EXHIBT 13

To Our Shareholders, Customers, and Friends:

It is my pleasure to present to you River Valley Bancorp's seventh Annual Report
to Shareholders, covering the year ending December 31, 2002.

From a national  perspective,  2002  offered  the  promise  of a renewed  spirit
dedicated to patriotism,  idealism,  and economic prosperity.  It was hoped that
the physiological  and psychological  scar incurred by our nation as a result of
September 11, 2001, was to have invigorated a nation, in thinking and in action.
The  reality of 2002 was that the country  was  besieged by a year-long  saga of
other bad news, and of wars and rumors of war. The promise of hope got lost in a
mire of uncertainties.

While most corporations  suffered the effects of that uncertainty,  River Valley
Bancorp experienced yet another outstanding year in 2002. Year 2002 was a record
year in a number of financial measures, none more important than net income. For
the  third   consecutive   year,  the  Corporation   experienced  no  less  than
double-digit  gains in profitability,  and even more impressive total returns to
shareholders.  For 2002,  shareholders  saw a total annual return of over 50% on
their investment.

Financially for the year ended December 31, 2002, net income was $2,558,000,  or
basic  earnings  per share of $3.29,  compared  to  $1,976,000,  or $2.50  basic
earnings  per share,  reported  in 2001.  The  return on average  assets for the
fiscal year 2002 was 1.22%;  the return on average  equity was  13.21%.  For the
fiscal year 2001,  those numbers were 1.09% and 11.27%,  respectively.  The book
value of shares  outstanding  as of  December  31,  2002 was $25.45  compared to
$22.21 at December 31, 2001.

The  organization  experienced  good asset  growth in fiscal 2002  supported  by
positive  portfolio  loan growth.  As of December  31,  2002,  total assets were
$224.0 million, an increase of 16.9%. Net loans,  including loans held for sale,
were $166.0 million,  an increase of $8.0 million, or 5.1% from that recorded as
of December 31, 2001.  Deposits  also  increased by $16.2  million,  or 11.1% to
$161.8 million as of December 31, 2002.  Shareholders' equity as of December 31,
2002 was $20.6 million, or 9.2% as expressed as a percentage of assets.

For the year ended 2002,  the  Corporation  funded its allowance for loan losses
with  $570,000,  up from $450,000 for the previous  year. The allowance for loan
losses  as of  December  31,  2002  totaled  $2.1  million,  or  1.27%  of loans
outstanding. Total delinquency, as defined as 30 days or more, stood at 0.96% of
total loans as of December 31, 2002,  virtually  unchanged  from the 0.97% level
experienced as of December 31, 2001.

Fiscal  2002 was yet  another  record  year.  The  Corporation  is on the  move,
building and expanding its asset base,  diversifying its market, and solidifying
its core business. We are proud of our accomplishments,  but always mindful that
our  success is defined by customer  service  and our  ability to  differentiate
ourselves  from other banks and "bank  wannabes." We sincerely  appreciate  your
continued support and patronage.

Respectfully Submitted,


/s/ Matthew P. Forrester
--------------------------
Matthew P. Forrester
President, CEO


<PAGE>



                              River Valley Bancorp

                            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,  with the sale of
1,190,250  common shares at an initial  offering  price of $10.00 per share.  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")  in a  transaction  that  was
accounted for, using the purchase method of accounting.  River Valley  Financial
and Citizens  merged on November 20, 1997.  Future  references  to River Valley,
River  Valley  Financial  and  Citizens  are  utilized  herein,  as the  context
requires.

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 813,820 common shares of River Valley Bancorp outstanding at February
25,  2003,  held of record by  approximately  378  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".

Presented  on the  following  page  are the high  and low  sale  prices  for the
Corporation's  common shares, as well as cash  distributions  paid thereon since
December  2000.  Such sales  prices do not  include  retail  financial  markups,
markdowns or commissions.  Information relating to sale prices has been obtained
from Nasdaq.



