FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20552

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

                For the Quarterly period Ended December 31, 1995

             ( ) 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                     (I.R.S. Employer
of Incorporation or organization)             Identification Number)

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

        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 13, 1996,  there were 665,731 Shares of the  Registrant's  Common
Stock issued and outstanding.

                                       1
<PAGE>



                          1ST BANCORP AND SUBSIDIARIES

                                      INDEX

                                                                      Page
PART I.  FINANCIAL INFORMATION:                                      Number

Item 1.     Financial Statements

                Consolidated Condensed Statements
                     of  Financial Condition,
                     December 31, 1995 and June 30,
                     1995 (Unaudited)                                  3

                Consolidated Condensed Statements
                     of Earnings, Three Months and
                     Six Months Ended December 31, 1995
                     And 1994 (Unaudited)                              4

                Consolidated Condensed Statements of
                    Cash Flows, Six Months Ended
                    December 31, 1995 and 1994
                    (Unaudited)                                        5


                Notes to Consolidated Condensed
                     Financial Statements (Unaudited)                6-7

Item 2.     Management's Discussion and Analysis
                     of Financial Condition and Results
                     of Operations                                  8-15

PART II.  OTHER INFORMATION                                           16

SIGNATURES                                                            18


                                       2
<PAGE>

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



                                                      December 31,    June 30,
                                                          1995          1995
                                                      ------------    --------
     ASSETS
Cash and cash equivalents:
    Interest bearing deposits                           $12,800       $15,978
    Non-interest bearing deposits                           286         1,354
                                                       --------      --------
          Cash and cash equivalents                      13,086        17,332
                                                       --------      --------
Investment securities held to maturity
    (market value of $29,144 at December 31, 1995
    and $70,281 at June 30, 1995)                        29,536        72,005
Investment securities available for sale                  9,209             -
Loans receivable, net                                   172,863       201,819
Loans held for sale                                       8,931         5,104
Accrued interest receivable:
    Investment securities                                   602         1,394
    Mortgage-backed securities and loans                  1,058         1,174
Stock in FHLB of Indianapolis, at cost                    4,376         3,876
Office premises and equipment                             3,031         3,989
Real estate owned                                           143           145
Prepaid expenses and other assets                         5,702         5,921
                                                       --------      --------
TOTAL ASSETS                                           $248,537      $312,759
                                                       ========      ========
     LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
    Deposits                                           $125,350      $209,805
    Advances from FHLB and other borrowings              94,902        79,387
    Advance payments by borrowers for taxes
       and insurance                                        728         2,321
    Accrued interest payable on deposits                    773           504
    Accrued expenses and other liabilities                5,409         4,039
    Deferred income taxes                                     7           370
                                                       --------      --------
          Total Liabilities                            $227,169      $296,426
                                                       --------      --------
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 665,731 at December 31, 1995 and
       665,989 at June 30, 1995 (Note 2)                   $634          $634
    Paid-in capital                                       2,752         2,825
    Retained earnings, substantially restricted          18,007        13,064
    Unrealized depreciation on securities                   (25)         (190)
                                                       --------      --------
          Total Stockholders' Equity                    $21,368       $16,333
                                                       --------      --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $248,537      $312,759
                                                       ========      ========


See Notes to Consolidated Condensed Financial Statements.

                                       3
<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,
                                                             -----------------               -------------------
                                                             1995         1994               1995           1994
                                                             ----         ----               ----           ----
<S>                                                       <C>              <C>               <C>           <C>
INTEREST INCOME:
   Loans and mortgage-backed securities                  $4,209           $3,804            $8,447        $7,227
   Investment securities                                  1,014            1,023             2,186         1,901
   Other short-term investments and
     interest bearing deposits                              221              165               438           292
                                                          -----            -----             -----         -----
  Total Interest Income                                   5,444            4,992            11,071         9,420
                                                          -----            -----             -----         -----
INTEREST EXPENSE:
   Deposits                                               2,497            2,117             5,269         4,135
   Short-term borrowings                                     32              155                56           199
   FHLB advances and other borrowings                     1,314              950             2,477         1,655
                                                          -----            -----             -----         -----
  Total Interest Expense                                  3,843            3,222             7,802         5,989
                                                          -----            -----             -----         -----
NET INTEREST INCOME BEFORE
    PROVISION FOR LOAN LOSSES                             1,601            1,770             3,269         3,431
Provision for loan losses                                    20               35                45            50
                                                          -----            -----             -----         -----
NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                             1,581            1,735             3,224         3,381
                                                          -----            -----             -----         -----
NON-INTEREST INCOME:
   Fees and service charges                                  84              391               224           758
   Net gain (loss) on sales of investment securities
      and trading account investments                      (123)               1              (122)            1
   Net gain on sales of loans and
      mortgage-backed securities                            340               98               652           150
   Net gain on sale of branch offices                     7,274             --               7,274          --
   Other                                                    357            1,194               934         1,371
                                                          -----            -----             -----         -----
  Total Non-Interest Income                               7,932            1,684             8,962         2,280
                                                          -----            -----             -----         -----
NON-INTEREST EXPENSE:
   Compensation and employee benefits                     1,206            1,022             2,240         2,111
   Net occupancy                                            198              214               403           418
   Federal insurance premiums                               132              119               268           238
   Other                                                    660              615             1,175         1,147
                                                          -----            -----             -----         -----
  Total Non-Interest Expense                              2,196            1,970             4,086         3,914
                                                          -----            -----             -----         -----
Earnings Before Income Taxes                              7,317            1,449             8,100         1,747
Income Taxes                                              2,735              527             3,030           632
                                                          -----            -----             -----         -----

