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 June 30, 1998

     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 -       2,798,134 shares as of August 12, 1998
                  Voting    -         264,096 shares as of August 12, 1998




<PAGE>
                    PEOPLES BANK CORPORATION OF INDIANAPOLIS

                                      INDEX



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements


              Consolidated Balance Sheets at June 30, 1998
              and December 31, 1997.........................................   2

              Consolidated Statements of Income for the three and 
              six months ended June 30, 1998 and 1997.......................   3

              Consolidated Statements of Comprehensive Income for the
              three and six months ended June 30, 1998 and 1997.............   4

              Consolidated Statements of Changes in Shareholders' Equity....   5

              Consolidated Statements of Cash Flows for the 
              six months ended June 30, 1998 and 1997.......................   6

              Notes to Consolidated Financial Statements....................   7

  Item 2.     Management's Discussion and Analysis of 
              Results of Operations and Financial Condition.................8-16

PART II.  OTHER INFORMATION

      Item 4.     Submission of Matters to a Vote of Security Holders.......  17

      Item 6.     Exhibitis and Reports on Form 8-K.........................  17

      Signatures     .......................................................  18



<PAGE>

PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED BALANCE SHEETS
================================================================================
(Dollar amounts in thousands)

<TABLE>
<CAPTION>

                                                                         June 30,             December 31,
                                                                           1998                   1997
                                                                     ------------------     -----------------
Assets
<S>                                                                   <C>              <C>        
      Cash and due from banks                                         $    23,337      $    25,462
      Federal funds sold                                                   27,200                0
                                                                      -----------      -----------
        Total cash and equivalents                                         50,537           25,462

      Available-for-sale securities                                       149,317          153,870

      Loans held for sale                                                     463              561
      Total loans                                                         438,899          406,893
        Allowance for loan losses                                          (7,258)          (5,516)
                                                                      -----------      -----------
        Loans, net                                                        431,641          401,377

      Premises and equipment, net                                           7,764            7,482
      Accrued income and other assets                                      13,731            9,724
                                                                      -----------      -----------
        Total assets                                                      653,453          598,476
                                                                      ===========     ===========

Liabilities

      Non interest-bearing deposits                                   $    86,801      $    82,132
      Interest-bearing deposits                                           481,438          426,179
                                                                      -----------      -----------
        Total deposits                                                    568,239          508,311

      Short-term borrowings                                                27,183           34,380

      Accrued expenses and other liabilities                                8,414            6,968
                                                                      -----------      -----------
        Total liabilities                                                 603,836          549,659

Shareholders' equity
      Common shares, no par value:
      Authorized:
        Voting - 300,000 shares

        Nonvoting - 4,000,000 shares

Issued:
        Voting -  264,096 shares                                              896              897
        Nonvoting -- 2,803,834 shares (1998)
                  -- 2,812,634 shares (1997)                               12,785           13,085

      Retained earnings                                                    35,326           34,220
      Net unrealized gain/(loss) on available-for-sale securities             610              615
                                                                      -----------      -----------
        Total shareholders' equity                                         49,617           48,817
                                                                      -----------      -----------
        Total liabilities and shareholders' equity                    $   653,453      $   598,476
                                                                      ===========      ===========
</TABLE>

See accompanying notes.


<PAGE>

PEOPLES BANK CORPORATION OF
INDIANAPOLIS
CONSOLIDATED STATEMENTS OF INCOME
================================================================================
(Dollar amounts in thousands, except
per share data)
<TABLE>
<CAPTION>

                                                   Three                       Six
                                               months ended                 months ended
                                                  June 30,                    June 30,
                                              1998         1997          1998         1997
                                            ------------------------------------------------
Interest income
<S>                                         <C>          <C>           <C>          <C>     
      Interest and fees on loans            $  9,360     $  7,667      $ 18,368     $ 14,843
      Interest on federal funds sold             126          298           231          518

      Interest on investments                  2,382        1,537         4,770        2,873
                                            ------------------------------------------------
        Total interest income                 11,868        9,502        23,369       18,234


Interest expense
      Interest on deposits                     5,462        4,056        10,687        7,688