<PAGE>

<TABLE>
<CAPTION>


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

Quarter Ended                       High                  Low                   Cash Distributions

2002
<S>        <C> <C>               <C>                   <C>                              <C>
  December 31, 2002              $31.75                $26.35                           $0.250
  September 30, 2002              28.25                 23.74                            0.200
  June 30, 2002                   27.70                 23.80                            0.200
  March 31, 2002                  26.00                 20.20                            0.150

2001
  December 31, 2001              $20.70                $19.50                           $0.150
  September 30, 2001              21.07                 17.72                            0.125
  June 30, 2001                   18.00                 16.02                            0.125
  March 31, 2001                  17.00                 15.19                            0.100

2000
  December 31, 2000              $16.00                $13.63                           $0.100
  September 30, 2000              14.25                 12.88                            0.085
  June 30, 2000                   13.00                 10.44                            0.085
  March 31, 2000                  12.63                 10.25                            0.075
</TABLE>

The high and low sale prices for River Valley's  common shares between  December
31, 2002 and February 25, 2003 were $31.24 and $28.98, respectively.

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 at least 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 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>

Selected consolidated financial condition data:                          At December 31,
                                                    2002         2001         2000         1999        1998
                                                    ----         ----         ----         ----         ----
Total amount of:                                                         (In thousands)
<S>                                              <C>          <C>          <C>          <C>          <C>
  Assets                                         $224,020     $191,618     $162,130     $138,695     $138,369
  Loans receivable - net (1)                      165,957      157,972      140,970      115,131      112,385
  Cash and cash equivalents (2)                    18,610        5,641        6,382        8,052       12,307
  Mortgage-backed and related securities              583          831        1,918        4,209        5,986
  Investment securities                            27,591       16,822        5,329        5,230        1,283
  Deposits                                        161,829      145,571      130,225      114,251      118,151
  FHLB advances and other borrowings               40,000       26,500       13,450        6,500          270
  Shareholders' equity- net                        20,633       17,971       17,184       16,866       18,613

Summary of consolidated earnings data:                               Year Ended December 31,
                                                    2002         2001         2000         1999         1998
                                                    ----         ----         ----         ----         ----
                                                                  (In thousands, except share data)

Total interest income                            $ 12,755     $ 13,084     $ 11,118     $  9,734     $ 10,108
Total interest expense                              5,638        6,617        5,637        4,617        4,842
                                                 --------     --------     --------     --------     --------
Net interest income                                 7,117        6,467        5,481        5,117        5,266
Provision for losses on loans                         570          450          227          140          275
                                                 --------     --------     --------     --------     --------
Net interest income after provision for
losses on loans                                     6,547        6,017        5,254        4,977        4,991

Other income                                        3,094        1,922        1,053          844        1,188
General, administrative and other expense           5,455        4,706        3,764        4,080        4,093
                                                 --------     --------     --------     --------     --------

Earnings before income tax expense                  4,186        3,233        2,543        1,741        2,086
Income tax expense                                  1,628        1,257          933          702          833
                                                 --------     --------     --------     --------     --------

Net earnings                                     $  2,558     $  1,976     $  1,610     $  1,039     $  1,253
                                                 ========     ========     ========     ========     ========

Basic earnings per share                         $   3.29     $   2.50     $   1.88     $   1.03     $   1.13
                                                 ========     ========     ========     ========     ========

Diluted earnings per share                       $   3.15     $   2.44     $   1.87     $   1.03     $   1.12
                                                 ========     ========     ========     ========     ========
</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)


Selected financial ratios and other data:

                                                                     Year ended December 31,
                                                      2002         2001          2000         1999         1998
                                                      ----         ----          ----         ----         ----

<S>                                                   <C>          <C>           <C>          <C>          <C>
Interest rate spread during period                    3.39%        3.58%         3.47%        3.63%        3.66%
Net yield on interest-earning assets (1)              3.56         3.80          3.79         3.94         4.08
Return on assets (2)                                  1.22         1.09          1.05         0.76         0.92
Return on equity (3)                                 13.21        11.27          9.45         5.87         6.85
Equity to assets (4)                                  9.21         9.38         10.60        12.16        13.45
Average interest-earning assets to
  average interest-bearing liabilities              106.18       105.94        108.02       108.81       111.07
Non-performing assets to total assets (4)             0.48         0.36          0.38         0.62         1.47
Allowance for loan losses to total
  loans outstanding (4)                               1.27         1.25          1.21         1.28         1.33
Allowance for loan losses to
  non-performing loans (4)                          194.54       285.80        274.07       164.41        75.78
Net charge-offs to average total
  loans outstanding                                   0.27         0.12          0.04         0.08         0.06
General, administrative and other expense
  to average assets (5)                               2.60         2.60          2.47         2.97         3.01
Dividend payout ratio                                25.40        20.49         18.45        25.73        19.64
Number of full service offices (4)                       4            4             5            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>



                              River Valley Bancorp

                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, 2002, 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 31
through 33 contains a summary of River Valley's significant  accounting policies
for the year ended December 31, 2002. Certain of these policies are important to
the  portrayal  of  River  Valley'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.  As described below, management
believes that its critical  accounting  policies  include those  relating to 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  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.  A worsening or protracted economic
decline would  increase the  likelihood  of additional  losses due to credit and
market risk and could create the need for additional loan loss reserves.


