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 September 30, 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 October 23, 1996,  there were 670,643  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,
                          September 30, 1996 and June 30,
                          1996 (Unaudited)                                   3

                     Consolidated Condensed Statements
                          of Earnings (Loss), Three Months Ended
                          September 30, 1996 and 1995 (Unaudited)            4

                     Consolidated Condensed Statements of
                         Cash Flows, Three Months Ended
                         September 30, 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                                   8-13

PART II.  OTHER INFORMATION                                                 14

SIGNATURES                                                                  15











                                       -2-


<PAGE>



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

<TABLE>
<CAPTION>


                                                                  September 30,               June 30,
                                                                      1996                     1996
                                                                ----------------           ------------
     ASSETS                                                  
Cash and cash equivalents:                                   
<S>                                                               <C>                         <C>      
    Interest bearing deposits                                     $  13,385                   $  24,689
    Non-interest bearing deposits                                       438                         410
                                                                  ---------                   ---------
            Cash and cash equivalents                                13,823                      25,099
                                                                  ---------                   ---------
                                                                                             
Securities available for sale                                        10,453                      10,499
Securities held to maturity (market value                                                    
    of $42,460,000 at September 30, 1996 and                                                 
    $42,184,000 at June 30, 1996)                                    43,592                      43,624
Loans receivable, net                                               161,597                     150,749
Loans held for sale                                                  13,627                      18,590
Accrued interest receivable:                                                                 
    Securities                                                          647                       1,036
    Loans                                                             1,090                       1,179
Stock in FHLB of Indianapolis, at cost                                4,864                       4,864
Office premises and equipment                                         2,905                       2,950
Real estate owned                                                       452                         177
Prepaid expenses and other assets                                     4,910                       4,716
                                                                  ---------                   ---------
                                                                                             
TOTAL ASSETS                                                      $ 257,960                   $ 263,483
                                                                  =========                   =========
                                                                                             
     LIABILITIES AND STOCKHOLDERS' EQUITY                                                    
Liabilities:                                                                                 
    Deposits                                                      $ 134,006                   $ 137,148
    Advances from FHLB and other borrowings                          98,905                     100,885
    Advance payments by borrowers for taxes and insurance               644                         492
    Accrued interest payable on deposits                                653                         816
    Accrued expenses and other liabilities                            2,602                       2,413
                                                                  ---------                   ---------
                                                                                             
                              Total Liabilities                   $ 236,810                   $ 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 670,643 at September 30, 1996 and                                                  
       666,561 at June 30, 1996                                   $     671                   $     667
    Paid-in capital                                                   2,838                       2,747
    Retained earnings, substantially restricted                      17,862                      18,560
    Unrealized depreciation on securities                              (221)                       (245)
                                                                  ---------                   ---------
                                                                                             
                             Total Stockholders' Equity           $  21,150                   $  21,729
                                                                  ---------                   ---------
                                                                                             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 257,960                   $ 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
                                                                                            September 30,
                                                                            --------------------------------------------
                                                                                1996                          1995
                                                                            -------------                 --------------
INTEREST INCOME:
<S>                                                                            <C>                            <C>    
   Loans                                                                       $ 3,595                        $ 4,222
   Investment securities                                                           927                          1,188
   Other short-term investments and                                                                         
     interest bearing deposits                                                     187                            217
                                                                               -------                        -------
                                                                                                            
  Total Interest Income                                                          4,709                          5,627
                                                                               -------                        -------
                                                                                                            
INTEREST EXPENSE:                                                                                           
   Deposits                                                                      1,829                          2,772
   Short-term borrowings                                                            21                             24
   FHLB advances and other borrowings                                            1,417                          1,163
                                                                               -------                        -------
                                                                                                            
  Total Interest Expense                                                         3,267                          3,959
                                                                               -------                        -------
                                                                                                            
NET INTEREST INCOME BEFORE                                                                                  
    PROVISION FOR LOAN LOSSES                                                    1,442                          1,668
                                                                                                            
Provision for loan losses                                                           46                             25
                                                                               -------                        -------
                                                                                                            
