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 March 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 April 23, 1997, there were 697,538 Shares of the Registrant's Common Stock
issued and outstanding.




<PAGE>


                          1ST BANCORP AND SUBSIDIARIES

                                      INDEX



                                                                          Page
PART I.  FINANCIAL INFORMATION:                                          Number

         Item 1.    Financial Statements

                        Consolidated Condensed Statements
                          of  Financial Condition,
                          March 31, 1997 and June 30,
                          1996 (Unaudited)                                 3

                        Consolidated Condensed Statements
                           of Earnings, Three Months and 
                           Nine Months Ended March 31, 1997 
                           and 1996 (Unaudited)                            4

                        Consolidated Condensed Statements of
                          Cash Flows, Nine Months Ended
                          March 31, 1997 and 1996 (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                                     8-14

PART II.  OTHER INFORMATION                                               15

SIGNATURES                                                                16



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

                                                           March 31,   June 30,
                                                             1997         1996
                                                         ---------    ---------
     ASSETS
Cash and cash equivalents:
    Interest bearing deposits                            $  18,239    $  24,689
    Non-interest bearing deposits                              369          410
                                                         ---------    ---------
                    Cash and cash equivalents               18,608       25,099
                                                         ---------    ---------
Trading account securities                                   1,973           --
Securities available for sale                                9,509       10,499
Securities held to maturity (market value
    of $45,911 at March 31, 1997 and
    $42,184 at June 30, 1996)                               47,072       43,624
Loans receivable, net                                      159,223      150,749
Loans held for sale                                         21,312       18,590
Accrued interest receivable:
    Securities                                                 704        1,036
    Loans                                                    1,094        1,179
Stock in FHLB of Indianapolis, at cost                       4,864        4,864
Office premises and equipment                                3,236        2,950
Real estate owned                                              326          177
Prepaid expenses and other assets                            5,169        4,716
                                                         ---------    ---------
TOTAL ASSETS                                             $ 273,090    $ 263,483
                                                         =========    =========

     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Deposits                                             $ 146,641    $ 137,148
    Advances from FHLB and other borrowings                101,325      100,885
    Advance payments by borrowers
          for taxes and insurance                              644          492
    Accrued interest payable on deposits                       803          816
    Accrued expenses and other liabilities                   1,918        2,413
                                                         ---------    ---------
                  Total Liabilities                      $ 251,331    $ 241,754
                                                         ---------    ---------
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  697,538 at March  31, 1997 and
       699,889 at June 30, 1996                          $     698    $     667
    Paid-in capital                                          2,631        2,747
    Retained earnings, substantially restricted             18,636       18,560
    Unrealized depreciation on securities                     (206)        (245)
                                                         ---------    ---------
                 Total Stockholders' Equity              $  21,759    $  21,729
                                                         ---------    ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $ 273,090    $ 263,483
                                                         =========    =========


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     Nine Months Ended
                                                                 March 31,              March 31,
                                                          ---------------------   --------------------
                                                            1997        1996        1997        1996
                                                          --------    --------    --------    --------
<S>                                                       <C>         <C>         <C>         <C>     
INTEREST INCOME:
   Loans                                                  $  3,897    $  3,811    $ 11,243    $ 12,221
   Investment securities                                       970         762       2,826       2,985
   Trading account securities                                   14           3          14           3
   Other short-term investments and
     interest bearing deposits                                 149         187         464         625
                                                          --------    --------    --------    --------
  Total Interest Income                                      5,030       4,763      14,547      15,834
                                                          --------    --------    --------    --------
INTEREST EXPENSE:
   Deposits                                                  1,949       1,817       5,655       7,086
   Short-term borrowings                                        18          22          43          78
   FHLB advances and other borrowings                        1,369       1,409       4,189       3,886
                                                          --------    --------    --------    --------
  Total Interest Expense                                     3,336       3,248       9,887      11,050
                                                          --------    --------    --------    --------
NET INTEREST INCOME BEFORE
    PROVISION FOR LOAN LOSSES                                1,694       1,515       4,660       4,784