<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Mortgage Servicing Rights

River Valley  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
statement of income.

Discussion of Changes in Financial  Condition from December 31, 2001 to December
31, 2002

At December 31, 2002, River Valley's consolidated assets totaled $224.0 million,
representing an increase of $32.4 million over the December 31, 2001 total. This
increase  in assets was funded in part by a $16.3  million  increase in deposits
and a $13.5 million increase in borrowings. Deposits increased to $161.8 million
as of December 31, 2002,  from $145.6  million while  borrowings  increased from
$26.5 million as of December 31, 2001, to $40.0 million as of December 31, 2002.
Shareholders'  equity was $20.6  million as December 31, 2002, a net increase of
$2.6 million from $18.0 million as of December 31, 2001.

Liquid assets (i.e.,  cash,  federal funds sold,  interest-earning  deposits and
certificates  of deposit)  increased  by $13.0  million  from  December 31, 2001
levels to a total of $18.6 million at December 31, 2002.  Investment  securities
totaled  $27.6  million at December 31, 2002,  an increase of $10.8 million over
December 31, 2001.  Mortgage-backed securities decreased by $248,000, to a total
of $583,000 at December 31, 2002,  primarily due to principal repayments and the
sale of several issues.




<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Discussion of Changes in Financial  Condition from December 31, 2001 to December
31, 2002

Loans  receivable,  including  loans held for sale,  totaled  $166.0  million at
December 31, 2002, an increase of $8.0 million over the $158.0  million total at
December 31, 2001. The increase resulted primarily from loan originations during
2002 of $171.4 million,  which were partially offset by principal  repayments of
$95.5  million  and sales of $67.9  million.  Loan  origination  volume for 2002
exceeded that of 2001 by $23.5  million,  or 15.9%.  There were increases in all
types of lending with the exception of consumer,  land, and multi-family  loans.
The volume of loan sales into the secondary  mortgage  market  increased  during
2002 from the 2001 volume by $21.5  million,  due in large part to low  interest
rates.

River Valley's allowance for loan losses totaled approximately $2.1 for the year
ended December 31, 2002,  which  represented  1.27% of total loans at that date.
The allowance for loan losses  totaled $2.0 million,  or 1.25% of total loans at
December 31, 2001.  Non-performing  loans (defined as loans  delinquent  greater
than 90 days and loans on  nonaccrual  status)  totaled  $1.1  million  and $0.7
million at December  31, 2002 and 2001,  respectively.  The  allowance  for loan
losses  represented 195% and 286% of  non-performing  loans at December 31, 2002
and 2001, respectively.

Although  management believes that its allowance for loan losses at December 31,
2002 was adequate based upon the available facts and circumstances, there can be
no assurance that additions to such an allowance will not be necessary in future
periods, which could negatively affect the Corporation's results of operations.

Deposits  increased by $16.2 million,  or 11.1%, to a total of $161.8 million at
December  31,  2002,  compared to $145.6  million  total at December  31,  2001.
Savings and demand  deposits  increased by $3.9 million,  or 6.2%,  during 2002,
while  certificates  of deposit  increased  by $12.4  million,  or 14.9%.  These
fluctuations in balances were attributed to competitive  rates and the flight of
money from equity investments.

Advances from the Federal Home Loan Bank and other borrowed  money  increased by
$13.5 million from the total at December 31, 2001, as current period  borrowings
of $40.0  million were used in part to fund loan growth.  The low interest  rate
environment has allowed for prudent long term funding.

Shareholders'  equity totaled $20.6 million at December 31, 2002, an increase of
$2.6 million  from the $18.0  million  total at December 31, 2001.  The increase
resulted  primarily from net income of $2.6 million,  which was partially offset
by a modest  repurchase  of  shares  totaling  $140,000  and cash  dividends  of
$619,000.  This net increase also includes a net increase of $450,000 related to
stock benefit plans,  proceeds of $99,000 from the exercise of stock options and
an increase in the unrealized gain on securities available for sale of $314,000.



