derivative instruments:

Derivative Instruments Not Designated as Hedging Instruments:	Location of Gain (Loss) Recognized in Operations on Derivatives	Amount of Gain (Loss) Recognized in Operations on Derivatives
		2012			2011		2010
		(dollars expressed in thousands)
Interest rate swap agreements – subordinated debentures	Other noninterest income	$	(43	)	(194	)	(2,929	)
Customer interest rate swap agreements	Other noninterest income	3			1		4
Interest rate lock commitments	Gain on loans sold and held for sale	456			1,105		(93	)
Forward commitments to sell mortgage-backed securities	Gain on loans sold and held for sale	424			(2,267	)	891

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Composition of the Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, financial and agricultural	$ 610,301	$ 725,195
Real estate construction and development	174,979	249,987
Real estate mortgage:
Real estate mortgage	2,060,131	2,255,332
Consumer and installment	19,262	23,596
Loans held for sale	66,133	31,111
Net deferred loan fees	(59)	(942)
Loans, net of net deferred loan fees	2,930,747	3,284,279	4,492,284
One-to-four-family residential
Real estate mortgage:
Real estate mortgage	986,767	902,438
Multi-family residential
Real estate mortgage:
Real estate mortgage	103,684	127,356
Loans, net of net deferred loan fees	103,684	127,356
Commercial real estate
Real estate mortgage:
Real estate mortgage	969,680	1,225,538
Loans, net of net deferred loan fees	$ 969,680	$ 1,225,538

XML

EMPLOYEE BENEFITS (Schedule of Changes in Projected Benefit Obligations) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$ 12,467	$ 12,334
Interest cost	516	587
Actuarial loss	1,765	970
Benefit payments	(761)	(1,424)
Projected benefit obligation at end of year	13,987	12,467
Change in Fair Value of Plan Assets:
Fair value at beginning of year	8,848	9,210
Actual return on plan assets	666	774
Employer contributions	666	288
Benefit payments	(761)	(1,424)
Fair value at end of year	9,419	8,848
Amount Recognized in Consolidated Balance Sheets:
Accrued pension liability	4,568	3,619
Amounts Recognized in Accumulated Other Comprehensive Income:
Loss	(5,940)	(4,370)
Deferred tax liability	2,396	1,737
Loss, net of tax	$ (3,544)	$ (2,633)

XML

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILLAND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets, net of amortization, were comprised of goodwill of $125.3 million at December 31, 2012 and 2011. First Bank did not record goodwill impairment for the years ended December 31, 2012, 2011 and 2010. Amortization of intangible assets was zero, $3.0 million and $3.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. Core deposit intangibles became fully amortized in 2011. Changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 were as follows:

	2012		2011
	(dollars expressed in thousands)
Balance, beginning of year	$	125,267	125,967
Goodwill allocated to discontinued operations (1)	—		(700	)
Balance, end of year	$	125,267	125,267

(1) Goodwill allocated to discontinued operations during 2011 pertains to the Florida Region, as further discussed in Note 2 to the consolidated financial statements.

The Company allocated goodwill to the various sale transactions, as discussed in Note 2 to the consolidated financial statements, based on the relative fair values of the business and operations to be disposed of and the portion of the First Bank segment that will be retained. The Company allocated goodwill to the sale of the Florida Region of $700,000, which is included in assets of discontinued operations at December 31, 2012 and 2011.

The Company’s annual measurement date for its goodwill impairment test is December 31. The Company operates as a single reporting unit. The Company engaged an independent valuation firm to assist management in computing the fair value estimate for the impairment assessment by utilizing two separate valuation methodologies and applying a weighted average to each methodology in order to determine the fair value of the reporting unit. The two separate valuation methodologies utilized in the valuation of the Company’s implied goodwill were the “Income Approach” and the “Market Approach.”

Income Approach – The Income Approach indicates the fair market value of the common stock of a business based on the present value of the cash flows that the business can be expected to generate in the future. This approach is generally considered to be the most theoretically correct method of valuation since it explicitly considers the future benefits associated with owning the business. The Income Approach is typically applied using the Discounted Cash Flow Method. The Discounted Cash Flow Method is comprised of four steps:

1. Project future cash flows for a certain discrete projection period;

2. Discount these cash flows to present value at a rate of return that considers the relative risk of achieving the cash flows and the time value of money;

3. Estimate the residual value of cash flows subsequent to the discrete projection period; and

4. Combine the present value of the residual cash flows with the discrete projection period cash flows to indicate the fair market value of invested capital on a marketable basis.

Any interest-bearing debt (or non-operating assets) is then subtracted (or added) to arrive at the fair market value of equity of the business.

Market Approach – The Market Approach uses the price at which shares of similar companies are traded or exchanged to estimate the fair market value of the company’s equity. The advantage of the Market Approach is that it is believed to reflect the effect of most of the principal valuation factors identified in the Discounted Cash Flow Method discussed above. Market prices of publicly traded companies and actual merger and acquisition transactions are believed to incorporate the effects on value of earnings, cash generation, and stockholders’ equity while also recognizing general economic conditions, the position of the industry in the economy, and the position of the company in its industry. Within the Market Approach, two valuation methods are commonly used: the Publicly Traded Guideline Company Method and the Recent Transactions Method. The Publicly Traded Guideline Company Method consists of identifying similar public companies and developing multiples of the total capitalization of each similar public company to certain income statement and/or balance sheet items. These multiples are then weighted and applied to similar income statement and balance sheet items of the Company. The Recent Transactions Method is based on actual prices paid in mergers and acquisitions for similar public and private companies. Ratios of the total purchase price paid to certain income statement and/or balance sheet items are generally developed for each comparable transaction if the data is available. These ratios are then applied to similar income statement and balance sheet items of the Company.

For purposes of completing the Company’s annual goodwill impairment test, the specific valuation methodologies utilized were the following:

• The Income Approach utilizing the Discounted Cash Flow Method; and

• The Market Approach utilizing (i) the Publicly Traded Guideline Company Method, focusing on a comparison of publicly-traded financial institutions as guideline companies based on size, geography and performance metrics, including the average price to tangible book value of comparable businesses, and (ii) the Recent Transactions Method, focusing on recent transactions and key transaction metrics, including price to the last-twelve-months earnings multiples.

As of December 31, 2012, the Income Approach utilizing the Discounted Cash Flow Method and applying a discount rate of 15.0% to the projected cash flows was weighted at 60.0% and each of the two Market Approaches was weighted at 20.0%. The Market Approach was given a relatively lower weighting primarily as a result of the Company’s previous lack of profitability, which required price to the last-twelve-months earnings multiples to be applied to longer-term projected future earnings.

Taking into account the independent third party valuation performed as of December 31, 2012, the Company concluded that the estimated fair value of its reporting unit exceeded its carrying value by approximately $42.9 million at December 31, 2012. As such, the results of Step 1 of the two-step goodwill impairment test, as further described in Note 1 to the consolidated financial statements, did not require the Company to proceed to Step 2 of the goodwill impairment test, and accordingly, the Company did not record goodwill impairment for the year ended December 31, 2012.

As of December 31, 2011, the Income Approach utilizing the Discounted Cash Flow Method and applying a discount rate of 23.0% to the projected cash flows was weighted at 60.0% and each of the two Market Approaches was weighted at 20.0%. The Market Approach was given a relatively lower weighting primarily as a result of the Company’s previous lack of profitability, which required price to the last-twelve-months earnings multiples to be applied to longer-term projected future earnings.

Taking into account the independent third party valuation performed as of December 31, 2011, the Company concluded that the carrying value of its reporting unit exceeded its estimated fair value by approximately $35.5 million at December 31, 2011. Consequently, the results of Step 1 of the two-step goodwill impairment test required the Company to proceed to Step 2 of the goodwill impairment test, as further described below.

Because the carrying value of the reporting unit exceeded the estimated fair value at December 31, 2011, the Company engaged the same independent valuation firm to assist management in computing the fair value of the reporting unit’s assets and liabilities in order to determine the implied fair value of the reporting unit’s goodwill at December 31, 2011, as required by Step 2 of the two-step goodwill impairment test.

Step 2 of the goodwill impairment test compared the implied fair value of goodwill with the carrying value of goodwill. The implied fair value of goodwill is determined in the same manner as the determination of the amount of goodwill recognized in a business combination. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. The fair value allocated to all of the assets and liabilities of the reporting unit requires significant judgment, especially for those assets and liabilities that are not measured on a recurring basis such as certain types of loans. The excess of the estimated fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill.

The material assumptions utilized in the annual goodwill impairment testing for purposes of calculating the implied fair value of the reporting unit’s goodwill at December 31, 2011 were as follows:

• Determination of the estimated fair value of loans – The estimated fair value assigned to loans significantly affected the determination of the implied fair value of the reporting unit’s goodwill at December 31, 2011. The implied fair value of a reporting unit’s goodwill will generally increase if the estimated fair value of the reporting unit’s loans is less than the carrying value of the reporting unit’s loans. The estimated fair value of the reporting unit’s loans was derived from discounted cash flow analyses. Loans were grouped into loan pools based on similar characteristics such as maturity, payment type and payment frequency, and rate type and underlying index. These cash flow calculations include assumptions for prepayment estimates over the loan’s remaining life, considerations for the current interest rate environment compared to the weighted average rate of the loan portfolio, a credit risk component based on the historical and expected performance of each loan portfolio stratum and a liquidity adjustment related to the current market environment. The estimated fair value of loans held for portfolio was $303.6 million less than the carrying value at December 31, 2011. To the extent any of these assumptions change in the future, the implied fair value of the reporting unit’s goodwill could change materially. A decrease in the discount rate utilized in deriving the estimated fair value of the reporting unit’s loans would decrease the implied fair value of goodwill.

• Determination of the estimated fair value of deposits, including the core deposit intangible – The estimated fair value assigned to the core deposit intangible, or the reporting unit’s deposit base, also significantly affected the determination of the implied fair value of the reporting unit’s goodwill at December 31, 2011. The implied fair value of a reporting unit’s goodwill will generally decrease by the estimated fair value assigned to the reporting unit’s core deposit intangible. The estimated fair value of the core deposit intangible was derived from discounted cash flow analyses with considerations for estimated deposit runoff, cost of the deposit base, interest costs, net maintenance costs and the cost of alternative funds. The resulting estimate of the fair value of the core deposit intangible represents the present value of the difference in cash flows between maintaining the existing deposits and obtaining alternative funds over the life of the deposit base. There were no significant changes in the estimate of fair value of the core deposit intangible at December 31, 2011 as compared to December 31, 2010. To the extent any of these assumptions used to determine the estimated fair value of the core deposit intangible change in the future, the implied fair value of the reporting unit’s goodwill could change materially.

Management then compared the implied fair value of the reporting unit’s goodwill, taking into account the analyses of the independent valuation firm, of $231.2 million as of December 31, 2011 with its carrying value of $125.3 million as of December 31, 2011. Taking into account the results of the goodwill impairment analyses performed for the year ended December 31, 2011, the Company did not record goodwill impairment for the year ended December 31, 2011, primarily reflecting the estimated discount on loans held for portfolio (i.e. excess of carrying value over estimated fair value) exceeding the amount by which the carrying value of the reporting unit exceeded its fair value.

The Company believes the estimates and assumptions utilized in the annual goodwill impairment tests are reasonable. However, further deterioration in the outlook for credit quality or other factors could impact the estimated fair value of the reporting unit as determined under Step 1 of the goodwill impairment test. A decrease in the estimated fair value of the reporting unit would decrease the implied fair value of goodwill as further determined under Step 2 of the goodwill impairment test.

