UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              ---------------------

                                    FORM 10-Q

(Mark One)

X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the period ended September 30, 1997

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
---  EXCHANGE ACT OF 1934

         For the transition period from ___________ to _____________

                         Commission File Number 0-23134

                    PEOPLES BANK CORPORATION OF INDIANAPOLIS
             (Exact name of registrant as specified in its charter)


           Indiana                                           35-1681096
--------------------------------------------------------------------------------
(State of other jurisdiction                             (I.R.S. Employer 
of incorporation or organization)                       identification no.)


130 East Market Street          Indianapolis, Indiana          46204
--------------------------------------------------------------------------------
(Address of principal                                        (Zip Code)
executive offices)

                                 (317) 237-8121
        (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.      X Yes      No

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practical date.

         Common Shares, without par value
                  Nonvoting -       2,812,634 shares as of November 13, 1997
                  Voting    -         264,456 shares as of November 13, 1997



<PAGE>


                    PEOPLES BANK CORPORATION OF INDIANAPOLIS

                                      INDEX



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets at September 30, 1997
         and December 31, 1996 ..............................................2

         Consolidated Statements of Income for three
         and nine months ended
         September 30, 1997 and 1996 ........................................3

         Consolidated Statements of Changes in Shareholders'
         Equity .............................................................4

         Consolidated Statements of Cash Flows for three
         and nine months ended
         September 30, 1997 and 1996 ........................................5

         Notes to Consolidated Financial Statements .........................6

Item 2.  Management's Discussion and Analysis
         of Results of Operations
         and Financial Condition .........................................7-15

PART II.  OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders................16

Item 6. Exhibits and Reports on Form 8-K ..................................16

Signatures ................................................................17


<PAGE>

                  Peoples Bank Corporation of Indianapolis

                   Notes to Consolidated Financial Statements

                               September 30, 1997

1.  Accounting Policies

         Except as noted in Note 3, the significant accounting policies followed
by Peoples Bank  Corporation of  Indianapolis  (the "Corporation")  for interim
financial  reporting are consistent  with the accounting  policies  followed for
annual financial  reporting.  The consolidated interim financial statements have
been prepared in accordance  with  instructions to Form 10-Q and may not include
all  information  and  footnotes   normally  shown  for  full  annual  financial
statements.  All adjustments which are, in the opinion of management,  necessary
for a fair  presentation  of the  results  for the  periods  reported  have been
included in the accompanying unaudited consolidated financial statements and all
such adjustments are of a normal recurring nature.

2.  Earnings Per Share

         Earnings per share are computed based upon the weighted  average number
of shares  outstanding  during the period which were 3,100,239 and 3,124,222 for
the three and nine months ending September 30, 1997, and 3,167,852 and 3,175,910
for the three and nine months ending September 30, 1996.

3.  Accounting Changes

         Financial  Accounting  Standard No. 125,  Accounting  for Transfers and
Servicing of Financial Assets and  Extinguishment of Liabilities,  was issued by
the Financial  Accounting Standards Board in 1996. It revises the accounting for
transfers  of  financial  assets,   such  as  loans  and  securities,   and  for
distinquishing  between sales and secured  borrowings.  It is effective for some
transactions in 1997 and others in 1998.  Management does not expect adoption of
this Standard to have a significant  effect on the Company's  financial position
or results of operations.


<PAGE>

<TABLE>
<CAPTION>

PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED BALANCE SHEETS
=============================================================================================================
(Dollar amounts in thousands)
                                                                       September 30,          December 31,
                                                                           1997                   1996
                                                                     ------------------     -----------------
<S>                                                                            <C>                   <C>    
Assets
      Cash and due from banks                                                  $20,870               $32,252
      Federal funds sold                                                             0                     0
                                                                     ------------------     -----------------
        Total cash and equivalents                                              20,870                32,252

      Available-for-sale securities                                            147,679                94,589