<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

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, and 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,  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 of 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 collectability 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.



<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of Results of Operations  for the Years Ended  December 2002 and 2001
(continued)

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 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 loans 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 gain on sale of a bank property,
and an increase in service fees and charges of $256,000. 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 $67.6
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 an
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.

Comparison  of Results of Operations  for the Years Ended  December 31, 2001 and
2000

General

River  Valley's net earnings for the year ended  December 31, 2001 totaled $1.98
million, an increase of $366,000,  or 22.7%, from net earnings reported in 2000.
The increase in net earnings in the 2001 period was primarily attributable to an
increase in net interest income of $986,000 and an increase of $869,000 in other
income, while general,  administrative and other expense were $942,000 higher in
the 2001 period.  The  provision  for federal  income taxes was $324,000 more in
fiscal year 2001 as compared to the same period in 2000.  The provision for loan
losses in 2001 was $450,000 as compared to $227,000 in 2000.


<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of results of Operations  for the Years Ended  December 2001 and 2000
(continued)

Net Interest Income

Total  interest  income for the year ended  December 31, 2001  amounted to $13.1
million, an increase of $2.0 million, or 18.0%, from the 2000 total,  reflecting
the effects of higher average balances on  interest-earning  assets. The average
balance of interest-earning  assets outstanding  year-to-year increased by $25.2
million and the yield on those assets  increased  from an average yield of 7.68%
in 2000  to  7.70%  in  2001.  Interest  income  on  loans  and  mortgage-backed
securities  totaled $12.3 million for 2001,  an increase of  approximately  $1.8
million,  or 16.9%,  from 2000.  Interest income on investments,  FHLB stock and
interest-earning deposits increased by $183,000, or 32.6%, due to higher average
balances on those investments.

Interest expense on deposits increased by $524,000, or 10.2%, to a total of $5.7
million for the year ended  December 31, 2001,  due primarily to higher  average
balances.  The cost of  deposits  decreased  from 4.1% in 2000 to 4.0% in fiscal
2001.  Interest  expense  on  borrowings  totaled  $956,000  for the year  ended
December  31, 2001,  an increase of $456,000  from 2000.  The increase  resulted
primarily from higher average borrowings year-to-year,  partially offset by a 17
basis point decrease in average cost.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest income  increased  during 2001 by $986,000,  or 18.0%,  compared to
2000.  The interest rate spread  increased by 11 basis points for 2001, to 3.58%
from 3.47% in the 2000 period,  while the net interest  margin amounted to 3.80%
in 2001 and 3.79% in 2000.

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  $450,000
provision  for  losses on loans in 2001,  an  increase  of  $223,000,  or 98.2%,
compared to the $227,000  provision  recorded in 2000. The 2001 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, 2001 were  $690,000,  an
increase of approximately  $69,000 from the $621,000  recorded as of fiscal year
2000. Net charge-offs amounted to $180,000 in 2001, compared to $47,000 in 2000.
The allowance for losses on loans was considered adequate at December 1, 2001.


<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Comparison  of Results of Operations  for the Years Ended  December 31, 2001 and
2000 (continued)

Other Income

Other income  amounted to $1.9 million for the year ended  December 31, 2001, an
increase of $869,000,  or 82.5%, compared to 2000, due primarily to increases in
net gains on loan sales and service  fees and  charges.  Net gains on loan sales
increased  from $44,000 in 2000,  to $772,000 in 2001,  an increase of $728,000.
The volume of loan sales increased from $2.6 million in 2000 to $46.1 million in
2001.

General, Administrative and Other Expense

General,  administrative  and other  expense  totaled  $4.7 million for the year
ended  December 31, 2001, an increase of $942,000 over the 2000 total.  Employee
compensation  and  benefits  increased by $266,000 in fiscal 2001 as compared to
2000,  primarily  from cost of living,  benefit  expense  and  increase  in ESOP
expenses. Occupancy and equipment expense increased by $44,000 in fiscal 2001 as
compared to 2000, due to higher  depreciation  costs.  Other operating  expenses
increased by $632,000 primarily from increases in advertising,  data processing,
donations and mortgage servicing.  The Corporation also made a $100,000 donation
to a local school system in exchange for federal tax credits in future years.

