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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  -------------
                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X]  ANNUAL  REPORT  PURSUANT TO 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

For the fiscal year ended December 31, 2000
                                       OR

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

For the transition period from                to
                               --------------    --------------

                         Commission File Number: 0-18392

                                AMERIANA BANCORP
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

         INDIANA                                                35-1782688
-------------------------------                            ---------------------
(State or Other Jurisdiction of                            (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

2118 Bundy Avenue, New Castle, Indiana                           47362-1048
--------------------------------------                      --------------------
  (Address of Principal Executive Offices)                      (Zip Code)

       Registrant's telephone number, including area code: (765) 529-2230
                                                           --------------

        Securities registered pursuant to Section 12(b) of the Act: NONE
                                                                    ----

           Securities registered pursuant to Section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $1.00 PER SHARE
                     ---------------------------------------

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not 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-K or any amendment to this
Form 10-K. [X]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant based on the closing sales price of the registrant's  common stock as
quoted on the Nasdaq National  Market SM on March 5, 2001 was  $30,907,282  (for
purposes of this calculation,  directors and executive  officers are not treated
as "non-affiliates").

As of March 5, 2001,  there were issued and outstanding  3,146,616 shares of the
registrant's common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions of Proxy  Statement  for the 2001 Annual  Meeting of  Shareholders
     ("Proxy Statement") (Part III).

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


<PAGE>


                                     PART I


Item 1.  Business
-----------------

FORWARD-LOOKING STATEMENTS

     When used in this Annual  Report on Form 10-K (the  "Annual  Report"),  the
words or phrases "will likely  result," "are expected to," "will  continue," "is
anticipated,"  "estimate,"  "project"  or similar  expressions  are  intended to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks  and  uncertainties  including  changes  in  economic  conditions  in  the
Company's market area, changes in policies by regulatory agencies,  fluctuations
in  interest  rates,  demand  for  loans  in  the  Company's  market  area,  and
competition that could cause actual results to differ materially from historical
earnings and those  presently  anticipated  or projected.  The Company wishes to
caution  readers  not  to  place  undue  reliance  on any  such  forward-looking
statements,  which speak only as of the date made.  The Company wishes to advise
readers  that the factors  listed  above could  affect the  Company's  financial
performance  and could cause the Company's  actual results for future periods to
differ  materially  from any opinions or  statements  expressed  with respect to
future periods in any current statements.

     The Company does not undertake,  and specifically disclaims any obligation,
to  publicly  release  the  result  of any  revisions  which  may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

GENERAL
-------

     THE COMPANY.  Ameriana  Bancorp (the  "Company") is the holding company for
Ameriana Bank and Trust of Indiana,  a federal savings bank headquartered in New
Castle,  Indiana (the "Bank"). In addition,  the Company owns Ameriana Insurance
Agency, Inc. ("AIA"), which provides insurance sales from offices in New Castle,
Greenfield,  and Avon,  Indiana.  The Company also owns Indiana Title  Insurance
Company ("ITIC") which provided title insurance services in Central Indiana, but
ceased  operations  at the close of business on December 31,  2000.  The Company
also holds a minority interest in a limited partnership organized to acquire and
manage real estate investments which qualify for federal tax credits.

         The Company  became the holding  company for the Bank in 1990. In 1992,
the Company  acquired Deer Park Financial  Corporation,  the holding company for
Deer Park Federal Savings and Loan Association  ("Deer Park"), a federal savings
association with its main office in Cincinnati, Ohio. After the acquisition, the
Company

<PAGE>

operated  Deer Park as a separate  subsidiary.  In 1998,  the  Company  acquired
Cardinal State Bank  ("Cardinal"),  an  Ohio-chartered  commercial bank with its
main office in Maineville,  Ohio, through a merger with Deer Park. Following the
acquisition,   Deer   Park  was   renamed   Ameriana   Bank  of   Ohio,   F.S.B.
("Ameriana-Ohio") and continued to operate as a separate subsidiary.  In October
2000, the Company merged Ameriana-Ohio into the Bank.

     THE BANK. The Bank is a federally  chartered stock savings bank which began
operations in 1890.  Since 1935, the Bank has been a member of the FHLB ("FHLB")
System and its savings deposits are insured to applicable  limits by the Savings
Association  Insurance  Fund  ("SAIF"),  administered  by  the  Federal  Deposit
Insurance Corporation ("FDIC").  The Bank's main office is located at 2118 Bundy
Avenue,  New Castle,  Indiana.  The Bank also  conducts  business  through eight
Indiana  branch  offices  located  in  New  Castle,   Middletown,   Knightstown,
Morristown,  Greenfield,  Anderson, Avon and New Palestine, Indiana and two Ohio
branch offices located in Cincinnati and Maineville,  Ohio. The Bank,  through a
wholly owned subsidiary,  Ameriana  Financial  Services,  Inc., has an ownership
interest  in  a  life  insurance  underwriting  firm  located  in  New  Orleans,
Louisiana, and offers a full line of investments and securities products through
its  brokerage  center  located  in New  Castle,  Indiana.  The  Bank  completed
construction of a new full service banking facility in New Palestine, Indiana to
extend its reach  southeast of the greater  Indianapolis  area.  This new branch
opened on December 6, 1999.  The Bank  maintains a website at  www.ameriana.com.
                                                               -----------------

     The business of the Bank consists primarily of attracting deposits from the
general public and originating mortgage loans on single-family  residences,  and
to a lesser extent on  multi-family  housing and commercial  property.  The Bank
also makes home improvement  loans and consumer loans and through its subsidiary
engages in insurance and brokerage  activities.  In 1999, the Bank established a
Business  Services  Division to provide  specialized  lending and other  banking
services for business customers.  As a result of the Business Services Division,
commercial real estate loans have increased  significantly during 1999 and 2000.
The Bank also began  operating a Trust  Department  during  1999 which  provides
trust,  investment and estate planning services.  The principal sources of funds
for the Bank's lending  activities  include  deposits  received from the general
public, funds borrowed from the FHLB,  principal  amortization and prepayment of
loans.  The Bank's primary  sources of income are interest and fees on loans and
interest on investments. The Bank has from time to time purchased loans and loan
participations in the secondary market. The Bank also invests in various federal
and government agency obligations and other investment  securities  permitted by
applicable  laws and  regulations,  including  mortgage-backed  securities.  The


                                      2
<PAGE>


Bank's  principal  expenses are interest  paid on deposit  accounts and borrowed
funds and operating expenses incurred in the operation of the Bank.

     PROPOSED  CONVERSION  OF BANK.  On  February  5,  2001,  the Bank  filed an
application with the Indiana Department of Financial Institutions for permission
to convert to an Indiana state stock savings  bank. It is  anticipated  that the
conversion to a state savings bank will be effected during the second quarter of
2001.  The Company does not  anticipate  that the  conversion to a state savings
bank will result in any material change in the Bank's operations. As a result of
the conversion,  however, the Company will become a bank holding company subject
to regulation by the Board of Governors of the Federal Reserve System  ("Federal
Reserve Board") under the Bank Holding Company Act of 1956 ("BHCA") and the Bank
will  be  subject  to  regulation   by  the  Indiana   Department  of  Financial
Institutions and the FDIC rather than by the OTS.

LENDING  AND  INVESTMENT ACTIVITIES

     GENERAL.   The  principal  lending  activity  of  the  Bank  has  been  the
origination of conventional first mortgage loans secured by residential property
and to a lesser  extent  commercial  real  estate,  equity  lines of credit  and
consumer loans. The residential  mortgage loans have been predominantly  secured
by single family homes and have included construction loans.

     The Bank may  originate  or  purchase  whole  loans or loan  participations
secured by real estate located in any part of the United States. Notwithstanding
this  nationwide  lending  authority,  the majority of the Bank's  mortgage loan
portfolio  is  secured by real  estate  located  in Henry,  Hancock,  Hendricks,
Madison,  Shelby,  Delaware  and Marion  counties in the state of Indiana and in
Hamilton, Butler, Clermont and Warren counties in the state of Ohio.


                                       3
<PAGE>


     The  following  table  sets  forth  information  concerning  the  Company's
aggregate  loans by type of loan at the dates  indicated.  Residential  mortgage
loans held for sale are included in this table, and  mortgage-backed  securities
are not included in this table.
<TABLE>
<CAPTION>

                                                                             AT DECEMBER  31,
                                 ---------------------------------------------------------------------------------------------------
                                       2000                  1999                 1998                1997               1996
                                 ----------------     ----------------     ----------------     ----------------    ---------------
                                 AMOUNT       %       AMOUNT       %       AMOUNT        %      AMOUNT       %      AMOUNT      %
                                 ------     -----     ------     -----     ------      -----    ------     -----    ------    -----
                                                                        (DOLLARS IN THOUSANDS)
<S>                             <C>           <C>    <C>           <C>    <C>           <C>    <C>          <C>    <C>         <C>
Real estate mortgage loans:
  Commercial....................$  35,615     8.57%  $  22,411     6.52%  $  15,282     5.47%  $  4,930     1.64%  $  3,096    1.07%
  Residential loans.............  295,776    71.17     249,911    72.73     209,817    75.07    251,237    83.61    230,723   80.03
  Construction loans............   43,287    10.42      42,971    12.51      23,176     8.29      4,354     1.45     10,225    3.55
Commercial loans................    8,764     2.11       1,209     0.35         862     0.31         19     0.01         24    0.01
Consumer loans:
  Mobile home and auto loans....   20,767     5.00      16,373     4.77      21,854     7.82     31,818    10.39     31,706   11.00
  Loans secured by deposits.....    1,598     0.38       1,392     0.40       1,351     0.48      1,308     0.44      1,395    0.48
  Home improvement loans........      321     0.08       1,577     0.46       2,774     0.99      5,629     1.87      5,645    1.96
  Other.........................    9,431     2.27       7,762     2.26       4,387     1.57      1,177     0.59      5,486    1.90
                                ---------   ------   ---------    -----   ---------    -----   --------    -----   --------   -----
     Total......................  415,559   100.00%    343,606   100.00%    279,503   100.00%   300,472   100.00%   288,300  100.00%
                                ---------   ======   ---------   ======   ---------   ======   --------   ======   --------  ======

Less:
  Loans in process..............   16,724               16,723               12,123               4,876               4,495
  Deferred loan fees............     (143)                (129)                 102                  44                 100
  Loan loss reserve.............    1,489                1,534                1,284               1,163               1,104
                                ---------            ---------            ---------            --------            --------
   Sub Total....................   18,070               18,128               13,509               6,083               5,699
                                ---------            ---------            ---------            --------            --------
     Total......................$ 397,489            $ 325,478            $ 265,994            $294,389            $282,601
                                =========            =========            =========            ========            ========

</TABLE>

                                       4
<PAGE>


     The following  table shows,  at December 31, 2000, the Company's  aggregate
loans based on their contractual terms to maturity  (mortgage-backed  securities
are not included).  Demand loans,  loans having no stated schedule of repayments
and no stated maturity,  and overdrafts are reported as due in one year or less.
Contractual  principal repayments of loans do not necessarily reflect the actual
term of the loan portfolio.  The average life of mortgage loans is substantially
less than their  contractual  terms because of loan  prepayments  and because of
enforcement of due-on-sale  clauses,  which give the Bank the right to declare a
loan  immediately  due and payable in the event,  among other  things,  that the
borrower  sells the real  property  subject to the  mortgage and the loan is not
repaid.  The average  life of mortgage  loans tends to increase,  however,  when
current  mortgage  loan rates  substantially  exceed rates on existing  mortgage
loans.
<TABLE>
<CAPTION>
                                       AMOUNTS OF LOANS WHICH MATURE IN
                                  ----------------------------------------------
                                                           2006 AND
                                   2001       2002-2005    THEREAFTER     TOTAL
                                  -------     -----------  ----------   --------
                                                (IN THOUSANDS)
<S>                              <C>          <C>          <C>          <C>
Type of Loan:
  Real estate mortgage .....     $ 20,348     $ 28,561     $325,010     $373,919
  Other ....................        5,632       27,612        8,396       41,640
                                 --------     --------     --------     --------
  Total ....................     $ 25,980     $ 56,173     $333,406     $415,559
                                 ========     ========     ========     ========
</TABLE>


     The following table sets forth the dollar amount of the Company's aggregate
loans due after  one year  from  December  31,  2000  which  have  predetermined
interest   rates  and  which  have   floating  or  adjustable   interest   rates
(mortgage-backed securities are not included).
<TABLE>
<CAPTION>

                                             FIXED       ADJUSTABLE
                                              RATE           RATE         TOTAL
                                             ------      -----------    --------
                                                       (IN THOUSANDS)

<S>                                         <C>           <C>           <C>
Real estate mortgage loans ...........      $110,469      $243,102      $353,571
Other loans ..........................        35,743           265        36,008
                                            --------      --------      --------
  Total ..............................      $146,212      $243,367      $389,579
                                            ========      ========      ========
</TABLE>

     RESIDENTIAL REAL ESTATE LENDING.  The Bank's primary lending activities are
the origination of loans on one-to-four family  residential  dwelling units. The
Bank  currently  offers  fixed-rate,   first  and  second  mortgage  loans.  The
fixed-rate  mortgage  loans provide for a maturity of ten to thirty years,  with
the thirty-year  loan bearing a slightly  higher rate of interest.  The terms of
the first mortgage loans generally conform to the guidelines  established by the
Federal Home Loan Mortgage Corporation ("FHLMC") and are, therefore, saleable in
the secondary  mortgage  market.  The Bank's  fixed-rate  second  mortgage loans
provide for a maturity of ten years and bear interest at a rate slightly  higher
than  that  borne by the  first  mortgage  loans.  At the time the Bank  makes a
fixed-rate


                                       5
<PAGE>


mortgage loan, it determines whether the loan will be held in portfolio or sold,
based  primarily  on the  interest  rate and term of the  loan.  Once  placed in
portfolio,  loans are not sold.  Loans  originated for sale are promptly sold in
the secondary market.  Fixed-rate mortgage loans in the amount of $9.238 million
were  originated  for sale during 2000 and $9.298 million were sold at a gain of
$103,000.  Mortgage loans held for sale are those loans that have been committed
to be sold, but have not closed as of the end of the year.

     The Bank emphasizes the origination of  adjustable-rate  mortgages ("ARMs")
for  portfolio.  The Bank  currently  offers  several  types of ARMs  either  as
first-lien mortgage loans or as second-lien  mortgage loans which are adjustable
semi-annually, annually, or on three-year, five-year or seven-year intervals and
indexed to the yields on comparable United States Treasury securities.

     The Bank  limits the  maximum  loan-to-value  ratio on  one-to-four  family
residential  first  mortgages to 95% of the appraised value with the requirement
that private mortgage insurance normally be obtained for loan-to-value ratios in
excess  of 80%.  The Bank  limits  the  loan-to-value  ratio to 89.9% on  second
mortgages on one-to-four family dwellings.

     The Bank's  residential  lending  activities  also include loans secured by
multi-family  residential  structures,  which are structures  consisting of over
four separate dwelling units. This has not constituted a significant  portion of
the Bank's lending activities to date.  Multi-family  residential structures are
generally  income producing  properties.  The Bank generally does not lend above
80% of the appraised values of multi-family residences on first mortgage loans.

     CONSTRUCTION AND COMMERCIAL REAL ESTATE LENDING.  The Bank originates loans
secured by existing commercial  properties and construction loans on residential
real estate.  The Bank's  commercial  real estate loans are secured by churches,
nursing homes, hotels/motels, multi-family properties and other income-producing
properties. The Bank's commercial real estate loans have increased significantly
due to the establishment of the new Business Services Division during 1999. This
new operation made direct  commercial loans and more importantly  purchased loan
participations  from  other  financial  institutions.  These  participations  in
commercial  real estate  loans are  reviewed  and  approved  based upon the same
credit  standards  as direct  commercial  loans at the Bank.  Loans  secured  by
commercial  real estate  properties  are generally  larger and involve a greater
degree of credit  risk than one-  to-four  family  residential  mortgage  loans.
Because payments on loans secured by commercial real estate properties are often
dependent on the successful operation or management of the properties, repayment
of such loans may be


                                       6
<PAGE>


subject to adverse  conditions in the real estate market or by general  economic
conditions. If the cash flow from the project is reduced (for example, if leases
are not obtained or renewed),  the  borrower's  ability to repay the loan may be
impaired.  To minimize the risks  involved in originating  such loans,  the Bank
considers,  among other  things,  the credit  worthiness  of the  borrower,  the
location of the real estate,  the condition and occupancy levels of the security
and the quality of the organization managing the property.

     The Bank originates  and/or purchases  construction  loans on single-family
residential  properties in its primary  market  areas.  The loans are secured by
real estate,  and most of the homes to be constructed  are already  subject to a
sales  contract  at  the  time  the  construction   loan  is  made.  The  Bank's
construction  loans generally range in size between  $100,000 and $500,000,  and
the Bank's  commercial  real  estate  loans range from  $100,000 to  $3,000,000.
Substantially  all of the commercial and construction  loans  originated  and/or
purchased by the Bank have either  adjustable  interest rates with maturities of
30 years or less or are loans with fixed  interest  rates and  maturities of ten
years or less.  During fiscal 2000  construction  loans  originated or purchased
amounted  to  $36.727  million.  The  gross  outstanding  construction  loans at
December 31, 2000 were:

                                                                    AMOUNT
                                                               --------------
                                                               (IN THOUSANDS)

                  Single family (1-4 units)...................  $  30,830
                  Five or more dwelling units.................      5,324
                  Other improved real estate..................      7,133
                                                                ---------
                                                                $  43,287
                                                                =========


     Loans involving construction financing present a greater level of risk than
loans for the purchase of existing homes since collateral value and construction
costs  can only be  estimated  at the time  the loan is  approved.  The Bank has
sought to  minimize  this risk by  limiting  construction  lending to  qualified
borrowers  in its market area and by limiting the number of  construction  loans
outstanding at any time to individual builders. In addition,  most of the Bank's
construction  loans are made on homes which are  pre-sold,  for which  permanent
financing is already arranged.

     The Bank's underwriting  criteria are designed to evaluate and minimize the
risks of each construction loan. Among other things, the Bank considers evidence
of the  availability  of  permanent  financing  or a takeout  commitment  to the
borrower; the reputation of the borrower and his or her financial condition; the
amount of the borrower's equity in the project; independent appraisal and review
of cost estimates;  preconstruction sale and leasing information;  and cash flow
projections of the borrower.


                                       7
<PAGE>

     The  aggregate  amount  of  loans  which  a  federally   chartered  savings
institution may make on the security of liens on  non-residential  real property
generally may not exceed 400% of the  institution's  regulatory  capital.  These
limits on non-residential real property lending have not materially affected the
Bank's lending activities.

     CONSUMER LOANS.  Federally  chartered thrift institutions are authorized to
make secured and unsecured consumer loans up to 35% of the institution's assets.
In addition,  a federal thrift  institution has lending  authority above the 35%
category  for  certain  consumer  loans,  such as home  equity  loans,  property
improvement loans, mobile home loans and loans secured by savings accounts.  The
consumer loans granted by the Bank have included loans on automobiles  and other
consumer goods, as well as education  loans,  loans secured by savings  accounts
and secured and unsecured  lines of credit.  In 2000,  the Company  continued to
originate  automobile  loans.  Such  loans are  originated  both  directly  with
customers and indirectly  through  automobile  dealers in the Company's  lending
areas.

     Management believes that the shorter terms and the normally higher interest
rates  available  on  various  types of  consumer  loans  have been  helpful  in
maintaining  profitable  spreads between average loan yields and costs of funds.
Consumer  loans  do,  however,  pose  additional  risks of  collectibility  when
compared to traditional  types of loans granted by thrift  institutions  such as
residential  first  mortgage  loans.  The Bank has sought to reduce this risk by
primarily granting secured consumer loans.

     COMMERCIAL BUSINESS LENDING. Under applicable law, the Bank is permitted to
make  secured  and  unsecured  loans for  commercial,  corporate,  business  and
agricultural  purposes,  including  issuing  letters of credit and  engaging  in
inventory financing and commercial leasing activities. The aggregate outstanding
amount of such loans generally may not exceed 10% of the Bank's assets. The Bank
does not, as a common  practice,  make unsecured  commercial  loans. The Company
began making and purchasing the collaterized commercial loans in 1998. The total
lease and commercial portfolio at December 31, 2000 was $8,764,000.

     ORIGINATIONS,  PURCHASES  AND  SALES.  Historically,  all  residential  and
commercial real estate loans have been  originated  directly by the Bank through
salaried loan officers.  Residential loan originations have been attributable to
referrals  from  real  estate  brokers  and  builders,  depositors  and  walk-in
customers,  and  commissioned  loan agents.  The Bank also obtains  consumer and
commercial  loans from paid brokers.  The Bank obtained $26.229 million of loans
from brokers in 2000.  Commercial real estate and construction loan originations
have also been obtained by direct  solicitation.  Consumer loan originations are
attributable  to  walk-in  customers  who have  been  made  aware of the  Bank's
programs by advertising, as well as direct solicitation.


                                       8
<PAGE>

     The Bank has previously  sold whole loans to other  financial  institutions
and  institutional  investors.  Sales of loans generate  income (or loss) at the
time of sale,  produce future  servicing income and provide funds for additional
lending and other  purposes.  When the Bank  retains the  servicing  of loans it
sells,  the Bank  retains  responsibility  for  collecting  and  remitting  loan
payments,  inspecting the properties,  making certain insurance and tax payments
on behalf of borrowers and otherwise  servicing those loans.  The Bank typically
receives  a fee of between  0.25% and  0.375% per annum of the loans'  principal
amount for  performing  this  service.  The right to service a loan has economic
value and the Company carries capitalized servicing rights on its books based on
comparable market values and expected cash flows. At December 31, 2000, the Bank
was servicing  $143.539 million of loans for others. The aggregate fair value of
capitalized servicing rights at December 31, 2000 was $847,000.

     Management  believes that  purchases of loans and loan  participations  are
generally desirable, primarily when area mortgage demand is less than the supply
of funds  available  for  local  mortgage  origination  or when  loan  terms are
available  in areas  outside  the  Bank's  local  lending  areas  which are more
favorable to their investment requirements. Additionally, purchases of loans may
be made in order to  diversify  the Bank's  lending  portfolio.  The Bank's loan
purchasing activities fluctuate significantly.  The servicing of purchased loans
is  generally  performed by the seller.  In order to cover  servicing  costs,  a
portion of the interest  being paid by the borrower is retained by the servicer.
In  addition  to whole loan  purchases,  the Bank also  purchases  participation
interests in loans. Both whole loans and participations are purchased on a yield
basis.  As of December  31,  2000,  $31.646  million,  or 7.932%,  of the Bank's
aggregate loans consisted of purchased loans which were serviced by others.



                                       9
<PAGE>


     The following table shows aggregate loans originated, purchased and sold by
the Company during the periods indicated.
<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                      ------------------------------------
                                                       2000          1999            1998
                                                      ------        ------          ------
                                                                 (IN THOUSANDS)
<S>                                                  <C>           <C>             <C>
Loans Originated:
  Conventional real estate loans:
    Construction loans...........................    $ 34,227      $ 31,233        $ 39,737
    Loans on existing property...................      40,088        41,295          72,390
    Loans refinanced.............................      15,985        17,996          49,791
  Other loans....................................      40,910        41,276          27,406
                                                     --------      --------        --------
       Total loans originated....................     131,210       131,800         189,324
                                                     --------      --------        --------

Loans Purchased:
  Real estate loans:
    Conventional.................................      43,886        60,355           3,938
    Mortgage-backed securities...................         611            --              --
  Commercial-other collateral....................       3,998            --           2,500
                                                     --------      --------        --------
       Total loans purchased.....................      48,495        60,355           6,438
                                                     --------      --------        --------

Total loans originated and purchased.............    $179,705      $192,155        $195,762
                                                     ========      ========        ========
Mortgage loans sold..............................    $  9,238      $ 23,303        $ 96,259
                                                     ========      ========        ========
</TABLE>

     For additional  information,  see "Management's  Discussion and Analysis --
Results of Operations" included in Item 7 of this Annual Report.

     LOAN UNDERWRITING. During the loan approval process, the Bank assesses both
the  borrower's  ability to repay the loan and the  adequacy  of the  underlying
security.  Potential  residential  borrowers  complete an  application  which is
submitted to a salaried loan officer.  As part of the loan application  process,
the  Bank  obtains  information  concerning  the  income,  financial  condition,
employment  and  credit  history  of  the  applicant.  In  addition,   qualified
appraisers  inspect and  appraise  the  property  which is offered to secure the
loan.

     The  Bank's  loan  officers  and/or  loan  committees,   analyze  the  loan
application and the property to be used as collateral and subsequently  approves
or denies the loan request.  Individual  salaried  employees  are  authorized to
approve  loans up to  their  individual  lending  limits  and  loan  parameters.
Residential  loans of $500,000 or more and commercial  loans of $350,000 or more
but less than $1,000,000  must be approved by a committee  consisting of certain
members of senior  management.  The Board of Directors must approve all loans in
excess of  $1,000,000.  In connection  with the  origination  of  single-family,
residential  ARMs,  borrowers are  qualified at a rate of interest  equal to the
second year rate, assuming the maximum increase.  It is the policy of management
to make  loans to  borrowers


                                       10
<PAGE>


who not only  qualify at the low initial  rate of  interest,  but who would also
qualify following an upward interest rate adjustment.

     LOAN  COMMITMENTS.  Conventional loan commitments by the Bank are generally
granted for periods of up to 60 days.  The total amount of the Bank's  aggregate
outstanding commitments to originate real estate loans at December 31, 2000, was
approximately  $5.379  million.  It has  been  the  Bank's  experience  that few
commitments expire unfunded.

     LOAN FEE AND SERVICING INCOME. In addition to interest earned on loans, the
Bank receives income through servicing of loans and fees in connection with loan
originations,  loan  modifications,   late  payments  and  changes  of  property
ownership and for miscellaneous  services related to the loan. Income from these
activities is volatile and varies from period to period with the volume and type
of loans made.

     When possible,  the Bank charges loan origination fees which are calculated
as a  percentage  of the amount  borrowed and are charged to the borrower at the
time of  origination  of the loan.  The fees  received  in  connection  with the
origination of commercial  real estate loans  generally  range from none to 1.00
point (one point being  equivalent to 1% of the  principal  amount of the loan).
The fees received in connection with the origination of conventional one-to-four
family  mortgages  typically  range from none to 1.00 point.  In accordance with
Statement  of  Financial  Accounting  Standards  No. 91,  loan  origination  and
commitment fees and certain direct loan  origination  costs are deferred and the
net amount  amortized as an adjustment of yield over the contractual life of the
related loans.

