SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                       _________________________________

                                   FORM 10-K

            [ X ]  Annual Report Pursuant to Section 13 or 15(d) of
               the Securities Exchange Act of 1934 (fee required)
                    For the fiscal year ended: June 30, 1998
                                       or
           [  ]  Transition Report Pursuant to Section 13 or 15(d) of
             the Securities Exchange Act of 1934 (no fee required)
                For the Transaction period from  ____ to _____.
                       _________________________________

Commission File No. 0-22880

                            Fidelity Federal Bancorp
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        Indiana                                                35-1894432
----------------------------                              -------------------
(State of other jurisdiction                               (I.R.S. Employer
    of Incorporation or                                   Identification No.)
       Organization)

  700 S. Green River Road, Suite 2000, PO Box 5584, Evansville, Indiana 47715
  ---------------------------------------------------------------------------
        (Address of principal executive offices)            (Zip Code)

       Registrant's Telephone number, including area code (812) 469-2100
                                                          --------------

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

          Securities registered pursuant to Section 12 (g) of the Act:
                         Common Stock, $1 Stated Value
                         -----------------------------
                                (Title of Class)

                      DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the Registrant's 1998 Annual Report to Stockholders for the year
        ended June 30, 1998 are incorporated by reference into Part II.

                          Exhibit index is on page 29

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

Indicate by checkmark 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 the 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 voting stock held by non-affiliates of the
Registrant (for purposes of such calculation, includes persons who are not
directors, executive officers, or holders of more than 10% of the registrant's
common stock) based on the average bid and asked prices of such stock at
September 17, 1998 was approximately $8,056,148.

Indicated below is the number of shares outstanding of each of the registrant's
classes of common stock as of September 17, 1998.

                        Common Stock - 3,127,208 shares
<PAGE>

                           FIDELITY FEDERAL BANCORP


                                    Index

PART I
                                                                          Page
                                                                          ----

ITEM 1     -     Business                                                    3
ITEM 2     -     Properties                                                 12
ITEM 3     -     Legal Proceedings                                          13
ITEM 4     -     Submission of Matters to a Vote of Security Holders        13

PART II

ITEM 5     -     Market for Registrant's Common Equity
                    and Related Stockholder Matters                         13
ITEM 6     -     Selected Financial Data                                    13
ITEM 7     -     Management's Discussion and Analysis of
                    Financial Condition and Results of Operations           13
ITEM 8     -     Financial Statements and Supplementary Data                13
                 Consolidated Balance Sheet                                 13
                 Consolidated Statement of Income                           13
                 Consolidated Statement of Stockholders' Equity             13
                 Consolidated Statement of Cash Flows                       13
                 Notes to Consolidated Financial Statements                 13
                 Report of Independent Auditors                             13
ITEM 9     -     Changes in and Disagreements with Accountants
                    on Accounting and Financial Disclosures                 13

PART III

ITEM 10     -    Directors and Executive Officers of the Registrant         14
ITEM 11     -    Executive Compensation                                     15
ITEM 12     -    Security Ownership of Certain Beneficial
                    Owners and Management                                   22
ITEM 13     -    Certain Relationships and Related Transactions             24

PART IV

ITEM 14     -    Exhibits, Financial Statement Schedules and Reports
                    on Form 8-K                                             26

SIGNATURES                                                                  28

                                       2
<PAGE>

                                     PART I
                                     ------

ITEM 1.  BUSINESS
-------

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Annual Report on Form 10-K are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects", "estimates" or words of similar import. Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which are described inclose proximity to such
statements and which could cause actual results to differ materially from those
anticipated as of the date of this report. Shareholders, potential investors and
other readers are urged to consider these factors in evaluating the
forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included herein are
only made as of the date of this report and the Company undertakes no obligation
to publicly update such forward-looking statements to reflect subsequent events
or circumstances.

OVERVIEW

     Fidelity Federal Bancorp (the "Company") formed in 1993, is a corporation
organized under the laws of the State of Indiana and is a registered savings and
loan holding company, with its principal office in Evansville, Indiana. The
Company's savings and loan subsidiary, United Fidelity Bank, fsb (the "Savings
Bank"), organized in 1914, is a federally-chartered stock savings bank located
in Evansville, Indiana. In 1992, the Board of Directors developed and began
implementation of a new business plan for the Savings Bank to improve the
financial performance of the organization. The key elements of this business
plan included: (i) the formation of a holding company to provide financial
flexibility and to develop and engage in nonbanking businesses; (ii) the
formation of an affordable housing group to engage in real estate development,
management and financing of affordable housing projects; and (iii) the growth of
assets through the origination and acquisition of loans. After the
implementation of the business plan, the holding company as well as an
affordable housing group, consisting of three nonbank subsidiaries of the
Savings Bank, was formed. Revenue generated from affordable housing activities
increased dramatically and significant asset growth was achieved, also resulting
in higher revenues. To conserve capital, the Company slowed its growth in fiscal
1996 and positioned the Company to reduce debt, increase core deposits, sell
loans, and use the proceeds to fund new loan production. During fiscal 1996 the
Company encountered increasing competition in the affordable housing group
activities. As a result the Company reevaluated its business plan in fiscal 1997
and closed its Indianapolis, Indiana real estate development office. This
process was completed in the fourth quarter of fiscal 1997. As a result of this,
Village Community Development Corporation, reduced and then subsequently
eliminated its activities. Due to the increased competition in the affordable
housing segment mentioned above and a change in the business plan, the Company
initiated a cost reduction program in the third quarter of fiscal 1997 which was
completed early in the fourth quarter. The cost reduction program called for the
Company to work toward achieving optimum efficiency within its operating units
by eliminating duplicative and less profitable activities. During fiscal 1998
the Office of Thrift Supervision ("OTS"), performed an examination on the
Company's savings bank, United Fidelity Bank and the Parent Company, Fidelity
Federal Bancorp. During the examination the OTS used a different methodology to
compute the allowance for loan losses and to establish reserves for letters of
credit in connection with the Section 42 projects than the methodology
previously used by the Company to compute these estimates. The OTS's methodology
was accepted by management and resulted in an additional provision for loan
losses of $3.6 million and a letter of credit valuation allowance of $6.8
million. The Company is pursuing a plan to refinance its Section 42 projects
which, if successful, could result in the reversal of a portion of these
charges. The availability of such refinancing depends upon numerous factors,
including among other things, interest rates, third-party appraisals and the
occupancy levels in the Section 42 projects. The Company continues toward
increasing the profitability of core banking activities and to increase earnings
in the subsidiaries.

     The Company, through its savings bank subsidiary, is engaged in the
business of obtaining funds in the form of savings deposits and other borrowings
and investing such funds in consumer loans, multi-family loans, commercial
loans, and mortgage loans, primarily owner occupied one-to-four family homes
located in Indiana, and in investment and money market securities. The Company
had engaged previously in the business of financing, owning, developing,
building, renting and managing affordable housing projects through its Savings

                                       3
<PAGE>

Bank wholly-owned subsidiaries, Village Management Corporation, Village
Community Development Corporation and Village Housing Corporation (collectively,
the "Affordable Housing Group"). The Affordable Housing Group structures and
participates in multifamily housing developments which have been granted tax
credits pursuant to Section 42 of the Internal Revenue Code of 1986, as amended
(the "Code") and tax-exempt bond financed developments. Village Housing
Corporation, as general partner to limited partnerships which own the
developments, receives a percentage interest in the profits, losses and tax
credits during the life of the project and receives a percentage of the annual
cash flow and residual (sale or refinancing) proceeds during operation and at
disposition or refinancing of the developments, respectively. Village Community
Development Corporation, as contractor and developer, received construction and
development fees as the project is completed. Village Management Corporation, as
manager of the completed project, receives a fee based on a percentage of rental
payments received from the project's tenants. As part of Village Management's
duties as project manager, it monitors compliance with the requirements of the
Code to prevent recapture of all or a portion of the tax credits or forfeiture
of the tax-exempt status of the bonds which would occur if certain tenant
eligibility and rent restriction requirements were violated. The Company remains
active in the Village Housing Corporation and Village Management Corporation,
however, Village Community Development Corporation has discontinued its
activities. Village Capital Corporation ("VCC"), another subsidiary of the
Savings Bank has packaged loan requests for developers of multifamily
residential real estate projects eligible for federal tax credits and tax exempt
financing. While most of the loans packaged to date have been referred to the
Savings Bank for origination, VCC also packages loan transactions for other
lenders, if the opportunity arises. VCC has earned fees by providing real estate
mortgage banking and consulting services to unaffiliated borrowers. The Savings
Bank, as lender, can earn points and interest on loans made to developers. The
Savings Bank's credit decisions are subject to applicable OTS restrictions on
loans of this type.

     The final subsidiary of the Savings Bank, Village Insurance Corporation, is
engaged in the business of selling credit life insurance, as well as accident
and health insurance, to the Savings Bank's loan customers.

     A second subsidiary of the Company, Village Securities Corporation, a
discount brokerage service, began operations in July 1997.

     Finally a third subsidiary, Village Affordable Housing Corporation was
formed in fiscal 1998, but is not yet operational. This company was formed to
hold an interest in a housing partnership that was initially financed by United
Fidelity Bank.

     The Company had consolidated total assets of $197.0 million and total
shareholders' equity of $7.5 million as of June 30, 1998.

The Company's subsidiaries at June 30, 1998, are listed below:

<TABLE>
<CAPTION>

SUBSIDIARY                                     PRINCIPAL OFFICE       YEAR ORGANIZED       ASSETS (in thousands)

<S>                                             <C>                        <C>                    <C>
1.  United Fidelity Bank, fsb                   Evansville, IN             1914                   $190,000

Subsidiaries of United Fidelity Bank, fsb:
    Village Capital Corporation                 Evansville, IN             1994                      1,113
    Village Insurance Corporation               Evansville, IN             1980                         75
    Village Management Corporation              Evansville, IN             1992                        308
    Village Community Development
       Corporation                              Evansville, IN             1992                      5,340
    Village Housing Corporation                 Evansville, IN             1992                      4,072


2.  Village Securities Corporation              Evansville, IN             1994                        122
3.  Village Affordable Housing Corporation      Evansville, IN             1998                          1

</TABLE>

       The Company's home office is located at 700 S. Green River Road, Suite
2000, Evansville, Indiana, 47715 and its telephone number is (812) 469-2100.