NET EARNINGS                                             $4,582             $922            $5,070        $1,115
                                                          =====            =====             =====         =====
EARNINGS PER SHARE:                                       $6.84            $1.43             $7.56         $1.73
</TABLE>

See Notes to Consolidated Condensed Financial Statements.


                                       4
<PAGE>

                          1ST BANCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                          (Unaudited and in Thousands)
<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                       December 31,
                                                                                ------------------------
                                                                                   1995            1994
                                                                                   ----            ----
Net Cash Flow From Operating Activities:                                    
<S>                                                                             <C>               <C>   
   Net earnings                                                                 $5,070            $1,115
   Adjustments to reconcile net cash provided by operating activities:                       
     Depreciation and amortization                                                 165                48
     Amortization of purchased and originated servicing premium                     69               274
     Originated mortgage servicing rights capitalized                             (344)               --
     Gain on sale of loans and mortgage-backed securities                         (651)             (150)
     Gain on sale of investment securities                                         122                --
     Gain on sale of loans - branch sales                                         (553)               --
     Gain on sale of office premises and equipment -  branch sales                (453)               --
     Gain on sale of deposits - branch sales                                    (6,715)               --
     Net change in loans held for sale                                          (3,827)              404
     Provision for loan losses                                                      45                50
     Decrease (increase) in accrued interest receivable                            908              (449)
     Decrease (increase) in prepaid expenses and other assets                      223            (1,639)
     Increase (decrease) in accrued expenses and other liabilities               1,166              (482)
     Undistributed loss of investment in limited partnership                       183                --
                                                                              --------           ------- 
        NET CASH USED BY OPERATING ACTIVITIES                                  ($4,592)            ($829)
                                                                              --------           ------- 
Cash Flows From Investing Activities:                                                        
     Purchases of investment securities                                       ($16,120)          (13,228)
     Purchases of investment securities - available for sale                    (2,000)               --
     Proceeds from sales of investment securities                               38,078                --
     Proceeds from maturities and calls of investment securities                13,421                --
     Principal collected on loans and mortgage-backed securities,                            
       net of originations                                                       1,890           (18,920)
     Purchases of stock of FHLB of Indianapolis                                   (500)           (1,375)
     Purchases of office premises and equipment                                    (92)             (151)
     Purchases of limited partnership investment                                    --            (2,500)
     Proceeds from sale of office premises and equipment - branch sales          1,316                --
     Proceeds from sale of loans - branch sales                                 28,369                --
     Sale of deposits - branch sales                                           (78,473)               --
     Other                                                                      (1,591)             (242)
                                                                              --------           ------- 
        NET CASH USED BY INVESTING ACTIVITIES                                 ($15,702)         ($36,416)
                                                                              --------           ------- 
Cash Flows From Financing Activities:                                                        
     Net increase in deposits                                                     $733           $12,559
     Proceeds from FHLB advances and other borrowings                           73,014            99,080
     Repayment of FHLB advances and other borrowings                           (57,499)          (66,983)
     Proceeds from issuance of common stock                                        109                71
     Payment of dividends on common stock                                         (128)              (56)
     Purchase and retirement of common stock                                      (181)               --
                                                                              --------           ------- 
        NET CASH PROVIDED BY FINANCING ACTIVITIES                              $16,048           $44,671
                                                                              --------           ------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           ($4,246)           $7,426
Cash and Cash Equivalents at Beginning of Period                                17,332             7,651
                                                                              --------           ------- 
Cash and Cash Equivalents at End of Period                                     $13,086           $15,077
                                                                              ========           =======
                                                                                               
                                                                                    
</TABLE>

See Notes to Consolidated Condensed Financial Statements.

                                       5
<PAGE>



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

Note 1. 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. Stock Dividend

On December 21, 1995, the Board of Directors approved a 5% common stock dividend
with a record date of January 26, 1996 and payment date of February 9, 1996. All
share and per share data have been adjusted to reflect the 5% stock dividend.

Note 3.  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  computation was
669,525 and 644,320 for the three  months  ended and 670,227 and 643,461 for the
six months ended December 31, 1995 and 1994, respectively.

