<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                   FORM 10-KSB

   |X|  Annual report under Section 13 or 15(d) of the Securities Exchange
                 Act of 1934 for the fiscal year ended December 31, 2001.

   | |  Transition report under Section 13 or 15 (d) of The Securities
                 Exchange Act of 1934 for the transition period
                 from ____________to ___________

--------------------------------------------------------------------------------
                         COMMISSION FILE NUMBER 0-24501

                           BLUE RIVER BANCSHARES, INC.
--------------------------------------------------------------------------------

                 (Name of small business issuer in its charter)

                 Indiana                            35-2016637
     -------------------------------    ------------------------------------
     (State or other jurisdiction of    (I.R.S. Employer Identification No.)
     incorporation or organization)


                29 E. Washington St., Shelbyville, Indiana 46176
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number (317) 398-9721

       Securities to be registered under Section 12 (b) of the Act: None.

                  Securities to be registered under Section 12 (g)
                                  of the Act:

                           Common Shares, No Par Value
                           ---------------------------
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act during the past 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.

                                 Yes |X| No | |
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |X|

State issuer's net interest income for the year ended December 31, 2001:
$3,816,000.

State the aggregate market value of the voting and non-voting common stock held
by non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked price of such common stock, as of a specified
date within the past 60 days (See definition of affiliate in Rule 12b-2 of the
Exchange Act): The aggregate market value of the voting common stock of the
issuer held by non-affiliates, based upon the price of a share of common stock
as quoted on the Small-Cap Issues Market of NASDAQ on March 15, 2002 was
$8,075,000.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,549,913 as of March 15, 2002.

DOCUMENTS INCORPORATED BY REFERENCE. If the following documents are incorporated
by reference, briefly describe them and identify the part of the Form 10-KSB
(e.g. Part I, Part II, etc.) into which the document is incorporated: (1) any
annual report to security holders; (2) any proxy or information statement; (3)
any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of
1933 ("Securities Act"). The listed documents should be clearly described for
identification purposes (e.g. annual report to security holders for fiscal year
ended December 31, 2001). The Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held is incorporated by reference into Part III
hereof, and the Annual Report of Shareholders for the year ended December 31,
2001 is incorporated by reference into Part II hereof.

Transitional Small Business Disclosure Format: Yes | | No |X|
Total number of sequentially numbered pages  - 77
Exhibit index on sequentially numbered pages - 24


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FORM 10-KSB TABLE OF CONTENTS
-----------------------------

<TABLE>
<CAPTION>
                                                                                PAGE
                                                                                ----
<S>                                                                             <C>
PART I

 Item  1 -   Description of Business........................................       4

 Item  2 -   Description of Property........................................      19

 Item  3 -   Legal Proceedings..............................................      20

 Item  4 -   Submission of Matters to a Vote of Security Holders ...........      22

PART II

 Item  5 -   Market for Common Equity and Related Stockholder Matters.......      22

 Item  6 -   Management's Discussion and Analysis or Results of Operation...      22

 Item  7 -   Financial Statements...........................................      22

 Item  8 -   Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure.......................................      23

PART III

 Item  9 -   Directors, Executive Officers, Promoters and Control
             Persons; Compliance with Section 16(a) of the Exchange Act.....      23

 Item 10 -   Executive Compensation ........................................      23

 Item 11 -   Security Ownership of Certain Beneficial Owners and
             Management ....................................................      23

 Item 12 -   Certain Relationships and Related Transactions.................      23

 Item 13 -   Exhibits, Financial Statement Schedules and Reports on
             Form 8-K.......................................................      24

             Signature Page.................................................      25
</TABLE>


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PART I.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Blue River Bancshares, Inc. (the "Company") was organized on March 18, 1997 for
the purpose of acquiring or forming a bank to be headquartered in Shelbyville,
Indiana. On February 5, 1998, the Company entered into an Agreement of
Affiliation and Merger (the "Merger Agreement") with Shelby County Bancorp
("SCB" or the "Predecessor") and Shelby County Savings Bank (the "Bank")
pursuant to which the Company would acquire the Bank through the merger of SCB
into the Company (the "Merger").

On June 26, 1998, the Successor completed a successful public offering of
1,500,000 new common shares at a price of $12 per share and acquired the Bank
pursuant to the Merger Agreement. At the closing of the Merger, the Bank's name
changed to "Shelby County Bank."

In December 1998, the Bank announced its intention to expand into the Fort
Wayne, Indiana market. The Bank received regulatory approval in 1999 and
commenced operations of two locations in September 1999.

On December 31, 2001, the Company's wholly owned subsidiary, Shelby County Bank
(the "Bank"), completed the sale of its two Fort Wayne branches pursuant to a
Branch Purchase and Assumption Agreement (the "Agreement") entered into with
Community First Bank and Trust, an Ohio state-chartered bank ("Community") on
October 17, 2001. The Agreement provided for Community's assumption of certain
deposit and other liabilities and purchase of certain assets of two branch
offices of the Bank. The affected branches, operating as First Community Bank,
are located at 7131 West Jefferson Boulevard, Fort Wayne, Indiana and 6154 Saint
Joe Center Road, Fort Wayne, Indiana (collectively, the "Branches").

Under the terms of the Agreement, Community acquired the loans, personal
property, fixed assets, cash, records, and real property lease interests of the
Branches. Also Community assumed specific deposit and certain other liabilities
of the Branches. The Bank retained approximately $33 million of time deposits.
The transaction involved the purchase of approximately $31 million in assets and
the assumption of approximately $11 million in liabilities. The difference
between the assets and liabilities was offset by a cash payment from Community
to the Bank of approximately $20 million. Community also retained all the
employees of the First Community branches.

All of the financial institutions in Shelby County, Indiana, except for the
Bank, are affiliated either with large out-of-state holding companies or with
medium-sized holding companies headquartered outside of Shelby County.
Accordingly, management of the Company believes that a locally-managed bank
located in Shelbyville can attract those customers who prefer to conduct
business with a local institution that demonstrates an active interest in their
business and personal financial affairs and can provide timely responses and
personal attention by its executive officers. The Company intends for the Bank
to maintain a strong commitment to community banking.

The Bank's offices are located in the Indiana cities of Shelbyville, Morristown
and St. Paul in Shelby County. The retail strategy of the Bank is to offer,
primarily in Shelby County and contiguous counties, a wide range of basic
banking products and services that are reasonably priced and easily understood
by the customer. The Bank's commercial strategy centers on small to medium-sized
businesses.

REGULATORY MATTERS

On July 10, 2000 the Office of Thrift Supervision (the "OTS") issued a letter
which formally designated Shelby County Bank to be in "troubled condition" based
upon the preliminary findings of the OTS' then ongoing examination of the Bank.
The OTS expressed supervisory concern relating to the Bank's management,
operating losses, interest rate risk sensitivity, internal controls and loan
documentation. Pursuant to the letter, the Bank is subject to the following
restrictions: (i) no increase in total assets during any quarter in excess of an
amount equal to interest credited on deposits during the quarter without prior
written approval of the OTS, (ii) prior OTS approval of

                                        4
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all executive compensation and agreements and the hiring of any executive
officer, director or consultant or changing the responsibilities of any current
executive officer, (iii) prior notice to the OTS of all transactions between the
Bank and its affiliates, (iv) prior OTS approval of all transactions between the
Bank and third parties outside the normal course of business and (v) no golden
parachute payments by the Bank, unless permissible pursuant to applicable law.
The Company and the Bank are taking action to address the concerns set forth in
this letter. The growth restrictions imposed by the OTS may have a material
adverse effect on the Bank's operations.

On February 7, 2001 the OTS issued a letter which formally designated Blue River
Bancshares, Inc. to be in "troubled condition" pursuant to the results of the
March 13, 2000 examination. This letter places restrictions on the Company to
notify the OTS at least 30 days prior to adding or replacing of members of the
board of directors, or employing or changing responsibilities of senior
executive officers. The letter also prohibits golden parachute payments unless
such payments are permitted by regulation.

On April 5, 2001, the OTS notified Shelby County Bank in writing that the
business plan and budget submitted by the Bank had been approved. Although the
Bank is no longer subject to the growth restrictions previously imposed by the
OTS, the Bank may not make any significant changes to its business plan and
budget without prior approval of the OTS. The Bank's business plan and budget
contemplates minimal growth in the foreseeable future. However, there can be no
assurances that the Bank will grow. In fact, depending on business conditions,
the Bank's size may decrease.

ENVIRONMENTAL MATTERS RELATING TO ST. PAUL PROPERTY

In August 1993, the Bank discovered the presence of petroleum compounds in both
the soil and groundwater underlying the property at the St. Paul branch of the
Bank. A portion of the property was the site of a former gasoline station. The
Bank engaged an environmental remediation firm to remove the "free product"
(i.e., gasoline) which was floating on top of the water table at the St. Paul
site. The cost of this clean-up work was approximately $10,000. On April 13,
1995, the Bank sold a portion of the St. Paul property to a resident of St.
Paul, Indiana for nominal consideration. The Bank apprised the buyer of the
environmental matters relating to the real estate sold, and the buyer released
and indemnified the Bank from all future liability connected with environmental
conditions on this property. There can be no assurance that a third party will
not make a claim against the Bank with respect to the contamination on or
originating from this portion of the St. Paul property or that if such a claim
were made that the indemnification of the Bank by the buyer of the property
would be sufficient to reimburse the Bank for any damages relating to such
claim.

With respect to the portion of the St. Paul property still owned by the Bank, in
early 1996, the Bank discovered the presence of diesel or fuel oil and gasoline
constituents in the groundwater. In early 1997, a heating oil storage tank was
removed from the ground and the area was remediated by excavating the soil
surrounding the location of the tank and replacing it with granular fill
material. An environmental remediation firm engaged by the Bank performed the
tank removal and remediation.