      Loans held for sale                                                          137                   421
      Total loans                                                              389,427               332,953
        Allowance for loan losses                                               (5,119)               (3,900)
                                                                     ------------------     -----------------
        Loans, net                                                             384,308               329,053

      Premises and equipment, net                                                7,404                 7,923
      Accrued income and other assets                                           10,426                 7,240
                                                                     ------------------     -----------------
        Total assets                                                          $570,824              $471,478
                                                                     ==================     =================

Liabilities

      Non interest-bearing deposits                                            $83,919               $83,911
      Interest-bearing deposits                                                423,049               327,894
                                                                     ------------------     -----------------
        Total deposits                                                         506,968               411,805

      Short-term borrowings                                                     10,271                10,266
      Accrued expenses and other liabilities                                     6,190                 4,058
                                                                     ------------------     -----------------
        Total liabilities                                                      523,429               426,129

Shareholders' equity Common shares, no par value:
      Authorized:
        Voting - 300,000 shares
        Nonvoting - 4,000,000 shares
      Issued:
        Voting - 264,456 shares                                                    950                   950
        Nonvoting  -  2,812,634 shares (1997)
                        -  2,866,424 shares (1996)                              13,041                14,775
      Retained earnings                                                         32,941                29,338
      Net unrealized gain/(loss) on available-for-sale securities                  463                   286
                                                                     ------------------     -----------------
        Total shareholders' equity                                              47,395                45,349
                                                                     ------------------     -----------------
        Total liabilities and shareholders' equity                            $570,824              $471,478
                                                                     ==================     =================
</TABLE>


See accompanying notes.

<PAGE>

<TABLE>
<CAPTION>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF INCOME
========================================================================================================================
(Dollar amounts in thousands, except per share data)
                                                                  Three months ended             Nine months ended
                                                                      September 30,               September 30,
                                                                   1997          1996           1997          1996
                                                               ---------------------------------------------------------
<S>                                                              <C>           <C>           <C>           <C>    
Interest income
      Interest and fees on loans                                 $8,264        $6,737        $23,107       $19,248
      Interest on federal funds sold                                132           291            650           689
      Interest on investments                                     2,096         1,234          4,969         3,867
                                                          ---------------------------------------------------------
        Total interest income                                    10,492         8,262         28,726        23,804

Interest expense
      Interest on deposits                                        4,783         3,507         12,471         9,921
      Interest on short-term borrowings                             136           124            388           453
                                                          ---------------------------------------------------------
        Total interest expense                                    4,919         3,631         12,859        10,374
                                                          ---------------------------------------------------------
Net interest income                                               5,573         4,631         15,867        13,430

Provision for loan losses                                           500           300          1,400           750
                                                          ---------------------------------------------------------
Net interest income after
      provision for loan losses                                   5,073         4,331         14,467        12,680

Other operating income
      Trust fees                                                    371           281          1,112           988
      Service charge income                                         791           674          2,245         1,767
      Mortgage banking revenue                                       89           149            325           515
      Net gain (loss) on
        investments                                                  (7)            0            (46)          (28)
      Other operating income                                        291           214            745           710
                                                          ---------------------------------------------------------
        Total other operating income                              1,535         1,318          4,381         3,952

Other operating expenses
      Salaries and employee benefits                              2,294         2,080          6,608         6,024
      Occupancy expense (net)                                       380           395          1,215         1,161
      Equipment expense                                             253           250            778           766
      Advertising Expense                                           124            78            397           347
      Other operating expense                                     1,054           941          3,018         2,656
                                                          ---------------------------------------------------------
        Total other operating expenses                            4,105         3,744         12,016        10,954

Income before income taxes                                        2,503         1,905          6,832         5,678

Income Taxes                                                        845           544          2,203         1,670

Net income                                                       $1,658        $1,361         $4,629        $4,008
                                                          =========================================================

Net income per share (Note 3)                                     $0.53         $0.43          $1.48         $1.26
                                                          =========================================================

</TABLE>

See accompanying notes.