Provision for loan losses                                       84          15         170          60
                                                          --------    --------    --------    --------
NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                                1,610       1,500       4,490       4,724
                                                          --------    --------    --------    --------
NON-INTEREST INCOME:
   Fees and service charges                                    101          66         273         213
   Net loss on sales of investment securities available
      for sale and trading account investments                 (34)        (42)        (32)       (164)
   Net gain on sales of loans                                  392         498       1,593       1,494
   Net gain on sale of branch offices                           --          --          --       7,274
   Other                                                       172         184         478         774
                                                          --------    --------    --------    --------
  Total Non-Interest Income                                    631         706       2,312       9,591
                                                          --------    --------    --------    --------
NON-INTEREST EXPENSE:
   Compensation and employee benefits                        1,010         906       2,995       3,146
   Net occupancy                                               185         168         545         571
   Federal insurance premiums                                   40         101       1,549         369
   Other                                                       472         468       1,616       1,566
                                                          --------    --------    --------    --------
  Total Non-Interest Expense                                 1,707       1,643       6,705       5,652
                                                          --------    --------    --------    --------
Earnings Before Income Taxes                                   534         563          97       8,663
Income Taxes                                                    (6)        218        (188)      3,248
                                                          --------    --------    --------    --------
NET EARNINGS                                              $    540    $    345    $    285    $  5,415
                                                          ========    ========    ========    ========
EARNINGS PER SHARE:                                       $   0.78    $   0.50    $   0.41    $   7.70


</TABLE>

See Notes to Consolidated Condensed Financial Statements

                                     - 4 -
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    Nine Months Ended
                                                                         March 31,
                                                                --------------------------
                                                                    1997           1996
                                                                 ---------      ---------
<S>                                                              <C>            <C>      
Net Cash Flow From Operating Activities:
Net earnings                                                     $     285      $   5,415
Adjustments to reconcile net cash
  provided by operating activities:
   Depreciation and amortization                                       241            256
   Amortization of mortgage servicing rights                            83             90
   Gain on sale of loans                                            (1,593)        (1,494)
   Net change in trading account securities                         (1,973)            --
   Loss on sale of securities                                           32            164
   Gain on sale of branches                                             --          (7274)
   Net change in loans held for sale                                (2,722)        (5,352)
   Provision for loan losses                                           170             60
   Decrease in accrued interest receivable                             417            726
   Decrease (increase) in prepaid expenses and other assets           (464)         1,081
   Decrease in accrued expenses and other liabilities                 (534)        (1,257)
   Undistributed loss of investment in limited partnership              95            227
                                                                 ---------      ---------
     NET CASH USED BY OPERATING ACTIVITIES                          (5,963)        (7,358)
                                                                 ---------      ---------
Cash Flows From Investing Activities:
    Purchase of investment and mortgage-backed securities
                   available for sale                              (20,982)       (34,024)
    Proceeds from maturities, calls, repayment
                   of principal and sales
                   of  investment and mortgage-backed
                   securities available for sale                    22,007         64,056
    Purchase of investment and mortgage-backed securities           (3,518)       (33,266)
    Proceeds from maturities, calls, and
                   repayment of principal of
                   investment and mortgage-backed securities            59         19,670
    Principal collected on loans, net of originations               (7,207)        (8,002)
    Purchases of life insurance policies                               (35)            --
    Purchases of stock of FHLB of Indianpolis                           --           (988)
    Purchases of office premises and equipment                        (494)          (118)
    Proceeds from sale of office premises and
                    equipment - branch sales                            --          1,316
    Proceeds from sale of loans - branch sales                          --         28,875
    Sale of deposits - branch sales                                     --        (78,473)
    Other                                                             (149)            15
                                                                 ---------      ---------
        NET CASH USED BY INVESTING ACTIVITIES                      (10,319)       (40,939)
                                                                 ---------      ---------
Cash Flows From Financing Activities:
    Net increase in deposits                                         9,493         14,620
    Proceeds from FHLB advances and other borrowings                51,818        139,344
    Repayment of FHLB advances and other borrowings                (51,378)      (110,890)
    Proceeds from issuance of common stock                             116            123
    Purchase and retirement of common stock                           (207)          (181)
    Payment of dividends on common stock                              (203)          (200)
    Increase (decrease) in advance payments by borrowers
        for taxes and insurance                                        152         (1,498
                                                                 ---------      ---------
        NET CASH PROVIDED BY FINANCING ACTIVITIES                    9,791         41,318
                                                                 ---------      ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS                           (6,491)        (6,979)

Cash and Cash Equivalents at Beginning of Period                    25,099         17,332
                                                                 ---------      ---------
Cash and Cash Equivalents at End of Period                       $  18,608      $  10,353
                                                                 =========      =========

</TABLE>

See Notes to Consolidated Condensed Financial Statements

                                     - 5 -

<PAGE>

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 November 22, 1996, the Board of Directors approved a 5% common stock dividend
with a record date of December 27,  1996,  and payment date of January 10, 1997.
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 earnings per share
computations  was 697,159 and 699,118 for the three months ended and 700,147 and
702,179 for the nine months ended March 31, 1997 and 1996, respectively.

