----

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| INDIANA                                                             |   | 35-1068133                               |
|---------------------------------------------------------------------|--------|------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer IdentificationNo.) |

| 100 North Michigan Street                               | South Bend, Indiana | 46601 |
|---------------------------------------------------------|---------------------|-------|
| (Address      of principal executive offices) (ZipCode) |

|   | Yes | X |   | No |   |   |
|--------|-----|---|--------|----|--------|--------|

|   | Large      accelerated filer |   |   | Accelerated      filer | X |   | Non-accelerated      filer |   | Smaller      reporting company |  |   |
|--------|------------------------------|--------|--------|------------------------|---|--------|----------------------------|--------|--------------------------------|--|--------|

|   | Yes |   |   | No | X |   |
|--------|-----|--------|--------|----|---|--------|

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Table of Contents

TABLE OF CONTENTS

| PART      I.  FINANCIAL INFORMATION |                                                                                                                     |
|-----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|
|                                          |                                                                                                                     | Page |
| Item      1.                                  | Financial      Statements (Unaudited)                                                                                    |   |
|                                          | Consolidated statements of financial condition – March 31,      2008, and December 31, 2007                        | 3 |
|                                          | Consolidated statements of income -- three months ended March      31, 2008 and 2007                                     | 4 |
|                                          | Consolidated statements of changes in shareholders’ equity –      three months ended March 31, 2008 and 2007 | 5 |
|                                          | Consolidated statements of cash flows -- three months ended      March 31, 2008 and 2007                                 | 6 |
|                                          | Notes to the Consolidated Financial    Statements                                                                        | 7 |
| Item      2.                                  | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                         | 14 |
| Item      3.                                  | Quantitative and Qualitative Disclosures About Market      Risk                                                          | 22 |
| Item      4.                                  | Controls and Procedures                                                                                                  | 22 |
|                                          |                                                                                                                     |   |
| PART      II.  OTHER INFORMATION    |                                                                                                                     |
|                                          |                                                                                                                     |   |
| Item      1.                                  | Legal Proceedings                                                                                                        | 23 |
| Item      1A.                                 | Risk Factors                                                                                                             | 23 |
| Item      2.                                  | Unregistered Sales of Equity Securities and Use of      Proceeds                                                         | 23 |
| Item      3.                                  | Defaults Upon Senior Securities                                                                                          | 23 |
| Item      4.                                  | Submission of Matters to a Vote of Security      Holders                                                                 | 23 |
| Item      5.                                  | Other Information                                                                                                        | 24 |
| Item      6.                                  | Exhibits                                                                                                                 | 24 |
|                                          |                                                                                                                     |   |
| SIGNATURES                                    | 25                                                                                                                       |
|                                          |                                                                                                                     |   |
| EXHIBITS                                      | Exhibit 31.1                                                                                                             |   |
|                                          | Exhibit 31.2                                                                                                             |   |
|                                          | Exhibit 32.1                                                                                                             |   |
|                                          | Exhibit 32.2                                                                                                             |   |
|                                          |                                                                                                                     |

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Table of Contents

| 1st SOURCE CORPORATION                                                                |   |           |      |   |              |   |
|---------------------------------------------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
| CONSOLIDATED STATEMENTS OF      FINANCIAL CONDITION                                   |   |           |      |   |              |   |
| (Unaudited      - Dollars in thousands)                                               |   |           |      |   |              |   |
|                                                                                  |   | March      31, |      |   | December      31, |   |
|                                                                                  |   | 2008           |      |   | 2007              |   |
| ASSETS                                                                                |   |           |      |   |              |   |
| Cash      and due from banks                                                          |   | $              | 118,844   |   |              | $      | 153,137 |   |
| Federal      funds sold and                                                           |   |           |      |   |              |   |   |   |
| interest      bearing deposits with other banks                                       |   |           | 90,351    |   |              |   | 25,817 |   |
| Investment      securities available-for-sale                                         |   |           |      |   |              |   |   |   |
| (amortized      cost of $763,024 and $790,859                                         |   |           |      |   |              |   |   |   |
| at      March 31, 2008 and December 31, 2007, respectively)                           |   |           | 772,994   |   |              |   | 794,918 |   |
| Mortgages      held for sale                                                          |   |           | 37,853    |   |              |   | 25,921 |   |
| Loans      and leases - net of unearned discount:                                     |   |           |      |   |              |   |   |   |
| Commercial      and agricultural loans                                                |   |           | 641,159   |   |              |   | 593,806 |   |
| Auto,      light truck and environmental equipment                                    |   |           | 301,879   |   |              |   | 305,238 |   |
| Medium      and heavy duty truck                                                      |   |           | 281,554   |   |              |   | 300,469 |   |
| Aircraft      financing                                                               |   |           | 575,676   |   |              |   | 587,022 |   |
| Construction      equipment financing                                                 |   |           | 370,276   |   |              |   | 377,785 |   |
| Loans      secured by real estate                                                     |   |           | 876,885   |   |              |   | 881,646 |   |
| Consumer      loans                                                                   |   |           | 142,412   |   |              |   | 145,475 |   |
| Total      loans and leases                                                           |   |           | 3,189,841 |   |              |   | 3,191,441 |   |
| Reserve      for loan and lease losses                                                |   |           | (67,428   | )      |              |   | (66,602 | ) |
| Net      loans and leases                                                             |   |           | 3,122,413 |   |              |   | 3,124,839 |   |
| Equipment      owned under operating leases, net of accumulated    depreciation       |   |           | 79,844    |   |              |   | 81,960 |   |
| Net      premises and equipment                                                       |   |           | 44,365    |   |              |   | 45,048 |   |
| Goodwill      and intangible assets                                                   |   |           | 93,165    |   |              |   | 93,567 |   |
| Accrued      income and other assets                                                  |   |           | 102,491   |   |              |   | 101,897 |   |
| Total      assets                                                                     |   | $              | 4,462,320 |   |              | $      | 4,447,104 |   |
|                                                                                  |   |           |      |   |              |   |   |   |
| LIABILITIES                                                                           |   |           |      |   |              |   |   |   |
| Deposits:                                                                             |   |           |      |   |              |   |   |   |
| Noninterest      bearing                                                              |   | $              | 419,287   |   |              | $      | 418,529 |   |
| Interest      bearing                                                                 |   |           | 3,085,837 |   |              |   | 3,051,134 |   |
| Total      deposits                                                                   |   |           | 3,505,124 |   |              |   | 3,469,663 |   |
|                                                                                  |   |           |      |   |              |   |   |   |
| Federal      funds purchased and securities                                           |   |           |      |   |              |   |   |   |
| sold      under agreements to repurchase                                              |   |           | 237,558   |   |              |   | 303,429 |   |
| Other      short-term borrowings                                                      |   |           | 74,387    |   |              |   | 34,403 |   |
| Long-term      debt and mandatorily redeemable securities                             |   |           | 35,025    |   |              |   | 34,702 |   |
| Subordinated      notes                                                               |   |           | 89,692    |   |              |   | 100,002 |   |
| Accrued      expenses and other liabilities                                           |   |           | 80,219    |   |              |   | 74,401 |   |
| Total      liabilities                                                                |   |           | 4,022,005 |   |              |   | 4,016,600 |   |
|                                                                                  |   |           |      |   |              |   |   |   |
| SHAREHOLDERS'      EQUITY                                                             |   |           |      |   |              |   |   |   |
| Preferred      stock; no par value                                                    |   |           |      |   |              |   |   |   |
| Authorized      10,000,000 shares; none issued or outstanding                         |   |           | -         |   |              |   | - |   |
| Common      stock; no par value                                                       |   |           |      |   |              |   |   |   |
| Authorized      40,000,000 shares; issued 25,913,889 at March 31, 2008                |   |           |      |   |              |   |   |   |
| and      25,927,510 at December 31, 2007, less unearned shares                        |   |           |      |   |              |   |   |   |
| (270,383      at March 31, 2008 and 284,004 at December 31, 2007)                     |   |           | 342,840   |   |              |   | 342,840 |   |
| Retained      earnings                                                                |   |           | 123,420   |   |              |   | 117,373 |   |
| Cost      of common stock in treasury (1,538,971 shares at March 31, 2008,      and   |   |           |      |   |              |   |   |   |
| 1,551,396      shares at December 31, 2007)                                           |   |           | (32,091   | )      |              |   | (32,231 | ) |
| Accumulated      other comprehensive income                                           |   |           | 6,146     |   |              |   | 2,522 |   |
| Total      shareholders' equity                                                       |   |           | 440,315   |   |              |   | 430,504 |   |
| Total      liabilities and shareholders' equity                                       |   | $              | 4,462,320 |   |              | $      | 4,447,104 |   |
|                                                                                  |   |           |      |   |              |   |   |   |
|                                                                                  |   |           |      |   |              |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |           |      |   |              |   |   |   |

