Exhibit 13


                            BUSINESS OF RIVER VALLEY


     River Valley  Bancorp  ("River  Valley" or the  "Corporation"),  an Indiana
corporation, was formed in 1996 for the primary purpose of purchasing all of the
issued and  outstanding  common stock of River Valley  Financial  Bank (formerly
Madison First Federal Savings and Loan  Association;  hereinafter  "River Valley
Financial"  or the "Bank") in its  conversion  from  mutual to stock  form.  The
conversion  offering was  completed on December 20, 1996.  On December 23, 1996,
the  Corporation  utilized  approximately  $3.0  million  of the net  conversion
proceeds to purchase 95.6% of the outstanding common shares of Citizens National
Bank of Madison ("Citizens"),  and River Valley Financial and Citizens merged on
November 20, 1997.

     The  activities of River Valley have been limited  primarily to holding the
stock of the Bank.  River Valley  Financial was organized in 1875 under the laws
of the United States of America. River Valley Financial conducts operations from
its four full-service  office locations in Jefferson County and offers a variety
of deposit  and  lending  services  to  consumer  and  commercial  customers  in
Jefferson and  surrounding  counties.  The Corporation is subject to regulation,
supervision  and  examination  by the Office of Thrift  Supervision  of the U.S.
Department  of  Treasury  (the  "OTS").  River  Valley  Financial  is subject to
regulation,  supervision  and  examination  by the OTS and the  Federal  Deposit
Insurance  Corporation  (the  "FDIC").  Deposits in River Valley  Financial  are
insured  up to  applicable  limits by the  Savings  Association  Insurance  Fund
("SAIF") of the FDIC.


                 MARKET PRICE OF THE CORPORATION'S COMMON SHARES
                         AND RELATED SHAREHOLDER MATTERS


     There were 1,659,227  common shares of River Valley Bancorp  outstanding at
February 25, 2004, held of record by approximately 365 shareholders.  The number
of shareholders  does not reflect the number of persons or entities who may hold
stock in nominee or "street name." Since December 1996, the Corporation's common
shares  have been listed on The Nasdaq  SmallCap  Market  ("Nasdaq"),  under the
symbol  "RIVR".  On December  26, 2003,  the shares of River Valley  underwent a
2-for-1 stock split in order to create a more liquid market for the stock.

     Presented  below  are the high and low sale  prices  for the  Corporation's
common shares, as well as cash  distributions  paid thereon since December 2001.
Such  sales  prices  do not  include  retail  financial  markups,  markdowns  or
commissions. Information relating to sales prices has been obtained from Nasdaq.

Quarter Ended                        High     Low    Cash Distributions
-----------------------------------------------------------------------
2003
         December 31, 2003          $30.25   $29.43         $0.170
         September 30, 2003          20.33    19.88          0.150
         June 30, 2003               20.75    20.13          0.150
         March 31, 2003              16.08    15.62          0.125
2002
         December 31, 2002          $15.88   $13.18         $0.125
         September 30, 2002          14.13    11.87          0.100
         June 30, 2002               13.85    11.90          0.100
         March 31, 2002              13.00    10.10          0.075
2001
         December 31, 2001          $10.35   $ 9.75         $0.075
         September 30, 2001          10.54     8.86          0.063
         June 30, 2001               9.00      8.01          0.063
         March 31, 2001              8.50      7.60          0.050

The high and low sales prices for River Valley's common shares between  December
31, 2003 and February 25, 2004 were $29.42 and $26.50, respectively (the 2-for-1
stock  split was  effected  during this  period and share  prices were  adjusted
accordingly).

Under OTS regulations applicable to converted savings associations, River Valley
Financial is not  permitted to pay a cash  dividend on its common  shares if the
regulatory  capital of River Valley  Financial would, as a result of the payment
of such  dividend,  be reduced  below the amount  required  for the  liquidation
account (which was  established  for the purpose of granting a limited  priority
claim on the  assets  of River  Valley  Financial,  in the  event of a  complete
liquidation,  to those members of River Valley  Financial  before the Conversion
who maintain a savings  account at River Valley  Financial after the Conversion)
or applicable regulatory capital requirements prescribed by the OTS.

Regulations of the OTS impose  limitations on the payment of dividends and other
capital  distributions  by savings  associations.  The OTS  amended  its capital
distribution  regulation  in a final rule  which  took  effect on April 1, 1999.
Because the Bank is a subsidiary  of a savings and loan holding  company,  it is
required  to file a  notice  with  the OTS 30 days  before  making  any  capital
distributions  to the Holding  Company.  It may also have to file an application
for approval of a proposed capital  distribution with the OTS if the Bank is not
eligible for expedited  treatment under the OTS's application  processing rules,
or the total amount of all capital distributions, including the proposed capital
distribution,  for the applicable  calendar year would exceed an amount equal to
the  Bank's net  earnings  for that year to date plus the  Bank's  retained  net
earnings for the preceding two years. The Bank must also file an application for
approval  of  a  proposed  capital   distribution  if,  following  the  proposed
distribution,  the Bank would not be adequately capitalized under the OTS prompt
corrective action regulations,  or if the proposed  distribution would violate a
prohibition  contained  in any  applicable  statute,  regulation,  or  agreement
between the Bank and the OTS or the FDIC.
<PAGE>

           SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA


The following tables set forth certain  information  concerning the consolidated
financial  condition,  earnings,  and other data  regarding  River Valley at the
dates and for the periods indicated.
<TABLE>
<CAPTION>

                                                                        At December 31,
                                                    --------------------------------------------------
                                                        2003     2002       2001      2000       1999
                                                    --------------------------------------------------
Selected consolidated financial condition data:                         (In thousands)
Total amount of:
<S>                                                 <C>        <C>       <C>       <C>        <C>
         Assets                                     $255,076   $224,020  $191,618  $162,130   $138,695
         Loans receivable - net (1)                  192,266    165,957   157,972   140,970    115,131
         Cash and cash equivalents (2)                12,512     18,610     5,641     6,382      8,052
         Mortgage-backed and related securities          175        583       831     1,918      4,209
         Investment securities                        34,382     27,591    16,822     5,329      5,230
         Deposits                                    179,954    161,829   145,571   130,225    114,251
         FHLB advances and other borrowings           50,000     40,000    26,500    13,450      6,500
         Shareholders' equity - net                   22,855     20,633    17,971    17,184     16,866


                                                                        At December 31,
                                                    --------------------------------------------------
                                                        2003     2002       2001      2000       1999
                                                    --------------------------------------------------
Summary of consolidated earnings data:                        (In thousands, except share data)

Total interest income                               $ 12,653   $ 12,755  $ 13,084  $ 11,118   $  9,734
Total interest expense                                 5,348      5,638     6,617     5,637      4,617
                                                    --------   --------  --------  --------   --------
Net interest income                                    7,305      7,117    6,467      5,481      5,117
Provision for losses on loans                            508        570      450        227        140
                                                    --------   --------  --------  --------   --------
Net interest income after provision for
losses on loans                                        6,797      6,547    6,017      5,254      4,977
Other income                                           3,354      3,094    1,922      1,053        844
General, administrative and other expense              5,831      5,455    4,706      3,764      4,080
                                                    --------   --------  --------  --------   --------
Earnings before income tax expense                     4,320      4,186    3,233      2,543      1,741
Income tax expense                                     1,665      1,628    1,257        933        702
                                                    --------   --------  --------  --------   --------
         Net earnings                               $  2,655   $  2,558  $ 1,976   $  1,610   $  1,039
                                                    ========   ========  =======   ========   ========
Basic earnings per share                            $   1.67   $   1.64  $  1.25   $    .94   $    .52
                                                    ========   ========  =======   ========   ========
Diluted earnings per share                          $   1.59   $   1.58  $  1.22   $    .94   $    .52
                                                    ========   ========  =======   ========   ========
--------------------------
</TABLE>
(1)  Includes loans held for sale.
(2)  Includes certificates of deposit in other financial institutions.

<PAGE>
<TABLE>
<CAPTION>

                                 SELECTED CONSOLIDATED FINANCIAL INFORMATION AND
                                             OTHER DATA (CONTINUED)


                                                                   Year ended December 31,
                                                    --------------------------------------------------
Selected financial ratios and other data:               2003     2002       2001      2000       1999
                                                    --------------------------------------------------
<S>                                                     <C>        <C>      <C>        <C>        <C>
Interest rate spread during period                      3.21%      3.39%    3.58%      3.47%      3.63%
Net yield on interest-earning assets (1)                3.28       3.56     3.80       3.79       3.94
Return on assets (2)                                    1.11       1.22     1.09       1.05       0.76
Return on equity (3)                                   12.22      13.21    11.27       9.45       5.87
Equity to assets (4)                                    8.96       9.21     9.38      10.60      12.16
Average interest-earning assets to
  average interest-bearing liabilities                102.86     106.18   105.94     108.02     108.81
Non-performing assets to total assets (4)               0.18       0.48     0.36       0.38       0.62
Allowance for loan losses to total
  loans outstanding (4)                                 1.07       1.27     1.25       1.21       1.28
Allowance for loan losses to
  non-performing loans (4)                            399.70     194.54   285.80     274.07     164.41
Net charge-offs to average total
  loans outstanding                                     0.31       0.27     0.12       0.04       0.08
General, administrative and other expense
  to average assets (5)                                 2.43       2.60     2.60       2.47       2.97
Dividend payout ratio                                  37.74      25.40    20.49      18.45      25.73
Number of full service offices (4)                         5          4        4          5         5
----------------------------------
</TABLE>

(1)  Net interest income divided by average interest-earning assets.

(2)  Net earnings divided by average total assets.

(3)  Net earnings divided by average total equity.

(4)  At end of period.

(5)  General, administrative and other expense divided by average total assets.

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


General

     As  discussed  previously,  River Valley was  incorporated  for the primary
purpose of owning all of the outstanding shares of River Valley Financial.  As a
result,  the  discussion  that  follows  focuses  on  River  Valley  Financial's
financial  condition and results of operations  for the periods  presented.  The
following  discussion and analysis of the financial condition as of December 31,
2003 and River  Valley's  results of  operations  for periods prior to that date
should be read in conjunction with the consolidated financial statements and the
notes thereto, included elsewhere in this Annual Report.

     In addition to the historical  information  contained herein, the following
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties. River Valley's operations and River Valley's actual results could
differ  significantly  from those discussed in the  forward-looking  statements.
Some of the  factors  that could cause or  contribute  to such  differences  are
discussed  herein  but also  include,  but are not  limited  to,  changes in the
economy and interest rates in the nation and River Valley's general market area.
The  forward-looking  statements  contained herein include those with respect to
the following matters:

     1.   Management's  determination  as to the amount and adequacy of the loan
          loss allowance;

     2.   The effect of changes in interest  rates on  financial  condition  and
          results of operations;

     3.   The effects of proposed  legislation  that would eliminate the federal
          thrift charter and the separate federal regulation of thrifts; and

     4.   Management's   opinion   as  to  the   effect  of  recent   accounting
          pronouncements on River Valley's  consolidated  financial position and
          results of operations.

Critical Accounting Policies

     Note 1 to the consolidated  financial statements thereto presented on pages
25 through 27  contains a summary of the  Corporation's  significant  accounting
policies for the year ended  December 31,  2003.  Certain of these  policies are
important to the portrayal of the Corporation's financial condition,  since they
require management to make difficult,  complex or subjective judgments,  some of
which may relate to matters that are inherently  uncertain.  Management believes
that its critical accounting policies include determining the allowance for loan
losses and the valuation of mortgage servicing rights.

Allowance For Loan Losses

     The allowance  for loan losses is a significant  estimate that can and does
change based on management's  assumptions  about specific  borrowers and current
economic and business  conditions,  among other factors.  Management reviews the
adequacy of the  allowance  for loan losses at least on a quarterly  basis.  The
evaluation by management includes consideration of past loss experience, changes
in the composition of the loan portfolio,  the current economic  condition,  the
amount  of  loans  outstanding,   certain  identified  problem  loans,  and  the
probability of collecting all amounts due.

     The allowance for loan losses represents  management's estimate of probable
losses  inherent  in the  Corporation's  loan  portfolios.  In  determining  the
appropriate  amount of the allowance for loan losses,  management makes numerous
assumptions, estimates and assessments.

     The   Corporation's   strategy   for  credit   risk   management   includes
conservative, centralized credit policies, and uniform underwriting criteria for
all loans as well as an overall  credit  limit for each  customer  significantly
below legal lending limits.  The strategy also emphasizes  diversification  on a
geographic,  industry and customer  level,  regular credit  quality  reviews and
quarterly  management  reviews of large credit exposures and loans  experiencing
deterioration of credit quality.

     The Corporation's  allowance consists of three components:  probable losses
estimated from individual  reviews of specific loans,  probable losses estimated
from historical loss rates, and probable losses resulting from economic or other
deterioration  above and beyond what is reflected in the first two components of
the allowance.

