----

----

| UNITED STATES                                                                         |
|---------------------------------------------------------------------------------------|
| SECURITIES AND EXCHANGE COMMISSION                                                    |
| Washington, D.C. 20549                                                                |
|                                                                                  |
| FORM 10-Q                                                                             |
| (Mark One)                                                                            |
| x                                                                                     | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|                                                                                  | For the quarterly period ended September 30,2010 |
|                                                                                  |
| OR                                                                                    |
| o                                                                                     | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|                                                                                  | For the transition period from ______________ to ______________ |
|                                                                                  |
| Commission file number 0-6233                                                         |
|                                                                                  |
|                                                              |
|       (Exact name of registrant as specified in its charter) |

| INDIANA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |           | 35-1068133                            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|---------------------------------------|
| (State or other jurisdiction of incorporation or organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |           | (I.R.S. Employer Indentification No.) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 100 North Michigan Street                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | South Bend, IN | 46614                                 |
| (Address of principle executive offices) (Zip Code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (574) 235-2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (Registrant’s telephone number, including area code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (Former name, former address and former fiscal year, if changed since last report)                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                       x Yes        o No |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    o Yes        o No                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):                                                                                                                                                                                      |

|                                                                                                                                                                                | Large accelerated filer o                                                  | Accelerated filer x         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|-----------------------------|
|                                                                                                                                                                                | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
|                                                                                                                                                                                |
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o  Yes   x   No |
|                                                                                                                                                                                |
| Number of shares of common stock outstanding as of October 15, 2010 – 24,203,450 shares                                                                                  |

----

| TABLE OF CONTENTS             |
|-------------------------------|
|                          |
| PART I. FINANCIAL INFORMATION |
|                          | Page |
| Item 1.                       | Financial Statements (Unaudited) |   |
|                          | Consolidated statements of financial condition – September 30, 2010 and December 31,2009 | 3 |
|                          | Consolidated statements of income – three and nine months ended September 30, 2010 and 2009 | 4 |
|                          | Consolidated statements of shareholders’ equity – nine months ended September 30, 2010 and 2009 | 5 |
|                          | Consolidated statements of cash flows – nine months ended September 30, 2010 and 2009 | 6 |
|                          | Notes to the Consolidated Financial Statements | 7 |
| Item 2.                       | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3.                       | Quantitative and Qualitative Disclosures About Market Risk | 32 |
| Item 4.                       | Controls and Procedures | 32 |
|                          |
| PART II. OTHER INFORMATION    |
|                          |
| Item 1.                       | Legal Proceedings |  32  |
| Item 1A.                      | Risk Factors | 32 |
| Item 2.                       | Unregistered Sales of Equity Securities and Use of Proceeds | 33 |
| Item 3.                       | Defaults Upon Senior Securities |  33  |
| Item 4.                       | (Removed and reserved) |  33  |
| Item 5.                       | Other Information |  33  |
| Item 6.                       | Exhibits |  33  |
|                          |
| SIGNATURES                    |   |  34  |
|                          |
| CERTIFICATIONS                |   |   |
|                          |   |   |
| Exhibit 31.1             |   |   |
| Exhibit 31.2             |   |   |
| Exhibit 32.1        |   |   |
| Exhibit 32.2        |   |   |

----

| 1st SOURCE CORPORATION                                                        |   |          |      |   |         |   |
|-------------------------------------------------------------------------------|--------|---------------|-----------|--------|--------------|--------|
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                |   |          |      |   |         |   |
| (Unaudited - Dollars in thousands)                                            |   |          |      |   |         |   |
|                                                                          |   | September 30, |      |   | December 31, |   |
|                                                                          |   | 2010          |      |   | 2009         |   |
| ASSETS                                                                        |   |          |      |   |         |   |
| Cash and due from banks                                                       |   | $             | 60,395    |   |         | $      | 72,872 |   |
| Federal funds sold and                                                        |   |          |      |   |         |   |   |   |
| interest bearing deposits with other banks                                    |   |          | 79,082    |   |         |   | 141,166 |   |
| Investment securities available-for-sale                                      |   |          |      |   |         |   |   |   |
| (amortized cost of $848,409 and $893,439                                      |   |          |      |   |         |   |   |   |
| at September 30, 2010 and December 31, 2009, respectively)                    |   |          | 874,514   |   |         |   | 901,638 |   |
| Other investments                                                             |   |          | 21,012    |   |         |   | 21,012 |   |
| Trading account securities                                                    |   |          | 125       |   |         |   | 125 |   |
| Mortgages held for sale                                                       |   |          | 114,947   |   |         |   | 26,649 |   |
| Loans and leases - net of unearned discount                                   |   |          |      |   |         |   |   |   |
| Commercial and agricultural loans                                             |   |          | 535,874   |   |         |   | 546,222 |   |
| Auto, light truck and environmental equipment                                 |   |          | 397,297   |   |         |   | 349,741 |   |
| Medium and heavy duty truck                                                   |   |          | 174,459   |   |         |   | 204,545 |   |
| Aircraft financing                                                            |   |          | 620,996   |   |         |   | 617,384 |   |
| Construction equipment financing                                              |   |          | 304,035   |   |         |   | 313,300 |   |
| Loans secured by real estate                                                  |   |          | 979,442   |   |         |   | 952,223 |   |
| Consumer loans                                                                |   |          | 100,076   |   |         |   | 109,735 |   |
| Total loans and leases                                                        |   |          | 3,112,179 |   |         |   | 3,093,150 |   |
| Reserve for loan and lease losses                                             |   |          | (89,509   | )      |         |   | (88,236 | ) |
| Net loans and leases                                                          |   |          | 3,022,670 |   |         |   | 3,004,914 |   |
| Equipment owned under operating leases, net                                   |   |          | 84,430    |   |         |   | 97,004 |   |
| Net premises and equipment                                                    |   |          | 36,133    |   |         |   | 37,907 |   |
| Goodwill and intangible assets                                                |   |          | 89,287    |   |         |   | 90,222 |   |
| Accrued income and other assets                                               |   |          | 149,718   |   |         |   | 148,591 |   |
| Total assets                                                                  |   | $             | 4,532,313 |   |         | $      | 4,542,100 |   |
|                                                                          |   |          |      |   |         |   |   |   |
| LIABILITIES                                                                   |   |          |      |   |         |   |   |   |
| Deposits:                                                                     |   |          |      |   |         |   |   |   |
| Noninterest bearing                                                           |   | $             | 495,778   |   |         | $      | 450,608 |   |
| Interest bearing                                                              |   |          | 3,070,416 |   |         |   | 3,201,856 |   |
| Total deposits                                                                |   |          | 3,566,194 |   |         |   | 3,652,464 |   |
| Federal funds purchased and securities                                        |   |          |      |   |         |   |   |   |
| sold under agreements to repurchase                                           |   |          | 145,887   |   |         |   | 123,787 |   |
| Other short-term borrowings                                                   |   |          | 26,337    |   |         |   | 26,323 |   |
| Long-term debt and mandatorily redeemable securities                          |   |          | 34,987    |   |         |   | 19,761 |   |
| Subordinated notes                                                            |   |          | 89,692    |   |         |   | 89,692 |   |
| Accrued expenses and other liabilities                                        |   |          | 72,893    |   |         |   | 59,753 |   |
| Total liabilities                                                             |   |          | 3,935,990 |   |         |   | 3,971,780 |   |
|                                                                          |   |          |      |   |         |   |   |   |
| SHAREHOLDERS' EQUITY                                                          |   |          |      |   |         |   |   |   |
| Preferred stock; no par value                                                 |   |          |      |   |         |   |   |   |
| Authorized 10,000,000 shares; issued 111,000 at September 30, 2010,           |   |          |      |   |         |   |   |   |
| and at December 31, 2009                                                      |   |          | 105,917   |   |         |   | 104,930 |   |
| Common stock; no par value                                                    |   |          |      |   |         |   |   |   |
| Authorized 40,000,000 shares; issued 25,643,506 at September 30, 2010,        |   |          |      |   |         |   |   |   |
| and at December 31, 2009                                                      |   |          | 350,278   |   |         |   | 350,269 |   |
| Retained earnings                                                             |   |          | 155,633   |   |         |   | 142,407 |   |
| Cost of common stock in treasury (1,440,056 shares at September 30, 2010, and |   |          |      |   |         |   |   |   |
| 1,532,483 shares at December 31, 2009)                                        |   |          | (31,723   | )      |         |   | (32,380 | ) |
| Accumulated other comprehensive income                                        |   |          | 16,218    |   |         |   | 5,094 |   |
| Total shareholders' equity                                                    |   |          | 596,323   |   |         |   | 570,320 |   |
| Total liabilities and shareholders' equity                                    |   | $             | 4,532,313 |   |         | $      | 4,542,100 |   |
|                                                                          |   |          |      |   |         |   |   |   |
| The accompanying notes are a part of the consolidated financial statements.   |   |          |      |   |         |   |   |   |