Prior to the acquisition, the Bank agreed with the Company in April 1998 to
begin the process of submitting the St. Paul branch location into Indiana's
Voluntary Remediation Program (the "VRP"). Again, the Bank engaged an
environmental consultant to assist it in this process. After performing
preliminary testing, the consultant informed the Bank that remediation would be
necessary to remove diesel or fuel oil and gasoline constituents in the
groundwater. The consultant estimated the remediation and costs associated with
the VRP to be $157,920 plus any costs incurred by the Indiana Department of
Environmental Management ("IDEM") which were believed to be immaterial. The Bank
charged to expense approximately $150,000 in its income statement for the period
ended March 31, 1998.

In contemplation of entering the VRP, the Bank's environmental consultant,
during the summer of 1998, performed additional testing on the portion of the
St. Paul property still owned by the Bank. These tests confirmed the presence of
diesel or fuel oil and gasoline constituents in the groundwater. Assuming
successful completion of the VRP, as the program currently exists, is
interpreted and is applied, which may include further remediation of the site,
IDEM

                                        5
<PAGE>
will issue a Certificate of Completion (which is recorded) and the Governor of
the State of Indiana will issue a Covenant Not to Sue.

Additionally, IDEM and the U.S. Environmental Protection Agency ("EPA") have a
Memorandum of Agreement that provides in substance that once a Certificate of
Completion has been issued by IDEM, unless the site poses an immediate and
substantial threat to human health and the environment, EPA will not plan or
anticipate any federal action under the Superfund law. Based upon the extent of
the contamination found during the summer of 1998, the Bank's environmental
consultant revised its estimate for completion of the project. On November 17,
1998 the Bank's environmental consultant estimated that the total cost for
completion of the VRP, including the remediation prior to entering the VRP, was
$238,000 plus any costs incurred by IDEM which are believed to be immaterial.
The additional cost associated with the VRP was added to the Company's goodwill
resulting from the merger.

The Company has been actively remediating the site since April of 1999. No "free
product" has been detected for several quarters and the levels of dissolved
phase contamination in the groundwater are generally decreasing. During the
fourth quarter of 2000, the Bank's management evaluated the project status with
the environmental consultant to assess the status of the remediation process.
During this discussion, it was determined that the remediation period is
expected to last longer than the original estimate. The environmental consultant
estimated that an additional one to two years of active remediation may be
necessary; and that the total costs to completion of the remediation and VRP
process should range from $123,500 to $188,000. The Company incurred an
additional $50,000 charge against earnings for 2000 to adjust the accrual to
cover future estimated costs. There can be no assurance that the Bank will
successfully complete the VRP or that the cost relating to the VRP will not
exceed $288,000 plus any costs incurred by IDEM which are believed to be
immaterial.

On November 19, 2001 the Company entered into a Voluntary Remediation Agreement
with IDEM. Even if the Bank successfully completes the VRP, there can be no
assurance that a non-governmental entity or person will not make a claim against
the Bank with respect to the environmental matters relating to the St. Paul
property.

MARKET AREA

The Bank's primary service area is Shelby County, which is located approximately
25 miles southeast of Indianapolis, Indiana. According to the 2000 Census,
Shelby County's population is 43,445, ranked 33rd of 92 Indiana counties. The
population has increased 7.8% compared to the 1990 census, ranking 45th in
population growth in the state over the ten-year period. According to a
projected population survey conducted by the Kelley School of Business at
Indiana University in February, 1999, Shelby County is projected to be 43rd
among the 92 counties in population growth projected to 2020. According to STATS
Indiana, Shelby County businesses employed 23,750 full and part-time workers in
2000. Of the total payrolls, 96.2% were from nonfarm employment, with the most
prevalent segments being manufacturing (29.1%), services (19.0%), retail trade
(16.0%). Shelby County ranks 28th in per capita income in 1999 and 25th in the
state in median household income in 1998. The unemployment rate in Shelby County
was 4.1% in December 2001, compared to a state average of 4.9%. Total deposits
held by Shelby County financial institutions were $396 million at June 30, 2001,
according to the FDIC/OTS Summary of Deposits report.

The Company's address is 29 East Washington Street, P.O. Box 927, Shelbyville,
Indiana 46176 and its telephone number is (317) 398-9721.

SERVICE CORPORATION SUBSIDIARY

OTS regulations permit federal savings associations to invest in the capital
stock, obligations, or other specified types of securities of subsidiaries
(referred to as "service corporations") and to make loans to such subsidiaries
and joint ventures in which such subsidiaries are participants in an aggregate
amount not exceeding 2% of an association's assets, plus an additional 1% of
assets if the amount over 2% is used for specified community or inner-city
development purposes. In addition, federal regulations permit associations to
make specified types of loans to such subsidiaries (other than special-purpose
finance subsidiaries), in which the association owns more than 10% of the stock,
in an aggregate amount not exceeding 50% of the association's regulatory capital
if the association's

                                        6
<PAGE>
regulatory capital is in compliance with applicable regulations. FIRREA requires
a savings association that acquires a non-savings association subsidiary, or
that elects to conduct a new activity within a subsidiary, to give the Federal
Deposit Insurance Corporation ("FDIC") and the OTS at least 30 days advance
written notice. The FDIC may, after consultation with the OTS, prohibit specific
activities if it determines such activities pose a serious threat to the Savings
Association Insurance Fund (the "SAIF"). Moreover, FIRREA requires savings
associations to deduct from capital, for purposes of meeting the core capital,
tangible capital, and risk-based capital requirements, their entire investment
in and loans to a subsidiary engaged in activities not permissible for a
national bank (other than exclusively agency activities for its customers or
mortgage banking subsidiaries).

The Bank wholly owns two subsidiaries. First Tier One Corporation, an Indiana
corporation, holds common stock issued by Intrieve, Inc., the Bank's data
processing provider. Through March 1994, it offered tax-deferred annuity
products. The Shelby Group, Inc., an Indiana Corporation ("TSGI"), offered a
full line of insurance products, including health, life, auto and medical
insurance. The Bank ceased the operations of TSGI as of November 1, 1996.

EMPLOYEES

As of December 31, 2001, the Bank employed 35 persons on a full-time basis and 8
persons on a part-time basis and the Company employed 5 persons on a part-time
basis. None of the Bank's employees are represented by a collective bargaining
group. All employees of the former Fort Wayne banking offices were retained by
Community First and their employment with the Bank was terminated effective
December 31, 2001. Management of the Bank considers its employee relations to be
good.

COMPETITION

The Company and the Bank face strong competition for deposits, loans and other
financial services from numerous Indiana and out-of-state banks, thrifts, credit
unions and other financial institutions as well as other entities which provide
financial services, including consumer finance companies, securities brokerage
firms, mortgage brokers, equipment leasing companies, insurance companies,
mutual funds, and other lending sources and investment alternatives. Some of the
financial institutions and financial services providers with which the Bank
competes are not subject to the same degree of regulation as the Bank. Many of
the financial institutions aggressively compete for business in the Bank's
market areas. Many of these competitors have been in business for many years,
have established customer bases, have substantially higher lending limits than
the Bank, and are larger and will be able to offer certain services that the
Bank does not expect to provide in the foreseeable future, including home
electronic banking services and international banking services. In addition,
most of these entities have greater capital resources than the Bank, which,
among other things, may allow them to price their services at levels more
favorable to the customer and to provide larger credit facilities than could the
Bank.

TAXATION

Federal Taxation. The Company and the Bank will file a consolidated federal
income tax return on the accrual basis for each calendar year ending December
31. The consolidated federal income tax return has the effect of eliminating
intercompany distributions, including dividends, in the computation of
consolidated taxable income. Income of the Company generally would not be taken
into account in determining the bad debt deduction allowed to the Bank,
regardless of whether a consolidated tax return is filed. However, certain
"functionally related" losses of the Company would be required to be taken into
account in determining the permitted bad debt deduction which, depending upon
the particular circumstances, could reduce the bad debt deduction. The Bank's
federal income tax returns have not been audited in the last five years.

Historically, savings associations, such as the Bank, have been permitted to
compute bad debt deductions using either the bank experience method or the
percentage of taxable income method. However, for years beginning after December
31, 1995, the Bank is no longer able to use the percentage of taxable income
method of computing its allocable tax bad debt deduction. The Bank is required
to compute its allocable deduction using the experience method. As a result of
the repeal of the percentage of taxable income method, reserves taken after 1987
using the percentage of taxable income method generally must be included in
future taxable income over a six-year period,

                                       7
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although a two-year delay may be permitted for institutions meeting a
residential mortgage loan origination test. In addition, the pre-1988 reserve,
in which no deferred taxes have been recorded, will not have to be recaptured
into income unless (i) the Bank no longer qualifies as a bank under the Internal
Revenue Code of 1986, as amended (the "Code"), or (ii) excess dividends are paid
out by the Bank.

Depending on the composition of its items of income and expense, a savings
institution may be subject to the alternative minimum tax. A savings institution
must pay an alternative minimum tax equal to the amount (if any) by which 20% of
alternative minimum taxable income ("AMTI"), as reduced by an exemption varying
with AMTI, exceeds the regular tax due. AMTI equals regular taxable income
increased or decreased by certain tax preferences and adjustments, including
depreciation deductions in excess of that allowable for alternative minimum tax
purposes, tax-exempt interest on most private activity bonds issued after August
7, 1986 (reduced by any related interest expense disallowed for regular tax
purposes), the amount of the bad debt reserve deduction claimed in excess of the
deduction based on the experience method and 75% of the excess of adjusted
current earnings over AMTI (before this adjustment and before any alternative
tax net operating loss). AMTI may be reduced only up to 90% by net operating
loss carryovers, but alternative minimum tax paid that is attributable to most
preferences (although not to post-August 7, 1986 tax-exempt interest) can be
credited against regular tax due in later years.

