|        x | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---------------|---------------------------------------------------------------------------------------------------|

|   |
|--------|

|   |  o | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|---------|----------------------------------------------------------------------------------------------------|

| INDIANA                                                             |    | 35-1068133                                |
|---------------------------------------------------------------------|--------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |         | (I.R.S.      Employer Identification No.) |

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

----

TABLE OF CONTENTS

| PART      I.  FINANCIAL INFORMATION |                                                                                                                   |
|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
|                                          |                                                                                                                   | Page |
| Item      1.                                  | Financial      Statements (Unaudited)                                                                                  |   |
|                                          | Consolidated statements of financial condition – September 30,      2009, and December 31, 2008                  | 3 |
|                                          | Consolidated statements of income -- three months and nine months      ended September 30, 2009 and 2008               | 4 |
|                                          | Consolidated statements of changes in shareholders’ equity --      nine months ended September 30, 2009 and 2008 | 5 |
|                                          | Consolidated statements of cash flows -- nine months ended      September 30, 2009 and 2008                            | 6 |
|                                          | Notes to the Consolidated FinancialStatements                                                                          | 7 |
| Item      2.                                  | Management’s Discussion and Analysis of Financial Condition and      Results of Operations                       | 21 |
| Item      3.                                  | Quantitative and Qualitative Disclosures About Market      Risk                                                        | 30 |
| Item      4.                                  | Controls and Procedures                                                                                                | 31 |
|                                          |                                                                                                                   |   |
| PART      II.  OTHER INFORMATION    |                                                                                                                   |
|                                          |                                                                                                                   |   |
| Item      1.                                  | Legal Proceedings                                                                                                      | 31 |
| Item      1A.                                 | Risk Factors                                                                                                           | 31 |
| Item      2.                                  | Unregistered Sales of Equity Securities and Use of      Proceeds                                                       | 31 |
| Item      3.                                  | Defaults Upon Senior Securities                                                                                        | 31 |
| Item      4.                                  | Submission of Matters to a Vote of Security      Holders                                                               | 32 |
| Item      5.                                  | Other Information                                                                                                      | 32 |
| Item      6.                                  | Exhibits                                                                                                               | 32 |
|                                          |                                                                                                                   |   |
| SIGNATURES                                    | 33                                                                                                                     |
|                                          |                                                                                                                   |   |
| CERTIFICATIONS                                |                                                                                                                   |
|        Exhibit 31.1       |                                                                                                                   |
|        Exhibit 31.2                      |                                                                                                                   |
|        Exhibit 32.1                      |                                                                                                                   |
|        Exhibit 32.2                      |                                                                                                                   |

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table of contents

| 1st      SOURCE CORPORATION                                                                              |   |               |      |   |              |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
| CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION                                                      |   |               |      |   |              |   |
| (Unaudited      - Dollars in thousands, except share amounts)                                            |   |               |      |   |              |   |
|                                                                                                     |   | September      30, |      |   | December      31, |   |
|                                                                                                     |   | 2009               |      |   | 2008              |   |
| ASSETS                                                                                                   |   |               |      |   |              |   |
| Cash      and due from banks                                                                             |   | $                  | 56,408    |   |              | $      | 119,771 |   |
| Federal      funds sold and                                                                              |   |               |      |   |              |   |   |   |
|    interest      bearing deposits with other banks                                        |   |               | 65,307    |   |              |   | 6,951 |   |
| Investment      securities available-for-sale                                                            |   |               |      |   |              |   |   |   |
|      (amortized      cost of $871,266 and $715,380                              |   |               |      |   |              |   |   |   |
|      at      September 30, 2009 and December 31, 2008, respectively)            |   |               | 886,777   |   |              |   | 724,754 |   |
| Other      investments                                                                                   |   |               | 21,012    |   |              |   | 18,612 |   |
| Trading      account securities                                                                          |   |               | 117       |   |              |   | 100 |   |
| Mortgages      held for sale                                                                             |   |               | 39,364    |   |              |   | 46,686 |   |
| Loans      and leases - net of unearned discount                                                         |   |               |      |   |              |   |   |   |
|    Commercial      and agricultural loans                                                 |   |               | 567,476   |   |              |   | 643,440 |   |
|    Auto,      light truck and environmental equipment                                     |   |               | 313,808   |   |              |   | 353,838 |   |
|    Medium      and heavy duty truck                                                       |   |               | 219,762   |   |              |   | 243,375 |   |
|    Aircraft      financing                                                                |   |               | 633,552   |   |              |   | 632,121 |   |
|    Construction      equipment financing                                                  |   |               | 326,858   |   |              |   | 375,983 |   |
|    Loans      secured by real estate                                                      |   |               | 917,754   |   |              |   | 918,749 |   |
|    Consumer      loans                                                                    |   |               | 114,820   |   |              |   | 130,706 |   |
| Total      loans and leases                                                                              |   |               | 3,094,030 |   |              |   | 3,298,212 |   |
|    Reserve      for loan and lease losses                                                 |   |               | (85,504   | )      |              |   | (79,776 | ) |
| Net      loans and leases                                                                                |   |               | 3,008,526 |   |              |   | 3,218,436 |   |
| Equipment      owned under operating leases, net                                                         |   |               | 91,538    |   |              |   | 83,062 |   |
| Net      premises and equipment                                                                          |   |               | 38,552    |   |              |   | 40,491 |   |
| Goodwill      and intangible assets                                                                      |   |               | 90,669    |   |              |   | 91,691 |   |
| Accrued      income and other assets                                                                     |   |               | 114,890   |   |              |   | 113,620 |   |
| Total      assets                                                                                        |   | $                  | 4,413,160 |   |              | $      | 4,464,174 |   |
|                                                                                                     |   |               |      |   |              |   |   |   |
| LIABILITIES                                                                                              |   |               |      |   |              |   |   |   |
| Deposits:                                                                                                |   |               |      |   |              |   |   |   |
|   Noninterest      bearing                                                                     |   | $                  | 425,742   |   |              | $      | 416,960 |   |
|   Interest      bearing                                                                        |   |               | 3,060,972 |   |              |   | 3,097,582 |   |
| Total      deposits                                                                                      |   |               | 3,486,714 |   |              |   | 3,514,542 |   |
| Federal      funds purchased and securities                                                              |   |               |      |   |              |   |   |   |
|   sold      under agreements to repurchase                                                     |   |               | 129,707   |   |              |   | 272,529 |   |
| Other      short-term borrowings                                                                         |   |               | 25,272    |   |              |   | 23,646 |   |
| Long-term      debt and mandatorily redeemable securities                                                |   |               | 20,046    |   |              |   | 29,832 |   |
| Subordinated      notes                                                                                  |   |               | 89,692    |   |              |   | 89,692 |   |
| Accrued      expenses and other liabilities                                                              |   |               | 87,399    |   |              |   | 80,269 |   |
| Total      liabilities                                                                                   |   |               | 3,838,830 |   |              |   | 4,010,510 |   |
|                                                                                                     |   |               |      |   |              |   |   |   |
| SHAREHOLDERS'      EQUITY                                                                                |   |               |      |   |              |   |   |   |
| Preferred      stock; no par value                                                                       |   |               |      |   |              |   |   |   |
|      Authorized      10,000,000 shares; issued 111,000 at September 30, 2009    |   |               |      |   |              |   |   |   |
|      and      none at December 31, 2008                                         |   |               | 104,612   |   |              |   | - |   |
| Common      stock; no par value                                                                          |   |               |      |   |              |   |   |   |
|      Authorized      40,000,000 shares; issued 25,894,879 at September 30, 2009 |   |               |      |   |              |   |   |   |
|      and      25,895,505 at December 31, 2008, less unearned shares             |   |               |      |   |              |   |   |   |
|      (251,373      at September 30, 2009 and 251,999 at December 31, 2008)      |   |               | 350,266   |   |              |   | 342,982 |   |
| Retained      earnings                                                                                   |   |               | 141,758   |   |              |   | 136,877 |   |
| Cost      of common stock in treasury (1,502,050 shares at September 30, 2009,      and                  |   |               |      |   |              |   |   |   |
|      1,532,576      shares at December 31, 2008)                                |   |               | (31,943   | )      |              |   | (32,019 | ) |
| Accumulated      other comprehensive income                                                              |   |               | 9,637     |   |              |   | 5,824 |   |
| Total      shareholders' equity                                                                          |   |               | 574,330   |   |              |   | 453,664 |   |
| Total      liabilities and shareholders' equity                                                          |   | $                  | 4,413,160 |   |              | $      | 4,464,174 |   |
|                                                                                                     |   |               |      |   |              |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements.                    |   |               |      |   |              |   |   |   |

