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, 1997

             ( ) 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 of 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 28, 1997,  there were 691,726  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, 1997 (Unaudited) and
                     June 30, 1997                                             4

               Consolidated Condensed Statements
                     of Earnings, Three Months Ended
                     September 30, 1997 and 1996 (Unaudited)                   5

               Consolidated Condensed Statements of
                    Cash Flows, Three Months Ended
                    September 30, 1997 and 1996 (Unaudited)                    6

               Notes to Consolidated Condensed
                     Financial Statements (Unaudited)                        7-8

Item 2.    Management's Discussion and Analysis
                     of Financial Condition and Results
                     of Operations                                          9-14

Item 3.    Quantitative and Qualitative Disclosures About
                     Market Risk                                              14

PART II.  OTHER INFORMATION                                                   15

Item 1.    Legal Proceedings                                                  15
                                                                       
Item 2.    Submissions of Matters to Vote of Securities               
                     Holders                                                  15
                                                                       
Item 3.    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.
<PAGE>


                          1ST BANCORP AND SUBSIDIARIES
            CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
                          (Unaudited and in Thousands)

<TABLE>
<CAPTION>
                                                        September 30,       June 30,
                                                           1997              1997
                                                        ----------------------------
<S>                                                         <C>             <C>    
     ASSETS
Cash and cash equivalents:
    Interest bearing deposits                               $19,982         $19,771
    Non-interest bearing deposits                               476             523
                                                          ----------   -------------
            Cash and cash equivalents                        20,458          20,294
                                                          ----------   -------------

Securities available for sale                                 6,687          11,588
Securities held to maturity (market value
    of $39,692 at September 30, 1997 and
    $43,556 at June 30, 1997)                                39,859          44,065
Loans receivable, net                                       151,309         146,840
Loans held for sale                                          27,349          27,769
Accrued interest receivable:
    Securities                                                  534           1,081
    Loans                                                     1,152           1,099
Stock in FHLB of Indianapolis, at cost                        4,941           4,941
Office premises and equipment                                 3,162           3,225
Real estate owned                                               408             397
Prepaid expenses and other assets                             5,076           9,191
                                                          ----------   -------------

TOTAL ASSETS                                               $260,935        $270,490
                                                          ==========   =============

     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:                                                           
    Deposits                                               $134,864        $144,316
    Advances from FHLB and other borrowings                 100,247         100,296
    Advance payments by borrowers for taxes and insurance       567             304
    Accrued interest payable on deposits                        681           1,194
    Accrued expenses and other liabilities                    2,002           2,047
                                                          ----------   -------------

                    Total Liabilities                      $238,361        $248,157
                                                          ----------   -------------

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  691,726 at September  30, 1997 and
       697,897 at June 30, 1997                                $692            $698
    Paid-in capital                                           2,428           2,642
    Retained earnings, substantially restricted              19,488          19,102
    Unrealized depreciation on securities                       (34)           (109)
                                                          ----------   -------------

                   Total Stockholders' Equity               $22,574         $22,333
                                                          ----------   -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $260,935        $270,490
                                                          ==========   =============
</TABLE>



See Notes to Consolidated Condensed Financial Statements.

<PAGE>

                          1ST BANCORP AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                          (Unaudited and in Thousands)

<TABLE>
<CAPTION>
                                                                Three months ended
                                                                    September 30,
                                                                -------------------
                                                                   1997      1996
                                                                --------   --------
<S>                                                              <C>       <C>    
INTEREST INCOME:
   Loans                                                         $ 3,783   $ 3,595
   Investment securities                                             901       927
   Trading account securities                                          2        --
   Other short-term investments and
     interest bearing deposits                                       292       187
                                                                 -------   -------

  Total Interest Income                                            4,978     4,709
                                                                 -------   -------

INTEREST EXPENSE:
   Deposits                                                        1,972     1,829
   Short-term borrowings                                               2        21
   FHLB advances and other borrowings                              1,426     1,417
                                                                 -------   -------

  Total Interest Expense                                           3,400     3,267
                                                                 -------   -------