     Larger commercial loans that exhibit probable or observed credit weaknesses
are subject to individual review.  Where appropriate,  reserves are allocated to
individual  loans based on  management's  estimate of the borrower's  ability to
repay the loan given the availability of collateral,  other sources of cash flow
and legal  options  available  to the  Corporation.  Included  in the  review of
individual  loans are those  that are  impaired  as  provided  in  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 114,  Accounting by Creditors for
Impairment of a Loan.  Any  allowances  for impaired loans are measured based on
the  present  value of  expected  future  cash  flows  discounted  at the loan's
effective  interest  rate  or  fair  value  of the  underlying  collateral.  The
Corporation  evaluates the  collectibility  of both  principal and interest when
assessing  the need for a loss  accrual.  Historical  loss rates are  applied to
other commercial loans not subject to specific reserve allocations.

     Homogenous  loans,  such as consumer  installment and residential  mortgage
loans are not individually risk graded. Rather,  standard credit scoring systems
are used to assess credit risks. Reserves are established for each pool of loans
based on the expected net  charge-offs for one year. Loss rates are based on the
average net charge-off history by loan category.

     Historical loss rates for commercial and consumer loans may be adjusted for
significant  factors that, in management's  judgment,  reflect the impact of any
current  conditions on loss recognition.  Factors which management  considers in
the analysis include the effects of the national and local economies,  trends in
the  nature  and  volume of loans  (delinquencies,  charge-offs  and  nonaccrual
loans),  changes in mix,  credit  score  migration  comparisons,  asset  quality
trends, risk management and loan administration, changes in the internal lending
policies and credit standards, collection practices and examination results from
bank regulatory agencies and the Corporation's internal loan review.

     An  unallocated  reserve is  maintained  to recognize  the  imprecision  in
estimating and measuring loss when evaluating  reserves for individual  loans or
pools of loans.  Allowances on individual  loans and  historical  loss rates are
reviewed  quarterly and adjusted as necessary based on changing  borrower and/or
collateral conditions and actual collection and charge-off experience.

     The Corporation's  primary market area for lending is southeastern Indiana.
When  evaluating  the  adequacy  of  allowance,  consideration  is given to this
regional  geographic  concentration  and the closely  associated effect changing
economic conditions have on the Corporation's customers.

     The  Corporation  has not  substantively  changed any aspect to its overall
approach in the determination of the allowance for loan losses.  There have been
no material changes in assumptions or estimation techniques as compared to prior
periods that impacted the determination of the current period allowance.

Mortgage Servicing Rights


     The Corporation recognizes the rights to service mortgage loans as separate
assets in the consolidated balance sheet. The total cost of loans, when sold, is
allocated between loans and mortgage servicing rights based on the relative fair
values of each. Mortgage servicing rights are subsequently  carried at the lower
of the  initial  carrying  value,  adjusted  for  amortization,  or fair  value.
Mortgage  servicing  rights are evaluated for impairment based on the fair value
of those  rights.  Factors  included  in the  calculation  of fair  value of the
mortgage  servicing  rights include,  estimating the present value of future net
cash flows,  market loan  prepayment  speeds for similar loans,  discount rates,
servicing costs, and other economic factors. Servicing rights are amortized over
the estimated period of net servicing revenue.  It is likely that these economic
factors will change over the life of the mortgage servicing rights, resulting in
different  valuations of the mortgage servicing rights. The differing valuations
will  affect  the  carrying  value  of  the  mortgage  servicing  rights  on the
consolidated  balance sheet as well as the amounts  recorded in the consolidated
income statement.

Discussion of Changes in Financial  Condition from December 31, 2002 to December
31, 2003


     At December 31, 2003,  River  Valley's  consolidated  assets totaled $255.1
million,  representing  an increase of $31.1  million over the December 31, 2002
total. This increase in assets was funded in part by a $18.2 million increase in
deposits  and a $10.0  million  increase in  borrowings.  Deposits  increased to
$180.0  million as of December  31, 2003 from $161.8  million  while  borrowings
increased  from $40.0  million as of December  31,  2002 to $50.0  million as of
December  31,  2003.  The  Bank  was able to  increase  deposits  due to new and
expanding  relationships  with its  customers.  The Bank felt that its marketing
plan was both effective and timely.  Increased borrowings were the result of the
advantageous rates that were available.  Shareholders'  equity was $22.9 million
as December 31,  2003,  a net increase of $2.3 million from $20.6  million as of
December 31, 2002.

     Liquid assets (i.e.,  cash, federal funds sold,  interest-earning  deposits
and  certificates  of deposit)  decreased by $6.1 million from December 31, 2002
levels to a total of $12.5  million at December 31, 2003.  This  decrease was in
response  to funding  needs for lending  operations,  as well as the low rate of
return of these funds.  Investment  securities totaled $34.4 million at December
31, 2003,  an increase of $6.8 million over  December 31, 2002.  Mortgage-backed
securities  decreased by $408,000,  to a total of $175,000 at December 31, 2003,
primarily due to principal  repayments and the sale of several issues.  The Bank
had  several  small  issues  that  were sold to cut down on  maintenance  of the
portfolio.

     Loans receivable,  including loans held for sale, totaled $192.3 million at
December 31, 2003, an increase of $26.3 million over the $166.0 million total at
December 31, 2002. The increase resulted primarily from loan originations during
2003 of $196.1 million,  which were partially offset by principal  repayments of
$55.9  million  and sales of $69.5  million.  Loan  origination  volume for 2003
exceeded that of 2002 by $24.7  million,  or 14.4%.  There were increases in all
types of lending with the exception of consumer loans.  The volume of loan sales
into the secondary mortgage market increased during 2003 from the 2002 volume by
$3.2 million,  due in large part to low interest rates.  Due to the historically
low interest rate  environment for the past two years and the level of refinance
activity,  it may be  assumed  that the  volume of loan  sales  will be lower in
successive years.

     River Valley's consolidated allowance for loan losses totaled approximately
$2.1 for the year ended  December 31,  2003,  which  represented  1.07% of total
loans at that date. The allowance for loan losses totaled $2.1 million, or 1.27%
of total loans for the period  ended  December 31,  2002.  Non-performing  loans
(defined  as  loans  delinquent  greater  than 90 days and  loans on  nonaccrual
status)  totaled  $0.5  million and $1.1  million at December 31, 2003 and 2002,
respectively.  The consolidated  allowance for loan losses  represented 400% and
195% of non-performing loans at December 31, 2003 and 2002, respectively. Due to
aggressive   collections  efforts,   problematic  loans  were  addressed  early.
Outstanding  consumer  loan  balances  historically  have  been a source of both
delinquency  and losses.  The  Corporation has  de-emphasized  consumer  lending
because of risk/reward opportunities.

     Although management believes that its allowance for loan losses at December
31, 2003 was adequate based upon the available  facts and  circumstances,  there
can be no assurance  that  additions to such  allowance will not be necessary in
future  periods,  which could  negatively  affect the  Corporation's  results of
operations.

     Deposits increased by $18.2 million, or 11.2%, to a total of $180.0 million
at December 31,  2003,  compared to $161.8  million  total at December 31, 2002.
Savings and demand deposits increased by $19.1 million,  or 28.7%,  during 2003,
while  certificates  of  deposit  decreased  by $0.9  million,  or  1.0%.  These
fluctuations in balances were attributed to competitive  rates and the flight of
money from equity investments.

     Advances from the Federal Home Loan Bank ("FHLB") and other  borrowed money
increased  by $10.0  million  from the total at December  31,  2002,  as current
period  borrowings of $50.0  million were used in part to fund loan growth.  The
low interest rate environment has allowed for prudent long term funding.

     Shareholders'  equity  totaled  $22.9  million at  December  31,  2003,  an
increase of $2.3 million from the $20.6 million total at December 31, 2002.  The
increase resulted primarily from net income of $2.7 million, which was partially
offset by a modest  repurchase of shares totaling $366,000 and cash dividends of
$955,000.  This net increase also includes a net increase of $681,000 related to
stock benefit plans, proceeds of $313,000 from the exercise of stock options and
a reduction in unrealized gain on securities available for sale of $106,000.

Comparison  of Results of Operations  for the Years Ended  December 31, 2003 and
2002

General

     River Valley's net earnings for the year ended  December 31, 2003,  totaled
$2.66 million,  an increase of $97,000,  or 3.8%, from net earnings  reported in
2002. The increase in net earnings in the 2003 period was primarily attributable
to an increase of $260,000 in other income,  while net interest income increased
by $188,000,  while  general,  administrative  and other  expense were  $376,000
higher in the current period. The provision for federal income taxes was $37,000
more in fiscal year 2003 as compared to the same period in 2002.  The  provision
for loan losses in 2003 was $508,000 as compared to $570,000 in 2002.

Net Interest Income

     Total  interest  income for the year ended  December 31, 2003,  amounted to
$12.7 million, a decrease of $102,000, or 0.8%, from the 2002 total,  reflecting
the  effects  of lower  interest  rates  offset by higher  average  balances  of
interest  earning  assets.  The  average  balance  of  interest-earning   assets
outstanding year-to-year increased by $22.9 million, however, the yield on those
assets  decreased  from an  average  yield  of  6.38%  in 2002 to 5.68% in 2003.
Interest income on loans and  mortgage-backed  securities  totaled $11.4 million
for 2003, a decrease of  approximately  $230,000,  or 2.0%, from 2002.  Interest
income on investments,  FHLB stock and  interest-earning  deposits  increased by
$127,000, or 11.3%, due to higher average balances on those investments.

     Interest  expense on deposits  decreased by $0.8  million,  or 19.6%,  to a
total of $3.3 million for the year ended  December 31,  2003,  due  primarily to
lower costs of funding higher average balances.  The cost of deposits  decreased
from 2.6% in 2002 to 1.9% in fiscal 2003. Interest expense on borrowings totaled
$2.1 million for the year ended  December 31, 2003, an increase of $504,000 from
2002.  The  increase   resulted   primarily   from  higher  average   borrowings
year-to-year, offset by a 30 basis point decrease in average cost.

     As a result of the  foregoing  changes  in  interest  income  and  interest
expense,  net  interest  income  increased  during  2003 by  $188,000,  or 2.6%,
compared to 2002.  The  interest  rate spread  decreased  by 18 basis points for
2003,  to 3.21% from 3.39% in the 2002  period,  while the net  interest  margin
amounted to 3.28% in 2003 and 3.56% in 2002.

Provision for Losses on Loans

     A  provision  for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered  appropriate by management based
upon historical  experience,  the volume and type of lending  conducted by River
Valley  Financial,  the  status of past due  principal  and  interest  payments,
general  economic  conditions,  particularly  as such  conditions  relate to the
primary market area, and other factors related to the collectibility of the loan
portfolio.  As a  result  of  such  analysis,  management  recorded  a  $508,000
provision for losses on loans in 2003, a decrease of $62,000, or 10.9%, compared
to the  $570,000  provision  recorded  in 2002.  The  current  period  provision
generally  reflects growth in the loan  portfolio,  coupled with a change in the
loan mix, that is more 1-4 family residential loans and less consumer loans.

     Non-performing  loans for the  period  ended  December  31,  2003 were $0.5
million, a decrease of approximately  $600,000 from the $1.1 million recorded as
of fiscal  year ended  2002.  Net  charge-offs  amounted  to  $553,000  in 2003,
compared to $441,000 in 2002. While  management  believes that the allowance for
losses on loans is adequate at December 31, 2003, based upon available facts and
circumstances,  there can be no assurance  that the loan loss  allowance will be
adequate to cover losses on nonperforming assets in the future.

Other Income

     Other income amounted to $3.4 million for the year ended December 31, 2003,
an increase of $260,000, or 8.4%, compared to 2002, due primarily to an increase
in service fees and charges of $117,000.  Net gains on loan sales increased from
$1.2  million in 2002 to $1.6  million in 2003,  an  increase of  $418,000.  The
volume of loan sales  increased  from $67.6  million in 2002 to $70.5 million in
2003.

General, Administrative and Other Expense

     General, administrative and other expense totaled $5.8 million for the year
ended  December 31, 2003, an increase of $376,000 over the 2002 total.  Employee
compensation  and  benefits  increased by $296,000 in fiscal 2003 as compared to
2002 primarily from  additional  staffing,  cost of living,  benefit expense and
increase in Employee  Stock  Ownership  Plan  ("ESOP")  expenses.  Occupancy and
equipment expense increased by $45,000 in fiscal 2003 as compared to 2002 due to
higher depreciation costs and equipment  maintenance  expenses.  Other operating
expenses increased by $35,000 primarily from increases in office supplies,  data
processing, charitable contributions and mortgage servicing.

Income Taxes

     The provision for income taxes increased by $37,000,  or 2.3%, for the year
ended December 31, 2003, as compared to 2002. The effective tax rates were 38.6%
and 38.9% for the years ended December 31, 2003 and 2002, respectively.