                                       4
<PAGE>

COMPETITION

     The Company and the Savings Bank faces strong direct competition for
deposits, loans and other financial-related services. The Savings Bank competes
in Indiana, Kentucky and Illinois with the other thrifts, commercial banks,
credit unions, stockbrokers, finance companies and insurance companies. Some of
these competitors are local, while others are statewide or national. The Savings
Bank competes for deposits principally by offering depositors a variety of
deposit programs, convenient office locations, hours and other services, and for
loan originations primarily through competitive interest rates and fees, the
efficiency and quality of service provided and the variety of loan products
offered. Some of the non-bank financial institutions and financial services
organizations with which the Savings Bank competes are not subject to the same
degree of regulation as that imposed on federal savings banks, thrifts, or
thrift-holding companies. As a result, such competitors may have advantages over
the Savings Bank in providing certain services. As of September 30, 1998,
approximately 4 banks, 3 thrifts, and 12 credit unions operated in the
Evansville, Indiana metropolitan area, which is the Savings Bank's principal
deposit market area. The Savings Bank is currently the second largest thrift in
this market. Many competitors are substantially larger or have significantly
greater capital resources than the Savings Bank. Due to recently enacted
legislation to allow unlimited interstate branching, the Company and the Savings
Bank may experience heightened competition from existing competitors and other
major financial institutions seeking to expand their regional banking presence
in Indiana. The Company has discontinued development activities pertaining to
the affordable housing industry and multifamily development in part because of
increased levels of competition.

REGULATION OF THE COMPANY

     The Company is a savings and loan holding company within the meaning of the
Home Owners' Loan Act of 1933 ("HOLA"), as amended. The Company is registered
with the Office of Thrift Supervision ("OTS") and is subject to OTS regulations,
examinations, supervision and reporting requirements. As a subsidiary of a
savings and loan holding company, the Savings Bank is subject to certain
restrictions in its dealings with the Company and with other companies
affiliated with the Company.

     The HOLA generally prohibits a savings and loan holding company, without
prior approval of the Director of the OTS, from (i) acquiring control of any
other savings association or savings and loan holding company or controlling the
assets thereof; or (ii) acquiring or retaining more than 5% of the voting shares
of a savings association or holding company thereof which is not a subsidiary of
such savings and loan holding company. Except with the prior approval of the
Director of the 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 association, or any other savings and loan holding company.

     The Company operates as a unitary savings and loan holding company. There
are generally no restrictions on the activities of a unitary savings and loan
holding company. However, if the Director of the OTS determines that there is
reasonable cause to believe that the continuation by a savings and loan holding
company of an activity constitutes a serious risk to the financial safety,
soundness, or stability of its subsidiary savings association, the Director of
the OTS may impose such restrictions as deemed necessary to address such risk
and limit (i) payment of dividends by the savings association, (ii) transactions
between the savings association and its affiliates, and (iii) any activities of
the savings association that might create a serious risk that the liabilities of
the holding company and its affiliates may be imposed on the savings
association.

     Notwithstanding the above rules as to permissible business activities of
unitary savings and loan holding companies, if the savings association
subsidiary of such a holding company fails to meet the Qualified Thrift Lender
Test ("QTL test"), as discussed below, then such unitary holding company would
become subject to the activities restrictions applicable to multiple savings and
loan holding companies. Additional restrictions on the savings association's
ability to obtain advances from the FHLB also apply.

     If the Company were to acquire control of another savings association,
other than through merger or other business combinations with the Savings Bank,
the Company would thereupon become a multiple savings and loan holding company.
Except where such acquisition is pursuant to the authority of the OTS to approve

                                       5
<PAGE>

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

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

     Indiana law permits federal and state savings association holding companies
with their home offices located outside of Indiana to acquire savings
associations whose home offices are located in Indiana and savings and loan
holding companies with their principal place of business in Indiana ("Indiana
Savings and Loan Holding Companies") upon receipt of approval by the Indiana
Department of Financial Institutions. Moreover, Indiana Savings and Loan Holding
Companies may acquire savings associations with their home offices located
outside of Indiana and savings association holding companies with their
principal place of business located outside of Indiana upon receipt of approval
by the Indiana Department of Financial Institutions.

     Subject to certain exceptions, commonly controlled banks and savings
associations must reimburse the Federal Deposit Insurance Corporation ("FDIC")
for any losses suffered in connection with a failed bank or savings association
affiliate. Institutions are commonly controlled if one is owned by another or if
both are owned by the same holding company. Such claims by the FDIC under this
provision are subordinate to claims of depositors, secured creditors, and
holders of subordinated debt, other than affiliates.

SAVINGS BANK REGULATION

     General. As a federally chartered, SAIF-insured savings association, the
Savings Bank is subject to extensive regulation by the OTS and the FDIC. The OTS
periodically examines the books and records of the Savings Bank and, in
conjunction with the FDIC in certain situations, has examination and enforcement
powers. This supervision and regulation are intended primarily for the
protection of depositors and federal deposit insurance funds.

     The Savings Bank is also subject to federal and state regulation as to such
matters as loans to officers, directors, or principal shareholders, required
reserves, limitations as to the nature and amount of its loans and investments,
regulatory approval of any merger or consolidation, issuance or retirements of
its securities, and limitations upon other aspects of banking operations. In
addition, its activities and operations are subject to a number of additional
detailed, complex and sometimes overlapping federal and state laws and
regulations. These include state usury and consumer credit laws, state laws
relating to fiduciaries, the Federal Truth-In-Lending Act and Regulation Z, the
Federal Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting
Act, the Community Reinvestment Act, anti-redlining legislation and antitrust
laws.

     In May 1998 the United States House of Representatives passed financial
reform legislation. The legislation is intended to break down barriers between
banking, securities and insurance activities, while continuing to restrict
commercial activity by banks. The bill also restricts the potential acquirers of
unitary thrift holding

                                       6
<PAGE>

companies. The Senate and the House must still agree on various aspects of the
legislation and therefore, no assurance can be given as to whether or in what
form the legislation will be enacted or its effect on the Company and the
Savings Bank. Any changes in legislation or regulations, whether by legislation
or regulatory action, could have a material impact on the Savings Bank and its
operations. Neither the Company nor the Savings Bank can predict what, if any,
future actions may be taken by legislative or regulatory authorities or what
impact any such actions may have on the operations of the Company or the Savings
Bank.

     Qualified Thrift Lender Requirement. In order for the Savings Bank to
exercise the powers granted to federally-chartered savings associations and
maintain full access to FHLB advances, it must be a "qualified thrift lender"
("QTL"). A savings association is a QTL if its qualified thrift investments
equal or exceed 65% of the savings association's portfolio assets on a monthly
basis in 9 out of every 12 months. Qualified thrift investments generally
consist of (i) various housing related loans and investments (such as
residential construction and mortgage loans, home improvement loans,
manufactured housing loans, home equity loans and mortgage-backed securities),
(ii) certain obligations of the FSLIC, the FDIC, the FSLIC Resolution Fund and
the Resolution Trust Corporation (for limited periods), and (iii) shares of
stock issued by any Federal Home Loan Bank, the Federal Home Loan Mortgage
Corporation or the Federal National Mortgage Association. At June 30, 1998, the
qualified thrift investment percentage test for the Savings Bank was 93.40%.

     Liquidity. Under applicable federal regulations, savings associations are
required to maintain an average daily balance of liquid assets (including cash,
certain time deposits, certain banker's acceptances, certain corporate debt
securities and highly rated commercial paper, securities of certain mutual funds
and specified United States government, state or federal agency obligations) of
not less than 4% of the average daily balance of the savings association's net
withdrawable deposits plus short-term borrowing during the preceding calendar
month. Under HOLA, this liquidity requirement may be changed from time to time
by the Director of the OTS to any amount within the range of 4% to 10%,
depending upon economic conditions and the deposit flows of member associations.
At June 30, 1998, the Savings Bank was in compliance with these liquidity
requirements, at 6.70%.

     Loans-to-One-Borrower Limitations. HOLA generally requires savings
associations to comply with the loans-to-one-borrower limitations applicable to
national banks. In general, national banks may make loans to one borrower in
amounts up to 15% of the bank's unimpaired capital and surplus, plus an
additional 10% of capital and surplus for loans secured by readily marketable
collateral. At June 30, 1998, the Savings Bank's loan-to-one-borrower limitation
was approximately $3.0 million and no loans to a single borrower exceeded that
amount, except as provided herein. Under certain conditions, a savings
association may make loans to one borrower for residential housing developments
in amounts up to 30% of the bank's unimpaired capital and surplus provided that
all loans made in reliance upon the increased lending limit do not, in the
aggregate, exceed 150% of the bank's unimpaired capital and surplus. At June 30,
1998, the Savings Bank had made $12.3 million in such loans under this higher
lending limit.

     Commercial Real Property Loans. HOLA limits the aggregate amount of
commercial real estate loans that a federal savings association may make to an
amount not in excess of 400% of the savings association's capital.

     Limitation on Capital Distributions. The OTS regulations impose limitations
on capital distributions by savings associations. Under the rule, a savings
association is classified as a tier 1 institution, a tier 2 institution, or a
tier 3 institution, depending on its level of regulatory capital both before and
after giving effect to a proposed capital distribution. A tier 1 institution may
generally make capital distributions in any calendar year up to 100% of its net
income to date during the calendar year plus the amount that would reduce by
one-half its "surplus capital ratio" (i.e., the percentage by which the
association's capital-to-assets ratio exceeds the ratio of its capital
requirements to its assets) at the beginning of the calendar year. No regulatory
approval of the capital distribution is required, but prior notice must be given
to the OTS. Restrictions exist on the ability of tier 2 and tier 3 institutions
to make capital distributions. Also, the OTS may prohibit any capital
distribution otherwise permitted if such distribution would constitute an unsafe
or unsound practice, such as a proposed distribution by an institution whose
capital is decreasing because of substantial losses or by an institution that is
in need of more than normal supervision.