Note 4.  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. can purchase the Corporation's  common stock at
a discount.  The purchase price of the shares under this plan is 85% of the fair
market  value of such  stock at the  beginning  or end of the  offering  period,
whichever  is lesser.  A total of 15,750  authorized  but  unissued  shares were
reserved  for  issuance  under this plan.  No shares have been issued under this
plan to date.  Under a former plan,  with identical terms as the exisiting plan,
13,781  authorized  but unissued  shares were reserved for issuance.  A total of
3,749 shares were issued and  purchased  by  employees  in the first  quarter of
fiscal year 1997 for the fiscal 1996 plan year under the former plan. A total of
11,472 shares were issued under the former plan.

Note 5.  Stock Repurchase Plan

In  August  1996,  the  Board  authorized  the  repurchase  of up  to 5% of  the
outstanding  shares of common  stock  (703,638  shares were  outstanding  at the
time), subject to market


                                     - 6 -
<PAGE>

conditions,  over a two year period  which  expires in August  1998.  During the
quarter ended December 31, 1996, 7,383 shares of common stock were  repurchased.
These 7,383 shares  represent the cumulative  total purchased under this plan to
date.


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

On  September  30,  1996,  the federal  government  mandated  an  industry  wide
assessment  to  recapitalize  the SAIF,  which is a part of the Federal  Deposit
Insurance  Corporation  ("FDIC").  The special assessment was charged to savings
associations with insured deposits by the SAIF. The assessment was calculated at
0.657% of insured  deposits  as of March 31,  1995.  The  Bank's  portion of the
assessment was $1,330,000 and is included in  non-interest  expense for the nine
months ended March 31, 1997.

Note 7.  Branch Sales

On December  16,  1995,  1ST BANCORP  completed  the sale of certain  assets and
certain  liabilities  (the  "Branch  Sales") of two of the  Bank's  full-service
retail branch offices in Tipton and Kokomo,  Indiana resulting in a pre-tax gain
of $7,274,000.  The  transaction  consisted of the sale of certain  mortgage and
consumer loans, office premises and equipment and certain deposit liabilities.

Note 8.  Reclassifications

Certain amounts in the fiscal year 1996 consolidated  financial  statements have
been reclassified to conform to the fiscal year 1997 presentation.



                                     - 7 -
<PAGE>



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



 (a)  Financial Condition:

Total assets  increased by $9,607,000,  or 3.65%,  to  $273,090,000 at March 31,
1997, compared to total assets of $263,483,000 at June 30, 1996. The increase is
primarily  attributable  to increases  in loans  receivable  and the  investment
securities portfolio.

Cash and cash equivalents  declined by $6,491,000,  or 25.86%, to $18,608,000 at
March 31, 1997,  from  $25,099,000 at June 30, 1996. At June 30, 1996,  cash and
cash equivalents were at above normal levels primarily due to a significant bulk
sale of lower  yielding  conforming  mortgage loans during the fourth quarter of
fiscal year 1996.  The decline in cash and cash  equivalents  was used to fund a
portion of the increased loan and investment portfolio.

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)  increased by $3,448,000,  or 7.90%,  to  $47,072,000,  at March 31,
1997, from  $43,624,000 at June 30, 1996.  Investment  securities  available for
sale (including  mortgage-backed  securities) declined by $990,000, or 9.43%, to
$9,509,000 at March 31, 1997, from $10,499,000 at June 30, 1996. Trading account
securities  totaled  $1,973,000  at March 31,  1997,  compared  with no  trading
account securities at June 30, 1996.

Net loans receivable increased by $8,474,000, or 5.62%, to $159,223,000 at March
31,  1997,  from  $150,749,000  at June 30,  1996.  The  increase  in net  loans
receivable is  attributable  to  residential  mortgage loan  production.  Growth
occurred  primarily in the  non-conforming  mortgage loan  portfolios.  Emphasis
continues  to be placed on  increasing  the  non-conforming  loan  portfolio  to
further enhance the Bank's net interest margin.