Comparison  of Results of Operations  for the Years Ended  December 31, 2002 and
2001

General

     River Valley's net earnings for the year ended  December 31, 2002,  totaled
$2.56 million, an increase of $582,000,  or 29.5%, from net earnings reported in
2001. The increase in net earnings in the 2002 period was primarily attributable
to an  increase  of  $1,172,000  in other  income,  while  net  interest  income
increased by $650,000,  while  general,  administrative  and other  expense were
$749,000  higher in the current  period.  The provision for federal income taxes
was  $371,000  more in fiscal  year 2002 as compared to the same period in 2001.
The  provision  for loan losses in 2002 was  $570,000 as compared to $450,000 in
2001.

Net Interest Income

     Total  interest  income for the year ended  December 31, 2002,  amounted to
$12.8 million, a decrease of $329,000, or 2.5%, from the 2001 total,  reflecting
the  effects  of lower  interest  rates  offset by higher  average  balances  of
interest  earning  assets.  The  average  balance  of  interest-earning   assets
outstanding year-to-year increased by $30.0 million, however, the yield on those
assets  decreased  from an  average  yield  of  7.70%  in 2001 to 6.38% in 2002.
Interest income on loans and  mortgage-backed  securities  totaled $11.6 million
for 2002, a decrease of  approximately  $705,000  million,  or 5.7%,  from 2001.
Interest  income  on  investments,  FHLB  stock  and  interest-earning  deposits
increased  by  $376,000,  or 50.5%,  due to  higher  average  balances  on those
investments.

     Interest  expense on deposits  decreased by $1.6  million,  or 28.4%,  to a
total of $4.1 million for the year ended  December 31,  2002,  due  primarily to
lower costs of funding higher average balances.  The cost of deposits  decreased
from 4.0% in 2001 to 2.6% in fiscal 2002. Interest expense on borrowings totaled
$1.6 million for the year ended  December 31, 2002, an increase of $628,000 from
2001.  The  increase   resulted   primarily   from  higher  average   borrowings
year-to-year, offset by a 62 basis point decrease in average cost.

     As a result of the  foregoing  changes  in  interest  income  and  interest
expense,  net  interest  income  increased  during 2002 by  $650,000,  or 10.1%,
compared to 2001.  The  interest  rate spread  decreased  by 19 basis points for
2002,  to 3.39% from 3.58% in the 2001  period,  while the net  interest  margin
amounted to 3.56% in 2002 and 3.80% in 2001.

Provision for Losses on Loans

     A  provision  for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered  appropriate by management based
upon historical  experience,  the volume and type of lending  conducted by River
Valley  Financial,  the  status of past due  principal  and  interest  payments,
general  economic  conditions,  particularly  as such  conditions  relate to the
primary market area, and other factors related to the collectibility of the loan
portfolio.  As a  result  of  such  analysis,  management  recorded  a  $570,000
provision  for  losses on loans in 2002,  an  increase  of  $120,000,  or 26.7%,
compared  to the  $450,000  provision  recorded  in  2001.  The  current  period
provision generally reflects growth in the loan portfolio, coupled with a change
in  the  loan  mix,  that  is  less  1-4  family   residential  loans  and  more
commercial/non-residential loans.

     Non-performing  loans for the  period  ended  December  31,  2002 were $1.1
million, an increase of approximately  $390,000 from the $690,000 recorded as of
fiscal year ended 2001. Net charge-offs  amounted to $441,000 in 2002,  compared
to $180,000 in 2001. While management  believes that the allowance for losses on
loans is  adequate  at  December  31,  2002,  based  upon  available  facts  and
circumstances,  there can be no assurance  that the loan loss  allowance will be
adequate to cover losses on nonperforming assets in the future.

Other Income

     Other income amounted to $3.1 million for the year ended December 31, 2002,
an increase of $1.2 million,  or 61.0%,  compared to 2001,  due primarily to the
increase  in net  gains  on loan  sales,  a  $352,000.00  gain on sale of a bank
property, and an increase in service fees and charges of $256,000.00.  Net gains
on loan sales  increased  from  $772,000  in 2001 to $1.2  million  in 2002,  an
increase of $454,000.  The volume of loan sales  increased from $46.1 million in
2001 to $68.1 million in 2002.

General, Administrative and Other Expense

     General, administrative and other expense totaled $5.5 million for the year
ended  December 31, 2002, an increase of $749,000 over the 2001 total.  Employee
compensation  and  benefits  increased by $328,000 in fiscal 2002 as compared to
2001 primarily from  additional  staffing,  cost of living,  benefit expense and
increase in ESOP expenses. Occupancy and equipment expense increased by $162,000
in  fiscal  2002 as  compared  to 2001  due to  higher  depreciation  costs  and
equipment  maintenance  expense.  Other operating expenses increased by $259,000
primarily  from  increases  in  office  supplies,  data  processing,  charitable
contributions and mortgage servicing.

Income Taxes

     The  provision for income taxes  increased by $371,000,  or 29.5 %, for the
year ended  December 31, 2002, as compared to 2001. The effective tax rates were
38.9% and 38.8% for the years ended December 31, 2002 and 2001, respectively.
<PAGE>

AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA

     The following table presents certain information relating to River Valley's
average balance sheet and reflects the average yield on interest-earning  assets
and the average cost of interest-bearing  liabilities for the periods indicated.
Such yields and costs are derived by  dividing  annual  income or expense by the
average   daily   balance  of   interest-earning   assets  or   interest-bearing
liabilities, respectively, for the years presented. Average balances are derived
from daily balances, which include nonaccruing loans in the loan portfolio.
<TABLE>
<CAPTION>

                                                                         Year ended December 31,
                                                     2003                           2002                         2001
-----------------------------------------------------------------------------------------------------------------------------------
                                      Average      Interest            Average     Interest           Average    Interest
                                    outstanding    earned/   Yield/  outstanding   earned/   Yield/  outstanding earned/    Yield/
                                      balance       paid      rate     balance      paid      rate    balance     paid       rate
-----------------------------------------------------------------------------------------------------------------------------------
Assets                                                                                                  (Dollars in thousands)
Interest-earning assets:
<S>                                  <C>           <C>        <C>     <C>          <C>        <C>     <C>        <C>         <C>
  Interest-earning deposits          $  8,774      $   112    1.28%   $ 10,186     $    158   1.55%   $  5,042   $   185     3.67%
  Other securities (1)                 32,652        1,029    3.15      23,136          867   3.75       8,480       481     5.67
  Mortgage-backed and
    related securities                    355           10    2.82         730           31   4.25       1,259        73     5.80
  Loans receivable (2)                179,026       11,395    6.36     164,306       11,604   7.06     154,171    12,267     7.96
  FHLB stock                            2,053          107    5.21       1,623           95   5.85       1,055        78     7.39
                                     --------      -------            --------     --------           --------   -------
Total interest-earning assets         222,860       12,653    5.68     199,981       12,755   6.38     170,007    13,084     7.70
                                                   -------    ----    --------     --------           --------   -------
Non-interest earning assets,
    net of allowance
    for loan losses                    17,067                            9,786                          10,922
                                     --------                         --------                        --------
                  Total assets       $239,927                         $209,767                        $180,929
                                     ========                         ========                        ========
Liabilities/shareholder equity
Interest-bearing liabilities:
  Savings deposits                   $ 43,454          468    1.08    $ 35,878         698    1.95    $ 32,108     1,006     3.13
  Interest bearing demand  (5)         32,018          129     .40      30,475         233    0.76      26,719       330     1.24
  Certificates of deposit              95,559        2,663    2.79      89,514       3,123    3.49      84,262     4,325     5.13
  FHLB advances and other borrowings   45,636        2,088    4.58      32,475       1,584    4.88      17,385       956     5.50
                                     --------      -------    ----    --------     --------           --------   -------
Total interest-bearing liabilities    216,667        5,348    2.47     188,342       5,638    2.99     160,474     6,617     4.12
                                                   -------                         --------                      -------
Other liabilities                       1,528                            2,052                           2,915
                                     --------                         --------                        --------
    Total liabilities                 218,195                          190,394                         163,389
    Total equity                       21,732                           19,373                          17,540
                                     --------                         --------                        --------
Total liabilities and equity         $239,927                         $209,767                        $180,929
                                     ========                         ========                        ========
Net interest earning assets          $  6,193                         $ 11,639                        $  9,533
                                     ========                         ========                        ========
Net interest income                                $ 7,305                         $ 7,117                       $ 6,467
                                                   =======                         =======                       =======

Interest rate spread (3)                                      3.21%                           3.39%                          3.58%

Net yield on weighted average
  interest-earning assets (4)                                 3.28%                           3.56%                          3.80%
Average interest-earning assets to
   average bearing liabilities         102.86%                          106.18%                         105.94%

-------------------------------
</TABLE>
(1)  Includes securities  available for sale at amortized cost prior to SFAS No.
     115 adjustments.

(2)  Total loans less loans in process plus loans held for sale.

(3)  Interest rate spread is calculated by subtracting weighted average interest
     rate  cost  from  weighted  average  interest  rate  yield  for the  period
     indicated.

(4)  The net yield on weighted average  interest-earning assets is calculated by
     dividing net interest income by weighted  average  interest-earning  assets
     for the period indicated.

(5) Includes Non-Interest DDA of $13,021, $9,985 and $8,512.
<PAGE>

Rate/Volume Table

     The following table describes the extent to which changes in interest rates
and changes in volume of  interest-related  assets and liabilities have affected
River Valley's interest income and expense during the years indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information is provided on changes attributable to (i) changes in volume (change
in volume  multiplied by prior year rate),  (ii) changes in rate (change in rate
multiplied  by prior year  volume),  and (iii) total changes in rate and volume.
The  combined  effects  of  changes in both  volume  and rate,  which  cannot be
separately identified,  have been allocated proportionately to the change due to
volume and the change due to rate:
<TABLE>
<CAPTION>
                                                                                 Year ended December 31,
                                                        ----------------------------------------------------------------
                                                                   2003 vs. 2002                  2002 vs. 2001
                                                                    Increase                        Increase
                                                                   (decrease)                      (decrease)
                                                                     due to                          due to
                                                        Volume        Rate         Total    Volume    Rate     Total
                                                        ----------------------------------------------------------------
                                                                                 (In thousands)

Interest-earning assets:
<S>                                                     <C>          <C>           <C>      <C>       <C>      <C>
         Interest-earning deposits and other            $   (3)      $   (37)      $  (34)  $  155    $ (165)  $  (10)
         Investment securities                             316          (154)         162      596      (210)     386
         Mortgage-backed and related securities            (13)           (8)         (21)     (26)      (16)     (42)
         Loans receivable, net                             991        (1,200)        (209)     773    (1,436)    (663)
                                                        ------       -------       ------   ------    ------   ------
                  Total                                  1,297        (1,399)        (102)   1,498    (1,827)    (329)
                                                        ------       -------       ------   ------    ------   ------
Interest-bearing liabilities:
         Deposits                                          337        (1,131)        (794)     406    (2,013)  (1,607)
         FHLB advances and other borrowings                607          (103)         504      747      (119)     628
                                                        ------       -------       ------   ------    ------   ------
                  Total                                    944        (1,234)        (290)   1,153    (2,132)    (979)
                                                        ------       -------       ------   ------    ------   ------
Net change in interest income                           $  353       $  (165)      $  188   $  345    $  305    $ 650
                                                        ======      ========       ======   ======    ======    =====
</TABLE>

Asset and Liability Management

     Like other  financial  institutions,  River Valley  Financial is subject to
interest  rate  risk  to  the  extent  that   interest-earning   assets  reprice
differently than interest-bearing  liabilities. As part of its effort to monitor
and manage interest rate risk, River Valley Financial is using the Net Portfolio
Value ("NPV") methodology adopted by the OTS as part of its capital regulations.
Although  River Valley  Financial is not subject to the NPV  regulation  because
such regulation  does not apply to  institutions  with less than $300 million in
assets and  risk-based  capital  in excess of 12%,  the  application  of the NPV
methodology  can  illustrate  River Valley  Financial's  degree of interest rate
risk.

     Presented on the following table is an analysis of River Valley Financial's
interest rate risk, as of December 31, 2003 (the latest  information  available)
and December 31, 2002,  as measured by changes in NPV for an  instantaneous  and
sustained  parallel  shift of 100  through 300 basis  points in market  interest
rates.

     Generally, NPV is more sensitive to rising rates than declining rates. Such
difference in sensitivity  occurs principally  because,  as rates rise, a bank's
assets reprice slower than the deposits that fund them. As a result, in a rising
interest rate environment,  the amount of interest a bank would receive on loans
would  increase as loans are slowly  prepaid  and new loans at higher  rates are
made. Moreover,  the interest the bank would pay on deposits would increase, but
generally slower than the bank's ability to reprice its interest-earning assets.
However,  River Valley Financial Bank has addressed some of these issues,  which
has generally reduced its overall exposure to interest rate risk.