Due to the current economic environment and the uncertainties regarding the impact on the Company, there can be no assurance that the Company’s estimates and assumptions made for the purposes of the goodwill impairment testing will prove to be accurate predictions in the future. Adverse changes in the economic environment, the Company’s operations, or other factors could result in a decline in the implied fair value of the reporting unit, which could result in the recognition of future goodwill impairment that may materially affect the carrying value of the reporting unit’s assets and its related operating results.

XML

SERVICING RIGHTS

12 Months Ended

Dec. 31, 2012

Servicing Rights [Abstract]

SERVICING RIGHTS

SERVICING RIGHTS

Mortgage Banking Activities. At December 31, 2012 and 2011, the Company serviced mortgage loans for others totaling $1.27 billion and $1.25 billion, respectively. Borrowers’ escrow balances held by the Company on such loans were $7.9 million and $8.0 million at December 31, 2012 and 2011, respectively. Changes in mortgage servicing rights for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	9,077		12,150
Originated mortgage servicing rights	4,887			3,450
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model (1)	(2,089		)	(4,280	)
Other changes in fair value (2)	(2,723		)	(2,243	)
Balance, end of year	$	9,152		9,077

(1) The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

Other Servicing Activities. At December 31, 2012 and 2011, the Company serviced SBA loans for others totaling $159.6 million and $178.5 million, respectively. Changes in SBA servicing rights for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	6,303		7,432
Originated SBA servicing rights	—			—
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model (1)	434			150
Other changes in fair value (2)	(1,097		)	(1,279	)
Balance, end of year	$	5,640		6,303

(1) The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

XML

MATURITIES OF TIME DEPOSITS

12 Months Ended

Dec. 31, 2012

Maturities of Time Deposits [Abstract]

MATURITIES OF TIME DEPOSITS

MATURITIESOF TIME DEPOSITS

A summary of maturities of time deposits of $100,000 or more and other time deposits as of December 31, 2012 is as follows:

	Time Deposits of $100,000 or More		Other Time Deposits	Total
	(dollars expressed in thousands)
Year ending December 31:
2013	$	371,325	655,484	1,026,809
2014	62,251		117,272	179,523
2015	16,883		33,957	50,840
2016	4,026		5,574	9,600
2017	6,306		11,548	17,854
Thereafter	—		101	101
Total	$	460,791	823,936	1,284,727

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Troubled Debt Restructurings On Performing Financing Receivables) (Details) (Performing Troubled Debt Restructurings, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	$ 128,917	$ 126,442
Commercial, financial and agricultural
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	0	4,264
Real estate construction and development
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	10,031	12,014
One-to-four-family residential
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	79,905	82,629
Multi-family residential
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	28,240	3,166
Commercial real estate
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings	$ 10,741	$ 24,369

XML

PARENT COMPANY ONLY FINANCIAL INFORMATION (Textual) (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011	Aug. 10, 2009	Dec. 31, 2012 Parent Company	Dec. 31, 2011 Parent Company	Mar. 24, 2011 Investors Of America Limited Partnership	Mar. 20, 2013 Subsequent Event Revolving Credit Facility Investors Of America Limited Partnership Parent Company
Entity Information [Line Items]
Cash and due from banks	$ 114,841,000	$ 101,822,000		$ 2,744,000	$ 2,801,000
Restricted cash and cash equivalents, current				0	2,008,000
Line of credit facility, maximum borrowing capacity						5,000,000	5,000,000
Trust preferred securities value			$ 345,000,000

XML

OTHER BORROWINGS (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Debt Instrument [Line Items]
Securities sold under agreements to repurchase	$ 26,000,000	$ 51,200,000
Debt, weighted average interest rate	(0.05%)	0.03%	1.52%
Other Borrowings
Debt Instrument [Line Items]
Debt, average outstanding amount	33,000,000	47,000,000
Debt, maximum month-end outstanding amount	57,700,000	59,600,000
Interest expense, securities sold under agreements to repurchase	33,000	82,000	3,600,000
Federal Home Loan Bank, advances, general debt obligations, interest expense			$ 5,400,000

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Modified Troubled Debt Restructurings) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012 contracts	Dec. 31, 2011 contracts
Commercial, financial and agricultural
Loan Modifications as Troubled Debt Restructurings:
Number of Contracts	2	3
Pre- Modification Outstanding Recorded Investment	$ 1,108	$ 1,945
Post- Modification Outstanding Recorded Investment	873	1,945
Real estate construction and development
Loan Modifications as Troubled Debt Restructurings:
Number of Contracts	4	8
Pre- Modification Outstanding Recorded Investment	6,263	42,784
Post- Modification Outstanding Recorded Investment	5,670	38,166
One-to-four-family residential
Loan Modifications as Troubled Debt Restructurings:
Number of Contracts	50	118
Pre- Modification Outstanding Recorded Investment	9,049	23,607
Post- Modification Outstanding Recorded Investment	8,992	22,377
Multi-family residential
Loan Modifications as Troubled Debt Restructurings:
Number of Contracts	2	1
Pre- Modification Outstanding Recorded Investment	28,280	4,964
Post- Modification Outstanding Recorded Investment	28,280	3,209
Commercial real estate
Loan Modifications as Troubled Debt Restructurings:
Number of Contracts	3	5
Pre- Modification Outstanding Recorded Investment	9,965	34,113
Post- Modification Outstanding Recorded Investment	$ 9,965	$ 26,890

XML

INCOME TAXES (Deferred Tax Asset Valuation Allowance Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Balance, beginning of year	$ 391,629	$ 370,125	$ 295,067
Reversal of deferred tax asset valuation allowance to provision for income taxes	(643)	(115)	(1,189)
(Decrease) increase in deferred tax asset valuation allowance to provision for income taxes	(468)	31,621	73,928
(Decrease) increase in deferred tax asset valuation allowance to accumulated other comprehensive income (loss)	(14,294)	(10,002)	2,319
Balance, end of year	$ 376,224	$ 391,629	$ 370,125

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Impaired Financing Receivables) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	$ 111,922	$ 150,152
With No Related Allowance Recorded: Unpaid Principal Balance	185,115	264,466
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	134,810	188,350
With No Related Allowance Recorded: Interest Income Recognized	2,248	935
With A Related Allowance Recorded: Recorded Investment	126,867	196,541
With A Related Allowance Recorded: Unpaid Principal Balance	157,590	262,775
With A Related Allowance Recorded: Related Allowance for Loan Losses	17,952	30,629
With A Related Allowance Recorded: Average Recorded Investment	148,645	230,033
With A Related Allowance Recorded: Interest Income Recognized	2,175	2,657
Recorded Investment, Total	238,789	346,693
Unpaid Principal Balance, Total	342,705	527,241
Average Recorded Investment, Total	283,455	418,383
Interest Income Recognized, Total	4,423	3,592
Commercial, financial and agricultural
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	6,451	20,494
With No Related Allowance Recorded: Unpaid Principal Balance	24,287	53,140
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	12,369	25,294
With No Related Allowance Recorded: Interest Income Recognized	215	336
With A Related Allowance Recorded: Recorded Investment	12,599	39,110
With A Related Allowance Recorded: Unpaid Principal Balance	19,255	64,867
With A Related Allowance Recorded: Related Allowance for Loan Losses	676	5,475
With A Related Allowance Recorded: Average Recorded Investment	24,157	48,270
With A Related Allowance Recorded: Interest Income Recognized	0	0
Recorded Investment, Total	19,050	59,604
Unpaid Principal Balance, Total	43,542	118,007
Average Recorded Investment, Total	36,526	73,564
Interest Income Recognized, Total	215	336
Real estate construction and development
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	39,706	62,524
With No Related Allowance Recorded: Unpaid Principal Balance	74,044	113,412
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	59,094	80,230
With No Related Allowance Recorded: Interest Income Recognized	561	72
With A Related Allowance Recorded: Recorded Investment	2,477	20,734
With A Related Allowance Recorded: Unpaid Principal Balance	10,221	39,832
With A Related Allowance Recorded: Related Allowance for Loan Losses	1,452	3,432
With A Related Allowance Recorded: Average Recorded Investment	3,687	26,605
With A Related Allowance Recorded: Interest Income Recognized	114	183
Recorded Investment, Total	42,183	83,258
Unpaid Principal Balance, Total	84,265	153,244
Average Recorded Investment, Total	62,781	106,835
Interest Income Recognized, Total	675	255
Bank portfolio
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	1,611	3,274
With No Related Allowance Recorded: Unpaid Principal Balance	1,690	5,030
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	2,166	3,291
With No Related Allowance Recorded: Interest Income Recognized	32	0
With A Related Allowance Recorded: Recorded Investment	6,910	11,416
With A Related Allowance Recorded: Unpaid Principal Balance	8,655	12,926
With A Related Allowance Recorded: Related Allowance for Loan Losses	284	796
With A Related Allowance Recorded: Average Recorded Investment	9,288	11,473
With A Related Allowance Recorded: Interest Income Recognized	0	0
Recorded Investment, Total	8,521	14,690
Unpaid Principal Balance, Total	10,345	17,956
Average Recorded Investment, Total	11,454	14,764
Interest Income Recognized, Total	32	0
Mortgage Division portfolio
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	10,255	10,250
With No Related Allowance Recorded: Unpaid Principal Balance	22,102	22,541
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	10,308	11,352
With No Related Allowance Recorded: Interest Income Recognized	0	0
With A Related Allowance Recorded: Recorded Investment	87,819	89,157
With A Related Allowance Recorded: Unpaid Principal Balance	96,931	98,118
With A Related Allowance Recorded: Related Allowance for Loan Losses	11,574	15,324
With A Related Allowance Recorded: Average Recorded Investment	88,277	98,739
With A Related Allowance Recorded: Interest Income Recognized	2,050	2,306
Recorded Investment, Total	98,074	99,407
Unpaid Principal Balance, Total	119,033	120,659
Average Recorded Investment, Total	98,585	110,091
Interest Income Recognized, Total	2,050	2,306
Home equity portfolio
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	1,382	196
With No Related Allowance Recorded: Unpaid Principal Balance	1,507	198
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	1,232	210
With No Related Allowance Recorded: Interest Income Recognized	0	0
With A Related Allowance Recorded: Recorded Investment	7,289	6,744
With A Related Allowance Recorded: Unpaid Principal Balance	8,188	7,657
With A Related Allowance Recorded: Related Allowance for Loan Losses	1,784	1,388
With A Related Allowance Recorded: Average Recorded Investment	6,500	7,212
With A Related Allowance Recorded: Interest Income Recognized	0	0
Recorded Investment, Total	8,671	6,940
Unpaid Principal Balance, Total	9,695	7,855
Average Recorded Investment, Total	7,732	7,422
Interest Income Recognized, Total	0	0
Multi-family residential
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	33,709	7,961
With No Related Allowance Recorded: Unpaid Principal Balance	37,206	8,378
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	13,682	8,358
With No Related Allowance Recorded: Interest Income Recognized	280	92
With A Related Allowance Recorded: Recorded Investment	1,292	3,180
With A Related Allowance Recorded: Unpaid Principal Balance	1,403	5,281
With A Related Allowance Recorded: Related Allowance for Loan Losses	1,138	335
With A Related Allowance Recorded: Average Recorded Investment	524	3,339
With A Related Allowance Recorded: Interest Income Recognized	0	0
Recorded Investment, Total	35,001	11,141
Unpaid Principal Balance, Total	38,609	13,659
Average Recorded Investment, Total	14,206	11,697
Interest Income Recognized, Total	280	92
Commercial real estate
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	18,808	45,452
With No Related Allowance Recorded: Unpaid Principal Balance	24,279	61,766
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	35,959	59,613
With No Related Allowance Recorded: Interest Income Recognized	1,160	435
With A Related Allowance Recorded: Recorded Investment	8,453	26,179
With A Related Allowance Recorded: Unpaid Principal Balance	12,909	34,073
With A Related Allowance Recorded: Related Allowance for Loan Losses	1,043	3,875
With A Related Allowance Recorded: Average Recorded Investment	16,161	34,335
With A Related Allowance Recorded: Interest Income Recognized	11	168
Recorded Investment, Total	27,261	71,631
Unpaid Principal Balance, Total	37,188	95,839
Average Recorded Investment, Total	52,120	93,948
Interest Income Recognized, Total	1,171	603
Consumer and installment
Loan and Lease Receivables, Impaired [Abstract]
With No Related Allowance Recorded: Recorded Investment	0	1
With No Related Allowance Recorded: Unpaid Principal Balance	0	1
With No Related Allowance Recorded: Related Allowance for Loan Losses	0	0
With No Related Allowance Recorded: Average Recorded Investment	0	2
With No Related Allowance Recorded: Interest Income Recognized	0	0
With A Related Allowance Recorded: Recorded Investment	28	21
With A Related Allowance Recorded: Unpaid Principal Balance	28	21
With A Related Allowance Recorded: Related Allowance for Loan Losses	1	4
With A Related Allowance Recorded: Average Recorded Investment	51	60
With A Related Allowance Recorded: Interest Income Recognized	0	0
Recorded Investment, Total	28	22
Unpaid Principal Balance, Total	28	22
Average Recorded Investment, Total	51	62
Interest Income Recognized, Total	$ 0	$ 0