Note 4.  Stock Option and Purchase Plans

The  Corporation  has an Incentive  Stock Option Plan whereby  49,220  shares of
authorized  but  unissued  common  stock were  reserved  for  issuance  upon the
exercise of stock  options  granted to key  employees.  Stock  options have been
granted for 49,220  shares under the plan at an option price of $5.71 per share.
The  Corporation  also has a stock  option  plan under which  157,500  shares of
authorized  but unissued  common stock were  reserved.  Under this plan,  91,875
non-qualified  stock  options  were  granted  at  $5.71  per  share  to  outside
directors,  and 39,375  incentive  stock options and 9,844  non-qualified  stock
options were granted at $5.71 and $5.86 per share, respectively,  to certain key
employees.  All options  granted have been  exercised or canceled as of December
31, 1995.

The  Corporation  maintains an Employee  Stock  Purchase Plan whereby  full-time
employees  of the Bank can  purchase  its  common  stock at a  discount;  13,125
authorized  but unissued  shares were reserved for issuance under this plan. The
purchase  price of these shares 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
5,213 shares were issued and  purchased  by  employees  in the first  quarter of
fiscal year 1996 for the fiscal 1995 plan year.


                                       6
<PAGE>



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

Note 5.  Stock Repurchase Plan

In  November  1993,  the Board  authorized  the  repurchase  of up to 10% of the
outstanding  shares of common  stock  (635,839  shares were  outstanding  at the
time),  subject to market  conditions,  over a two year period which  expired in
November  1995.  During the quarter  ended  December 31,  1995,  6,358 shares of
common stock were repurchased.  Cumulatively, 63,583 shares of common stock were
repurchased through the plan.


Note 6. Branch Sales

On December  16,  1995,  1ST BANCORP  completed  the sale of certain  assets and
certain liabilities of two retail branch offices of its thrift subsidiary, First
Federal Bank, A Federal  Savings Bank, to two of STAR  Financial  Group,  Inc.'s
subsidiary  banks.  The  sale  produced  a  pre-tax  gain of $7.3  million.  The
transaction consisted of the sale of deposits,  mortgage and consumer loans, and
office premises and equipment.

Note 7.  Investment Reclassification

A reclassification of investment  securities from the held to maturity portfolio
to the available for sale portfolio  occurred  during the quarter ended December
31, 1995, in accordance with the FASB Special Report, "A Guide to Implementation
of  Statement  115 on  Accounting  for  Certain  Investments  in Debt and Equity
Securities," which was issued November 15, 1995. The investment  securities that
were  reclassified  had a carrying  value of  $45,838,000  and a market value of
$46,061,000 at the time of transfer.

Note 8.  Reclassifications

Certain amounts in the fiscal year 1995 consolidated  financial  statements have
been reclassified to conform to the fiscal year 1996 presentation.


                                       7
<PAGE>



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

(a)  Financial Condition:

On December  16,  1995,  1ST BANCORP  completed  the sale of certain  assets and
certain  liabilities ( the "Branch  Sales") of two retail branch  offices of its
thrift  subsidiary,  First Federal Bank, A Federal Savings Bank ("First Federal"
or the "Bank"),  to two of STAR Financial  Group,  Inc.'s  subsidiary banks (the
"Purchasers").  STAR Financial Bank,  Marion,  Indiana ("STAR Marion") purchased
certain  assets and assumed  certain  liabilities of First Federal Bank's retail
branch office located in Kokomo,  Indiana.  STAR Financial  Bank,  Indianapolis,
Indiana  ("STAR  Indianapolis")  purchased  certain  assets and assumed  certain
liabilities of First Federal's retail branch office located in Tipton, Indiana.

The sale of the branch offices included  approximately $78.5 million in deposits
and $28.4  million in mortgage and consumer  loans.  The sale also  included the
retail  branch  offices'  premises  and  equipment.  The Bank  transferred  cash
totaling  approximately  $41.4 million to the Purchasers in connection  with the
branch sales. The sale contributed  approximately  $4.5 million after tax to 1ST
BANCORP's stockholders' equity.

Total assets at December 31, 1995, were $248,537,000, a decrease of $64,220,000,
or 20.53%,  from total assets of  $312,759,000  at June 30, 1995. The decline in
total assets is primarily attributable to the Branch Sales.

Cash and cash equivalents  declined by $4,246,000,  or 24.50%, to $13,086,000 at
December  31,  1995,  from  $17,332,000  at June 30, 1995.  The  decreased  cash
accounts were attributable  primarily to increased  mortgage loan production and
the funding of normal business operations.

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.  In a falling interest
rate  environment,  the securities  with a "call" feature would be called by the
issuer.  The rates paid on the "step-up"  securities  increase after a period of
time.  Generally,  the rates increase on the  securities  several times prior to
maturity.