NET INTEREST INCOME AFTER                                                                                   
    PROVISION FOR LOAN LOSSES                                                    1,396                          1,643
                                                                               -------                        -------
                                                                                                            
NON-INTEREST INCOME:                                                                                        
   Fees and service charges                                                         84                             95
   Net gain (loss) on sales of investment securities available                                              
      for sale and trading account investments                                      --                              1
   Net gain on sales of loans                                                      653                            483
   Other                                                                           136                            406
                                                                               -------                        -------
                                                                                                            
  Total Non-Interest Income                                                        873                            985
                                                                               -------                        -------
                                                                                                            
NON-INTEREST EXPENSE:                                                                                       
   Compensation and employee benefits                                            1,045                          1,034
   Net occupancy                                                                   181                            205
   Federal insurance premiums                                                    1,429                            136
   Other                                                                           669                            470
                                                                               -------                        -------
                                                                                                            
  Total Non-Interest Expense                                                     3,324                          1,845
                                                                               -------                        -------
                                                                                                            
Earnings (Loss) Before Income Taxes                                             (1,055)                           783
Income Taxes                                                                      (424)                           295
                                                                               -------                        -------
                                                                                                            
NET EARNINGS (LOSS)                                                            ($  631)                       $   488
                                                                               =======                        =======
                                                                                                            
EARNINGS (LOSS) PER SHARE:                                                                                  
      Primary                                                                  ($ 0.94)                       $  0.72
      Fully-diluted                                                            ($ 0.94)                       $  0.72
</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>
                                                                                          Three Months Ended
                                                                                              September 30,
                                                                                  1996                            1995
                                                                              ------------                   ------------
Net Cash Flow From Operating Activities:
<S>                                                                            <C>                            <C> 
   Net earnings (loss)                                                            ($631)                           $488
   Adjustments to reconcile net cash provided by operating activities:                                       
      Depreciation and amortization                                                  58                              65
      Amortization of mortgage servicing rights                                      26                              45
      Gain on sale of loans                                                        (653)                           (483)
      Net change in loans held for sale                                           4,963                          (2,392)
      Provision for loan losses                                                      46                              25
      Decrease in accrued interest receivable                                       478                             347
      Decrease (increase) in prepaid expenses and other assets                     (174)                            315
      Increase in accrued expenses and other liabilities                             10                              78
      Undistributed loss of investment in limited partnership                        36                              30
                                                                                -------                        --------
                                                                                                             
        NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                          4,159                          (1,482)
                                                                                -------                         -------
                                                                                                             
Cash Flows From Investing Activities:                                                                        
    Proceeds from maturities, calls, repayment  of principal and sales                                       
           of  investment and mortgage-backed securities available for sale          89                             -
    Purchase of investment and mortgage-backed securities                           -                           (12,415)
    Proceeds from maturities, calls, and repayment of principal of                                           
           investment and mortgage-backed securities                                 31                          11,753
    Principal collected on loans, net of originations                           (10,313)                            721
    Purchases of office premises and equipment                                      (25)                            (27)
    Other                                                                          (275)                            (34)
                                                                                -------                         -------
                                                                                                             
        NET CASH USED BY INVESTING ACTIVITIES                                   (10,493)                             (2)
                                                                                -------                         -------
                                                                                                             
Cash Flows From Financing Activities:                                                                        
    Net decrease in deposits                                                     (3,142)                         (2,379)
    Proceeds from FHLB advances and other borrowings                             18,865                          27,866
    Repayment of FHLB advances and other borrowings                             (20,845)                        (27,915)
    Proceeds from issuance of common stock                                           95                              95
    Payment of dividends on common stock                                            (67)                            (64)
    Increase (decrease) in advance payments by borrowers                                                     
        for taxes and insurance                                                     152                            (488)
                                                                                -------                      ----------
                                                                                                             
        NET CASH USED BY FINANCING ACTIVITIES                                    (4,942)                         (2,885)
                                                                                -------                         -------
                                                                                                             
NET DECREASE IN CASH AND CASH EQUIVALENTS                                       (11,276)                         (4,369)
                                                                                                             
Cash and Cash Equivalents at Beginning of Period                                 25,099                          17,332
                                                                                -------                         -------
                                                                                                             
Cash and Cash Equivalents at End of Period                                      $13,823                         $12,963
                                                                                =======                         =======
</TABLE>
                                                            

See Notes to Consolidated Condensed Financial Statements



<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.  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 666,979
and  670,929  for  the  three  months  ended   September   30,  1996  and  1995,
respectively.