Loan production  during the nine months ended March 31, 1997 decreased  compared
to the same  period of the prior year.  During the nine  months  ended March 31,
1997, the Bank funded $93.2 million of loans compared to $125.7 million of loans
during the nine  months  ended March 31,  1996.  Primarily  responsible  for the
decrease in loan  production was the decline in purchases of one-to-four  family
mortgage loans. The Bank purchased and funded $2.0 million in one-to-four family
mortgage loans during the nine months ended March 31, 1997,  compared with $21.9
million  for the same  period of the prior year.  This  occurred  because of the
Bank's  decision  to  decrease  the  correspondent  loan  program due to pricing
constraints.


                                     - 8 -
<PAGE>

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


During the nine months ended March 31,  1997,  non-conforming  mortgage  lending
constituted  $57.6 million,  or 61.8%,  of total loans funded during the period.
During the same nine month period,  $29.4 million of  non-conforming  loans were
sold on a non-recourse basis in the secondary market. The remainder of the loans
are retained in portfolio  to increase the net interest  margin.  Non-conforming
loans,  including  those held for sale,  increased to $64.8 million at March 31,
1997 compared to $39.9 million at June 30, 1996.

Loans held for sale  totaled  $21,312,000  at March 31,  1997,  an  increase  of
$2,722,000,  or 14.64%, from $18,590,000 at June 30, 1996. Primarily responsible
for the  change in the level of loans held for sale is the timing of the sale of
bulk packages of non-conforming loans.

At March 31, 1997,  non-performing  assets totaled $1,951,000,  or .71% of total
assets.  This compares to $732,000 of  non-performing  assets,  or .29% of total
assets,  at June 30, 1996. The increase in  non-performing  assets was primarily
the result of  one-to-four  family  mortgage loans becoming 90 days or more past
due. Increased conforming loan and non-conforming loan delinquencies contributed
to the increased  non-performing  assets.  Management is actively monitoring the
upward  trend  in   non-performing   assets.   As  a  result  of  the  increased
delinquencies,  mortgage  loan  collection  personnel  have been  increased.  In
addition,  the  loan  loss  valuation  allowance  accounts  have  been  actively
increased to compensate for the increased level of non-performing assets.

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
generally placed on non-accrual  status when they become  contractually past due
90 days or more.


                                               March 31,        June 30,
                                                 1997            1996
                                              ----------      -----------
Non-performing assets:                      
                                            
   Non-accrual loans                          $1,625,000      $  555,000
                                            
   Other non-performing assets (1)               326,000         177,000
                                            
   Restructured loans                                 --              --
                                            
Total non-performing assets                   $1,951,000      $  732,000
                                              ----------      ----------
                                            
Non-performing assets to total assets               0.71%           0.29%
                                        

-----------------

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

                                      - 9 -




<PAGE>



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


During the nine  months  ended March 31,  1997,  the Bank  established,  through
operations,  provisions for loan losses totaling $170,000. In addition, the Bank
realized  net  charge-offs  through  its  allowance  for loan loss  accounts  of
$71,000.  The Bank's  allowance for loan loss was $995,000 at March 31, 1997 and
$896,000 at June 30, 1996.

Prepaid expenses and other assets increased to $5,169,000 at March 31, 1997 from
$4,716,000  at June 30, 1996.  The increase was  primarily  attributable  to the
purchase of the book of business of an  existing  independent  insurance  agency
during December 1996. The book of business was merged with the existing customer
base of First Financial  Insurance Agency,  Inc. As a result of the acquisition,
First  Financial  Insurance,  Inc.  opened a full  service  insurance  office in
Princeton, Indiana in addition to its existing full service office in Vincennes,
Indiana.

Total deposits  increased by $9,493,000,  or 6.92%, to $146,641,000 at March 31,
1997 from  $137,148,000 at June 30, 1996. The increase in deposits was primarily
the result of an  increased  use of brokered  funds during the nine months ended
March 31, 1997. The additional brokered deposits were used to fund on-going loan
and investment operations. Advances from the Federal Home Loan Bank ("FHLB") and
other  borrowings  increased  slightly  to  $101,325,000  at March 31, 1997 from
$100,885,000 at June 30, 1996.