Insurance of Deposits.

     Deposit Insurance. The FDIC is an independent federal agency that insures
the deposits, up to prescribed statutory limits, of banks and thrifts and
safeguards the safety and soundness of the banking and thrift industries.

                                       7
<PAGE>

The FDIC administers two separate insurance funds, the Bank Insurance Fund (the
"BIF") for commercial banks and state savings banks and the SAIF for savings
associations such as the Savings Bank. The FDIC is required to maintain
designated levels of reserves in each fund.

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

     On September 30, 1996, President Clinton signed into law legislation which
included provisions designed to recapitalize the SAIF and eliminate the
significant premium disparity between the BIF and the SAIF. Under the new law,
the Savings Banks was charged a one-time special assessment equal to $.657 per
$100 in assessable deposits at March 31, 1995. The Savings Bank recognized this
one-time assessment as a non-recurring operating expense of $1,040,000 ($628,000
after tax) during the three-month period ending September 30, 1996, and paid
this assessment on November 27, 1996. The assessment was fully deductible for
both federal and state income tax purposes. Beginning January 1, 1997, annual
deposit insurance premiums between $0.00 and $0.27 per $100 of deposits are in
effect, based on the assessment determined in accordance with the
risk-assessment system discussed above. The Savings Bank most recently paid
$0.03 per $100 of deposits to comply with this assessment. BIF institutions pay
lower assessments than comparable SAIF institutions because BIF institutions pay
only 20% of the rate being paid by SAIF institutions on their deposits with
respect to obligations issued by the federally-chartered corporation which
provided some of the financing to resolve the thrift crisis in the 1980's
("FICO"). The 1996 law also provides for the merger of the SAIF and the BIF by
1999, but not until such time as bank and thrift charters are combined. Until
the charters are combined, savings associations with SAIF deposits may not
transfer deposits into the BIF system without paying various exit and entrance
fees, and SAIF institutions will continue to pay higher FICO assessments. Such
exit and entrance fees need not be paid if a SAIF institution converts to a bank
charter or merges with a bank, as long as the resulting bank continues to pay
applicable insurance assessments to the SAIF, and as long as certain other
conditions are met.

     Community Reinvestment Act. Ratings of depository institutions under the
Community Reinvestment Act of 1977 ("CRA") must be disclosed. The disclosure
includes both a four-tier descriptive rating using terms such as "outstanding,"
"satisfactory," "needs to improve," or "substantial non-compliance" and a
written evaluation of each institution's performance. The Savings Bank received
a satisfactory rating from the OTS in its most recent CRA examination. Also, the
FHLB is required to adopt regulations establishing standards of community
investment and service for members of the FHLB System to meet to be eligible for
long-term advances. Those regulations are required to take into account a
savings association's CRA record and the member's record of lending to
first-time home buyers. The Savings Bank intends to maintain its record of
community lending and to meet or exceed the applicable CRA standards.

     Brokered Deposits. Pursuant to the FDIC regulations, well-capitalized
institutions are subject to no brokered deposits limitations, while adequately
capitalized institutions are able to accept, renew or rollover brokered deposit
only (i) with a waiver from the FDIC, and (ii) subject to certain restrictions
on payment of rates. Undercapitalized institutions are not permitted to accept
brokered deposits and may not solicit deposits by offering an effective yield
that significantly exceeds the prevailing effective yields on insured deposits
of comparable maturity in the institution's normal market area or in which such
deposits are being solicited.

     Enforcement. The OTS has primary enforcement responsibility over savings
associations and has the authority to bring enforcement action against all
"institution-affiliated parties," including stockholders, and any attorneys,
appraisers and accountants who knowingly or recklessly participate in wrongful
action likely to have an adverse effect on an insured institution. Civil
penalties cover a wide range of violations and actions and range up to $25,000
per day unless a finding of reckless disregard is made, in which case penalties
may be as high as $1 million per day. In addition, regulators are provided with
far greater flexibility to impose enforcement action on an institution that
fails to comply with its regulatory requirements, particularly with respect to
the capital requirements. Possible enforcement action ranges from the imposition
of a capital directive to receivership, conservatorship or the termination of
deposit insurance. The FDIC has the authority to recommend to the Director of
OTS that enforcement action to be taken with respect to a particular savings
institution. If action is not taken by the Director, the FDIC has authority to
take such action under certain

                                       8
<PAGE>

circumstances.

     Standards for Safety and Soundness. In 1995 the federal banking agencies
prescribed for all insured depository institutions safety and soundness
standards in the form of guidelines, relating to internal controls, information
systems and audit systems, loan documentation, credit underwriting, interest
rate risk exposure, asset quality and growth, earnings, and compensation, fees
and benefits. If an insured depository institution fails to meet any of the
standards described above, it will be required to submit to the appropriate
federal banking agency a plan specifying the steps that will be taken to cure
the deficiency. If an institution fails to submit an acceptable plan or fails to
implement the plan, the appropriate federal banking agency will require the
institution to comply with the restrictions applicable under the prompt
corrective action provisions of the Federal Deposit Insurance Act.

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

     Prompt Corrective Regulatory Action. The Federal Deposit Insurance Act
("FDI Act") establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, the banking
regulators are required to take certain supervisory actions against
undercapitalized institutions, the severity of which depends upon the
institution's degree of capitalization. Generally, subject to narrow exceptions,
the FDI Act requires the banking regulator to appoint a receiver or conservator
for an institution that is critically undercapitalized. The FDI Act authorizes
the banking regulators to specify the ratio of tangible capital to assets at
which an institution becomes critically undercapitalized and requires that ratio
to be not less than 2% of assets.

     Under the OTS prompt corrective action regulation, generally, a savings
association that has a total risk-based capital of less than 8.0% or a leverage
ratio is less than 4.0% is considered to be undercapitalized. A savings
association that has a total risk-based capital of less than 6.0%, a tier 1
risk-based capital ratio of less than 3%, or a leverage ratio that is less than
3.0% is considered to be "significantly undercapitalized" and a savings
association that has a tangible capital to assets ratio equal to or less than 2%
is deemed to be "critically undercapitalized." Generally, a capital restoration
plan must be filed with the OTS within 45 days of the date an association
receives notice that it is "undercapitalized," "significantly undercapitalized"
or "critically undercapitalized." In addition, numerous mandatory supervisory
actions become immediately applicable to the associations, including, but not
limited to, restrictions on growth, investment activities, capital
distributions, and affiliate transactions. The OTS could also take any one of a
number of discretionary supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and directors.

     Capital Requirements. The Director of the OTS has adopted capital standards
under which savings associations must maintain (i) "core capital" in an amount
not less than 3% of total adjusted assets, (ii) "tangible capital" in an amount
not less than 1.5% of total adjusted assets, and (iii) a level of risk-based
capital equal to 8.0% of risk-weighted assets. The capital standards established
by the OTS for savings associations must generally be no less stringent that
those applicable to national banks.

     Under OTS regulations "core capital" includes common stockholders' equity,
noncumulative perpetual preferred stock and related surplus, and minority
interests in the equity accounts of consolidated subsidiaries, less
nonqualifying intangible assets. In determining compliance with the capital
standards, a savings association must deduct from capital its entire investment
in and loans to any subsidiary engaged in activities not permissible for a
national bank, other than subsidiaries (i) engaged in such non-permissible
activities solely as agent for their customers; (ii) engaged in mortgage banking
activities; or (iii) that are themselves savings associations or companies, the
only investment of which is another savings association, acquired prior to May
1, 1989.

     In determining total risk-weighted assets for purposes of the risk-based
requirement, (i) each off-balance

                                       9
<PAGE>

sheet asset must be converted to its on-balance sheet credit equivalent by
multiplying the face amount of each such item by a credit conversion factor
ranging from 0% to 100% (depending upon the nature of the asset), (ii) the
credit equivalent amount of each off-balance sheet asset and the book value of
each on-balance sheet asset must be multiplied by a risk factor ranging from 0%
to 100% (again depending upon the nature of the asset), and (iii) the resulting
amounts are added together and constitute total risk-weighted assets. Total
capital, for purposes of the risk-based requirement, equals the sum of core
capital plus supplementary capital (which, as defined, includes, among other
items, perpetual preferred stock not counted as core capital, limited life
preferred stock, subordinated debt and general loan and lease loss allowances up
to 1.25% of risk-weighted assets, less certain deductions). The amount of
supplementary capital that may be counted towards satisfaction of the total
capital requirement may not exceed 100% of core capital.

     Capital requirements higher than the generally applicable minimum
requirement may be established for a particular savings association if the OTS
determines that the association's capital was or may become inadequate in view
of its particular circumstances. Individual minimum capital requirements may be
appropriate where the savings association is receiving special supervisory
attention, has a high degree of exposure to interest rate risk, or poses other
safety or soundness concerns.

     In determining compliance with the risk-based capital requirements, a
savings association must determine its interest rate risk and, if such risk
exceeds a certain level, it must deduct an interest rate risk component in
calculating its total capital for purposes of determining whether it meets its
risk-based capital requirements. An association's interest rate risk (IRR) is
measured by the decline in the net portfolio value (NPV) resulting from a 200
basis point increase or decrease in market interest rates, divided by the
estimated economic value of its assets. If an association's measured IRR
exposure exceeds 2%, it must then deduct an IRR component from total capital for
determining its risk-based capital requirement. The IRR component is an amount
equal to one-half the difference between its measured interest rate risk and 2%,
multiplied by the estimated economic value of its total assets.

