U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR (15)d OF THE SECURITIES EXCHANGE ACT OF
    1934

For the quarterly period ended  March 31, 1999     
                                --------------

                                       OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
    OF 1934

For the transition period ____________________ to ____________________

Commission file number         0-12199        
                               -------

                           SOURCE CAPITAL CORPORATION
                           --------------------------
             (Exact name of registrant as specified in its charter)

          Washington                                         91-0853890     
          ----------                                         ----------     
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)


               1825 N. Hutchinson Road, Spokane, Washington 99212
               --------------------------------------------------
                     (Address of principal executive office)


                                 (509) 928-0908
                                 --------------
                          ( Issuer's telephone number)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]  No__

As of April 29, 1999, there were 1,360,279 shares of the Registrant's common
stock outstanding.

Transitional Small Business Disclosure Format (check One)  Yes____  No [X]     


<PAGE>
                           SOURCE CAPITAL CORPORATION

                                   Form 10-QSB
                      For the Quarter Ended March 31, 1999
                                  ------------


                                      Index

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----

<S>                                                                                                          <C>
Part I - Financial Information

         Item 1 - Financial Statements:

                      -  Consolidated Balance Sheets - March 31, 1999 and December 31, 1998                  1

                      -  Consolidated Statements of Income, Comprehensive Income and
                      -  Retained Earnings - Three Months Ended March 31, 1999 and 1998                      2

                      -  Consolidated Statements of Cash Flows - Three months
                         Ended March 31, 1999 and 1998                                                       3

                      -  Notes to Consolidated Financial Statements                                          4

         Item 2 - Management's Discussion and Analysis of Financial Condition and
                         Results of Operations                                                               7

PART II - Other Information                                                                                  10


</TABLE>

<PAGE>
                        Part I - Financial Information

Item 1.  Financial Statements

                           SOURCE CAPITAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                  ------------
<TABLE>
<CAPTION>
                                                                       March 31,              December 31,
                                                                            1999                      1998 
                                                                            ----                      ---- 
<S>                                                                  <C>                       <C>        
            ASSETS                                                   (Unaudited)
Loans receivable, net                                                $42,440,716               $40,411,783
Leases receivable, net                                                16,117,679                14,006,137
Accrued interest receivable                                              571,209                   463,986
Cash and cash equivalents                                              1,159,326                   750,218
Marketable securities                                                    219,004                   219,502
Other real estate owned                                                  478,358                   393,013
Other assets                                                           1,037,344                   853,942
Deferred income tax                                                    1,443,960                 1,467,660
                                                                    ------------             -------------

Total assets                                                         $63,467,596               $58,566,241
                                                                    ============             =============

       LIABILITIES
Notes payable to bank                                                $40,144,683               $35,243,164
Mortgage contracts payable                                             3,135,614                 3,147,579
Accounts payable and accrued expenses                                    529,997                   651,904
Customer deposits                                                        780,197                   687,802
Convertible subordinated debentures                                    6,000,000                 6,000,000
                                                                    ------------             -------------

Total liabilities                                                     50,590,491                45,730,449
                                                                    ------------             -------------


       STOCKHOLDERS' EQUITY
Preferred stock, no par value, 10,000,000
  shares authorized, none outstanding                                          -                         -
Common stock, no par value, authorized 10,000,000 shares;
  issued and outstanding, 1,360,279 and 1,350,279 shares               7,056,849                 7,006,849
  Additional paid in capital                                           2,049,047                 2,049,047
  Accumulated other comprehensive loss                                   (16,367)                  (15,869)
  Retained earnings                                                    3,787,576                 3,795,765
                                                                    ------------             -------------

Total stockholders' equity                                            12,877,105                12,835,792
                                                                    ------------             -------------

Total liabilities and stockholders' equity                           $63,467,596               $58,566,241
                                                                    ============             =============
</TABLE>
See accompanying notes to consolidated financial statements.
                                       1

<PAGE>
                           SOURCE CAPITAL CORPORATION
           CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND
                                RETAINED EARNINGS
               For the Three Months Ended March 31, 1999 and 1998
                                   (Unaudited)
                                  ------------
<TABLE>
<CAPTION>
                                                                       Three Months ended March 31,
                                                                        1999                    1998   
                                                                        ----                    ----   
<S>                                                                 <C>                      <C>       
Financing income:
  Interest and fee income                                           $1,482,629               $1,405,698
  Lease financing income                                               667,863                  150,714
  Interest expense                                                    (942,222)                (703,460)
                                                                 -------------              -----------
     Net financing income                                            1,208,270                  852,952

