Exhibit 13


                          Table of Contents

Message to Shareholders........................................................1
Selected Consolidated Financial Data...........................................2
Management's Discussion and Analysis...........................................3
Independent Accountants' Report...............................................19
Consolidated Balance Sheets...................................................20
Consolidated Statements of Income.............................................21
Consolidated Statements of Shareholders' Equity...............................22
Consolidated Statements of Cash Flows.........................................23
Notes to Consolidated Financial Statements....................................24
Directors and Officers........................................................42
Shareholder Information.......................................................44

Description of Business

     Union Community Bancorp (the "Holding  Company") is an Indiana  corporation
organized  in September  1997 to become a savings and loan holding  company upon
its acquisition of all the issued and outstanding capital stock of Union Federal
Savings and Loan  Association  ("Union  Federal,"  and together with the Holding
Company,  the  "Company") in connection  with Union  Federal's  conversion  from
mutual to stock form. The Holding Company became Union Federal's holding company
on December 29,  1997.  The  principal  asset of the Holding  Company  currently
consists of 100% of the issued and outstanding shares of capital stock, $.01 par
value per share, of Union Federal.

     On January 2, 2002, the Company acquired Montgomery  Financial  Corporation
("Montgomery"), the holding company of Montgomery Savings, a Federal Association
("Montgomery Savings"), a federally chartered thrift. Montgomery was merged with
and into the  Company  and  Montgomery  Savings  was merged  with and into Union
Federal.   MSA  Service   Corporation   ("MSA"),   an  Indiana  corporation  and
wholly-owned  subsidiary of Montgomery Savings, will continue as a subsidiary of
Union Federal.

     Union  Federal  conducts  its  business  from its main  office  located  in
Crawfordsville,  Indiana.  In addition,  Union Federal has two additional branch
offices in  Crawfordsville  and branch  offices in Covington,  Williamsport  and
Lafayette,  Indiana.  Four of the above  mentioned  branch offices were added in
connection with the acquisition of Montgomery.

     Union  Federal  offers a variety of lending,  deposit  and other  financial
services  to its retail and  commercial  customers.  Union  Federal's  principal
business consists of attracting deposits from the general public and originating
fixed-rate and  adjustable-rate  loans secured  primarily by first  mortgages on
one- to four-family  residential real estate.  Union Federal's deposits accounts
are insured up to applicable limits by the Savings Association Insurance Fund of
the Federal  Deposit  Insurance  Corporation.  Union Federal  offers a number of
other financial services, which include: (i) residential real estate loans; (ii)
multi-family loans, (iii) commercial real estate loans; (iv) construction loans;
(v) home improvement loans and consumer loans, including single-pay loans, loans
secured by deposits,  installment  loans and commercial loans; (vi) money market
demand accounts;  (vii) passbook savings  accounts;  and (viii)  certificates of
deposit.
<PAGE>


To Our Shareholders:

     On  behalf  of the  Board of  Directors,  our  management  team and all the
employees of Union Community  Bancorp and its subsidiary,  Union Federal Savings
and Loan  Association,  it is our  pleasure  to provide you with our 2003 Annual
Report.

     During  the past year,  we  completed  the  remodeling  of our main  office
facility.  This remodel enabled us to provide our customers with a new drive-up,
an ATM and an improved  banking  environment  for both  customers and employees.
Also, we introduced our consumer credit card product and added Internet  Banking
to our  services.  In  connection  with the  offering of Internet  Banking,  our
website at www.unionfed.com was restructured to provide ease of use by customers
and shareholders and to provide needed  information for potential  customers and
investors.

     Throughout the year, we repurchased 178,000 shares of our common stock at a
cost of $3.0 million,  or an average of $16.85 per share,  reducing  outstanding
shares to 2,100,000.  Repurchase of  outstanding  shares is a strategy used from
time to time to enhance  shareholder value and will continue to be considered in
the future. Book value per share increased from $16.32 per share at December 31,
2002 to $16.92 per share at December 31,  2003,  an increase of $0.60 per share.
Also during 2003 dividends of $0.60 per share were paid.

     For the year ended December 31, 2003 total assets decreased $7.7 million to
$261.6 while net loans increased $4.5 million to $221.2 million. During the same
time  frame,   deposits   remained   relatively  the  same  at  $190.2  million.
Shareholders  equity  decreased  $1.7 million to $35.5 million due to reductions
for the  repurchase of common stock and the payment of dividends and an increase
for the net income.

     Net income was  $2,331,704  for 2003, or $1.18 basic earnings per share and
$1.16 diluted  earning per share.  Return on average assets was 0.85% and return
on average equity was 6.45%.  The acquisition of Montgomery  Financial still has
an effect on net interest  income.  During the year ended  December 31, 2002 the
amortization of purchase  accounting  adjustments  increased net interest income
$1,103,091  while the increase in net interest income due to the adjustments was
$503,000 for 2003. The effects of these  adjustments net interest income will be
reduced to income of $42,315 for 2004.

     The  Management  and the  Board of  Directors  want to  thank  you for your
business,  your support and your confidence in Union Community Bancorp and Union
Federal  Savings and Loan  Association.  We  encourage  you to  recommend  Union
Federal to your  friends,  neighbors  and  associates,  and we are  dedicated to
providing  innovative  products  delivered  with  quality  service  to you,  our
customers and shareholders, while continuing our commitment to community banking
that has marked our performance for the past 91 years.  Please review the Annual
Report and join us at the meeting on April 21, 2004.

                                        Sincerely,


                                        /s/ Joseph E. Timmons

                                        Joseph E. Timmons,
                                        Chairman of the Board and President


                                        /s/ Alan L. Grimble

                                        Alan L. Grimble, Chief Executive Officer

<PAGE>
<TABLE>
<CAPTION>

                SELECTED CONSOLIDATED FINANCIAL DATA OF
                UNION COMMUNITY BANCORP AND SUBSIDIARY

     The  following  selected  consolidated  financial  data of the  Company  is
qualified  in its  entirety  by, and  should be read in  conjunction  with,  the
consolidated financial statements,  including notes thereto,  included elsewhere
in this Shareholder Annual Report.

                                                                         At  December 31,
                                             -------------------------------------------------------------------------
                                                2003            2002            2001            2000            1999
                                             -------------------------------------------------------------------------
                                                                        (Dollars in thousands)
<S>                                           <C>            <C>             <C>              <C>             <C>
Summary of Selected Consolidated
Financial Condition Data:
Total assets                                  $261,577       $269,316        $142,391         $125,383        $120,654
Loans, net                                     221,230        216,703         121,749          109,505         106,174
Cash and interest bearing deposits in
         other banks (1)                        12,039         36,731          13,565            4,755           3,117
Investment securities available for sale         5,908             --              --               --             315
Investment securities held to maturity             494          1,637           2,848            7,597           7,522
Deposits                                       190,192        190,191          81,702           72,816          68,990
Borrowings                                      33,946         40,055          25,883           15,189          12,496
Shareholders' equity                            35,530         37,189          33,740           36,188          38,280

                                                                      Year Ended December 31,
                                             -------------------------------------------------------------------------
                                                2003            2002            2001            2000            1999
                                             -------------------------------------------------------------------------
Summary of Operating Data:
Total interest and dividend income            $ 15,481       $ 17,986        $  9,546         $  9,222        $  8,470
Total interest expense                           6,927          8,162           4,760            4,601           3,817
                                              --------       --------        --------         --------        --------
   Net interest income                           8,554          9,824           4,786            4,621           4,653
Provision for loan losses                          238            372              40               60              60
                                              --------       --------        --------         --------        --------
   Net interest income after provision
     for loan losses                             8,316          9,452           4,746            4,561           4,593
                                              --------       --------        --------         --------        --------
Other income:
   Service charges on deposit accounts             143            155              23               20              12
   Equity in losses of limited
     partnership                                   (21)           (20)            (55)            (100)            (44)
   Gain on sales of available for
     sale securities                                --              9              --               46              73
   Other                                           358            205             145              104              98
                                              --------       --------        --------         --------        --------
     Total other income                            480            349             113               70             139
                                              --------       --------        --------         --------        --------
Other expenses:
   Salaries and employee benefits                2,859          2,809           1,335            1,102           1,069
   Net occupancy expenses                          292            311              85               45              47
   Equipment expenses                              320            312              36               23              27
   Legal and professional fees                     270            233             124              109             127
   Data processing                                 393            812              95               77             122
   Other                                         1,158          1,043             406              329             367
                                              --------       --------        --------         --------        --------
     Total other expenses                        5,292          5,520           2,081            1,685           1,759
                                              --------       --------        --------         --------        --------
Income before income taxes                       3,504          4,281           2,778            2,946           2,973
Income taxes                                     1,172          1,479             927            1,011           1,003
                                              --------       --------        --------         --------        --------
     Net income                               $  2,332       $  2,802        $  1,851         $  1,935        $  1,970
                                              ========       ========        ========         ========        ========
---------------------------------
Table continued on following page

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                             SELECTED CONSOLIDATED FINANCIAL DATA OF
                                        UNION COMMUNITY BANCORP AND SUBSIDIARY (continued)


                                                                        Year Ended December 31,
                                             -------------------------------------------------------------------------
                                                2003            2002            2001            2000    1       999
                                             -------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>              <C>             <C>
Supplemental Data:
Basic earnings per share                      $   1.18         $ 1.25           $ .93            $ .87           $ .81
Diluted earnings per share                        1.16           1.24             .93              .87             .81
Dividends per share                                .600           .520            .600             .585            .465
Dividend payout ratio                            51.78%         41.94%          64.52%          67.24%           57.41%
Interest rate spread during period                2.99           3.29            2.33             2.12            2.31
Net yield on interest earning assets (2)          3.32           3.76            3.80             3.87            4.14
Return on assets (3)                              0.85           1.03            1.44             1.59            1.72
Return on equity (4)                              6.45           7.19            5.38             5.17            5.02
Other expenses to average assets (5)              1.94           2.02            1.62             1.39            1.53
Equity to assets (6)                             13.58          13.81           23.70            28.86           31.73
Average equity to average assets                 13.26          14.29           26.80            30.77           34.25
Average interest earning assets to average
         interest bearing liabilities           111.99         115.09          138.78           145.47          153.70
Nonperforming assets to total assets (6)          1.53           1.30             .49              .33             .22
Allowance for loan losses to total loans
         outstanding (6)                          0.55           0.47             .43              .44             .40
Allowance for loan losses to
         nonperforming loans (6)                 33.56          33.56           76.25           118.23          253.69
Net charge offs to average total
        loans outstanding                          .02            .11              --               --              --
Number of full service offices (6)                   6              6               2                1               1
----------------------------------
</TABLE>

(1)  Includes certificates of deposit in other financial institutions.
(2)  Net interest income divided by average interest earning assets.
(3)  Net income divided by average total assets.
(4)  Net income divided by average total equity.
(5)  Other expenses divided by average total assets.
(6)  At end of period.

================================================================================
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

     The following  discussion and analysis of the Company's financial condition
and results of operations  should be read in conjunction with and with reference
to the  consolidated  financial  statements  and the notes thereto  presented on
pages through 43.

     In addition to the historical  information  contained herein, the following
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.   The  Company's  operations  and  actual  results  could  differ
significantly from those discussed in the  forward-looking  statements.  Some of
the factors that could cause or  contribute  to such  differences  are discussed
herein but also include  changes in the economy and interest rates in the nation
and the Company's general market area. The forward-looking  statements contained
herein  include,  but are not limited to,  those with  respect to the  following
matters:

     1.   Management's  determination  of  the  amount  of  loan  loss
          allowance;

     2.   The effect of changes in interest rates; and

     3.   Changes in deposit insurance premiums.

Executive Summary

     The  previous  two  years  have seen the  largest  refinance  boom,  lowest
interest  rates and  higher  local  unemployment  than we have seen in  decades.
During this same period we have spent significant resources, including our time,
to digest the acquisition of Montgomery. These events have been the focus of our
efforts over the past two years and we have become more  flexible and  adaptable
to this changing environment.

     The  environment  described  above has had a significant  impact on our net
interest  income and net  income.  Our  interest  rate margin has  continued  to
decline due to the  numerous  interest  rate cuts by the Federal  Reserve  Bank.
Additionally, the merger of Montgomery has added certain expenses, both one-time
and  ongoing,  that,  although  planned,  have had a negative  impact on our net
income.
<PAGE>

     Our asset growth over the past two years has been limited - due both to our
attention to the  assimilation of Montgomery and the impact of that  acquisition
on our traditional  market area of Crawfordsville  and surrounding  communities.
Our current  strategies  to improve  asset  growth  include  expansion  into new
markets, primarily Lafayette, Indiana and Tippecanoe County. Because our planned
and actual loan growth has been minimal during the past two years,  we have used
cash provided by investing activities to reduce our borrowings.

Critical Accounting Policies

     Note 1 to the consolidated  financial statements presented on pages through
contains a summary of the Company's significant accounting policies for the year
ended  December  31,  2003.  Certain  of these  policies  are  important  to the
portrayal of the Company's financial condition, since they require management to
make  difficult,  complex or subjective  judgments,  some of which may relate to
matters that are  inherently  uncertain.  Management  believes that its critical
accounting  policies  include  determining  the allowance  for loan losses,  the
valuation of the foreclosed assets and real estate held for development, and the
valuation of intangible assets.

Allowance for loan losses

     The allowance  for loan losses is a significant  estimate that can and does
change based on management's  assumptions  about specific  borrowers and current
general economic and business conditions,  among other factors.  Union Federal's
management  reviews the adequacy of the  allowance for loan losses at least on a
quarterly  basis.  The  evaluation  includes  a review of  payment  performance,
adequacy of collateral and financial condition of all major borrowers.  A review
of all nonperforming  loans and other identified  problem loans is performed and
the  probability  of  collecting  all amounts due is  determined.  In  addition,
changes in the composition of the loan portfolio,  the total  outstanding  loans
and past loss experience are reviewed to determine the adequacy of the allowance
for loan losses.  Current economic and market conditions and potential  negative
changes to economic  conditions are also reviewed in  determining  possible loan
losses.  Although it is the intent of management to fully  evaluate and estimate
the  potential  effects  of  economic  and market  conditions,  changes in these
conditions  are  susceptible to significant  changes beyond those  projected.  A
worsening or protracted economic decline beyond  management's  projections would
increase the likelihood of additional  losses due to the  additional  credit and
market risk and could create the need for additional loss reserves.

Foreclosed assets and real estate held for development

     Foreclosed assets and real estate held for develop- ment are carried at the
lower of cost or fair  value  less  estimated  selling  costs.  Union  Federal's
management estimates the fair value of the properties based on current appraisal
information. Reviews of estimated fair value are performed on at least an annual
basis.  Economic  environment,  market conditions and the real estate market are
continually  monitored  and  decreases  in the carried  value are  written  down
through current  operations when any of these factors indicate a decrease to the
market value of the assets.  Future worsening or protracted  economic conditions
and a decline in the real estate  market  would  increase  the  likelihood  of a
decline in property  values and could  create the need for future write downs of
the properties held.

Intangible assets

     Management  annually  assesses  the  impairment  of its  goodwill  and  the
recoverability of its core deposit intangible.  Impairment is the condition that
exists when the carrying  amount of goodwill  exceeds its implied fair value. If
actual external conditions and future operating results differ from management's
judgements, impairment and/or increased amortization charges may be necessary to
reduce the carrying value of these assets to the appropriate  value. A review of
the fair value of the Company's  goodwill was performed in the fourth quarter of
2003 and it was  management's  opinion  that  there was no  impairment  to these
intangible assets as of the date of the review.

