8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 24, 2008
1st Source Corporation
(Exact name of registrant as specified in its charter)
Indiana	0-6233	35-1068133
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)
100 North Michigan Street, South Bend, Indiana  46601
(Address of principal executive offices)     (Zip Code)
574-235-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02                              Results of Operations and Financial Condition

On January 24, 2008, 1st Source Corporation issued a press release that announced its fourth quarter earnings for 2007.  A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

ITEM 9.01                              Financial Statements and Exhibits

Exhibit 99.1:    Press release dated January 24, 2008, with respect to 1st Source Corporation’s financial results for the fourth quarter ended December 31, 2007.

SIGNATURE

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 hereunto duly authorized.

	1st SOURCE CORPORATION
	(Registrant)
Date:   January 24, 2008	/s/CHRISTOPHER J. MURPHY III
	Christopher J. Murphy III
	Chairman of the Board, President and CEO
Date:  January 24, 2008	/s/LARRY E. LENTYCH
	Larry E. Lentych
	Treasurer and Chief Financial Officer
	Principal Accounting Officer

EX-99.1

FOR:	Immediate Release	CONTACT:	Larry Lentych
	January 24, 2008		574 235 2000
			Andrea Short
			574 235 2000

1st Source Corporation Announces Fourth Quarter, Year End Results

Dividend Declared

South Bend, IN--1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank and First National Bank, Valparaiso, today reported net income of $7.83 million for the fourth quarter of 2007, down 3.66 percent compared to the $8.12 million of net income reported for the fourth quarter of 2006. Diluted net income per common share for the fourth quarter of 2007 amounted to $0.32, compared to $0.36 per common share reported in the fourth quarter of 2006.

For the year, net income was $30.54 million in 2007, a decrease of 22.29 percent from the $39.30 million reported for the year 2006. Diluted net income per common share for 2007 amounted to $1.28, down 25.58 percent compared to $1.72 diluted net income per common share for 2006.

The Board of Directors approved a fourth quarter cash dividend of $0.14 per share. The cash dividend is payable on February 15, 2008 to shareholders of record on February 5, 2008.

        Christopher J. Murphy III, Chairman of 1st Source Corporation, commented, “As we finished the year we were very pleased with our credit results.  Net charge-offs for the year amounted to only $2.11 million for a remarkably good loss ratio of 0.07 percent.  Our non-performing assets to total loans and leases ratio was 0.56 percent and our loss reserve to non-performing loans coverage was 5.92 times. Like many, we are expecting a continued slowing in the economy and growing credit stress and believe we are properly reserved.”

        Mr. Murphy continued, “The quarter was very noisy for the banking industry in general and we are pleased to have avoided the substantial losses working their way through the industry. We are not a participant in the sub-prime mortgage markets but we are an owner of some Fannie Mae and Freddie Mac preferred securities.  Going into the month of December we were carrying a gain on these securities which quickly evaporated when Fannie Mae and Freddie Mac went to the markets for additional capital in late November and early December.  With the turmoil in the financial markets and the concern over any mortgage related business, their new preferred securities had to be issued at higher rates.  This had the affect of reducing the value of the already outstanding preferred. We believed this to be an other than temporary impairment and decided to write down the securities we held by $4.1 million.”

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“We were also pleased with the many things we accomplished this year including the acquisition of the First National Bank, Valparaiso; the opening of our new banking facility and expansion in Lafayette, Indiana; the installation of new core computer systems throughout the bank; the acquisition and merger of Insurit, a full service insurance agency in Fort Wayne into 1st Source Insurance; and good growth over most of our lines of business.  We would have liked stronger earnings but with the accomplishments noted above, the continuing margin compression, and the volatility in the national and global markets, we are pleased with the foundation we are building for the future.” concluded Mr. Murphy.

