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 December 31, 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 February 3, 1998, there were 1,089,685  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,
                        December 31, 1997 (Unaudited) and
                        June 30, 1997                                       4

                  Consolidated Condensed Statements
                        of Earnings, Three and Six  Months Ended
                        December 31, 1997 and 1996 (Unaudited)              5

                  Consolidated Condensed Statements of
                       Cash Flows, Six Months Ended
                       December 31, 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

   Item 1.    Legal Proceedings                                            15

   Item 4.     Submissions of Matters to Vote of Securities
                          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 addtion,  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 such factors
could cause the  statements or  projections  contained  therein to be materially
inaccurate.


<PAGE>

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

<TABLE>
<CAPTION>
                                                        December 31,      June 30,
                                                            1997            1997
                                                       --------------     ---------
     ASSETS
<S>                                                           <C>          <C>    
Cash and cash equivalents:
    Interest bearing deposits                                 $5,459       $19,771
    Non-interest bearing deposits                                456           523
                                                        -------------     ---------
            Cash and cash equivalents                          5,915        20,294
                                                        -------------     ---------

Securities available for sale                                 12,273        11,588
Securities held to maturity (market value
    of $33,695 at December 31, 1997 and
    $43,556 at June 30, 1997)                                 33,855        44,065
Loans receivable, net                                        151,597       146,840
Loans held for sale                                           36,361        27,769
Accrued interest receivable:
    Securities                                                   836         1,081
    Loans                                                      1,144         1,099
Stock in FHLB of Indianapolis, at cost                         4,941         4,941
Office premises and equipment                                  3,088         3,225
Real estate owned                                                762           397
Prepaid expenses and other assets                              5,155         9,191
                                                        -------------     ---------

TOTAL ASSETS                                                $255,927      $270,490
                                                        =============     =========

     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:                                                              
    Deposits                                                $134,668      $144,316
    Advances from FHLB and other borrowings                   95,406       100,296
    Advance payments by borrowers 
       for taxes and insuranc                                    247           304
    Accrued interest payable on deposits                         615         1,194
    Accrued expenses and other liabilities                     2,017         2,047
                                                        -------------     ---------

                    Total Liabilities                       $232,953      $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  1,089,685 at December  31, 1997 and
       1,099,188 at June 30, 1997                             $1,038          $698
    Paid-in capital                                            2,091         2,642
    Retained earnings, substantially restricted               19,847        19,102
    Unrealized depreciation on securities                         (2)         (109)
                                                        -------------     ---------

                   Total Stockholders' Equity                $22,974       $22,333
                                                        -------------     ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $255,927      $270,490
                                                        =============     =========
</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)

<TABLE>
<CAPTION>
                                                                      Three months ended       Six months ended
                                                                         December 31,             December 31,
                                                                    --------------------     ---------------------
                                                                      1997         1996        1997          1996
                                                                    --------     -------     --------      -------
INTEREST INCOME:
<S>                                                                 <C>          <C>          <C>          <C>    
   Loans                                                            $ 3,946      $ 3,751      $ 7,729      $ 7,346
   Investment securities                                                804          929        1,705        1,856
   Trading account securities                                            --           --            2           --
   Other short-term investments and
     interest bearing deposits                                           83          128          375          315
                                                                    -------      -------      -------      -------

  Total Interest Income                                               4,833        4,808        9,811        9,517
                                                                    -------      -------      -------      -------

INTEREST EXPENSE:
   Deposits                                                           1,918        1,877        3,890        3,706
   Short-term borrowings                                                 --            4            2           25
   FHLB advances and other borrowings                                 1,328        1,403        2,754        2,820
                                                                    -------      -------      -------      -------

  Total Interest Expense                                              3,246        3,284        6,646        6,551
                                                                    -------      -------      -------      -------

NET INTEREST INCOME BEFORE
    PROVISION FOR LOAN LOSSES                                         1,587        1,524        3,165        2,966

Provision for loan losses                                                90           40          180           86
                                                                    -------      -------      -------      -------

NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                                         1,497        1,484        2,985        2,880
                                                                    -------      -------      -------      -------

NON-INTEREST INCOME:
   Fees and service charges                                              86           88          169          172
   Net gain (loss) on sales of investment securities available
      for sale and trading account investments                           16            2           22            2
   Net gain on sales of loans                                           105          548          166        1,201
   Other                                                                190          170          409          306
                                                                    -------      -------      -------      -------

  Total Non-Interest Income                                             397          808          766        1,681
                                                                    -------      -------      -------      -------

NON-INTEREST EXPENSE:
   Compensation and employee benefits                                   703          940        1,366        1,985
   Net occupancy                                                        128          179          255          360
   Federal insurance premiums                                            41           80           82        1,509
   Other                                                                426          475          832        1,144
                                                                    -------      -------      -------      -------

  Total Non-Interest Expense                                          1,298        1,674        2,535        4,998
                                                                    -------      -------      -------      -------

Earnings Before Income Taxes                                            596          618        1,216         (437)

Income Taxes                                                            159          242          324         (182)
                                                                    -------      -------      -------      -------

NET EARNINGS                                                        $   437      $   376      $   892      ($  255)
                                                                    =======      =======      =======      =======

BASIC EARNINGS PER SHARE:                                           $  0.40      $  0.34      $  0.81      ($ 0.23)

DILUTED EARNINGS PER SHARE:                                         $  0.40      $  0.34      $  0.81      ($ 0.23)

</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>

                                                                                      Six Months Ended
                                                                                        December 31,
                                                                                  -----------------------
                                                                                    1997           1996
                                                                                  --------       --------
<S>                                                                               <C>            <C>      
Net Cash Flows From Operating Activities:
   Net earnings                                                                   $    892       ($   255)
   Adjustments to reconcile net cash provided by operating activities:
      Depreciation and amortization                                                    224            139
      Amortization of mortgage servicing rights                                         98             54
      Gain on sale of loans                                                           (166)        (1,201)
      Gain on sale of securities                                                       (22)            (2)
      Net change in loans held for sale                                             (8,592)         1,522
      Provision for loan losses                                                        180             86
      Change in accrued interest receivable                                            200            137
      Change in prepaid expenses and other assets                                    3,875           (661)
      Change in accrued expenses and other liabilities                                (680)          (649)
      Loss on investment in limited partnership                                         57             67
                                                                                  --------       --------

        NET CASH USED BY OPERATING ACTIVITIES                                       (3,934)          (763)
                                                                                  --------       --------

Cash Flows From Investing Activities:
    Purchase of securities held to maturity                                             --         (2,515)
    Proceeds from maturity of securities held to maturity                           10,212             56
    Purchase of securities available for sale and trading account securities       (18,689)        (8,968)
    Proceeds from maturities of securities available for sale                        2,164             96
    Proceeds from sales of securities available for sale
      and trading account securites                                                 16,025         10,934
    Principal collected on loans, net of originations                               (4,822)       (12,423)
    Purchases of equipment                                                             (17)           (57)
    Other                                                                             (365)          (349)
                                                                                  --------       --------

        NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                             4,508        (13,226)
                                                                                  --------       --------

Cash Flows From Financing Activities:
    Change in deposits                                                              (9,648)        (2,269)
    Proceeds from FHLB advances and other borrowings                                26,991         42,844
    Repayment of FHLB advances and other borrowings                                (31,881)       (41,287)
    Proceeds from issuance of common stock                                              94            108
    Purchase and retirement of common stock                                           (305)          (207)
    Payment of dividends on common stock                                              (147)          (134)
    Change in advance payments by borrowers for insurance and taxes                    (57)          (153)
                                                                                  --------       --------

        NET CASH USED BY FINANCING ACTIVITIES                                      (14,953)        (1,098)
                                                                                  --------       --------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                          (14,379)       (15,087)

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

Cash and Cash Equivalents at End of Period                                        $  5,915       $ 10,012
                                                                                  ========       ========