                            As of December 31, 2003
                             (Dollars in thousands)

           Change in
         Interest Rates         Estimated        Amount
         (basis points)            NPV          of Change         Percent
         --------------         ---------       ---------         -------

             +300                $33,347          $  650               2%
             +200                 33,819           1,123               3%
             +100                 33,640             943               3%
               --                 32,697              --
             -100                 31,122          (1,575)             -5%
             -200 (1)                 --              --              --
             -300 (1)                 --              --              --
<PAGE>
                            As of December 31, 2002
                             (Dollars in thousands)

           Change in
         Interest Rates         Estimated        Amount
         (basis points)            NPV          of Change         Percent
         --------------         ---------       ---------         -------
             +300                $26,462          $1,814               7%
             +200                 26,305           1,656               7%
             +100                 25,666           1,018               4%
               --                 24,648              --
             -100                 23,487          (1,161)             -5%
             -200 (1)                 --              --              --
             -300 (1)                 --              --              --
------------------------
(1)  At December 31, 2003 and 2002,  the OTS did not provide  information  as to
     interest rate risk for 200 and 300 point decreases.

     As with any method of measuring  interest rate risk,  certain  shortcomings
are inherent in the NPV  approach.  For  example,  although  certain  assets and
liabilities may have similar maturities or periods of repricing,  they may react
in different  degrees to changes in market  interest  rates.  Also, the interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes in market  interest  rates,  while interest rates on other types may lag
behind  changes in market rates.  Further,  in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed  securities and
early  withdrawal  levels from  certificates  of deposit  would  likely  deviate
significantly from those assumed in making the risk calculations.

Liquidity and Capital Resources

     The  Corporation's  principal  sources  of  funds  are  deposits,  loan and
mortgage-backed securities repayments,  maturities of securities, borrowings and
other funds provided by operations. While scheduled loan repayments and maturing
investments   are   relatively   predictable,   deposit   flows   and  loan  and
mortgage-backed  securities  prepayments  are more influenced by interest rates,
general  economic   conditions  and  competition.   The  Corporation   maintains
investments in liquid assets based upon management's  assessment of (1) the need
for funds,  (2) expected  deposit flows,  (3) the yield  available on short-term
liquid assets and (4) the objectives of the asset/liability management program.

     The Financial  Regulatory Relief and Economic Efficiency Act of 2000, which
was  signed  into law on  December  27,  2000,  repealed  the  former  statutory
requirement that all savings  associations  maintain an average daily balance of
liquid assets in a minimum  amount of not less than 4% or more than 10% of their
withdrawable  accounts plus  short-term  borrowings.  The OTS adopted an interim
final rule in March 2001 that  implemented this revised  statutory  requirement,
although savings associations remain subject to the OTS regulation that requires
them to maintain sufficient  liquidity to ensure their safe and sound operation.
At December 31, 2003,  River Valley  Financial Bank had commitments to originate
loans totaling $4.0 million and in addition,  had undisbursed  loans in process,
unused lines of credit and standby letters of credit totaling $23.5 million.  At
such date,  River Valley  Financial bank had $0.5 million in commitments to sell
loans and no outstanding commitment to purchase loans. The Corporation considers
River Valley Financial Bank's liquidity and capital resources sufficient to meet
outstanding short and long term needs.

     The  Corporation's  liquidity,  primarily  represented  by  cash  and  cash
equivalents,  is a result of the funds provided by or used in the  Corporation's
operating,  investing and financing activities.  These activities are summarized
below for the years ended December 31, 2003, 2002 and 2001:
<TABLE>
<CAPTION>
                                                                  Year ended December 31,
                                                     ----------------------------------------------
                                                          2003              2002            2001
                                                     ----------------------------------------------
                                                                    (In thousands)
<S>                                                  <C>               <C>              <C>
Cash flows from operating activities                 $   5,043         $   5,348        $    756

Cash flows from investing activities:
Purchase of securities                                 (17,151)          (22,161)        (19,262)
Proceeds from maturities of securities                   5,387             4,217           5,204
Proceeds from sales of securities                        5,095             7,951           3,689
Net loan originations                                  (27,287)          (10,385)        (15,078)
Other                                                   (4,383)           (1,163)         (3,079)

Cash flows from financing activities:
Net increase in deposits                                18,125            16,258          15,346
Net increase in borrowings                              10,000            13,500          13,050
Purchase of stock                                         (366)             (140)         (1,182)
Other                                                     (561)             (456)           (185)
                                                     ---------         ---------        --------
Net increase (decrease) in cash
   and cash equivalents                              $ (6,098)         $  12,969        $   (741)
                                                     ========          =========        ========
</TABLE>
<PAGE>
     River Valley Financial is required by applicable law and regulation to meet
certain minimum capital  standards.  Such capital  standards  include a tangible
capital  requirement,  a core  capital  requirement,  or leverage  ratio,  and a
risk-based capital requirement.

     The tangible capital requirement  requires savings associations to maintain
"tangible  capital" of not less than 1.5% of the  association's  adjusted  total
assets.  Tangible  capital is defined in OTS  regulations  as core capital minus
intangible assets.  "Core capital" is comprised of common  shareholders'  equity
(including  retained  earnings),   noncumulative  preferred  stock  and  related
surplus,    minority   interests   in   consolidated    subsidiaries,    certain
nonwithdrawable  accounts  and  pledged  deposits  of mutual  associations.  OTS
regulations  require  savings  associations  to maintain core capital  generally
equal to 4% of the association's total assets except those associations with the
highest examination rating and acceptable levels of risk.

     OTS  regulations  require that savings  associations  maintain  "risk-based
capital"  in an amount not less than 8% of  "risk-weighted  assets."  Risk-based
capital is defined as core  capital plus  certain  additional  items of capital,
which in the  case of River  Valley  Financial  includes  a  general  loan  loss
allowance of $2.1 million at December 31, 2003.

     River Valley Financial exceeded all of its regulatory capital  requirements
at December 31, 2003. The following table  summarizes  River Valley  Financial's
regulatory capital requirements and regulatory capital at December 31, 2003:

                           OTS Requirement         Actual Amount
                        --------------------------------------------------------
                        Percent of            Percent of                Amount
                          Assets     Amount   Assets (1)   Amount   of Excess
                        --------------------------------------------------------
Tangible capital           1.50%    $ 3,758    10.0%      $24,968     $21,210
Core capital (2)           4.00%     10,021    10.0        24,968      14,947
Risk-based capital         8.00%     14,917    14.5        26,970      12,053

(1)  Tangible and core capital levels are shown as a percentage of total assets;
     risk-based  capital  levels  are  shown as a  percentage  of  risk-weighted
     assets.

(2)  The OTS has proposed  and is expected to adopt a core  capital  requirement
     for savings  associations  comparable  to that adopted by the Office of the
     Comptroller of the Currency for national  banks.  The  regulation  requires
     core  capital  of  at  least  3%  of  total  adjusted  assets  for  savings
     associations  that received the highest  supervisory  rating for safety and
     soundness,  and 4% to 5% for all other savings  associations.  River Valley
     Financial is in  compliance  with this  requirement.

Impact of Accounting Changes

     In May 2003, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 150,  Accounting for Certain Financial  Instruments with  Characteristics of
both   Liabilities  and  Equity.   SFAS  No.  150   establishes   standards  for
classification and measurement in the statement of financial position of certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability.  The FASB's  Staff  Position  150-3  deferred  indefinitely  the
guidance  in SFAS  No.  150 on  certain  mandatorily  redeemable  noncontrolling
interests.

     In January of 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest  Entities,  an Interpretation of Accounting  Research Bulletin
No.  51, and in  December  2003 the FASB  deferred  certain  effective  dates of
Interpretation  No. 46. For all variable  interest  entities  other than special
purpose  entities,  the revised  Interpretation  is effective for periods ending
after March 15, 2004. For variable  interest  entities meeting the definition of
special purpose  entities under earlier  accounting  rules,  the  Interpretation
remains effective for periods ending after December 31, 2003. The Interpretation
requires the consolidation of entities in which an enterprise absorbs a majority
of the entity's  expected losses,  receives a majority of the entity's  expected
residual  returns,  or both,  as a result  of  ownership,  contractual  or other
financial   interests  in  the  entity.   Currently,   entities  are   generally
consolidated  by an  enterprise  when  it  has a  controlling  interest  through
ownership  of a majority  voting  interest in the entity.  The  Corporation  has
determined that all such  instruments  covered under this statement have been or
will be properly reported under SFAS No. 150 and Staff Position Bulletin 150-3.

     In April 2003, the FASB issued SFAS No. 149,  Amendment of Statement 133 on
Derivative   Instruments  and  Hedging  Activities.   This  statement  clarifies
reporting  of  contracts  as  either  derivatives  or  hybrid  instruments.  The
Corporation has determined that it has no such instruments.

     In December 2002, the FASB issued SFAS No. 148,  Accounting for Stock-based
Compensation - Transition and Disclosure, which provides guidance for transition
from the intrinsic value method of accounting for stock-based compensation under
Accounting  Principles Board ("APB") Opinion No. 25 to SFAS No. 123's fair value
method of accounting,  if a Corporation so elects.  The Corporation  applies APB
Opinion No. 25 and related  Interpretations  in accounting  for the stock option
plan.  Accordingly,  no compensation costs have been recognized,  as all options
granted had an exercise price equal to the market value of the underlying common
stock on the date of grant. Had compensation  cost for the  Corporation's  stock
option plan been recorded  based on the fair value at the grant dates for awards
under the plan consistent with the method prescribed by SFAS No. 123, net income
and net  income per share  would  have been  adjusted  to the  proforma  amounts
indicated in Note 1.

     In  November  2002,  FASB  Interpretation  No. 45 ("FIN  45"),  Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others was issued. FIN 45 requires the disclosures
to be made by a guarantor  in its  financial  statements  about its  obligations
under certain  guarantees that it has issued. It also clarifies that a guarantor
is required to recognize,  at the inception of a guarantee,  a liability for the
fair value of the  obligation  undertaken  in issuing  the  guarantee.  The most
significant FIN 45 instruments of the Corporation are standby letters of credit.
The Corporation  has determined  that its standby letters of credit  obligations
under FIN 45 are not material for disclosure.

Impact of Inflation and Changing Prices

     The  consolidated  financial  statements and notes thereto  included herein
have been prepared in accordance with generally accepted accounting  principles,
which  require  River  Valley to  measure  financial  position  and  results  of
operations in terms of historical  dollars with the exception of investment  and
mortgage-backed securities available-for-sale,  which are carried at fair value.
Changes  in the  relative  value of money  due to  inflation  or  recession  are
generally not considered.

     In  management's  opinion,  changes in interest  rates affect the financial
condition of a financial institution to a far greater degree than changes in the
rate of inflation. While interest rates are greatly influenced by changes in the
rate of inflation,  they do not change at the same rate or in the same magnitude
as the rate of inflation.  Rather,  interest rate volatility is based on changes
in the  expected  rate of  inflation,  as well as changes in monetary and fiscal
policies.

<PAGE>


                              River Valley Bancorp
           Accountants' Report and Consolidated Financial Statements
                           December 31, 2003 and 2002

<PAGE>

                              River Valley Bancorp
                        December 31, 2003, 2002 and 2001

                                    Contents


Independent Accountants' Report...............................................19

Consolidated Financial Statements

         Balance Sheets.......................................................20

         Statements of Income.................................................21

         Statements of Comprehensive Income...................................22

         Statements of Stockholders' Equity...................................23

         Statements of Cash Flows.............................................24

         Notes to Financial Statements........................................25

<PAGE>

                         Independent Accountants' Report
To the Stockholders and
Board of Directors
River Valley Bancorp
Madison, Indiana


     We have  audited  the  accompanying  consolidated  balance  sheets of River
Valley  Bancorp as of December 31, 2003 and 2002,  and the related  consolidated
statements of income,  comprehensive income, stockholders' equity and cash flows
for each of the  three  years in the  period  ended  December  31,  2003.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
River Valley  Bancorp as of December  31, 2003 and 2002,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2003 in conformity with accounting principles generally accepted in
the United States of America.



