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| 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) |   | (Zip      Code) |

No

 No

  No 

| Large      accelerated filer |        o | Accelerated      filer |        x | Non-accelerated      filer |        o | Smaller      reporting company |        o |
|------------------------------|---------------|------------------------|---------------|----------------------------|---------------|--------------------------------|---------------|

  r   No

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TABLE OF CONTENTS

| Part      I                                                  |                                                                                                             |           |
|--------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|----------------|
|                                                         |                                                                                                             |           |
| Item      1.                                                 | Business                                                                                                         |        3  |
| Item      1A.                                                | Risk Factors                                                                                                     |        7  |
| Item      1B.                                                | Unresolved Staff Comments                                                                                        |        10 |
| Item      2.                                                 | Properties                                                                                                       |        10 |
| Item      3.                                                 | Legal Proceedings                                                                                                |        10 |
| Item      4.                                                 | Submission of Matters to a Vote of Security      Holders                                                         |        10 |
|                                                         |                                                                                                             |           |
|                                                         |                                                                                                             |           |
| Part      II                                                 |                                                                                                             |           |
| Item      5.                                                 | Market for Registrant's Common Equity, Related      Stockholder Matters and Issuer Purchases of EquitySecurities |        10 |
| Item      6.                                                 | Selected Financial Data                                                                                          |        11 |
| Item      7.                                                 | Management’s Discussion and Analysis of Financial      Condition and Results of Operations                 |        11 |
| Item      7A.                                                | Quantitative and Qualitative Disclosures About Market      Risk                                                  |        26 |
| Item      8                                                  | Financial Statements and Supplementary      Data                                                                 |        26 |
|                                                         | Reports of Independent Registered Public Accounting      Firm                                                    |        26 |
|                                                         | Consolidated Statements of Financial      Condition                                                              |        28 |
|                                                         | Consolidated Statements of      Income                                                                           |        29 |
|                                                         | Consolidated Statements of Shareholders’      Equity                                                       |        30 |
|                                                         | Consolidated Statements of Cash Flow                                                                             |        31 |
|                                                         | Notes to Consolidated Financial      Statements                                                                  |        32 |
| Item      9.                                                 | Changes in and Disagreements with      Accountants on Accounting and Financial Disclosure                        |        51 |
| Item      9A.                                                | Controls and Procedures                                                                                          |        51 |
| Item      9B.                                                | Other Information                                                                                                |        51 |
|                                                         |                                                                                                             |           |
|                                                         |                                                                                                             |           |
| Part      III                                                |                                                                                                             |           |
| Item      10.                                                | Directors, Executive Officers and Corporate      Governance                                                      |        51 |
| Item      11.                                                | Executive Compensation                                                                                           |        51 |
| Item      12.                                                | Security Ownership of Certain Beneﬁcial Owners and      Management and Related Stockholder Matters        |        51 |
| Item      13.                                                | Certain Relationships and Related Transactions, and      Director Independence                                   |        52 |
| Item      14.                                                | Principal Accounting Fees and      Services                                                                      |        52 |
|                                                         |                                                                                                             |           |
|                                                         |                                                                                                             |           |
| Part      IV                                                 |                                                                                                             |           |
| Item      15.                                                | Exhibits, Financial Statement    Schedules                                                                       |        52 |
| Signatures                                                   |        54                                                                                                   |
| Exhibit 23                                                   |                                                                                                             |
| Exhibit 31.1                                                 |                                                                                                             |
| Exhibit 31.2         |                                                                                                             |
| Exhibit 32.1                                                 |                                                                                                             |
| Exhibit 32.2                                                 |                                                                                                             |

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Item1.  Business.

1stSource Corporation

1st Source Corporation, an Indiana corporation incorporatedin 1971, is a bank holding company headquartered in South Bend, Indiana thatprovides, through our subsidiaries (collectively referred to as "1st Source"), abroad array of financial products and services. 1st Source Bank ("Bank"), ourbanking subsidiary, offers commercial and consumer banking services, trust andinvestment management services, and insurance to individual and business clientsthrough most of our 79 banking center locations in 17 counties in Indiana andMichigan. 1st Source Bank's Specialty Finance Group, with 24 locationsnationwide, offers specialized financing services for new and used private andcargo aircraft, automobiles and light trucks for leasing and rental agencies,medium and heavy duty trucks, construction equipment, and environmentalequipment. While concentrated in certain equipment types, we enjoy serving avery diverse client base. We are not dependent upon any single industry orclient. At December 31, 2008, we had consolidated total assets of $4.46 billion,loans and leases of $3.30 billion, deposits of $3.51 billion, and totalshareholders’ equity of $453.66 million.

Our principal executive office is located at 100 NorthMichigan Street, South Bend, Indiana 46601 and our telephone number is 574235-2000. Access to our annual report on Form 10-K, quarterly reports on Form10-Q, current reports on Form 8-K, and all amendments to those reports isavailable, free of charge, at www.1stsource.com soon after the material iselectronically filed with the Securities Exchange Commission (SEC). We willprovide a printed copy of any of the aforementioned documents to any requestingshareholder.

1stSource Bank

1st Source Bank is a wholly owned subsidiary of 1st SourceCorporation that offers a broad range of consumer and commercial bankingservices through its lending operations, retail branches, and fee basedbusinesses.

Commercial,Agricultural, and Real Estate Loans — 1st Source Bank providescommercial, small business, agricultural, and real estate loans to primarilyprivately owned business clients mainly located within our regional market area.Loans are made for a wide variety of general corporate purposes, includingfinancing for industrial and commercial properties, financing for equipment,inventories and accounts receivable, and acquisition financing. Other servicesinclude commercial leasing and cash management services.

ConsumerServices — 1st Source Bank provides a full range of consumer bankingservices, including checking accounts, on-line banking including bill payment,telephone banking, savings programs, installment and real estate loans, homeequity loans and lines of credit, drive-through and night deposit services, safedeposit facilities, automated teller machines, overdraft facilities, debit andcredit card services, financial literacy seminars and brokerageservices.

TrustServices — 1st Source Bank provides a wide range of trust, investment,agency, and custodial services for individual, corporate, and not-for-profitclients. These services include the administration of estates and personaltrusts, as well as the management of investment accounts for individuals,employee benefit plans, and charitable foundations.

SpecialtyFinance Group Services — 1st Source Bank, through its Specialty FinanceGroup,  provides a broad range of comprehensive equipment loan andlease finance products addressing the financing needs of a broad array ofcompanies. This group can be broken down into five areas: auto and light trucks;environmental equipment; medium and heavy duty trucks; new and used aircraft;and construction equipment.

The auto and light truck division consists of financings toautomobile rental and leasing companies, and light truck rental and leasingcompanies. The auto and light truck finance receivables generally range from$50,000 to $15 million with fixed or variable interest rates and terms of two toseven years.

Environmental equipment financing handles trash and recyclingequipment for municipalities and private businesses as well as equipment forlandfills. Receivables generally range from $50,000 to $15 million with fixed orvariable interest rates and terms of two to seven years.

The medium and heavy duty truck division provides financingfor highway tractors and trailers and delivery trucks to the commercial truckingindustry. Medium and heavy duty truck finance receivables generally range from$50,000 to $15 million with fixed or variable interest rates and terms of two toseven years.

Aircraft financing consists of financings for new and usedgeneral aviation aircraft for private and corporate aircraft users, aircraftdistributors and dealers, air charter operators, and air cargo carriers. We haveselectively entered the business aircraft markets of Brazil, Canada and Mexicoon a limited basis where desirable aircraft financing opportunities exist.Aircraft finance receivables generally range from $250,000 to $15 million withfixed or variable interest rates and terms of two to fifteenyears.

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Item 1A.  Risk Factors.

An investment in our common stock is subject to risks inherent to ourbusiness. The material risks and uncertainties that we believe affect us aredescribed below. See “Forward Looking Statements” under Item 7 of this reportfor a discussion of other important factors that can affect ourbusiness.

| ·   | We      may incur substantial costs identifying and evaluating potential      acquisitions and merger partners, or in evaluating new markets, hiring      experienced local managers, and opening new  offices; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      estimates and judgments used to evaluate credit, operations, management,      and market risks relating to target institutions may not be      accurate; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | There      may be substantial lag-time between completing an acquisition or opening a      new office and generating sufficient assets and deposits to support costs      of the expansion; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      may not be able to finance an acquisition, or the financing we obtain may      have an adverse effect on our operating results or dilution of our      existing shareholders; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      attention of our management in negotiating a transaction and integrating      the operations and personnel of the combining businesses may be diverted      from our existing business; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Acquisitions      typically involve the payment of a premium over book and market values      and; therefore, some dilution of our tangible book value and net income      per common share may occur in connection with any future      transaction; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      may enter new markets where we lack local  experience; |
|--------------------|----------------------------------------------------------------|

| ·   | We      may incur goodwill in connection with an acquisition, or the goodwill we      incur may become impaired, which results in adverse short-term effects on      our operating results; or |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      may lose key employees and clients. |
|--------------------|---------------------------------------------|

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Item 1B.  Unresolved StaffComments.

Item 2.  Properties.

Item 3.  Legal Proceedings.

Item 4.  Submission of Matters to a Vote of SecurityHolders.

Item 5.  Market for Registrant’s CommonEquity, Related Stockholder Matters and Issuer Purchases of EquitySecurities.

|                                                                                             |   | 2008      Sales Price |   | Cash      Dividends |   | 2007      Sales Price |   | Cash      Dividends |
|--------------------------------------------------------------------------------------------------|--------|-----------------------|--------|---------------------|--------|-----------------------|--------|---------------------|
| Common Stock      Prices  (quarter      ended)                                         |   | High                  |   | Low                 |   | Paid                  |   | High                |   | Low |   | Paid |
| March      31                                                                                    | $      | 21.81                 | $      | 15.13               | $      | .14                   | $      | 32.62               | $ | 24.27 | $ | .14 |
| June      30                                                                                     |   | 22.62                 |   | 16.10               |   | .14                   |   | 27.92               |   | 23.32 |   | .14 |
| September      30                                                                                |   | 30.00                 |   | 14.54               |   | .14                   |   | 27.00               |   | 18.41 |   | .14 |
| December      31                                                                                 |   | 25.56                 |   | 12.61               |   | .16                   |   | 24.47               |   | 16.28 |   | .14 |
| As      of December 31, 2008, there were 1,012 holders of record of 1st Source      common stock |   |                  |   |                |

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Item 6.  Selected FinancialData.

| (Dollars      in thousands, except per share amounts)                                                                                                                                   |   | 2008   |      |   | 2007      (2) |   |      | 2006   |   |   | 2005      |   |   | 2004   |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|---------------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Interest income                                                                                                                                                                         |   | $      | 235,308   |   |          | $      | 253,587   |   |   | $      | 208,994   |   |   | $      | 168,532   |   |   | $ | 151,437 |   |
| Interest      expense                                                                                                                                                                   |   |   | 103,148   |   |          |   | 134,677   |   |   |   | 102,561   |   |   |   | 70,104    |   |   |   | 52,749 |   |
| Net      interest income                                                                                                                                                                |   |   | 132,160   |   |          |   | 118,910   |   |   |   | 106,433   |   |   |   | 98,428    |   |   |   | 98,688 |   |
| Provision      for (recovery of) loan and lease losses                                                                                                                                  |   |   | 16,648    |   |          |   | 7,534     |   |   |   | (2,736    | )      |   |   | (5,855    | ) |   |   | 229 |   |
| Net      interest income after provision for (recovery of)                                                                                                                              |   |   |      |   |          |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| loan      and lease losses                                                                                                                                                              |   |   | 115,512   |   |          |   | 111,376   |   |   |   | 109,169   |   |   |   | 104,283   |   |   |   | 98,459 |   |
| Noninterest      income                                                                                                                                                                 |   |   | 84,003    |   |          |   | 70,619    |   |   |   | 76,585    |   |   |   | 68,533    |   |   |   | 62,733 |   |
| Noninterest      expense                                                                                                                                                                |   |   | 153,114   |   |          |   | 140,312   |   |   |   | 126,211   |   |   |   | 123,439   |   |   |   | 127,091 |   |
| Income      before income taxes                                                                                                                                                         |   |   | 46,401    |   |          |   | 41,683    |   |   |   | 59,543    |   |   |   | 49,377    |   |   |   | 34,101 |   |
| Income      taxes                                                                                                                                                                       |   |   | 13,015    |   |          |   | 11,144    |   |   |   | 20,246    |   |   |   | 15,626    |   |   |   | 9,136 |   |
| Net      income                                                                                                                                                                         |   | $      | 33,386    |   |          | $      | 30,539    |   |   | $      | 39,297    |   |   | $      | 33,751    |   |   | $ | 24,965 |   |
| Assets      at year-end                                                                                                                                                                 |   | $      | 4,464,174 |   |          | $      | 4,447,104 |   |   | $      | 3,807,315 |   |   | $      | 3,511,277 |   |   | $ | 3,563,715 |   |
| Long-term      debt and mandatorily redeemable                                                                                                                                          |   |   |      |   |          |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| securities      at year-end                                                                                                                                                             |   |   | 29,832    |   |          |   | 34,702    |   |   |   | 43,761    |   |   |   | 23,237    |   |   |   | 17,964 |   |
| Shareholders’      equity at year-end                                                                                                                                             |   |   | 453,664   |   |          |   | 430,504   |   |   |   | 368,904   |   |   |   | 345,576   |   |   |   | 326,600 |   |
| Basic      net income per common share (1)                                                                                                                                              |   |   | 1.38      |   |          |   | 1.30      |   |   |   | 1.74      |   |   |   | 1.48      |   |   |   | 1.10 |   |
| Diluted      net income per common share (1)                                                                                                                                            |   |   | 1.37      |   |          |   | 1.28      |   |   |   | 1.72      |   |   |   | 1.46      |   |   |   | 1.08 |   |
| Cash      dividends per common share (1)                                                                                                                                                |   |   | .580      |   |          |   | .560      |   |   |   | .534      |   |   |   | .445      |   |   |   | .382 |   |
| Dividend      payout ratio                                                                                                                                                              |   |   | 42.34     | %      |          |   | 43.75     | %      |   |   | 31.05     | %      |   |   | 30.48     | % |   |   | 35.37 | % |
| Return      on average assets                                                                                                                                                           |   |   | 0.76      | %      |          |   | 0.74      | %      |   |   | 1.11      | %      |   |   | 1.00      | % |   |   | 0.75 | % |
| Return      on average common equity                                                                                                                                                    |   |   | 7.52      | %      |          |   | 7.47      | %      |   |   | 10.98     | %      |   |   | 10.12     | % |   |   | 7.81 | % |
| Average      common equity to average assets                                                                                                                                            |   |   | 10.09     | %      |          |   | 9.85      | %      |   |   | 10.07     | %      |   |   | 9.89      | % |   |   | 9.55 | % |
|                                                                                                                                                                                    |   |   |      |   |          |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (1)      The computation of per common share data gives retroactive recognition to      a 10% stock dividend declared July 27, 2006.                                                    |   |   |      |   |          |   |      |   |   |
| (2)      Results for 2007 and later include the acquisition of FINA Bancorp,      Inc. Refer to Note C of the Notes to Consolidated Financial      Statements for further details. |   |   |      |   |          |

Item 7.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.