<PAGE>

<TABLE>
<CAPTION>

PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
=========================================================================================
(Dollar amounts in thousands)


                                                       1997                    1996
                                                  -------------            ------------
<S>                                                  <C>                     <C>    
Balance at January 1                                   $45,349                 $41,636

      Net Income                                         4,629                   4,008

      Cash dividends                                    (1,026)                   (871)

      Repurchase of common stock                        (1,734)                   (556)

      Change in net unrealized loss on
        available-for-sale securities                      177                     (75)
                                                  -------------            ------------

Balance at September 30                                $47,395                 $44,142
                                                  =============            ============
</TABLE>



<PAGE>

<TABLE>
<CAPTION>

PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF CASH FLOWS
==========================================================================================================
(Dollar amounts in thousands)

                                                                             Nine months ended
                                                                                September 30,
                                                                        1997                     1996
                                                                     ------------            -------------
<S>                                                                       <C>                      <C>   
Cash flows from operating activities
       Net Income                                                         $4,629                   $4,008
       Adjustments to reconcile net income to net cash
         from operating activities
       Depreciation and amortization                                         820                      785
       Provision for loan losses                                           1,400                      750
       Net loss on investment securities                                      46                       27
       Net amortization/(accretion) on investments                           177                      294
       Net gain on the sale of loans                                        (152)                    (361)
       Change in interest payable and other liabilities                    2,133                      186
       Change in interest receivable and other assets                     (3,302)                    (937)
       Loans originated for sale, net of sales proceeds                      436                    1,840
                                                                     ------------            -------------

               Net cash from operating activities                          6,187                    6,592
                                                                     ------------            -------------


Cash flows from investing activities
       Proceeds from sales of available-for-sale securities               16,707                    2,972
       Proceeds from maturities of available-for-sale securities          17,645                   43,746
       Purchase of available-for-sale securities                         (87,373)                 (28,585)
       Loans made to customers, net of principal
         collection thereon                                              (56,655)                 (48,153)
       Property and equipment expenditures                                  (301)                     (57)
                                                                     ------------            -------------

         Net cash from investing activities                             (109,977)                 (30,077)
                                                                     ------------            -------------

Cash flows from financing activities
       Net change in deposits                                             95,163                   44,720
       Net change in short-term borrowings                                     5                  (10,274)
       Dividends paid                                                     (1,026)                    (871)
       Purchase of common stock                                           (1,734)                    (556)
                                                                     ------------            -------------

         Net cash from financing activities                               92,408                   33,019
                                                                     ------------            -------------

Net change in cash and cash equivalents                                  (11,382)                   9,534

Cash and cash equivalents at beginning of year                            32,252                   23,377
                                                                     ------------            -------------

Cash and cash equivalents at September 30                                $20,870                  $32,911
                                                                     ============            =============
</TABLE>


<PAGE>



PART I. FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis

 (Dollar amounts in thousands, except per share data)

General

The  business  of Peoples  Bank  Corporation  of  Indianapolis  (the  "Company")
consists  of holding and  administering  its  interest  in Peoples  Bank & Trust
Company  ("Peoples").  The principal  business of Peoples consists of attracting
deposits from consumer and commercial  customers and making loans to individuals
and  businesses.  Peoples  offers  various  products  for  depositors  including
checking and savings  accounts,  certificates of deposit and safe deposit boxes.
Loans consist  principally of loans to individuals  secured by mortgage liens on
residential  properties,  consumer loans generally  secured by personal property
and loans to businesses  generally secured by liens on business assets.  Peoples
also offers trust services to individuals, businesses and institutions.

The Company  operates 11 branch  locations,  a twelve  story  office in downtown
Indianapolis,  and an  operations  center.  Peoples  occupies five floors of the
downtown office building and leases six floors to tenants.  The top floor houses
the board room and a training area.  Leased tenant space at the downtown  office
remains at near capacity.