Average Balances and Interest Rates and Yields

     The following  tables present for the years ended  December 31, 2003,  2002
and 2001,  the  balances,  interest  rates and  average  daily  balances of each
category  of  the  Company's   interest  earning  assets  and  interest  bearing
liabilities, and the interest earned or paid on such amounts.
<PAGE>
<TABLE>
<CAPTION>

                                                    Average Balance Sheet/Yield Analysis


                                                                 Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                             2003                                 2002                             2001
------------------------------------------------------------------------------------------------------------------------------------
                               Average                   Average     Average                 Average  Average              Average
                               Balance    Interest(1)   Yield/Cost   Balance   Interest(1) Yield/Cost Balance Interest(1) Yield/Cost
------------------------------------------------------------------------------------------------------------------------------------
                                                                 (Dollars in thousands)
Assets:
Interest earning assets:
<S>                            <C>         <C>             <C>       <C>        <C>           <C>    <C>        <C>         <C>
  Interest earning deposits    $ 32,877    $   364         1.11%     $ 22,604   $   340       1.50%  $  3,954   $  150      3.79%
  Mortgage-backed securities        776         56         7.22         1,787       150       8.39      2,395      175      7.31
  Other investment securities     4,399        142         3.23           644        48       7.45      2,753      184      6.68
  Loans receivable (2)(5)       216,399     14,743         6.81       232,965    17,240       7.40    115,627    8,950      7.74
  FHLB stock                      3,481        176         5.06         3,424       208       6.07      1,178       87      7.39
                               --------    -------                   --------   -------              --------   ------
    Total interest
      earning assets            257,932     15,481         6.00       261,424    17,986       6.88    125,907    9,546      7.58
                                           -------                              -------                         ------
Noninterest earning assets,
  net of allowance for loan
  losses                         14,805                                11,286                           2,366
                               --------                              --------                        --------
    Total assets               $272,737                              $272,710                        $128,273
                               ========                              ========                        ========
Liabilities and shareholders'
  equity:
Interest bearing liabilities:
  Savings deposits             $ 33,474    $   610         1.82      $ 38,326   $ 1,094       2.85    $ 2,908      104      3.58
  Interest bearing demand        60,521      1,112         1.84        42,066     1,118       2.66     21,976      938      4.27
  Certificates of deposit        97,923      3,406         3.48       106,177     4,092       3.85     51,698    2,993      5.79
  FHLB advances                  38,399      1,799         4.69        40,579     1,858       4.58     14,143      725      5.13
                               --------    -------                   --------   -------              --------   ------
    Total interest bearing
      liabilities               230,317      6,927         3.01       227,148     8,162       3.59     90,725    4,760      5.25
                                           -------                              -------                         ------
Other liabilities                 6,255                                 6,590                           3,173
                               --------                              --------                        --------
    Total liabilities           236,572                               233,738                          93,898
Shareholders' equity             36,165                                38,972                          34,375
                               --------                              --------                        --------
    Total liabilities and
      shareholders' equity     $272,737                              $272,710                        $128,273
                               ========                              ========                        ========
Net interest earning assets    $ 27,615                              $ 34,276                        $ 35,182
Net interest income                        $ 8,554                              $ 9,824                         $4,786
                                           =======                              =======                         ======
Interest rate spread (3)                                   2.99%                              3.29%                         2.33%
Net yield on weighted
  average interest earning
  assets (4)                                               3.32%                              3.76%                         3.80%
Average interest earning
  assets to average interest-
  bearing liabilities            111.99%                               115.09%                       138.78%
-------------------------------
(1)  Interest income on loans  receivable  includes loan fee income of $532,000,
     $309,000 and $68,000 for the years ended December 31, 2003,  2002 and 2001,
     respectively.
(2)  Total loans less loans in process.
(3)  Interest rate spread is calculated by subtracting weighted average interest
     rate  cost  from  weighted  average  interest  rate  yield  for the  period
     indicated.
(4)  The net yield on weighted  average interest earning assets is calculated by
     dividing net interest income by weighted  average  interest  earning assets
     for the period indicated.
(5)  The balances include nonaccrual loans.
</TABLE>
<PAGE>

Interest Rate Spread

     The Company's  results of operations have been determined  primarily by net
interest income and, to a lesser extent,  fee income,  miscellaneous  income and
general and  administrative  expenses.  The  Company's  net  interest  income is
determined by the interest  rate spread  between the yields the Company earns on
interest earning assets and the rates it pays on interest  bearing  liabilities,
and by the relative  amounts of interest  earning  assets and  interest  bearing
liabilities.

     The following table sets forth the weighted average effective interest rate
that the Company  earned on its loan and  investment  portfolios,  the  weighted
average  effective cost of its deposits and advances,  the interest rate spread,
and net yield on  weighted  average  interest  earning  assets for the  periods.
Average balances are based on average daily balances.

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                               --------------------------------------
                                                2003            2002            2001
                                               --------------------------------------
<S>                                             <C>             <C>             <C>

Weighted average interest rate earned on:
   Interest earning deposits                    1.11%           1.50%           3.79%
   Mortgage-backed securities                   7.22            8.39            7.31
   Other investment securities                  3.23            7.45            6.68
   Loans receivable                             6.81            7.40            7.74
   FHLB stock                                   5.06            6.07            7.39
      Total interest earning assets             6.00            6.88            7.58
Weighted average interest rate cost of:
   Savings deposits                             1.82            2.85            3.58
   Interest bearing demand                      1.84            2.66            4.27
   Certificates of deposit                      3.48            3.85            5.79
   FHLB advances                                4.69            4.58            5.13
      Total interest bearing liabilities        3.01            3.59            5.25
Interest rate spread (1)                        2.99            3.29            2.33
Net yield on weighted average interest
        earning assets (2)                      3.32            3.76            3.80
-------------------------------------
(1)  Interest rate spread is calculated by subtracting combined weighted average
     interest rate cost from combined  weighted average interest rate earned for
     the period  indicated.  Interest rate spread  figures must be considered in
     light of the  relationship  between the amounts of interest  earning assets
     and interest bearing liabilities.
(2)  The net yield on weighted  average interest earning assets is calculated by
     dividing net interest income by weighted  average  interest  earning assets
     for the period indicated.

</TABLE>


     The following table describes the extent to which changes in interest rates
and changes in volume of  interest-related  assets and liabilities have affected
the Company's interest income and expense during the periods indicated. For each
category of interest earning asset and interest bearing  liability,  information
is provided  on changes  attributable  to (1)  changes in rate  (changes in rate
multiplied  by old  volume)  and  (2)  changes  in  volume  (changes  in  volume
multiplied  by old rate).  Changes  attributable  to both rate and volume  which
cannot be segregated  have been  allocated  proportionally  to the change due to
volume and the change due to rate.
<PAGE>
<TABLE>
<CAPTION>
                                                     Increase (Decrease) in Net Interest Income
                                                     -------------------------------------------
                                                                                         Total
                                                       Due to            Due to            Net
                                                        Rate             Volume          Change
                                                     -------------------------------------------
                                                                    (In thousands)
<S>                                                  <C>               <C>               <C>

Year ended December 31, 2003 compared
to year ended December 31, 2002
   Interest earning assets:
      Interest earning deposits.                     $  (105)          $     129         $    24
      Mortgage-backed securities                         (19)                (75)            (94)
      Other investment securities                        (41)                135              94
      Loans receivable                                (1,317)             (1,180)         (2,497)
      FHLB stock                                         (35)                  3             (32)
                                                     -------           ---------         -------
         Total                                        (1,517)               (988)         (2,505)
   Interest bearing liabilities:
      Savings deposits                                   358)               (126)           (484)
      Interest bearing demand                           (408)               (402)             (6)
      Certificates of deposit                           (382)               (304)           (686)
      FHLB advances                                       42                (101)            (59)
                                                     -------           ---------         -------
         Total                                        (1,106)               (129)         (1,235)
                                                     -------           ---------         -------
   Net change in net interest income                 $  (411)          $    (859)        $(1,270)
                                                     =======           =========         =======

Year ended December 31, 2002 compared
to year ended December 31, 2001
   Interest earning assets:
      Interest earning deposits                      $  (139)          $     329         $   190
      Mortgage-backed securities                          24                 (49)            (25)
      Other investment securities                         19                (155)           (136)
      Loans receivable                                  (410)              8,700           8,290
      FHLB stock                                         (18)                139             121
                                                     -------           ---------         -------
         Total                                          (524)              8,964           8,440
                                                     -------           ---------         -------
   Interest bearing liabilities:
      Savings deposits                                   (25)              1,015             990
      Interest bearing demand                            448)                628             180
      Certificates of deposit                         (1,255)              2,354           1,099
      FHLB advances                                      (85)              1,218           1,133
                                                     -------           ---------         -------
         Total                                        (1,813)              5,215           3,402
                                                     -------           ---------         -------
   Net change in net interest income                 $ 1,289              $3,749         $ 5,038
                                                     =======           =========         =======

</TABLE>
<PAGE>

Financial  Condition  at December 31, 2003  Compared to  Financial  Condition at
December 31, 2002

     Total assets  decreased  approximately  $7.7  million,  or 2.9%,  to $261.6
million at December 31, 2003, from $269.3 million at December 31, 2002. Although
asset growth is a primary goal of the Company,  minimal growth was projected for
the years 2002 and 2003 due to the  acquisition of Montgomery.  This  projection
was made based on both Union  Federal and  Montgomery  being located in the same
market area with a duplication of customer base.  During 2003 a commercial  loan
officer was added at our Lafayette, Indiana location to increase Union Federal's
presence in the  Tippecanoe  County market and to generate both loan and deposit
growth. The decrease was primarily due to the use of short-term interest-earning
deposits to repay borrowings.  Net loans increased by $4.5 million,  or 2.1%, to
$221.2  million at  December  31,  2003.  Short-term  interest-earning  deposits
decreased  $24.5  million,  or 68.8% from $35.6  million at December 31, 2002 to
$11.1 million at December 31, 2003.  These  deposits were primarily used to fund
loan growth, for investment purposes and the repayment of Federal Home Loan Bank
advances.  Total  investment  securities  increased $4.8 million during the year
ended  December 31, 2003.  Investment  securities  available for sale  increased
approximately $5.9 million and investment  securities held to maturity decreased
$1.1  million due to  maturities  and  principal  repayment  on  mortgage-backed
securities.  Premises and equipment  increased $1.4 million from $3.2 million at
December  31, 2002 to $4.6  million at December  31, 2003  primarily  due to the
remodeling  of  Union   Federal's   home  office.   The  investment  in  limited
partnerships  increased  $1.4 million  primarily  due to an  investment by Union
Federal with Pedcor  Investments-2003-LIX,  L.P., an Indiana limited partnership
that was  established  to  organize,  build,  own,  operate and lease a 128-unit
residential  rental  community  in  Hamilton,  Butler  County,  Ohio,  known  as
Knollwood   Crossing,   II.  Knollwood   Crossing  II  will  be  operated  as  a
multi-family,  low- and moderate-income  housing project.  Real estate owned and
held for investment decreased $259,000,  or 16.1%, from $1.6 million at December
31, 2002 to $1.3 million at December 31, 2003. In connection with the Montgomery
acquisition,  the  balances of goodwill and core  deposit  intangibles  are $2.4
million and $398,000 respectively.  Goodwill is reviewed annually for impairment
and core deposit  intangibles are currently being amortized.  A purchase of bank
owned  life  insurance  at a cost of $5.0  million  was made  during  the second
quarter of 2003. At December 31, 2003 the cash surrender value of life insurance
was $5.1 million.

     Loans and  Allowance  for Loan  Losses.  Average  loans for the year  ended
December  31, 2003 were $216.4  million  compared to average  loans for the 2002
period of $233.0  million,  a decrease of $16.6  million.  The average  rates on
loans were 7.4% for 2002 and 6.8% for 2003, a decrease of 59 basis  points.  The
allowance  for loan losses  increased  from $1.0 million at December 31, 2002 to
$1.2 million at December 31, 2003,  an increase of $191,000.  The  allowance for
loan losses as a percentage of total loans  increased  from .47% at December 31,
2002 to .55% at December 31, 2003. The increase in allowance for loan losses was
a result of a $238,000  provision for loan losses during the year ended December
31, 2003 and a loan loss recovery of $8,000  partially offset by a charge off of
$55,000.  The ratio of the allowance for loan losses to nonperforming  loans was
33.6% at  December  31,  2002 and at  December  31,  2003.  Nonperforming  loans
increased from $3.1 million at December 31, 2002 to $3.6 million at December 31,
2003.
<PAGE>

     Deposits.  Deposits  remained  virtually  the same at December  31, 2003 as
compared  to  December  31,  2002,  increasing  $724 to  $190.2  million.  Union
Federal's deposit growth has been limited due to the duplication of the customer
base of Union  Federal  and  Montgomery.  The limit on deposit  insurance  still
effects the  movement of deposits as prior  Montgomery  certificates  of deposit
mature.  Union  Federal  is  currently  in  the  process  of and  will  continue
developing new deposit products to attract new depositors.

     Borrowed Funds. Borrowed funds decreased $6.1 million from $40.0 million at
December 31, 2002 to $33.9  million at December 31, 2003.  Borrowings  decreased
$5.9 million due to the  scheduled  repayment of Federal Home Loan Bank advances
and a decrease of $171,000 in the note payable to Pedcor Investments - 1993-XVI,
LP  ("Pedcor"),  a limited  partnership  organized  to build,  own and operate a
48-unit apartment complex.  The note to Pedcor was used to fund an investment in
the Pedcor low income housing income tax credit limited partnership and bears no
interest so long as there exists no event of default.

     Shareholders' Equity.  Shareholder's equity decreased $1.7 million to $35.5
million at December 31, 2003. The decrease was primarily due to stock repurchase
of $3.0 million,  the payment of cash  dividends of $1.2 million and  unrealized
losses on securities of $55,000.  These  decreases were partially  offset by net
income for the year ended  December  31, 2003 of $2.3  million;  Employee  Stock
Ownership Plan shares earned of $159,000; and unearned compensation amortization
of $113,000.

Financial  Condition  at December 31, 2002  Compared to  Financial  Condition at
December 31, 2001

     Total assets increased  approximately  $126.9 million,  or 89.1%, to $269.3
million at December 31,  2003,  from $142.4  million at December  31, 2001.  The
increase was primarily due to the acquisition of Montgomery. Net loans increased
by $95.0 million,  or 78.0%, to $216.7 million at December 31, 2003.  During the
twelve months ended December 31, 2003, net loans of $117.0 million were added as
a result of the  Montgomery  acquisition  while loan  payoffs  exceeded new loan
production,  net  of  other  adjustments,   by  $22.0  million.  Cash  and  cash
equivalents  increased  by $23.0 for the twelve month  period.  The increase was
primarily due to the net cash  received in the  Montgomery  acquisition  and the
repayment of loans offset by cash used for stock  repurchases and the outflow of
deposits.  Investment  securities held to maturity decreased $1.2 million during
the year ended  December 31, 2003  primarily due to funds received on investment
securities that were called prior to their scheduled maturity dates and payments
received on mortgage-backed  securities.  Premises and equipment  increased $2.8
million from  $399,000 at December 31, 2001 to $3.2 million at December 31, 2003
also due to the Montgomery acquisition.  The acquisition of Montgomery increased
Union  Federal's  full-service  offices from two to six.  Due to the  Montgomery
acquisition transaction,  foreclosed assets and real estate held for development
increased from $9,000 at December 31, 2001 to $1.6 million at December 31, 2003.
In connection with the Montgomery  acquisition,  these properties were marked to
market  and are  currently  for sale.  Also in  connection  with the  Montgomery
acquisition,  Goodwill of $2.3 million and a core deposit intangible of $590,000
was recorded.  Goodwill will be reviewed  annually for  impairment  and the core
deposit intangible will be amortized over seven years.