     The Savings Bank's Subsidiaries. The OTS regulations permit federal savings
associations to invest in the capital stock, obligations or specified types of
securities of subsidiaries (referred to as "service corporations") and to make
loans to such subsidiaries and joint ventures in which such subsidiaries are
participants in an aggregate amount not exceeding 3% of an association's assets,
provided any investment over 2% is used for specified community or inner-city
development purposes. In addition, federal regulations permit associations to
make specified types of loans to such subsidiaries in an aggregate amount not
exceeding 50% of the association's regulatory capital if certain requirements
and conditions are met. The FDIC may, after consultation with the OTS, prohibit
specific activities if it determines such activities pose a serious threat to
SAIF.

     Assessments. Savings associations are required by OTS regulation to pay
assessments to the OTS to fund the operations of the OTS. The general assessment
is computed upon the savings association's total assets, including consolidated
subsidiaries, as reported in the Saving Bank's latest quarterly Thrift Financial
Report. The Savings Bank's total assessment for the year ended June 30, 1998 was
$67,000.

ACQUISITIONS AND BRANCHING

     The Bank Holding Company Act specifically authorizes a bank holding
company, upon receipt of appropriate regulatory approvals, to acquire control of
any savings association or holding company thereof wherever located. Similarly,
a savings and loan holding company may acquire control of a bank. Moreover,
federal savings associations may acquire or be acquired by any insured
depository institution. Regulations promulgated by the Federal Reserve Board
restrict the branching authority of savings associations acquired by bank
holding companies. Savings associations acquired by bank holding companies may
be converted to banks if they continue to pay SAIF premiums, but as such they
become subject to branching and activity restrictions applicable to banks.

     The OTS has adopted regulations which permit nationwide branching to the
extent permitted by federal statute. Federal statutes permit federal savings
associations to branch outside of their home state if the association meets the
domestic building and loan test in ss.7701(a)(19) of the Internal Revenue Code
or the asset composition test of ss.7701(c) of the Internal Revenue Code.
Branching that would result in the formation of a multiple savings and loan
holding company controlling savings associations in more than one state is
permitted if the law of the state in which the savings association to be
acquired is located specifically authorizes acquisitions of its state-chartered
associations by state-chartered associations or their holding companies in the
state where

                                       10
<PAGE>

the acquiring association or holding company is located. Moreover, Indiana banks
and savings associations are permitted to acquire other Indiana banks and
savings associations and to establish branches throughout Indiana.

     Finally, The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Riegle-Neal Act") permits bank holding companies to acquire banks in
other states and, with state consent and subject to certain limitations, allows
banks to acquire out-of-state branches either through merger or de novo
expansion. The State of Indiana enacted legislation establishing interstate
branching provisions for Indiana state-chartered banks consistent with those
established by the Riegle-Neal Act (the "Indiana Branching Law"). The Indiana
Branching Law authorizes Indiana banks to branch interstate by merger or de novo
expansion, provided that such transactions are not permitted to out-of-state
banks unless the laws of their home states permit Indiana banks to merge or
establish de novo banks on a reciprocal basis. The Indiana Branching Law became
effective March 15, 1996.

TRANSACTIONS WITH AFFILIATES

     Pursuant to HOLA, transactions engaged in by a savings association or one
of its subsidiaries with affiliates of the savings association generally are
subject to the affiliate transaction restrictions contained in Sections 23A and
23B of the Federal Reserve Act in the same manner and to the same extent as such
restrictions now apply to transactions engaged in by a member bank or one of its
subsidiaries with affiliates of the member bank. Section 23A of the Federal
Reserve Act imposes both quantitative and qualitative restrictions on
transactions engaged in by a member bank or one of its subsidiaries with an
affiliate, while Section 23B of the Federal Reserve Act requires, among other
things, that all transactions with affiliates be on terms substantially the
same, and at least as favorable to the member bank or its subsidiary, as the
terms that would apply to or would be offered in a comparable transaction with
an unaffiliated party. Section 22(h) of the Federal Reserve Act imposes
restrictions on loans to executive officers, directors, and principal
shareholders. Further, the Federal Reserve Board pursuant to Section 22(h)
requires that loans to directors, executive officers, and principal shareholders
be made on terms substantially the same as offered in comparable transactions to
other persons. The Savings Bank was in compliance with these rules at June 30,
1998.

FEDERAL HOME LOAN BANK SYSTEM

     The Federal Home Loan Bank System consists of 12 regional Federal Home Loan
Banks ("FHLBs"), each subject to supervision and regulation by the Federal
Housing Finance Board (the "FHFB"). The FHLBs provide a central credit facility
for member savings associations. As a member of the FHLB of Indianapolis, the
Savings Bank is required to own shares of capital stock in the FHLB in an amount
at least equal to 1% of the aggregate principal amount of its unpaid residential
mortgage loans, home purchase contracts, and similar obligations at the
beginning of each year, or 1/20 of its advances (borrowings) from the FHLB,
whichever is greater. As of June 30, 1998, the Savings Bank was in compliance
with this requirement.

PERSONNEL

     As of June 30, 1998 the Company had 122 full-time equivalent employees. The
employees are not represented by any collective bargaining unit. The Company
believes its relations with its employees are good.

     The Company maintains group life, hospital, surgical, dental, major
medical, and long-term disability programs for full-time employees. The Company
also participates in a defined benefit pension plan covering all eligible
employees, as well as a defined contribution 401(k) plan.



                                       11
<PAGE>

ITEM 2.  PROPERTIES
-------

     The following table sets forth the location of the Company's savings bank
offices, all of which are owned by the Savings Bank, as well as certain
additional information relating to these offices as of June 30, 1998. The
Savings Bank currently has no plans to sell or close any existing branches.

<TABLE>
<CAPTION>
                                     Year Facility                       Net
Office Location                          Opened                      Book Value
---------------                      -------------                   ----------
<S>                                       <C>                        <C>
Home Office                               1974                       $1,673,000
18 NW Fourth Street
Evansville, IN  47708

Eastside Branch                           1971                        2,324,000
700 S. Green River Rd
Evansville, IN  47715

Northside Branch                          1976                          204,000
4441 First Avenue
Evansville, IN  47710

Westside Branch                           1979                          190,000
4801 W. Lloyd Expressway
Evansville, IN  47712

</TABLE>

     The Company and the other non-bank subsidiaries use the premises of the
Savings Bank's Home office and 2nd floor of the Eastside Branch, for its office
and equipment needs and pays rental fees for such use.




                     (This space intentionally left blank)






                                       12
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS
-------

     Other than as discussed herein there are no material pending legal
proceedings, other than ordinary routine litigation incidental to the
Registrant's business, to which the Registrant or its subsidiaries is a party or
of which any of their property is the subject.

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

     No matter was submitted to a vote of the Registrant's security holders
during the fourth quarter of the fiscal year ended June 30, 1998.

                                    PART II
                                    -------

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

     The discussion concerning the market for the Registrant's common equity and
related shareholder matters under the heading "Market Summary" is included in
the 1998 Annual Report to Stockholders on page 4 and is incorporated herein by
reference. Cash dividends by quarter for the current and previous year appear
under the heading "Quarterly Results of Operations" included in the 1998 Annual
Report to Stockholders on page 11 and is incorporated herein by reference.
Additional information relating to stockholder matters can be found under the
heading "Corporate Information" included in the 1998 Annual Report to
Stockholders on page 58 and is incorporated herein by reference.

ITEM 6.  SELECTED FINANCIAL DATA
-------

     Selected Financial and Other Data included in the 1998 Annual Report to
Stockholders  on page 5 is incorporated herein by reference.

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

     Management's Discussion and Analysis of Financial Condition and Results of
Operation included in the 1998 Annual Report to Stockholders on pages 7 through
26 is incorporated herein by reference.

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

     The discussion concerning quantative and qualitative disclosures about
market risk under the heading "Asset/Liability Management" included in the 1998
Annual Report to Stockholders on pages 25 and 26, and is incorporated herein by
reference.

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

     The financial statements and supplementary data required under this item
are incorporated herein by reference to pages 27 through 57 of the 1998 Annual
Report to Stockholders.

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

         No response to this item is required.


                                       13
<PAGE>

                                    PART III
                                    --------

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

     The following sets forth information as to each Director and each executive
officer of the Company as of June 30, 1998, including their ages, present
principal occupations, other business experience during the last five years,
directorships in other publicly held companies, and the year they were first
elected or appointed to the Board of Directors. Each individual's service with
the Company began at the formation of the Company in 1993, unless otherwise
noted. In addition, all current Directors of the Company are also current
Directors of the Savings Bank.

     There are no arrangements or understandings between any of the Directors,
executive officers or any other person pursuant to which any Director or
executive officer has been selected for his or her respective position.

CURT J. ANGERMEIER  Age- 44, term expires in 2000.
------------------

Mr. Angermeier was appointed to the Board of directors of the Company on March
21, 1996.  Mr. Angermeier is a practicing attorney, concentrating on insurance
law matters.  Mr. Angermeier is a member of the Indiana Bar Association, Indiana
Defense Lawyers Association and the Evansville Bar Association.

WILLIAM R. BAUGH  Age - 77, term expires in 1998.
----------------

Mr. Baugh is a Director of the Company and has been Chairman Emeritus of the
Board of Directors since October 1994. Mr. Baugh served as Chairman of the Board
of Directors of the Company from its formation in 1993 until October 1994. He
has been a Director of the Savings Bank since 1955, was Chairman of the Board of
the Savings Bank from 1979 until October 1994, and was President of the Savings
Bank from 1970 until 1981 and from 1983 until 1986.

BRUCE A. CORDINGLEY  Age - 51, term expires in 1998.
-------------------

Mr. Cordingley is a Director of the Company and served as Chairman of the Board
of Directors from October 1994 until April 1998, and served as Chief Executive
Officer of the Company from June 1995, to March 1996. He continues to serve as a
Director of the Company and in the other positions discussed below.