  Gain on sale of real estate                                           11,773                   -
  Provision for loan and lease losses                                  (89,393)                 (21,000)
                                                                 -------------              -----------
    Income before non-interest expenses                              1,130,650                  831,952

Non-interest expenses:
   Employee compensation and benefits                                  486,761                  342,829
   Other operating expenses                                            288,830                  234,273
                                                                 -------------              -----------
Total non interest expenses                                            775,591                  577,102
                                                                 -------------              -----------

Income before income taxes                                             355,059                  254,850
Income tax provision:
  Current                                                               96,800                   59,500
  Deferred                                                              23,700                   27,000
                                                                 -------------              -----------
     Total income tax provision                                        120,500                   86,500
                                                                 -------------              -----------
         Net income                                                    234,559                  168,350

Retained earnings, beginning of period                               3,795,765                3,295,163
Dividends paid                                                        (242,748)                (244,047)
                                                                 -------------              -----------
Retained earnings, end of period                                    $3,787,576               $3,219,466
                                                                 =============              ===========

Net income per common share - basic                                 $      .17               $      .12
                                                                 =============              ===========
Net income per common share - diluted                               $      .15               $      .11
                                                                 =============              ===========

Weighted average number of common shares outstanding:
    Basic                                                            1,356,946                1,355,818
                                                                 =============              ===========
    Diluted                                                          2,106,010                1,892,319
                                                                 =============              ===========

Cash dividends per share                                            $      .18               $      .18
                                                                 =============              ===========

Net income                                                            $234,559                 $168,350
Other comprehensive income, net of tax:
   Unrealized gain (loss) on marketable securities
      net of $(169) and $5,607 tax expense (benefit)                      (329)                  10,888
                                                                 -------------              -----------
Comprehensive income                                                  $234,230                 $179,238
                                                                 =============              ===========
</TABLE>
See accompanying notes to consolidated financial statements.
 
                                        2

<PAGE>
                           SOURCE CAPITAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the Three Months Ended March 31, 1999 and 1998 (Unaudited)
                                  ------------
<TABLE>
<CAPTION>
                                                                                   1999                    1998    
                                                                                   ----                    ----    
<S>                                                                        <C>                        <C>          
Cash flows from operating activities:
   Net income                                                              $     234,559              $     168,350
    Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation                                                                 15,105                      9,914
     Provision for loan and lease losses                                          89,393                     21,000
     Deferred income taxes                                                        23,700                     27,000
     Gain on sale of real estate owned                                           (11,773)                         -
     Change in:
       Accrued interest receivable                                              (115,779)                   (64,521)
       Other assets                                                               15,300                   (537,584)
       Accounts payable and accrued expenses                                    (123,394)                    43,383
       Customer deposits                                                          92,395                          -     
                                                                           -------------              -------------
          Net cash provided by (used in) operating activities                    219,506                   (332,458)
                                                                           -------------              -------------

Cash flows from investing activities:
     Sale of investment securities                                                     -                     13,005
     Loan originations                                                        (6,098,266)                (4,155,819)
     Loan repayments                                                           3,864,572                  3,631,640
     Lease originations                                                       (3,502,701)                (1,665,786)
     Collections on direct financing leases                                    1,114,440                    345,977
     Capitalization of costs related to
      other real estate owned                                                     (3,959)                    (1,111)
     Proceeds from sale of other real estate                                     169,704                          -
     Purchase of office equipment                                                (50,994)                   (21,164)
                                                                           -------------              -------------
        Net cash used in investing activities                                 (4,507,204)                (1,853,258)
                                                                           -------------              -------------

Cash flows from financing activities:
     Proceeds from line of credit                                             11,896,079                  5,927,277
     Payments on line of credit                                               (6,994,560)                (9,487,153)
     Proceeds from sale of convertible subordinated debentures                         -                  6,000,000
     Payments of long-term debt                                                  (11,965)                   (10,433)
     Proceeds from exercise of stock options                                      50,000                          -
     Cash dividends paid                                                        (242,748)                  (244,047)
                                                                           -------------              -------------
       Net cash provided by financing activities                               4,696,806                  2,185,644
                                                                           -------------              -------------