The net interest margin was 3.21 percent for the fourth quarter of 2007 versus 3.10 percent for the same period in 2006.  The net interest margin was 3.18 percent for the year ended December 31, 2007, versus 3.29 percent for the same period in 2006.  Tax-equivalent net interest income was $33.14 million for the fourth quarter of 2007, up 21.01 percent from 2006’s fourth quarter.  For the year, tax-equivalent net interest income was $122.53 million compared to $108.98 million for 2006, an increase of 12.44 percent.

1st Source’s reserve for loan and lease losses as of December 31, 2007, was 2.09 percent of total loans and leases, compared to 2.18 percent as of December 31, 2006. Net charge-offs were $1.48 million for the fourth quarter 2007, compared to net charge-offs of $0.10 million a year ago. Net charge-offs for the year were $2.11 million compared to net recoveries of $2.84 million in 2006. The ratio of nonperforming assets to net loans and leases was 0.56 percent on December 31, 2007, compared to 0.64 percent on December 31, 2006.

Noninterest income for the fourth quarter of 2007 was $16.17 million, a decrease of 8.62 percent compared to the fourth quarter of 2006.  During the fourth quarter of 2007, we wrote-down Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) preferred stocks in the investment portfolio by $4.11 million, as discussed above.  In addition, mortgage banking income declined $1.34 million.  These decreases were partially offset by increases in trust fees, services charges on deposit accounts, insurance commissions and other investment securities gains.  For the year, noninterest income was $70.62 million, down 7.79 percent from 2006.  The primary factors were a decrease in mortgage banking income of $8.77 million resulting from a decline in production volume, non-recurring 2006 gains on the sale of mortgage servicing rights and a decline in loan servicing fee income and the preferred stock write-down mentioned above.  Trust fees, service charges on deposit accounts, insurance commissions, and equipment rental income all increased in 2007 as compared to 2006.

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Noninterest expense for the fourth quarter of 2007 was $36.63 million, an increase of 12.37 percent as compared to the fourth quarter of 2006.  This was primarily due to higher salaries and employee benefits and furniture and equipment expense.  For the year, noninterest expense was $140.31 million, up 11.17 percent from one year ago.  The predominate factors behind the year over year increase in salaries and employee benefits, occupancy expense, and furniture and equipment expense was the acquisition of First National Bank, Valparaiso on May 31, 2007.  Additionally, depreciation expense on leased equipment, and software costs increased in 2007 compared to 2006.

As of December 31, 2007, the 1st Source common equity-to-assets ratio was 9.68 percent, compared to 9.69 percent a year ago. Shareholders’ equity was $430.50 million, up from $368.90 million a year ago. Total assets at the end of the fourth quarter of 2007 were $4.45 billion, up 16.80 percent compared to the same period last year. Total loans and leases were up 18.09 percent and total deposits were up 13.82 percent from the comparable figures at the end of the fourth quarter of 2006.

1st Source Corporation is the largest locally controlled financial institution serving the northern Indiana-southwestern Michigan area. While delivering a comprehensive range of consumer and commercial banking services, 1st Source has distinguished itself with highly personalized services. 1st Source Bank also competes for business nationally by offering specialized financing services for new and used private and cargo aircraft, automobiles for leasing and rental agencies, medium and heavy duty trucks, construction and environmental equipment. At year end, the Corporation had over 80 banking centers in 17 counties, six 1st Source Insurance offices, plus 24 locations nationwide for the 1st Source Bank Specialty Finance Group. With a history dating back to 1863, 1st Source Bank has a tradition of providing superior service to clients while playing a leadership role in the continued development of the communities in which it serves.

1st Source may be accessed on its home page at “www.1stsource.com.”  Its common stock is traded on the Nasdaq Global Select Market under “SRCE” and appears in the National Market System tables in many daily newspapers under the code name “1st Src.” Marketmakers in 1st Source common shares are Cantor, Fitzgerald & Company; FTN Midwest Securities Corp.; Goldman, Sachs & Company; Howe Barnes Investments; Keefe, Bruyette & Woods, Incorporated; Sandler O’Neill & Partners; Stifel, Nicolaus & Company; Susquehanna Capital Group; Timber Hill Incorporated; and UBS Securities LLC.

Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

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1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source’s actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source’s competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements.

# # #

(charts attached)

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1st SOURCE CORPORATION											Page 5
4th QUARTER 2007 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
	Three Months Ended							Twelve Months Ended
	December 31							December 31
	2007			2006				2007			2006
END OF PERIOD BALANCES
Assets								$	4,447,104		$	3,807,315
Loans and leases									3,191,441			2,702,537
Deposits									3,469,663			3,048,284
Reserve for loan and lease losses									66,602			58,802
Intangible assets									93,567			19,418
Common shareholders' equity									430,504			368,904
AVERAGE BALANCES
Assets	$	4,440,229		$	3,742,787			$	4,151,309		$	3,552,301
Earning assets		4,092,830			3,506,946				3,852,729			3,315,104
Investments		785,926			680,983				749,780			644,099
Loans and leases		3,177,892			2,648,292				2,992,540			2,566,217
Deposits		3,497,308			2,966,604				3,269,806			2,770,548
Interest bearing liabilities		3,550,482			2,982,497				3,314,812			2,780,142
Common shareholders' equity		433,928			368,940				408,975			357,759
INCOME STATEMENT DATA
Net interest income	$	32,069		$	26,738			$	118,910		$	106,433
Net interest income - FTE		33,135			27,383				122,533			108,977
Provision for (recovery of) loan and lease losses		3,250			(98	)			7,534			(2,736	)
Noninterest income		16,166			17,690				70,619			76,585
Noninterest expense		36,626			32,595				140,312			126,211
Net income		7,826			8,123				30,539			39,297
PER SHARE DATA
Basic net income per common share	$	0.32		$	0.36			$	1.30		$	1.74
Diluted net income per common share		0.32			0.36				1.28			1.72
Cash dividends paid per common share		0.140			0.140				0.560			0.534
Book value per common share		17.87			16.40				17.87			16.40
Market value - High		24.470			33.460				32.620			33.460
Market value - Low		16.280			29.080				16.280			22.636
Basic weighted average common shares outstanding		24,130,772			22,498,061				23,516,342			22,536,844
Diluted weighted average common shares outstanding		24,420,402			22,826,381				23,809,867			22,830,093
KEY RATIOS
Return on average assets		0.70	%		0.86		%		0.74	%		1.11	%
Return on average common shareholders' equity		7.16			8.74				7.47			10.98
Average common shareholders' equity to average assets		9.77			9.86				9.85			10.07
End of period tangible common equity to tangible assets		7.74			9.23				7.74			9.23
Net interest margin		3.21			3.10				3.18			3.29
Efficiency: expense to revenue		66.62			69.60				68.77			65.99
Net charge-offs to average loans and leases		0.18			0.02				0.07			(0.11	)
Loan and lease loss reserve to loans and leases		2.09			2.18				2.09			2.18
Nonperforming assets to loans and leases		0.56			0.64				0.56			0.64
ASSET QUALITY
Loans and leases past due 90 days or more								$	1,105		$	116
Nonaccrual and restructured loans and leases									10,136			15,575
Other real estate									4,821			800
Repossessions									2,291			975
Equipment owned under operating leases									126			201
Total nonperforming assets									18,479			17,667

