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, 1996

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

       For the transition period from _________________to ________________

                             Commission File Number
                                     0-17915

                                   1ST BANCORP
         --------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

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

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

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

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

                                              YES_____X_________NO______________

As of February 5, 1997,  there were 697,261  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, 1996 and June 30,
                       1996 (Unaudited)                                  3

                  Consolidated Condensed Statements
       of Earnings (Loss), Three Months and Six Months
       Ended December 31, 1996 and 1995 (Unaudited)                      4

                  Consolidated Condensed Statements of
                      Cash Flows, Six Months Ended
                      December 31, 1996 and 1995
                      (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                                          15-16

SIGNATURES                                                              17











                                       -2-


<PAGE>

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

<TABLE>
<CAPTION>

                                                              December 31,    June 30,
                                                                1996           1996
                                                              ---------      ---------
<S>                                                           <C>            <C>      
     ASSETS
Cash and cash equivalents:
    Interest bearing deposits                                 $   9,563      $  24,689
    Non-interest bearing deposits                                   449            410
                                                              ---------      ---------
            Cash and cash equivalents                            10,012         25,099
                                                              ---------      ---------
Securities available for sale                                     8,672         10,499
Securities held to maturity (market value
    of $45,529,000 at December 31, 1996 and
    $42,184,000 at June 30, 1996)                                46,080         43,624
Loans receivable, net                                           164,194        150,749
Loans held for sale                                              17,068         18,590
Accrued interest receivable:
    Securities                                                      998          1,036
    Loans                                                         1,080          1,179
Stock in FHLB of Indianapolis, at cost                            4,864          4,864
Office premises and equipment                                     2,868          2,950
Real estate owned                                                   491            177
Prepaid expenses and other assets                                 5,384          4,716
                                                              ---------      ---------

TOTAL ASSETS                                                  $ 261,711      $ 263,483
                                                              =========      =========
     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Deposits                                                  $ 134,879      $ 137,148
    Advances from FHLB and other borrowings                     102,442        100,885
    Advance payments by borrowers for taxes and insurance           339            492
    Accrued interest payable on deposits                            905            816
    Accrued expenses and other liabilities                        1,767          2,413
                                                              ---------      ---------

                               Total Liabilities              $ 240,332      $ 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  697,261 at December 31, 1996 and
       699,889 at June 30, 1996                               $     664      $     667
    Paid-in capital                                               2,651          2,747
    Retained earnings, substantially restricted                  18,171         18,560
    Unrealized depreciation on securities                          (107)          (245)
                                                              ---------      ---------
                              Total Stockholders' Equity      $  21,379      $  21,729
                                                              ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $ 261,711      $ 263,483
                                                              =========      =========
</TABLE>

See Notes to Consolidated Condensed Financial Statements.

                                      -3-
<PAGE>

                          1ST BANCORP AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (LOSS)
               (Unaudited and in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                 Three Months Ended       Six Months Ended
                                                                      December 31,           December 31,
                                                                --------------------    --------------------
                                                                   1996       1995        1996        1995
                                                                 --------   --------    --------    --------
<S>                                                              <C>        <C>         <C>         <C>     
INTEREST INCOME:
   Loans                                                         $  3,751   $  4,188    $  7,346    $  8,410
   Investment securities                                              929      1,035       1,856       2,223
   Other short-term investments and
     interest bearing deposits                                        128        221         315         438
                                                                 --------   --------    --------    --------

  Total Interest Income                                             4,808      5,444       9,517      11,071
                                                                 --------   --------    --------    --------

INTEREST EXPENSE:
   Deposits                                                         1,877      2,497       3,706       5,269
   Short-term borrowings                                                4         32          25          56
   FHLB advances and other borrowings                               1,403      1,314       2,820       2,477
                                                                 --------   --------    --------    --------

  Total Interest Expense                                            3,284      3,843       6,551       7,802
                                                                 --------   --------    --------    --------

NET INTEREST INCOME BEFORE
    PROVISION FOR LOAN LOSSES                                       1,524      1,601       2,966       3,269

Provision for loan losses                                              40         20          86          45
                                                                 --------   --------    --------    --------

NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                                       1,484      1,581       2,880       3,224
                                                                 --------   --------    --------    --------

NON-INTEREST INCOME:
   Fees and service charges                                            88         60         172         155
   Net gain (loss) on sales of investment securities available
      for sale and trading account investments                          2       (123)          2        (122)
   Net gain on sales of loans                                         548        513       1,201         996
   Net gain on sale of branch offices                                  --      7,274          --       7,274
   Other                                                              170        184         306         590
                                                                 --------   --------    --------    --------