NET INTEREST INCOME BEFORE
    PROVISION FOR LOAN LOSSES                                      1,578     1,442

Provision for loan losses                                             90        46
                                                                 -------   -------

NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                                      1,488     1,396
                                                                 -------   -------

NON-INTEREST INCOME:
   Fees and service charges                                           83        84
   Net gain (loss) on sales of investment securities available
      for sale and trading account investments                         6        --
   Net gain on sales of loans                                         61       653
   Other                                                             219       136
                                                                 -------   -------

  Total Non-Interest Income                                          369       873
                                                                 -------   -------

NON-INTEREST EXPENSE:
   Compensation and employee benefits                                663     1,045
   Net occupancy                                                     127       181
   Federal insurance premiums                                         41     1,429
   Other                                                             406       669
                                                                 -------   -------

  Total Non-Interest Expense                                       1,237     3,324
                                                                 -------   -------

Earnings Before Income Taxes                                         620    (1,055)

Income Taxes                                                         165      (424)
                                                                 -------   -------

NET EARNINGS                                                     $   455   ($  631)
                                                                 =======   =======

EARNINGS PER SHARE:                                              $  0.65   ($ 0.90)
</TABLE>



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,
                                                                --------------------
                                                                  1997        1996
                                                                --------    --------
<S>                                                             <C>         <C>      
Net Cash Flow From Operating Activities:
   Net earnings                                                 $    455    ($   631)
   Adjustments to reconcile net cash
        provided by operating activities:
      Depreciation and amortization                                  105          58
      Amortization of mortgage servicing rights                       46          26
      Gain on sale of loans                                          (61)       (653)
      Gain on sale of securities                                      (6)         --
      Net change in loans held for sale                              420       4,963
      Provision for loan losses                                       90          46
      Change in accrued interest receivable                          494         478
      Change in prepaid expenses and other assets                  4,015        (174)
      Change in accrued expenses and other liabilities              (608)         10
      Loss on investment in limited partnership                       32          36
                                                                --------    --------

        NET CASH PROVIDED BY OPERATING ACTIVITIES                  4,982       4,159
                                                                --------    --------

Cash Flows From Investing Activities:
    Purchase of securities held to maturity                           --          --
    Proceeds from maturity of securities held to maturity          4,207          31
    Purchase of securities available for sale and
          trading account securities                              (2,998)         --
    Proceeds from maturities of securities available for sale      2,007          89
    Proceeds from sales of securities available for sale
          and trading account securites                            6,017          --
    Principal collected on loans, net of originations             (4,499)    (10,313)
    Purchases of equipment                                           (14)        (25)
    Other                                                            (11)       (275)
                                                                --------    --------

        NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES           4,709     (10,493)
                                                                --------    --------

Cash Flows From Financing Activities:
    Change in deposits                                            (9,452)     (3,142)
    Proceeds from FHLB advances and other borrowings              10,996      18,865
    Repayment of FHLB advances and other borrowings              (11,045)    (20,845)
    Proceeds from issuance of common stock                            85          95
    Purchase and retirement of common stock                         (305)         --
    Payment of dividends on common stock                             (69)        (67)
    Change in advance payments by borrowers
          for insurance and taxes                                    263         152
                                                                --------    --------

        NET CASH USED BY FINANCING ACTIVITIES                     (9,527)     (4,942)
                                                                --------    --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 164     (11,276)

Cash and Cash Equivalents at Beginning of Period                  20,294      25,099
                                                                --------    --------

Cash and Cash Equivalents at End of Period                      $ 20,458    $ 13,823
                                                                ========    ========
</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  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 earnings per share
computations  was 698,729 and 700,328 for the three months ended  September  30,
1997 and 1996, respectively.

Note 3.  Stock Purchase Plans

The  Corporation  maintains an Employee  Stock  Purchase Plan whereby  full-time
employees of First Federal  Bank, A Federal  Savings Bank (the "Bank") and First
Financial   Insurance  Agency,   Inc.  ("First   Financial")  can  purchase  the
Corporation's common stock at a discount. The purchase price of the shares under
this 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 15,750  authorized but
unissued  shares were  reserved for  issuance  under this plan. A total of 3,564
shares were issued and  purchased by  employees  in the first  quarter of fiscal
year 1998 for the fiscal 1997 plan year.