      Interest on short-term borrowings          213          132           375          252
                                            ------------------------------------------------
        Total interest expense                 5,675        4,188        11,062        7,940
                                            ------------------------------------------------
Net interest income                            6,193        5,314        12,307       10,294

Provision for loan losses                        500          500         3,500          900
                                            ------------------------------------------------
Net interest income after
      provision for loan losses                5,693        4,814         8,807        9,394

Other operating income
      Trust fees                                 485          370           965          741

      Service charge income                      728          749         1,386        1,454

      Mortgage banking revenue                   178          109           357          236

      Net gain (loss) on investments               1          (38)            7          (39)

      Other operating income                     365          253           602          454
                                            ------------------------------------------------
        Total other operating income           1,757        1,443         3,317        2,846


Other operating expenses
      Salaries and employee benefits           2,673        2,184         5,290        4,314

      Occupancy expense (net)                    378          401           750          835

      Equipment expense                          346          262           658          525
      Advertising expense                        115          149           227          273
      Other operating expense                  1,253        1,062         2,527        1,964
                                            ------------------------------------------------
        Total other operating expenses         4,765        4,058         9,452        7,911


Income before income taxes                     2,685        2,199         2,672        4,329


Income Taxes                                     848          681           780        1,358

Net income                                  $  1,837     $  1,518      $  1,892     $  2,971
                                            ================================================
Net income per share (Note 3)
                                            ================================================
  Basic                                     $   0.60     $   0.49      $   0.62     $   0.95
                                            ================================================
  Diluted                                   $   0.58     $   0.48      $   0.60     $   0.94
                                            ================================================
</TABLE>

See accompanying notes.

<PAGE>

PEOPLES BANK CORPORATION OF
INDIANAPOLIS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
================================================================================
(Dollar amounts)

<TABLE>
<CAPTION>
                                                                Three                     Six
                                                             months ended             months ended
                                                               June 30,                 June 30,
                                                          1998         1997        1998         1997
                                                        ---------------------------------------------
<S>                                                     <C>          <C>         <C>          <C>    
Net income                                              $ 1,837      $ 1,518     $ 1,892      $ 2,971
  Other comprehensive income, net of tax:
    Change in unrealized gains/losses on securities         (18)         321          (5)          94
                                                        ---------------------------------------------
Comprehensive income                                    $ 1,819      $ 1,839     $ 1,887      $ 3,065
                                                        =============================================
</TABLE>

<PAGE>

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


                                                   1998          1997
                                                 --------      --------

Balance at January 1                             $ 48,817      $ 45,349

      Net Income                                    1,892         2,971

      Cash dividends                                 (784)         (673)

      Proceeds from exercise of stock option            3             0


      Repurchase of common stock                     (306)         (724)


      Change in unrealized
         gains (losses) on  securities:                (5)           94
                                                 --------      --------
Balance at June 30                               $ 49,617      $ 47,017
                                                 ========      ========

<PAGE>

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

                                                                          Six months
                                                                             ended
                                                                            June 30,
                                                                       1998          1997
                                                                     --------      --------
Cash flows from operating
activities
<S>                                                                  <C>           <C>     
       Net Income                                                    $  1,892      $  2,971
       Adjustments to reconcile net income to net cash
         from operating activities
       Depreciation and amortization                                      546           588
       Provision for loan losses                                        3,500             0
       Net (gain)/loss on investment securities                            (7)           39
       Net amortization/(accretion) on  investments                       (33)          119
       Net gain on the sale of loans                                     (257)         (119)
       Change in interest payable and other liabilities                 1,446           228
       Change in interest receivable and other assets                  (5,461)       (1,970)
       Loans originated for sale, net of sales proceeds                   355           (62)
                                                                     --------      --------
               Net cash from operating activities                       1,981         1,794
                                                                     --------      --------


Cash flows from investing activities
       Proceeds from sales of  available-for-sale securities                0        14,218
       Proceeds from maturities of available-for-sale securities       32,614        18,200
       Purchase of available-for-sale securities                      (26,281)      (54,471)
       Loans made to customers, net of principal
           collection thereon                                         (33,764)      (33,648)
       Property and equipment expenditures                             (1,119)          (50)
                                                                     --------      --------
         Net cash from investing activities                           (28,550)      (55,751)
                                                                     --------      --------