On August 20, 1996, the "Small Business Job Protection Act of 1996" was passed
into law. One provision of this act repeals the special bad debt reserve method
for thrift institutions currently provided for in Section 593 of the Code. The
provision requires thrifts to recapture any reserves accumulated after 1987 but
generally forgives taxes owed. Thrift institutions have been given six years to
account for the recaptured excess reserves, beginning with the first taxable
year after 1995, and are permitted to delay the timing of this recapture for one
or two years subject to whether they meet certain residential loan test
requirements.

Income of the Bank appropriated to bad debt reserves and deducted for federal
income tax purposes is not available for payment of cash dividends or other
distributions to the Company without the payment of federal income taxes by the
Bank on the amount of such income deemed removed from the reserves at the
then-current income tax rate. At December 31, 2001, approximately $1.1 million
of the Bank's retained income represented bad debt deductions for which no
federal income tax provision had been made.

State Taxation. The Bank is subject to Indiana's Financial Institutions Tax
("FIT"), that is imposed at a flat rate of 8.5% on "adjusted gross income."
"Adjusted gross income," for purposes of FIT, begins with taxable income as
defined by Section 63 of the Code, and thus, incorporates federal tax law to the
extent that it affects the computation of taxable income. Federal taxable income
is then adjusted by several Indiana modifications. Other applicable state taxes
include generally applicable sales and use taxes plus real and personal property
taxes.

The Bank's state income tax returns have not been audited in the last five
years.

CURRENT ACCOUNTING ISSUES

In June 1998, SFAS No. 133, ("SFAS 133") Accounting for Derivative Instruments
and Hedging Activities, was issued. This statement was amended by Statement of
Financial Accounting Standards No. 137 ("SFAS 137"), Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS 133.
SFAS 133, as amended by SFAS 137, is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. This statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognizes all derivatives as either
assets or liabilities in the statement of financial condition and measures those
instruments at fair value. If certain conditions are met, a derivative may be
specifically designated as a fair value hedge, a cash flow hedge, or a hedge of
foreign currency exposure. The accounting for changes in the fair value of a
derivative (that is, gains and losses) depends on the intended use of the
derivative and the resulting designation. The Company adopted this statement on
January 1, 2001, and the adoption of this statement had no material impact on
the financial condition, results of operations or cash flows of the Company.


                                        8
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Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business
Combinations," was issued in July 2001. SFAS 141 requires the purchase method of
accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method.

Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and
Other Intangible Assets," was issued in July 2001. Under SFAS 142, goodwill
amortization ceases when the new standard is adopted. The new rules also require
an initial goodwill impairment assessment in the year of adoption and at least
annual impairment tests thereafter. SFAS 142, is effective for the Company
January 1, 2002. Annual goodwill amortization of approximately $212,000 will
cease. Management has not determined whether any impairment charge will result
from the adoption of SFAS 142.

Statement of Financial Accounting Standards No. 143 ("SFAS 143"), "Accounting
for Asset Retirement Obligations," was issued in June 2001 and is effective for
financial statements issued for fiscal years beginning after June 15, 2002. SFAS
143 addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated asset retirement
costs. Management has not yet quantified the effect, if any, of this new
standard on the consolidated financial statements.

Statement of Financial Accounting Standards No. 144 ("SFAS 144), "Accounting for
the Impairment or Disposal of Long-Lived Assets" was issued in August 2001 and
is effective for financial statements issued for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years. SFAS 144
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. Management has not yet quantified the effect, if any, of this
new standard on the consolidated financial statements.

SUPERVISION AND REGULATION

GENERAL

Financial institutions and their holding companies are extensively regulated
under federal and state law. Consequently, the growth and earnings performance
of the Company and the Bank can be affected not only by management decisions and
general economic conditions, but also by the statutes administered by, and the
regulations and policies of, various governmental regulatory authorities. Those
authorities include, but are not limited to, Federal Board of Governors of The
Federal Reserve Bank (the "Federal Reserve"), the OTS, the Federal Deposit
Insurance Corporation (the "FDIC"), the Indiana Department of Financial
Institution (the "Department"), the Securities and Exchange Commission (the
"Commission"), the Internal Revenue Service and state taxing authorities. The
effect of such statutes, regulations and policies can be significant, and cannot
be predicted with a high degree of certainty.

Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, lending activities and practices, the nature and amount of
collateral for loans, the establishment of branches, mergers, consolidations and
dividends. The system of supervision and regulation applicable to the Company
and the Bank establishes a comprehensive framework for their respective
operations and is intended primarily for the protection of the FDIC's deposit
insurance funds, the depositors of the Bank and the public, rather than
shareholders of the Bank or the Company.

Federal law and regulations establish supervisory standards applicable to the
operation, management and lending activities of the Bank, including internal
controls, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation and loan-to-value ratios for loans secured by real
property. The Bank will continue to comply with these requirements, and in some
cases may apply more restrictive standards.

The following references to statutes and regulations are intended to summarize
material effects of certain government regulation on the business of the Company
and the Bank. Any change in government regulation may have a material adverse
effect on the Company, the Bank and their operations.


                                        9
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REGULATION OF THE COMPANY UNDER HOLA

As the holding company for the Bank, the Company will be regulated as a
"non-diversified savings and loan holding company" within the meaning of Home
Owners Loan Act (the "HOLA"), and subject to regulatory oversight of the
Director of the OTS. As such, the Company will be registered with the OTS and
thereby subject to OTS regulations, examinations, supervision and reporting
requirements. As a subsidiary of a savings and loan holding company, the Bank
will be subject to certain restrictions in its dealings with the Company and
with other companies affiliated with the Company.

In general, the HOLA prohibits a savings and loan holding company, without prior
approval of the Director of the OTS, from acquiring control of another savings
association or savings and loan holding company or retaining more than 5% of the
voting shares of a savings association or of another holding company which is
not a subsidiary. The HOLA will restrict the ability of a director or officer of
the Company, or any person who owns more than 25% of the Company's common stock,
from acquiring control of another savings association or savings and loan
holding company without obtaining the prior approval of the Director of the OTS.

OTS regulations generally do not restrict the permissible business activities of
a unitary savings and loan holding company.

Notwithstanding the above rules as to permissible business activities of unitary
savings and loan holding companies, if the savings association subsidiary of
such a holding company fails to meet the QTL test, then such unitary holding
company would become subject to the activities restrictions applicable to
multiple holding companies. (Additional restrictions on securing advances from
the Federal Home Loan Bank (the "FHLB") also apply.) At December 31, 2001, the
Bank's asset composition was in excess of that required to qualify as a
Qualified Thrift Lender ("QTL").

If the Company were to acquire control of another savings association other than
through a merger or other business combination with the Bank, the Company would
thereupon become a multiple savings and loan holding company. Except where such
acquisition is pursuant to the authority to approve emergency thrift
acquisitions and where each subsidiary savings association meets the QTL test,
the activities of the Company and any of its subsidiaries (other than the Bank
or other subsidiary savings associations) would thereafter be subject to further
restrictions. The HOLA provides that, among other things, no multiple savings
and loan holding company or subsidiary thereof which is not a savings
association shall commence or continue for a limited period of time after
becoming a multiple savings and loan holding company or subsidiary thereof, any
business activity other than (i) furnishing or performing management services
for a subsidiary savings association, (ii) conducting an insurance agency or
escrow business, (iii) holding, managing, or liquidating assets owned by or
acquired from a subsidiary savings association, (iv) holding or managing
properties used or occupied by a subsidiary savings association, (v) acting as
trustee under deeds of trust, (vi) those activities previously directly
authorized by the FSLIC by regulation as of March 5, 1987, to be engaged in by
multiple holding companies, or (vii) those activities authorized by the Federal
Reserve as permissible for bank holding companies, unless the Director of the
OTS by regulation prohibits or limits such activities for savings and loan
holding companies. Those activities described in (vii) above must also be
approved by the Director of the OTS before a multiple holding company may engage
in such activities.

The Director of the OTS may also approve acquisitions resulting in the formation
of a multiple savings and loan holding company which controls savings
associations in more than one state, if the multiple savings and loan holding
company involved controls a savings association which operated a home or branch
office in the state of the association to be acquired as of March 5, 1987, or if
the laws of the state in which the association to be acquired is located
specifically permit associations to be acquired by state-chartered associations
or savings and loan holding companies located in the state where the acquiring
entity is located (or by a holding company that controls such state-chartered
savings associations). Also, the Director of the OTS may approve an acquisition
resulting in a multiple savings and loan holding company controlling savings
associations in more than one state in the case of certain emergency thrift
acquisitions. Indiana law permits federal and state savings association holding
companies with their home offices located outside of Indiana to acquire savings
associations whose home offices are located in Indiana and savings association
holding


                                       10
<PAGE>
companies with their principal place of business in Indiana ("Indiana Savings
Association Holding Companies") upon receipt of approval by the Department.
Moreover, Indiana Savings Association Holding Companies may acquire savings
associations with their home offices located outside of Indiana and savings
association holding companies with their principal place of business located
outside of Indiana upon receipt of approval by the Department.

No subsidiary savings association of a savings and loan holding company may
declare or pay a dividend on its permanent or nonwithdrawable stock unless it
first gives the Director of the OTS 30 days advance notice of such declaration
and payment. Any dividend declared during such period or without giving notice
shall be invalid.

REGULATION OF THE BANK

As a federally chartered, Savings Association Insurance Fund ("SAIF") insured
savings association, the Bank is subject to extensive regulation by the OTS and
the FDIC. For example, the Bank must obtain OTS approval before it may engage in
certain activities and must file reports with the OTS regarding its activities
and financial condition. The OTS periodically examines the Bank's books and
records and, in conjunction with the FDIC, due to SAIF insurance, in certain
situations, has examination and enforcement powers. This supervision and
regulation are intended primarily for the protection of depositors and federal
deposit insurance funds. The Bank's semi-annual assessment owed to the OTS,
which is based upon a specified percentage of deposits, is approximately
$44,000.