XML

FAIR VALUE DISCLOSURES (Details) (Recurring, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	$ 2,126,271	$ 2,505,400
Liabilities, fair value disclosure, recurring	6,530	7,645
U.S. Government sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	310,429	341,817
Residential mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,534,067	1,924,920
Commercial mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	915	910
State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	4,929	5,410
Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	192,365	183,813
Equity investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,022	1,017
Mortgage loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	66,133	31,111
Customer interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	87	370
Liabilities, fair value disclosure, recurring	87	307
Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,837	1,381
Forward commitments to sell mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	(305)	(729)
Servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	14,792	15,380
Interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	0	807
Nonqualified deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	6,443	6,531
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,022	1,017
Liabilities, fair value disclosure, recurring	6,443	6,531
Fair Value, Inputs, Level 1 | U.S. Government sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Residential mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Commercial mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Equity investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,022	1,017
Fair Value, Inputs, Level 1 | Mortgage loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Customer interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Liabilities, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Forward commitments to sell mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 1 | Nonqualified deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	6,443	6,531
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	2,110,457	2,489,003
Liabilities, fair value disclosure, recurring	87	1,114
Fair Value, Inputs, Level 2 | U.S. Government sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	310,429	341,817
Fair Value, Inputs, Level 2 | Residential mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,534,067	1,924,920
Fair Value, Inputs, Level 2 | Commercial mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	915	910
Fair Value, Inputs, Level 2 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	4,929	5,410
Fair Value, Inputs, Level 2 | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	192,365	183,813
Fair Value, Inputs, Level 2 | Equity investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 2 | Mortgage loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	66,133	31,111
Fair Value, Inputs, Level 2 | Customer interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	87	370
Liabilities, fair value disclosure, recurring	87	307
Fair Value, Inputs, Level 2 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	1,837	1,381
Fair Value, Inputs, Level 2 | Forward commitments to sell mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	(305)	(729)
Fair Value, Inputs, Level 2 | Servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 2 | Interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	0	807
Fair Value, Inputs, Level 2 | Nonqualified deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	14,792	15,380
Liabilities, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | U.S. Government sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Residential mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Commercial mortgage-backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Equity investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Mortgage loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Customer interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Liabilities, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Forward commitments to sell mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, recurring	14,792	15,380
Fair Value, Inputs, Level 3 | Interest rate swap agreements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	0	0
Fair Value, Inputs, Level 3 | Nonqualified deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value disclosure, recurring	$ 0	$ 0

XML

DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations Balance Sheet

Assets and liabilities of discontinued operations at December 31, 2012 and 2011 were as follows:

	December 31, 2012		December 31, 2011
	Florida		Florida
	(dollars expressed in thousands)
Cash and due from banks	$	1,139	1,018
Total loans	—		—
Bank premises and equipment, net	4,837		5,165
Goodwill and other intangible assets	700		700
Other assets	30		30
Assets of discontinued operations	$	6,706	6,913
Deposits:
Noninterest-bearing demand	$	12,488	9,103
Interest-bearing demand	10,480		8,198
Savings and money market	67,686		86,983
Time deposits of $100 or more	27,034		24,242
Other time deposits	37,964		46,123
Total deposits	155,652		174,649
Other borrowings	—		12
Accrued expenses and other liabilities	59		76
Liabilities of discontinued operations	$	155,711	174,737

Discontinued Operations Income Statement

Loss from discontinued operations, net of tax, for the year ended December 31, 2012 was as follows:

	Florida
	(dollars expressed in thousands)
Year ended December 31, 2012:
Interest income:
Interest and fees on loans	$	—
Interest expense:
Interest on deposits	972
Net interest loss	(972		)
Provision for loan losses	—
Net interest loss after provision for loan losses	(972		)
Noninterest income:
Service charges and customer service fees	467
Other	13
Total noninterest income	480
Noninterest expense:
Salaries and employee benefits	2,279
Occupancy, net of rental income	1,760
Furniture and equipment	278
Legal, examination and professional fees	5
FDIC insurance	358
Other	351
Total noninterest expense	5,031
Loss from operations of discontinued operations	(5,523		)
Benefit for income taxes	—
Net loss from discontinued operations, net of tax	$	(5,523	)

Loss from discontinued operations, net of tax, for the year ended December 31, 2011 was as follows:

	Florida			Northern Illinois	Total
	(dollars expressed in thousands)
Year ended December 31, 2011:
Interest income:
Interest and fees on loans	$	—		895	895
Interest expense:
Interest on deposits	2,160			261	2,421
Net interest (loss) income	(2,160		)	634	(1,526	)
Provision for loan losses	—			—	—
Net interest (loss) income after provision for loan losses	(2,160		)	634	(1,526	)
Noninterest income:
Service charges and customer service fees	411			259	670
Other	8			5	13
Total noninterest income	419			264	683
Noninterest expense:
Salaries and employee benefits	2,325			357	2,682
Occupancy, net of rental income	1,746			68	1,814
Furniture and equipment	431			29	460
Legal, examination and professional fees	1			6	7
Amortization of intangible assets	63			—	63
FDIC insurance	469			100	569
Other	379			67	446
Total noninterest expense	5,414			627	6,041
(Loss) income from operations of discontinued operations	(7,155		)	271	(6,884	)
Net gain on sale of discontinued operations	—			425	425
Benefit for income taxes	—			—	—
Net (loss) income from discontinued operations, net of tax	$	(7,155	)	696	(6,459	)

Income from discontinued operations, net of tax, for the year ended December 31, 2010 was as follows:

	Florida			Northern Illinois	Chicago		Texas		WIUS		MVP		Total
	(dollars expressed in thousands)
Year ended December 31, 2010:
Interest income:
Interest and fees on loans	$	—		9,629	2,391		1,816		33		—		13,869
Interest expense:
Interest on deposits	3,305			4,232	2,550		1,796		—		—		11,883
Other borrowings	—			—	—		3		(2	)	—		1
Total interest expense	3,305			4,232	2,550		1,799		(2	)	—		11,884
Net interest (loss) income	(3,305		)	5,397	(159	)	17		35		—		1,985
Provision for loan losses	—			—	—		—		—		—		—
Net interest (loss) income after provision for loan losses	(3,305		)	5,397	(159	)	17		35		—		1,985
Noninterest income:
Service charges and customer service fees	400			2,500	523		1,192		—		—		4,615
Investment management income	—			—	—		—		—		787		787
Other	5			30	254		161		—		(1	)	449
Total noninterest income	405			2,530	777		1,353		—		786		5,851
Noninterest expense:
Salaries and employee benefits	2,325			3,403	2,137		2,843		32		517		11,257
Occupancy, net of rental income	1,734			1,115	606		1,148		—		59		4,662
Furniture and equipment	652			365	178		345		—		17		1,557
Legal, examination and professional fees	—			62	123		111		153		115		564
Amortization of intangible assets	33			319	—		—		—		—		352
FDIC insurance	636			1,650	292		478		—		—		3,056
Other	345			709	424		860		184		29		2,551
Total noninterest expense	5,725			7,623	3,760		5,785		369		737		23,999
(Loss) income from operations of discontinued operations	(8,625		)	304	(3,142	)	(4,415	)	(334	)	49		(16,163	)
Net gain (loss) on sale of discontinued operations	—			6,355	8,414		4,984		(29	)	(156	)	19,568
Benefit for income taxes	—			—	—		—		(157	)	—		(157	)
Net (loss) income from discontinued operations, net of tax	$	(8,625	)	6,659	5,272		569		(206	)	(107	)	3,562

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Noncontrolling Interest [Line Items]
Interest-bearing deposits in banks and other financial institutions	$ 404,005,000	$ 371,318,000
Required daily cash and cash equivalents reserve balance	14,600,000	13,100,000
Federal Reserve stock, investment requirement as a percent of First Bank capital stock and capital surplus	6.00%
Federal Home Loan Bank of Des Moines [Member]
Noncontrolling Interest [Line Items]
Federal Home Loan Bank stock, investment requirement as a percent of First Bank total Assets	0.12%
Federal Home Loan Bank stock, investment requirement, maximum amount	10,000,000
Federal Home Loan Bank stock, investment requirement, maximum, percent of advances	4.45%
Federal Home Loan Bank stock	7,900,000	8,800,000
Federal Reserve Bank of St. Louis [Member]
Noncontrolling Interest [Line Items]
Federal Reserve Bank stock	$ 19,400,000	$ 18,300,000
First Capital America, Inc.
Noncontrolling Interest [Line Items]
Noncontrolling interest, ownership percentage by parent	46.77%
First Bank
Noncontrolling Interest [Line Items]
Noncontrolling interest, ownership percentage by parent	53.23%
Buildings and improvements | Minimum
Noncontrolling Interest [Line Items]
Property, plant and equipment, useful life	5 years
Buildings and improvements | Maximum
Noncontrolling Interest [Line Items]
Property, plant and equipment, useful life	40 years
Equipment | Minimum
Noncontrolling Interest [Line Items]
Property, plant and equipment, useful life	3 years
Equipment | Maximum
Noncontrolling Interest [Line Items]
Property, plant and equipment, useful life	7 years

XML

REGULATORY CAPITAL AND OTHER REGULATORY MATTERS

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

REGULATORY CAPITAL AND OTHER REGULATORY MATTERS

REGULATORY CAPITAL AND OTHER REGULATORY MATTERS

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

Quantitative measures established by regulation to ensure capital adequacy require the Company and First Bank to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets.

The Company did not meet the minimum regulatory capital standards established for bank holding companies by the Federal Reserve at December 31, 2012 and 2011. The Company must maintain minimum total regulatory, Tier 1 regulatory and Tier 1 leverage ratios as set forth in the table below in order to meet the minimum capital adequacy standards.

