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): July 22, 2010
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 July 22, 2010, 1st Source Corporation issued a press release that announced its second quarter earnings for 2010.  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 July 22, 2010, with respect to 1st Source Corporation’s financial results for the second quarter ended June 30, 2010.

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:   July 22, 2010	/s/CHRISTOPHER J. MURPHY III
	Christopher J. Murphy III
	Chairman of the Board, President and CEO
Date:  July 22, 2010	/s/LARRY E. LENTYCH
	Larry E. Lentych
	Treasurer and Chief Financial Officer
	Principal Accounting Officer

EX-99.1

Exhibit 99.1

For:	Immediate Release	Contact:	Larry Lentych
	July 22, 2010		Andrea Short
			574 235 2000

1ST SOURCE CORPORATION SECOND QUARTER INCOME UP,

DIVIDEND REPORTED

South Bend, IN -- 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported net income of $7.80 million for the second quarter of 2010, an increase of 24.20% over the $6.28 million reported in the second quarter of 2009. For the first six months of 2010, net income for 1st Source Corporation was $17.47 million, up 39.43% compared to $12.53 million reported for the same period in 2009. Diluted net income per common share for the second quarter amounted to $0.25 compared with $0.19, an increase of 31.58% over the second quarter of 2009. Diluted net income per common share for the first half of 2010 was $0.57, up 46.15% over the $0.39 earned a year earlier.

At its July meeting, the Board of Directors approved a cash dividend of $0.15 per common share, payable on August 16, 2010 to shareholders of record on August 6, 2010.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “I am pleased with our performance in the second quarter. We’ve seen a small decrease in our non-performing assets over each of the last two quarters, and our net charge-offs of loans and leases are down over the same period from a year ago. Also, our net interest margin has been slowly increasing each quarter for the past year. Our capital ratios both with and without TARP are quite strong and exceed the regulatory “well capitalized” minimums. As positive as this is, we still see instability in the economy and will continue to keep close tabs on our loan portfolios and on our expenses. Similarly, we a re retaining the TARP investment until we are more convinced that there will not be a second and more severe dip in the economy."

“Unfortunately, it seems that the stimulus package initiatives instigated by Washington have increased the cost of government while underperforming in their intent. Additionally, Washington continues to increase the regulatory burden on financial institutions without differentiating between smaller community-based banks versus the “big box” mega regional, national and investment banks that caused many of the country’s financial problems. Both of these challenges will have immediate and long range impacts on the cost of doing business for 1st Source as they will for everyone else in our industry. With these thoughts in mind, we will continue to take a very cautious view of the economy, keeping our clients best interests in mind for the long run, while remaining str ong, stable, local and personal for our community,” Mr. Murphy concluded.

As of June 30, 2010, the 1st Source common equity-to-assets ratio was 10.68% compared to 10.22% a year ago and the tangible common equity to tangible assets ratio was 8.88% compared to 8.39% a year earlier.

- 1 -

Total assets at June 30, 2010 were $4.53 billion, steady from a year earlier. Total loans and leases were $3.13 billion, down slightly from June 30, 2009.  Total deposits were $3.61 billion, also down slightly from the comparable figures at June 30, 2009.

The 1st Source reserve for loan and lease losses as of June 30, 2010 was 2.81% of total loans and leases compared to 2.64% at June 30, 2009.  Net charge-offs were $5.61 million in the second quarter 2010, compared with net charge-offs of $9.72 million in the same quarter a year ago.  Year-to-date, net charge-offs of $10.41 million have been recorded in 2010, compared to net charge-offs of $12.92 million for the first half of 2009. The ratio of nonperforming assets to net loans and leases was 2.71% on June 30, 2010, compared to 2.48% on June 30, 2009.

The net interest margin was 3.57% for the second quarter of 2010 versus 3.11% for the same period in 2009. The net interest margin was 3.53% for the six months ending June 30, 2010, versus 3.07% for the same period in 2009. Tax-equivalent net interest income was $37.11 million for the second quarter of 2010, compared to $32.84 million for 2009’s second quarter. For the first six months of 2010, tax-equivalent net interest income was $72.89 million, compared to $64.48 million for the first six months of 2009. The net interest margin increased primarily due to a reduction in the cost of funds as a result of certificates of deposit interest rate re-pricing.

Noninterest income for the second quarter of 2010 was $20.60 million, down 9.29% from the same period in 2009. For the first six months, noninterest income was $41.52 million, down 4.00% from 2009.  Noninterest income decreased primarily as a result of lower mortgage banking income due to impairment charges on mortgage servicing rights in the second quarter of 2010 and a reduction in the gain on sale of mortgage loans for the first six months of 2010.