The activities of the Bank are governed by the HOLA and, in certain respects,
the Federal Deposit Insurance Act, as amended (the "FDI Act"). The Director of
the OTS is authorized to promulgate regulations to ensure the safe and sound
operation of savings associations and may impose various requirements and
restrictions on the activities of savings associations.

FEDERAL HOME LOAN BANK SYSTEM. The Bank is a member of the FHLB of Indianapolis.
The FHLB System consists of 12 regional FHLBs. Each FHLB serves as a reserve or
central bank for its members within its assigned region. It is funded primarily
from funds deposited by savings associations and proceeds derived from the sale
of consolidated obligations of the FHLB System. It makes loans to members (i.e.,
advances) in accordance with policies and procedures established by the Board of
Directors of the FHLB. All FHLB advances must be fully secured by sufficient
collateral as determined by the FHLB. The Federal Housing Finance Board, an
independent agency, controls the FHLB System, including the FHLB of
Indianapolis.

As a member of the FHLB of Indianapolis, the Bank is required to purchase and
maintain stock in the FHLB of Indianapolis in an amount equal to at least 1% of
its aggregate unpaid residential mortgage loans, home purchase contracts, or
similar obligations at the beginning of each year. At December 31, 2001, the
Bank's investment in stock of the FHLB of Indianapolis was $2,153,000. The FHLB
imposes various limitations on advances such as limiting the amount of certain
types of real estate-related collateral to 30% of a member's capital and
limiting total advances to a member. Interest rates charged for advances vary
depending upon maturity, the cost of funds to the FHLB of Indianapolis and the
purpose of the borrowing.

The FHLBs are required to provide funds for the resolution of troubled savings
associations and to contribute to affordable housing programs through direct
loans or interest subsidies on advances targeted for community investment and
low- and moderate-income housing projects. These contributions have adversely
affected the level of FHLB dividends paid and could continue to do so in the
future. For the year ended December 31, 2001, dividends paid by the FHLB of
Indianapolis to the Bank totaled approximately $160,000, for an annual rate of
7.43%.

SAVINGS ASSOCIATION REGULATORY CAPITAL. Currently, savings associations are
subject to three separate minimum capital-to-assets requirements: (i) a leverage
limit, (ii) a tangible capital requirement, and (iii) a risk-based capital
requirement. The leverage limit requires that savings associations maintain
"core capital" of at least 4% of total assets, 3% for savings associations with
a composite rating of 1. Core capital is generally defined as common
shareholders' equity (including retained income), noncumulative perpetual
preferred stock and related surplus, certain minority equity interests in
subsidiaries, certain non-withdrawable accounts, qualifying supervisory
goodwill, purchased mortgage servicing rights and purchased credit card
relationships (subject to certain limits) less

                                       11
<PAGE>
nonqualifying intangibles. Under the tangible capital requirement, a savings
association must maintain tangible capital (core capital less all intangible
assets except purchased mortgage servicing rights which may be included after
making the above-noted adjustment in an amount up to 100% of tangible capital)
of at least 1.5% of total assets. Under the risk-based capital requirements, a
minimum amount of capital must be maintained by a savings association to account
for the relative risks inherent in the type and amount of assets held by the
savings association. The risk-based capital requirement requires a savings
association to maintain capital (defined generally for these purposes as core
capital plus general valuation allowances and permanent or maturing capital
instruments such as preferred stock and subordinated debt less assets required
to be deducted) equal to 8.0% of risk-weighted assets. Assets are ranked as to
risk in one of four categories (0-100%). A credit risk-free asset, such as cash,
requires no risk-based capital, while an asset with a significant credit risk,
such as a non-accrual loan, requires a risk factor of 100%. Moreover, a savings
association must deduct from capital, for purposes of meeting the core capital,
tangible capital and risk-based capital requirements, its entire investment in
and loans to a subsidiary engaged in activities not permissible for a national
bank (other than exclusively agency activities for its customers or mortgage
banking subsidiaries). At December 31, 2001, the Bank was in compliance with all
capital requirements imposed by law.

In 1994 and 1997 the OTS proposed new regulations affecting risk based capital
standards and regulatory treatment of recourse obligations. However, final rules
were never issued. On March 8, 2000, the OTS again proposed new regulations in
this area. Until a final rule is issued, the impact on the savings association
can not be determined.

The following is a summary of the Bank's regulatory capital and capital
requirements at December 31, 2001:

<TABLE>
<CAPTION>
                                                                        TOTAL
                                              TANGIBLE     CORE       RISK-BASED
 FOR CAPITAL ADEQUACY PURPOSES                 CAPITAL    CAPITAL      CAPITAL
                                               -------    -------      ---------
<S>                                           <C>         <C>         <C>
Bank Amount .............................      $6,784      $6,784       $7,734
Required Amount .........................       1,799       3,597        6,002
                                               ------      ------       ------
Excess/(Deficit) ........................      $4,985      $3,187       $1,732
                                               ======      ======       ======
Bank Ratio ..............................        5.66%       5.66%       10.31%
Required Ratio ..........................        1.50%       3.00%        8.00%
                                               ------      ------       ------
Ratio Excess/(Deficit) ..................        4.16%       2.66%        2.31%
                                               ======      ======       ======
</TABLE>

If an association is not in compliance with the capital requirements, the OTS is
required to prohibit asset growth and to impose a capital directive that may
restrict, among other things, the payment of dividends and officers'
compensation. In addition, the OTS and the FDIC generally are authorized to take
enforcement actions against a savings association that fails to meet its capital
requirements. These actions may include restricting the operations activities of
the association, imposing a capital directive, cease and desist order, or civil
money penalties, or imposing harsher measures such as appointing a receiver or
conservator or forcing the association to merge into another institution.

DIVIDEND LIMITATIONS. An OTS regulation imposes limitations upon all "capital
distributions" by savings associations, including cash dividends, payments by an
association to repurchase or otherwise acquire its shares, payments to
shareholders of another institution in a cash-out merger and other distributions
charged against capital. The regulation establishes a three-tiered system of
regulation, with the greatest flexibility being afforded to well-capitalized
associations. A savings association which has total capital (immediately prior
to and after giving effect to the capital distribution) that is at least equal
to its fully phased-in capital requirements would be a Tier 1 institution ("Tier
1 Institution"). An association that has total capital at least equal to its
minimum capital requirements, but less than its fully phased-in capital
requirements, would be a Tier 2 institution ("Tier 2 Institution"). An
institution having total capital that is less than its minimum capital
requirements would be a Tier 3 institution ("Tier 3 Institution"). However, an
institution which otherwise qualifies as a Tier 1 Institution may be designated
by the OTS as a Tier 2 Institution or Tier 3 Institution if the OTS determines
that the institution is "in need of more than normal supervision." The Bank is
currently a Tier 1 Institution.

A Tier 1 Institution may, after prior notice but without the approval of the
OTS, make capital distributions during a calendar year up to the greater of (a)
100% of its net income to date during the calendar year plus the amount that
would reduce by one-half its "surplus capital ratio" at the beginning of the
calendar year (the smallest excess over its

                                       12
<PAGE>
capital requirements), or (b) 75% of its net income over the most recent
four-quarter period. Any additional amount of capital distributions would
require prior regulatory approval.

The OTS has proposed revisions to these regulations which would permit savings
associations to declare dividends in amounts which would assure that they remain
adequately capitalized following the dividend declaration. Savings associations
in a holding company system which are rated CAMELS 1 or 2 and which are not in
troubled condition would need to file a prior notice with the OTS concerning
such dividend declaration.

REAL ESTATE LENDING STANDARDS. OTS regulations require savings associations to
establish and maintain written internal real estate lending policies. Each
association's lending policies must be consistent with safe and sound banking
practices and appropriate to the size of the association and the nature and
scope of its operations. The policies must establish loan portfolio
diversification standards; establish prudent underwriting standards, including
loan-to-value limits, that are clear and measurable; establish loan
administration procedures for the association's real estate portfolio; and
establish documentation, approval, and reporting requirements to monitor
compliance with the association's real estate lending policies. The
association's written real estate lending policies must be reviewed and approved
by the association's Board of Directors at least annually. Further, each
association is expected to monitor conditions in its real estate market to
ensure that its lending policies continue to be appropriate for current market
conditions.

LOANS TO ONE BORROWER. The Bank may not make a loan or extend credit to a single
or related group of borrowers in excess of 15% of its unimpaired capital and
surplus. Additional amounts may be lent, not in excess of 10% of unimpaired
capital and surplus, if such loans or extensions of credit are fully secured by
readily marketable collateral, including certain debt and equity securities but
not including real estate. In some cases, a savings association may lend up to
30 percent of unimpaired capital and surplus to one borrower for purposes of
developing domestic residential housing, provided that the association meets its
regulatory capital requirements and the OTS authorizes the association to use
this expanded lending authority. At December 31, 2001, the Bank did not have any
loans or extensions of credit to a single or related group of borrowers in
excess of its lending limits.

QUALIFIED THRIFT LENDER. Savings associations must meet a QTL test. If the Bank
maintains an appropriate level of qualified thrift investments ("QTIs")
(primarily residential mortgages and related investments, including certain
mortgage-related securities) and otherwise qualify as a QTL, the Bank will
continue to enjoy full borrowing privileges from the FHLB of Indianapolis. The
required percentage of QTIs is 65% of portfolio assets (defined as all assets
minus intangible assets, property used by the association in conducting its
business and liquid assets in an amount not exceeding 20% of total assets). In
addition, savings associations may include shares of stock of the FHLBs, FNMA,
and FHLMC as QTIs. Compliance with the QTL test is determined on a monthly basis
in nine out of every twelve months. As of December 31, 2001, the Bank was in
compliance with its QTL requirement, with approximately 72% of its assets
invested in QTLs.