     Loans and  Allowance  for Loan  Losses.  Average  loans for the year  ended
December  31, 2003 were $233.0  million  compared to average  loans for the 2001
period of $115.6  million,  an  increase of $117.4  million.  The  increase  was
primarily due to the acquisition of Montgomery.  The average rates on loans were
7.7% for 2001 and 7.4% for 2003, a decrease of 34 basis  points.  The  allowance
for loan losses  increased from $520,000 at December 31, 2001 to $1.0 million at
December 31, 2003. The  acquisition of Montgomery  accounted for $379,000 of the
$510,000 increase.  The allowance for loan losses as a percentage of total loans
increased  from .43% at  December  31, 2001 to .47% at December  31,  2003.  The
increase in the allowance  for loan losses was a result of a $372,000  provision
for loan  losses for the year ended  December  31,  2003 and  $379,000  from the
Montgomery  acquisition  offset by  charge  offs of  $241,000.  The ratio of the
allowance for loan losses to nonperforming  loans was 76.3% at December 31, 2001
compared to 33.6% at December  31,  2003.  Nonperforming  loans  increased  from
$682,000 at December 31, 2001 to $3.1 million at December 31, 2003. The increase
in substandard loans was primarily due to the addition of substandard loans from
the Montgomery acquisition and the addition of $1.3 million of substandard loans
from a single borrower, which is secured by 12 properties with favorable loan to
value ratios.
<PAGE>

     Deposits.  Deposits  increased by $108.5  million to $190.2  million during
2003,  of  which  $117.4  million  were  added  as a  result  of the  Montgomery
acquisition.  Excluding the deposits acquired,  deposits decreased approximately
$8.9 million with certificates of deposit decreasing approximately $22.1 million
and other deposits increasing approximately $13.2 million.

     Borrowed  Funds.  Borrowed funds  increased $14.2 million from December 31,
2001 to December 31, 2003. The acquisition of Montgomery  added $17.6 million of
borrowed funds.  Excluding the borrowings  acquired,  borrowings  decreased $3.4
million due to the  scheduled  repayment  of Federal  Home Bank  advances in the
amount of $3.2 million and a decrease in the note payable to Pedcor  Investments
- 1993-XVI,  LP ("Pedcor"),  a limited  partnership  organized to build, own and
operate a 48-unit apartment complex, of $174,000. The note to Pedcor was used to
fund an investment in the Pedcor low income  housing  income tax credit  limited
partnership and bears no interest so long as there exists no event of default.

     Shareholders' Equity.  Shareholders' equity increased $3.4 million to $37.2
million at December 31, 2003. The increase was primarily due to shares issued in
connection  with the  acquisition of Montgomery,  net of costs, of $9.0 million;
net income for the year ended December 31, 2003 of $2.8 million;  Employee Stock
Ownership Plan shares earned of $143,000;  unearned compensation amortization of
$264,000;  and exercised  options of $117,000.  These  increases  were offset by
stock repurchases of $7.4 million, cancellation of shares of Company stock owned
by Montgomery of $257,000 and cash dividends of $1.2 million.

Comparison of Operating Results For Years Ended December 31, 2003 and 2002

     General. Net income decreased $471,000, or 16.8%, from $2.8 million for the
year ended  December  31, 2002 to $2.3  million for the year ended  December 31,
2003.  The decrease was  primarily  due to a decrease in net interest  income of
$1.1  million,  or 12.0%,  to $8.3 million for the year ended  December 31, 2003
from $9.4 million for the year ended  December  31, 2002.  The return on average
assets was 0.85% and 1.03% and the return on average  equity was 6.45% and 7.19%
for the years ended December 31, 2003 and 2002, respectively.

     Interest Income.  Total interest income was $15.5 million for 2003 compared
to $18.0 million for 2002. Interest income decreased primarily due to a decrease
in the yield on interest  earning  assets from 6.88% for the year ended December
31, 2002 to 6.00% for the year ended December 31, 2003. Average interest earning
assets also  decreased  from $261.4  million for the 2002  comparable  period to
$257.9 million for the 2003 period.

     Interest  Expense.  Interest expense decreased $1.2 million to $6.9 million
for the year  ended  December  31,  2003 from $8.2  million  for the year  ended
December 31, 2002.  The decrease was  primarily due to a decrease in the cost of
interest-bearing  liabilities from 3.59% for the year ended December 31, 2002 to
3.01% for the year ended December 31, 2003.  This decrease was partially  offset
by an increase in average  interest-bearing  liabilities  from $227.1 million to
$230.3  million for the years ended  December  31, 2002 and 2003,  respectively.
Also  offsetting the decrease in the cost of  interest-bearing  liabilities  was
amortization of purchase  accounting  adjustments which reduced interest expense
by $503,000 for the 2003  twelve-month  period  compared to $1.1 million for the
2002 twelve-month period.

     Provision for Loan Losses. The provision for loan losses for the year ended
December  31, 2003 was  $238,000  as  compared  to  $372,000  for the year ended
December  31,  2002.  The loan charge off during 2003 was $55,000  compared to a
$240,000 charge off taken during the 2002 comparable  period. The balance of the
allowance for loan losses was considered adequate,  based on size, condition and
components of the loan portfolio.

     Other Income.  Other income increased from $349,000 for 2002 to $479,000 in
2003.  Service charges on deposit accounts  decreased  $12,000 from $155,000 for
the 2002 period to $143,000 for the  comparable  2003 period.  Union  Federal is
currently  analyzing the fees charged as service charges on deposit  accounts to
determine the fee structure as compared to local  competitors.  Management is of
the opinion fees can be increased  and still  remain  competitive  in the market
area. Due to the operating results of the limited partnership,  equity in losses
of the limited partnership  increased from losses of $20,000 recorded in 2002 to
losses of $21,500 in 2003. The investment in the limited partnership  represents
a 99% equity  investment  in Pedcor.  In addition to recording the equity in the
losses of  Pedcor,  a benefit of low income  housing  income tax  credits in the
amount of $178,000 for both 2003 and 2002 was  recorded.  There were no gains on
securities recorded during 2003 compared to $9,000 in 2002.  Miscellaneous other
income increased $153,000 to $358,000 for the year ended 2003. This increase was
primarily due to the increase in cash value of bank owned life  insurance in the
amount of $149,000.
<PAGE>

     Salaries and Employee  Benefits.  Salaries and employee  benefits were $2.9
million for the year ended  December 31, 2003, an increase of $50,000,  or 1.8%,
from the 2002 comparable period.  Normal increases in employee  compensation and
the cost of employee  related benefits were the primary causes for the increase.
While the  workforce  at Union  Federal's  main office  should  remain  somewhat
constant,  growth of the customer  base in other branch  offices may require the
addition of staff to provide quality service.

     Net  Occupancy  and Equipment  Expense.  Occupancy  and equipment  expenses
decreased  $11,000 to $612,000 for the year ended  December 31, 2003 compared to
the 2002 period.  This decrease was primarily  due to the  consolidation  of the
main office from two  locations  to one during the 2003  period.  Union  Federal
completed  the  remodeling  of its home office  located at 221 East Main Street,
Crawfordsville,  Indiana  in the fourth  quarter  of 2003.  With the sale of the
previous home office of Montgomery  at 119 East Main Street,  Crawfordsville  in
January  2004,  the net  effect  on  depreciation  expense  for 2004  will be an
approximate increase of $42,000 as compared to 2003.  Additional savings in real
estate tax expense, insurance expense and utility expense exceeding $15,000 will
be realized from the sale of the 119 East Main Street building.

     Legal and Professional  Fees. Legal and professional fees were $270,000 for
the year ended  December 31, 2003  compared to $233,000 for the 2002 period,  an
increase of $37,000. This increase was due to an increase of $69,000 in the cost
of  contractual  services  which  includes  information  technology  support and
services.  This increase was partially offset by a decrease in legal services of
$15,000 and a decrease in audit and accounting services of $17,000.

     Data Processing.  Data processing  expense  decreased from $812,000 for the
year ended  December 31, 2002 to $393,000 for the  comparable  period in 2003, a
decrease  of  $419,000.  During the first  quarter  of 2002 a one time  $411,000
termination fee for data processing services was expensed in connection with the
Montgomery acquisition.

     Other Expenses. Other expenses, consisting primarily of expenses related to
advertising,  directors' fees, supervisory examination fee, supplies and postage
increased $115,000 to $1.2 million for 2003 compared to 2002. The major expenses
contributing  to the increase in other  expenses were an increase in advertising
expense  of  $66,000  due to the  implementation  of an  advertising  program to
promote  Union  Federal's  products and services  during 2003 and an increase in
directors' fees of $41,000.  Total  advertising  expense and directors' fees for
2003 were  $138,000  and  $137,000  respectively.  During 2002  advertising  was
basically  used  for  name  recognition  only  due to  the  ongoing  review  and
consolidation of products and services  previously  offered by Union Federal and
Montgomery. During 2003 an advertising campaign was established to promote a new
image and the products  offered.  Directors fees increased due to an increase in
retainer  and  regular  meeting  fees  and the  establishment  of a fee  payment
schedule for committee meetings.

     Income Tax Expense.  Income tax decreased  $307,000 during 2003 compared to
2002.  The  effective tax rate was 33.5% and 34.5% for the  respective  2003 and
2002 periods. For both periods, the primary difference between the effective tax
rate and the statutory tax rate relates to the benefit  received from low income
housing tax credits. The additional reduction for 2003 in the effective tax rate
was caused by the tax free income on bank owned life  insurance.

Comparison of Operating Results For Years Ended December 31, 2002 and 2001

     General. Net income increased $951,000, or 51.4%, from $1.9 million for the
year ended  December  31, 2001 to $2.8  million for the year ended  December 31,
2002. The increase in net income was primarily  attributable  to the acquisition
of  Montgomery  on  January  2, 2002 with an  increase  of $5.0  million  in net
interest  income offset,  in part, by an increase of $3.4 million in total other
expenses.  The  return on  average  assets was 1.03% and 1.44% and the return on
average  equity was 7.19% and 5.38% for the years  ended  December  31, 2002 and
2001, respectively.

     Interest Income.  Total interest income was $18.0 million for 2002 compared
to $9.5 million for 2001. Interest income increased primarily due to an increase
in average  interest  earning assets from $125.9 for the year ended December 31,
2001 to $261.4 million for the year ended December 31, 2002, which was offset by
a decrease in the yield on interest  earning  assets from 7.58%  during the 2001
period to 6.88% during the 2002 period.

     Interest  Expense.  Interest expense increased $3.4 million to $8.2 million
for the year  ended  December  31,  2002 from $4.8  million  for the year  ended
December  31,  2001.  The  increase  was due to an increase in average  interest
bearing liabilities from $90.7 million to $227.1 million,  which was offset by a
decrease in the cost of interest bearing liabilities from 5.25% to 3.59% for the
years ended December 31, 2001 and 2002, respectively.
<PAGE>

     Provision for Loan Losses. The provision for loan losses for the year ended
December  31,  2002 was  $372,000  as  compared  to  $40,000  for the year ended
December 31, 2001. In addition to the  acquisition  of  Montgomery,  the primary
reason for the increase in the  provision  related to a $240,000 loan charge off
taken in the  fourth  quarter of 2002  based on  updated  appraisal  information
received  during that quarter.  The balance of the provision for loan losses was
considered adequate, based on growth, size, condition and components of the loan
portfolio.

     Other Income  (Losses).  Other  income  (losses)  increased  from income of
$113,000  for the year ended  December  31, 2001 to income of  $349,000  for the
comparable  period  in  2002.  Due  to the  operating  results  of  the  limited
partnership,  equity in losses of the limited partnership  decreased from losses
of $55,000  recorded in 2001 to losses of $20,000 in 2002. The investment in the
limited partnership represents a 99% equity investment in Pedcor. In addition to
recording  the equity in the losses of Pedcor,  a benefit of low income  housing
income  tax  credits  in the  amount  of  $178,000  for  both  2002 and 2001 was
recorded.  In addition,  other income increased  $201,000 in 2002 as compared to
2001 due primarily to an increase in fee income. Gains on sales of securities of
$9,000 were recorded during 2002 as compared to no gains during 2001.

     Salaries and Employee  Benefits.  Salaries and employee  benefits were $2.8
million for the year ended  December  31, 2002  compared to $1.3 million for the
2001  period.  This  increase  was  primarily  due to the growth of the  Company
through the acquisition of Montgomery. Normal increases in employee compensation
and related payroll taxes also contributed to the increase.

     Net  Occupancy  and Equipment  Expense.  Occupancy  and equipment  expenses
increased  $502,000 to $623,000 for the year ended December 31, 2002 compared to
the 2001 period.  This  increase was  primarily due to the addition of four full
service offices, from two to six, through the Montgomery acquisition.

     Legal and Professional  Fees. Legal and professional fees were $233,000 for
the year ended  December 31, 2002 compared to $124,000 for the 2001 period,  and
increase of $109,000.

     Data  Processing.  Data processing  expense  increased from $95,000 for the
year ended December 31, 2001 to $812,000 for the comparable  period in 2002, and
increase  of  $717,000.  During the first  quarter  of 2002 a one time  $411,000
termination  fee for  data  processing  services  was  expensed.  The  remaining
increase was due to the growth of the Company through the Montgomery acquisition
and costs related to the conversion of data onto a single processing system.

     Other Expenses. Other expenses, consisting primarily of expenses related to
advertising, directors' fees, supervisory examination fee, supplies, and postage
increased,  $636,000 to $1.0 million for 2002 compared to 2001.  These increases
were  primarily due to the increased  expenses  associated  with the  Montgomery
acquisition.

     Income Tax  Expense.  Income tax  expense  increased  $552,000  during 2002
compared to 2001.  The effective tax rate was 34.5% and 33.4% for the respective
2002 and 2001 periods.  For both  periods,  the primary  difference  between the
effective tax rate and the  statutory  tax rate relates to the benefit  received
from low income housing tax credits.

Liquidity and Capital Resources

     The Financial  Regulatory Relief and Economic Efficiency Act of 2000, which
was  signed  into law on  December  27,  2000,  repealed  the  former  statutory
requirement that all savings  associations  maintain an average daily balance of
liquid assets in a minimum  amount of not less than 4% or more than 10% of their
withdrawable  accounts plus  short-term  borrowings.  The OTS adopted an interim
final rule in March 2001 that  implemented this revised  statutory  requirement,
although savings associations remain subject to the OTS regulation that requires
them to maintain sufficient liquidity to ensure their safe and sound operation.