/s/ BKD, LLP

BKD, LLP


Indianapolis, Indiana
January 20, 2004

<PAGE>

<TABLE>
<CAPTION>
                                     River Valley Bancorp
                                  Consolidated Balance Sheets
                                  December 31, 2003 and 2002

                                                                2003            2002
                                                         ------------------------------------
                                                         (In Thousands, Except Share Amounts)
Assets
<S>                                                          <C>              <C>
         Cash and due from banks                             $  4,443         $  5,094
         Interest-bearing demand deposits                       8,069           13,516
                                                             --------         --------
             Cash and cash equivalents                         12,512           18,610
         Investment securities available for sale              34,557           28,174
         Loans held for sale                                      100            1,062
         Loans, net of allowance for loan losses
            of $2,056 and $2,101                              192,166          164,895
         Premises and equipment                                 5,980            5,741
         Federal Home Loan Bank stock                           2,176            2,000
         Interest receivable                                    1,489            1,467
         Cash surrender value of life insurance                 5,093            1,326
         Other assets                                           1,003              745
                                                             --------         --------
             Total assets                                    $255,076         $224,020
                                                             ========         ========
Liabilities
         Deposits
                  Noninterest-bearing                        $ 11,828         $ 11,115
                  Interest-bearing                            168,126          150,714
                                                             --------         --------
                           Total deposits                     179,954          161,829
         Borrowings                                            50,000           40,000
         Interest payable                                         381              459
         Other liabilities                                      1,886            1,099
                                                             --------         --------
            Total liabilities                                 232,221          203,387
                                                             --------         --------

Commitments and Contingencies

Stockholders' Equity
         Preferred stock, no par value
                  Authorized and unissued - 2,000,000 shares
         Common stock, no par value
                  Authorized - 5,000,000 shares
                  Issued and outstanding - 1,646,680
                       and 1,621,688 shares                     8,705            7,957
         Retained earnings                                     14,088           12,654
         Shares acquired by stock benefit plans                  (193)            (339)
         Accumulated other comprehensive income                   255              361
                                                             --------         --------
             Total stockholders' equity                        22,855           20,633
                                                             --------         --------
             Total liabilities and stockholders' equity      $255,076         $224,020
                                                             ========         ========
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                              River Valley Bancorp
                        Consolidated Statements of Income
                  Years Ended December 31, 2003, 2002 and 2001



                                                        2003            2002            2001
                                                        ---------------------------------------
                                                        (In Thousands, Except Per Share Amounts)
Interest Income
<S>                                                    <C>            <C>             <C>
         Loans receivable                              $11,395        $11,604         $12,267
         Investment securities                           1,039            898             554
         Interest-earning deposits and other               219            253             263
                                                       -------        -------         -------
                  Total interest income                 12,653         12,755          13,084
                                                       -------        -------         -------
Interest Expense
         Deposits                                        3,260          4,054           5,661
         Borrowings                                      2,088          1,584             956
                                                       -------        -------         -------
             Total interest expense                      5,348          5,638           6,617
                                                       -------        -------         -------

Net Interest Income                                      7,305          7,117           6,467
         Provision for loan losses                         508            570             450
                                                       -------        -------         -------
Net Interest Income After Provision for Loan Losses      6,797          6,547           6,017
                                                       -------        -------         -------
Other Income
         Service fees and charges                        1,472          1,355           1,099
         Net realized gains on sales of
           available-for-sale securities                     4             37              17
         Net gains on loan sales                         1,644          1,226             772
         Gain on sale of premises and equipment             --            352              --
         Other income                                      234            124              34
                                                       -------        -------         -------
             Total other income                          3,354          3,094           1,922
                                                       -------        -------         -------
Other Expenses
         Salaries and employee benefits                  2,915          2,619           2,291
         Net occupancy and equipment expenses              819            774             612
         Data processing fees                              163            228             190
         Advertising                                       242            209             208
         Amortization of mortgage servicing rights         407            345             238
         Office supplies                                   161            159             101
         Legal and professional fees                       131             63             164
         Other expenses                                    993          1,058             902
                                                       -------        -------         -------
             Total other expenses                        5,831          5,455           4,706
                                                       -------        -------         -------
Income Before Income Tax                                 4,320          4,186           3,233
         Income tax expense                              1,665          1,628           1,257
                                                       -------        -------         -------
Net Income                                             $ 2,655        $ 2,558         $ 1,976
                                                       =======        =======         =======
Basic Earnings per Share                               $  1.67        $  1.64         $  1.25
                                                       =======        =======         =======
Diluted Earnings per Share                             $  1.59        $  1.58         $  1.22
                                                       =======        =======         =======
</TABLE>


See Notes to Consolidated Financial Statements


<PAGE>

                              River Valley Bancorp
                 Consolidated Statements of Comprehensive Income
                  Years Ended December 31, 2003, 2002 and 2001
<TABLE>
<CAPTION>


                                                                2003     2002     2001
                                                              ------------------------
                                                                    (In Thousands)

<S>                                                           <C>      <C>      <C>
Net Income                                                    $2,655   $2,558   $1,976
  Other comprehensive income, net of tax
    Unrealized gains on securities available for sale
       Unrealized holding gains (losses) arising during
         the period, net of tax expense (benefit) of
         $(68), $220 and $18                                    (104)    336        27
       Less:  Reclassification adjustment for gains
         included in net income, net of tax expense of
         $2, $15 and $7                                            2       22       10
                                                              ------   ------   ------
                                                                (106)     314       17
                                                              ------   ------   ------
Comprehensive Income                                          $2,549   $2,872   $1,993
                                                              ======   ======   ======
</TABLE>






See Notes to Consolidated Financial Statements
<PAGE>

<TABLE>
<CAPTION>

                                                         River Valley Bancorp
                                            Consolidated Statements of Stockholders' Equity
                                             Years Ended December 31, 2003, 2002 and 2001


                                                                                             Shares
                                                                                            Acquired   Accumulated
                                                                                            by Stock     Other
                                                                         Common  Retained   Benefit   Comprehensive
                                                         Shares           Stock  Earnings     Plans      Income         Total
------------------------------------------------------------------------------------------------------------------------------

<S>               <C>                                   <C>              <C>      <C>         <C>         <C>          <C>
Balances, January 1, 2001                               1,737,748        $8,135   $ 9,753     $(734)      $ 30         $ 17,184

         Net income                                                                 1,976                                 1,976
         Unrealized gains on securities, net of
                  reclassification adjustment                                                               17               17
         Cash dividends ($.25 per share)                                             (388)                                 (388)
         Exercise of stock options                          9,340           68                                               68
         Tax benefit of stock options exercised
                  and RRP                                                    4                                                4
         Amortization of expense related to stock
                  benefit plans                                             90                  202                         292
         Purchase of stock                               (128,586)        (643)      (539)                               (1,182)
                                                        ---------        -----     ------      ----       ----         --------
Balances, December 31, 2001                             1,618,502        7,654     10,802      (532)        47           17,971
         Net income                                                                 2,558                                 2,558
         Unrealized gains on securities, net of
                  reclassification adjustment                                                              314              314
         Cash dividends ($.40 per share)                                             (619)                                 (619)
         Exercise of stock options                         13,754           99                                               99
         Tax benefit of stock options exercised
                  and RRP                                                   51                                               51
         Contribution to stock benefit plans                                                    (22)                        (22)
         Amortization of expense related to stock
                  benefit plans                                            206                  215                         421
         Purchase of stock                                (10,568)         (53)       (87)                                 (140)
                                                        ---------        -----     ------      ----       ----         --------
Balances, December 31, 2002                             1,621,688        7,957     12,654      (339)       361           20,633
         Net income                                                                 2,655                                 2,655
         Unrealized losses on securities, net of
                  reclassification adjustment                                                             (106)            (106)
         Cash dividends ($.595 per share)                                            (955)                                 (955)
         Exercise of stock options                         44,992          313                                              313
         Tax benefit of stock options exercised
                  and RRP                                                  236                                              236
         Amortization of expense related to stock
                  benefit plans                                            299                  146                         445
         Purchase of stock                                (20,000)        (100)      (266)                                 (366)
                                                        ---------        -----     ------      ----       ----         --------
Balances, December 31, 2003                             1,646,680       $8,705    $14,088     $(193)      $255          $22,855
                                                        =========       ======    =======     =====       ====         ========

</TABLE>

See Notes to Consolidated Financial Statements

<PAGE>
<TABLE>
<CAPTION>

                                                         River Valley Bancorp
                                                 Consolidated Statements of Cash Flows
                                             Years Ended December 31, 2003, 2002 and 2001


                                                                                        2003           2002        2001
                                                                                        -------------------------------
                                                                                                    (In Thousands)
Operating Activities
<S>                                                                                     <C>       <C>           <C>
         Net income                                                                     $ 2,655   $    2,558    $ 1,976
         Items not requiring (providing) cash
                  Provision for loan losses                                                 508          570        450
                  Depreciation and amortization                                             507          502        311
                  Deferred income tax                                                       517           31          3
                  Investment securities gains                                                (4)         (37)       (17)
                  Loans originated for sale in the secondary market                     (68,536)     (65,339)   (48,428)
                  Proceeds from sale of loans in the secondary market                    70,512       67,589     46,101
                  Gain on sale of loans                                                  (1,644)      (1,226)      (772)
                  Amortization of deferred loan origination cost                            138          175        157
                  Amortization of expense related to stock benefit plans                    445          421        292
                  (Gain) loss on sale of premises and equipment                               2         (352)        --
         Net change in
                  Interest receivable                                                       (22)           8         (7)
                  Interest payable                                                          (78)        (154)        15
         Other adjustments                                                                   43          602        675
                                                                                         --------   ---------  ---------
                           Net cash provided by operating activities                      5,043        5,348        756
                                                                                         --------   ---------  ---------
Investing Activities
         Purchase of FHLB stock                                                             (48)        (750)      (307)
         Purchases of securities available for sale                                      (17,151)    (22,161)   (19,262)
         Proceeds from maturities of securities available for sale                         5,387       4,217      5,204
         Proceeds from sales of securities available for sale                              5,095       7,951      3,689
         Net change in loans                                                             (27,287)    (10,385)   (15,078)
         Purchases of premises and equipment                                                (749)     (1,141)    (2,784)
         Proceeds from sale of premises and equipment                                          1         630         --
         Proceeds from sale of real estate acquired through foreclosure                       48          98        107
         Premiums paid on life insurance                                                  (3,635)         --        (95)
                                                                                         --------   ---------  ---------
                           Net cash used in investing activities                         (38,339)    (21,541)   (28,526)
                                                                                         --------   ---------  ---------
Financing Activities
         Net change in
                  Noninterest-bearing, interest-bearing demand and savings deposits        19,051      3,891      9,643
                  Certificates of deposit                                                    (926)    12,367      5,703
         Proceeds from borrowings                                                          16,000     50,000     32,050
         Repayment of borrowings                                                           (6,000)   (36,500)   (19,000)
         Cash dividends                                                                      (878)      (543)      (261)
         Purchase of stock                                                                   (366)      (140)    (1,182)
         Proceeds from exercise of stock options                                              313         99         68
         Advances by borrowers for taxes and insurance                                          4         10          8
         Acquisition of stock for stock benefit plans                                          --        (22)        --
                                                                                         --------   ---------  ---------
                           Net cash provided by financing activities                       27,198     29,162     27,029
                                                                                         --------   ---------  ---------
Net Change in Cash and Cash Equivalents                                                    (6,098)    12,969       (741)

Cash and Cash Equivalents, Beginning of Year                                               18,610      5,641      6,382
                                                                                         --------   ---------  ---------
Cash and Cash Equivalents, End of Year                                                    $12,512  $  18,610   $  5,641
                                                                                         ========  ==========  =========
Additional Cash Flows Information
         Interest paid                                                                   $  5,426  $   5,792   $  6,691
         Income tax paid                                                                    1,435      1,480      1,119

</TABLE>

See Notes to Consolidated Financial Statements


<PAGE>

                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2003, 2002 and 2001
                       (Table Dollar Amounts in Thousands
                           Except Per Share Amounts)

Note 1:   Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting  policies of River Valley Bancorp (Company) and its
wholly owned subsidiaries, River Valley Financial Bank (Bank) and RIVR Statutory
Trust I (Trust),  and the Bank's wholly owned subsidiary,  Madison First Service
Corporation (First Service), conform to accounting principles generally accepted
in the United States of America and reporting  practices  followed by the thrift
industry. The more significant of the policies are described below.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

The  Company  is a  thrift  holding  company  whose  principal  activity  is the
ownership and  management of the Bank.  The Bank operates under a federal thrift
charter and provides full banking  services,  in a single  significant  business
segment. As a  federally-chartered  thrift, the Bank is subject to regulation by
the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation.

The Bank generates commercial, mortgage and consumer loans and receives deposits
from customers located primarily in southeastern  Indiana.  The Bank's loans are
generally  secured by specific  items of  collateral  including  real  property,
consumer assets and business assets.

Consolidation - The consolidated  financial  statements  include the accounts of
the Company,  the Bank,  the Trust and First  Service after  elimination  of all
material intercompany transactions.

Cash  Equivalents - The Company  considers all liquid  investments with original
maturities of three months or less to be cash equivalents.

Investment  Securities - Debt securities are classified as held to maturity when
the  Company  has the  positive  intent and  ability to hold the  securities  to
maturity.  Securities  held to maturity  are  carried at  amortized  cost.  Debt
securities not classified as held to maturity and marketable  equity  securities
are classified as available for sale.  Securities available for sale are carried
at  fair  value  with  unrealized  gains  and  losses  reported   separately  in
accumulated other comprehensive income, net of tax.

Amortization  of premiums and  accretion  of discounts  are recorded as interest
income from  securities.  Realized gains and losses are recorded as net security
gains  (losses).  Gains and losses on sales of securities  are determined on the
specific-identification method.

Loans held for sale are carried at the lower of aggregate cost or market. Market
is determined using the aggregate  method.  Net unrealized  losses,  if any, are
recognized  through a  valuation  allowance  by charges to income,  based on the
difference between estimated sales proceeds and aggregate cost.