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table of contents

| 1st      SOURCE CORPORATION                                                           |   |                    |       |   |                   |   |       |   |   |   |       |   |
|---------------------------------------------------------------------------------------|--------|-------------------------|------------|--------|------------------------|--------|------------|--------|--------|--------|------------|--------|
| CONSOLIDATED STATEMENTS OF      INCOME                                                |   |                    |       |   |                   |   |       |   |   |   |       |   |
| (Unaudited      - Dollars in thousands, except per share amounts)                     |   |                    |       |   |                   |   |       |   |   |   |       |   |
|                                                                                  |   | Three      Months Ended |       |   | Nine      Months Ended |   |
|                                                                                  |   | September      30,      |       |   | September      30,     |   |
|                                                                                  |   | 2009                    |       |   | 2008                   |   |       | 2009   |   |   | 2008       |   |
| Interest      income:                                                                 |   |                    |       |   |                   |   |       |   |   |   |       |   |
| Loans      and leases                                                                 |   | $                       | 43,436     |   |                   | $      | 50,979     |   |   | $      | 132,507    |   |   | $ | 154,590 |   |
| Investment      securities, taxable                                                   |   |                    | 4,357      |   |                   |   | 4,896      |   |   |   | 12,600     |   |   |   | 17,288 |   |
| Investment      securities, tax-exempt                                                |   |                    | 1,651      |   |                   |   | 1,873      |   |   |   | 5,046      |   |   |   | 5,904 |   |
| Other                                                                                 |   |                    | 297        |   |                   |   | 317        |   |   |   | 894        |   |   |   | 986 |   |
| Total      interest income                                                            |   |                    | 49,741     |   |                   |   | 58,065     |   |   |   | 151,047    |   |   |   | 178,768 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Interest      expense:                                                                |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Deposits                                                                              |   |                    | 15,460     |   |                   |   | 20,347     |   |   |   | 49,662     |   |   |   | 67,116 |   |
| Short-term      borrowings                                                            |   |                    | 265        |   |                   |   | 2,255      |   |   |   | 909        |   |   |   | 6,434 |   |
| Subordinated      notes                                                               |   |                    | 1,648      |   |                   |   | 1,648      |   |   |   | 4,942      |   |   |   | 5,067 |   |
| Long-term      debt and mandatorily redeemable securities                             |   |                    | 322        |   |                   |   | 418        |   |   |   | 853        |   |   |   | 1,333 |   |
| Total      interest expense                                                           |   |                    | 17,695     |   |                   |   | 24,668     |   |   |   | 56,366     |   |   |   | 79,950 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Net      interest income                                                              |   |                    | 32,046     |   |                   |   | 33,397     |   |   |   | 94,681     |   |   |   | 98,818 |   |
| Provision      for loan and lease losses                                              |   |                    | 6,469      |   |                   |   | 3,571      |   |   |   | 22,741     |   |   |   | 9,603 |   |
| Net      interest income after provision for                                          |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| loan      and lease losses                                                            |   |                    | 25,577     |   |                   |   | 29,826     |   |   |   | 71,940     |   |   |   | 89,215 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Noninterest      income:                                                              |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Trust      fees                                                                       |   |                    | 3,782      |   |                   |   | 4,939      |   |   |   | 11,473     |   |   |   | 14,155 |   |
| Service      charges on deposit accounts                                              |   |                    | 5,402      |   |                   |   | 5,761      |   |   |   | 15,367     |   |   |   | 16,633 |   |
| Mortgage      banking income                                                          |   |                    | 965        |   |                   |   | 959        |   |   |   | 6,874      |   |   |   | 3,493 |   |
| Insurance      commissions                                                            |   |                    | 1,022      |   |                   |   | 1,084      |   |   |   | 3,614      |   |   |   | 4,122 |   |
| Equipment      rental income                                                          |   |                    | 6,347      |   |                   |   | 6,285      |   |   |   | 18,896     |   |   |   | 17,794 |   |
| Other      income                                                                     |   |                    | 2,022      |   |                   |   | 2,168      |   |   |   | 6,613      |   |   |   | 6,836 |   |
| Investment      securities and other investment gains (losses)                        |   |                    | 716        |   |                   |   | (8,816     | )      |   |   | 673        |   |   |   | (9,259 | ) |
| Total      noninterest income                                                         |   |                    | 20,256     |   |                   |   | 12,380     |   |   |   | 63,510     |   |   |   | 53,774 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Noninterest      expense:                                                             |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Salaries      and employee benefits                                                   |   |                    | 18,425     |   |                   |   | 19,297     |   |   |   | 55,340     |   |   |   | 58,996 |   |
| Net      occupancy expense                                                            |   |                    | 2,221      |   |                   |   | 2,332      |   |   |   | 7,095      |   |   |   | 7,289 |   |
| Furniture      and equipment expense                                                  |   |                    | 3,241      |   |                   |   | 3,694      |   |   |   | 10,487     |   |   |   | 11,555 |   |
| Depreciation      - leased equipment                                                  |   |                    | 5,021      |   |                   |   | 5,041      |   |   |   | 15,065     |   |   |   | 14,266 |   |
| Professional      fees                                                                |   |                    | 1,020      |   |                   |   | 2,773      |   |   |   | 2,897      |   |   |   | 6,453 |   |
| Supplies      and communication                                                       |   |                    | 1,473      |   |                   |   | 1,812      |   |   |   | 4,468      |   |   |   | 5,163 |   |
| FDIC      and other insurance                                                         |   |                    | 1,582      |   |                   |   | 713        |   |   |   | 6,851      |   |   |   | 1,396 |   |
| Other      expense                                                                    |   |                    | 3,587      |   |                   |   | 2,655      |   |   |   | 10,356     |   |   |   | 9,495 |   |
| Total      noninterest expense                                                        |   |                    | 36,570     |   |                   |   | 38,317     |   |   |   | 112,559    |   |   |   | 114,613 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Income      before income taxes                                                       |   |                    | 9,263      |   |                   |   | 3,889      |   |   |   | 22,891     |   |   |   | 28,376 |   |
| Income      tax expense (benefit)                                                     |   |                    | 2,530      |   |                   |   | (583       | )      |   |   | 3,624      |   |   |   | 7,305 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Net      income                                                                       |   |                    | 6,733      |   |                   |   | 4,472      |   |   |   | 19,267     |   |   |   | 21,071 |   |
| Preferred      stock dividends and discount accretion                                 |   |                    | (1,701     | )      |                   |   | -          |   |   |   | (4,710     | )      |   |   | - |   |
| Net      income available to common shareholders                                      |   | $                       | 5,032      |   |                   | $      | 4,472      |   |   | $      | 14,557     |   |   | $ | 21,071 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Per      common share                                                                 |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| Basic      net income per common share                                                |   | $                       | 0.21       |   |                   | $      | 0.19       |   |   | $      | 0.60       |   |   | $ | 0.87 |   |
| Diluted      net income per common share                                              |   | $                       | 0.21       |   |                   | $      | 0.18       |   |   | $      | 0.60       |   |   | $ | 0.86 |   |
| Dividends                                                                             |   | $                       | 0.15       |   |                   | $      | 0.14       |   |   | $      | 0.43       |   |   | $ | 0.42 |   |
| Basic      weighted average common shares outstanding                                 |   |                    | 24,164,884 |   |                   |   | 24,109,960 |   |   |   | 24,166,887 |   |   |   | 24,104,015 |   |
| Diluted      weighted average common shares outstanding                               |   |                    | 24,212,042 |   |                   |   | 24,381,657 |   |   |   | 24,215,542 |   |   |   | 24,374,811 |   |
|                                                                                  |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |                    |       |   |                   |   |       |   |   |   |       |   |   |   |   |   |