Accrued  expenses and other  liabilities  decreased to  $1,918,000  at March 31,
1997, from  $2,413,000 at June 30, 1996. The decrease is primarily  attributable
to two items.  First,  accrued income tax payable decreased due to a lower level
of earnings for the nine months ended March 31, 1997.  The lower  earnings  were
directly  attributable  to the  SAIF  assessment.  The  assessment  expense  was
recognized  during the first quarter of fiscal 1997 on a tax effected basis, and
was paid  during  the second  quarter of fiscal  1997.  Second,  the  management
incentive plan payable was  distributed  during the first quarter of fiscal year
1997 for the fiscal 1996 plan year. Offsetting the decrease from these items was
an increased  payable to the Federal Home Loan Mortgage  Corporation  ("FHLMC").
The  increase  was caused by an  increased  number of mortgage  loan payoffs for
loans that had been sold to FHLMC near the end of the quarter.

(b)  Results of Operations:

During the three  months  ended  March 31,  1997,  1ST BANCORP had net income of
$540,000, or $0.78 per share, compared to net earnings of $345,000, or $0.50 per
share,  for the three months ended March 31, 1996.  During the nine months ended
March 31, 1997, 1ST BANCORP recorded net income of $285,000, or $0.41 per share,
compared to net earnings of $5,415,000,  or $7.70 per share, for the nine months
ended March 31, 1996.

                                     - 10 -




<PAGE>



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


The lower  level of net  earnings  for the nine  months  ended March 31, 1997 as
compared to the nine months ended March 31, 1996 is  attributable to two primary
factors.  The net earnings  for the nine months ended March 31, 1997  included a
one time pre-tax assessment of $1,330,000 for the  recapitalization of the SAIF.
The assessment was realized  through earnings during the first quarter of fiscal
year 1997.  The net earnings for the nine months ended March 31, 1996 included a
pre-tax gain of $7,274,000 from the Branch Sales. The gain from the Branch Sales
was realized through earnings during the second quarter of fiscal year 1996.

Net  earnings  for the three  months  ended  March 31,  1997 and 1996,  are more
readily  comparable.  The net earnings  increase for the quarter ended March 31,
1997 as  compared  with the same  period  of the  previous  year  resulted  from
increased net interest  income and a  substantially  reduced income tax expense,
offset by increased net non-interest expense.

Net interest  income  before  provision for loan losses was  $1,694,000  for the
three months ended March 31, 1997,  compared to $1,515,000  for the three months
ended March 31,  1996.  The net  interest  margin was 2.64% for the three months
ended March 31,  1997  compared  to 2.42% for the three  months  ended March 31,
1996. The increased  level of net interest income was the result of the expanded
net interest margin.  The net interest margin was expanded primarily through the
increased level of higher yielding non-conforming mortgage loans which have been
retained in the loan portfolio.  Also contributing to the increased net interest
margin for the three  months  ended  March 31,  1997 as  compared  with the same
period of the previous  year,  was a slightly  higher level of  interest-earning
assets and interest-bearing liabilities and a relatively stable cost of funds.

Net interest income before provision for loan losses was $4,660,000 for the nine
months ended March 31, 1997,  compared to  $4,784,000  for the nine months ended
March 31,  1996.  The net  interest  margin was 2.45% for the nine months  ended
March 31, 1997  compared to 2.33% for the nine months ended March 31, 1996.  The
lower level of net interest  income for the nine months ended March 31, 1997 was
attributable   to  a  lower  average  level  of   interest-earning   assets  and
interest-bearing  liabilities  which  resulted  from the Branch Sales during the
second quarter of fiscal 1996.  However,  offsetting the decreased  volume,  the
average excess of interest-earning assets over interest-bearing  liabilities was
greater  during the nine  months  ended  March 31,  1997 as compared to the same
period of the prior year.  This enabled the net interest  margin as a percent of
total assets to expand despite the lower actual net interest income.

In addition,  the Bank's continued emphasis on non-conforming loan originations,
which typically are higher yielding than conforming loan products, has augmented
the   expansion  of  the  net  interest   margin  by  enhancing   the  yield  on
interest-earning  assets.  This,  combined with a slightly lower average cost of
funds during the nine month period ended March 31,

                                     - 11 -




<PAGE>



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

1997,  has assisted in the expansion of the net interest  margin as a percent of
total assets.