Mr. Cordingley is a Director of Village Management Corporation, Village
Community Development Corporation, and Village Housing Corporation (the three
service corporation subsidiaries of the Savings Bank previously involved in the
development and currently involved in the management of affordable housing
units) and Village  Insurance Corporation.  Mr. Cordingley has been a Director
of the Savings Bank since 1992.  Mr. Cordingley is an attorney and was a partner
in the law firm of Ice Miller Donadio and Ryan in Indianapolis, Indiana, from
1973 to February 1992. Mr. Cordingley is President of Pedcor Investments, a
Limited Liability Company, located in Indianapolis, Indiana, the principal
business of which is real estate oriented investments and developments.  Mr.
Cordingley is also a Director of International City Bank, N.A. (Long Beach,
California).

JACK CUNNINGHAM  Age - 68, term expires in 1999.
---------------

Mr. Cunningham is a Director of the Company and has served as Chairman and
Secretary of the Company and the Savings Bank since April 1998. He served as
President of the Company from May 1994 through October 1994 and as President of
the Savings Bank from May 1994 through December 1994. Mr. Cunningham again
served as President and CEO of the Savings Bank from March 1997 until January
1998. Mr. Cunningham is Chairman of the Board of Village Management Corporation,
Village Capital Corporation, Village Community Development Corporation, and
Village Housing Corporation (the three service corporation subsidiaries of the
Savings Bank previously involved in the development and currently the management
of affordable housing units) and Village Insurance Corporation. Mr. Cunningham
has been a Director of the Savings Bank since 1985 and an officer of the Savings
Bank since 1974.

                                       14
<PAGE>

M. BRIAN DAVIS  Age - 43, term expires in 1998.
--------------

Mr. Davis is a Director of the Company and has served as its President and Chief
Executive Officer since November 1996.  Mr. Davis is also a Director of the
Savings Bank and has served as its Chief Executive Officer since January 1998.
Mr. Davis previously served as Chief Operating Officer of the Company from June
1995 to November 1996. Mr. Davis is also a Director of Village Management
Corporation, Village Community Development Corporation, and Village Housing
Corporation (the three service corporation subsidiaries of the Savings Bank
previously involved in the development and currently involved in the management
of affordable housing units).  Mr. Davis is the President of Village Management
Corporation, Village Insurance Corporation, Village Community Development
Corporation, Village Housing Corporation, VCC and Village Securities
Corporation.  Mr. Davis has been a Director of the Savings Bank since 1992.  Mr.
Davis is a partner in the Davis Brothers Real Estate  Partnership, located in
Evansville, Indiana, which has developed and managed commercial real estate
throughout the Midwest.  He is also currently President of Southern Investment
Corporation, a real estate investment company.

ROBERT F. DOERTER   Age - 78, term expires in 1999.
-----------------

Mr. Doerter is a Director of the Company, and has been a Director of the Savings
Bank since 1968.  Mr. Doerter is currently retired.

BARRY A. SCHNAKENBURG  Age - 50, term expires in 2000.
---------------------

Mr. Schnakenburg is a Director of the Company.  He has been a Director of the
Savings Bank since 1990.  Mr. Schnakenburg currently serves as a Director of VCC
and as a Director and the Executive Vice-President and Chief Operating Officer
of Village Insurance Corporation.  Mr. Schnakenburg has served as the President
of U.S. Industries Group, Inc. for the past 10 years.  U.S. Industries Group,
Inc. is a sheet metal and roofing contractor located in Evansville, Indiana.

DONALD R. NEEL  Age - 35, term expires in 2000.
--------------

Mr. Neel is a Director of the Company and serves as Executive Vice-President,
Chief Financial Officer, and Treasurer of the Company and as Executive Vice
President and Chief Operating Officer of the Savings Bank. Mr. Neel also serves
as Treasurer of Village Management Corporation, Village Insurance Corporation,
and as Executive Vice President and Treasurer of VCC and as Senior Vice
President and Treasurer of Village Securities Corporation, Village Community
Development Corporation and Village Housing Corporation. Prior to joining the
Savings Bank and the Company in 1993, Mr. Neel served as Vice-President and
Controller of INB Banking Company, Southwest (successor to Peoples Bank) from
May 1987 through April 1993.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

     Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Company common stock and other
equity securities of the Company. Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the best knowledge of the Company,
during the most recent fiscal year ended June 30, 1998, there were no late
filings with respect to the Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners.


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

FIVE-YEAR TOTAL SHAREHOLDER RETURN

                                       15
<PAGE>

     The following indexed graph indicates the Company's total return to its
shareholders on its common stock for the past five years, assuming dividend
reinvestment, as compared to total return for the NASDAQ Market Index and the
Peer Group Index (which is a line-of-business index prepared by an independent
third party consisting of savings and loan holding companies or federally
chartered savings institutions with the same SIC number as the Company and which
have been publicly traded for at least six years). The comparison of total
return on investment for each of the periods assumes that $100 was invested on
July 1, 1993, in each of the Company, the NASDAQ Market Index the Peer Group
Index. The period prior to November 8, 1993 (the date the Company became the
sole shareholder of the Saving Bank pursuant to a reorganization in which the
Company exchanged one share of its common stock for each one share of common
stock of the Savings Bank outstanding) reflects the stock of the Savings Bank.

                   Comparative 5-Year Cumulative Total Return
                         Among Fidelity Federal Bancorp
                     NASDAQ Market Index and SIC Code Index

                                    [Graph]

                     Assumes $100 Invested on July 1, 1993
                          Assumes Dividends Reinvested
                        Fiscal Year Ending June 30, 1998
<TABLE>
<CAPTION>
                         1993     1994      1995      1996      1997      1998
                         ----     ----      ----      ----      ----      ----
<S>                      <C>     <C>       <C>       <C>       <C>       <C>
NASDAQ Market Index      100     109.66    128.61    161.89    195.02    258.52
SIC Code Index           100     116.22    135.42    170.66    267.49    376.54
Fidelity Federal         100     227.89    414.05    430.83    421.20    295.35

</TABLE>

COMPENSATION COMMITTEE REPORT

     Decisions on compensation of the Company's executives are made by the
Executive Committee of the Board of Directors of the Company, which also serves
as the Compensation Committee. All decisions of the Executive Committee relating
to the compensation of the Company's officers are reviewed by the full board.
Set forth below is a report submitted by Messrs. Cordingley, Davis, Cunningham
and Schnakenburg, in their capacity as the Board's Executive Committee,
addressing the Company's compensation policies for 1998 as they affected the
Company's executive officers.

     Compensation Policies Toward Executive Officers.
     -----------------------------------------------

     The Executive Committee's executive compensation policies are designed to
provide competitive levels of compensation to the executive officers and to
reward officers for satisfactory individual performance and for satisfactory
performance of the Company as a whole. There are no established goals or
standards relating to performance of the Company which have been utilized in
setting compensation of individual employees.

     Base Salary.
     -----------

     Each executive officer is reviewed individually by the Executive Committee,
which includes an analysis of the performance of the Company. In addition, the
review includes, among other things, an analysis of the individual's performance
during the past fiscal year, focusing primarily upon the following aspects of
the individual's job or characteristics of the individual exhibited during the
most recent fiscal year: quality and quantity of work; supervisory skills;
dependability; initiative; attendance; overall skill level; and overall value to
the Company.

     Other Compensation Plans.
     ------------------------

     At various times in the past the Company has adopted certain broad
based employee benefit plans in which the senior executives are permitted to
participate on the same terms as non-executive employees who meet applicable
eligibility criteria, subject to any legal limitations on the amount that may be
contributed or the benefits that may be payable under the plans.

                                       16
<PAGE>

     Benefits.
     --------

     The Company provides medical, defined benefit, and defined contribution
plans to the senior executives that are generally available to the other Company
employees. The amount of perquisites, as determined in accordance with the rules
of the SEC relating to executive compensation, did not exceed 10% of salary and
bonus for fiscal year 1998.

     Mr. Davis' 1998 Compensation.
     ----------------------------

     Regulations of the Securities and Exchange Commission require that the
Executive Committee disclose the Committee's basis for compensation reported for
any individual who served as the Chief Executive Officer during the last fiscal
year.  Mr. Davis' salary is determined in the same manner as discussed above for
other senior executives.  Mr. Davis did not participate in the deliberations of
the Executive Committee with respect to his compensation level.  See
"Compensation Committee Insider Participation."

                Current Members of the 1998 Executive Committee:

                              Bruce A. Cordingley
                                 M. Brian Davis
                                Jack Cunningham
                             Barry A. Schnakenburg


COMPENSATION COMMITTEE INSIDER PARTICIPATION

     During the past fiscal year, Mr. Davis a current officer of the Company,
and Messrs. Cunningham and Cordingley former officers of the Company served on
the Executive Committee. Mr. Davis did not participate in any discussion or
voting with respect to his respective salary as an executive officer and was not
present in the room during the discussion by the Executive Committee of his
compensation.

SUMMARY COMPENSATION TABLE

     The following table sets forth, for the fiscal years ended June 30, 1998,
1997, and 1996, the cash compensation paid by the Company or its subsidiaries,
as well as certain other compensation paid or awarded during those years, to the
Chief Executive Officer of the Company at any time during the fiscal year ended
June 30, 1998 and the executive officers of the Company whose salary and bonus
exceeded $100,000 during the fiscal year ended June 30, 1998.



                                       17
<PAGE>

<TABLE>
<CAPTION>

         SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                      LONG-TERM COMPENSATION
                                                                         -------------------------------------------
                                     ANNUAL COMPENSATION                              AWARDS               PAYOUTS
                        --------------------------------------------------------------------------------------------
Name &                                                       (1) (2)                        Securities                     (3)
Principal                                                  Other Annual     Restricted      Underlying      LTIP        All Other
Position                Year     Salary          Bonus     Compensation    Stock Awards    Options/SARs    Payouts     Compensation
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>      <C>             <C>        <C>                  <C>          <C>             <C>         <C>
M. Brian  Davis         1998     $226,646.05     $0.00      $17,600.00           0            15,000          0           $2,343
President, CEO and      1997     $220,783.00     $0.00      $15,600.00           0              0             0           $1,671
Director                1996     $185,260.00     $0.00      $12,000.00           0              0             0           $    0
-----------------------------------------------------------------------------------------------------------------------------------
Bruce A. Cordingley     1998     $130,903.87     $0.00      $19,200.00           0              0             0           $  784
Chairman and Director   1997     $235,693.00     $0.00      $15,600.00           0              0             0           $2,004
Chairman and            1996     $280,519.00     $0.00      $12,000.00           0              0             0           $1,498
Director
-----------------------------------------------------------------------------------------------------------------------------------
Donald R. Neel          1998     $103,164.00     $0.00      $ 8,400.00           0            7,500           0           $1,547
Exec. Vice-President,
CFO, Treasurer and
Director
===================================================================================================================================
</TABLE>

(1)  While officers enjoy certain perquisites, such perquisites do not exceed
     the lesser of $50,000 or 10% of such office's salary and bonus and are not
     required to be disclosed by applicable rules of the SEC.