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table of contents

| 1st SOURCE CORPORATION                                                                |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |
|---------------------------------------------------------------------------------------|--------|--------|---------|--------|-----------|--------|---------|--------|--------|--------|----------|--------|--------|------------------|---------|--------|--------------------|--------|
| STATEMENT OF CHANGES IN SHAREHOLDERS'      EQUITY                                     |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |
| (Unaudited      - Dollars in thousands, except per share amounts)                     |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   | Net                |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   | Unrealized         |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   | Appreciation       |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   | Cost      of     |    |   | (Depreciation)     |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   | Common           |    |   | of      Securities |   |
|                                                                                  |   |   |    |   | Preferred |   |    | Common |   |   | Retained |   |   | Stock            |    |   | Available-         |   |
|                                                                                  |   | Total  |    |   | Stock     |   |    | Stock  |   |   | Earnings |   |   | in      Treasury |    |   | For-Sale           |   |
| Balance      at January 1, 2008                                                       |   | $      | 430,504 |   |      | $      | -       |   |   | $      | 342,840  |   |   | $                | 117,373 |   |               | $      | (32,231 | ) |   | $ | 2,522 |   |
| Comprehensive      Income, net of tax:                                                |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |   |   |   |   |   |   |
| Net      Income                                                                       |   |   | 21,071  |   |      |   | -       |   |   |   | -        |   |   |             | 21,071  |   |               |   | - |   |   |   | - |   |
| Change      in unrealized appreciation                                                |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |   |   |   |   |   |   |
| of      available-for-sale securities, net of tax                                     |   |   | (900    | )      |      |   | -       |   |   |   | -        |   |   |             | -       |   |               |   | - |   |   |   | (900 | ) |
| Total      Comprehensive Income                                                       |   |   | 20,171  |   |      |   | -       |   |   |   | -        |   |   |             | -       |   |               |   | - |   |   |   | - |   |
| Issuance      of 18,820 common shares                                                 |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |   |   |   |   |   |   |
| under      stock based compensation awards,                                           |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |   |   |   |   |   |   |
|  including      related tax effects                                              |   |   | 342     |   |      |   | -       |   |   |   | -        |   |   |             | 130     |   |               |   | 212 |   |   |   | - |   |
| Stock-based      compensation                                                         |   |   | 139     |   |      |   | -       |   |   |   | 139      |   |   |             |    |   |               |   |   |   |   |   |   |   |
| Common      stock dividend ($0.42 per share)                                          |   |   | (10,146 | )      |      |   | -       |   |   |   | -        |   |   |             | (10,146 | )      |               |   | - |   |   |   | - |   |
| Balance      at September 30, 2008                                                    |   | $      | 441,010 |   |      | $      | -       |   |   | $      | 342,979  |   |   | $                | 128,428 |   |               | $      | (32,019 | ) |   | $ | 1,622 |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |   |   |   |   |   |   |
| 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      acquired 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 |   |
|                                                                                  |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |   |   |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |   |    |   |      |   |    |   |   |   |     |   |   |             |    |   |               |

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| 1st SOURCE CORPORATION                                                                |   |                                 |     |   |   |   |
|---------------------------------------------------------------------------------------|--------|--------------------------------------|----------|--------|--------|--------|
| CONSOLIDATED STATEMENTS OF CASH      FLOWS                                            |   |                                 |     |   |   |   |
| (Unaudited      - Dollars in thousands)                                               |   |                                 |     |   |   |   |
|                                                                                  |   | Nine      Months Ended September 30, |     |
|                                                                                  |   | 2009                                 |     |   | 2008   |   |
| Operating      activities:                                                            |   |                                 |     |   |   |   |
| Net      income                                                                       |   | $                                    | 19,267   |   |   | $      | 21,071 |   |
| Adjustments      to reconcile net income to net cash                                  |   |                                 |     |   |   |   |   |   |
| provided      (used) by operating activities:                                         |   |                                 |     |   |   |   |   |   |
| Provision      for loan and lease losses                                              |   |                                 | 22,741   |   |   |   | 9,603 |   |
| Depreciation      of premises and equipment                                           |   |                                 | 3,515    |   |   |   | 4,088 |   |
| Depreciation      of equipment owned and leased to others                             |   |                                 | 15,065   |   |   |   | 14,266 |   |
| Amortization      of investment security premiums                                     |   |                                 |     |   |   |   |   |   |
| and      accretion of discounts, net                                                  |   |                                 | 4,477    |   |   |   | 1,328 |   |
| Amortization      of mortgage servicing rights                                        |   |                                 | 2,517    |   |   |   | 2,234 |   |
| Mortgage      servicing asset impairment (recovery) charges                           |   |                                 | (1,793   | )      |   |   | 56 |   |
| Deferred      income taxes                                                            |   |                                 | 3,460    |   |   |   | (11,558 | ) |
| Realized      investment securities (gains) losses                                    |   |                                 | (673     | )      |   |   | 9,259 |   |
| Originations/purchases      of loans held for sale, net of principal collected        |   |                                 | (512,286 | )      |   |   | (300,404 | ) |
| Proceeds      from the sales of loans held for sale                                   |   |                                 | 522,780  |   |   |   | 288,878 |   |
| Net      gain on sale of loans held for sale                                          |   |                                 | (3,170   | )      |   |   | (1,253 | ) |
| Change      in trading account securities                                             |   |                                 | (17      | )      |   |   | - |   |
| Change      in interest receivable                                                    |   |                                 | 1,352    |   |   |   | 438 |   |
| Change      in interest payable                                                       |   |                                 | 2,173    |   |   |   | (5,853 | ) |
| Change      in other assets                                                           |   |                                 | (8,109   | )      |   |   | 1,984 |   |
| Change      in other liabilities                                                      |   |                                 | 4,249    |   |   |   | 2,539 |   |
| Other                                                                                 |   |                                 | 754      |   |   |   | 2,988 |   |
| Net      change in operating activities                                               |   |                                 | 76,302   |   |   |   | 39,664 |   |
|                                                                                  |   |                                 |     |   |   |   |   |   |
| Investing      activities:                                                            |   |                                 |     |   |   |   |   |   |
| Proceeds      from sales of investment securities                                     |   |                                 | 147,658  |   |   |   | 8,237 |   |
| Proceeds      from maturities of investment securities                                |   |                                 | 323,295  |   |   |   | 390,303 |   |
| Purchases      of investment securities                                               |   |                                 | (630,642 | )      |   |   | (289,498 | ) |
| Net      change in short-term investments                                             |   |                                 | (60,757  | )      |   |   | (36,948 | ) |
| Loans      sold or participated to others                                             |   |                                 | 13,482   |   |   |   | - |   |
| Net      change in loans and leases                                                   |   |                                 | 173,687  |   |   |   | (124,021 | ) |
| Net      change in equipment owned under operating leases                             |   |                                 | (23,541  | )      |   |   | (19,712 | ) |
| Purchases      of premises and equipment                                              |   |                                 | (1,772   | )      |   |   | (2,403 | ) |
| Net      change in investing activities                                               |   |                                 | (58,590  | )      |   |   | (74,042 | ) |
|                                                                                  |   |                                 |     |   |   |   |   |   |
| Financing      activities:                                                            |   |                                 |     |   |   |   |   |   |
| Net      change in demand deposits, NOW                                               |   |                                 |     |   |   |   |   |   |
| accounts      and savings accounts                                                    |   |                                 | 74,639   |   |   |   | (96,857 | ) |
| Net      change in certificates of deposit                                            |   |                                 | (102,468 | )      |   |   | (22,394 | ) |
| Net      change in short-term borrowings                                              |   |                                 | (141,197 | )      |   |   | 96,832 |   |
| Proceeds      from issuance of long-term debt                                         |   |                                 | 240      |   |   |   | 10,024 |   |
| Payments      on subordinated notes                                                   |   |                                 | -        |   |   |   | (10,310 | ) |
| Payments      on long-term debt                                                       |   |                                 | (10,392  | )      |   |   | (10,371 | ) |
| Net      proceeds from issuance of treasury stock                                     |   |                                 | 1,663    |   |   |   | 341 |   |
| Acquisition      of treasury stock                                                    |   |                                 | (862     | )      |   |   | - |   |
| Proceeds      from issuance of preferred stock & common stock    warrants         |   |                                 | 111,000  |   |   |   | - |   |
| Cash      dividends                                                                   |   |                                 | (13,698  | )      |   |   | (10,320 | ) |
| Net      change in financing activities                                               |   |                                 | (81,075  | )      |   |   | (43,055 | ) |
|                                                                                  |   |                                 |     |   |   |   |   |   |
| Net      change in cash and cash equivalents                                          |   |                                 | (63,363  | )      |   |   | (77,433 | ) |
|                                                                                  |   |                                 |     |   |   |   |   |   |
| Cash      and cash equivalents, beginning of year                                     |   |                                 | 119,771  |   |   |   | 153,137 |   |
|                                                                                  |   |                                 |     |   |   |   |   |   |
| Cash      and cash equivalents, end of period                                         |   | $                                    | 56,408   |   |   | $      | 75,704 |   |
|                                                                                  |   |                                 |     |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |                                 |     |   |   |   |   |   |