     For  additional  information,  see  Note  4 of the  Consolidated  Financial
Statements included under Item 8 of this Annual Report.

         DELINQUENCIES.  When a borrower  defaults upon a required  payment on a
loan,  the Bank contacts the borrower and attempt to induce the borrower to cure
the  default.  A late  payment  notice is mailed to the borrower and a telephone
contact  is made after a payment is 15 days past due.  If the  delinquency  on a
mortgage  loan  exceeds  90 days and is not  cured  through  the  Bank's  normal
collection  procedures or an acceptable  arrangement  is not worked out with the
borrower,  the Bank will  institute  measures to remedy the  default,  including
commencing a foreclosure action.

     NON-PERFORMING  ASSETS AND ASSET  CLASSIFICATION.  Loans are  reviewed on a
regular  basis and are placed on a  non-accrual  status when,  in the opinion of
management,  the  collection  of  additional  interest is doubtful.


                                       11
<PAGE>


Residential  mortgage  loans  are  placed  on  non-accrual  status  when  either
principal  or interest  is 90 days or more past due unless  they are  adequately
secured and there is  reasonable  assurance of full  collection of principal and
interest.  Consumer  loans  generally are charged off when the loan becomes over
120 days  delinquent.  Commercial  business  and real estate loans are placed on
non-accrual  status when the loan is 90 days or more past due.  Interest accrued
and unpaid at the time a loan is placed on non-accrual status is charged against
interest  income.  Subsequent  payments  are either  applied to the  outstanding
principal balance or recorded as interest income, depending on the assessment of
the ultimate collectibility of the loan.

     Real estate  acquired by the Bank as a result of  foreclosure or by deed in
lieu of  foreclosure is classified as real estate owned until such time as it is
sold. When such property is acquired,  it is recorded at the lower of the unpaid
principal  balance  of the  related  loan  or its  fair  value.  Any  subsequent
deterioration  of the property is provided for in an allowance  for loss on real
estate owned.



                                       12
<PAGE>

     The following  table sets forth  information  with respect to the Company's
aggregate  non-performing  assets at the dates indicated.  At December 31, 2000,
the  Company  had  $609,000  of other  problem  loans for which the  Company had
serious  doubts as to the ability of the  borrowers  to comply with the existing
payment terms and conditions.
<TABLE>
<CAPTION>
                                                                            AT DECEMBER 31,
                                                        ------------------------------------------------------
                                                        2000        1999        1998       1997         1996
                                                        -----      ------      ------     ------       ------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                                     <C>         <C>        <C>        <C>         <C>
Loans accounted for on a non-accrual basis:
  Real Estate:
     Residential....................................    $  720      $  703     $  684     $  847      $  694
     Commercial.....................................        36         226         15         --          --
     Construction...................................        --          --         --         --          --
  Commercial........................................         8          11         --         19          24
  Consumer..........................................        37         231         46         11           3
                                                        ------      ------     ------     ------      ------
    Total...........................................       801       1,171        745        877         721
                                                        ------      ------     ------     ------      ------

Accruing loans contractually past due 90
  days or more:
  Real Estate:
     Residential....................................       576          16         37         61         279
     Commercial.....................................        --          --         --         57          --
     Construction...................................       158          --         --         --          --
  Commercial........................................        --          --         --         --          --
  Consumer..........................................        13           9          3          7          36
                                                        ------      ------     ------     ------      ------
    Total...........................................       747          25         40        124         315
                                                        ------      ------     ------     ------      ------

    Total of non-accrual and
       90 days past due loans.......................    $1,548      $1,196     $  785     $1,002      $1,036
                                                        ======      ======     ======     ======      ======

Percentage of total loans (excluding
    mortgage-backed securities).....................      0.39%       0.37%      0.30%       0.33%      0.36%
                                                        ======      ======     ======    ========     ======
Other non-performing assets (1).....................    $  125      $   --     $   96    $    160     $  101
                                                        ======      ======     ======    ========     ======
<FN>
________________
(1)      Other  non-performing   assets  represents  property  acquired  through
         foreclosure or  repossession.  This property is carried at the lower of
         its fair market value or the principal balance of the related loan.
</FN>
</TABLE>

     During 2000,  the Company  would have  recorded  gross  interest  income of
$73,000 on the loans set forth above as accounted for on a non-accrual basis, if
such loans had been current in accordance with their terms. Instead, the Company
included  interest  income of $59,000  on those  loans in its net income for the
year. For additional information regarding the Company's problem assets and loss
provisions recorded thereon,  see "Management's  Discussion and Analysis" in the
Item 7 of this Annual Report.

     Federal  regulations  require that each savings  institution shall classify
its assets on a regular basis. In addition,  in connection with  examinations of
savings  institutions,  OTS examiners have authority to identify  problem assets
and, if  appropriate,  classify them.  The  regulation  provides for three asset
classification   categories   (i.e.,


                                       13
<PAGE>

Substandard,  Doubtful and Loss).  The  regulations  also have a Special Mention
category,   described  as  assets  which  do  not  currently  expose  a  savings
institution  to a  sufficient  degree of risk to warrant  classification  but do
possess credit deficiencies or potential weaknesses deserving management's close
attention.  Assets classified as Substandard or Doubtful require the institution
to establish general  allowances for loan losses. If an asset or portion thereof
is classified  Loss, the savings  institution  must either  establish  specified
allowances  for loan  losses in the  amount of 100% of the  portion of the asset
classified Loss, or charge off such amount.  General loss allowances established
to cover possible  losses related to assets  classified  Substandard or Doubtful
may be  included in  determining  an  institution's  regulatory  capital,  while
specific  valuation  allowances  for loan  losses do not  qualify as  regulatory
capital.   OTS   examiners   may   disagree   with  the  savings   institution's
classifications and amounts reserved. Based on management's review of the Bank's
assets at December 31, 2000, $945,000, $12,000 and $609,000 of the Bank's assets
were classified as Substandard and Doubtful and Special Mention, respectively.

RESERVES FOR LOSSES ON LOANS AND REAL ESTATE

     In making loans,  management recognizes the fact that credit losses will be
experienced  and that the risk of loss will vary with,  among other things,  the
type of loan being made, the  creditworthiness  of the borrower over the term of
the loan and, in the case of a secured loan, the quality of the security for the
loan.

     It is  management's  policy to maintain  reserves for  estimated  losses on
loans and real estate  acquired.  General loan loss reserves are provided  based
on,  among other  things,  estimates  of the  historical  loan loss  experience,
evaluation  of  economic  conditions  in general  and in various  sectors of the
Bank's  customer  base, and periodic  reviews of loan  portfolio  quality by the
Bank's personnel.  Specific reserves will be provided for individual loans where
the ultimate collection is considered questionable by management after reviewing
the current status of loans which are contractually past due and considering the
net realizable  value of the security of the loan or guarantees,  if applicable.
It is management's policy to establish specific reserves for estimated losses on
delinquent  loans and real  estate  owned  when it  determines  that  losses are
anticipated to be incurred on the underlying  properties.  At December 31, 2000,
the Bank's allowance for loan losses amounted to $1,489,000.

     Future   reserves  may  be  necessary  if  economic   conditions  or  other
circumstances  differ  substantially  from the  assumptions  used in making  the
initial determinations.  There can be no assurance that regulators, in reviewing
the Bank's loan  portfolio in the future,  will not ask the Bank to increase its
allowance for loan losses,  thereby negatively affecting its financial condition
and earnings.

                                       14
<PAGE>

     The  following  table sets forth an  analysis  of the  Company's  aggregate
allowance for loan losses for the periods indicated.
<TABLE>
<CAPTION>

                                                                       YEAR ENDED DECEMBER 31,
                                                       ------------------------------------------------------
                                                        2000        1999        1998        1997        1996
                                                       ------      ------      ------      ------      ------
                                                                       (DOLLARS IN THOUSANDS)

<S>                                                    <C>         <C>         <C>         <C>         <C>
Balance at Beginning of Period.....................    $ 1,534     $ 1,284     $ 1,163     $ 1,104     $ 1,076
                                                       -------     -------     -------     -------     -------

Charge-Offs:
  Real Estate:
    Residential....................................         30          --          12          31           1
    Commercial.....................................        206          --          --          --          --
    Construction...................................         --          --          --          --          --
  Commercial business..............................        252          --          --          --          --
  Consumer.........................................         --          98         153         170          51
                                                       -------     -------     -------     -------     -------
                                                           488          98         165         201          52
                                                       -------     -------     -------     -------     -------

Recoveries:
  Real Estate:
    Residential....................................         --          --          --          --          --
    Commercial.....................................         --          --          --          --          --
    Construction...................................         --          --          --          --          --
  Commercial business..............................          3           4          --          --          10
  Consumer.........................................         23          16          27          18           4
                                                       -------     -------     -------     -------     -------
                                                            26          20          27          18          14
                                                       -------     -------     -------     -------     -------

Net Charge-Offs....................................        462         (78)       (138)       (183)        (38)
Increase from Acquisition..........................         --          --         100          --          --
Provision for Loan Losses..........................        417         328         159         242          66
                                                       -------     -------     -------     -------     -------


Balance at End of Period............................   $ 1,489     $ 1,534     $ 1,284     $ 1,163     $ 1,104
                                                       =======     =======     =======     =======     =======

Ratio of Net Charge-Offs to Average
  Loans Outstanding During the Period..............       0.12%       0.03%       0.05%       0.06%       0.01%
                                                     =========     =======     =======    ========    ========

Ratio of Ending Allowance for
  Loan Losses to Ending Loans......................       0.37%       0.47%       0.49%       0.40%       0.39%
                                                     =========    ========    ========    ========    ========
</TABLE>

     Net charge-offs for the year ended December 31, 2000 increased  principally
due to $378,000 in  charge-offs on two commercial  loans.  The Bank  charged-off
$172,000 on a loan which was acquired in the  acquisition of Cardinal State Bank
in 1998 and which had been fully  reserved  for in 1999.  The second  loan was a
real estate development loan on which the Bank charged off $206,000.


                                       15
<PAGE>


         The following  table sets forth a breakdown of the Company's  aggregate
allowance  for loan losses by loan category at the dates  indicated.  Management
believes that the allowance can be allocated by category only on an  approximate
basis.  The  allocation  of the  allowance to each  category is not  necessarily
indicative  of future  losses and does not restrict the use of the  allowance to
absorb losses in any category.
<TABLE>
<CAPTION>

                                                                           AT DECEMBER 31,
                                            -----------------------------------------------------------------------------
                                                     2000                       1999                      1998
                                            -------------------------   ----------------------     ----------------------
                                                         PERCENT OF                PERCENT OF                 PERCENT OF
                                                        LOANS IN EACH             LOANS IN EACH              LOANS IN EACH
                                                         CATEGORY TO               CATEGORY TO                CATEGORY TO
                                            AMOUNT       TOTAL LOANS    AMOUNT     TOTAL LOANS     AMOUNT     TOTAL LOANS
                                            ------      -------------   ------    -------------    ------    -------------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                         <C>              <C>       <C>             <C>         <C>            <C>
Loans:
  Real Estate Mortgage:
    Commercial............................  $     76         9%        $     58        7%          $    31        6%
    Residential...........................       635        71              649       73               429       75
    Construction..........................        93        10              112       12                47        8
  Commercial..............................         8         2               11       --                15       --
  Consumer................................       677         8              704        8               762       11
                                            --------       ---         --------      ---           -------      ---
    Total Allowance for Loan Losses.......  $  1,489       100%        $  1,534      100%          $ 1,284      100%
                                            ========       ===         ========      ===           =======      ===

<CAPTION>

                                                               AT DECEMBER 31,
                                            ----------------------------------------------------
                                                   1997                        1996
                                            --------------------------  ------------------------
                                                         PERCENT OF                PERCENT OF
                                                        LOANS IN EACH             LOANS IN EACH
                                                         CATEGORY TO               CATEGORY TO
                                            AMOUNT       TOTAL LOANS    AMOUNT     TOTAL LOANS
                                            ------      -------------   ------    --------------
                                                          (DOLLARS IN THOUSANDS)
<S>                                         <C>               <C>      <C>             <C>
Loans:
  Real Estate Mortgage:
    Commercial............................  $       9         1%       $       6       1%
    Residential...........................        459        84              469      80
    Construction..........................          8         1               21       4
  Commercial..............................         19        --               24      --
  Consumer................................        668        14              584      15
                                            ---------       ---        ---------     ---
    Total Allowance for Loan Losses.......  $   1,163       100%       $   1,104     100%
                                            =========       ===        =========     ===
</TABLE>

INVESTMENT ACTIVITIES

     Interest  and   dividends   on   investment   securities,   mortgage-backed
securities, FHLB stock and interest-bearing deposits provides the second largest
source of income for the Company (after interest on loans),  constituting 20.69%
of the Company's total interest income (and dividends) for fiscal 2000. The Bank
maintains its liquid assets at levels believed  adequate to meet requirements of
normal banking activities and potential savings outflows.  At December 31, 2000,
the Bank's  liquidity  ratio (liquid assets as a percentage of net  withdrawable
savings and short-term borrowings) was 16.65%.

                                       16
<PAGE>

     The Bank has the  authority  to invest in various  types of liquid  assets,
including  short-term  United  States  Treasury  obligations  and  securities of
various federal  agencies,  certificates of deposit at insured savings and loans
and banks, bankers'  acceptances,  and federal funds. The Bank may also invest a
portion of its assets in certain commercial paper and corporate debt securities.
The Bank is also  authorized  to invest in mutual  funds and stocks whose assets
conform to the investments that the Bank is authorized to make directly.

     At  December  31,  2000,  the  market  values  of the  Company's  aggregate
investment   securities,   FHLB  stock  and   mortgage-backed   securities  were
approximately $86.901 million, $7.265 million and $11.806 million, respectively.
The following  table sets forth the carrying  value of the Company's  short-term
investments, FHLB stock, and mortgage-backed securities at the dates indicated.
<TABLE>
<CAPTION>

                                                                    AT DECEMBER 31,
                                                     --------------------------------------------
                                                       2000              1999             1998
                                                     --------          ---------        ---------
                                                                   (IN THOUSANDS)

         <S>                                         <C>               <C>              <C>
         Investment securities.....................  $   87,901        $  87,735        $  51,581
         Mortgage-backed securities................      11,806           14,970           20,217
         Interest-bearing deposits (1).............       4,422            6,795           41,493
         FHLB stock................................       7,265            4,341            3,588
                                                     ----------        ---------        ---------
             Total investments.....................  $  111,394        $ 113,841        $ 116,879
                                                     ==========        =========        =========
         <FN>
         __________
         (1)  Consist of overnight deposits and short-term non-negotiable
              certificates of deposit.
         </FN>
</TABLE>

     The following table sets forth information  regarding maturity distribution
and average yields for the Company's investment securities portfolio at December
31, 2000. The Company's  investment  securities  portfolio  consists of callable
obligations issued by FNMA, FHLMC, and the FHLB System.
<TABLE>
<CAPTION>
                                      WITHIN 1 YEAR         1-5 YEAR          5-10 YEARS        OVER 10 YEARS          TOTAL
                                    ----------------   ----------------    ----------------    ----------------  ----------------
                                    AMOUNT     YIELD   AMOUNT     YIELD    AMOUNT     YIELD    AMOUNT     YIELD  AMOUNT     YIELD
                                    ------     -----   ------     -----    ------     -----    ------     -----  ------     -----
         <S>                        <C>        <C>     <C>        <C>      <C>        <C>      <C>        <C>    <C>        <C>
         Federal agencies........   $200       5.58%   $1,500     6.29%    $27,046    6.57%    $59,155    7.00%  $87,901    6.85%
</TABLE>



     The   Company's   mortgage-backed   securities   include  both  fixed-  and
adjustable-rate  securities,   though  the  Company  emphasizes  adjustable-rate
investments   in  order  to  enhance  the  interest  rate   sensitivity  of  its
interest-earning  assets.  At December 31, 2000,  the Company's  mortgage-backed
securities consisted of the following:


                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                                      CARRYING          AVERAGE
                                                                       AMOUNT             RATE
                                                                     ----------         --------
                                                                        (DOLLARS IN THOUSANDS)
        <S>                                                          <C>                 <C>
        Variable rate:
           Repricing in one year or less...........................  $   6,916           7.63%
           Repricing in one to five years..........................        901           6.70
        Fixed-rate:
           Maturing in five years or less..........................         91           8.03
           Maturing in five to ten years...........................        980           7.66
           Maturing in more than ten years.........................      2,918           7.57
                                                                     ---------
           Total...................................................  $  11,806           7.55
                                                                     =========
</TABLE>

SOURCES OF FUNDS

     GENERAL.  Savings  accounts and other types of deposits have  traditionally
been an  important  source of the Bank's  funds for use in lending and for other
general business  purposes.  In addition to deposit  accounts,  the Bank derives
funds  from  loan  repayments,   loan  sales,  borrowings  and  operations.  The
availability  of funds from loan sales is influenced by general  interest  rates
and other market  conditions.  Borrowings  may be used on a short-term  basis to
compensate for reductions in deposits or deposit  inflows at less than projected
levels  and may be used on a longer  term  basis  to  support  expanded  lending
activities.

     DEPOSITS. The Bank attracts both short-term and long-term deposits from the
general  public by offering a wide  assortment of deposit  accounts and interest
rates.  The Bank offers regular  savings  accounts,  NOW accounts,  money market
accounts,   fixed-interest-rate   certificates  with  varying  maturities,   and
negotiated-rate jumbo certificates with various maturities. The Bank also offers
tax-deferred  individual retirement,  Keogh retirement,  and simplified employer
plan retirement accounts.  On December 15, 2000, the Bank sold $1.649 million of
demand and savings deposits with the Loveland branch in Ohio.

     As of December 31, 2000,  approximately 30.12%, or $110.719 million, of the
Bank's  aggregate  deposits  consisted  of various  savings  and demand  deposit
accounts  from which  customers  are  permitted  to  withdraw  funds at any time
without penalty.

     Interest earned on passbook and statement accounts is paid from the date of
deposit to the date of withdrawal  and  compounded  semi-annually  for the Bank.
Interest  earned on NOW and money market deposit  accounts is paid from the date
of deposit to the date of withdrawal and compounded  and credited  monthly.  The
interest rate on these accounts is established by management.

     The Bank also makes available to its depositors a number of certificates of
deposit with various terms and interest  rates to be  competitive  in its market
area. These certificates have minimum deposit requirements as well.


                                       18
<PAGE>

         The following  table sets forth the change in dollar amount of deposits
in the various types of deposit  accounts  offered by the Bank between the dates
indicated.
<TABLE>
<CAPTION>
                                                         INCREASE                           INCREASE
                                      BALANCE AT        (DECREASE)        BALANCE AT       (DECREASE)        BALANCE AT
                                     DECEMBER 31,       FROM PRIOR       DECEMBER 31,      FROM PRIOR        DECEMBER 31,
                                        2000               YEAR             1999              YEAR               1998
                                -------------------    -----------  -------------------    ----------    -------------------
                                                                     (DOLLARS IN THOUSANDS)

<S>                             <C>            <C>     <C>          <C>           <C>      <C>          <C>           <C>
Savings deposits ............   $  34,687      9.44%   $  (3,973)   $  38,660     10.87%   $  (5,518)   $  44,178     13.23%
NOW accounts ................      37,693     10.25        3,839       33,854      9.52        1,435       32,419      9.71
Money market deposit accounts      38,285     10.41          206       38,079     10.70        8,801       29,278      8.77

Certificate accounts:
  Jumbo certificates ........      43,039     11.71        2,995       40,044     11.26       11,891       28,153      8.43
  Fixed-rate certificates:
     12 months or less ......      55,338     15.05      (20,173)      75,511     21.22       15,144       60,367     18.07
     13-24 months ...........      88,084     23.96       43,936       44,148     12.41        1,965       42,183     12.63
     25-36 months ...........      14,759      4.02      (41,275)      56,034     15.75      (12,939)      68,973     20.65
     37 months or greater ...      52,774     14.36       27,464       25,310      7.11        1,521       23,789      7.12
  Variable-rate certificate:
     18 months ..............       2,936      0.80       (1,183)       4,119      1.16         (530)       4,649      1.39
                                ---------    ------    ---------    ---------    ------    ---------    ---------    ------
                                $ 367,595    100.00%   $  11,836    $ 355,759    100.00%   $  21,770    $ 333,989    100.00%
                                =========    ======    =========    =========    ======    =========    =========    ======
</TABLE>


                                       19
<PAGE>


     The variety of deposit  accounts offered by the Bank has permitted it to be
competitive  in obtaining  funds and has allowed it to respond with  flexibility
to, but without eliminating the threat of,  disintermediation (the flow of funds
away from  depository  institutions  such as savings  institutions  into  direct
investment vehicles such as government and corporate  securities).  In addition,
the Bank has become  much more  subject  to  short-term  fluctuation  in deposit
flows, as customers have become more interest rate conscious. The ability of the
Bank to attract and maintain deposits and its costs of funds have been, and will
continue to be,  significantly  affected by money  market  conditions.  The Bank
currently offers a variety of deposit products as options to the customer.  They
include   non-interest-bearing   and  interest-bearing  NOW  accounts,   savings
accounts,  Money Market Deposit  Accounts  ("MMDA") and  Certificates of Deposit
ranging in terms  from  three  months to seven  years.  To  attract  longer-term
deposits,  the Bank promoted a 37-month certificate of deposit during 2000 which
attracted a substantial amount of funds.

     The following table sets forth the Company's average aggregate balances and
interest rates. Average balances are derived from balances which management does
not believe are materially  different from daily balances (actual daily balances
cannot be obtained without undue effort and expense).
<TABLE>
<CAPTION>
                                                       FOR THE YEAR ENDED DECEMBER 31,
                                  ---------------------------------------------------------------------------------
                                         2000                     1999                       1998
                                  --------------------      --------------------      ---------------------
                                              AVERAGE                   AVERAGE                   AVERAGE
                                  AVERAGE       RATE        AVERAGE       RATE        AVERAGE       RATE
                                  BALANCE       PAID        BALANCE       PAID        BALANCE       PAID
                                  -------     --------      -------     --------      -------     --------
                                                            (DOLLARS IN THOUSANDS)
<S>                              <C>               <C>      <C>           <C>        <C>           <C>
Interest-bearing demand
   deposits....................  $   58,598        3.49%    $   53,982    3.27%      $   36,274    3.12%
Savings deposits...............      36,584        2.01         41,717    1.99           45,626    2.13
Time deposits..................     250,343        5.82        235,867    5.34          231,141    5.69
                                 ----------        ----     ----------    ----       ----------    ----
     Total interest-bearing
        deposits...............     345,525        5.02%       331,566    4.58%         313,041    4.88%
                                                   ====                   ====                     ====
Non-interest-bearing demand
   and savings deposits........      16,269                     14,580                   14,020
                                 ----------                 ----------               ----------
     Total deposits............  $  361,794                 $  346,146               $  327,061
                                 ==========                 ==========               ==========
</TABLE>

                                       20
<PAGE>


     The following  table sets forth the aggregate  time deposits in the Company
classified by rates as of the dates indicated.
<TABLE>
<CAPTION>
                                                                    AT DECEMBER 31,
                                                     ---------------------------------------------
                                                      2000              1999              1998
                                                     ------            ------            ------
                                                                   (IN THOUSANDS)
         <S>                                         <C>               <C>              <C>
         Less than 4%..............................  $     478         $   5,375        $     757
         4% -  5.99%...............................     84,009           176,432          169,194
         6% -  7.99%...............................    172,429            63,328           57,754
         8% -  9.99%...............................         14                31              409
                                                     ---------         ---------        ---------
                                                     $ 256,930         $ 245,166        $ 228,114
                                                     =========         =========        =========
</TABLE>

     The following  table sets forth the amount and  maturities of the Company's
time deposits at December 31, 2000.
<TABLE>
<CAPTION>
                                                                AMOUNT  DUE
                                  -----------------------------------------------------------------------
                                  LESS THAN                                        MORE THAN
      RATE                        ONE YEAR        1-2 YEARS      2-3 YEARS          3 YEARS        TOTAL
      ----                        --------        ---------      ---------         ---------       -----
                                                               (IN THOUSANDS)
<S>                               <C>             <C>            <C>             <C>              <C>
Less than 4%....................  $     478       $       --     $       --      $       --       $    478
4% - 5.99%......................     66,860            9,641          4,259           3,249         84,009
6% - 7.99%......................     68,051           47,160         52,195           5,023        172,429
8% - 9.99%......................         --               14             --              --             14
                                  ---------       ----------     ----------      ----------       --------
                                  $ 135,389       $   56,815     $   56,454      $    8,272       $256,930
                                  =========       ==========     ==========      ==========       ========
</TABLE>


     The following table  indicates the amount of the Company's  certificates of
deposit and other deposits of $100,000 or more by time remaining  until maturity
at December 31, 2000.
<TABLE>
<CAPTION>
                                                                                      SAVINGS, NOW
                                                            CERTIFICATES                AND MMDA
                      MATURITY PERIOD                        OF DEPOSIT                  DEPOSITS
                      ---------------                       ------------              -------------
                                                                         (IN THOUSANDS)

             <S>                                             <C>                       <C>
             Three months or less.........................   $  11,778                 $   22,980
             Over three through six months................       2,786                         --
             Over six through twelve months...............       9,147                         --
             Over twelve months...........................      19,328                         --
                                                             ---------                 ----------
                    Total.................................   $  43,039                 $   22,980
                                                             =========                 ==========
</TABLE>


                                       21
<PAGE>
     The  following  table sets forth the  aggregate  savings  activities of the
Company for the periods indicated.
<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                   --------------------------------------------
                                                                    2000              1999               1998
                                                                   ------            ------            --------
                                                                                   (In thousands)

      <S>                                                         <C>               <C>              <C>
      Net increase (decrease) before interest credited..........  $   (3,670)       $    6,780       $   (2,815)
      Deposits sold.............................................      (1,649)               --               --
      Interest credited.........................................      17,155            14,990           14,587
                                                                  ----------        ----------       ----------
      Net increase in deposits..................................  $   11,836        $   21,770       $   11,772
                                                                  ==========        ==========       ==========
</TABLE>

     BORROWINGS.  Deposits  are the  primary  sources  of funds  for the  Bank's
lending and investment  activities and for its general  business  purposes.  The
Bank also uses advances (borrowings) from the FHLB of Indianapolis to supplement
its supply of lendable funds,  to meet deposit  withdrawal  requirements  and to
extend the terms of its liabilities.  Advances from the FHLB of Indianapolis are
typically  secured by the Bank's stock in the FHLB of Indianapolis and a portion
of its first mortgage  loans.  At December 31, 2000, the Bank had $114.4 million
of advances outstanding from the FHLB of Indianapolis. At the time of its merger
with  the  Bank,  Ameriana-Ohio  had  long-term  borrowings  from  the  FHLB  of
Cincinnati.  These borrowings  totaled $24.351 million at December 31, 2000, and
are secured by the Bank's stock in the FHLB of  Cincinnati  and a portion of the
Bank's investment securities.