The Board of Directors of the Company approved on July 18, 1996, the repurchase,
from time to time, of 200,000  nonvoting  common shares on the open market.  The
Board  believed that the shares had been at times  undervalued in the market and
that it was in the best interest of the  shareholders  and the Company to effect
such share  repurchases.  At September  30, 1997, a total of 102,894  shares had
been repurchased at an average price of $22.32.

The book value per share of Peoples  nonvoting  common  shares at September  30,
1997, was $ 15.40.  For the third  quarter,  the low trading price per share was
$25.50, and the high trading price per share was $35.25.

On September  18,1997,  Peoples  declared a cash dividend in the amount of $.115
per share,  payable October 17, 1997, to  shareholders  of record  September 30,
1997.  This dividend  represents a 4.5%  increase  over the second  quarter 1997
dividend and is the fifth  consecutive  quarter in which Peoples has declared an
increase in dividends.


<PAGE>


Selected ratios and summary data.

                                            At or for the Nine Months Ended
                                                    September  30,
                                              1997                  1996
                                              ----                  ----

Assets                                       $570,824              $454,206
Loans (includes loans held for sale)          389,564               320,153
Deposits                                      506,968               396,482
Shareholders Equity                            47,395                44,142
Book value per share                            15.40                 14.03

Earnings per share                              $1.48                 $1.26
Dividends per share                             $0.33                $0.275
Net Interest Margin (FTE)                       4.53%                 4.60%
Return on Average Assets                        1.20%                 1.23%
Return on Average Equity                       13.29%                12.40%

Average Shares Outstanding                  3,124,222             3,175,910

Total Shares Outstanding                    3,077,090             3,146,584



Net Income

Net income for the third  quarter of 1997 was $1,658  compared to $1,361 for the
third  quarter of 1996,  an increase of 21.82% or $297.  Net income for the nine
months ended  September  30, 1997,  was $4,629 which  represents  an increase of
15.49% or $621 from net income of $4,008 for the nine months ended September 30,
1996. Net income per share for the third quarter 1997 increased  $0.10 or 23.25%
to $0.53 from $0.43 for the third quarter of 1996.  Net income per share for the
first nine months of 1997 was $1.48  compared to $1.26 for the first nine months
of  1996,  an  increase  of $0.22 or  17.46%.  The  increase  in net  income  is
attributable to increases in net interest income and  non-interest  income which
exceeded increases in non-interest expense.

Net Interest Income

Net interest income is the principal component of net income for the Company and
represents the difference  between  interest earned on loans and investments and
the interest  cost of deposits  and other  borrowed  funds.  For the nine months
ended  September  30, net  interest  income was $15,867 and $13,430 for 1997 and
1996, respectively. This reflects an increase of $2,437 or 18.15%. For the third
quarter  of 1997 and 1996,  respectively,  net  interest  income  was $5,573 and
$4,631 an increase of $942 or 20.34%.


<PAGE>

Interest  income for the nine months ended September 30, was $28,726 and $23,804
for 1997 and 1996,  respectively.  Interest income for the third quarter of 1997
and 1996,  respectfully,  was $10,492 and $8,262 an increase of $2,230 or 26.99%
due primarily to increases in earning assets. Total interest expense was $12,859
and  $10,374  for  the  nine  months  ended   September  30,  1997,   and  1996,
respectively.  For the  third  quarter  of 1997 and  1996,  respectively,  total
interest expense was $4,919 and $3,631 an increase of $1,288 or 35.47%.

Interest and fees on loans  increased  from $19,248 for the first nine months of
1996 to $23,107  for that period in 1997,  an increase of $3,859 or 20.05%.  For
the third  quarter of 1997 and 1996,  respectively,  interest  and fees on loans
were  $8,264 and $6,737 an  increase of $1,527 or 22.67%.  These  increases  are
attributable  primarily  to an increase in loans  outstanding.  Total loans were
$320,153 at September  30, 1996,  compared to $389,564 at September 30, 1997, an
increase of $69,411 or 21.68%.