Note 3.  Stock Option and Purchase Plans

1ST BANCORP  (the  "Corporation")  has an  Incentive  Stock  Option Plan whereby
49,220 shares of authorized but unissued common stock were reserved for issuance
upon the exercise of stock options granted to key employees.  Stock options have
been  granted for 49,220  shares  under the plan at an option price of $5.71 per
share.  The Corporation  also has a stock option plan under which 157,500 shares
of authorized but unissued common stock were reserved.  Under this plan,  91,875
non-qualified  stock  options  were  granted  at  $5.71  per  share  to  outside
directors,  and 39,375  incentive  stock options and 9,844  non-qualified  stock
options were granted at $5.71 and $5.86 per share, respectively,  to certain key
employees.  All options  granted had been  exercised  or canceled as of June 30,
1996.

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.  15,000  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,  13,125 authorized but unissued shares were reserved
for issuance.  A total of 3,570 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.



                                       -6-


<PAGE>




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


Note 4.  Stock Repurchase Plan

In  August  1996,  the  Board  authorized  the  repurchase  of up  to 5% of  the
outstanding  shares of common  stock  (670,131  shares were  outstanding  at the
time),  subject to market  conditions,  over a two year period which  expires in
August 1998. There have been no repurchases of stock under this plan.

Note 5.  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
quarter ended September 30, 1996.

Note 6.  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 at September 30, 1996, were $257,960,000, a decrease of $5,523,000,
or 2.10%,  from total assets of  $263,483,000 at June 30, 1996. The reduction in
total  assets  is  primarily  attributable  to  lower  levels  of cash  and cash
equivalents.

Cash and cash equivalents declined by $11,276,000,  or 44.93%, to $13,823,000 at
September 30, 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 quarter ended  September 30,
1996,  contributing  to the lower level of cash.  In addition,  a portion of the
funds were used to pay down borrowed funds and repay matured  brokered  deposits
during the first quarter of fiscal year 1997.

Investment securities consist primarily of U.S. Agency securities.  The majority
of securities have either a "call" or "step-up" feature, which provides the Bank
with flexibility  under varying  interest rate scenarios.  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)  remained  stable and totaled  $43,592,000,  at September  30, 1996,
compared with $43,624,000 at June 30, 1996.  Investment securities available for
sale  (including  mortgage-backed  securities)  also remained stable and totaled
$10,453,000 at September 30, 1996, compared with $10,499,000 at June 30, 1996.

Net loans  receivable  increased by  $10,848,000,  or 7.20%,  to $161,597,000 at
September  30, 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 three months  ended  September  30, 1996  decreased
modestly  compared to the same period of the prior year. During the three months
ended  September 30, 1996,  the Bank funded $37.8  million of loans  compared to
$41.5  million of loans  during  the three  months  ended  September  30,  1995.
Primarily  responsible  for  the  slight  decrease  in loan  production  was the
decrease of purchased one-to-four family mortgage loans. This type of production
totaled $1.6 million for the quarter  ended  September  30, 1996,  compared with
$4.2 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 three  months  ended  September  30,  1996,  non-conforming  mortgage
lending  constituted $22.1 million,  or 58.47%, of total loans funded during the
period.  During the three months ended  September  30,  1996,  $16.9  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 $44.1  million at September 30, 1996 compared
to $39.9 million at June 30, 1996.