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1st SOURCE CORPORATION				Page 6
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
	December 31, 2007			December 31, 2006
ASSETS
Cash and due from banks	$	153,137		$	118,131
Federal funds sold and interest bearing deposits with other banks		25,817			64,979
Investment securities available-for-sale
(amortized cost of $790,859 and $709,091 at
December 31, 2007 and 2006, respectively)		794,918			708,672
Mortgages held for sale		25,921			50,159
Loans and leases, net of unearned discount:
Commercial and agricultural loans		593,806			478,310
Auto, light truck and environmental equipment		305,238			317,604
Medium and heavy duty truck		300,469			341,744
Aircraft financing		587,022			498,914
Construction equipment financing		377,785			305,976
Loans secured by real estate		881,646			632,283
Consumer loans		145,475			127,706
Total loans and leases		3,191,441			2,702,537
Reserve for loan and lease losses		(66,602	)		(58,802	)
Net loans and leases		3,124,839			2,643,735
Equipment owned under operating leases, net		81,960			76,310
Net premises and equipment		45,048			37,326
Goodwill and intangible assets		93,567			19,418
Accrued income and other assets		101,897			88,585
Total assets	$	4,447,104		$	3,807,315
LIABILITIES
Deposits:
Noninterest bearing	$	418,529		$	339,866
Interest bearing		3,051,134			2,708,418
Total deposits		3,469,663			3,048,284
Federal funds purchased and securities sold
under agreements to purchase		303,429			195,262
Other short-term borrowings		34,403			27,456
Long-term debt and mandatorily redeemable securities		34,702			43,761
Subordinated notes		100,002			59,022
Accrued expenses and other liabilities		74,401			64,626
Total liabilities		4,016,600			3,438,411
SHAREHOLDERS' EQUITY
Preferred stock; no par value		-			-
Common stock; no par value		342,840			289,163
Retained earnings		117,373			99,572
Cost of common stock in treasury		(32,231	)		(19,571	)
Accumulated other comprehensive income (loss)		2,522			(260	)
Total shareholders' equity		430,504			368,904
Total liabilities and shareholders' equity	$	4,447,104		$	3,807,315

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1st SOURCE CORPORATION										Page 7
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
	Three Months Ended						Twelve Months Ended
	December 31						December 31
	2007			2006			2007			2006
Interest income:
Loans and leases	$	56,864		$	48,586		$	216,186		$	181,363
Investment securities, taxable		6,684			5,796			25,770			19,816
Investment securities, tax-exempt		2,257			1,345			7,608			5,183
Other		1,167			1,711			4,023			2,632
Total interest income		66,972			57,438			253,587			208,994
Interest expense:
Deposits		29,864			26,352			115,113			85,067
Short-term borrowings		2,695			2,653			10,935			11,011
Subordinated notes		1,815			1,092			6,051			4,320
Long-term debt and mandatorily redeemable securities		529			603			2,578			2,163
Total interest expense		34,903			30,700			134,677			102,561
Net interest income		32,069			26,738			118,910			106,433
Provision for (recovery of provision for) loan and lease losses		3,250			(98	)		7,534			(2,736	)
Net interest income after provision for
(recovery of provision for) loan and lease losses		28,819			26,836			111,376			109,169
Noninterest income:
Trust fees		4,200			3,486			15,567			13,806
Service charges on deposit accounts		5,396			4,717			20,470			19,040
Mortgage banking income		468			1,804			2,868			11,637
Insurance commissions		1,126			948			4,666			4,574
Equipment rental income		5,582			5,062			21,312			18,972
Other income		2,822			1,681			8,864			6,554
Investment securities and other investment (losses) gains		(3,428	)		(8	)		(3,128	)		2,002
Total noninterest income		16,166			17,690			70,619			76,585
Noninterest expense:
Salaries and employee benefits		18,190			16,785			73,944			66,605
Net occupancy expense		2,478			1,911			9,030			7,492
Furniture and equipment expense		4,307			3,287			15,145			12,316
Depreciation - leased equipment		4,482			3,998			17,085			14,958
Supplies and communication		1,537			1,468			5,987			5,496
Other expense		5,632			5,146			19,121			19,344
Total noninterest expense		36,626			32,595			140,312			126,211
Income before income taxes		8,359			11,931			41,683			59,543
Income tax expense		533			3,808			11,144			20,246
Net income	$	7,826		$	8,123		$	30,539		$	39,297
The NASDAQ Global Select National Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com

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