Cash flows from financing activities
       Net change in deposits                                          59,928        55,059
       Net change in  short-term borrowings                            (7,197)         (241)
       Proceeds from exercise of stock option                               3             0
       Dividends paid                                                    (784)         (673)
       Purchase of common stock                                          (306)         (724)
                                                                     --------      --------
         Net cash from financing activities                            51,644        53,421
                                                                     --------      --------

Net change in cash and cash equivalents                                25,075          (536)


Cash and cash equivalents at beginning of year                         25,462        32,252
                                                                     --------      --------

Cash and cash equivalents at June 30                                 $ 50,537      $ 31,716
                                                                     ========      ========
</TABLE>

<PAGE>

                    Peoples Bank Corporation of Indianapolis

                   Notes to Consolidated Financial Statements

                                  June 30, 1998

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

The following table presents share data used to compute earnings per share:

                                                         Year-to-date
                                                         At June 30,

                                                      1998            1997
                                                      ----            ----

Weighted average shares outstanding                 3,076,354       3,136,413
Dilutive effect of potential shares                    85,365          31,121
                                                    ---------       ---------
Shares used to compute diluted earnings per share   3,161,719       3,167,534



                                                          Three Month ended
                                                             June 30,

                                                        1998            1997
                                                        ----            ----

Weighted average shares outstanding                  3,075,848        3,129,231
Dilutive effect of potential shares                     81,968           39,762
                                                     ---------        ---------
Shares used to compute diluted earnings per share    3,157,816        3,168,993

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 1997. 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.

         Financial Accounting Standard No. 130, Reporting  Comprehensive Income,
is effective for both interim and year-end financial statements for fiscal years
beginning after December 15, 1997, and  establishes  standards for reporting and
display of comprehensive income and its components  (revenues,  expenses,  gains
and losses) in a full set of general-purpose financial statements. Comprehensive
income is defined  as all  changes in equity  other  than those  resulting  from
investments by owners or  distributions  to owners.  Net income,  therefore is a
component of comprehensive income.  Implementation of this Standard will require
additional disclosures in future financial reports but will not otherwise affect
the Company.

<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 June 30, 1998,  a total of 112,254  shares had been
repurchased at an average price of $23.23.

The book value per share of Peoples  nonvoting  common  shares at June 30, 1998,
was $16.17. For the second quarter,  the low trading price per share was $32.00,
and the high trading price per share was $38.375.

On June 18,  1998,  Peoples  declared a cash  dividend in the amount of $.13 per
share,  payable July 17, 1998,  to  shareholders  of record June 30, 1998.  This
dividend represents a 4.00% increase over the first quarter 1998 dividend and is
the eighth  consecutive  quarter in which  Peoples  has  declared an increase in
dividends.

<PAGE>


Selected ratios and summary data.
                                              At or for the Six Months Ended
                                                       June  30,
                                                   1998          1997
                                                --------       --------

Assets                                          $653,453       $528,192
Loans (includes loans held for sale)             439,362        368,181
Deposits                                         568,239        466,864
Shareholders Equity                               49,617         47,017
Book value per share                               16.17          15.10

Earnings per share (basic)                         $0.62          $0.95
Earnings per share (diluted)                       $0.60          $0.94
Dividends per share                               $0.255         $0.215
Net Interest Margin (FTE)                           4.37%          4.65%
Return on Average Assets                            0.62%          1.20%
Return on Average Equity                            7.91%         12.87%

Average Shares Outstanding
         -   Basic                             3,076,354      3,136,413
         -   Diluted                              85,365         31,121

Total Shares Outstanding                       3,161,719      3,167,534

Net Income

Net income for the second quarter of 1998 was $1,837  compared to $1,518 for the
second  quarter of 1997, an increase of 21.01% or $319. Net income for the first
six months of 1998 was $1,892  compared to $2,971 for the same period in 1997, a
decrease of 36.32% or $1,079.  Basic net income per share for the second quarter
of 1998 was  $0.60,  an  increase  of $0.11 or 22.44%  from $0.49 for the second
quarter of 1997. Basic net income per share for the first six months of 1998 was
$0.62,  a decrease of $33 or 34.74% from $0.95 for the same period in 1997.  The
decrease  in net  income  is  attributable  to  management's  and the  board  of
directors'  election to recognize  losses on impaired  loans and to write down a
low-income housing tax credit investment.  Additionally, loan loss reserves were
strengthened  in response to increased  levels of criticized  and  nonperforming
loans.