(2)  Includes Directors' fees of $19,200 paid to Mr. Cordingley, $17,600 paid to
     Mr. Davis and $8,400 paid to Mr. Neel for the fiscal year end June 30,
     1998.

(3)  Includes Company contributions under the Company's Retirement Savings Plan.

1993 DIRECTORS' STOCK OPTION PLAN

     The 1993 Directors' Stock Option Plan ("Directors Plan") expired on August
1, 1998. It provided for the grant of non-qualified stock options to individuals
who are directors of the Company or any of its subsidiaries to acquire shares of
common stock of the Company for a price of not less than $2 above the average of
the high and low bid quotations as reported by NASDAQ for the common stock of
the Company for the five trading days immediately preceding the date the option
is granted.

     No additional options may be granted under the plan; however outstanding
options shall remain in effect until they have been exercised, terminated,
forfeited, or have expires. As such, options will be outstanding under the
Directors Plan through November 19, 2007. The number of shares and option
exercise prices under the Directors Plan have been adjusted to reflect a twenty
percent stock dividend distributed in 1994, a 2.1 for 1 stock split in 1995, and
a 10% stock dividend in 1996. As of September 30, 1998 there were options for
118,295 shares outstanding.

1995 KEY EMPLOYEES' STOCK OPTION PLAN

     The Key Employees Plan provides for the grant of incentive stock options
and non-qualified stock options to acquire shares of common stock of the Company
for a price of not less than the fair market value of the share on the date
which the option is granted. A total of 236,500 shares was reserved for issuance
under the Key Employees Plan. The option price per share for each incentive
stock option granted to an employee must not be less than the fair market value
of the share of common stock on the date the option is granted. The option price
per share for an incentive stock option granted to an employee owning 10% or
more of the common stock of the Company must not be less than 110% of the fair
market value of the share on the date that the option is granted. The option
price per share for non-qualified stock options will be determined by the
Administrative Committee of the Key Employees' Plan, but may not be less than
100% of the fair market value of a share of common stock on the date of the
grant of the option.

                                       18
<PAGE>

     The Key Employees' Plan will expire on March 15, 2005, except outstanding
options will remain in effect until they have been exercised, terminated,
forfeited, or have expired. As such, options may be outstanding under the Key
Employees' Plan through March 15, 2015. The number of shares and option exercise
prices under the Key Employees' Plan have been adjusted to reflect a 2.1 for 1
stock split in 1995, and a 10% stock dividend in 1996.


                       OPTION GRANTS IN LAST FISCAL YEAR

     The following table provides details regarding stock options granted to
Messrs. Davis and Neel in 1998. In addition, in accordance with the rules of the
Securities and Exchange Commission, there are shown the hypothetical gains or
"options spreads" that would exist for respective options. These gains are based
on assumed rates of annual compound stock price appreciation of five percent
(5%) and ten percent (10%) from the date the options were granted over the full
option term. Gains are reported net of the option exercise price, but before any
effect of taxes. In assessing these values, it should be kept in mind that no
matter what value is placed on a stock option on the date of grant, its ultimate
value will be dependent on the market value of the Company's stock at a future
date, and that value would depend on the efforts of such executive to foster the
future success of the Company for the benefit of all shareholders. The amounts
reflected in the table may not necessarily be achieved.

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS                                                                         POTENTIAL REALIZABLE
                                                                                          VALUE AT ASSUMED ANNUAL
                                                                                          RATE OF
                                                                                          STOCK APPRECIATION
                                                                                          FOR OPTION TERM
-------------------------------------------------------------------------------------------------------------------
Name             Number of       Percent of   Exercise or    Market        Expiration     5%          10%
                 Shares          Total        Base Price     Price on      Date           ($)         ($)
                 underlying      Options      ($/Share)      Date of
                 Options         Granted in                  Grant
                 Granted (#)     Fiscal                      ($/Share)
                                 Year (%)
-------------------------------------------------------------------------------------------------------------------
<S>              <C>             <C>          <C>            <C>           <C>            <C>         <C>

M. Brian Davis   15,000          47.6%        $10.81         $9.81         11/19/07       $101,975    $258,425
-------------------------------------------------------------------------------------------------------------------

Donald R. Neel    7,500          23.8%        $10.81         $9.81         11/19/07       $ 50,988    $129,213
-------------------------------------------------------------------------------------------------------------------

</TABLE>


                                       19
<PAGE>

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
TABLE

     The following table shows for the named executive officers the number of
shares acquired on exercise and shares covered by both exercisable and
non-exercisable stock options as of June 30, 1998. Also reported are the values
for "in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the fiscal year-end price
of Common Stock.

<TABLE>
<CAPTION>

================================================================================================================================
                      AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
--------------------------------------------------------------------------------------------------------------------------------
                      Shares
                   Acquired on           Value               Number of Unexercised                 Value of Unexercised
                     Exercise          Realized                  Stock Options                     in-the-Money Options
     Name              (#)                ($)                       6/30/98                              6/30/98
                                                     ---------------------------------------------------------------------------
                                                        Exercisable     Unexercisable         Exercisable       Unexercisable
--------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>               <C>               <C>              <C>               <C>                   <C>
M. Brian Davis         None              N/A               39,916               0             $11,176 (1)           N/A
                                                           22,176           5,544                 N/A (2)           N/A (2)
                                                            6,000           9,000                 N/A (3)           N/A (3)
--------------------------------------------------------------------------------------------------------------------------------
Bruce A. Cordingley    None              N/A               39,916               0             $11,176 (1)           N/A
--------------------------------------------------------------------------------------------------------------------------------
Donald R. Neel         None              N/A                3,000           4,500                 N/A (3)           N/A (3)
================================================================================================================================
</TABLE>


NOTE:    (1)   The bid value of the Company's Common Stock at June 30, 1998
               ($6.50 per share), less the exercise price ($6.22 per share).

         (2)   The bid value of the Company's Common Stock at June 30, 1998
               ($6.50 per share), was less than the exercise price ($10.60 per
               share).

         (3)   The bid value of the Company's Common Stock at June 30, 1998
               ($6.50 per share), was less than the exercise price ($10.81 per
               share).


OTHER EMPLOYEE BENEFIT PLANS

     Pension Plan
     ------------

     The Company currently participates in a defined benefit pension plan
sponsored by the Financial Institutions Retirement Fund, a non-profit, tax
qualified, tax-exempt pension plan and trust in which Federal Home Loan Banks,
savings and loan association and similar institutions participate ("Pension
Plan"). All employees of the Company or its subsidiaries (which excludes
non-employee Directors of the Company) (i) who have not attained age sixty (60)
prior to being hired and (ii) who work a minimum of 1000 hours per year are
covered by the Pension Plan and become participants upon completion of one year
of service and attainment of age 21. Participants are not required or allowed to
make contributions to the Pension Plan.

     A participant in the Pension Plan is entitled to receive benefits based
upon years of service for the Company or its subsidiaries and a percentage of
the individual's average annual salary during the five (5) consecutive years of
service which produce the highest such average without deduction for Social
Security benefits. For purposes of computing benefits, "salary" includes an
employee's regular base salary or wage inclusive of bonuses and overtime but
exclusive of special payments such as fees, deferred compensation, severance
payments and contributions by the Company to the Pension Plan.

     Participants become fully vested in their benefits after completion of five
(5) years of service. Upon attaining age sixty-five (65), participants become
one hundred percent (100% vested in their benefits provided by the Company under
the Pension Plan, regardless of the number of their years of service. Benefits
are payable at

                                       20
<PAGE>

normal retirement age (age 65). The Pension Plan also contains provisions for
the payment of benefits on the early retirement, late retirement, death or
disability of a participant.

     The regular benefit under the Pension Plan to be paid on a participant's
retirement is a monthly pension for the life of a participant with minimum
guaranteed benefit of twelve (12) times the participant's annual retirement
benefit under the Pension Plan. Thus, the regular form of all retirement
benefits includes not only a retirement allowance, but also a lump sum
retirement death benefit which is twelve (12) times the annual retirement
benefit less the sum of such retirement benefits made before death. The Pension
Plan provides that married participants will receive the regular retirement
benefit in the form of an actuarially equivalent joint and survivor annuity.
Optional forms of payments are available to all participants; however, married
participants must obtain written spousal consent to the distribution of benefits
in a form other than a joint and survivor annuity.

     According to the Pension plan sponsor, the actuaries for the Pension Plan
have determined that no contributions were required to be made to the Pension
Plan by the Company for the plan year ended June 30, 1998.

     The following table shows estimated annual benefits payable at normal
retirement to persons in specified remuneration classifications. The benefit
amounts presented in the totals are annual pension amounts for the life of the
participant, with a minimum guaranteed benefit of twelve (12) times the annual
retirement benefit under the Pension Plan, for a participant at normal
retirement (age 65) with the years of service set forth below with no deduction
for Social Security or other offset amounts. The maximum compensation which may
be taken into account for any purpose under the Pension Plan is limited by the
Internal Revenue Code to $160,000 for 1998.  As of July 1, 1998, M. Brian Davis
had 3 years of service and Donald R. Neel had 5 years of service under the
Pension Plan.