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Table of Contents

| 1st SOURCE CORPORATION                                                                |   |                    |       |   |   |   |
|---------------------------------------------------------------------------------------|--------|-------------------------|------------|--------|--------|--------|
| CONSOLIDATED      STATEMENTS OF INCOME                                                |   |                    |       |   |   |   |
| (Unaudited      - Dollars in thousands, except per share amounts)                     |   |                    |       |   |   |   |
|                                                                                  |   | Three      Months Ended |       |
|                                                                                  |   |  March      31,    |       |
|                                                                                  |   | 2008                    |       |   | 2007   |   |
| Interest      income:                                                                 |   |                    |       |   |   |   |
| Loans      and leases                                                                 |   | $                       | 53,263     |   |   | $      | 48,274 |   |
| Investment      securities, taxable                                                   |   |                    | 6,600      |   |   |   | 5,730 |   |
| Investment      securities, tax-exempt                                                |   |                    | 2,105      |   |   |   | 1,417 |   |
| Other                                                                                 |   |                    | 156        |   |   |   | 532 |   |
| Total      interest income                                                            |   |                    | 62,124     |   |   |   | 55,953 |   |
| Interest      expense:                                                                |   |                    |       |   |   |   |   |   |
| Deposits                                                                              |   |                    | 25,120     |   |   |   | 25,270 |   |
| Short-term      borrowings                                                            |   |                    | 2,381      |   |   |   | 2,690 |   |
| Subordinated      notes                                                               |   |                    | 1,772      |   |   |   | 1,094 |   |
| Long-term      debt and mandatorily redeemable securities                             |   |                    | 554        |   |   |   | 627 |   |
| Total      interest expense                                                           |   |                    | 29,827     |   |   |   | 29,681 |   |
| Net      interest income                                                              |   |                    | 32,297     |   |   |   | 26,272 |   |
| Provision      for (recovery of provision for) loan and lease losses                  |   |                    | 1,539      |   |   |   | (623 | ) |
| Net      interest income after provision for                                          |   |                    |       |   |   |   |   |   |
| (recovery      of provision for) loan and lease losses                                |   |                    | 30,758     |   |   |   | 26,895 |   |
| Noninterest      income:                                                              |   |                    |       |   |   |   |   |   |
| Trust      fees                                                                       |   |                    | 4,262      |   |   |   | 3,643 |   |
| Service      charges on deposit accounts                                              |   |                    | 5,108      |   |   |   | 4,570 |   |
| Mortgage      banking income                                                          |   |                    | 1,117      |   |   |   | 571 |   |
| Insurance      commissions                                                            |   |                    | 1,946      |   |   |   | 1,638 |   |
| Equipment      rental income                                                          |   |                    | 5,749      |   |   |   | 5,098 |   |
| Other      income                                                                     |   |                    | 2,222      |   |   |   | 1,719 |   |
| Investment      securities and other investment gains                                 |   |                    | 623        |   |   |   | 247 |   |
| Total      noninterest income                                                         |   |                    | 21,027     |   |   |   | 17,486 |   |
| Noninterest      expense:                                                             |   |                    |       |   |   |   |   |   |
| Salaries      and employee benefits                                                   |   |                    | 20,634     |   |   |   | 17,566 |   |
| Net      occupancy expense                                                            |   |                    | 2,476      |   |   |   | 1,936 |   |
| Furniture      and equipment expense                                                  |   |                    | 3,978      |   |   |   | 3,094 |   |
| Depreciation      - leased equipment                                                  |   |                    | 4,616      |   |   |   | 4,076 |   |
| Supplies      and communication                                                       |   |                    | 1,669      |   |   |   | 1,272 |   |
| Other      expense                                                                    |   |                    | 4,528      |   |   |   | 3,856 |   |
| Total      noninterest expense                                                        |   |                    | 37,901     |   |   |   | 31,800 |   |
| Income      before income taxes                                                       |   |                    | 13,884     |   |   |   | 12,581 |   |
| Income      tax expense                                                               |   |                    | 4,530      |   |   |   | 4,058 |   |
|                                                                                  |   |                    |       |   |   |   |   |   |
| Net      income                                                                       |   | $                       | 9,354      |   |   | $      | 8,523 |   |
|                                                                                  |   |                    |       |   |   |   |   |   |
| Per      common share                                                                 |   |                    |       |   |   |   |   |   |
| Basic      net income per common share                                                |   | $                       | 0.39       |   |   | $      | 0.38 |   |
| Diluted      net income per common share                                              |   | $                       | 0.38       |   |   | $      | 0.37 |   |
| Dividends                                                                             |   | $                       | 0.140      |   |   | $      | 0.140 |   |
| Basic      weighted average common shares outstanding                                 |   |                    | 24,096,274 |   |   |   | 22,504,799 |   |
| Diluted      weighted average common shares outstanding                               |   |                    | 24,382,507 |   |   |   | 22,797,557 |   |
|                                                                                  |   |                    |       |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |                    |       |   |   |
|                                                                                  |   |                    |       |   |   |   |   |   |