<PAGE>

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 three months
ended  June 30,  net  interest  income  was $6,193 and $5,314 for 1998 and 1997,
respectively. This reflects an increase $879 or 16.54%. For the six months ended
June 30, net interest income was $12,307 and $10,294.  This reflects an increase
of $2,013 or  19.56%.  Interest  income for the three  months  ended June 30 was
$11,868 and $9,502 for 1998 and 1997,  respectively,  an increase of $2,366,  or
24.90%. Interest income for the six months ended June 30 was $23,369 and $18,234
for 1998 and 1997,  respectively,  an  increase  of  $5,135,  or  28.16%.  Total
interest expense was $5,675 and $4,188 for the three months ended June 30, 1998,
and 1997, respectively, an increase of $1,487, or 35.51%. Total interest expense
was  $11,062  and  $7,940  for the six months  ended  June 30,  1998,  and 1997,
respectively, an increase of $3,122, or 39.32%. This increase in interest income
is attributable to loan growth of 19.33% and growth in investments of 28.10%.

Interest and fees on loans  increased from $7,667 for the second quarter of 1997
to $9,360 for that period in 1998, an increase of $1,693 or 22.08%. Interest and
fees on loans increased from $14,843 for the first six months of 1997 to $18,368
for that period in 1998,  an increase of $3,525 or 23.75%.  These  increases are
attributable to an increase in loans  outstanding.  Total loans were $439,362 at
June 30, 1998,  compared to $368,181 at June 30, 1997, an increase of $71,181 or
19.33%.

The Company's net interest margin, or margin on earning assets,  decreased 3.75%
from  4.42% for the second  quarter  of 1997 to 4.26% for the second  quarter of
1998. On a tax equivalent basis, the Company's net interest margin was 4.65% and
4.37%,  respectively,   for  those  periods,  a  decrease  of  6.02%.  The  most
significant  reason for the decrease in the net interest  margin in 1998 was the
increase in security  balances.  While this strategy reduced interest rate risk,
enhanced net interest income,  and resulted in significant  unrealized gains, it
also  reduced  the net  interest  margin.  Had  the  Company  not  significantly
increased investment security balances,  the net interest margin would have been
up  slightly.  The  stability  of the net  interest  margin  (absent  investment
securities  purchases)  occurred  at the same  time that the  balance  sheet was
growing  significantly,  demonstrating  that  balance  sheet growth was achieved
without sacrificing pricing.

Provision & Allowance for Loan Losses

The  provision  for loan  losses  was $3,500 for the first six months of 1998 as
compared  to $900 for the first six  months of 1997,  an  increase  of $2,600 or
288.89%.  The allowance for loan losses at June 30, 1998, was $7,258 or 1.65% of
total loans  compared to $5,516 or 1.36% of total  loans at December  31,  1997.
Gross charge-offs during the first six months of 1998 were $2,330 and recoveries
were $571.

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.  During the first quarter, provision
expense of $3,000 was necessitated by net charge-offs of $2,183.  Net recoveries
of $425 were recorded  during the second quarter of 1998  (including  recoveries
from loans charged off during the first quarter).  Management expects additional
recoveries against these loans during the remainder of 1998. Management believes
that the allowance for loan losses should be maintained a strong level given the
mature status of the economy. Therefore,  management anticipates maintaining the
allowance for loan losses in the range of 1.50% to 1.75% so long as the level of
non-performing  loans  remains  at  its  current  level.  Management's  analysis
indicated  that the allowance for loan losses at June 30, 1998,  was adequate to
cover  potential  losses on identified  loans with credit problems and potential
losses on the remaining loan portfolio based on historical percentages.

Other Operating Income

Non-interest  income totaled $1,757 for the second quarter of 1998,  compared to
$1,443 for that  period of 1997,  an  increase  of $314 or 21.76%.  Non-interest
income totaled  $3,317 for the first six months of 1998,  compared to $2,846 for
that period in 1997,  an  increase  of $471 or 16.55%.  Trust fees were $485 and
$370 for the second quarter of 1998 and 1997, respectively,  an increase of $115
or 31.08%.  For the first six months of 1998 and 1997,  trust fees were $965 and
$741, an increase of $224 or 30.23%.