</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

1ST BANCORP has  implemented  Statement of Financial  Accounting  Standards 128,
"Earnings  per Share" (EPS) which is effective for fiscal  periods  ending after
December 15, 1997. Accordingly, these amounts appear on the financial statements
in this  Quarterly  Report on Form 10-Q.  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 1,089,395 and 1,098,186 for the three and six months
ended December 31, 1997 and 1996,  respectively.  The weighted average number of
shares for use in the dilutive EPS  computations was 1,096,320 and 1,104,670 for
the three and six months ended December 31, 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 24,523  authorized but
unissued  shares were  reserved for  issuance  under this plan. A total of 5,613
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  260,466  authorized  but
unissued shares of common stock were reserved.  As of December 31, 1997,  26,775
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.

Note 5.  Stock Repurchase Plan

In  August  1996,  the  Board  authorized  the  repurchase  of up  to 5% of  the
outstanding shares of common stock subject to market conditions, over a two year
period which  expires in August 1998.  During the six months ended  December 31,
1997, 15,750 shares of common stock were repurchased.

Note 6.  Stock Split and Stock Dividend

On October 23, 1997, the Corporation  declared a three-for-two  stock split. The
additional shares were issued on November 30, 1997, to shareholders of record as
of November 15, 1997. All share and per share data have been adjusted to reflect
the three-for-two stock split.

On  December  18,  1997,  the Board of  Directors  approved  a 5%  common  stock
dividend.  The dividend will be paid January 23, 1998 to  shareholders of record
as of  January  9,  1998.  All share and per share  data have been  adjusted  to
reflect the 5% stock dividend.


<PAGE>

Note 7.  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 six
months ended December 31, 1996.

Note 8.  Reclassifications

Certain  amounts  in the  fiscal  year  1997  consolidated  condensed  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

 (a)  Financial Condition:

The  Corporation's  goal is to  increase  net  interest  income and become  less
reliant on non-interest  items to provide  profitability.  To achieve this goal,
the Corporation has targeted lower levels of cash and cash equivalents,  smaller
securities   portfolios,   and  increased   levels  of  loans  as  part  of  its
asset/liability  strategy to enhance the net interest margin. As a result, total
assets have  declined  modestly  during this time of  restructuring  the balance
sheet.  Total assets aggregated  $255,927,000 at December 31, 1997,  compared to
total assets of $270,490,000 at June 30, 1997, a decrease of 5.38%.

Cash and cash equivalents  aggregated  $5,915,000,  which approximates  targeted
levels, at December 31, 1997, compared to $20,294,000 at June 30, 1997, a 70.85%
reduction.  Securities held to maturity (including mortgage-backed  securities),
which  primarily  consist of U.S. Agency  securities,  totaled  $33,855,000,  at
December 31, 1997,  compared to $44,065,000 at June 30, 1997. The decline in the
level of held to  maturity  securities  resulted  from the  exercise of the call
feature  by the  issuer  of the  securities.  These  declines  were used to fund
expansion of the loan portfolios and to pay down brokered  deposits and borrowed
funds at their maturity.

Investment securities available for sale (including mortgage-backed  securities)
increased modestly to $12,273,000 at December 31, 1997, from $11,588,000 at June
30, 1997. There were no trading account  securities at December 31, 1997 or June
30, 1997.

Net loans  receivable  (including loans held for sale) increased by $13,349,000,
or 7.65%, to  $187,958,000  at December 31, 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
nonconforming  and conforming  residential  mortgage loan  portfolios and in the
auto loan portfolio.

During the six months ended  December 31, 1997, the Bank funded $44.2 million of
loans  compared to $68.2  million of loans during the six months ended  December
31,  1996.  The  decrease  in  overall  loan  production  was the  result of 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  Bank's  main  office  in  Vincennes,  Indiana..  The
restructuring was undertaken primarily as a cost reduction measure. The "Results
of  Operations"  section of this  Quarterly  Report on Form 10-Q  discusses  the
effectiveness of the cost reduction plan in additional detail.