     The FHLBs function as central  reserve banks  providing  credit for savings
institutions and certain other member financial  institutions.  As a member, the
Bank is required to own capital stock in its FHLB and is authorized to apply for
advances on the  security of such stock and  certain of its home  mortgages  and
other assets  (principally,  securities  which are obligations of, or guaranteed
by, the United States) provided certain  standards  related to  creditworthiness
have been met.

     The  Company  had notes  payable in the total  amount of $2.421  million at
December 31,  2000.  Included in this amount was a note payable to a third party
financial  institution  with a current  balance of $2.150  million  and  bearing
interest at 8.0% at December 31, 2000 the proceeds of which were used to finance
stock  repurchases  during 1999. The remainder of notes payable with balances of
$271,000 and $361,000 at December 31, 2000 and 1999, respectively,  are 6% notes
payable to former stockholders of Cardinal State Bank.


                                       22
<PAGE>
     The following  table sets forth certain  information  regarding  borrowings
from the FHLBs at the dates and for the periods indicated.
<TABLE>
<CAPTION>
                                                                               AT OR FOR THE YEAR
                                                                               YEAR ENDED DECEMBER 31,
                                                                   --------------------------------------------
                                                                    2000              1999               1998
                                                                   ------            ------            --------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                                               <C>               <C>              <C>
      Amounts outstanding at end of period:
           FHLB advances........................................  $  138,751        $   82,511       $   17,101

      Weighted average rate paid on:
           FHLB advances........................................        6.54%             5.49%            5.34%

      Maximum amount of borrowings outstanding at any month end:
           FHLB advances........................................  $  138,751        $   82,511       $   17,500

      Approximate average amounts outstanding:
           FHLB advances........................................  $  106,657        $   28,402       $   12,007

      Approximate weighted average rate paid on:
           FHLB advances........................................        6.73%            5.41%             5.88%
</TABLE>

                                       23
<PAGE>

AVERAGE BALANCE SHEET

     The  following  table  sets  forth  certain  information  relating  to  the
Company's  aggregate average yield on assets and average cost of liabilities for
the periods  indicated and average  yields earned and rates paid at December 31,
2000.  Such yields and costs are  derived by dividing  income or expenses by the
average  balance  of  assets  or  liabilities,  respectively,  for  the  periods
presented.  Average balances are derived from balances which management does not
believe are  materially  different  from daily  balances  (actual daily balances
cannot be obtained without undue effort and expense).
<TABLE>
<CAPTION>
                                                                       FOR THE YEAR ENDED DECEMBER 31,
                                    ------------------------------------------------------------------------------------------------
                                                2000                                1999                           1998
                                    -------------------------------    -------------------------------    --------------------------
                                                            AVERAGE                            AVERAGE                      AVERAGE
                                    AVERAGE                  YIELD/    AVERAGE                  YIELD/    AVERAGE            YIELD/
                                    BALANCE     INTEREST      COST     BALANCE     INTEREST      COST     BALANCE  INTEREST   COST
                                    -------     --------    -------    -------     --------    -------    -------  -------- -------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                 <C>        <C>            <C>      <C>        <C>           <C>      <C>       <C>       <C>
Interest-earning assets:
 Loan portfolio (1)..............   $371,349   $29,359        7.91%    $ 281,943  $21,703       7.70%    $277,233  $22,517    8.12%
 Mortgage-backed securities......     13,016       910        6.99        17,280    1,080       6.25       25,236    1,663    6.59
 Short-term investments and other
  interest-earning assets (2)....     98,410     6,750        6.85        98,345    6,300       6.41       67,716    4,121    6.08
                                    --------   -------       -----     ---------  -------      -----     --------  -------   -----
    Total interest-earning
      assets.....................    482,775    37,019        7.67       397,568   29,083       7.32      370,185   28,301    7.64
Noninterest-earning assets.......     40,518                              33,488                           20,002
                                    --------                           ---------                         --------
    Total assets.................   $523,293                           $ 431,056                         $390,187
                                    ========                           =========                         ========


Interest-bearing liabilities:
  Deposits.......................   $345,525    17,337        5.02     $ 331,566   15,194       4.58     $313,041   15,265    4.88
  FHLB advances..................    106,657     7,187        6.73        28,402    1,537       5.41       12,007      706    5.88
  Notes payable..................      2,456       204        8.30           298       18       6.00          372       22    6.00
                                    --------   -------       -----     ---------  -------      -----     --------  -------   -----
    Total interest-bearing
       liabilities...............    454,638    24,728        5.44       360,266   16,749       4.65      325,420   15,993    4.91
                                               -------       -----                -------      -----               -------   -----
Noninterest-bearing liabilities..     27,615                              26,958                           19,522
                                    --------                           ---------                         --------

    Total liabilities............    482,253                             387,224                          344,942

Shareholders' equity.............     41,040                              43,832                           45,245
                                    --------                           ---------                         --------

    Total liabilities and
      shareholders' equity.......   $523,293                           $ 431,056                         $390,187
                                    ========                           =========                         ========
Net interest income..............              $12,291                            $12,334                          $12,308
                                               =======                            =======                          =======
Interest rate spread.............                             2.23%                             2.67%                         2.73%
                                                            ======                            ======                        ======
Net yield on interest-earning
    assets.......................                             2.55%                             3.10%                         3.32%
                                                            ======                            ======                        ======
Ratio of average interest-earning
  assets to average interest-bearing
  liabilities....................                           106.19%                           110.35%                       113.76%
                                                            ======                            ======                        ======
<FN>
____________
(1)  Excludes  income  earned  on late  charges  and  inspection  fees.  Average
     balances include non-accrual loans.
(2)  Includes   interest-bearing   deposits  in  other  financial  institutions,
     investment securities and FHLB stock.
</FN>
</TABLE>

                                       24
<PAGE>

TRUST ACTIVITIES

     During 1999, the Bank began offering trust,  investment and estate planning
services through its Ameriana Trust and Investment Management Services division.
Trust  services  consist of personal  trusts,  testamentary  trusts,  investment
agency  accounts  (discretionary  and directed),  guardianships,  rollover IRA's
(discretionary  and  directed)  and  estates  (personal  representative).  These
accounts are offered to customers  within the Bank's service area in Indiana and
Ohio.  Trust account  balances of $75,000 and more can  profitably be managed by
the Bank. At December 31, 2000,  the Bank had  $16,409,000 in trust assets under
management.

SUBSIDIARY ACTIVITIES

     As a federally  chartered  savings  institution,  the Bank is  permitted to
invest an amount equal to 2% of its respective  assets in  subsidiaries  with an
additional  investment of 1% of assets where such  investment  serves  primarily
community, inner-city and community-development purposes. Under such limitations
at December  31, 2000,  the Bank was  authorized  to invest up to  approximately
$16.778  million  in  the  stock  of or  loans  to  subsidiaries.  In  addition,
institutions  meeting regulatory  capital  requirements and certain other tests,
which  the Bank  does,  may  invest  up to 50% of their  regulatory  capital  in
conforming first mortgage loans to subsidiaries.

     In addition to owning all of the stock of the Bank,  the Company  also owns
all the stock of AIA, which provides  insurance  products to the  communities it
serves and all of the stock of ITIC, which provided title insurance  services in
the  communities it served.  ITIC ceased  operations at the close of business on
December 31, 2000.

     The Bank  has two  direct  wholly-owned  subsidiaries,  Ameriana  Financial
Services,  Inc. ("AFS") and Deer Park Service Corporation  ("DPSC").  AFS offers
insurance products through its ownership of an interest in Family Financial Life
Insurance  Company,  New Orleans,  Louisiana  which offers a full line of credit
related  insurance   products.   AFS  also  operates  a  brokerage  facility  in
conjunction  with  Linsco/Private  Ledger.  DPSC,  which  operated  a  brokerage
facility in conjunction with Money  Concepts/Pinnacle  Financial Advisors,  Inc.
ceased operations in 2000 and is currently an inactive corporation.

     At  December  31,  2000,  the  Bank's  investments  in,  and loans to,  its
subsidiaries  were  approximately  $3.414 million,  respectively,  consisting of
direct equity investments.

     Savings institutions whose deposits are insured by the SAIF are required to
give the FDIC and the OTS 30 days' prior notice before establishing or acquiring
a new subsidiary, or commencing any new activity through an


                                       25
<PAGE>


existing subsidiary. Both the FDIC and the Director of the OTS have authority to
order  termination  of  subsidiary  activities  determined to pose a risk to the
safety or soundness of the institution.

COMPETITION

     The  Bank  experiences  substantial  competition  both  in  attracting  and
retaining savings deposits and in the making of mortgage and other loans. Direct
competition  for  savings  deposits  comes  from  other  savings   institutions,
commercial  banks,  and  credit  unions  located  in  the  Bank's  market  area.
Additional significant  competition for savings deposits comes from money market
mutual funds and corporate and government debt securities.

     The primary  factors in  competing  for loans are  interest  rates and loan
origination  fees and the range of  services  offered by the  various  financial
institutions.  Competition  for  origination of real estate loans normally comes
from other thrift  institutions,  commercial banks,  mortgage bankers,  mortgage
brokers and insurance  companies.  The Bank has been able to compete effectively
in its market area.

     The Bank has  offices in Henry,  Hancock,  Hendricks,  Shelby  and  Madison
Counties in Indiana and in Hamilton  County,  Ohio. In addition to the financial
institutions  which  have  offices in these  counties,  the Bank  competes  with
several commercial banks and savings institutions in surrounding counties,  many
of which have assets which are substantially larger than the Bank.

REGULATION OF THE BANK

     GENERAL.  As a federally  chartered  savings  bank,  the Bank is subject to
extensive regulation by the OTS. The lending activities and other investments of
the Bank must comply  with  various  federal  regulatory  requirements.  The OTS
periodically   examines  the  Bank  for  compliance   with  various   regulatory
requirements. The FDIC also has the authority to conduct special examinations of
SAIF members.  The Bank must file reports with the OTS describing its activities
and  financial   condition.   The  Bank  is  also  subject  to  certain  reserve
requirements  promulgated by the Federal  Reserve Board.  This  supervision  and
regulation is intended primarily for the protection of depositors.  As a savings
and loan  holding  company,  the  Company  is  subject  to the OTS'  regulation,
examination, supervision and reporting requirements. Certain of these regulatory
requirements are referred to below or appear elsewhere herein.

     FINANCIAL  MODERNIZATION  LEGISLATION.  On  November  12,  1999,  President
Clinton  signed  legislation  which  could  have a  far-reaching  impact  on the
financial services  industry.  The  Gramm-Leach-Bliley  ("G-L-B") Act authorizes
affiliations between banking, securities and insurance firms and authorizes bank
holding  companies  and


                                       26
<PAGE>

national banks to engage in a variety of new financial activities. Among the new
activities  that will be permitted to bank holding  companies are securities and
insurance  brokerage,   securities  underwriting,   insurance  underwriting  and
merchant banking.  The Federal Reserve Board, in consultation with the Secretary
of the Treasury,  may approve additional  financial  activities.  The G-L-B Act,
however,  prohibits  future  acquisitions  of existing  unitary savings and loan
holding  companies,  like the Company,  by firms which are engaged in commercial
activities and limits the permissible  activities of unitary  holding  companies
formed after May 4, 1999.

     The G-L-B Act imposes  new  requirements  on  financial  institutions  with
respect to customer  privacy.  The G-L-B Act generally  prohibits  disclosure of
customer  information  to  non-affiliated  third parties unless the customer has
been given the  opportunity  to object and has not objected to such  disclosure.
Financial  institutions  are further required to disclose their privacy policies
to customers  annually.  Financial  institutions,  however,  will be required to
comply  with state law if it is more  protective  of customer  privacy  than the
G-L-B Act.  The G-L-B Act directs the federal  banking  agencies,  the  National
Credit Union Administration,  the Secretary of the Treasury,  the Securities and
Exchange  Commission and the Federal Trade Commission,  after  consultation with
the National Association of Insurance Commissioners,  to promulgate implementing
regulations  within six months of enactment.  The privacy provisions will become
effective in July 2001.

     The G-L-B Act contains significant  revisions to the FHLB System. The G-L-B
Act imposes new capital  requirements  on the FHLBs and authorizes them to issue
two classes of stock with differing dividend rates and redemption  requirements.
The G-L-B Act deletes the current requirement that the FHLBs annually contribute
$300 million to pay interest on certain government obligations in favor of a 20%
of net  earnings  formula.  The G-L-B Act expands the  permissible  uses of FHLB
advances by community  financial  institutions (under $500 million in assets) to
include   funding   loans  to  small   businesses,   small   farms   and   small
agri-businesses. The G-L-B Act makes membership in the FHLB System voluntary for
federal savings associations.

     The  G-L-B  Act  contains  a  variety  of  other  provisions   including  a
prohibition  against ATM surcharges  unless the customer has first been provided
notice of the  imposition  and  amount of the fee.  The  G-L-B Act  reduces  the
frequency of Community  Reinvestment Act  examinations for smaller  institutions
and imposes certain reporting requirements on depository  institutions that make
payments  to   non-governmental   entities  in  connection  with  the  Community
Reinvestment  Act.  The  G-L-B  Act  eliminates  the SAIF  special  reserve  and
authorizes a federal  savings


                                       27
<PAGE>

association that converts to a national or state bank charter to continue to use
the term "federal" in its name and to retain any interstate branches.

     The  Company  is  unable  to  predict  the  impact  of the G-L-B Act on its
operations  at this time.  Although the G-L-B Act reduces the range of companies
with which the  Company  may  affiliate,  it may  facilitate  affiliations  with
companies in the financial services industry.

     REGULATORY   CAPITAL   REQUIREMENTS.   Under   OTS   regulations,   savings
institutions must maintain "tangible" capital equal to at least 1.5% of adjusted
total  assets,  "Tier  1" or  "core"  capital  equal  to at  least 4% (3% if the
institution  is rated  CAMELS 1 under  the OTS  examination  rating  system)  of
adjusted  total  assets  and  "total"   capital,   a  combination  of  core  and
"supplementary"  capital,  equal to at least 8% of  "risk-weighted"  assets.  In
addition,  the OTS has adopted regulations which impose certain  restrictions on
savings  institutions  that have a total  risk-based  capital ratio that is less
than 8.0%, a ratio of Tier 1 capital to  risk-weighted  assets of less than 4.0%
or a ratio of Tier 1 capital to adjusted total assets of less than 4.0% (or 3.0%
if the institution has a CAMELS 1 rating). See "-- Prompt Corrective  Regulatory
Action." For purposes of the regulation, Tier 1 capital, has the same definition
as core  capital  which is defined  as common  shareholders'  equity  (including
retained earnings), noncumulative perpetual preferred stock and related surplus,
minority  interests in the equity accounts of fully  consolidated  subsidiaries,
certain   nonwithdrawable   accounts  and  pledged   deposits  and   "qualifying
supervisory  goodwill."  Tier 1 and core  capital are  generally  reduced by the
amount  of the  savings  institution's  intangible  assets  for  which no market
exists.  Limited  exceptions to the deduction of intangible  assets are provided
for purchased mortgage and nonmortgage  servicing rights,  purchased credit card
relationships and qualifying supervisory goodwill. Tangible capital is given the
same  definition  as core  capital,  but  does  not  include  an  exception  for
qualifying  supervisory goodwill and is reduced by the amount of all the savings
institution's  intangible  assets  with only a limited  exception  for  mortgage
servicing  rights.  Both core and  tangible  capital are  further  reduced by an
amount  equal to the  savings  institution's  debt  and  equity  investments  in
subsidiaries  engaged in activities not permissible  for national banks,  unless
the subsidiaries are engaged in activities  undertaken as agent for customers or
in mortgage banking activities and subsidiary  depository  institutions or their
holding companies.

     Adjusted  total  assets  are a  savings  institution's  consolidated  total
assets, as determined under generally accepted accounting  principles,  adjusted
for  certain  goodwill  amounts,  by a  pro  rated  portion  of  the  assets  of
unconsolidated  includable subsidiaries in which the savings institution holds a
minority  interest.  Adjusted  total

                                       28
<PAGE>


assets are reduced by the amount of assets that have been deducted from capital,
the investments in any  unconsolidated  includable  subsidiary which the savings
institution  has a minority  interest  and,  for  purposes  of the core  capital
requirement, by qualifying supervisory goodwill.

     In  determining  compliance  with the  risk-based  capital  requirement,  a
savings  institution  is  allowed  to use both core  capital  and  supplementary
capital  provided the amount of  supplementary  capital used does not exceed its
core  capital.  Supplementary  capital is defined to include  certain  preferred
stock issues,  nonwithdrawable accounts and pledged deposits that do not qualify
as core  capital,  certain  approved  subordinated  debt,  certain other capital
instruments,  a portion of the savings institution's general loss allowances and
up to 45% of unrealized gains on equity securities. Total core and supplementary
capital are reduced by the amount of certain high loan-to-value ratio land loans
and non-residential  construction loans, and equity investments other than those
deducted from core and tangible capital.  At December 31, 2000, the Company held
no  high  ratio  land  or  nonresidential   construction  loans  for  which  OTS
regulations require a deduction from capital.

     The  risk-based  capital  requirement  is  measured  against  the amount of
risk-weighted  assets  which  equals  the sum of the  amount  of each  asset and
credit-equivalent amount of each off-balance sheet item after such asset or item
is multiplied by an assigned risk weight.  Under the OTS risk-weighting  system,
cash and securities  backed by the full faith and credit of the U.S.  government
are given a 0% risk weight.  Mortgage-backed  securities  that qualify under the
Secondary Mortgage  Enhancement Act, including those issued, or fully guaranteed
as to principal and interest,  by the Federal National  Mortgage  Association or
the FHLMC are assigned a 20% risk weight. Single-family first mortgages not more
than  90 days  past  due  with  loan-to-value  ratios  under  80%,  multi-family
mortgages  (maximum 36 dwelling units) with  loan-to-value  ratios under 80% and
average annual  occupancy rates over 80%, and certain  qualifying  loans for the
construction of one- to four-family  residences  pre-sold to home purchasers are
assigned  a risk  weight  of 50%.  Consumer  loans,  non-qualifying  residential
construction  loans and  commercial  real estate loans,  repossessed  assets and
assets  more than 90 days past due,  as well as other  assets  not  specifically
categorized, are assigned a risk weight of 100%.


                                       29
<PAGE>


     The table below represents the Bank's historical  capital position relative
to its various minimum regulatory capital requirements at December 31, 2000.
<TABLE>
<CAPTION>
                                                                                   PERCENT OF
                                                              AMOUNT               ASSETS  (1)
                                                              ------               -----------
                                                                 (DOLLARS IN THOUSANDS)

<S>                                                           <C>                      <C>
Tangible Capital............................................  $  40,315                7.3%
Tangible Capital Requirement................................      8,335                1.5
                                                              ---------               ----
  Excess....................................................  $  31,980                5.8%
                                                              =========               ====

Core Capital................................................  $  40,315                7.3%
Core Capital Requirement....................................     16,669                3.0
                                                              ---------               ----
  Excess....................................................  $  23,646                4.3%
                                                              =========               ====

Total Capital (i.e., Core and
  Supplementary Capital)....................................  $  41,270               13.1%
Risk-Based Capital Requirement..............................     25,258                8.0
                                                              ---------               ----
  Excess....................................................  $  16,012                5.1%
                                                              =========               ====
<FN>
_____________
(1)      Based on adjusted total assets for purposes of the tangible capital and
         core capital requirements, and risk-weighted assets for purposes of the
         risk-based capital requirement.
</FN>
</TABLE>


     The OTS requires  savings  institutions  with more than a "normal" level of
interest rate risk to maintain additional total capital. A savings institution's
interest rate risk is measured in terms of the sensitivity of its "net portfolio
value" to changes in interest rates. Net portfolio value is defined,  generally,
as the  present  value  of  expected  cash  inflows  from  existing  assets  and
off-balance  sheet  contracts  less the present  value of expected cash outflows
from existing  liabilities.  A savings  institution will be considered to have a
"normal"  level  of  interest  rate  risk  exposure  if the  decline  in its net
portfolio  value  after an  immediate  200 basis  point  increase or decrease in
market interest rates  (whichever  results in the greater  decline) is less than
two percent of the current  estimated  economic  value of its assets.  A savings
institution  with a greater than normal interest rate risk is required to deduct
from  total  capital,   for  purposes  of  calculating  its  risk-based  capital
requirement,  an amount (the "interest rate risk  component")  equal to one-half
the difference  between the  institution's  measured  interest rate risk and the
normal level of interest  rate risk,  multiplied  by the  economic  value of its
total assets.

     The OTS calculates the sensitivity of a savings institution's net portfolio
value based on data submitted by the  institution in a schedule to its quarterly
Thrift  Financial  Report and using the  interest  rate risk  measurement  model
adopted by the OTS. The amount of the interest rate risk  component,  if any, to
be deducted  from a savings  institution's  total  capital  will be based on the
institution's  Thrift  Financial  Report  filed two  quarters  earlier.  Savings
institutions  with less than $300  million  in assets and a  risk-based  capital
ratio above 12% are generally exempt from


                                       30
<PAGE>

filing the interest  rate risk  schedule  with their Thrift  Financial  Reports.
However,  the OTS may require any exempt savings  institution that it determines
may have a high level of interest  rate risk exposure to file such schedule on a
quarterly  basis.  Based upon the Bank's  current  level of  interest  rate risk
exposure, it is subject to additional capital requirements.

     The 200  basis  point  immediate  increase  in  rates  would  create  a net
portfolio  decrease  of  $13,778,000.  Based upon 2% of assets from the June 30,
2000, Thrift Financial  Report,  the Bank would be required to reduce capital by
50% of the  difference or  $1,642,000.  The excess  risk-based  capital would be
reduced to an excess of  $14,370,000  from the previously  calculated  excess of
$16,012,000.

     In addition to requiring generally applicable capital standards for savings
institutions,  the Director of OTS is  authorized to establish the minimum level
of  capital  for a  savings  institution  at such  amount  or at such  ratio  of
capital-to-assets  as the Director determines to be necessary or appropriate for
such  institution in light of the particular  circumstances  of the institution.
Such  circumstances  would  include a high degree of  exposure to interest  rate
risk,  prepayment  risk,  credit risk,  concentration of credit risk and certain
risks arising from non-traditional activities. The Director of OTS may treat the
failure of any savings institution to maintain capital at or above such level as
an unsafe or unsound  practice and may issue a directive  requiring  any savings
institution  which  fails to  maintain  capital  at or above the  minimum  level
required by the Director to submit and adhere to a plan for increasing  capital.
Such an order may be enforced in the same manner as an order issued by the FDIC.

     LOANS-TO-ONE-BORROWER   LIMITATIONS.  Savings  institutions  generally  are
subject to the lending limits applicable to national banks. With certain limited
exceptions,  an institution's  loans and extensions of credit outstanding at one
time to a person and not fully  secured  shall not exceed 15% of the  unimpaired
capital and surplus of the savings  institution on an unsecured basis. Loans and
extensions of credit fully secured by certain readily marketable  collateral may
represent  an  additional  10%  of  unimpaired  capital  and  surplus.   Savings
institutions are additionally  authorized to make loans to one borrower, for any
purpose,  in an amount not to exceed  $500,000  or, by order of the  Director of
OTS, in an amount not to exceed the lesser of  $30,000,000  or 30% of unimpaired
capital and surplus to develop residential housing,  provided:  (i) the purchase
price  of  each  single-family  dwelling  in the  development  does  not  exceed
$500,000;  (ii) the savings  institution  is in compliance  with its  regulatory
capital  standards;   (iii)  the  loans  comply  with  applicable  loan-to-value
requirements;  and (iv) the aggregate  amount of loans made under this authority
does not exceed 150% of unimpaired capital and surplus. A savings institution is
also


                                       31
<PAGE>

authorized  to make loans to one  borrower to finance the sale of real  property
acquired in satisfaction  of debts in an amount up to 15% of unimpaired  capital
and  surplus.  Certain  types of loans are  exempted  from the  lending  limits,
including loans secured by savings deposits.

     At  December  31,  2000,  the  maximum  amount  the Bank  could lend to one
borrower  under the 15% standard was $6.190  million.  At that date,  the Bank's
largest loan to one borrower was $4.147 million.

     PROMPT CORRECTIVE  REGULATORY  ACTION.  Under the Federal Deposit Insurance
Corporation  Improvement Act of 1991 ("FDICIA"),  the federal banking regulators
are  required  to  take  prompt  corrective  action  if  an  insured  depository
institution fails to satisfy certain minimum capital  requirements,  including a
leverage limit, a risk-based capital  requirement,  and any other measure deemed
appropriate by the federal banking regulators for measuring the capital adequacy
of an insured  depository  institution.  All  institutions,  regardless of their
capital levels,  are restricted  from making any capital  distribution or paying
any management  fees if the  institution  would  thereafter  fail to satisfy the
minimum levels for any of its capital requirements. An institution that fails to
meet the minimum level for any relevant  capital  measure (an  "undercapitalized
institution")  may be: (i) subject to increased  monitoring  by the  appropriate
federal  banking  regulator;  (ii)  required  to  submit an  acceptable  capital
restoration plan within 45 days; (iii) subject to asset growth limits;  and (iv)
required to obtain prior regulatory approval for acquisitions, branching and new
lines of businesses.  The capital  restoration  plan must include a guarantee by
the institution's holding company that the institution will comply with the plan
until  it has been  adequately  capitalized  on  average  for  four  consecutive
quarters, under which the holding company would be liable up to the lesser of 5%
of the  institution's  total  assets  or  the  amount  necessary  to  bring  the
institution into capital  compliance as of the date it failed to comply with its
capital  restoration plan. A "significantly  undercapitalized"  institution,  as
well as any  undercapitalized  institution  that does not  submit an  acceptable
capital   restoration   plan,   may  be  subject  to   regulatory   demands  for
recapitalization,  broader  application of  restrictions  on  transactions  with
affiliates,  limitations  on interest  rates paid on deposits,  asset growth and
other  activities,   possible   replacement  of  directors  and  officers,   and
restrictions on capital  distributions  by any bank holding company  controlling
the institution. Any company controlling the institution may also be required to
divest  the  institution  or  the  institution   could  be  required  to  divest
subsidiaries.  The senior executive officers of a significantly undercapitalized
institution may not receive  bonuses or increases in compensation  without prior
approval and the  institution is prohibited from making payments of principal or
interest on its  subordinated  debt. In their  discretion,  the federal  banking
regulators  may also  impose  the  foregoing  sanctions



                                       32
<PAGE>


on an undercapitalized institution if the regulators determine that such actions
are necessary to carry out the purposes of the prompt corrective provisions.  If
an  institution's  ratio of  tangible  capital to total  assets  falls below the
"critical  capital  level"  established  by  the  appropriate   federal  banking
regulator,  the institution will be subject to  conservatorship  or receivership
within specified time periods.