First Bank was categorized as well capitalized at December 31, 2012 and 2011 under the prompt corrective action provisions of the regulatory capital standards. First Bank must maintain minimum total regulatory, Tier 1 regulatory and Tier 1 leverage ratios as set forth in the table below in order to be categorized as well capitalized. In addition, First Bank is currently required to maintain its Tier 1 capital to total assets ratio at no less than 7.00% in accordance with the provisions of its informal agreement entered into with the State of Missouri Division of Finance (MDOF), as further described below. First Bank’s Tier 1 capital to total assets ratio of 9.20% and 8.37% at December 31, 2012 and 2011, respectively, exceeded the 7.00% minimum level required under the terms of the informal agreement with the MDOF.

At December 31, 2012 and 2011, the Company and First Bank’s required and actual capital ratios were as follows:

	Actual								For Capital Adequacy Purposes	To be Well Capitalized Under Prompt Corrective Action Provisions
	2012				2011
	Amount		Ratio		Amount		Ratio
	(dollars expressed in thousands)
Total capital (to risk-weighted assets):
First Banks, Inc.	$	93,542	2.57	%	$	73,830	1.88	%	8.0%	N/A
First Bank	626,177		17.18		588,860		14.98		8.0	10.0%
Tier 1 capital (to risk-weighted assets):
First Banks, Inc.	46,771		1.28		36,915		0.94		4.0	N/A
First Bank	580,026		15.92		538,592		13.70		4.0	6.0
Tier 1 capital (to average assets):
First Banks, Inc.	46,771		0.73		36,915		0.56		4.0	N/A
First Bank	580,026		9.13		538,592		8.19		4.0	5.0

As noted above, the Company’s capital ratios are below the minimum regulatory capital standards established for bank holding companies, and therefore, the Company could be subject to additional actions by regulators that could have a direct material effect on the operations and financial condition of the Company and First Bank.

Regulatory Agreements. On March 24, 2010, the Company, SFC and First Bank entered into a Written Agreement (Agreement) with the FRB requiring the Company and First Bank to take certain steps intended to improve their overall financial condition. Pursuant to the Agreement, the Company prepared and filed with the FRB a number of specific plans designed to strengthen and/or address the following matters: (i) board oversight over the management and operations of the Company and First Bank; (ii) credit risk management practices; (iii) lending and credit administration policies and procedures; (iv) asset improvement; (v) capital; (vi) earnings and overall financial condition; and (vii) liquidity and funds management.

The Agreement requires, among other things, that the Company and First Bank obtain prior approval from the FRB in order to pay dividends. In addition, the Company must obtain prior approval from the FRB to: (i) take any other form of payment from First Bank representing a reduction in capital of First Bank; (ii) make any distributions of interest, principal or other sums on junior subordinated debentures or trust preferred securities; (iii) incur, increase or guarantee any debt; or (iv) purchase or redeem any shares of the Company’s stock. Pursuant to the terms of the Agreement, the Company and First Bank submitted a written plan to the FRB to maintain sufficient capital at the Company, on a consolidated basis, and at First Bank, on a standalone basis. In addition, the Agreement also provides that the Company and First Bank must notify the FRB if the regulatory capital ratios of either entity fall below those set forth in the capital plans that were accepted by the FRB, and specifically if First Bank falls below the criteria for being well capitalized under the regulatory framework for prompt corrective action. The Company must also notify the FRB before appointing any new directors or senior executive officers or changing the responsibilities of any senior executive officer position. The Agreement also requires the Company and First Bank to comply with certain restrictions regarding indemnification and severance payments. The Agreement is specifically enforceable by the FRB in court.

The Company and First Bank must furnish periodic progress reports to the FRB regarding compliance with the Agreement. As of the date of this filing, the Company and First Bank have provided progress reports and other reports, as required under the Agreement. The Company and First Bank have received, and may receive in the future, additional requests from the FRB regarding compliance with the Agreement, which may include, but are not limited to, updates and modifications to the Company’s Asset Quality Improvement, Profit Improvement and Capital Plans. Management has responded promptly to any such requests and intends to do so in the future. The Agreement will remain in effect until stayed, modified, terminated or suspended by the FRB.

The description of the Agreement above represents a summary and is qualified in its entirety by the full text of the Agreement which is incorporated herein by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the United States Securities and Exchange Commission on March 25, 2010.

Prior to entering into the Agreement on March 24, 2010, the Company and First Bank had entered into a memorandum of understanding and an informal agreement, respectively, with the FRB and the MDOF. Each of the agreements were characterized by regulatory authorities as informal actions that were neither published nor made publicly available by the agencies and are used when circumstances warrant a milder form of action than a formal supervisory action, such as a written agreement or cease and desist order. The informal agreement with the MDOF is still in place and there have not been any modifications thereto since its inception in September 2008.

Under the terms of the prior memorandum of understanding with the FRB, the Company agreed, among other things, to provide certain information to the FRB including, but not limited to, financial performance updates, notice of plans to materially change its fundamental business and notice to issue trust preferred securities or raise additional equity capital. In addition, the Company agreed not to pay any dividends on its common or preferred stock or make any distributions of interest or other sums on its trust preferred securities without the prior approval of the FRB.

First Bank, under its informal agreement with the MDOF and the FRB, agreed to, among other things, prepare and submit plans and reports to the agencies regarding certain matters including, but not limited to, the performance of First Bank’s loan portfolio. In addition, First Bank agreed not to declare or pay any dividends or make certain other payments without the prior consent of the MDOF and the FRB and to maintain a Tier 1 capital to total assets ratio of no less than 7.00%.

While the Company and First Bank intend to take such actions as may be necessary to comply with the requirements of the Agreement with the FRB and informal agreement with the MDOF, there can be no assurance that the Company and First Bank will be able to comply fully with the requirements of the Agreement or that First Bank will be able to comply fully with the provisions of the informal agreement, that compliance with the Agreement and the informal agreement will not be more time consuming or more expensive than anticipated, that compliance with the Agreement and the informal agreement will enable the Company and First Bank to maintain profitable operations, or that efforts to comply with the Agreement and the informal agreement will not have adverse effects on the operations and financial condition of the Company or First Bank. If the Company or First Bank is unable to comply with the terms of the Agreement or the informal agreement, respectively, the Company and First Bank could become subject to various requirements limiting the ability to develop new business lines, mandating additional capital, and/or requiring the sale of certain assets and liabilities. Failure of the Company or First Bank to meet these conditions could lead to further enforcement action by the regulatory agencies. The terms of any such additional regulatory actions, orders or agreements could have a materially adverse effect on the Company’s business, financial condition or results of operations.

Capital Plan. On August 10, 2009, the Company announced the adoption of a Capital Plan designed to improve its regulatory capital ratios and financial performance through certain divestiture activities, asset reductions and other profit improvement initiatives. The Capital Plan was adopted in order to, among other things, preserve and enhance the Company’s regulatory capital.

The successful completion of all or any portion of the Capital Plan is not assured, and no assurance can be made that the Capital Plan will not be materially modified in the future. The decision to implement the Capital Plan reflects the adverse effect that the severe downturn in the commercial and residential real estate markets has had on the Company’s financial condition and results of operations. If the Company is not able to complete substantially all of the Capital Plan, its business, financial condition, including regulatory capital ratios, and results of operations may be materially and adversely affected and its ability to withstand continued adverse economic conditions could be threatened.

XML

EMPLOYEE BENEFITS (Schedule of Expected Benefit Payments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	$ 821
2014	834
2015	849
2016	849
2017	844
2018 – 2022	$ 4,256

XML

BUSINESS SEGMENT RESULTS

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

BUSINESS SEGMENT RESULTS

BUSINESSSEGMENTRESULTS

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

The business segment results are consistent with the Company’s internal reporting system and, in all material respects, with GAAP and practices predominant in the banking industry. Such principles and practices are summarized in Note 1 to the consolidated financial statements. The business segment results are summarized as follows:

	First Bank				Corporate, Other and Intercompany Reclassifications						Consolidated Totals
	2012		2011	2010	2012		2011		2010		2012	2011	2010
	(dollars expressed in thousands)
Balance sheet information:
Investment securities	$	2,675,280	2,470,704	1,483,659	—		—		—		2,675,280	2,470,704	1,483,659
Loans, net of net deferred loan fees	2,930,747		3,284,279	4,492,284	—		—		—		2,930,747	3,284,279	4,492,284
FRB and FHLB stock	27,329		27,078	30,121	—		—		—		27,329	27,078	30,121
Goodwill and other intangible assets	125,267		125,267	129,054	—		—		—		125,267	125,267	129,054
Assets held for sale	—		—	2,266	—		—		—		—	—	2,266
Assets of discontinued operations	6,706		6,913	43,532	—		—		—		6,706	6,913	43,532
Total assets	6,495,226		6,593,515	7,361,706	13,900		15,398		16,422		6,509,126	6,608,913	7,378,128
Deposits	5,495,624		5,625,889	6,462,068	(2,777	)	(2,834	)	(3,653	)	5,492,847	5,623,055	6,458,415
Other borrowings	26,025		51,170	31,761	—		—		—		26,025	51,170	31,761
Subordinated debentures	—		—	—	354,133		354,057		353,981		354,133	354,057	353,981
Liabilities held for sale	—		—	23,406	—		—		—		—	—	23,406
Liabilities of discontinued operations	155,711		174,737	94,184	—		—		—		155,711	174,737	94,184
Stockholders’ equity	751,252		680,625	693,458	(451,293	)	(416,954	)	(386,163	)	299,959	263,671	307,295

	First Bank							Corporate, Other and Intercompany Reclassifications						Consolidated Totals
	2012			2011		2010		2012		2011		2010		2012		2011		2010
	(dollars expressed in thousands)
Income statement information:
Interest income	$	202,444		233,211		312,333		121		85		135		202,565		233,296		312,468
Interest expense	15,250			30,927		63,027		14,838		13,612		12,993		30,088		44,539		76,020
Net interest income(loss)	187,194			202,284		249,306		(14,717	)	(13,527	)	(12,858	)	172,477		188,757		236,448
Provision for loan losses	2,000			69,000		214,000		—		—		—		2,000		69,000		214,000
Net interest income(loss) afterprovision for loan losses	185,194			133,284		35,306		(14,717	)	(13,527	)	(12,858	)	170,477		119,757		22,448
Noninterest income	65,801			61,975		78,453		405		219		39		66,206		62,194		78,492
Amortization ofintangible assets	—			3,024		3,292		—		—		—		—		3,024		3,292
Other noninterestexpense	203,808			227,600		294,708		1,510		(378	)	639		205,318		227,222		295,347
Income (loss) from continuingoperations beforeprovision(benefit)for income taxes	47,187			(35,365	)	(184,241	)	(15,822	)	(12,930	)	(13,458	)	31,365		(48,295	)	(197,699	)
Provision (benefit) forincome taxes	230			(10,608	)	4,286		(369	)	(46	)	(172	)	(139	)	(10,654	)	4,114
Net income (loss) from continuingoperations, net of tax	46,957			(24,757	)	(188,527	)	(15,453	)	(12,884	)	(13,286	)	31,504		(37,641	)	(201,813	)
(Loss) income from discontinued operations,net of tax	(5,523		)	(6,459	)	3,562		—		—		—		(5,523	)	(6,459	)	3,562
Net income (loss)	41,434			(31,216	)	(184,965	)	(15,453	)	(12,884	)	(13,286	)	25,981		(44,100	)	(198,251	)
Net loss attributable tononcontrolling interestin subsidiary	(297		)	(2,950	)	(6,514	)	—		—		—		(297	)	(2,950	)	(6,514	)
Net income (loss) attributable toFirst Banks, Inc.	$	41,731		(28,266	)	(178,451	)	(15,453	)	(12,884	)	(13,286	)	26,278		(41,150	)	(191,737	)