A savings association which fails to meet the QTL test must either convert to a
bank (but its deposit insurance assessments and payments will be those of and
paid to the SAIF) or be subject to the following penalties: (i) it may not enter
into any new activity except for those permissible for a national bank and for a
savings association; (ii) its branching activities shall be limited to those of
a national bank; (iii) it shall not be eligible for any new FHLB advances; and
(iv) it shall be bound by regulations applicable to national banks respecting
payment of dividends. Three years after failing the QTL test the association
must (i) dispose of any investment or activity not permissible for a national
bank and a savings association and (ii) repay all outstanding FHLB advances. If
such a savings association is controlled by a savings and loan holding company,
then such holding company must, within a prescribed time period, become
registered as a bank holding company and become subject to all rules and
regulations applicable to bank holding companies (including restrictions as to
the scope of permissible business activities).

BRANCHING. The rules of the OTS on branching by federally-chartered savings
associations permit nationwide branching to the extent allowed by federal
statute. This permits federal savings associations with interstate networks to
diversify their loan portfolio and lines of business. The OTS authority
pre-empts any state law purporting to regulate branching by federal savings
associations.

                                       13
<PAGE>
INSURANCE OF DEPOSITS. The FDIC is an independent federal agency that insures
the deposits, up to prescribed statutory limits, of banks and thrifts and
safeguards the safety and soundness of the banking and thrift industries. The
FDIC administers two separate insurance funds, the Bank Insurance Fund (the
"BIF") for commercial banks and state savings banks and the SAIF for savings
associations such as the Bank and banks that have acquired deposits from savings
associations. The FDIC is required to maintain designated levels of reserves in
each fund. As of September 30, 1996, the reserves of the SAIF were below the
level required by law, primarily because a significant portion of the
assessments paid into the SAIF have been used to pay the cost of prior thrift
failures, while the reserves of the BIF met the level required by law in May,
1995. However, on September 30, 1996, provisions designed to recapitalize the
SAIF and eliminate the premium disparity between the BIF and SAIF were signed
into law.

The FDIC is authorized to establish separate annual assessment rates for deposit
insurance for members of the BIF and members of the SAIF. The FDIC may increase
assessment rates for either fund if necessary to restore the fund's ratio of
reserves to insured deposits to the target level within a reasonable time and
may decrease these rates if the target level has been met. The FDIC has
established a risk-based assessment system for both SAIF and BIF members. Under
this system, assessments vary depending on the risk the institution poses to its
deposit insurance fund. An institution's risk level is determined based on its
capital level and the FDIC's level of supervisory concern about the institution.

On September 30, 1996, President Clinton signed into law legislation which
included provisions designed to recapitalize the SAIF and eliminate the
significant premium disparity between the BIF and the SAIF. Under the new law,
the Bank was charged a one-time special assessment equal to $.657 per $100 in
assessable deposits at March 31, 1995. The Bank recognized this one-time
assessment as a non-recurring operating expense of $332,000 ($200,000 after tax)
during the three-month period ending September 30, 1996, and the Bank paid this
assessment in November 1996. The assessment was fully deductible for both
federal and state income tax purposes. Beginning January 1, 1997, the Bank's
annual deposit insurance premium was reduced from .23% to .13% of total
assessable deposits. On June 1, 1998, the Bank's annual deposit insurance
premium was increased to .16% of total assessable deposits. On June 1, 1999 the
Bank's annual assessment resulted in a decrease to .12%. BIF institutions pay
lower assessments than comparable SAIF institutions because BIF institutions pay
only 20% of the rate being paid by SAIF institutions on their deposits with
respect to obligations issued by the federally-chartered corporation which
provided some of the financing to resolve the thrift crisis in the 1980's
("FICO"). The 1996 law also provides for the merger of the SAIF and the BIF, but
not until such time as bank and thrift charters are combined. Until the charters
are combined, savings associations with SAIF deposits may not transfer deposits
into the BIF system without paying various exit and entrance fees, and SAIF
institutions will continue to pay higher FICO assessments. Such exit and
entrance fees need not be paid if a SAIF institution converts to a bank charter
or merges with a bank, as long as the resulting bank continues to pay applicable
insurance assessments to the SAIF, and as long as certain other conditions are
met.

PROMPT CORRECTIVE ACTION. The Federal Deposit Insurance Corporation Act of 1991
("FDICIA") established a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, federal depository
institution regulators are required to take certain mandatory supervisory
actions, and may take certain discretionary supervisory actions against
undercapitalized institutions, the severity of which depends upon the
institution's degree of capitalization. In addition, subject to a narrow
exception, FDICIA generally requires the federal depository institution
regulators to appoint a receiver or conservator for an institution that is
critically undercapitalized.

As mandated by FDICIA, the federal banking regulators have specified by
regulation the relevant capital measures at which an insured depository
institution is deemed well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. Pursuant to the FDIC's regulations implementing the prompt
corrective action provisions of FDICIA, a bank will be deemed to be: (i) well
capitalized if the bank has a total risk-based capital ratio of 10% or greater,
Tier 1 risk-based capital ratio of 6% or greater and leverage ratio of 5% or
greater; (ii) adequately capitalized if the bank has a total risk-based capital
ratio of 8% or greater, Tier 1 risk-based capital ratio of 4% or greater and
leverage ratio of 4% or greater (3% for the most highly rated banks); (iii)


                                       14
<PAGE>
undercapitalized if the bank has a total risk-based capital ratio of less than
8%, or Tier 1 risk-based capital ratio of 4% or greater and leverage ratio of
less than 4% (less than 3% for the most highly rated banks); (iv) significantly
undercapitalized if the bank has a total risk-based capital ratio of less than
6%, Tier 1 risk-based capital ratio of less than 3% or leverage ratio of less
than 3%; and (v) critically undercapitalized if the bank has a ratio of tangible
equity to total assets of 2% or less. At December 31, 2001, the Bank was
categorized as "well capitalized," and it was not subject to regulatory order,
agreement or directive to meet and maintain a specific level for any capital
measure. However, there are no assurances that the Bank will maintain its "well
capitalized" status.

Subject to certain exceptions, these capital ratios are generally determined on
the basis of Call Reports submitted by each depository institution and the
reports of examination by each institution's appropriate federal depository
institution regulatory agency. Depending upon the capital category to which an
institution is assigned, the regulators' corrective powers include: requiring
the submission of a capital restoration plan (which must include a holding
company guarantee of performance); placing limits on asset growth and
restrictions on activities; requiring the institution to issue additional
capital stock (including additional voting stock) or to be acquired; restricting
transactions with affiliates; restricting the interest rate the institution may
pay on deposits; ordering a new election of directors of the institution;
requiring that senior executive officers or directors be dismissed; prohibiting
the institution from accepting deposits from correspondent banks; requiring the
holding company to divest certain subsidiaries including the institution;
requiring the institution to divest certain subsidiaries; prohibiting the
payment of principal or interest on subordinated debt; and ultimately,
appointing a receiver or conservator for the institution.

In general, a depository institution may be reclassified to a lower category
than is indicated by its capital position if the appropriate federal depository
institution regulatory agency determines the institution to be otherwise in an
unsafe or unsound condition or to be engaged in an unsafe or unsound practice.
This could include a failure by the institution, following receipt of a
less-than-satisfactory rating on its most recent examination report, to correct
the deficiency.

INSIDER TRANSACTIONS. The Bank is subject to certain restrictions imposed by the
Federal Reserve Act ("FRA") on any extensions of credit to the Company or its
subsidiaries, on investments in the stock or other securities of the Company or
its subsidiaries, and the acceptance of the stock or other securities of the
Company or its subsidiaries as collateral for loans. These restrictions limit
the aggregate amount of transactions with any individual affiliate to 10% of the
Bank's capital and surplus, limit the aggregate amount of transactions with all
affiliates to 20% of the Bank's capital and surplus, require that loans and
certain other extensions of credit be secured by collateral in certain specified
amounts and types, generally prohibit the purchase of low quality assets from
affiliates and generally require that certain transactions with affiliates,
including loans and asset purchases, be on terms and under circumstances,
including credit standards, that are substantially the same or at least as
favorable to the Bank as those prevailing at the time for comparable
transactions with nonaffiliated individuals or entities.

Also, the FRA prescribes certain limitations and reporting requirements on
extensions of credit by the Bank to its directors and executive officers, to
directors and executive officers of the Company and its subsidiaries, to
principal shareholders of the Company and its subsidiaries, to principal
shareholders of the Company and to "related interests" of such directors,
officers and principal shareholders. Among other things, the FRA, and the
regulations thereunder, require such loans to be made on substantially the same
terms as those offered to unaffiliated individuals, place limits on the amount
of loans the Bank may extend to such individuals and require certain approval
procedures to be followed. In addition, such legislation and regulations may
affect the terms upon which any person becoming a director or officer of the
Company or one of its subsidiaries or a principal shareholder of the Company may
obtain credit from banks with which the Bank maintains a correspondent
relationship.

LIMITATIONS ON RATES PAID FOR DEPOSITS. Regulations promulgated by the FDIC
pursuant to FDICIA limit the ability of insured depository institutions to
accept, renew or roll over deposits by offering rates of interest which are
significantly higher than the prevailing rates of interest on deposits offered
by other insured depository institutions having the same type of charter in the
institution's normal market area. Under these regulations, "well-capitalized"
depository institutions may accept, renew or roll such deposits over without
restriction, "adequately capitalized" depository institutions may accept, renew
or roll such deposits over with a waiver from the FDIC (subject to certain


                                       15
<PAGE>
restrictions on payments of rates) and "undercapitalized" depository
institutions may not accept, renew or roll such deposits over. The regulations
contemplate that the definitions of "well capitalized," "adequately capitalized"
and "undercapitalized" will be the same as the definition adopted by the
agencies to implement the corrective action provisions of FDICIA. The Bank does
not believe that these regulations will have a materially adverse effect on its
current operations.