  Total Non-Interest Income                                           808      7,908       1,681       8,893
                                                                 --------   --------    --------    --------

NON-INTEREST EXPENSE:
   Compensation and employee benefits                                 940      1,206       1,985       2,240
   Net occupancy                                                      179        198         360         403
   Federal insurance premiums                                          80        132       1,509         268
   Other                                                              475        636       1,144       1,106
                                                                 --------   --------    --------    --------

  Total Non-Interest Expense                                        1,674      2,172       4,998       4,017
                                                                 --------   --------    --------    --------

Earnings (Loss) Before Income Taxes                                   618      7,317        (437)      8,100
Income Taxes                                                          242      2,735        (182)      3,030
                                                                 --------   --------    --------    --------

NET EARNINGS (LOSS)                                              $    376   $  4,582    ($   255)   $  5,070
                                                                 ========   ========    ========    ========

EARNINGS (LOSS) PER SHARE:
      Primary                                                    $   0.53   $   6.51    ($  0.37)   $   7.20
      Fully-diluted                                              $   0.53   $   6.51    ($  0.37)   $   7.20
</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>
                                                                               Six Months Ended
                                                                                  December 31,
                                                                                1996        1995
                                                                              --------    --------
<S>                                                                           <C>         <C>     
Net Cash Flow From Operating Activities:
   Net earnings (loss)                                                        ($   255)   $  5,070
   Adjustments to reconcile net cash provided by operating activities:
      Depreciation and amortization                                                139         165
      Amortization of mortgage servicing rights                                     54          69
      Gain on sale of loans                                                     (1,201)       (996)
      Gain (Loss) on sale of securities                                             (2)        122
      Gain on sale of branches                                                      --      (7,274)
      Net change in loans held for sale                                          1,522      (3,827)
      Provision for loan losses                                                     86          45
      Decrease in accrued interest receivable                                      137         908
      Decrease (increase) in prepaid expenses and other assets                    (661)        223
      Increase (decrease) in accrued expenses and other liabilities               (649)      1,166
      Undistributed loss of investment in limited partnership                       67         183
                                                                              --------    --------

        NET CASH USED BY OPERATING ACTIVITIES                                     (763)     (4,146)
                                                                              --------    --------

Cash Flows From Investing Activities:
    Purchase of investment and mortgage-backed securities
           available for sale                                                   (8,968)     (2,000)
    Proceeds from maturities, calls, repayment  of principal and sales
           of  investment and mortgage-backed securities available for sale     11,030      38,078
    Purchase of investment and mortgage-backed securities                       (2,515)    (16,120)
    Proceeds from maturities, calls, and repayment of principal of
           investment and mortgage-backed securities                                56      13,421
    Principal collected on loans, net of originations                          (12,423)        938
    Purchases of life insurance policies                                           (35)         --
    Purchases of stock of FHLB of Indianpolis                                       --        (500)
    Purchases of office premises and equipment                                     (57)        (92)
    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                                                                         (314)          2
                                                                              --------    --------

        NET CASH USED BY INVESTING ACTIVITIES                                  (13,226)    (14,555)
                                                                              --------    --------

Cash Flows From Financing Activities:
    Net increase (decrease) in deposits                                         (2,269)        733
    Proceeds from FHLB advances and other borrowings                            42,844      73,014
    Repayment of FHLB advances and other borrowings                            (41,287)    (57,499)
    Proceeds from issuance of common stock                                         108         109
    Purchase and retirement of common stock                                       (207)       (181)
    Payment of dividends on common stock                                          (134)       (128)
    Decrease in advance payments by borrowers
        for taxes and insurance                                                   (153)     (1,593)
                                                                                          --------

        NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                        (1,098)     14,455
                                                                              --------    --------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                      (15,087)     (4,246)

Cash and Cash Equivalents at Beginning of Period                                25,099      17,332
                                                                              --------    --------

Cash and Cash Equivalents at End of Period                                    $ 10,012    $ 13,086
                                                                              ========    ========
</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 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

Primary  earnings  per  share and  fully-diluted  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 702,646
and  703,001  for the three  months  ended and  700,709  and 703,738 for the six
months ended December 31, 1996 and 1995, 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 its 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,  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.





                                                        -6-


<PAGE>



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


Note 5.  Stock Repurchase Plan

In  August  1996,  the  Board  authorized  the  repurchase  of up  to 5% of  the
outstanding  shares of common  stock  (703,638  shares were  outstanding  at the
time),  subject to market  conditions,  over a two year period which  expires in
August 1998.  During the quarter ended 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 six
months ended December 31, 1996.

