Summary of FIRST STATE BANCORPORATION

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On December 23, 2008, First State Bancorporation's Board of Directors approved the First Amendment to the First State Bancorporation Key Executives Incentive Plan (the "Plan"). The Plan is a cash and option based short-term incentive program that establishes individual target awards related to achievement of Company performance over certain three-year performance periods. The performance levels for each performance period have been defined as average returns on equity between 12% and 16%. The target awards are divided into two components, 33% as performance cash awards and 67% as performance options awards. Persons eligible to participate in the Plan include certain designated officers of First State Bancorporation who have a title of Vice President and above, and who are key members of management with significant decision-making capabilities and influence on Company operations. The current participants are First State Bancorporation's Chief Executive Officer ("CEO"), Chief Operating Officer ("COO"), and Chief Financial Officer ("CFO").

The Plan amendment is included herein as Exhibit 10.1. The amendment allows the Board of Directors sole discretion, after due consideration of all relevant facts and circumstances, to decline the grant of performance options to all participants under the Plan if such declination is consistent with current business conditions and stock performance. After due consideration, on December 23, 2008, the Board of Directors declined the grant of performance options to First State Bancorporation's CEO, COO, and CFO for the third performance period, January 1, 2009 to December 31, 2011.