Income Taxes

The  provision for income taxes  increased by $324,000,  or 34.7 %, for the year
ended December 31, 2001, as compared to 2000. The effective tax rates were 38.8%
and 36.7% for the years ended December 31, 2001 and 2000, 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,
                                                  2002                               2001                            2000
                                   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       $ 10,186      $   158      1.55%    $   5,042    $    185     3.67%   $  4,005   $   240    5.99%
  Other securities (1)              23,136          867      3.75         8,480         481     5.67       3,580       243    6.79
  Mortgage-backed and
        related securities             730           31      4.25         1,259          73     5.80       2,976       192    6.45
  Loans receivable (2)             164,306       11,604      7.06       154,171      12,267     7.96     133,255    10,365    7.78
  FHLB stock                         1,623           95      5.85         1,055          78     7.39         943        78    8.27
                                  --------      -------               ---------    --------              -------   -------
Total interest-earning assets      199,981       12,755      6.38       170,007      13,084     7.70     144,759    11,118    7.68
                                  --------      -------                            --------                        -------
Non-interest earning assets,
   net of allowance for
        loan losses                  9,786                               10,922                            7,859
                                  --------                            ----------                         -------
          Total assets            $209,767                            $ 180,929                         $152,618
                                  ========                            =========                         ========


Liabilities/shareholder equity
Interest-bearing liabilities:
  Savings deposits                $ 35,878          698      1.95     $  32,108       1,006     3.13    $ 32,906     1,185    3.60
  Interest bearing demand  (5)      30,475          233      0.76        26,719         330     1.24      24,265       392    1.62
  Certificates of deposit           89,514        3,123      3.49        84,262       4,325     5.13      68,026     3,560    5.23
  FHLB advances and other
      borrowings                    32,475        1,584      4.88        17,385         956     5.50       8,813       500    5.67
                                  --------      -------               ---------    --------              -------   -------    ----
Total interest-bearing
        liabilities                188,342        5,666      2.99       160,474       6,617     4.12     134,010     5,637    4.21
                                  --------      -------               ---------    --------                        -------
Other liabilities                    2,052                                2,915                            1,561
                                  --------                            ----------                        --------
        Total liabilities          190,394                              163,389                          135,571
         Total equity               19,373                               17,540                           17,047
                                  --------                            ---------                         --------

Total liabilities and equity      $209,767                            $ 180,929                         $152,618
                                  ========                            =========                         ========


Net interest earning assets       $ 11,639                            $   9,533                         $ 10,749
                                  ========                            =========                         ========


Net interest income                             $ 7,117                            $  6,467                        $ 5,481
                                                ======                             ========                        =======

Interest rate spread (3)                                     3.39%                              3.58%                         3.47%
Net yield on weighted average
  interest-earning assets (4)                                3.56%                              3.80%                         3.79%
Average interest-earning
  assets to average
  Interest-bearing liabilities      106.18%                              105.94%                          108.02%

</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 $11,854, $9,985, and $8,512.

<PAGE>
                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

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,
                                                     2002 vs. 2001                           2001 vs. 2000
                                                       Increase                                Increase
                                                       (decrease)                              (decrease)
                                                        to due                                  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       $  155    $   (165)  $   (10)           $   64      $  (119)  $  (55)
  Investment securities                        596        (210)      386               284          (46)     238
  Mortgage-backed and related securities       (26)        (16)      (42)             (101)         (18)    (119)
  Loans receivable, net                        773      (1,436)     (663)            1,659          243    1,902
                                            -------   ---------  --------           -------    --------- -------
Total                                        1,498      (1,827)     (329)            1,906           60    1,966
                                            -------   ---------  --------           -------    --------- -------

Interest-bearing liabilities:
  Deposits                                     406      (2,013)   (1,607)              713         (189)     524
  FHLB advances and other borrowings           747        (119)      628               472          (16)     456
                                            -------   ---------  --------           -------    --------- -------
Total                                        1,153      (2,132)     (979)            1,185         (205)     980
                                            -------   ---------  --------           -------    --------- -------

Net change in interest income               $  345    $    305   $   650             $ 721      $   265   $  986
                                            =======   ========   =======             =====      ======== =======

</TABLE>

Asset and Liability Management

Like other financial institutions, River Valley 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 is using the Net  Portfolio  Value  ("NPV")
methodology  adopted  by the OTS as part of its  capital  regulations.  Although
River Valley 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's  interest rate
risk, as of December 31, 2002, (the latest  information  available) and December
31,  2001,  as measured  by changes in NPV for an  instantaneous  and  sustained
parallel shift of 100 through 300 basis points in market interest rates.