The Company's net interest margin, or margin on earning assets,  decreased 0.02%
from 4.38% for the first nine  months of 1996 to 4.36% for the first nine months
of 1997. On a tax equivalent  basis, the Company's net interest margin was 4.60%
and 4.53%,  respectively,  for those  periods.  For the third  quarter,  the net
interest  margin  decreased  2.78%  from 4.32% in 1996 to 4.20% in 1997 due to a
significant increase in lower-yielding  investment securities. On tax equivalent
basis,  the  Company's  net  interest  margin  was 4.53% and 4.35% for the third
quarters of 1996 and 1997, respectively.

Provision & Allowance for Loan Losses

The  provision  for loan  losses was $1,400 for the first nine months of 1997 as
compared  to $750 for the first  nine  months of 1996,  an  increase  of $650 or
86.67%. The allowance for loan losses at September 30, 1997, was $5,119 or 1.31%
of total loans  compared to $3,900 or 1.17% of total loans at December 31, 1996.
Gross charge-offs  during the first nine months of 1997 were $447 and recoveries
were $266.

The adequacy of the allowance for loan loss is evaluated at least quarterly by a
credit review officer and management  based upon the review of identified  loans
with more than a normal degree of risk,  historical loan loss  percentages,  and
present and forecasted economic conditions. Management's analysis indicated that
the  allowance  for loan losses at  September  30,  1997,  was adequate to cover
potential  losses on identified  loans with credit problems and potential losses
on the remaining loan  portfolio  based on historical  percentages.  Peoples has
made an effort to increase the allowance  through increases in the provision for
loan losses in order to target the ratio of the  allowance to total loans rather
than due to any specific decrease in credit quality.

<PAGE>

Other Operating Income

Non-interest  income totaled $4,381 for the first nine months of 1997,  compared
to $3,952 for that period of 1996,  an increase of $429 or 10.86%.  Non-interest
income  was  $1,535  and  $1,318  for  the  third  quarters  of 1997  and  1996,
respectively, an increase of $217 or 16.46%. Trust fees were $1,112 and $988 for
the first nine  months of 1997 and 1996,  respectively,  an  increase of $124 or
12.55%.

Service  charges on deposit  accounts,  which comprise the largest  component of
non-interest income, were up for the first nine months of 1997 compared with the
same periods of 1996. Service charge income was $2,245 for the nine months ended
September  30,  1997,  an increase  of $478 or 27.05%,  from $1,767 for the same
period in 1996. For the three month periods ending September 30, 1997, and 1996,
service  charge  income was $791 and $674  respectively,  an increase of $117 or
17.36%. The increase in service charge income can be traced to a review of local
market fees during late 1996 which resulted in increases in many service charges
to market levels.

Mortgage  banking  revenue  includes net gains and losses realized when mortgage
loans are sold into the  secondary  market and service  fee revenue  earned from
servicing  those loans  after they are sold.  Mortgage  banking  revenue for the
first nine  months of 1997 was $325,  reflecting  a decrease  of $190 or 36.89%,
compared to $515 for the same period in 1996.  Mortgage  banking revenue for the
third  quarter of 1997 and 1996,  respectively,  was $89 and $149, a decrease of
$60 or 40.27%.  The decrease in mortgage  banking  revenue is associated  with a
change in the  bank's  mortgage  origination  strategy.  During  1996,  the bank
reduced  staff  in  this  area  by more  than  fifty  percent  and  focused  its
origination  efforts on adjustable  rate mortgage  loans which would not be sold
into the secondary market. During the third quarter of 1996, the bank originated
$ 4.7  million  in loans  sold into the  secondary  market  and $8.7  million in
adjustable  rate  mortgages  retained by the bank.  During the third  quarter of
1997, the bank originated  $2.0 million in loans sold into the secondary  market
and $11.0 million in adjustable rate mortgages retained by the bank.

Other operating  income  increased  during the first nine months of 1997 to $745
from $710 for the same period in 1996, an increase of $35 or 4.93%.