----

| 1st SOURCE CORPORATION                                                      |   |               |       |   |   |              |       |   |   |   |   |       |   |
|-----------------------------------------------------------------------------|--------|--------------------|------------|--------|--------|-------------------|------------|--------|--------|--------|--------|------------|--------|
| CONSOLIDATED STATEMENTS OF INCOME                                           |   |               |       |   |   |              |       |   |   |   |   |       |   |
| (Unaudited - Dollars in thousands, except per share amounts)                |   |               |       |   |   |              |       |   |   |   |   |       |   |
|                                                                        |   | Three Months Ended |       |   |   | Nine Months Ended |       |
|                                                                        |   | September 30,      |       |   |   | September 30,     |       |
|                                                                        |   | 2010               |       |   | 2009   |              |       |   | 2010   |   |   | 2009       |   |
| Interest income:                                                            |   |               |       |   |   |              |       |   |   |   |   |       |   |
| Loans and leases                                                            |   | $                  | 43,722     |   |   | $                 | 43,436     |   |   |   | $      | 129,091    |   |   | $ | 132,507 |   |
| Investment securities, taxable                                              |   |               | 4,931      |   |   |              | 4,357      |   |   |   |   | 15,611     |   |   |   | 12,600 |   |
| Investment securities, tax-exempt                                           |   |               | 1,369      |   |   |              | 1,651      |   |   |   |   | 4,258      |   |   |   | 5,046 |   |
| Other                                                                       |   |               | 219        |   |   |              | 297        |   |   |   |   | 743        |   |   |   | 894 |   |
| Total interest income                                                       |   |               | 50,241     |   |   |              | 49,741     |   |   |   |   | 149,703    |   |   |   | 151,047 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Interest expense:                                                           |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Deposits                                                                    |   |               | 10,790     |   |   |              | 15,460     |   |   |   |   | 34,768     |   |   |   | 49,662 |   |
| Short-term borrowings                                                       |   |               | 219        |   |   |              | 265        |   |   |   |   | 613        |   |   |   | 909 |   |
| Subordinated notes                                                          |   |               | 1,648      |   |   |              | 1,648      |   |   |   |   | 4,942      |   |   |   | 4,942 |   |
| Long-term debt and mandatorily redeemable securities                        |   |               | 400        |   |   |              | 322        |   |   |   |   | 1,045      |   |   |   | 853 |   |
| Total interest expense                                                      |   |               | 13,057     |   |   |              | 17,695     |   |   |   |   | 41,368     |   |   |   | 56,366 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Net interest income                                                         |   |               | 37,184     |   |   |              | 32,046     |   |   |   |   | 108,335    |   |   |   | 94,681 |   |
| Provision for loan and lease losses                                         |   |               | 5,578      |   |   |              | 6,469      |   |   |   |   | 15,764     |   |   |   | 22,741 |   |
| Net interest income after provision for                                     |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| loan and lease losses                                                       |   |               | 31,606     |   |   |              | 25,577     |   |   |   |   | 92,571     |   |   |   | 71,940 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Noninterest income:                                                         |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Trust fees                                                                  |   |               | 3,870      |   |   |              | 3,782      |   |   |   |   | 11,677     |   |   |   | 11,473 |   |
| Service charges on deposit accounts                                         |   |               | 4,918      |   |   |              | 5,402      |   |   |   |   | 14,813     |   |   |   | 15,367 |   |
| Mortgage banking income                                                     |   |               | 2,549      |   |   |              | 965        |   |   |   |   | 3,751      |   |   |   | 6,874 |   |
| Insurance commissions                                                       |   |               | 1,180      |   |   |              | 1,022      |   |   |   |   | 3,706      |   |   |   | 3,614 |   |
| Equipment rental income                                                     |   |               | 6,495      |   |   |              | 6,347      |   |   |   |   | 19,912     |   |   |   | 18,896 |   |
| Other income                                                                |   |               | 2,656      |   |   |              | 2,022      |   |   |   |   | 8,357      |   |   |   | 6,613 |   |
| Investment securities and other investment gains                            |   |               | 1,083      |   |   |              | 716        |   |   |   |   | 2,059      |   |   |   | 673 |   |
| Total noninterest income                                                    |   |               | 22,751     |   |   |              | 20,256     |   |   |   |   | 64,275     |   |   |   | 63,510 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Noninterest expense:                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Salaries and employee benefits                                              |   |               | 18,980     |   |   |              | 18,425     |   |   |   |   | 56,638     |   |   |   | 55,340 |   |
| Net occupancy expense                                                       |   |               | 2,200      |   |   |              | 2,221      |   |   |   |   | 6,626      |   |   |   | 7,095 |   |
| Furniture and equipment expense                                             |   |               | 3,227      |   |   |              | 3,241      |   |   |   |   | 9,223      |   |   |   | 10,487 |   |
| Depreciation - leased equipment                                             |   |               | 5,173      |   |   |              | 5,021      |   |   |   |   | 15,841     |   |   |   | 15,065 |   |
| Professional fees                                                           |   |               | 1,563      |   |   |              | 1,020      |   |   |   |   | 4,495      |   |   |   | 2,897 |   |
| Supplies and communication                                                  |   |               | 1,387      |   |   |              | 1,473      |   |   |   |   | 4,094      |   |   |   | 4,468 |   |
| FDIC and other insurance                                                    |   |               | 1,420      |   |   |              | 1,582      |   |   |   |   | 4,761      |   |   |   | 6,851 |   |
| Business development and marketing expense                                  |   |               | 845        |   |   |              | 655        |   |   |   |   | 2,292      |   |   |   | 1,934 |   |
| Loan and lease collection and repossession expense                          |   |               | 1,449      |   |   |              | 1,147      |   |   |   |   | 5,822      |   |   |   | 2,776 |   |
| Other expense                                                               |   |               | 1,566      |   |   |              | 1,785      |   |   |   |   | 4,777      |   |   |   | 5,646 |   |
| Total noninterest expense                                                   |   |               | 37,810     |   |   |              | 36,570     |   |   |   |   | 114,569    |   |   |   | 112,559 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Income before income taxes                                                  |   |               | 16,547     |   |   |              | 9,263      |   |   |   |   | 42,277     |   |   |   | 22,891 |   |
| Income tax expense                                                          |   |               | 5,344      |   |   |              | 2,530      |   |   |   |   | 13,600     |   |   |   | 3,624 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Net income                                                                  |   |               | 11,203     |   |   |              | 6,733      |   |   |   |   | 28,677     |   |   |   | 19,267 |   |
| Preferred stock dividends and discount accretion                            |   |               | (1,721     | )      |   |              | (1,701     | )      |   |   |   | (5,149     | )      |   |   | (4,710 | ) |
| Net income available to common shareholders                                 |   | $                  | 9,482      |   |   | $                 | 5,032      |   |   |   | $      | 23,528     |   |   | $ | 14,557 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Per common share                                                            |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| Basic net income per common share                                           |   | $                  | 0.39       |   |   | $                 | 0.21       |   |   |   | $      | 0.96       |   |   | $ | 0.60 |   |
| Diluted net income per common share                                         |   | $                  | 0.39       |   |   | $                 | 0.21       |   |   |   | $      | 0.96       |   |   | $ | 0.60 |   |
| Dividends                                                                   |   | $                  | 0.15       |   |   | $                 | 0.15       |   |   |   | $      | 0.45       |   |   | $ | 0.43 |   |
| Basic weighted average common shares outstanding                            |   |               | 24,247,236 |   |   |              | 24,164,884 |   |   |   |   | 24,247,468 |   |   |   | 24,166,887 |   |
| Diluted weighted average common shares outstanding                          |   |               | 24,253,883 |   |   |              | 24,212,042 |   |   |   |   | 24,254,026 |   |   |   | 24,215,542 |   |
|                                                                        |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |
| The accompanying notes are a part of the consolidated financial statements. |   |               |       |   |   |              |       |   |   |   |   |       |   |   |   |   |   |

----

| 1st SOURCE CORPORATION                                                      |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |
|-----------------------------------------------------------------------------|--------|--------|---------|--------|-----------|--------|---------|--------|--------|--------|----------|--------|--------|-------------|---------|--------|--------------------|--------|
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                             |   |   |    |   |      |   |    |   |   |   |     |   |   |
| (Unaudited - Dollars in thousands, except per share amounts)                |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |
|                                                                        |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |
|                                                                        |   |   |    |   |      |   |    |   |   |   |     |   |   | Cost of     |    |   | Accumulated        |   |
|                                                                        |   |   |    |   |      |   |    |   |   |   |     |   |   | Common      |    |   | Other              |   |
|                                                                        |   |   |    |   | Preferred |   |    | Common |   |   | Retained |   |   | Stock       |    |   | Comprehensive      |   |
|                                                                        |   | Total  |    |   | Stock     |   |    | Stock  |   |   | Earnings |   |   | in Treasury |    |   | Income (Loss), Net |   |
| Balance at January 1, 2009                                                  |   | $      | 453,664 |   |      | $      | -       |   |   | $      | 342,982  |   |   | $           | 136,877 |   |               | $      | (32,019 | ) |   | $ | 5,824 |   |
| Comprehensive Income, net of tax:                                           |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| Net Income                                                                  |   |   | 19,267  |   |      |   | -       |   |   |   | -        |   |   |        | 19,267  |   |               |   | - |   |   |   | - |   |
| Change in unrealized appreciation                                           |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| of available-for-sale securities, net of tax                                |   |   | 3,813   |   |      |   | -       |   |   |   | -        |   |   |        | -       |   |               |   | - |   |   |   | 3,813 |   |
| Total Comprehensive Income                                                  |   |   | 23,080  |   |      |   | -       |   |   |   | -        |   |   |        | -       |   |               |   | - |   |   |   | - |   |
| Issuance of 83,402 common shares                                            |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| under stock based compensation awards,                                      |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| including related tax effects                                               |   |   | 1,663   |   |      |   | -       |   |   |   | -        |   |   |        | 725     |   |               |   | 938 |   |   |   | - |   |
| Cost of 52,876 shares of common                                             |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| stock aquired for treasury                                                  |   |   | (862    | )      |      |   |    |   |   |   |     |   |   |        |    |   |               |   | (862 | ) |   |   |   |   |
| Issuance of preferred stock                                                 |   |   | 103,725 |   |      |   | 103,725 |   |   |   | -        |   |   |        | -       |   |               |   | - |   |   |   | - |   |
| Preferred stock discount accretion                                          |   |   | -       |   |      |   | 887     |   |   |   |     |   |   |        | (887    | )      |               |   |   |   |   |   |   |   |
| Issuance of warrants to purchase common stock                               |   |   | 7,275   |   |      |   | -       |   |   |   | 7,275    |   |   |        | -       |   |               |   | - |   |   |   | - |   |
| Preferred stock dividend (paid and/or accrued)                              |   |   | (3,823  | )      |      |   | -       |   |   |   | -        |   |   |        | (3,823  | )      |               |   | - |   |   |   | - |   |
| Common stock dividend ($0.43 per share)                                     |   |   | (10,401 | )      |      |   | -       |   |   |   | -        |   |   |        | (10,401 | )      |               |   | - |   |   |   | - |   |
| Stock based compensation                                                    |   |   | 9       |   |      |   | -       |   |   |   | 9        |   |   |        | -       |   |               |   | - |   |   |   | - |   |
| Balance at September 30, 2009                                               |   | $      | 574,330 |   |      | $      | 104,612 |   |   | $      | 350,266  |   |   | $           | 141,758 |   |               | $      | (31,943 | ) |   | $ | 9,637 |   |
|                                                                        |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| Balance at January 1, 2010                                                  |   | $      | 570,320 |   |      | $      | 104,930 |   |   | $      | 350,269  |   |   | $           | 142,407 |   |               | $      | (32,380 | ) |   | $ | 5,094 |   |
| Comprehensive Income, net of tax:                                           |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| Net Income                                                                  |   |   | 28,677  |   |      |   | -       |   |   |   | -        |   |   |        | 28,677  |   |               |   | - |   |   |   | - |   |
| Change in unrealized appreciation                                           |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| of available-for-sale securities, net of tax                                |   |   | 11,124  |   |      |   | -       |   |   |   | -        |   |   |        | -       |   |               |   | - |   |   |   | 11,124 |   |
| Total Comprehensive Income                                                  |   |   | 39,801  |   |      |   | -       |   |   |   | -        |   |   |        | -       |   |               |   | - |   |   |   | - |   |
| Issuance of 187,354 common shares                                      |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| under stock based compensation awards,                                      |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| including related tax effects                                               |   |   | 2,871   |   |      |   | -       |   |   |   | -        |   |   |        | 636     |   |               |   | 2,235 |   |   |   | - |   |
| Cost of 94,927 shares of common                                             |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| stock acquired for treasury                                                 |   |   | (1,578  | )      |      |   | -       |   |   |   | -        |   |   |        | -       |   |               |   | (1,578 | ) |   |   | - |   |
| Preferred stock discount accretion                                          |   |   | -       |   |      |   | 987     |   |   |   | -        |   |   |        | (987    | )      |               |   | - |   |   |   | - |   |
| Preferred stock dividend (paid and/or accrued)                              |   |   | (4,163  | )      |      |   | -       |   |   |   | -        |   |   |        | (4,163  | )      |               |   | - |   |   |   | - |   |
| Common stock dividend ($0.45 per share)                                     |   |   | (10,937 | )      |      |   | -       |   |   |   | -        |   |   |        | (10,937 | )      |               |   | - |   |   |   | - |   |
| Stock based compensation                                                    |   |   | 9       |   |      |   | -       |   |   |   | 9        |   |   |        | -       |   |               |   | - |   |   |   | - |   |
| Balance at September 30, 2010                                               |   | $      | 596,323 |   |      | $      | 105,917 |   |   | $      | 350,278  |   |   | $           | 155,633 |   |               | $      | (31,723 | ) |   | $ | 16,218 |   |
|                                                                        |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |   |   |   |   |   |   |   |
| The accompanying notes are a part of the consolidated financial statements. |   |   |    |   |      |   |    |   |   |   |     |   |   |        |    |   |               |