The level of investment  securities held to maturity (including  mortgage-backed
securities)  decreased to $29,536,000,  a decline of $42,469,000,  or 58.99%, at
December 31, 1995, from $72,005,000 at June 30, 1995. The most significant cause
for the decline was the reclassification of investment  securities from the held
to maturity portfolio to the available for sale portfolio.  The reclassification
of investment  securities  from the held to maturity  portfolio to the available
for sale  portfolio  occurred  during the  quarter  ended  December  31, 1995 in
accordance with the FASB Special Report, "A Guide to Implementation of Statement
115 on Accounting for Certain  Investments in Debt and Equity Securities," which
was issued November 15, 1995. The investment  securities that were  reclassified
had a carrying  value of  $45,838,000  and a market value of  $46,061,000 at the
time of  transfer.  Other  activity  within the  investment  securities  held to
maturity  portfolio during the six months ended December 31, 1995,  included the
exercise of the call feature on securities totaling $12,750,000 and purchases of
securities totaling $16,120,000.


                                       8
<PAGE>



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

Investment  securities  available  for sale totaled  $9,209,000  at December 31,
1995,  compared  with no  investment  securities  available for sale at June 30,
1995.  The  primary  cause  of the  increased  level  of  investment  securities
available for sale was the  reclassification  of investment  securities from the
held to maturity  portfolio  to the  available  for sale  portfolio.  A total of
$45,838,000 of securities were  reclassified to the available for sale portfolio
and $38,078,000 of these  securities were sold during the quarter ended December
31, 1995. The most  significant  factor in the  reclassification  and subsequent
sale of securities  was to provide cash to fund the deposits sold in conjunction
with the Branch Sales.

Net loans  receivable  declined by  $28,956,000,  or 14.35%,  to $172,863,000 at
December 31, 1995, from $201,819,000 at June 30, 1995. The primary cause for the
reduced level of net loans  receivable was the Branch Sales.  Loans sold as part
of the Branch Sales  totaled  $28,369,000.  These loans  consisted  primarily of
loans secured by one-to-four family dwellings and secured and unsecured consumer
loans. Loans held for sale increased by $3,827,000 to $8,931,000 at December 31,
1995 from $5,104,000 at June 30, 1995.

Loan production during the six months ended December 31, 1995 increased compared
to the same period of the prior year as interest rates trended downward.  During
the six months ended  December 31, 1995,  the Bank funded $82.4 million of loans
compared to $66.2  million of loans  during the six months  ended  December  31,
1994. As the economic environment has changed, the Bank has continued to develop
new mortgage loan products to serve its customers.  During fiscal 1995, the Bank
developed  a  wholesale  nonconforming  mortgage  loan  network  as a  means  of
augmenting its traditional conforming loan markets.

During the three  months  ended  September  30,  1995,  a retail  non-conforming
mortgage  loan  program  was  implemented  within  the Bank's  loan  origination
network.  The Bank has  continued  its  expansion  into new markets for both the
wholesale  and retail  non-conforming  mortgage  loan  segments.  During the six
months ended  December 31, 1995,  non-conforming  mortgage  lending  constituted
$18.4 million, or 22.33%, of total loans funded during the period. A majority of
these loans are sold on a  non-recourse  basis in the  non-conforming  secondary
market.  However,  a  segment  of the  highest  quality  loans are  retained  in
portfolio  to  increase  interest  income,  and in the case of  adjustable  rate
product,  to reduce interest rate risk.  Continued emphasis is also being placed
on consumer lending for the same reasons.

Asset  quality  remains  strong.  At December  31, 1995,  non-performing  assets
totaled  $1,088,000,  or .44% of total  assets.  This  compares  to  $545,000 of
non-performing  assets,  or .17% of total assets, at June 30, 1995. The increase
in non-performing  assets was the result of single family loans becoming 90 days
or more past  due.  The  increase  in  non-performing  assets  represents  a net
increase of only seven additional  loans that were placed on non-accrual  status
due to  delinquency.  All of these loans are  consumer  loans or mortgage  loans
secured by one-to-four family dwellings.


                                       9
<PAGE>



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

The  table  below  sets  forth  the  amounts  and  categories  of 1ST  BANCORP's
non-performing  assets (non-accrual loans and other  non-performing  assets) for
the balance sheet dates presented.  Loans are reviewed  regularly and are placed
on non-accrual status when they become contractually past due 90 days or more.

                                                  December 31,          June 30,
                                                     1995                 1995
                                                     ----                 ----
                                                           (In Thousands)
Non-performing assets:
 Non-accrual loans                                 $   945              $  400
 Other non-performing assets (1)                       143                 145
 Restructured loans                                     --                  --
 ------------------                                -------              ------  
Total non-performing assets                         $1,088              $  545
Non-performing assets to total assets                  .44%                .17%

(1)     Certain  assets  acquired  through  foreclosures  or  deeds  in  lieu of
        foreclosure,  which are included in the Statement of Financial Condition
        as real estate owned.