XML

FAIR VALUE DISCLOSURES (Details 3) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Carrying Value
Financial Assets:
Cash and cash equivalents	$ 518,846	$ 473,140
Investment securities:
Available for sale	2,043,727	2,457,887
Held to maturity	631,553	12,817
Loans held for portfolio	2,773,012	3,115,458
Loans held for sale	66,133	31,111
FRB and FHLB stock	27,329	27,078
Derivative instruments	1,619	1,022
Accrued interest receivable	18,284	21,050
Assets of discontinued operations	6,706	6,913
Financial Liabilities:
Noninterest-bearing demand	1,327,183	1,225,622
Interest-bearing demand	1,000,666	899,114
Savings and money market	1,880,271	1,964,905
Time deposits	1,284,727	1,533,414
Other borrowings	26,025	51,170
Derivative instruments	87	1,114
Accrued interest payable	48,541	34,343
Subordinated debentures	354,133	354,057
Liabilities of discontinued operations	155,711	174,737
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	(2,779)	(2,785)
Estimated Fair Value
Financial Assets:
Cash and cash equivalents	518,846	473,140
Investment securities:
Available for sale	2,043,727	2,457,887
Held to maturity	637,024	13,424
Loans held for portfolio	2,572,256	2,811,866
Loans held for sale	66,133	31,111
FRB and FHLB stock	27,329	27,078
Derivative instruments	1,619	1,022
Accrued interest receivable	18,284	21,050
Assets of discontinued operations	6,706	6,913
Financial Liabilities:
Noninterest-bearing demand	1,327,183	1,225,622
Interest-bearing demand	1,000,666	899,114
Savings and money market	1,880,271	1,964,905
Time deposits	1,286,730	1,536,824
Other borrowings	26,025	51,170
Derivative instruments	87	1,114
Accrued interest payable	48,541	34,343
Subordinated debentures	254,984	204,502
Liabilities of discontinued operations	155,711	174,737
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	(2,779)	(2,785)
Estimated Fair Value | Fair Value, Inputs, Level 1
Financial Assets:
Cash and cash equivalents	518,846
Investment securities:
Available for sale	1,022
Held to maturity	0
Loans held for portfolio	0
Loans held for sale	0
FRB and FHLB stock	27,329
Derivative instruments	0
Accrued interest receivable	18,284
Assets of discontinued operations	0
Financial Liabilities:
Noninterest-bearing demand	1,327,183
Interest-bearing demand	1,000,666
Savings and money market	1,880,271
Time deposits	0
Other borrowings	26,025
Derivative instruments	0
Accrued interest payable	48,541
Subordinated debentures	0
Liabilities of discontinued operations	0
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	0
Estimated Fair Value | Fair Value, Inputs, Level 2
Financial Assets:
Cash and cash equivalents	0
Investment securities:
Available for sale	2,042,705
Held to maturity	637,024
Loans held for portfolio	0
Loans held for sale	66,133
FRB and FHLB stock	0
Derivative instruments	1,619
Accrued interest receivable	0
Assets of discontinued operations	6,706
Financial Liabilities:
Noninterest-bearing demand	0
Interest-bearing demand	0
Savings and money market	0
Time deposits	0
Other borrowings	0
Derivative instruments	87
Accrued interest payable	0
Subordinated debentures	0
Liabilities of discontinued operations	155,711
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	0
Estimated Fair Value | Fair Value, Inputs, Level 3
Financial Assets:
Cash and cash equivalents	0
Investment securities:
Available for sale	0
Held to maturity	0
Loans held for portfolio	2,572,256
Loans held for sale	0
FRB and FHLB stock	0
Derivative instruments	0
Accrued interest receivable	0
Assets of discontinued operations	0
Financial Liabilities:
Noninterest-bearing demand	0
Interest-bearing demand	0
Savings and money market	0
Time deposits	1,286,730
Other borrowings	0
Derivative instruments	0
Accrued interest payable	0
Subordinated debentures	254,984
Liabilities of discontinued operations	0
Off-Balance Sheet Financial Instruments:
Commitments to extend credit, standby letters of credit and financial guarantees	$ (2,779)

XML

EMPLOYEE BENEFITS (Tables)

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Schedule of Changes in Projected Benefit Obligations

A summary of the Plan’s change in the projected benefit obligation and change in the fair value of Plan assets for the years ended December 31, 2012 and 2011 and amounts recognized in the Company’s consolidated balance sheets as of December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	12,467		12,334
Interest cost	516			587
Actuarial loss	1,765			970
Benefit payments	(761		)	(1,424	)
Projected benefit obligation at end of year	$	13,987		12,467
Change in Fair Value of Plan Assets:
Fair value at beginning of year	$	8,848		9,210
Actual return on plan assets	666			774
Employer contributions	666			288
Benefit payments	(761		)	(1,424	)
Fair value at end of year	$	9,419		8,848
Amount Recognized in Consolidated Balance Sheets:
Accrued pension liability	$	4,568		3,619
Amounts Recognized in Accumulated Other Comprehensive Income:
Loss	$	(5,940	)	(4,370	)
Deferred tax liability	2,396			1,737
Loss, net of tax	$	(3,544	)	(2,633	)

Schedule of Assumptions Used

The following table reflects the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2012 and 2011:

	2012		2011
Discount rate	4.28	%	4.93	%
Expected long-term rate of return on Plan assets	7.00		7.00

Schedule of Net Benefit Costs

A summary of the components of net periodic benefit cost for the years ended December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Interest cost	$	516		587
Expected return on Plan assets	(617		)	(625	)
Amortization of net actuarial loss	145			109
Net periodic benefit cost	$	44		71

Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss)

Amounts recognized in accumulated other comprehensive income consist of:

	2012			2011
	(dollars expressed in thousands)
Net loss	$	1,715		821
Amortization of net actuarial loss	(145		)	(109	)
Total recognized in accumulated other comprehensive income	$	1,570		712

Schedule of Allocation of Plan Assets

The fair value of Plan assets at December 31, 2012 and 2011 was comprised of the following:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
Plan Assets - December 31, 2012:
Cash and cash equivalents	$	361	—	—	361
Equity securities	—		3,959	—	3,959
Debt securities	—		4,603	—	4,603
Other	—		496	—	496
Total	$	361	9,058	—	9,419
Plan Assets - December 31, 2011:
Cash and cash equivalents	$	287	—	—	287
Equity securities	—		3,635	—	3,635
Debt securities	—		4,463	—	4,463
Other	—		463	—	463
Total	$	287	8,561	—	8,848

Schedule of Expected Benefit Payments

Pension benefit payments are expected to be paid to Plan participants by the Plan as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013	$	821
2014	834
2015	849
2016	849
2017	844
2018 – 2022	4,256

XML

INCOME TAXES (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended
	Sep. 30, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Income Taxes [Line Items]
Unrecognized tax benefits		$ 1,126,000	$ 1,194,000	$ 1,276,000
Unrecognized tax benefits that would affect provision for income taxes		740,000	784,000
Interest on income taxes accrued		116,000	136,000
Interest on income tax expense		(20,000)	(44,000)	(1,000,000)
Possible decrease in unrecognized tax benefits		234,000
Estimated provision for income taxes before deferred tax asset valuation allowance resulting from lapse of applicable statute of limitations		153,000
Intraperiod tax allocation expense (benefit)			(10,500,000)
Accumulated other comprehensive (loss) regarding unrealized gain on certain interest reate swap agreements		(6,800,000)
Provision for income tax, expiration of unrealized gain on interest rate swap	6,800,000
Bad debt deductions		29,800,000	29,800,000
Internal Revenue Service (IRS)
Schedule of Income Taxes [Line Items]
Operating loss carryforwards		597,686,000	539,200,000
State and Local Jurisdiction
Schedule of Income Taxes [Line Items]
Operating loss carryforwards		786,400,000	702,800,000
Deferred tax aset related to net operating loss		$ 65,900,000	$ 58,300,000

XML

MATURITIES OF TIME DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2012

Maturities of Time Deposits [Abstract]

Maturities of Time Deposits

A summary of maturities of time deposits of $100,000 or more and other time deposits as of December 31, 2012 is as follows:

	Time Deposits of $100,000 or More		Other Time Deposits	Total
	(dollars expressed in thousands)
Year ending December 31:
2013	$	371,325	655,484	1,026,809
2014	62,251		117,272	179,523
2015	16,883		33,957	50,840
2016	4,026		5,574	9,600
2017	6,306		11,548	17,854
Thereafter	—		101	101
Total	$	460,791	823,936	1,284,727

XML

BUSINESS SEGMENT RESULTS (Schedule of Business Segment Results) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Balance sheet information:
Investment securities	$ 2,675,280	$ 2,470,704	$ 1,483,659
Loans, net of net deferred loan fees	2,930,747	3,284,279	4,492,284
FRB and FHLB stock	27,329	27,078	30,121
Goodwill and other intangible assets	125,267	125,267	129,054
Assets held for sale	0	0	2,266
Assets of discontinued operations	6,706	6,913	43,532
Total assets	6,509,126	6,608,913	7,378,128
Deposits	5,492,847	5,623,055	6,458,415
Other borrowings	26,025	51,170	31,761
Subordinated debentures	354,133	354,057	353,981
Liabilities held for sale	0	0	23,406
Liabilities of discontinued operations	155,711	174,737	94,184
Stockholders’ equity	299,959	263,671	307,295	522,380
Income statement information:
Interest income	202,565	233,296	312,468
Interest expense	30,088	44,539	76,020
Net interest income	172,477	188,757	236,448
Provision for loan losses	2,000	69,000	214,000
Net interest income after provision for loan losses	170,477	119,757	22,448
Noninterest income	66,206	62,194	78,492
Amortization of intangible assets	0	3,024	3,292
Other noninterest expense	205,318	227,222	295,347
Income (loss) from continuing operations before provision (benefit) for income taxes	31,365	(48,295)	(197,699)
Provision (benefit) for income taxes	(139)	(10,654)	4,114
Net income (loss) from continuing operations	31,504	(37,641)	(201,813)
(Loss) income from discontinued operations, net of tax	(5,523)	(6,459)	3,562
Net income (loss)	25,981	(44,100)	(198,251)
Net loss attributable to noncontrolling interest in subsidiary	(297)	(2,950)	(6,514)
Net income (loss) attributable to First Banks, Inc.	26,278	(41,150)	(191,737)
Corporate, Other and Intercompany Reclassifications
Balance sheet information:
Investment securities	0	0	0
Loans, net of net deferred loan fees	0	0	0
FRB and FHLB stock	0	0	0
Goodwill and other intangible assets	0	0	0
Assets held for sale	0	0	0
Assets of discontinued operations	0	0	0
Total assets	13,900	15,398	16,422
Deposits	(2,777)	(2,834)	(3,653)
Other borrowings	0	0	0
Subordinated debentures	354,133	354,057	353,981
Liabilities held for sale	0	0	0
Liabilities of discontinued operations	0	0	0
Stockholders’ equity	(451,293)	(416,954)	(386,163)
Income statement information:
Interest income	121	85	135
Interest expense	14,838	13,612	12,993
Net interest income	(14,717)	(13,527)	(12,858)
Provision for loan losses	0	0	0
Net interest income after provision for loan losses	(14,717)	(13,527)	(12,858)
Noninterest income	405	219	39
Amortization of intangible assets	0	0	0
Other noninterest expense	1,510	(378)	639
Income (loss) from continuing operations before provision (benefit) for income taxes	(15,822)	(12,930)	(13,458)
Provision (benefit) for income taxes	(369)	(46)	(172)
Net income (loss) from continuing operations	(15,453)	(12,884)	(13,286)
(Loss) income from discontinued operations, net of tax	0	0	0
Net income (loss)	(15,453)	(12,884)	(13,286)
Net loss attributable to noncontrolling interest in subsidiary	0	0	0
Net income (loss) attributable to First Banks, Inc.	(15,453)	(12,884)	(13,286)
First Bank
Balance sheet information:
Investment securities	2,675,280	2,470,704	1,483,659
Loans, net of net deferred loan fees	2,930,747	3,284,279	4,492,284
FRB and FHLB stock	27,329	27,078	30,121
Goodwill and other intangible assets	125,267	125,267	129,054
Assets held for sale	0	0	2,266
Assets of discontinued operations	6,706	6,913	43,532
Total assets	6,495,226	6,593,515	7,361,706
Deposits	5,495,624	5,625,889	6,462,068
Other borrowings	26,025	51,170	31,761
Subordinated debentures	0	0	0
Liabilities held for sale	0	0	23,406
Liabilities of discontinued operations	155,711	174,737	94,184
Stockholders’ equity	751,252	680,625	693,458
Income statement information:
Interest income	202,444	233,211	312,333
Interest expense	15,250	30,927	63,027
Net interest income	187,194	202,284	249,306
Provision for loan losses	2,000	69,000	214,000
Net interest income after provision for loan losses	185,194	133,284	35,306
Noninterest income	65,801	61,975	78,453
Amortization of intangible assets	0	3,024	3,292
Other noninterest expense	203,808	227,600	294,708
Income (loss) from continuing operations before provision (benefit) for income taxes	47,187	(35,365)	(184,241)
Provision (benefit) for income taxes	230	(10,608)	4,286
Net income (loss) from continuing operations	46,957	(24,757)	(188,527)
(Loss) income from discontinued operations, net of tax	(5,523)	(6,459)	3,562
Net income (loss)	41,434	(31,216)	(184,965)
Net loss attributable to noncontrolling interest in subsidiary	(297)	(2,950)	(6,514)
Net income (loss) attributable to First Banks, Inc.	$ 41,731	$ (28,266)	$ (178,451)