Non-interest  income for the three months ended March 31, 1997 totaled  $631,000
compared to $706,000 for the three months ended March 31, 1996.  The lower level
of  non-interest  income for the three  months  ended  March 31,  1997  resulted
primarily  from a decreased  gain on sale of loans  because of fewer loan sales.
Non-interest  income for the nine months ended March 31, 1997 totaled $2,312,000
compared to $9,591,000 for the nine months ended March 31, 1996. The lower level
of non-interest income for the nine months ended March 31, 1997 was attributable
to the Branch Sales which occurred during fiscal year 1996.

Fees and service  charges  totaled  $101,000 and $273,000 for the three and nine
months  ended March 31, 1997  compared to $66,000 and $213,000 for the three and
nine months ended March 31, 1996.  The  increased  income for the three and nine
month  periods  ended  March 31, 1997 was  attributable  to  increased  mortgage
servicing fees for loans serviced for others and increased  prepayment  fees for
non-conforming mortgage loans.

The net  losses  on the sale of  investment  securities  available  for sale and
trading account  investments  totaled $34,000 and $32,000 for the three and nine
months ended March 31, 1997,  respectively,  compared with net losses of $42,000
and $164,000  for the three and nine months ended March 31, 1996,  respectively.
The higher  losses during the nine months ended March 31, 1996 resulted in large
part from the sale of  available  for sale  securities  used to fund the sale of
deposits  that was a part of the Branch  Sales.  The sales and trading  activity
during 1997 has been in the normal course of business and largely driven by cash
flow needs.

The gain on sale of mortgage loans totaled  $392,000 for the quarter ended March
31, 1997 compared to $498,000 for the quarter ended March 31, 1996.  The decline
in the gain on sale of loans for the three months ended March 31, 1997  resulted
from a lower volume of  conforming  loan sales.  The total volume of loans sold,
conforming  and  non-conforming  mortgage  loans,  declined for the three months
ended March 31, 1997 to $16.5  million from $21.5  million for the quarter ended
March 31, 1996.  Lower  conforming  loan sales levels  represented  96.7% of the
overall lower volume of loan sales.

The gain on sale of mortgage loans totaled  $1,593,000 for the nine months ended
March 31, 1997 compared to $1,494,000  for the nine months ended March 31, 1996.
The total volume of mortgage loan sales declined for the nine months ended March
31, 1997 to $57.5  million from $72.3 million  (excluding  loans sold as part of
the Branch Sales) for the same period of the prior year. However, non-conforming
loan sales represented an increased percentage of the loans sold during the nine
months  ended March 31, 1997 as compared  with the same period of the prior year
which resulted in the increased gain on sale of loans.  Nonconforming loan sales
totaled $29.4 million for the nine months ended March 31, 1997

                                     - 12 -




<PAGE>



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

compared   with  $14.8   million   for  the  same  period  of  the  prior  year.
Non-conforming  loans  have  been  sold at  higher  gain  levels  compared  with
conforming  loan sales due to pricing  methodology  differences  (including loan
origination fees collected) at the time the loans are originated.

"Other"  non-interest  income remained relatively stable during the three months
ended March 31, 1997 and totaled  $172,000  compared  with  $184,000  during the
three months ended March 31, 1996. "Other"  non-interest income totaled $478,000
for the nine  months  ended March 31,  1997  compared  to $774,000  for the nine
months  ended March 31,  1996.  The lower level of "Other"  non-interest  income
resulted  from two  primary  factors.  First,  there  were no sales of  mortgage
servicing  rights  during the nine months ended March 31, 1997 compared to a net
gain of $237,000 on the sale of mortgage servicing rights during the nine months
ended March 31, 1996.  Second,  service  charges for deposit  accounts  declined
during the nine months ended March 31, 1997 compared with the same period of the
prior year.  The decline was  attributable  to the  reduction of retail  deposit
accounts which resulted from the Branch Sales.

Non-interest  expense  totaled  $1,707,000  for the three months ended March 31,
1997,  compared  to  $1,643,000  for the three  months  ended  March  31,  1996.
Non-interest  expense  totaled  $6,705,000  for the nine months  ended March 31,
1997, compared to $5,652,000 for the nine months ended March 31, 1996.