During the six months ended  December 31, 1995,  the Bank  established,  through
operations,  provisions for loan losses totaling $45,000. In addition,  the Bank
realized  net  charge-offs  through  its  allowance  for loan loss  accounts  of
$35,000.  The Bank's  allowance  for loan loss was $888,000 at December 31, 1995
and $878,000 at June 30, 1995.

Prepaid expenses and other assets decreased by $219,000, or 3.70%, to $5,702,000
at December 31, 1995, from $5,921,000 at June 30, 1995. The largest  decrease in
this  category,  purchased  mortgage  servicing  rights  ("PMSR"),  decreased by
$1,306,000 to $126,000 at September 30, 1995,  from $1,432,000 at June 30, 1995.
Offsetting the decrease in PMSR were increases in various other prepaid expenses
and other  asset  accounts.  The most  significant  increase  was  approximately
$1,008,000 in accounts  receivable which  represented  payments due from brokers
from the sale of investment securities.

The  majority  of the  decrease  of PMSR  was due to a  $161.1  million  sale of
mortgage servicing rights. PMSR had been previously  recognized on a significant
portion of the servicing  rights sold. The sale of servicing rights was executed
primarily to mitigate  prepayment risk. Mortgage loans serviced for other owners
decreased  by   $130,548,000,   to  $61,741,000  at  December  31,  1995,   from
$192,289,000 at June 30, 1995.


                                       10
<PAGE>




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

As of July 1, 1995,  the Bank  adopted the  Statement  of  Financial  Accounting
Standards No. 122 ("SFAS 122"), "Accounting for Mortgage Servicing Rights." This
statement  amended  FASB  Statement  No. 65,  "Accounting  for Certain  Mortgage
Banking Activities," to require that a mortgage banking enterprise recognize, as
separate  assets,  rights to service  mortgage  loans for others  however  those
servicing  rights are acquired.  For the six months ended December 31, 1995, and
in conjunction  with the adoption of SFAS 122, the Bank  recognized  $335,000 of
servicing  rights on loans that were  originated  through  its loan  origination
network and retail banking offices.  The Bank had definitive plans to sell these
mortgage  loans and retain the  servicing  rights.  These  servicing  rights are
included in the "Prepaid Expenses and Other Assets" category on the Statement of
Financial Condition.

Total deposits decreased by $84,455,000,  or 40.25%, to $125,350,000 at December
31, 1995 from deposits of  $209,805,000  at June 30, 1995. The primary cause for
the reduced level of deposits was the Branch Sales. Deposits sold as part of the
Branch  Sales  totaled  $78,473,000.   In  addition,  in  the  months  prior  to
consummation of the Branch Sales,  the Bank allowed a run-off of public funds at
its former Tipton and Kokomo branch offices.

Advances from the Federal Home Loan Bank ("FHLB") and other borrowings increased
by $15,515,000,  or 19.54%, to $94,902,000 at December 31, 1995 from $79,387,000
at June 30, 1995.  The increase in borrowed money was used primarily to fund the
portion  of the  deposits  sold as part of the  Branch  Sales  that the sales of
assets did not cover.

Advance  payments by borrowers for taxes and insurance  decreased by $1,593,000,
or 68.63%,  to $728,000 at December 31, 1995 from  $2,321,000  at June 30, 1995.
The sale of servicing  rights during the six months ended  December 31, 1995 was
primarily  responsible  for the declined  level of escrow held by the Bank.  The
sale of  mortgage  loans as part of the  Branch  Sales also  contributed  to the
decline.

Accrued expenses and other  liabilities  increased by $1,370,000,  or 33.92%, to
$5,409,000 at December 31, 1995,  from  $4,039,000  at June 30, 1995.  Primarily
responsible for the increased  accrued  expenses were income taxes payable.  The
increased  income  taxes  payable  were  attributable  to  significantly  higher
earnings during the six months ended December 31, 1995 as compared with the same
period of the prior year.

(b)  Results of Operations:

During the three months ended December 31, 1995, 1ST BANCORP had net earnings of
$4,582,000,  or $6.84 per share,  compared to net earnings of $922,000, or $1.43
per share,  for the three months ended December 31, 1994.  During the six months
ended December 31, 1995,  1ST BANCORP had net earnings of  $5,070,000,  or $7.56
per share,  compared to net earnings of $1,115,000,  or $1.73 per share, for the
six months ended December 31, 1994. The increased  three and six months earnings
were the result of increased  non-interest  income,  and more  specifically  the
Branch Sales.


