FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                For the Quarterly Period Ended September 30, 1998

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

       For the transition period from _________________to ________________

                             Commission File Number
                                     0-17915

                                   1ST BANCORP

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

               Indiana                                 35-1775411
--------------------------------------   ------------------------------------
       (State or other jurisdiction of        (I.R.S. Employer Identification
       incorporation or organization)                   Number)

        101 N. Third Street
        Vincennes, Indiana                               47591
--------------------------------------    ------------------------------------
(Address of principal executive office)                (Zip Code)

        Registrant's telephone number, including are code: (812) 882-4528

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                                            YES_____X_________NO______________

As of October 19, 1998, there were 1,096,388  Shares of the Registrant's  Common
Stock issued and outstanding.


<PAGE>



                          1ST BANCORP AND SUBSIDIARIES

                                      INDEX


  Page
                                                                          Number

Forward-Looking Statements                                                    3

PART I.  FINANCIAL INFORMATION:

            Item 1.    Financial Statements

                           Consolidated Condensed Statements
                                 of  Financial Condition,
                                 September 30, 1998 (Unaudited) and
                                 June 30, 1998                                4

                           Consolidated Condensed Statements
                                 of Earnings, Three Months Ended
                                 September 30, 1998 and 1997 (Unaudited)      5

                           Consolidated Condensed Statements of
                                Cash Flows, Three Months Ended
                                September 30, 1998 and 1997 (Unaudited)       6

                           Notes to Consolidated Condensed
                                 Financial Statements (Unaudited)             7

            Item 2.    Management's Discussion and Analysis
                                 of Financial Condition and Results
                                 of Operations                             8-14

            Item 3.    Quantitative and Qualitative Disclosures About
                                  Market Risk                                14

PART II.  OTHER INFORMATION

            Item 1.    Legal Proceedings                                     15

            Item 4.     Submission of Matters to Vote of Security
                                   Holders                                   15

            Item 6.     Exhibits and Reports on Form 8-K                     15

SIGNATURES                                                                   16


<PAGE>



Forward-Looking Statements

This  Quarterly  Report on Form 10-Q ("Form  10-Q")  contains  statements  which
constitute   forward-looking  statements  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include  statements  regarding the intent,  belief,
outlook,  estimate or expectations  of the  Corporation (as defined below),  its
directors or its officers primarily with respect to future events and the future
financial  performance  of the  Corporation.  Readers  of  this  Form  10-Q  are
cautioned that any such forward- looking statements are not guarantees of future
events or  performance  and  involve  risks and  uncertainties,  and that actual
results may differ materially from those in the forward-looking  statements as a
result of various factors. The accompanying  information  contained in this Form
10-Q  identifies  important  factors  that could cause such  differences.  These
factors include  changes in interest rates;  loss of deposits and loan demand to
other  savings and  financial  institutions;  substantial  changes in  financial
markets;  changes in real estate values and the real estate  market;  regulatory
changes;  or the  deterioration in the financial  strength of the  Corporation's
loan customers.  In addition,  from time to time, the Corporation may make other
oral or written forward-looking statements with respect to future events and the
future financial performance of the Corporation. All these other forward-looking
statements are also subject to the factors indicated above,  which factors could
cause  the  statements  or  projections   contained  therein  to  be  materially
inaccurate.

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

                          1ST BANCORP AND SUBSIDIARIES
            CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
                 (Unaudited and in thousands except share data)
<TABLE>
<CAPTION>


                                                                     September 30,   June 30,
                                                                        1998           1998
                                                                     ---------      ---------
<S>                                                                  <C>            <C>      
     ASSETS 
Cash and cash equivalents:
    Interest bearing deposits                                        $  23,741      $  15,831
    Non-interest bearing deposits                                          505            332
                                                                     ---------      ---------
            Cash and cash equivalents                                   24,246         16,163
                                                                     ---------      ---------

Securities available for sale                                           15,603         15,504
Securities held to maturity (market value
    of $12,761 at September 30, 1998 and
    $19,514 at June 30, 1998)                                           12,738         19,553
Loans receivable, net                                                  193,150        185,290
Loans held for sale                                                      4,954          2,449
Accrued interest receivable:
    Securities                                                             391            524
    Loans                                                                1,222          1,205
Stock in FHLB of Indianapolis, at cost                                   6,219          5,769
Office premises and equipment                                            3,041          3,077
Real estate owned and repossessed assets                                   794            930
Prepaid expenses and other assets                                        5,639          9,685
                                                                     ---------      ---------