Loans  held for sale  decreased  by  $4,963,000,  or  26.70% to  $13,627,000  at
September 30, 1996 from $18,590,000 at June 30, 1996. The primary reason for the
decrease in loans held for sale was the sale of two bulk  packages of adjustable
rate  non-conforming  mortgage  loans which totaled  approximately  $7.7 million
during the quarter ended  September  30, 1996.  These two packages were held for
sale at June 30, 1996.

Asset  quality  remains  strong.  At September 30, 1996,  non-performing  assets
totaled  $1,142,000  or .44% 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 the result of one-to-four family loans becoming 90
days or more past due and the  addition of one single  family real estate  owned
property.

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.

                                             September 30,            June 30,
                                                1996                   1996
                                             -------------            --------
                                                        (In thousands)
Non-performing assets:
 Non-accrual loans                             $ 690                   $ 555
 Other non-performing assets (1)                 452                     177
 Restructured loans                               --                      --
                                             -------                   -----
Total non-performing assets                   $1,142                   $ 732
Non-performing assets to total assets            .44%                    .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 three months ended September 30, 1996, the Bank established,  through
operations,  provisions for loan losses totaling $46,000. In addition,  the Bank
realized  net  charge-offs  through  its  allowance  for loan loss  accounts  of
$39,000.  The Bank's  allowance for loan loss was $903,000 at September 30, 1996
and $896,000 at June 30, 1996.

Total deposits  decreased by $3,142,000,  or 2.29%, to $134,006,000 at September
30, 1996 from  $137,148,000 at June 30, 1996. The decrease in deposits  resulted
primarily  from the  maturity of  brokered  deposits  during the  quarter  ended
September 30, 1996.

Advances from the Federal Home Loan Bank ("FHLB") and other borrowings decreased
by $1,980,000,  or 1.96%, to $98,905,000 at September 30, 1996 from $100,885,000
at June 30, 1996. The slight decrease in borrowed money resulted  primarily from
the repayment of short-term borrowed funds.

Accrued  expenses and other  liabilities  increased  slightly to  $2,602,000  at
September 30, 1996,  from  $2,413,000  at June 30, 1996.  While there was only a
slight increase in the overall accrued expenses and other liabilities  category,
there  were two items  that  changed  significantly  during  the  quarter  ended
September  30,  1996.  First,  accounts  payable  increased  by $1.3 million due
exclusively to the SAIF assessment. Second, accrued income tax payable decreased
by  $529,000  due to the net  loss  attributable  to the  SAIF  assessment.  The
assessment  expense was recognized  during the first quarter of fiscal 1997 on a
tax effected basis, and is payable during the second quarter of fiscal 1997.

(b)  Results of Operations:

During the three months ended  September  30, 1996,  1ST BANCORP  recorded a net
loss of $631,000,  or $0.94 per share,  compared to net earnings of $488,000, or
$0.72 per share, for the three months ended September 30, 1995. The net loss for
the quarter  ended  September  30,  1996,  was a direct  result of the  one-time
assessment for the recapitalization of the SAIF.

Net  earnings  for the  quarter  ended  September  30,  1996,  would  have  been
approximately  $165,000  or $0.24  per  share as  compared  to net  earnings  of
$488,000 or $0.72 per share for the quarter ended  September  30, 1995,  without
the one-time  SAIF  assessment.  This  reduction was  attributable  to lower net
interest income, lower non-interest income, and one-time charges associated with
the loan origination offices recorded during the quarter.





                                      -10-


<PAGE>



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

Net interest  income  before  provision for loan losses was  $1,442,000  for the
three months ended  September  30, 1996,  compared to  $1,668,000  for the three
months ended September 30, 1995. The net interest margin was 2.30% for the three
months  ended  September  30, 1996  compared to 2.24% for the three months ended
September 30, 1995.  The lower level of net interest  income 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 sale of two retail  branch
offices of the Bank in the second quarter of fiscal 1996.