<TABLE>
<CAPTION>

============================================================================================================================
                                            ANNUAL BENEFIT AT NORMAL RETIREMENT
                                                     YEARS OF SERVICE

----------------------------------------------------------------------------------------------------------------------------
Highest Five      10                15               20                25               30                35            40
Year Average      --                --               --                --               --                --            --
Annual Salary
----------------------------------------------------------------------------------------------------------------------------
  <S>           <C>               <C>              <C>               <C>             <C>               <C>           <C>
  $ 50,000      10,000            15,000           20,000            25,000           30,000            35,000        40,000
----------------------------------------------------------------------------------------------------------------------------
  $ 75,000      15,000            22,500           30,000            37,500           45,000            52,500        60,000
----------------------------------------------------------------------------------------------------------------------------
  $100,000      20,000            30,000           40,000            50,000           60,000            70,000        80,000
----------------------------------------------------------------------------------------------------------------------------
  $125,000      25,000            37,500           50,000            62,500           75,000            87,500       100,000
----------------------------------------------------------------------------------------------------------------------------
  $150,000      30,000            45,000           60,000            75,000           90,000           105,000       120,000
----------------------------------------------------------------------------------------------------------------------------
  $175,000      35,000            52,500           70,000            87,500          105,000           122,500       140,000
============================================================================================================================
</TABLE>

     Retirement Savings Plan.
     -----------------------

     In 1994 the Company adopted a defined contribution plan under Internal
Revenue Code Section 401(k) in which substantially all employees may
participate. Under this plan, employees may contribute up to 15% of pay, and
contributions up to 6% are supplemented by Company contributions. Such Company
contributions are made at the rate of 25(cent) for each dollar contributed by
the participant. Participants may elect to have all or a portion of their
contributions made on a tax-deferred basis pursuant to provisions in the plan
meeting the requirements of Section 401(k) of the Internal Revenue Code. The
Company expense for the plan was $19,000 for the fiscal year ended June 30,
1998.

COMPENSATION OF DIRECTORS

      The Directors of the Company and Savings Bank, who are the same
individuals, are compensated for their services in the amount of $1,000 per
month (or $12,000 per year) plus an additional $200 per month if the Director
attends that month's regularly scheduled Board meeting. Executive committee
members receive an extra $400 per

                                       21
<PAGE>

month for their services. The maximum compensation received by any Director for
his or her service on the Board was $19,200 for the current year.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS

     On December 1, 1997, the Company entered into severance agreements with M.
Brian Davis, Donald R. Neel, and Terry G. Johnston, respectively. Each of these
agreements provides that it will terminate on December 1, 1999, but may be
extended annually for an additional year. If not extended, the agreement will
terminate in two years. Each agreement provides that if during the two year
period following a change in control (as defined in the agreement), the
executive is terminated for any reason other than cause (as defined in the
agreement), disability, retirement or death, or if the executive resigns due to
a reduction in his duties or responsibilities, a reduction in his compensation
or benefits, or a requirement that he be based at a location other than
Evansville, the executive is entitled to an amount equal to two times his
average annual base salary and bonus, plus an amount computed by the actuary for
the Company's retirement plan equal to the present value of the executive's
accrued benefit (as defined in the plan) computed as if the executive had
remained employed by the Company for two years after his termination of
employment. In addition, the Company must maintain for the benefit of the
executive for three years following termination all employee welfare plans and
programs in which he was entitled to participate prior to termination, and
reimburse the executive for the cost of obtaining such benefits for the first 24
months following termination. No payments may be made pursuant to the agreement
if such payments would, among other things, be considered by a federal or state
regulatory authority having jurisdiction over the Company an unsafe or unsound
practice.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------

     BENEFICIAL OWNERSHIP

     The following table sets forth information regarding the beneficial
ownership of Common Stock as of September 17, 1998 by the only persons known by
the Company to beneficially own 5% or more of the issued and outstanding shares
of Common Stock.

<TABLE>
<CAPTION>

====================================================================================================
Name and Address of                          Amount and Nature of               Percent of Class
Beneficial Owner                             Beneficial Ownership (1)
----------------------------------------------------------------------------------------------------
<S>                                                <C>                               <C>
Bruce A. Cordingley                                300,567 (2)                        9.46%
8888 Keystone Crossing
Suite 900
Indianapolis, IN 46240
----------------------------------------------------------------------------------------------------
M. Brian Davis                                     775,662 (3)                       24.28%
700 S.  Green River Road, Suite 2000
Evansville, IN 47716-558
----------------------------------------------------------------------------------------------------
Barry A. Schnakenburg                              269,182 (4)                        8.57%
8701 Petersburg Road
Evansville, IN 47711
----------------------------------------------------------------------------------------------------
Rahmi Soyugenc                                     171,720                            5.5%
119 LaDonna Blvd.
Evansville, IN 47711
----------------------------------------------------------------------------------------------------
First Financial Fund, Inc                          202,900 (5)                        6.49%
c/o Wellington Management
75 State St
Boston, MA 02109
----------------------------------------------------------------------------------------------------
Wellington Management                              202,900 (6)                        6.49%
75 State St
Boston, MA 02109
====================================================================================================
</TABLE>

(1)  This information is based on Schedule 13D and 13G Reports filed by the
     beneficial owner with the Securities and Exchange Commission ("SEC")
     pursuant to applicable provisions of the Securities Exchange Act of 1934
     ("Exchange Act"), as of September 17, 1998, and any other information
     provided to the Company by the beneficial owner. It does not reflect any
     changes in those shareholdings which may have occurred since that date.
     Beneficial ownership is direct except as otherwise indicated by footnote.

(2)  Includes 196,683 shares held by Pedcor Investments, A Limited Liability
     Company, as to which Mr. Cordingley is a 47.6% owner and a co-chief
     executive officer and President. Also includes 39,916 shares which Mr.
     Cordingley has the right to acquire pursuant to the exercise of stock
     options granted under the Company's 1993 Director's Stock Options Plan,
     8,587 shares which Mr. Cordingley, Pedcor Investments, and Mr. Cordingley's
     wife are entitled to purchase upon exercise of 31 warrants acquired
     pursuant to the 1994 Rights Offering and also includes 42,966 shares held
     by Gerald Pedigo which is a part of the Cordingley Group.

                                       22
<PAGE>

(3)  Includes 13,646 shares which Mr. Davis holds as custodian for his minor
     daughter and 12,714 shares which Mr. Davis holds as custodian for his minor
     son. Also includes 39,916 shares which Mr. Davis has the right to acquire
     pursuant to the exercise of stock options granted under the 1993 Directors
     Stock Option Plan and 28,176 shares which Mr. Davis has the right to
     acquire pursuant to the exercise of stock options granted under the
     Company's 1995 Key Employees' Stock Option Plan. Also includes 106,758
     shares of the Company owned by Maybelle R. Davis, the mother of Mr. Davis,
     as to which shares Mr. Davis has authority to vote pursuant to a Power of
     Attorney. Also includes 796 shares owned by Mr. Davis' wife.

(4)  Includes 5,775 shares held by the spouse of Mr. Schnakenburg, 12,474 shares
     held as custodian by Mr. Schnakenburg for his minor children living in his
     home, 24,948 shares held by U.S. Industries Group, Inc., 52,263 shares held
     by Barry, Inc. and 40,378 shares held by BOAH Associates. Also includes
     13,497 shares which Mr. Schnakenburg has the right to acquire through the
     exercise of stock options granted under the Company's 1993 Directors' Stock
     Option Plan. Also includes 74,109 shares of the Company pursuant to which
     Mr. Schnakenburg may exercise voting and investment power pursuant to a
     Power of Attorney.

(5)  First Financial Fund, Inc. Reports that it had sole voting power and shared
     dispositive power with respect to the reported shares. These shares are
     also included in the shares beneficially owned by Wellington Management
     Company, as investment adviser to First Financial Fund, Inc., as explained
     in footnote 6.

(6)  Wellington Management Company ("WMC"), in its capacity as investment
     adviser, may be deemed to have beneficial ownership of these shares, which
     are owned by First Financial Fund, Inc. As of September 25, 1998, WMC
     reported that it had sole/shared voting power as to 0 shares, and shared
     dispositive power as to 202,900 shares.

SECURITY OWNERSHIP OF MANAGEMENT

     The following table sets forth certain information as of September 17,
1998, with respect to the Common Stock of the Company beneficially owned by each
Director of the Company and by all Executive Officers and Directors as a group.

<TABLE>
<CAPTION>

==============================================================================================================
                NAME                     NUMBER OF SHARES BENEFICIALLY OWNED(1)        PERCENT OF CLASS(1)
--------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                                     <C>
William R. Baugh (8)                                     28,570                                 .91%
--------------------------------------------------------------------------------------------------------------
Bruce A. Cordingley (2)                                 300,567                                9.46%
--------------------------------------------------------------------------------------------------------------
Jack Cunningham (3)                                      46,535                                1.48%
--------------------------------------------------------------------------------------------------------------
M. Brian Davis (4)                                      775,662                               24.28%
--------------------------------------------------------------------------------------------------------------
Robert F. Doerter (9)                                    10,563                                 .34%
--------------------------------------------------------------------------------------------------------------
Barry A. Schnakenburg (5)                               269,182                                8.57%
--------------------------------------------------------------------------------------------------------------
Curt J. Angermeier (6)                                   30,878                                 .99%
--------------------------------------------------------------------------------------------------------------
Donald R. Neel (7)                                        7,827                                 .25%
--------------------------------------------------------------------------------------------------------------
All Executive Officers and                            1,469,784                               44.74%
Directors as a Group (8 Persons)
==============================================================================================================
</TABLE>

(1)  The information contained in this column is based upon information
     furnished to the Company by the individuals named above as of September 17,
     1998. The nature of beneficial ownership for shares shown in this column
     represent sole or shared voting and investment unless other wise noted. At
     September 17, 1998, the Company had 3,127,208 shares of common stock
     outstanding.