Noninterest expense was $39.65 million for the second quarter of 2010, up 6.16% from the second quarter of 2009.  For the first six months, noninterest expense was $76.76 million, up 1.01% compared with $75.99 million for the same period in 2009.  The leading factors in the change were higher employee benefits, professional fees and loan and lease collection and repossession expense offset by reduced furniture and equipment expense and FDIC and other insurance expense.

1st Source serves the northern half of Indiana and southwest Michigan and is the largest locally controlled financial institution headquartered in the area. While delivering a comprehensive range of consumer and commercial banking services through its community bank offices, 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. The Corporation includes 76 community banking centers in 17 counties, 23 specialty finance locations nationwide, 7 trust and wealth management locations, and 7 1st Source Insurance offices. Wi th 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 it serves.

- 2 -

In addition to the results presented in accordance with generally accepted accounting principles (GAAP), in the United States of America, this press release contains certain non-GAAP financial measures. 1st Source Corporation believes that providing non-GAAP financial measures provides investors with information useful to understanding our financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible equity” which is “common shareholders’ equity” excluding intangible assets.

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". Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “contemplate,” “seek,” “plan,” “possible,” “assume,” “expect,” “intend,” “targeted,” “continue,” “remain,” “estimate,” “anticipate,” “project,” “will,” “should,” “indicate,” “would,” “may”  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.

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.

# # #

- 3 -

1st SOURCE CORPORATION
2nd QUARTER 2010 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
END OF PERIOD BALANCES
Assets							$	4,531,313		$	4,544,369
Loans and leases								3,131,749			3,154,416
Deposits								3,609,586			3,615,043
Reserve for loan and lease losses								88,014			83,124
Intangible assets								89,618			91,009
Common shareholders' equity								483,919			464,592
Total shareholders' equity								589,502			568,890
AVERAGE BALANCES
Assets	$	4,517,624		$	4,525,757		$	4,501,598		$	4,531,013
Earning assets		4,174,376			4,231,724			4,160,120			4,230,479
Investments		917,151			850,106			904,946			814,447
Loans and leases		3,120,871			3,179,034			3,110,565			3,211,858
Deposits		3,592,827			3,591,315			3,583,529			3,589,205
Interest bearing liabilities		3,399,245			3,461,696			3,397,971			3,485,730
Common shareholders' equity		481,462			467,732			477,534			466,305
Total shareholders' equity		586,835			571,830			582,746			557,747
INCOME STATEMENT DATA
Net interest income	$	36,249		$	31,913		$	71,151		$	62,635
Net interest income - FTE		37,113			32,841			72,890			64,483
Provision for loan and lease losses		5,798			8,487			10,186			16,272
Noninterest income		20,602			22,705			41,524			43,254
Noninterest expense		39,649			37,349			76,759			75,989
Net income		7,795			6,283			17,474			12,534
Net income available to common shareholders		6,078			4,587			14,046			9,525
PER SHARE DATA
Basic net income per common share	$	0.25		$	0.19		$	0.57		$	0.39
Diluted net income per common share		0.25			0.19			0.57			0.39
Common cash dividends declared		0.15			0.14			0.30			0.28
Book value per common share		19.93			19.21			19.93			19.21
Tangible book value per common share		16.24			15.45			16.24			15.45
Market value - High		20.36			21.98			20.36			23.92
Market value - Low		16.58			15.36			14.25			14.16
Basic weighted average common shares outstanding		24,284,519			24,185,415			24,247,586			24,167,905
Diluted weighted average common shares outstanding		24,292,491			24,226,542			24,254,098			24,208,966
KEY RATIOS
Return on average assets		0.69	%		0.56	%		0.78	%		0.56	%
Return on average common shareholders' equity		5.06			3.93			5.93			4.12
Average common shareholders' equity to average assets		10.66			10.33			10.61			10.29
End of period tangible common equity to tangible assets		8.88			8.39			8.88			8.39
Risk-based capital - Tier 1		16.58			15.62			16.58			15.62
Risk-based capital - Total		17.87			16.90			17.87			16.90
Net interest margin		3.57			3.11			3.53			3.07
Efficiency: expense to revenue		66.70			64.89			65.27			67.92
Net charge-offs to average loans and leases		0.72			1.23			0.67			0.81
Loan and lease loss reserve to loans and leases		2.81			2.64			2.81			2.64
Nonperforming assets to loans and leases		2.71			2.48			2.71			2.48
ASSET QUALITY
Loans and leases past due 90 days or more							$	1,230		$	621
Nonaccrual and restructured loans and leases								68,433			67,983
Other real estate								6,673			1,790
Former bank premises held for sale								2,363			3,095
Repossessions								8,670			6,960
Equipment owned under operating leases								337			269
Total nonperforming assets								87,706			80,718