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NOTESTO THE CONSOLIDATED FINANCIAL STATEMENTS

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|                                                          |   | Amortized |    |   | Gross                 |   |   | Gross                  |   |   |            |   |
|---------------------------------------------------------------|--------|-----------|---------|--------|-----------------------|--------|--------|------------------------|--------|--------|-----------------|--------|
| (Dollars      in thousands)                                   |   | Cost      |    |   | Unrealized      Gains |   |   | Unrealized      Losses |   |   | Fair      Value |   |
| September      30, 2009                                       |   |      |    |   |                  |   |   |                   |   |   |            |   |
| U.S.      Treasury and Federal agencies securities            |   | $         | 393,345 |   |                  | $      | 2,055  |                   |   | $      | (20             | )      |   | $ | 395,380 |   |
| U.S.      State and political subdivisions securities         |   |      | 202,265 |   |                  |   | 7,396  |                   |   |   | (2,034          | )      |   |   | 207,627 |   |
| Mortgage-backed      securities  - Federal agencies |   |      | 254,715 |   |                  |   | 6,797  |                   |   |   | (934            | )      |   |   | 260,578 |   |
| Corporate      debt securities                                |   |      | 18,978  |   |                  |   | 200    |                   |   |   | -               |   |   |   | 19,178 |   |
| Foreign      government securities                            |   |      | 675     |   |                  |   | -      |                   |   |   | -               |   |   |   | 675 |   |
| Total      debt securities                                    |   |      | 869,978 |   |                  |   | 16,448 |                   |   |   | (2,988          | )      |   |   | 883,438 |   |
| Marketable      equity securities                             |   |      | 1,288   |   |                  |   | 2,076  |                   |   |   | (25             | )      |   |   | 3,339 |   |
| Total      investment securities available-for-sale           |   | $         | 871,266 |   |                  | $      | 18,524 |                   |   | $      | (3,013          | )      |   | $ | 886,777 |   |
|                                                          |   |      |    |   |                  |   |   |                   |   |   |            |   |   |   |   |   |
| December      31, 2008                                        |   |      |    |   |                  |   |   |                   |   |   |            |   |   |   |   |   |
| U.S.      Treasury and Federal agencies securities            |   | $         | 293,461 |   |                  | $      | 2,892  |                   |   | $      | (2              | )      |   | $ | 296,351 |   |
| U.S.      State and political subdivisions securities         |   |      | 198,640 |   |                  |   | 3,995  |                   |   |   | (1,686          | )      |   |   | 200,949 |   |
| Mortgage-backed      securities  - Federal agencies |   |      | 207,954 |   |                  |   | 3,553  |                   |   |   | (1,499          | )      |   |   | 210,008 |   |
| Corporate      debt securities                                |   |      | 10,000  |   |                  |   | 50     |                   |   |   | -               |   |   |   | 10,050 |   |
| Foreign      government and other securities                  |   |      | 929     |   |                  |   | -      |                   |   |   | -               |   |   |   | 929 |   |
| Total      debt securities                                    |   |      | 710,984 |   |                  |   | 10,490 |                   |   |   | (3,187          | )      |   |   | 718,287 |   |
| Marketable      equity securities                             |   |      | 4,396   |   |                  |   | 2,092  |                   |   |   | (21             | )      |   |   | 6,467 |   |
| Total      investment securities available-for-sale           |   | $         | 715,380 |   |                  | $      | 12,582 |                   |   | $      | (3,208          | )      |   | $ | 724,754 |   |

| (Dollars      in thousands)                   |   |                |    |   |            |   |
|-----------------------------------------------|--------|---------------------|---------|--------|-----------------|--------|
|                                          |   | Amortized      Cost |    |   | Fair      Value |   |
| Due      in one year or less                  |   | $                   | 120,555 |   |            | $      | 120,914 |   |
| Due      after one year through five years    |   |                | 334,454 |   |            |   | 339,827 |   |
| Due      after five years through ten years   |   |                | 141,996 |   |            |   | 145,527 |   |
| Due      after ten years                      |   |                | 18,258  |   |            |   | 16,592 |   |
| Mortgage      backed securities               |   |                | 254,715 |   |            |   | 260,578 |   |
| Total      debt securities available-for-sale |   | $                   | 869,978 |   |            | $      | 883,438 |   |

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|                             |   |                    |   |   |                   |   |   |   |   |   |   |   |
|----------------------------------|--------|-------------------------|--------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|
| (Dollars      in thousands)      |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|                             |   | September      30,      |   |   | September      30,     |   |
|                             |   | 2009                    |   |   | 2008                   |   |   | 2009   |   |   | 2008   |   |
| Gross      realized gains        |   | $                       | 356    |   |                   | $      | -      |   |   | $      | 1,010  |   |   | $ | 826 |   |
| Gross      realized losses       |   |                    | -      |   |                   |   | (8,999 | )      |   |   | (707   | )      |   |   | (10,456 | ) |
| Net      realized gains (losses) |   | $                       | 356    |   |                   | $      | (8,999 | )      |   | $      | 303    |   |   | $ | (9,630 | ) |

|                                                          |   | 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, 2009                                       |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury and Federal agencies securities            |   | $                        | 30,166 |   |                     | $      | (20    | )      |   | $ | - |   |   | $ | - |   |   | $ | 30,166 |   |   | $ | (20 | ) |
| U.S.      State and political subdivisions securities         |   |                     | 1,717  |   |                     |   | (29    | )      |   |   | 17,121 |   |   |   | (2,005 | ) |   |   | 18,838 |   |   |   | (2,034 | ) |
| Mortgage-backed      securities  - Federal agencies |   |                     | 31,140 |   |                     |   | (324   | )      |   |   | 30,388 |   |   |   | (610 | ) |   |   | 61,528 |   |   |   | (934 | ) |
| Total      debt securities                                    |   |                     | 63,023 |   |                     |   | (373   | )      |   |   | 47,509 |   |   |   | (2,615 | ) |   |   | 110,532 |   |   |   | (2,988 | ) |
| Marketable      equity securities                             |   |                     | 2      |   |                     |   | (1     | )      |   |   | 5 |   |   |   | (24 | ) |   |   | 7 |   |   |   | (25 | ) |
| Total      investment securities available-for-sale           |   | $                        | 63,025 |   |                     | $      | (374   | )      |   | $ | 47,514 |   |   | $ | (2,639 | ) |   | $ | 110,539 |   |   | $ | (3,013 | ) |
|                                                          |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2008                                        |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury and Federal agencies securities            |   | $                        | 19,998 |   |                     | $      | (2     | )      |   | $ | - |   |   | $ | - |   |   | $ | 19,998 |   |   | $ | (2 | ) |
| U.S.      State and political subdivisions securities         |   |                     | 29,594 |   |                     |   | (1,686 | )      |   |   | - |   |   |   | - |   |   |   | 29,594 |   |   |   | (1,686 | ) |
| Mortgage-backed      securities  - Federal agencies |   |                     | 14,840 |   |                     |   | (229   | )      |   |   | 34,721 |   |   |   | (1,270 | ) |   |   | 49,561 |   |   |   | (1,499 | ) |
| Foreign      government and other securities                  |   |                     | 493    |   |                     |   | (1     | )      |   |   | - |   |   |   | - |   |   |   | 493 |   |   |   | (1 | ) |
| Total      debt securities                                    |   |                     | 64,925 |   |                     |   | (1,918 | )      |   |   | 34,721 |   |   |   | (1,270 | ) |   |   | 99,646 |   |   |   | (3,188 | ) |
| Marketable      equity securities                             |   |                     | 11     |   |                     |   | (18    | )      |   |   | 2 |   |   |   | (2 | ) |   |   | 13 |   |   |   | (20 | ) |
| Total      investment securities available-for-sale           |   | $                        | 64,936 |   |                     | $      | (1,936 | )      |   | $ | 34,723 |   |   | $ | (1,272 | ) |   | $ | 99,659 |   |   | $ | (3,208 | ) |