Loans are carried at the principal amount outstanding.  A loan is impaired when,
based on current  information or events, it is probable that the Company will be
unable to collect all amounts due  (principal  and  interest)  according  to the
contractual terms of the loan agreement.  Payments with insignificant delays not
exceeding  90  days  are  not  considered   impaired.   Certain  nonaccrual  and
substantially  delinquent  loans may be considered  to be impaired.  The Company
considers its investment in one-to-four  family  residential  loans and consumer
loans to be homogeneous and therefore excluded from separate  identification for
evaluation of impairment.  Interest income is accrued on the principal  balances
of  loans.  The  accrual  of  interest  on  impaired  and  nonaccrual  loans  is
discontinued when, in management's  opinion,  the borrower may be unable to meet
payments as they become due. When interest accrual is  discontinued,  all unpaid
accrued interest is reversed when considered  uncollectible.  Interest income is
subsequently  recognized only to the extent cash payments are received.  Certain
loan fees and direct costs are being  deferred and amortized as an adjustment of
yield on the loans over the contractual  lives of the loans. When a loan is paid
off or sold, any unamortized loan origination fee balance is credited to income.

Allowance  for  loan  losses  is  maintained  to  absorb  loan  losses  based on
management's  continuing  review and  evaluation  of the loan  portfolio and its
judgment  as to  the  impact  of  economic  conditions  on  the  portfolio.  The
evaluation by management includes consideration of past loss experience, changes
in the composition of the portfolio,  the current  condition and amount of loans
outstanding,  and the probability of collecting all amounts due.  Impaired loans
are  measured by the present  value of expected  future cash flows,  or the fair
value of the  collateral of the loan, if collateral  dependent.  Loan losses are
charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed.  Subsequent  recoveries,  if any, are credited to the
allowance.

The  determination  of the adequacy of the allowance for loan losses is based on
estimates  that are  particularly  susceptible  to  significant  changes  in the
economic  environment  and market  conditions.  Management  believes  that as of
December  31,  2003,  the  allowance  for  loan  losses  is  adequate  based  on
information  currently available.  A worsening or protracted economic decline in
the areas within which the Company  operates  would  increase the  likelihood of
additional  losses due to credit and market  risks and could create the need for
additional loss reserves.

Premises  and  equipment  are carried at cost net of  accumulated  depreciation.
Depreciation is computed using the straight-line method based principally on the
estimated  useful lives of the assets.  Maintenance  and repairs are expensed as
incurred  while major  additions and  improvements  are  capitalized.  Gains and
losses on dispositions are included in current operations.

Federal Home Loan Bank stock is a required  investment for institutions that are
members of the Federal Home Loan Bank system.  The  required  investment  in the
common stock is based on a predetermined formula.

Foreclosed  assets are carried at the lower of cost or fair value less estimated
selling costs. When foreclosed assets are acquired,  any required  adjustment is
charged to the allowance for loan losses. All subsequent activity is included in
current operations.

Mortgage  servicing rights on originated loans are capitalized by allocating the
total cost of the mortgage loans between the mortgage  servicing  rights and the
loans based on their  relative  fair values.  Capitalized  servicing  rights are
amortized in proportion to and over the period of estimated servicing revenues.

Stock  options - At December 31, 2003,  the Company has a  stock-based  employee
compensation  plan,  which is  described  more  fully in Note  16.  The  Company
accounts for this plan under the recognition  and measurement  principles of APB
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   and  related
interpretations.  No stock-based employee  compensation cost is reflected in net
income,  as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the grant date. The following
table illustrates the effect on net income and earnings per share if the Company
had applied the fair value  provisions  of  Statement  of  Financial  Accounting
Standards  (SFAS)  No.  123,   Accounting  for  Stock-Based   Compensation,   to
stock-based employee compensation.
<TABLE>
<CAPTION>

                                                                 2003        2002         2001
                                                                ------------------------------
<S>                                                             <C>         <C>         <C>
Net income, as reported                                         $2,655      $2,558      $1,976
Less:  Total stock-based employee compensation
         cost determined under the fair value based method,
         net of income taxes                                       (25)        (54)        (35)
                                                                -------     -------     -------
Pro forma net income                                            $2,630      $2,504      $1,941
                                                                =======     =======     =======
Earnings per share
         Basic - as reported                                    $  1.67     $ 1.64      $ 1.25
                                                                =======     =======     =======
         Basic - pro forma                                      $  1.65     $ 1.61      $ 1.23
                                                                =======     =======     =======
         Diluted - as reported                                  $  1.59     $ 1.58      $ 1.22
                                                                =======     =======     =======
         Diluted - pro forma                                    $  1.57     $ 1.54      $ 1.20
</TABLE>

Income tax in the consolidated statements of income includes deferred income tax
provisions or benefits for all significant  temporary differences in recognizing
income and expenses for financial reporting and income tax purposes.

Earnings per share have been  computed  based upon the  weighted-average  common
shares  outstanding  during each year and have been restated to give effect to a
2-for-1 stock split on the Company's outstanding shares announced on December 9,
2003.  Unearned ESOP shares have been excluded from the  computation  of average
shares outstanding.

Reclassifications of certain amounts in the 2002 and 2001 consolidated financial
statements have been made to conform to the 2003 presentation.

Note 2:   Restriction on Cash and Due From Banks

The Bank is required to maintain  reserve  funds in cash and/or on deposit  with
the  Federal  Reserve  Bank.  The  reserve  required  at  December  31, 2003 was
$1,168,000.
<PAGE>

Note 3:   Investment Securities
<TABLE>
<CAPTION>

                                                                                2003
                                                       --------------------------------------------------
                                                                        Gross          Gross
                                                       Amortized     Unrealized     Unrealized      Fair
                                                          Cost         Gains          Losses        Value
                                                       --------------------------------------------------
Available for sale
<S>                                                     <C>             <C>             <C>       <C>
   Federal agencies                                     $33,483         $438            $24       $33,897
   State and municipal                                      475           10             --           485
   Mortgage and other asset-backed securities               177           --              2           175
                                                        -------         ----            ---       -------
     Total investment securities                        $34,135         $448            $26       $34,557
                                                        =======         ====            ===       =======


                                                                                2002
                                                       --------------------------------------------------
                                                                        Gross          Gross
                                                       Amortized     Unrealized     Unrealized      Fair
                                                          Cost         Gains          Losses        Value
                                                       --------------------------------------------------

Available for sale
   Federal agencies                                     $24,581         $567            $--       $25,148
   State and municipal                                      335           17             --           352
   Mortgage and other asset-backed securities               571           13              1           583
   Corporate obligations                                  2,090            1             --         2,091
                                                        -------         ----            ---       -------
     Total investment securities                        $27,577         $598            $ 1       $28,174
                                                        =======         ====            ===       =======
</TABLE>


At December 31, 2003, of the Company's  investment  securities  with  unrealized
losses,  only one  asset-backed  security,  with an unrealized loss of $900, has
been in a continuous unrealized-loss position for more than a year.

The amortized  cost and fair value of securities  available for sale at December
31, 2003, by contractual  maturity,  are shown below.  Expected  maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.

                                                            Available for Sale
                                                          Amortized      Fair
                                                            Cost         Value
                                                          ---------------------
         Less than one year                                $ 9,014      $ 9,156
         One to five years                                  23,950       24,235
         Five to ten years                                     994          991
                                                           -------      -------
                                                            33,958       34,382
         Mortgage and other asset-backed securities            177          175
                                                           -------      -------
                  Totals                                   $34,135      $34,557
                                                           =======      =======

Securities with a carrying value of $10,425,000 and $10,819,000  were pledged at
December 31, 2003 and 2002 to secure certain  deposits and for other purposes as
permitted or required by law.

Proceeds from sales of securities  available for sale during 2003, 2002 and 2001
were $5,095,000, $7,951,000 and $3,689,000. Gross gains of $10,000, $103,000 and
$33,000 and gross losses of $6,000,  $66,000 and $16,000 were  realized on those
sales.
<PAGE>

Note 4:   Loans and Allowance

                                                2003            2002
-----------------------------------------------------------------------
Residential real estate
         One-to-four family residential        $90,492        $ 73,197
         Multi-family residential                5,009           4,396
         Construction                            8,689           4,866
Nonresidential real estate and land             56,388          46,036
Commercial                                      26,764          26,203
Consumer and other                              10,287          14,066
                                               -------         --------
                                               197,629         168,764
Unamortized deferred loan costs                    461             379
Undisbursed loans in process                    (3,868)         (2,147)
Allowance for loan losses                       (2,056)         (2,101)
                                               -------         --------
                  Total loans                  $192,166        $164,895
                                               ========        ========

                                             2003      2002     2001
----------------------------------------------------------------------

Allowance for loan losses
         Balances, January 1                $2,101   $1,972   $1,702
         Provision for losses                  508      570      450
         Recoveries on loans                   190       60       31
         Loans charged off                    (743)    (501)    (211)
                                            -------  -------  -------
         Balances, December 31              $2,056   $2,101   $1,972
                                            =======  =======  =======

Information on impaired loans is summarized below.

                                                  2003     2002
                                                  -------------
Impaired loans for which the discounted
   cash flows or collateral value exceeds
   the carrying value of the loan                $1,100    $749


                                                          2003   2002     2001
                                                        ------------------------

Average balance of impaired loans                       $1,242   $663     $1,352
Interest income recognized on impaired loans               107     34       117
Cash-basis interest included above                          97     35       110


At December  31, 2003 and 2002,  the Company  had  non-accruing  loans  totaling
$514,000 and $1,080,000, respectively. At December 31, 2003 and 2002, there were
no accruing loans delinquent 90 days or more.

Note 5:  Premises and Equipment

                                                  2003     2002
                                                ---------------
Land                                            $1,450   $1,450
Buildings                                        3,577    3,395
Equipment                                        3,148    2,629
Construction in progress                            90       81
                                                -------  ------
         Total cost                              8,265    7,555
Accumulated depreciation and amortization       (2,285)  (1,814)
                                                -------  ------
         Net                                    $5,980   $5,741
                                                =======  =======

Note 6:   Deposits
<TABLE>
<CAPTION>

                                                                    2003             2002
                                                                --------------------------
<S>                                                             <C>              <C>
Demand deposits                                                 $  58,874        $  41,763
Savings deposits                                                   26,478           24,538
Certificates and other time deposits of $100,000 or more           38,609           41,901
Other certificates and time deposits                               55,993           53,627
                                                                ---------        ---------
         Total deposits                                         $ 179,954        $ 161,829
                                                                =========        =========
</TABLE>
<PAGE>
Certificates and other time deposits maturing in

                2004                    $10,232
                2005                     56,952
                2006                      7,014
                2007                      1,624
                2008                      2,786
                Thereafter               15,994
                                        -------
                                        $94,602
                                        =======
Note 7:  Borrowings

                                                  2003            2002
                                                -------------------------
Federal Home Loan Bank advances                 $43,000         $40,000
Trust preferred securities                        7,000              --
                                                -------         -------
         Total borrowings                       $50,000         $40,000
                                                =======         =======

Maturities  by year for advances at December 31, 2003 are  $10,000,000  in 2004,
$9,000,000 in 2005, $1,000,000 in 2006,  $10,000,000 in 2007, $1,000,000 in 2008
and $12,000,000 thereafter.  The weighted-average  interest rate at December 31,
2003 and 2002 was 4.08% and 4.48%.

The Federal Home Loan Bank advances are secured by first-mortgage loans totaling
$73,002,000  at December  31,  2003.  Advances  are subject to  restrictions  or
penalties in the event of prepayment.

On March 13, 2003, the Company formed RIVR Statutory  Trust I (Trust).  On March
26, 2003, the Trust issued 7,000  Fixed/Floating  Rate Capital Securities with a
liquidation  amount of $1,000 per Capital Security in a private  placement to an
offshore  entity for an aggregate  offering price of $7,000,000,  and 217 Common
Securities  with a  liquidation  amount of $1,000  per  Common  Security  to the
Company for  $217,000.  The aggregate  proceeds of  $7,217,000  were used by the
Trust  to  purchase   $7,217,000  in  Fixed/Floating  Rate  Junior  Subordinated
Deferrable Interest  Debentures from the Company.  The Debentures and the Common
and Capital Securities have a term of 30 years, bear interest at the annual rate
of 6.4% for five years and  thereafter  bear interest at the rate of the 3-Month
LIBOR plus  3.15%.  The Company has  guaranteed  payment of amounts  owed by the
Trust to holders of the Capital Securities.

Note 8:  Loan Servicing

Loans  serviced  for others are not  included in the  accompanying  consolidated
balance  sheets.  The unpaid  principal  balances of loans  serviced  for others
totaled $91,639,000,  $76,544,000 and $56,057,000 at December 31, 2003, 2002 and
2001, respectively.

The aggregate fair value of capitalized  mortgage  servicing  rights at December
31, 2003,  2002 and 2001 totaled  $854,000,  $631,000 and  $430,000.  Comparable
market values and a valuation  model that calculates the present value of future
cash  flows  were  used to  estimate  fair  value.  For  purposes  of  measuring
impairment,  risk  characteristics  including  product type,  investor type, and
interest rates, were used to stratify the originated mortgage servicing rights.