TOTAL ASSETS                                                         $ 267,997      $ 260,149
                                                                     =========      =========

     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Deposits                                                         $ 115,868      $ 117,763
    Advances from FHLB and other borrowings                            124,381        115,381
    Advance payments by borrowers for taxes and insurance                  704            362
    Accrued interest payable on deposits                                   233            598
    Accrued expenses and other liabilities                               2,414          2,190
                                                                     ---------      ---------

                                      Total Liabilities              $ 243,600      $ 236,294
                                                                     ---------      ---------

Stockholders' Equity:
    Preferred stock, no par value; shares authorized
       of 2,000,000, none outstanding                                       --             --
    Common stock, $1 par value; shares authorized
       of 5,000,000; shares issued and outstanding
       of  1,096,388 at September 30, 1998 and
       1,091,710 at June 30, 1998                                    $   1,096      $   1,092
    Paid-in capital                                                      2,162          2,084
    Retained earnings, substantially restricted                         21,084         20,715
    Unrealized appreciation/(depreciation) on securities                    55            (36)
                                                                     ---------      ---------

                                     Total Stockholders' Equity      $  24,397      $  23,855
                                                                     ---------      ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 267,997      $ 260,149
                                                                     =========      =========
</TABLE>


See Notes to Consolidated Condensed Financial Statements.



<PAGE>

                          1ST BANCORP AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
               (Unaudited and in thousands except per share data)

                                                        Three months ended
                                                           September 30,
                                                  ------------------------------
                                                     1998              1997
                                                  ------------     -------------
INTEREST INCOME:
   Loans                                               $4,122            $3,783
   Investment securities                                  609               901
   Trading account securities                               -                 2
   Other short-term investments and
     interest bearing deposits                            242               292
                                                  ------------     -------------

  Total Interest Income                                 4,973             4,978
                                                  ------------     -------------

INTEREST EXPENSE:
   Deposits                                             1,619             1,972
   Short-term borrowings                                    -                 2
   FHLB advances and other borrowings                   1,635             1,426
                                                  ------------     -------------

  Total Interest Expense                                3,254             3,400
                                                  ------------     -------------

NET INTEREST INCOME BEFORE
    PROVISION FOR LOAN LOSSES                           1,719             1,578

Provision for loan losses                                 150                90
                                                  ------------     -------------

NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                           1,569             1,488
                                                  ------------     -------------

NON-INTEREST INCOME:
   Fees and service charges                                70                83
   Net gain (loss) on sales of investment
      securities available
      for sale and trading account investments             (5)                6
   Net gain on sales of loans                             143                61
   Other                                                  285               219
                                                  ------------     -------------

  Total Non-Interest Income                               493               369
                                                  ------------     -------------

NON-INTEREST EXPENSE:
   Compensation and employee benefits                     805               663
   Net occupancy                                          141               127
   Federal insurance premiums                              37                41
   Other                                                  453               406
                                                  ------------     -------------

  Total Non-Interest Expense                            1,436             1,237
                                                  ------------     -------------

Earnings Before Income Taxes                              626               620

Income Taxes                                              185               165
                                                  ------------     -------------

NET EARNINGS                                             $441              $455
                                                  ============     =============

BASIC EARNINGS PER SHARE:                               $0.40             $0.41

DILUTED EARNINGS PER SHARE:                             $0.40             $0.41

See Notes to Consolidated Condensed Financial Statements





<PAGE>

                          1ST BANCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                          (Unaudited and in thousands)

<TABLE>
<CAPTION>


                                                                      Three Months Ended
                                                                         September 30,
                                                                   -----------------------
                                                                     1998           1997
                                                                   --------       --------
Net Cash Flows From Operating Activities:
<S>                                                                <C>            <C>     
   Net earnings                                                    $    441       $    455
   Adjustments to reconcile net cash
      provided by operating activities:
      Depreciation and amortization                                     134            105
      Amortization of mortgage servicing rights                          75             46
      Gain on sales of loans                                           (143)           (61)
      (Gain) loss on sales of securities                                  5             (6)
      Net change in loans held for sale                              (2,505)           420
      Provision for loan losses                                         150             90
      Change in accrued interest receivable                             116            494
      Change in prepaid expenses and other assets                     4,020          4,015
      Change in accrued expenses and other liabilities                 (201)          (608)
      Loss on investment in limited partnership                          25             32
                                                                   --------       --------