<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Asset and Liability Management (continued)

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.

<TABLE>
<CAPTION>

                             As of December 31, 2002

                             (Dollars in thousands)
Change in
Interest Rates                      Estimated                    Amount
(basis points)                         NPV                     of Change                 Percent
--------------                      ---------                  ---------                 -------
<S>                                 <C>                        <C>                           <C>
+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)                            --------                   --------                  ------

                             As of December 31, 2001

                             (Dollars in thousands)
Change in
Interest Rates                      Estimated                    Amount
(basis points)                         NPV                     of Change                 Percent
---------------                     ---------                  ---------                 -------
+300                                $ 22,166                   $ (3,131)                   (12)%
+200                                  23,416                     (1,881)                    (7)
+100                                  24,376                       (921)                    (4)
     -                                25,297                    --------                 ------
-100                                  25,957                        661                      3
-200 (1)                            --------                   --------                  ------
-300 (1)                            --------                   --------                  ------
</TABLE>

(1)  At December 31, 2002,  the OTS did not provide  information  as to interest
     rate risk for 200 and 300 point decreases.


<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Asset and Liability Management (continued)

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,
2002,  River Valley had commitments to originate loans totaling $1.4 million and
in  addition,  had  undisbursed  loans in  process,  unused  lines of credit and
standby letters of credit totaling $15.9 million. At such date, River Valley had
$10.0  million in  commitments  to sell loans and no  outstanding  commitment to
purchase loans.  The Corporation  considers its liquidity and capital  resources
sufficient to meet outstanding short- and long-term needs.







<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (continued)

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, 2002, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                Year ended December 31,
                                                       2002                2001                    2000
                                                                       (In thousands)

<S>                                                  <C>                 <C>                 <C>
Cash flows from operating activities                 $   5,348           $    756            $    2,028

Cash flows from investing activities:
  Purchase of securities                               (22,161)           (19,262)               (7,949)
  Proceeds from maturities of securities                 4,217              5,204                 8,297
  Proceeds from sales of securities                      7,951              3,689                 2,002
  Net loan (originations) repayments                   (10,385)           (15,078)              (26,165)
  Other                                                 (1,163)            (3,079)               (1,087)

Cash flows from financing activities:
  Net increase (decrease) in deposits                   16,258             15,346                15,974
  Net increase (decrease) in borrowings                 13,500             13,050                 6,950
  Purchase of stock                                       (140)            (1,182)               (1,367)
  Other                                                   (456)              (185)                 (353)
                                                     ----------          --------            -----------

Net change in cash and cash equivalents              $  12,969           $   (741)            $  (1,670)
                                                     =========           ========            ==========
</TABLE>

River Valley 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.




<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (continued)

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  includes a general loan loss  allowance of $2.1 million at
December 31, 2002.

River Valley exceeded all of its regulatory capital requirements at December 31,
2002. The following table summarizes River Valley Financial's regulatory capital
requirements and regulatory capital at December 31, 2002:

<TABLE>
<CAPTION>
                                                  OTS Requirement                       Actual Amount

                                     Percent of                    Percent of                       Amount
                                       Assets      Amount           Assets(1)      Amount         of Excess
                                     ----------    ------          -----------     ------         ---------
                                                            (Dollars in thousands)

<S>                                     <C>        <C>                 <C>        <C>             <C>
Tangible capital                        1.50%      $ 3,341             8.4%       $ 18,637        $ 15,296
Core capital (2)                        4.00%        8,909             8.4%         18,637           9,728
Risk-based capital                      8.00%       12,888            12.8%         20,651           7,763

</TABLE>



(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 is
     in compliance with this requirement.






<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Effect of Recent Accounting Pronouncements

Accounting  for  a  Business  Combination.  Statement  of  Financial  Accounting
Standards  ("SFAS") No. 141, requires that all business  combinations  should be
accounted for using the purchase method of accounting; use of the pooling method
is prohibited.

This statement requires that goodwill be initially recognized as an asset in the
financial statement and measured as the excess of the cost of an acquired entity
over  the net of the  amounts  assigned  to  identifiable  assets  acquired  and
liabilities  assumed. In addition,  SFAS No. 141 requires all other intangibles,
such as core deposit intangibles for a financial institution, to be identified.

The provisions of Statement No. 141 were effective for any business  combination
that is initiated after June 30, 2001.