Other Operating Expenses

Total other operating  expenses were $12,016 for the nine months ended September
30, 1997,  compared  with $10,954 for that period in 1996.  This  represents  an
increase of $1,062,  or 9.70%.  Total  other  operating  expenses  for the third
quarter of 1997 and 1996,  respectively,  were  $4,105 and $3,744 an increase of
$361 or 9.64%. Salary and employee benefit expense was $6,608 for the first nine
months of 1997,  an  increase  of $584 or 9.69%  from  6,024 for the first  nine

<PAGE>

months of 1996.  Salary and employee  benefit  expense for the third  quarter of
1997 and 1996,  respectively,  were  $2,294 and  $2,080,  an increase of $214 or
10.29%. The increase was primarily  associated with an increase in headcount and
in salary and wage rate increases.

Occupancy  expense was $1,215 for the first nine months of 1997,  an increase of
$54, or 4.65% from $1,161 for the first nine months of 1996.  Occupancy  expense
was $380 for the third quarter of 1997, a decrease of $15 or 3.80% from $395 for
the third quarter of 1996. Equipment expenses were $778 and $766,  respectively,
for the  first  nine  months  of 1997 and  1996,  an  increase  of $12 or 1.57%.
Equipment  expense was $253 for the third  quarter of 1997, an increase of $3 or
1.20% from $250 for the same period in 1996.

Advertising  expenses were $397 and $347,  for the first nine months of 1997 and
1996, respectively,  an increase of $50 or 14.41%. For the third quarter of 1997
and 1996,  advertising expenses were $124 and $78, an increase of $46, or 58.97%
over the same period in 1996.  Other  operating  expenses were $2,980 and $2,654
for the first nine months of 1997 and 1996, respectively, an increase of $326 or
12.28%.  For the third quarter of 1997 and 1996,  respectively,  other operating
expenses were $1,045 and $940, an increase of $105 or 11.17%.

Income Taxes

Income  taxes were  $2,203 for the first nine  months of 1997 and $1,670 for the
first nine months of 1996. On a quarterly comparison, income taxes were $845 for
the third quarter of 1997 and $544 for the third  quarter of 1996.  The increase
in taxes can be primarily attributed to increased profitability.

Balance sheet

Total assets were $570,824 at September  30, 1997,  and $471,478 at December 31,
1996,  an increase of $99,346.  The portfolio of  available-for-sale  securities
increased  from $94,589 at December 31, 1996, to $147,679 at September 30, 1997,
an increase of $53,090 or 56.13%.  The increase in the  portfolio  resulted from
growth in deposits exceeding loan growth. Total loans,  excluding loans held for
sale,  increased  during the first nine months of 1997 from $332,953 at December
31,  1996,  to $389,427 at  September  30,  1997.  This  reflects an increase of
$56,474 or 16.96%.  Commercial  loans increased $8,282 or 5.28% from $156,755 at

<PAGE>

December 31, 1996, to $165,037 at September 30, 1997.  Real estate loans,  which
consist  of  construction   loans  and  permanent   residential  and  commercial
mortgages,  increased  $27,376 or 27.68% from $98,891 at December  31, 1996,  to
$126,267 at September 30, 1997.  Consumer loans increased $20,877 or 27.77% from
$75,187 at December 31, 1996, to $96,064 at September 30, 1997, on strong growth
in home equity  lending.  Loans held for sale consist of  conforming  fixed rate
mortgage  loans that Peoples  sells in the  secondary  market  (having  retained
servicing rights with respect to such loans) and that are pending funding. Loans
held for sale were $421 at December 31, 1996,  compared to $137 at September 30,
1997.  The  amount  of loans  outstanding  (excluding  loans  held for sale) are
reflected in the following table.