     The following is a summary of the Company's cash flows,  which are of three
major  types.  Cash flows from  operating  activities  consist  primarily of net
income generated by cash.  Investing  activities generate cash flows through the
origination and principal  collection on loans as well as purchases and sales of
securities.  Investing  activities will generally  result in negative cash flows
when the Company experiences loan growth.  Cash flows from financing  activities
include savings deposits,  withdrawals and maturities and changes in borrowings.
The following table summarizes cash flows for each year in the three-year period
ended December 31, 2003.
<PAGE>
<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                      ------------------------------------------
                                                                        2003             2002           2001
                                                                      ------------------------------------------
                                                                                   (In thousands)
<S>                                                                   <C>              <C>            <C>
Operating activities                                                  $  2,760         $  4,276       $  1,971
                                                                      --------         --------       --------
Investing activities:
Investment securities
  Purchase of investment securities available for sale                 (11,000)              --             --
  Proceeds from maturities and sales of investment
     securities available for sale                                       5,000               76             --
  Proceeds from maturities and paydowns of
     mortgage- backed securities held to maturity                        1,146              827            437
  Proceeds from maturities of investment securities
     held to maturity                                                       --              400          4,315
Investment in limited partnership                                       (1,400)              --             --
Purchase of loans                                                           --               --           (173)
Other net change in loans                                               (5,123)          20,949        (12,111)
Purchase of FHLB of Indianapolis stock                                      --               --           (487)
Additions to real estate owned                                            (162)              --             --
Proceeds on sale of foreclosed real estate                                 663              951             --
Purchases of premises and equipment                                     (1,682)            (608)           (63)
Premium on life insurance                                               (5,000)              --             --
Net cash received in acquisition                                            --           15,830             --
Other investing activities                                                (101)               6             --
                                                                      --------         --------       --------
  Net cash provided (used) by investing activities                     (17,659)          38,431         (8,082)
                                                                      --------         --------       --------
Financing activities:
Net change in
  Interest bearing demand and savings deposits                          10,442           13,195          8,883
  Certificates of deposits                                             (10,119)         (21,173)             2
Proceeds from borrowings                                                 1,400           20,000         19,000
Repayment of borrowings                                                 (7,328)         (23,255)        (8,307)
Net change in advances by borrowers For taxes and
  insurance                                                                 39              (44)            53
Cash dividends                                                          (1,233)          (1,112)        (1,254)
Stock options exercised                                                     --              117             --
Repurchase of common stock                                              (3,000)          (7,414)        (3,456)
                                                                      --------         --------       --------
  Net cash provided (used) by financing activities                      (9,799)         (19,686)        14,921
                                                                      --------         --------       --------
Net change in cash and cash equivalents                               $(24,698)        $ 23,021       $  8,810
                                                                      ========         ========       ========
</TABLE>


     Pursuant to OTS capital  regulations,  savings  associations must currently
meet a 1.5% tangible  capital  requirement,  a leverage  ratio (or core capital)
requirement of 3% to 5% depending upon the association's  supervisory rating for
safety and soundness,  and a total risk-based  capital to  risk-weighted  assets
ratio of 8%. At December 31, 2003,  Union Federal's  capital levels exceeded all
applicable  regulatory capital  requirements  currently in effect. The following
table provides the minimum regulatory  capital  requirements and Union Federal's
capital ratios as of December 31, 2003:

                                         At December 31, 2003
--------------------------------------------------------------------------------
                           OTS Requirement       Union Federal's Capital Level
--------------------------------------------------------------------------------
                           % of                  % of                   Amount
Capital Standard          Assets   Amount      Assets(1)    Amount     of Excess
--------------------------------------------------------------------------------
                                          (Dollars in thousands)
Tangible capital           1.5%    $ 3,874      11.72%     $30,270     $26,396
Core capital (2)           4.0       10,331     11.72       30,270      19,939
Risk-based capital         8.0       13,538     18.06       30,560      17,022
--------------------
(1)  Tangible and core capital levels are shown as a percentage of total assets;
     risk-based  capital  levels  are  shown as a  percentage  of  risk-weighted
     assets.
(2)  The OTS core capital requirement for savings  associations is comparable to
     the OCC  requirement  for national  banks.  The OTS regulation  requires at
     least 3% of total adjusted assets for savings associations that receive the
     highest  supervisory rating for safety and soundness,  and 4% to 5% for all
     other  savings  associations.  Union  Federal  is in  compliance  with this
     regulation.
<PAGE>

     As  of  December  31,  2003,   management  is  not  aware  of  any  current
recommendations by regulatory authorities which, if they were to be implemented,
would have, or are reasonably likely to have, a material adverse effect on Union
Federal's  liquidity,  capital  resources or results of operations.

Off-Balance Sheet Arrangements

     As of the  date of this  Annual  Report,  the  Company  does  not  have any
off-balance  sheet  arrangements  that have or are  reasonably  likely to have a
current  or  future  effect  on the  Company's  financial  condition,  change in
financial  condition,  revenues or expenses,  results of operations,  liquidity,
capital  expenditures or capital  resources that are material to investors.  The
term "off-balance sheet arrangement" generally means any transaction, agreement,
or other  contractual  arrangement  to which an entity  unconsolidated  with the
Company is a party and under which the Company  has (i) any  obligation  arising
under a guarantee contract,  derivative instrument or variable interest; or (ii)
a retained  or  contingent  interest  in assets  transferred  to such  entity or
similar arrangement that serves as credit,  liquidity or market risk support for
such assets.

Contractual Obligations

     In the  ordinary  course of  operations,  the Company  enters into  certain
contractual  obligations.   Such  obligations  include  contracts  with  service
providers as well as leases for  premises and  equipment.  The  following  table
summarizes  the  Company's   significant  fixed  and  determinable   contractual
obligations, by payment date, at December 31, 2003.
<TABLE>
<CAPTION>
                                                                Contractual Obligations Due By Period
                                                                One             Three
                                              Within          Year to         Years to           After
(Dollars in thousands)                        One Year       Three Years      Five Years       Five Years         Total
                                             ---------------------------------------------------------------------------
<S>                                           <C>             <C>              <C>             <C>             <C>
Deposits without stated maturity              $ 96,168        $     --         $     --        $    --         $  96,168
Certificates of deposit                         53,832          23,848          16,344              --            94,024
Borrowings                                         253           3,730          10,000          19,963            33,946
Service contract (1)                               396             297              --              --               693
Operating lease (2)                                 21              41              41              --               103
                                              --------        --------         -------         -------          --------
Total contractual obligations                 $150,670        $ 29,916         $26,385         $19,963          $224,934
                                              ========        ========         =======         =======          ========
----------------------
(1)  The service  contract is with Aurum  Technologies  to provide Union Federal
     with service  bureau  support for  processing of deposit and loan accounts.
     The contract fees are based on number of accounts  processed and additional
     reporting  services  provided  from time to time.  The  amount  shown is an
     estimate  of cost  based on  current  account  support  and  reporting  fee
     structures. The contract expires in September 2005.
(2)  The  operating  lease is for a branch  office  offering  lobby and drive-up
     services  located  at 1688  Crawfordsville  Square  Drive,  Crawfordsville,
     Indiana.  The lease  expires on December  31,  2008.

</TABLE>
Impact of Accounting Changes

     In May 2003,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 150,  Accounting for
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity. SFAS 150 establishes standards for classification and measurement in the
statement  of  financial   position  of  certain   financial   instruments  with
characteristics  of both  liabilities  and equity.  It  requires  that an issuer
classify a financial  instrument  that is within its scope as a  liability.  The
FASB's Staff Position 150-3 deferred  indefinitely  the guidance in SFAS No. 150
on certain mandatorily redeemable noncontrolling interests.

     In January 2003, the FASB issued  Interpretation  No. 46,  Consolidation of
Variable Interest  Entities,  an Interpretation of Accounting  Research Bulletin
No.  51, and in  December  2003 the FASB  deferred  certain  effective  dates of
Interpretation  No. 46. For all variable  interest  entities  other than special
purpose  entities,  the revised  Interpretation  is effective for periods ending
after March 15, 2004. For variable  interest  entities meeting the definition of
special purpose  entities under earlier  accounting  rules,  the  Interpretation
remains effective for periods ending after December 31, 2003. The Interpretation
requires the consolidation of entities in which an enterprise absorbs a majority
of the entity's  expected losses,  receives a majority of the entity's  expected
residual  returns,  or both,  as a result  of  ownership,  contractual  or other
financial   interests  in  the  entity.   Currently,   entities  are   generally
consolidated  by an  enterprise  when  it  has a  controlling  interest  through
ownership  of a  majority  voting  interest  in  the  entity.  The  Company  has
determined that it has no such instruments.
<PAGE>
     In April 2003, the FASB issued SFAS No. 149,  Amendment of Statement 133 on
Derivative   Instruments  and  Hedging  Activities.   This  statement  clarifies
reporting of contracts as either derivatives or hybrid instruments.  The Company
has determined that it has no such instruments.

     In December 2002, the FASB issued SFAS No. 148,  Accounting for Stock-based
Compensation - Transition and Disclosure, which provides guidance for transition
from the intrinsic value method of accounting for stock-based compensation under
Accounting  Principles Board ("APB") Opinion No. 25 to SFAS No. 123's fair value
method of accounting,  if a company so elects.  The Company  applies APB Opinion
No. 25 and related  Interpretations  in  accounting  for the stock  option plan.
Accordingly,  no compensation costs have been recognized, as all options granted
had an exercise price equal to the market value of the  underlying  common stock
on the date of grant. Had compensation  cost for the Company's stock option plan
been  recorded  based on the fair value at the grant dates for awards  under the
plan consistent  with the method  prescribed by SFAS No. 123, net income and net
income per share would have been adjusted to the proforma  amounts  indicated in
Note 1.

     In  November  2002,  FASB  Interpretation  No. 45 ("FIN  45"),  Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others was issued. FIN 45 requires the disclosures
to be made by a guarantor  in its  financial  statements  about its  obligations
under certain  guarantees that it has issued. It also clarifies that a guarantor
is required to recognize,  at the inception of a guarantee,  a liability for the
fair value of the  obligation  undertaken  in issuing  the  guarantee.  The most
significant FIN45 instruments of the Company are standby letters of credit.  The
Company has determined that its standby letters of credit  obligations under FIN
45 are not material for disclosure.

Impact of Inflation and Changing Prices

     The consolidated  financial  statements presented herein have been prepared
in accordance with generally accepted  accounting  principles.  These principles
require the measurement of financial  position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

     The Company's  primary assets and liabilities are monetary in nature.  As a
result,  interest  rates  have  a  more  significant  impact  on  the  Company's
performance  than the effects of general  levels of inflation.  Interest  rates,
however,  do not  necessarily  move  in the  same  direction  or with  the  same
magnitude as the price of goods and services,  since such prices are affected by
inflation.  In a period of rapidly  rising  interest  rates,  the  liquidity and
maturities  structures of the Company's  assets and  liabilities are critical to
the maintenance of acceptable performance levels.

     The  principal  effect of  inflation,  as distinct  from levels of interest
rates, on earnings is in the area of noninterest expense.  Such expense items as
employee  compensation,  employee benefits and occupancy and equipment costs may
be  subject to  increases  as a result of  inflation.  An  additional  effect of
inflation  is the  possible  increase  in the  dollar  value  of the  collateral
securing loans that the Company has made. The Company is unable to determine the
extent,  if any, to which  properties  securing  its loans have  appreciated  in
dollar value due to inflation.

Quarterly Results of Operations

     The  following  table sets forth  certain  quarterly  results for the years
ended December 31, 2003 and 2002.
<TABLE>
<CAPTION>

                           Net      Provision             Basic         Diluted
Quarter  Interest Interest Interest For Loan    Net      Earnings       Earnings     Dividends
Ended    Income   Expense  Income   Losses      Income   Per Share      Per Share    Per Share
-----------------------------------------------------------------------------------------------
                         (Dollars in thousands except for per share data)
2003:
<S>      <C>      <C>      <C>      <C>         <C>      <C>            <C>             <C>
March    $4,226   $1,921   $2,305   $  30       $645     $0.31          $0.30           $0.15
June      3,952    1,785    2,167      30        551      0.28           0.28            0.15
September 3,823    1,669    2,154     118        668      0.35           0.34            0.15
December  3,480    1,552    1,928      60        468      0.24           0.24            0.15

2002:

March    $4,594   $2,108   $2,486    $ 40       $647     $0.30          $0.30           $0.11
June      4,685    2,104    2,581      20        893      0.39           0.39            0.12
September 4,465    2,036    2,429      30        699      0.31           0.31            0.14
December  4,242    1,914    2,328     282        563      0.26           0.26            0.15
</TABLE>

<PAGE>

Quantitative and Qualitative Disclosures about Market Risks

     An important component of Union Federal's asset/liability management policy
includes  examining the interest rate  sensitivity of its assets and liabilities
and  monitoring  the  expected  effects  of  interest  rate  changes  on its net
portfolio value.

     An asset or liability is interest  rate  sensitive  within a specific  time
period if it will mature or reprice within that time period.  If Union Federal's
assets  mature  or  reprice  more  quickly  or  to a  greater  extent  than  its
liabilities,  Union  Federal's net portfolio value and net interest income would
tend to increase  during periods of rising  interest  rates but decrease  during
periods of falling interest rates. Conversely,  if Union Federal's assets mature
or reprice  more  slowly or to a lesser  extent  than its  liabilities,  its net
portfolio value and net interest income would tend to decrease during periods of
rising  interest rates but increase  during periods of falling  interest  rates.
Union  Federal's  policy has been to mitigate the interest rate risk inherent in
the historical  business of savings  associations,  the origination of long-term
loans funded by short-term deposits,  by pursuing certain strategies designed to
decrease the  vulnerability of its earnings to material and prolonged changes in
interest rates.

     Because of the lack of  customer  demand for  adjustable  rate loans in its
market area, Union Federal  primarily  originates  fixed-rate real estate loans,
which  accounted for  approximately  74.2% of its loan portfolio at December 31,
2003.  To manage the interest  rate risk of this type of loan  portfolio,  Union
Federal  limits  maturities  of  fixed-rate  loans to no more than 20 years.  In
addition,  Union Federal  continues to offer and attempts to increase its volume
of adjustable  rate loans when market  interest rates make these type loans more
attractive to customers.

     Management  believes  it is  critical  to manage the  relationship  between
interest  rates and the effect on Union  Federal's net portfolio  value ("NPV").
This approach  calculates the  difference  between the present value of expected
cash  flows  from  assets  and the  present  value of  expected  cash flows from
liabilities,  as well as cash  flows from  off-balance  sheet  contracts.  Union
Federal  manages assets and liabilities  within the context of the  marketplace,
regulatory  limitations and within limits  established by its Board of Directors
on the amount of change in NPV which is acceptable  given certain  interest rate
changes.

     The Board of  Directors  has  established  targets  for minimum NPV ratios.
Currently  minimum  targets for NPV ratios are 13%, 12% and 11% for increases of
100,  200 and 300 basis  points,  respectively,  and 15% for a 100  basis  point
decline.  Monitoring of the change in NPV ratios has an effect on the maturities
of loan and savings  products  offered by Union Federal.  Current NPV ratios and
potential  changes in NPV  ratios are also  reviewed  to  determine  the type of
investments  made and  borrowings  obtained by Union  Federal.  Union Federal is
currently  reviewing  available  options for the sale of loans in the  secondary
market. This option would be another means of maintaining acceptable NPV ratios.
<PAGE>

     Presented  below, as of December 31, 2003 and 2002, is an analysis of Union
Federal's interest rate risk as measured by changes in NPV for instantaneous and
sustained  parallel  shifts  in the yield  curve,  in 100  basis  points.  It is
estimated that at December 31, 2003, NPV would decrease 22% and 34% in the event
of 200 and 300 basis point  increases  in market  interest  rates  respectively,
compared to 12% and 22% for the same increases at December 31, 2002. Information
was not available  for 200 and 300 point  decreases at the end of 2002 and 2003.
At December  31, 2003,  2% of the present  value of Union  Federal's  assets was
approximately $5.2 million. The interest rate risk of a 200 basis point increase
in market rates was $8.6 million at December 31, 2003.