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 decreased  slightly to $261,711,000 at December 31, 1996,  compared
to total assets of $263,483,000 at June 30, 1996.  While there was only a slight
reduction in total  assets,  cash and cash  equivalents  declined  significantly
during the six months  ended  December  31,  1996.  The decline in cash and cash
equivalents was used to fund an increased loan portfolio.

Cash and cash equivalents declined by $15,087,000,  or 60.11%, to $10,012,000 at
December 31, 1996, 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. Funds from the sale were invested primarily in higher yielding
nonconforming mortgage loans during the six months ended December 31, 1996.

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 $2,456,000,  or 5.63%, to $46,080,000,  at December 31,
1996, from  $43,624,000 at June 30, 1996.  Investment  securities  available for
sale (including  mortgage-backed  securities) declined by $1,827,000, or 17.40%,
to $8,672,000 at December 31, 1996, from $10,499,000 at June 30, 1996.

Net loans  receivable  increased by  $13,445,000,  or 8.92%,  to $164,194,000 at
December 31, 1996, from $150,749,000 at June 30, 1996. The increase in net loans
receivable is  attributable  to  residential  mortgage loan  production.  Growth
occurred in both the conforming  and  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 six months ended December 31, 1996 decreased compared
to the same period of the prior year.  During the six months ended  December 31,
1996,  the Bank funded $68.1 million of loans compared to $82.4 million of loans
during the six months ended  December 31, 1995.  Primarily  responsible  for the
decrease in loan  production  was the decrease of purchased  one-to-four  family
mortgage loans. This type of production  totaled $2.0 million for the six months
ended December 31, 1996,  compared with $13.1 million for the same period of the
prior year.


                                                        -8-


<PAGE>



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

During the six months ended December 31, 1996,  non-conforming  mortgage lending
constituted  $42.3 million,  or 62.12%, of total loans funded during the period.
During the six months ended December 31, 1996,  $24.7 million of  non-conforming
loans were sold on a non-recourse  basis in the secondary market.  The remainder
of the loans,  typically the highest quality loans, are retained in portfolio to
increase the net interest margin. Non-conforming loans, including those held for
sale,  increased to $55.7 million at December 31, 1996 compared to $39.9 million
at June 30, 1996.

Loans held for sale  totaled  $17,068,000  at December  31,  1996, a decrease of
$1,522,000,  or 8.19%, 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 December 31, 1996,  non-performing assets totaled $2,126,000 or .82% 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 and the addition of three single  family real estate owned  properties.  The
increased  level of one-to-four  family  mortgage loans 90 or more days past due
are due to increased conforming and non-conforming delinquencies.

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.

                                              December 31,           June 30,
                                                  1996                 1996
                                              -------------------------------
                                                       (In thousands)
Non-performing assets:
 Non-accrual loans                               $1,635                $ 555
 Other non-performing assets (1)                    491                  177
 Restructured loans                                  --                   --
                                                 ------               ------
Total non-performing assets                      $2,126                $ 732
Non-performing assets to total assets               .82%                 .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 six months ended  December 31, 1996,  the Bank  established,  through
operations,  provisions for loan losses totaling $86,000. In addition,  the Bank
realized  net  charge-offs  through  its  allowance  for loan loss  accounts  of
$38,000.  The Bank's  allowance  for loan loss was $944,000 at December 31, 1996
and $896,000 at June 30, 1996.

Prepaid  expenses and other assets  increased to $5,384,000 at December 31, 1996
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  decreased by $2,269,000,  or 1.65%,  to $134,879,000 at December
31, 1996 from  $137,148,000 at June 30, 1996. The decrease in deposits  resulted
primarily  from the  maturity of brokered  deposits  during the six months ended
December 31, 1996.

Advances from the Federal Home Loan Bank ("FHLB") and other borrowings increased
by $1,557,000,  or 1.54%, to $102,442,000 at December 31, 1996 from $100,885,000
at June 30, 1996. The slight increase in borrowed money resulted  primarily from
an increased  usage of short-term  borrowed  funds near the calendar year end to
offset decrease in deposits.

Accrued expenses and other  liabilities  decreased to $1,767,000 at December 31,
1996, from  $2,413,000 at June 30, 1996. The decrease is primarily  attributable
to two items. First, accrued income tax payable decreased by $273,000 due to the
net loss  realized for the six months ended  December 31, 1996.  The net loss is
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.

(b)  Results of Operations:

During the three months ended  December 31, 1996,  1ST BANCORP had net income of
$376,000, or $0.53 per share,  compared to net earnings of $4,582,000,  or $6.51
per share,  for the three months ended December 31, 1995.  During the six months
ended December 31, 1996, 1ST BANCORP  recorded a net loss of $255,000,  or $0.37
per share,  compared to net earnings of $5,070,000,  or $7.20 per share, for the
six months ended December 31, 1995.