     Under  regulations  jointly  adopted by the federal banking  regulators,  a
savings  institution's  capital  adequacy  for  purposes  of the  FDICIA  prompt
corrective  action rules is determined on the basis of the  institution's  total
risk-based  capital  ratio  (the  ratio of its total  capital  to  risk-weighted
assets),  Tier 1  risk-based  capital  ratio (the  ratio of its core  capital to
risk-weighted  assets)  and  leverage  ratio (the  ratio of its core  capital to
adjusted total assets).  The following  table shows the capital ratios  required
for the each prompt corrective action category.
<TABLE>
<CAPTION>

                                                     ADEQUATELY                                   SIGNIFICANTLY
                           WELL CAPITALIZED          CAPITALIZED         UNDERCAPITALIZED        UNDERCAPITALIZED
                           ----------------          -----------         ----------------        ----------------
<S>                        <C>                       <C>                 <C>                     <C>
Total risk-based
    capital ratio          10.0% or more             8.0% or more        Less than 8.0%          Less than 6.0%
Tier 1 risk-based
    capital ratio           6.0% or more             4.0% or more        Less than 4.0%          Less than 3.0%
Leverage ratio              5.0% or more             4.0% or more *      Less than 4.0% *        Less than 3.0%
<FN>
-----------
*  3.0% if institution has a composite 1 CAMELS rating.
</FN>
</TABLE>

A "critically undercapitalized" savings institution is defined as an institution
that  has a ratio of  "tangible  equity"  to total  assets  of less  than  2.0%.
Tangible equity is defined as core capital plus cumulative  perpetual  preferred
stock  (and  related  surplus)  less  all  intangibles   other  than  qualifying
supervisory  goodwill and certain purchased  mortgage  servicing rights. The OTS
may reclassify a well capitalized savings institution as adequately  capitalized
and may require an adequately  capitalized  or  undercapitalized  institution to
comply with the supervisory actions applicable to institutions in the next lower
capital  category  (but  may not  reclassify  a  significantly  undercapitalized
institution as critically  undercapitalized) if the OTS determines, after notice
and an opportunity for a hearing,  that the savings  institution is in an unsafe
or unsound  condition or that the  institution  has received and not corrected a
less-than-satisfactory  rating for any CAMELS rating  category.  For information
regarding  the  position  of the  Company  with  respect  to the  FDICIA  prompt
corrective  action  rules,  see Note 14 to the Notes to  Consolidated  Financial
Statements included under Item 8 hereof.

     STANDARDS  FOR SAFETY AND  SOUNDNESS.  FDICIA  requires  each  federal bank
regulatory agency to prescribe,  by regulation,  safety and soundness  standards
for institutions  under its authority.  In 1995,  these agencies,  including the
OTS,  released  Interagency  Guidelines  Establishing  Standards  for Safety and
Soundness and published a final


                                       33
<PAGE>

rule  establishing  deadlines for  submission and review of safety and soundness
compliance  plans.  The  guidelines  require  savings  institutions  to maintain
internal  controls and  information  systems and internal audit systems that are
appropriate for the size,  nature and scope of the institution's  business.  The
guidelines also establish certain basic standards for loan documentation, credit
underwriting,  interest  rate risk  exposure and asset  growth.  The  guidelines
further provide that savings  institutions should maintain safeguards to prevent
the payment of compensation,  fees and benefits that are excessive or that could
lead to material  financial  loss and should take into  account  factors such as
comparable  compensation  practices  at  comparable  institutions.  If  the  OTS
determines  that a savings  institution is not in compliance with the safety and
soundness  guidelines,  it may require the  institution  to submit an acceptable
plan to achieve  compliance  with the  guidelines.  A savings  institution  must
submit an acceptable  compliance  plan to the OTS within 30 days of receipt of a
request for such a plan.  Failure to submit or implement a  compliance  plan may
subject the institution to regulatory  sanctions.  Management  believes that the
Bank meets substantially all the standards adopted in the interagency guidelines
and,  therefore,  does not believe that the  implementation  of these regulatory
standards will materially affect its operations.

     Additionally,  the FDICIA required each federal banking agency to establish
standards  relating to the adequacy of asset and earnings quality.  In 1995, the
OTS issued  guidelines  relating  to asset and  earnings  quality.  Under  these
guidelines, a savings institution should maintain systems, commensurate with its
size and the nature and scope of its operations,  to identify problem assets and
prevent  deterioration  in  those  assets  as well as to  evaluate  and  monitor
earnings and ensure that earnings are  sufficient to maintain  adequate  capital
and  reserves.  Management  does not believe that the asset quality and earnings
standards have a material effect on the Bank.

     FEDERAL HOME LOAN BANK SYSTEM. The Bank is a member of the FHLB System. The
FHLB System  consists of 12 regional FHLBs subject to supervision and regulation
by the Federal  Housing  Finance  Board  ("FHFB").  The FHLBs  provide a central
credit facility primarily for member  institutions.  As a member of the FHLBs of
Indianapolis and Cincinnati,  the Bank is required to acquire and hold shares of
capital stock in these FHLBs in an amount at least equal to the greater of 1% of
the aggregate unpaid principal of its residential  mortgage loans, home purchase
contracts  and  similar  obligations  at the  beginning  of each year,  or 5% of
outstanding advances (borrowings) from the FHLBs, whichever is greater. The Bank
was in compliance with this requirement at December 31, 2000, with an investment
in FHLB stock of $7.265 million.


                                       34
<PAGE>

     The FHLBs serve as reserve or central  banks for their member  institutions
within their assigned  regions.  They are funded primarily from proceeds derived
from the sale of consolidated obligations of the FHLB System. They make advances
to members in accordance  with policies and  procedures  established by the FHFB
and their  Boards of  Directors.  At December  31,  2000,  the Bank had $114.400
million  of  advances  outstanding  from the FHLB of  Indianapolis  and  $24.351
million of advances outstanding from the FHLB of Cincinnati.

     INSURANCE OF ACCOUNTS.  The Bank is required to pay assessments  based on a
percentage of its insured  deposits to the FDIC for insurance of its accounts by
the FDIC through the SAIF.  Under the Federal  Deposit  Insurance  Act, the FDIC
sets semi-annual assessments for SAIF-insured  institutions at a level necessary
to  maintain  the  designated  reserve  ratio of the SAIF to 1.25% of  estimated
insured  deposits or to a higher  percentage of estimated  insured deposits that
the FDIC determines to be justified for that year by circumstances  indicating a
significant risk of substantial future losses to the SAIF.

     Under the  FDIC's  risk-based  deposit  insurance  assessment  system,  the
assessment rate for an insured depository  institution depends on the assessment
risk  classification  assigned to the institution by the FDIC, which is based on
the institution's capital level and supervisory  evaluations.  Based on the data
reported to regulators, institutions are assigned to one of three capital groups
-- well capitalized,  adequately  capitalized or  undercapitalized  -- using the
same percentage criteria as in the prompt corrective action regulations. See "--
Prompt Corrective  Regulatory  Action." Within each capital group,  institutions
are assigned to one of three  subgroups on the basis of supervisory  evaluations
by the institution's primary supervisory authority and such other information as
the FDIC determines to be relevant to the institution's  financial condition and
the risk posed to the deposit insurance fund. Subgroup A consists of financially
sound  institutions  with only a few minor  weaknesses.  Subgroup B consists  of
institutions that demonstrate  weaknesses which, if not corrected,  could result
in significant  deterioration  of the  institution and increased risk of loss to
the deposit  insurance  fund.  Subgroup C consists of  institutions  that pose a
substantial  probability of loss to the deposit  insurance fund unless effective
corrective action is taken.

     The FDIC has adopted an  assessment  schedule  for SAIF  deposit  insurance
premiums where the assessment rate for well  capitalized  institutions  with the
highest  supervisory  ratings  is  zero  and  institutions  in  the  worst  risk
assessment  category are assessed at the rate of 0.27% of insured  deposits.  In
addition,  FDIC-insured institutions are required to pay assessments to the FDIC
to help  fund  interest  payments  on  certain  bonds  issued  by the  Financing
Corporation ("FICO"), an agency of the federal government established to finance
takeovers  of  insolvent   thrifts.


                                       35
<PAGE>

Until  December 31, 2000,  SAIF-insured  institutions  were required to pay FICO
assessments at five times the rate at which Bank Insurance Fund ("BIF")  members
were  assessed.  After  December  31,  2000,  both BIF and SAIF  members will be
assessed at the same rate for FICO payments.

     QUALIFIED THRIFT LENDER TEST. A savings  institution that does not meet the
Qualified  Thrift  Lender test must either  convert to a bank  charter or comply
with the following  restrictions on its operations:  (i) the institution may not
engage in any new activity or make any new  investment,  directly or indirectly,
unless such activity or investment is permissible  for a national bank; (ii) the
branching  powers of the institution  shall be restricted to those of a national
bank; and (iii) payment of dividends by the institution  shall be subject to the
rules regarding  payment of dividends by a national bank. Upon the expiration of
three  years  from the date the  institution  ceases  to be a  Qualified  Thrift
Lender,  it must cease any activity,  and not retain any investment,  unless the
investment  or  activity  is  permissible  for a  national  bank  and a  savings
association.

     To qualify as a Qualified Thrift Lender, a savings  institution must either
satisfy the  definition of "domestic  building and loan  association"  under the
Internal  Revenue  Code or  maintain at least 65% of its  "portfolio"  assets in
Qualified Thrift Investments.  Portfolio assets are defined as total assets less
intangibles, the value of property used by a savings institution in its business
and  liquidity  investments  in an amount  not  exceeding  20% of total  assets.
Qualified  Thrift  Investments  consist  of:  (i)  loans,  equity  positions  or
securities related to domestic,  residential real estate or manufactured housing
and  educational,  small  business  and credit card  loans,  and (ii) 50% of the
dollar  amount of  residential  mortgage  loans  subject to sale  under  certain
conditions  but  do not  include  any  intangible  assets.  Subject  to a 20% of
portfolio  assets  limit,  however,  savings  institutions  are able to treat as
Qualified  Thrift  Investments  200% of their  investments  in loans to  finance
"starter  homes"  and loans for  construction,  development  or  improvement  of
housing and community  service  facilities or for financing small  businesses in
"credit-needy"  areas.  A savings  institution  must  maintain  its  status as a
Qualified Thrift Lender for nine out of every 12 months.  A savings  institution
that fails to maintain  Qualified  Thrift  Lender  status will be  permitted  to
requalify  once and if it fails the Qualified  Thrift Lender Test a second time,
it will become  immediately  subject to all  penalties  as if all time limits on
such penalties had expired. Upon failure to qualify as a Qualified Thrift Lender
for two years, a savings institution must convert to a commercial bank.

     At  December  31,  2000,  approximately  86.29% of the Bank's  assets  were
invested in Qualified Thrift Investments as currently defined.

                                       36
<PAGE>

     FEDERAL  RESERVE  SYSTEM.  Pursuant to regulations  of the Federal  Reserve
Board, a thrift institution must maintain average daily reserves equal to 3% net
transaction  accounts on the first  $42.8  million,  plus 10% of the  remainder.
These  percentages  are  subject to  adjustment  by the Federal  Reserve  Board.
Because  required  reserves must be maintained in the form of vault cash or in a
noninterest-bearing account at a Federal Reserve Bank, the effect of the reserve
requirement  is to  reduce  the  amount  of the  institution's  interest-earning
assets. At December 31, 2000, the Bank met its reserve requirements.

REGULATION OF THE COMPANY

         GENERAL.  The  Company  is  registered  as a savings  and loan  holding
company with the OTS and subject to OTS regulations,  examinations,  supervision
and  reporting  requirements.  As a  subsidiary  of a savings  and loan  holding
company,  the Bank is subject to certain  restrictions  in its dealings with the
Company and affiliates thereof.  The Company is required to file certain reports
with, and otherwise  comply with the rules and regulations of the Securities and
Exchange Commission under the federal securities laws.

     ACTIVITIES  RESTRICTIONS.  Because  the  Company  did not  become a unitary
savings and loan holding company pursuant to an application  filed before May 4,
1999, it is subject to the same  restrictions on its activities as are placed on
multiple  savings  and  loan  holding  companies  and  bank  holding  companies.
Accordingly, the Company may not engage in activities other than: (i) furnishing
or performing  management  services for a subsidiary savings  institution;  (ii)
conducting an insurance agency or escrow business;  (iii) holding,  managing, or
liquidating assets owned by or acquired from a subsidiary  savings  institution;
(iv) holding or managing  properties  used or occupied by a  subsidiary  savings
institution;  (v) acting as trustee under deeds of trust;  (vi) those activities
previously  directly  authorized by regulation as of March 5, 1987 to be engaged
in by multiple holding  companies;  or (vii) those activities  authorized by the
Federal  Reserve Board as  permissible  for bank holding  companies,  unless the
Director of OTS by regulation  prohibits or limits such  activities  for savings
and loan holding companies.

     RESTRICTIONS ON ACQUISITIONS. No company may acquire control of the Company
unless the company is only engaged in activities that are permitted for multiple
savings and loan holding  companies or for financial holding companies under the
Bank Holding Company Act of 1956 as amended by the G-L-B Act.  Financial holding
companies  may  engage  in  activities   that  the  Federal  Reserve  Board,  in
consultation with the Secretary of the Treasury,  has determined to be financial
in nature or incidental to a financial  activity or complementary to a financial
activity provided that the complementary activity does not pose a risk to safety
and soundness. Financial



                                       37
<PAGE>

holding  companies that were not previously bank holding  companies may continue
to engage in  limited  non-financial  activities  for up to ten years  after the
effective  date of the G-L-B Act (with  provision  for  extension for up to five
additional  years by the Federal  Reserve  Board)  provided  that the  financial
holding company is predominantly engaged in financial activities.

     Savings and loan holding  companies are prohibited from acquiring,  without
prior  approval  of the  Director  of OTS,  (i)  control  of any  other  savings
association or savings and loan holding company or substantially  all the assets
thereof,  or (ii) more than 5% of the voting shares of a savings  association or
holding company thereof which is not a subsidiary. Except with the prior written
approval  of the  Director  of OTS, no director or officer of a savings and loan
holding  company or person owning or controlling by proxy or otherwise more than
25%  of  such  company's   stock,  may  also  acquire  control  of  any  savings
association,  other  than a  subsidiary  savings  association,  or of any  other
savings and loan holding company.

     The  Director  of  OTS  may  only  approve  acquisitions  resulting  in the
formation of a multiple  savings and loan holding company which controls savings
associations  in more than one  state  if:  (i) the  multiple  savings  and loan
holding company involved controls a savings institution which operated a home or
branch  office in the state of the  association  to be  acquired  as of March 5,
1987;  (ii) the  acquiror  is  authorized  to  acquire  control  of the  savings
association  pursuant to the  emergency  acquisition  provisions  of the Federal
Deposit  Insurance  Act;  or (iii)  the  statutes  of the  state  in  which  the
association to be acquired is located  specifically  permit  institutions  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 institutions).

FEDERAL AND STATE TAXATION

     The Company and its  subsidiaries  file a  consolidated  federal income tax
return  on a  calendar  year  end.  Consolidated  returns  have  the  effect  of
eliminating   intercompany   distributions,   including   dividends,   from  the
computation  of  consolidated  taxable  income for the taxable year in which the
distributions occur.

     FEDERAL TAXATION.  Thrift institutions are subject to the provisions of the
Internal  Revenue Code of 1986 (the "Code") in the same general  manner as other
corporations.   However,  institutions  such  as  the  Bank  which  met  certain
definitional  tests and other  conditions  prescribed by the Code benefited from
certain favorable  provisions regarding their deductions from taxable income for
annual additions to their bad debt reserve. For purposes of the bad debt reserve
deduction,  loans were separated into  "qualifying  real property  loans," which
generally  were  loans


                                       38
<PAGE>

secured by interests in certain real property,  and nonqualifying  loans,  which
were  all  other  loans.  The  bad  debt  reserve   deduction  with  respect  to
nonqualifying loans was based on actual loss experience. For tax years beginning
before  January  1,  1996,  the amount of the bad debt  reserve  deduction  with
respect to qualifying  real property loans was based upon actual loss experience
(the "experience  method") or a percentage of taxable income determined  without
regard to such deduction (the "percentage of taxable income  method").  The Bank
historically  used  whichever  method  resulted in the highest bad debt  reserve
deduction in any given year.

     Legislation  that was effective for tax years  beginning after December 31,
1995 requires  institutions  to recapture into taxable income over a six taxable
year period the portion of the tax loan loss  reserve  that exceeds the pre-1988
tax loan loss reserve.  The Bank will no longer be allowed to use the percentage
of taxable income method for tax loan loss  provisions,  but would be allowed to
use the experience  method of accounting for bad debts.  There will be no future
effect on net income  from the  recapture  because  the taxes on these bad debts
reserves has already been accrued as a deferred tax liability.

     The  legislation  provides  for a  suspension  of  this  recapture  if  the
institution meets the "residential loan requirement." This requirement is met if
the principal amount of residential loans that the institution originates during
its first  taxable  year after  December  31,  1995,  exceeds the average of the
principal  amounts of residential  loans made by the institution  during the six
most recent taxable years  beginning  before January 1, 1996. If the requirement
is met, the recapture is suspended until a taxable year beginning after December
31, 1997.  Recapture is  mandatory no later than for tax years  beginning  after
December 31, 1997.

     Earnings appropriated to an institution's bad debt reserve and claimed as a
tax  deduction  are not  available  for the  payment  of cash  dividends  or for
distribution to  shareholders  (including  distributions  made on dissolution or
liquidation),  unless such amount is included in taxable income,  along with the
amount deemed necessary to pay the resulting federal income tax.

     The Company's federal income tax returns have been audited through 1988.

     STATE  TAXATION.  The State of  Indiana  imposes a  franchise  tax which is
assessed on  qualifying  financial  institutions,  such as the Bank.  The tax is
based upon  federal  taxable  income  before  net  operating  loss  carryforward
deductions (adjusted for certain Indiana  modifications) and is levied at a rate
of 8.5% of adjusted taxable income.


                                       39
<PAGE>

EMPLOYEES

     As of December 31, 2000, the Company and subsidiaries had approximately 159
full-time and ten part-time  employees.  The employees are not  represented by a
collective  bargaining  agreement.  Management  believes  the  Company  and  its
subsidiaries enjoy good relations with their personnel.

EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
                                    AGE AT
NAME                          DECEMBER 31, 2000      PRINCIPAL POSITION
----                          -----------------      ------------------
<S>                                  <C>             <C>
Harry J. Bailey                      58              President and Chief Executive Officer of the Bank and the
                                                     Company

Grover F. Archer                     60              Senior Vice President - Branch Administration of the Bank

Deborah A. Bell                      48              Senior Vice President - Information Technology of the Bank

Timothy G. Clark                     50              Executive Vice President and Chief Operating Officer of
                                                     the Bank and the Company

Ronald M. Holloway                   51              Senior Vice President - Lending Services of the Bank

Ralph E. Kerwin                      64              Senior Vice President - Deposit  Services of the Bank

Nancy A. Rogers                      58              Senior Vice President - Marketing Services of
                                                     the Bank and Secretary of the Bank and the Company

Richard E. Welling                   55              Senior Vice President - Treasurer of the Bank and the
                                                     Company

Jan F. Wright                        57              Senior Vice President - Business Services of the Bank
</TABLE>

     Unless otherwise noted, all officers have held the position described below
for at least the past five years.

     HARRY J.  BAILEY has been  President  of the Company and the Bank since May
1990 and was appointed Chief Executive  Officer in December 1990. Mr. Bailey had
been the Executive  Vice  President and Chief  Operating  Officer of the Company
since its formation in 1989 and of the Bank since  February  1984. He has been a
director  of the Bank  since  1987  and a  director  of the  Company  since  its
formation.

     GROVER  F.  ARCHER  joined  the  Bank as  Senior  Vice  President  - Branch
Administration  in January 1999.  Prior to joining the Bank he held the position
of Area President for one year, as Regional Administrative Manager for six years
and Senior  Vice  President  and  Director  of Retail  Banking  for six years at
National City Bank of Indiana and its predecessor in Anderson, Indiana. Prior to
that time Mr. Archer was in senior  management  positions with Indiana  Lawrence
Bank in North Manchester, Indiana for 16 years.


                                       40
<PAGE>

     DEBORAH  A.  BELL was  elected  as  Senior  Vice  President  -  Information
Technology  in May 1998.  She has been  employed at the Bank since 1976 and most
recently  served as Vice  President and Director of Data  Processing  since 1991
after serving in that department since July 1985.

     TIMOTHY G. CLARK  joined the Bank as  Executive  Vice  President  and Chief
Operating  Officer on September 2, 1997. He was elected Executive Vice President
and Chief  Operating  Officer of the Company on October 23, 2000.  He previously
held the position of Regional Executive and Area President at National City Bank
of  Indiana  in  Seymour,  Indiana  for 5 years and  prior to that  held  senior
management  positions with Central  National Bank in Greencastle,  Indiana for 5
years and Hancock Bank & Trust in Greenfield, Indiana for 13 years.

     RONALD M. HOLLOWAY has been employed by the Bank since 1973 and was elected
Senior Vice President and Chief Lending  Officer in December 1995. Mr.  Holloway
previously was responsible for the Bank's loan servicing department.

     RALPH E.  KERWIN  has been  employed  by the Bank  since 1964 and heads the
funds acquisition function as Senior Vice President - Deposit Services.

     NANCY A. ROGERS was elected as Senior Vice  President - Marketing  Services
in March 1995 and was also  appointed  Secretary  of the Company and the Bank in
1998.  She has been employed at the Bank since 1964 and most recently  served as
Vice President and Director of Advertising and Public Relations.

     RICHARD E. WELLING,  a certified  public  accountant,  joined the Bank as a
Senior Vice  President on December 1, 1997,  and was appointed  Treasurer of the
Company  and the Bank in 1998.  Prior to joining  the Bank,  he was  employed as
Secretary,  Treasurer and Chief Financial  Officer of AMBANC Corp. in Vincennes,
Indiana, where he had been employed for eleven years.

     JAN F. WRIGHT was elected as Senior Vice  President - Business  Services at
the Bank in January  1998 and prior to that  served as Senior  Vice  President -
Branch  Operations  since March 1995.  He  previously  held the position of Vice
President and Director of Loan  Origination and Processing and has been employed
by the Bank since 1972.

ITEM 2.  PROPERTIES
-------------------

     The  following  table  sets  forth the  location  of the  Company's  office
facilities at December 31, 2000 and certain other information  relating to these
properties at that date.

                                       41
<PAGE>

<TABLE>
<CAPTION>
                                    YEAR           TOTAL              NET          OWNED/            SQUARE
                                  ACQUIRED      INVESTMENT        BOOK VALUE       LEASED             FEET
                                  --------      ----------        ----------       ------            ------
                                              (DOLLAR AMOUNTS IN THOUSANDS)
<S>                                 <C>          <C>             <C>               <C>                <C>
  MAIN OFFICE:
  2118 Bundy Avenue
  New Castle, Indiana..........     1958         $   3,639       $    1,181         Owned             20,500

  BRANCH OFFICES:
  1311 Broad Street
  New Castle, Indiana..........     1890             1,398              407         Owned             18,000

  956 North Beechwood Street
  Middletown, Indiana..........     1971               443               95         Owned              5,500

  22 North Jefferson
  Knightstown, Indiana.........     1979               578              195         Owned              3,400

  1810 North State Street
  Greenfield, Indiana..........     1995             1,499            1,060         Owned              5,800

  99 Dan Jones Road
  Avon, Indiana................     1995             1,833            1,459         Owned             12,600

  1754 East 53rd Street
  Anderson, Indiana............     1993               430              272         Owned              1,500

  488 W. Main Street
  Morristown, Indiana..........     1998               456              362         Owned              2,600

  7435 W. U.S. 52
  New Palestine, Indiana.......     1999             1,093            1,017         Owned              3,300

  7200 Blue Ash Road
  Cincinnati, Ohio.............     1992             1,460              567         Owned              9,100

  2894 W. U.S. 22 & 3
  Maineville, Ohio.............     1998               109               28        Leased              3,000

  AMERIANA INSURANCE
  AGENCY, INC. AND TRUST
  DEPARTMENT OF THE BANK
  1908 Bundy Avenue
  New Castle, Indiana..........     1999               584              454         Owned              5,000
                                                 ---------       ----------

        Total..................                  $  13,522       $    7,097
                                                 =========       ==========
</TABLE>


     The Bank uses on-line processing terminals.  Most of the data processing is
done by an in-house data processing  center. At December 31, 2000, the total net
book  value  of  the  Company's  offices  and  equipment   (including  leasehold
improvements) was $7.097 million.


                                       42
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS
--------------------------
     The Company and its  subsidiaries  are not a party to any material  pending
legal proceedings.

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

     No matter was  submitted  to a vote of security  holders  during the fourth
quarter of the fiscal year covered by this Report.

                                     PART II

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
         MATTERS
--------------------------------------------------------------------------------

     The Company's common stock, par value $1.00 per share (the "Common Stock"),
is traded on the Nasdaq  National Market SM under the symbol "ASBI." As of March
5, 2001, the Company had 3,146,616  shares of Common Stock  outstanding  and had
approximately 2,100 shareholders,  including beneficial owners holding shares in
nominee or "street" name. The Company began paying  quarterly  dividends  during
the 4th quarter of fiscal year 1987.  The Company's  ability to pay dividends is
dependent on dividends  received from the Bank. See Note 12 to the  Consolidated
Financial  Statements included under Item 8 for a discussion of the restrictions
on the payment of cash dividends by the Company.

