1ST BANCORP reports closing of nonconforming mortgage loan production offices.

VINCENNES, Ind.--(BUSINESS WIRE)--May 30, 1997--1ST BANCORP today announced its banking subsidiary, First Federal Bank, A Federal Savings Bank, will close three of its four loan production offices prior to June 30, 1997. The overhead expenses for these three offices currently exceed $2.0 million annually. As a result of this action, corporate net earnings are expected to increase to a level above that being experienced currently.

"We have been extremely pleased with the mortgage volume and operating profits associated with the loan production offices in the past," stated C. James McCormick, Chairman of 1ST BANCORP. "However, with the influx of new players in the subpar financing market, and the subsequent loosening of underwriting standards by some of the companies competing for this business, remaining in the market is no longer a reasonable financial option for the Bank."

First Federal's entry into the nonconforming mortgage loan business began in October 1994. At that time, the Bank's average yield on mortgage loans was 7.2%. A portion of the "A" quality paper was placed in portfolio, resulting in the increase in the mortgage yield to 8.5% as of April 30, 1997. Thus, the Bank increased its net interest income as a result of the mortgage banking operation. Adequate reserves have been established to absorb the increased credit risk on the loans in portfolio.

The Corporation's operating expenses have been high because of the overhead associated with the three loan production offices. Until recently, this overhead expense was offset by gains on the sale of loans which were not placed in portfolio. However, because of the decreased loan volume in the past few months, the noninterest income from the operation decreased and no longer was at a level to absorb the overhead expenses. With the closing of the three offices, the operating expenses of the Bank will decrease substantially.

"We believe being in the nonconforming market has served us well and the income from the loans placed in the Bank's portfolio will continue to be reflected in ongoing earnings," stated Chairman McCormick. "We also feel our exit from this business is timely and will open the door to other business opportunities. We will continue to provide financing to our local community and in the Evansville market."

1ST BANCORP (NASDAQ:FBCV) is a holding company whose subsidiaries include First Federal Bank, A Federal Savings Bank, First Financial Insurance Agency, Inc., and First Title Company. First Federal operates retail banking offices in Vincennes, Indiana and will continue to operate a loan production office in Evansville, Indiana. Information about 1ST BANCORP may be accessed at http://www.businesswire.com/cnn/fbcv.htm and information about First Federal can be accessed at www.firstfedafsb.com

CONTACT: 1ST BANCORP, Vincennes

Frank Baracani, 812/885-2255