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Table of Contents

| 1st SOURCE CORPORATION                                                                |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |
|---------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|----------|--------|--------|------------------|--------|--------|--------------------|---------|
| STATEMENT      OF CHANGES IN SHAREHOLDERS' EQUITY                                     |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |
| (Unaudited      - Dollars in thousands, except per share amounts)                     |   |   |    |   |   |   |    |     |   |   |             |   |   |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   | Net                |    |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   | Unrealized         |    |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   | Appreciation       |    |
|                                                                                  |   |   |    |   |   |   |    |     |   |   | Cost      of     |   |   | (Depreciation)     |    |
|                                                                                  |   |   |    |   |   |   |    |     |   |   | Common           |   |   | of      Securities |    |
|                                                                                  |   |   |    |   | Common |   |    | Retained |   |   | Stock            |   |   | Available-         |    |
|                                                                                  |   | Total  |    |   | Stock  |   |    | Earnings |   |   | in      Treasury |   |   | For-Sale           |    |
| Balance      at January 1, 2007                                                       |   | $      | 368,904 |   |   | $      | 289,163 |     |   | $      | 99,572           |   |   | $                  | (19,571 | ) |   | $ | (260 | ) |
| Comprehensive      Income, net of tax:                                                |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| Net      Income                                                                       |   |   | 8,523   |   |   |   | -       |     |   |   | 8,523            |   |   |               | -       |   |   |   | - |   |
| Change      in unrealized appreciation                                                |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| of      available-for-sale securities, net of tax                                     |   |   | 621     |   |   |   | -       |     |   |   | -                |   |   |               | -       |   |   |   | 621 |   |
| Total      Comprehensive Income                                                       |   |   | 9,144   |   |   |   | -       |     |   |   | -                |   |   |               | -       |   |   |   | - |   |
| Issuance      of 30,355 common shares                                                 |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| under      stock based compensation awards,                                           |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| including      related tax effects                                                    |   |   | 340     |   |   |   | -       |     |   |   | 292              |   |   |               | 48      |   |   |   | - |   |
| Cost      of 16,758 shares of common                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| stock      acquired for treasury                                                      |   |   | (174    | )      |   |   | -       |     |   |   | -                |   |   |               | (174    | ) |   |   | - |   |
| Cash      dividend ($0.14 per share)                                                  |   |   | (3,156  | )      |   |   | -       |     |   |   | (3,156           | )      |   |               | -       |   |   |   | - |   |
| Balance      at March 31, 2007                                                        |   | $      | 375,058 |   |   | $      | 289,163 |     |   | $      | 105,231          |   |   | $                  | (19,697 | ) |   | $ | 361 |   |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| Balance      at January 1, 2008                                                       |   | $      | 430,504 |   |   | $      | 342,840 |     |   | $      | 117,373          |   |   | $                  | (32,231 | ) |   | $ | 2,522 |   |
| Comprehensive      Income, net of tax:                                                |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| Net      Income                                                                       |   |   | 9,354   |   |   |   | -       |     |   |   | 9,354            |   |   |               | -       |   |   |   | - |   |
| Change      in unrealized appreciation                                                |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| of      available-for-sale securities, net of tax                                     |   |   | 3,624   |   |   |   | -       |     |   |   | -                |   |   |               | -       |   |   |   | 3,624 |   |
| Total      Comprehensive Income                                                       |   |   | 12,978  |   |   |   | -       |     |   |   | -                |   |   |               | -       |   |   |   | - |   |
| Issuance      of 12,425 common shares                                                 |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| under      stock based compensation awards,                                           |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| including      related tax effects                                                    |   |   | 214     |   |   |   | -       |     |   |   | 74               |   |   |               | 140     |   |   |   | - |   |
| Cash      dividend ($0.14 per share)                                                  |   |   | (3,381  | )      |   |   | -       |     |   |   | (3,381           | )      |   |               | -       |   |   |   | - |   |
| Balance      at March 31, 2008                                                        |   | $      | 440,315 |   |   | $      | 342,840 |     |   | $      | 123,420          |   |   | $                  | (32,091 | ) |   | $ | 6,146 |   |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |
|                                                                                  |   |   |    |   |   |   |    |     |   |   |             |   |   |               |    |   |   |   |   |   |