Non-interest  income for the three  months  ended  September  30,  1996  totaled
$873,000  compared to $985,000 for the three months  ended  September  30, 1995.
During the quarter  ended  September  30, 1996,  there were no sales of mortgage
servicing  rights  compared  to a net gain of  $237,000  on the sale of mortgage
servicing  rights during the quarter ended  September 30, 1995. The gain on sale
of  servicing  is included in "Other"  non-interest  income in the  Consolidated
Condensed Statement of Earnings.

Partially  offsetting this decline in non-interest income was the increased gain
on the sale of  mortgage  loans.  The  gain on sale of  mortgage  loans  totaled
$653,000 for the quarter  ended  September 30, 1996 compared to $483,000 for the
quarter  ended  September  30,  1995.  The total  volume of mortgage  loan sales
increased only modestly to $23.9 million from $22.1 million.  However,  the type
of loans sold  changed to  primarily  non-conforming  loan sales from  primarily
conforming  loan sales which  resulted in the  increased  gain on sale of loans.
Non-conforming  loan sales  totaled  $16.9 for the quarter  ended  September 30,
1996,  compared  with  $4.1  million  for the same  period  of the  prior  year.
Typically,  for the Bank,  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.

Non-interest  expense was  $3,324,000  for the three months ended  September 30,
1996,  compared to $1,845,000 for the three months ended September 30, 1995. The
assessment to recapitalize the SAIF is directly  responsible for the significant
increase in non-interest  expense. 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 is  included  in  non-interest  expense  for the  quarter  ended
September 30, 1996. The assessment is payable on November 27, 1996.




                                      -11-


<PAGE>



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

While  the  immediate   effect  on  earnings  of  the  one-time   assessment  is
significant,  future  earnings  will be  augmented  by lower  deposit  insurance
premiums.  Based on the latest information available, it is anticipated that the
Bank will begin paying an  approximately  0.065% premium for insured deposits as
of January 1, 1997, compared with the current premium rate of 0.23%.

(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 September 30, 1996, the
Bank met all current capital requirements.

The  following  is a  summary  of the  Bank's  regulatory  capital  and  capital
requirements at September 30, 1996:

                                 Tangible              Core        Risk-Based
                                  Capital            Capital          Capital
                                  -----------      -----------     -----------
Regulatory Capital               $22,415,000       $22,415,000     $22,820,000

Minimum Capital Requirement        3,873,000         7,746,000      10,181,000
                                  -----------      -----------     -----------

Excess Capital                   $18,542,000       $14,669,000     $12,639,000

Regulatory Capital Ratio                8.68%             8.68%          17.93%
Required Capital Ratio                  1.50%             3.00%           8.00%

During the quarter ended  September 30, 1996,  1ST BANCORP paid a $0.10 dividend
per share to shareholders.  This is the sixteenth consecutive quarterly dividend
1ST BANCORP has paid to shareholders.




                                      -12-


<PAGE>



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

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  $20,637,000  in loan  commitments  and
$1,251,000 of loans in process  outstanding  at September 30, 1996. The majority
of these  commitments  are  expected to be funded  within the three month period
ending  December 31, 1996.  At September  30, 1996,  the Bank had  $4,380,000 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 September 30, 1996 was 12.03%.

In  August  1996,  the  Board  authorized  the  repurchase  of up  to 5% of  the
outstanding  shares of common  stock  (670,131  shares were  outstanding  at the
time),  subject to market  conditions,  over a two year period which  expires in
August 1998. There have been no repurchases of stock under this plan.

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.









                                      -13-


<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.

There were no matters submitted to a vote of security holders during the quarter
ended September 30, 1996.


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 September 30, 1996.













                                      -14-


<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                   1ST BANCORP


Date: November 12, 1996                  By: /s/ C. James McCormick
                                         --------------------------
                                         C. James McCormick, Chairman and
                                         Chief Executive Officer


Date: November 12, 1996                  By:  /s/    Frank D. Baracani
                                         -----------------------------
                                         Frank D. Baracani, President


Date: November 12, 1996                  By:  /s/   Mary Lynn Stenftenagel
                                         ---------------------------------
                                         Mary Lynn Stenftenagel,
                                         Secretary-Treasurer and
                                         Chief Accounting Officer







                                      -15-