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| Fair      values of derivative instruments as of September 30, 2009: |   |             |    |                   |                         |   |                       |   |     |
|----------------------------------------------------------------------|--------|------------------|---------|------------------------|------------------------------|--------|----------------------------|--------|----------|
|                                                                 |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
|                                                                 |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
|                                                                 |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
| (Dollars      in thousands)                                          |   |             |    | Asset      derivatives |                         |   | Liability      derivatives |   |
|                                                                 |   | Notional      or |    | Balance                |                         |   |                       |   | Balance  |   |   |   |   |
|                                                                 |   | contractual      |    | sheet                  |                         | Fair   |                       |   | sheet    |   |   | Fair |   |
|                                                                 |   | amount           |    | location               |                         | value  |                       |   | location |   |   | value |   |
|                                                                 |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
| Derivatives      not designated as                                   |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
| hedging      instruments                                             |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
|                                                                 |   |             |    |                   |                         |   |                       |   |     |   |   |   |   |
| Interest      rate swap contracts                                    |   | $                | 436,801 |                   | Other      assets            |   | $                          | 16,507 |     |   |    Other      liabilities |   |   | $ | 16,900 |   |
| Loan      commitments                                                |   |             | 51,421  |                   | Mortgages      held for sale |   |                       | 305    |     |   |   | N/A |   |   |   | - |   |
| Forward      contracts                                               |   |             | 55,119  |                   | N/A                          |   |                       | -      |     |   |    Mortgages held for      sale |   |   |   | 671 |   |
| Total                                                                |   |             |    |                   |                         |   | $                          | 16,812 |     |   |   |   |   |   | $ | 17,571 |   |

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|                                                   |   | September      30, 2009 |   |   |     |   |   |            |   |
|--------------------------------------------------------|--------|-------------------------|--------|--------|----------|--------|--------|-----------------|--------|
|                                                   |   |                    |   |   |     |   |   | Average         |   |   |   |   |
|                                                   |   |                    |   |   | Weighted |   |   | Remaining       |   |   | Total |   |
|                                                   |   |                    |   |   | Average  |   |   | Contractual     |   |   | Intrinsic |   |
|                                                   |   | Number      of          |   |   | Exercise |   |   | Term            |   |   | Value |   |
|                                                   |   | Shares                  |   |   | Price    |   |   | (in      years) |   |   | (in      000's) |   |
|                                                   |   |                    |   |   |     |   |   |            |   |   |   |   |
| Options      outstanding, beginning of year            |   |                    | 80,948 |   |     | $      | 18.51  |            |   |   |   |   |   |   |
| Granted                                                |   |                    | -      |   |     |   | -      |            |   |   |   |   |   |   |
| Exercised                                              |   |                    | -      |   |     |   | -      |            |   |   |   |   |   |   |
| Forfeited                                              |   |                    | -      |   |     |   | -      |            |   |   |   |   |   |   |
| Options      outstanding, September 30, 2009           |   |                    | 80,948 |   |     | $      | 18.51  |            |   |   | 2.09 |   |   | $ | 94 |   |
|                                                   |   |                    |   |   |     |   |   |            |   |   |   |   |   |   |   |   |
|                                                   |   |                    |   |   |     |   |   |            |   |   |   |   |   |   |   |   |
| Vested      and expected to vest at September 30, 2009 |   |                    | 80,948 |   |     | $      | 18.51  |            |   |   | 2.09 |   |   | $ | 94 |   |
| Exercisable      at September 30, 2009                 |   |                    | 75,448 |   |     | $      | 18.99  |            |   |   | 1.98 |   |   | $ | 70 |   |

|                  | 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                   | 2.99        | $13.38                   |   | 24,008 | $13.69 |
| $18.00      to $26.99 | 45,885                   | 1.51        | 20.55                    |   | 45,885 | 20.55 |
| $27.00      to $29.46 | 5,555                    | 2.06        | 28.95                    |   | 5,555 | 28.95 |

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

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

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

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|                                                                           |   |         |    |   |         |   |    |         |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------------|---------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|
| (Dollars      in thousands)                                                    |   | Level      1 |    |   | Level      2 |   |    | Level      3 |   |   | Total  |   |
| Assets:                                                                        |   |         |    |   |         |   |    |         |   |   |   |   |
| Investment      securities available for sale:                                 |   |         |    |   |         |   |    |         |   |   |   |   |
| U.S.      Treasury and Federal agencies securities                             |   | $            | 46,216  |   |         | $      | 349,164 |         |   | $      | -      |   |   |   | 395,380 |   |
| U.S.      State and political subdivisions securities                          |   |         | -  |   |         |   | 180,022 |         |   |   | 27,605 |   |   |   | 207,627 |   |
| Mortgage-backed      securities - Federal agencies                             |   |         | -  |   |         |   | 260,578 |         |   |   | -      |   |   |   | 260,578 |   |
| Corporate      debt securities                                                 |   |         | -  |   |         |   | 19,178  |         |   |   | -      |   |   |   | 19,178 |   |
| Foreign      government securities                                             |   |         | -  |   |         |   | -       |         |   |   | 675    |   |   |   | 675 |   |
| Total      debt securities                                                     |   |         | 46,216  |   |         |   | 808,942 |         |   |   | 28,280 |   |   |   | 883,438 |   |
| Marketable      equity securities                                              |   |         | 3,330   |   |         |   | -       |         |   |   | 9      |   |   |   | 3,339 |   |
| Total      investment securities available for sale                            |   |         | 49,546  |   |         |   | 808,942 |         |   |   | 28,289 |   |   |   | 886,777 |   |
| Trading      account securities                                                |   |         | 117     |   |         |   | -       |         |   |   | -      |   |   |   | 117 |   |
| Mortgages      held for sale                                                   |   |         | -       |   |         |   | 39,364  |         |   |   | -      |   |   |   | 39,364 |   |
| Accrued      income and other assets (Interest rate swap agreements)           |   |         | -       |   |         |   | 16,507  |         |   |   | -      |   |   |   | 16,507 |   |
| Total                                                                          |   | $            | 49,663  |   |         | $      | 864,813 |         |   | $      | 28,289 |   |   | $ | 942,765 |   |
|                                                                           |   |         |    |   |         |   |    |         |   |   |   |   |   |   |   |   |
| Liabilities:                                                                   |   |         |    |   |         |   |    |         |   |   |   |   |   |   | - |   |
| Accrued      expenses and other liabilities (Interest rate swap    agreements) |   | $            | -       |   |         | $      | 16,900  |         |   | $      | -      |   |   | $ | 16,900 |   |
| Total                                                                          |   | $            | -       |   |         | $      | 16,900  |         |   | $      | -      |   |   | $ | 16,900 |   |

|                                                                                                    |   | Quarter      ended                                    |   |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|
| (Dollars      in thousands)                                                                             |   | September      30, 2009                               |   |
|                                                                                                    |   | U.S.      State and political subdivisions securities |   |   | Foreign      government securities |   |   | Marketable      equity securities |   |   | Investment      securities available for sale |   |
| Beginning      balance July 1, 2009                                                                     |   | $                                                     | 28,725 |   |   | $ | 775 |   |   | $ | 9 |   |   | $ | 29,509 |   |
|   Total      gains or losses (realized/unrealized):                                           |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Included      in earnings                   |   |                                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|           Included      in other comprehensive income |   |                                                  | 147    |   |   |   | - |   |   |   | - |   |   |   | 147 |   |
|   Purchases      and issuances                                                                |   |                                                  | 8      |   |   |   | - |   |   |   | - |   |   |   | 8 |   |
|   Settlements                                                                                 |   |                                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Expirations                                                                                 |   |                                                  | (1,275 | ) |   |   | (100 | ) |   |   | - |   |   |   | (1,375 | ) |
|   Transfers      in and/or out of Level 3                                                     |   |                                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Ending      balance September 30, 2009                                                                  |   | $                                                     | 27,605 |   |   | $ | 675 |   |   | $ | 9 |   |   | $ | 28,289 |   |