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net income (loss)	$ 25,981	$ (44,100)	$ (198,251)
Other comprehensive income:
Unrealized gains on available-for-sale investment securities, net of tax	17,420	22,676	4,764
Reclassification adjustment for available-for-sale investment securities gains included in net income (loss), net of tax	(758)	(3,461)	(5,378)
Amortization of net unrealized gain associated with reclassification of available-for-sale investment securities to held-to-maturity investment securities, net of tax	(913)	0	0
Reclassification adjustment for deferred tax asset valuation allowance on investment securities	15,014	(119)	(331)
Change in unrealized gains on derivative instruments, net of tax	0	0	(3,734)
Reclassification adjustment for deferred tax asset valuation allowance on derivative instruments	0	0	4,806
Amortization of net loss related to pension liability, net of tax	(911)	(413)	(4)
Reclassification adjustment for deferred tax asset valuation allowance on pension liability	(659)	(299)	23
Other comprehensive income	29,193	18,384	146
Comprehensive income (loss)	55,174	(25,716)	(198,105)
Comprehensive loss attributable to noncontrolling interest in subsidiary	(297)	(2,950)	(6,514)
Comprehensive income (loss) attributable to First Banks, Inc.	$ 55,471	$ (22,766)	$ (191,591)

XML

SUBORDINATED DEBENTURES (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012 installment trust	Dec. 31, 2011	Dec. 31, 2010	Jan. 26, 2011	Aug. 10, 2009
Subordinated Borrowings [Abstract]
Number of trusts created for issuing trust preferred securities	13
Percent of principal amount callable at call date	100.00%
Distributions accrued on junior subordinated debentures	$ 14,800,000	$ 13,500,000	$ 12,900,000
Trust preferred securities value					345,000,000
Number of quarterly periods for deferral of cash interest payments on junior subordinated debt	14
Statement [Line Items]
Individual ownership percentage				100.00%
Cummulative trust preferred securities, percentage				8.15%
Regularly Scheduled Deferred Interest Payments Accrued
Statement [Line Items]
Interest payable	43,800,000	31,000,000
Additional Deferred Interest Payments Accrued
Statement [Line Items]
Interest payable	$ 3,900,000	$ 1,900,000

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS IN DEBT AND EQUITY SECURITIES

INVESTMENTS IN DEBTAND EQUITY SECURITIES

Securities Available for Sale. The amortized cost, contractual maturity, gross unrealized gains and losses and fair value of investment securities available for sale at December 31, 2012 and 2011 were as follows:

	Maturity									Total Amortized Cost	Gross Unrealized				Weighted Average Yield
	1 Year or Less			1-5 Years		5-10 Years		After 10 Years			Gains	Losses		Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Carrying value:
U.S. Government sponsored agencies	$	10,051		80,328		—		213,892		304,271	6,304	(146	)	310,429	1.42	%
Residential mortgage-backed	364			24,014		219,286		1,251,917		1,495,581	38,983	(497	)	1,534,067	2.32
Commercial mortgage-backed	—			—		806		—		806	109	—		915	4.86
State and political subdivisions	985			3,579		201		—		4,765	164	—		4,929	4.05
Corporate notes	—			137,090		49,704		—		186,794	6,192	(621	)	192,365	3.13
Equity investments	—			—		—		1,000		1,000	22	—		1,022	2.54
Total	$	11,400		245,011		269,997		1,466,809		1,993,217	51,774	(1,264	)	2,043,727	2.26
Fair value:
Debt securities	$	11,476		251,558		275,251		1,504,420
Equity securities	—			—		—		1,022
Total	$	11,476		251,558		275,251		1,505,442
Weighted average yield	2.01		%	2.17	%	2.65	%	2.21	%
December 31, 2011:
Carrying value:
U.S. Government sponsored agencies	$	1,000		231,691		107,019		—		339,710	2,107	—		341,817	1.75	%
Residential mortgage-backed	—			2,726		64,309		1,821,209		1,888,244	36,908	(232	)	1,924,920	2.27
Commercial mortgage-backed	—			—		818		—		818	92	—		910	4.86
State and political subdivisions	310			4,088		786		—		5,184	226	—		5,410	4.00
Corporate Notes	—			122,941		65,088		5,000		193,029	—	(9,216	)	183,813	3.28
Equity investments	—			—		—		1,000		1,000	17	—		1,017	2.83
Total	$	1,310		361,446		238,020		1,827,209		2,427,985	39,350	(9,448	)	2,457,887	2.28
Fair value:
Debt securities	$	1,314		357,194		236,824		1,861,538
Equity securities	—			—		—		1,017
Total	$	1,314		357,194		236,824		1,862,555
Weighted average yield	2.93		%	2.07	%	2.56	%	2.28	%

Securities Held to Maturity. The amortized cost, contractual maturity, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31, 2012 and 2011 were as follows:

	Maturity									Total Amortized Cost	Gross Unrealized				Weighted Average Yield
	1 Year or Less			1-5 Years		5-10 Years		After 10 Years			Gains	Losses		Fair Value
	(dollars expressed in thousands)
December 31, 2012:
Carrying value:
U.S. Government sponsored agencies	$	—		—		52,582		—		52,582	269	—		52,851	1.63	%
Residential mortgage-backed	—			—		108,420		466,863		575,283	6,142	(614	)	580,811	1.82
State and political subdivisions	826			1,099		252		1,511		3,688	51	(377	)	3,362	1.89
Total	$	826		1,099		161,254		468,374		631,553	6,462	(991	)	637,024	1.80
Fair value:
Debt securities	$	836		1,129		164,433		470,626
Weighted average yield	2.56		%	3.40	%	1.77	%	1.81	%
December 31, 2011:
Carrying value:
Residential mortgage-backed	$	—		—		728		615		1,343	116	—		1,459	5.06	%
Commercial mortgage-backed	—			6,310		—		—		6,310	447	—		6,757	5.16
State and political subdivisions	1,372			2,004		254		1,534		5,164	44	—		5,208	4.20
Total	$	1,372		8,314		982		2,149		12,817	607	—		13,424	4.76
Fair value:
Debt securities	$	1,387		8,768		1,056		2,213
Weighted average yield	2.55		%	4.67	%	4.60	%	6.61	%

Proceeds from sales of available-for-sale investment securities were $315.2 million, $283.7 million and $249.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. Proceeds from calls of investment securities were $277.2 million, $56.0 million and $2.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. Gross realized gains and gross realized losses on investment securities for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(dollars expressed in thousands)
Gross realized gains on sales of available-for-sale securities	$	1,675		5,286		8,350
Gross realized losses on sales of available-for-sale securities	(374		)	(1	)	(31	)
Other-than-temporary impairment	(2		)	(3	)	(4	)
Gross realized gains on calls of investment securities	7			53		—
Net realized gain on investment securities	$	1,306		5,335		8,315

Investment securities with a carrying value of approximately $257.6 million and $228.9 million at December 31, 2012 and 2011, respectively, were pledged in connection with deposits of public and trust funds, securities sold under agreements to repurchase and for other purposes as required by law.

On June 30, 2012, the Company reclassified certain of its available-for-sale investment securities to held-to-maturity investment securities at their respective fair values, which totaled $729.1 million, in aggregate. The determination of the reclassification was made by management based on the Company’s current and expected future liquidity levels and the resulting intent to hold such investment securities to maturity. The net gross unrealized gain on these available-for-sale investment securities at the time of transfer of $11.7 million, in aggregate, was recorded as additional premium on the securities and is being amortized over the remaining lives of the respective securities, as further described in Note 13 to the consolidated financial statements.

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2012 and 2011, were as follows:

	Less than 12 months				12 months or more			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(dollars expressed in thousands)
December 31, 2012:
Available for sale:
U.S. Government sponsored agencies	$	20,018	(146	)	—	—		20,018	(146	)
Residential mortgage-backed	125,449		(441	)	270	(56	)	125,719	(497	)
Corporate notes	—		—		17,675	(621	)	17,675	(621	)
Total	$	145,467	(587	)	17,945	(677	)	163,412	(1,264	)
Held to maturity:
Residential mortgage-backed	$	66,011	(614	)	—	—		66,011	(614	)
State and political subdivisions	1,133		(377	)	—	—		1,133	(377	)
Total	$	67,144	(991	)	—	—		67,144	(991	)
December 31, 2011:
Available for sale:
Residential mortgage-backed	$	67,395	(126	)	22,349	(106	)	89,744	(232	)
Corporate notes	173,813		(9,216	)	—	—		173,813	(9,216	)
Total	$	241,208	(9,342	)	22,349	(106	)	263,557	(9,448	)

The Company does not believe that the investment securities that were in an unrealized loss position at December 31, 2012 and 2011 are other-than-temporarily impaired. The unrealized losses on the investment securities were primarily attributable to fluctuations in interest rates. It is expected that the securities would not be settled at a price less than the amortized cost. Because the decline in fair value is attributable to changes in interest rates and not credit loss, and because the Company does not intend to sell these investments and it is more likely than not that the Company will not be required to sell these securities before the anticipated recovery of the remaining amortized cost basis or maturity, these investments are not considered other-than-temporarily impaired. The unrealized losses for residential mortgage-backed securities for 12 months or more at December 31, 2012 and 2011 included nine and 11 securities, respectively. The unrealized losses for corporate notes for 12 months or more at December 31, 2012 included six securities.