----

| 1st SOURCE CORPORATION                                                      |   |                            |     |   |   |   |
|-----------------------------------------------------------------------------|--------|---------------------------------|----------|--------|--------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                       |   |                            |     |   |   |   |
| (Unaudited - Dollars in thousands)                                          |   |                            |     |   |   |   |
|                                                                        |   | Nine Months Ended September 30, |     |
|                                                                        |   | 2010                            |     |   | 2009   |   |
| Operating activities:                                                       |   |                            |     |   |   |   |
| Net income                                                                  |   | $                               | 28,677   |   |   | $      | 19,267 |   |
| Adjustments to reconcile net income to net cash                             |   |                            |     |   |   |   |   |   |
| (used) provided by operating activities:                                    |   |                            |     |   |   |   |   |   |
| Provision for loan and lease losses                                         |   |                            | 15,764   |   |   |   | 22,741 |   |
| Depreciation of premises and equipment                                      |   |                            | 3,103    |   |   |   | 3,515 |   |
| Depreciation of equipment owned and leased to others                        |   |                            | 15,841   |   |   |   | 15,065 |   |
| Amortization of investment security premiums                                |   |                            |     |   |   |   |   |   |
| and accretion of discounts, net                                             |   |                            | 1,232    |   |   |   | 4,477 |   |
| Amortization of mortgage servicing rights                                   |   |                            | 2,277    |   |   |   | 2,517 |   |
| Mortgage servicing asset impairment (recovery)                              |   |                            | 821      |   |   |   | (1,793 | ) |
| Deferred income taxes                                                       |   |                            | (3,800   | )      |   |   | 3,460 |   |
| Investment securities and other investment gains                            |   |                            | (2,059   | )      |   |   | (673 | ) |
| Originations/purchases of loans held for sale, net of principal collected   |   |                            | (299,298 | )      |   |   | (512,286 | ) |
| Proceeds from the sales of loans held for sale                              |   |                            | 215,678  |   |   |   | 522,780 |   |
| Net gain on sale of loans held for sale                                     |   |                            | (4,678   | )      |   |   | (3,170 | ) |
| Change in trading account securities                                        |   |                            | -        |   |   |   | (17 | ) |
| Change in interest receivable                                               |   |                            | 795      |   |   |   | 1,352 |   |
| Change in interest payable                                                  |   |                            | 664      |   |   |   | 2,173 |   |
| Change in other assets                                                      |   |                            | (4,084   | )      |   |   | (8,109 | ) |
| Change in other liabilities                                                 |   |                            | 9,495    |   |   |   | 4,249 |   |
| Other                                                                       |   |                            | 616      |   |   |   | 754 |   |
| Net change in operating activities                                          |   |                            | (18,956  | )      |   |   | 76,302 |   |
|                                                                        |   |                            |     |   |   |   |   |   |
| Investing activities:                                                       |   |                            |     |   |   |   |   |   |
| Proceeds from sales of investment securities                                |   |                            | 72,417   |   |   |   | 147,658 |   |
| Proceeds from maturities of investment securities                           |   |                            | 330,904  |   |   |   | 323,295 |   |
| Purchases of investment securities                                          |   |                            | (357,465 | )      |   |   | (630,642 | ) |
| Net change in short-term and other investments                              |   |                            | 62,084   |   |   |   | (60,757 | ) |
| Loans sold or participated to others                                        |   |                            | 13,186   |   |   |   | 13,482 |   |
| Net change in loans and leases                                              |   |                            | (46,707  | )      |   |   | 173,687 |   |
| Net change in equipment owned under operating leases                        |   |                            | (3,267   | )      |   |   | (23,541 | ) |
| Purchases of premises and equipment                                         |   |                            | (1,577   | )      |   |   | (1,772 | ) |
| Net change in investing activities                                          |   |                            | 69,575   |   |   |   | (58,590 | ) |
|                                                                        |   |                            |     |   |   |   |   |   |
| Financing activities:                                                       |   |                            |     |   |   |   |   |   |
| Net change in demand deposits, NOW                                          |   |                            |     |   |   |   |   |   |
| accounts and savings accounts                                               |   |                            | (23,309  | )      |   |   | 74,639 |   |
| Net change in certificates of deposit                                       |   |                            | (62,961  | )      |   |   | (102,468 | ) |
| Net change in short-term borrowings                                         |   |                            | 22,114   |   |   |   | (141,197 | ) |
| Proceeds from issuance of long-term debt                                    |   |                            | 15,418   |   |   |   | 240 |   |
| Payments on long-term debt                                                  |   |                            | (363     | )      |   |   | (10,392 | ) |
| Net proceeds from issuance of treasury stock                                |   |                            | 2,871    |   |   |   | 1,663 |   |
| Acquisition of treasury stock                                               |   |                            | (1,578   | )      |   |   | (862 | ) |
| Net proceeds from issuance of preferred stock & common stock warrants   |   |                            | -        |   |   |   | 111,000 |   |
| Cash dividends paid on preferred stock                                      |   |                            | (4,163   | )      |   |   | (3,114 | ) |
| Cash dividends paid on common stock                                         |   |                            | (11,125  | )      |   |   | (10,584 | ) |
| Net change in financing activities                                          |   |                            | (63,096  | )      |   |   | (81,074 | ) |
|                                                                        |   |                            |     |   |   |   |   |   |
| Net change in cash and cash equivalents                                     |   |                            | (12,477  | )      |   |   | (63,363 | ) |
|                                                                        |   |                            |     |   |   |   |   |   |
| Cash and cash equivalents, beginning of year                                |   |                            | 72,872   |   |   |   | 119,771 |   |
|                                                                        |   |                            |     |   |   |   |   |   |
| Cash and cash equivalents, end of period                                    |   | $                               | 60,395   |   |   | $      | 56,408 |   |
|                                                                        |   |                            |     |   |   |   |   |   |
| Non-cash transactions:                                                      |   |                            |     |   |   |   |   |   |
| Loans transferred to other real estate and repossessed assets               |   | $                               | 15,501   |   |   | $      | 12,489 |   |
| Common stock matching contribution to KSOP plan                             |   |                            | 2,545    |   |   |   | 1,254 |   |
|                                                                        |   |                            |     |   |   |   |   |   |
| The accompanying notes are a part of the consolidated financial statements. |   |                            |     |   |   |   |   |   |

----

1ST 

----

----

|                                              |   | Amortized |    |   | Gross            |   |   | Gross             |   |   |       |   |
|---------------------------------------------------|--------|-----------|---------|--------|------------------|--------|--------|-------------------|--------|--------|------------|--------|
| (Dollars in thousands)                            |   | Cost      |    |   | Unrealized Gains |   |   | Unrealized Losses |   |   | Fair Value |   |
| September 30, 2010                                |   |      |    |   |             |   |   |              |   |   |       |   |
| U.S. Treasury and Federal agencies securities     |   | $         | 347,564 |   |             | $      | 7,563  |              |   | $      | -          |   |   | $ | 355,127 |   |
| U.S. States and political subdivisions securities |   |      | 160,583 |   |             |   | 7,529  |              |   |   | (1,550     | )      |   |   | 166,562 |   |
| Mortgage-backed securities - Federal agencies     |   |      | 306,711 |   |             |   | 10,757 |              |   |   | (30        | )      |   |   | 317,438 |   |
| Corporate debt securities                         |   |      | 28,564  |   |             |   | 261    |              |   |   | (6         | )      |   |   | 28,819 |   |
| Foreign government and other securities           |   |      | 3,724   |   |             |   | 37     |              |   |   | (2         | )      |   |   | 3,759 |   |
| Total debt securities                             |   |      | 847,146 |   |             |   | 26,147 |              |   |   | (1,588     | )      |   |   | 871,705 |   |
| Marketable equity securities                      |   |      | 1,263   |   |             |   | 1,549  |              |   |   | (3         | )      |   |   | 2,809 |   |
| Total investment securities available-for-sale    |   | $         | 848,409 |   |             | $      | 27,696 |              |   | $      | (1,591     | )      |   | $ | 874,514 |   |
|                                              |   |      |    |   |             |   |   |              |   |   |       |   |   |   |   |   |
| December 31, 2009                                 |   |      |    |   |             |   |   |              |   |   |       |   |   |   |   |   |
| U.S. Treasury and Federal agencies securities     |   | $         | 390,189 |   |             | $      | 760    |              |   | $      | (1,780     | )      |   | $ | 389,169 |   |
| U.S. States and political subdivisions securities |   |      | 188,706 |   |             |   | 5,450  |              |   |   | (2,337     | )      |   |   | 191,819 |   |
| Mortgage-backed securities - Federal agencies     |   |      | 286,415 |   |             |   | 5,996  |              |   |   | (1,434     | )      |   |   | 290,977 |   |
| Corporate debt securities                         |   |      | 26,166  |   |             |   | 194    |              |   |   | (38        | )      |   |   | 26,322 |   |
| Foreign government and other securities           |   |      | 675     |   |             |   | -      |              |   |   | -          |   |   |   | 675 |   |
| Total debt securities                             |   |      | 892,151 |   |             |   | 12,400 |              |   |   | (5,589     | )      |   |   | 898,962 |   |
| Marketable equity securities                      |   |      | 1,288   |   |             |   | 1,417  |              |   |   | (29        | )      |   |   | 2,676 |   |
| Total investment securities available-for-sale    |   | $         | 893,439 |   |             | $      | 13,817 |              |   | $      | (5,618     | )      |   | $ | 901,638 |   |