                                                2003     2002     2001
                                               -----------------------
Mortgage Servicing Rights
         Balances, January 1                   $ 881    $ 540    $ 227
         Servicing rights capitalized            630      546      441
         Amortization of servicing rights       (302)    (205)    (128)
                                               ------   ------   ------
                                               1,209      881      540
         Valuation allowance                    (355)    (250)    (110)
                                               ------   ------   ------
         Balances, December 31                 $ 854    $ 631    $ 430
                                               ======   ======   ======

Activity  in the  valuation  allowance  for  mortgage  servicing  rights  was as
follows:

                                        2003             2002              2001
--------------------------------------------------------------------------------

Balance, beginning of year              $250            $110               $ --
         Additions                       105             140                110
                                        ----            ----               ----
Balance, end of year                    $355            $250               $110
                                        ====            ====               ====
<PAGE>
Note 9:  Income Tax

                                            2003       2002         2001
                                           ------------------------------
Income tax expense (benefit)
  Currently payable
    Federal                                $  878     $1,318       $1,000
    State                                     269        279          254
  Deferred
    Federal                                   459        (23)           2
    State                                      59         54            1
                                           ------     ------       ------
         Total income tax expense          $1,665     $1,628       $1,257
                                           ======     ======       ======
Reconciliation of federal statutory
  to actual tax expense (benefit)
    Federal statutory income tax at 34%    $1,469     $1,423       $1,099
    Effect of state income taxes              217        220          168
    Qualified Zone Academy Credit             (65)        --           --
    Bank-owned life insurance                 (45)        --           --
    ESOP expense in excess of cost            102         --           --
    Other                                     (13)       (15)         (10)
                                            ------    ------       ------
                  Actual tax expense        $1,665    $1,628       $1,257
                                            ======    ======       ======


Effective tax rate                            38.5%     38.9%        38.8%

A  cumulative  net  deferred  tax asset  (liability)  is included in the balance
sheets. The components of the asset (liability) are as follows:

                                                        2003            2002
                                                      ------------------------
Assets
         Allowance for loan losses                    $   794         $   807
         Deferred compensation                            125             220
         Pensions and employee benefits                    15              21
         Purchase accounting adjustments                   66              71
         Qualified Zone Academy Bond credits               11              11
                                                      -------         -------
                  Total assets                          1,011           1,130
                                                      =======         =======
Liabilities
         Depreciation and amortization                   (409)           (178)
         Loan fees                                       (178)           (147)
         Mortgage servicing rights                       (330)           (249)
         Federal Home Loan Bank stock dividends           (58)             --
         Securities available for sale                    (65)           (133)
         Other                                             (1)             (5)
                                                      -------         -------
                  Total liabilities                    (1,041)           (712)
                                                      -------         -------
                                                      $   (30)         $  418
                                                      =======         =======


Income tax expense  attributable  to  securities  gains was $2,000,  $14,000 and
$7,000 for the years ended December 31, 2003, 2002 and 2001.

Retained earnings include approximately  $2,100,000 for which no deferred income
tax  liability  has been  recognized.  This amount  represents  an allocation of
income to bad debt  deductions  as of December 31, 1987 for tax  purposes  only.
Reduction of amounts so allocated for purposes other than tax bad debt losses or
adjustments  arising from carryback of net operating  losses would create income
for tax  purposes  only,  which  income  would be  subject  to the  then-current
corporate  income tax rate. The unrecorded  deferred income tax liability on the
above amount was approximately $714,000.

Note 10:  Commitments and Contingent Liabilities

In  the  normal  course  of  business  there  are  outstanding  commitments  and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements.  The
Bank's exposure to credit loss in the event of nonperformance by the other party
to the  financial  instruments  for  commitments  to extend  credit and  standby
letters of credit is represented by the  contractual or notional amount of those
instruments.  The Bank uses the same credit policies in making such  commitments
as it does for instruments that are included in the consolidated balance sheets.
<PAGE>

Financial  instruments  whose  contract  amount  represents  credit  risk  as of
December 31 were as follows:

                                                       2003     2002
                                                     ----------------
         Commitments to extend credit                $27,353  $17,002
         Standby letters of credit                       339      347

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash  requirements.  The Bank evaluates each customer's  credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's  credit
evaluation.   Collateral  held  varies  but  may  include  accounts  receivable,
inventory, property, equipment, and income-producing commercial properties.

Standby  letters of credit  are  conditional  commitments  issued by the Bank to
guarantee the performance of a customer to a third party.

The  Company  and Bank are also  subject  to claims  and  lawsuits  which  arise
primarily in the ordinary  course of business.  It is the opinion of  management
that the disposition or ultimate resolution of such claims and lawsuits will not
have a material  adverse effect on the  consolidated  financial  position of the
Company.

Note 11:   Stockholders' Equity

On December 9, 2003,  the Company  announced a 2-for-1 stock split,  under which
each share of its common stock  outstanding at the close of business on December
26,  2003  was  converted  into two  shares  of  common  stock.  The  additional
certificates were distributed to stockholders on January 9, 2004. As a result of
the stock  split,  the number of shares  outstanding  increased  from 823,340 to
1,646,680 shares. Unless otherwise noted, all share and per share data have been
restated for the 2-for-1 split.

Note 12:  Dividend and Capital Restrictions

Without prior approval,  current  regulations allow the Bank to pay dividends to
the Company not  exceeding  net profits (as  defined)  for the current year plus
those for the previous two years.  The Bank  normally  restricts  dividends to a
lesser amount because of the need to maintain an adequate capital structure.  At
December 31, 2003,  the  stockholder's  equity of the Bank was  $26,280,000,  of
which approximately $23,911,000 was restricted from dividend distribution to the
Company.

Note 13:  Regulatory Capital

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies and is assigned to a capital category. The assigned
capital  category is largely  determined  by three  ratios  that are  calculated
according to the regulations:  total risk adjusted capital,  Tier 1 capital, and
Tier 1 leverage  ratios.  The ratios are intended to measure capital relative to
assets and  credit  risk  associated  with those  assets and  off-balance  sheet
exposures of the entity.  The capital category assigned to an entity can also be
affected by  qualitative  judgments  made by regulatory  agencies about the risk
inherent in the entity's activities that are not part of the calculated ratios.

There are five capital categories defined in the regulations,  ranging from well
capitalized to critically  undercapitalized.  Classification of a bank in any of
the  undercapitalized  categories can result in actions by regulators that could
have a material  effect on a bank's  operations.  At December 31, 2003 and 2002,
the Bank is categorized as well capitalized and met all subject capital adequacy
requirements.  There are no  conditions  or events since  December 31, 2003 that
management believes have changed the Bank's classification.
<PAGE>
<TABLE>
<CAPTION>
                                                                   Required for Adequate       To Be Well
                                                    Actual             Capital(1)            Capitalized(1)
                                               ------------------------------------------------------------
                                                Amount    Ratio       Amount   Ratio         Amount   Ratio
                                               ------------------------------------------------------------
2003
Total risk-based capital(1)
<S>                                             <C>       <C>        <C>         <C>         <C>       <C>
         (to risk-weighted assets)              $26,970   14.5%      $14,917     8.0%        $18,646   10.0%
Tier 1 capital1 (to risk-weighted
         assets)                                 24,968   13.4%        7,458     4.0%         11,187    6.0%
Core capital(1) (to adjusted total
         assets)                                 24,968   10.0%       10,021     4.0%         12,527    5.0%
Core capital1 (to adjusted
         tangible assets)                        24,968   10.0%        5,011     2.0%             --    N/A
Tangible capital(1) (to adjusted total
         assets)                                 24,968   10.0%        3,758     1.5%             --    N/A

2002
Total risk-based capital(1)
         (to risk-weighted assets)              $20,651   12.8%      $12,888     8.0%        $16,110   10.0%
Tier 1 capital(1) (to risk-weighted
         assets)                                 18,637   11.6%        6,443     4.0%          9,666    6.0%
Core capital1 (to adjusted total
         assets)                                 18,637    8.4%        8,909     4.0%         11,136    5.0%
Core capital1 (to adjusted
         tangible assets)                        18,637    8.4%        4,455     2.0%             --    N/A
Tangible capital(1) (to adjusted
         total assets)                           18,637    8.4%        3,341     1.5%             --    N/A
     (1) As defined by regulatory agencies
</TABLE>

Note 14:   Employee Benefits


The Bank provides pension benefits for substantially all of the Bank's employees
and is a participant in a pension fund known as the Pentegra Group. This plan is
a multi-employer  plan; separate actuarial  valuations are not made with respect
to each participating employer.  There was no pension expense or benefit related
to this plan for the years ended December 31, 2003, 2002 and 2001.

The  Bank has a  retirement  savings  401(k)  plan in  which  substantially  all
employees may participate. The Bank matches employees' contributions at the rate
of  50  percent  for  the  first  6  percent  of  W-2  earnings  contributed  by
participants.  The Bank's expense for the plan was $43,000,  $31,000 and $35,000
for the years ended December 31, 2003, 2002 and 2001.

The Bank has a supplemental  retirement plan which provides  retirement benefits
to all directors.  The Bank's obligations under the plan have been funded by the
purchase  of  key  man  life  insurance  policies,  of  which  the  Bank  is the
beneficiary.  Expense recognized under the supplemental  retirement plan totaled
approximately  $51,000,  $41,000 and $42,000  for the years ended  December  31,
2003, 2002 and 2001.

The Company has an ESOP covering  substantially all employees of the Company and
Bank. The ESOP acquired  190,440 shares of the Company's common stock at $10 per
share with funds  provided  by a loan from the  Company.  Unearned  ESOP  shares
totaled  29,044 and 51,034 at December 31, 2003 and 2002 and had a fair value of
$855,000  and  $778,000 at those  dates.  Shares are  released  to  participants
proportionately  as the  loan is  repaid.  Dividends  on  allocated  shares  are
recorded as dividends and charged to retained earnings. Dividends on unallocated
shares,  which may be distributed to participants or used to repay the loan, are
treated as compensation  expense.  Compensation expense is recorded equal to the
fair market value of the stock when contributions, which are determined annually
by the Board of  Directors of the Company and Bank,  are made to the ESOP.  ESOP
expense for the years  ended  December  31,  2003,  2002 and 2001 was  $410,000,
$331,000 and  $196,000.  At December 31,  2003,  the ESOP had 161,396  allocated
shares,  29,044  suspense  shares and no  committed-to-be  released  shares.  At
December 31, 2002, the ESOP had 139,406 allocated shares, 51,034 suspense shares
and no committed-to-be released shares.

The Company also has a Recognition  and Retention  Plan (RRP) which provides for
the award and issuance of up to 95,220 shares of the Company's  stock to members
of the Board of Directors and management. The RRP has purchased 67,640 shares of
the  Company's  common  stock in the open market.  At December 31, 2003,  66,816
shares had been awarded. Common stock awarded under the RRP vests ratably over a
five-year  period,  commencing  with the date of the award.  Expense  recognized
under the RRP plan totaled  approximately  $35,000,  $53,000 and $98,000 for the
years ended December 31, 2003, 2002 and 2001.
<PAGE>
Note 15:  Related Party Transactions

The Bank  has  entered  into  transactions  with  certain  directors,  executive
officers,  significant  stockholders and their affiliates or associates (related
parties).  Such  transactions  were made in the  ordinary  course of business on
substantially  the same  terms  and  conditions,  including  interest  rates and
collateral,  as those  prevailing at the same time for  comparable  transactions
with other  customers,  and did not, in the opinion of management,  involve more
than normal credit risk or present other unfavorable features.

The  aggregate  amount of loans,  as defined,  to such  related  parties were as
follows:

        Balances, January 1, 2003               $1,598
        Change in composition                      109
        New loans, including renewals            1,057
        Payments, etc., including renewals      (1,632)
                                                -------
        Balances, December 31, 2003             $1,132
                                                =======

Deposits  from  related  parties  held by the Bank at December 31, 2003 and 2002
totaled $2,198,000 and $466,000.

Note 16:   Stock Option Plan

Under the Company's  incentive  stock option plan,  which is accounted for under
the  recognition  and  measurement  principles  of Accounting  Principles  Board
Opinion  (APB) No. 25,  Accounting  for Stock Issued to  Employees,  and related
interpretations,  the Company grants selected executives and other key employees
stock option awards which vest at a rate of 20 percent a year.  During 1997, the
Company  authorized  the  grant  of  options  for up to  238,050  shares  of the
Company's common stock. The exercise price of each option,  which has a ten-year
life, was equal to the market price of the Company's stock on the date of grant;
therefore, no compensation expense is recognized.

Although the Company has elected to follow APB No. 25, SFAS No. 123 requires pro
forma  disclosures  of net income and  earnings  per share as if the Company had
accounted for its employee stock options under that Statement. The fair value of
each option grant was estimated on the grant date using an option-pricing  model
with the following assumptions:

                                                                2002       2001
                                                              -----------------

  Risk-free interest rates                                      3.5%       5.1%
  Dividend yields                                               3.1%       2.8%
  Volatility factors of expected market price of common stock  11.2%       7.8%
  Weighted-average expected life of the options               10 years  10 years

The pro forma effect on net income is disclosed in Note 1.