                                December 31, 2003
--------------------------------------------------------------------------------
                    Net Portfolio Value                 NPV as % of PV of Assets
       Change       -------------------                 ------------------------
      In Rates     $ Amount      $ Change    % Change     NPV Ratio    Change
      --------     --------      --------    --------     ---------    ------
                             (Dollars in thousands)
     + 300 bp *    $26,001      $(13,627)      (34)%      10.30%     (427) bp
     + 200 bp       30,989        (8,638)      (22)       11.96      (262) bp
     + 100 bp       35,792        (3,835)      (10)       13.46      (111) bp
         0 bp       39,628            --        --        14.57        --
     - 100 bp       40,665         1,037         3        14.76        19  bp


         Interest Rate Risk Measures: 200 Basis Point Rate Shock

     Pre-Shock NPV Ratio: NPV as % of PV of Assets        14.57%
     Exposure Measure: Post-Shock NPV Ratio               11.96%
     Sensitivity Measure: Change in NPV Ratio             262 bp



                                December 31, 2002
--------------------------------------------------------------------------------
                    Net Portfolio Value                 NPV as % of PV of Assets
       Change       -------------------                 ------------------------
      In Rates     $ Amount      $ Change    % Change     NPV Ratio    Change
      --------     --------      --------    --------     ---------    ------
                             (Dollars in thousands)
      + 300 bp *   $33,453      $(9,699)       (22)%      12.52%     (273) bp
      + 200 bp      37,774       (5,377)       (12)       13.82      (143) bp
      + 100 bp      41,530       (1,621)        (4)       14.88       (37) bp
          0 bp      43,151                                15.25
      - 100 bp      42,492         (660)        (2)       14.92       (33) bp

             Interest Rate Risk Measures: 200 Basis Point Rate Shock

         Pre-Shock NPV Ratio: NPV as % of PV of Assets    15.25%
         Exposure Measure: Post-Shock NPV Ratio           13.82%
         Sensitivity Measure: Change in NPV Ratio         143 bp
-----------------------------------------
*Basis points (1 basis point equals .01%)

     As with any method of measuring  interest rate risk,  certain  shortcomings
are inherent in the methods of analysis  presented above. For example,  although
certain  assets  and  liabilities  may have  similar  maturities  or  periods to
repricing,  they may react in  different  degrees to changes in market  interest
rates.  Also, the interest rates on certain types of assets and  liabilities may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
assets,  such as adjustable-rate  loans, have features which restrict changes in
interest rates on a short-term basis and over the life of the asset. Further, in
the event of a change in interest rates,  expected rates of prepayments on loans
and early withdrawals from certificates could likely deviate  significantly from
those assumed in calculating the table.
<PAGE>

                         Independent Accountants' Report



To the Shareholders and
Board of Directors
Union Community Bancorp
Crawfordsville, Indiana

We have audited the accompanying  consolidated balance sheets of Union Community
Bancorp  as of  December  31,  2003  and  2002,  and  the  related  consolidated
statements of income,  shareholders' equity and cash flows for each of the three
years in the period ended December 31, 2003. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Union  Community
Bancorp as of December 31, 2003, and 2002, and the results of its operations and
its cash flows for each of the three  years in the  period  ended  December  31,
2003, in conformity with accounting  principles generally accepted in the United
States of America.


/s/ BKD, LLP

Indianapolis, Indiana
January 26, 2004


<PAGE>

<TABLE>
<CAPTION>


                             Union Community Bancorp
                           Consolidated Balance Sheets
                           December 31, 2003 and 2002

                                                             2003                   2002
                                                        -----------------------------------
Assets
<S>                                                     <C>                     <C>
  Cash                                                  $    784,673            $    992,705
  Interest-bearing demand deposits                        11,103,669              35,593,482
                                                        ------------            ------------
     Cash and cash equivalents                            11,888,342              36,586,187
  Interest-bearing deposits                                  150,239                 145,107
  Investment securities
     Available-for-sale                                    5,908,437                      --
     Held to maturity
      (fair value of $525,528 and $1,731,904)                493,801               1,636,513
                                                        ------------            ------------
       Total investment securities                         6,402,238               1,636,513
  Loans, net of allowance for loan losses
     of $1,221,000 and $1,030,000                        221,230,152             216,703,469
  Premises and equipment                                   4,627,766               3,238,899
  Federal Home Loan Bank stock                             3,556,100               3,423,600
  Investment in limited partnership                        2,215,109                 836,609
  Foreclosed assets and real estate
     held for development, net                             1,347,824               1,607,146
  Goodwill                                                 2,392,808               2,296,927
  Interest receivable                                      1,128,342               1,276,538
  Cash value of life insurance                             5,149,394                      --
  Other assets                                             1,488,457               1,565,322
                                                        ------------            -------------
       Total assets                                     $261,576,771            $269,316,317
                                                        ============            =============
Liabilities
  Deposits
     Noninterest-bearing                                $  3,929,724            $   3,849,659
     Interest-bearing                                    186,262,428              186,341,769
                                                        ------------            -------------
       Total deposits                                    190,192,152              190,191,428
  Borrowings                                              33,946,109               40,054,523
  Interest payable                                           572,487                  650,182
  Other liabilities                                        1,336,501                1,231,667
                                                        ------------            -------------
       Total liabilities                                 226,047,249              232,127,800
                                                        ------------            -------------

Commitments and Contingent Liabilities

Shareholders' Equity
  Preferred stock, without par value
     Authorized and unissued - 2,000,000 shares
  Common stock, without par value
     Authorized - 5,000,000 shares
     Issued and outstanding -
        2,100,000 and 2,278,000 shares                    22,395,104               24,159,185
  Retained earnings                                       14,984,757               15,032,214
  Accumulated other comprehensive loss                       (55,295)                      --
  Unearned employee stock ownership plan (ESOP) shares    (1,228,998)              (1,323,401)
  Unearned recognition and retention plan (RRP) shares      (566,046)                (679,481)
                                                        ------------            -------------
       Total shareholders' equity                         35,529,522               37,188,517
                                                        ------------            -------------
       Total liabilities and shareholders' equity       $261,576,771             $269,316,317
                                                        ============            =============


See Notes to Consolidated Financial Statements


</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                            Union Community Bancorp
                                         Consolidated Statements of Income
                                        Years December 31, 2003, 2002 and 2001


                                                           2003                  2002             2001
                                                        -------------------------------------------------
Interest and Dividend Income
<S>                                                     <C>                  <C>               <C>
  Loans                                                 $14,743,258          $17,239,593       $8,949,593
  Investment securities
     Mortgage-backed securities                              56,283              150,267          174,360
     Other investment securities                            142,279               48,185          184,076
  Federal Home Loan Bank stock                              175,720              207,550           87,468
  Deposits with financial institutions                      363,708              340,431          149,954
                                                        -----------          -----------       ----------
      Total interest and dividend income                 15,481,248           17,986,026        9,545,451

Interest Expense
  Deposits                                                5,127,831            6,304,542        4,035,014
  Federal Home Loan Bank advances                         1,799,367            1,857,892          724,787
                                                        -----------          -----------       ----------
       Total interest expense                             6,927,198            8,162,434        4,759,801
                                                        -----------          -----------       ----------

Net Interest Income                                       8,554,050            9,823,592        4,785,650
  Provision for loan losses                                 238,431              372,472           40,000
                                                        -----------          -----------       ----------
Net Interest Income After Provision for Loan Losses       8,315,619            9,451,120        4,745,650
                                                        -----------          -----------       ----------
Other Income
  Service charges on deposit accounts                       143,084              155,330           22,967
  Equity in losses of limited partnership                   (21,500)             (20,000)         (55,000)
  Net realized gains on sales of
        available-for-sale securities                            --                8,534               --
  Other income                                              357,833              205,073          145,320
                                                        -----------          -----------       ----------
       Total other income                                   479,417              348,937          113,287
                                                        -----------          -----------       ----------
Other Expenses
  Salaries and employee benefits                          2,858,857            2,808,870        1,335,003
  Net occupancy expenses                                    291,757              310,868           85,212
  Equipment expenses                                        319,901              311,678           35,631
  Legal and professional fees                               270,195              233,325          123,875
  Data processing                                           393,377              811,773           94,502
  Other expenses                                          1,157,245            1,042,346          406,572
                                                        -----------          -----------       ----------
       Total other expenses                               5,291,332            5,518,860        2,080,795
                                                        -----------          -----------       ----------
Income Before Income Tax                                  3,503,704            4,281,197        2,778,142
  Income tax expense                                      1,172,000            1,478,935          927,062
                                                        -----------          -----------       ----------
Net Income                                              $ 2,331,704           $2,802,262       $1,851,080
                                                        ===========           ==========       ==========
Basic Earnings per Share                                 $     1.18           $     1.25       $      .93
Diluted Earnings per Share                                     1.16                 1.24              .93



See Notes to Consolidated Financial Statements


</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                                        Union Community Bancorp
                                            Consolidated Statements of Shareholders' Equity
                                                Years December 31, 2003, 2002 and 2001

                                                                   Accumulated
                                                                      Other        Unearned
                                         Common       Retained    Comprehensive      ESOP         Unearned
                                          Stock       Earnings       Income         Shares      Compensation        Total
                                       -------------------------------------------------------------------------------------
<S>               <C>                  <C>           <C>                        <C>            <C>               <C>
Balances, January 1, 2001              $22,868,943   $16,025,304                $(1,521,125)   $(1,185,188)      $36,187,934
  Net and comprehensive income                         1,851,080                                                   1,851,080
  Cash dividends ($.60 per share)                     (1,219,732)                                                 (1,219,732)
  Purchase of common stock              (2,356,034)   (1,099,991)                                                 (3,456,025)
  Amortization of unearned
          compensation expense                                                                     241,876           241,876
  ESOP shares earned                        34,672                                                 100,348           135,020
                                       -----------   -----------    ---------   ------------    ----------       -----------

Balances, December 31, 2001             20,547,581    15,556,661                 (1,420,777)     (943,312)        33,740,153
  Net and comprehensive income                         2,802,262                                                   2,802,262
  Cash dividends ($.52 per share)                     (1,161,061)                                                 (1,161,061)
  Shares issued in acquisition,
     net of cost                         8,954,487                                                                 8,954,487
  Shares cancelled in acquisition         (257,111)                                                                 (257,111)
  Purchase of common stock              (5,247,896)   (2,165,648)                                                 (7,413,544)
  Stock options exercised                  116,750                                                                   116,750
  Amortization of unearned
     compensation expense                                                                          263,831           263,831
  ESOP shares earned                        45,374                                   97,376                          142,750
                                       -----------   -----------    ---------   ------------    ----------       -----------
Balances, December 31, 2002             24,159,185    15,032,214                 (1,323,401)      (679,481)       37,188,517
  Comprehensive income
    Net income                                         2,331,704                                                   2,331,704
    Other comprehensive loss,
      net of tax -
      unrealized losses on
      securities, net of
      reclassification
      adjustment                                                    $(55,295)                                        (55,295)
                                                                                                                 -----------
  Comprehensive income                                                                                             2,276,409
                                                                                                                 -----------
  Cash dividends ($.60 per share)                     (1,207,295)                                                 (1,207,295)
  Purchase of common stock              (1,828,434)   (1,171,866)                                                 (3,000,300)
  Amortization of unearned
         compensation expense                                                                     113,435            113,435
  ESOP shares earned                        64,353                                   94,403                          158,756
                                       -----------   -----------    ---------   ------------    ----------       -----------
Balances, December 31, 2003            $22,395,104   $14,984,757    $(55,295)   $(1,228,998)    $(566,046)       $35,529,522
                                       ===========   ===========    =========   ============    ==========       ===========

</TABLE>




See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>

                                                        Union Community Bancorp
                                                 Consolidated Statements of Cash Flows
                                                Years December 31, 2003, 2002 and 2001

                                                                     2003                  2002                  2001
                                                               ----------------------------------------------------------
Operating Activities
<S>                                                            <C>                    <C>                    <C>
  Net income                                                   $  2,331,704           $  2,802,262           $  1,851,080
  Items not requiring (providing) cash
    Provision for loan losses                                       238,431                372,472                 40,000
    Depreciation                                                    321,673                327,392                 38,106
    Deferred income tax                                             228,558                398,958                (20,814)
    Amortization of unearned compensation expense                   113,435                263,831                241,876
    ESOP shares earned                                              158,756                142,750                135,020
    Amortization of purchase accounting adjustments                (339,379)              (907,695)                    --
  Net change in
    Interest receivable                                             148,196                301,166                 55,410
    Interest payable                                                (77,695)               (52,340)               (10,104)
  Other adjustments                                                (363,107)               626,971               (359,684)
                                                               ------------           -------------          -------------
      Net cash provided by operating activities                   2,760,572              4,275,767              1,970,890
                                                               ------------           -------------          -------------
Investing Activities
  Net change in interest-bearing deposits                            (5,132)                94,521                     --
  Purchases of investment securities available for sale         (11,000,000)                    --                     --
  Proceeds from maturities of investment securities
    available for sale                                            5,000,000                     --                     --
  Proceeds from sales of investment securities available for sale        --                 75,613                     --
  Proceeds from maturities of investment securities held to
    maturity                                                      1,146,213              1,227,200              4,752,335
  Net change in loans                                            (5,122,596)            20,948,780            (12,284,036)
  Purchases of premises and equipment                            (1,682,121)              (607,578)               (62,977)
  Additions to real estate owned                                   (162,012)               (88,509)                    --
  Proceeds from real estate sales                                   663,030                950,881                     --
  Purchase of Federal Home Loan Bank of Indianapolis stock               --                     --               (486,600)
  Contribution to limited partnership                            (1,400,000)                    --                     --
  Premium of life insurance                                      (5,000,000)                    --                     --
  Net cash received in acquisition                                       --             15,829,942                     --
  Other investing activities                                        (95,881)                    --                     --
                                                               ------------           -------------          -------------
      Net cash provided by (used in) investing activities       (17,658,499)            38,430,850             (8,081,278)
                                                               ------------           -------------          -------------
Financing Activities
  Net change in
    Interest-bearing demand and savings deposits                 10,442,128             13,195,417              8,882,589
    Certificates of deposit                                     (10,119,404)           (21,173,403)                 2,464
  Proceeds from borrowings                                        1,400,000             20,000,000             19,000,000
  Repayment of borrowings                                        (7,327,289)           (23,254,580)            (8,306,660)
  Cash dividends                                                 (1,233,996)            (1,111,544)            (1,254,332)
  Stock options exercised                                                --                116,750                     --
  Repurchase of common stock                                     (3,000,300)            (7,413,544)            (3,456,025)
  Net change in advances by borrowers for taxes and insurance         38,943               (44,428)                52,568
                                                               ------------           -------------          -------------
      Net cash provided by (used in) financing activities        (9,799,918)           (19,685,332)            14,920,604
                                                               ------------           -------------          -------------
Net Change in Cash and Cash Equivalents                         (24,697,845)            23,021,285              8,810,216

Cash and Cash Equivalents, Beginning of Year                     36,586,187             13,564,902              4,754,686
                                                               ------------           -------------          -------------
Cash and Cash Equivalents, End of Year                          $11,888,342            $36,586,187            $13,564,902
                                                                ============          =============          =============
Additional Cash Flows Information
  Interest paid                                                $  7,004,893           $  8,214,774           $  4,769,905
  Income tax paid                                                   868,653              1,124,491              1,077,327
  Loans transferred to foreclosed real estate                       280,311                663,142                     --
</TABLE>




See Notes to Consolidated Financial Statements
<PAGE>
                             Union Community Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2003, 2002 and 2001
                       (Table Dollar Amounts in Thousands)

Note 1: Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting  policies of Union Community  Bancorp (Company) and
its wholly-owned  subsidiary,  Union Federal Savings and Loan Association (Union
Federal) and Union Federal's wholly-owned subsidiaries,  UFS Service Corp. (UFS)
and MSA Service Corporation (MSA),  conform to accounting  principles  generally
accepted in the United States of America and reporting practices followed by the
thrift industry. The more significant of the policies are described below.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

The  Company  is a  thrift  holding  company  whose  principal  activity  is the
ownership  and  management of Union  Federal.  Union  Federal  operates  under a
federal   thrift   charter   and   provides   full   banking   services.   As  a
federally-chartered thrift, Union Federal is subject to regulation by the Office
of Thrift Supervision and the Federal Deposit Insurance Corporation.