        NET CASH PROVIDED BY OPERATING ACTIVITIES                     2,117          4,982
                                                                   --------       --------

Cash Flows From Investing Activities:
    Purchase of securities held to maturity                              --             --
    Proceeds from maturity of securities held to maturity             6,815          4,207
    Purchase of securities available for sale
          and trading account securities                             (4,778)        (2,998)
    Proceeds from maturities of securities available for sale         1,804          2,007
    Proceeds from sales of securities available
          for sale and trading account securities                     2,983          6,017
    Change in loans, net                                             (7,821)        (4,510)
    Purchases of equipment                                              (43)           (14)
    Purchases of stock of FHLB of Indianapolis                         (450)            --
                                                                   --------       --------

        NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES             (1,490)         4,709
                                                                   --------       --------

Cash Flows From Financing Activities:
    Change in deposits                                               (1,895)        (9,452)
    Proceeds from FHLB advances and other borrowings                  9,000         10,996
    Repayment of FHLB advances and other borrowings                      --        (11,045)
    Proceeds from issuance of common stock                               82             85
    Purchase and retirement of common stock                              --           (305)
    Payment of dividends on common stock                                (73)           (69)
    Change in advance payments by borrowers
          for insurance and taxes                                       342            263
                                                                   --------       --------

        NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES              7,456         (9,527)
                                                                   --------       --------

NET INCREASE IN CASH AND CASH EQUIVALENTS                             8,083            164

Cash and Cash Equivalents at Beginning of Period                     16,163         20,294
                                                                   --------       --------

Cash and Cash Equivalents at End of Period                         $ 24,246       $ 20,458
                                                                   ========       ========

</TABLE>

See Notes to Consolidated Financial Statements





<PAGE>

                          1ST BANCORP AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.  Basis of Presentation

In the opinion of management,  the accompanying unaudited consolidated condensed
financial statements contain all adjustments  necessary for a fair presentation.
The results of operations for the interim periods are not necessarily indicative
of the  results  which may be  expected  for an  entire  year.  These  financial
statements  are  condensed  and do  not  contain  all  disclosures  required  by
generally accepted  accounting  principles which would be included in a complete
set of financial statements.

Note 2.  Earnings Per Share

Earnings per share (EPS) have been computed on the basis of the weighted average
number of common shares outstanding and the dilutive effect of stock options not
exercised  during the periods  presented  using the treasury  stock method.  The
weighted  average  number  of  shares  outstanding  for  use  in the  basic  EPS
computations  was 1,096,173  and 1,098,690 for the three months ended  September
30, 1998 and 1997,  respectively.  The weighted average number of shares for use
in the dilutive EPS  computations  was  1,110,055  and  1,103,132  for the three
months ended September 30, 1998 and 1997, respectively.

Note 3.  Stock Purchase Plans

1ST BANCORP (the  "Corporation")  maintains an Employee Stock Purchase Plan (the
"Plan")  whereby  full-time  employees of First Federal Bank, A Federal  Savings
Bank (the "Bank"),  First Financial Insurance Agency, Inc. ("First  Financial"),
and First Title Insurance Company ("First Title") can purchase the Corporation's
common stock at a discount.  The purchase  price of the shares under the Plan is
85% of the fair  market  value  of such  stock  at the  beginning  or end of the
offering period,  whichever is lesser. A total of 24,523 authorized but unissued
shares were  reserved for issuance  under the Plan. A total of 4,479 shares were
issued and  purchased by employees in the first  quarter of fiscal year 1999 for
the fiscal  1998 plan year.  The Plan was  suspended  effective  June 30,  1998,
pursuant to the terms of the definitive  agreement  signed on August 5, 1998, by
1ST BANCORP and German American Bancorp which outlined terms for the Corporation
to be merged with and into German American Bancorp.