     The following  table sets forth the high,  low and closing sales prices for
the  Common  Stock as  reported  on the Nasdaq  National  Market SM and the cash
dividends declared on the Common Stock for each full quarterly period during the
last two fiscal years.
<TABLE>
<CAPTION>
                                       2000                                      1999
                           -----------------------------------       -------------------------------------
                                                     DIVIDENDS                                   DIVIDENDS
QUARTER ENDED:             HIGH     LOW     CLOSE    DECLARED        HIGH    LOW      CLOSE      DECLARED
-------------              ----     ---     -----    ---------       ----    ---      -----      --------
<S>                        <C>      <C>     <C>        <C>           <C>     <C>      <C>         <C>
March 31                   $14.50   $  7.56 $  8.50    $0.15         $17.63  $15.50   $17.63      $0.15
June 30                     12.75      9.00    9.87     0.15          16.75   15.25    16.63       0.15
September 30                12.94      9.88   11.00     0.15          17.50   16.38    17.38       0.15
December 31                 13.13     10.50   10.50     0.15          17.13   14.38    17.13       0.15
</TABLE>



                                       43
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                            (Dollars in thousands, except per share data)
                                                                          At December 31
Summary of Financial Condition                      2000        1999         1998         1997        1996
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>          <C>          <C>          <C>
   Cash                                         $   14,609  $  14,637    $     7,545  $     5,066  $     4,939
   Loans and mortgage-backed securities            409,295    340,448        286,212      324,386      321,142
   Interest-bearing deposits, investments
      and other interest-earning assets             99,588     98,871         96,662       45,537       54,749
   Other assets                                     33,796     32,393         15,299       15,879       15,925
-------------------------------------------------------------------------------------------------------------------
   Total assets                                 $  557,288  $ 486,349    $   405,718  $   390,868  $   396,755
-------------------------------------------------------------------------------------------------------------------

   Deposits                                     $  367,595  $ 355,759    $   333,989  $   322,217  $   318,705
   Borrowings                                      141,172     82,872         17,551       16,016       26,549
   Other liabilities                                 6,810      7,689          8,829        8,200        7,556
-------------------------------------------------------------------------------------------------------------------
   Total liabilities                               515,577    446,320        360,369      346,433      352,810
-------------------------------------------------------------------------------------------------------------------
   Shareholders' equity                             41,711     40,029         45,349       44,435       43,945
-------------------------------------------------------------------------------------------------------------------
   Total liabilities and shareholders' equity   $  557,288  $ 486,349    $   405,718  $   390,868  $   396,755
===================================================================================================================
<CAPTION>

                                                                    Year Ended December 31
Summary of Earnings                                 2000        1999         1998         1997        1996
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>          <C>          <C>          <C>
   Interest income                              $   37,019  $  29,083    $    28,301  $    29,332  $    28,567
   Interest expense                                 24,728     16,749         15,993       17,345       16,705
-------------------------------------------------------------------------------------------------------------------
   Net interest income                              12,291     12,334         12,308       11,987       11,862
   Provision for loan losses                           417        328            159          242           66
   Other income                                      3,766      3,302          3,429        2,864        2,433
   Other expense                                    10,914     10,509          9,655        8,985       10,520
-------------------------------------------------------------------------------------------------------------------
   Income before taxes                               4,726      4,799          5,923        5,624        3,709
   Income taxes                                      1,164      1,467          2,085        1,992        1,305
-------------------------------------------------------------------------------------------------------------------
   Net income                                   $    3,562  $   3,332    $     3,838  $     3,632  $     2,404
===================================================================================================================
   Basic earnings per share (1)                 $     1.13  $    0.98    $      1.08  $      1.02  $      0.65
   Diluted earnings per share (1)               $     1.13  $    0.98    $      1.06  $      1.01  $      0.65
-------------------------------------------------------------------------------------------------------------------
   Dividends declared per share (1)             $    0.60   $    0.60    $      0.59  $      0.56  $      0.52
-------------------------------------------------------------------------------------------------------------------
   Book value per share (1)                     $   13.26   $   12.72    $     12.92  $     12.49  $     12.14
===================================================================================================================
<CAPTION>

                                                                     Year Ended December 31
-------------------------------------------------------------------------------------------------------------------
Other Selected Data                                 2000        1999         1998         1997        1996
-------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>            <C>          <C>          <C>
   Return on average assets                          0.68%       0.77%          0.98%        0.92%        0.62%
   Return on average equity                          8.68        7.60           8.48         8.28         5.39
   Ratio of average equity to average assets         7.84       10.17          11.60        11.06        11.41
   Dividend payout ratio (2)                        53.00%      61.22%         55.66%       55.45%       80.00%
   Number of full-service bank offices                 11          12             11            8            7
-------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Restated to reflect  four-for-three  stock  split  declared in 1996 and the
     eleven-for-ten stock split in 1998.
(2)  Based on total  dividends  per share  declared and net income per share for
     the year.
</FN>
</TABLE>


                                       44
<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS
--------------------------------------------------------------------------------

GENERAL

     Ameriana Bancorp (the "Company") was incorporated under Indiana law for the
purpose of becoming the holding  company for Ameriana  Bank and Trust of Indiana
("ABT").  In 1990, the Company  acquired all of ABT's common stock in connection
with ABT's  reorganization into the holding company form of ownership.  In 1992,
the Company acquired Ameriana Bank of Ohio, F.S.B.  ("ABO"). ABO was merged into
ABT in October 2000.  In 1995,  the Company  purchased a minority  interest in a
limited  partnership  organized  to acquire and manage real estate  investments,
which qualify for federal tax credits.  The Company owns Indiana Title Insurance
Company ("ITIC"), which sells title insurance and performs real estate closings.
ITIC  ceased  operations  at the close of business on  December  31,  2000.  The
Company also owns  Ameriana  Insurance  Agency,  Inc.  which  operates a general
insurance agency in three locations.  ABT has a brokerage  operation through its
wholly owned subsidiary  Ameriana  Financial  Services,  Inc., which also owns a
partial interest in a life insurance company.

     The largest components of the Company's total revenue and total expense are
interest income and interest expense, respectively.  Consequently, the Company's
earnings are primarily dependent on its net interest income, which is determined
by (i) the  difference  between  rates of  interest  earned on  interest-earning
assets and rates paid on interest-bearing  liabilities ("interest rate spread"),
and (ii) the relative amounts of  interest-earning  assets and  interest-bearing
liabilities.  Levels of other income and operating  expenses also  significantly
affect net income.

     Management  believes that  interest rate risk,  i.e.,  the  sensitivity  of
income and net asset  values to changes in  interest  rates,  is one of the most
significant  determinants of the Company's  ability to generate future earnings.
Accordingly,  the Company has implemented a long-range plan intended to minimize
the effect of changes in interest rates on  operations.  The asset and liability
management  policies of the Company are  designed  to  stabilize  long-term  net
interest income by managing the repricing  terms,  rates and relative amounts of
interest-earning   assets  and  interest-bearing   liabilities.   The  Company's
portfolio  of  investments  has  remained  stable  without  purchases,  calls or
maturities  during  2000  with the  balance  changing  only by  amortization  of
discounts and accretion of premiums between year-end 2000 and year-end 1999. The
investments  consist of callable  agency  bonds held to  maturity  and the total
portfolio  averages a return of 6.85% at year-end 2000. The Company's  portfolio
of  mortgage-backed  securities  ("MBS") has decreased  $3,164,000 and 21.14% to
$11,806,000 at December 31, 2000 from  $14,970,000


                                       45
<PAGE>

at  December  31,  1999.  This is due to normal  payoffs  offset  by a  $611,000
purchase in 2000. The MBS portfolio is 34%  fixed-rate  and 66%  adjustable-rate
and has an overall yield of 7.55% at year-end 2000.

     The Company's portfolio of loans before deducting undisbursed loan proceeds
and deferred loan fees has increased  $71,957,000  and 20.95% in 2000 over 1999.
Residential loans increased  $42,052,000 and 14.79%,  commercial  mortgage loans
and  commercial  loans  increased  $25,214,000  and  78.93%,  installment  loans
increased $4,486,000 and 17.45% and loans secured by deposits increased $205,000
and 14.72%. The substantial  percentage  increase in commercial loans was due to
increased  purchases of commercial  participation  loans along with increases in
direct  commercial real estate loans.  The mix of fixed-rate to  adjustable-rate
and short-term balloon loans was 40% to 60% at year-end 2000, compared to 43% to
57% at year-end  1999 and year-end  1998 being 48% to 52%. The decrease in fixed
rate loans was caused by the increases in adjustable-rate  residential  mortgage
loans and  commercial  loans  being more than the  increases  in all  fixed-rate
loans.  As rates  increased  during  1999 and 2000,  the real estate loan demand
decreased and the customers  preference changed to the variable rate real estate
loans.  This preference  began to change during the last two months of 2000 when
fixed rate  30-year  loan rates  decreased  below 8.00% and  15-year  loan rates
decreased below 7.50%. Prior to this time in 2000,  variable rate loans had been
the loan of choice by the customers,  and these loans are retained and not sold.
The  decrease  in the fixed rate loan demand and sales to the  secondary  market
resulted  in the gain on  sales  of loans  reducing  to  $103,000  in 2000  from
$381,000  in 1999  and  $1,055,000  in  1998.  Total  loan  volume  for 2000 was
$179,705,000,  $192,155,000  in 1999 and  $195,762,000 in 1998. The Company sold
$9,238,000  of  fixed-rate  loans in 2000  compared to  $23,303,000  in 1999 and
$96,259,000 in 1998.

     During  the year all types of  deposits,  except  for  savings,  increased.
Demand deposits  increased  $4,045,000 and 5.62% with the increase being in both
NOW and  money  market  rate  accounts,  while  total  certificates  of  deposit
increased  $11,764,000  and 4.80%,  which was due to increases of $16,646,000 in
regular  certificates  offset by a decrease  of  $4,882,000  in  negotiated-rate
certificates primarily from local county governmental entities. Savings deposits
decreased   $3,973,000   and   10.28%   due   mostly  to   movement   to  higher
interest-bearing  demand deposit rate  products.  The overall change in deposits
was an  increase of  $11,836,000  and 3.33% at  December  31,  2000  compared to
December 31,  1999.  On December 15,  2000,  ABT sold  $1,649,000  of demand and
savings  deposits  with the Loveland  Branch in Ohio,  and a gain of $89,000 was
recorded  on the sale.  ABT  purchased  over $12 million of deposits in a branch
purchase on February 27, 1998, and ABO purchased over $21 million of deposits in
a


                                       46
<PAGE>


bank purchase on July 1, 1998. These increases in deposits  through  purchases
were  maintained  and even  increased  during 1999.  To fund the increase in the
assets,  borrowings  from the Federal Home Loan Bank  increased  $56,240,000  to
$138,751,000 at year-end 2000 from $82,511,000 at year-end 1999. This leveraging
of the balance sheet helped to counteract the decreasing net interest spread and
added to net  interest  income  during the year 2000 and 1999.  The  Company has
notes payable of $2,421,000 at December 31, 2000. The proceeds of the notes with
a current  balance of $2,150,000  at 8.0% were used to repurchase  the Company's
stock in 1999.  The remainder of the notes payable with balances of $271,000 and
$361,000 at December 31, 2000 and 1999, respectively,  is 6.0% notes payable and
relate to the Cardinal State Bank purchase.  The Company continues to experience
competitive  forces on its deposits from other  institutions in the marketplace,
but the  Company  was able to  compete  with  these  investing  alternatives  by
providing additional  investment choices for its customers through its brokerage
and insurance products.

     The Company has  continued to increase the level of  non-interest-sensitive
fee income producing  assets.  These activities  include an equity interest in a
life insurance  company and ownership of a  full-service  general lines property
and casualty insurance agency and brokerage services.

     As noted  above,  loans sold  decreased  during 2000 over 1999 and 1998 and
servicing of sold loans as of December 31, 2000 decreased to  $144,000,000  from
$154,000,000 and $181,000,000 at December 31, 1999 and 1998,  respectively.  ABO
sold  $19,572,000  of loan servicing for a gain of $67,000 in May 1999. No sales
or purchases of loan servicing were done in 2000 or 1998.

INTEREST SENSITIVITY

     The following table presents the Company's interest sensitivity gap between
interest-earning  assets and interest-bearing  liabilities at December 31, 2000.
This table assumes no prepayments of loans, no early redemption of securities at
call dates, no early  withdrawals of certificates of deposit and no extension of
deposit account sensitivity relating to core deposit stability.


                                       47
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
                                                    (Dollars in thousands)
-------------------------------------------------------------------------------------------------------------------------------
                                6            6                                                             More
                             Months       Months       1 to 3        3 to 5       5 to 10     10 to 20     Than
                             Or Less     To 1 Year      Years        Years         Years       Years     20 Years     Total
<S>                            <C>          <C>          <C>           <C>          <C>           <C>        <C>      <C>
Rate Sensitive Assets:
-------------------------------------------------------------------------------------------------------------------------------
   Balloon and
     adjustable-rate
     rate loans (1)            $86,273      $25,475      $33,307       $64,778      $40,591       $   -      $   -    $250,424

   Fixed-rate loans (1)         35,728          233        1,099         2,174        9,427      36,454     38,412     123,527

   Other loans                   8,285          528        6,057        20,407        4,294       2,037          -      41,608

   Mortgage-backed
     securities
       Variable rate             4,942        1,973          618           284            -           -          -       7,817

        Fixed rate                   1            2           39            58        1,997       1,892          -       3,989

   Other investments (2)        11,687          200        1,500             -       27,058      59,143          -      99,588

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

     Total                     146,916       28,411       42,620        87,701       83,367      99,526     38,412     526,953
-------------------------------------------------------------------------------------------------------------------------------
Rate Sensitive Liabilities:
-------------------------------------------------------------------------------------------------------------------------------
   Deposits:

     Certificate accounts       73,689       62,415      112,501         8,043          282           -          -     256,930

      Money market
         deposit accounts       38,339            -            -             -            -           -          -      38,339

      Passbook accounts         34,643            -            -             -            -           -          -      34,643

      NOW accounts              24,756            -            -             -            -           -          -      24,756

-------------------------------------------------------------------------------------------------------------------------------
          Total deposits       171,427       62,415      112,501         8,043          282           -          -     354,668

   Notes payable                 2,150           90          181             -            -           -          -       2,421

   FHLB advances                71,676        1,422       57,953         6,485        1,215           -          -     138,751
-------------------------------------------------------------------------------------------------------------------------------

     Total                     245,253       63,927      170,635        14,528        1,497           -          -     495,840

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

     Asset/liability gap      $(98,337)    $(35,516)   $(128,015)      $73,173      $81,870     $99,526    $38,412    $ 31,113

-------------------------------------------------------------------------------------------------------------------------------
Additional Gap Information:

-------------------------------------------------------------------------------------------------------------------------------
     Gap as a percentage
          of total assets       (17.65)%      (6.37)%     (22.97)%       13.13%       14.69%      17.86%      6.89%       5.58%

     Cumulative gap          $ (98,337)   $(133,853)   $(261,868)    $(188,695)   $(106,825)    $(7,299)   $31,113

     Cumulative gap as
          a percentage of
          total assets          (17.65)%     (24.02)%     (46.99)%      (33.86)%     (19.17)%     (1.31)%     5.58%
===============================================================================================================================
<FN>

(1)  Includes mortgage loans and mortgage-backed securities.  Amounts are stated
     without  reductions of $18.070 million for deferred fees,  unearned income,
     undisbursed loan proceeds and allowance for loan losses.
(2)  Includes  interest-bearing  demand  deposits,  investment  securities,  and
     Federal Home Loan Bank stock.
</FN>
</TABLE>


                                       48
<PAGE>

INTEREST RATE RISK

     ABT and ABO (prior to the merger) are subject to interest  rate risk to the
degree that their interest-bearing  liabilities,  primarily deposits,  mature or
reprice at different rates than their interest-earning  assets.  Although having
liabilities  that mature or reprice less  frequently on average than assets will
be  beneficial  in times  of  rising  interest  rates,  such an  asset/liability
structure will result in lower net income during  periods of declining  interest
rates, unless offset by other factors.

     It is  important  to ABT  and ABO  (prior  to the  merger)  to  manage  the
relationship  between interest rates and the effect on their net portfolio value
("NPV").  This approach  calculates the difference  between the present value of
expected  cash flows from  assets and the present  value of expected  cash flows
from liabilities, as well as cash flows from off-balance sheet contracts. Assets
and  liabilities are managed within the context of the  marketplace,  regulatory
limitations  and  within  its  limits on the  amount of change in NPV,  which is
acceptable given certain interest rate changes.

     The Office of Thrift Supervision ("OTS") issued a regulation,  which uses a
net market  value  methodology  to measure the  interest  rate risk  exposure of
savings associations.  Under this OTS regulation an institution's "normal" level
of interest rate risk in the event of an assumed  change in interest  rates is a
decrease in the  institution's  NPV in an amount not exceeding 2% of the present
value of its assets.  Savings  associations  with over $300 million in assets or
less than a 12% risk-based  capital ratio are required to file OTS Schedule CMR.
Data from  Schedule CMR is used by the OTS to calculate  changes in NPV (and the
related  "normal" level of interest rate risk) based upon certain  interest rate
changes (discussed below). Associations,  which do not meet either of the filing
requirements,  are  not  required  to  file  OTS  Schedule  CMR,  but  may do so
voluntarily.  ABT and ABO (prior to merger) both file  Schedule  CMR.  Under the
regulation,  associations, which must file are required to take a deduction (the
interest  rate risk capital  component)  from their total  capital  available to
calculate  their risk based capital  requirement if their interest rate exposure
is greater  than  "normal".  The amount of that  deduction  is  one-half  of the
difference  between (a) the institution's  actual  calculated  exposure to a 200
basis point interest rate increase or decrease (whichever results in the greater
pro forma decrease in NPV) and (b) its "normal" level of exposure which is 2% of
the  present  value of its  assets  on the  Thrift  Financial  Report  filed two
quarters earlier.

     Presented  below, as of December 31, 2000, is an analysis  performed by the
OTS of ABT's interest rate risk as measured by changes in NPV for  instantaneous
and sustained parallel shifts in the yield curve, in 100 basis point


                                       49
<PAGE>

increments,  up and down 300 basis  points.  At June 30, 2000, 2% of the present
value of ABT's  (combined ABT and ABO) assets was $10.495  million.  Because the
interest  rate risk of a 200 basis  point  increase in market  rates  (which was
greater than the interest  rate risk of a 200 basis point  decrease) was $13.778
million at  December  31,  2000,  ABT would have been  required to make a $1.642
million  deduction from its total capital  available to calculate its risk-based
capital  requirement.  This  reduction in capital  would reduce ABT's risk based
capital  ratio to 12.55%  from 13.07%  which is still in excess of the  required
risk-based capital ratio of 8.0%.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                            NPV as Percent of
                                               Net Portfolio Value                       Present Value of Assets
-------------------------------------------------------------------------------------------------------------------
 Change                       Dollar                Dollar                Percent
in Rates                      Amount                Change                Change        NPV Ratio          Change
-------------------------------------------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                          <C>                   <C>                      <C>            <C>            <C>
 +300  bp*                   $21,882               $-21,509                -50%            4.16%         -358 bp
 +200  bp                     29,613                -13,778                -32             5.50          -224 bp
 +100  bp                     37,021                 -6,371                -15             6.73          -101 bp
    0  bp                     43,391                                                       7.74
 -100  bp                     45,075                  1,684                 +4             7.95           +21 bp
 -200  bp                     44,697                  1,305                 +3             7.82            +8 bp
 -300  bp                     45,625                  2,234                 +5             7.90           +17 bp
<FN>
* basis points
</FN>
</TABLE>

     Presented  below, as of December 31, 1999, is an analysis  performed by the
OTS of ABO's interest rate risk as measured by changes in NPV for  instantaneous
and sustained parallel shifts in the yield curve, in 100 basis point increments,
up and down 300 basis points. At June 30, 1999, 2% of the present value of ABO's
assets was $1.826  million.  Because the interest rate risk of a 200 basis point
decrease in market rates (which was greater than the interest rate risk of a 200
basis point  increase) was $5.823  million at December 31, 1999,  ABO would have
been required to make a $1.999 million capital  deduction from its total capital
available to calculate its  risk-based  capital  requirement.  This reduction in
capital  would  reduce ABO's  risk-based  capital to 10.75% from 14.17% which is
still in excess of the required risk-based capital ratio of 8.0%.


                                       50
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                            NPV as Percent of
                                               Net Portfolio Value                       Present Value of Assets
-------------------------------------------------------------------------------------------------------------------
 Change                       Dollar                Dollar                Percent
in Rates                      Amount                Change                Change        NPV Ratio          Change
-------------------------------------------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                          <C>                    <C>                    <C>             <C>            <C>
 +300  bp*                   $-1,154                $-8,875               -115%            1.09%         -772 bp
 +200  bp                      1,898                 -5,823                -75             1.73          -489 bp
 +100  bp                      4,913                 -2,808                -36             4.34          -228 bp
    0  bp                      7,720                                                       6.63
 -100  bp                      9,967                  2,247                +29             8.35          +172 bp
 -200  bp                     10,887                  3,167                +41             8.99          +236 bp
 -300  bp                     11,547                  3,827                +50             9.42          +279 bp
<FN>
* basis points
</FN>
</TABLE>

     Also presented below, as of December 31, 1999, is an analysis, performed by
the  OTS,  of  ABT's  interest  rate  risk as  measured  by  changes  in NPV for
instantaneous  and sustained  parallel  shifts in the yield curve,  in 100 basis
point  increments,  up and down 300 basis  points.  At June 30, 1999,  2% of the
present value of ABT's assets was $6.477 million. Because the interest rate risk
of a 200 basis  point  increase  in market  rates  (which was  greater  than the
interest  rate  risk of a 200 basis  point  decrease)  was  $13.689  million  at
December  31,  1999,  ABT would  have  been  required  to make a $3.606  million
deduction  from its total capital  available to calculate its risk based capital
requirement.  This  reduction in capital would reduce ABT's  risk-based  capital
ratio to 13.81%  from  15.58%,  which is still  far in  excess  of the  required
risk-based capital ratio of 8.0%.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                            NPV as Percent of
                                               Net Portfolio Value                       Present Value of Assets
-------------------------------------------------------------------------------------------------------------------
 Change                       Dollar                Dollar                Percent
in Rates                      Amount                Change                Change        NPV Ratio          Change
-------------------------------------------------------------------------------------------------------------------
                                                    (Dollars in thousands)

<S>                          <C>                   <C>                      <C>            <C>            <C>
+300 bp*                     $ 9,544               $-20,773                 -69%            2.80%         -549 bp
+200 bp                       16,628                -13,689                 -45             4.76          -353 bp
+100 bp                       23,691                 -3,659                 -22             6.62          -167 bp
   0 bp                       30,317                                                        8.29
-100 bp                       35,897                  5,580                 +18             9.63          +134 bp
-200 bp                       36,485                  6,168                 +20             9.73          +144 bp
-300 bp                       36,874                  6,557                 +22             9.79          +150 bp
<FN>
* basis points
</FN>
</TABLE>

     As with any method of measuring  interest rate risk,  certain  shortcomings
are inherent in the methods of analysis  presented above. For example,  although
certain  assets  and  liabilities  may have  similar  maturities  or  periods


                                       51
<PAGE>

to repricing,  they may react in different degrees to changes in market interest
rates.  Also, the interest rates on certain types of assets and  liabilities may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
assets, such as adjustable-rate loans, have features,  which restrict changes in
interest rates on a short-term basis and over the life of the asset. Further, in
the event of a change in interest rates,  expected rates of prepayments on loans
and early withdrawals from certificates could likely deviate  significantly from
those assumed in calculating the table.  Finally,  the ability of many borrowers
to service  their debt may decrease in the event of an interest  rate  increase.
The  Company  considers  all of these  factors in  monitoring  its  exposure  to
interest rate risk.

YIELDS EARNED AND RATES PAID

     The following  tables set forth the weighted  average  yields earned on the
Company's  interest-earning  assets and the weighted average interest rates paid
on the Company's  interest-bearing  liabilities,  together with the net yield on
interest-earning assets.
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                              ----------------------------------
Weighted Average Yield:                                                       2000          1999         1998
-------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>          <C>          <C>
     Loans                                                                     7.91%        7.70%        8.12%
     Mortgage-backed securities                                                6.99         6.25         6.59
     Other interest-earning assets                                             6.85         6.41         6.08
     All interest-earning assets                                               7.67         7.32         7.64
Weighted Average Cost:
-------------------------------------------------------------------------------------------------------------------
     Deposits                                                                  5.02         4.58         4.88
     Federal Home Loan Bank advances                                           6.73         5.41         5.88
     Notes payable                                                             8.30         6.00         6.00
     All interest-bearing liabilities                                          5.44         4.65         4.91
-------------------------------------------------------------------------------------------------------------------
Interest Rate Spread (spread between weighted average yield on all
     interest-earning assets and all interest-bearing liabilities)             2.23         2.67         2.73
-------------------------------------------------------------------------------------------------------------------
Net Yield (net interest income as a percentage of average
     interest-earning assets)                                                  2.55         3.10         3.32
<CAPTION>

                                                                                       At December 31,
                                                                                       --------------
Weighted Average Interest Rates:                                              2000          1999         1998
-------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>          <C>          <C>
     Loans                                                                     8.16%        7.70%        7.88%
     Mortgage-backed securities                                                7.55         7.07         7.46
     Other interest-earning assets                                             6.94         6.75         5.72
     Total interest-earning assets                                             7.91         7.49         7.36
     Deposits                                                                  5.25         4.71         4.71
     Federal Home Loan Bank advances                                           6.54         5.49         5.34
     Notes payable                                                             8.67         6.00         6.00
     Total interest-bearing liabilities                                        5.63         4.86         4.74
     Interest rate spread                                                      2.28         2.63         2.62
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       52
<PAGE>

RATE/VOLUME ANALYSIS

     The following  table sets forth certain  information  regarding  changes in
interest income, interest expense and net interest income of the Company for the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing  liabilities,  information is provided on changes  attributable
to: (1)  changes in volume  (changes in volume  multiplied  by old rate) and (2)
changes in rate (changes in rate multiplied by old volume).  No material amounts
of loan fees or out-of-period  interest is included in the table. Dollars are in
thousands.
<TABLE>
<CAPTION>
                                                                  Year Ended December 31
                                                  2000     vs.     1999            1999      vs.     1998
-------------------------------------------------------------------------------------------------------------------
                                                   Increase (Decrease)             Increase (Decrease)
                                                   Due to Changes in               Due to Changes in
-------------------------------------------------------------------------------------------------------------------
                                                                      Net                              Net
                                               Volume      Rate     Change      Volume      Rate      Change
-------------------------------------------------------------------------------------------------------------------
<S>                                            <C>       <C>       <C>           <C>       <C>      <C>
Interest income:
   Loans and mortgage-backed securities        $ 6,680   $   806   $ 7,486       $  (350)  $(1,047) $ (1,373)
   Other interest-earning assets                     4       446       450         1,952       227     2,179
-------------------------------------------------------------------------------------------------------------------
   Total interest-earning assets               $ 6,684   $ 1,252   $ 7,936       $ 1,602   $  (820) $    782
-------------------------------------------------------------------------------------------------------------------
Interest Expense:
   Deposits                                    $   658   $ 1,485   $ 2,143       $   876   $  (947) $    (71)
   FHLB advances and notes payable               5,358       478     5,836           889       (62)      827
-------------------------------------------------------------------------------------------------------------------
   Total interest-bearing liabilities          $ 6,016   $ 1,963   $ 7,979       $ 1,765   $(1,009) $    756
-------------------------------------------------------------------------------------------------------------------
   Change in net interest income               $   668   $  (711)  $   (43)      $  (163)  $   189  $     26
===================================================================================================================
</TABLE>

RESULTS OF OPERATIONS

     NET INCOME.  The  Company's  net income  increased  $230,000 and 6.90%,  to
$3,562,000  ($1.13  basic and  diluted  earnings  per  share) for the year ended
December 31, 2000  compared to $3,332,000  ($.98 basic and diluted  earnings per
share) for the year ended December 31, 1999. The improvement in year 2000 income
was  primarily  due to an increase in other income and lower tax expense both of
which were attributable in large part to an increase in the cash surrender value
of the  Company-owned  life  insurance  policies.  Net income for the year ended
December 31, 1999 had declined $506,000 and 13.18%, from $3,838,000 ($1.08 basic
and  $1.06  diluted  earnings  per  share)  in the  prior  year due to lower net
interest income after provision and other income and increased other expense.