| (Dollars in thousands)                   |   |           |    |   |   |       |   |
|------------------------------------------|--------|----------------|---------|--------|--------|------------|--------|
|                                     |   | Amortized Cost |    |   |   | Fair Value |   |
| Due in one year or less                  |   | $              | 41,678  |   |   |       | $      | 41,955 |   |
| Due after one year through five years    |   |           | 374,298 |   |   |       |   | 384,449 |   |
| Due after five years through ten years   |   |           | 110,756 |   |   |       |   | 115,646 |   |
| Due after ten years                      |   |           | 13,703  |   |   |       |   | 12,217 |   |
| Mortgage-backed securities               |   |           | 306,711 |   |   |       |   | 317,438 |   |
| Total debt securities available-for-sale |   | $              | 847,146 |   |   |       | $      | 871,705 |   |

----

| (Dollars in thousands)      |   | Three Months Ended |   |   |   | Nine Months Ended |   |
|-----------------------------|--------|--------------------|--------|--------|--------|-------------------|--------|
|                        |   | September 30,      |   |   |   | September 30,     |   |
|                        |   | 2010               |   |   | 2009   |              |   |   | 2010 |   |   | 2009 |   |
| Gross realized gains        |   | $                  | -      |   |   | $                 | 356    |   |   |   | $ | 292 |   |   | $ | 1,010 |   |
| Gross realized losses       |   |               | (24    | )      |   |              | -      |   |   |   |   | (36 | ) |   |   | (707 | ) |
| Net realized gains (losses) |   | $                  | (24    | )      |   | $                 | 356    |   |   |   | $ | 256 |   |   | $ | 303 |   |

|                                              |   | Less than 12 Months |    |   | 12 months or Longer |   |   | Total  |   |
|---------------------------------------------------|--------|---------------------|---------|--------|---------------------|--------|--------|--------|--------|
|                                              |   | Fair                |    |   | Unrealized          |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| (Dollars in thousands)                            |   | Value               |    |   | Losses              |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| September 30, 2010                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. States and political subdivisions securities |   | $                   | 2,523   |   |                | $      | (46    | )      |   | $ | 11,450 |   |   | $ | (1,504 | ) |   | $ | 13,973 |   |   | $ | (1,550 | ) |
| Mortgage-backed securities - Federal agencies     |   |                | 1,627   |   |                |   | (10    | )      |   |   | 5,275 |   |   |   | (20 | ) |   |   | 6,902 |   |   |   | (30 | ) |
| Corporate debt securities                         |   |                | 4,520   |   |                |   | (6     | )      |   |   | - |   |   |   | - |   |   |   | 4,520 |   |   |   | (6 | ) |
| Foreign government and other securities           |   |                | 1,038   |   |                |   | (2     | )      |   |   | - |   |   |   | - |   |   |   | 1,038 |   |   |   | (2 | ) |
| Total debt securities                             |   |                | 9,708   |   |                |   | (64    | )      |   |   | 16,725 |   |   |   | (1,524 | ) |   |   | 26,433 |   |   |   | (1,588 | ) |
| Marketable equity securities                      |   |                | 1       |   |                |   | -      |   |   |   | 4 |   |   |   | (3 | ) |   |   | 5 |   |   |   | (3 | ) |
| Total investment securities available-for-sale    |   | $                   | 9,709   |   |                | $      | (64    | )      |   | $ | 16,729 |   |   | $ | (1,527 | ) |   | $ | 26,438 |   |   | $ | (1,591 | ) |
|                                              |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                                 |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury and Federal agencies securities     |   | $                   | 245,921 |   |                | $      | (1,780 | )      |   | $ | - |   |   | $ | - |   |   | $ | 245,921 |   |   | $ | (1,780 | ) |
| U.S. States and political subdivisions securities |   |                | 9,501   |   |                |   | (178   | )      |   |   | 16,718 |   |   |   | (2,159 | ) |   |   | 26,219 |   |   |   | (2,337 | ) |
| Mortgage-backed securities - Federal agencies     |   |                | 90,592  |   |                |   | (1,137 | )      |   |   | 22,330 |   |   |   | (297 | ) |   |   | 112,922 |   |   |   | (1,434 | ) |
| Corporate debt securities                         |   |                | 7,149   |   |                |   | (38    | )      |   |   | - |   |   |   | - |   |   |   | 7,149 |   |   |   | (38 | ) |
| Total debt securities                             |   |                | 353,163 |   |                |   | (3,133 | )      |   |   | 39,048 |   |   |   | (2,456 | ) |   |   | 392,211 |   |   |   | (5,589 | ) |
| Marketable equity securities                      |   |                | 2       |   |                |   | (2     | )      |   |   | 4 |   |   |   | (27 | ) |   |   | 6 |   |   |   | (29 | ) |
| Total investment securities available-for-sale    |   | $                   | 353,165 |   |                | $      | (3,135 | )      |   | $ | 39,052 |   |   | $ | (2,483 | ) |   | $ | 392,217 |   |   | $ | (5,618 | ) |

----

|                                                             |   | Three Months Ended |   |   |   | Nine Months Ended |   |
|------------------------------------------------------------------|--------|--------------------|--------|--------|--------|-------------------|--------|
| (Dollars in thousands)                                           |   | September 30,      |   |   |   | September 30,     |   |
|                                                             |   | 2010               |   |   | 2009   |              |   |   | 2010 |   |   | 2009 |   |
| Mortgage servicing assets:                                       |   |               |   |   |   |              |   |   |   |   |   |   |   |
| Balance at beginning of period                                   |   | $                  | 8,168  |   |   | $                 | 9,335  |   |   |   | $ | 8,749 |   |   | $ | 6,708 |   |
| Additions                                                        |   |               | 1,493  |   |   |              | 1,447  |   |   |   |   | 3,034 |   |   |   | 6,370 |   |
| Amortization                                                     |   |               | (816   | )      |   |              | (945   | ) |   |   |   | (2,277 | ) |   |   | (2,517 | ) |
| Sales                                                            |   |               | (657   | )      |   |              | (392   | ) |   |   |   | (1,318 | ) |   |   | (1,116 | ) |
| Carrying value before valuation allowance at end of period       |   |               | 8,188  |   |   |              | 9,445  |   |   |   |   | 8,188 |   |   |   | 9,445 |   |
| Valuation allowance:                                             |   |               |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                                   |   |               | (971   | )      |   |              | (566   | ) |   |   |   | (1 | ) |   |   | (2,073 | ) |
| Impairment recoveries (charges)                                  |   |               | 149    |   |   |              | 286    |   |   |   |   | (821 | ) |   |   | 1,793 |   |
| Balance at end of period                                         |   | $                  | (822   | )      |   | $                 | (280   | ) |   |   | $ | (822 | ) |   | $ | (280 | ) |
| Net carrying value of mortgage servicing assets at end of period |   | $                  | 7,366  |   |   | $                 | 9,165  |   |   |   | $ | 7,366 |   |   | $ | 9,165 |   |
| Fair value of mortgage servicing assets at end of period         |   | $                  | 7,646  |   |   | $                 | 9,648  |   |   |   | $ | 7,646 |   |   | $ | 9,648 |   |

----

|                                            |   | September 30, |                      |
|-------------------------------------------------|--------|---------------|---------------------------|
|                                            |   | 2010          |                      |   | 2009 |   |
| Expected weighted-average life (in years)       |   |          | 3.59                      |   |   |   |  3.49 |   |
| Weighted-average constant prepayment rate (CPR) |   |          |    29.76 %      |   |   |   |    23.16 % |   |
| Weighted-average discount rate                  |   |          |     8.41 % |   |   |   |      8.54 % |   |