Note 4.  Stock Option Plan

The  Corporation  has a stock  option plan under which  260,466  authorized  but
unissued shares of common stock were reserved.  As of September 30, 1998, 25,200
incentive  stock  options  were  outstanding  with  certain  key  officers.   An
additional 2,961 shares remain reserved for future grant. All other options have
been exercised or have expired. No additional options can be granted pursuant to
the definitive agreement between 1ST BANCORP and German American Bancorp.

Note 5.  Reclassifications

Certain  amounts  in the  fiscal  year  1998  consolidated  condensed  financial
statements   have  been   reclassified  to  conform  to  the  fiscal  year  1999
presentation.


<PAGE>



Item 2.                  1ST BANCORP AND SUBSIDIARIES
           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

 (a)  Financial Condition:

The  Corporation's  goal is to continue to increase  net  interest  income while
maintaining its mortgage banking  operations to provide  non-interest  income to
augment  overall  profitability.  To achieve  this  goal,  the  Corporation  has
targeted a smaller securities  portfolio and is concentrating  efforts on retail
loan   originations  and  loan  purchases   through   correspondent  and  broker
agreements.

Total assets  aggregated  $267,997,000 at September 30, 1998,  compared to total
assets of $260,149,000 at June 30, 1998, an increase of 3.01%.

Cash and cash equivalents increased by $8,083,000,  or 50.01%, to $24,246,000 at
September  30,  1998,  from  $16,163,000  at June 30, 1998.  Securities  held to
maturity, which consist of U.S. Agency securities,  decreased by $6,815,000,  or
34.85% to $12,738,000 at September 30, 1998, from  $19,553,000 at June 30, 1998.
The  decline  in the  level of held to  maturity  securities  resulted  from the
exercise of the call feature by the issuer of the  securities.  At September 30,
1998,  securities  available for sale remained stable at $15,603,000 compared to
$15,504,000  at June 30,  1998.  There were no  trading  account  securities  at
September 30, 1998 or June 30, 1998.

The overall  decline in the level of securities  is a part of the  Corporation's
asset/liability   management   strategy  to  shift  funds  from  the  securities
portfolios  into the loan  portfolios  as the  securities  are  called or mature
rather than  replacing  the  securities.  This  strategy is being  undertaken to
continue the expansion of the Bank's net interest margin. The increased level of
cash and cash  equivalents  resulted  from the timing of the inflow of cash from
loan sales and called securities and the funding of loan production.

Net loans  receivable  (including loans held for sale) increased by $10,365,000,
or 5.52%, to  $198,104,000 at September 30, 1998, from  $187,739,000 at June 30,
1998.  The  increase in net loans  receivable  is  attributable  to  residential
mortgage  loan  production.  Growth  occurred  primarily  in  the  nonconforming
mortgage loan portfolio and to a lesser degree in the  conforming  mortgage loan
portfolio.

During the three months ended  September 30, 1998, the Bank funded $37.7 million
of loans  compared  to $17.7  million  of loans  during the three  months  ended
September 30, 1997.  The increase in total loan  production is  attributable  to
three primary factors.  First,  mortgage loan rates are at or near  historically
low levels which has resulted in increased loan production.

Second,  during the fourth quarter of fiscal year 1997, the Bank's nonconforming
loan  operations were  restructured.  All loan  origination  offices were closed
except the Evansville,  Indiana loan origination  office and all  administrative
functions were transferred to the main office in Vincennes, Indiana. As a result
of this  restructuring,  retail and wholesale  loan  production  was  negatively
effected in the first quarter of fiscal year 1997.


<PAGE>



                          1ST BANCORP AND SUBSIDIARIES
           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

Finally,  during the first  quarter of fiscal  year 1998,  the Bank  implemented
correspondent loan agreements to purchase loans from third parties. This program
was fully  operational  in the first quarter of fiscal year 1999 resulting in an
increased level of purchased  loans.  Loans purchased from third parties totaled
$5.5 million for the quarter  ended  September 30, 1998 compared to $520,000 for
the same period of the prior year.