The following is a summary of the status of the Company's  stock option plan and
changes in that plan as of and for the years ended  December 31, 2003,  2002 and
2001.
<TABLE>
<CAPTION>

                                  2003                         2002                        2001
                           -----------------------------------------------------------------------------------
                                      Weighted-                    Weighted-                    Weighted-
                                       Average                      Average                      Average
Options                    Shares    Exercise Price    Shares     Exercise Price    Shares     Exercise Price
---------------------------------------------------------------------------------------------------------------
Outstanding, beginning
<S>                        <C>           <C>           <C>           <C>            <C>            <C>
         of year           170,268       $7.58         172,166       $7.08          198,690        $7.09
Granted                         --          --          14,000       13.25            4,000         8.95
Exercised                  (44,992)       7.36         (13,754)       7.20           (9,340)        7.31
Forfeited/expired               --          --          (2,144)       7.39          (21,184)        7.39
                           --------      -----         --------                     --------
Outstanding, end of
         year              125,276       $7.63         170,268       $7.58          172,166        $7.08
                           ========                    ========                     ========
Options exercisable at
         year end          94,076                      124,668                      106,574
Weighted-average fair
         value of options
         granted during
         the year                       $  --                        $1.52                         $1.54

</TABLE>
<PAGE>
As of December 31, 2003,  options  totaling  25,048 have exercise prices ranging
from $5.38 to $6.32 and a  weighted-average  remaining  contractual  life of 6.0
years,  options totaling 85,428 have exercise prices ranging from $6.99 to $7.39
and a weighted-average remaining contractual life of 4.3 years, options totaling
2,400  have  an  exercise  price  of  $8.95  and  a  weighted-average  remaining
contractual  life of 7.5 years,  and  options  totaling  12,400 have an exercise
price of $13.25 and a weighted-average remaining contractual life of 8.7 years.

Note 17:  Earnings Per Share
<TABLE>
<CAPTION>

                                              2003                          2002                           2001
                                            Weighted-     Per             Weighted-    Per               Weighted-     Per
                                             Average     Shares           Average    Shares              Average      Shares
                                  Income     Shares      Amount   Income   Shares     Amount     Income   Shares      Amount
                                ----------------------------------------------------------------------------------------------

Basic Earnings Per Share
Income available to
<S>                              <C>       <C>           <C>      <C>      <C>        <C>        <C>     <C>          <C>
    common stockholders          $2,655    1,590,732     $1.67    $2,558   1,557,286  $1.64      $1,976  1,581,866    $1.25
                                                                                      =====                           =====
Effect of Dilutive
    Stock Options                             79,418                          64,890                        34,866
                                 ------    ---------              ------   ---------             ------  ---------
Diluted Earnings Per Share
Income available to
    common stockholders
    and assumed conversions      $2,655    1,670,150     $1.59    $2,558   1,622,176  $1.58      $1,976  1,616,732    $1.22
                                 ======    =========     =====    ======   =========  =====      ======  =========    =====
</TABLE>

Note 18:  Fair Values of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instrument:

Cash  and Cash  Equivalents  - The  fair  value  of cash  and  cash  equivalents
approximates carrying value.

Investment Securities - Fair values are based on quoted market prices.

Loans Held for Sale - Fair values are based on quoted market prices.

Loans - The fair  value  for  loans is  estimated  using  discounted  cash  flow
analyses,  using interest rates  currently  being offered for loans with similar
terms to borrowers of similar credit quality.

Interest  Receivable/Payable  - The fair values of  interest  receivable/payable
approximate carrying values.

FHLB  Stock - Fair  value of FHLB stock is based on the price at which it may be
resold to the FHLB.

Cash Surrender  Value of Life Insurance - The fair value of cash surrender value
of life insurance approximates carrying value.

Deposits - The fair values of  noninterest-bearing,  interest-bearing demand and
savings  accounts are equal to the amount payable on demand at the balance sheet
date. The carrying amounts for variable rate, fixed-term certificates of deposit
approximate  their  fair  values at the  balance  sheet  date.  Fair  values for
fixed-rate  certificates  of deposit are estimated  using a discounted cash flow
calculation  that applies interest rates currently being offered on certificates
to a schedule of aggregated expected monthly maturities on such time deposits.

Federal  Home  Loan  Bank  Advances  - The fair  value of these  borrowings  are
estimated using a discounted cash flow  calculation,  based on current rates for
similar debt.

Other  Borrowings - The fair value of these  borrowings  are  estimated  using a
discounted cash flow calculation, based on current rates for similar debt.

Advance  Payment  by  Borrowers  for  Taxes  and  Insurance  -  The  fair  value
approximates carrying value.

Off-Balance  Sheet  Commitments - Commitments  include  commitments to originate
mortgage and consumer loans and standby letters of credit and are generally of a
short-term  nature.  The  fair  value  of such  commitments  are  based  on fees
currently  charged to enter into  similar  agreements,  taking into  account the
remaining terms of the agreements and the counterparties'  credit standing.  The
carrying  amounts of these  commitments,  which are  immaterial,  are reasonable
estimates of the fair value of these financial instruments:

The estimated fair values of the Company's financial instruments are as follows:
<PAGE>
<TABLE>
<CAPTION>
                                                                  2003                            2002
                                                        -----------------------------------------------------
                                                         Carrying        Fair          Carrying         Fair
                                                          Amount         Value           Amount         Value
                                                        -----------------------------------------------------
Assets
<S>                                                     <C>             <C>            <C>           <C>
         Cash and cash equivalents                      $  12,512       $  12,512      $ 18,610      $ 18,610
         Investment securities available for sale          34,557          34,557        28,174        28,174
         Loans including loans held for sale, net         192,266         195,278       165,957       170,495
         Interest receivable                                1,489           1,489         1,467         1,467
         Stock in FHLB                                      2,176           2,176         2,000         2,000
         Cash surrender value of life insurance             5,093           5,093         1,326         1,326
Liabilities
         Deposits                                         179,954         181,170       161,829       163,776
         FHLB advances                                     43,000          44,372        40,000        41,975
         Other borrowings                                   7,000           7,000            --            --
         Interest payable                                     381             381           459           459
         Advance payments by borrowers for taxes
                  and insurance                                63             63             59            59

</TABLE>

Note 19:  Condensed Financial Information (Parent Company Only)

Presented  below is condensed  financial  information as to financial  position,
results of operations and cash flows of the Company:

                            Condensed Balance Sheets

                                                             2003       2002
                                                           ------------------
Assets
  Cash and due from banks                                 $  3,060   $   961
  Investment in common stock of subsidiary                  26,280    19,659
  Investment in RVB Trust I                                    217        --
  Other assets                                                 795       216
                                                          --------   -------
    Total assets                                          $ 30,352   $20,836
                                                          ========   =======
Liabilities
  Borrowings                                              $ 7,217    $    --
  Dividends payable                                           280        203
                                                         --------   --------
    Total liabilities                                       7,497        203

Stockholders' Equity                                       22,855     20,633
                                                         --------   --------
    Total liabilities and stockholders' equity            $30,352    $20,836
                                                         ========   ========

<TABLE>
<CAPTION>
                         Condensed Statements of Income

                                                               2003         2002      2001
                                                             ------------------------------
Income
<S>                                                          <C>          <C>        <C>
         Dividends from subsidiary                           $  632       $2,601     $  425
         Other income                                            63           35         45
                                                             ------       ------     ------
                  Total income                                  695        2,636        470
                                                             ------       ------     ------
Expenses
         Interest expense                                       346           23         55
         Other expenses                                         232          142        153
                                                             ------       ------     ------
                  Total expenses                                578          165        208
                                                             ------       ------     ------
Income before income tax and equity in
         undistributed income of subsidiary.                    117        2,471        262
         Income tax benefit                                     204           51         65
                                                             ------       ------     ------
Income before equity in undistributed income of
         subsidiary                                             321        2,522        327
         Equity in undistributed income of subsidiary         2,334           36      1,649
                                                             ------       ------     ------
Net Income                                                   $2,655       $2,558     $1,976
                                                             ======       ======     ======


<PAGE>

                       Condensed Statements of Cash Flows

                                                               2003         2002      2001
                                                             ------------------------------

Operating Activities
         Net income                                          $2,655       $2,558     $1,976
         Items not requiring (providing) cash                (2,625)         109     (1,453)
                                                             ------       ------     ------
                  Net cash provided by operating activities      30        2,667        523

Financing Activities
    Purchase of stock                                          (366)        (140)    (1,182)
    Proceeds from exercise of stock options                     313           99         68
    Acquisition of stock for stock benefit plans                 --          (22)        --
    Proceeds from borrowings                                  7,000           --      1,050
    Repayment of borrowings                                      --       (1,500)        --
    Capital contribution to subsidiary                       (4,000)          --         --
    Cash dividends                                             (878)        (543)      (261)
                                                             ------       ------     ------
      Net cash provided by (used in) financing activities     2,069       (2,106)      (325)
                                                             ------       ------     ------
Net Change in Cash and Cash Equivalents                       2,099          561        198

Cash and Cash Equivalents at Beginning of Year                  961          400        202
                                                             ------       ------     ------
Cash and Cash Equivalents at End of Year                     $3,060       $  961     $  400
                                                             ======       ======     ======
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                      GENERAL INFORMATION FOR SHAREHOLDERS

<S>                                                             <C>
Transfer Agent and Registrar:                                   Shareholder and General Inquiries:
Registrar and Transfer Company                                  River Valley Bancorp
10 Commerce Drive                                               Attn: Matthew P. Forrester
Cranford, NJ  07016-3572                                        430 Clifty Drive, P.O. Box 1590
Tel:  1-800-368-5948                                            Madison, Indiana  47250
www.rtco.com                                                    Tel: (812) 273-4949
                                                                Fax: (812) 273-4944


Corporate Counsel:                                              Special Counsel:
Lonnie D. Collins, Attorney                                     Barnes & Thornburg
307 Jefferson Street                                            11 S. Meridian Street
Madison, Indiana  47250                                         Indianapolis, Indiana  46204
Tel: (812) 265-3616                                             Tel: (317) 236-1313
Fax: (812) 273-3143                                             Fax: (317) 231-7433

</TABLE>

Annual and Other Reports:

Additional  copies of this Annual Report to Shareholders  and copies of the most
recent Form 10-KSB may be obtained without charge by contacting the Corporation.

Offices of River Valley Financial Bank:

Hilltop:        430 Clifty Drive
Downtown:       233 East Main Street
Drive thru:     401 East Main Street
Wal-Mart:       567 Ivy Tech Drive
Hanover:        10 Medical Plaza
Charleston:     1025 Highway 62

Internet and E-MAIL Address:   rvfbank.com

Annual Meeting:

The Annual  Meeting of  Shareholders  of River  Valley  Bancorp  will be held on
Wednesday, April 16, 2003, at 3:00 PM, at 430 Clifty Drive, Madison, IN 47250.
<PAGE>
<TABLE>
<CAPTION>

                      DIRECTORS OF THE COMPANY AND THE BANK

<S>                                     <C>                                     <C>
Fred W. Koehler                         Matthew P. Forrester                    Charles J. McKay
Chairman                                Director & President                    Director

Robert W. Anger                         Michael J. Hensley                      *****************
Director                                Director

Jonnie L. Davis                         L. Sue Livers                           Lonnie D. Collins
Director                                Director                                Secretary

</TABLE>



                EXECUTIVE OFFICERS OF RIVER VALLEY FINANCIAL BANK
<TABLE>
<CAPTION>


<S>                                     <C>                                     <C>
Matthew P. Forrester                    Barbara J. Eades                        Loy M. Skirvin
President, CEO                          Vice President of Retail Banking        Vice President of Human Resources

Mark A. Goley                           Larry C. Fouse                          Vickie Grimes
Vice President of Lending               Vice President of Finance               Internal Auditor

Anthony D. Brandon                      Deanna J. Liter                         John Muessel
Vice President of                       Vice President of Data Services         Vice President
Loan Administration                                                             Trust Officer

</TABLE>

              OFFICERS AND MANAGERS OF RIVER VALLEY FINANCIAL BANK
<TABLE>
<CAPTION>

<S>                                                     <C>
Loan Officers                                           Other Managers

Theresa A. Dryden                                       Kenneth L. Cull - Collection Officer
Sherri Furnish                                          Laura Denning - Loan Processing Manager
Natasha Jenkins                                         Luann Nay - Loan Administrator
Rick T. Nelson                                          Kelly Shelton - Loan Operations Manager
Robert J. Schoenstein - AVP                             Teresa J. Smith - Data Processing Manager
Don Bennett                                             Mary Ellen Wehner - Commercial Loan Operations Manager

Customer Service Managers                               Elizabeth Baxter - Accounting Manager

Angela D. Adams                                         Mary Ellen McClelland - Executive Secretary
Debbie R. Finnegan
Rachael A. Goble
Sandy Stilwell
</TABLE>