Service  charges on deposit  accounts,  which comprise the largest  component of
non-interest  income, were down for the second quarter of 1998 compared with the
same periods of 1997.  For the three month  periods  ending June 30,  1998,  and
1997, service charge income was $728 and $749 respectively, a decrease of $21 or
2.80%. For the six month periods ending June 30, 1998, and 1997,  service charge
income  was  $1,386 and $1,454  respectively,  a decrease  of $68 or 4.68%.  The
decrease  in  service  charge  income  can be traced to a  decrease  in fees for
nonsufficient funds (NSF).

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
second  quarter  of 1998 was $178,  reflecting  an  increase  of $69 or  63.30%,
compared to $109 for the same period in 1997.  Mortgage  banking revenue for the
first six months of 1998 was $357,  reflecting  an  increase  of $121 or 51.27%,
compared to $236 for the same period in 1997.  The increase in mortgage  banking
revenue can be associated with stronger activity in the first six months of 1998
due to an increase in refinancing  activities  associated  with lower  long-term
interest  rates.  During 1997,  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 second
quarter of 1998,  the bank  originated  $5,952 in loans sold into the  secondary
market and $17,536 in adjustable rate mortgages retained by the bank compared to
$3,530 in loans sold and $11,243 in adjustable  rate  mortgages  retained in the
second quarter of 1997 .

Other operating  income increased during the second quarter of 1998 to $365 from
$253 for the same period in 1997, an increase of $112 or 44.27%. Other operating
income  increased  during the first six months of 1998 to $602 from $454 for the
same period in 1997, an increase of $148 or 32.60%. During the second quarter of
1997,  the  Company  began  to  offer  additional   products--mutual  funds  and
annuities--through  Peoples  Investment  Services,  Inc.,  a  subsidiary  of the
Company,  which are serviced  through a  third-party  vendor,  Invest  Financial
Corporation.  This area of  business  has grown and the  Company  has  increased
staffing to meet the growth. The increase in other operating income is primarily
associated with income of $168 for the first six months of 1998 from the sale of
products through Peoples Investment Services, Inc.

Other Operating Expenses

Total other  operating  expenses were $4,765 for the three months ended June 30,
1998,  compared with $4,058 for that period in 1997. This represents an increase
of $707,  or 17.42%.  For the first six months of 1998,  total  other  operating
expenses were $9,452,  compared with $7,911 for that period in 1997, an increase
of $1,541,  or 19.48%.  Salary and employee  benefit  expense was $2,673 for the
three months ended June  30,1998,  an increase of $489 or 22.39% from $2,184 for
the same period of 1997.  Salary and employee benefit expense was $5,290 for the
first six months of 1998, an increase of $976 or 22.62% from $4,314 for the same
period in 1997. This increase was primarily associated with salary and wage rate
increases,  increases  in staff,  and an expense of $177 for stock  appreciation
rights granted to the Company's Chief Operating Officer.

Occupancy expense was $378 for the second quarter of 1998, a decrease of $23, or
5.74%  from $401 for the  second  quarter  of 1997.  For the first six months of
1998,  occupancy expense was $750, a decrease of $85 or 10.18% from $835 for the
same period in 1997.  Equipment expenses were $346 and $262,  respectively,  for
the second quarter of 1998 and 1997, an increase of $84 or 32.06%. The reduction
in occupancy  expense is primarily  associated  with reductions in operating and
maintenance  expenses in the first six months of 1998. The increase in equipment
expense is primarily the result of  investments  in new  technology  including a
bank-wide  network,  platform  automation for the branch system,  and new office
equipment.

Advertising  expenses  were $115 and $149,  for the  second  quarter of 1998 and
1997,  respectively,  a decrease  of $34 or 22.82%.  For the first six months of
1998 and 1997, advertising expenses were $227 and $273, respectively, a decrease
of $46 or 16.85%. Other operating expenses were $1,253 and $1,062 for the second
quarter of 1998 and 1997,  respectively,  an increase of $191 or 17.98%. For the
first six months of 1998 and 1997,  other  operating  expenses  were  $2,527 and
$1,964,  respectively,  an increase of $563 or 28.67%.  The principal reason for
this  increase  was  management's  decision  to  recognize  a loss  of $355 on a
low-income housing investment through the second quarter.