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| ·   | Local,      regional, national, and international economic conditions and the impact      they may have on us and our clients and our assessment of that      impact. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes      in the level of nonperforming assets and  charge-offs. |
|--------------------|---------------------------------------------------------------------|

| ·   | Changes      in estimates of future cash reserve requirements based upon the periodic      review thereof under relevant regulatory and accounting      requirements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      effects of and changes in trade and monetary and fiscal policies and laws,      including the interest rate policies of the Federal Reserve      Board. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Inflation,      interest rate, securities market, and monetary    fluctuations. |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Political      instability. |
|--------------------|-----------------------------|

| ·   | Acts      of war or terrorism. |
|--------------------|--------------------------------|

| ·   | Substantial      increases in the cost of fuel. |
|--------------------|-------------------------------------------------|

| ·   | The      timely development and acceptance of new products and services and      perceived overall value of these products and services by      others. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes      in consumer spending, borrowings, and savings  habits. |
|--------------------|---------------------------------------------------------------------|

| ·   | Changes      in the financial performance and/or condition of our      borrowers. |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Technological      changes. |
|--------------------|-----------------------------|

| ·   | Acquisitions      and integration of acquiredbusinesses. |
|--------------------|----------------------------------------------------------|

| ·   | The      ability to increase market share and control  expenses. |
|--------------------|------------------------------------------------------------------|

| ·   | Changes      in the competitive environment among bank holding    companies. |
|--------------------|------------------------------------------------------------------------------|

| ·   | The      effect of changes in laws and regulations (including laws and regulations      concerning taxes, banking, securities, and insurance) with which we and      our subsidiaries must comply. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      effect of changes in accounting policies and practices and auditing      requirements, as may be adopted by the regulatory agencies, as well as the      Public Company Accounting Oversight Board, the Financial Accounting      Standards Board, and other accounting standard  setters. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes      in our organization, compensation, and benefit  plans. |
|--------------------|---------------------------------------------------------------------|

| ·   | The      costs and effects of legal and regulatory developments including the      resolution of legal proceedings or regulatory or other governmental      inquires and the results of regulatory examinations or      reviews. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Greater      than expected costs or difficulties related to the integration of new      products and lines of business. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      success at managing the risks described in Item 1A. Risk      Factors. |
|--------------------|---------------------------------------------------------------------------------|

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|                                                      |   |           |      |   |                2008 |   |    |       |   |   |          |   |   |           2007 |      |   |       |   |    |           |   |   |                 2006 |   |   |       |      |
|-----------------------------------------------------------|--------|----------------|-----------|--------|------------------------------------------------------------------|--------|---------|------------|--------|--------|--------------------------------------------------|--------|--------|------------------------------------------------------------------|-----------|--------|------------|--------|---------|----------------|--------|--------|------------------------------------------------------------------------|--------|--------|------------|-----------|
| (Dollars      in thousands)                               |   | AverageBalance |      |   |  Interest      Income/Expense                               |   |    | Yield/Rate |   |   | AverageBalance                                   |   |   | InterestIncome/Expense                                           |      |   | Yield/Rate |   |    | AverageBalance |   |   |  Interest      Income/Expense                                     |   |   | Yield/Rate |      |
| ASSETS                                                    |   |           |      |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             |      |   |       |   |    |           |   |   |                                                                   |   |   |       |      |
| Investment      securities:                               |   |           |      |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             |      |   |       |   |    |           |   |   |                                                                   |   |   |       |      |
| Taxable                                                   |   | $              | 491,061   |   |                                                             | $      | 22,170  |       |   |   | 4.51                                             | %      |   | $                                                                | 510,949   |   |       | $      | 25,136  |           |   |   | 4.92                                                                   | %      |   | $          | 458,152   |   |   | $ | 19,177 |   |   |   | 4.19 | % |
| Tax-exempt                                                |   |           | 222,751   |   |                                                             |   | 10,692  |       |   |   | 4.80                                             |   |   |                                                             | 225,849   |   |       |   | 10,800  |           |   |   | 4.78                                                                   |   |   |       | 173,652   |   |   |   | 7,416 |   |   |   | 4.27 |   |
| Mortgages      held for sale                              |   |           | 33,925    |   |                                                             |   | 2,069   |       |   |   | 6.10                                             |   |   |                                                             | 28,913    |   |       |   | 1,892   |           |   |   | 6.54                                                                   |   |   |       | 53,034    |   |   |   | 3,549 |   |   |   | 6.69 |   |
| Net      loans and leases                                 |   |           | 3,263,276 |   |                                                             |   | 202,539 |       |   |   | 6.21                                             |   |   |                                                             | 2,992,540 |   |       |   | 214,725 |           |   |   | 7.18                                                                   |   |   |       | 2,566,217 |   |   |   | 178,125 |   |   |   | 6.94 |   |
| Other      investments                                    |   |           | 57,601    |   |                                                             |   | 1,425   |       |   |   | 2.47                                             |   |   |                                                             | 94,478    |   |       |   | 4,657   |           |   |   | 4.93                                                                   |   |   |       | 64,049    |   |   |   | 3,271 |   |   |   | 5.11 |   |
| Total      earning assets                                 |   |           | 4,068,614 |   |                                                             |   | 238,895 |       |   |   | 5.87                                             |   |   |                                                             | 3,852,729 |   |       |   | 257,210 |           |   |   | 6.68                                                                   |   |   |       | 3,315,104 |   |   |   | 211,538 |   |   |   | 6.38 |   |
| Cash      and due from banks                              |   |           | 83,270    |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             | 81,714    |   |       |   |    |           |   |   |                                                                   |   |   |       | 78,365    |   |   |   |   |   |   |   |   |   |
| Reserve      for loan and lease losses                    |   |           | (71,358   | )      |                                                             |   |    |       |   |   |                                             |   |   |                                                             | (61,555   | )      |       |   |    |           |   |   |                                                                   |   |   |       | (59,082   | ) |   |   |   |   |   |   |   |   |
| Other      assets                                         |   |           | 319,997   |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             | 278,421   |   |       |   |    |           |   |   |                                                                   |   |   |       | 217,914   |   |   |   |   |   |   |   |   |   |
| Total      assets                                         |   | $              | 4,400,523 |   |                                                             |   |    |       |   |   |                                             |   |   | $                                                                | 4,151,309 |   |       |   |    |           |   |   |                                                                   |   |   | $          | 3,552,301 |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS'      EQUITY                 |   |           |      |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             |      |   |       |   |    |           |   |   |                                                                   |   |   |
| Interest      bearing deposits                            |   | $              | 2,996,830 |   |                                                             | $      | 86,903  |       |   |   | 2.90                                             | %      |   | $                                                                | 2,918,756 |   |       | $      | 115,113 |           |   |   | 3.94                                                                   | %      |   | $          | 2,418,344 |   |   | $ | 85,067 |   |   |   | 3.52 | % |
| Short-term      borrowings                                |   |           | 386,850   |   |                                                             |   | 7,626   |       |   |   | 1.97                                             |   |   |                                                             | 271,377   |   |       |   | 10,935  |           |   |   | 4.03                                                                   |   |   |       | 265,824   |   |   |   | 11,011 |   |   |   | 4.14 |   |
| Subordinated      notes                                   |   |           | 90,960    |   |                                                             |   | 6,714   |       |   |   | 7.38                                             |   |   |                                                             | 82,414    |   |       |   | 6,051   |           |   |   | 7.34                                                                   |   |   |       | 59,022    |   |   |   | 4,320 |   |   |   | 7.32 |   |
| Long-term      debt and mandatorily redeemable securities |   |           | 34,472    |   |                                                             |   | 1,905   |       |   |   | 5.53                                             |   |   |                                                             | 42,265    |   |       |   | 2,578   |           |   |   | 6.10                                                                   |   |   |       | 36,952    |   |   |   | 2,163 |   |   |   | 5.85 |   |
| Total      interest bearing liabilities                   |   |           | 3,509,112 |   |                                                             |   | 103,148 |       |   |   | 2.94                                             |   |   |                                                             | 3,314,812 |   |       |   | 134,677 |           |   |   | 4.06                                                                   |   |   |       | 2,780,142 |   |   |   | 102,561 |   |   |   | 3.69 |   |
| Noninterest      bearing deposits                         |   |           | 377,440   |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             | 351,050   |   |       |   |    |           |   |   |                                                                   |   |   |       | 352,204   |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                    |   |           | 69,823    |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             | 76,472    |   |       |   |    |           |   |   |                                                                   |   |   |       | 62,196    |   |   |   |   |   |   |   |   |   |
| Shareholders'      equity                                 |   |           | 444,148   |   |                                                             |   |    |       |   |   |                                             |   |   |                                                             | 408,975   |   |       |   |    |           |   |   |                                                                   |   |   |       | 357,759   |   |   |   |   |   |   |   |   |   |
| Total      liabilities and shareholders' equity           |   | $              | 4,400,523 |   |                                                             |   |    |       |   |   |                                             |   |   | $                                                                | 4,151,309 |   |       |   |    |           |   |   |                                                                   |   |   | $          | 3,552,301 |   |   |   |   |   |   |   |   |   |
| Net      interest income                                  |   |           |      |   |                                                             | $      | 135,747 |       |   |   |                                             |   |   |                                                             |      |   |       | $      | 122,533 |           |   |   |                                                                   |   |   |       |      |   |   | $ | 108,977 |   |   |   |   |   |
| Net      interest margin on a tax equivalent basis        |   |           |      | 3.34   | %                                                                |   |    |       |   |   |                                             |   |   |                                                             |      | 3.18   | %          |   |    |           |   |   |                                                                   |   |   |       |      | 3.29 | % |

----

table of contents

|                                                      |   | Increase      (Decrease) due to |   |   |   |   |
|-----------------------------------------------------------|--------|---------------------------------|--------|--------|--------|--------|
| (Dollars      in thousands)                               |   | Volume                          |   |   | Rate   |   |   | Net |   |
| 2008      compared to 2007                                |   |                            |   |   |   |   |   |   |   |
| Interest      earned on:                                  |   |                            |   |   |   |   |   |   |   |
| Investment      securities:                               |   |                            |   |   |   |   |   |   |   |
| Taxable                                                   |   | $                               | (927   | )      |   | $      | (2,039 | ) |   | $ | (2,966 | ) |
| Tax-exempt                                                |   |                            | (153   | )      |   |   | 45 |   |   |   | (108 | ) |
| Mortgages      held for sale                              |   |                            | 290    |   |   |   | (113 | ) |   |   | 177 |   |
| Net      loans and leases                                 |   |                            | 24,816 |   |   |   | (37,002 | ) |   |   | (12,186 | ) |
| Other      investments                                    |   |                            | (1,417 | )      |   |   | (1,815 | ) |   |   | (3,232 | ) |
| Total      earning assets                                 |   | $                               | 22,609 |   |   | $      | (40,924 | ) |   | $ | (18,315 | ) |
| Interest      paid on:                                    |   |                            |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits                            |   | $                               | 3,045  |   |   | $      | (31,255 | ) |   | $ | (28,210 | ) |
| Short-term      borrowings                                |   |                            | 16,581 |   |   |   | (19,890 | ) |   |   | (3,309 | ) |
| Subordinated      notes                                   |   |                            | 630    |   |   |   | 33 |   |   |   | 663 |   |
| Long-term      debt and mandatorily redeemable securities |   |                            | (447   | )      |   |   | (226 | ) |   |   | (673 | ) |
| Total      interest bearing liabilities                   |   | $                               | 19,809 |   |   | $      | (51,338 | ) |   | $ | (31,529 | ) |
| Net      interest income                                  |   | $                               | 2,800  |   |   | $      | 10,414 |   |   | $ | 13,214 |   |
| 2007      compared to 2006                                |   |                            |   |   |   |   |   |   |   |   |   |   |
| Interest      earned on:                                  |   |                            |   |   |   |   |   |   |   |   |   |   |
| Investment      securities:                               |   |                            |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                   |   | $                               | 2,383  |   |   | $      | 3,576 |   |   | $ | 5,959 |   |
| Tax-exempt                                                |   |                            | 2,422  |   |   |   | 962 |   |   |   | 3,384 |   |
| Mortgages      held for sale                              |   |                            | (1,579 | )      |   |   | (78 | ) |   |   | (1,657 | ) |
| Net      loans and leases                                 |   |                            | 30,264 |   |   |   | 6,336 |   |   |   | 36,600 |   |
| Other      investments                                    |   |                            | 1,497  |   |   |   | (111 | ) |   |   | 1,386 |   |
| Total      earning assets                                 |   | $                               | 34,987 |   |   | $      | 10,685 |   |   | $ | 45,672 |   |
| Interest      paid on:                                    |   |                            |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits                            |   | $                               | 19,125 |   |   | $      | 10,921 |   |   | $ | 30,046 |   |
| Short-term      borrowings                                |   |                            | 241    |   |   |   | (317 | ) |   |   | (76 | ) |
| Subordinated      notes                                   |   |                            | 1,719  |   |   |   | 12 |   |   |   | 1,731 |   |
| Long-term      debt and mandatorily redeemable securities |   |                            | 320    |   |   |   | 95 |   |   |   | 415 |   |
| Total      interest bearing liabilities                   |   | $                               | 21,405 |   |   | $      | 10,711 |   |   | $ | 32,116 |   |
| Net      interest income                                  |   | $                               | 13,582 |   |   | $      | (26 | ) |   | $ | 13,556 |   |

| (Dollars      in thousands)                                    |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Noninterest      income:                                       |   |   |   |   |   |   |   |   |   |
| Trust      fees                                                |   | $      | 18,599 |   |   | $      | 15,567 |   |   | $ | 13,806 |   |
| Service      charges on deposit accounts                       |   |   | 22,035 |   |   |   | 20,470 |   |   |   | 19,040 |   |
| Mortgage      banking income                                   |   |   | 2,994  |   |   |   | 2,868  |   |   |   | 11,637 |   |
| Insurance      commissions                                     |   |   | 5,363  |   |   |   | 4,666  |   |   |   | 4,574 |   |
| Equipment      rental income                                   |   |   | 24,224 |   |   |   | 21,312 |   |   |   | 18,972 |   |
| Other      income                                              |   |   | 9,293  |   |   |   | 8,864  |   |   |   | 6,554 |   |
| Gain      on sale of certain Investment Advisor assets         |   |   | 11,492 |   |   |   | -      |   |   |   | - |   |
| Investment      securities and other investment (losses) gains |   |   | (9,997 | )      |   |   | (3,128 | )      |   |   | 2,002 |   |
| Total      noninterest income                                  |   | $      | 84,003 |   |   | $      | 70,619 |   |   | $ | 76,585 |   |

----

table of contents

| (Dollars      in thousands)                             |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Noninterest      expense:                               |   |   |    |   |   |   |    |   |   |
| Salaries      and employee benefits                     |   | $      | 76,965  |   |   | $      | 73,944  |   |   | $ | 66,605 |   |
| Net      occupancy expense                              |   |   | 9,698   |   |   |   | 9,030   |   |   |   | 7,492 |   |
| Furniture      and equipment expense                    |   |   | 15,095  |   |   |   | 15,145  |   |   |   | 12,316 |   |
| Depreciation      — leased equipment              |   |   | 19,450  |   |   |   | 17,085  |   |   |   | 14,958 |   |
| Professional      fees                                  |   |   | 8,446   |   |   |   | 4,575   |   |   |   | 3,998 |   |
| Supplies      and communications                        |   |   | 6,782   |   |   |   | 5,987   |   |   |   | 5,496 |   |
| Business      development and marketing expense         |   |   | 3,749   |   |   |   | 4,788   |   |   |   | 4,008 |   |
| Intangible      asset amortization                      |   |   | 1,393   |   |   |   | 874     |   |   |   | 1,910 |   |
| Loan      and lease collection and repossession expense |   |   | 1,162   |   |   |   | 1,123   |   |   |   | 704 |   |
| Other      expense                                      |   |   | 10,374  |   |   |   | 7,761   |   |   |   | 8,724 |   |
| Total      noninterest expense                          |   | $      | 153,114 |   |   | $      | 140,312 |   |   | $ | 126,211 |   |

----

table of contents

| (Dollars      in thousands)                                                                                    |   | 2008   |      |   | 2007   |   |      | 2006   |   |   | 2005      |   |   | 2004   |      |
|----------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Commercial      and agricultural loans                                                                         |   | $      | 643,440   |   |   | $      | 593,806   |   |   | $      | 478,310   |   |   | $      | 453,197   |   |   | $ | 425,018 |   |
| Auto,      light truck and environmental equipment                                                             |   |   | 353,838   |   |   |   | 305,238   |   |   |   | 317,604   |   |   |   | 310,786   |   |   |   | 263,637 |   |
| Medium      and heavy duty truck                                                                               |   |   | 243,375   |   |   |   | 300,469   |   |   |   | 341,744   |   |   |   | 302,137   |   |   |   | 267,834 |   |
| Aircraft      financing                                                                                        |   |   | 632,121   |   |   |   | 587,022   |   |   |   | 498,914   |   |   |   | 459,645   |   |   |   | 444,481 |   |
| Construction      equipment financing                                                                          |   |   | 375,983   |   |   |   | 377,785   |   |   |   | 305,976   |   |   |   | 224,230   |   |   |   | 196,516 |   |
| Loans      secured by real estate                                                                              |   |   | 918,749   |   |   |   | 881,646   |   |   |   | 632,283   |   |   |   | 601,077   |   |   |   | 583,437 |   |
| Consumer      loans                                                                                            |   |   | 130,706   |   |   |   | 145,475   |   |   |   | 127,706   |   |   |   | 112,359   |   |   |   | 99,245 |   |
| Total      loans and leases                                                                                    |   | $      | 3,298,212 |   |   | $      | 3,191,441 |   |   | $      | 2,702,537 |   |   | $      | 2,463,431 |   |   | $ | 2,280,168 |   |
| At      December 31, 2008, 12.3% of total loans and leases were concentrated with      construction end users. |   |   |      |   |   |

----

table of contents

| (Dollars      in thousands)                        |   | 0-1      Year |      |   | 1-5      Years |   |    | Over      5 Years |   |   | Total  |   |
|----------------------------------------------------|--------|---------------|-----------|--------|----------------|--------|---------|-------------------|--------|--------|--------|--------|
| Commercial      and agricultural loans             |   | $             | 465,587   |   |           | $      | 177,655 |              |   | $      | 198    |   |   | $ | 643,440 |   |
| Auto,      light truck and environmental equipment |   |          | 238,730   |   |           |   | 111,178 |              |   |   | 3,930  |   |   |   | 353,838 |   |
| Medium      and heavy duty truck                   |   |          | 124,767   |   |           |   | 117,285 |              |   |   | 1,323  |   |   |   | 243,375 |   |
| Aircraft      financing                            |   |          | 297,928   |   |           |   | 321,532 |              |   |   | 12,661 |   |   |   | 632,121 |   |
| Construction      equipment financing              |   |          | 176,238   |   |           |   | 199,180 |              |   |   | 565    |   |   |   | 375,983 |   |
| Total                                              |   | $             | 1,303,250 |   |           | $      | 926,830 |              |   | $      | 18,677 |   |   | $ | 2,248,757 |   |

| Rate      Sensitivity  (Dollars in thousands) |   | Fixed      Rate |    |   | Variable      Rate |   |    | Total  |   |
|---------------------------------------------------------|--------|-----------------|---------|--------|--------------------|--------|---------|--------|--------|
| 1 –      5 Years                                  |   | $               | 639,869 |   |               | $      | 286,961 |   |   | $ | 926,830 |   |
| Over      5 Years                                       |   |            | 5,723   |   |               |   | 12,954  |   |   |   | 18,677 |   |
| Total                                                   |   | $               | 645,592 |   |               | $      | 299,915 |   |   | $ | 945,507 |   |