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 and paid during the
second  quarter of fiscal 1997.  While the  immediate  effect on earnings of the
one-time  assessment is significant,  future earnings will be augmented by lower
deposit  insurance  premiums.  The Bank  began  paying an  assessment  of 0.065%
premium for insured  deposits as of January 1, 1997,  compared with the previous
assessment rate of 0.23%.

Federal  insurance  premium  expense totaled $40,000 for the quarter ended March
31, 1997  compared to $101,000 for the quarter  ended March 31, 1996.  The lower
expense  resulted from a reduced  assessment  rate as mandated by the FDIC.  The
assessment to recapitalize the SAIF is directly  responsible for the significant
increase  in  non-interest  expense for the nine  months  ended March 31,  1997.
Federal insurance  premium expense totaled  $1,549,000 for the nine months ended
March 31, 1997 compared to $369,000 the nine months ended March 31, 1996.

Compensation  and employee  benefits  expense  totaled  $1,010,000 for the three
months  ended March 31, 1997  compared to $906,000  for three months ended March
31, 1996.  The higher level of  compensation  and employee  benefits  during the
quarter  ended March 31, 1997 resulted from  increased  staffing  levels for the
Bank's  non-conforming  loan  origination  operation  and  for  First  Financial
Insurance  Agency,  Inc.  Compensation  and employee  benefits  expense  totaled
$2,995,000  for the nine months ended March 31, 1997 compared to $3,146,000  for
nine months ended March 31, 1996. The lower level of  compensation  and employee
benefit  expense for the nine months ended March 31, 1997 was  primarily  due to
lower expenses  associated  with the management  incentive plan and the employee
pension plan.


                                     - 13 -




<PAGE>



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


"Other"  non-interest  expense remained relatively stable for the three and nine
month  periods  ended March 31, 1997 as  compared  with the same  periods of the
prior year. "Other"  non-interest  expense totaled $472,000 for the three months
ended March 31, 1997  compared to $468,000  for the three months ended March 31,
1996. "Other"  non-interest expense totaled $1,616,000 for the nine months ended
March 31, 1997 compared to $1,566,000 for the nine months ended March 31, 1996.

The  Corporation  realized an income tax benefit for the nine months ended March
31, 1997 of $188,000  compared to an income tax expense of  $3,248,000  for nine
months  ended March 31,  1996.  The income tax benefit for the nine months ended
March 31, 1997 resulted from the recognition of income tax credits  generated by
an affordable housing limited partnership investment.

(c) Capital Resources and Liquidity:

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

Current  capital  regulations  require  savings  institutions  to  have  minimum
tangible  capital  equal to 1.5% of total  assets and a minimum 3% core  capital
ratio.  Additionally,  savings  institutions  are  required to meet a risk-based
capital ratio equal to 8.0% of risk-weighted assets. At March 31, 1997, the Bank
met all current capital requirements.

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


                                  Tangible         Core          Risk-Based
                                   Capital        Capital          Capital
                                 -----------    -----------      -----------
Regulatory Capital               $22,522,000    $22,522,000      $23,031,000

Minimum Capital Requirement        4,101,000      8,201,000       11,747,000
                                 -----------    -----------      -----------
Excess Capital                   $18,421,000    $14,321,000      $11,284,000

Regulatory Capital Ratio               8.24%          8.24%           15.69%

Required Capital Ratio                 1.50%          3.00%            8.00%



During the quarter ended March 31, 1997,  1ST BANCORP paid a $0.10 cash dividend
per share to shareholders. This is the eighteenth 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  $31,515,000  in loan  commitments  and
$1,562,000 of loans in process  outstanding  at March 31, 1997.  The majority of
these commitments are expected to be funded within the three month period ending
June 30,  1997.  At March  31,  1997,  the Bank had  $2,546,000  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 March 31, 1997 was 10.34%.

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.



                                     - 14 -




<PAGE>


PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

There were no matters submitted to a vote of security holders during the quarter
ended March 31, 1997.

Item 6. Exhibits and Reports on Form 8-K

a)       The following exhibits are filed herewith:

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

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

         Exhibit 27       Financial Data Schedule

b) Reports  on Form 8-K -- There  were no  reports on Form 8-K filed  during the
three months ended March 31, 1997.



                                     - 15 -




<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: May 13, 1997                             By:  /s/ C. James McCormick
                                               --------------------------
                                               C. James McCormick, Chairman and
                                               hief Executive Officer


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


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




                                     - 16 -