     NET INTEREST INCOME.  Net interest income was essentially even between 2000
and 1999, declining by $43,000. Although interest income increased by $7,936,000
and 27.29%,  interest  expense  increased by a greater  amount,  $7,979,000  and
47.64%.  The  increase  in  interest  income and  interest  expense  were driven
primarily   by  growth  in  the   volumes   of   interest-earning   assets   and
interest-bearing liabilities,  respectively, as the Company has sought to better
leverage  its  balance  sheet.  Also  contributing  to the  greater  increase in
interest  expense was the higher average cost of  interest-bearing  liabilities,
which jumped 79 basis points while the average yield on interest-


                                       53
<PAGE>

earning  assets  increased by only 35 basis  points.  As a result of the greater
increase in average costs,  the Company's net interest  spread narrowed to 2.23%
in 2000 from 2.67% for 1999.  Slower growth in  interest-earning  assets and the
narrowing of the spread is also reflected in the Company's net interest  margin,
which declined to 2.55% in 2000 from 3.10% in 1999.

     The  Company's  average  portfolio  balance  of loans  increased  31.71% to
$371,349,000  for the year  2000,  from  $281,943,000  for the year  1999.  This
average  portfolio had increased  1.70% for the year 1999 over the  $277,233,000
average  for the year  1998.  The  ending  balance  of loans  was  $398,775,000,
$326,804,000  and  $263,097,000  for  2000,  1999 and 1998,  respectively.  Loan
originations and purchases were down 6.48% to $179,705,000 in 2000 compared with
$192,155,000  in 1999 and were down 1.84% in 1999 compared with  $195,762,000 in
1998.  Sold  loans,  which are all fixed rate  loans,  were also down  60.36% to
$9,238,000 in 2000 compared to  $23,303,000 in 1999 and were down 75.79% in 1999
compared to $96,259,000  in 1998. Net loans (loans  originated or purchased less
loans sold)  increased  only 3.2% in 2000 after  increasing  61.23% in 1999 over
1998. The loan portfolio grew in 2000 because more of the loans were  commercial
and variable rate mortgage loans which are retained as compared to 1998 and 1999
loans being more refinanced  fixed-rate consumer loans which are sold. Purchased
loans decreased in 2000 to $48,495,000  from  $60,355,000 in 1999 after being up
substantially from $6,438,000 in 1998.

     The  Company's  average  portfolio  balance of  mortgage-backed  securities
decreased  24.68% to $13,016,000 for the year 2000 from $17,280,000 for the year
1999.  This average  portfolio had  decreased  31.53% for the year 1999 from the
$25,236,000  average for the year 1998.  The ending  balance of  mortgage-backed
securities was $11,806,000, $14,970,000 and $20,217,000 for 2000, 1999 and 1998,
respectively.  Purchases  were  $611,000  in 2000  and  were 30 year  fixed-rate
mortgage-backed  securities  designed  to  meet  requirements  of the  Community
Reinvestment  Act.  No  purchases  were made in 1999 and 1998 as rates  were not
advantageous for long-term investments.

     The average short-term investments and other  interest-earning  assets were
$98,410,000,  98,345,000 and $67,716,000 for 2000, 1999 and 1998,  respectively.
The increase in 1999 was due to investment of excess cash early during the year,
and the balance remained consistent during the remainder of 1999 and 2000.

     Average   interest-earning   assets  increased  $85,207,000  or  21.43%  to
$482,775,000 in 2000 from $397,568,000 in 1999. The 2000 increase was in average
loans   while   average    mortgage-back    securities   decreased


                                       54
<PAGE>

and other  interest-earning  assets remained the same. Average  interest-earning
assets  increased  $27,383,000 or 7.40% in 1999 over  $370,185,000  in 1998. The
1999 increase was in average loans,  investment  securities and interest-bearing
time deposits while mortgage-backed  securities decreased.  The average yield on
the Company's total interest-earning assets was 7.67% in 2000, 7.32% in 1999 and
7.64%  in  1998.  Total  interest  income  was   $37,019,000,   $29,083,000  and
$28,301,000 for 2000, 1999 and 1998,  respectively.  The $7,936,000  increase in
interest income in 2000 were increases of $6,684,000 related to volume increases
and $1,252,000 related to rate increases while the $782,000 increase in interest
income in 1999 were increases of $1,602,000  related to volume increases reduced
by $820,000 due to rate decreases.

     Average  interest-bearing  liabilities  increased  $94,372,000 or 26.20% to
$454,638,000  in 2000 from  $360,266,000  in 1999.  The increase was composed of
average  interest-bearing  deposits  increasing  $13,959,000 and 4.21%,  average
borrowings from the Federal Home Loan Banks  increasing  $78,255,000 and 275.53%
and notes payable increasing $2,158,000.  Average  interest-bearing  liabilities
increased  $34,846,000 or 10.71% to  $360,266,000  in 1999 from  $325,420,000 in
1998.  The 1999  increase  was  composed  of average  interest-bearing  deposits
increasing  $18,525,000  and  5.92%,  average  Federal  Home Loan Bank  advances
increasing  $16,395,000 and 2.37% and notes payable  decreasing  $74,000.  Total
interest expense was $24,728,000, $16,749,000 and $15,993,000 for 2000, 1999 and
1998, respectively.  The $7,979,000 increase of interest expense in 2000 was due
to volume  increases of $6,016,000  and rate  increases of $1,963,000  while the
$756,000  increase of interest  expense in 1999 was due to volume  increases  of
$1,765,000 and rate decreases of $1,009,000.

     The net interest spread,  which is the mathematical  difference between the
yield  on  average   interest-earning   assets  and  cost  of   interest-bearing
liabilities,  was 2.23% in 2000, 2.67% in 1999 and 2.73% in 1998. The net yield,
which is  interest  income as percent of average  earning  assets,  was 2.55% in
2000, 3.10% in 1999 and 3.32% in 1998.

     PROVISION  FOR LOAN LOSSES.  The  provision for loan losses was $417,000 in
2000, $328,000 in 1999 and $159,000 in 1998. The provision is the amount that is
added to the allowance for loan losses for future charge-offs. The allowance for
loan losses was .37% of loans at December 31, 2000 and .47% of loans at December
31, 1999, and represents  management's best estimate of expected  charge-offs in
the loan portfolio.  Net loan charge-offs have  historically  been less than the
annual provision for loan losses and were $462,000, $78,000 and $138,000 for the
years 2000, 1999 and 1998, respectively. Non-performing assets (e.g. real estate
owned,  non-accrual  loans and



                                       55
<PAGE>

loans 90 days or more past due) were  $1,673,000,  $1,196,000  and  $881,000  at
December 31, 2000,  1999 and 1998,  respectively.  The 1999  provision  includes
$172,000 for a non-performing  loan that was acquired in the Cardinal State Bank
purchase.  This loan was  written-off  during the first quarter of 2000. If this
loan is deleted from the 2000 net  charge-offs,  the 2000  provision of $417,000
exceeds the $290,000 of  charged-offs by $127,000.  The Company  believes it has
established an adequate  allowance for loan losses in accordance  with generally
accepted accounting principles. The variation in the amount of provision charged
against   income  is   directly   related  to   changes  in  loan   charge-offs,
non-performing  loans, loan delinquencies,  economic conditions in the Company's
lending area and loan growth or reduction during each year.

     OTHER INCOME.  Other income was  $3,766,000,  $3,302,000 and $3,429,000 for
2000, 1999 and 1998, respectively. The 2000 gain on sales of loans and servicing
rights of $103,000 was significantly  lower than $381,000 in 1999 and $1,055,000
in 1998. These changes reflect the lower demand for fixed rate real estate loans
in 2000 and 1999 and the sale of these loans to the secondary  market.  The 1999
amount  included  $67,000  from the sale of  servicing  rights and 2000 and 1998
included no gain on sales of servicing  rights.  The net loan  servicing fees of
$293,000, $266,000 and $191,000 for the years 2000, 1999 and 1998, respectively,
have  increased  in the  reverse  of gain on  sales  of loans  and  reflect  the
retention and increase of average loans serviced.  Operating  losses  associated
with the limited partnership  amounted to $142,000 in 2000, $245,000 in 1999 and
$154,000 in 1998.  Brokerage and insurance  commissions have decreased  slightly
each of the last three years with  $1,056,000  in 2000,  $1,199,000  in 1999 and
$1,268,000 in 1998.  ABT invested in life  insurance on employees and directors,
with a  balance  or cash  surrender  value of  $17,089,000  and  $16,118,000  at
December 31, 2000 and 1999,  respectively.  The  majority of the  policies  were
purchased during 1999, and accordingly the nontaxable increase in cash surrender
value of life  insurance  was $972,000 in 2000,  $447,000 in 1999 and $16,000 in
1998. The 2000 income includes an adjustment of $197,000 related to the value of
insurance  policies on two retired  employees.  These policies earned $16,000 of
the  nontaxable  cash  surrender  value  increase in life insurance for 1999 and
1998.

     OTHER  EXPENSE.  Operating  expenses  were  $10,914,000,   $10,509,000  and
$9,655,000 for 2000, 1999 and 1998, respectively. The increases in 2000 and 1999
were due to normal increases and to additional  expense of operating a new trust
department,  commercial  loan department and a new branch that ABT opened during
December 1999. The 1999 expenses also included  additional  costs related to the
Year 2000 compliance.  The conversion of both banks to the same mainframe system
had provided  for a reduction  of data  processing  expense  during  1999.


                                       56
<PAGE>


This reduction was offset in 2000 by  improvements  made in data  processing and
the initial expense of implementing  check imaging.  Data processing expense and
other  expenses in 2000 include some  additional  costs related to the merger of
the two banks  during the year.  The merger of the banks is  expected  to reduce
expenses in future years.

     INCOME TAX EXPENSE.  Income tax expense was $1,164,000 in 2000,  $1,467,000
in 1999 and $2085,000 in 1998. The effective tax rate decreased to 24.6% in 2000
from 30.6% in 1999 and 35.2% in 1998.  The  decrease  in tax expense in 2000 and
1999 is due to lower pretax  income each year and to a lower  effective tax rate
due to the  nontaxable  insurance  income and to lower state income taxes due to
change in state law. See note 10 to the  consolidated  financial  statements for
detail of income taxes.

LIQUIDITY AND CAPITAL RESOURCES

     The Institutions are required by regulation to maintain liquidity ratios at
certain minimum levels. The regulations specify the types of assets that qualify
for liquidity, which generally include cash, federal funds sold, certificates of
deposit and qualifying types of United States Treasury and agency securities and
other investments not pledged as collateral.  Such investments serve as a source
of funds upon which the  Institutions  may rely to meet deposit  withdrawals and
other short-term  needs. The required level of such liquidity is calculated on a
"liquidity  base"  consisting of net  withdrawable  accounts plus borrowings due
within one year or less. Presently, ABT is required to maintain liquid assets as
described  above of at least 4% of its liquidity  base. The liquidity  ratio for
ABT was 16.65% at December  31,  2000,  18.71% at December 31, 1999 and 29.4% at
December 31, 1998. ABT and ABO (prior to the merger) have exceeded their monthly
average liquidity requirement for all periods presented.

     Historically,  funds provided by operations,  loan principal repayments and
new deposits  have been the  Company's  principal  sources of liquid  funds.  In
addition,  the Company has the ability to obtain  funds  through the sale of new
mortgage loans and through borrowings from the Federal Home Loan Bank system. At
December  31,  2000,  the  Company's  commitments  for loans in process  totaled
$5,379,000.  Management  believes that the Company's liquidity and other sources
of funds will be sufficient to fund all  outstanding  commitments and other cash
needs. A portion of these  commitments is for fixed-rate  mortgage loans,  which
will be sold immediately into the secondary market.

     On November 23, 1998,  the Board of  Directors  declared an  eleven-for-ten
stock split  effected in the form of a dividend on common stock  outstanding  at
the close of  business  on December  18,  1998.  This stock split was payable on
January 4, 1999, and all per share  information in this report has been restated
to reflect this split.


                                       57
<PAGE>

     An amendment of the 1996 Stock Option Plan, which provides for the granting
of incentive and non-qualified  stock options,  was approved by the shareholders
in April 1998 and extended the plan's term to ten years and increased the number
of shares  reserved under the plan from 176,000 to 352,000  shares.  Options for
825  shares  in 2000,  9,235  shares  in 1999 and  29,768  shares  in 1998  were
exercised.  See note 11 to the  consolidated  financial  statements  for  option
activity and the pro forma effect on net income.

     In April 1999,  the  Company's  Board of Directors  approved an  additional
one-year and $5,000,000 for a stock  repurchase  program.  The stock  repurchase
program,  which  began  in July  1998,  was a  one-year  repurchase  program  of
$5,000,000 to acquire up to 10% of the Company's  outstanding  common stock. The
Company  repurchased  374,130  shares in 1999 and  201,388  shares in 1998 at an
aggregate  cost of $6,747,000 and  $3,358,000,  respectively.  In addition,  the
Company retired 173 shares at a cost of $3,000 for fractional  shares created by
the 1998 stock split.

IMPACT OF INFLATION AND CHANGING PRICES

     The  consolidated  financial  statements and related data presented in this
report have been  prepared in  accordance  with  generally  accepted  accounting
principles.  This requires the  measurement of financial  position and operating
results in terms of historical  dollars without  consideration of changes in the
relative purchasing power of money over time due to inflation.

     Virtually all of the assets and liabilities of a financial  institution are
monetary in nature. As a result,  interest rates have a more significant  impact
on a financial  institution's  performance than the effects of general levels of
inflation.  Interest rates do not  necessarily  move in the same direction or at
the same rate as changes in the prices of goods and services, which are directly
affected by  inflation,  although  interest  rates may  fluctuate in response to
perceived changes in the rate of inflation.

CURRENT ACCOUNTING ISSUES

     Statement of Financial  Accounting  Standards ("SFAS") No. 133,  Accounting
for  Derivative  Instruments  and  Hedging  Activities,  was  issued in 1998 and
becomes  effective for all fiscal years  beginning after June 15, 2000. SFAS No.
133 was issued to require the recording of  derivatives  on the balance sheet at
their fair value.  SFAS No. 133 also acknowledges that the method of recording a
gain or loss depends on the use of the derivative. If certain conditions are met
a  derivative  may be  specifically  designed as (a) a hedge of the  exposure to
changes in the fair value of a recognized  asset or liability of an unrecognized
firm  commitment,  (b) a hedge  of the  exposure  to  variable


                                       58
<PAGE>

cash flows of a forecasted  transaction,  or (c) a hedge of the foreign currency
exposure  of a net  investment  in a foreign  operation,  an  unrecognized  firm
commitment,  an available-for-sale  security, or a foreign  currency-denominated
forecasted  transaction.  This new Statement  applies to all entities.  If hedge
accounting is elected by the entity,  the method of assessing the  effectiveness
of the  hedging  derivative  and the  measurement  approach of  determining  the
hedge's  ineffectiveness  must be established at the inception of the hedge. The
Company does not currently nor does it expect to have derivative  instruments or
hedge  transactions.  If these  instruments  or activities are undertaken in the
future, they will be accounted for in accordance with SFAS No. 133.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
-------------------------------------------------------------------

     Reference  is made to  discussions  captioned  "Interest  Sensitivity"  and
"Interest Rate Risk" in Item 7 of this Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page

Report of Independent Auditors                                               60

Consolidated Statements of Condition at December 31, 2000 and 1999           61

Consolidated Statements of Income for Each of the Three Years
     in the Period Ended December 31, 2000                                   62

Consolidated Statements of Shareholders' Equity for Each of the
     Three Years in the Period Ended December 31, 2000                       63

Consolidated Statements of Cash Flows for Each of the Three Years
     in the Period Ended December 31, 2000                                   64

Notes to Consolidated Financial Statements                                   65




                                       59
<PAGE>

                         Report of Independent Auditors


To the Shareholders and
Board of Directors
Ameriana Bancorp
New Castle, Indiana


     We have audited the  accompanying  consolidated  statements of condition of
Ameriana  Bancorp and  subsidiaries  as of December  31, 2000 and 1999,  and the
related consolidated  statements of income,  shareholders' equity and cash flows
for each of the  three  years in the  period  ended  December  31,  2000.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.
     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
     In our opinion,  the  consolidated  financial  statements  described  above
present fairly, in all material respects, the consolidated financial position of
Ameriana  Bancorp and  subsidiaries  as of December  31, 2000 and 1999,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  2000,  in  conformity  with  generally  accepted
accounting principles.


/s/ Olive LLP

Indianapolis, Indiana
February 7, 2001





                                       60
<PAGE>

                        Ameriana Bancorp and Subsidiaries
                      Consolidated Statements of Condition
                        (in thousands, except share data)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                                December 31
----------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                      2000                 1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                   <C>
   Cash on hand and in other institutions                                               $  14,609             $  14,637
   Interest-bearing demand deposits                                                         4,422                 5,296
   Interest-bearing time deposits                                                              --                 1,499
   Investment securities held to maturity (fair value of $86,152 and $81,481)              87,901                87,735
   Mortgage-backed securities held to maturity (fair value of $11,711 and
     $14,787)                                                                              11,806                14,970
   Mortgage loans held for sale                                                               203                   207
   Loans, net of allowance for loan losses of $1,489 and $1,534                           397,286               325,270
   Real estate owned                                                                          125                    --
   Premises and equipment                                                                   7,097                 7,117
   Stock in Federal Home Loan Bank                                                          7,265                 4,341
   Mortgage servicing rights                                                                  847                   910
   Investments in unconsolidated affiliates                                                 1,037                 1,179
   Intangible assets                                                                        1,670                 1,852
   Cash surrender value of life insurance                                                  17,089                16,118
   Other assets                                                                             5,931                 5,218
----------------------------------------------------------------------------------------------------------------------------
         Total assets                                                                    $557,288              $486,349
============================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------------------
   Liabilities
     Deposits
       Noninterest-bearing                                                              $  12,927             $  16,308
       Interest-bearing                                                                   354,668               339,451
----------------------------------------------------------------------------------------------------------------------------
         Total deposits                                                                   367,595               355,759
     Advances from Federal Home Loan Bank                                                 138,751                82,511
     Notes payable                                                                          2,421                   361
     Drafts payable                                                                         3,039                 3,901
     Advances by borrowers for taxes and insurance                                            939                   823
     Other liabilities                                                                      2,832                 2,965
----------------------------------------------------------------------------------------------------------------------------
         Total liabilities                                                                515,577               446,320
----------------------------------------------------------------------------------------------------------------------------
   Commitments and contingencies
   Shareholders' equity
     Preferred stock  (5,000,000  shares  authorized;  none issued)
     Common stock ($1.00 par value; authorized 15,000,000 shares;
       issued shares: 2000--3,146,616 and 1999--3,145,791)                                  3,147                 3,146
     Additional paid-in capital                                                               499                   492
     Retained earnings--substantially restricted                                           38,065                36,391
----------------------------------------------------------------------------------------------------------------------------
         Total shareholders' equity                                                        41,711                40,029
----------------------------------------------------------------------------------------------------------------------------
         Total liabilities and shareholders' equity                                      $557,288              $486,349
============================================================================================================================

</TABLE>

See accompanying notes.

                                       61
<PAGE>


                                             Ameriana Bancorp and Subsidiaries
                                             Consolidated Statements of Income
                                             (in thousands, except share data)
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                                                   Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                         2000               1999               1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                 <C>               <C>
INTEREST INCOME
   Interest on loans                                                     $29,359             $21,703           $22,517
   Interest on mortgage-backed securities                                    910               1,080             1,663
   Interest on investment securities                                       6,055               5,107             2,589
   Other interest and dividend income                                        695               1,193             1,532
----------------------------------------------------------------------------------------------------------------------------
         Total interest income                                            37,019              29,083            28,301
----------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
   Interest on deposits                                                   17,337              15,194            15,265
   Interest on borrowings                                                  7,391               1,555               728
----------------------------------------------------------------------------------------------------------------------------
         Total interest expense                                           24,728              16,749            15,993
----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME                                                       12,291              12,334            12,308
   Provision for loan losses                                                 417                 328               159
----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                       11,874              12,006            12,149
----------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
   Net loan servicing fees                                                   293                 266               191
   Other fees and service charges                                          1,194               1,067               911
   Brokerage and insurance commissions                                     1,056               1,199             1,268
   Net loss on investments in unconsolidated affiliates                     (101)               (192)             (154)
   Gains on sales of loans and servicing rights                              103                 381             1,055
   Increase in cash surrender value of life insurance                        972                 447                16
   Other                                                                     249                 134               142
----------------------------------------------------------------------------------------------------------------------------
         Total other income                                                3,766               3,302             3,429
----------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSE
   Salaries and employee benefits                                          6,613               6,052             5,248
   Net occupancy expense                                                   1,541               1,465             1,367
   Federal insurance premium                                                  74                 182               194
   Data processing expense                                                   308                 275               389
   Printing and office supplies                                              290                 346               339
   Other                                                                   2,088               2,189             2,118
----------------------------------------------------------------------------------------------------------------------------
         Total other expense                                              10,914              10,509             9,655
----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                                                 4,726               4,799             5,923
   Income taxes                                                            1,164               1,467             2,085
----------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                              $  3,562            $  3,332          $  3,838
============================================================================================================================
BASIC EARNINGS PER SHARE                                                $   1.13            $    .98          $   1.08
============================================================================================================================
DILUTED EARNINGS PER SHARE                                              $   1.13            $    .98          $   1.06
============================================================================================================================
DIVIDENDS DECLARED PER SHARE                                            $    .60            $    .60          $    .59
============================================================================================================================
</TABLE>

See accompanying notes.


                                       62
<PAGE>



                        Ameriana Bancorp and Subsidiaries
                 Consolidated Statements of Shareholders' Equity
                                 (in thousands)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                        Additional
                                                         Common           Paid-in           Retained
                                                         Stock            Capital           Earnings            Total
----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>              <C>                 <C>
Balance at January 1, 1998                                $3,233            $7,572           $33,630             $44,435
Net income                                                    --                --             3,838               3,838
Dividends declared                                            --                --            (2,083)             (2,083)
Eleven-for-ten stock split                                   319                --              (319)                 --
Payment for fractional shares in connection with
   eleven-for-ten stock split                                 --                --                (3)                 (3)
Purchase of common stock                                    (183)           (3,175)               --              (3,358)
Stock issued in purchase of subsidiary                       115             2,026                --               2,141
Exercise of stock options                                     27               352                --                 379
----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                               3,511             6,775            35,063              45,349
Net income                                                    --                --             3,332               3,332
Dividends declared                                            --                --            (2,004)             (2,004)
Purchase of common stock                                    (374)           (6,373)               --              (6,747)
Exercise of stock options                                      9                90                --                  99
----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                               3,146               492            36,391              40,029
Net income                                                    --                --             3,562               3,562
Dividends declared                                            --                --            (1,888)             (1,888)
Exercise of stock options                                      1                 7                --                   8
----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000                              $3,147          $    499           $38,065             $41,711
============================================================================================================================

</TABLE>


See accompanying notes.


                                       63
<PAGE>




                        Ameriana Bancorp and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------
                                                                                         Year Ended December 31
------------------------------------------------------------------------------------------------------------------------------
                                                                                2000             1999             1998
------------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>             <C>               <C>
   Net income                                                                  $  3,562        $  3,332          $  3,838
   Adjustments to reconcile net income to net cash provided by operating
     activities
     Provision for losses on loans and real estate owned                            417             349               191
     Depreciation and amortization                                                  677             574               696
     Equity in loss of limited partnership                                          142             245               154
     Mortgage servicing rights amortization                                         107             191               222
     Goodwill amortization                                                          182             190               149
     Deferred income taxes                                                          (79)             76               177
     (Gains) losses on sales of real estate owned                                    28               5               (28)
     Increase in cash surrender value                                              (972)           (447)              (16)
     Mortgage loans originated for sale                                          (9,238)        (23,303)          (96,259)
     Proceeds from sale of mortgage loans                                         9,298          27,411            93,862
     Gains on sale of loans and servicing rights                                   (103)           (381)           (1,055)
     Gain on sale of branch                                                         (89)             --                --
     Decrease  in other assets                                                     (714)           (885)             (172)
     Increase (decrease) in drafts payable                                         (862)           (452)              128
     Increase (decrease) in other liabilities                                        61            (702)              (64)
------------------------------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                                2,417           6,203             1,823
------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
------------------------------------------------------------------------------------------------------------------------------
   Net change in interest-bearing time deposits                                   1,499           1,988            (3,487)
   Purchase of investment securities held to maturity                                --         (43,061)          (82,193)
   Proceeds from maturity of securities held to maturity                             --              --             5,000
   Proceeds from calls of securities held to maturity                                --           6,993            60,985
   Principal collected on mortgage-backed securities held to maturity             3,720           5,151             9,629
   Purchase of mortgage-backed securities                                          (606)             --                --
   Net change in loans                                                          (72,769)        (63,884)           45,177
   Proceeds from sales of mortgage servicing rights                                  --             247                --
   Proceeds from sales of real estate owned                                         183             139               245
   Net purchases of premises and equipment                                         (636)         (1,587)             (213)
   Cash received in acquisitions                                                     --              --            19,607
   Cash paid in sale of branch                                                   (1,527)             --                --
   Premiums paid on life insurance                                                   --         (15,461)               --
   Purchase of Federal Home Loan Bank stock                                      (2,924)           (754)             (176)
   Other investing activities                                                      (165)             29                34
------------------------------------------------------------------------------------------------------------------------------
        Net cash provided (used) by investing activities                        (73,225)       (110,200)           54,608
------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
------------------------------------------------------------------------------------------------------------------------------
   Net change in demand and passbook deposits                                     1,722           4,718            17,892
   Net change in certificates of deposit                                         11,764          17,052           (40,014)
   Advances from Federal Home Loan Bank                                         327,100          88,000             9,000
   Repayment of Federal Home Loan Bank advances                                (270,860)        (22,590)           (7,915)
   Proceeds from notes payable                                                    2,500              --                --
   Repayment of notes payable                                                      (440)            (90)               --
   Proceeds from exercise of stock options                                            8              99               379
   Purchase of common stock                                                          --          (6,747)           (3,358)
   Cash dividends paid                                                           (1,888)         (2,063)           (2,070)
   Payment for fractional shares                                                     --              --                (3)
------------------------------------------------------------------------------------------------------------------------------
         Net cash provided (used) by financing activities                        69,906          78,379           (26,089)
------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (902)        (25,618)           30,342
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                   19,933          45,551            15,209
------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                        $19,031         $19,933           $45,551
==============================================================================================================================

</TABLE>

See accompanying notes.