----

table of contents

| (Dollars      in thousands)                                               |   | 2008   |      |   | 2007   |   |      | 2006   |   |   | 2005      |     |   | 2004   |      |
|---------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|----------|--------|--------|-----------|
| Amounts of loans and leases      outstanding                    |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |
| at      end of period                                                     |   | $      | 3,298,212 |   |   | $      | 3,191,441 |   |   | $      | 2,702,537 |     |   | $      | 2,463,431 |   |   | $ | 2,280,168 |   |
| Average      amount of net loans and leases outstanding                   |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |   |   |   |   |
| during      period                                                        |   | $      | 3,263,276 |   |   | $      | 2,992,540 |   |   | $      | 2,566,217 |     |   | $      | 2,348,690 |   |   | $ | 2,240,055 |   |
| Balance      of reserve for loan and lease losses                         |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |   |   |   |   |
| at      beginning of period                                               |   | $      | 66,602    |   |   | $      | 58,802    |   |   | $      | 58,697    |     |   | $      | 63,672    |   |   | $ | 70,045 |   |
| Charge-offs:                                                              |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |   |   |   |   |
| Commercial      and agricultural loans                                    |   |   | 1,580     |   |   |   | 1,841     |   |   |   | 1,038     |     |   |   | 1,478     |   |   |   | 6,104 |   |
| Auto,      light truck and environmental equipment                        |   |   | 234       |   |   |   | 1,770     |   |   |   | 340       |     |   |   | 630       |   |   |   | 2,408 |   |
| Medium      and heavy duty truck                                          |   |   | 924       |   |   |   | 569       |   |   |   | -         |     |   |   | 15        |   |   |   | 352 |   |
| Aircraft      financing                                                   |   |   | 462       |   |   |   | 378       |   |   |   | 1,126     |     |   |   | 2,424     |   |   |   | 3,585 |   |
| Construction      equipment financing                                     |   |   | 1,695     |   |   |   | 799       |   |   |   | 118       |     |   |   | -         |   |   |   | 686 |   |
| Loans      secured by real estate                                         |   |   | 879       |   |   |   | 356       |   |   |   | 129       |     |   |   | 167       |   |   |   | 456 |   |
| Consumer      loans                                                       |   |   | 2,619     |   |   |   | 1,654     |   |   |   | 1,203     |     |   |   | 858       |   |   |   | 1,090 |   |
| Total      charge-offs                                                    |   |   | 8,393     |   |   |   | 7,367     |   |   |   | 3,954     |     |   |   | 5,572     |   |   |   | 14,681 |   |
| Recoveries:                                                               |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |   |   |   |   |
| Commercial      and agricultural loans                                    |   |   | 1,177     |   |   |   | 2,356     |   |   |   | 1,594     |     |   |   | 1,308     |   |   |   | 1,312 |   |
| Auto,      light truck and environmental equipment                        |   |   | 330       |   |   |   | 446       |   |   |   | 430       |     |   |   | 1,140     |   |   |   | 1,277 |   |
| Medium      and heavy duty truck                                          |   |   | 248       |   |   |   | 64        |   |   |   | 59        |     |   |   | 174       |   |   |   | 14 |   |
| Aircraft      financing                                                   |   |   | 2,230     |   |   |   | 1,779     |   |   |   | 3,612     |     |   |   | 2,255     |   |   |   | 4,460 |   |
| Construction      equipment financing                                     |   |   | 139       |   |   |   | 19        |   |   |   | 753       |     |   |   | 1,065     |   |   |   | 547 |   |
| Loans      secured by real estate                                         |   |   | 171       |   |   |   | 169       |   |   |   | 31        |     |   |   | 89        |   |   |   | 107 |   |
| Consumer      loans                                                       |   |   | 624       |   |   |   | 421       |   |   |   | 316       |     |   |   | 421       |   |   |   | 362 |   |
| Total      recoveries                                                     |   |   | 4,919     |   |   |   | 5,254     |   |   |   | 6,795     |     |   |   | 6,452     |   |   |   | 8,079 |   |
| Net      charge-offs (recoveries)                                         |   |   | 3,474     |   |   |   | 2,113     |   |   |   | (2,841    | )        |   |   | (880      | ) |   |   | 6,602 |   |
| Provision      for (recovery of provision for) loan and lease losses |   |   | 16,648    |   |   |   | 7,534     |   |   |   | (2,736    | )        |   |   | (5,855    | ) |   |   | 229 |   |
| Reserves      acquired in acquisitions                                    |   |   | -         |   |   |   | 2,379     |   |   |   | -         |     |   |   | -         |   |   |   | - |   |
| Balance      at end of period                                             |   | $      | 79,776    |   |   | $      | 66,602    |   |   | $      | 58,802    |     |   | $      | 58,697    |   |   | $ | 63,672 |   |
| Ratio      of net charge-offs (recoveries) to average net                 |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |   |   |   |   |
| loans      and leases outstanding                                         |   |   | 0.11      | %      |   |   | 0.07      | %      |   |   | (0.11     | )      % |   |   | (0.04     | )      % |   |   | 0.29 | % |

|                                                                               |   |                       2008 |   |   |                             2007 |   |   |                             2006 |   |   |                         2005 |     |   |               2004 |   |
|------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------|------------------------------------------------------------------------------------------|--------|
| Commercial      and agricultural loans                                             |   |                                                                                                                                     | 0.06   | %      |                                                                                                                                           |   | (0.09  | )      %                                                                                                                                       |   |   | (0.12                                                                                                                                                | )      % |   |                                                                                     | 0.04   | % |   |   | 1.14 | % |
| Auto,      light truck and environmental equipment                                 |   |                                                                                                                                     | (0.03  | )      |                                                                                                                                           |   | 0.40   |                                                                                                                                           |   |   | (0.03                                                                                                                                                | )        |   |                                                                                     | (0.17  | ) |   |   | 0.43 |   |
| Medium      and heavy duty truck                                                   |   |                                                                                                                                     | 0.25   |   |                                                                                                                                           |   | 0.16   |                                                                                                                                           |   |   | (0.02                                                                                                                                                | )        |   |                                                                                     | (0.06  | ) |   |   | 0.14 |   |
| Aircraft      financing                                                            |   |                                                                                                                                     | (0.30  | )      |                                                                                                                                           |   | (0.26  | )                                                                                                                                              |   |   | (0.54                                                                                                                                                | )        |   |                                                                                     | 0.04   |   |   |   | (0.19 | ) |
| Construction      equipment financing                                              |   |                                                                                                                                     | 0.41   |   |                                                                                                                                           |   | 0.22   |                                                                                                                                           |   |   | (0.24                                                                                                                                                | )        |   |                                                                                     | (0.51  | ) |   |   | 0.07 |   |
| Loans      secured by real estate                                                  |   |                                                                                                                                     | 0.08   |   |                                                                                                                                           |   | 0.02   |                                                                                                                                           |   |   | 0.02                                                                                                                                                 |     |   |                                                                                     | 0.01   |   |   |   | 0.06 |   |
| Consumer      loans                                                                |   |                                                                                                                                     | 1.44   |   |                                                                                                                                           |   | 0.88   |                                                                                                                                           |   |   | 0.74                                                                                                                                                 |     |   |                                                                                     | 0.41   |   |   |   | 0.77 |   |
| Total      net charge-offs (recoveries) to average portfolio loans and      leases |   |                                                                                                                                     | 0.11   | %      |                                                                                                                                           |   | 0.07   | %                                                                                                                                              |   |   | (0.11                                                                                                                                                | )      % |   |                                                                                     | (0.04  | )      % |   |   | 0.29 | % |

----

table of contents

|                                           |   | 2008    |   |   | 2007            |   |   | 2006    |   |   | 2005            |   |   | 2004    |   |
|-----------------------------------------------------|--------|---------|--------|--------|-----------------|--------|--------|---------|--------|--------|-----------------|--------|--------|---------|--------|
|                                                |   |    |   |   | Percent      of |   |   |    |   |   | Percent      of |   |   |    |   |   | Percent      of |   |   |   |   |   | Percent      of |   |   |   |   |   | Percent      of |   |
|                                                |   |    |   |   | Loans      and  |   |   |    |   |   | Loans      and  |   |   |    |   |   | Loans      and |   |   |   |   |   | Loans      and |   |   |   |   |   | Loans      and |   |
|                                                |   |    |   |   | Leases          |   |   |    |   |   | Leases          |   |   |    |   |   | Leases |   |   |   |   |   | Leases |   |   |   |   |   | Leases |   |
|                                                |   |    |   |   | in      Each    |   |   |    |   |   | in      Each    |   |   |    |   |   | in      Each |   |   |   |   |   | in      Each |   |   |   |   |   | in      Each |   |
|                                                |   |    |   |   | Category        |   |   |    |   |   | Category        |   |   |    |   |   | Category |   |   |   |   |   | Category |   |   |   |   |   | Category |   |
|                                                |   |    |   |   | to      Total   |   |   |    |   |   | to      Total   |   |   |    |   |   | to      Total |   |   |   |   |   | to      Total |   |   |   |   |   | to      Total |   |
|                                                |   | Reserve |   |   | Loans      and  |   |   | Reserve |   |   | Loans      and  |   |   | Reserve |   |   | Loans      and |   |   | Reserve |   |   | Loan      and |   |   | Reserve |   |   | Loans      and |   |
| (Dollars      in thousands)                         |   | Amount  |   |   | Leases          |   |   | Amount  |   |   | Leases          |   |   | Amount  |   |   | Leases |   |   | Amount |   |   | Leases |   |   | Amount |   |   | Leases |   |
| Commercial      and agricultural loans              |   | $       | 23,025 |   |            |   | 19.51  | %       |   | $      | 17,393          |   |   |    | 18.61  | % |   | $ | 14,547 |   |   |   | 17.70 | % |   | $ | 15,472 |   |   |   | 18.40 | % |   | $ | 13,612 |   |   |   | 18.64 | % |
| Auto,      light truck, and environmental equipment |   |    | 9,852  |   |            |   | 10.73  |    |   |   | 7,242           |   |   |    | 9.57   |   |   |   | 7,022 |   |   |   | 11.75 |   |   |   | 6,877 |   |   |   | 12.62 |   |   |   | 7,933 |   |   |   | 11.56 |   |
| Medium      and heavy duty truck                    |   |    | 8,915  |   |            |   | 7.38   |    |   |   | 8,775           |   |   |    | 9.41   |   |   |   | 6,337 |   |   |   | 12.65 |   |   |   | 6,131 |   |   |   | 12.26 |   |   |   | 4,700 |   |   |   | 11.75 |   |
| Aircraft      financing                             |   |    | 19,163 |   |            |   | 19.17  |    |   |   | 17,761          |   |   |    | 18.39  |   |   |   | 18,621 |   |   |   | 18.46 |   |   |   | 19,583 |   |   |   | 18.66 |   |   |   | 26,475 |   |   |   | 19.49 |   |
| Construction      equipment financing               |   |    | 10,672 |   |            |   | 11.40  |    |   |   | 6,171           |   |   |    | 11.84  |   |   |   | 5,030 |   |   |   | 11.32 |   |   |   | 4,235 |   |   |   | 9.10 |   |   |   | 4,502 |   |   |   | 8.62 |   |
| Loans      secured by real estate                   |   |    | 4,602  |   |            |   | 27.85  |    |   |   | 6,320           |   |   |    | 27.62  |   |   |   | 4,672 |   |   |   | 23.40 |   |   |   | 4,058 |   |   |   | 24.40 |   |   |   | 4,187 |   |   |   | 25.59 |   |
| Consumer      loans                                 |   |    | 3,547  |   |            |   | 3.96   |    |   |   | 2,940           |   |   |    | 4.56   |   |   |   | 2,573 |   |   |   | 4.72 |   |   |   | 2,341 |   |   |   | 4.56 |   |   |   | 2,263 |   |   |   | 4.35 |   |
| Total                                               |   | $       | 79,776 |   |            |   | 100.00 | %       |   | $      | 66,602          |   |   |    | 100.00 | % |   | $ | 58,802 |   |   |   | 100.00 | % |   | $ | 58,697 |   |   |   | 100.00 | % |   | $ | 63,672 |   |   |   | 100.00 | % |

| Nonperforming      assets at December 31 (Dollars in      thousands) |   | 2008   |   |   | 2007   |   |   | 2006   |   |   | 2005   |   |   | 2004   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Loans      past due over 90 days                                     |   | $      | 1,022  |   |   | $      | 1,105  |   |   | $      | 116    |   |   | $      | 245    |   |   | $ | 481 |   |
| Nonaccrual      loans and leases and restructured loans:             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and agricultural loans                               |   |   | 5,399  |   |   |   | 1,597  |   |   |   | 1,768  |   |   |   | 3,701  |   |   |   | 6,928 |   |
| Auto,      light truck and environmental equipment                   |   |   | 709    |   |   |   | 507    |   |   |   | 481    |   |   |   | 812    |   |   |   | 2,336 |   |
| Medium      and heavy duty truck                                     |   |   | 7,801  |   |   |   | 277    |   |   |   | 1,755  |   |   |   | 17     |   |   |   | 179 |   |
| Aircraft      financing                                              |   |   | 9,975  |   |   |   | 1,846  |   |   |   | 8,219  |   |   |   | 7,641  |   |   |   | 10,132 |   |
| Construction      equipment financing                                |   |   | 1,934  |   |   |   | 1,196  |   |   |   | 853    |   |   |   | 2,513  |   |   |   | 4,097 |   |
| Loans      secured by real estate                                    |   |   | 9,147  |   |   |   | 3,581  |   |   |   | 2,214  |   |   |   | 1,475  |   |   |   | 1,141 |   |
| Consumer      loans                                                  |   |   | 1,590  |   |   |   | 1,132  |   |   |   | 285    |   |   |   | 393    |   |   |   | 440 |   |
| Total      nonaccrual loans and leases and restructured loans        |   |   | 36,555 |   |   |   | 10,136 |   |   |   | 15,575 |   |   |   | 16,552 |   |   |   | 25,253 |   |
| Total      nonperforming loans and leases                            |   |   | 37,577 |   |   |   | 11,241 |   |   |   | 15,691 |   |   |   | 16,797 |   |   |   | 25,734 |   |
| Other      real estate                                               |   |   | 1,381  |   |   |   | 783    |   |   |   | 800    |   |   |   | 960    |   |   |   | 1,307 |   |
| Former      bank premises held for sale                              |   |   | 3,356  |   |   |   | 4,038  |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Repossessions:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and agricultural loans                               |   |   | 53     |   |   |   | 45     |   |   |   | 2      |   |   |   | -      |   |   |   | - |   |
| Auto,      light truck and environmental equipment                   |   |   | 226    |   |   |   | 183    |   |   |   | 178    |   |   |   | 128    |   |   |   | 1,112 |   |
| Medium      and heavy duty truck                                     |   |   | 1,248  |   |   |   | 54     |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Aircraft      financing                                              |   |   | 16     |   |   |   | 1,850  |   |   |   | 300    |   |   |   | 4,073  |   |   |   | 3,037 |   |
| Construction      equipment financing                                |   |   | 67     |   |   |   | 92     |   |   |   | 400    |   |   |   | -      |   |   |   | 183 |   |
| Consumer      loans                                                  |   |   | 59     |   |   |   | 67     |   |   |   | 95     |   |   |   | 83     |   |   |   | 50 |   |
| Total      repossessions                                             |   |   | 1,669  |   |   |   | 2,291  |   |   |   | 975    |   |   |   | 4,284  |   |   |   | 4,382 |   |
| Operating      leases                                                |   |   | 185    |   |   |   | 126    |   |   |   | 201    |   |   |   | -      |   |   |   | 1,785 |   |
| Total      nonperforming assets                                      |   | $      | 44,168 |   |   | $      | 18,479 |   |   | $      | 17,667 |   |   | $      | 22,041 |   |   | $ | 33,208 |   |
| Nonperforming      loans and leases to loans and leases,             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net      of unearned discount                                        |   |   | 1.14   | %      |   |   | 0.35   | %      |   |   | 0.58   | %      |   |   | 0.68   | % |   |   | 1.13 | % |
| Nonperforming      assets to loans and leases and operating leases,  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net      of unearned discount                                        |   |   | 1.30   | %      |   |   | 0.56   | %      |   |   | 0.64   | %      |   |   | 0.87   | % |   |   | 1.42 | % |