- 4 -

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
	June 30, 2010			June 30, 2009
ASSETS
Cash and due from banks	$	65,337		$	70,798
Federal funds sold and
interest bearing deposits with other banks		42,979			29,545
Investment securities available-for-sale
(amortized cost of $909,516 and $874,562 at
June 30, 2010 and 2009, respectively)		932,583			883,047
Other investments		21,012			18,612
Trading account securities		113			104
Mortgages held for sale		59,084			136,505
Loans and leases, net of unearned discount:
Commercial and agricultural loans		539,003			593,914
Auto, light truck and environmental equipment		416,152			338,774
Medium and heavy duty truck		185,954			225,345
Aircraft financing		596,138			619,797
Construction equipment financing		308,602			345,928
Loans secured by real estate		983,054			910,728
Consumer loans		102,846			119,930
Total loans and leases		3,131,749			3,154,416
Reserve for loan and lease losses		(88,014	)		(83,124	)
Net loans and leases		3,043,735			3,071,292
Equipment owned under operating leases, net		91,288			87,094
Net premises and equipment		36,573			38,837
Goodwill and intangible assets		89,618			91,009
Accrued income and other assets		148,991			117,526
Total assets	$	4,531,313		$	4,544,369
LIABILITIES
Deposits:
Noninterest bearing	$	487,719		$	434,729
Interest bearing		3,121,867			3,180,314
Total deposits		3,609,586			3,615,043
Federal funds purchased and securities
sold under agreements to repurchase		113,638			146,529
Other short-term borrowings		28,136			27,464
Long-term debt and mandatorily redeemable securities		29,854			19,947
Subordinated notes		89,692			89,692
Accrued expenses and other liabilities		70,905			76,804
Total liabilities		3,941,811			3,975,479
SHAREHOLDERS' EQUITY
Preferred stock; no par value		105,583			104,298
Common stock; no par value		350,275			350,263
Retained earnings		149,799			140,355
Cost of common stock in treasury		(30,486	)		(31,314	)
Accumulated other comprehensive income		14,331			5,288
Total shareholders' equity		589,502			568,890
Total liabilities and shareholders' equity	$	4,531,313		$	4,544,369

- 5 -

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Interest income:
Loans and leases	$	43,099		$	44,474		$	85,369		$	89,071
Investment securities, taxable		5,279			4,207			10,680			8,243
Investment securities, tax-exempt		1,422			1,685			2,889			3,395
Other		250			264			524			597
Total interest income		50,050			50,630			99,462			101,306
Interest expense:
Deposits		11,573			16,596			23,978			34,202
Short-term borrowings		206			295			394			644
Subordinated notes		1,647			1,647			3,294			3,294
Long-term debt and mandatorily redeemable securities		375			179			645			531
Total interest expense		13,801			18,717			28,311			38,671
Net interest income		36,249			31,913			71,151			62,635
Provision for loan and lease losses		5,798			8,487			10,186			16,272
Net interest income after provision for loan and lease losses		30,451			23,426			60,965			46,363
Noninterest income:
Trust fees		4,062			3,887			7,807			7,691
Service charges on deposit accounts		5,275			5,219			9,895			9,965
Mortgage banking income		425			3,339			1,202			5,909
Insurance commissions		1,061			1,076			2,526			2,592
Equipment rental income		6,672			6,402			13,417			12,549
Other income		3,012			2,356			5,701			4,591
Investment securities and other investment gains (losses)		95			426			976			(43	)
Total noninterest income		20,602			22,705			41,524			43,254
Noninterest expense:
Salaries and employee benefits		18,848			16,829			37,658			36,915
Net occupancy expense		1,939			2,273			4,426			4,874
Furniture and equipment expense		3,196			3,765			5,996			7,246
Depreciation - leased equipment		5,304			5,088			10,668			10,044
Professional fees		1,418			815			2,932			1,877
Supplies and communication		1,338			1,428			2,707			2,995
FDIC and other insurance		1,667			3,719			3,341			5,269
Business development and marketing expense		880			794			1,447			1,279
Loan and lease collection and respossession expense		3,267			1,070			4,373			1,629
Other expense		1,792			1,568			3,211			3,861
Total noninterest expense		39,649			37,349			76,759			75,989
Income before income taxes		11,404			8,782			25,730			13,628
Income tax expense		3,609			2,499			8,256			1,094
Net income		7,795			6,283			17,474			12,534
Preferred stock dividends and discount accretion		(1,717	)		(1,696	)		(3,428	)		(3,009	)
Net income available to common shareholders	$	6,078		$	4,587		$	14,046		$	9,525
The Nasdaq Global Select Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com

- 6 -