Note 4.  Stock Option Plan

The  Corporation  has a stock  option plan under which  165,375  authorized  but
unissued shares of common stock were reserved.  As of September 30, 1997, 17,000
incentive  stock  options  were  outstanding  with  certain  key  officers.   An
additional 1,880 shares remain reserved for future grant. All other options have
been exercised or canceled.

Note 5.  Stock Repurchase Plan

In  August  1996,  the  Board  authorized  the  repurchase  of up  to 5% of  the
outstanding  shares of common  stock  (703,638  shares were  outstanding  at the
time),  subject to market  conditions,  over a two year period which  expires in
August 1998.  During the quarter  ended  September  30, 1997,  10,000  shares of
common stock were repurchased.

<PAGE>

Note 6.  Savings Association Insurance Fund ("SAIF") Recapitalization

On  September  30,  1996,  the federal  government  mandated  an  industry  wide
assessment  to  recapitalize  the SAIF,  which is a part of the Federal  Deposit
Insurance  Corporation  ("FDIC").  The special assessment was charged to savings
associations with insured deposits by the SAIF. The assessment was calculated at
0.657% of insured  deposits  as of March 31,  1995.  The  Bank's  portion of the
assessment was $1,330,000 and is included in non-interest  expense for the three
months ended September 30, 1996.

Note 7.  Reclassifications

Certain amounts in the fiscal year 1997 consolidated  financial  statements have
been reclassified to conform to the fiscal year 1998 presentation.


<PAGE>

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

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

(a)  Financial Condition:

Total assets decreased by $9,555,000, or 3.53%, to $260,935,000 at September 30,
1997, compared to total assets of $270,490,000 at June 30, 1997. The decrease is
primarily  attributable  to  decreases  in the  securities  held to maturity and
available for sale portfolios.

Cash and cash equivalents remained stable during the quarter ended September 30,
1997.  Cash and cash  equivalents  totaled  $20,458,000  at September  30, 1997,
compared to $20,294,000 at June 30, 1997.

Investment securities consist primarily of U.S. Agency securities.  The majority
of securities have either a "call" or "step-up" feature, which provides the Bank
with flexibility under varying interest rate scenarios.  The level of investment
securities held to maturity (including mortgage-backed  securities) decreased by
$4,206,000, or 9.55%, to $39,859,000, at September 30, 1997, from $44,065,000 at
June 30, 1997. The decline in the level of securities held to maturity  resulted
from the exercise of the call feature by the issuer of the securities.

Investment securities available for sale (including mortgage-backed  securities)
declined by  $4,901,000,  or 42.29%,  to $6,687,000 at September 30, 1997,  from
$11,588,000 at June 30, 1997.  The decline in the level of securities  available
for sale resulted from sales of securities  and the exercise of the call feature
of the  securities by the issuer.  There were no trading  account  securities at
September 30, 1997 or June 30, 1997.

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 and mature
rather than  replacing  the  securities.  This  strategy is being  undertaken to
continue the expansion of the Bank's net interest margin.


<PAGE>

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

Net loans receivable (including loans held for sale) increased by $4,049,000, or
2.32%,  to  $178,658,000  at September 30, 1997,  from  $174,609,000 at June 30,
1997.  The  increase in net loans  receivable  is  attributable  to  residential
mortgage  loan  production,  an emphasis  on the Bank's  indirect  auto  lending
program  and a lower  level of  mortgage  loan  sales.  Growth  occurred  in the
non-conforming  and  conforming  mortgage loan  portfolios  and in the auto loan
portfolio.

Loan  production  during the three months  ended  September  30, 1997  decreased
compared  to the same period of the prior year.  During the three  months  ended
September  30, 1997,  the Bank funded $17.7  million of loans  compared to $37.8
million of loans during the three months ended  September 30, 1996. The decrease
in  loan  originations  is  primarily  due to the  restructuring  of the  Bank's
nonconforming  loan origination  network in the latter part of fiscal year 1997.
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.