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| (Dollars      in thousands)                                                                  |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|----------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| U.S.      Treasury and government agencies, including agency mortgage-backed      securities |   | $      | 501,415 |   |   | $      | 483,596 |   |   | $ | 466,326 |   |
| States      and political subdivisions                                                       |   |   | 198,640 |   |   |   | 258,260 |   |   |   | 182,356 |   |
| Other      securities                                                                        |   |   | 15,325  |   |   |   | 34,066  |   |   |   | 50,197 |   |
| Total      investment securities available-for-sale                                          |   | $      | 715,380 |   |   | $      | 775,922 |   |   | $ | 698,879 |   |

| (Dollars      in thousands)                                                                        |   | Amount |    |   | Yield  |   |
|----------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| U.S.      Treasury and government agencies, including agency mortgage-backed      securities       |   |   |    |   |   |   |
| Under      1 year                                                                                  |   | $      | 172,205 |   |   |   | 1.87 |  % |
| 1 –      5 years                                                                             |   |   | 76,698  |   |   |   | 4.50 |   |
| 5 –      10 years                                                                            |   |   | 80,674  |   |   |   | 4.88 |   |
| Over      10 years                                                                                 |   |   | 171,838 |   |   |   | 4.30 |   |
| Total      U.S. Treasury and government agencies, including agency mortgage-backed      securities |   |   | 501,415 |   |   |   | 3.59 |   |
| States      and political subdivisions                                                             |   |   |    |   |   |   |   |   |
| Under      1 year                                                                                  |   |   | 42,475  |   |   |   | 4.37 |   |
| 1 –      5 years                                                                             |   |   | 81,917  |   |   |   | 5.18 |   |
| 5 –      10 years                                                                            |   |   | 54,904  |   |   |   | 5.53 |   |
| Over      10 years                                                                                 |   |   | 19,344  |   |   |   | 3.71 |   |
| Total      states and political subdivisions                                                       |   |   | 198,640 |   |   |   | 4.96 |   |
| Other      securities                                                                              |   |   |    |   |   |   |   |   |
| Under      1 year                                                                                  |   |   | 160     |   |   |   | 4.21 |   |
| 1 –      5 years                                                                             |   |   | 10,769  |   |   |   | 2.33 |   |
| 5 –      10 years                                                                            |   |   | -       |   |   |   | - |   |
| Over      10 years                                                                                 |   |   | -       |   |   |   | - |   |
| Marketable      equity securities                                                                  |   |   | 4,396   |   |   |   | 8.38 |   |
| Total      other securities                                                                        |   |   | 15,325  |   |   |   | 4.09 |   |
| Total      investment securities available-for-sale                                                |   | $      | 715,380 |   |   |   | 3.98 |  % |

|                                     |   | 2008   |      |   |  2008 |   |   | 2007   |   |   |  2007 |   |   | 2006   |   |   |  2006 |   |
|------------------------------------------|--------|--------|-----------|--------|------------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|
| (Dollars      in thousands)              |   | Amount |      |   | Rate       |   |   | Amount |   |   | Rate       |   |   | Amount |   |   | Rate       |   |
| Noninterest      bearing demand deposits |   | $      | 377,440   |   |       |   | -      | %      |   | $      | 351,050    |   |   |   | -      | %      |       | $      | 352,204 |   |   |   | - | % |
| Interest      bearing demand deposits    |   |   | 1,137,491 |   |       |   | 1.82   |   |   |   | 988,308    |   |   |   | 3.10   |   |       |   | 715,242 |   |   |   | 2.51 |   |
| Savings      deposits                    |   |   | 285,538   |   |       |   | 0.63   |   |   |   | 250,927    |   |   |   | 1.21   |   |       |   | 190,347 |   |   |   | 0.44 |   |
| Other      time deposits                 |   |   | 1,573,801 |   |       |   | 4.09   |   |   |   | 1,679,521  |   |   |   | 4.85   |   |       |   | 1,512,755 |   |   |   | 4.38 |   |
| Total      deposits                      |   | $      | 3,374,270 |   |       |   | -      |   |   | $      | 3,269,806  |   |   |   | -      |   |       | $      | 2,770,548 |   |   |   | - |   |

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table of contents

| (Dollars      in thousands) |   |   |    |
|-----------------------------|--------|--------|---------|
| Under      3 months         |   | $      | 124,795 |   |
| 4 –      6 months     |   |   | 97,227  |   |
| 7 –      12 months    |   |   | 102,874 |   |
| Over      12 months         |   |   | 289,889 |   |
| Total                       |   | $      | 614,785 |   |

| (Dollars      in thousands) |   |
|-----------------------------|--------|
| 2009                        |   | $ | 877,734 |   |
| 2010                        |   |   | 471,670 |   |
| 2011                        |   |   | 187,918 |   |
| 2012                        |   |   | 57,126 |   |
| 2013                        |   |   | 22,339 |   |
| Thereafter                  |   |   | 48,367 |   |
| Total                       |   | $ | 1,665,154 |   |

|                                                           |   | Federal      Funds |    |   |       |   |   |       |   |   |       |   |
|----------------------------------------------------------------|--------|--------------------|---------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                                           |   | Purchased      and |    |   |       |   |   |       |   |   |       |   |
|                                                           |   | Security           |    |   |       |   |   | Other      |   |   |       |   |
|                                                           |   | Repurchase         |    |   | Commercial |   |   | Short-Term |   |   | Total      |   |
| (Dollars      in thousands)                                    |   | Agreements         |    |   | Paper      |   |   | Borrowings |   |   | Borrowings |   |
| 2008                                                           |   |               |    |   |       |   |   |       |   |   |       |   |
| Balance      at December 31, 2008                              |   | $                  | 272,529 |   |       | $      | 4,461  |       |   | $      | 19,185     |   |   | $ | 296,175 |   |
| Maximum      amount outstanding at any month-end               |   |               | 359,452 |   |       |   | 9,875  |       |   |   | 247,828    |   |   |   | 617,155 |   |
| Average      amount outstanding                                |   |               | 270,503 |   |       |   | 7,694  |       |   |   | 108,653    |   |   |   | 386,850 |   |
| Weighted      average interest rate during the year            |   |               | 1.97    | %      |       |   | 2.35   | %          |   |   | 1.95       | %      |   |   | 1.97 | % |
| Weighted      average interest rate for outstanding amounts at |   |               |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| December      31, 2008                                         |   |               | 0.49    | %      |       |   | 0.29   | %          |   |   | 2.92       | %      |   |   | 0.65 | % |
| 2007                                                           |   |               |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| Balance      at December 31, 2007                              |   | $                  | 303,429 |   |       | $      | 10,783 |       |   | $      | 23,620     |   |   | $ | 337,832 |   |
| Maximum      amount outstanding at any month-end               |   |               | 327,623 |   |       |   | 15,478 |       |   |   | 42,784     |   |   |   | 385,885 |   |
| Average      amount outstanding                                |   |               | 246,792 |   |       |   | 12,598 |       |   |   | 11,987     |   |   |   | 271,377 |   |
| Weighted      average interest rate during the year            |   |               | 3.92    | %      |       |   | 4.84   | %          |   |   | 5.49       | %      |   |   | 4.03 | % |
| Weighted      average interest rate for outstanding amounts at |   |               |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| December      31, 2007                                         |   |               | 2.98    | %      |       |   | 4.04   | %          |   |   | 2.60       | %      |   |   | 2.99 | % |
| 2006                                                           |   |               |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| Balance      at December 31, 2006                              |   | $                  | 195,262 |   |       | $      | 10,907 |       |   | $      | 16,549     |   |   | $ | 222,718 |   |
| Maximum      amount outstanding at any month-end               |   |               | 265,362 |   |       |   | 12,922 |       |   |   | 90,689     |   |   |   | 368,973 |   |
| Average      amount outstanding                                |   |               | 211,973 |   |       |   | 7,997  |       |   |   | 45,854     |   |   |   | 265,824 |   |
| Weighted      average interest rate during the year            |   |               | 3.95    | %      |       |   | 4.99   | %          |   |   | 4.87       | %      |   |   | 4.14 | % |
| Weighted      average interest rate for outstanding amounts at |   |               |    |   |       |   |   |       |   |   |       |   |   |   |   |   |
| December      31, 2006                                         |   |               | 3.41    | %      |       |   | 5.08   | %          |   |   | 4.89       | %      |   |   | 3.60 | % |

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|                                  |   |                                                                                                                                           |   |      |                  |   |      |                   |   |    |                   |   |   |              |   |    | Indeterminate |    |   |   |   |
|---------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------------------|--------|-----------|------------------------|--------|---------|------------------------|--------|--------|-------------------|--------|---------|---------------|---------|--------|--------|--------|
| (Dollars      in thousands)           |   |                        Note |   |      | 0 –      1 Year |   |      | 1 –      3 Years |   |    | 3 –      5 Years |   |   | Over      5 Years |   |    | maturity      |    |   | Total  |   |
| Deposits      without stated maturity |   |                                                                                                                                           | -      |      |                  | $      | 1,849,388 |                   |   |  $ | -                      |   |   |  $           | -      |    |          |  $ | -      |   |   |  $ | - |   |   | $ | 1,849,388 |   |
| Certificates      of deposit          |   |                                                                                                                                           | -      |      |                  |   | 877,734   |                   |   |    | 659,588                |   |   |              | 79,465 |    |          |    | 48,367 |   |   |   | - |   |   |   | 1,665,154 |   |
| Long-term      debt                   |   |                                                                                                                                           | K      |      |                  |   | 10,342    |                   |   |    | 10,682                 |   |   |              | 70     |    |          |    | 833    |   |   |   | 7,905 |   |   |   | 29,832 |   |
| Subordinated      notes               |   |                                                                                                                                           | M      |      |                  |   | -         |                   |   |    | -                      |   |   |              | -      |    |          |    | 89,692 |   |   |   | - |   |   |   | 89,692 |   |
| Operating      leases                 |   |                                                                                                                                           | P      |      |                  |   | 2,634     |                   |   |    | 4,153                  |   |   |              | 1,279  |    |          |    | 734    |   |   |   | - |   |   |   | 8,800 |   |
| Purchase      obligations             |   |                                                                                                                                           | -      |      |                  |   | 19,371    |                   |   |    | 6,164                  |   |   |              | 4,626  |    |          |    | -      |   |   |   | - |   |   |   | 30,161 |   |
| Total      contractual obligations    |   |                                                                                                                                           | $      | 2,759,469 |                  |   | $         | 680,587                |   |    | $                      | 85,440 |   |              | $      | 139,626 |          |    | $      | 7,905  |   |   | $ | 3,673,027 |   |

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table of contents

| Three Months Ended (Dollars in thousands, except      per share amounts) | March      31                                                 | June      30                                                  | September      30                                             | December      31                                              |
|--------------------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------|
| 2008                                                                     |                                                          |                                                          |                                                          |                                                          |
| Interest      income                                                     |  $        62,124 |  $        58,579 |  $        58,065 |  $        56,540 |
| Interest      expense                                                    | 29,827                                                        | 25,455                                                        | 24,668                                                        | 23,198                                                        |
| Net      interest income                                                 | 32,297                                                        | 33,124                                                        | 33,397                                                        | 33,342                                                        |
| Provision      for loan and lease losses                                 | 1,539                                                         | 4,493                                                         | 3,571                                                         | 7,045                                                         |
| Investment      securities and other investment gains (losses)           | 623                                                           | (1,066)                                                       | (8,816)                                                       | (738)                                                         |
| Income      before income taxes                                          | 13,884                                                        | 10,603                                                        | 3,889                                                         | 18,025                                                        |
| Net      income                                                          | 9,354                                                         | 7,245                                                         | 4,472                                                         | 12,315                                                        |
| Diluted      net income per common share                                 | 0.38                                                          | 0.30                                                          | 0.18                                                          | 0.50                                                          |
| 2007                                                                     |                                                          |                                                          |                                                          |                                                          |
| Interest      income                                                     |  $        55,953 |  $        62,332 |  $        68,330 |  $        66,972 |
| Interest      expense                                                    | 29,681                                                        | 33,461                                                        | 36,632                                                        | 34,903                                                        |
| Net      interest income                                                 | 26,272                                                        | 28,871                                                        | 31,698                                                        | 32,069                                                        |
| (Recovery      of) provision for loan and lease losses                   | (623)                                                         | 1,247                                                         | 3,660                                                         | 3,250                                                         |
| Investment      securities and other investment gains (losses)           | 247                                                           | 207                                                           | (154)                                                         | (3,428)                                                       |
| Income      before income taxes                                          | 12,581                                                        | 12,248                                                        | 8,495                                                         | 8,359                                                         |
| Net      income                                                          | 8,523                                                         | 8,060                                                         | 6,130                                                         | 7,826                                                         |
| Diluted      net income per common share                                 | 0.37                                                          | 0.34                                                          | 0.25                                                          | 0.32                                                          |

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table of contents

Item 7A.  Quantitative and Qualitative Disclosuresabout Market Risk.

Item 8.  Financial Statements andSupplementary Data.

----

table of contents

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table of contents

| CONSOLIDATED STATEMENTS OF      FINANCIAL CONDITION                                                          |   |   |      |   |   |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                                         |   |   |      |   |   |   |
| December      31 (Dollars in      thousands)                                                            |   | 2008   |      |   | 2007   |   |
|                                                                                                         |   |   |      |   |   |   |
| ASSETS                                                                                                       |   |   |      |   |   |   |
| Cash      and due from banks                                                                                 |   | $      | 119,771   |   |   | $      | 153,137 |   |
| Federal      funds sold and interest bearing deposits with other banks                                       |   |   | 6,951     |   |   |   | 25,817 |   |
| Investment      securities available-for-sale                                                                |   |   |      |   |   |   |   |   |
| (amortized      cost of $715,380 and $775,922 at December 31, 2008 and December 31, 2007,      respectively) |   |   | 724,754   |   |   |   | 779,981 |   |
| Other      investments                                                                                       |   |   | 18,612    |   |   |   | 14,937 |   |
| Trading      account securities                                                                              |   |   | 100       |   |   |   | - |   |
| Mortgages      held for sale                                                                                 |   |   | 46,686    |   |   |   | 25,921 |   |
| Loans      and leases, net of unearned discount:                                                             |   |   |      |   |   |   |   |   |
| Commercial      and agricultural loans                                                                       |   |   | 643,440   |   |   |   | 593,806 |   |
| Auto,      light truck and environmental equipment                                                           |   |   | 353,838   |   |   |   | 305,238 |   |
| Medium      and heavy duty truck                                                                             |   |   | 243,375   |   |   |   | 300,469 |   |
| Aircraft      financing                                                                                      |   |   | 632,121   |   |   |   | 587,022 |   |
| Construction      equipment financing                                                                        |   |   | 375,983   |   |   |   | 377,785 |   |
| Loans      secured by real estate                                                                            |   |   | 918,749   |   |   |   | 881,646 |   |
| Consumer      loans                                                                                          |   |   | 130,706   |   |   |   | 145,475 |   |
| Total      loans and leases                                                                                  |   |   | 3,298,212 |   |   |   | 3,191,441 |   |
| Reserve      for loan and lease losses                                                                       |   |   | (79,776   | )      |   |   | (66,602 | ) |
| Net      loans and leases                                                                                    |   |   | 3,218,436 |   |   |   | 3,124,839 |   |
| Equipment      owned under operating leases, net                                                             |   |   | 83,062    |   |   |   | 81,960 |   |
| Net      premises and equipment                                                                              |   |   | 40,491    |   |   |   | 45,048 |   |
| Goodwill      and intangible assets                                                                          |   |   | 91,691    |   |   |   | 93,567 |   |
| Accrued      income and other assets                                                                         |   |   | 113,620   |   |   |   | 101,897 |   |
| Total      assets                                                                                            |   | $      | 4,464,174 |   |   | $      | 4,447,104 |   |
| LIABILITIES                                                                                                  |   |   |      |   |   |   |   |   |
| Deposits:                                                                                                    |   |   |      |   |   |   |   |   |
| Noninterest      bearing                                                                                     |   | $      | 416,960   |   |   | $      | 418,529 |   |
| Interest      bearing                                                                                        |   |   | 3,097,582 |   |   |   | 3,051,134 |   |
| Total      deposits                                                                                          |   |   | 3,514,542 |   |   |   | 3,469,663 |   |
| Short-term      borrowings:                                                                                  |   |   |      |   |   |   |   |   |
| Federal      funds purchased and securities sold under agreements to      repurchase                         |   |   | 272,529   |   |   |   | 303,429 |   |
| Other      short-term borrowings                                                                             |   |   | 23,646    |   |   |   | 34,403 |   |
| Total      short-term borrowings                                                                             |   |   | 296,175   |   |   |   | 337,832 |   |
| Long-term      debt and mandatorily redeemable securities                                                    |   |   | 29,832    |   |   |   | 34,702 |   |
| Subordinated      notes                                                                                      |   |   | 89,692    |   |   |   | 100,002 |   |
| Accrued      expenses and other liabilities                                                                  |   |   | 80,269    |   |   |   | 74,401 |   |
| Total      liabilities                                                                                       |   |   | 4,010,510 |   |   |   | 4,016,600 |   |
| SHAREHOLDERS' EQUITY                                                                                         |   |   |      |   |   |   |   |   |
| Preferred      stock; no par value                                                                           |   |   |      |   |   |   |   |   |
| Authorized      10,000,000 shares; none issued or outstanding                                                |   |   | -         |   |   |   | - |   |
| Common      stock; no par value                                                                              |   |   |      |   |   |   |   |   |
| Authorized      40,000,000 shares; issued 25,895,505 shares in 2008 and 25,927,510 shares      in 2007       |   |   |      |   |   |   |   |   |
| less      unearned shares (251,999 shares in 2008 and 284,004 shares in      2007)                           |   |   | 342,982   |   |   |   | 342,840 |   |
| Retained      earnings                                                                                       |   |   | 136,877   |   |   |   | 117,373 |   |
| Cost      of common stock in treasury (1,532,576 shares in 2008 and 1,551,396 shares      in 2007)           |   |   | (32,019   | )      |   |   | (32,231 | ) |
| Accumulated      other comprehensive income                                                                  |   |   | 5,824     |   |   |   | 2,522 |   |
| Total      shareholders' equity                                                                              |   |   | 453,664   |   |   |   | 430,504 |   |
| Total      liabilities and shareholders' equity                                                              |   | $      | 4,464,174 |   |   | $      | 4,447,104 |   |
|                                                                                                         |   |   |      |   |   |   |   |   |
| The      accompanying notes are a part of the consolidated financial      statements.                        |   |   |      |   |   |   |   |   |