During the three months ended  September  30,  1998,  nonconforming  residential
mortgage  lending  constituted  $12.3 million,  or 32.6%,  of total loans funded
during the period  compared with $5.6 million,  or 31.6%,  of total loans funded
during the three months ended  September  30,  1997.  Nonconforming  residential
loans  increased  to $88.6  million at  September  30,  1998,  compared to $81.0
million at June 30, 1998.

During the fourth quarter of fiscal year 1997, the Bank  implemented an indirect
auto lending program in its Vincennes,  Indiana market area.  Indirect auto loan
fundings  during the three months ended September 30, 1998 totaled $1.5 million.
The indirect auto loan portfolio totaled $9.2 million at September 30, 1998.

At  September  30,  1998,  nonaccrual  loans,  real estate  owned  ("REO"),  and
repossessed assets totaled  $4,643,000,  or 1.73% of total assets. This compares
to $4,421,000 of nonaccrual loans, REO, and repossessed assets or 1.70% of total
assets,  at June 30,  1998.  Overall,  the upward trend in  nonaccrual  loans is
attributable to residential one-to-four family mortgage loans. In particular the
Bank's  nonconforming  loan  delinquencies  have  increased.  Over the past four
fiscal  years  the  Bank  has  expanded  its  residential   one-to-four   family
nonconforming  loan  portfolio to increase its net  interest  margin.  While the
larger  nonconforming  loan  portfolio has been  successful in expanding the net
interest margin,  the credit risk associated with these loans has contributed to
the increased level of delinquencies, nonaccrual loans, and real estate owned.

Loan quality  continues to be of major importance to the Bank and strong efforts
are being made to ensure loan quality. In an effort to mitigate potential losses
and reduce  non-performing  assets,  additional  collection  personnel have been
hired,  more  stringent  collection  practices  have been  implemented,  and the
portfolio 100% nonconforming  second mortgage loan program was discontinued.  In
addition,  loan loss  allowances  have been  increased to prepare for  potential
future losses in the loan portfolio.

The  table  below  sets  forth  the  amounts  and  categories  of 1ST  BANCORP's
nonaccrual  loans,  REO,  and  repossessed  assets for the  balance  sheet dates
presented.  Loans are reviewed  regularly and are generally placed on nonaccrual
status when they become contractually past due more than 90 days.
<TABLE>
<CAPTION>


                                                               September 30,      June 30,
                                                                    1998             1998
<S>                                                              <C>              <C>       
Nonaccrual loans, REO, and repossessed assets:                   
   Nonaccrual loans                                              $3,849,000       $3,491,000
   REO and repossessed assets (1)                                   794,000          930,000
   Restructured loans                                                    --               --
                                                                 
Total nonaccrual loans, REO, and repossessed assets              $4,643,000       $4,421,000
Nonaccrual loans, REO and repossessed assets to total assets           1.73%            1.70%

</TABLE>

(1) Certain assets acquired through repossession, foreclosures, or deeds in lieu
of foreclosure,  which are included in the Consolidated  Condensed Statements of
Financial Condition as real estate owned and repossessed assets.

During the three months ended September 30, 1998, the Bank established,  through
operations,  provisions for loan losses  totaling  $150,000  compared to $90,000
during the same three months of the prior year.  The Bank's  allowance  for loan
loss  increased to $1,540,000 at September 30, 1998 from  $1,465,000 at June 30,
1998.

Prepaid  expenses and other assets  decreased by  $4,046,000  to  $5,639,000  at
September 30, 1998 from  $9,685,000 at June 30, 1998. The decrease was primarily
the result of the completion of a $3.9 million loan sale.

Deposits aggregated  $115,868,000 at September 30, 1998 compared to $117,763,000
at June 30,  1998.  The modest  decline in the level of deposits  included  both
retail and brokered funds. Federal Home Loan Bank ("FHLB") advances increased by
$9,000,000,  or 7.80%,  to  $124,381,000  at  September  30,  1998  compared  to
$115,381,000  at June 30, 1998.  FHLB advances were a lower cost source of funds
than  retail  or  brokered  funds  during  quarter  ended  September  30,  1998.
Therefore, FHLB advances were used to fund loan portfolio growth.