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|                                                                                |   |         |   |   |         |   |   |         |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|
|                                                                                |   |         |   |
| (Dollars      in thousands)                                                         |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |   | Total  |   |
|                                                                                |   |         |   |   |         |   |   |         |   |   |   |   |
| Loans                                                                               |   | $            | -      |   |         | $      | -      |         |   | $      | 72,595 |   |   | $ | 72,595 |   |
| Accrued      income and other assets (venture capital partnership      investments) |   |         | -      |   |         |   | -      |         |   |   | 2,764  |   |   |   | 2,764 |   |
| Accrued      income and other assets (mortgage servicing rights)                    |   |         | -      |   |         |   | -      |         |   |   | 9,165  |   |   |   | 9,165 |   |
| Goodwill      and intangible assets (goodwill)                                      |   |         | -      |   |         |   | 83,329 |         |   |   | -      |   |   |   | 83,329 |   |
| Accrued      income and other assets (repossessions)                                |   |         | -      |   |         |   | -      |         |   |   | 5,672  |   |   |   | 5,672 |   |
| Accrued      income and other assets (other real estate)                            |   |         | -      |   |         |   | -      |         |   |   | 7,169  |   |   |   | 7,169 |   |
|                                                                                |   | $            | -      |   |         | $      | 83,329 |         |   | $      | 97,365 |   |   | $ | 180,694 |   |

| (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                                                                                                                                                                 |  $                    39,364                                                                   |  $               38,634                                                                   |  $                   730      (1)                               |
|   Nonaccrual      loans                                                                                                                                                            |                                  - |                             - |                            - |
|   Loans      90 days or more past due and still accruing                                                                                                                           |                                  - |                             - |                            - |
|                                                                                                                                                                                         |                                                                                                                                                                                                    |                                                                                                                                                                      |                                                                                                                                                                |
| (1)      The excess of fair value carrying amount over unpaid principal includes      changes in fair value recorded at and subsequent to funding, gains and      losses on the related loan |
| commitment      prior to funding, and premiums on acquired loans included      in mortgage bankingincome.                                                                                    |

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|                                                                                                                 |   | September      30, 2009 |      |   | December      31, 2008 |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|------------------------|--------|
|                                                                                                                 |   | Carrying      or        |      |   |                   |   |   | Carrying      or |   |   |   |   |
| (Dollars      in thousands)                                                                                          |   | Contract      Value     |      |   | Fair      Value        |   |   | Contract      Value |   |   | Fair      Value |   |
| Assets:                                                                                                              |   |                    |      |   |                   |   |   |   |   |   |   |   |
| Cash      and due from banks                                                                                         |   | $                       | 56,408    |   |                   | $      | 56,408 |   |   | $ | 119,771 |   |   | $ | 119,771 |   |
| Federal      funds sold and interest bearing deposits with other banks                                               |   |                    | 65,307    |   |                   |   | 65,307 |   |   |   | 6,951 |   |   |   | 6,951 |   |
| Investment      securities, available-for-sale                                                                       |   |                    | 886,777   |   |                   |   | 886,777 |   |   |   | 724,754 |   |   |   | 724,754 |   |
| Other      investments and trading account securities                                                                |   |                    | 21,129    |   |                   |   | 21,129 |   |   |   | 18,712 |   |   |   | 18,712 |   |
| Mortgages      held for sale                                                                                         |   |                    | 39,364    |   |                   |   | 39,364 |   |   |   | 46,686 |   |   |   | 46,686 |   |
| Loans      and leases, net of reserve for loan and lease losses                                                      |   |                    | 3,008,526 |   |                   |   | 3,046,714 |   |   |   | 3,218,436 |   |   |   | 3,239,567 |   |
| Cash      surrender value of life insurance policies                                                                 |   |                    | 39,836    |   |                   |   | 39,836 |   |   |   | 38,837 |   |   |   | 38,837 |   |
| Mortgage      servicing rights                                                                                       |   |                    | 9,165     |   |                   |   | 9,648 |   |   |   | 4,635 |   |   |   | 4,715 |   |
| Interest      rate swaps                                                                                             |   |                    | 16,507    |   |                   |   | 16,507 |   |   |   | 22,663 |   |   |   | 22,663 |   |
| Liabilities:                                                                                                         |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                             |   | $                       | 3,486,714 |   |                   | $      | 3,528,917 |   |   | $ | 3,514,542 |   |   | $ | 3,486,609 |   |
| Short-term      borrowings                                                                                           |   |                    | 154,979   |   |                   |   | 154,979 |   |   |   | 296,175 |   |   |   | 296,175 |   |
| Long-term      debt and mandatorily redeemable securities                                                            |   |                    | 20,046    |   |                   |   | 20,071 |   |   |   | 29,832 |   |   |   | 29,674 |   |
| Subordinated      notes                                                                                              |   |                    | 89,692    |   |                   |   | 74,236 |   |   |   | 89,692 |   |   |   | 73,972 |   |
| Interest      rate swaps                                                                                             |   |                    | 16,900    |   |                   |   | 16,900 |   |   |   | 23,003 |   |   |   | 23,003 |   |
| Off-balance-sheet      instruments *                                                                                 |   |                    | -         |   |                   |   | 276 |   |   |   | - |   |   |   | 297 |   |
| *      Represents estimated cash outflows required to currently settle the      obligations at current market rates. |   |                    |      |   |                   |

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MANAGEMENT’S DISCUSSION AND ANALYSISOF

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| (Dollars      in Thousands)                         |   |               |    |
|-----------------------------------------------------|--------|--------------------|---------|
|                                                |   |               |    |
|                                                |   | September      30, |    |   | December      31, |   |
|                                                |   | 2009               |    |   | 2008 |   |
| Accrued      income and other assets:               |   |               |    |   |   |   |
| Bank      owned life insurance cash surrender value |   | $                  | 39,836  |   |   | $ | 38,837 |   |
| Accrued      interest receivable                    |   |               | 16,558  |   |   |   | 17,910 |   |
| Mortgage      servicing assets                      |   |               | 9,165   |   |   |   | 4,635 |   |
| Other      real estate                              |   |               | 4,074   |   |   |   | 1,381 |   |
| Former      bank premises held for sale             |   |               | 3,095   |   |   |   | 3,356 |   |
| Repossessions                                       |   |               | 5,672   |   |   |   | 1,669 |   |
| All      other assets                               |   |               | 36,490  |   |   |   | 45,832 |   |
| Total      accrued income and other assets          |   | $                  | 114,890 |   |   | $ | 113,620 |   |

|                                           |   |   |    |   |                 |   |   |                   |   |   |    |   |   | 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                    |   | $      | 605,775 |   |                 |   | 17.43  | %                      |   | $      | 278,089 |   |   |                   | 8.00   | % |   | $ | 347,611 |   |   |   | 10.00 | % |
| 1st      Source Bank                           |   |   | 570,560 |   |                 |   | 16.48  |                   |   |   | 276,909 |   |   |                   | 8.00   |   |   |   | 346,137 |   |   |   | 10.00 |   |
| Tier      1 Capital (to Risk-Weighted Assets): |   |   |    |   |                 |   |   |                   |   |   |    |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| 1st      Source Corporation                    |   |   | 560,881 |   |                 |   | 16.14  |                   |   |   | 139,045 |   |   |                   | 4.00   |   |   |   | 208,567 |   |   |   | 6.00 |   |
| 1st      Source Bank                           |   |   | 526,753 |   |                 |   | 15.22  |                   |   |   | 138,455 |   |   |                   | 4.00   |   |   |   | 207,682 |   |   |   | 6.00 |   |
| Tier      1 Capital (to Average Assets):       |   |   |    |   |                 |   |   |                   |   |   |    |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| 1st      Source Corporation                    |   |   | 560,881 |   |                 |   | 12.82  |                   |   |   | 174,990 |   |   |                   | 4.00   |   |   |   | 218,738 |   |   |   | 5.00 |   |
| 1st      Source Bank                           |   |   | 526,753 |   |                 |   | 12.10  |                   |   |   | 174,140 |   |   |                   | 4.00   |   |   |   | 217,675 |   |   |   | 5.00 |   |