                                       11
<PAGE>



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

Net interest  income  before  provision for loan losses was  $1,601,000  for the
three months  ended  December 31,  1995,  compared to  $1,770,000  for the three
months ended  December 31, 1994. Net interest  income before  provision for loan
losses was $3,269,000  for the six months ended  December 31, 1995,  compared to
$3,431,000  for the six months ended December 31, 1994. The interest rate margin
was 2.24% for the three months ended December 31, 1995 compared to 2.59% for the
three months ended  December 31, 1994.  The interest  rate margin was also 2.24%
for the six months ended  December 31, 1995 compared to 2.61% for the six months
ended  December  31,  1994.  The  narrowed  interest  rate  margin is  primarily
responsible for the decreased net interest  income.  The accumulation of cash to
fund the deposits sold as part of the Branch Sales  throughout  the three months
ended December 31, 1995 contributed to the Bank's lower net interest margin. The
funds were invested at overnight  funds rates and therefore  decreased the yield
which could have been realized through alternative  investments.  A higher level
of  interest-earning  assets and  interest-bearing  liabilities during the first
three  months of fiscal year 1996 as  compared  to fiscal year 1995  allowed net
interest  income to remain stable during that period,  partially  offsetting the
declined margin for the six months ended December 31, 1995.

Non-interest  income  for the three  months  ended  December  31,  1995  totaled
$7,932,000  compared to $1,684,000 for the three months ended December 31, 1994.
Non-interest  income  for  the  six  months  ended  December  31,  1995  totaled
$8,962,000  compared to $2,280,000 for the three months ended December 31, 1994.
The higher level of non interest income for both the three and six month periods
ended  December 31, 1995, as compared to the same periods of the prior year, was
directly attributable to the Branch Sales.

Fee and service  charge  income for the three  months  ended  December  31, 1995
totaled  $84,000  compared to $391,000 for the three  months ended  December 31,
1994.  Fee and service  charge income for the six months ended December 31, 1995
totaled  $224,000  compared to $758,000 for the three months ended  December 31,
1994. A significant  decline in the Bank's  mortgage loan  servicing  portfolio,
which resulted in reduced loan servicing fee income, was the primary factor that
contributed to the lower fee and service charge  income.  The reduced  servicing
portfolio  resulted from sales of servicing  during the fourth quarter of fiscal
year 1995 and the first quarter of fiscal year 1996.

The  net  loss  on  the  sale  of  investment  securities  and  trading  account
investments  for the three  months  ended  December  31, 1995  totaled  $123,000
compared to a net gain of $1,000 for the three months  ended  December 31, 1994.
The  net  loss  on  the  sale  of  investment  securities  and  trading  account
investments for the six months ended December 31, 1995 totaled $122,000 compared
to a net gain of $1,000 for the six months ended December 31, 1994. The net loss
for the three and six months ended December 31, 1995 resulted primarily from the
sale of $38.1 million of investment securities classified as available for sale.
These securities were sold in order to fund the sale of deposits that was a part
of the Branch Sales.  There was only minimal activity in the investment  trading
account during the six months ended December 31, 1995.

The net gain on the sale of loans  (excluding  loans  sold as part of the Branch
Sales) for the three months ended December 31, 1995 totaled  $340,000  compared
to $98,000 for the three  months ended  December  31, 1994.  The net gain on the



                                       12
<PAGE>



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

sale of loans  (excluding  loans sold as part of the  Branch  Sales) for the six
months ended December 31, 1995 totaled $652,000 compared to $150,000 for the six
months  ended  December  31,  1994.  The  increased  gain on sale of  loans  was
attributable to a higher volume of loan  originations and subsequent loan sales.
Also  contributing to the higher gain on sale of loans was the Bank's continuing
emphasis on origination and sale of non-conforming loans.

The largest increase in total  non-interest  income was the net gain on the sale
of branch  offices.  The Branch Sales  produced a pre-tax net gain of $7,274,000
for the  three and six month  period  ending  December  31,  1995.  The gain was
derived from the deposit  premium,  gain on sale of mortgage and consumer loans,
and gain on the sale of the branch  offices' real estate.  "Other"  non-interest
income for the three months ended December 31, 1995 totaled $357,000 compared to
$1,194,000  for the three months ended December 31, 1994.  "Other"  non-interest
income for the six months ended December 31, 1995 totaled  $934,000  compared to
$1,371,000 for the six months ended December 31, 1994.

The primary  component  of "other"  non-interest  income is the gain on sale and
capitalization of mortgage loan servicing rights.  "Other"  non-interest  income
was  lower for the three and six month  periods  ending  December  31,  1995 due
primarily to the lower gain on sale of servicing rights.  There were no sales of
servicing  rights during the three months ended  December 31, 1995. For the same
period one year  earlier,  the Bank  completed a bulk sale of  servicing  rights
resulting in a gain of $988,000. For the six months ended December 31, 1995, the
gain on sale of servicing  totaled  $237,000  compared with $988,000 for the six
months ending December 31, 1994. However, mitigating the reduced gain on sale of
servicing was the capitalization of servicing rights for loans originated by the
Bank in  accordance  with SFAS 122 which was  adopted  by the Bank as of July 1,
1995.  The Bank  capitalized  $173,000  and  $344,000  of  servicing  rights  on
originated loans during the three and six month periods ended December 31, 1995,
respectively.