Accrued  expenses and other  liabilities  increased  modestly to  $2,414,000  at
September 30, 1998, compared to $2,190,000 at June 30, 1998. Advance payments by
borrowers  for taxes and  insurance  increased to $704,000 at September 30, 1998
compared to  $362,000 at June 30,  1998.  Accrued  interest  payable on deposits
decreased to $233,000 at September 30, 1998, from $598,000 at June 30, 1998. The
fluctuation in these categories were due to timing  differences that occurred in
the normal course of business.

(b)  Results of Operations:

During the three months ended  September  30, 1998,  1ST  BANCORP's net earnings
remained  stable at  $441,000,  or $0.40 per  share,  compared  to net income of
$455,000, or $0.41 per share, for the three months ended September 30, 1997.

Net interest  income before  provision  for loan losses  increased to $1,719,000
during the three months ended  September  30,  1998,  as compared to  $1,578,000
during the three months ended  September 30, 1997.  The  increased  level of net
interest  income was primarily  the result of an increased net interest  margin.
The net interest margin  increased to 2.75% for the three months ended September
30, 1998 as compared to 2.49% for the three months ended September 30, 1997.

As a part of the Bank's  asset/liability  strategy  during  fiscal year 1998 and
fiscal year 1999, the mix of interest earning assets was changed.  As securities
matured or were called by the issuer,  the funds were  reinvested  in the Bank's
mortgage loan and consumer loan portfolios. This strategy has allowed the Bank's
yield on earning assets to increase during a period of declining market interest
rates.  In addition,  the increased  earning asset yield enabled gross  interest
income to remain stable despite a modestly lower average level of earning assets
during the first quarter of fiscal year 1999 compared with fiscal year 1998.

For the quarter  ended  September  30, 1998,  the Bank's cost of funds and gross
interest  expense were both lower as compared to same quarter of the prior year.
As a part of the Bank's  asset/liability  strategy  during  fiscal year 1998 and
fiscal year 1999, the Bank used FHLB advances to replace brokered deposits which
matured.  FHLB  advances  represented  a lower cost  funding  source  during the
periods than brokered deposits. Also contributing to the lower funding costs was
an overall  decline in market  interest rates and a modestly lower average level
of costing liabilities.

As previously  stated,  the Bank has placed into  portfolio  "A+",  "A" and "B+"
rated  nonconforming  residential  mortgage  loans.  To mitigate the credit risk
associated with nonconforming loans,  provisions for loan losses were increased.
During the three month ended September 30, 1998, provisions for loan losses have
aggregated  $150,000 compared to loan loss provisions of $90,000 during the same
period of the previous fiscal year.

Non-interest  income for the three  months  ended  September  30,  1998  totaled
$493,000 compared to $369,000 for the three months ended September 30, 1997. The
increased  non-interest  income  resulted  primarily from a higher level of loan
sales and a  corresponding  increased  gain on sales of loans and from increased
activity by First Title Insurance Company.

The gain on sales of mortgage  loans  totaled  $143,000  during the three months
ended  September  30,  1998,  compared to $61,000  during the same period of the
prior year. The increased gain on sales of loans is primarily attributable to an
increased  volume of loan sales.  Loan sales totaled  $12.4  million  during the
three months ended  September  30, 1998,  compared to $5.1 million for the three
months ended  September  30,  1997.  The  declining  interest  rate  environment
presented market opportunities for the Bank to complete conforming loan sales to
mitigate  prepayment  risk which  contributed  to the increased  loan sales.  In
addition,  the  increased  volume of loan sales was due in part to a significant
increase in the volume of loan production during the quarter ended September 30,
1998, as compared with the same period of the prior year.

Other  non-interest  income  increased to $285,000 during the three months ended
September  30,  1998,  compared  with  $219,000  during the three  months  ended
September 30, 1997. The increase is attributable  to additional  income from the
operations of First Title Insurance Company.  During the third quarter of fiscal
year 1998, the Corporation  acquired the assets of an existing independent title
and abstract  company.  The assets of the acquired  company were merged into the
previously inactive subsidiary, First Title Insurance Company. First Title sells
title  insurance as an agent for Chicago Title  Insurance  Company,  Ticor Title
Insurance Company, and Stewart Title Guaranty Company.

Non-interest expense totaled $1,436,000 for the three months ended September 30,
1998,  compared to $1,237,000 for the three months ended September 30, 1997. The
increased non-interest expense is largely attributable to expanded operations by
First Title  Insurance  Company and expenses  relating to  administrative  costs
associated with the pending merger of 1ST BANCORP into German American Bancorp.