COMMUNITY REINVESTMENT ACT MATTERS. Federal law requires that ratings of
depository institutions under the Community Reinvestment Act of 1977 ("CRA") be
disclosed. The disclosure includes both a four-unit descriptive rating
(outstanding, satisfactory, needs to improve, and substantial noncompliance) and
a written evaluation of an institution's performance. Each FHLB is required to
establish standards of community investment or service that its members must
maintain for continued access to long-term advances from the FHLBs. The
standards take into account a member's performance under the CRA and its record
of lending to first-time homebuyers. The OTS has designated the Bank's record of
meeting community credit needs as satisfactory.

SAFETY AND SOUNDNESS STANDARDS. On July 10, 1995, the FDIC, the OTS, the Federal
Reserve and the Office of the Comptroller of the Currency published final
guidelines implementing the FDICIA requirement that the federal banking agencies
establish operational and managerial standards to promote the safety and
soundness of federally insured depository institutions. The guidelines, which
took effect on August 9, 1995, establish standards for internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth and compensation, fees and
benefits, and specifically prohibit, as an unsafe and unsound practice,
excessive compensation that could lead to a material loss to an institution. The
federal banking agencies also adopted asset quality and earnings standards that
were added to the safety and soundness guidelines effective October 1, 1996. If
an institution fails to comply with any of the standards set forth in the
guidelines, the institution's primary federal regulator may require the
institution to submit a plan for achieving and maintaining compliance. Failure
to submit an acceptable compliance plan, or failure to adhere to a compliance
plan that has been accepted by the appropriate regulator, would constitute
grounds for further enforcement action.

CONSUMER BANKING. The Bank's business will include making a variety of types of
loans to individuals. In making these loans, the Bank will be subject to state
usury and regulatory laws and to various federal statutes, such as the Equal
Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act, Real
Estate Settlement Procedures Act and Home Mortgage Disclosure Act, and the
regulations promulgated thereunder, which prohibit discrimination, specify
disclosures to be made to borrowers regarding credit and settlement costs and
regulate the mortgage loan servicing activities of the Bank, including the
maintenance and operation of escrow accounts and the transfer of mortgage loan
servicing. The Riegle Act imposed new escrow requirements on depository and
non-depository mortgage lenders and services under the National Flood Insurance
Program. See "Supervision and Regulation -- Regulatory Developments." In
receiving deposits, the Bank will be subject to extensive regulation under state
and federal law and regulations, including the Truth in Savings Act, the
Expedited Funds Availability Act, the Bank Secrecy Act, the Electronic Funds
Transfer Act and the FDI Act. Violation of these laws could result in the
imposition of significant damages and fines upon the Bank, its directors and
officers.

REGULATORY DEVELOPMENTS

In 1994, the Congress enacted two major pieces of banking legislation, the
Riegle Community Direction Act (the "Riegle Act") and the Riegle-Neal Interstate
Banking and Branching Efficiency Act (the "Riegle-Neal Act"). The Riegle Act
addressed such varied issues as the promotion of economic revitalization of
defined urban and rural "qualified distressed communities" through special
purpose "Community Development Financial Institutions," the expansion of
consumer protection with respect to certain loans secured by a consumer's home
and reverse mortgages and reductions in compliance burdens regarding Currency
Transaction Reports, in addition to reform of the National Flood Insurance
Program, the promotion of a secondary market for small business loans and leases
and mandating specific changes to reduce regulatory impositions on depository
institutions and holding companies.

The Riegle-Neal Act substantially changed the geographic constraints applicable
to the banking industry. Effective September 29, 1995, the Riegle-Neal Act
allows bank holding companies to acquire banks located in any state in the
United States without regard to geographic restrictions or reciprocity
requirements imposed by state law, but subject

                                       16
<PAGE>
to certain conditions, including limitations on the aggregate amount of deposits
that may be held by the acquiring holding company and all of its insured
depository institution affiliates. Effective June 1, 1997 (or earlier if
expressly authorized by applicable state law), the Riegle-Neal Act allows banks
to establish interstate branch networks through acquisitions of other banks,
subject to certain conditions, including certain limitations on the aggregate
amount of deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. The establishment of de novo interstate
branches or the acquisition of individual branches of a bank in another state
(rather than the acquisition of an out-of-state bank in its entirety) is allowed
by the Riegle-Neal Act only if specifically authorized by state law. The
legislation allowed individual states to "opt-out" of certain provisions of the
Riegle-Neal Act by enacting appropriate legislation prior to June 1, 1997.

Effective March 14, 1996, Indiana "opted in" to the interstate branching
provisions of the Riegle-Neal Act. The Indiana legislation authorizes, subject
to certain approval and other requirements, Indiana-chartered banks to establish
branches in states other than Indiana and out-of-state banks to establish
branches in Indiana. Indiana and out-of-state banks are authorized to establish
branches either by acquisition or de novo.

FDIC regulations, which became effective April 1, 1996, impose certain
limitations (and in certain cases, prohibitions) on (i) "golden parachute"
severance payments by troubled depository institutions, their subsidiaries and
affiliated holding companies to institution-affiliated parties (primarily
directors, officers, employees or principal shareholders of the institution),
and (ii) indemnification payments by a depository institution, their
subsidiaries and affiliated holding companies, regardless of financial
condition, to institution-affiliated parties. The FDIC regulations impose
limitations on indemnification payments which could restrict, in certain
circumstances, payments by the Company or the Bank to their respective directors
or officers otherwise permitted under Indiana state law.

The FDIC includes, in its evaluations of a bank's capital adequacy, an
assessment of the bank's exposure to declines in the economic value of the
bank's capital due to changes in interest rates. On June 26, 1996, the FDIC,
along with the Office of the Comptroller of the Currency (the "OCC") and the
Federal Reserve, issued a joint policy statement to provide guidance on sound
practices for managing interest rate risk. The statement sets forth the factors
the federal regulatory examiners will use to determine the adequacy of a bank's
capital for interest rate risk. These qualitative factors include the adequacy
and effectiveness of the bank's internal interest rate risk management process
and the level of interest rate exposure. Other qualitative factors that will be
considered include the size of the bank, the nature and complexity of its
activities, the adequacy of its capital and earnings in relation to the bank's
overall risk profile, and its earning exposure to interest rate movements. The
interagency supervisory policy statement describes the responsibilities of a
bank's board of directors in implementing a risk management process and the
requirements of the bank's senior management in ensuring the effective
management of interest rate risk. Further, the statement specifies the elements
that a risk management process must contain.

In August 1996, the Federal Reserve and the FDIC issued final regulations
further revising their risk-based capital standards to include a supervisory
framework for measuring market risk. The effect of the new regulations is that
any bank holding company or bank which has significant exposure to market risk
must measure such risk using its own internal model, subject to the requirements
contained in the regulations, and must maintain adequate capital to support that
exposure.

The new regulations apply to any bank holding company or bank whose trading
activity equals 10% or more of its total assets, or whose trading activity
equals $1 billion or more. Examiners may require a bank holding company or bank
that does not meet the applicability criteria to comply with the capital
requirements if necessary for safety and soundness purposes.

The new regulations contain supplemental rules to determine qualifying and
excess capital, calculate risk-weighted assets, calculate market risk equivalent
assets and calculate risk-based capital ratios adjusted for market risk.


                                       17
<PAGE>
On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley Act into
law. Effective as of March 11, 2000, the Gramm-Leach-Bliley Act:

      -     allows bank holding companies meeting management, capital and CRA
            standards to engage in a substantially broader range of nonbanking
            activities then was previously permissible, including insurance
            underwriting and agency, and underwriting and making merchant
            banking investments in commercial and financial companies;

      -     allows insurers and other financial service companies to acquire
            banks;

      -     removes various restrictions that previously applied to bank holding
            company ownership of securities firms and mutual fund advisory
            companies and;

      -     establishes the overall regulatory structure applicable to bank
            holding companies that also engage in insurance and securities
            operations.

In order for a bank holding company to engage in the broader range of activities
that are permitted by the Gramm-Leach-Bliley Act, (1) all of its depository
institutions must be well capitalized and well managed and (2) it must file a
declaration with the Federal Reserve Board that it elects to be a "financial
holding company". In addition, to commence any new activity permitted by the
Gramm-Leach-Bliley Act, each insured depository institution of the financial
holding company must have received at least a "satisfactory" rating in its most
recent examination under the Community Reinvestment Act.

The Gramm-Leach-Bliley Act also allows a national bank to own a financial
subsidiary engaged in certain of the nonbanking activities authorized for
financial holding companies. The national bank must meet certain requirements,
including that it and all of its depository institution affiliates be well
capitalized and well managed. Also, to commence any activity or acquire any
company engaged in any new activity, the national bank must have at least a
"satisfactory" Community Reinvestment Act examination rating. In addition, it
must obtain approval of the OCC.

The Gramm-Leach Bliley Act also modified laws related to financial privacy and
community reinvestment. The new financial privacy provisions generally prohibit
financial institutions, including the Company, from disclosing nonpublic
personal financial information to third parties unless customers have the
opportunity to "opt out" of the disclosure. The Gramm-Leach-Bliley Act also
requires an annual disclosure of an institutions privacy policy in addition to a
disclosure at the time that a customer relationship is established. Regulations
governing the privacy requirements of the Act have been proposed. Until the
final rules have been issued, it is difficult to determine the impact of the
regulations on the activities of the Company.