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|  CONSOLIDATED STATEMENTS      OF INCOME                                                        |                                                              |                                                                                              |                                                                                                                                                    |
|-----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                |                                                              |                                                                                              |                                                                                                                                                    |
| Year      Ended December 31 (Dollars in      thousands, except per share data)                 | 2008                                                              | 2007                                                                                              | 2006                                                                                                                                                    |
| Interest      income:                                                                               |                                                              |                                                                                              |                                                                                                                                                    |
| Loans      and leases                                                                               |  $   204,006                                  |  $        216,186                                    |  $   181,363                                                                                                                        |
| Investment      securities, taxable                                                                 | 22,170                                                            | 25,136                                                                                            | 19,177                                                                                                                                                  |
| Investment      securities, tax-exempt                                                              | 7,707                                                             | 7,608                                                                                             | 5,183                                                                                                                                                   |
| Other                                                                                               | 1,425                                                             | 4,657                                                                                             | 3,271                                                                                                                                                   |
| Total      interest income                                                                          | 235,308                                                           | 253,587                                                                                           | 208,994                                                                                                                                                 |
| Interest      expense:                                                                              |                                                              |                                                                                              |                                                                                                                                                    |
| Deposits                                                                                            | 86,903                                                            | 115,113                                                                                           | 85,067                                                                                                                                                  |
| Short-term      borrowings                                                                          | 7,626                                                             | 10,935                                                                                            | 11,011                                                                                                                                                  |
| Subordinated      notes                                                                             | 6,714                                                             | 6,051                                                                                             | 4,320                                                                                                                                                   |
| Long-term      debt and mandatorily redeemable securities                                           | 1,905                                                             | 2,578                                                                                             | 2,163                                                                                                                                                   |
| Total      interest expense                                                                         | 103,148                                                           | 134,677                                                                                           | 102,561                                                                                                                                                 |
| Net      interest income                                                                            | 132,160                                                           | 118,910                                                                                           | 106,433                                                                                                                                                 |
| Provision      for (recovery of provision for) loan and lease losses                                | 16,648                                                            | 7,534                                                                                             | (2,736)                                                                                                                                                 |
| Net      interest income after provision for (recovery of provision for) loan and      lease losses | 115,512                                                           | 111,376                                                                                           | 109,169                                                                                                                                                 |
| Noninterest      income:                                                                            |                                                              |                                                                                              |                                                                                                                                                    |
| Trust      fees                                                                                     | 18,599                                                            | 15,567                                                                                            | 13,806                                                                                                                                                  |
| Service      charges on deposit accounts                                                            | 22,035                                                            | 20,470                                                                                            | 19,040                                                                                                                                                  |
| Mortgage      banking income                                                                        | 2,994                                                             | 2,868                                                                                             | 11,637                                                                                                                                                  |
| Insurance      commissions                                                                          | 5,363                                                             | 4,666                                                                                             | 4,574                                                                                                                                                   |
| Equipment      rental income                                                                        | 24,224                                                            | 21,312                                                                                            | 18,972                                                                                                                                                  |
| Other      income                                                                                   | 9,293                                                             | 8,864                                                                                             | 6,554                                                                                                                                                   |
| Gain      on sale of certain Investment Advisor assets                                              | 11,492                                                            |                      - |                               - |
| Investment      securities and other investment (losses) gains                                      | (9,997)                                                           | (3,128)                                                                                           | 2,002                                                                                                                                                   |
| Total      noninterest income                                                                       | 84,003                                                            | 70,619                                                                                            | 76,585                                                                                                                                                  |
| Noninterest      expense:                                                                           |                                                              |                                                                                              |                                                                                                                                                    |
| Salaries      and employee benefits                                                                 | 76,965                                                            | 73,944                                                                                            | 66,605                                                                                                                                                  |
| Net      occupancy expense                                                                          | 9,698                                                             | 9,030                                                                                             | 7,492                                                                                                                                                   |
| Furniture      and equipment expense                                                                | 15,095                                                            | 15,145                                                                                            | 12,316                                                                                                                                                  |
| Depreciation      - leased equipment                                                                | 19,450                                                            | 17,085                                                                                            | 14,958                                                                                                                                                  |
| Professional      fees                                                                              | 8,446                                                             | 4,575                                                                                             | 3,998                                                                                                                                                   |
| Supplies      and communications                                                                    | 6,782                                                             | 5,987                                                                                             | 5,496                                                                                                                                                   |
| Business      development and marketing expense                                                     | 3,749                                                             | 4,788                                                                                             | 4,008                                                                                                                                                   |
| Loan      and lease collection and repossession expense                                             | 1,162                                                             | 1,123                                                                                             | 704                                                                                                                                                     |
| Other  expense                                                                            | 11,767                                                            | 8,635                                                                                             | 10,634                                                                                                                                                  |
| Total      noninterest expense                                                                      | 153,114                                                           | 140,312                                                                                           | 126,211                                                                                                                                                 |
| Income      before income taxes                                                                     | 46,401                                                            | 41,683                                                                                            | 59,543                                                                                                                                                  |
| Income      taxes                                                                                   | 13,015                                                            | 11,144                                                                                            | 20,246                                                                                                                                                  |
| Net      income                                                                                     |         $     33,386           |  $          30,539                         |  $     39,297                                                                                                             |
| Basic      net income per common share                                                              | $         1.38       |  $              1.30   |  $         1.74                                                                                       |
| Diluted      net income per common share                                                            |  $         1.37 |  $              1.28   |  $         1.72                                                                                       |
|                                                                                                |                                                              |                                                                                              |                                                                                                                                                    |
| The      accompanying notes are a part of the consolidated financial      statements.               |                                                              |                                                                                              |                                                                                                                                                    |

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|  CONSOLIDATED STATEMENTS      OF SHAREHOLDERS' EQUITY                            |   |
|---------------------------------------------------------------------------------------|--------|
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Dollars      in thousands, except per share data)                                    |   | Total |   |   | CommonStock |   |   | RetainedEarnings |   |   | Cost      ofCommonStockin      Treasury |   |   | AccumulatedOtherComprehensiveIncome (Loss),      Net |   |
| Balance      at January 1, 2006                                                       |   | $ | 345,576 |   |   | $ | 221,579 |   |   | $ | 139,601 |   |   | $ | (12,364 | ) |   | $ | (3,240 | ) |
| Comprehensive      income, net of tax:                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                       |   |   | 39,297 |   |   |   | - |   |   |   | 39,297 |   |   |   | - |   |   |   | - |   |
| Change      in unrealized losses of                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale      securities, net of tax                                        |   |   | 2,980 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,980 |   |
| Total      comprehensive income                                                       |   |   | 42,277 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issuance      of 95,032 common shares per                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock      based compensation awards, including                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  related      tax effects                                                        |   |   | 814 |   |   |   | - |   |   |   | 364 |   |   |   | 450 |   |   |   | - |   |
| Cost      of 335,038 shares of common                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock      acquired for treasury                                                      |   |   | (7,657 | ) |   |   | - |   |   |   | - |   |   |   | (7,657 | ) |   |   | - |   |
| Cash      dividend ($.534 per share)                                                  |   |   | (12,094 | ) |   |   | - |   |   |   | (12,094 | ) |   |   | - |   |   |   | - |   |
| 10%      common stock dividend                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ($12      cash paid in lieu of fractional shares)                                     |   |   | (12 | ) |   |   | 67,584 |   |   |   | (67,596 | ) |   |   | - |   |   |   | - |   |
| Balance      at December 31, 2006                                                     |   | $ | 368,904 |   |   | $ | 289,163 |   |   | $ | 99,572 |   |   | $ | (19,571 | ) |   | $ | (260 | ) |
| Comprehensive      income, net of tax:                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                       |   |   | 30,539 |   |   |   | - |   |   |   | 30,539 |   |   |   | - |   |   |   | - |   |
| Change      in unrealized losses of                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale      securities, net of tax                                        |   |   | 2,782 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,782 |   |
| Total      comprehensive income                                                       |   |   | 33,321 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issuance      of 40,349 common shares per                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock      based compensation awards, including                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  related      tax effects                                                        |   |   | 545 |   |   |   | - |   |   |   | 384 |   |   |   | 161 |   |   |   | - |   |
| Cost      of 569,310 shares of common                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock      acquired for treasury                                                      |   |   | (12,821 | ) |   |   | - |   |   |   | - |   |   |   | (12,821 | ) |   |   | - |   |
| Cash      dividend ($.560 per share)                                                  |   |   | (13,122 | ) |   |   | - |   |   |   | (13,122 | ) |   |   | - |   |   |   | - |   |
| Issuance      of 2,124,974 shares of common                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock      for FINA Bancorp purchase                                                  |   |   | 53,677 |   |   |   | 53,677 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance      at December 31, 2007                                                     |   | $ | 430,504 |   |   | $ | 342,840 |   |   | $ | 117,373 |   |   | $ | (32,231 | ) |   | $ | 2,522 |   |
| Comprehensive      income, net of tax:                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                       |   |   | 33,386 |   |   |   | - |   |   |   | 33,386 |   |   |   | - |   |   |   | - |   |
| Change      in unrealized losses of                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale      securities, net of tax                                        |   |   | 3,302 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,302 |   |
| Total      comprehensive income                                                       |   |   | 36,688 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issuance      of 18,820 common shares per                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock      based compensation awards, including                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  related      tax effects                                                        |   |   | 341 |   |   |   | - |   |   |   | 129 |   |   |   | 212 |   |   |   | - |   |
| Stock      based compensation                                                         |   |   | 142 |   |   |   | 142 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cash      dividend ($.580 per share)                                                  |   |   | (14,011 | ) |   |   | - |   |   |   | (14,011 | ) |   |   | - |   |   |   | - |   |
| Balance      at December 31, 2008                                                     |   | $ | 453,664 |   |   | $ | 342,982 |   |   | $ | 136,877 |   |   | $ | (32,019 | ) |   | $ | 5,824 |   |
|                                                                                  |   |
| The      accompanying notes are a part of the consolidated financial      statements. |   |

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|  CONSOLIDATED STATEMENTS OF CASH      FLOW                                             |   |   |     |   |   |   |     |   |   |
|---------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                        |   |   |     |   |   |   |     |   |   |
| Year      Ended December 31 (Dollars in      thousands)                                     |   | 2008   |     |   | 2007   |   |     | 2006   |   |
| Operating      activities:                                                                  |   |   |     |   |   |   |     |   |   |
| Net      income                                                                             |   | $      | 33,386   |   |   | $      | 30,539   |   |   | $ | 39,297 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |   |     |   |   |   |     |   |   |   |   |   |
| Provision      for (recovery of provision for) loan and lease losses                        |   |   | 16,648   |   |   |   | 7,534    |   |   |   | (2,736 | ) |
| Depreciation      of premises and equipment                                                 |   |   | 5,312    |   |   |   | 5,364    |   |   |   | 4,797 |   |
| Depreciation      of equipment owned and leased to others                                   |   |   | 19,450   |   |   |   | 17,085   |   |   |   | 14,958 |   |
| Amortization      of investment security premiums and accretion of discounts,      net      |   |   | 2,232    |   |   |   | (356     | )      |   |   | (259 | ) |
| Amortization      of mortgage servicing rights                                              |   |   | 2,838    |   |   |   | 2,403    |   |   |   | 4,587 |   |
| Mortgage      servicing asset impairment/(recoveries)                                       |   |   | 1,913    |   |   |   | 143      |   |   |   | (12 | ) |
| Deferred      income taxes                                                                  |   |   | (10,779  | )      |   |   | (4,558   | )      |   |   | (3,885 | ) |
| Investment      securities and other investment losses (gains)                              |   |   | 9,997    |   |   |   | 3,128    |   |   |   | (2,002 | ) |
| Change      in mortgages held for sale                                                      |   |   | (20,765  | )      |   |   | 24,238   |   |   |   | 17,065 |   |
| Purchase      of trading account securities                                                 |   |   | (100     | )      |   |   | -        |   |   |   | - |   |
| Change      in interest receivable                                                          |   |   | 1,383    |   |   |   | (1,296   | )      |   |   | (3,616 | ) |
| Change      in interest payable                                                             |   |   | (6,710   | )      |   |   | (380     | )      |   |   | 10,577 |   |
| Change      in other assets                                                                 |   |   | (15,980  | )      |   |   | (8,587   | )      |   |   | 8,378 |   |
| Change      in other liabilities                                                            |   |   | 21,345   |   |   |   | 4,003    |   |   |   | (4,306 | ) |
| Other                                                                                       |   |   | 4,070    |   |   |   | 5,101    |   |   |   | 1,253 |   |
| Net      change in operating activities                                                     |   |   | 64,240   |   |   |   | 84,361   |   |   |   | 84,096 |   |
| Investing      activities:                                                                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      paid for acquisition, net                                                         |   |   | -        |   |   |   | (55,977  | )      |   |   | - |   |
| Proceeds      from sales of investment securities                                           |   |   | 8,548    |   |   |   | 121,671  |   |   |   | 65,682 |   |
| Proceeds      from maturities of investment securities                                      |   |   | 519,847  |   |   |   | 496,324  |   |   |   | 322,073 |   |
| Purchases      of investment securities                                                     |   |   | (480,082 | )      |   |   | (518,041 | )      |   |   | (456,706 | ) |
| Net      change in short-term investments                                                   |   |   | 15,191   |   |   |   | 195,337  |   |   |   | 3,599 |   |
| Net      change in loans and leases                                                         |   |   | (110,246 | )      |   |   | (252,929 | )      |   |   | (236,266 | ) |
| Net      change  in equipment owned under operatingleases                         |   |   | (20,552  | )      |   |   | (22,734  | )      |   |   | (33,015 | ) |
| Net      increase in premises and equipment                                                 |   |   | (3,726   | )      |   |   | (14,467  | )      |   |   | (5,553 | ) |
| Net      change in investing activities                                                     |   |   | (71,020  | )      |   |   | (50,816  | )      |   |   | (340,186 | ) |
| Financing      activities:                                                                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Net      change in demand deposits, NOW accounts and savings    accounts                    |   |   | (72,780  | )      |   |   | (14,260  | )      |   |   | (101,390 | ) |
| Net      change in certificates of deposit                                                  |   |   | 117,659  |   |   |   | (86,502  | )      |   |   | 404,087 |   |
| Net      change in short-term borrowings                                                    |   |   | (41,656  | )      |   |   | 96,930   |   |   |   | (54,751 | ) |
| Proceeds      from issuance of long-term debt                                               |   |   | 10,826   |   |   |   | 1,159    |   |   |   | 21,922 |   |
| Proceeds      from issuance of subordinated notes                                           |   |   | -        |   |   |   | 58,764   |   |   |   | - |   |
| Payments      on subordinated notes                                                         |   |   | (10,310  | )      |   |   | (17,784  | )      |   |   | - |   |
| Payments      on long-term debt                                                             |   |   | (16,413  | )      |   |   | (11,225  | )      |   |   | (1,306 | ) |
| Net      proceeds from issuance of treasury stock                                           |   |   | 341      |   |   |   | 545      |   |   |   | 814 |   |
| Acquisition      of treasury stock                                                          |   |   | -        |   |   |   | (12,821  | )      |   |   | (7,657 | ) |
| Cash      dividends                                                                         |   |   | (14,253  | )      |   |   | (13,345  | )      |   |   | (12,315 | ) |
| Net      change in financing activities                                                     |   |   | (26,586  | )      |   |   | 1,461    |   |   |   | 249,404 |   |
| Net      change in cash and cash equivalents                                                |   |   | (33,366  | )      |   |   | 35,006   |   |   |   | (6,686 | ) |
| Cash      and cash equivalents, beginning of year                                           |   |   | 153,137  |   |   |   | 118,131  |   |   |   | 124,817 |   |
| Cash      and cash equivalents, end of year                                                 |   | $      | 119,771  |   |   | $      | 153,137  |   |   | $ | 118,131 |   |
| Supplemental      Information:                                                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      paid for:                                                                         |   |   |     |   |   |   |     |   |   |   |   |   |
| Interest                                                                                    |   | $      | 109,858  |   |   | $      | 137,397  |   |   | $ | 91,985 |   |
| Income      taxes                                                                           |   |   | 19,187   |   |   |   | 13,314   |   |   |   | 29,364 |   |
| The      accompanying notes are a part of the consolidated financial      statements.       |   |   |     |   |   |   |     |   |   |   |   |   |

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Notes to Consolidated FinancialStatements

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| (Dollars      in thousands)                                                 |   |   |    |
|-----------------------------------------------------------------------------|--------|--------|---------|
| Purchase      price                                                         |   | $      | 134,193 |   |
| Carrying      value of net assets acquired                                  |   |   | 68,676  |   |
| Excess      of purchase price over carrying value of net assets    acquired |   |   | 65,517  |   |
| Purchase      accounting adjustments                                        |   |   |    |   |
| Securities                                                                  |   |   | (44     | ) |
| Loans                                                                       |   |   | 1,707   |   |
| Premises      and equipment                                                 |   |   | 1,765   |   |
| Mortgage      servicing rights                                              |   |   | (511    | ) |
| Other      assets                                                           |   |   | 337     |   |
| Deposits                                                                    |   |   | (1,489  | ) |
| Severance      and exit costs                                               |   |   | 3,098   |   |
| Other      liabilities                                                      |   |   | 503     |   |
| Deferred      taxes                                                         |   |   | 1,944   |   |
| Subtotal                                                                    |   |   | 72,827  |   |
| Core      deposit intangibles                                               |   |   | (8,689  | ) |
| Other      identifiable intangible assets                                   |   |   | (254    | ) |
| Goodwill                                                                    |   | $      | 63,884  |   |