Compensation and employee  benefits expense  increased to $805,000 for the three
months ended September 30,  1998,compared to $663,000 for the three months ended
September 30, 1997. Increased expenses associated with the employee's retirement
plan, the management  incentive plan, and the director's  deferred  compensation
program for the period ended  September 30, 1998,  compared with the same period
of the prior year  resulted  in a portion  of the  increased  expense.  Expanded
operations  and the  corresponding  expanding  staffing  for  First  Title  also
contributed to the increased compensation expense.

Other  non-interest  expense  increased  to $453,000  for the three months ended
September  30, 1998,  compared to $406,000 for the three months ended  September
30,  1997.  These  increases  resulted  from  various  administrative   expenses
associated  with the pending merger of 1ST BANCORP and German  American  Bancorp
and expanded operations by First Title Insurance Company.

(c) Capital Resources and Liquidity:

The  Corporation is subject to regulation as a savings and loan holding  company
by the Office of Thrift  Supervision  ("OTS").  First  Federal  Bank,  A Federal
Savings Bank, as a subsidiary of a savings and loan holding company,  is subject
to certain  restrictions in its dealings with the Corporation.  The Bank is also
subject to the regulatory requirements applicable to a federal savings bank.

Current  capital  regulations  require  savings  institutions  to  have  minimum
tangible  capital equal to 1.5% of total assets and a minimum core capital ratio
of 3  percent.  Additionally,  savings  institutions  are  required  to  meet  a
risk-based capital ratio equal to 8.0% of risk-weighted assets. At September 30,
1998, the Bank met all current capital requirements.



The  following  is a  summary  of the  Bank's  regulatory  capital  and  capital
requirements at September 30, 1998:

                              Tangible            Core              Risk-Based
                              Capital            Capital              Capital

Regulatory Capital            $22,906,000       $22,906,000         $23,987,000
Minimum Capital Requirement     4,010,000         8,020,000          12,593,000

Excess Capital                $18,896,000       $14,886,000         $11,394,000

Regulatory Capital Ratio             8.57%             8.57%              15.24%
Required Capital Ratio               1.50%             3.00%               8.00%


During the quarter  ended  September  30, 1998,  1ST BANCORP paid a $0.0667 cash
dividend per share. This is the twenty third consecutive  quarterly dividend 1ST
BANCORP has paid to shareholders.

Liquidity  measures the Bank's ability to meet savings  withdrawals  and lending
commitments.  Management  believes  that  liquidity  is adequate to meet current
requirements,  including  the funding of $24.5 million in loan  commitments  and
$2.2 million of loans in process outstanding at September 30, 1998. The majority
of these  commitments  are  expected to be funded  within the three month period
ending  December 31, 1998. At September  30, 1998,  the Bank had $5.6 million in
outstanding  commitments to sell mortgage loans. The Bank maintains liquidity of
at  least  4% of net  withdrawable  assets  as  required  by  current  liquidity
regulations.  The  average  regulatory  liquidity  ratio  for  the  month  ended
September 30, 1998 was 8.36%.

The Year 2000 issue is the result of  potential  problems  with the  programming
code in existing computer systems as the Year 2000 approaches.  An assessment of
the impact of the Year 2000 issue on the Corporation's  computer system has been
completed. Management is closely monitoring the progress of the systems in place
toward Year 2000 compliance.

The Bank's records are primarily  maintained by a third-party  data center.  The
Corporation  also  relies on third  party  vendors  to provide  data  processing
capabilities.  Formal  communications  from the data  center  and other  service
providers  indicate  reprogramming  will be completed  within a sufficient  time
frame to allow  adequate  testing to ensure  continuing  operations  in the Year
2000.  Completion  of testing for Year 2000  compliance  is expected by June 30,
1999.  Management  believes  the Year  2000  issue  will  not  pose  significant
operational problems for the Corporation's computer systems.

Expenses  related to upgrading  the computer  systems and software for Year 2000
compliance  are estimated to be $200,000.  At September 30, 1998,  approximately
$130,000 of this amount had already been expended in  connection  with Year 2000
compliance.  Management  does not consider the cost to the  Corporation of these
Year 2000  compliance  activities  to be material to the  financial  position or
results of operations in any given year.