                                       64
<PAGE>

                        Ameriana Bancorp and Subsidiaries
                   Notes to Consolidated Financial Statements
             (table dollar amounts in thousands, except share data)


1.       NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation:  The consolidated financial statements include
the  accounts  of  Ameriana   Bancorp  (the  "Company")  and  its  wholly  owned
subsidiaries:  Ameriana Bank and Trust of Indiana  ("ABT"),  Ameriana  Financial
Services,  Inc., Indiana Title Insurance Company ("ITIC") and Ameriana Insurance
Agency,  Inc. A  previously  separate  subsidiary,  Ameriana  Bank of Ohio,  FSB
("ABO"),  was merged into ABT in October,  2000.  ITIC ceased  operations at the
close of business on December 31, 2000. All  significant  intercompany  accounts
and transactions have been eliminated.
     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.
     The Company is a thrift  holding  company whose  principal  activity is the
ownership and management of the ABT and other subsidiaries. The Company provides
various banking services and engages in loan servicing  activities for investors
and operates in a single  significant  business  segment.  ABT is subject to the
regulation of the Office of Thrift  Supervision  ("OTS").  The  Company's  gross
revenues are substantially  earned from the various banking services provided by
ABT.  The  Company  also earns  brokerage  and  insurance  commissions  from the
services provided by the other subsidiaries.
     In December 2000, the Company  approved the conversion of ABT to an Indiana
chartered  savings bank, which will be subject to the regulations of the Indiana
Department  of  Financial   Institutions  and  the  Federal  Deposit   Insurance
Corporation.  The  conversion  is subject  to  approval  of  various  regulatory
agencies and should be completed during the second quarter of 2001.
     ABT generates loans and receives  deposits from customers located primarily
in east central Indiana and southwestern  Ohio.  Loans are generally  secured by
specific items of collateral  including real property and consumer  assets.  The
Company has sold  various  loans to  investors  while  retaining  the  servicing
rights.
     Cash and Cash  Equivalents:  Cash and cash  equivalents  consist of cash on
hand and in other institutions and interest-bearing demand deposits.
     Investment  Securities:  Debt securities are classified as held to maturity
when the Company has the positive  intent and ability to hold the  securities to
maturity. Securities held to maturity are carried at amortized cost.
     Amortization  of premiums and accretion of discounts are recorded using the
interest  method as interest income from  securities.  Realized gains and losses
are  recorded  as net  security  gains  (losses).  Gains and  losses on sales of
securities are determined on the specific-identification method.
     Stock in  Federal  Home  Loan  Bank:  Stock in the  Federal  Home Loan Bank
("FHLB")  is stated at cost and the amount of stock the  Company is  required to
own is determined by regulation.
     Mortgage-Backed    Securities:    Mortgage-backed    securities   represent
participating  interests in pools of long-term  first mortgage loans  originated
and serviced by the issuers of the  securities.  Mortgage-backed  securities are
acquired and held for investment purposes and,  accordingly,  are stated at cost
adjusted for amortization of premiums and accretion of discounts,  both computed
by methods which produce a level yield.  The Company has the positive intent and
ability to hold these securities to maturity.
     Mortgage  Loans Held for Sale:  Mortgage loans held for sale are carried at
the lower of aggregate  cost or market.  Net  unrealized  losses are  recognized
through a valuation allowance by charges to income.


                                       65
<PAGE>


Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     Loans:  Loans are carried at the principal  amount  outstanding.  A loan is
impaired when, based on current  information or events,  it is probable that the
Company  will be unable to collect  all  amounts due  (principal  and  interest)
according  to  the  contractual  terms  of the  loan  agreement.  Payments  with
insignificant  delays  not  exceeding  90 days  outstanding  are not  considered
impaired.   Certain  nonaccrual  and  substantially   delinquent  loans  may  be
considered to be impaired.  The Company  considers its investment in one-to-four
family  residential  loans and installment loans to be homogeneous and therefore
excluded from separate  identification  of  evaluation of  impairment.  Interest
income is accrued on the principal balances of loans. The accrual of interest on
impaired and nonaccrual loans is discontinued when, in management's opinion, the
borrower  may be unable to meet  payments  as they  become  due.  When  interest
accrual is discontinued, all unpaid accrued interest is reversed when considered
uncollectible.  Interest  income is  subsequently  recognized only to the extent
cash  payments  are  received.  Certain  loan  fees and  direct  costs are being
deferred  and  amortized  as an  adjustment  of  yield  on the  loans  over  the
contractual lives of the loans. When a loan is paid off or sold, any unamortized
loan origination fee balance is credited to income.
     Real Estate Owned:  Real estate owned arises from loan  foreclosure or deed
in lieu of  foreclosure  and is carried at the lower of cost (the unpaid balance
at the date of  acquisition  plus  foreclosure  and other related costs) or fair
value.  Subsequent  to  acquisition,  an allowance is recorded for any excess of
carrying  value  over  fair  value  minus  estimated  selling  costs.  Costs  of
improvements  made to  facilitate  sales are  capitalized;  costs of holding the
property are charged to expense.
     Allowance for Loan Losses: The allowance for loan losses is maintained at a
level  believed  adequate by  management to absorb  inherent  losses in the loan
portfolio.  Management's determination of the adequacy of the allowance is based
on an  evaluation  of the portfolio  including  consideration  of past loan loss
experience,  current economic conditions,  volume, growth and composition of the
loan  portfolio,  the  probability  of  collecting  all amounts  due,  and other
relevant  factors.  Impaired loans are measured by the present value of expected
future  cash  flows,  or the  fair  value  of the  collateral  of the  loan,  if
collateral  dependent.  The allowance is increased by provisions for loan losses
charged against income.
     The determination of the adequacy of the allowance for loan losses is based
on estimates that are  particularly  susceptible  to significant  changes in the
economic  environment  and market  conditions.  Management  believes  that as of
December  31,  2000,  the  allowance  for  loan  losses  is  adequate  based  on
information  currently available.  A worsening or protracted economic decline in
the areas within which the Company  operates  would  increase the  likelihood of
additional  losses due to credit and market  risks and could create the need for
additional loss reserves.
     Premises  and  Equipment:  Premises and  equipment  are stated at cost less
accumulated   depreciation.   Depreciation   is  computed   principally  by  the
straight-line  method over the  estimated  useful  lives of the related  assets.
Maintenance  and repairs are  expensed as  incurred  while major  additions  and
improvements are capitalized.
     Intangible Assets:  Intangible assets are being amortized on an accelerated
or straight-line basis not exceeding a period of up to 15 years. Such assets are
periodically evaluated as to the recoverability of their carrying value.
     Earnings  per Share:  Earnings per share is computed by dividing net income
by the weighted-average number of common and potential common shares outstanding
during each year.
     Stock  Split:  On November 23,  1998,  the Board of  Directors  declared an
eleven-for-ten  stock split effected in the form of a dividend under which every
ten shares of the Company's common stock outstanding of the close of business on
December  18,  1998 were  converted  into  eleven  shares of  common  stock.  No
fractional  shares were issued;  cash in lieu of  fractional  shares was paid to
shareholders.  Per share and shares  outstanding  and stock option plan data for
all periods presented have been adjusted to give effect to the split.
     Mortgage  Servicing Rights:  Mortgage  servicing rights on originated loans
are  capitalized  by allocating the total cost of the mortgage loans between the
mortgage  servicing  rights and the loans based on their  relative  fair values.
Capitalized  servicing  rights,  which include purchased  servicing rights,  are
amortized in proportion to and over the period of estimated servicing revenues.




                                       66
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     Stock  Options:  Stock options are generally  granted for a fixed number of
shares with an exercise  price equal to the fair value of the shares at the date
of grant.  The Company accounts for and will continue to account for these stock
option grants in accordance with Accounting Principles Board ("APB") Opinion No.
25, Accounting for Stock Issued to Employees,  and,  accordingly,  recognizes no
compensation expense for the stock option grants.
     Income Taxes: Income tax in the consolidated  statements of income includes
deferred  income  tax  provisions  or  benefits  for all  significant  temporary
differences  in  recognizing  income and expenses for  financial  reporting  and
income tax purposes.  The Company and its  subsidiaries  file  consolidated  tax
returns.  The parent  company and  subsidiaries  are charged or given credit for
income taxes as though separate returns were filed.

2.   ACQUISITIONS

     On July 1, 1998, the Company  completed the purchase of Cardinal State Bank
("Cardinal"),  Maineville,  Ohio, and merged  Cardinal into ABO. The transaction
was  recorded  under  the  purchase  method  of  accounting.  The  Company  paid
$1,122,000 in cash including expenses, and issued 126,451 shares of common stock
and $451,000 of promissory  notes for a total purchase price of $3,714,000.  The
Cardinal acquisition included $14,380,000 of loans,  $9,384,000 of cash and cash
equivalents and $21,521,000 of deposits.  The Company recorded intangible assets
totaling $1,351,000 related to the transaction.
     On February 27, 1998,  the Company  completed  the purchase of deposits and
branch facility in Morristown,  Indiana, from National City Bank of Indiana. The
transaction was recorded under the purchase method of accounting. The Morristown
acquisition  included assets and  liabilities of $12,394,000,  including cash of
$11,346,000,  and deposits of  $12,388,000.  Intangible  assets of $684,000 were
recorded.
     The results of operations of Cardinal and the  Morristown  branch have been
included since their  acquisition  date.  Intangible  assets are being amortized
over their estimated useful lives.

3.   INVESTMENT SECURITIES

     Investment  securities  held to  maturity at December  31,  2000,  included
federal  agencies  at an  amortized  cost of  $87,901,000  with a fair  value of
approximately  $86,152,000 and gross unrealized gains and (losses) of $9,000 and
$(1,758,000),  respectively.  Investment securities held to maturity at December
31, 1999,  included  federal agencies at an amortized cost of $87,735,000 with a
fair  value of  approximately  $81,481,000  and  gross  unrealized  (losses)  of
$(6,254,000).
     The  amortized  cost  and fair  value of  securities  held to  maturity  at
December 31, 2000, by contractual maturity, are shown below. Expected maturities
may differ from  contractual  maturities  because  issuers may have the right to
call or prepay obligations without call or prepayment penalties.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                           Amortized            Fair
                                                             Cost              Value
--------------------------------------------------------------------------------------------
<S>                                                        <C>                <C>
Maturity Distribution at December 31, 2000
   Due within one year                                     $      200         $     200
   Due in one through five years                                1,500             1,500
   Due after five through ten years                            27,046            26,840
   Due after ten years                                         59,155            57,612
--------------------------------------------------------------------------------------------
                                                              $87,901           $86,152
============================================================================================
</TABLE>

     Investment  securities  with a  total  amortized  cost of  $41,554,000  and
$54,418,000 were pledged at December 31, 2000 and 1999, to secure FHLB advances.


                                       67
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


4.   LOANS AND MORTGAGE-BACKED SECURITIES

         Loans receivable consist of the following:
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                                                                 December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                                           2000                1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                  <C>
Residential mortgage loans                                                                $326,403             $284,351
Commercial mortgage loans                                                                   48,393               30,734
Installment loans                                                                           30,198               25,712
Commercial loans                                                                             8,764                1,209
Loans secured by deposits                                                                    1,598                1,393
----------------------------------------------------------------------------------------------------------------------------
                                                                                           415,356              343,399
----------------------------------------------------------------------------------------------------------------------------
Deduct
----------------------------------------------------------------------------------------------------------------------------
   Undisbursed loan proceeds                                                                16,724               16,723
   Deferred loan costs, net                                                                   (143)                (128)
   Allowance for loan losses                                                                 1,489                1,534
----------------------------------------------------------------------------------------------------------------------------
                                                                                            18,070               18,129
----------------------------------------------------------------------------------------------------------------------------
                                                                                          $397,286             $325,270
============================================================================================================================
</TABLE>

         Loans being  serviced for  investors,  primarily  the Federal Home Loan
Mortgage Corporation and Federal National Mortgage  Association,  by the Company
totaled approximately $144,000,000, $154,000,000 and $181,000,000 as of December
31,  2000,  1999 and 1998,  respectively.  Such loans are not  reflected  in the
preceding table.
         The aggregate fair value of capitalized  mortgage  servicing  rights at
December  31, 2000 and 1999 is based on  comparable  market  values and expected
cash  flows,  with  impairment  assessed  based  on  portfolio   characteristics
including product type, investor type and interest rates. No valuation allowance
was necessary at December 31, 2000 and 1999.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                      Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                              2000             1999             1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>               <C>             <C>
Mortgage servicing rights
   Balance at beginning of year                                              $   910           $1,076          $   526
   Servicing rights capitalized                                                   44              180              691
   Servicing rights acquired in acquisition                                       --               --               81
   Servicing rights sold                                                          --             (155)              --
   Amortization of servicing rights                                             (107)            (191)            (222)
----------------------------------------------------------------------------------------------------------------------------
   Balance at end of year                                                     $  847          $   910           $1,076
============================================================================================================================

</TABLE>

                                       68
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


         At December 31, 2000 and 1999, the Company had outstanding  commitments
to originate  loans of  approximately  $5,379,000  and  $22,389,000,  which were
primarily for  adjustable-rate  mortgages  with rates that are  determined  just
prior to closing loans or fixed-rate  mortgage loans with rates locked in at the
time of loan  commitment.  The majority of the fixed-rate  loans are sold at the
time the  rates are  locked.  In  addition,  the  Company  had  $19,842,000  and
$18,405,000,  respectively,  of  conditional  commitments  for  lines of  credit
receivables. Exposure to credit loss in the event of nonperformance by the other
party  to  the  financial  instruments  for  commitments  to  extend  credit  is
represented by the contractual or notional amount of those instruments. The same
credit policies are used in making such  commitments as are used for instruments
that are included in the  consolidated  statements of condition.  Commitments to
extend  credit  are  agreements  to lend to a  customer  as long as  there is no
violation of any condition  established in the contract.  Commitments  generally
have fixed expiration dates or other termination clauses and may require payment
of a fee.  Since many of the  commitments  are expected to expire  without being
drawn upon, the total  commitment  amounts do not necessarily  represent  future
cash  requirements.   Each  customer's  credit  worthiness  is  evaluated  on  a
case-by-case basis. The amount of collateral obtained,  if deemed necessary upon
extension of credit, is based on management's credit evaluation. Collateral held
varies but may include accounts receivable,  inventory,  real estate, equipment,
and income-producing commercial properties.
         The fair value of  mortgage-backed  securities at December 31, 2000 and
1999, was $11,711,000 and $14,787,000,  respectively. Gross unrealized gains and
(losses)  on  mortgage-backed  securities  at December  31, 2000 and 1999,  were
$44,000   and   $(139,000),   and   $29,000   and   $(212,000),    respectively.
Mortgage-backed  securities  with a  total  amortized  cost  of  $2,981,000  and
$7,119,000, were pledged at December 31, 2000 and 1999, to secure FHLB advances.

5.       ALLOWANCE FOR LOSSES

         Changes to the allowances for losses on loans and real estate owned are
as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                      Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                              2000               1999            1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>              <C>
Loans
   Balance at beginning of year                                                $1,534            $1,284           $1,163
   Provision for losses                                                           417               328              159
   Increase from acquisition                                                       --                --              100
   Net charge-offs
     Charge-offs                                                                 (488)              (98)            (165)
     Recoveries                                                                    26                20               27
----------------------------------------------------------------------------------------------------------------------------
     Net charge-offs                                                             (462)              (78)            (138)
----------------------------------------------------------------------------------------------------------------------------
   Balance at end of year                                                      $1,489            $1,534           $1,284
============================================================================================================================

Real estate owned
   Balance at beginning of year                                               $    --          $     32           $   --
   Provision for losses                                                            --                22               32
   Net charge-offs
     Charge-offs                                                                   --               (54)              --
     Recoveries                                                                    --                --               --
----------------------------------------------------------------------------------------------------------------------------
     Net charge-offs                                                               --               (54)              --
----------------------------------------------------------------------------------------------------------------------------
   Balance at end of year                                                     $    --            $   --          $    32
============================================================================================================================
</TABLE>



                                       69
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


6.       PREMISES AND EQUIPMENT

         Premises and equipment consists of the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                                   December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                                              2000              1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                <C>
Land                                                                                          $1,398             $1,373
Land improvements                                                                                513                527
Office buildings                                                                               7,157              6,936
Furniture and equipment                                                                        4,384              4,218
Automobiles                                                                                       70                112
----------------------------------------------------------------------------------------------------------------------------
                                                                                              13,522             13,166
Less accumulated depreciation                                                                  6,425              6,049
----------------------------------------------------------------------------------------------------------------------------
                                                                                              $7,097             $7,117
============================================================================================================================
</TABLE>

7.       INVESTMENTS IN UNCONSOLIDATED AFFILIATES

         Investments  in  unconsolidated  affiliates  include an investment in a
limited partnership of $584,000 and $726,000 at December 31, 2000 and 1999. This
investment  represents a 5.1% equity in the partnership,  which was organized to
acquire  and  manage  real  estate  investments.   Total  cash  contributed  was
$1,459,000 in 1995.  The Company  recorded a net loss of $142,000,  $245,000 and
$154,000 for 2000, 1999 and 1998 on its  investment,  and low income housing tax
credits of $213,000,  $206,000 and $212,000.  Available financial statements for
the  partnership  as of December  31, 2000 and 1999,  reported  total  assets of
$12,427,000  and   $15,740,000;   total  partners'  equity  of  $10,062,000  and
$12,412,000  and for each of the three years in the period  ended  December  31,
2000,  a net loss of  $2,344,000,  $2,531,000  and  $3,016,000,  with the losses
allocated based on the dates of partners' contributions and other factors.
         In  addition,  the Company has  invested  $453,000 in a life  insurance
company.  Dividends  from this  affiliate for the years ended December 31, 2000,
1999 and 1998 were $41,000,  $54,000 and $50,  respectively.  Commission  income
also generated through this affiliate is included in Other Income.



                                       70
<PAGE>


Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


8.       DEPOSITS

         Deposits consist of the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                                 December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                                           2000                1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                  <C>
Demand                                                                                   $  75,978            $  71,933
Savings                                                                                     34,687               38,660
Certificates of $100,000 or more                                                            43,039               40,044
Other certificates                                                                         213,891              205,122
----------------------------------------------------------------------------------------------------------------------------
                                                                                          $367,595             $355,759
============================================================================================================================
</TABLE>

         Certificates maturing in years ending after December 31, 2000:

-------------------------------------------------------------------------
2001                                                      $135,389
2002                                                        56,815
2003                                                        56,454
2004                                                         2,423
2005                                                         5,567
Thereafter                                                     282
-------------------------------------------------------------------------
                                                          $256,930
=========================================================================

         Interest paid on deposits  approximated  interest expense in 2000, 1999
and 1998.

9.   BORROWINGS

     Borrowings  at December  31, 2000 and 1999  include  Federal Home Loan Bank
advances totaling  $138,751,000 and $82,511,000 with a weighted-average  rate of
6.54% and 5.49%, respectively.
     The advances are secured by a  combination  of  first-mortgage  loans in an
amount equal to at least 150% of the advances and/or mortgage-backed  securities
and investment  securities equal to the amount of the advance and using only 95%
of their book value  adjusted for decreases in market  value.  Some advances are
subject to restrictions or penalties in the event of prepayment.
     Borrowings at December 31, 2000, also include a note payable for $2,150,000
to another  financial  institution with a rate of 9% and due date of January 24,
2001.  The note is secured by the  outstanding  common stock of ABT. In January,
the Company  made a payment of $600,000 and renewed the note to July 24, 2001 at
a rate of 8.0%.
     Promissory  notes at December  31, 2000  related to the  Cardinal  purchase
totaled $271,000 at a rate of 6.0%.



                                       71
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     Interest paid on borrowings  was  $7,064,000,  $1,361,000  and $722,000 for
2000, 1999 and 1998.

---------------------------------------------------------------------------
Maturities in years ending December 31
   2001                                                        $  75,338
   2002                                                           42,344
   2003                                                           17,360
   2004                                                              915
   2005                                                            4,801
   Thereafter                                                        414
---------------------------------------------------------------------------
                                                                $141,172
===========================================================================

10.  INCOME TAXES

     Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                            December 31
---------------------------------------------------------------------------------------------------
                                                                        2000            1999
---------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>
Deferred tax assets
   Deferred compensation                                              $      92        $      24
   General loan loss reserves                                               550              525
   Other                                                                    155              127
---------------------------------------------------------------------------------------------------
                                                                            797              676
---------------------------------------------------------------------------------------------------
Deferred tax liabilities
   FHLB stock dividends                                                    (443)            (363)
   Tax bad debt reserves                                                   (218)            (284)
   Purchase accounting adjustments                                         (101)             (90)
   Deferred loan fees                                                      (225)            (120)
   Mortgage servicing rights                                               (283)            (312)
   Other                                                                   (115)            (174)
---------------------------------------------------------------------------------------------------
                                                                         (1,385)          (1,343)
---------------------------------------------------------------------------------------------------
         Net tax liabilities                                          $    (588)       $    (667)
===================================================================================================

</TABLE>



                                       72
<PAGE>


Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     The  effective  income tax rate on income  from  continuing  operations  is
reconciled to the statutory corporate tax rate as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                      Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                              2000             1999             1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>              <C>
Statutory federal tax rate                                                    34.0%             34.0%            34.0%
State income taxes, net of federal tax benefit                                 1.4               4.4              4.7
Tax credits                                                                   (4.5)             (4.3)            (3.6)
Cash surrender value of life insurance                                        (7.0)             (3.2)             (.1)
Other                                                                           .7               (.3)              .2
----------------------------------------------------------------------------------------------------------------------------
Effective tax rate                                                            24.6%             30.6%            35.2%
============================================================================================================================
</TABLE>

     The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                      Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                              2000             1999             1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>              <C>
Federal
   Current                                                                     $1,172           $1,094           $1,521
   Deferred                                                                      (111)              55              143
----------------------------------------------------------------------------------------------------------------------------
                                                                                1,061            1,149            1,664
----------------------------------------------------------------------------------------------------------------------------
State
   Current                                                                         71              297              387
   Deferred                                                                        32               21               34
----------------------------------------------------------------------------------------------------------------------------
                                                                                  103              318              421
----------------------------------------------------------------------------------------------------------------------------
                                                                               $1,164           $1,467           $2,085
============================================================================================================================
</TABLE>

     The Company paid $1,624,000, $1,749,000 and $1,722,000 of state and federal
income taxes in 2000, 1999 and 1998, respectively.

11.  EMPLOYEE BENEFITS AND LIFE INSURANCE

     The Company is a participating employer in a multi-employer defined-benefit
pension plan sponsored by the Pentegra Group and a 401(k) plan also administered
by the Pentegra Group. The plans cover  substantially all full-time employees of
the Company. Since the defined-benefit pension plan is a multi-employer plan, no
separate  actuarial  valuations  are made  with  respect  to each  participating
employer.  Contributions  are not required because the plan reached the Internal
Revenue Service's full funding limitation. Pension expense for the plans totaled
$25,000, $39,000 and $28,000 in 2000, 1999 and 1998, respectively.
     The Company has arrangements that provide  retirement and death benefits to
certain  officers and directors.  The accrual of benefits  totaled  $235,000 for
2000 and $47,000 for 1999. In connection with these benefits,  life insurance on
these  officers and  directors  has been  purchased  with the proceeds  from the
policies to be utilized for the payment of benefits. The cash surrender value of
these policies at December 31, 2000 and 1999, totaled  approximately  $7,779,000
and $7,770,000, respectively.
     In  addition,  other  life  insurance  policies  on  certain  officers  and
directors  has been  purchased.  These  policies had a cash  surrender  value of
approximately   $9,310,000  and  $8,348,000  at  December  31,  2000  and  1999,
respectively.