During the three  months  ended  September  30,  1997,  non-conforming  mortgage
lending  constituted  $5.6 million,  or 31.6%,  of total loans funded during the
period  compared with $21.7  million,  or 57.2% of total loans funded during the
three months ended  September 30, 1996.  Non-conforming  loans,  including those
held for sale,  increased  to $70.6  million at September  30, 1997  compared to
$66.5 million at June 30, 1997.

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 first quarter of fiscal year 1997 totaled $1.5 million.  The
indirect auto loan portfolio totaled $1.7 million at September 30, 1997.

At  September  30,  1997,   nonaccrual  loans  and  real  estate  owned  totaled
$2,930,000,  or 1.12% of total assets. This compares to $2,727,000 of nonaccrual
loans and real estate  owned,  or 1.01% of total assets,  at June 30, 1997.  The
upward trend in loan delinquencies is related to residential  one-to-four family
mortgage  loans.  Delinquencies  have  trended  upward  in both  conforming  and
non-conforming  mortgage loans. 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,  mortgage
loan  collection  personnel  have  been  expanded,   more  stringent  collection
practices have been  implemented,  and certain higher risk lending programs have
been  discontinued.  In addition,  loan loss  allowances  have been increased to
prepare for potential future losses in the portfolio.

The  table  below  sets  forth  the  amounts  and  categories  of 1ST  BANCORP's
nonaccrual  loans and real estate owned 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.


<PAGE>

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

<TABLE>
<CAPTION>
                                                               September 30,          June 30,
                                                                   1997                1997
                                                               -------------------------------
<S>                                                              <C>                <C>       
Nonaccrual loans and real estate owned:
   Nonaccrual loans                                              $2,522,000         $2,330,000
   Real estate owned (1)                                            408,000            397,000
   Restructured loans                                                  -                    -
                                                               -------------------------------
Total nonaccrual loans and real estate owned                     $2,930,000         $2,727,000
Nonaccrual loans and real estate owned to total assets                1.12%              1.01%
</TABLE>
-----------------------
(1)  Certain  assets  acquired   through   foreclosures  or  deeds  in  lieu  of
     foreclosure,  which are included in the Consolidated Condensed Statement of
     Financial Condition as real estate owned.

During the three months ended September 30, 1997, the Bank established,  through
operations,  provisions for loan losses totaling $90,000. In addition,  the Bank
realized  net  charge-offs  through  its  allowance  for loan loss  accounts  of
$74,000. The Bank's allowance for loan loss was $1,174,000 at September 30, 1997
and $1,158,000 at June 30, 1997.

Prepaid  expenses and other assets  decreased by  $4,115,000  to  $5,076,000  at
September 30, 1997 from  $9,191,000 at June 30, 1997. The decrease was primarily
the result of the funding of a $4.1 million  loan sale during the quarter  ended
September 30, 1997 which was in process at June 30, 1997.

Total deposits  decreased by $9,452,000,  or 6.55%, to $134,864,000 at September
30, 1997 from  $144,316,000  at June 30,  1997.  The  decrease  in deposits  was
primarily the result of decreasing  brokered funds during the three months ended
September 30, 1997. The decline in brokered  funds  correlated to the decline in
the securities held to maturity and available for sale portfolios. Advances from
the Federal Home Loan Bank  ("FHLB")  and other  borrowings  remained  stable at
$100,247,000 at September 30, 1997 compared to $100,296,000 at June 30, 1997.

Accrued  expenses  and  other  liabilities  remained  stable  at  $2,002,000  at
September 30, 1997 compared to $2,047,000 at June 30, 1997.  Advance payments by
borrowers  for taxes and insurance  increased  modestly to $567,000 at September
30, 1997, from $304,000 at June 30, 1997.  Accrued  interest payable on deposits
decreased to $681,000 at September 30, 1997,  from  $1,194,000 at June 30, 1997.
The  fluctuations in these  categories were due to the timing  differences  that
occur in the normal course of business.