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Table of Contents

| 1st SOURCE CORPORATION                                                                |   |                              |     |   |   |   |
|---------------------------------------------------------------------------------------|--------|-----------------------------------|----------|--------|--------|--------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                            |   |                              |     |   |   |   |
| (Unaudited      - Dollars in thousands)                                               |   |                              |     |   |   |   |
|                                                                                  |   | Three      Months Ended March 31, |     |
|                                                                                  |   | 2008                              |     |   | 2007   |   |
| Operating      activities:                                                            |   |                              |     |   |   |   |
| Net      income                                                                       |   | $                                 | 9,354    |   |   | $      | 8,523 |   |
| Adjustments      to reconcile net income to net cash                                  |   |                              |     |   |   |   |   |   |
| provided      by operating activities:                                                |   |                              |     |   |   |   |   |   |
| Provision      for (recovery of provision for) loan and lease losses                  |   |                              | 1,539    |   |   |   | (623 | ) |
| Depreciation      of premises and equipment                                           |   |                              | 1,470    |   |   |   | 1,215 |   |
| Depreciation      of equipment owned and leased to others                             |   |                              | 4,616    |   |   |   | 4,076 |   |
| Amortization      of investment security premiums                                     |   |                              |     |   |   |   |   |   |
| and      accretion of discounts, net                                                  |   |                              | 127      |   |   |   | (64 | ) |
| Amortization      of mortgage servicing rights                                        |   |                              | 694      |   |   |   | 639 |   |
| Mortgage      servicing asset impairment/(recoveries)                                 |   |                              | 587      |   |   |   | (1 | ) |
| Deferred      income taxes                                                            |   |                              | (1,515   | )      |   |   | (1,354 | ) |
| Realized      investment securities(gains)                                            |   |                              | (623     | )      |   |   | (247 | ) |
| Change      in mortgages held for sale                                                |   |                              | (11,932  | )      |   |   | 8,510 |   |
| Change      in interest receivable                                                    |   |                              | 162      |   |   |   | 938 |   |
| Change      in interest payable                                                       |   |                              | (2,055   | )      |   |   | 1,162 |   |
| Change      in other assets                                                           |   |                              | (1,635   | )      |   |   | 1,455 |   |
| Change      in other liabilities                                                      |   |                              | 7,103    |   |   |   | 4,683 |   |
| Other                                                                                 |   |                              | 679      |   |   |   | 177 |   |
| Net      change in operating activities                                               |   |                              | 8,571    |   |   |   | 29,089 |   |
|                                                                                  |   |                              |     |   |   |   |   |   |
| Investing      activities:                                                            |   |                              |     |   |   |   |   |   |
| Proceeds      from sales of investment securities                                     |   |                              | 5,579    |   |   |   | - |   |
| Proceeds      from maturities of investment securities                                |   |                              | 192,520  |   |   |   | 154,101 |   |
| Purchases      of investment securities                                               |   |                              | (169,768 | )      |   |   | (88,034 | ) |
| Net      change in short-term investments                                             |   |                              | (64,534  | )      |   |   | (71,429 | ) |
| Net      change in loans and leases                                                   |   |                              | 887      |   |   |   | (48,354 | ) |
| Net      change  in equipment owned under operatingleases                   |   |                              | (2,500   | )      |   |   | (3,307 | ) |
| Purchases      of premises and equipment                                              |   |                              | (880     | )      |   |   | (839 | ) |
| Net      change in investing activities                                               |   |                              | (38,696  | )      |   |   | (57,862 | ) |
|                                                                                  |   |                              |     |   |   |   |   |   |
| Financing      activities:                                                            |   |                              |     |   |   |   |   |   |
| Net      change in demand deposits, NOW                                               |   |                              |     |   |   |   |   |   |
| accounts      and savings accounts                                                    |   |                              | (23,898  | )      |   |   | (17,684 | ) |
| Net      change in certificates of deposit                                            |   |                              | 59,359   |   |   |   | 2,830 |   |
| Net      change in short-term borrowings                                              |   |                              | (25,887  | )      |   |   | (244 | ) |
| Proceeds      from issuance of long-term debt                                         |   |                              | 10,006   |   |   |   | - |   |
| Payments      on subordinated notes                                                   |   |                              | (10,310  | )      |   |   | - |   |
| Payments      on long-term debt                                                       |   |                              | (10,214  | )      |   |   | (255 | ) |
| Net      proceeds from issuance of treasury stock                                     |   |                              | 214      |   |   |   | 340 |   |
| Acquisition      of treasury stock                                                    |   |                              | -        |   |   |   | (174 | ) |
| Cash      dividends                                                                   |   |                              | (3,438   | )      |   |   | (3,209 | ) |
| Net      change in financing activities                                               |   |                              | (4,168   | )      |   |   | (18,396 | ) |
|                                                                                  |   |                              |     |   |   |   |   |   |
| Net      change in cash and cash equivalents                                          |   |                              | (34,293  | )      |   |   | (47,169 | ) |
|                                                                                  |   |                              |     |   |   |   |   |   |
| Cash      and cash equivalents, beginning of year                                     |   |                              | 153,137  |   |   |   | 118,131 |   |
|                                                                                  |   |                              |     |   |   |   |   |   |
| Cash      and cash equivalents, end of period                                         |   | $                                 | 118,844  |   |   | $      | 70,962 |   |
|                                                                                  |   |                              |     |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |                              |     |   |   |   |   |   |
|                                                                                  |   |                              |     |   |   |   |   |   |

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1ST SOURCE

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|                                               |   |                |   |            |   |            |   |            |
|----------------------------------------------------|--------|---------------------|--------|-----------------|--------|-----------------|--------|-----------------|
|                                               |   | March      31, 2008 |   |            |   |            |
|                                               |   |                |   |            |   | Average         |   |            |
|                                               |   |                |   | Weighted        |   | Remaining       |   | Total           |
|                                               |   |                |   | Average         |   | Contractual     |   | Intrinsic       |
|                                               |   | Number      of      |   | Grant-date      |   | Term            |   | Value           |
|                                               |   | Shares              |   | Fair      Value |   | (in      years) |   | (in      000's) |
|                                               |   |                |   |            |   |            |   |            |
| Options      outstanding, beginning of year        |   | 471,517             |   | $26.51          |   |            |   |            |
| Granted                                            |   | -                   |   | -               |   |            |   |            |
| Exercised                                          |   | -                   |   | -               |   |            |   |            |
| Forfeited                                          |   | (6,670)             |   | 25.44           |   |            |   |            |
| Options      outstanding, March 31, 2008           |   | 464,847             |   | $26.53          |   | 0.89            |   | $255            |
|                                               |   |                |   |            |   |            |   |            |
|                                               |   |                |   |            |   |            |   |            |
| Vested      and expected to vest at March 31, 2008 |   | 464,847             |   | $26.53          |   | 0.89            |   | $255            |
| Exercisable      at March 31, 2008                 |   | 453,847             |   | $26.88          |   | 0.79            |   | $156            |

|                  |           | Weighted    |     |           |     |
|-----------------------|----------------|-------------|----------|----------------|----------|
|                  |           | Average     | Weighted |           | Weighted |
| Range      of         | Number         | Remaining   | Average  | Number         | Average  |
| Exercise              | of      shares | Contractual | Exercise | of      shares | Exercise |
| Prices                | Outstanding    | Life        | Price    | Exercisable    | Price    |
| $12.04      to $17.99 | 29,508         | 4.49        | $13.38   | 18,508         | $14.18   |
| $18.00      to $26.99 | 55,587         | 2.93        | 20.46    | 48,917         | 20.46    |
| $27.00      to $28.40 | 386,422        | 0.35        | 28.30    | 386,422        | 28.30    |