(2)  Includes 196,683 shares held by Pedcor Investments, A Limited Liability
     Company, as to which Mr. Cordingley is a 47.6% owner and a co-chief
     executive officer and President. Also includes 39,916 shares which Mr.
     Cordingley has the right to acquire pursuant to the exercise of stock
     options granted under the Company's 1993 Directors' Stock Option Plan.
     8,587 shares which Mr. Cordingley, Pedcor Investments, and Mr. Cordingley's
     wife are entitled to purchase upon exercise of 31 warrants acquired
     pursuant to the 1994 Rights Offering and also includes 42,966 shares held
     by Gerald Pedigo which is a part of the Cordingley Group.

                                       23
<PAGE>

(3)  Includes 9,744 shares held in the name of Mr. Cunningham's wife and 17,074
     shares which Mr. Cunningham has the right to acquire pursuant to the
     exercise of stock options granted under the Company's 1993 Directors' Stock
     Option Plan.

(4)  Includes 13,646 shares which Mr. Davis holds as custodian for his minor
     daughter and 12,714 shares which Mr. Davis holds as custodian for his minor
     son. Also includes 39,916 shares which Mr. Davis has the right to acquire
     pursuant to the exercise of stock options granted under the 1993 Directors'
     Stock Option Plan, and 28,176 shares which Mr. Davis has the right to
     acquire pursuant to the exercise of stock options granted under the
     Company's 1995 Key Employees' Stock Option Plan. Also includes 106,758
     shares of the Company owned by Maybelle R. Davis, the mother of Mr. Davis,
     as to which shares Mr. Davis has authority to vote pursuant to a Power of
     Attorney. Also includes 796 shares owned by Mr. Davis' wife.

(5)  Includes 5,775 shares held by the spouse of Mr. Schnakenburg, 12,474 shares
     held as custodian by Mr. Schnakenburg for his minor children living in his
     home, 24,958 shares held by U.S. Industries Group, Inc., 52,263 shares held
     by Barry, Inc. And 40,378 shares held by BOAH Associates. Also includes
     13,497 shares which Mr. Schnakenburg has the right to acquire through the
     exercise of stock options granted under the Company's 1993 Directors' Stock
     Option Plan. Also includes 74,109 shares of the Company pursuant to which
     Mr. Schnakenburg may exercise voting and investment power pursuant to a
     Power of Attorney.

(6)  Includes 19,401 shares held in a Family Trust of Mr. Angermeier. Also
     includes 3,940 shares which Mr. Angermeier has the right to acquire
     pursuant to the exercise of stock options granted under the 1993 Directors'
     Stock Option Plan.

(7)  Includes 4,827 shares beneficially owned by Donald R. Neel, Executive
     Vice-President, Chief Financial Officer and Treasurer of the Company. Also
     includes 3,000 shares which Mr. Neel has the right to acquire pursuant to
     the exercise of the stock options granted under the Company's 1995 Key
     Employees' Stock option Plan.

(8)  Includes 26,600 shares beneficially owned by Mr. Baugh. Also includes 1,970
     shares which Mr. Baugh has the right to acquire pursuant to the exercise of
     stock options granted under the 1993 Directors' Stock Option Plan.

(9)  Includes 8,593 shares beneficially owned by Mr. Doerter. Also includes
     1,970 shares which Mr. Doerter has the right to acquire pursuant to the
     exercise of stock options granted under the 1993 Directors' Stock Option
     Plan.


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

     CERTAIN TRANSACTIONS AND OTHER MATTERS BETWEEN MANAGEMENT AND THE COMPANY

     Directors and executive officers of the Company and the Savings Bank and
their associates are customers of, and have had transactions with, the Company
and the Savings Bank in the ordinary course of business. Comparable transactions
may be expected to take place in the future. Directors of the Company may not
obtain extensions of credit from the Company. Loans made to non-director
officers were made in the ordinary course of business on substantially the same
terms as those prevailing at the time for comparable transactions with other
persons. These loans did not involve more than the normal risk of collectibility
or present other unfavorable features.

     The Office of Thrift Supervision ("OTS"), the primary federal banking
regulatory agency of the Savings Bank, by regulation has provided that each
director, officer, or affiliated person of a savings association, such as the
Savings Bank, has a fundamental duty to avoid placing himself in a position
which creates, or which leads to or could lead to, a conflict of interest or
appearance of a conflict of interest having an adverse effect upon, among other
things, the interests of the members of the savings association or the
association's soundness. In addition, the OTS by regulation has stated that the
fiduciary relationship owed by a director or officer of a savings association,
such as the Savings Bank, includes the duty to protect the association and that
the OTS would consider this duty to be breached if such individual would take
advantage of a business opportunity for his own or another person's personal
benefit or profit when the opportunity is within the corporate powers of the
savings association

                                       24
<PAGE>

(or its service corporation) and when the opportunity is of a present or
potential practical advantage to the savings association. The Board of Directors
of the Company and the Savings Bank are aware of these regulations and
requirements of the OTS and believe they have conducted, and intend to continue
to conduct, themselves in compliance with these requirements at all times.






                     (This space intentionally left blank)







                                       25
<PAGE>

                                    PART IV
                                    -------

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

(a) (1) The following consolidated financial statements are included in Item 8:

                                                            Page Number in
                                                             Annual Report
Independent Auditor's Report on
Consolidated Financial Statements                                27

Consolidated Balance Sheet
June 30, 1998 and 1997                                           28

Consolidated Statement of Income -
For the years ended June 30, 1998,
1997, and 1996                                                   29 and 30

Consolidated Statement of Changes in Stockholders'
Equity - For the years ended
June 30, 1998, 1997, and 1996                                    31

Consolidated Statement of Cash Flows -
For the years ended June 30, 1998, 1997, and 1996                32 and 33

Notes to Consolidated Financial Statements                       34 through 57

(2) See response to Item 14 (a) (1).   All other financial statement schedules
have been omitted because they are not applicable, or the required information
is shown in the consolidated financial statements or notes thereto.

(3) List of Exhibits

    Exhibit Number    Description
    --------------    -----------

    3 (a)             Articles of Incorporation of the Company, filed as exhibit
                      3(a) to the Company's 1995 Annual Report on Form 10-K, are
                      incorporated herein by reference.

    3 (b)             By-Laws of the Company, filed as exhibit 3(b) to the
                      Company's 1994 Annual Report on Form 10-K, are
                      incorporated herein by reference.

   10          (a)    The 1993 Director's Stock Option Plan, filed as exhibit
                      10(d) to the Company's 1995 Annual Report on Form 10-K, is
                      incorporated herein by reference.
               (b)    1995 Key Employee's Stock Option Plan, filed as exhibit
                      10(c) to the Company's 1996 Annual Report on Form 10-K, is
                      incorporated herein by reference.
               (c)    Severance Agreement between the Company and M. Brian Davis
               (d)    Severance Agreement between the Company and Donald R. Neel
               (e)    Severance Agreement between the Company and Terry G.
                      Johnston

   11                 Statement regarding computation of per share earnings. See
                      page 51 and 52 of the Company's 1998 Annual Report to
                      Stockholders. (Incorporated in part into the Form 10-K by
                      reference)

   13                 1998 Annual Report to Stockholders of Fidelity Federal
                      Bancorp (Incorporated in part into the Form 10-K by
                      reference).

   21                 Subsidiaries of Fidelity Federal Bancorp.

   27                 Financial Data Schedule.

                                       26
<PAGE>

(b) No Form 8-K was filed during the last quarter of the fiscal year, but
    subsequent to year end a Form 8-K was filed on September 4, 1998, pertaining
    to the release of earnings for the year ended June 30, 1998, the restatement
    of the third quarter 1998 financials and the suspension of quarterly
    dividends.

(c) See the list of exhibits in Item 14 (a) (3).

(d) No other financial statement schedules are required to be submitted.


                                       27

<PAGE>

                                  SIGNATURES

Pursuant to the requirements of Section 13 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 on the 8th day of October, 1998.


                                         FIDELITY FEDERAL BANCORP

                                         Registrant

                                By  /S/  M. BRIAN DAVIS
                                    -----------------------------------
                                         M. Brian Davis
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

                                By  /S/  DONALD R. NEEL
                                    -----------------------------------
                                         Donald R. Neel, Executive Vice
                                         President, Treasurer and Chief
                                         Financial Officer
                                         (Principal Accounting Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on October 8, 1998, by the following persons on behalf of
the registrant and in the capacities indicated.

By   /S/ BRUCE A. CORDINGLEY
     --------------------------------------
         Bruce A. Cordingley
         Chairman of the Board

By   /S/ M. BRIAN DAVIS
     --------------------------------------
         M. Brian Davis
         President, Chief Executive Officer
         and Director

By   /S/ CURT J. ANGERMEIER
     --------------------------------------
         Curt J. Angermeier, Director

By   /S/ WILLIAM R. BAUGH
     --------------------------------------
         William R. Baugh, Director

By   /S/ JACK CUNNINGHAM
     --------------------------------------
         Jack Cunningham, Director

By   /S/ ROBERT F. DOERTER
     --------------------------------------
         Robert F. Doerter, Director

By   /S/ BARRY A. SCHNAKENBURG
     --------------------------------------
         Barry A. Schnakenburg, Director

By   /S/ DONALD R. NEEL
     --------------------------------------
         Donald R. Neel, Director

                                      By  /S/  JACK CUNNINGHAM
                                          --------------------------------------
                                               Jack Cunningham, Attorney-in-fact



                                       28
<PAGE>

                               INDEX TO EXHIBITS
                               -----------------

        Exhibit
Page     Number    Exhibit
------------------------------------------------------------------------------

         10(c)     Severance Agreement between the Company and M. Brian Davis
         10(d)     Severance Agreement between the Company and Donald R. Neel
         10(e)     Severance Agreement between the Company and Terry G. Johnston

         11        Statement regarding computation of per share earnings. See
                   pages 51 and 52 in the 1998 Annual Report to Stockholders.

         13        1998 Annual Report to Stockholders of Fidelity Federal
                   Bancorp (Incorporated in part into the Form 10-K by
                   reference).

         21        Subsidiaries of Fidelity Federal Bancorp.

         27        Financial Data Schedule.


















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