                                                       -10-


<PAGE>



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


The net loss for the six months ended  December 31, 1996, was a direct result of
the one-time assessment of $1,330,000 for the  recapitalization of the SAIF. The
higher level of earnings  for the three and six months  ended  December 31, 1995
resulted from the pre-tax gain of $7,274,000 from the Branch Sales.

Net interest  income  before  provision for loan losses was  $1,524,000  for the
three months  ended  December 31,  1996,  compared to  $1,601,000  for the three
months ended December 31, 1995. The net interest  margin was 2.45% for the three
months  ended  December  31, 1996  compared to 2.24% for the three  months ended
December 31, 1995.  Net interest  income  before  provision  for loan losses was
$2,966,000  for the six months ended  December 31, 1996,  compared to $3,269,000
for the six months ended  December 31, 1995.  The net interest  margin was 2.37%
for the six months ended  December 31, 1996 compared to 2.24% for the six months
ended December 31, 1995.

The lower level of net  interest  income for both the three and six months ended
December  31, 1996 was the result of a lower volume of  interest-earning  assets
and interest-bearing  liabilities.  The lower levels of interest-earning  assets
and interest-bearing liabilities compared with the prior year were the result of
the Branch Sales during the second quarter of fiscal 1996. However,  the average
excess of interest-earning assets over interest-bearing  liabilities was greater
during the three and six months ended  December 31, 1996 as compared to the same
periods of the prior year.  This enabled the net interest margin as a percent of
total assets to expand despite the Bank's  reduced size. In addition,  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.

Non-interest  income  for the three  months  ended  December  31,  1996  totaled
$808,000  compared to $7,908,000  for the three months ended  December 31, 1995.
Non-interest  income  for  the  six  months  ended  December  31,  1996  totaled
$1,681,000  compared to $8,893,000  for the six months ended  December 31, 1995.
The lower  level of  non-interest  income  for the three  and six  months  ended
December  31, 1996 as compared  to same period of the prior year,  was  directly
attributable to the Branch Sales.

The net gain on the sale of investment securities available for sale and trading
account  investments  totaled $2,000 for the three and six months ended December
31, 1996  compared  with a net loss of $123,000  for the three  months and a net
loss of $122,000  for the six months ended  December 31, 1995.  The net loss for
the three and six months ended  December 31, 1995  resulted  primarily  from the
sale of available for sale securities in order to fund the sale of deposits that
was a part of the Branch Sales. There was only minimal activity in the available
for sale and trading accounts during the three and six months ended December 31,
1996.
                                                       -11-


<PAGE>



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

The gain on sale of  mortgage  loans  totaled  $548,000  for the  quarter  ended
December 31, 1996 compared to $513,000 for the quarter ended  December 31, 1995.
The gain on sale of mortgage  loans totaled  $1,201,000 for the six months ended
December 31, 1996  compared to $996,000  for the six months  ended  December 31,
1995.  The total volume of mortgage loan sales declined for the six months ended
December 31, 1996 to $41.0 million from $50.8 million for the same period of the
prior  year.  However,  the  type  of  loans  sold  changed  to  a  majority  of
non-conforming  loan sales from a  majority  of  conforming  loan  sales,  which
resulted  in the  increased  gain on sale of loans.  Non-conforming  loan  sales
totaled $24.7  million for the six months ended  December 31, 1996 compared with
$9.9  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 December 31, 1996 and totaled  $170,000  compared with $184,000 during the
three  months  ended  December 31, 1995.  "Other"  non-interest  income  totaled
$306,000 for the six months ended December 31, 1996 compared to $590,000 for the
six months  ended  December 31,  1995.  The lower level of "Other"  non-interest
income resulted from two primary items.  First,  there were no sales of mortgage
servicing rights during the six months ended December 31, 1996 compared to a net
gain of $237,000 on the sale of mortgage  servicing rights during the six months
ended December 31, 1995.  Second,  service charges for deposit accounts declined
during the six months ended  December 31, 1996  compared with the same period of
the prior  year.  The  decline  was  attributable  to the  reduction  of deposit
accounts which resulted from the Branch Sales.

Non-interest  expense totaled $1,674,000 for the three months ended December 31,
1996,  compared to  $2,172,000  for the three  months  ended  December 31, 1995.
Non-interest  expense  totaled  $4,998,000 for the six months ended December 31,
1996, compared to $4,017,000 for the six months ended December 31, 1995.