----

| (Dollars in thousands)       |   |        |    |   |   | Asset derivatives   |                    |   |   | Liability derivatives |   |
|------------------------------|--------|-------------|---------|--------|--------|---------------------|-------------------------|--------|--------|-----------------------|--------|
|                         |   | Notional or |    |   |   | Statement of        |                    |   |   |                  |   |   |   | Statement of |   |   |   |   |   |
|                         |   | contractual |    |   |   | Financial Condition |                    |   |   | Fair                  |   |   |   | Financial Condition |   |   |   | Fair |   |
|                         |   | amount      |    |   |   | location            |                    |   |   | value                 |   |   |   | location |   |   |   | value |   |
|                         |   |        |    |   |   |                |                    |   |   |                  |   |   |   |   |   |   |   |   |   |
| September 30, 2010           |   |        |    |   |   |                |                    |   |   |                  |   |   |   |   |   |   |   |   |   |
| Interest rate swap contracts |   | $           | 423,069 |   |   |                | Other assets            |   |   |                  | $      | 18,933 |   |   |   | Other liabilities |   |   |   | $ | 19,473 |   |
| Loan commitments             |   |        | 118,840 |   |   |                | Mortgages held for sale |   |   |                  |   | 476 |   |   |   | N/A |   |   |   |   | - |   |
| Forward contracts            |   |        | 173,340 |   |   |                | N/A                     |   |   |                  |   | - |   |   |   | Mortgages held for sale |   |   |   |   | 849 |   |
|                         |   |        |    |   |   |                |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   |        |    |   |   |                |                    |   |   |                  |   | $ | 19,409 |   |   |   |   |   |   |   |   | $ | 20,322 |   |
|                         |   |        |    |   |   |                |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009            |   |        |    |   |   |                |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap contracts |   | $           | 412,717 |   |   |                | Other assets            |   |   |                  | $      | 13,516 |   |   |   | Other liabilities |   |   |   | $ | 13,988 |   |
| Loan commitments             |   |        | 48,821  |   |   |                | Mortgages held for sale |   |   |                  |   | 77 |   |   |   | N/A |   |   |   |   | - |   |
| Forward contracts            |   |        | 38,940  |   |   |                | Mortgages held for sale |   |   |                  |   | 411 |   |   |   | N/A |   |   |   |   | - |   |
|                         |   |        |    |   |   |                |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   |        |    |   |   |                |                    |   |   |                  |   | $ | 14,004 |   |   |   |   |   |   |   |   | $ | 13,988 |   |

|                         |                    |   | Gain (loss)        |   |
|------------------------------|-------------------------|--------|--------------------|--------|
|                         |                    |   | Three Months Ended |   |   |   | Nine Months Ended |   |
|                         | Statement of            |   | September 30,      |   |   |   | September 30, |   |
| (Dollars in thousands)       | Income location         |   | 2010               |   |   | 2009 |   |   |   | 2010 |   |   | 2009 |   |
|                         |                    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap contracts | Other expense           |   | $                  | 110    |   |   | $ | (121 | ) |   |   | $ | (68 | ) |   | $ | (53 | ) |
| Loan commitments             | Mortgage banking income |   |               | 3      |   |   |   | (249 | ) |   |   |   | 399 |   |   |   | (1,277 | ) |
| Forward contracts            | Mortgage banking income |   |               | 1,093  |   |   |   | (258 | ) |   |   |   | (1,260 | ) |   |   | 714 |   |
| Total                        |                    |   | $                  | 1,206  |   |   | $ | (628 | ) |   |   | $ | (929 | ) |   | $ | (616 | ) |

----

|                                                                      |   | Three Months Ended |       |   |   | Nine Months Ended |       |
|---------------------------------------------------------------------------|--------|--------------------|------------|--------|--------|-------------------|------------|
| (Dollars in thousands - except per share amounts)                         |   | September 30,      |       |   |   | September 30,     |       |
|                                                                      |   | 2010               |       |   | 2009   |              |       |   | 2010 |   |   | 2009 |   |
| Distributed earnings allocated to common stock                            |   | $                  | 3,641      |   |   | $                 | 3,626      |   |   |   | $ | 10,900 |   |   | $ | 10,386 |   |
| Undistributed earnings allocated to common stock                          |   |               | 5,732      |   |   |              | 1,381      |   |   |   |   | 12,390 |   |   |   | 4,095 |   |
| Net earnings allocated to common stock                                    |   |               | 9,373      |   |   |              | 5,007      |   |   |   |   | 23,290 |   |   |   | 14,481 |   |
| Net earnings allocated to participating securities                        |   |               | 109        |   |   |              | 25         |   |   |   |   | 238 |   |   |   | 76 |   |
| Net income allocated to common stock and participating securities         |   | $                  | 9,482      |   |   | $                 | 5,032      |   |   |   | $ | 23,528 |   |   | $ | 14,557 |   |
|                                                                      |   |               |       |   |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding for basic earnings per common share   |   |               | 24,247,236 |   |   |              | 24,164,884 |   |   |   |   | 24,247,468 |   |   |   | 24,166,887 |   |
| Dilutive effect of stock compensation                                     |   |               | 6,647      |   |   |              | 47,158     |   |   |   |   | 6,558 |   |   |   | 48,655 |   |
| Weighted average shares outstanding for diluted earnings per common share |   |               | 24,253,883 |   |   |              | 24,212,042 |   |   |   |   | 24,254,026 |   |   |   | 24,215,542 |   |
|                                                                      |   |               |       |   |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per common share                                           |   | $                  | 0.39       |   |   | $                 | 0.21       |   |   |   | $ | 0.96 |   |   | $ | 0.60 |   |
| Diluted earnings per common share                                         |   | $                  | 0.39       |   |   | $                 | 0.21       |   |   |   | $ | 0.96 |   |   | $ | 0.60 |   |

----

|                                              |   |   |      |   |   |   |     |   |   |   | Average     |   |   |   |       |   |
|---------------------------------------------------|--------|--------|-----------|--------|--------|--------|----------|--------|--------|--------|-------------|--------|--------|--------|------------|--------|
|                                              |   |   |      |   |   |   | Weighted |   |   |   | Remaining   |   |   |   | Total      |   |
|                                              |   |   |      |   |   |   | Average  |   |   |   | Contractual |   |   |   | Intrinsic  |   |
|                                              |   |   | Number of |   |   |   | Exercise |   |   |   | Term        |   |   |   | Value      |   |
|                                              |   |   | Shares    |   |   |   | Price    |   |   |   | (in years)  |   |   |   | (in 000's) |   |
|                                              |   |   |      |   |   |   |     |   |   |   |        |   |   |   |       |   |
| Options outstanding, beginning of year            |   |   |      | 71,763 |   |   |     |   | $18.19 |   |        |   |   |   |       |   |   |   |
| Granted                                           |   |   |      | -      |   |   |     |   | -      |   |        |   |   |   |       |   |   |   |
| Exercised                                         |   |   |      | -      |   |   |     |   | -      |   |        |   |   |   |       |   |   |   |
| Forfeited                                         |   |   |      | (9,255 | )      |   |     |   | 25.03  |   |        |   |   |   |       |   |   |   |
| Options outstanding, September 30, 2010           |   |   |      | 62,508 |   |   |     |   | $17.18 |   |        |   |   | 1.36   |       |   |   | $117 |   |
|                                              |   |   |      |   |   |   |     |   |   |   |        |   |   |   |       |   |   |   |   |   |
|                                              |   |   |      |   |   |   |     |   |   |   |        |   |   |   |       |   |   |   |   |   |
| Vested and expected to vest at September 30, 2010 |   |   |      | 62,508 |   |   |     |   | $17.18 |   |        |   |   | 1.36   |       |   |   | $117 |   |
| Exercisable at September 30, 2010                 |   |   |      | 59,758 |   |   |     |   | $17.42 |   |        |   |   | 1.31   |       |   |   | $103 |   |

|     |            |   | Options Outstanding |         |   |        | Options Exercisable |   |
|----------|-----------------|--------|---------------------|--------------|--------|-------------|---------------------|--------|
|     |            |   |                |         |   | 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 |   |        |  1.99          |   |   | $ | 13.38 |   |   |   |  26,758 |   |   | $ | 13.52 |   |
| $        | 18.00 to $26.99 |   |                |  33,000 |   |        |  0.80          |   |   |   | 20.58 |   |   |   |  33,000 |   |   |   | 20.58 |   |

----

|  §  | Level 1 – The valuation is based on quoted prices in active markets for identical instruments. |
|--------------------|------------------------------------------------------------------------------------------------------|

| §  | Level 2 – The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §  | Level 3 – The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument.  Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation. |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (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                                                                                                                                                    |   | $                          | 114,947 |   |                       | $      | 111,631 |                                                                |   | $      | 3,316  |   | (1 | ) |
|   Nonaccrual loans                                                                                                                                               |   |                       | -       |   |                       |   | -       |                                                                |   |   | -      |   |   |   |
|   Loans 90 days or more past due and still accruing                                                                                                              |   |                       | -       |   |                       |   | -       |                                                                |   |   | -      |   |   |   |
|                                                                                                                                                                       |   |                       |    |   |                       |   |    |                                                                |   |   |   |   |   |   |
| (1) The excess of fair value carrying amount over unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding, |
| gains and losses on the related loan commitment prior to funding, and premiums on acquired loans.                                                                          |

| ·   | 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 CMOs, 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 dealer quotes. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| · | 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. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (Dollars in thousands)                                                 |   | Level 1 |   |   |   | Level 2 |   |    |   | Level 3 |   |   |   | Total  |   |
|------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|---------|--------|---------|--------|--------|--------|--------|--------|
|                                                                   |   |    |   |   |   |    |   |    |   |    |   |   |   |   |   |
| Assets:                                                                |   |    |   |   |   |    |   |    |   |    |   |   |   |   |   |
| Investment securities available-for-sale:                              |   |    |   |   |   |    |   |    |   |    |   |   |   |   |   |
| U.S. Treasury and Federal agencies securities                          |   | $       | 20,242 |   |   |    | $      | 334,885 |   |    |   | $      | -      |   |   |   | $ | 355,127 |   |
| U.S. States and political subdivisions securities                      |   |    | -      |   |   |    |   | 146,942 |   |    |   |   | 19,620 |   |   |   |   | 166,562 |   |
| Mortgage-backed securities - Federal agencies                          |   |    | -      |   |   |    |   | 317,438 |   |    |   |   | -      |   |   |   |   | 317,438 |   |
| Corporate debt securities                                              |   |    | -      |   |   |    |   | 28,819  |   |    |   |   | -      |   |   |   |   | 28,819 |   |
| Foreign government and other securities                                |   |    | -      |   |   |    |   | 3,084   |   |    |   |   | 675    |   |   |   |   | 3,759 |   |
| Total debt securities                                                  |   |    | 20,242 |   |   |    |   | 831,168 |   |    |   |   | 20,295 |   |   |   |   | 871,705 |   |
| Marketable equity securities                                           |   |    | 2,800  |   |   |    |   | -       |   |    |   |   | 9      |   |   |   |   | 2,809 |   |
| Total investment securities available-for-sale                         |   |    | 23,042 |   |   |    |   | 831,168 |   |    |   |   | 20,304 |   |   |   |   | 874,514 |   |
| Trading account securities                                             |   |    | 125    |   |   |    |   | -       |   |    |   |   | -      |   |   |   |   | 125 |   |
| Mortgages held for sale                                                |   |    | -      |   |   |    |   | 114,947 |   |    |   |   | -      |   |   |   |   | 114,947 |   |
| Accrued income and other assets (Interest rate swap agreements)        |   |    | -      |   |   |    |   | 18,933  |   |    |   |   | -      |   |   |   |   | 18,933 |   |
| Total                                                                  |   | $       | 23,167 |   |   |    | $      | 965,048 |   |    |   | $      | 20,304 |   |   |   | $ | 1,008,519 |   |
|                                                                   |   |    |   |   |   |    |   |    |   |    |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                           |   |    |   |   |   |    |   |    |   |    |   |   |   |   |   |   |   |   |   |
| Accrued expenses and other liabilities (Interest rate swap agreements) |   | $       | -      |   |   |    | $      | 19,473  |   |    |   | $      | -      |   |   |   | $ | 19,473 |   |
| Total                                                                  |   | $       | -      |   |   |    | $      | 19,473  |   |    |   | $      | -      |   |   |   | $ | 19,473 |   |