----

table of contents

| (Dollars      in thousands)                |   |   |     |
|--------------------------------------------|--------|--------|----------|
| Assets:                                    |   |   |     |
| Cash      and cash equivalents             |   | $      | 171,308  |   |
| Securities                                 |   |   | 184,494  |   |
| Loans,      net of reserve for loan losses |   |   | 235,709  |   |
| Premises      and equipment                |   |   | 14,277   |   |
| Mortgage      servicing rights             |   |   | 1,086    |   |
| Goodwill      and other intangibles        |   |   | 72,827   |   |
| Other      assets                          |   |   | 8,623    |   |
| Total      assets                          |   |   | 688,324  |   |
| Liabilities:                               |   |   |     |   |
| Deposits                                   |   |   | (521,630 | ) |
| Borrowings                                 |   |   | (18,184  | ) |
| Other      liabilities                     |   |   | (14,317  | ) |
| Total      liabilities                     |   |   | (554,131 | ) |
| Fair      value of net assets acquired     |   | $      | 134,193  |   |

|                                                  |   | Amortized |    |   | Gross                 |   |   | Gross                  |   |   |            |   |
|-------------------------------------------------------|--------|-----------|---------|--------|-----------------------|--------|--------|------------------------|--------|--------|-----------------|--------|
| (Dollars      in thousands)                           |   | Cost      |    |   | Unrealized      Gains |   |   | Unrealized      Losses |   |   | Fair      Value |   |
| December      31, 2008                                |   |      |    |   |                  |   |   |                   |   |   |            |   |
| U.S.      Treasury and government agencies securities |   | $         | 293,461 |   |                  | $      | 2,892  |                   |   | $      | (2              | )      |   | $ | 296,351 |   |
| States      and political subdivisions                |   |      | 198,640 |   |                  |   | 3,995  |                   |   |   | (1,686          | )      |   |   | 200,949 |   |
| Mortgage-backed      securities                       |   |      | 207,954 |   |                  |   | 3,553  |                   |   |   | (1,499          | )      |   |   | 210,008 |   |
| Other      securities                                 |   |      | 15,325  |   |                  |   | 2,142  |                   |   |   | (21             | )      |   |   | 17,446 |   |
| Total      investment securities available-for-sale   |   | $         | 715,380 |   |                  | $      | 12,582 |                   |   | $      | (3,208          | )      |   | $ | 724,754 |   |
| December      31, 2007                                |   |      |    |   |                  |   |   |                   |   |   |            |   |   |   |   |   |
| U.S.      Treasury and government agencies securities |   | $         | 284,214 |   |                  | $      | 1,556  |                   |   | $      | (134            | )      |   | $ | 285,636 |   |
| States      and political subdivisions                |   |      | 258,260 |   |                  |   | 1,162  |                   |   |   | (544            | )      |   |   | 258,878 |   |
| Mortgage-backed      securities                       |   |      | 199,382 |   |                  |   | 988    |                   |   |   | (1,274          | )      |   |   | 199,096 |   |
| Other      securities                                 |   |      | 34,066  |   |                  |   | 2,832  |                   |   |   | (527            | )      |   |   | 36,371 |   |
| Total      investment securities available-for-sale   |   | $         | 775,922 |   |                  | $      | 6,538  |                   |   | $      | (2,479          | )      |   | $ | 779,981 |   |

|                                                |   | Amortized |    |   |            |   |
|-----------------------------------------------------|--------|-----------|---------|--------|-----------------|--------|
| (Dollars      in thousands)                         |   | Cost      |    |   | Fair      Value |   |
| Due      in one year or less                        |   | $         | 214,840 |   |            | $      | 215,607 |   |
| Due      after one year through five years          |   |      | 168,928 |   |            |   | 172,036 |   |
| Due      after five years through ten years         |   |      | 99,918  |   |            |   | 102,337 |   |
| Due      after ten years                            |   |      | 19,344  |   |            |   | 18,299 |   |
| Mortgage-backed      securities                     |   |      | 207,954 |   |            |   | 210,008 |   |
| Equity      securities                              |   |      | 4,396   |   |            |   | 6,467 |   |
| Total      investment securities available for sale |   | $         | 715,380 |   |            | $      | 724,754 |   |
|                                                |   |      |    |   |            |   |   |   |

----

table of contents

|                                                  |   | Less      than 12 Months |    |   | 12      months or Longer |   |   | Total  |   |
|-------------------------------------------------------|--------|--------------------------|---------|--------|--------------------------|--------|--------|--------|--------|
|                                                  |   | Fair                     |    |   | Unrealized               |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| (Dollars      in thousands)                           |   | Value                    |    |   | Losses                   |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| December      31, 2008                                |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury and government agencies securities |   | $                        | 19,998  |   |                     | $      | (2     | )      |   | $ | - |   |   | $ | - |   |   | $ | 19,998 |   |   | $ | (2 | ) |
| States      and political subdivisions                |   |                     | 29,594  |   |                     |   | (1,686 | )      |   |   | - |   |   |   | - |   |   |   | 29,594 |   |   |   | (1,686 | ) |
| Mortgage-backed      securities                       |   |                     | 14,840  |   |                     |   | (229   | )      |   |   | 34,721 |   |   |   | (1,270 | ) |   |   | 49,561 |   |   |   | (1,499 | ) |
| Other      securities                                 |   |                     | 504     |   |                     |   | (19    | )      |   |   | 2 |   |   |   | (2 | ) |   |   | 506 |   |   |   | (21 | ) |
| Total      temporarily impaired securities            |   | $                        | 64,936  |   |                     | $      | (1,936 | )      |   | $ | 34,723 |   |   | $ | (1,272 | ) |   | $ | 99,659 |   |   | $ | (3,208 | ) |
|                                                  |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2007                                |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury and government agencies securities |   | $                        | 5,058   |   |                     | $      | (5     | )      |   | $ | 47,856 |   |   | $ | (129 | ) |   | $ | 52,914 |   |   | $ | (134 | ) |
| States      and political subdivisions                |   |                     | 30,209  |   |                     |   | (137   | )      |   |   | 70,039 |   |   |   | (407 | ) |   |   | 100,248 |   |   |   | (544 | ) |
| Mortgage-backed      securities                       |   |                     | 64,965  |   |                     |   | (627   | )      |   |   | 27,680 |   |   |   | (647 | ) |   |   | 92,645 |   |   |   | (1,274 | ) |
| Other      securities                                 |   |                     | 921     |   |                     |   | (229   | )      |   |   | 6,715 |   |   |   | (298 | ) |   |   | 7,636 |   |   |   | (527 | ) |
| Total      temporarily impaired securities            |   | $                        | 101,153 |   |                     | $      | (998   | )      |   | $ | 152,290 |   |   | $ | (1,481 | ) |   | $ | 253,443 |   |   | $ | (2,479 | ) |

| (Dollars      in thousands)                    |   | 2008   |    |   | 2007   |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Direct      finance leases:                    |   |   |    |   |   |   |
| Rentals      receivable                        |   | $      | 183,818 |   |   | $      | 157,658 |   |
| Estimated      residual value of leased assets |   |   | 33,711  |   |   |   | 44,775 |   |
| Gross      investment in lease financing       |   |   | 217,529 |   |   |   | 202,433 |   |
| Unearned      income                           |   |   | (31,630 | )      |   |   | (29,402 | ) |
| Net      investment in lease financing         |   | $      | 185,899 |   |   | $      | 173,031 |   |

----

table of contents

| (Dollars      in thousands)                                          |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance,      beginning of year                                      |   | $      | 66,602 |   |   | $      | 58,802 |   |   | $ | 58,697 |   |
| Provision      for (recovery of provision for) loan and lease losses |   |   | 16,648 |   |   |   | 7,534  |   |   |   | (2,736 | ) |
| Charge-offs                                                          |   |   | (8,393 | )      |   |   | (7,367 | )      |   |   | (3,954 | ) |
| Recoveries                                                           |   |   | 4,919  |   |   |   | 5,254  |   |   |   | 6,795 |   |
| Reserves      acquired in acquisitions                               |   |   | -      |   |   |   | 2,379  |   |   |   | - |   |
| Balance,      end of year                                            |   | $      | 79,776 |   |   | $      | 66,602 |   |   | $ | 58,802 |   |

| (Dollars      in thousands)                    |   | 2008   |    |   | 2007   |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Land                                           |   | $      | 10,788  |   |   | $      | 6,981 |   |
| Buildings      and improvements                |   |   | 47,832  |   |   |   | 52,443 |   |
| Furniture      and equipment                   |   |   | 35,861  |   |   |   | 35,397 |   |
| Total      premises and equipment              |   |   | 94,481  |   |   |   | 94,821 |   |
| Accumulated      depreciation and amortization |   |   | (53,990 | )      |   |   | (49,773 | ) |
| Net      premises and equipment                |   | $      | 40,491  |   |   | $      | 45,048 |   |

----

table of contents

| (Dollars      in thousands)                                              |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Mortgage      servicing assets:                                          |   |   |   |   |   |   |
| Balance      at beginning of period                                      |   | $      | 7,440  |   |   | $      | 7,590 |   |
| Additions                                                                |   |   | 5,488  |   |   |   | 4,987 |   |
| Acquired      in acquisition                                             |   |   | -      |   |   |   | 1,086 |   |
| Amortization                                                             |   |   | (2,838 | )      |   |   | (2,403 | ) |
| Sales                                                                    |   |   | (3,382 | )      |   |   | (3,820 | ) |
| Carrying      value before valuation allowance at end of period          |   |   | 6,708  |   |   |   | 7,440 |   |
| Valuation      allowance:                                                |   |   |   |   |   |   |   |   |
| Balance      at beginning of period                                      |   |   | (161   | )      |   |   | (18 | ) |
| Impairment      (charges) recoveries                                     |   |   | (1,912 | )      |   |   | (143 | ) |
| Balance      at end of period                                            |   | $      | (2,073 | )      |   | $      | (161 | ) |
| Net      carrying value of mortgage servicing assets at end of    period |   | $      | 4,635  |   |   | $      | 7,279 |   |
| Fair      value of mortgage servicing assets at end of period            |   | $      | 4,715  |   |   | $      | 9,010 |   |

|                                                 |   | 2008   |   |   | 2007   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Expected      weighted-average life (in years)       |   |   | 3.02   |   |   |   | 3.19 |   |
| Weighted-average      constant prepayment rate (CPR) |   |   | 40.40  | %      |   |   | 17.28 | % |
| Weighted-average      discount rate                  |   |   | 8.45   | %      |   |   | 8.57 | % |

| (Dollars      in thousands)         |   | 2008   |   |   | 2007   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| Core      deposit intangibles:      |   |   |   |   |   |   |
| Gross      carrying amount          |   | $      | 10,537 |   |   | $      | 15,655 |   |
| Less:      accumulated amortization |   |   | (2,378 | )      |   |   | (5,999 | ) |
| Net      carrying amount            |   | $      | 8,159  |   |   | $      | 9,656 |   |
| Other      intangibles:             |   |   |   |   |   |   |   |   |
| Gross      carrying amount          |   | $      | 254    |   |   | $      | 7,454 |   |
| Less:      accumulated amortization |   |   | (50    | )      |   |   | (7,219 | ) |
| Net      carrying amount            |   | $      | 204    |   |   | $      | 235 |   |

----

table of contents

| (Dollars      in thousands)                                     |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Term      loan                                                  |   | $      | 10,000 |   |   | $      | - |   |
| Federal      Home Loan Bank borrowings (4.73%–6.54%)      |   |   | 10,981 |   |   |   | 26,005 |   |
| Mandatorily      redeemable securities                          |   |   | 7,905  |   |   |   | 7,188 |   |
| Other      long-term debt                                       |   |   | 946    |   |   |   | 1,509 |   |
| Total      long-term debt and mandatorily redeemable securities |   | $      | 29,832 |   |   | $      | 34,702 |   |

|                              |                                                                                                                        | Non-Vested      Stock                                                                            |                                                                                                        | Stock      Options |
|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|--------------------|
|                              |                                                                                                                        | Awards      Outstanding                                                                          |                                                                                                        | Outstanding        |
|                              |                                                                                                                        |                                                                                             | Weighted-                                                                                                   |               |   | Weighted- |
|                              | Shares                                                                                                                      |                                                                                             | Average                                                                                                     |               |   | Average |
|                              | Available                                                                                                                   | Number      of                                                                                   | Grant-Date                                                                                                  |               | Number      of | Exercise |
|                              | for      Grant                                                                                                              | Shares                                                                                           | Fair      Value                                                                                             |               | Shares | Price |
| Balance,      January 1, 2006     |            2,410,958                                                 |              373,049            |  $              13.35            |               |              580,848 |  $              24.19 |
| Shares      authorized --2006 EIP |                76,442                            |  -                                                                                          | -                                                                                                           |               |  - |  - |
| Granted                           |               (97,123)                                |                94,264 |                  16.65 |               |                  2,859 |                  29.46 |
| Stock      options exercised      |  -                                                                                                                     |  -                                                                                          | -                                                                                                           |               |               (71,062) |                  12.78 |
| Stock      awards vested          |  -                                                                                                                     |               (37,269)     |                  15.57 |               |  - |  - |
| Forfeited                         |                17,382                            |               (19,896)     |                  13.46 |               |               (23,170) |                  20.74 |
| Canceled                          |  -                                                                                                                     |  -                                                                                          |  -                                                                                                     |               |  - |  - |
| Balance,      December 31, 2006   |            2,407,659                                                 |              410,148            |                  13.90 |               |              489,475 |                  26.04 |
| Shares      authorized --2007 EIP |                97,250                            |  -                                                                                          | -                                                                                                           |               |  - |  - |
| Granted                           |             (131,796)                                           |              129,100            |                  18.90 |               |                  2,696 |                  28.40 |
| Stock      options exercised      |  -                                                                                                                     |  -                                                                                          | -                                                                                                           |               |               (20,654) |                  15.63 |
| Stock      awards vested          |  -                                                                                                                     |               (48,530)     |                  15.43 |               |  - |  - |
| Forfeited                         |                     555 |               (20,516)     |                  12.33 |               |  - |  - |
| Canceled                          |  -                                                                                                                     |  -                                                                                          | -                                                                                                           |               |  - |  - |
| Balance,      December 31, 2007   |            2,373,668                                                 |              470,202            |                  15.18 |               |              471,517 |                  26.51 |
| Shares      authorized --2008 EIP |                64,847                            |  -                                                                                          | -                                                                                                           |               |  - |  - |
| Granted                           |               (66,847)                                |                66,847 |                  17.96 |               |  - |  - |
| Stock      options exercised      |  -                                                                                                                     |  -                                                                                          | -                                                                                                           |               |  - |  - |
| Stock      awards vested          |  -                                                                                                                     |               (37,070)     |                  16.92 |               |  - |  - |
| Forfeited                         |                15,902                            |               (64,508)     |                  15.10 |               |             (390,569) |                  28.17 |
| Canceled                          |  -                                                                                                                     |  -                                                                                          | -                                                                                                           |               |  - |  - |
| Balance,      December 31, 2008   |            2,387,570                                                 |              435,471            |  $              15.47            |               |                80,948 |  $              18.51 |

----

table of contents

|                          | Options      Outstanding |                       | Options      Exercisable |
|-------------------------------|--------------------------|----------------------------|--------------------------|
|                          |                     | Weighted-Average           |                     |   |   |   |
|                          | Number      of           | Remaining      Contractual | Weighted-Average         |   | Number      of | Weighted-Average |
| Range      of Exercise Prices | Shares                   | Life      (Years)          | Exercise      Price      |   | Shares | Exercise      Price |
| $12.04      to $17.99         | 29,508                   | 3.73                       | $13.38                   |   | 21,258 | $13.90 |
| $18.00      to $26.99         | 45,885                   | 2.26                       | 20.55                    |   | 45,885 | 20.55 |
| $27.00      to $29.46         | 5,555                    | 2.81                       | 28.95                    |   | 5,555 | 28.95 |

----

table of contents

|                                    |   | Amount      of |   |   |     |   |     |
|-----------------------------------------|--------|----------------|--------|--------|----------|--------|----------|
|                                    |   | Subordinated   |   |   | Interest |   | Maturity |
| (Dollars      in thousands)             |   | Notes          |   |   | Rate     |   | Date     |
| September      2004 issuance-fixed rate |   | $              | 30,928 |   |     |   | 7.66     | % | 12/15/34 |
| June      2007 issuance-fixed rate      |   |           | 41,238 |   |     |   | 7.22     | % | 06/15/37 |
| August      2007 issuance-fixed rate    |   |           | 17,526 |   |     |   | 7.10     | % | 09/15/37 |
| Total                                   |   | $              | 89,692 |   |     |   |     |   |   |