During the six months ended December 31, 1997,  nonconforming  mortgage  lending
constituted  $14.7  million,  or 33.3% of total loans  funded  during the period
compared  with $42.3  million,  or 62.0% of total  loans  funded  during the six
months ended December 31, 1996.  Nonconforming  loans,  including those held for
sale, increased to $76.4 million at December 31, 1997, compared to $66.5 million
at June 30, 1997. Conforming mortgage loan production remained relatively stable
with originations  totaling $18.3 million,  or 41.4% of total loans funded,  for
the six months ended December 31, 1997 compared with $18.8 million,  or 27.6% of
total loans funded, for the same period of the prior year.

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 six months ended  December 31, 1997 totaled $3.8  million.  The
indirect auto loan portfolio totaled $3.8 million at December 31, 1997.


<PAGE>

At December 31, 1997, nonaccrual loans and real estate owned totaled $3,143,000,
or 1.23% 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  nonconforming
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,  additional  mortgage loan
collection  personnel have been hired, 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.

<TABLE>
<CAPTION>
                                                              December 31,          June 30,
                                                                  1997                1997
                                                              ==============================
<S>                                                            <C>                <C>       
Nonaccrual loans and real estate owned:
   Nonaccrual loans                                            $2,381,000         $2,330,000
   Real estate owned (1)                                          762,000            397,000
   Restructured loans                                                -                    -
                                                               -----------------------------
Total nonaccrual loans and real estate owned                   $3,143,000         $2,727,000
Nonaccrual loans and real estate owned to total assets               1.23%              1.01%
</TABLE>
----------------
(1)  Certain  assets  acquired   through   foreclosures  or  deeds  in  lieu  of
foreclosure,  which are included in the  Consolidated  Condensed  Statements  of
Financial Condition as real estate owned.

During the six months ended  December 31, 1997,  the Bank  established,  through
operations,  provisions for loan losses  totaling  $180,000  compared to $86,000
during the same six months of the prior year. The Bank's allowance for loan loss
increased to $1,183,000 at December 31, 1997 from $1,158,000 at June 30, 1997.

Prepaid  expenses and other assets  decreased by  $4,036,000  to  $5,155,000  at
December 31, 1997 from  $9,191,000 at June 30, 1997.  The decrease was primarily
the result of the completion of a $4.1 million loan sale.

Deposits  aggregated  $134,668,000 at December 31, 1997 compared to $144,316,000
at June 30, 1997. This $9,648,000, or 6.69%, decline resulted primarily from the
decreased use of brokered  funds during the six months ended  December 31, 1997.
Advances from the Federal Home Loan Bank ("FHLB") and other borrowings  declined
by  $4,890,000,  or 4.88%,  to  $95,406,000  at December  31,  1997  compared to
$100,296,000  at June 30,  1997.  The decline in  borrowed  funds  included  the
repayment  of $1.4 million of debt at the holding  company  level which had been
used in prior years as a capital infusion to the Bank. The overall  reduction of
borrowed funds and brokered  deposits during the period  correlated to the lower
levels of cash and securities,  and was a part of the Corporation's  strategy of
expanding the net interest margin and improving profitability.

Accrued expenses and other liabilities remained stable at $2,017,000 at December
31, 1997 compared to $2,047,000 at June 30, 1997.  Advance payments by borrowers
for taxes and insurance  also  remained  stable at $247,000 at December 31, 1997
compared to  $304,000 at June 30,  1997.  Accrued  interest  payable on deposits
decreased to $615,000 at December 31, 1997,  from  $1,194,000  at June 30, 1997.
The fluctuation in this category was due to timing differences that occur in the
normal course of business.


<PAGE>

(b)  Results of Operations:

During the three months ended  December 31,  1997,  1ST  BANCORP's  net earnings
increased to $437,000,  or $0.40 per share,  compared to net income of $376,000,
or $0.34 per share, for the three months ended December 31, 1996. During the six
months ended December 31, 1997, 1ST BANCORP had net income of $892,000, or $0.81
per share,  compared to a net loss of $255,000,  or $0.23 per share, for the six
months ended  December 31, 1996.  The net loss for the six months ended December
31, 1996, was directly  attributable to the special one-time  assessment for the
recapitalization of the SAIF.