| (Dollars in thousands)                       |   | U.S. States and political subdivisions securities |   |   |   | Foreign government and other securities |   |   |   | Marketable equity securities |   |   |   | Investment securities available-for-sale |   |
|----------------------------------------------|--------|---------------------------------------------------|--------|--------|--------|-----------------------------------------|--------|--------|--------|------------------------------|--------|--------|--------|------------------------------------------|--------|
| Beginning balance July 1, 2010               |   | $                                                 | 9,324  |   |   |                                    | $      | 675    |   |                         |   | $      | 9      |                                     |   |   | $ | 10,008 |   |
| Total gains or losses (realized/unrealized): |   |                                              |   |   |   |                                    |   |   |   |                         |   |   |   |                                     |   |   |   |   |   |
| Included in earnings                         |   |                                              | -      |   |   |                                    |   | -      |   |                         |   |   | -      |                                     |   |   |   | - |   |
| Included in other comprehensive income       |   |                                              | 73     |   |   |                                    |   | -      |   |                         |   |   | -      |                                     |   |   |   | 73 |   |
| Purchases                                    |   |                                              | -      |   |   |                                    |   | 100    |   |                         |   |   | -      |                                     |   |   |   | 100 |   |
| Issuances                                    |   |                                              | -      |   |   |                                    |   | -      |   |                         |   |   | -      |                                     |   |   |   | - |   |
| Settlements                                  |   |                                              | -      |   |   |                                    |   | -      |   |                         |   |   | -      |                                     |   |   |   | - |   |
| Maturities                                   |   |                                              | (642   | )      |   |                                    |   | (100   | )      |                         |   |   | -      |                                     |   |   |   | (742 | ) |
| Transfers into Level 3                       |   |                                              | 10,865 |   |   |                                    |   | -      |   |                         |   |   | -      |                                     |   |   |   | 10,865 |   |
| Transfers out of Level 3                     |   |                                              | -      |   |   |                                    |   | -      |   |                         |   |   | -      |                                     |   |   |   | - |   |
| Ending balance September 30, 2010            |   | $                                                 | 19,620 |   |   |                                    | $      | 675    |   |                         |   | $      | 9      |                                     |   |   | $ | 20,304 |   |

----

| (Dollars in thousands)                                      |   | Level 1 |   |   |   | Level 2 |   |   |   | Level 3 |   |   |    | Total  |   |
|-------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|---------|--------|--------|
|                                                        |   |    |   |   |   |    |   |   |   |    |   |   |    |   |   |
| Loans                                                       |   | $       | -      |   |   |    | $      | -      |   |    |   | $      | 87,081  |   |   |   | $ | 87,081 |   |
| Accrued income and other assets (partnership investments)   |   |    | -      |   |   |    |   | -      |   |    |   |   | 2,889   |   |   |   |   | 2,889 |   |
| Accrued income and other assets (mortgage servicing rights) |   |    | -      |   |   |    |   | -      |   |    |   |   | 7,366   |   |   |   |   | 7,366 |   |
| Accrued income and other assets (repossessions)             |   |    | -      |   |   |    |   | -      |   |    |   |   | 9,665   |   |   |   |   | 9,665 |   |
| Accrued income and other assets (other real estate)         |   |    | -      |   |   |    |   | -      |   |    |   |   | 9,200   |   |   |   |   | 9,200 |   |
|                                                        |   | $       | -      |   |   |    | $      | -      |   |    |   | $      | 116,201 |   |   |   | $ | 116,201 |   |

----

|                                                                                                       |   | September 30, 2010 |      |   |   | December 31, 2009 |   |
|------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|--------|-------------------|--------|
|                                                                                                       |   | Carrying or        |      |   |   |              |   |   |   | Carrying or |   |   |   |   |   |
| (Dollars in thousands)                                                                                     |   | Contract Value     |      |   |   | Fair Value        |   |   |   | Contract Value |   |   |   | Fair Value |   |
| Assets:                                                                                                    |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                    |   | $                  | 60,395    |   |   |              | $      | 60,395 |   |   |   | $ | 72,872 |   |   |   | $ | 72,872 |   |
| Federal funds sold and interest bearing deposits with other banks                                          |   |               | 79,082    |   |   |              |   | 79,082 |   |   |   |   | 141,166 |   |   |   |   | 141,166 |   |
| Investment securities, available-for-sale                                                                  |   |               | 874,514   |   |   |              |   | 874,514 |   |   |   |   | 901,638 |   |   |   |   | 901,638 |   |
| Other investments and trading account securities                                                           |   |               | 21,138    |   |   |              |   | 21,138 |   |   |   |   | 21,137 |   |   |   |   | 21,137 |   |
| Mortgages held for sale                                                                                    |   |               | 114,947   |   |   |              |   | 114,947 |   |   |   |   | 26,649 |   |   |   |   | 26,649 |   |
| Loans and leases, net of reserve for loan and lease losses                                                 |   |               | 3,022,670 |   |   |              |   | 3,077,572 |   |   |   |   | 3,004,914 |   |   |   |   | 3,042,251 |   |
| Cash surrender value of life insurance policies                                                            |   |               | 52,907    |   |   |              |   | 52,907 |   |   |   |   | 51,342 |   |   |   |   | 51,342 |   |
| Mortgage servicing rights                                                                                  |   |               | 7,366     |   |   |              |   | 7,646 |   |   |   |   | 8,748 |   |   |   |   | 10,180 |   |
| Interest rate swaps                                                                                        |   |               | 18,933    |   |   |              |   | 18,933 |   |   |   |   | 13,516 |   |   |   |   | 13,516 |   |
| Liabilities:                                                                                               |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                   |   | $                  | 3,566,194 |   |   |              | $      | 3,601,646 |   |   |   | $ | 3,652,464 |   |   |   | $ | 3,692,203 |   |
| Short-term borrowings                                                                                      |   |               | 172,224   |   |   |              |   | 172,224 |   |   |   |   | 150,110 |   |   |   |   | 150,110 |   |
| Long-term debt and mandatorily redeemable securities                                                       |   |               | 34,987    |   |   |              |   | 35,474 |   |   |   |   | 19,761 |   |   |   |   | 19,831 |   |
| Subordinated notes                                                                                         |   |               | 89,692    |   |   |              |   | 73,078 |   |   |   |   | 89,692 |   |   |   |   | 81,118 |   |
| Interest rate swaps                                                                                        |   |               | 19,473    |   |   |              |   | 19,473 |   |   |   |   | 13,988 |   |   |   |   | 13,988 |   |
| Off-balance-sheet instruments *                                                                            |   |               | -         |   |   |              |   | 139 |   |   |   |   | - |   |   |   |   | 150 |   |
| * Represents estimated cash outflows required to currently settle the obligations at current market rates. |   |               |      |   |   |              |

----

----

ITEM 

----

| (Dollars in thousands)                         |   | September 30, |    |   |   | December 31, |   |
|------------------------------------------------|--------|---------------|---------|--------|--------|--------------|--------|
|                                           |   | 2010          |    |   |   | 2009         |   |
| Accrued income and other assets:               |   |          |    |   |   |         |   |
| Bank owned life insurance cash surrender value |   | $             | 52,907  |   |   |         | $      | 51,342 |   |
| Accrued interest receivable                    |   |          | 15,392  |   |   |         |   | 16,187 |   |
| Mortgage servicing assets                      |   |          | 7,366   |   |   |         |   | 8,748 |   |
| Other real estate                              |   |          | 7,010   |   |   |         |   | 4,039 |   |
| Former bank premises held for sale             |   |          | 2,190   |   |   |         |   | 2,490 |   |
| Repossessions                                  |   |          | 9,665   |   |   |         |   | 10,165 |   |
| All other assets                               |   |          | 55,188  |   |   |         |   | 55,620 |   |
| Total accrued income and other assets          |   | $             | 149,718 |   |   |         | $      | 148,591 |   |

----

|                                      |   |   |    |   |            |   |   |              |   |   |    |   |   | To Be Well        |   |
|-------------------------------------------|--------|--------|---------|--------|-----------------|--------|--------|-------------------|--------|--------|---------|--------|--------|-------------------|--------|
|                                      |   |   |    |   |            |   |   |              |   |   |    |   |   | Capitalized Under |   |
|                                      |   |   |    |   | 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                    |   | $      | 621,785 |   |            |   | 18.15  | %                 |   | $      | 274,132 |   |   |              | 8.00   | % |   | $ | 342,665 |   |   |   | 10.00 | % |
| 1st Source Bank                           |   |   | 584,673 |   |            |   | 17.13  |              |   |   | 273,009 |   |   |              | 8.00   |   |   |   | 341,261 |   |   |   | 10.00 |   |
| Tier 1 Capital (to Risk-Weighted Assets): |   |   |    |   |            |   |   |              |   |   |    |   |   |              |   |   |   |   |   |   |   |
| 1st Source Corporation                    |   |   | 577,681 |   |            |   | 16.86  |              |   |   | 137,066 |   |   |              | 4.00   |   |   |   | 205,599 |   |   |   | 6.00 |   |
| 1st Source Bank                           |   |   | 541,405 |   |            |   | 15.86  |              |   |   | 136,504 |   |   |              | 4.00   |   |   |   | 204,757 |   |   |   | 6.00 |   |
| Tier 1 Capital (to Average Assets):       |   |   |    |   |            |   |   |              |   |   |    |   |   |              |   |   |   |   |   |   |   |   |   |   |
| 1st Source Corporation                    |   |   | 577,681 |   |            |   | 13.04  |              |   |   | 177,164 |   |   |              | 4.00   |   |   |   | 221,455 |   |   |   | 5.00 |   |
| 1st Source Bank                           |   |   | 541,405 |   |            |   | 12.28  |              |   |   | 176,421 |   |   |              | 4.00   |   |   |   | 220,526 |   |   |   | 5.00 |   |