                                       73
<PAGE>


Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     Under the 1987 Stock  Option Plan and the 1996 Stock  Option and  Incentive
Plan ("1996 Plan"),  the Company has granted  options to individuals to purchase
common  stock at a price  equal to the fair  market  value at the date of grant,
subject to the terms and  conditions  of the plans.  Plan terms  permit  certain
nonincentive  stock  options  to be granted  at less than  market  value at plan
committee  discretion.  Options vest and are fully  exercisable  when granted or
over an  extended  period  subject  to  continuous  employment  or  under  other
conditions set forth in the plans.  The period for exercising  options shall not
exceed ten years from the date of grant.  The plans also permit  grants of stock
appreciation  rights. An amendment of the 1996 Plan approved by the shareholders
in April 1998 extended the plan's term by five years and increased the number of
shares reserved under the plan from 176,000 to 352,000 shares.
     The  following  is a summary of the status of the  Company's  stock  option
plans and  changes in those  plans as of and for the years  ended  December  31,
2000,  1999 and 1998. The number of shares and prices have been restated to give
effect to the Company's 1998 stock split.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                     Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
                                                  2000                        1999                         1998
----------------------------------------------------------------------------------------------------------------------------
                                                     WEIGHTED-                     Weighted-                   Weighted-
                                                      AVERAGE                       Average                     Average
                 OPTIONS                 SHARES    EXERCISE PRICE     Shares    Exercise Price    Shares    Exercise Price
----------------------------------------------------------------------------------------------------------------------------

<S>                                       <C>           <C>           <C>            <C>           <C>           <C>
Outstanding at beginning of year          255,505       $14.43        256,481        $14.18        277,890       $13.87
Granted                                     1,000        10.63          9,800         16.78          8,800        15.50
Exercised                                    (825)        9.43         (9,235)        10.11        (29,768)       12.18
Forfeited/expired                         (28,894)       14.01         (1,541)        14.32           (441)       13.02
                                          -------                     -------                      -------
Outstanding at end of year                226,786        14.31        255,505         14.43        256,481        14.18
                                          =======                     =======                      =======

Options exercisable at year end           215,082       $14.32        216,169        $14.16        196,552       $13.68
Weighted-average fair value of
   options granted during the year                       $2.35                        $3.80                       $3.24
</TABLE>

     As of December 31, 2000,  other  information  in exercise  price ranges for
options outstanding and exercisable is as follows:
<TABLE>
<CAPTION>
                                      Outstanding                                                    Exercisable
----------------------------------------------------------------------------------------  ----------------------------------
                                             Weighted-           Weighted-Average                             Weighted-
Exercise Price         Number                Average         Remaining Contractual               Number        Average
    Range             of Shares           Exercise Price              Life                     of Shares    Exercise Price
----------------------------------------------------------------------------------------  ----------------------------------
<S>                   <C>                    <C>                    <C>                         <C>            <C>
$9.43 - 12.53          71,690                 $12.47                 5.1 years                   71,690         $12.47
14.32 - 18.30         155,096                  15.41                 6.4 years                  143,392          15.24
</TABLE>

     During  1998,  shares  totaling  499 were  tendered as partial  payment for
shares  exercised.  There were 171,326  shares under the 1996 Plan available for
grant at December 31, 2000.
     SFAS No. 123,  Stock-Based  Compensation,  was effective for the Company in
1996.  This  Statement  established a fair value based method of accounting  for
stock-based  compensation plans.  Although the Company has elected to follow APB
No. 25, SFAS No. 123 requires pro forma  disclosures  of net income and earnings
per share as if the Company had accounted  for its employee  stock options under
that  Statement.  The fair value of each option grant was estimated on the grant
date using an option-pricing model with the following assumptions:
<TABLE>
<CAPTION>
                                                                                  2000            1999           1998
                                                                             -----------------------------------------------
<S>                                                                                <C>           <C>              <C>
Risk-free interest rates                                                           6.4%          5.0-6.0%          5.6%
Dividend yields                                                                    5.3%              3.7%          3.3%
Expected volatility factors of market price of common stock                       27.9%             23.4%         14.5%

Weighted-average expected life of the options                                     8 years        8 years         8 years

</TABLE>

                                       74
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     Under SFAS No. 123,  compensation  cost is  recognized in the amount of the
estimated  fair value of the options and  amortized to expense over the options'
vesting  period.  The pro forma  effect on net income and  earnings per share of
this Statement are as follows:
<TABLE>
<CAPTION>
                                                                           2000             1999             1998
                                                                       -----------------------------------------------------
<S>                                                   <C>                 <C>               <C>              <C>
Net income                                            As reported         3,562             $3,332           $3,838
                                                      Pro forma           3,529              3,231            3,755

Basic earnings per share                              As reported          1.13                .98             1.08
                                                      Pro forma            1.12                .95             1.05

Diluted earnings per share                            As reported          1.13                .98             1.06
                                                      Pro forma            1.12                .95             1.04

</TABLE>

12.  SHAREHOLDERS' EQUITY

     The Company's Board of Directors has approved  periodically  the repurchase
of up to 10 percent of the Company's  outstanding  shares of common stock.  Such
purchases in 1999 and 1998 were made subject to market conditions in open market
or block transactions, or in negotiated transactions.
     The payment of dividends by the Company depends  substantially upon receipt
of dividends from ABT, which is subject to various  regulatory  restrictions  on
the payment of dividends.  Under  regulations of the OTS, ABT may not declare or
pay a cash dividend or repurchase any of its capital stock if the effect thereof
would cause the net worth of this entity to be reduced below regulatory  capital
requirements or the amount required for its liquidation accounts.
     In addition,  without prior approval,  current regulations allow ABT to pay
dividends to the Company not  exceeding  retained net income for the  applicable
calendar  year to date,  plus  retained net income for the  preceding two years.
Application  is required by ABT to pay dividends in excess of this  restriction.
At December 31, 2000, the stockholder's equity of ABT was $41,867,000.  Although
well capitalized,  under regulations in effect,  ABT is required to apply to the
OTS to pay dividends to the Company.

13.  EARNINGS PER SHARE

     Earnings per share were computed as follows:
<TABLE>
<CAPTION>
                                                                     Year Ended December 31
------------------------------------------------------------------------------------------------------------------------------
                                               2000                          1999                           1998
------------------------------------------------------------------------------------------------------------------------------
                                            WEIGHTED-                      Weighted-                      Weighted-
                                             AVERAGE  PER SHARE             Average  Per Share             Average  Per Share
                                    INCOME   SHARES     AMOUNT    Income    Shares     Amount    Income    Shares     Amount
------------------------------------------------------------------------------------------------------------------------------

<S>                                 <C>    <C>           <C>      <C>     <C>            <C>     <C>     <C>          <C>
Basic Earnings Per Share
   Income available to common       $3,562 3,146,451     $1.13    $3,332  3,386,444      $.98    $3,838  3,561,831    $1.08
     shareholders                                        =====                           ====                         =====
Effect Of Dilutive Stock Options        --       110                  --     30,291                  --     48,568
                                    ----------------              -----------------              -----------------
Diluted Earnings Per Share
   Income available to common
     shareholders and assumed
     conversions                    $3,562 3,146,561     $1.13    $3,332  3,416,735      $.98    $3,838  3,610,399    $1.06
                                    ==========================================================================================
</TABLE>

                                       75
<PAGE>


Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


14.  REGULATORY CAPITAL

     ABT  (and  ABO  prior to its  merger  into  ABT)  are  subject  to  various
regulatory capital requirements administered by the federal banking agencies and
are assigned to a capital  category.  The assigned  capital  category is largely
determined by three ratios that are calculated according to the regulations. The
ratios  are  intended  to measure  capital  relative  to assets and credit  risk
associated  with those  assets and  off-balance  sheet  exposures.  The  capital
category  assigned  can  also  be  affected  by  qualitative  judgments  made by
regulatory  agencies about the risk inherent in the entity's activities that are
not part of the calculated ratios.
     There are five capital categories defined in the regulations,  ranging from
well capitalized to critically  undercapitalized.  Classification  in any of the
undercapitalized  categories can result in actions by regulators that could have
a material  effect on a bank's  operations.  At December 31, 2000 and 1999,  ABT
(and ABO at December 31, 1999) are  categorized as well  capitalized and met all
subject capital adequacy  requirements.  There are no conditions or events since
December 31, 2000, that management believes have changed this classification.
     Actual and required capital amounts and ratios are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                         December 31, 2000
------------------------------------------------------------------------------------------------------------------------------
                                                                                                ABT
------------------------------------------------------------------------------------------------------------------------------
                                                                         Required For Adequate
                                                                              Capital (1)                Actual Capital
------------------------------------------------------------------------------------------------------------------------------
                                                                          Ratio        Amount       Ratio         Amount
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>        <C>           <C>         <C>
Total risk-based capital (1) (to risk-weighted assets)                      8.0%       $25,258       13.1%       $41,270
Tier 1 capital (to risk-weighted assets)                                    4.0         12,629       12.8         40,315
Core capital (1) (to adjusted total assets)                                 3.0         16,669        7.3         40,315
Core capital (1) (to adjusted tangible assets)                              2.0         11,113        7.3         40,315
Tangible capital (to adjusted total assets)                                 1.5          8,335        7.3         40,315
<FN>
(1) As defined by regulatory agencies
</FN>
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                          December 31, 1999
------------------------------------------------------------------------------------------------------------------------------
                                                            ABT                                       ABO
------------------------------------------------------------------------------------------------------------------------------
                                             Required For                              Required For
                                           Adequate Capital(1)   Actual Capital     Adequate Capital(1)    Actual Capital
------------------------------------------------------------------------------------------------------------------------------
                                           Ratio     Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount
------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>    <C>          <C>     <C>           <C>     <C>          <C>     <C>
Total risk-based capital (1) (to             8.0%   $16,220      15.6%   $31,599       8.0%    $4,673       14.2%   $8,279
   risk-weighted assets)
Tier 1 capital (to risk-weighted assets)     4.0      8,110      15.3     31,031       4.0      2,337       13.7     8,010
Core capital (1) (to adjusted total
   assets)                                   3.0     11,057       8.4     31,031       3.0      3,531        6.8     8,010
Core capital (1) (to adjusted tangible       2.0      7,371       8.4     31,031       2.0      2,354        6.8     8,010
   assets)
Tangible capital (to adjusted total          1.5      5,529       8.4     31,031       1.5      1,766        6.8     8,010
   assets)
<FN>
(1) As defined by regulatory agencies
</FN>
</TABLE>
     ABT has  qualified  under  provisions  of the  Internal  Revenue Code which
permit it to deduct from taxable  income a provision for bad debts which differs
from the provision for such losses charged against income. Accordingly, retained
earnings at December  31,  2000,  includes an  allocation  of income to bad debt
deductions  of  approximately  $11,883,000  for which no  provision  for federal
income taxes has been made. If, in the future, this portion of retained earnings
is used  for any  purpose  other  than to  absorb  bad  debt  losses,  including
redemption of bank stock or excess dividends,  or loss of "bank" status, federal
income  taxes  may be  imposed  at the then  applicable  rates.  The  unrecorded
deferred income tax liability on the above amount was approximately $4,000,000.

                                       76
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     Fair values are based on estimates  using present value and other valuation
techniques  in instances  where quoted market  prices are not  available.  These
techniques  are  significantly  affected  by  the  assumptions  used,  including
discount  rates and  estimates of future cash flows.  As such,  the derived fair
value estimates cannot be compared to independent markets and, further,  may not
be realizable in an immediate  settlement of the instruments.  Accordingly,  the
aggregate  fair value  amounts  presented  do not  represent,  and should not be
construed to represent, the underlying value of the Company.

     The  following  table  presents  the  estimates  of fair value of financial
instruments:
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                                                       December 31
----------------------------------------------------------------------------------------------------------------------------
                                                                            2000                          1999
----------------------------------------------------------------------------------------------------------------------------
                                                                  Carrying         Fair         Carrying         Fair
                                                                    Value          Value          Value          Value
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>           <C>             <C>           <C>
Assets
   Cash and cash equivalents                                         $14,609       $14,609         $14,637       $14,637
   Interest-bearing deposits                                           4,422         4,422           5,296         5,296
   Interest-bearing time deposits                                         --            --           1,499         1,499
   Investment securities held to maturity                             87,901        86,152          87,735        81,481
   Mortgage-backed securities held to maturity                        11,806        11,711          14,970        14,787
   Loans receivable, including loans held for sale, net              397,489       398,920         325,478       320,705
   Interest receivable                                                 4,496         4,496           2,629         2,629
   Stock in FHLB                                                       7,265         7,265           4,341         4,341
   Cash surrender value of life insurance                             17,089        17,089          16,118        16,118

Liabilities
   Deposits                                                          367,595       369,477         355,759       353,832
   FHLB advances                                                     138,751       139,761          82,511        82,058
   Notes payable                                                       2,421         2,421             361           361
   Interest payable                                                      950           950             541           541
   Drafts payable                                                      3,039         3,039           3,901         3,901
   Advances by borrowers for taxes and insurance                         939           939             823           823
</TABLE>

     The following  methods and assumptions were used to estimate the fair value
of each class of financial instrument:
     Cash,  Interest-Bearing Deposits, Stock in FHLB and Cash Surrender Value of
Life Insurance:  The carrying amounts reported in the consolidated statements of
condition for cash on hand and in other institutions, interest-bearing deposits,
stock in FHLB, and cash  surrender  value of life  insurance  approximate  those
assets' fair values.
     Investment and Mortgage-Backed  Securities: Fair values are based on quoted
market prices.
     Loans Receivable:  The fair values for loans receivable are estimated using
a discounted cash flow calculation that applies interest rates used to price new
similar loans to a schedule of aggregated expected monthly maturities on loans.
     Interest   Receivable/Payable:   The  fair   value  of   accrued   interest
receivable/payable approximates carrying values.
     Deposits:  The fair values of interest-bearing  demand and savings accounts
are equal to the amount payable on demand at the balance sheet date. Fair values
for  certificates  of  deposit  are  estimated  using  a  discounted  cash  flow
calculation that applies interest rates currently being offered on deposits to a
schedule of aggregated  expected monthly maturities on deposits.  A core deposit
intangible component in the fair value estimate is not included, and although it
would be impractical from a cost-benefit  standpoint to estimate that value, the
Company realizes that the dollar amount could be significant.


                                       77
<PAGE>


Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


     FHLB Advances:  The fair value of these  borrowings  are estimated  using a
discounted  cash flow  calculation,  based on  current  FHLB  advance  rates for
periods comparable to the remaining terms to maturity of these advances.

     Notes Payable: The fair value approximates carrying value.

     Drafts Payable and Advances by Borrowers for Taxes and Insurance:  The fair
value approximates carrying value.

16.  PARENT COMPANY FINANCIAL INFORMATION

     The following are condensed  financial  statements for the parent  company,
Ameriana Bancorp, only:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                                  December 31
----------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CONDITION                                                                     2000               1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>               <C>
Assets
   Cash                                                                                  $         2       $         2
   Advances to subsidiaries                                                                    1,825             1,103
   Investments in thrift subsidiaries                                                         41,867            40,766
   Investments in other subsidiaries and affiliates                                            1,230             1,544
   Other assets                                                                                  174               400
----------------------------------------------------------------------------------------------------------------------------
                                                                                             $45,098           $43,815
============================================================================================================================
Liabilities and shareholders' equity
   Notes payable to subsidiaries, net of discount                                          $     465          $  2,966
   Notes payable, other                                                                        2,421               361
   Miscellaneous liabilities                                                                     501               459
   Shareholders' equity                                                                       41,711            40,029
----------------------------------------------------------------------------------------------------------------------------
                                                                                             $45,098           $43,815
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                                                     Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>               <C>               <C>
STATEMENTS OF INCOME                                                        2000              1999              1998
----------------------------------------------------------------------------------------------------------------------------
Dividends from subsidiaries                                                  $2,888           $5,150            $4,620
Interest income                                                                  30               84               215
----------------------------------------------------------------------------------------------------------------------------
                                                                              2,918            5,234             4,835
Operating expense                                                               664              538               625
----------------------------------------------------------------------------------------------------------------------------
   Income before income tax credit and equity in undistributed
     income of subsidiaries                                                   2,254            4,696             4,210
Income tax credit                                                               521              480               433
----------------------------------------------------------------------------------------------------------------------------
                                                                              2,775            5,176             4,643
Equity in undistributed income of subsidiaries and affiliates
   (distributions in excess of equity in income)                                787           (1,844)             (805)
----------------------------------------------------------------------------------------------------------------------------
Net Income                                                                   $3,562           $3,332            $3,838
============================================================================================================================
</TABLE>


                                       78
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                      Year Ended December 31
----------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS                                                     2000              1999             1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>              <C>               <C>
Operating Activities
   Net income                                                                 $3,562           $3,332            $3,838
   Adjustments to reconcile net income to net cash provided by
     operating activities
     Equity in undistributed income of subsidiaries and affiliates              (787)           1,844               805
     Noncash dividend                                                             --               --            (1,020)
     Accretion                                                                    49               67                85
     (Increase) decrease in other assets                                          50               56               (11)
     Increase (decrease) in miscellaneous liabilities                             42              (25)               97
----------------------------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                             2,916            5,274             3,794
----------------------------------------------------------------------------------------------------------------------------
Investing Activities
   Advance to subsidiaries                                                      (722)              --                --
   Repayment of advances to subsidiaries                                          --            1,654             2,580
   Purchase of premises and equipment                                             --             (176)               --
   Proceeds from sale of premises and equipment                                  176               --                --
   Cash paid in acquisition                                                       --               --            (1,122)
----------------------------------------------------------------------------------------------------------------------------
         Net cash provided (used) by investing activities                       (546)           1,478             1,458
----------------------------------------------------------------------------------------------------------------------------
Financing Activities
   Proceeds from note payable to subsidiary                                       --            2,300                --
   Repayment of notes payable to subsidiaries                                 (2,550)            (250)             (300)
   Proceeds from note payable, other                                           2,500               --                --
   Repayment of notes payable, other                                            (440)             (90)               --
   Cash dividends paid                                                        (1,888)          (2,063)           (2,073)
   Purchase of common stock                                                       --           (6,747)           (3,358)
   Proceeds from exercise of stock options                                         8               99               379
----------------------------------------------------------------------------------------------------------------------------
         Net cash used by financing activities                                (2,370)          (6,751)           (5,352)
----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash                                                       --                1              (100)
Cash at beginning of year                                                          2                1               101
----------------------------------------------------------------------------------------------------------------------------
Cash at end of year                                                        $       2         $      2          $      1
============================================================================================================================
</TABLE>



                                       79
<PAGE>

Ameriana Bancorp and  Subsidiaries
Notes to Consolidated  Financial  Statements
(table dollar amounts in thousands, except share data)


17.  QUARTERLY DATA (UNAUDITED)

     Summarized  quarterly  financial  data  for  2000  and  1999 is as  follows
(dollars in thousands, except for per share data):
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                           FIRST            SECOND            THIRD            FOURTH
                                                          QUARTER           QUARTER          QUARTER           QUARTER
----------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>              <C>              <C>               <C>
2000
   TOTAL INTEREST INCOME                                     $8,501           $9,152           $9,579            $9,787
   TOTAL INTEREST EXPENSE                                     5,386            5,989            6,565             6,788
   NET INTEREST INCOME                                        3,115            3,163            3,014             2,999
   PROVISION FOR LOAN LOSSES                                     70              109              119               119
   NET INCOME                                                 1,065              876              863               758
----------------------------------------------------------------------------------------------------------------------------
   BASIC EARNINGS PER SHARE                                     .34              .28              .27               .24
----------------------------------------------------------------------------------------------------------------------------
   DILUTED EARNINGS PER SHARE                                   .34              .28              .27               .24
----------------------------------------------------------------------------------------------------------------------------
   DIVIDENDS DECLARED PER SHARE                                 .15              .15              .15               .15
----------------------------------------------------------------------------------------------------------------------------
   STOCK PRICE RANGE
     HIGH                                                     14.50            12.75            12.94             13.13
     LOW                                                       7.56             9.00             9.88             10.50
----------------------------------------------------------------------------------------------------------------------------
1999
   Total interest income                                     $6,887           $6,882           $7,343            $7,971
   Total interest expense                                     3,834            3,802            4,256             4,857
   Net interest income                                        3,053            3,080            3,087             3,114
   Provision for loan losses                                     38               30               30               230
   Net income                                                   797              861            1,073               601
----------------------------------------------------------------------------------------------------------------------------
   Basic earnings per share                                     .23              .25              .32               .18
----------------------------------------------------------------------------------------------------------------------------
   Diluted earnings per share                                   .23              .25              .32               .18
----------------------------------------------------------------------------------------------------------------------------
   Dividends declared per share                                 .15              .15              .15               .15
----------------------------------------------------------------------------------------------------------------------------
   Stock price range
     High                                                     17.63            16.75            17.50             17.13
     Low                                                      15.50            15.25            16.38             14.38
----------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                       80

<PAGE>


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

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

         Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

     For  information  concerning the directors of the Company,  the information
contained under the section  captioned  "Proposal I -- Election of Directors" in
the Proxy  Statement  is  incorporated  herein  by  reference.  For  information
concerning  the  executive  officers of the  Company,  see "Item 1.  Business --
Executive  Officers"  under Part I of the Annual Report,  which is  incorporated
herein by reference.

     For  information  concerning  compliance with Section 16(a) of the Exchange
Act,  see the section  titled  "Section  16(a)  Beneficial  Ownership  Reporting
Compliance" in the Proxy Statement, which is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

     The  information  contained  under the  section  captioned  "Proposal  I --
Election of  Directors  --  Executive  Compensation"  in the Proxy  Statement is
incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (A)      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

                  Information  required by this item is  incorporated  herein by
                  reference  to the section  captioned  "Voting  Securities  and
                  Security Ownership" in the Proxy Statement.

         (B)      SECURITY OWNERSHIP OF MANAGEMENT

                  Information  required by this item is  incorporated  herein by
                  reference  to the section  captioned  "Voting  Securities  and
                  Security Ownership" in the Proxy Statement.

         (C)      CHANGES IN CONTROL

                  The Company is not aware of any  arrangements,  including  any
                  pledge  by  any  person  of  securities  of the  Company,  the
                  operation of which may at a subsequent date result in a change
                  in control of the Company.


                                       81
<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

     The information  required by this item is incorporated  herein by reference
to the section captioned "Transactions with Management" in the Proxy Statement.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------

          (a)  LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
               ----------------------------------------------

              (1) Financial  Statements.  The following  consolidated  financial
statements are filed under Item 8 hereof:

               Report of Independent Auditors

               Consolidated  Statements  of  Condition  at December 31, 2000 and
               1999

               Consolidated  Statements of Income for Each of the Three Years in
               the Period Ended December 31, 2000

               Consolidated  Statements of Shareholders'  Equity for Each of the
               Three Years in the Period Ended  December  31, 2000

               Consolidated Statements of Cash Flows for Each of the Three Years
               in the Period Ended December 31, 2000

               Notes to Consolidated Financial Statements

              (2)  Financial  Statement  Schedules.   All  schedules  for  which
provision  is made in the  applicable  accounting  regulations  are  either  not
required under the related instructions or are inapplicable,  and therefore have
been omitted.

             (3)  Exhibits.  The following is a list of exhibits as part of this
Report and is also the Exhibit Index.

              NO.      DESCRIPTION
              --       -----------

              3        Ameriana Bancorp Articles of Incorporation and Bylaws
                       -- incorporated  herein by reference to the Company's
                       Registration Statement on Form S-4 filed with the SEC
                       on September 18, 1989

              10.1*    Ameriana Bancorp 1987 Stock Option Plan  incorporated
                       herein by  reference  to the  Company's  Registration
                       Statement on Form S-8 filed with the SEC on March 30,
                       1990;


                                       82
<PAGE>


                       other  option   agreements  with  Charles  M. Drackett,
                       Jr., Michael E. Kent and Ronald R. Pritzke incorporated
                       herein by  reference  to the  Company's Registration
                       Statement on Form S-8 filed with the SEC on May 17, 1996

              10.2*    Ameriana  Bancorp  1996 Stock  Option  and  Incentive
                       Plan,  as amended in 1998 --  incorporated  herein by
                       reference to the Company's Annual Report on Form 10-K
                       filed with the SEC on March 30, 1999

              10.3*    Employment  Agreement,  dated February 26, 2001, between
                       Ameriana Bank & Trust and Harry J. Bailey

              10.4*    Employment  Agreement,  dated  February  26,  2001,
                       between  Ameriana  Bank & Trust and Timothy G. Clark

              10.5*    Employment  Agreement,  dated  February  26,  2001,
                       between  Ameriana  Bank & Trust and Richard E. Welling

              10.6*    Ameriana Bank of Indiana,  F.S.B.  Director  Supplemental
                       Retirement  Program  Director Agreement --  incorporated
                       herein by reference to the  Company's  Annual Report on
                       Form 10-K filed with the SEC on March 30, 2000

              10.7*    Ameriana Bank of Indiana,  F.S.B.  Director  Supplemental
                       Retirement Program Director Agreement, dated June 4, 1999
                       between  Ameriana Bank of Indiana,  F.S.B.  and Paul W.
                       Prior -- incorporated herein by reference to the
                       Company's  Annual Report on Form 10-K filed with the SEC
                       on March 30, 2000

              10.8*    Executive  Supplemental  Retirement Plan Agreement, dated
                       May 6, 1999, between Ameriana Bank of Indiana, F.S.B. and
                       Harry J. Bailey -- incorporated  herein by reference to
                       the Company's Annual Report on Form 10-K filed with the
                       SEC on March 30, 2000

              10.9*    Executive  Supplemental  Retirement Plan Agreement, dated
                       May 6, 1999, between Ameriana Bank of Indiana, F.S.B. and
                       Timothy G. Clark

              10.10*   Executive  Supplemental  Retirement Plan Agreement, dated
                       May 6, 1999, between Ameriana Bank of Indiana, F.S.B. and
                       Richard E. Welling

              10.11*   Change-in-Control Severance Agreement, dated February
                       26, 2001,  between Ameriana Bank and Trust and Nancy A.
                       Rogers

              10.12*   Change-in-Control Severance Agreement, dated February
                       26, 2001, between Ameriana Bank and Trust and Ralph E.
                       Kerwin

                                       83
<PAGE>

              10.13*   Change-in-Control Severance Agreement, dated February
                       26, 2001,  between Ameriana Bank and Trust and Jan F.
                       Wright

              21       Subsidiaries

              23       Consent of Olive LLP
     _________
     * Management contract or compensation plan or arrangement.


     (b) REPORTS ON FORM 8-K. The Company did not file a Current  Report on Form
         -------------------
8-K during the fourth quarter of the fiscal year covered by this Report.

     (c)  EXHIBITS.  The  exhibits  required by Item 601 of  Regulation  S-K are
          --------
either filed as part of this Report or incorporated by reference herein.

     (d) FINANCIAL  STATEMENTS AND SCHEDULES EXCLUDED FROM ANNUAL REPORT.  There
         ---------------------------------------------------------------
are no other financial  statements and financial statement schedules required by
Regulation  S-X which  are  excluded  from the  Annual  Report  to  Stockholders
pursuant to Rule 14a-3(b)(1) which are required to be included herein.


                                       84
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  as of the date set
forth below.

                                    AMERIANA BANCORP


Date:    March 27, 2001             By:/s/ Harry J. Bailey
                                       ----------------------------------------
                                       Harry J. Bailey
                                       President and Chief Executive Officer
                                       (Duly Authorized Representative)



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
in the capacities indicated as of the date set forth above.


By:                                       By:/s/ Harry J. Bailey
    --------------------------------         -----------------------------------
    Paul W. Prior                            Harry J. Bailey
    Chairman of the Board and                President, Chief Executive Officer
    Director                                 and Director
                                             (Principal Executive Officer)


By: /s/ Richard E. Welling                By:
    --------------------------------         -----------------------------------
    Richard E. Welling                       Donald C. Danielson
    Senior Vice President - Treasurer        Director
    (Principal Financial and Accounting
    Officer)


By: /s/ Charles M. Drackett, Jr.          By:/s/ R. Scott Hayes
    --------------------------------         -----------------------------------
    Charles M. Drackett, Jr.                 R. Scott Hayes
    Director                                 Director


By: /s/ Michael E. Kent                   By:/s/ Ronald R. Pritzke
    --------------------------------         -----------------------------------
    Michael E. Kent                          Ronald R. Pritzke
    Director                                 Director