Net increase (decrease) in cash and cash equivalents                             409,108                        (72)
Cash and cash equivalents, beginning of period                                   750,218                    473,551
                                                                           -------------              -------------
Cash and cash equivalents, end of period                                    $  1,159,326                $   473,479
                                                                           =============              =============

Supplemental disclosure of cash flow information:
   Cash paid during the period for interest                                 $    924,093                $   672,622
   Cash paid during the period for income taxes                                   15,000                          -
   Non-cash financing and investing transactions:
    Loan converted to repossessed assets                                         198,317                     15,000
    Leases converted to repossessed and other assets                             203,812                     19,000
    Leases charged off                                                            47,342                          -

</TABLE>
See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
                           SOURCE CAPITAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.
------

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Source Capital Leasing Co. All significant
intercompany transactions and balances have been eliminated in consolidation.

The unaudited consolidated financial statements reflect all adjustments
(consisting only of normal recurring items), which in the opinion of management,
are necessary to fairly state the periods reported. Certain 1998 amounts have
been reclassified to conform with the 1999 presentation. These reclassifications
had no effect on the net income or retained earnings as previously reported. The
results of operations for the three-month period ended March 31, 1999, are not
necessarily indicative of the results to be expected for the full year. These
unaudited financial statements should be read in conjunction with the Company's
most recent audited financial statements for the year ended December 31, 1998.

NOTE 2.
------

The Company's provision for federal income taxes for the three months ended
March 31, 1999 and 1998, is based on the statutory corporate income tax rate of
34%. The actual current income tax liability to the Company for the year ending
December 31, 1999, is estimated to be significantly less than the amount based
on the statutory corporate tax rate, because of the effect of net operating loss
carryforwards from prior years.

NOTE 3.
------

Net income per share - basic is computed by dividing net income by the
weighted-average number of common shares outstanding during the period. Net
income (after adjustment for the after-tax effect of interest on convertible
debentures) per share - diluted is computed by dividing net income by the
weighted-average number of common shares outstanding increased by the additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued.

Earnings Per Share Computation:
<TABLE>
<CAPTION>
                                                        For the Quarter Ended March 31, 1999
                                                        ------------------------------------
                                                                        Weighted-       Per-Share
                                                      Net Income      Average shares     Amount
                                                      ----------      --------------     ------
<S>                                                  <C>               <C>              <C>      
Basic EPS
Income available to
  Stockholders                                       $  234,559        1,356,946        $     .17
                                                                                        =========

Effect of Dilutive Securities
   Interest on 7.5% convertible subordinated
     debentures (net of 34% tax)                         74,250          749,064
                                                    -----------      -----------

Diluted EPS
Income available to common
  stockholders + assumed conversions                 $  308,809        2,106,010        $     .15
                                                    ===========      ===========        =========
</TABLE>

                                       4
<PAGE>

Earnings Per Share Computation, Continued:
<TABLE>
<CAPTION>
                                                  For the Quarter Ended March 31, 1998
                                                  ------------------------------------
                                                                    Weighted-       Per-Share
                                            Net Income           Average shares     Amount
                                            ----------           --------------     ------
<S>                                         <C>                    <C>              <C>      
Basic EPS
Income available to
  Stockholders                              $  168,350             1,355,818        $     .12
                                                                                    =========

Effect of Dilutive Securities
Interest on convertible subordinated
     debentures (net of 34% tax)                41,514               499,376
   Common stock options                                               37,125
                                            ----------             ---------

Diluted EPS
Income available to common
  stockholders + assumed conversions        $  209,864             1,892,319        $     .11
                                            ==========             =========        =========
</TABLE>

NOTE 4.
------

The Company's consolidated financial statements include certain reportable
segment information. The segments include the parent company Source Capital
Corporation who's primary business is commercial real estate lending and its
wholly owned subsidiary Source Capital Leasing Co. who's primary business is
equipment lease financing. All accounting policies of the parent and subsidiary
are the same. The parent evaluates the performance of the subsidiary based upon
multiple variables including lease income, interest expense and profit or loss
after tax. The parent does not allocate any unusual items to the subsidiary.