The increased  earnings for the three and six months ended  December 31, 1997 as
compared to the three and six months ended  December 31, 1996, are in large part
a reflection  of the  Corporation's  shift to more  emphasis on the net interest
margin and less reliance on non-interest  income. As a result, the Corporation's
net interest  margin has  improved  markedly  and net  earnings  have  increased
despite a  significant  reduction in  non-interest  income.  Also  significantly
contributing to the improved earnings was a substantial  decline in non-interest
expenses.  This decline is  attributable to the closure of several of the Bank's
loan origination offices during the latter part of fiscal year 1997.

Net interest  income before  provision  for loan losses  increased to $1,587,000
during the three months  ended  December  31,  1997,  as compared to  $1,524,000
during the three  months  ended  December  31,  1996.  The net  interest  margin
increased to 2.62% for the three  months ended  December 31, 1997 as compared to
2.45% for the three months ended December 31, 1996.  Net interest  income before
provision  for loan losses  increased  to  $3,165,000  for the six months  ended
December 31, 1997,  compared to $2,966,000  during the six months ended December
31, 1996.  The net interest  margin  increased to 2.57% for the six months ended
December  31, 1997 as compared to 2.37% for the six months  ended  December  31,
1996.

The  increased  level of net interest  income was the result of the expanded net
interest  margin.  To achieve the increased net interest  margin,  high-quality,
high-yielding  nonconforming mortgage loans were placed in portfolio. The Bank's
strategy of retaining  more loan  production in portfolio  and  targeting  lower
levels of cash and  securities  resulted in a modestly  lower  average  level of
interest  earning assets and interest bearing  liabilities  during the three and
six months ended December 31, 1997 as compared with the same period of the prior
year.  Despite the lower  average and a modestly  higher cost of funds,  the net
interest  margin has continued a steady  expansion  and net interest  income has
increased.

Non-interest  income  for the three  months  ended  December  31,  1997  totaled
$397,000  compared to $808,000  for the three  months  ended  December 31, 1996.
Non-interest  income for the six months ended December 31, 1997 totaled $766,000
compared to  $1,681,000  for the six months ended  December 31, 1996.  The lower
level of  non-interest  income for the three and six months  ended  December 31,
1997  resulted  primarily  from a lower level of loan sales and a  corresponding
decreased gain on sale of loans.

The reduction in loan sales is a part of the Bank's  asset/liability  management
strategy to enhance the net interest margin by retaining a larger portion of its
mortgage  loan  production  in  portfolio.  The gain on sale of  mortgage  loans
totaled $105,000 and $166,000 during the three and six months ended December 31,
1997,  compared to $548,000 and $1,201,000  during the same periods of the prior
year.  The  decline  in the gain on sale of loans for the  three and six  months
ended  December 31, 1997 resulted from a lower volume of loan sales.  Loan sales
totaled $8.0 million and $13.1  million  during the three and six month  periods
ended  December 31, 1997,  compared to $17.2  million and $41.0  million for the
same periods of the prior fiscal year.

Other  non-interest  income  increased  to $190,000  for the three  months ended
December 31, 1997 compared with $170,000  during the three months ended December
31, 1996.  Other  non-interest  income  increased to $409,000 for the six months
ended  December  31, 1997  compared  with  $306,000  during the six months ended
December 31, 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 the 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 a full service  insurance
office in Princeton, Indiana in addition to its office in Vincennes, Indiana.


<PAGE>

Non-interest  expense totaled $1,298,000 for the three months ended December 31,
1997,  compared to $1,674,000  for the three months ended December 31, 1996. The
restructuring of the Bank's nonconforming loan operations near the end of fiscal
year 1997  resulted in the lower level of  non-interest  expenses  for the three
months  ended  December  31, 1997 as  compared  to the prior year.  Non-interest
expense totaled $2,535,000 for the six months ended December 31, 1997,  compared
to $4,998,000 for the six months ended December 31, 1996. The nonconforming loan
operation  restructuring combined with the one-time SAIF assessment in the first
quarter of fiscal year 1997 resulted in the lower level of non-interest expenses
for the six months ended  December 31, 1997 compared with the same period of the
prior year.