(b)  Results of Operations:

During the three months ended  September 30, 1997, 1ST BANCORP had net income of
$455,000,  or $0.65 per share,  compared to a net loss of $631,000, or $0.90 per
share,  for the three months  ended  September  30,  1996.  The net loss for the
quarter ended  September  30, 1996,  was directly  attributable  to the one-time
assessment  for  the  recapitalization  of  the  SAIF.  Exclusive  of  the  SAIF
assessment,  pre-tax net earnings for the quarter ended September 30, 1996 would
have been approximately $275,000.

<PAGE>

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


The increased  earnings for the quarter ended  September 30, 1997 as compared to
the quarter ended  September  30, 1996,  resulted from an increased net interest
margin and a substantially reduced level of noninterest expenses.  The decreased
noninterest expenses,  exclusive of the SAIF assessment, was attributable to the
closure of several of the Bank's loan origination offices during the latter part
of fiscal 1997.

Net interest  income  before  provision for loan losses was  $1,578,000  for the
three months ended  September  30, 1997,  compared to  $1,442,000  for the three
months ended September 30, 1996. The net interest margin was 2.49% for the three
months  ended  September  30, 1997  compared to 2.30% for the three months ended
September 30, 1996. The increased level of net interest income was the result of
the expanded net interest margin. The net interest margin was expanded primarily
through the increased  level of higher  yielding  non-conforming  mortgage loans
which have been retained in the loan  portfolio.  The higher yield on the Bank's
loan portfolio was partially  offset by an increased cost of funds. The modestly
higher  cost of funds was  attributable  to the Bank's  savings  deposits.  Also
contributing  to the  increased  net interest  margin for the three months ended
September 30, 1997 as compared with the same period of the previous  year, was a
slightly   higher  level  of   interest-earning   assets  and   interest-bearing
liabilities.

Non-interest  income for the three  months  ended  September  30,  1997  totaled
$369,000 compared to $873,000 for the three months ended September 30, 1996. The
lower level of non-interest income for the three months ended September 30, 1997
resulted primarily from a decreased gain on sale of loans.

The  gain on sale of  mortgage  loans  totaled  $61,000  for the  quarter  ended
September  30, 1997,  compared to $653,000 for the quarter  ended  September 30,
1996.  The  decline  in the gain on sale of loans  for the  three  months  ended
September  30,  1997  resulted  from a lower  volume of loan  sales.  Loan sales
totaled $5.1 million for the quarter ended September 30, 1997, compared to $23.9
million for the quarter ended September 30, 1996. The reduction in loan sales is
a part of the Bank's  asset/liability  management  strategies to enhance the net
interest margin by retaining a larger portion its mortgage loan  originations in
portfolio.

Fees and  service  charges  remained  stable and  totaled  $83,000 for the three
months ended  September  30, 1997 compared to $84,000 for the three months ended
September 30, 1996. The net gains on the sale of investment securities available
for sale and trading  account  investments  totaled  $6,000 for the three months
ended  September  30, 1997  compared  with no  activity in the first  quarter of
fiscal year 1996.

"Other"  non-interest  income  increased to $219,000 for the three months ended
September  30,  1997  compared  with  $136,000  during  the three  months  ended
September 30, 1996. The increase is attributable  to additional  income from the
insurance  operations of First Financial  Insurance Agency,  Inc. The additional
insurance income was due in large part to the purchase of book of business of an
existing independent insurance agency in December 1996. The book of business was
merged with the existing  customer base of First  Financial.  As a result of the
acquisition,   First  Financial  operates  full  service  insurance  offices  in
Vincennes, Indiana and Princeton, Indiana.

<PAGE>

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

Non-interest expense totaled $1,237,000 for the three months ended September 30,
1997,  compared to $3,324,000 for the three months ended September 30, 1996. The
lower level of  non-interest  expenses were the result of the SAIF assessment in
the quarter  ended  September  30,  1996,  and the  restructuring  of the Bank's
nonconforming loan operations.