On October 26, 2001, President Bush signed the USA Patriot Act of 2001 (the
"Patriot Act"). The Patriot Act is intended to strengthen the ability of U. S.
Law Enforcement to combat terrorism on a variety of fronts. The potential impact
of the Patriot Act on financial institutions is significant and wide-ranging.
The Patriot Act contains sweeping anti-money laundering and financial
transparency laws and requires financial institutions to implement additional
policies and procedures with respect to, or additional measures designed to
address, any or all of the following matters, among others: money laundering,
suspicious activities and currency transaction reporting; and currency crimes.

Additional legislation and administrative actions affecting the banking industry
are being considered and in the future may be considered by the United States
Congress, state legislatures and various regulatory agencies, including those
referred to above. It cannot be predicted with certainty whether such
legislation or administrative action will be enacted or the extent to which the
banking industry in general or the Company and the Bank in particular would be
affected thereby.


                                       18
<PAGE>
FORWARD-LOOKING STATEMENTS

A cautionary note about forward-looking statements. In its oral and written
communication, the Company from time to time includes forward-looking
statements, within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements can include statements about estimated
cost savings, plans and objectives for future operations, and expectations about
performance as well as economic and market conditions and trends. They often can
be identified by the use of words like "expect", "may", "could", "intend",
"project", "estimate", "believe" or "anticipate." The Company may include
forward-looking statements in filings with the Securities and Exchange
Commission, such as this Form 10-KSB, in other written materials, and in oral
statements made by senior management to analysts, investors, representatives of
the media, and others. It is intended that these forward-looking statements
speak only as of the date they are made, and the Company undertakes no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the forward-looking statement is made or
to reflect the occurrence of unanticipated events. By their nature,
forward-looking statements are based on assumptions and are subject to risks,
uncertainties, and other factors. Actual results may differ materially from
those contained in the forward-looking statement. The discussion in the 2001
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," incorporated in Item
6 of this Form 10-KSB, lists some of the factors which could cause the Company's
actual results to vary materially from those in any forward-looking statements.
Your attention is directed to this discussion which can be found in Exhibit 13
to this Form 10-KSB. Other uncertainties which could affect the Company's future
performance include the effects of competition, technological changes and
regulatory developments; changes in fiscal, monetary and tax policies; market,
economic conditions, either nationally or regionally, resulting in, among other
things, credit quality deterioration; and changes in the securities markets.
Investors should consider these risks, uncertainties, and other factors in
addition to those mentioned by the Company in its other filings from time to
time when considering any forward-looking statement.

ITEM 2. DESCRIPTION OF PROPERTY

<TABLE>
<CAPTION>
                                                  Net Book Value
                                        Year       of Property,    Approximate
                                      Opened or    Furniture &       Square
      Description and Address         Acquired       Fixtures        Footage
      --------------------------      ---------   --------------   -----------
      <S>                             <C>         <C>              <C>
      Shelbyville Main Office           1975        $1,211,558       15,000
      29 East Washington St.

      Shelbyville Rampart Office        1995        $  670,583        3,000
      34 Rampart Street

      Morristown Office                 1995        $   43,472        1,800
      127 East Main Street

      St. Paul Office                   1989        $   48,156        1,476
      105 County Line Road
</TABLE>

      In the opinion of management, the Bank's properties are adequately covered
      by insurance.

      The Bank has three ATMs, one at each of the following offices: Shelbyville
      Main Office, the Rampart Office, and the Morristown office. The Bank's
      ATMs are on the INTRIEVE INC. interchange system and participate in the
      nationwide STAR ATM network.

      The Bank owns computer and data processing equipment, which is used for
      transaction processing, accounting, financial forecasting, and loan
      document preparation. The net book value of electronic data processing
      equipment owned by the Bank was $171,000 at December 31, 2001.

      The Bank also has contracted for the data processing and reporting
      services of Intrieve. The Bank's service corporation subsidiary owns
      common stock of Intrieve having a book value of $15,000. The cost of these
      data processing services is approximately $42,000 per month.


                                       19
<PAGE>
ITEM 3. LEGAL PROCEEDINGS

In August 1993, the Bank discovered the presence of petroleum compounds in both
the soil and groundwater underlying the property at the St. Paul branch of the
Bank. A portion of the property was the site of a former gasoline station. The
Bank engaged an environmental remediation firm to remove the "free product"
(i.e., gasoline) which was floating on top of the water table at the St. Paul
site. The cost of this clean-up work was approximately $10,000. On April 13,
1995, the Bank sold a portion of the St. Paul property to a resident of St.
Paul, Indiana for nominal consideration. The Bank apprised the buyer of the
environmental matters relating to the real estate sold, and the buyer released
and indemnified the Bank from all future liability connected with environmental
conditions on this property. There can be no assurance that a third party will
not make a claim against the Bank with respect to the contamination on or
originating from this portion of the St. Paul property or that if such a claim
were made that the indemnification of the Bank by the buyer of the property
would be sufficient to reimburse the Bank for any damages relating to such
claim.

With respect to the portion of the St. Paul property still owned by the Bank, in
early 1996, the Bank discovered the presence of diesel or fuel oil and gasoline
constituents in the groundwater. In early 1997, a heating oil storage tank was
removed from the ground and the area was remediated by excavating the soil
surrounding the location of the tank and replacing it with granular fill
material. An environmental remediation firm engaged by the Bank performed the
tank removal and remediation.

Prior to the acquisition, the Bank agreed with the Company in April 1998 to
begin the process of submitting the St. Paul branch location into Indiana's
Voluntary Remediation Program (the "VRP"). Again, the Bank engaged an
environmental consultant to assist it in this process. After performing
preliminary testing, the consultant informed the Bank that remediation would be
necessary to remove diesel or fuel oil and gasoline constituents in the
groundwater. The consultant estimated the remediation and costs associated with
the VRP to be $157,920 plus any costs incurred by the Indiana Department of
Environmental Management ("IDEM") which were believed to be immaterial. The Bank
charged to expense approximately $150,000 in its income statement for the period
ended March 31, 1998.

In contemplation of entering the VRP, the Bank's environmental consultant,
during the summer of 1998, performed additional testing on the portion of the
St. Paul property still owned by the Bank. These tests confirmed the presence of
diesel or fuel oil and gasoline constituents in the groundwater. Assuming
successful completion of the VRP, as the program currently exists, is
interpreted and is applied, which may include further remediation of the site,
IDEM will issue a Certificate of Completion (which is recorded) and the Governor
of the State of Indiana will issue a Covenant Not to Sue.

Additionally, IDEM and the U.S. Environmental Protection Agency ("EPA") have a
Memorandum of Agreement that provides in substance that once a Certificate of
Completion has been issued by IDEM, unless the site poses an immediate and
substantial threat to human health and the environment, EPA will not plan or
anticipate any federal action under the Superfund law. Based upon the extent of
the contamination found during the summer of 1998, the Bank's environmental
consultant revised its estimate for completion of the project. On November 17,
1998 the Bank's environmental consultant estimated that the total cost for
completion of the VRP, including the remediation prior to entering the VRP, is
$238,000 plus any costs incurred by IDEM which are believed to be immaterial.
The additional cost associated with the VRP was added to the Company's goodwill
resulting from the merger..

The Company has been actively remediating the site since April of 1999. No "free
product" has been detected for several quarters and the levels of dissolved
phase contamination in the groundwater are generally decreasing. During the
fourth quarter of 2000, the Bank's management evaluated the project status with
the environmental consultant to assess the status of the remediation process.
During this discussion, it was determined that the remediation period is
expected to last longer than the original estimate. The environmental consultant
estimated that an additional one to two years of active remediation may be
necessary; and that the total costs to completion of the remediation and VRP
process should range from $123,500 to $188,000. The Company incurred an
additional $50,000 charge against earnings for 2000 to adjust the accrual to
cover future estimated costs. There can be no


                                       20
<PAGE>
assurance that the Bank will successfully complete the VRP or that the cost
relating to the VRP will not exceed $288,000 plus any costs incurred by IDEM
which are believed to be immaterial.

On November 19, 2001 the Company entered into a Voluntary Remediation Agreement
with IDEM. Even if the Bank successfully completes the VRP, there can be no
assurance that a non-governmental entity or person will not make a claim against
the Bank with respect to the environmental matters relating to the St. Paul
property.

On April 12, 2001, the Bank filed a complaint in the Shelby Superior Court
against Creative Development, LLC, Creative Renovations, Inc., Jeffrey M.
Valles, John Valles, Jr., John M. Valles and Shaun K. York for failure to pay
certain promissory notes, failure to pay guaranties and foreclosure of
mortgages. The Bank was seeking compensatory damages and other appropriate
relief. The complaint arose out of the defendants' failure to pay certain loans
made by the Bank to Creative Renovations, Inc. and Creative Development, LLC. On
August 1, 2001, Creative Development, LLC, Jeffrey M. Valles and John Valles
filed a counterclaim against the Bank in the Shelby Superior Court #1 in
Shelbyville, Indiana seeking compensatory and punitive damages in undisclosed
amounts for breach of contract, breach of fiduciary duty and fraud. The
counterclaim arose out of certain alleged actions taken by the Bank and Robert
Reed in his capacity as former President and C.E.O. of the Bank. Management of
the Company believed that the Bank had valid claims against the defendants as
asserted in its complaint. This matter was settled on December 31, 2001 and was
dismissed by the Court on February 11, 2002.

On April 12, 2001, the Bank filed a complaint in the Shelby Superior Court
against John F. Valles, Sophie Valles and John Valles, Jr. for failure to pay
certain notes, foreclosure of mortgage and fraud. The Bank was seeking
compensatory and punitive damages. The complaint arose out of the defendants'
failure to pay certain loans made by the Bank to John F. Valles. On July 31,
2001, John F. Valles filed a counterclaim in the Shelby Circuit Court in
Shelbyville, Indiana against the Bank seeking compensatory and punitive damages
in undisclosed amounts. The counterclaim arose out of certain alleged actions
taken by the Bank and Robert Reed in his capacity as former President and C.E.O.
of the Bank. The counterclaim alleged that purported false promises, material
misrepresentations and fraudulent conduct of Mr. Reed and the Bank damaged John
F. Valles. This matter was settled on December 31, 2001 and was dismissed by the
Court on February 11, 2002.