----

table of contents

| Year      Ended December 31  (Dollars in      thousands) |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Current:                                                           |   |   |    |   |   |   |   |   |   |
| Federal                                                            |   | $      | 21,112  |   |   | $      | 14,630 |   |   | $ | 22,350 |   |
| State                                                              |   |   | 2,682   |   |   |   | 1,072  |   |   |   | 1,781 |   |
| Total      current                                                 |   |   | 23,794  |   |   |   | 15,702 |   |   |   | 24,131 |   |
| Deferred:                                                          |   |   |    |   |   |   |   |   |   |   |   |   |
| Federal                                                            |   |   | (9,446  | )      |   |   | (4,191 | )      |   |   | (3,434 | ) |
| State                                                              |   |   | (1,333  | )      |   |   | (367   | )      |   |   | (451 | ) |
| Total      deferred                                                |   |   | (10,779 | )      |   |   | (4,558 | )      |   |   | (3,885 | ) |
| Total      provision                                               |   | $      | 13,015  |   |   | $      | 11,144 |   |   | $ | 20,246 |   |

|                                                                                                                                                                    | 2008                                  |            | 2007   |                                  | 2006            |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|-----------------|--------|---------------------------------------|-----------------|--------|
|                                                                                                                                                                    |                                  | Percent      of |   |                                  | Percent      of |   |   | Percent      of |   |
|                                                                                                                                                                    |                                  | Pretax          |   |                                  | Pretax          |   |   | Pretax |   |
| Year      Ended December 31  (Dollars in      thousands)                                                                                                      | Amount                                | Income          |   | Amount                                | Income          |   | Amount | Income |   |
| Statutory      federal income tax                                                                                                                                       |  $    16,240 | 35.0            | %      |  $    14,589 | 35.0            | %      |  $    20,840 | 35.0 | % |
| (Decrease)      increase in income taxes resulting from:                                                                                                                |                                  |            |   |                                  |            |   |   |   |   |
| Tax-exempt      interest income                                                                                                                                         | (2,412)                               | (5.2)           |   | (2,380)                               | (5.7)           |   | (1,669) | (2.8) |   |
| State      taxes, net of federal income tax benefit                                                                                                                     | 877                                   | 1.9             |   | 458                                   | 1.1             |   | 865 | 1.5 |   |
| Dividends      received deduction                                                                                                                                       | (171)                                 | (0.4)           |   | (343)                                 | (0.8)           |   | (270) | (0.5) |   |
| Other                                                                                                                                                                   | (1,519)                               | (3.2)           |   | (1,180)                               | (2.9)           |   | 480 | 0.8 |   |
| Total                                                                                                                                                                   |  $    13,015 | 28.1            | %      |  $    11,144 | 26.7            | %      |  $    20,246 | 34.0 | % |
| The      tax (benefit) expense applicable to securities gains for the years 2008,      2007, and 2006 was $(3,786,000) , $(1,185,000), and $758,000,      respectively. |                                  |

| Deferred      tax assets and liabilities as of December 31, 2008 and 2007 consisted of      the following: |
|------------------------------------------------------------------------------------------------------------|

| (Dollars      in thousands)                                       | 2008                                                             | 2007                                         |
|-------------------------------------------------------------------|------------------------------------------------------------------|----------------------------------------------|
| Deferred      tax assets:                                         |                                                             |                                         |
| Reserve      for loan and lease losses                            |  $    30,583                            |  $     25,649  |
| Securities      valuation reserve                                 | 5,935                                                            | 2,762                                        |
| Accruals      for employee benefits                               | 3,323                                                            | 3,693                                        |
| Other                                                             | 521                                                              | 586                                          |
| Total      deferred tax assets                                    | 40,362                                                           | 32,690                                       |
| Deferred      tax liabilities:                                    |                                                             |                                         |
| Differing      depreciable bases in premises and leased equipment | 29,782                                                           | 30,558                                       |
| Net      unrealized gains on securities available-for-sale        | 3,550                                                            | 1,537                                        |
| Differing      bases in assets related to acquisitions            | 2,168                                                            | 2,095                                        |
| Capitalized      loan costs                                       | 1,879                                                            | 2,833                                        |
| Mortgage      servicing                                           | 1,206                                                            | 2,174                                        |
| Other                                                             | 1,192                                                            | 1,674                                        |
| Total      deferred tax liabilities                               | 39,777                                                           | 40,871                                       |
| Net      deferred tax asset/(liability)                           |  $         585 |  $     (8,181) |

----

table of contents

| (Dollars      in thousands)                                       | 2008                                                                                          | 2007                                                        |
|-------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|-------------------------------------------------------------|
| Balance,      beginning of year                                   |  $         7,063                            |  $      5,795            |
| Additions      based on tax positions related to the current year |             1,271                 |          1,268 |
| Additions      for tax positions of prior years                   |                693 |  -                                                     |
| Reductions      for tax positions of prior years                  |              (136)           |  -                                                     |
| Reductions      due to lapse in statute of limitations            |           (1,290)                           |  -                                                     |
| Settlements                                                       |  -                                                                                       |  -                                                     |
| Balance,      end of year                                         |  $         7,601                            |  $      7,063            |

| Year Ended December      31  (Dollars in      thousands) |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Gross      rental expense                                          |   | $      | 3,116  |   |   | $      | 3,255  |   |   | $ | 3,250 |   |
| Sublease      rental income                                        |   |   | (1,523 | )      |   |   | (1,640 | )      |   |   | (1,626 | ) |
| Net      rental expense                                            |   | $      | 1,593  |   |   | $      | 1,615  |   |   | $ | 1,624 |   |

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table of contents

|                                           |                       |   |     |                       |                   |                   | 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                    |  $  490,612 | 13.26  | %        |  $  296,077 | 8.00                   | %                      |  $  370,096 | 10.00  | % |
| 1st      Source Bank                           | 486,335                    | 13.19  | %        | 294,906                    | 8.00                   | %                      | 368,633                    | 10.00  | % |
| Tier      I Capital (to Risk-Weighted Assets): |                       |   |     |                       |                   |                   |                       |   |   |
| 1st      Source Corporation                    | 443,000                    | 11.97  | %        | 148,038                    | 4.00                   | %                      | 222,058                    | 6.00   | % |
| 1st      Source Bank                           | 439,835                    | 11.93  | %        | 147,453                    | 4.00                   | %                      | 221,180                    | 6.00   | % |
| Tier      I Capital (to Average Assets):       |                       |   |     |                       |                   |                   |                       |   |   |
| 1st      Source Corporation                    | 443,000                    | 10.16  | %        | 174,328                    | 4.00                   | %                      | 217,910                    | 5.00   | % |
| 1st      Source Bank                           | 439,835                    | 10.13  | %        | 173,592                    | 4.00                   | %                      | 216,990                    | 5.00   | % |

----

table of contents

| (Dollars      in thousands)                                        |   | Fair      value carrying amount |   |   | Aggregate      unpaid principal |   |   | Excess      of fair value carrying amount over (under) unpaid      principal |   |
|--------------------------------------------------------------------|--------|---------------------------------|--------|--------|---------------------------------|--------|--------|-----------------------------------------------------------------------------------|--------|
| Mortgages      held for sale reported at fair value:               |   |                            |   |   |                            |   |   |                                                                              |   |
|   Total      Loans                                       |   | $                               | 46,686 |   |                            | $      | 45,141 |                                                                              |   |  $ | 1545 |        (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 at and subsequent to funding, gains and losses on      the related loan commitment prior to |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| funding,      and premiums on acquired loans.                                                                                                                                                                 |   |   |   |

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

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

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

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

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

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

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

| (Dollars      in thousands)                                                    |   | Level      1 |   |   | Level      2 |   |    | Level      3 |   |   | Total  |   |
|--------------------------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|
| Assets:                                                                        |   |         |   |   |         |   |    |         |   |   |   |   |
| Investment      securities available for sale                                  |   | $            | 84,870 |   |         | $      | 620,468 |         |   | $      | 19,416 |   |   | $ | 724,754 |   |
| Trading      account securities                                                |   |         | 100    |   |         |   | -       |         |   |   | -      |   |   |   | 100 |   |
| Mortgages      held for sale                                                   |   |         | -      |   |         |   | 46,686  |         |   |   | -      |   |   |   | 46,686 |   |
| Accrued      income and other assets (interest rate swap agreements)           |   |         | -      |   |         |   | 22,663  |         |   |   | -      |   |   |   | 22,663 |   |
| Total                                                                          |   | $            | 84,970 |   |         | $      | 689,817 |         |   | $      | 19,416 |   |   | $ | 794,203 |   |
|                                                                           |   |         |   |   |         |   |    |         |   |   |   |   |   |   |   |   |
| Liabilities:                                                                   |   |         |   |   |         |   |    |         |   |   |   |   |   |   |   |   |
| Accrued      expenses and other liabilities (interest rate swap    agreements) |   | $            | -      |   |         | $      | 23,003  |         |   | $      | -      |   |   | $ | 23,003 |   |
| Total                                                                          |   | $            | -      |   |         | $      | 23,003  |         |   | $      | -      |   |   | $ | 23,003 |   |

----

table of contents

|                                                                                                    |   | Investment      securities |    |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|
| (Dollars      in thousands)                                                                             |   | available      for sale    |    |
| Beginning      balance January 1, 2008                                                                  |   | $                          | 42,212  |   |
|   Total      gains or losses (realized/unrealized)                                            |   |                       |    |   |
|           Included      in earnings                   |   |                       | 747     |   |
|           Included      in other comprehensive income |   |                       | (1,362  | ) |
| Purchases      and issuances                                                                            |   |                       | 24,714  |   |
| Settlements                                                                                             |   |                       | -       |   |
| Maturities                                                                                              |   |                       | (49,998 | ) |
| Transfers      in and/or out of Level 3                                                                 |   |                       | 3,103   |   |
| Ending      balance December 31, 2008                                                                   |   | $                          | 19,416  |   |

| (Dollars      in thousands)                                                         |  Level      1                                                                                                                                                                    |  Level      2                                                                                                                                                                    |  Level      3                                                                                                                        |  Total                                                                                                                               |
|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                |                                                                                                                                                                                  |                                                                                                                                                                                  |                                                                                                                                      |                                                                                                                                      |
| Loans                                                                               |  $                           -            |  $                           -            |  $                   6,191            |  $                   6,191            |
| Accrued      income and other assets (venture capital partnership      investments) |                               - |                               - |                       2,253 |                       2,253 |
| Accrued      income and other assets (mortgage servicing rights)                    |                               - |                               - |                       4,715 |                     4,715             |
| Total                                                                               |  $                           -            |  $                           -            |  $                 13,159                       |  $                 13,159                       |

|                                                                                                                 | 2008                                                                       | 2007                                                                             |
|----------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|----------------------------------------------------------------------------------|
|                                                                                                                 | Carrying      or                                                           |                                                                             | Carrying      or |   |
| (Dollars      in thousands)                                                                                          | Contract      Value                                                        | Fair      Value                                                                  | Contract      Value | Fair      Value |
| Assets:                                                                                                              |                                                                       |                                                                             |   |   |
| Cash      and due from banks                                                                                         |  $          119,771 |  $           119,771 |  $        153,137 |  $    153,137 |
| Federal      funds sold and interest bearing deposits with other banks                                               | 6,951                                                                      | 6,951                                                                            | 25,817 | 25,817 |
| Investment      securities, available-for-sale                                                                       | 724,754                                                                    | 724,754                                                                          | 779,981 | 779,981 |
| Other      investments and trading account securities                                                                | 18,712                                                                     | 18,712                                                                           | 14,937 | 14,937 |
| Mortgages      held for sale                                                                                         | 46,686                                                                     | 46,686                                                                           | 25,921 | 25,921 |
| Loans      and leases, net of reserve for loan and lease losses                                                      | 3,218,436                                                                  | 3,239,567                                                                        | 3,124,839 | 3,144,394 |
| Interest      rate swaps                                                                                             | 22,663                                                                     | 22,663                                                                           | 4,573 | 4,573 |
| Liabilities:                                                                                                         |                                                                       |                                                                             |   |   |
| Deposits                                                                                                             |  $       3,514,542                 |  $        3,486,609                 |  $     3,469,663 |  $      3,468,360 |
| Short-term      borrowings                                                                                           | 296,175                                                                    | 296,175                                                                          | 337,832 | 337,832 |
| Long-term      debt and mandatorily redeemable securities                                                            | 29,832                                                                     | 29,674                                                                           | 34,702 | 34,900 |
| Subordinated      notes                                                                                              | 89,692                                                                     | 73,972                                                                           | 100,002 | 89,959 |
| Interest      rate swaps                                                                                             | 23,003                                                                     | 23,003                                                                           | 4,573 | 4,573 |
| Off-balance-sheet      instruments *                                                                                 | -                                                                          | 297                                                                              | - | 406 |
| *      Represents estimated cash outflows required to currently settle the      obligations at current market rates. |                                                                       |

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table of contents

| STATEMENTS      OF FINANCIAL CONDITION                                                      |   |   |    |   |   |   |
|---------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                        |   |   |    |   |   |   |
| December      31 (Dollars in      thousands)                                                |   | 2008   |    |   | 2007   |   |
| ASSETS                                                                                      |   |   |    |   |   |   |
| Cash                                                                                        |   | $      | 2       |   |   | $      | 32 |   |
| Short-term      investments with bank subsidiary                                            |   |   | 15,368  |   |   |   | 11,220 |   |
| Investment      securities, available-for-sale                                              |   |   |    |   |   |   |   |   |
| (amortized      cost of $4,742 and $8,907 at December 31, 2008 and 2007,      respectively) |   |   | 6,811   |   |   |   | 11,075 |   |
| Trading      account securities                                                             |   |   | 100     |   |   |   | - |   |
| Investments      in:                                                                        |   |   |    |   |   |   |   |   |
| Bank      subsidiaries                                                                      |   |   | 534,586 |   |   |   | 514,988 |   |
| Non-bank      subsidiaries                                                                  |   |   | 3,091   |   |   |   | 4,127 |   |
| Premises      and equipment, net                                                            |   |   | 2,264   |   |   |   | 2,237 |   |
| Other      assets                                                                           |   |   | 6,803   |   |   |   | 9,509 |   |
| Total      assets                                                                           |   | $      | 569,025 |   |   | $      | 553,188 |   |
| LIABILITIES AND SHAREHOLDERS’      EQUITY                                             |   |   |    |   |   |   |   |   |
| Commercial      paper borrowings                                                            |   | $      | 5,344   |   |   | $      | 11,475 |   |
| Other      liabilities                                                                      |   |   | 1,739   |   |   |   | 3,086 |   |
| Long-term      debt and mandatorily redeemable securities                                   |   |   | 108,278 |   |   |   | 108,123 |   |
| Total      liabilities                                                                      |   |   | 115,361 |   |   |   | 122,684 |   |
| Shareholders’      equity                                                             |   |   | 453,664 |   |   |   | 430,504 |   |
| Total      liabilities and shareholders’ equity                                       |   | $      | 569,025 |   |   | $      | 553,188 |   |

| STATEMENTS      OF INCOME                                                                                                |                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                      |
| Year      Ended December 31 (Dollars in      thousands)                                                                  | 2008                                                                                                                                                                      | 2007 | 2006 |
| Income:                                                                                                                  |                                                                                                                                                                      |   |   |
| Dividends      from bank and non-bank subsidiaries                                                                       |  $                          17,468 |  $                          58,051 |  $                          15,045 |
| Rental      income from subsidiaries                                                                                     | 2,412                                                                                                                                                                     | 2,442 | 2,542 |
| Other                                                                                                                    | 994                                                                                                                                                                       | 2,077 | 1,788 |
| Investment      securities and other investment (losses) gains                                                           | (1,053)                                                                                                                                                                   | 3 | 2,346 |
| Total      income                                                                                                        | 19,821                                                                                                                                                                    | 62,573 | 21,721 |
| Expenses:                                                                                                                |                                                                                                                                                                      |   |   |
| Interest      on long-term debt and mandatorily redeemable securities                                                    | 7,773                                                                                                                                                                     | 7,294 | 5,495 |
| Interest      on commercial paper and other short-term borrowings                                                        | 209                                                                                                                                                                       | 639 | 418 |
| Rent      expense                                                                                                        | 1,060                                                                                                                                                                     | 1,057 | 1,059 |
| Other                                                                                                                    | 1,850                                                                                                                                                                     | 1,572 | 1,148 |
| Total      expenses                                                                                                      | 10,892                                                                                                                                                                    | 10,562 | 8,120 |
| Income      before income tax benefit and equity in undistributed (distributed in      excess of) income of subsidiaries |                                                                                                                                                                      | 8,929 | 52,011 | 13,601 |
| Income      tax benefit                                                                                                  | 3,308                                                                                                                                                                     | 2,380 | 220 |
| Income      before equity in undistributed (distributed in excess of) income of      subsidiaries                        | 12,237                                                                                                                                                                    | 54,391 | 13,821 |
| Equity      in undistributed (distributed in excess of) income of      subsidiaries:                                     |                                                                                                                                                                      |   |   |
| Bank      subsidiaries                                                                                                   | 21,235                                                                                                                                                                    | (23,028) | 23,448 |
| Non-bank      subsidiaries                                                                                               | (86)                                                                                                                                                                      | (824) | 2,028 |
| Net      income                                                                                                          |  $                          33,386 |  $                          30,539 |  $                          39,297 |