Company segment profit and loss components and schedule of assets as of March
31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
                                                     1999                               1998
                                                     ----                               ----
                                            Leasing        Lending        Leasing          Lending
                                            -------        -------        -------          -------
<S>                                        <C>           <C>             <C>          <C>                
Income commercial real estate              $         -   $ 1,482,629     $       -    $ 1,405,698        
Income lease financing                         667,863             -       150,714              -        
Interest expense                               221,802       720,420        53,471        649,989        
Depreciation                                     3,818        11,287           840          9,074        
Income tax expense (benefit)                    23,500        97,000        (1,950)        88,450        
Net income (loss)                               45,905       188,654        (3,736)       172,086        
Significant non-cash items                                                                               
  other than depreciation                       74,393        15,000        10,000         11,000        
Real estate lending assets                           -    50,037,822             -     42,627,775        
Leasing assets                              17,025,930             -     5,250,176              -        
                                                                                                        
</TABLE>
                                          
                                       5

<PAGE>

NOTE 4. Continued:

Reconciliation of segment net income, total assets, notes payable and other
significant items for the quarter ended March 31, 1999 and 1998 follows:
<TABLE>
<CAPTION>

                                                             1999              1998
                                                             ----              ----
<S>                                                       <C>             <C>          
Profit or loss

Leasing net income                                        $     45,905    $     (3,736)
Adjustment for income taxes                                    (97,000)        (88,950)
Unallocated amounts:
  Revenue of real estate lending                             1,482,629       1,405,698
  Expense of real estate lending                            (1,196,975)     (1,144,662)
                                                          ------------    ------------
Consolidated net income after tax                         $    234,559    $    168,350
                                                          ============    ============

Total assets

Net lease investment                                      $ 16,117,679    $  4,207,954
Unallocated assets of leasing                                  908,251       1,042,222
Elimination of intercompany                                 (3,596,156)     (2,417,781)
Commercial loans receivable, net                            42,440,716      37,048,952
Unallocated assets of real estate lending                    7,597,106       5,578,823
                                                          ------------    ------------
Consolidated assets                                       $ 63,467,596    $ 45,460,170
                                                          ============    ============

Debt

Leasing note payable                                      $ 12,609,683    $  3,070,220
Real estate lending note payable                            27,535,000      20,360,000
Real estate lending long-term debt                           3,135,614       3,177,106
Real estate lending convertible subordinated debentures      6,000,000       6,000,000
                                                          ------------    ------------
Consolidated notes payable and long-term debt             $ 49,280,297    $ 32,607,326
                                                          ============    ============

</TABLE>
<TABLE>
<CAPTION>
                                                                     Real Estate
                                                    Leasing            Lending
Other significant items                             Total               Total       Consolidated
                                                    -----               -----       ------------
<S>                                                 <C>               <C>              <C>     
1999
Interest expense                                    $221,802          $720,420         $942,222
Provision for losses                                  74,393            15,000           89,393

1998
Interest expense                                    $ 53,471          $649,989         $703,460
Provision for losses                                  10,000            11,000           21,000

</TABLE>

                                       6
<PAGE>
                           SOURCE CAPITAL CORPORATION



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
-------  -----------------------------------------------------------------------
of Operations
-------------

General
-------

These discussions contain forward-looking statements containing words such as
"will continue to be," "will be," "continue to," "anticipates that," "to be," or
"can impact." Management cautions that forward-looking statements are subject to
risks and uncertainties that could cause the Company's actual results to differ
materially from those projected in forward-looking statements.

Three Months Ended March 31, 1999 Compared to Three Months ended March 31, 1998
-------------------------------------------------------------------------------

For the three months ended March 31, 1999, the Company reported a net income of
$234,559 or $.15 per diluted common share. These results compare to a net income
of $168,350 or $.11 per diluted share, for the comparable period in 1998. Net
financing income (interest and lease income less interest expense) increased
from approximately $853,000 during the three months ended March 31, 1998 to
approximately $1,208,000 in the comparable period of 1999 (a 42% increase).
Finance income of approximately $2,150,000 and $1,556,000 for the three months
ended March 31, 1999 and 1998 respectively, represents an approximate average
interest yield of 15.3% and 15.2%, respectively, on the Company's average
earning assets. The Company experienced a slight decline in interest yield on
its average lending portfolio (approximately .5%). However this decline was
offset by an increase of approximately .6% in yield on its leasing portfolio, as
compared to first quarter 1998. The decline in yield on the Company's loan
portfolio is primarily due to the Company's policy of pricing its commercial
loans using a prime rate index. During the past year the prime lending rate of
commercial banks declined from 8.5% in the first quarter of 1998 to 7.75%
currently. The rates charged on the Company's lease portfolio, although
declining slightly on leases booked in the first quarter of 1999, were
relatively unaffected by market rates charged to loan customers.