Non-interest  expense was  $2,196,000  for the three months  ended  December 31,
1995,  compared to  $1,970,000  for the three  months  ended  December 31, 1994.
Non-interest  expense was $4,086,000 for the six months ended December 31, 1995,
compared to $3,914,000  for the six months ended  December 31, 1994. The primary
reason  for the  increase  in  non-interest  expense in the three and six months
ended December 31, 1995 as compared with the same periods for the prior year was
higher compensation and employee benefit expense.

(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




                                       13
<PAGE>



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

to  certain  restrictions  in its  dealings  with the  Corporation.  The Bank is
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 December 31, 1995, the
Bank met all current capital requirements.

The  following  is a  summary  of the  Bank's  regulatory  capital  and  capital
requirements at December 31, 1995:

                                    Tangible           Core          Risk-Based
                                     Capital         Capital          Capital
                                     -------         -------          -------
Regulatory Capital                $22,541,000      $22,541,000      $22,914,000

Minimum Capital Requirement       $ 3,719,000      $ 7,439,000      $10,490,000
                                  -----------      -----------      -----------

Excess Capital                    $18,822,000      $15,102,000      $12,424,000

Regulatory Capital Ratio                 9.07%            9.07%           17.48%
Required Capital Ratio                   1.50%            3.00%            8.00%

During the quarter ended  December 31, 1995,  1ST BANCORP paid a $0.10  dividend
per share to shareholders. This is the thirteenth 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  $11,434,000  in loan  commitments  and
$1,151,000 of loans in process outstanding at December 31, 1995. The majority of
these commitments are expected to be funded within the three month period ending
March 31, 1996. At December 31, 1995,  the Bank had  $3,878,000  in  outstanding
commitments  to sell mortgage  loans and  mortgage-backed  securities.  The Bank
maintains  liquidity of at least 5% of net  withdrawable  assets.  The liquidity
ratio at December 31, 1995 was 13.71%.


(d) Proposed Legislation

Because  of the  differing  reserve of the SAIF and the BIF,  deposit  insurance
assessments paid by healthy commercial banks were recently reduced significantly
below the level  paid the  healthy  savings  associations.  Assessments  paid by
healthy savings associations  exceeded those paid by healthy commercial banks by
approximately  $.19 per $100 in  deposits  in late 1995 and will  exceed them by
$.23 per $100 in deposits beginning in 1996. Congress is considering legislation



                                       14
<PAGE>



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

to  recapitalize  the SAIF and to eliminate the  significant  premium  disparity
between the BIF and the SAIF. Currently,  the recapitalization plan provides for
the payment,  during the first calender quarter of 1996, of a special assessment
of approximately $.85 per $100 of SAIF deposits held at March 31, 1995, in order
to increase  SAIF reserves to the level  required by law.  Certain banks holding
SAIF insured  deposits would pay a lower special  assessment.  In addition,  the
cost of prior thrift failures would be shared by both the SAIF and the BIF. Such
cost  sharing  might  increase  BIF  assessments  by $.02 to  $.025  per $100 in
deposits.  SAIF assessments for healthy savings  associations  would be set at a
significantly  lower  level  after the  special  assessment  is paid by all SAIF
institutions  and could  never be reduced  below the level set for  healthy  BIF
institutions.

The  recapitalization  plan also  provides for the merger of the SAIF and BIF on
January  1,  1998.  However,  the SAIF  recapitalization  legislation  currently
provides for an  elimination  of the federal  thrift  charter or of the separate
federal  regulation  of  thrifts  prior to the merger of the  deposit  insurance
funds.  First Federal would be regulated  under federal law as a bank, and, as a
result,  would  become  subject  to the more  restrictive  activity  limitations
imposed on national banks. Under current tax laws, savings  associations meeting
certain  requirements  have been able to deduct  from  income  for tax  purposes
amounts designated as reserved for bad debts. Currently,  upon the conversion of
a savings  association to a bank, certain amounts of such association's bad debt
reserve  must be  recaptured  as taxable  income  over a six-year  period if the
association  has used the  percentage  of taxable  income  method to compute its
reserve. Congress is considering legislation requiring,  generally, that even if
a savings  association does not convert to a bank, bad debt reserves taken after
1987 using the  percentage  of taxable  income method must be included in future
taxable income of the association  over a six-year  period,  although a two-year
delay may be permitted  for  institutions  meeting a  residential  mortgage loan
origination test.

No assurances can be given that the SAIF  recapitalization  plan will be enacted
into law or in what form it may be enacted. In addition, 1ST BANCORP can give no
assurances  that  the  disparity  between  BIF  and  SAIF  assessments  will  be
eliminated and cannot be certain of the impact of its being  regulated as a bank
holding  company,  First Federal being  regulated as a bank or the change in tax
accounting for bad debt reserves until the legislation  requiring such change is
enacted.  Any such  legislation  could have a material  effect on the liquidity,
capital reserves or operation of 1ST BANCORP.