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| 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, |   |
|                                                              |   | 2009                                  |      |   | 2008                               |   |   | 2009   |   |   | 2008    |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   | 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                                                           |   | $                                     | 622,975   |   |                               | $      | 4,357  |   |   |   | 2.78    | %      |   | $        | 461,448   |   |   | $      | 4,896  |    |   |   | 4.22     | %      |   | $ | 611,456 |   |   | $ | 12,600 |   |   |   | 2.76 | % |   | $ | 498,066 |   |   | $ | 17,288 |   |   |   | 4.64 | % |
| Tax      exempt                                                   |   |                                  | 203,493   |   |                               |   | 2,464  |   |   |   | 4.80    | %      |   |     | 220,524   |   |   |   | 2,573  |    |   |   | 4.64     | %      |   |   | 207,042 |   |   |   | 7,366 |   |   |   | 4.76 | % |   |   | 227,235 |   |   |   | 8,156 |   |   |   | 4.79 | % |
| Mortgages      - held for sale                                    |   |                                  | 72,278    |   |                               |   | 933    |   |   |   | 5.12    | %      |   |     | 32,794    |   |   |   | 523    |    |   |   | 6.34     | %      |   |   | 89,942 |   |   |   | 3,459 |   |   |   | 5.14 | % |   |   | 33,868 |   |   |   | 1,544 |   |   |   | 6.09 | % |
| Net      loans and leases                                         |   |                                  | 3,130,362 |   |                               |   | 42,673 |   |   |   | 5.41    | %      |   |     | 3,322,970 |   |   |   | 50,617 |    |   |   | 6.06     | %      |   |   | 3,184,394 |   |   |   | 129,559 |   |   |   | 5.44 | % |   |   | 3,251,499 |   |   |   | 153,484 |   |   |   | 6.31 | % |
| Other      investments                                            |   |                                  | 130,210   |   |                               |   | 297    |   |   |   | 0.90    | %      |   |     | 37,805    |   |   |   | 317    |    |   |   | 3.34     | %      |   |   | 113,664 |   |   |   | 894 |   |   |   | 1.05 | % |   |   | 36,463 |   |   |   | 986 |   |   |   | 3.61 | % |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Earning Assets                                         |   |                                  | 4,159,318 |   |                               |   | 50,724 |   |   |   | 4.84    | %      |   |     | 4,075,541 |   |   |   | 58,926 |    |   |   | 5.75     | %      |   |   | 4,206,498 |   |   |   | 153,878 |   |   |   | 4.89 | % |   |   | 4,047,131 |   |   |   | 181,458 |   |   |   | 5.99 | % |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and due from banks                                      |   |                                  | 57,028    |   |                               |   |   |   |   |   |    |   |   |     | 79,943    |   |   |   |   |    |   |   |     |   |   |   | 58,807 |   |   |   |   |   |   |   |   |   |   |   | 88,126 |   |   |   |   |   |   |   |   |   |
| Reserve      for loan and leaselosses                             |   |                                  | (84,382   | )      |                               |   |   |   |   |   |    |   |   |     | (73,187   | )      |   |   |   |    |   |   |     |   |   |   | (84,240 | ) |   |   |   |   |   |   |   |   |   |   | (69,490 | ) |   |   |   |   |   |   |   |   |
| Other      assets                                                 |   |                                  | 331,360   |   |                               |   |   |   |   |   |    |   |   |     | 317,712   |   |   |   |   |    |   |   |     |   |   |   | 327,137 |   |   |   |   |   |   |   |   |   |   |   | 318,181 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $                                     | 4,463,324 |   |                               |   |   |   |   |   |    |   |   | $        | 4,400,009 |   |   |   |   |    |   |   |     |   |   | $ | 4,508,202 |   |   |   |   |   |   |   |   |   |   | $ | 4,383,948 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY:                        |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits                                    |   | $                                     | 3,104,240 |   |                               | $      | 15,460 |   |   |   | 1.98    | %      |   | $        | 2,964,923 |   |   | $      | 20,347 |    |   |   | 2.73     | %      |   | $ | 3,151,071 |   |   | $ | 49,662 |   |   |   | 2.11 | % |   | $ | 2,992,747 |   |   | $ | 67,116 |   |   |   | 3.00 | % |
| Short-term      borrowings                                        |   |                                  | 176,580   |   |                               |   | 265    |   |   |   | 0.60    | %      |   |     | 427,895   |   |   |   | 2,255  |    |   |   | 2.10     | %      |   |   | 192,245 |   |   |   | 909 |   |   |   | 0.63 | % |   |   | 374,246 |   |   |   | 6,434 |   |   |   | 2.30 | % |
| Subordinated      notes                                           |   |                                  | 89,692    |   |                               |   | 1,648  |   |   |   | 7.29    | %      |   |     | 89,692    |   |   |   | 1,648  |    |   |   | 7.31     | %      |   |   | 89,692 |   |   |   | 4,942 |   |   |   | 7.37 | % |   |   | 91,385 |   |   |   | 5,067 |   |   |   | 7.41 | % |
| Long-term      debt and                                           |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| mandatorily      redeemablesecurities                             |   |                                  | 19,928    |   |                               |   | 322    |   |   |   | 6.42    | %      |   |     | 34,820    |   |   |   | 418    |    |   |   | 4.78     | %      |   |   | 20,610 |   |   |   | 853 |   |   |   | 5.53 | % |   |   | 34,635 |   |   |   | 1,333 |   |   |   | 5.14 | % |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Interest-Bearing Liabilities                           |   |                                  | 3,390,440 |   |                               |   | 17,695 |   |   |   | 2.07    | %      |   |     | 3,517,330 |   |   |   | 24,668 |    |   |   | 2.79     | %      |   |   | 3,453,618 |   |   |   | 56,366 |   |   |   | 2.18 | % |   |   | 3,493,013 |   |   |   | 79,950 |   |   |   | 3.06 | % |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearingdeposits                                       |   |                                  | 431,773   |   |                               |   |   |   |   |   |    |   |   |     | 376,112   |   |   |   |   |    |   |   |     |   |   |   | 420,209 |   |   |   |   |   |   |   |   |   |   |   | 376,727 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                            |   |                                  | 67,292    |   |                               |   |   |   |   |   |    |   |   |     | 62,348    |   |   |   |   |    |   |   |     |   |   |   | 71,212 |   |   |   |   |   |   |   |   |   |   |   | 71,046 |   |   |   |   |   |   |   |   |   |
| Shareholders'      equity                                         |   |                                  | 573,819   |   |                               |   |   |   |   |   |    |   |   |     | 444,219   |   |   |   |   |    |   |   |     |   |   |   | 563,163 |   |   |   |   |   |   |   |   |   |   |   | 443,162 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $                                     | 4,463,324 |   |                               |   |   |   |   |   |    |   |   | $        | 4,400,009 |   |   |   |   |    |   |   |     |   |   | $ | 4,508,202 |   |   |   |   |   |   |   |   |   |   | $ | 4,383,948 |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Interest Income                                          |   |                                  |      |   |                               | $      | 33,029 |   |   |   |    |   |   |     |      |   |   | $      | 34,258 |    |   |   |     |   |   |   |   |   |   | $ | 97,512 |   |   |   |   |   |   |   |   |   |   | $ | 101,508 |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                  |      |   |                               |   |   |   |   |   |    |   |   |     |      |   |   |   |   |    |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Yield on Earning Assets on a Taxable EquivalentBasis     |   |                                  |      |   |                               |   |   |   |   |   | 3.15    | %      |   |     |      |   |   |   |   |    |   |   | 3.34     | %      |   |   |   |   |   |   |   |   |   |   | 3.10 | % |   |   |   |   |   |   |   |   |   |   | 3.35 | % |

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|                                                        |   | Summary      of Reserve for Loan and Lease Losses |      |
|-------------------------------------------------------------|--------|---------------------------------------------------|-----------|
|                                                        |   | (Dollars      in thousands)                       |      |
|                                                        |   | Three      Months Ended                           |      |   | Nine      Months Ended |   |
|                                                        |   | September      30,                                |      |   | September      30, |   |
|                                                        |   | 2009                                              |      |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |
| Reserve      for loan and lease losses - beginning balance  |   | $                                                 | 83,124    |   |   | $ | 71,698 |   |   | $ | 79,776 |   |   | $ | 66,602 |   |
| Charge-offs                                                 |   |                                              | (4,701    | ) |   |   | (1,006 | ) |   |   | (20,156 | ) |   |   | (3,921 | ) |
| Recoveries                                                  |   |                                              | 612       |   |   |   | 1,343 |   |   |   | 3,143 |   |   |   | 3,322 |   |
| Net      (charge-offs)/recoveries                           |   |                                              | (4,089    | ) |   |   | 337 |   |   |   | (17,013 | ) |   |   | (599 | ) |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for loan and lease losses                    |   |                                              | 6,469     |   |   |   | 3,571 |   |   |   | 22,741 |   |   |   | 9,603 |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve      for loan and lease losses - ending balance     |   | $                                                 | 85,504    |   |   | $ | 75,606 |   |   | $ | 85,504 |   |   | $ | 75,606 |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      and leases outstanding at end of period          |   | $                                                 | 3,094,030 |   |   | $ | 3,314,863 |   |   | $ | 3,094,030 |   |   | $ | 3,314,863 |   |
| Average      loans and leases outstanding during period     |   |                                              | 3,130,362 |   |   |   | 3,322,970 |   |   |   | 3,184,394 |   |   |   | 3,251,499 |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve      for loan and lease losses as a percentage of   |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| loans      and leases outstanding at end of period          |   |                                              | 2.76      | % |   |   | 2.28 | % |   |   | 2.76 | % |   |   | 2.28 | % |
| Ratio      of net charge-offs/(recoveries) during period to |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| average      loans and leases outstanding                   |   |                                              | 0.52      | % |   |   | -0.04 | % |   |   | 0.71 | % |   |   | 0.02 | % |

