September 20, 2000
First Banks, Inc.
135 North Meramec
St. Louis, Missouri 63105
First Preferred Capital Trust II
135 North Meramec
St. Louis, Missouri 63105
Re: First Preferred Capital Trust II, ___% Cumulative Trust
Preferred Securities
Ladies and Gentlemen:
We have acted as federal income tax counsel for First Banks, Inc.,
a Missouri corporation (the "Company"), and First Preferred Capital
Trust II, a statutory business trust created under the laws of Delaware
(the "Trust"), in connection with the proposed issuance of: (i) __%
Cumulative Trust Preferred Securities of the Trust (the "Preferred
Securities") pursuant to the terms of the Amended and Restated Trust
Agreement between the Company and the trustees named therein (the "Trust
Agreement"); (ii) subordinated debentures of the Company (the
"Subordinated Debentures") pursuant to the terms of an indenture from
the Company to State Street Bank and Trust Company as Trustee (the
"Indenture"); and (iii) the Preferred Securities Guarantee Agreement of
the Company with respect to the Preferred Securities (the "Guarantee")
between the Company and State Street Bank and Trust Company as Guarantee
Trustee. The Preferred Securities and the Subordinated Debentures are
to be issued as contemplated by the registration statement on Form S-2
dated September 20, 2000 (the "Registration Statement") to be filed by
the Company and the Trust to register the issuances of the Preferred
Securities, the Subordinated Debentures and the Guarantee under the
Securities Act of 1933, as amended. In connection with our engagement,
we have participated in the preparation of the discussion set forth
under the caption "Federal Income Tax Consequences" in the Registration
Statement. Except as otherwise indicated, defined terms used herein
have the meanings given to them in the Registration Statement.
In rendering this opinion we have examined such documents, records
and other instruments as we have deemed necessary or appropriate,
including, without limitation: (i) the Registration Statement; (ii) the
form of Indenture attached as an exhibit to the Registration Statement;
(iii) the form of the Subordinated Debentures attached as an exhibit to
the Registration Statement; (iv) the form of Original Trust Agreement,
attached as an exhibit to the Registration Statement; (v) the form of
Amended and Restated Trust Agreement, attached as an exhibit to the
First Banks, Inc.
First Preferred Capital Trust II
September 20, 2000
Page 2
Registration Statement; (vi) the form of Guarantee attached as an
exhibit to the Registration Statement; and (vii) the form of Preferred
Security Certificate attached as an exhibit to the Registration
Statement (collectively the "Documents"). Our opinion is premised and
conditioned on the accuracy of the facts contained in the Documents, the
correctness of all representations made in the Documents, the assumption
that the final Documents will be substantially identical to the forms of
the Documents attached as exhibits to the Registration Statement, the
assumption that the transactions contemplated by the Documents will be
consummated in the manner described in the Documents, and the assumption
that there will be full compliance with all of the terms of the final
Documents. In particular, and without limiting the scope of the
preceding sentence, we have assumed for purposes of our opinion that the
trustees will conduct the affairs of the Trust in accordance with the
Trust Agreement.
In rendering this opinion, we have also relied, without
independent investigation or verification, upon the initial and
continuing accuracy of the following certifications on behalf of the
Company or the Trust, the initial and continuing accuracy of which
constitute an integral basis for the opinions expressed herein:
1. The Company and the Trust intend to create a debtor-creditor
relationship between the Company, as debtor, and the Trust
as creditor, upon the issuance of the Subordinated
Debentures to the Trust by the Company, and the Company and
the Trust will: (i) record and at all times continue to
reflect the Subordinated Debentures as indebtedness of the
Company on their respective separate books and records for
financial accounting purposes; and (ii) treat the
Subordinated Debentures as indebtedness of the Company for
all United States federal income tax purposes.
2. The sole assets of the Trust will be the Subordinated
Debentures.
3. The Company has no present intent to exercise its right to
defer payments of interest by extending the interest payment
period on the Subordinated Debentures.
4. The Company believes that the likelihood that it would
exercise its right to defer payments of interest by
extending the interest payment period on the Subordinated
Debentures is remote because of the resulting (i)
restrictions that would be imposed on the Company's ability
to pay dividends on its outstanding equity and its ability
to make payments on its outstanding debt securities that
rank pari passu or junior to the Subordinated Debentures,
and (ii) adverse effect on the Company's cost of, and
ability to raise, capital in the future.
5. The Company expects that it will be able to cause its
wholly-owned subsidiaries
First Banks, Inc.
First Preferred Capital Trust II
September 20, 2000
Page 3
to pay dividends to the Company in amounts and at times
sufficient to enable the Company to make timely payments of
interest and principal on the Subordinated Debentures.
6. The Company has and expects to continue to have material
amounts of trade accounts payable.
7. There has been no material payment default by the Company
with respect to any of its currently or previously
outstanding debt.
Accordingly, subject to the assumptions, qualifications, and
conditions set forth therein and in this opinion:
the legal conclusions within the discussion set
forth under the caption "Federal Income Tax
Consequences" in the Registration Statement
constitute the opinion of this firm with respect
to the United States federal income tax matters
specifically addressed therein.
This opinion is based on the Internal Revenue Code of 1986, as
amended, United States Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in existence
and in effect on the date hereof and all of which are subject to change,
possibly on a retroactive basis. Any such changes could have a material
impact upon the conclusions reached herein. Our opinion is not binding
on the Internal Revenue Service ("IRS") or the courts. The authorities
on which this opinion is based are subject to various interpretations
and there is no clear legal precedent dealing with the federal income
tax characterization of securities similar to the Subordinated
Debentures and the Preferred Securities. The IRS has issued a Notice
(Notice 94-47, 1994-1 C.B. 357) indicating that it intends to closely
scrutinize securities similar to those contemplated to be issued in the
transactions here in question. Accordingly, there can be no assurance
that the IRS will not challenge the opinions expressed herein or that a
court would not sustain such a challenge.
We specifically note that we are rendering no opinion as to the
state, local or foreign tax consequences associated with the Trust, the
Subordinated Debentures or the Preferred Securities nor do we render any
opinion as to any United States federal income tax consequences related
thereto except as expressly addressed herein. Additionally, we
undertake no obligation to update this opinion in the event there is (i)
a change in the legal authorities, the facts (including the taking of
any action by any party to any of the transactions described in the
Documents relating to such transactions) or the Documents on which this
opinion is based, or (ii) any inaccuracy in any of the representations
or warranties upon which we have relied in rendering this opinion.
First Banks, Inc.
First Preferred Capital Trust II
September 20, 2000
Page 4
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement, and to the use of our name under the
headings "Federal Income Tax Consequences" and "Legal Matters" in the
Registration Statement.
Sincerely,
Jackson Walker L.L.P.
/s/ Jackson Walker L.L.P.