                                     September 30,   December 31,  September 30,
                                         1997           1996           1996
                                     -------------   ------------  -------------
Real Estate                            $126,267       $ 98,891       $ 95,077
Commercial                              165,037        156,755        135,952
Consumer                                 96,064         75,187         70,892
Tax exempt                                2,059          2,120    
                                                                        2,154
Loans to Depository Institutions              0              0         15,000
                                       --------       --------       --------
                                                                  
Total Loans                             389,427        332,953        319,075
Less:  Allowance for Loan Losses          5,119          3,900          4,010
                                       --------       --------       --------
Net Loans                              $384,308       $329,053       $315,065
                                       ========       ========       ========
                                                               
Deposits  represent the primary source of funds for the Company.  Total deposits
increased $95,163 or 23.11%,  from $411,805 at December 31,1996,  to $506,968 at
September  30,  1997 due to the  Company's  competitive  position  on CD  rates.
Non-interest-bearing  deposits  decreased $8, or 0.00%, from $83,911 at December
31, 1996, to $83,919 at September 30, 1997. The Company's  deposit  balances are
reflected in the following table.

                                  September 30,   December 31,    September 30,
                                      1997            1996            1996
                                  -------------   ------------    -------------
Deposits:                                                        
                                                                 
         Non-interest-bearing       $ 83,919        $ 83,911        $ 76,839
                                                                 
            Interest-bearing         423,049         327,894         319,643
                                    --------        --------        --------
                                                                 
                  Total deposits    $506,968        $411,805        $396,482
                                    ========        ========        ========
                                                                 
Total deposits/total assets            88.81%          87.34%          87.29%
                                                              

Short-term  borrowings in the form of Federal funds, Federal Home Loan advances,
and  repurchase  agreements  are  acquired,  as  needed,  to  satisfy  temporary
liquidity needs. Many of the funds are from businesses with large cash balances.

<PAGE>

Though short-term in nature,  repurchase agreements have been and continue to be
a stable  source of funds for  Peoples.  Short-term  borrowings  were $10,271 at
September 30, 1997, as compared to $10,266 at December 31, 1996. This represents
an increase of $5 or 0.05%. At September 30, 1997, the bank had no federal funds
purchased,  and $1,000 in Federal Home Loan Bank advances.  All other short-term
borrowings were in the form of customer repurchase agreements.

Total  shareholders'  equity increased $2,046 or 4.51% for the nine months ended
September 30, 1997, to $47,395,  from $45,349 at December 31, 1996. The increase
in shareholders'  equity was the result of net income of $4,629,  less dividends
paid of $1,026,  plus the adoption of FAS No. 115 resulted in a $177 increase in
equity,  less the  repurchase of $ 1,734 of common stock.  The Company  issued a
2-for-1 share split effective July 18, 1997.

Credit Quality

Nonaccrual  loans are loans on which the  Company  no longer  accrues  interest.
Management  places a loan on nonaccrual status when the collection of additional
interest is unlikely  and the loan is not  considered  to be well secured and in
the  process of  collection.  Nonperforming  loans  consist of loans that are on
nonaccrual  status,  that  are 90 days  or  more  past  due as to  principal  or
interest,  or that are restructured.  If a loan is designated as a nonperforming
loan, management,  as a result of delinquent status or significant concern about
the ultimate  collectibility of the loan, typically ceases to recognize interest
income with respect to such loan and places it on nonaccrual status.

At September 30, 1997,  Management  designated $3,098 in loans as "impaired" for
the  purpose  of FAS  No.  114.  Management  has  further  determined  that  all
commercial non-accrual loans will be considered as impaired.

The following table shows the composition of nonperforming loans.


                                       September 30, December 31,  September 30,
                                           1997         1996           1996
                                       ------------- ------------  -------------
Nonperforming loans:                                                
                                                                    
         Total nonaccrual loans           $2,006       $  234         $  384
         Loans past due more than             17           49             92
           90 days and still accruing         --           --             --
                                                                    
         Total                            $2,023       $  283         $  476
                                          ======       ======         ======
                                                                 

<PAGE>

At  September  30,  1997,  nonperforming  loans  were  comprised  of  $1,855  of
commercial  loans,  $151  of  real  estate  loans  and  $17 of  consumer  loans.
Nonperforming  loans were  comprised of $143 of commercial  loans,  $140 of real
estate loans and $0 of consumer  loans at December 31,  1996.  At September  30,
1996,  nonperforming  loans consisted of $121 of commercial  loans, $307 of real
estate  loans  and $48 of  consumer  loans.  Asset  quality  continues  to be an
important  area of focus for the  Company.  Nonperforming  loans as a percent of
assets were 0.35% at  September  30, 1997,  and 0.06% at December 31, 1996.  The
Company  maintains  asset  quality  through  the use of  well-defined  policies,
underwriting criteria, and review processes.