----

----

| DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |
|--------------------------------------------------------------|----------------------------------|-----------|----------|---------------------------------|--------|--------|--------|---------|--------|----------|-----------|--------|--------|--------|---------|--------|
| INTEREST RATES AND INTEREST DIFFERENTIAL                     |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |
| (Dollars in thousands)                                       |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |
|                                                         | Three months ended September 30, |      |     | Nine months ended September 30, |   |
|                                                         | 2010                             |      | 2009     |                            | 2010   |   | 2009   |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |                             |      | Interest |                            |   |   |   |    |   | Interest |      |   |   |   |    |   | Interest |   |   |   |   |   |   | Interest |   |   |   |
|                                                         | Average                          |      | Income/  |                            | Yield/ |   |   | Average |   | Income/  |      | Yield/ |   |   | Average |   | Income/ |   | Yield/ |   |   | Average |   | Income/ |   | Yield/ |   |
|                                                         | Balance                          |      | Expense  |                            | Rate   |   |   | Balance |   | Expense  |      | Rate   |   |   | Balance |   | Expense |   | Rate |   |   | Balance |   | Expense |   | Rate |   |
| ASSETS:                                                      |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities:                                       |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                      | $                                | 728,684   |     | $                               | 4,931  |   | 2.68   | %       |   | $        | 622,975   |   | $      | 4,357  |    | 2.78   | % |   | $ | 728,427 |   | $ | 15,611 |   | 2.87 | % |   | $ | 611,456 |   | $ | 12,600 |   | 2.76 | % |
| Tax exempt                                                   |                             | 167,059   |     |                            | 2,018  |   | 4.79   | %       |   |     | 203,493   |   |   | 2,464  |    | 4.80   | % |   |   | 173,417 |   |   | 6,258 |   | 4.82 | % |   |   | 207,042 |   |   | 7,366 |   | 4.76 | % |
| Mortgages - held for sale                                    |                             | 75,934    |     |                            | 886    |   | 4.63   | %       |   |     | 72,278    |   |   | 933    |    | 5.12   | % |   |   | 44,175 |   |   | 1,610 |   | 4.87 | % |   |   | 89,942 |   |   | 3,459 |   | 5.14 | % |
| Net loans and leases                                         |                             | 3,129,445 |     |                            | 43,022 |   | 5.45   | %       |   |     | 3,130,362 |   |   | 42,673 |    | 5.41   | % |   |   | 3,116,927 |   |   | 128,055 |   | 5.49 | % |   |   | 3,184,394 |   |   | 129,559 |   | 5.44 | % |
| Other investments                                            |                             | 81,210    |     |                            | 219    |   | 1.07   | %       |   |     | 130,210   |   |   | 297    |    | 0.90   | % |   |   | 104,659 |   |   | 743 |   | 0.95 | % |   |   | 113,664 |   |   | 894 |   | 1.05 | % |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Earning Assets                                         |                             | 4,182,332 |     |                            | 51,076 |   | 4.85   | %       |   |     | 4,159,318 |   |   | 50,724 |    | 4.84   | % |   |   | 4,167,605 |   |   | 152,277 |   | 4.89 | % |   |   | 4,206,498 |   |   | 153,878 |   | 4.89 | % |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                      |                             | 62,339    |     |                            |   |   |   |    |   |     | 57,028    |   |   |   |    |   |   |   |   | 60,392 |   |   |   |   |   |   |   |   | 58,807 |   |   |   |   |   |   |
| Reserve for loan and lease losses                            |                             | (89,572   | )        |                            |   |   |   |    |   |     | (84,382   | )      |   |   |    |   |   |   |   | (89,248 | ) |   |   |   |   |   |   |   | (84,240 | ) |   |   |   |   |   |
| Other assets                                                 |                             | 363,294   |     |                            |   |   |   |    |   |     | 331,360   |   |   |   |    |   |   |   |   | 368,509 |   |   |   |   |   |   |   |   | 327,137 |   |   |   |   |   |   |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                        | $                                | 4,518,393 |     |                            |   |   |   |    |   | $        | 4,463,324 |   |   |   |    |   |   |   | $ | 4,507,258 |   |   |   |   |   |   |   | $ | 4,508,202 |   |   |   |   |   |   |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY:                        |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                    | $                                | 3,074,493 |     | $                               | 10,790 |   | 1.39   | %       |   | $        | 3,104,240 |   | $      | 15,460 |    | 1.98   | % |   | $ | 3,109,528 |   | $ | 34,768 |   | 1.49 | % |   | $ | 3,151,071 |   | $ | 49,662 |   | 2.11 | % |
| Short-term borrowings                                        |                             | 160,594   |     |                            | 219    |   | 0.54   | %       |   |     | 176,580   |   |   | 265    |    | 0.60   | % |   |   | 158,385 |   |   | 613 |   | 0.52 | % |   |   | 192,245 |   |   | 909 |   | 0.63 | % |
| Subordinated notes                                           |                             | 89,692    |     |                            | 1,648  |   | 7.29   | %       |   |     | 89,692    |   |   | 1,648  |    | 7.29   | % |   |   | 89,692 |   |   | 4,942 |   | 7.37 | % |   |   | 89,692 |   |   | 4,942 |   | 7.37 | % |
| Long-term debt and                                           |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| mandatorily redeemable securities                            |                             | 33,138    |     |                            | 400    |   | 4.79   | %       |   |     | 19,928    |   |   | 322    |    | 6.42   | % |   |   | 26,868 |   |   | 1,045 |   | 5.20 | % |   |   | 20,610 |   |   | 853 |   | 5.53 | % |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Interest-Bearing Liabilities                           |                             | 3,357,917 |     |                            | 13,057 |   | 1.54   | %       |   |     | 3,390,440 |   |   | 17,695 |    | 2.07   | % |   |   | 3,384,473 |   |   | 41,368 |   | 1.63 | % |   |   | 3,453,618 |   |   | 56,366 |   | 2.18 | % |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits                                 |                             | 493,935   |     |                            |   |   |   |    |   |     | 431,773   |   |   |   |    |   |   |   |   | 468,912 |   |   |   |   |   |   |   |   | 420,209 |   |   |   |   |   |   |
| Other liabilities                                            |                             | 68,813    |     |                            |   |   |   |    |   |     | 67,292    |   |   |   |    |   |   |   |   | 66,078 |   |   |   |   |   |   |   |   | 71,212 |   |   |   |   |   |   |
| Shareholders' equity                                         |                             | 597,728   |     |                            |   |   |   |    |   |     | 573,819   |   |   |   |    |   |   |   |   | 587,795 |   |   |   |   |   |   |   |   | 563,163 |   |   |   |   |   |   |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                        | $                                | 4,518,393 |     |                            |   |   |   |    |   | $        | 4,463,324 |   |   |   |    |   |   |   | $ | 4,507,258 |   |   |   |   |   |   |   | $ | 4,508,202 |   |   |   |   |   |   |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                          |                             |      |     | $                               | 38,019 |   |   |    |   |     |      |   | $      | 33,029 |    |   |   |   |   |   |   | $ | 110,909 |   |   |   |   |   |   |   | $ | 97,512 |   |   |   |
|                                                         |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Yield on Earning Assets on a Taxable                     |                             |      |     |                            |   |   |   |    |   |     |      |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equivalent Basis                                             |                             |      |     |                            |   |   | 3.61   | %       |   |     |      |   |   |   |    | 3.15   | % |   |   |   |   |   |   |   | 3.56 | % |   |   |   |   |   |   |   | 3.10 | % |

----

|                                                  |   | Three Months Ended |      |   |   | Nine Months Ended |   |
|-------------------------------------------------------|--------|--------------------|-----------|--------|--------|-------------------|--------|
|                                                  |   | September 30,      |      |   |   | September 30,     |   |
| (Dollars in thousands)                                |   | 2010               |      |   |   | 2009              |   |   |   | 2010 |   |   |   | 2009 |   |
|                                                  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |
| Reserve for loan and lease losses - beginning balance |   | $                  | 88,014    |   |   |              | $      | 83,124 |   |   |   | $ | 88,236 |   |   |   | $ | 79,776 |   |
| Charge-offs                                           |   |               | (5,351    | )      |   |              |   | (4,701 | ) |   |   |   | (17,056 | ) |   |   |   | (20,156 | ) |
| Recoveries                                            |   |               | 1,268     |   |   |              |   | 612 |   |   |   |   | 2,565 |   |   |   |   | 3,143 |   |
| Net charge-offs                                       |   |               | (4,083    | )      |   |              |   | (4,089 | ) |   |   |   | (14,491 | ) |   |   |   | (17,013 | ) |
|                                                  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan and lease losses                   |   |               | 5,578     |   |   |              |   | 6,469 |   |   |   |   | 15,764 |   |   |   |   | 22,741 |   |
|                                                  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve for loan and lease losses - ending balance    |   | $                  | 89,509    |   |   |              | $      | 85,504 |   |   |   | $ | 89,509 |   |   |   | $ | 85,504 |   |
|                                                  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans and leases outstanding at end of period         |   | $                  | 3,112,179 |   |   |              | $      | 3,094,030 |   |   |   | $ | 3,112,179 |   |   |   | $ | 3,094,030 |   |
| Average loans and leases outstanding during period    |   |               | 3,129,445 |   |   |              |   | 3,130,362 |   |   |   |   | 3,116,927 |   |   |   |   | 3,184,394 |   |
|                                                  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve for loan and lease losses as a percentage of  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| loans and leases outstanding at end of period         |   |               | 2.88      | %      |   |              |   | 2.76 | % |   |   |   | 2.88 | % |   |   |   | 2.76 | % |
| Ratio of annualized net charge-offs during period to  |   |               |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| average loans and leases outstanding                  |   |               | 0.52      | %      |   |              |   | 0.52 | % |   |   |   | 0.62 | % |   |   |   | 0.71 | % |