The Company  generates  mortgage and consumer  loans and receives  deposits from
customers  located  primarily  in  Montgomery  County,  Indiana and  surrounding
counties.  The  Company's  loans are  generally  secured  by  specific  items of
collateral  including real property,  consumer assets and business  assets.  UFS
invests in a low income housing partnership. MSA is a real estate management and
development company.

Consolidation - The consolidated  financial  statements  include the accounts of
the  Company,  Union  Federal,  UFS and MSA after  elimination  of all  material
intercompany transactions.

Cash  Equivalents - The Company  considers all liquid  investments with original
maturities of three months or less to be cash equivalents.

Investment  Securities - Debt securities are classified as held to maturity when
the  Company  has the  positive  intent and  ability to hold the  securities  to
maturity.  Securities  held to maturity  are  carried at  amortized  cost.  Debt
securities not classified as held to maturity and marketable  equity  securities
are classified as available for sale.  Securities available for sale are carried
at  fair  value  with  unrealized  gains  and  losses  reported   separately  in
accumulated other comprehensive income, net of tax.

Amortization  of premiums and  accretion  of discounts  are recorded as interest
income from  securities.  Realized gains and losses are recorded as net security
gains  (losses).  Gains and losses on sales of securities  are determined on the
specific-identification method.

Loans are carried at the principal amount outstanding.  A loan is impaired when,
based on current  information or events,  it is probable that Union Federal will
be unable to collect all amounts due (principal  and interest)  according to the
contractual terms of the loan agreement. Loans with payment delays not exceeding
90 days  are not  considered  impaired.  Certain  nonaccrual  and  substantially
delinquent loans may be considered to be impaired.  Generally,  loans are placed
on an  non-accrual  status at ninety days past due and interest is  considered a
loss,  unless the loan is  well-secured  and in the process of  collection.  The
Company  considers its investment in one-to-four  family  residential  loans and
consumer  loans  to  be  homogeneous   and  therefore   excluded  from  separate
identification  for evaluation of impairment.  Interest income is accrued on the
principal  balances of loans. The accrual of interest on impaired and nonaccrual
loans is discontinued when, in management's  opinion, the borrower may be unable
to meet payments as they become due. When interest accrual is discontinued,  all
unpaid  accrued  interest is reversed when  considered  uncollectible.  Interest
income is subsequently recognized only to the extent cash payments are received.
Certain  loan fees and  direct  costs are being  deferred  and  amortized  as an
adjustment of yield on the loans over the contractual lives of the loans. When a
loan is paid off or sold,  any  unamortized  loan  origination  fee  balance  is
credited to income.
<PAGE>

Allowance for loan losses is  maintained  to absorb losses  inherent in the loan
portfolio.  The  allowance  is based on ongoing,  quarterly  assessments  of the
probable  estimated  losses  inherent in the loan  portfolio.  The  allowance is
increased by the provision for credit losses,  which is charged  against current
period  operating  results.  Loan losses are charged  against the allowance when
management  believes  the  uncollectibility  of a  loan  balance  is  confirmed.
Subsequent  recoveries,  if any, are credited to the  allowance.  The  Company's
methodology  for assessing  the  appropriateness  of the  allowance  consists of
several key elements,  which include the formula allowance,  specific allowances
for identified problem loans, and the unallocated allowance.

The  formula  allowance  is  calculated  by  applying  loss  factors  to certain
classified  loans  and  pools  of  loans.  Changes  in  classifications  of both
performing and nonperforming  loans affect the amount of the formula  allowance.
Loss factors are based on the Company's  historical  loss  experience and may be
adjusted for  significant  factors that, in management's  judgement,  affect the
collectibility of the portfolio as of the evaluation date.

Specific  allowances are  established  in cases where  management has identified
significant  conditions  or  circumstances  related to a credit that  management
believes indicate the probability that a loss has been incurred in excess of the
amount determined by the application of the formula allowance.

There are certain  inherent risks in the Company's loan portfolio;  accordingly,
the  Company  includes  certain  environmental  or  qualitative  factors  in its
determination  of the adequacy of the allowance  for loan losses.  These factors
include  existing  general  economic  and  business  conditions   affecting  the
Company's key lending areas,  credit quality  trends,  collateral  values,  loan
volumes and concentrations,  seasoning of the loan portfolio,  specific industry
conditions  within  portfolio  segments,  recent loss  experience  in particular
segments  of  the  portfolio,  duration  of  the  current  business  cycle,  and
regulatory examination results. The evaluation of the inherent loss with respect
to these  conditions is subject to a higher degree of  uncertainty  because they
are not identified with specific credits.

The  allowance  for loan  losses  also  incorporates  the  results of  measuring
impaired  loans  as  provided  in SFAS  No.  114 and  SFAS  No.  118.  A loan is
considered  impaired  when  management  determines  that it is probable that the
Company  will be unable to collect  all amounts due  according  to the  original
contractual  terms  of  the  loan  agreement.  Impairment  is  measured  by  the
difference between the recorded investment in the loan and the estimated present
value of total expected  future cash flows,  discounted at the loan's  effective
rate, or the fair value of the collateral of the loan, if collateral  dependent.
Impairment is  recognized  by adjusting an allocation of the existing  allowance
for loan losses.

The  determination  of the adequacy of the allowance for loan losses is based on
estimates  that are  particularly  susceptible  to  significant  changes  in the
economic  environment  and market  conditions.  Management  believes  that as of
December  31,  2003,  the  allowance  for loan  losses  is based on  information
currently  available.  A worsening or  protracted  economic  decline in the area
within which Union Federal  operates would increase the likelihood of additional
losses due to credit and market risks and could  create the need for  additional
loss reserves.

Premises  and  equipment  are carried at cost net of  accumulated  depreciation.
Depreciation is computed using the straight-line method based principally on the
estimated  useful  lives  of  the  assets  which  range  from 5 to  31.5  years.
Maintenance  and repairs are  expensed as  incurred  while major  additions  and
improvements are  capitalized.  Gains and losses on dispositions are included in
current operations.

Federal Home Loan Bank stock is a required  investment for institutions that are
members of the Federal Home Loan Bank (FHLB) system. The required  investment in
the common stock is based on a predetermined formula.

Investment  in  limited  partnership  is  recorded  using the  equity  method of
accounting. Losses due to impairment are recorded when it is determined that the
investment  no longer has the  ability  to  recover  its  carrying  amount.  The
benefits of low income  housing tax credits  associated  with the investment are
accrued when earned.
<PAGE>

Foreclosed  assets and real  estate held for  development,  net arises from loan
foreclosure  or deed in lieu of foreclosure  and  acquisition of real estate for
development  and are  carried at the lower of cost or fair value less  estimated
selling costs.  Costs relating to  development  and  improvement of property are
capitalized,  whereas costs  relating to the holding of property,  net of rental
and other income, are expensed.

Goodwill  is  annually  tested  for  impairment.  If the  implied  fair value of
goodwill is lower than its carrying amount,  a goodwill  impairment is indicated
and goodwill is written down to its implied fair value.  Subsequent increases in
goodwill value are not recognized in the financial statements.

Core deposit  intangible is being  amortized on an accelerated  basis over seven
years until such time that  straight-line  amortization  exceeds the accelerated
method.  This asset is periodically  evaluated as to the  recoverability  of its
carrying value.

Stock options - The Company has a stock-based employee  compensation plan, which
is described more fully in Note 17. The Company accounts for this plan under the
recognition  and  measurement  principles of APB Opinion No. 25,  Accounting for
Stock Issued to Employees, and related interpretations.  No stock-based employee
compensation cost is reflected in net income, as all options granted under those
plans had an exercise price equal to the market value of the  underlying  common
stock on the grant  date.  The  following  table  illustrates  the effect on net
income and  earnings  per share as if the  Company  had  applied  the fair value
provisions of Statement of Financial  Accounting  Standards No. 123,  Accounting
for Stock-Based Compensation, to stock-based employee compensation.
<PAGE>
<TABLE>
<CAPTION>

                                            UNION COMMUNITY BANCORP
                                     Notes to Consolidated Financial Statements
                                         December 31, 2003, 2002 and 2001
                                        (Table Dollar Amounts in Thousands

                                                                    2003             2002              2001
                                                                   -----------------------------------------
<S>                                                                <C>              <C>             <C>
Net income, as reported                                            $ 2,332          $2,802          $ 1,851
Less:  Total stock-based employee compensation cost
       determined under the fair value based method, net
       of income taxes                                                 (37)            (48)             (98)
Pro forma net income                                                $2,295          $2,754           $1,753
Earnings per share
      Basic - as reported                                          $  1.18         $  1.25           $  .93
      Basic - pro forma                                            $  1.16         $  1.22           $  .88
      Diluted - as reported                                        $  1.16         $  1.24           $  .93
      Diluted - pro forma                                          $  1.15         $  1.22           $  .88
</TABLE>

Income tax in the consolidated statements of income includes deferred income tax
provisions or benefits for all significant  temporary differences in recognizing
income and expenses for financial reporting and income tax purposes. The Company
files consolidated income tax returns with its subsidiary.

Earnings per share have been  computed  based upon the  weighted-average  common
shares outstanding  during each year.  Unearned ESOP shares and RRP shares which
have not vested  have been  excluded  from the  computation  of  average  shares
outstanding.

Note 2:   Restriction on Cash and Due From Banks

The Company is required to maintain reserve funds in cash and/or on deposit with
the  Federal  Reserve  Bank.  The  reserve  required  at  December  31, 2003 was
$183,000.

Note 3:   Investment Securities
<TABLE>
<CAPTION>
                                                                 2003
                                                -------------------------------------------
                                                              Gross       Gross
                                                Amortized  Unrealized   Unrealized    Fair
                                                  Cost        Gains       Losses      Value
                                                -------------------------------------------
<S>                                             <C>            <C>         <C>      <C>
Available for sale - federal agencies           $6,000         $  2        $94      $5,908
Held to maturity - mortgage-backed securities      494           32         --         526
                                                ------         ----        ---      ------
   Total investment securities                  $6,494         $ 34        $94      $6,434
                                                ======         ====        ===      ======


                                                                 2002
                                                -------------------------------------------
                                                              Gross       Gross
                                                Amortized  Unrealized   Unrealized    Fair
                                                  Cost        Gains       Losses      Value
                                                -------------------------------------------
Held to maturity
   Federal agencies                             $  300         $ 8        $--       $  308
   Mortgage-backed securities                    1,337          87         --        1,424
                                                ------         ----        ---      ------
      Total held to maturity                    $1,637         $95        $--       $1,732
                                                ======         ===        ===       ======
</TABLE>

At December 31, 2003,  the Company had no investment  securities in a continuous
unrealized  loss  position for more than a year.

At December 31, 2003, federal agencies outstanding mature in one to five years.

Proceeds from sales of  securities  available for sale during 2002 were $76,000.
Gross  gains of $9,000  were  realized  on those  sales.  There were no sales of
securities available for sale during 2003 and 2001.
<PAGE>

Note 4:    Loans and Allowance

                                                 2003               2002
                                               --------------------------
Real estate mortgage loans
   One-to-four family                          $154,297          $163,890
   Multi-family                                  11,982             7,098
   Commercial                                    38,569            34,788
   Land                                           3,315             3,169
Real estate construction loans                    3,134             1,615
Commercial loans                                  9,992             6,433
Individuals' loans for household
   and other personal expenditures                  817               614
                                               --------          --------
                                                222,106           217,607
Unamortized deferred loan costs                     345               126
Allowance for loan losses                        (1,221)          (1,030)
                                               --------          --------
                  Total loans                  $221,230          $216,703
                                               ========          ========


                                                 2003       2002         2001
                                              ----------------------------------
Allowance for loan losses
   Balances, beginning of year                  $1,030       $ 520        $480
   Allowance acquired in acquisition                --         379          --
   Recoveries on loans                               8          --          --
   Provision for losses                            238         372          40
   Loans charged off                               (55)       (241)         --
                                                ------      ------        ----
   Balances, end of year                        $1,221      $1,030        $520
                                                ======      ======        ====


Information on impaired loans is summarized below.

                                                 2003         2002
                                                ------------------
Impaired loans, all of which have
   an allocated allowance                       $2,670      $2,775
Allowance for impaired loans
   (included in the Company's allowance
   for loan losses)                                440         293

The average  balance of impaired loans was  $2,182,000,  $3,060,000 and $116,000
during 2003, 2002 and 2001. During those years, the difference  between interest
income  recognized on impaired loans and cash-basis  interest  collected was not
material.

At  December  31,  2003  and  2002,   non-accruing  loans  were  $3,638,000  and
$3,069,000,  respectively. At December 31, 2003 and 2002, there were no accruing
loans delinquent 90 days or more.

Note 5:  Premises and Equipment

                                                         2003       2002
                                                      -------------------
Land                                                    $  569     $  564
Buildings                                                3,885      1,988
Construction in process                                     --        432
Equipment                                                1,318      1,132
                                                        ------     ------
   Total cost                                            5,772      4,116
Accumulated depreciation                                (1,144)      (877)
                                                        ------     ------
   Net                                                  $4,628     $3,239
                                                        =======    =======
<PAGE>


Note 6:  Investment in Limited Partnership

The  investment in limited  partnerships  of $2,215,000 and $837,000 at December
31, 2003 and 2002  represents  a 49.5  percent  equity in Pedcor  Investments  -
2003-LIX,  LP for 2003 and 2002, and a 99 percent equity in Pedcor Investments -
1993-XVI, LP for 2002, limited partnerships  organized to build, own and operate
apartment  complexes.  In addition to recording  its equity in the losses of the
partnerships,  the Company has  recorded  the benefit of low income  housing tax
credits of $178,000  for each of the years ended  December  31,  2003,  2002 and
2001.  Condensed  unaudited  financial  statements  for the  partnerships  as of
December 31 are as follows:

                                                        2003            2002
                                                      -----------------------
Condensed statements of financial condition
  Assets
     Cash                                               $   229         $  136
     Land and property                                    1,950          2,008
     Bond fund                                            5,362             --
     Development cost                                     2,412             --
     Other assets                                           224            210
                                                        -------         ------
         Total assets                                   $10,177         $2,354
                                                        =======         ======
  Liabilities
     Notes payable - Association                        $   121         $  268
     Notes payable - other                                7,647          1,309
     Other liabilities                                      305            163
                                                        -------         ------
         Total liabilities                                8,073          1,740
  Partners' equity                                        2,104            614
                                                        -------         ------
      Total liabilities and partners' equity            $10,177         $2,354
                                                        =======         ======


                                         2003      2002       2001
                                        ----------------------------
Condensed statements of operations
  Total revenue                         $ 236    $  258     $  263
  Total expenses                         (318)     (292)      (305)
                                        -----    ------     ------
     Net loss                           $ (82)   $  (34)    $  (42)
                                        =====    ======     ======

Note 7:  Core Deposit Intangible

The carrying basis of the recognized core deposit  intangible  included in other
assets  was  $590,000  at  December  31,  2003  and  2002  and  the  accumulated
amortization  of such  intangible  was  $192,000  and  $105,000 at those  dates.

Amortization  expense  for 2003 and 2002 was  $105,000  and  $87,000.  Estimated
amortization  expense  for each of the  following  five  years is  approximately
$80,000.