Capital

The  Company  and Peoples  are  required  to comply  with  capital  requirements
promulgated  by their  primary  regulators  that  affect  their  ability  to pay
dividends and that can affect their operations.  Those  regulations  require the
maintenance of specified  levels of capital to total assets (leverage ratio) and
to risk weighted  assets (the  risk-based  capital  ratios).  These  regulations
require  the  maintenance  of a  leverage  ratio of at least  3.00%  and a total
risk-based  capital ratio of at least 8.00%. A financial  institution's  deposit
insurance assessment and, in certain circumstances,  operations will be affected
by its capital  level.  Institutions  with leverage  ratios of 5.00% or more and
total  risk-based  capital  ratios  of  10.00%  or more are  deemed  to be "well
capitalized," and accordingly,  pay the lowest deposit insurance  assessment and
are not subject to operational restrictions as outlined within the regulation.

As of September 30, 1997,  the  Company's  Tier I and total  risk-based  capital
ratios were 11.46% and 12.71%,  respectively.  The Company's  leverage ratio was
8.48% at September 30, 1997. As of September 30, 1997,  Peoples was in excess of
the minimum capital and leverage requirements necessary to be considered a "well
capitalized"  banking company as defined by Federal regulators.  The Company and
Peoples were in full  compliance  with all regulatory  capital  requirements  at
September 30, 1997.

<PAGE>


The following table provides the capital ratios for the entities.

                                        At September 30, 1997

                                                           Consolidated
                                     Bank Only               Company

Total assets                          $566,768                $570,824

Risked-based assets                    407,386                 409,446

Tier I capital                          41,251                  46,909

Total risk-based capital                46,344                  52,027

Leverage ratio                           7.51%                   8.48%

Tier I risk-based capital ratio         10.13%                  11.46%

Total risk-based capital                11.38%                  12.71%


<PAGE>


Item 6. EXHIBITS AND REPORTS ON FORM 8-K

         A.   Exhibits -

              Exhibit List appears following the Signature Page


         B.   Form 8-K - No reports on Form 8-K were filed during the quarter
                  ended September 30, 1997.



<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    PEOPLES BANK CORPORATION
                                    OF INDIANAPOLIS

                                    By: /s/ William. E. McWhirter
                                        ---------------------------------------
                                            William E. McWhirter
                                            Chairman and Chief Executive Officer


                                    By: /s/ Charles R. Hageboeck
                                        ---------------------------------------
                                            Charles R. Hageboeck
                                            Senior Vice President and Chief
                                            Financial Officer

                                    DATE: November 13, 1997


<PAGE>

                                 EXHIBIT INDEX

10.1           Employment Agreement between Registrant and Gerald R. Francis, 
               dated April 17, 1997

10.2           Guaranty Agreement between Registrant and Gerald R. Francis,
               dated April 17, 1997

10.3           Incentive Stock Option Agreement between Registrant and
               Gerald R. Francis, dated April 17, 1997

10.4           Stock Appreciation Award for Gerald R. Francis

10.5           Second amendment and complete restatement of the Registrant's
               Unfunded Supplemental Executive Retirement Plan 

10.6           Split Dollar Insurance Agreement between Registrant and
               Gerald R. Francis

10.7           Split Dollar Insurance Agreement between Registrant and
               William E. McWhirter

10.8           Split Dollar Insurance Agreement between Registrant and
               Charles R. Farber