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| §   | Level      1 – Quoted prices are available in active markets for identical assets or      liabilities as of the reporteddate. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| §   | Level      2 – Pricing inputs are other than quoted prices in active markets, which      are either directly or indirectly observable as of the reported      date.  The nature of these assets and liabilities include items      for which quoted prices are available but traded less frequently, and      items that are fair valued using other financial instruments, the      parameters of which can be directlyobserved. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Level      3 – Assets and liabilities that have little to no pricing observability as      of the reported date.  These items do not have two-way markets      and are measured using management’s best estimate of fair value, where the      inputs into the determination of fair value require significant management      judgment or estimation. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Investment      securities available for sale are valued primarily by a third party      pricing agent and both the market and income valuation approaches are      implemented using the following types ofinputs: |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| §   | U.S.      treasuries are priced using the market approach and utilizing live data      feeds from active market exchanges for identical    securities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Government-sponsored      agency debt securities and corporate bonds are primarily priced using      available market information through processes such as benchmark curves,      market valuations of like securities, sector groupings and matrix      pricing. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Other      government-sponsored agency securities, mortgage-backed securities and      some of the actively traded REMICs and CMO’s, are primarily priced using      available market information including benchmark yields, prepayment      speeds, spreads and volatility of similar  securities. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Other      inactive government-sponsored agency securities are primarily priced using      consensus pricing and dealerquotes. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| §   | State      and political subdivisions are largely grouped by characteristics, i.e.,      geographical data and source of revenue in trade dissemination      systems.  Since some securities are not traded daily and due to      other grouping limitations, active market quotes are often obtained using      benchmarking for like securities.  Local tax anticipation      warrants, with very little market activity, are priced using an      appropriate market yield curve. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Marketable      equity (common) securities are primarily priced using the market approach      and utilizing live data feeds from active market exchanges for identical      securities. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Marketable      equity (preferred) securities are primarily priced using available market      information through processes such as benchmark curves, benchmarking of      like securities, sector groupings and matrix  pricing. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Other      non-marketable securities are primarily priced using cost or book values      due to an absence of market activity and market  data. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Stock      in the Federal Reserve Bank and the Federal Home Loan Bank, which totaled      $14.88 million at March 31, 2008, is carried at cost and is not reported      in the table of assets and liabilities measured at fair value at March 31,      2008. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Mortgages      held for sale and the related loan commitments and forward contracts      (hedges) are valued using an income approach and utilizing an appropriate      current market yield and a loan commitment closing rate based on      historical analysis. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Interest      rate swap positions, both assets and liabilities, are valued by a      third-party pricing agent using an income approach and utilizing models      that use as their basis readily observable market      parameters.  This valuation process considers various factors      including interest rate yield curves, time value and volatility      factors. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |   |   | March      31, 2008 |
|--------|--------|--------|--------|--------|---------------------|

| (Dollars      in thousands)                                                    |   | Level      1 |   |   | Level      2 |   |    | Level      3 |   |   | Total  |   |
|--------------------------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|
| Assets:                                                                        |   |         |   |   |         |   |    |         |   |   |   |   |
| Investment      securities available for sale                                  |   | $            | 60,792 |   |         | $      | 683,638 |         |   | $      | 13,681 |   |   | $ | 758,111 |   |
| Mortgages      held for sale                                                   |   |         | -      |   |         |   | 37,853  |         |   |   | -      |   |   |   | 37,853 |   |
| Accrued      Income and other assets (Interest rate swap agreements)           |   |         | -      |   |         |   | 9,726   |         |   |   | -      |   |   |   | 9,726 |   |
| Total                                                                          |   | $            | 60,792 |   |         | $      | 731,217 |         |   | $      | 13,681 |   |   | $ | 805,690 |   |
|                                                                           |   |         |   |   |         |   |    |         |   |   |   |   |   |   |   |   |
| Liabilities                                                                    |   |         |   |   |         |   |    |         |   |   |   |   |   |   | - |   |
| Accrued      expenses and other liabilities (Interest rate swap    agreements) |   | $            | -      |   |         | $      | 9,726   |         |   | $      | -      |   |   | $ | 9,726 |   |
| Total                                                                          |   | $            | -      |   |         | $      | 9,726   |         |   | $      | -      |   |   | $ | 9,726 |   |

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| (Dollars      in thousands)                                                                             |   | Quarter      ended March 31, 2008             |    |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                                                    |   | Investment      securities available for sale |    |
| Beginning      balance January 1, 2008                                                                  |   | $                                             | 42,212  |   |
|   Total      gains or losses (realized/unrealized):                                           |   |                                          |    |   |
|           Included      in earnings                   |   |                                          | 794     |   |
|           Included      in other comprehensive income |   |                                          | (709    | ) |
|   Purchases      and issuances                                                                |   |                                          | 3,917   |   |
|   Settlements                                                                                 |   |                                          | -       |   |
|   Expirations                                                                                 |   |                                          | (32,533 | ) |
|   Transfers      in and/or out of Level 3                                                     |   |                                          | -       |   |
| Ending      balance March 31, 2008                                                                      |   | $                                             | 13,681  |   |
|                                                                                                    |   |                                          |    |   |
| The      amount of total gains or (losses) for the period included in      earnings                     |   |                                          |    |   |
| attributable      to the change in unrealized gains or losses relating to                               |   |                                          |    |   |
| assets      and liabilities still held at March 31, 2008.                                               |   | $                                             | -       |   |

|                                                                                                                                                    |   |                |   |   |         |   |   |         |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|
|                                                                                                                                                    |   | March      31, 2008 |   |
| (Dollars      in thousands)                                                                                                                             |   | Level      1        |   |   | Level      2 |   |   | Level      3 |   |   | Total  |   |
|                                                                                                                                                    |   |                |   |   |         |   |   |         |   |   |   |   |
| Loans      (1)                                                                                                                                          |   | $                   | -      |   |         | $      | -      |         |   | $      | 5,892  |   |   | $ | 5,892 |   |
| Accrued      income and other assets (venture capital partnership      investments)                                                                     |   |                | -      |   |         |   | -      |         |   |   | 2,896  |   |   |   | 2,896 |   |
|                                                                                                                                                    |   | $                   | -      |   |         | $      | -      |         |   | $      | 8,788  |   |   | $ | 8,788 |   |
|                                                                                                                                                    |   |                |   |   |         |   |   |         |   |   |   |   |   |   |   |   |
| (1)      Represents carrying value and related write-downs of loans for which      adjustments are based on the appraised value of the      collateral. |   |
| The      carrying value of loans fully charged off, the majority of which are      unsecured lines and loans, is zero.                                  |   |                |   |   |         |   |   |         |   |

| (Dollars      in thousands)                                                                                                        |   | Fair      value carrying amount |   |   | Aggregate      unpaid principal |   |   | Excess      of fair value carrrying amount over (under) unpaid    principal |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|---------------------------------|--------|--------|-----------------------------------------------------------------------------|--------|
|                                                                                                                               |   |                            |   |   |                            |   |   |                                                                        |   |
| Mortgages      held for sale reported at fair value:                                                                               |   |                            |   |   |                            |   |   |                                                                        |   |
|   Total      loans                                                                                                       |   | $                               | 37,853 |   |                            | $      | 37,331 |                                                                        |   | $ | 522 | (1) |
|   Nonaccrual      loans                                                                                                  |   |                            | -      |   |                            |   | -      |                                                                        |   |   | - |   |
|   Loans      90 days or more past due and still accruing                                                                 |   |                            | -      |   |                            |   | -      |                                                                        |   |   | - |   |
|                                                                                                                               |   |                            |   |   |                            |   |   |                                                                        |   |   |   |   |
| (1)      The excess of fair value carrying amount over unpaid principal includes      changes in fair value recorded at and        |   |
| subsequent      to funding, gains and losses on the related loan commitment prior to      funding, and premiums on acquired loans. |   |