Accounting for Goodwill.  Under the provisions of SFAS No. 142,  goodwill should
not be amortized,  but should be tested for  impairment  at the  reporting  unit
level.  Impairment  test of goodwill  should be done on an annual basis,  unless
events or circumstances  indicate impairment has occurred in the interim period.
The annual impairment test can be performed at any time during the year, as long
as the measurement date is used consistently from year to year.

Impairment testing is a two-step process,  as outlined within the statement.  If
the fair  value  of the  goodwill  is less  than its  carrying  value,  then the
goodwill  is  deemed  impaired  and  a  loss  recognized.  Any  impairment  loss
recognized as a result of completing the transitional impairment test, should be
treated as a change in accounting  principle and recognized in the first interim
period financial statements.

The  provisions of Statement No. 142 were  effective for fiscal years  beginning
after  December  15,  2001.   Goodwill  and  intangible  assets  acquired  in  a
transaction  completed  after  June 30,  2001,  but  before  this  Statement  is
initially  applied,  would be accounted for in accordance with the  amortization
and  nonamortization  provisions of the statement.  The useful  economic life of
previously  recognized  intangible  assets should be reassessed upon adoption of
the   Statement,   and  remaining   amortization   periods  should  be  adjusted
accordingly. Intangible assets deemed to have an indefinite life would no longer
be amortized.

The Company adopted these new accounting  rules on January 1, 2002. As a result,
the Company will not  amortize the goodwill it recorded  prior to June 30, 2001,
but will make an  annual  assessment  of any  impairment  in  goodwill  and,  if
necessary,  recognize an impairment  loss at that time. The Company had goodwill
of $31,000 at December 31, 2002 and no impairment loss was identified.

Acquisitions of Certain Financial Institutions. SFAS No. 147 amends SFAS No. 72,
Accounting for Certain Acquisitions of Banking or Thrift Institutions,  and FASB
Interpretation  No. 9,  Applying  APB Opinions No. 16 and 17, When a Savings and
Loan Association or a similar Institution is Acquired in a Business  Combination
Accounted for by the Purchase Method.  SFAS No. 72 and FASB Interpretation No. 9
provided  interpretive  guidance on the  application  of the purchase  method to
acquisitions of financial  institutions.  Except for transactions between two or
more  mutual  enterprises,  SFAS  No.  147  removes  acquisitions  of  financial
institutions  from the scope of both SFAS No. 72 and  Interpretation  No. 9, and
requires that those  transactions  be accounted for in accordance  with SFAS No.
141, Business Combinations, No. 142, Goodwill and Other Intangible


<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Effect of Recent Accounting Pronouncements (continued)

Assets, No. 147. In addition,  SFAS No. 147 amends SFAS No. 144,  Accounting for
the  Impairment  or  Disposal  of  Long-Lived  Assets,  to  include in its scope
long-term  customer-relationship  intangible  assets of financial  institutions,
such as  depositor  and borrower  relationship,  intangible  assets,  and credit
cardholder  intangible  assets.  Those intangible assets are subject to the same
undiscounted cash flow  recoverability  test and impairment loss recognition and
measurement  provisions that SFAS No. 144 requires for other  long-lived  assets
that are held and used.

The effective date of SFAS No. 147 was October 1, 2002, with earlier application
relating to previously  recognized permitted  unidentifiable  intangible assets.
However,  the Statement  did not have a  significant  impact on the Company upon
adoption.

Accounting for Stock-Based  Compensation---Transition  and Disclosure.  SFAS No.
148 amends FASB Statement No. 123, Accounting for Stock-Based Compensation. SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.  In
addition,  SFAS No. 148 amends the  disclosure  requirements  of SFAS No. 123 to
require more  prominent and more frequent  disclosures  in financial  statements
about the effects of stock-based compensation.

Under the  provisions  of SFAS No. 123,  companies  that  adopted the fair value
based  method were  required to apply that  method  prospectively  for new stock
option  awards.   This   contributed  to  a  "ramp-up"   effect  on  stock-based
compensation  expense in the first few years  following  adoption,  which caused
concern  for  companies  and  investors  because of the lack of  consistency  in
reported results. To address that concern,  SFAS No. 148 provides two additional
methods of transition  that reflect an entity's full  complement of  stock-based
compensation   expense  immediately  upon  adoption,   thereby  eliminating  the
"ramp-up" effect.