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| (Dollars      in thousands)                       |   |               |   |   |              |   |   |               |   |
|---------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------------|--------|
|                                              |   | September      30, |   |   | December      31, |   |   | September      30, |   |
|                                              |   | 2009               |   |   | 2008              |   |   | 2008               |   |
|                                              |   |               |   |   |              |   |   |               |   |
| Loans      and leases past due 90 days or more    |   | $                  | 1,125  |   |              | $      | 1,022  |               |   | $ | 1,476 |   |
| Nonaccrual      and restructured loans and leases |   |               | 80,361 |   |              |   | 36,555 |               |   |   | 22,812 |   |
| Other      real estate                            |   |               | 4,074  |   |              |   | 1,381  |               |   |   | 1,615 |   |
| Former      bank premises held for sale           |   |               | 3,095  |   |              |   | 3,356  |               |   |   | 3,821 |   |
| Repossessions                                     |   |               | 5,672  |   |              |   | 1,669  |               |   |   | 234 |   |
| Equipment      owned under operating leases       |   |               | 74     |   |              |   | 185    |               |   |   | 40 |   |
|                                              |   |               |   |   |              |   |   |               |   |   |   |   |
| Total      nonperforming assets                   |   | $                  | 94,401 |   |              | $      | 44,168 |               |   | $ | 29,998 |   |

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table of contents

| (Dollars      in thousands)                        |   |                  |      |   | Nonaccrual              |   |   | Other      real estate |   |   | Year-to-date            |   |
|----------------------------------------------------|--------|-----------------------|-----------|--------|-------------------------|--------|--------|------------------------|--------|--------|-------------------------|--------|
|                                               |   | Loans      and leases |      |   | and                     |   |   | owned      and         |   |   | net      credit losses/ |   |
|                                               |   | outstanding           |      |   | restructured      loans |   |   | repossessions          |   |   | (recoveries)            |   |
|                                               |   |                  |      |   |                    |   |   |                   |   |   |                    |   |
| Commercial      and agricultural loans             |   | $                     | 567,476   |   |                    | $      | 8,648  |                   |   | $      | 165                     |   |   | $ | 6,490 |   |
| Auto,      light truck and environmental equipment |   |                  | 313,808   |   |                    |   | 11,585 |                   |   |   | 419                     |   |   |   | 2,343 |   |
| Medium      and heavy duty truck                   |   |                  | 219,762   |   |                    |   | 12,336 |                   |   |   | 12                      |   |   |   | 2,408 |   |
| Aircraft      financing                            |   |                  | 633,552   |   |                    |   | 12,031 |                   |   |   | 4,536                   |   |   |   | 3,125 |   |
| Construction      equipment financing              |   |                  | 326,858   |   |                    |   | 5,241  |                   |   |   | 513                     |   |   |   | 871 |   |
| Loans      secured by real estate                  |   |                  | 917,754   |   |                    |   | 30,378 |                   |   |   | 4,074                   |   |   |   | 1,100 |   |
| Consumer      loans                                |   |                  | 114,820   |   |                    |   | 142    |                   |   |   | 27                      |   |   |   | 1,449 |   |
|                                               |   |                  |      |   |                    |   |   |                   |   |   |                    |   |   |   |   |   |
| Total                                              |   | $                     | 3,094,030 |   |                    | $      | 80,361 |                   |   | $      | 9,746                   |   |   | $ | 17,786 |   |

| (Dollars      in thousands)                                                |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|----------------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                                                       |   | September      30,      |   |   | September      30,     |   |
|                                                                       |   | 2009                    |   |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| Noninterest      income:                                                   |   |                    |   |   |                   |   |   |   |   |   |   |   |
|   Trust      fees                                                |   | $                       | 3,782  |   |                   | $      | 4,939 |   |   | $ | 11,473 |   |   | $ | 14,155 |   |
|   Service      charges on deposit accounts                       |   |                    | 5,402  |   |                   |   | 5,761 |   |   |   | 15,367 |   |   |   | 16,633 |   |
|   Mortgage      banking income                                   |   |                    | 965    |   |                   |   | 959 |   |   |   | 6,874 |   |   |   | 3,493 |   |
|   Insurance      commissions                                     |   |                    | 1,022  |   |                   |   | 1,084 |   |   |   | 3,614 |   |   |   | 4,122 |   |
|   Equipment      rental income                                   |   |                    | 6,347  |   |                   |   | 6,285 |   |   |   | 18,896 |   |   |   | 17,794 |   |
|   Other      income                                              |   |                    | 2,022  |   |                   |   | 2,168 |   |   |   | 6,613 |   |   |   | 6,836 |   |
|   Investment      securities and other investment gains (losses) |   |                    | 716    |   |                   |   | (8,816 | ) |   |   | 673 |   |   |   | (9,259 | ) |
|                                                                       |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      noninterest income                                              |   | $                       | 20,256 |   |                   | $      | 12,380 |   |   | $ | 63,510 |   |   | $ | 53,774 |   |

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table of contents

| (Dollars      in thousands)                                         |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|---------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                                                |   | September      30,      |   |   | September      30,     |   |
|                                                                |   | 2009                    |   |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| Noninterest      expense:                                           |   |                    |   |   |                   |   |   |   |   |   |   |   |
|   Salaries      and employee benefits                     |   | $                       | 18,425 |   |                   | $      | 19,297 |   |   | $ | 55,340 |   |   | $ | 58,996 |   |
|   Net      occupancy expense                              |   |                    | 2,221  |   |                   |   | 2,332 |   |   |   | 7,095 |   |   |   | 7,289 |   |
|   Furniture      and equipment expense                    |   |                    | 3,241  |   |                   |   | 3,694 |   |   |   | 10,487 |   |   |   | 11,555 |   |
|   Depreciation      - leased equipment                    |   |                    | 5,021  |   |                   |   | 5,041 |   |   |   | 15,065 |   |   |   | 14,266 |   |
|   Professional      fees                                  |   |                    | 1,020  |   |                   |   | 2,773 |   |   |   | 2,897 |   |   |   | 6,453 |   |
|   Supplies      and communication                         |   |                    | 1,473  |   |                   |   | 1,812 |   |   |   | 4,468 |   |   |   | 5,163 |   |
|   Business      development and marketing expense         |   |                    | 655    |   |                   |   | 881 |   |   |   | 1,934 |   |   |   | 2,524 |   |
|   Intangible      asset amortization                      |   |                    | 340    |   |                   |   | 351 |   |   |   | 1,022 |   |   |   | 1,052 |   |
|   Loan      and lease collection and repossession expense |   |                    | 1,147  |   |                   |   | (130 | ) |   |   | 2,776 |   |   |   | 672 |   |
|   FDIC      and other insurance                           |   |                    | 1,582  |   |                   |   | 713 |   |   |   | 6,851 |   |   |   | 1,396 |   |
|   Other      expense                                      |   |                    | 1,445  |   |                   |   | 1,553 |   |   |   | 4,624 |   |   |   | 5,249 |   |
|                                                                |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      noninterest expense                                      |   | $                       | 36,570 |   |                   | $      | 38,317 |   |   | $ | 112,559 |   |   | $ | 114,613 |   |

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

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table of contents

CONTROLS AND PROCEDURES

| ITEM      1. | LegalProceedings. |
|--------------|-------------------|

ITEM 1A.      Risk Factors.

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

|   | ISSUER PURCHASES OF      EQUITY SECURITIES |
|--------|--------------------------------------------|

|                                                                                                                                                                                                                                    |              |                | 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, 2009                                                                                                                                                                                                                 | -                 | -                   | -                                  | 1,433,965                            |   |
| August      01 - 31, 2009                                                                                                                                                                                                               | 19,347            | 16.41               | 19,347                             | 1,414,618                            |   |
| September      01 - 30, 2009                                                                                                                                                                                                            | 20,046            | 15.61               | 20,046                             | 1,394,572                            |   |
|                                                                                                                                                                                                                                    |              |                |                               |                                 |   |
|                                                                                                                                                                                                                                    |              |                |                               |                                 |   |
| (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 605,428  shares.                                                                                                                         |

Defaults Upon Senior Securities.

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Submission of Matters to a Vote of SecurityHolders.

| ITEM      5. | OtherInformation. |
|--------------|-------------------|

 Exhibits

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table of contents

SIGNATURES

----