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 and special  assessments  totaled $41,000 and $82,000 for the three and
six months ended December 31, 1997, compared with $80,000 and $1,509,000 for the
three and six months ended December 31, 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  non-interest  operating  expenses and
improve profitability of the Bank.

Compensation  and employee  benefits expense declined to $703,000 and $1,366,000
for the three and six months ended  December  31, 1997  compared to $940,000 and
$1,985,000  for three and six months  ended  December 31,  1996.  Net  occupancy
expense  totaled  $128,000  and  $255,000  for the  three and six  months  ended
December 31, 1997 compared to $179,000 and $360,000 for the three and six months
ended  December  31,  1996.  Finally,  other  non-interest  expense  declined to
$426,000  and  $832,000  for the three and six months  ended  December  31, 1997
compared to $475,000 and  $1,144,000 for the three and six months ended December
31, 1996. These declines in operating expenses resulted from a reduced number of
employees,  fewer office facilities, and generally lower administrative expenses
which  are  attributable  to  the  restructuring  of  the   nonconforming   loan
operations.

(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 December 31,
1997, the Bank met all current capital requirements.

The  following  is a  summary  of the  Bank's  regulatory  capital  and  capital
requirements at December 31, 1997:

<TABLE>
<CAPTION>
                                                Tangible             Core            Risk-Based
                                                 Capital           Capital            Capital
                                               --------------------------------------------------
<S>                                             <C>               <C>                 <C>        
Regulatory Capital                              $21,891,000       $21,891,000         $22,577,000
Minimum Capital Requirement                       3,836,000         7,671,000          11,658,000
                                               --------------------------------------------------
Excess Capital                                  $18,055,000       $14,220,000         $10,919,000

Regulatory Capital Ratio                              8.56%             8.56%              15.49%
Required Capital Ratio                                1.50%             3.00%               8.00%
</TABLE>



<PAGE>

During the quarter  ended  December  31,  1997,  1ST  BANCORP  paid a $0.07 cash
dividend per share. This is the twenty first 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  $16,570,000  in loan  commitments  and
$1,139,000 of loans in process outstanding at December 31, 1997. The majority of
these commitments are expected to be funded within the three month period ending
March 31,  1998.  At December 31,  1997,  the Bank had  $235,000 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 quarter ended December 31, 1997 was
5.85%.

A Year 2000 Committee (the  "Committee")has  been established by the Corporation
consisting of directors,  officers,  and employees of the Corporation to address
problems  which  could  arise  from the  forthcoming  Year  2000  rollover.  The
Committee is charged with  providing  regular  reports to the Board of Directors
detailing  progress in this area. Based on progress by the Committee to date, it
is not anticipated that the Year 2000 rollover will present  material  financial
or operational burdens for 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 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.

On October 23, 1997, the Annual Meeting of Shareholders was held and the results
of which follow.  The meeting was held prior to declaration of the three-for-two
stock  split and the 5% stock  dividend,  therefore,  the voting  results do not
reflect any effects of the stock split or stock dividend.

<TABLE>
<CAPTION>
                                                     Against or                     Broker
                                         For          Withheld       Abstain      Non-votes
                                     ------------- --------------- ------------ ---------------
<S>                                   <C>             <C>              <C>           <C>
Election of C. James
McCormick as Director for
term expiring in 2000                  572,082         2,382            0             0

Election of Mary Lynn
Stenftenagel as Director for
term expiring in 2000                  573,663           800            0             0

Election of James W.
Bobe as Director for
term expiring in 2000                  572,995         1,468            0             0
</TABLE>

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 December 31, 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: February 13, 1998                      By:  /s/   C. James McCormick
                                             -----------------------------
                                             C. James McCormick, Chairman
                                             and Chief Executive Officer


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


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