Income Taxes

Income taxes were $780 for the first six months of 1998 and $1,358 for the first
six  months of 1997.  The  decrease  in taxes  can be  primarily  attributed  to
decreased income recognized during the first quarter.

Balance sheet

Total assets were $653,453 at June 30, 1998,  and $598,476 at December 31, 1997,
an increase of $54,977, or 9.19%. The portfolio of available-for-sale securities
decreased  from  $153,870 at December 31, 1997,  to $149,317 at June 30, 1998, a
decrease  of  $4,553 or  2.96%.  Total  loans,  excluding  loans  held for sale,
increased  during the first six months of 1998 from  $406,893  at  December  31,
1997,  to $438,899  at June 30,  1998.  This  reflects an increase of $32,006 or
7.87%.  Commercial  loans increased  $18,912 or 10.22% from $185,089 at December
31, 1997,  to $204,001 at June 30, 1998.  Real estate  loans,  which  consist of
construction loans and permanent residential and commercial mortgages, increased
$8,444 or 7.05% from  $119,640 at  December  31,  1997,  to $128,084 at June 30,
1998.  Consumer  loans  increased  $4,697 or 4.70% from $100,139 at December 31,
1997,  to $104,836 at June 30, 1998.  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 $561 at December 31, 1997, compared to $463 at
June 30, 1998. The amount of loans  outstanding  (excluding loans held for sale)
are reflected in the following table.


<TABLE>
<CAPTION>

                                       June 30,            December 31,      June 30,
                                         1998                  1997            1997

<S>                                        <C>                <C>             <C>     
Real Estate                                $128,084           $119,640        $117,750
Commercial                                  204,001            185,089         158,700
Consumer                                    104,836            100,139          89,053
Tax exempt                                    1,978              2,025           2,075
                                   -----------------    ---------------   -------------
Total Loans                                 438,899            406,893         367,578
Less: Allowance for Loan Losses               7,258              5,516           4,877
                                   =================    ===============   =============
                                           $431,641           $401,377        $362,701
                                   =================    ===============   =============
</TABLE>

Deposits  represent the primary source of funds for the Company.  Total deposits
increased $59,928 or 11.79%,  from $508,311 at December 31,1997,  to $568,239 at
June 30, 1998.  Non-interest-bearing  deposits  increased $4,669, or 5.68%, from
$82,132 at December 31, 1997, to $86,801 at June 30, 1998. The Company's deposit
balances are reflected in the following table.


<PAGE>
<TABLE>
<CAPTION>


                                               June 30,     December 31,     June 30,
                                                 1998           1997           1997
Deposits:
<S>                                          <C>            <C>             <C>      
               Non-interest-bearing          $  86,801      $  82,132       $  70,932
               Interest-bearing                481,438        426,179         395,932
                                         --------------   ------------   -------------
                         Total deposits      $ 568,239      $ 508,311       $ 466,864
                                         --------------   ------------   -------------
Total deposits/total assets                      86.96%         84.93%          88.39%
</TABLE>


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.  Overnight  repurchase  agreements  continue to be a source of
funds for  Peoples.  Many of the  funds  are from  businesses  with  large  cash
balances.  Short-term  borrowings  were $27,183 at June 30, 1998, as compared to
$34,380 at December 31, 1997. This represents a decrease of $7,197 or 20.93%. At
June 30, 1998, the bank had $11,183 in overnight  repurchase  agreements,  $0 in
federal funds purchased,  $6,000 in Federal Home Loan Bank advances, and $10,000
in borrowings through the Treasury Tax and Loan Note Option program.

Total shareholders' equity increased $800 or 1.64% for the six months ended June
30,  1998,  to $49,617,  from  $48,817 at December  31,  1997.  The  increase in
shareholders' equity was the result of net income of $1,892, less dividends paid
of $784,  plus the  adoption of FAS No. 115 resulted in a $5 decrease in equity,
less the  repurchase  of $306 of  common  stock,  plus the issue of $3 of common
stock due to the exercise of stock options.