On August 5, 1998 1ST BANCORP and German American  Bancorp  ("German  American")
jointly  announced  the  signing of a  definitive  agreement  (the  "Agreement")
pursuant to which the  Corporation  will be merged with and into German American
(the  "Merger").  The Agreement  provides  that upon the  effective  date of the
Merger, the shareholders of the Corporation would receive shares of common stock
of German American with an aggregate value of $57,120,000 based on market prices
during a period of 15 days ending on the second trading date before closing.  To
determine the total number of shares German  American will issue,  the companies
will value the German  American  common stock by calculating the average closing
bid/asked quotations for German American common stock during the 15 trading days
ending on the second day prior to the closing date and dividing  $57,120,000  by
that average value. If, however,  the average value exceeds $33 per share,  then
the total number of shares will equal  1,730,909  ($57,120,000  divided by $33).
Similarly,  if the average  value is below $28,  then the total number of shares
will equal 2,040,000  ($57,120,000 divided by $28). German American is listed on
the Nasdaq  National  Market System  (symbol:  GABC).  On November 4, 1998,  the
average of the closing bid/asked quotations for German American common stock was
$24.125 per share. Assuming, for purposes of illustration only, that the average
value remains $24.125 during the 15 day valuation  period,  then German American
will issue an aggregate  2,040,000  shares of German  American  common stock (or
1.8188  shares of German  American  common stock with an average value of $43.88
for each share of 1ST BANCORP common stock assuming 1,121,588 outstanding shares
of 1ST BANCORP common stock at the closing).

The Corporation has also signed a Stock Option  Agreement with German  American,
giving  German  American an option to purchase up to 19.9% of the  Corporation's
outstanding  shares,  exercisable at $50.94 per share upon occurrence of certain
events that create the  potential  for another  party to acquire  control of the
Corporation.

There are no other known trends,  events,  or  uncertainties,  including current
recommendations  by  regulatory  authorities,  that  should  have,  or that  are
reasonably  likely  to  have,  a  material  effect  on  the  liquidity,  capital
resources, or operations of 1ST BANCORP.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There have been no  material  changes in market risk  exposures  that affect the
quantitative  or qualitative  disclosures  presented as of the preceding  fiscal
year end in the Corporation's Annual Report on Form 10-K.


<PAGE>




PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

Neither 1ST  BANCORP nor its  subsidiaries  is  involved in any  material  legal
proceedings,  other than routine proceedings occurring in the ordinary course of
its business.

Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted to a vote of security holders during the quarter
ended September 30, 1998.

Item 6. Exhibits and Reports on Form 8-K

a)       The following exhibits are filed herewith:

               Exhibit 3a     Certificate   of   Incorporation   of   Registrant
                              (incorporated  by  reference  to  exhibit  3.1  to
                              Registrant's  Registration  Statement on Form S-4,
                              Registration  No.  33-24587,  filed  September 28,
                              1988)

               Exhibit 3b     Restated    Code   of   By-Laws   of    Registrant
                              (incorporated   by  reference  to  Exhibit  3b  to
                              Registrant's Form 10-K for the year ended June 30,
                              1994)

               Exhibit 27     Financial Data Schedule

b)       The Registrant filed a Report on Form 8-K on August 6, 1998, announcing
         the  signing of a  definitive  agreement  pursuant to which 1ST BANCORP
         will be merged with and into German American Bancorp.

         The  Registrant  file a  Report  on  Form  8-K  on  November 6,  1998,
         announcing first quarter fiscal year 1999 earnings.


<PAGE>




                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                              1ST BANCORP


Date: November 13, 1998                       By:  /s/   C. James McCormick
                                              -----------------------------
                                              C. James McCormick, Chairman and
                                              Chief Executive Officer


Date: November 13, 1998                       By:  /s/   Frank D. Baracani
                                              ----------------------------
                                              Frank D. Baracani, President


Date: November 13, 1998                       By:  /s/   Mary Lynn Stenftenagel
                                              ---------------------------------
                                              Mary Lynn Stenftenagel,
                                              Secretary-Treasurer and
                                              Chief Accounting Officer