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MANAG

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| (Dollars      in Thousands)                         |   |           |    |
|-----------------------------------------------------|--------|----------------|---------|
|                                                |   |           |    |
|                                                |   | March      31, |    |   | December      31, |   |
|                                                |   | 2008           |    |   | 2007 |   |
| Accrued      income and other assets:               |   |           |    |   |   |   |
| Bank      owned life insurance cash surrender value |   | $              | 37,692  |   |   | $ | 38,871 |   |
| Accrued      interest receivable                    |   |           | 19,131  |   |   |   | 19,293 |   |
| Mortgage      servicing assets                      |   |           | 6,463   |   |   |   | 7,279 |   |
| Other      real estate                              |   |           | 4,742   |   |   |   | 4,821 |   |
| Repossessions                                       |   |           | 1,604   |   |   |   | 2,291 |   |
| Intangible      assets                              |   |           | 93,165  |   |   |   | 93,567 |   |
| All      other assets                               |   |           | 32,859  |   |   |   | 29,341 |   |
| Total      accrued income and other assets          |   | $              | 195,656 |   |   | $ | 195,463 |   |

|                                           |   |   |    |   | Minimum      Capital |   |   | Prompt      Corrective |   |
|------------------------------------------------|--------|--------|---------|--------|----------------------|--------|--------|------------------------|--------|
|                                           |   | Actual |    |   | Adequacy             |   |   | Action      Provisions |   |
| (Dollars      in thousands)                    |   | Amount |    |   | Ratio                |   |   | Amount                 |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| Total      Capital (To Risk-Weighted Assets):  |   |   |    |   |                 |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| 1st      Source Corporation                    |   | $      | 474,703 |   |                 |   | 12.89  | %                      |   | $ | 294,552 |   |   |   | 8.00 | % |   | $ | 368,191 |   |   |   | 10.00 | % |
| 1st      Source Bank                           |   |   | 409,851 |   |                 |   | 11.93  |                   |   |   | 274,837 |   |   |   | 8.00 |   |   |   | 343,546 |   |   |   | 10.00 |   |
| First      National Bank, Valparaiso           |   |   | 64,825  |   |                 |   | 23.08  |                   |   |   | 22,474 |   |   |   | 8.00 |   |   |   | 28,093 |   |   |   | 10.00 |   |
| Tier      1 Capital (to Risk-Weighted Assets): |   |   |    |   |                 |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st      Source Corporation                    |   |   | 427,821 |   |                 |   | 11.62  |                   |   |   | 147,276 |   |   |   | 4.00 |   |   |   | 220,914 |   |   |   | 6.00 |   |
| 1st      Source Bank                           |   |   | 366,638 |   |                 |   | 10.67  |                   |   |   | 137,418 |   |   |   | 4.00 |   |   |   | 206,127 |   |   |   | 6.00 |   |
| First      National Bank, Valparaiso           |   |   | 62,008  |   |                 |   | 22.07  |                   |   |   | 11,237 |   |   |   | 4.00 |   |   |   | 16,856 |   |   |   | 6.00 |   |
| Tier      1 Capital (to Average Assets):       |   |   |    |   |                 |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st      Source Corporation                    |   |   | 427,821 |   |                 |   | 10.02  |                   |   |   | 170,743 |   |   |   | 4.00 |   |   |   | 213,429 |   |   |   | 5.00 |   |
| 1st      Source Bank                           |   |   | 366,638 |   |                 |   | 9.44   |                   |   |   | 155,347 |   |   |   | 4.00 |   |   |   | 194,183 |   |   |   | 5.00 |   |
| First      National Bank, Valparaiso           |   |   | 62,008  |   |                 |   | 10.25  |                   |   |   | 24,191 |   |   |   | 4.00 |   |   |   | 30,239 |   |   |   | 5.00 |   |