----

| (Dollars in thousands)                    |   |          |   |   |   |         |   |    |   |          |   |
|-------------------------------------------|--------|---------------|--------|--------|--------|--------------|--------|---------|--------|---------------|--------|
|                                      |   | September 30, |   |   |   | December 31, |   |    |   | September 30, |   |
|                                      |   | 2010          |   |   |   | 2009         |   |    |   | 2009          |   |
|                                      |   |          |   |   |   |         |   |    |   |          |   |
| Loans and leases past due 90 days or more |   | $             | 1,104  |   |   |         | $      | 628     |   |          |   | $ | 1,125 |   |
| Nonaccrual loans and leases          |   |          | 79,094 |   |   |         |   | 83,537  |   |          |   |   | 80,361 |   |
| Other real estate                         |   |          | 7,010  |   |   |         |   | 4,039   |   |          |   |   | 4,074 |   |
| Former bank premises held for sale        |   |          | 2,190  |   |   |         |   | 2,490   |   |          |   |   | 3,095 |   |
| Repossessions                             |   |          | 9,665  |   |   |         |   | 10,165  |   |          |   |   | 5,672 |   |
| Equipment owned under operating leases    |   |          | 311    |   |   |         |   | 154     |   |          |   |   | 74 |   |
|                                      |   |          |   |   |   |         |   |    |   |          |   |   |   |   |
| Total nonperforming assets                |   | $             | 99,374 |   |   |         | $      | 101,013 |   |          |   | $ | 94,401 |   |

----

| (Dollars in thousands)                        |   |             |      |   |   |             |   |   |   | Other real estate |   |   |   | Year-to-date       |   |
|-----------------------------------------------|--------|------------------|-----------|--------|--------|------------------|--------|--------|--------|-------------------|--------|--------|--------|--------------------|--------|
|                                          |   | Loans and leases |      |   |   | Nonaccrual loans |   |   |   | owned and         |   |   |   | net credit losses/ |   |
|                                          |   | outstanding      |      |   |   |  and leases |   |   |   | repossessions     |   |   |   | (recoveries)       |   |
|                                          |   |             |      |   |   |             |   |   |   |              |   |   |   |               |   |
| Commercial and agricultural loans             |   | $                | 535,874   |   |   |             | $      | 8,066  |   |              |   | $      | 22     |               |   |   | $ | 117 |   |
| Auto, light truck and environmental equipment |   |             | 397,297   |   |   |             |   | 3,765  |   |              |   |   | 317    |               |   |   |   | 761 |   |
| Medium and heavy duty truck                   |   |             | 174,459   |   |   |             |   | 6,345  |   |              |   |   | 308    |               |   |   |   | 1,651 |   |
| Aircraft financing                            |   |             | 620,996   |   |   |             |   | 14,744 |   |              |   |   | 7,127  |               |   |   |   | 6,275 |   |
| Construction equipment financing              |   |             | 304,035   |   |   |             |   | 9,480  |   |              |   |   | 1,879  |               |   |   |   | 1,366 |   |
| Loans secured by real estate                  |   |             | 979,442   |   |   |             |   | 36,610 |   |              |   |   | 7,010  |               |   |   |   | 6,007 |   |
| Consumer loans                                |   |             | 100,076   |   |   |             |   | 84     |   |              |   |   | 12     |               |   |   |   | 812 |   |
|                                          |   |             |      |   |   |             |   |   |   |              |   |   |   |               |   |   |   |   |   |
| Total                                         |   | $                | 3,112,179 |   |   |             | $      | 79,094 |   |              |   | $      | 16,675 |               |   |   | $ | 16,989 |   |

----

| (Dollars in thousands)                                       |   | Three Months Ended |   |   |   | Nine Months Ended |   |
|--------------------------------------------------------------|--------|--------------------|--------|--------|--------|-------------------|--------|
|                                                         |   | September 30,      |   |   |   | September 30,     |   |
|                                                         |   | 2010               |   |   | 2009   |              |   |   | 2010 |   |   | 2009 |   |
| Noninterest income:                                          |   |               |   |   |   |              |   |   |   |   |   |   |   |
|   Trust fees                                       |   | $                  | 3,870  |   |   | $                 | 3,782  |   |   |   | $ | 11,677 |   |   | $ | 11,473 |   |
|   Service charges on deposit accounts              |   |               | 4,918  |   |   |              | 5,402  |   |   |   |   | 14,813 |   |   |   | 15,367 |   |
|   Mortgage banking income                          |   |               | 2,549  |   |   |              | 965    |   |   |   |   | 3,751 |   |   |   | 6,874 |   |
|   Insurance commissions                            |   |               | 1,180  |   |   |              | 1,022  |   |   |   |   | 3,706 |   |   |   | 3,614 |   |
|   Equipment rental income                          |   |               | 6,495  |   |   |              | 6,347  |   |   |   |   | 19,912 |   |   |   | 18,896 |   |
|   Other income                                     |   |               | 2,656  |   |   |              | 2,022  |   |   |   |   | 8,357 |   |   |   | 6,613 |   |
|   Investment securities and other investment gains |   |               | 1,083  |   |   |              | 716    |   |   |   |   | 2,059 |   |   |   | 673 |   |
| Total noninterest income                                     |   | $                  | 22,751 |   |   | $                 | 20,256 |   |   |   | $ | 64,275 |   |   | $ | 63,510 |   |

----

| (Dollars in thousands)                                         |   | Three Months Ended |   |   |   | Nine Months Ended |   |
|----------------------------------------------------------------|--------|--------------------|--------|--------|--------|-------------------|--------|
|                                                           |   | September 30,      |   |   |   | September 30,     |   |
|                                                           |   | 2010               |   |   | 2009   |              |   |   | 2010 |   |   | 2009 |   |
| Noninterest expense:                                           |   |               |   |   |   |              |   |   |   |   |   |   |   |
|   Salaries and employee benefits                     |   | $                  | 18,980 |   |   | $                 | 18,425 |   |   |   | $ | 56,638 |   |   | $ | 55,340 |   |
|   Net occupancy expense                              |   |               | 2,200  |   |   |              | 2,221  |   |   |   |   | 6,626 |   |   |   | 7,095 |   |
|   Furniture and equipment expense                    |   |               | 3,227  |   |   |              | 3,241  |   |   |   |   | 9,223 |   |   |   | 10,487 |   |
|   Depreciation - leased equipment                    |   |               | 5,173  |   |   |              | 5,021  |   |   |   |   | 15,841 |   |   |   | 15,065 |   |
|   Professional fees                                  |   |               | 1,563  |   |   |              | 1,020  |   |   |   |   | 4,495 |   |   |   | 2,897 |   |
|   Supplies and communication                         |   |               | 1,387  |   |   |              | 1,473  |   |   |   |   | 4,094 |   |   |   | 4,468 |   |
|   Business development and marketing expense         |   |               | 845    |   |   |              | 655    |   |   |   |   | 2,292 |   |   |   | 1,934 |   |
|   Intangible asset amortization                      |   |               | 331    |   |   |              | 340    |   |   |   |   | 993 |   |   |   | 1,022 |   |
|   Loan and lease collection and repossession expense |   |               | 1,449  |   |   |              | 1,147  |   |   |   |   | 5,822 |   |   |   | 2,776 |   |
|   FDIC and other insurance                           |   |               | 1,420  |   |   |              | 1,582  |   |   |   |   | 4,761 |   |   |   | 6,851 |   |
|   Other expense                                      |   |               | 1,235  |   |   |              | 1,445  |   |   |   |   | 3,784 |   |   |   | 4,624 |   |
| Total noninterest expense                                      |   | $                  | 37,810 |   |   | $                 | 36,570 |   |   |   | $ | 114,569 |   |   | $ | 112,559 |   |

----

ITEM 

ITEM 

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

| ITEM 1A. | Risk Factors. |
|----------|---------------|

----

| 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           |   |
| July 01 - 31, 2010                                                                                                                                                                  |   |         | 0      |   |           |   | 0      |                          |   |   | 0                               |   |   |   | 1,342,668 |   |
| August 01 - 31, 2010                                                                                                                                                                |   |         | 58,359 |   |           |   | 16.54  |                          |   |   | 58,359                          |   |   |   | 1,284,309 |   |
| September 01 - 30, 2010                                                                                                                                                             |   |         | 15,097 |   |           |   | 16.61  |                          |   |   | 15,097                          |   |   |   | 1,269,212 |   |
|                                                                                                                                                                                |   |         |   |   |           |   |   |                          |   |   |                            |   |   |   |   |   |
| (1) 1st Source maintains a stock repurchase plan that was 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 730,788 shares.                                                                                                                     |   |

| ITEM 3.       | Defaults Upon Senior Securities                     |
|---------------|----------------------------------------------------------|
|          |                                                     |
|          | None                                                |
|          |                                                     |
| ITEM 4.  | (Removed and reserved).                             |
|          |                                                     |
|          |                                                     |
| ITEM 5.  | Other Information.                                  |
|          |                                                     |
|          | None                                                |
|          |                                                     |
| ITEM 6.  | Exhibits                                            |
|          |                                                     |
|          | The following exhibits are filed with this report:  |

|   | 31.1  | Certification of Chief Executive Officer required by Rule 13a-14(a).               |
|--------|------------|-----------------------------------------------------------------------------------------|
|   |       |                                                                                    |
|   | 31.2  | Certification of Chief Financial Officer required by Rule 13a-14(a).               |
|   |       |                                                                                    |
|   | 32.1  | Certification pursuant to 18 U.S.C. Section 1350 of Chief Executive Officer.       |
|   |       |                                                                                    |
|   | 32.2  | Certification pursuant to 18 U.S.C. Section 1350 of Chief Financial Officer.  |

----

SIGNATURES

|                              | 1st Source Corporation                         |
|-----------------------------------|------------------------------------------------|
|                              |                                           |
|                              |                                           |
|                              |                                           |
| DATE   October 21, 2010 | /s/CHRISTOPHER J. MURPHY III              |
|                              | Christopher J. Murphy III                 |
|                              | Chairman of the Board, President and CEO  |
|                              |                                           |
|                              |                                           |
| DATE   October 21, 2010 | /s/LARRY E. LENTYCH                            |
|                              | Larry E. Lentych                          |
|                              | Treasurer and Chief Financial Officer     |
|                              | Principal Accounting Officer              |

----