Summary of FIRST STATE BANCORPORATION

Item 2.01. Completion of Acquisition or Disposition of Assets

On June 26, 2009, First State Bancorporation and its wholly owned subsidiary, First Community Bank (the "Company") completed the sale of their twenty branches located in Colorado to Great Western Bank, a South Dakota-based subsidiary of National Australia Bank. Under the terms of the agreement, Great Western Bank will acquire approximately $385 million in selected loans, $509 million in deposits, and $20 million in premises and equipment and other assets. The transaction includes a premium on deposits of $30 million and is expected to result, after transaction costs and the write-off of the core deposit intangible, in a pre-tax gain of approximately $23 million. The transaction excludes approximately $252 million in loans, which consist primarily of construction, acquisition and development, and non-accrual loans. These loans will continue to be serviced by First State personnel in Colorado until they are paid off or are sold. First State will also retain all Certificate of Deposit Account Registry ("CDARS") and certain other deposits. A copy of the press release regarding the completion of the sale is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 2.05. Costs Associated with Exit or Disposal Activities

On June 26, 2009, First State Bancorporation and First Community Bank completed the sale of their Colorado branches referred to in Item 2.01 of the report. The discussion in Item 2.01 is incorporated into this Item by this reference.

As a result of entering into this transaction, the Company estimates it will incur pre-tax legal and investment banking charges of approximately $950,000 and pre-tax employment contract termination and other costs of approximately $900,000.

Certain statements in this Form 8-K are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based on management's current expectations or predictions of future results or events. We make these forward-looking statements in reliance on the safe harbor provisions provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical fact, included in this report which relate to performance, development or activities that we expect or anticipate will or may happen in the future, are forward looking statements. The discussions regarding the estimated costs related to the transaction are forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties and are based on numerous assumptions. They are not guarantees of future performance. A number of important factors could cause actual results to differ materially from those in the forward-looking statement including events and conditions related to the closing of the transaction described in this Report and in the Agreement. Forward-looking statements contained herein are made only as of the date made, and we do not undertake any obligation to update them to reflect events or circumstances after the date of this report to reflect the occurrence of unanticipated events.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. These factors are included in our Form 10-K for the period ended December 31, 2008, as filed with the Securities and Exchange Commission.