Note 8:  Deposits
                                                          2003            2002
                                                       -------------------------
Noninterest bearing demand                             $  3,930       $  3,850
Interest bearing demand                                  62,482         49,462
Savings deposits                                         29,756         32,414
Certificates and other time deposits
        of $100,000 or more                              36,803         42,233
Other certificates and time deposits                     57,221         62,232
                                                       --------       --------
         Total deposits                                $190,192       $190,191
                                                       ========       ========

<PAGE>

     The scheduled maturities of time deposits are:

         2004                                   $53,832
         2005                                    14,702
         2006                                     9,146
         2007                                     8,370
         2008                                     7,974
                                                -------
                                                $94,024
                                                =======

Note 9:  Borrowings

Borrowings included the following:

                           2003          2002
                         ----------------------
FHLB advances            $33,814        $39,752
Note payable                 132            303
                         -------        -------
                         $33,946        $40,055
                         =======        =======

Aggregate annual maturities of borrowings at December 31, 2003, are:

         2004                 $   253
         2005                   3,730
         2007                  10,000
         After 2008            19,963
                              -------
                              $33,946
                              =======

FHLB  advances  are  secured  by  first-mortgage  loans  totaling  $146,519,000.
Advances, at interest rates from 4.2 to 6.6 percent, are subject to restrictions
or penalties in the event of prepayment.

Union Federal has an available line of credit with the FHLB totaling $2,000,000.
The line of credit  expires March 3, 2004 and bears  interest at a rate equal to
the current variable advance rate. There were no draws on this line of credit at
December 31, 2003.

The note payable  bears no interest so long as there exists no event of default.
In the  instances  where an event of default  has  occurred,  interest  shall be
calculated  at a rate equal to the lesser of 14 percent per annum or the highest
amount permitted by applicable law.

Note 10:  Income Tax

                                           2003       2002      2001
                                        -------------------------------
Income tax expense
  Currently payable
     Federal                             $  701    $  843       $719
     State                                  243       237        229
  Deferred
     Federal                                180       273        (17)
     State                                   48       126         (4)
                                         ------    ------       ----
    Total income tax expense             $1,172    $1,479       $927
                                         ======    ======       ====
Reconciliation of federal statutory
    to actual tax expense
  Federal statutory income tax at 34%    $1,191    $1,456       $945
  Effect of state income taxes              192       240        149
  Tax credits                              (178)     (178)      (178)
  Other                                     (33)      (39)        11
                                         ------    ------       ----
           Actual tax expense            $1,172    $1,479       $927
                                         ======    ======       ====
     Effective tax rate                    33.5%     34.5%      33.4%

<PAGE>

The components of the cumulative net deferred tax asset included in other assets
are as follows:

                                                   2003            2002
                                                -------------------------
Assets
   Allowance for loan losses                      $ 516            $ 435
   Pensions and employee benefits                   124              108
   Purchase accounting adjustments                  198              352
   Available-for-sale securities                     36               --
   Other                                             --               60
                                                  -----            -----
      Total assets                                  874              955
                                                  -----            -----
Liabilities
   Depreciation                                    (308)            (290)
   State income tax                                  (4)             (16)
   FHLB stock dividend                             (109)             (53)
   Loan fees                                       (291)            (263)
   Equity in partnership losses                    (140)            (119)
                                                  -----            -----
      Total liabilities                            (852)            (741)
                                                  -----            -----
                                                  $  22            $ 214
                                                  =====            =====

There was no valuation allowance necessary at December 31, 2003 and 2002.

Retained earnings include approximately  $4,132,000 for which no deferred income
tax  liability  has been  recognized.  This amount  represents  an allocation of
income to bad debt  deductions  as of December 31, 1987 for tax  purposes  only.
Reduction  of amounts so allocated  for purposes  other than tax bad debt losses
including  redemption  of bank  stock or  excess  dividends,  or loss of  "bank"
status, would create income for tax purposes only, which income would be subject
to the then-current  corporate  income tax rate. The unrecorded  deferred income
tax liability on the above amounts was approximately $1,637,000.

Note 11:  Other Comprehensive Income
<TABLE>
<CAPTION>

                                                                          2003
                                                       ------------------------------------------
                                                       Before-Tax        Tax           Net-of-Tax
                                                        Amount          Benefit         Amount
                                                       ------------------------------------------
Unrealized losses on securities:
<S>                                                       <C>            <C>            <C>
  Unrealized holding losses arising during the year       $(92)          $37            $(55)
  Less: reclassification adjustment for gains realized
           in net income                                    --            --              --
                                                          -----          ---            -----
  Other comprehensive loss                                $(92)          $37            $(55)
                                                          =====          ===            =====



                                                                          2002
                                                       ------------------------------------------
                                                       Before-Tax        Tax           Net-of-Tax
                                                        Amount          Benefit         Amount
                                                       ------------------------------------------
Unrealized gains on securities:
  Unrealized holding gains arising during the year        $  8          $(3)            $  5
  Less: reclassification adjustment for gains realized
           in net income                                     8           (3)               5
                                                          -----          ---            -----
  Other comprehensive income                              $ --           $--            $--
                                                          =====          ===            =====

</TABLE>
<PAGE>

During  2001,  the  Company had no  realized  or  unrealized  gains or losses on
securities or other items of comprehensive income.

Note 12:  Commitments and Contingent Liabilities

In  the  normal  course  of  business  there  are  outstanding  commitments  and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements.  The
Company's  exposure to credit loss in the event of  nonperformance  by the other
party to the financial  instruments for commitments to extend credit and standby
letters of credit is represented by the  contractual or notional amount of those
instruments.   The  Company  uses  the  same  credit  policies  in  making  such
commitments  as it does for  instruments  that are included in the  consolidated
balance sheets.

Financial  instruments  whose  contract  amount  represents  credit  risk  as of
December 31 were as follows:

                                                  2003           2002
                                                -----------------------

         Commitments to extend credit           $18,145         $11,670
         Standby letters of credit                4,142           4,177

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash requirements. The Company evaluates each customer's credit
worthiness on a case-by-case  basis. The amount of collateral obtained if deemed
necessary  by the  Company  upon  extension  of credit is based on  management's
credit evaluation.  Collateral held varies but may include accounts  receivable,
inventory, property and equipment, and income-producing commercial properties.

Standby letters of credit are conditional  commitments  issued by the Company to
guarantee the performance of a customer to a third party.

Union Federal has entered into  employment  agreements with three officers which
provide  for the  continuation  of salary and certain  benefits  for a specified
period of time under certain conditions for approximately three years. Under the
terms of the agreements,  these payments could occur in the event of a change in
control of Union  Federal,  as defined,  along with other  specific  conditions.
Union  Federal is not required to pay any amounts under these  agreements  which
cannot be deducted for federal income tax purposes.

The Company  and Union  Federal are also  subject to claims and  lawsuits  which
arise  primarily  in the  ordinary  course of  business.  It is the  opinion  of
management  that the  disposition  or  ultimate  resolution  of such  claims and
lawsuits will not have a material adverse effect on the  consolidated  financial
position of the Company.

Note 13: Dividend and Capital Restrictions

Without prior approval, current regulations allow Union Federal to pay dividends
to the Company not exceeding retained net income for the current year plus those
for the previous two years.  Union  Federal  normally  restricts  dividends to a
lesser amount because of the need to maintain an adequate capital structure.

At December 31, 2003, the shareholder's equity of Union Federal was $33,531,000.
Although well capitalized, under current regulations in effect, Union Federal is
required to apply to the Office of Thrift  Supervision  to pay  dividends to the
Company.
<PAGE>

Note 14:  Regulatory Capital

Union Federal is subject to various regulatory capital requirements administered
by the federal  banking  agencies  and is assigned  to a capital  category.  The
assigned  capital  category is largely  determined by ratios that are calculated
according  to the  regulations.  The ratios  are  intended  to  measure  capital
relative to assets and credit risk  associated with those assets and off-balance
sheet exposures of the entity.  The capital  category  assigned to an entity can
also be affected by qualitative  judgments made by regulatory agencies about the
risk  inherent in the entity's  activities  that are not part of the  calculated
ratios.

There are five capital categories defined in the regulations,  ranging from well
capitalized to critically undercapitalized.  Classification of an association in
any of the undercapitalized  categories can result in actions by regulators that
could have a material  effect on an  association's  operations.  At December 31,
2003 and 2002,  Union Federal is categorized as well  capitalized  and meets all
subject capital adequacy  requirements.  There are no conditions or events since
December  31,  2003  that  management  believes  have  changed  Union  Federal's
classification.
<PAGE>

Union Federal's actual and required capital amounts and ratios are as follows:

<TABLE>
<CAPTION>
                                                                                2003
                                                                         Required for        To Be Well
                                                         Actual        Adequate Capital(1)  Capitalized(1)
                                                     Amount   Ratio    Amount     Ratio     Amount   Ratio
                                                     ------------------------------------------------------
Total risk-based capital(1)
<S>                                                   <C>     <C>      <C>        <C>       <C>      <C>
  (to risk-weighted assets)                          $30,560  18.1%    $13,538    8.0%      $16,923  10.0%
Tier 1 capital(1) (to risk-weighted assets)           30,270  17.9%      6,769    4.0%       10,154   6.0%
Core capital(1) (to adjusted total assets)            30,270  11.7%     10,331    4.0%       12,914   5.0%
Core capital(1) (to adjusted tangible assets)         30,270  11.7%      5,165    2.0%        N/A     N/A
Tangible capital(1) (to adjusted total assets)        30,270  11.7%      3,874    1.5%        N/A     N/A
(1)As defined by regulatory agencies


                                                                                2002
                                                                         Required for        To Be Well
                                                         Actual        Adequate Capital(1)  Capitalized(1)
                                                     Amount   Ratio    Amount     Ratio     Amount   Ratio
                                                     -----------------------------------------------------
Total risk-based capital(1)
  (to risk-weighted assets)                          $33,661  21.4%    $12,605    8.0%      $15,756  10.0%
Tier 1 capital(1) (to risk-weighted assets)           32,631  20.7%      6,302    4.0%        9,454   6.0%
Core capital(1) (to adjusted total assets)            32,631  12.2%     10,672    4.0%       13,340   5.0%
Core capital(1) (to adjusted tangible assets)         32,631  12.2%      5,336    2.0%         N/A    N/A
Tangible capital(1) (to adjusted total assets)        32,631  12.2%      4,002    1.5%         N/A    N/A
(1)As defined by regulatory agencies
</TABLE>

Note 15:  Employee Benefit Plans

The Company provides pension  benefits for  substantially  all of its employees,
and is a  participant  in a  multi-employer  pension  fund.  Separate  actuarial
valuations  are not made with respect to each  participating  employer.  Pension
expense was $93,000, $2,000, and $1,000 for 2003, 2002 and 2001.

The Company has a  retirement  savings  401(k) plan in which  substantially  all
employees may participate.  The Company matches employees'  contributions at the
rate of 50% for the first 5% of base salary  contributed  by  participants.  The
Company's  expense for the plan was $43,000,  $45,000 and $18,000 for 2003, 2002
and 2001.

The Company has an ESOP covering  substantially all employees of the Company and
Union Federal.  The ESOP acquired  184,000 shares of the Company common stock at
$10 per share with funds  provided  by a loan from the  Company.  Unearned  ESOP
shares totaled  122,900 and 132,340 at December 31, 2003 and 2002 and had a fair
value of $2,146,000  and  $2,078,000  at December 31, 2003 and 2002.  Shares are
released to  participants  proportionately  as the loan is repaid.  Dividends on
allocated  shares are  recorded as dividends  and charged to retained  earnings.
Dividends on unallocated  shares,  which may be distributed to  participants  or
used to repay  the loan,  are  treated  as  compensation  expense.  Compensation
expense  is  recorded  equal  to  the  fair  market  value  of  the  stock  when
contributions,  which are determined annually by the Board of Directors of Union
Federal,  are made to the ESOP.  ESOP  expense for the years ended  December 31,
2003, 2002 and 2001 was $159,000,  $143,000 and $135,000.  At December 31, 2003,
the  ESOP  had  61,100  allocated   shares,   122,900  suspense  shares  and  no
committed-to-be  released  shares.  At December  31,  2002,  the ESOP had 51,660
allocated  shares,  132,340  suspense  shares  and no  committed-to-be  released
shares.

Union Federal has a Recognition  and Retention  Plan and Trust (RRP) to which it
contributed  $1,753,853  for the  purchase of 121,670  shares of Company  common
stock,  and  grants  for  88,900 of these  shares  have been  awarded to various
directors,  officers and employees of Union Federal.  These awards generally are
to vest and be earned by the recipient at a rate of 20 percent per year. Expense
under  the  plan  for the  years  ended  December  31,  2003,  2002 and 2001 was
$113,000, $264,000 and $242,000.
<PAGE>

Note 16:  Stock Option Plan

Under the Company's  stock option plan (Plan),  which is accounted for under the
recognition and measurement  principles of Accounting  Principles  Board Opinion
(APB)  No.  25,   Accounting   for  Stock  Issued  to  Employees,   and  related
interpretations,  the Company grants selected executives and other key employees
stock option awards which vest at a rate of 20 percent per year. The Company has
authorized the grant of options for up to 304,175 shares of the Company's common
stock and has granted 226,000 of the options. The exercise price of each option,
which has a ten-year life, was equal to the market price of the Company's  stock
on the date of grant; therefore, no compensation expense was recognized.
<PAGE>

Although the Company has elected to follow APB No. 25, SFAS No. 123 requires pro
forma  disclosures  of net income and  earnings  per share as if the Company had
accounted for its employee  stock options under that Statement (see Note 1). The
fair  value of each  option  grant  was  estimated  on the grant  date  using an
option-pricing model with the following assumptions for the 2003 grants:

                                                                        2003
                                                                      --------
         Risk-free interest rate                                        3.3%
         Dividend yield                                                 3.6
         Volatility factors of expected market price of common stock   15.4
         Weighted-average expected life of the options                 10 years

A summary of the status of the Plan at December  31,  2003,  2002 and 2001,  and
changes during the years then ended is presented below:
<TABLE>
<CAPTION>

                                         2003                      2002                       2001
                                       Weighted-                 Weighted-                  Weighted-
                                        Average                   Average                    Average
                            Shares   Exercise Price    Shares  Exercise Price    Shares   Exercise Price
                           ------------------------------------------------------------------------------
Outstanding,
<S>                        <C>           <C>          <C>           <C>         <C>            <C>
  beginning of year        165,000       $14.49       186,000       $14.49      186,000        $14.49
Granted                     40,000        15.90            --                        --
Exercised                       --                     (8,000)       14.49           --
Forfeited                   (2,000)       14.49       (13,000)       14.49           --
                           -------                    --------                  -------
Outstanding, end of year   203,000        14.77       165,000        14.49      186,000         14.49
                           ========                   ========                  ========
Options exercisable,
  end of year              163,000                    130,400                   116,800
                           ========                   ========                  ========
</TABLE>

As of December  31, 2003,  options  totaling  163,000 have an exercise  price of
$14.49  and a  weighted-average  remaining  contractual  life of 4.5  years  and
options totaling 40,000 have an exercise price of $15.90 and a  weighted-average
remaining contractual life of 9.1 years.
<PAGE>

Note 17:  Earnings Per Share

     Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>

                                                              Year Ended December 31, 2003
                                                                        Weighted-
                                                                         Average          Per Share
                                                        Income           Shares            Amount
                                                       -------------------------------------------------
Basic earnings per share
<S>                                                     <C>            <C>                 <C>
  Income available to common shareholders               $ 2,332        1,982,872           $1.18
Effect of dilutive stock options                                          20,819
                                                        -------        ---------
Diluted earnings per share
  Income available to common shareholders and
     assumed conversions                                $ 2,332        2,003,691           $1.16
                                                        =======        =========           =====

                                                              Year Ended December 31, 2002
                                                                        Weighted-
                                                                         Average          Per Share
                                                        Income           Shares            Amount
                                                       -------------------------------------------------

Basic earnings per share
  Income available to common shareholders               $ 2,802        2,249,239           $1.25
Effect of dilutive stock options                                           1,841
                                                        -------        ---------
Diluted earnings per share
  Income available to common shareholders and
     assumed conversions                                $ 2,802        2,251,080           $1.24
                                                        =======        =========           =====
</TABLE>
<PAGE>
For 2001,  basic and  diluted  EPS were $.93 a share,  and the  weighted-average
shares  outstanding  were  1,995,020.  Options to purchase  186,000  shares were
excluded from the computation of diluted EPS because the options' exercise price
was greater than or equal to the average market price of common shares.