The increase in financing income of approximately $594,000 is directly
attributable to the increase of approximately $15,500,000 in the Company`s
average earning assets over the first quarter of 1998. The Company's average
earning asset portfolio grew from $40,900,000 for the three months ended March
31, 1998 to approximately $56,500,000 at March 31, 1999. The growth in the
portfolio is directly attributable to the increase in production personnel and
to the steady growth in the Company's lease portfolio which exceeded
expectations by growing from $4,200,000 in the first quarter of 1998 to
$16,100,000 at March 31, 1999. The increase in financing income was partially
offset by an approximate $239,000 increase in interest expense. The Company's
cost of funds on average borrowings decreased from approximately 8.9% at March
31, 1998 to approximately 8.2% in the comparable period in 1999. The Company was
able to reduce its borrowing costs by funding a portion of its loan portfolio
using a "LIBOR" based rate, which is currently more attractive than a prime
based rate. The Company funds its lease portfolio using a "LIBOR" based rate
which currently approximates prime less .625%. At March 31, 1999, the Company
had approximately $2,199,000 of loans and leases which were delinquent as to
principal or interest more than 60 days, as compared to approximately $1,268,000
at March 31, 1998. Subsequent to March 31, 1999, a delinquent loan of
approximately $310,000 included in the over 60 day category was paid in full.
These loans and leases are well collateralized and the Company's allowance for
loan and lease losses of approximately $469,000 is considered adequate as of
March 31, 1999.

Total non-interest expenses increased approximately 34.4% over the first three
months of 1998 primarily due to a 42% increase in salaries and benefits
resulting from a 33% increase in personnel over the comparable period in 1998

                                       7
<PAGE>

and an accrual for profit sharing in 1999 for which there was no corresponding
accrual in 1998. Additionally, other operating expenses increased by
approximately $55,000 or 23.3% over the prior year. Of the increase in other
expense, approximately $54,000 related to general and administrative expenses of
the Company's leasing subsidiary. There were other increases and decreases in
the Company's other operating expenses none of which is material when considered
individually.

The provision for income taxes of approximately $120,500 and $86,500 for the
three months ended March 31, 1999 and 1998, respectively, is based on the
statutory income tax rate of 34%. The Company expects to pay current income
taxes significantly less than the estimated tax provision for the year ended
December 31, 1999, due to the utilization of net operating loss carryovers and
the differences between book and tax accounting for leases. The Company's
effective tax rate for taxes paid in 1998 was approximately 23%.

Financial Condition and Liquidity
---------------------------------

At March 31, 1999, the Company had approximately $1,159,000 of cash and cash
equivalents and $219,000 of marketable securities. Cash and cash equivalents
increased approximately $409,000 from December 31, 1998. The Company's primary
sources of cash during the first three months of 1999 were approximately
$11,896,000 from short-term borrowings, $3,865,000 loan repayments, $1,114,000
lease repayments and $220,000 from operations. The primary uses of cash during
the first three months of 1999 were approximately $6,995,000 repayment of short
term borrowings, $6,098,000 of loan originations, $3,503,000 additions to direct
financing leases, and $243,000 payment of dividends.

The Company's line of credit, which matures annually, was renewed and increased
to $40,000,000 on April 30, 1999. The line matures April 30, 2000. At March 31,
1999, the Company had $27,535,000 outstanding under the line of credit. In
addition to the Company's line of credit, its wholly owned subsidiary, Source
Capital Leasing Co., has a $17,000,000 line of credit to fund its lease
portfolio. The leasing company's line which matured on April 30, 1999, has been
extended 30 days to provide time for the renewal process. The Company expects
the leasing line will be renewed prior to the expiration of the 90 day
extension. The leasing company had approximately $12,610,000 outstanding under
its line at March 31, 1999. The cash flows from the Company's lines of credit,
loan and lease repayments, and the existing cash, cash equivalents and
marketable securities are expected to be sufficient for the operating needs of
the Company.