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.



                                       15
<PAGE>


PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

The Bank and Amcore  Mortgage,  Inc.  have been named as defendants in a lawsuit
filed on March 2, 1995 in the  United  States  District  Court for the  Northern
District of Illinois. The plaintiffs have sued on their own behalf and on behalf
of purported classes.  In their multiple count complaint,  the plaintiffs allege
that the  defendants  have  assessed  escrow  deposits  in excess of the  amount
allowed by mortgage  contracts  and in  violation  of the law and have failed to
disclose to their borrowers material information  pertaining to private mortgage
insurance  ("PMI").  The  plaintiffs  have sued for damages,  punitive  damages,
attorney fees,  costs,  and declaratory and injunctive  relief.  With respect to
escrow  deposits,  the plaintiffs have alleged that Bank practices  breached the
terms of mortgage contracts, constituted unfair and deceptive trade practices in
violation  of state laws,  and  violated the  Racketeer  Influenced  and Corrupt
Organization statute ("RICO").  With respect to private mortgage insurance,  the
plaintiffs  have alleged that Bank  practices  constituted  unfair and deceptive
trade  practices.  The  plaintiffs  seek  to  represent  nationwide  classes  of
borrowers who allegedly  were damaged by these  practices.  Management  believes
adequate provisions have been made in the consolidated  financial statements for
this contingency.

The Bank and the  plaintiffs  have  entered  into an  agreement  to  settle  the
mortgage  escrow claims with a defined  class.  The court has given  preliminary
approval to the settlement and a date for final hearing, following notice to the
defined class, is set for May 6, 1996. The settlement agreement provides for the
dismissal with prejudice of the mortgage  escrow claims  asserted by the defined
class against the Bank.  It also  provides  that the PMI claims,  which were not
being settled,  will be dismissed  without  prejudice.  The settlement is for an
amount less than that which has been reserved by the Bank.

First  Federal is involved in two other  lawsuits  that are not in the  ordinary
course of business. The first involves a discrimination complaint filed with the
U.S.  Department of Housing and Urban  Development  pursuant to the Fair Housing
Act.  The second  lawsuit was filed by a title  company  involved  in  providing
closing  services for a mortgage loan that was purchased by First Federal from a
third party  mortgage  company  subsequent to closing,  and alleges the mortgage
company was acting as an agent for First Federal and failed to provide funds for
closing the  transaction  in exchange for the note and deed of trust.  It is the
opinion of management that, based on current information available, the ultimate
resolutions  of these  matters  will not have a material  adverse  affect on the
Corporation's financial position.

Other than the above,  neither 1ST BANCORP nor First  Federal is involved in any
legal  proceedings,  other than  routine  proceedings  occurring in the ordinary
course of its business.


                                       16
<PAGE>



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

On October 21, 1995, the Annual Meeting of Shareholders was held and the results
of which follow.  The meeting was held prior to the  declaration of the 5% stock
dividend,  therefore, the voting results do not reflect any effects of the stock
dividend.

                                               Against or              Broker
                                    For        Withheld    Abstain     Non-votes
                                    ---        --------    -------     ---------
Election of Donald G. Bell
as Director for term expiring
in 1998                           499,805        500          0           0

Election of Ruth Mix Carnahan
as Director for term expiring
in 1998                           499,649        656          0           0

Election of Rahmi Soyugenc
as Director for term expiring
in 1998                           499,774        531          0           0



Item 6. Exhibits and Reports on Form 8-K

a)   The  following  Exhibit  is  filed  herewith:  Exhibit  27  Financial  Data
     Schedule.

b)   The  Registrant  filed a Report on Form 8-K on December  28, 1995 to report
     that on December 16,  1995,  it  completed  the sale of certain  assets and
     certain  liabilities of two retail branch offices of its thrift subsidiary,
     First Federal Bank, A Federal Savings Bank, to two of STAR Financial Group,
     Inc.'s  subsidiary banks.  STAR Financial Bank,  Marion,  Indiana purchased
     certain  assets and assumed  certain  liabilities  of First Federal  Bank's
     retail branch  office  located in Kokomo,  Indiana.  STAR  Financial  Bank,
     Indianapolis,   Indiana   purchased  certain  assets  and  assumed  certain
     liabilities of First Federal Bank's retail branch office located in Tipton,
     Indiana.




                                       17
<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, 1996                   By: /s/   C. James McCormick
                                                    --------------------------
                                                    C. James McCormick, Chairman
                                                    and Chief Executive Officer
                                
                                
Date: February 13, 1996                   By: /s/    Frank D. Baracani
                                                     --------------------------
                                                     Frank D. Baracani,
                                                     President
                                
                                
Date: February 13, 1996                   By: /s/   Mary Lynn Stenftenagel
                                                    ---------------------------
                                                    Mary Lynn Stenftenagel,
                                                    Secretary-Treasurer and
                                                    Chief Accounting Officer
                             


                                       18