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 June 30, 1998,  Management  designated  $2,233 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.



<PAGE>





The following table shows the composition of nonperforming loans.

<TABLE>
<CAPTION>

                                                June 30,       December 31,      June 30,
                                                  1998             1997            1997
Nonperforming loans:
<S>                                              <C>               <C>            <C>   
          Total nonaccrual loans                 $ 1,770           $ 3,626        $  784
           Loans past due more than
           ninety days and still accruing            127                16             4
                                              ===========       ===========    ==========
         Total                                   $ 1,897           $ 3,642         $ 788
                                              ===========       ===========    ==========
</TABLE>

At June 30, 1998,  nonperforming  loans were  comprised of $1,778 of  commercial
loans, $119 of real estate loans and $0 of consumer loans.  Nonperforming  loans
were comprised of $2,694 of commercial  loans,  $944 of real estate loans and $4
of consumer  loans at December 31, 1997. At June 30, 1997,  nonperforming  loans
consisted  of $322 of  commercial  loans,  $460 of real  estate  loans and $6 of
consumer loans. Asset quality continues to be an important area of focus for the
Company. Nonperforming loans as a percent of assets were 0.29% at June 30, 1998,
and 0.61% at December 31, 1997. 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 June 30, 1998,  the Company's Tier I and total  risk-based  capital ratios
were 10.48% and 11.73%, respectively.  The Company's leverage ratio was 7.92% at
June 30, 1998. As of June 30, 1998, 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 June 30, 1998.

<PAGE>



The following table provides the capital ratios for the entities.

                                           At June 30, 1998

                                                     Consolidated
                                     Bank Only           Company

Total assets                          $649,840          $653,453

Risked-based assets                    464,191           467,187

Tier I capital                          43,527            49,579

Total risk-based capital                49,347            55,436

Leverage ratio                            7.09%             7.92%

Tier I risk-based capital ratio           9.38%            10.48%

Total risk-based capital                 10.63%            11.73%



Year 2000 Readiness

Peoples is engaged in an aggressive  program to coordinate its Year 2000 efforts
with business  partners,  vendors,  service  providers and regulators.  In 1997,
Peoples  established  a Year 2000 Project to address the  challenges  associated
with Year 2000 and to resolve  Year 2000 risks to  business  operations.  A risk
assessment system is in place which  incorporates a vendor  management  program,
assessment of mission  critical  applications,  and a  comprehensive  validation
process with specific time lines.  Peoples has targeted December 31, 1998 as the
date when critical  systems and  applications  will be Year 2000 compliant.  The
Year 2000  Project has been  reviewed by both  Federal  and State  Examiners  to
ensure its compliance with regulatory  guidelines.  Peoples currently  estimates
costs of compliance with the Year 2000 issue at $100,000.



<PAGE>




PART II.  OTHER INFORMATION

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The  Company's  Annual  Meeting of  Stockholders  was held April 16,  1998.  The
following  members  were  elected to the  Company's  Board of  Directors to hold
office for a period of one year or until  their  successors  are duly chosen and
qualified.  Proxy votes comprised 76% percent of the outstanding  voting shares.
No shares were voted in person.

                                       Against or                Broker Non-
    Nominee                   For      Withheld      Abstain       Votes
    -------                   ---      --------      -------       -----
William E. McWhirter        210,625        0           560           0
Gerald R. Francis           210,625        0           560           0
Charles R. Farber           210,625        0           560           0
Robert B. Hirschman         210,625        0           560           0
Ethan Jackson               210,625        0           560           0
David W. Knall              210,625        0           560           0
Mary Ellen Rodgers          210,625        0           560           0
Stephen R. West             210,625        0           560           0
Darell E. Zink, Jr.         210,625        0           560           0

The shareholders also ratified the Peoples Bank Corporation of Indianapolis 1998
Stock  Option Plan with  183,065  shares  voting in favor of the plan and 26,440
shares voting against, with 1,680 shares abstaining.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

         A.  Exhibits -

                  27       Financial Data Schedule

         B.   Form 8-K - No reports on Form 8-K were filed during the quarter
                  ended June 30, 1998.


<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: August 13, 1998