Effect of Inflation and Changing Prices
---------------------------------------

Interest rates on the Company's loan portfolio are subject to inflation as
inflationary pressures affect the prime interest rate. At March 31, 1998,
interest rates on approximately 98% of the Company's loan portfolio were
variable based on various indexes. The remaining loans have fixed interest
rates. Loans with fixed rates and maturities of less than one year at March 31,
1999 are considered variable. The Company's line of credit agreement provides
for variable interest based on the prime rate or at the Company's option, a
"LIBOR" based rate.

Management believes that any negative effects of an increase in the prime
interest rate would be largely offset by the Company's relatively short-term
loan portfolio, balloon payments and the large percentage of variable rate
loans.

Rates earned on the Company's lease portfolio are fixed for the term of the
lease, however, the Company match funds it portfolio by borrowing under its
lease line of credit as soon as is practicable after funding the lease. Each
lease is funded separately and the interest rate charged by the bank is fixed
for the term of the advance which is matched to the term of the lease.

                                       8
<PAGE>

Year 2000 Issues and Status
---------------------------

As the end of the millennium approaches, the Company is addressing the impact of
the year 2000 (Y2K) on its information technology (IT) and non (IT) functions.
Currently, the Company's IT related electronic infrastructure consists of
primary and backup domain controller servers utilizing the Windows NT operating
system, and independent workstations utilizing the Windows 95 operating system.
All leasing portfolio management, servicing and general ledger information is
maintained on the system. Additionally, the Company contracts with an external
third party service provider for all commercial loan sub-ledger and general
ledger systems.

In completing its assessment of Y2K compliance, the Company reviewed and
identified all of the major system components believed to be susceptible to Y2K
issues. These included all software components of its in-house network as well
as its commercial lending service provider. The Company has obtained written
confirmation from all software vendors and software service providers of Y2K
compliance. The Company also reviewed other components of its in-house system
and is currently working with a third party network administrator to identify
and resolve other non-major Y2K issues.

The Company estimates that its Y2K compliance effort is approximately 95%
complete as of the end of March 1999, and anticipates being 100% complete by the
end of June 1999. Remaining testing will be performed on the non-major
components of its in-house network workstations. The Company estimates total Y2K
compliance costs will not exceed $10,000. The majority of these costs relate to
the review and repair, if necessary, of major and non-major software components.
The Company expects to incur all of these costs during 1999.

The Company's exposure to a non-compliant system is considered minimal. System
software vendors utilized by the Company are nationally known and reputable
service providers that offer these and similar services to many subscribers. The
Company does not believe it is reasonable to assume a collapse of the entire or
a significant portion of its computer system as a result of a Y2K issue. Should
the entire system or major component fail as a result of a Y2K issue, the
Company maintains adequate historical records that would enable reconstruction
and maintenance of loan and lease information manually until the system is
corrected.

The Company will complete its assessment of non IT related systems for Y2K
compliance by the end of the third quarter 1999. Major non-IT related systems
utilized by the Company include the telephone systems and building security
system. If the Company determines that any non-IT related systems are not Y2K
compliant, it will be necessary to adjust estimates of the cost of Y2K
compliance.

                                       9

<PAGE>
                           SOURCE CAPITAL CORPORATION


                           PART II - OTHER INFORMATION
                           ---------------------------




Items 1,2,3,4 and 5 of Part II are omitted from this report as they are either
------------------------------------------------------------------------------
inapplicable or the answer is negative.
---------------------------------------


Item 6.  Exhibits and Reports on Form 8-K
-------  --------------------------------

     (a)  Exhibits

         10.4 Amended and restated credit and security agreement

         27.1 Financial Data Schedule

     (b) Reports on Form 8-K

         None


          (The balance of this page has been intentionally left blank.)


                                       10
<PAGE>
                           SOURCE CAPITAL CORPORATION

                                   SIGNATURES
                                  ------------



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.


                                SOURCE CAPITAL CORPORATION
                                --------------------------
                                      (Registrant)



Date:      May  12, 1999        By:  /s/ D. Michael Jones         
           -------------             ------------------------------------------
                                      D. Michael Jones
                                      President and Chief Executive Officer




Date:      May 12, 1999         By:  /s/ Lester L. Clark             
           ------------              -----------------------------------------
                                      Lester L. Clark
                                      Vice President-Secretary/Treasurer
                                      Principal accounting and finance officer


                                       11