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):  December 29, 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 1.01                      Entry into a Material Definitive Agreement.

On December 29, 2010, 1st Source Corporation (“1st Source”) entered into a letter agreement (the “Letter Agreement”), dated as of December 29, 2010, between 1st Source and the United States Department of the Treasury (“Treasury”).  Pursuant to the Letter Agreement, 1st Source repurchased from Treasury all 111,000 shares of Series A Preferred Stock (the “Preferred Stock”) issued to Treasury in January 2009 under the Capital Purchase Program of the Emergency Economic Stabilization Act of 2008.  1st Source paid a purchase price of $111.68 million for the Preferred Stock, which included $0.68 million in respect of accrued and unpaid dividends on the Preferred Stock.  The Letter Agreement is attached as Exhibit 10.1 hereto and is incorporated herein by reference.

In conjunction with the Preferred Stock redemption, 1st Source Bank paid a special dividend of $80.00 million to 1st Source.  The remaining $31.68 million funding came from liquid assets of 1st Source.  1st Source Bank received approval from the Federal Reserve Bank of Chicago and Indiana Department of Financial Institutions to make the special dividend.  The $80.00 million special dividend will be taken into account throughout 2011 and 2012 in determining whether 1st Source Bank may pay dividends to 1st Source Corporation without prior regulatory approval.

ITEM 9.01		Financial Statements and Exhibits.
	(d)	Exhibits
	10.1	Letter Agreement, dated as of December 29, 2010, between 1st Source Corporation and the United States Department of the Treasury

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:  December 30, 2010	/s/LARRY E. LENTYCH
	Larry E. Lentych
	Treasurer and Chief Financial Officer
	Principal Accounting Officer

EX-10.1

Exhibit 10.1

United States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

December 29, 2010

Ladies and Gentlemen:

     Reference is made to that certain Letter Agreement incorporating the Securities Purchase Agreement – Standard Terms (the "Securities Purchase Agreement"), dated as of the date set forth on Schedule A hereto, between the United States Department of the Treasury (the "Investor") and the company set forth on Schedule A hereto (the "Company"). Capitalized terms used but not defined herein shall have the meanings assigned to them in the Securities Purchase Agreement.  Pursuant to the Securities Purchase Agreement, at the Closing, the Company issued to the Investor the number of shares of the series of its preferred stock set forth on Schedule A hereto (the “Preferred Shares” ) and a warrant to purchase the number of shares of its common stock set forth on Schedule A hereto (the “Warrant”).

In connection with the consummation of the repurchase (the “Repurchase”) by the Company from the Investor, on the date hereof, of the number of Preferred Shares listed on Schedule A hereto (the “Repurchased Preferred Shares”), as permitted by the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009:

(a)

The Company hereby acknowledges receipt from the Investor of the share certificate(s) set forth on Schedule A hereto representing the Preferred Shares; and

(b)

The Investor hereby acknowledges receipt from the Company of a wire transfer to the account of the Investor set forth on Schedule A hereto in immediately available funds of the aggregate purchase price set forth on Schedule A hereto, representing payment in full for the Repurchased Preferred Shares at a price per share equal to the Liquidation Amount per share, together with any accrued and unpaid dividends to, but excluding, the date hereof.

The Investor and the Company hereby agree that, notwithstanding Section 4.4 of the Securities Purchase Agreement, immediately following consummation of the Repurchase, but subject to compliance with applicable securities laws, the Investor shall be permitted to Transfer all or a portion of the Warrant with respect to, and/or exercise the Warrant for, all or a portion of the number of shares of Common Stock issuable thereunder, at any time and without limitation, and Section 4.4 of the Securities Purchase Agreement shall be deemed to be amended in order to permit the foregoing.  The Company shall take all steps as may be reasonably requested by the Investor to facilitate any such Transfer.

In addition, the Company agrees that in the event it elects to repurchase the Warrant, it shall deliver to the Investor within 15 calendar days of the date hereof a notice of intent to repurchase the Warrant, which notice shall be in accordance with Section 4.9(b) of the Securities Purchase Agreement (the “Warrant Repurchase Notice”).  In the event the Company does not deliver the Warrant Repurchase Notice to the Investor within 15 calendar days of the date hereof, the Investor hereby provides notice, pursuant to Section 4.5(p) of the Securities Purchase Agreement, of its intention to sell the Warrant, such notice to be effective as of the first day following the end of such 15-day period.

In the event that the Company delivers a Warrant Repurchase Notice and the Company and the Investor fail to agree on the Fair Market Value of the Warrant pursuant to the procedures (including the Appraisal Procedure), and in accordance with the time periods, set forth in Section 4.9(c) of the Securities Purchase Agreement or the Company revokes the delivery of such Warrant Repurchase Notice, then the Investor hereby provides notice of its intention to sell the Warrant.

This letter agreement will be governed by and construed in accordance with the federal law of the United States if and to the extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

This letter agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this letter agreement may be delivered by facsimile and such facsimiles will be deemed sufficient as if actual signature pages had been delivered.

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In witness whereof, the parties have duly executed this letter agreement as of the date first written above.

UNITED STATES DEPARTMENT OF
THE TREASURY
By:	/s/ Timothy G. Massad
	Name: Timothy G. Massad
	Title:   Acting Assistant Secretary for
	Financial Stability
COMPANY: 1st Source Corporation
By:	/s/ Christopher J. Murphy III
	Name: Christopher J. Murphy III
	Title:   Chief Executive Officer