Note 18:  Related Party Transactions

Union Federal has entered into  transactions with certain  directors,  executive
officers,  significant  shareholders and their affiliates or associates (related
parties).  Such  transactions  were made in the  ordinary  course of business on
substantially  the same  terms  and  conditions,  including  interest  rates and
collateral,  as those  prevailing at the same time for  comparable  transactions
with other  customers,  and did not, in the opinion of management,  involve more
than normal credit risk or present other unfavorable features.

     Balances, January 1, 2003                      $3,942

         New loans, including renewals                 639
         Change in composition                         782
         Payments, etc. including renewals            (966)
                                                    -------
     Balances, December 31, 2003                    $4,397
                                                    ======

Deposits  from related  parties  held by Union  Federal at December 31, 2003 and
2002, totaled $1,368,000 and $988,000.

Note 19:     Fair Values of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instrument:

Cash  and Cash  Equivalents  - The  fair  value  of cash  and  cash  equivalents
approximates carrying value.

Interest-bearing   Deposits  -  The  fair  value  of  interest-bearing  deposits
approximates carrying values.

Securities - Fair values are based on quoted market prices.

Loans - The fair  value  for  loans is  estimated  using  discounted  cash  flow
analyses,  using interest rates  currently  being offered for loans with similar
terms to borrowers of similar credit quality.

FHLB  Stock - Fair  value of FHLB stock is based on the price at which it may be
resold to the FHLB.

Interest  Receivable/Payable  - The fair  value of  interest  receivable/payable
approximates carrying values.

Cash Value of Life  Insurance  - The fair value of cash value of life  insurance
approximates the carrying value.

Deposits  - Fair  values  for  certificates  of deposit  are  estimated  using a
discounted  cash flow  calculation  that applies  interest rates currently being
offered on certificates to a schedule of aggregated  expected monthly maturities
on such time deposits.

Advance  Payments  by  Borrowers  for  Taxes  and  Insurance  - The  fair  value
approximates carrying value.

Federal  Home  Loan  Bank  Advances  - The fair  value of these  borrowings  are
estimated using a discounted cash flow  calculation,  based on current rates for
similar debt.

Note  Payable  -  Limited  Partnership  - The  fair  value of the  borrowing  is
estimated using a discounted cash flow  calculation,  based on current rates for
similar debt.

Off-Balance  Sheet  Commitments - Commitments  include  commitments to originate
mortgage and consumer loans, and are generally of a short-term  nature. The fair
value of such  commitments  are based on fees  currently  charged  to enter into
similar  agreements,  taking into account the remaining  terms of the agreements
and  the  counterparties'   credit  standing.  The  carrying  amounts  of  these
commitments, which are immaterial, are reasonable estimates of the fair value of
these financial instruments.
<PAGE>

The estimated fair values of the Company's financial instruments are as follows:

                                               2003                 2002
                                       -----------------------------------------

                                       Carrying    Fair     Carrying     Fair
                                        Amount     Value      Amount     Value
                                       -----------------------------------------
Assets
  Cash and cash equivalents             $11,888  $11,888      $36,586   $36,586
  Interest-bearing deposits                 150      150          145       145
  Securities available for sale           5,908    5,908           --        --
  Securities held to maturity               494      526        1,637     1,732
  Loans, net                            221,230  228,971      216,703   226,998
  Stock in FHLB                           3,556    3,556        3,424     3,424
  Interest receivable                     1,128    1,128        1,277     1,277
  Cash value of life insurance            5,149    5,149           --        --

Liabilities
  Deposits                              190,192  192,064      190,191   192,824
  Borrowings
     FHLB advances                        33,814  36,668       39,752    42,798
     Notes payable - limited partnership     132     132          303       297
  Interest payable                           572     572          650       650
  Advances by borrowers for
     taxes and insurance                     582     582          543       543

Note 20:  Condensed Financial Information (Parent Company Only)

Presented  below is condensed  financial  information as to financial  position,
results of operations and cash flows of the Company:


                            Condensed Balance Sheets
                                          2003            2002
                                       ------------------------
Assets
  Cash                                  $  1,988        $  1,258
  Interest bearing deposits                   50              45
  Investment in Union Federal             33,531          35,903
  Other assets                               457             461
                                        --------        --------
   Total assets                          $36,026          $37,667
                                        ========        ========

Liability - other                       $   496         $    478
Shareholders' Equity                     35,530           37,189
                                        --------        --------
  Total liabilities and
   shareholders' equity                  $36,026          $37,667
                                        ========        ========
<TABLE>
<CAPTION>
                         Condensed Statements of Income

                                                               2003             2002              2001
--------------------------------------------------------------------------------------------------------

Income
<S>                                                           <C>             <C>               <C>
  Dividends from Union Federal                                $5,000          $3,721            $16,709
  Other income                                                    64              90                 77
                                                              ------          ------            -------
  Total income                                                 5,064           3,811             16,786
                                                              ------          ------            -------
Expenses
  Salaries and employee benefits                                  79              74                 91
  Legal and professional fees                                     73              85                 78
  Other expenses                                                  57              57                 32
                                                              ------          ------            -------
  Total expenses                                                 209             216                201
                                                              ------          ------            -------
Income before income tax and equity in
   undistributed income of Union Federal                       4,855           3,595             16,585

Income tax benefit                                                37              36                 35
                                                              ------          ------            -------
Income before equity in undistributed income
  of Union Federal                                             4,892           3,631             16,620

Distribution in excess of income of Union Federal             (2,560)           (829)           (14,769)

Net Income                                                    $2,332          $2,802            $  1,851
                                                              ======          ======            ========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                     Condensed Statements of Cash Flows

                                                              2003             2002              2001
---------------------------------------------------------------------------------------------------------

Operating Activities
<S>                                                           <C>            <C>                <C>
Net income                                                    $2,332         $ 2,802            $  1,851
Items not requiring (providing) cash
   Distributions in excess of income of subsidiary             2,560             829              14,769
   Other                                                          77           2,042                (155)
                                                              ------          ------            -------
    Net cash provided by operating activities                  4,969           5,673              16,465
                                                              ------          ------            -------
Investing Activities
   Net change in interest bearing deposits                        (5)             (5)                 --
   Proceeds from sales of investments available for sale          --              76                  --
   Net cash paid in acquisition                                   --          (9,413)                 --
                                                              ------          ------             -------
    Net cash used in investing activities                         (5)         (9,342)                 --
                                                              ------          ------             -------
Financing Activities
  Cash dividends                                              (1,234)         (1,112)             (1,254)
  Stock options exercised                                       --               117                  --
  Repurchase of common stock                                  (3,000)         (7,414)             (3,456)
                                                              ------          ------            -------
     Net cash used in financing activities                    (4,234)         (8,409)             (4,710)
                                                              ------          ------            --------
Net Change in Cash                                               730         (12,078)             11,755

Cash at Beginning of Year                                      1,258          13,336               1,581
                                                              ------          ------            --------
Cash at End of Year                                           $1,988         $ 1,258             $13,336
                                                              ======          ======            ========
</TABLE>

<PAGE>
<TABLE>
================================================================================================

                                      DIRECTORS AND OFFICERS

================================================================================================

                                        BOARD OF DIRECTORS

                                         Joseph E. Timmons
                                       Chairman of the Board
                        President of Union Federal Savings and Loan Association

<S>     <C>    <C>    <C>    <C>    <C>    <C>
     Philip L. Boots                       Mark E. Foster                   John M. Horner
        President,                        General Manager,                 Dealer Principal,
Boots Brothers Oil Company, Inc.       Birkey's Farm Store, Inc.       Horner Pontiac Buick GMC

    Marvin L. Burkett                     C. Rex Henthorn                   Harry A. Siamas
     Farmer (Retired)                         Attorney                         Attorney

    Phillip E. Grush                   Samuel H. Hildebrand                Joseph M. Malott
      Optometrist                            President,                  Financial Institutions
                                     Village Traditions, Inc.                 Consultant

================================================================================================

                                 OFFICERS OF UNION COMMUNITY BANCORP

                         Alan L. Grimble                    Joseph E. Timmons
                     Chief Executive Officer                   President

                      Denise E. Swearingen                   J. Lee Walden
                     Secretary and Treasurer             Chief Financial Officer

================================================================================================

                          OFFICERS OF UNION FEDERAL SAVINGS AND LOAN ASSOCIATION

                       Alan L. Grimble                      Joseph E. Timmons
                   Chief Executive Officer                     President

                        J. Lee Walden                        Steve V. Brier
                   Executive Vice President and             Vice President and
                     Chief Financil Officer               Chief Lending Officer

                      Denise E. Swearingen                  Lori S. Collins
                      Vice President and                   Vice President and
                   Chief Operations Officer             Chief Administration Officer
</TABLE>
<PAGE>
                             Directors and Officers

     Philip L.  Boots  (age 57) has  served  since  1985 as  President  of Boots
Brothers Oil Company, Inc., a petroleum marketer that operates gasoline outlets,
convenience grocery stores and car washes in the Crawfordsville area.

     Marvin  L.  Burkett  (age 76) has  retired  from  his work as a farmer  and
equipment dealer in Montgomery County since 1956.

     Mark E. Foster  (age 51) is the Owner and General  Manager of a retail farm
equipment  and  automobile  dealership  located  in Warren  County,  Indiana,  a
position he has held since 1983.

     Alan L. Grimble (age 47) is currently  the Chief  Executive  Officer of the
Holding Company and Union Federal having held these positions since 2002. He has
worked for Union Federal since 1998.

     Phillip  E.  Grush  (age  72)  worked  as a  self-employed  optometrist  in
Crawfordsville  from 1960 until  September,  1996 when he sold his practice.  He
currently  works for Dr.  Michael  Scheidler  in  Crawfordsville  as a part-time
employee/consultant.

     C. Rex  Henthorn  (age 66) is a partner  with  Henthorn,  Harris,  Taylor &
Weliever, P.C., a professional legal corporation engaged in the practice of law.

     Samuel H.  Hildebrand,  II (age 64) has served since 1995 as President  and
Chief  Executive  Officer  of Village  Traditions,  Inc.,  a company  engaged in
property  management and custom  fabrication of rain gutter systems  through its
Custom Flo  Division,  Seamless  Gutter  Systems  Division,  in  Crawfordsville,
Indiana.


     John M. Horner (age 67) has served as Dealer  Principal  of Horner  Pontiac
Buick GMC in Crawfordsville since 1974.

     Joseph  M.  Malott  (age  66) has been  self-employed  as a  consultant  to
financial institutions for the past five years.

     Harry A. Siamas (age 53) has practiced law in Crawfordsville since 1976 and
has served as Union Federal's attorney for 18 years.

     Denise E. Swearingen (age 45) has served as the Holding Company's Secretary
and Treasurer since 1997 and as Vice President and Chief  Operations  Officer of
Union Federal since 2002. She has worked for Union Federal since 1983.

     Joseph E.  Timmons  (age 69) is  currently  the  President  of the  Holding
Company  and Union  Federal,  having  served as  President  and Chief  Executive
Officer  of the  Holding  Company  from  1997 to 2002 and  President  and  Chief
Executive Officer of Union Federal from 1974 to 2002. He has been an employee of
Union Federal since 1954.

     J. Lee Walden (age 56) is currently Chief Financial  Officer of the Holding
Company and Union Federal having held these positions since the 2002 acquisition
of Montgomery  Financial Corp. and Montgomery Savings. In addition,  he has been
the Executive  Vice  President of Union  Federal  since 2003. He had  previously
worked for Montgomery Savings since 1984.
<PAGE>

SHAREHOLDER INFORMATION

Market Information

     Union Federal  converted from a federal mutual savings and loan association
to a federal stock savings and loan association effective December 29, 1997, and
simultaneously  formed a savings and loan holding company,  the Holding Company.
The Holding  Company's  Common Stock,  is traded on the NASDAQ  National  Market
System  under  the  symbol   "UCBC."  As  of  February  26,  2004,   there  were
approximately 415 record holders of the Holding Company's Common Stock.

     Any dividends paid by the Holding Company will be subject to  determination
and declaration by the Board of Directors in its discretion.  In determining the
level of any future dividends, the Board of Directors will consider, among other
factors,  the  following:  tax  considerations;   industry  standards;  economic
conditions;  capital levels;  regulatory  restrictions  on dividend  payments by
Union Federal to the Holding Company; and, general business practices.

     The Holding  Company is not subject to OTS regulatory  restrictions  on the
payment of dividends to its  shareholders  although the source of such dividends
will depend in part upon the receipt of dividends from Union Federal. Applicable
law  restricts  the amount of  dividends  Union  Federal  may pay to the Holding
Company  without  obtaining the prior approval of the OTS to an amount that does
not exceed Union Federal's  year-to-date net income plus its retained net income
for the preceding two years.  The Holding  Company is subject,  however,  to the
requirements  of Indiana law, which  generally limit the payment of dividends to
amounts  that will not affect  the  ability of the  Holding  Company,  after the
dividend  has been  distributed,  to pay its  debts in the  ordinary  course  of
business and will not exceed the difference  between the Holding Company's total
assets and total liabilities plus  preferential  amounts payable to shareholders
with rights  superior to those of the  holders of the Holding  Company's  common
stock.

     In addition to the foregoing, the portion of Union Federal's earnings which
has been  appropriated for bad debt reserves and deducted for federal income tax
purposes  cannot be used by Union  Federal to pay cash  dividends to the Holding
Company without the payment of federal income taxes by Union Federal at the then
current  income tax rate on the amount deemed  distributed,  which would include
any federal income taxes  attributable to the distribution.  The Holding Company
does not  contemplate  any  distribution by Union Federal that would result in a
recapture of Union  Federal's bad debt reserve or otherwise  create  federal tax
liabilities.

                                    Stock Price
                                    -----------               Dividends
Quarter Ended                 High              Low           Per Share
-------------                 ----              ---           ---------
March 31, 2002               15.19             13.26            .11
June 30, 2002                15.33             13.92            .12
September 30, 2002           15.28             13.81            .14
December 31, 2002            16.24             13.56            .15
March 31, 2003               16.94             15.40            .15
June 30, 2003                18.06             16.25            .15
September 30, 2003           17.65             16.15            .15
December 31, 2003            17.95             16.53            .15

Transfer Agent and Registrar

Computershare Investor Services LLC
P.O. Box 3504
Chicago, Illinois 60690

Corporate Counsel

Barnes & Thornburg
11 South Meridian Street
Indianapolis, Indiana  46204

Independent Auditor

BKD LLP
201 N. Illinois Street, Suite 700S
Indianapolis, Indiana  46244

Shareholders and General Inquiries

The  Company  filed an  Annual  Report on Form 10-K for its  fiscal  year  ended
December 31, 2003 with the  Securities and Exchange  Commission.  Copies of this
annual  report may be obtained  without  charge upon written  request to:

         J. Lee Walden
         Chief Financial Officer
         Union Community Bancorp
         221 East Main Street - PO Box 151
         Crawfordsville, Indiana 47933