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| DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS'      EQUITY |   |                        |      |   |     |   |   |
|-------------------------------------------------------------------|--------|-----------------------------|-----------|--------|----------|--------|--------|
| INTEREST      RATES AND INTEREST DIFFERENTIAL                     |   |                        |      |   |     |   |   |
| (Dollars      in thousands)                                       |   |                        |      |   |     |   |   |
|                                                              |   | Three months ended March31, |      |
|                                                              |   |                        |      |   | 2008     |   |   |   |   |   |   |   |   | 2007 |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   | Interest |   |   |   |   |   |   |   |   | Interest |   |   |   |   |
|                                                              |   | Average                     |      |   | Income/  |   |   | Yield/ |   |   | Average |   |   | Income/ |   |   | Yield/ |   |
|                                                              |   | Balance                     |      |   | Expense  |   |   | Rate |   |   | Balance |   |   | Expense |   |   | Rate |   |
| ASSETS:                                                           |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities:                                       |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                           |   | $                           | 542,980   |   |     | $      | 6,600  |   |   |   | 4.89 | % |   | $ | 484,489 |   |   | $ | 5,730 |   |   |   | 4.80 | % |
| Tax      exempt                                                   |   |                        | 236,082   |   |     |   | 2,895  |   |   |   | 4.93 | % |   |   | 180,861 |   |   |   | 2,018 |   |   |   | 4.53 | % |
| Mortgages      - held for sale                                    |   |                        | 32,361    |   |     |   | 484    |   |   |   | 6.02 | % |   |   | 38,969 |   |   |   | 638 |   |   |   | 6.64 | % |
| Net      loans and leases                                         |   |                        | 3,177,595 |   |     |   | 52,908 |   |   |   | 6.70 | % |   |   | 2,706,462 |   |   |   | 47,728 |   |   |   | 7.15 | % |
| Other      investments                                            |   |                        | 21,155    |   |     |   | 156    |   |   |   | 2.97 | % |   |   | 40,832 |   |   |   | 532 |   |   |   | 5.28 | % |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Earning Assets                                         |   |                        | 4,010,173 |   |     |   | 63,043 |   |   |   | 6.32 | % |   |   | 3,451,613 |   |   |   | 56,646 |   |   |   | 6.66 | % |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and due from banks                                      |   |                        | 95,576    |   |     |   |   |   |   |   |   |   |   |   | 70,166 |   |   |   |   |   |   |   |   |   |
| Reserve      for loan and lease losses                            |   |                        | (66,834   | )      |     |   |   |   |   |   |   |   |   |   | (58,800 | ) |   |   |   |   |   |   |   |   |
| Other      assets                                                 |   |                        | 322,822   |   |     |   |   |   |   |   |   |   |   |   | 218,817 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $                           | 4,361,737 |   |     |   |   |   |   |   |   |   |   | $ | 3,681,796 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY:                        |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits                                    |   | $                           | 3,007,404 |   |     | $      | 25,120 |   |   |   | 3.36 | % |   | $ | 2,576,261 |   |   | $ | 25,270 |   |   |   | 3.98 | % |
| Short-term      borrowings                                        |   |                        | 339,282   |   |     |   | 2,381  |   |   |   | 2.82 | % |   |   | 248,871 |   |   |   | 2,690 |   |   |   | 4.38 | % |
| Subordinated      notes                                           |   |                        | 94,790    |   |     |   | 1,772  |   |   |   | 7.52 | % |   |   | 59,022 |   |   |   | 1,094 |   |   |   | 7.52 | % |
| Long-term      debt and                                           |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| mandatorily      redeemable securities                            |   |                        | 34,089    |   |     |   | 554    |   |   |   | 6.54 | % |   |   | 43,575 |   |   |   | 627 |   |   |   | 5.84 | % |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Interest-Bearing Liabilities                           |   |                        | 3,475,565 |   |     |   | 29,827 |   |   |   | 3.45 | % |   |   | 2,927,729 |   |   |   | 29,681 |   |   |   | 4.11 | % |
| Noninterest-bearing      deposits                                 |   |                        | 370,320   |   |     |   |   |   |   |   |   |   |   |   | 314,124 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                            |   |                        | 76,103    |   |     |   |   |   |   |   |   |   |   |   | 65,749 |   |   |   |   |   |   |   |   |   |
| Shareholders'      equity                                         |   |                        | 439,749   |   |     |   |   |   |   |   |   |   |   |   | 374,194 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $                           | 4,361,737 |   |     |   |   |   |   |   |   |   |   | $ | 3,681,796 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Interest Income                                          |   |                        |      |   |     | $      | 33,216 |   |   |   |   |   |   |   |   |   |   | $ | 26,965 |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Yield on Earning Assets on a Taxable                     |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equivalent      Basis                                             |   |                        |      |   |     |   |   |   |   |   | 3.33 | % |   |   |   |   |   |   |   |   |   |   | 3.17 | % |
|                                                              |   |                        |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                                                 |   | Summary      of Reserve for Loan and Lease Losses |      |
|----------------------------------------------------------------------|--------|---------------------------------------------------|-----------|
|                                                                 |   | (Dollars      in Thousands)                       |      |
|                                                                 |   | Three      Months Ended                           |      |
|                                                                 |   | March      31,                                    |      |
|                                                                 |   | 2008                                              |      |   | 2007 |   |
|                                                                 |   |                                              |      |   |   |   |
|                                                                 |   |                                              |      |   |   |   |
|                                                                 |   |                                              |      |   |   |   |
| Reserve      for loan and lease losses - beginning balance           |   | $                                                 | 66,602    |   |   | $ | 58,802 |   |
| Charge-offs                                                          |   |                                              | (1,582    | ) |   |   | (1,345 | ) |
| Recoveries                                                           |   |                                              | 869       |   |   |   | 1,868 |   |
| Net      (charge-offs)/recoveries                                    |   |                                              | (713      | ) |   |   | 523 |   |
|                                                                 |   |                                              |      |   |   |   |   |   |
| Provision      for (recovery of provision for) loan and lease losses |   |                                              | 1,539     |   |   |   | (623 | ) |
|                                                                 |   |                                              |      |   |   |   |   |   |
| Reserve      for loan and lease losses - ending balance              |   | $                                                 | 67,428    |   |   | $ | 58,702 |   |
|                                                                 |   |                                              |      |   |   |   |   |   |
| Loans      and leases outstanding at end of period                   |   | $                                                 | 3,189,841 |   |   | $ | 2,751,415 |   |
| Average      loans and leases outstanding during period              |   |                                              | 3,177,595 |   |   |   | 2,706,462 |   |
|                                                                 |   |                                              |      |   |   |   |   |   |
|                                                                 |   |                                              |      |   |   |   |   |   |
| Reserve      for loan and lease losses as a percentage of            |   |                                              |      |   |   |   |   |   |
| loans      and leases outstanding at end of period                   |   |                                              | 2.11      | % |   |   | 2.13 | % |
| Ratio      of net charge-offs/(recoveries) during period to          |   |                                              |      |   |   |   |   |   |
| average      loans and leases outstanding                            |   |                                              | 0.09      | % |   |   | (0.08 | )% |

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| (Dollars      in thousands)                       |   |           |   |   |              |   |   |           |   |
|---------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|
|                                              |   | March      31, |   |   | December      31, |   |   | March      31, |   |
|                                              |   | 2008           |   |   | 2007              |   |   | 2007           |   |
|                                              |   |           |   |   |              |   |   |           |   |
|                                              |   |           |   |   |              |   |   |           |   |
| Loans      and leases past due 90 days or more    |   | $              | 1,072  |   |              | $      | 1,105  |           |   | $ | 75 |   |
| Nonaccrual      and restructured loans and leases |   |           | 10,966 |   |              |   | 10,136 |           |   |   | 12,275 |   |
| Other      real estate                            |   |           | 4,742  |   |              |   | 4,821  |           |   |   | 534 |   |
| Repossessions                                     |   |           | 1,604  |   |              |   | 2,291  |           |   |   | 1,019 |   |
| Equipment      owned under operating leases       |   |           | 200    |   |              |   | 126    |           |   |   | 112 |   |
|                                              |   |           |   |   |              |   |   |           |   |   |   |   |
| Total      nonperforming assets                   |   | $              | 18,584 |   |              | $      | 18,479 |           |   | $ | 14,015 |   |