In July of 2001, the Bank filed a complaint against Richard L. Wilcher, Sr.,
Agnes L. Wilcher and Thistle Management for foreclosure of mortgage, payment of
certain notes and replevin. The complaint arises out of the defendants' failure
to pay certain loans made by the Bank to the defendants. On September 27, 2001,
the defendants filed a counterclaim in the Shelby Circuit Court in Shelbyville,
Indiana against the Bank seeking $1,000,000 in damages. The counterclaim arises
out of certain alleged actions taken by the Bank and Robert Reed in his capacity
as former President and C.E.O. of the Bank. The counterclaim alleges that the
Bank intentionally mislead the defendants with regard to certain loans made to
the defendants. Further, the counterclaim alleges that the Bank instituted its
complaint in a malicious attempt to subvert the judicial process. Management of
the Company believes that the Bank has valid claims against the defendants as
asserted in its complaint. However, no assurance can be given that the
litigation will be resolved on terms favorable to the Bank or that any damages
will be awarded to the Bank. The Company also believes that the defendants'
counterclaims will not have a material adverse effect on the financial position
of the Bank. This matter was dismissed by the Court on March 22, 2002.

On June 26, 2001, the Bank filed a complaint against Bruce H. Young in the
Hamilton Superior Court for collection of a promissory note and against
International Marine Drive, LLC on its guaranty of that note to foreclose its
security interest in collateral of International Marine Drive. On August 24,
2001, the defendant filed a counterclaim against the Bank seeking compensatory
damages and other punitive damages for breach of contract, fraud, constructive
fraud, promissory estoppel and violations of the Corrupt Business Influence Act.
These claims are for an undisclosed amount. The counterclaim arises out of
certain alleged actions taken by the Bank and Robert Reed in his capacity as
former President and C.E.O. of the Bank. The counterclaim alleges, in part, that
the Bank committed to make certain loans to International Marine Drive, LLC,
which were never made. The Bank moved for summary judgment against Mr. Young on
the note. Young was granted five months in which to conduct discovery and to
prepare a response. Mr. Young has subsequently made an application to extend
that period until May 12, 2002. In January 2002 the Court denied the Bank's
Motion to Strike Mr. Young's request for a jury trial. The case is on the


                                       21
<PAGE>
Court's jury calendar for January 2003. The Bank's efforts to find a basis upon
which the case could be resolved have been unsuccessful. The Bank anticipates
that the case will be mediated either by agreement or by order of the Court.
Management of the Company believes that the Bank has valid claims against the
defendants as asserted in its complaint. However, no assurance can be given that
the litigation will be resolved on terms favorable to the Bank or that any
damages will be awarded to the Bank. The Company also believes that the
defendant's counterclaims will not have a material adverse effect on the
financial position of the Bank. However, no assurance can be given that the Bank
will be successful in defending the counterclaims.

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

      No matters were submitted to a vote of security holders of the Registrant
      during the fourth quarter of 2001.

PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

      In conjunction with a public offering of common stock completed in the
      second quarter of 1998, the Company obtained approval for quotation on the
      National Association of Securities Dealers Automated Quotation System
      Small-Cap Market ("NASDAQ") under the symbol "BRBI" During 2001, the
      Company satisfied all requirements for continued inclusion on, and was
      traded on, NASDAQ.

      As of March 15, 2002, there were 131 shareholders of record of Blue River
      common stock.

      The following table sets forth the high and low sale prices for Blue River
      common stock for the quarters during the years indicated, as reported by
      NASDAQ. Such over-the-counter quotations reflect inter-dealer prices,
      without retail mark-up, markdown or commission, and may not necessarily
      represent actual transactions.

<TABLE>
<CAPTION>
                                             2001                  2000
                                             ----                  ----
                                        High      Low         High       Low
                                       -----    -----       -----      -----
<S>                                    <C>      <C>         <C>        <C>
      First Quarter                    $4.25    $3.06       $5.13      $3.94
      Second Quarter                    4.85     3.43        4.63       3.50
      Third Quarter                     4.70     3.31        4.75       3.56
      Fourth Quarter                    4.65     3.45        4.25       2.13
</TABLE>

      The Company did not declare any dividend on its shares of common stock
      during 2001 or 2000. Future dividend payments by the Company are subject
      to regulatory and legal limitations and may be dependent upon dividends
      paid by the Bank. The Company does not intend to pay dividends in the
      foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

      Pages 41 through 58 inclusive, of the Company's Annual Report to
      Shareholders for the year ended December 31, 2001 is incorporated herein
      by reference in regard to this item.

ITEM 7. FINANCIAL STATEMENTS

      Pages 61 through 77, inclusive, of the Company's Annual Report to
      Shareholders for the year ended December 31, 2001 is incorporated herein
      by reference in regard to this item.


                                       22
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None.

PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

      This information is omitted from this report pursuant to General
      Instruction E. (3) of Form 10-KSB as the Company intends to file with the
      Commission its definitive Proxy Statement for the Annual Meeting of
      Shareholders pursuant to Regulation 14A of the Securities Exchange Act of
      1934, as amended, not later than 120 days after December 31, 2001.

ITEM 10. EXECUTIVE COMPENSATION

      This information is omitted from this report pursuant to General
      Instruction E. (3) of Form 10-KSB as the Company intends to file with the
      Commission its definitive Proxy Statement for the Annual Meeting of
      Shareholders pursuant to Regulation 14A of the Securities Exchange Act of
      1934, as amended, not later than 120 days after December 31, 2001.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      This information is omitted from this report pursuant to General
      Instruction E. (3) of Form 10-KSB as the Company intends to file with the
      Commission its definitive Proxy Statement for the Annual Meeting of
      Shareholders pursuant to Regulation 14A of the Securities Exchange Act of
      1934, as amended, not later than 120 days after December 31, 2001.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      This information is omitted from this report pursuant to General
      Instruction E. (3) of Form 10-KSB as the Company intends to file with the
      Commission its definitive Proxy Statement for the Annual Meeting of
      Shareholders pursuant to Regulation 14A of the Securities Exchange Act of
      1934, as amended, not later than 120 days after December 31, 2001.


                                       23
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

D. The following Exhibits are being filed as part of this 10-KSB:

      2*            Branch Purchase and Assumption Agreement
      3(i)****      Articles of Incorporation
      3(ii)         Amended and Restated By-Laws
      10.01*****    Registrant's 1997 Directors' Stock Option Plan
      10.02*****    Registrant's 1997 Key Employees' Stock Option Plan
      10.03**       Registrant's 2000 Directors' Stock Option Plan
      10.04**       Registrant's 2000 Key Employees' Stock Option Plan
      10.05**       Registrant's 2000 Employee Stock Purchase Plan
      10.06**       Registrant's First Amendment of 2000 Key Employees' Stock
                    Option Plan
      10.07         Registrant's Change in Control Agreement with Lawrence T.
                    Toombs
      13            The Annual Report to Shareholders of the Company for the
                    year ended December 31, 2001 (except for the pages and
                    information thereof expressly incorporated by reference
                    in this Form 10-KSB, the Annual Report to Shareholders
                    is provided solely for the information of the Securities
                    and Exchange Commission and is not deemed "filed" as
                    part of this Form 10-KSB).
      21***         Subsidiaries of the Registrant

      *             Incorporated by reference to Registrant's Form 8-K, filed
                    January 15, 2002.
      **            Incorporated by reference to Registrant's Form 10-KSB, filed
                    March 31, 2001.
      ***           Incorporated by reference to Registrant's Form 10-KSB, filed
                    March 31, 1999.
      ****          Incorporated by reference to Registrant's Amendment No. 4 to
                    the Registration Statement on Form SB-2, File No. 333-48269
                    filed on June 22, 1998.
      *****         Incorporated by reference to Registrant's Amendment No. 2 to
                    the Registration Statement on Form SB-2, File No. 333-48269
                    filed on June 8, 1998.

The Company filed one Form 8-K in 2001, on October 30, 2001.


                                       24
<PAGE>
SIGNATURES

In accordance with Section 15 (d) of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf of the undersigned,
there unto duly authorized.

<TABLE>
<CAPTION>
                                      Blue River Bancshares, Inc.
                                      (Registrant)
<S>                                   <C>
Date:   April 1, 2002                 By: /s/ Lawrence T. Toombs
                                      ------------------------------------
                                          Lawrence T. Toombs,
                                          President


Date:   April 1, 2002                 By: /s/ Bradley A. Long
                                      ------------------------------------
                                          Bradley A. Long,
                                          Vice President & Treasurer


Date:   April 1, 2002                 By: /s/ Steven R. Abel
                                      ------------------------------------
                                          Steven R. Abel,
                                          Chairman of the Board & CEO


Date:   April 1, 2002                 By: /s/ D. Warren Robison
                                      ------------------------------------
                                          D. Warren Robison,
                                          Senior Vice President &
                                          Secretary, Director


Date:   April 1, 2002                 By: /s/ Wendell L. Bernard
                                      ------------------------------------
                                          Wendell L. Bernard, Director


Date:   April 1, 2002                 By: /s/ Ralph W. Van Natta
                                      ------------------------------------
                                          Ralph W. Van Natta, Director


Date:   April 1, 2002                 By: /s/ Peter G. DePrez
                                      ------------------------------------
                                          Peter G. DePrez, Director


Date:   April 1, 2002                 By: /s/ Michael J. Vaught
                                      ------------------------------------
                                          Michael J. Vaught, Director
</TABLE>


                                       25