XML

INVESTMENTS IN DEBT AND EQUITY SECURITIES (Gross Unrealized Losses) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Available for sale: Less than 12 months, Fair Value	$ 145,467	$ 241,208
Available for sale: Less than 12 months, Unrealized Losses	(587)	(9,342)
Available for sale: 12 months or more, Fair Value	17,945	22,349
Available for sale: 12 months or more, Unrealized Losses	(677)	(106)
Available for sale: Total, Fair Value	163,412	263,557
Available for sale: Total, Unrealized Losses	(1,264)	(9,448)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	67,144
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(991)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	67,144
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Losses	(991)
U.S. Government sponsored agencies
Available for sale: Less than 12 months, Fair Value	20,018
Available for sale: Less than 12 months, Unrealized Losses	(146)
Available for sale: 12 months or more, Fair Value	0
Available for sale: 12 months or more, Unrealized Losses	0
Available for sale: Total, Fair Value	20,018
Available for sale: Total, Unrealized Losses	(146)
Residential mortgage-backed
Available for sale: Less than 12 months, Fair Value	125,449	67,395
Available for sale: Less than 12 months, Unrealized Losses	(441)	(126)
Available for sale: 12 months or more, Fair Value	270	22,349
Available for sale: 12 months or more, Unrealized Losses	(56)	(106)
Available for sale: Total, Fair Value	125,719	89,744
Available for sale: Total, Unrealized Losses	(497)	(232)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	66,011
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(614)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	66,011
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Losses	(614)
State and political subdivisions
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,133
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(377)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	1,133
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Losses	(377)
Corporate notes
Available for sale: Less than 12 months, Fair Value	0	173,813
Available for sale: Less than 12 months, Unrealized Losses	0	(9,216)
Available for sale: 12 months or more, Fair Value	17,675	0
Available for sale: 12 months or more, Unrealized Losses	(621)	0
Available for sale: Total, Fair Value	17,675	173,813
Available for sale: Total, Unrealized Losses	$ (621)	$ (9,216)

XML

DERIVATIVE INSTRUMENTS (Schedule of Other Derivatives Not Designated as Hedging Instruments, Location in Statements) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Derivative Instruments, Gain (Loss) [Line Items]
Other noninterest income	$ (40)	$ (193)	$ (2,900)
Not Designated As Hedging Instrument | Interest rate lock commitments
Derivative Instruments, Gain (Loss) [Line Items]
Gain on loans sold and held for sale	456	1,105	(93)
Not Designated As Hedging Instrument | Forward commitments to sell mortgage-backed securities
Derivative Instruments, Gain (Loss) [Line Items]
Gain on loans sold and held for sale	424	(2,267)	891
Not Designated As Hedging Instrument | Interest rate swap agreements – subordinated debentures
Derivative Instruments, Gain (Loss) [Line Items]
Other noninterest income	(43)	(194)	(2,929)
Not Designated As Hedging Instrument | Customer interest rate swap agreements
Derivative Instruments, Gain (Loss) [Line Items]
Other noninterest income	$ 3	$ 1	$ 4

XML

EARNINGS (LOSS) PER COMMON SHARE (Earnings Per Share Reconciliation) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Class of Stock [Line Items]
Net income (loss) from continuing operations attributable to First Banks, Inc.	$ 31,801	$ (34,691)	$ (195,299)
Preferred stock dividends declared and undeclared	(18,886)	(17,908)	(16,980)
Accretion of discount on preferred stock	(3,554)	(3,466)	(3,381)
Net income (loss) from continuing operations attributable to common stockholders	9,361	(56,065)	(215,660)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523)	(6,459)	3,562
Net income (loss) available to common stockholders	3,838	(62,524)	(212,098)
Weighted average shares of common stock outstanding	23,661	23,661	23,661
Basic earnings (loss) per common share – continuing operations	$ 395.64	$ (2,369.48)	$ (9,114.61)
Basic (loss) earnings per common share – discontinued operations	$ (233.42)	$ (272.98)	$ 150.54
Basic earnings (loss) per common share	$ 162.22	$ (2,642.46)	$ (8,964.07)
Net income (loss) from continuing operations attributable to common stockholders	9,361	(56,065)	(215,660)
Net (loss) income from discontinued operations attributable to common stockholders	(5,523)	(6,459)	3,562
Net income (loss) available to First Banks, Inc. common stockholders	3,838	(62,524)	(212,098)
Weighted average shares of common stock outstanding	23,661	23,661	23,661
Diluted earnings (loss) per common share – continuing operations	$ 395.64	$ (2,369.48)	$ (9,114.61)
Diluted (loss) earnings per common share – discontinued operations	$ (233.42)	$ (272.98)	$ 150.54
Diluted earnings (loss) per common share	$ 162.22	$ (2,642.46)	$ (8,964.07)
Class A convertible preferred stock
Class of Stock [Line Items]
Effect of dilutive securities – Class A convertible preferred stock	$ 0	$ 0	$ 0
Effect of dilutive securities – Class A convertible preferred stock	0	0	0

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Allowance For Credit Losses On Financing Receivables By Portfolio Segments) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Allowance for loan losses:
Balance, beginning of year	$ 137,710	$ 201,033	$ 266,448
Charge-offs	(78,070)	(154,627)	(331,196)
Recoveries	29,962	22,304	52,102
Provision (benefit) for loan losses	2,000	69,000	214,000
Balance, end of year	91,602	137,710	201,033
Commercial and Industrial
Allowance for loan losses:
Balance, beginning of year	27,243	28,000
Charge-offs	(17,410)	(46,256)
Recoveries	12,886	6,962
Provision (benefit) for loan losses	(9,147)	38,537
Balance, end of year	13,572	27,243
Real Estate Construction and Development
Allowance for loan losses:
Balance, beginning of year	24,868	58,439
Charge-offs	(12,244)	(35,459)
Recoveries	5,659	6,694
Provision (benefit) for loan losses	(3,849)	(4,806)
Balance, end of year	14,434	24,868
One-to- Four-Family Residential
Allowance for loan losses:
Balance, beginning of year	50,864	60,762
Charge-offs	(21,814)	(31,355)
Recoveries	5,188	3,985
Provision (benefit) for loan losses	4,659	17,472
Balance, end of year	38,897	50,864
Multi- Family Residential
Allowance for loan losses:
Balance, beginning of year	4,851	5,158
Charge-offs	(2,435)	(3,126)
Recoveries	44	562
Provision (benefit) for loan losses	1,792	2,257
Balance, end of year	4,252	4,851
Commercial Real Estate
Allowance for loan losses:
Balance, beginning of year	29,448	47,880
Charge-offs	(23,856)	(37,974)
Recoveries	5,982	3,787
Provision (benefit) for loan losses	8,474	15,755
Balance, end of year	20,048	29,448
Consumer and Installment
Allowance for loan losses:
Balance, beginning of year	436	794
Charge-offs	(311)	(457)
Recoveries	203	314
Provision (benefit) for loan losses	71	(215)
Balance, end of year	$ 399	$ 436

XML

TRANSACTIONS WITH RELATED PARTIES

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH RELATED PARTIES

Outside of normal customer relationships, no directors or officers of the Company, no shareholders holding over 5% of the Company’s voting securities and no corporations or firms with which such persons or entities are associated currently maintain or have maintained, since the beginning of the last full fiscal year, any significant business or personal relationships with the Company or its subsidiaries, other than that which arises by virtue of such position or ownership interest in the Company or its subsidiaries, except as described in the following paragraphs.

First Services, L.P. First Services, L.P. (First Services), a limited partnership indirectly owned by the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, provides information technology, item processing and various related services to the Company and First Bank. Fees paid under agreements with First Services were $21.1 million, $24.5 million and $26.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. First Services leases information technology and other equipment from First Bank. First Services paid First Bank rental fees for the use of such equipment of $1.3 million, $1.9 million and $2.5 million during the years ended December 31, 2012, 2011 and 2010, respectively. In addition, First Services paid $1.8 million, $1.8 million and $1.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, in rental payments to First Bank for occupancy of certain First Bank premises from which business is conducted.

First Services entered into an Affiliate Services Agreement with the Company and First Bank effective January 2009. The Affiliate Services Agreement relates to various services provided to First Services, including certain human resources, payroll, employee benefit and training services, accounting services, insurance services and vendor payment processing services. Fees accrued under the Affiliate Services Agreement by First Services were $183,000, $177,000 and $157,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

First Brokerage America, L.L.C. First Brokerage America, L.L.C. (First Brokerage), a limited liability company indirectly owned by the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, received approximately $4.3 million, $5.3 million and $5.0 million for the years ended December 31, 2012, 2011 and 2010, respectively, in gross commissions paid by unaffiliated third-party companies. The commissions received primarily resulted from sales of annuities, securities and other insurance products to customers of First Bank. First Brokerage paid approximately $401,000, $491,000 and $312,000 for the years ended December 31, 2012, 2011 and 2010, respectively, to First Bank in rental payments for occupancy of certain First Bank premises from which brokerage business is conducted.

Dierbergs Markets, Inc. First Bank leases certain of its in-store branch offices and automated teller machine (ATM) sites from Dierbergs Markets, Inc., a grocery store chain headquartered in St. Louis, Missouri that is owned and operated by the brother of the Company’s Chairman and members of his immediate family. Total rent expense incurred by First Bank under the lease obligation contracts was $498,000, $474,000 and $462,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

First Capital America, Inc. / FB Holdings, LLC. The Company formed FB Holdings, a limited liability company organized in the state of Missouri, in May 2008. FB Holdings operates as a majority-owned subsidiary of First Bank and was formed for the primary purpose of holding and managing certain nonperforming loans and assets to allow the liquidation of such assets at a time that is more economically advantageous to First Bank and to permit an efficient vehicle for the investment of additional capital by the Company’s sole owner of its Class A and Class B preferred stock. First Bank contributed cash of $9.0 million and nonperforming loans and assets with a fair value of approximately $133.3 million and FCA, a corporation owned by the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company, contributed cash of $125.0 million to FB Holdings during 2008. As a result, First Bank owned 53.23% and FCA owned the remaining 46.77% of FB Holdings as of December 31, 2012. The contribution of cash by FCA is reflected as a component of stockholders’ equity in the consolidated balance sheets and, consequently, increased the Company’s and First Bank’s regulatory capital ratios under then-existing regulatory guidelines, subject to certain limitations.

FB Holdings receives various services provided by First Bank, including loan servicing and special assets services as well as various other financial, legal, human resources and property management services. Fees paid under the agreement by FB Holdings to First Bank were $124,000, $194,000 and $321,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Investors of America Limited Partnership. In March 2011, the Company entered into a $5.0 million Credit Agreement with Investors of America, LP, as further described in Note 11 to the consolidated financial statements. Investors of America, LP is a Nevada limited partnership that was created by and for the benefit of the Company’s Chairman and members of his immediate family, including Mr. Michael Dierberg, Vice Chairman of the Company. There were no balances outstanding under this Credit Agreement during the period from its inception in March 2011 to its maturity date on December 31, 2012.

On March 20, 2013, the Company entered into a New Credit Agreement with Investors of America, LP, as further described in Note 25 to the consolidated financial statements.

Loans to Directors and/or their Affiliates. First Bank has had in the past, and may have in the future, loan transactions in the ordinary course of business with its directors and/or their affiliates. These loan transactions have been made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated persons and, except as described below, did not involve more than the normal risk of collectability or present other unfavorable features. Loans to directors, their affiliates and executive officers of the Company were $9.1 million and $23.4 million at December 31, 2012 and 2011, respectively. First Bank does not extend credit to its officers or to officers of the Company, except extensions of credit secured by mortgages on personal residences, loans to purchase automobiles, personal credit card accounts and deposit account overdraft protection under a plan whereby a credit limit has been established in accordance with First Bank’s standard credit criteria.