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table of contents

|  STATEMENTS      OF CASH FLOW                                                          |                                                                                                                                                                                                                       |                                                                                                                                                                                                                      |                                                                                                                                                                                                                       |
|---------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                        |                                                                                                                                                                                                                       |                                                                                                                                                                                                                      |                                                                                                                                                                                                                       |
| Year      Ended December 31  (Dollars in      thousands)                          | 2008                                                                                                                                                                                                                       | 2007                                                                                                                                                                                                                      | 2006                                                                                                                                                                                                                       |
| Operating      activities:                                                                  |                                                                                                                                                                                                                       |                                                                                                                                                                                                                      |                                                                                                                                                                                                                       |
| Net      income                                                                             |  $                          33,386                                                  |  $                          30,539                                                 |  $                          39,297                                                  |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |                                                                                                                                                                                                                       |                                                                                                                                                                                                                      |                                                                                                                                                                                                                       |
| Equity      (undistributed) distributed in excess of income of      subsidiaries            | (21,149)                                                                                                                                                                                                                   | 23,852                                                                                                                                                                                                                    | (25,476)                                                                                                                                                                                                                   |
| Depreciation      of premises and equipment                                                 | 377                                                                                                                                                                                                                        | 316                                                                                                                                                                                                                       | 289                                                                                                                                                                                                                        |
| Realized      and unrealized investment securities losses (gains)                           | 1,053                                                                                                                                                                                                                      | (3)                                                                                                                                                                                                                       | (2,346)                                                                                                                                                                                                                    |
| Change      in trading account securities                                                   | (100)                                                                                                                                                                                                                      |                                     - |                                     -  |
| Other                                                                                       | 2,732                                                                                                                                                                                                                      | (629)                                                                                                                                                                                                                     | 705                                                                                                                                                                                                                        |
| Net      change in operating activities                                                     | 16,299                                                                                                                                                                                                                     | 54,075                                                                                                                                                                                                                    | 12,469                                                                                                                                                                                                                     |
| Investing      activities:                                                                  |                                                                                                                                                                                                                       |                                                                                                                                                                                                                      |                                                                                                                                                                                                                       |
| Proceeds      from sales and maturities of investment securities                            | 2,879                                                                                                                                                                                                                      | 18,752                                                                                                                                                                                                                    | 1,817                                                                                                                                                                                                                      |
| Purchases      of investment securities                                                     |                                     -  | (10,499)                                                                                                                                                                                                                  | (3,754)                                                                                                                                                                                                                    |
| Net      change in premises and equipment                                                   | (405)                                                                                                                                                                                                                      | (410)                                                                                                                                                                                                                     | (288)                                                                                                                                                                                                                      |
| Change      in short-term investments with bank subsidiary                                  | (4,148)                                                                                                                                                                                                                    | 3,222                                                                                                                                                                                                                     | (2,880)                                                                                                                                                                                                                    |
| Change      in loans made to subsidiaries, net                                              |                                     -  | 3,030                                                                                                                                                                                                                     | 2,970                                                                                                                                                                                                                      |
| Capital      contributions to subsidiaries                                                  |                                     -  | -                                                                                                                                                                                                                         | 1,400                                                                                                                                                                                                                      |
| Return      of capital from subsidiaries                                                    | 5,950                                                                                                                                                                                                                      | 5,106                                                                                                                                                                                                                     | -                                                                                                                                                                                                                          |
| Cash      paid for acquisition, net                                                         |                                     -  | (78,348)                                                                                                                                                                                                                  | -                                                                                                                                                                                                                          |
| Net      change in investing activities                                                     | 4,276                                                                                                                                                                                                                      | (59,147)                                                                                                                                                                                                                  | (735)                                                                                                                                                                                                                      |
| Financing      activities:                                                                  |                                                                                                                                                                                                                       |                                                                                                                                                                                                                      |                                                                                                                                                                                                                       |
| Net      change in commercial paper and other short-term borrowings                         | (6,131)                                                                                                                                                                                                                    | 3                                                                                                                                                                                                                         | 6,673                                                                                                                                                                                                                      |
| Proceeds      from issuance of subordinated notes                                           |                                     -  | 58,764                                                                                                                                                                                                                    | -                                                                                                                                                                                                                          |
| Payments      on subordinated notes                                                         | (10,310)                                                                                                                                                                                                                   | (17,784)                                                                                                                                                                                                                  | -                                                                                                                                                                                                                          |
| Proceeds      from issuance of long-term debt                                               | 10,000                                                                                                                                                                                                                     | -                                                                                                                                                                                                                         | 874                                                                                                                                                                                                                        |
| Payments      on long-term debt                                                             | (252)                                                                                                                                                                                                                      | (10,259)                                                                                                                                                                                                                  | (123)                                                                                                                                                                                                                      |
| Net      proceeds from issuance of treasury stock                                           | 341                                                                                                                                                                                                                        | 545                                                                                                                                                                                                                       | 814                                                                                                                                                                                                                        |
| Acquisition      of treasury stock                                                          |                                     -  | (12,821)                                                                                                                                                                                                                  | (7,657)                                                                                                                                                                                                                    |
| Cash      dividends                                                                         | (14,253)                                                                                                                                                                                                                   | (13,345)                                                                                                                                                                                                                  | (12,315)                                                                                                                                                                                                                   |
| Net      change in financing activities                                                     | (20,605)                                                                                                                                                                                                                   | 5,103                                                                                                                                                                                                                     | (11,734)                                                                                                                                                                                                                   |
| Net      change in cash and cash equivalents                                                | (30)                                                                                                                                                                                                                       | 31                                                                                                                                                                                                                        | -                                                                                                                                                                                                                          |
| Cash      and cash equivalents, beginning of year                                           | 32                                                                                                                                                                                                                         | 1                                                                                                                                                                                                                         | 1                                                                                                                                                                                                                          |
| Cash      and cash equivalents, end of year                                                 |  $                                   2 |  $                                 32           |  $                                   1 |

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table of contents

Item 9.  Changes in and Disagreements withAccountants on Accounting and Financial Disclosure.

Item 9A.  Controls and Procedures.

Item 9B.  Other Information.

Item 10.  Directors, Executive Officers andCorporate Governance.

Item 11.  ExecutiveCompensation.

Item 12.  Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters.

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table of contents

|                                                                                                                                      |                            |                      | Number      of Securities     |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|---------------------------|-------------------------------|--------|
|                                                                                                                                      |                            |                      | Remaining      Available      |   |
|                                                                                                                                      |                            |                      | for      Future Issuance      |   |
|                                                                                                                                      | Number      of Securities to be | Weighted-average          | Under      Equity             |   |
|                                                                                                                                      | Issued      upon Exercise of    | Exercise      Price of    | Compensation      Plans       |   |
|                                                                                                                                      | Outstanding      Options,       | Outstanding      Options, | [excluding      securities    |   |
|                                                                                                                                      | Warrants      and Rights        | Warrants      and Rights  | reflected      in column (a)] |   |
| Equity      compensation plans                                                                                                            |                            |                      |                          |   |
| approved      by shareholders                                                                                                             |                            |                      |                          |   |
| 1992      stock option plan                                                                                                               | 16,693                          | $19.36                    | -                             |   |
| 2001      stock option plan                                                                                                               | 64,255                          | 18.29                     | 2,119,922                     |   |
| 1997      employee stock purchase plan                                                                                                    | 23,121                          | 22.34                     | 159,034                       |   |
| 1982      executive incentive plan                                                                                                        | -                               | -                         | 95,824                        | (1)(2) |
| 1982      restricted stock award plan                                                                                                     | -                               | -                         | 171,824                       | (1)    |
| Total      plans approved by shareholders                                                                                                 | 104,069                         | $19.36                    | 2,546,604                     |   |
| Equity      compensation plans                                                                                                            |                            |
| not      approved by shareholders                                                                                                         | -                               | -                         | -                             |   |
| Total      equity compensation plans                                                                                                      | 104,069                         | $19.36                    | 2,546,604                     |   |
| (1)Amount is to be awarded by grants      administered by the Executive Compensation Committee of the 1st Source      Board of Directors. |                            |
| (2)Amount includes market value      stock only. Book value shares used for annual awards may only be sold to      1st Source             |                            |

Item13.  Certain Relationships and Related Transactions, and DirectorIndependence.

Item 14.  Principal Accounting Fees andServices.

Item15.  Exhibits,

| 3(a) | Articles      of Incorporation of Registrant, as amended April 30, 1996, and filed as      exhibit to Form 10-K, dated December 31, 1996, and incorporated herein by      reference.         |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3(b) | By-Laws      of Registrant, as amended January 29, 2004, filed as exhibit to Form 10-K,      dated December 31, 2003, and incorporated herein by    reference.                               |
| 3(c) | Certificate      of Designations for Series A Preferred Stock, dated January 23, 2009,      filed as exhibit to Form 8-K, dated January 23, 2009, and incorporated      herein by reference. |
| 4(a) | Form      of Common Stock Certificates of Registrant filed as exhibit to      Registration Statement 2-40481 and incorporated herein by      reference.                                 |
| 4(b) | 1st      Source agrees to furnish to the Commission, upon request, a copy of each      instrument defining the rights of holders of Senior and Subordinated debt      of 1st Source.         |
| 4(c) | Form      of Certificate for Series A Preferred Stock, dated January 23, 2009, filed      as exhibit to Form 8-K, dated January 23, 2009, and incorporated herein by      reference.         |
| 4(d) | Warrant      for Purchase of Shares of Common Stock, dated January 23, 2009, filed as      exhibit to Form 8-K, dated January 23, 2009, and incorporated herein by      reference.           |

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table ofcontents

|     |                                                                                                                                                                                                                                                                                                                               |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(a)(1) | Employment      Agreement of Christopher J. Murphy III, dated January 1, 2008, filed as      exhibit to Form 8-K, dated March 17, 2008, and incorporated herein by      reference.                                                                                                                                            |
| 10(a)(2) | Employment      Agreement of Wellington D. Jones III, dated January 1, 2008, filed as      exhibit to Form 8-K, dated March 17, 2008, and incorporated herein by      reference.                                                                                                                                              |
| 10(a)(4) | Employment      Agreement of Larry E. Lentych, dated January 1, 2008, filed as exhibit to      Form 8-K, dated March 17, 2008, and incorporated herein by      reference.                                                                                                                                                          |
| 10(a)(5) | Employment      Agreement of Richard Q. Stifel, dated January 1, 2008, filed as exhibit to      Form 8-K, dated March 17, 2008, and incorporated herein by      reference.                                                                                                                                                    |
| 10(a)(6) | Employment      Agreement of John B. Griffith, dated January 1, 2008, filed as exhibit to      Form 8-K, dated March 17, 2008, and incorporated herein by      reference.                                                                                                                                                     |
| 10(b)    | 1st      Source Corporation Employee Stock Purchase Plan dated April 17, 1997,      filed as exhibit to Form 10-K, dated December 31, 1997, and incorporated      herein by reference.                                                                                                                                             |
| 10(c)    | 1st      Source Corporation 1982 Executive Incentive Plan, amended January 17,      2003, and filed as exhibit to Form 10-K, dated December 31, 2003, and      incorporated herein by reference.                                                                                                                         |
| 10(d)    | 1st      Source Corporation 1982 Restricted Stock Award Plan, amended January      17, 2003, and filed as exhibit to Form 10-K, dated December 31, 2003, and      incorporated herein by reference.                                                                                                                           |
| 10(e)    | 1st      Source Corporation 2001 Stock Option Plan, amended July 27, 2006, and      filed as an exhibit to 1st Source Corporation Proxy Statement dated March      7, 2001, and incorporated herein by reference.                                                                                                                  |
| 10(g)(1) | 1st      Source Corporation 1992 Stock Option Plan, amended July 27, 2006, and      dated April 23, 1992, as amended December 11, 1997, filed as exhibit to      Form 10-K, dated December 31, 1997, and incorporated herein by      reference.                                                                                    |
| 10(g)(2) | An      amendment to 1st Source Corporation 1992 Stock Option Plan, dated July 18,      2000, and filed as exhibit to Form 10-K, dated December 31, 2000, and      incorporated herein by reference.                                                                                                                               |
| 10(h)    | 1st      Source Corporation 1998 Performance Compensation Plan, dated February 19,      1998, filed as exhibit to Form 10-K, dated December 31, 1998, and      incorporated herein by reference.                                                                                                                                   |
| 10(j)    | Contract      with Fiserv Solutions, Inc. dated November 23, 2005, filed as exhibit to      Form 10-K, dated, December 31, 2005, and incorporated herein by      reference.                                                                                                                                                        |
| 10(k)    | Letter      Agreement dated January 23, 2009 by and between 1st Source Corporation and      the United States Department of the Treasury,  including the      Securites Purchase Agreement – Standard Terms, filed as exhibit to Form      8-K, dated January 23, 2009, and incorporated herein by      reference. |
| 10(l)    | Form      of CPP Compensation Limitation Agreement, dated January 23, 2009, filed as      exhibit to Form 8-K, dated January 23, 2009, and incorporated herein by      reference.                                                                                                                                                  |
| 21       | Subsidiaries      of Registrant (unless otherwise indicated, each subsidiary does business      under its own name):                                                                                                                                                                                                               |
|     | Name                                                                                                                                                                                                                                                                                                                               | Jurisdiction |
|     | 1st      Source Bank                                                                                                                                                                                                                                                                                                               | Indiana |
|     | SFG      Equipment Leasing, Inc. *                                                                                                                                                                                                                                                                                                 | Indiana |
|     | 1st      Source Insurance, Inc. *                                                                                                                                                                                                                                                                                                  | Indiana |
|     | 1st      Source Specialty Finance, Inc. *                                                                                                                                                                                                                                                                                          | Indiana |
|     | FBT      Capital Corporation (Inactive)                                                                                                                                                                                                                                                                                            | Indiana |
|     | 1st      Source Leasing, Inc.                                                                                                                                                                                                                                                                                                      | Indiana |
|     | 1st      Source Capital Corporation *                                                                                                                                                                                                                                                                                              | Indiana |
|     | Trustcorp      Mortgage Company                                                                                                                                                                                                                                                                                                    | Indiana |
|     | 1st      Source Capital Trust IV                                                                                                                                                                                                                                                                                                   | Delaware |
|     | 1st      Source Master Trust                                                                                                                                                                                                                                                                                                       | Delaware |
|     | Michigan      Transportation Finance Corporation *                                                                                                                                                                                                                                                                                 | Michigan |
|     | 1st      Source Intermediate Holding, LLC                                                                                                                                                                                                                                                                                          | Delaware |
|     | 1st      Source Funding, LLC                                                                                                                                                                                                                                                                                                       | Delaware |
|     | 1st      Source Corporation Investment Advisors, Inc. *                                                                                                                                                                                                                                                                       | Indiana |
|     | SFG      Commercial Aircraft Leasing, Inc. *                                                                                                                                                                                                                                                                                       | Indiana |
|     | SFG      Equipment Leasing Corporation I*                                                                                                                                                                                                                                                                                          | Indiana |
|     | Washington      and Michigan Insurance, Inc.*                                                                                                                                                                                                                                                                                      | Arizona |
|     | *Wholly-owned      subsidiaries of 1st Source Bank                                                                                                                                                                                                                                                                                 |   |
| 23       | Consent      of Ernst & Young LLP, Independent Registered Public Accounting      Firm.                                                                                                                                                                                                                                         |
| 31.1     | Certification      of Christopher J. Murphy III, Chief Executive Officer (Rule      13a-14(a)).                                                                                                                                                                                                                                    |
| 31.2     | Certification      of Larry E. Lentych, Chief Financial Officer (Rule    13a-14(a)).                                                                                                                                                                                                                                               |
| 32.1     | Certification      of Christopher J. Murphy III, Chief Executive Officer.                                                                                                                                                                                                                                                          |
| 32.2     | Certification      of Larry E. Lentych, Chief FinancialOfficer.                                                                                                                                                                                                                                                                    |

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table of contents

SIGNATURES

| Signature                          | Title                                      | Date                   |
|------------------------------------|--------------------------------------------|------------------------|
| /s/      CHRISTOPHER J. MURPHY III | Chairman      of the Board,                | February      20, 2009 |
| Christopher      J. Murphy III     | President      and Chief Executive Officer |                   |
|                               |                                       |                   |
| /s/      WELLINGTON D. JONES III   | Executive      Vice President              | February      20, 2009 |
| Wellington      D. Jones III       | and      Director                          |                   |
|                               |                                       |                   |
| /s/      LARRY E. LENTYCH          | Treasurer,      Chief Financial Officer    | February      20, 2009 |
| Larry      E. Lentych              | and      Principal Accounting Officer      |                   |
|                               |                                       |                   |
| /s/      JOHN B. GRIFFITH          | Secretary                                  | February      20, 2009 |
| John      B. Griffith              | and      General Counsel                   |                   |
|                               |                                       |                   |
| /s/      DANIEL B. FITZPATRICK     | Director                                   | February      20, 2009 |
| Daniel      B. Fitzpatrick         |                                       |                   |
|                               |                                       |                   |
| /s/      TERRY L. GERBER           | Director                                   | February      20, 2009 |
| Terry      L. Gerber               |                                       |                   |
|                               |                                       |                   |
| /s/      LAWRENCE E. HILER         | Director                                   | February      20, 2009 |
| Lawrence      E. Hiler             |                                       |                   |
|                               |                                       |                   |
| /s/      WILLIAM P. JOHNSON        | Director                                   | February      20, 2009 |
| William      P. Johnson            |                                       |                   |
|                               |                                       |                   |
| /s/      CRAIG A. KAPSON           | Director                                   | February      20, 2009 |
| Craig      A. Kapson               |                                       |                   |
|                               |                                       |                   |
| /s/      REX MARTIN                | Director                                   | February      20, 2009 |
| Rex      Martin                    |                                       |                   |
|                               |                                       |                   |
| /s/      DANE A. MILLER            | Director                                   | February      20, 2009 |
| Dane      A. Miller                |                                       |                   |
|                               |                                       |                   |
| /s/      TIMOTHY K. OZARK          | Director                                   | February      20, 2009 |
| Timothy      K. Ozark              |                                       |                   |
|                               |                                       |                   |
| /s/      JOHN T. PHAIR             | Director                                   | February      20, 2009 |
| John      T. Phair                 |                                       |                   |
|                               |                                       |                   |
| /s/      MARK D. SCHWABERO         | Director                                   | February      20, 2009 |
| Mark      D. Schwabero             |                                       |                   |
|                               |                                       |                   |

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