| (Dollars      in thousands)                        |   |                  |      |   | Nonaccrual              |   |   | Other      real estate |   |   | Year-to-date            |   |
|----------------------------------------------------|--------|-----------------------|-----------|--------|-------------------------|--------|--------|------------------------|--------|--------|-------------------------|--------|
|                                               |   | Loans      and leases |      |   | and                     |   |   | owned      and         |   |   | net      credit losses/ |   |
|                                               |   | outstanding           |      |   | restructured      loans |   |   | repossessions          |   |   | recoveries              |   |
|                                               |   |                  |      |   |                    |   |   |                   |   |   |                    |   |
| Commercial      and agricultural loans             |   | $                     | 641,159   |   |                    | $      | 787    |                   |   | $      | -                       |   |   | $ | 131 |   |
| Auto,      light truck and environmental equipment |   |                  | 301,879   |   |                    |   | 509    |                   |   |   | 255                     |   |   |   | (57 | ) |
| Medium      and heavy duty truck                   |   |                  | 281,554   |   |                    |   | 839    |                   |   |   | 375                     |   |   |   | 433 |   |
| Aircraft      financing                            |   |                  | 575,676   |   |                    |   | 1,948  |                   |   |   | 768                     |   |   |   | (400 | ) |
| Construction      equipment financing              |   |                  | 370,276   |   |                    |   | 698    |                   |   |   | 150                     |   |   |   | 431 |   |
| Loans      secured by real estate                  |   |                  | 876,885   |   |                    |   | 6,106  |                   |   |   | 936                     |   |   |   | 16 |   |
| Consumer      loans                                |   |                  | 142,412   |   |                    |   | 79     |                   |   |   | 57                      |   |   |   | 127 |   |
|                                               |   |                  |      |   |                    |   |   |                   |   |   |                    |   |   |   |   |   |
| Total                                              |   | $                     | 3,189,841 |   |                    | $      | 10,966 |                   |   | $      | 2,541                   |   |   | $ | 681 |   |

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| (Dollars      in thousands)                                       |   | Three      Months Ended |   |
|-------------------------------------------------------------------|--------|-------------------------|--------|
|                                                              |   | March      31,          |   |
|                                                              |   | 2008                    |   |   | 2007 |   |
| Noninterest      income:                                          |   |                    |   |   |   |   |
|   Trust      fees                                       |   | $                       | 4,262  |   |   | $ | 3,643 |   |
|   Service      charges on deposit accounts              |   |                    | 5,108  |   |   |   | 4,570 |   |
|   Mortgage      banking income                          |   |                    | 1,117  |   |   |   | 571 |   |
|   Insurance      commissions                            |   |                    | 1,946  |   |   |   | 1,638 |   |
|   Equipment      rental income                          |   |                    | 5,749  |   |   |   | 5,098 |   |
|   Other      income                                     |   |                    | 2,222  |   |   |   | 1,719 |   |
|   Investment      securities and other investment gains |   |                    | 623    |   |   |   | 247 |   |
|                                                              |   |                    |   |   |   |   |   |   |
| Total      noninterest income                                     |   | $                       | 21,027 |   |   | $ | 17,486 |   |

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| (Dollars      in thousands)                             |   | Three      Months Ended |   |
|---------------------------------------------------------|--------|-------------------------|--------|
|                                                    |   | March      31,          |   |
|                                                    |   | 2008                    |   |   | 2007 |   |
| Noninterest      expense:                               |   |                    |   |   |   |   |
| Salaries      and employee benefits                     |   | $                       | 20,634 |   |   | $ | 17,566 |   |
| Net      occupancy expense                              |   |                    | 2,476  |   |   |   | 1,936 |   |
| Furniture      and equipment expense                    |   |                    | 3,978  |   |   |   | 3,094 |   |
| Depreciation      - leased equipment                    |   |                    | 4,616  |   |   |   | 4,076 |   |
| Professional      fees                                  |   |                    | 1,158  |   |   |   | 900 |   |
| Supplies      and communication                         |   |                    | 1,669  |   |   |   | 1,272 |   |
| Business      development and marketing expense         |   |                    | 643    |   |   |   | 858 |   |
| Intangible      asset amortization                      |   |                    | 351    |   |   |   | 106 |   |
| Loan      and lease collection and repossession expense |   |                    | 533    |   |   |   | 165 |   |
| Other      expense                                      |   |                    | 1,843  |   |   |   | 1,827 |   |
|                                                    |   |                    |   |   |   |   |   |   |
| Total      noninterest expense                          |   | $                       | 37,901 |   |   | $ | 31,800 |   |

QUANT

CONTRO

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PART II

|   | ITEM 1.    Legal  Proceedings. |
|--------|-----------------------------------------------|

ITEM

|   | ITEM 2.    Unregistered Sales of Equity      Securities and Use of Proceeds |
|--------|--------------------------------------------------------------------------------------------|

|                                                                                                                                             |              |                |                               |                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|---------------------|------------------------------------|--------------------------------------|
|                                                                                                                                             |              |                | Total      number of               | Maximum      number (or approximate  |
|                                                                                                                                             | Total      number | Average             | shares      purchased              | dollar      value) of shares         |
|                                                                                                                                             | of      shares    | price      paid per | as      part of publicly announced | that      may yet be purchased under |
| Period                                                                                                                                           | purchased         | share               | plans      or programs (1)         | the      plans or programs           |
| January      01 - 31, 2008                                                                                                                       | -                 | -                   | -                                  | 1,447,448                            |
| February      01 - 29, 2008                                                                                                                      | -                 | -                   | -                                  | 1,447,448                            |
| March      01 - 31, 2008                                                                                                                         | -                 | -                   | -                                  | 1,447,448                            |
|                                                                                                                                             |              |                |                               |                                 |
|                                                                                                                                             |              |                |                               |                                 |
| (1)1st      Source maintains a longstanding stock repurchase plan that was last      re-authorized by the Board of Directors on April 26,  2007. |
| Under      the terms of the plan, 1st Source may repurchase up to 2,000,000 shares of      its common stock when                                 |
| favorable      conditions exist on the open market or through private transactions at      various prices from time to time.                     |
| Since      the inception of the plan, 1st Source has repurchased a total of 552,552      shares.                                                 |

|   | ITEM 3.    Defaults Upon Senior      Securities. |
|--------|-----------------------------------------------------------------|

|   | ITEM 4.    Submission of Matters to a Vote of      Security Holders. |
|--------|-------------------------------------------------------------------------------------|

|   | None |
|--------|------|

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|   | ITEM 5.    Other  Information. |
|--------|-----------------------------------------------|

|   | None |
|--------|------|

ITEM 6.

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SIGNA

|                                 |   | 1st Source Corporation                        |
|--------------------------------------|--------|-----------------------------------------------|
|                                 |   |                                          |
|                                 |   |                                          |
|                                 |   |                                          |
| DATE   April 24, 2008 |   | /s/CHRISTOPHER J. MURPHY III                  |
|                                 |   | Christopher      J. Murphy III                |
|                                 |   | Chairman      of the Board, President and CEO |
|                                 |   |                                          |
|                                 |   |                                          |
| DATE   April 24, 2008 |   | /s/LARRY E.      LENTYCH                      |
|                                 |   | Larry      E. Lentych                         |
|                                 |   | Treasurer      and Chief Financial Officer    |
|                                 |   | Principal      AccountingOfficer              |

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