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%.

                                                       -12-



<PAGE>



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

Federal insurance premium expense totaled $80,000 for the quarter ended December
31, 1996 compared to $132,000 for the quarter ended December 31, 1995. The lower
expense  resulted from a reduced  assessment  rate as mandated by the FDIC and a
lower level of insured  deposits as compared with the prior year.The  assessment
to recapitalize the SAIF is directly responsible for the significant increase in
non-interest  expense  for the six  months  ended  December  31,  1996.  Federal
insurance  premium expense totaled  $1,509,000 for the six months ended December
31, 1996 compared to $268,000 the six months ended December 31, 1995.

Compensation and employee benefits expense totaled $940,000 for the three months
ended  December 31, 1996 compared to $1,206,000  for three months ended December
31, 1996.  Compensation and employee benefits expense totaled $1,985,000 for the
six months ended  December 31, 1996 compared to $2,240,000  for six months ended
December 31, 1996. The lower level of compensation  and employee benefit expense
are primarily due to lower expenses  associated  with the  management  incentive
plan and from a reduced  number of  employees  which  resulted  from the  Branch
Sales.

"Other"  non-interest  expense  totaled  $475,000  for the  three  months  ended
December 31, 1996  compared to $636,000 for the three months ended  December 31,
1996.  The lower  expense was  primarily  due to a lower  operating  loss of the
affordable  housing tax credit  apartment  project that the Bank's  wholly owned
subsidiary  Financial Services of Southern Indiana Corporation is invested in as
a limited partner.  "Other"  non-interest expense remained relatively stable and
totaled  $1,144,000  for the six months  ended  December  31,  1996  compared to
$1,106,000 for the six months ended December 31, 1995.

(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
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, 1996, the
Bank met all current capital requirements.




                                                       -13-


<PAGE>

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

The  following  is a  summary  of the  Bank's  regulatory  capital  and  capital
requirements at December 31, 1996:

<TABLE>
<CAPTION>
                                      Tangible               Core                  Risk-Based
                                       Capital             Capital                    Capital
<S>                                   <C>                 <C>                       <C>        
Regulatory Capital                    $21,940,000         $21,940,000               $22,392,000
Minimum Capital Requirement             3,906,000           7,811,000                11,368,000
                                       -----------       -------------             ------------

Excess Capital                        $18,034,000         $14,129,000               $11,024,000

Regulatory Capital Ratio                     8.43%               8.43%                    15.76%
Required Capital Ratio                       1.50%               3.00%                     8.00%
</TABLE>


During the quarter  ended  December  31,  1996,  1ST  BANCORP  paid a $0.10 cash
dividend  per  share  to  shareholders.  This  is  the  seventeenth  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  $27,566,000  in loan  commitments  and
$1,212,000 of loans in process outstanding at December 31, 1996. The majority of
these commitments are expected to be funded within the three month period ending
March 31, 1997. At December 31, 1996,  the Bank had  $3,966,000  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, 1996 was 7.96%.

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.

First Federal is involved in two lawsuits that are not in the ordinary course of
business.  The first involves a  discrimination  complaint  filed  regarding the
Bank's  lending  practices.  The  second  lawsuit  was filed by a title  company
providing  closing  services for a mortgage  loan that was purchased by the Bank
from a third party  mortgage  company  subsequent  to  closing,  and alleges the
mortgage company was acting as an agent for the Bank and failed to provide funds
for closing the  transaction  in exchange for the note and deed of trust.  First
Federal  received a summary  judgement in its favor in this case. The plaintiffs
are appealing the court's decision.  It is the opinion of management that, based
on current information available, the ultimate resolutions of these matters will
not have a material adverse effect on the Corporation's financial position.

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

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

On October 24, 1996, 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.

<TABLE>
<CAPTION>

                                                     Against or                             Broker
                                        For           Withheld           Abstain          Non-votes
<S>                                <C>                <C>                   <C>                 <C>
Election of R. William
Ballard as Director for
term expiring in 1999               491,574            47,774                0                   0

Election of Frank D.
Baracani as Director for
term expiring in 1999               484,667            54,681                0                   0

Election of John J.
Summers as Director for
term expiring in 1999               484,701            54,647                0                   0

Approval and ratification
of 1ST BANCORP 1997
Employee Stock Purchase
Plan                                474,964            59,160            2,622                   0
</TABLE>


                                                       -15-



<PAGE>



Item 6. Exhibits and Reports on Form 8-K

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

b)   Reports on Form 8-K -- There  were no reports on Form 8-K filed  during the
     three months ended December 31, 1996.

















                                                       -16-



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


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


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








                                      -17-