Loans to directors, their affiliates and executive officers of the Company at December 31, 2011 included a $15.6 million multi-family real estate loan to a limited liability company which was 50% owned by the brother-in-law of Mr. Douglas H. Yaeger, a director of the Company. The loan had been paid as agreed and was not reported as past due, nonaccrual or restructured as of December 31, 2011. However, based on current economic and financial considerations, management had classified this loan as special mention in the Company’s loan watch list as of December 31, 2011. On September 28, 2012, the then current balance of $15.4 million was repaid in full.

Loans to directors, their affiliates and executive officers of the Company at December 31, 2011 also included two credit relationships aggregating $1.2 million to companies which were approximately 16% owned by the brother-in-law of Mr. Yaeger, including a $328,000 credit relationship that was 60 - 89 days past due. Both loans had been classified by management as problem loans in the Company’s loan watch list as of December 31, 2011 and were subsequently placed on nonaccrual status during 2012. On December 14, 2012, First Bank sold these nonaccrual loans for an aggregate purchase price of $785,000 to a company partially owned by the brother-in-law of Mr. Yaeger.

Depositary Accounts of Directors and/or their Affiliates. Certain directors and/or their affiliates maintain funds on deposit with First Bank in the ordinary course of business. These deposit transactions include demand, savings and time accounts, and have been established on the same terms, including interest rates, as those prevailing at the time for comparable transactions with unaffiliated persons.

XML

PARENT COMPANY ONLY FINANCIAL INFORMATION (CONDENSED BALANCE SHEETS) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Assets
Cash deposited in First Bank (unrestricted cash)	$ 114,841	$ 101,822
Other assets	67,996	73,026
Total assets	6,509,126	6,608,913	7,378,128
Liabilities and Stockholders' Equity
Subordinated debentures	354,133	354,057	353,981
Accrued expenses and other liabilities	144,269	115,962
Total liabilities	6,209,167	6,345,242
First Banks, Inc. stockholders’ equity	206,304	169,719
Total liabilities and stockholders’ equity	6,509,126	6,608,913
Parent Company
Assets
Cash deposited in First Bank (unrestricted cash)	2,744	2,801
Cash deposited in unaffiliated financial institution (restricted cash)	0	2,008
Total cash	2,744	4,809
Investment in common securities - TRuPS	10,678	10,678
Investment in subsidiaries	657,838	586,899
Other assets	3,583	3,067
Total assets	674,843	605,453
Liabilities and Stockholders' Equity
Subordinated debentures	354,133	354,057
Derivative instruments	0	807
Accrued interest payable	47,878	33,179
Dividends payable	61,931	43,045
Accrued expenses and other liabilities	4,597	4,646
Total liabilities	468,539	435,734
First Banks, Inc. stockholders’ equity	206,304	169,719
Total liabilities and stockholders’ equity	$ 674,843	$ 605,453

XML

BANK PREMISES AND EQUIPMENT, NET (Textual) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Abstract]
Interest costs capitalized	$ 31,000	$ 23,000	$ 42,000
Depreciation and amortization	12,100,000	13,400,000	16,500,000
Operating leases, rent expense	11,500,000	13,000,000	14,500,000
Rental income, nonoperating	$ 4,100,000	$ 4,400,000	$ 5,300,000

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 were as follows:

	2012		2011
	(dollars expressed in thousands)
Balance, beginning of year	$	125,267	125,967
Goodwill allocated to discontinued operations (1)	—		(700	)
Balance, end of year	$	125,267	125,267

(1) Goodwill allocated to discontinued operations during 2011 pertains to the Florida Region, as further discussed in Note 2 to the consolidated financial statements.

XML

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Common Stock. There is no established public trading market for the Company’s common stock. Various trusts, which were established by and are administered by and for the benefit of the Company’s Chairman of the Board and members of his immediate family (including Mr. Michael Dierberg, Vice Chairman of the Company), own all of the voting stock of the Company.

Preferred Stock. The Company has four classes of preferred stock outstanding. The Class A preferred stock is convertible into shares of common stock at a rate based on the ratio of the par value of the preferred stock to the current market value of the common stock at the date of conversion, to be determined by independent appraisal at the time of conversion. Shares of Class A preferred stock may be redeemed by the Company at any time at 105.0% of par value. The Class B preferred stock may not be redeemed or converted. The holders of the Class A and Class B preferred stock have full voting rights. Dividends on the Class A and Class B preferred stock are adjustable quarterly based on the highest of the Treasury Bill Rate or the Ten Year Constant Maturity Rate for the two-week period immediately preceding the beginning of the quarter. This rate shall not be less than 6.0% nor more than 12.0% on the Class A preferred stock, or less than 7.0% nor more than 15.0% on the Class B preferred stock. Effective August 10, 2009, the Company suspended the declaration of dividends on its Class A and Class B preferred stock.

On December 31, 2008, the Company issued 295,400 shares of Class C Fixed Rate Cumulative Perpetual Preferred Stock (Class C Preferred Stock) and 14,770 shares of Class D Fixed Rate Cumulative Perpetual Preferred Stock (Class D Preferred Stock) to the United States Department of the Treasury (U.S. Treasury) in conjunction with the U.S. Treasury’s Troubled Asset Relief Program’s Capital Purchase Program (CPP). The Class C Preferred Stock has a par value of $1.00 per share and a liquidation preference of $1,000 per share. The holders of the Class C Preferred Stock have no voting rights except in certain limited circumstances. The Class C Preferred Stock carries an annual dividend rate equal to 5% for the first five years and the annual dividend rate increases to 9% per annum on and after February 15, 2014, payable quarterly in arrears beginning February 15, 2009. The Class D Preferred Stock has a par value of $1.00 per share and a liquidation preference of $1,000 per share. The holders of the Class D Preferred Stock have no voting rights except in certain limited circumstances. The Class D Preferred Stock carries an annual dividend rate equal to 9%, payable quarterly in arrears beginning February 15, 2009. The Class C Preferred Stock and the Class D Preferred Stock qualify as Tier 1 capital. Effective February 17, 2009, the Class C Preferred Stock and the Class D Preferred Stock may be redeemed at any time without penalty and without the need to raise new capital, subject to the U.S. Treasury’s consultation with the Company’s primary regulatory agency. The Class D Preferred Stock may not be redeemed until all of the outstanding shares of the Class C Preferred Stock have been redeemed. In addition, the U.S. Treasury has certain supervisory and oversight duties and responsibilities under the CPP and, pursuant to the terms of the agreement governing the issuance of the Class C Preferred Stock and the Class D Preferred Stock to the U.S. Treasury (Purchase Agreement), the U.S. Treasury is empowered to unilaterally amend any provision of the Purchase Agreement with the Company to the extent required to comply with any changes in applicable federal statutes. As a result of the Company’s deferral of dividends to the U.S. Treasury for an aggregate of six quarters, the U.S. Treasury had the right to elect two directors to the Company’s Board. On July 13, 2011, the U.S. Treasury elected two members to the Company’s Board of Directors.

The Company allocated the total proceeds received under the CPP of $295.4 million to the Class C Preferred Stock and the Class D Preferred Stock based on the relative fair values of the respective classes of preferred stock at the time of issuance. The discount on the Class C Preferred Stock of $17.3 million is being accreted to retained earnings on a level-yield basis over five years. Accretion of the discount on the Class C Preferred Stock was $3.6 million, $3.5 million and $3.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

The redemption of any issue of preferred stock requires the prior approval of the Federal Reserve. Furthermore, the Purchase Agreement that the Company entered into with the U.S. Treasury contains limitations on certain actions of the Company, including, but not limited to, payment of dividends and redemptions and acquisitions of the Company’s equity securities. In addition, the Company, under its agreement with the FRB, has agreed, among other things, to provide certain information to the FRB including, but not limited to, notice of plans to materially change its fundamental business and notice to raise additional equity capital. Furthermore, the Company agreed not to pay any dividends on its common or preferred stock without the prior approval of the FRB, as further described in Note 14 to the consolidated financial statements.

In conjunction with the deferral of its regularly scheduled interest payments on its outstanding junior subordinated debentures on August 10, 2009, as further described in Note 12 to the consolidated financial statements, the Company also began suspending the payment of cash dividends on its outstanding preferred stock beginning with the regularly scheduled quarterly dividend payments on the preferred stock that would otherwise have been made in August and September 2009. The Company has deferred such payments for 14 quarterly periods as of December 31, 2012. Consequently, the Company has suspended the declaration of dividends on its Class A and Class B preferred stock, but continues to declare and accumulate dividends on its Class C Preferred Stock and its Class D Preferred Stock. The Company has declared and deferred $56.3 million and $40.2 million of its regularly scheduled dividend payments on its Class C Preferred Stock and Class D Preferred Stock at December 31, 2012 and 2011, respectively, and has declared and accrued an additional $5.6 million and $2.8 million of cumulative dividends on such deferred dividend payments at December 31, 2012 and 2011, respectively.

On June 30, 2012, the Company reclassified certain of its available-for-sale investment securities to held-to-maturity investment securities at their respective fair values, which totaled $729.1 million, in aggregate, as further described in Note 3 to the consolidated financial statements. The gross unrealized gain on these available-for-sale investment securities at the time of transfer was $11.7 million. The unrealized gain included as a component of accumulated other comprehensive income was $6.8 million at June 30, 2012, net of tax of $4.9 million. The fair value adjustment at the time of transfer of $11.7 million was recorded as additional premium on the investment securities, and is being amortized as an adjustment to interest income on investment securities over the remaining lives of the respective securities. The amortization of the unrealized gain reported in stockholders’ equity is also being amortized as an adjustment to interest income on investment securities over the remaining lives of the respective securities. Consequently, the combined amortization of the additional premium and the unrealized gain have no net impact on interest income on investment securities.

Other comprehensive income of $29.2 million, $18.4 million and $146,000, as presented in the consolidated statements of changes in stockholders’ equity, is reflected net of income tax expense (benefit) of $8.0 million, $10.1 million and $(2.3) million for the years ended December 31, 2012, 2011 and 2010, respectively.

XML

INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Deferred tax assets:
Federal net operating loss carryforwards	$ 209,190	$ 188,726
State net operating loss carryforwards	65,882	58,326
Allowance for loan losses	37,825	56,649
Loans held for sale	2,032	1,745
Alternative minimum and general business tax credits	19,146	17,326
Interest on nonaccrual loans	12,551	15,359
Deferred compensation	3,573	3,593
Core deposit intangibles	2,706	3,111
Partnership and corporate investments	7,908	12,052
Deferred loan charge-offs and other fraud losses	4,341	13,875
Other real estate and repossessed assets	22,666	22,665
Accrued contingent liabilities	2,870	3,632
Depreciation on bank premises and equipment	1,202	486
State taxes	682	0
Other	12,692	13,205
Gross deferred tax assets	405,266	410,750
Valuation allowance	(376,224)	(391,629)	(370,125)	(295,067)
Deferred tax assets, net of valuation allowance	29,042	19,121
Deferred tax liabilities:
Servicing rights	2,632	2,418
Net fair value adjustment for available-for-sale investment securities	21,214	10,466
Deferred gain on reclassification of investment securities from available for sale to held to maturity	4,265	0
Equity investments	5,364	5,366
State taxes	0	4,577
Net deferred loan fees	1,903	2,779
Other	804	655
Deferred tax liabilities	36,182	26,261
Net deferred tax liabilities	$ (7,140)	$ (7,140)