On  September  30,  1996,  the federal  government  mandated  an  industry  wide
assessment to  recapitalize  the SAIF,  which is a part of the FDIC. The special
assessment  was charged to savings  associations  with  insured  deposits by the
SAIF. The  assessment  was calculated at 0.657% of insured  deposits as of March
31, 1995.  The Bank's  portion of the assessment was $1,330,000 and was included
in non-interest  expense for the first quarter of fiscal 1997. Federal insurance
premiums totaled $41,000 for the quarter ended September 30, 1997, compared with
$1,429,000 for the quarter ended September 30, 1996.

During  the fourth  quarter  of fiscal  year  1997,  the Bank  restructured  its
nonconforming  loan  operation.  The  restructuring  included  closing  all loan
offices except the Evansville,  Indiana loan  origination  office and moving all
administrative  functions to the Bank's home office in Vincennes,  Indiana.  The
restructuring  was  undertaken  to reduce  noninterest  operating  expenses  and
improve profitability of the Bank.

Compensation  and employee  benefits  expense declined to $663,000 for the three
months ended  September 30, 1997  compared to $1,045,000  for three months ended
September 30, 1996.  Net occupancy  expense also  decreased in the quarter ended
September  30,  1997 as  compared  to the same  period  of the prior  year.  Net
occupancy expense totaled $127,000 for the three months ended September 30, 1997
compared to $181,000  for the three  months  ended  September  30,  1996.  These
declines in operating  expenses  resulted from a reduced number of employees and
fewer  office  facilities  which  are  attributable  to the  nonconforming  loan
operation restructuring.

(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 3% core  capital
ratio.  Additionally,  savings  institutions  are  required to meet a risk-based
capital ratio equal to 8.0% of risk-weighted  assets. At September 30, 1997, the
Bank met all current capital requirements.

<PAGE>

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


The  following  is a  summary  of the  Bank's  regulatory  capital  and  capital
requirements at September 30, 1997:

                                     Tangible          Core       Risk-Based
                                      Capital        Capital       Capital
                                    -----------------------------------------
Regulatory Capital                  $22,836,000    $22,836,000    $23,497,000
Minimum Capital Requirement           3,912,000      7,825,000     11,315,000
                                    -----------------------------------------
Excess Capital                      $18,924,000    $15,011,000    $12,182,000

Regulatory Capital Ratio                  8.75%          8.75%         16.61%
Required Capital Ratio                    1.50%          3.00%          8.00%

During the quarter  ended  September  30,  1997,  1ST BANCORP  paid a $0.10 cash
dividend per share to shareholders.  This is the twentieth 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  $13,792,000  in loan  commitments  and
$1,099,000 of loans in process  outstanding  at September 30, 1997. The majority
of these  commitments  are  expected to be funded  within the three month period
ending  December 31,  1997.  At  September  30,  1997,  the Bank had $268,000 in
outstanding  commitments to sell mortgage loans and mortgage-backed  securities.
The Bank  maintains  liquidity of at least 5% of net  withdrawable  assets.  The
average regulatory  liquidity ratio for the quarter ended September 30, 1997 was
12.11%.

On October 23, 1997, the Corporation  declared a three-for-two  stock split. The
additional shares are payable November 30, 1997, to shareholders of record as of
November 15, 1997. For financial  statements issued after November 15, 1997, all
share  and per  share  data  will  be  adjusted  retroactively  to  reflect  the
three-for-two stock split.

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 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, 1997.

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)       Reports on Form 8-K -- There were no reports on Form 8-K filed during 
                      the three months ended September 30, 1997.


<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, 1997                     By:  /s/   C. James McCormick
                                            -----------------------------
                                             C. James McCormick, Chairman and
                                             Chief Executive Officer


Date: November 13, 1997                     By:  /s/   Frank D. Baracani
                                            ----------------------------
                                             Frank D. Baracani, President


Date: November 13, 1997                     By:  /s/   Mary Lynn Stenftenagel
                                            ---------------------------------
                                             Mary Lynn Stenftenagel,
                                             Secretary-Treasurer and
                                             Chief Accounting Officer