SFAS No. 148 also improves the clarity and prominence of  disclosures  about the
proforma  effects  of using  the fair  value  based  method  of  accounting  for
stock-based  compensation for all companies -regardless of the accounting method
used - by requiring  that the data be presented more  prominently  and in a more
user-friendly format in the footnotes to the financial statements.  In addition,
SFAS No. 148 improves the  timeliness of those  disclosures,  by requiring  that
this information be included in interim, as well as annual financial statements.
In the past, companies were required to make proforma disclosures only in annual
financial statements.

The  transition  guidance and annual  disclosure  provisions of SFAS No. 148 are
effective  for fiscal  years  ending  after  December  15,  2002,  with  earlier
application   permitted  in  certain   circumstances.   The  interim  disclosure
provisions are effective for financial reports containing  financial  statements
for interim  periods  beginning  after  December 15, 2002.  The Company does not
believe  that  adoption  of this  Statement  will have a material  effect on the
Company's financial position or results of operations.



<PAGE>



                              River Valley Bancorp

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

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, 2002 and 2001


<PAGE>



                              River Valley Bancorp
                        December 31, 2002, 2001 and 2000


Contents



    Independent Accountants' Report...........................................25



    Financial Statements

        Consolidated Balance Sheets...........................................26

        Consolidated Statements of Income.....................................27

        Consolidated Statements of Comprehensive Income.......................28

        Consolidated Statements of Stockholders' Equity.......................29

        Consolidated Statements of Cash Flows.................................30

        Notes to Consolidated Financial Statements............................31




<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,  2002  and  2001,  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,  2002.  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 described above present
fairly, in all material respects,  the consolidated  financial position of River
Valley  Bancorp  as of  December  31,  2002 and  2001,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America.

As discussed in the notes to the consolidated financial statements,  the Company
changed  its  method  of  accounting  for  derivative  instruments  and  hedging
activities in 2000.



/s/ BKD, LLP
--------------------
BKD, LLP

Indianapolis, Indiana
January 21, 2003







<PAGE>



                              River Valley Bancorp
                           Consolidated Balance Sheets
                           December 31, 2002 and 2001

<TABLE>
<CAPTION>

Assets

                                                                                 2002                 2001
                                                                         -------------------------------------------
                                                                            (In Thousands, Except Share Amounts)

<S>                                                                        <C>                  <C>
     Cash and due from banks                                               $          5,094     $          4,689
     Interest-bearing demand deposits                                                13,516                  952
                                                                            ---------------      ---------------
                Cash and cash equivalents                                            18,610                5,641
     Investment securities available for sale                                        28,174               17,653
     Loans held for sale                                                              1,062                2,638
     Loans, net of allowance for loan losses of $2,101 and $1,972                   164,895              155,334
     Premises and equipment                                                           5,741                5,379
     Federal Home Loan Bank stock                                                     2,000                1,250
     Interest receivable                                                              1,467                1,475
     Other assets                                                                     2,071                2,248
                                                                            ---------------      ---------------

                Total assets                                               $        224,020     $        191,618
                                                                            ===============      ===============

 Liabilities

     Deposits
         Noninterest-bearing                                               $         11,115     $         11,406
         Interest-bearing                                                           150,714              134,165
                                                                            ---------------      ---------------
                Total deposits                                                      161,829              145,571
     Borrowings                                                                      40,000               26,500
     Interest payable                                                                   459                  613
     Other liabilities                                                                1,099                  963
                                                                            ---------------      ---------------
                Total liabilities                                                   203,387              173,647
                                                                            ---------------      ---------------

 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 - 810,844 and 809,251 shares                          7,957                7,654
     Retained earnings                                                               12,654               10,802
     Shares acquired by stock benefit plans                                            (339)                (532)
     Accumulated other comprehensive income                                             361                   47
                                                                            ---------------      ---------------
                Total stockholders' equity                                           20,633               17,971
                                                                            ---------------      ---------------

                Total liabilities and stockholders' equity                 $        224,020     $        191,618
                                                                            ===============      ===============
See Notes to Consolidated Financial Statements
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                              River Valley Bancorp
                        Consolidated Statements of Income
                  Years Ended December 31, 2002, 2001 and 2000

                                                              2002                 2001                 2000
                                                      ---------------------------------------------------------------
                                                                 (In Thousands, Except Per Share Amounts)

     Interest Income
<S>                                                     <C>                  <C>                  <C>
         Loans receivable                               $         11,604     $         12,267     $         10,365
         Investment securities                                       898                  554                  435
         Interest-earning deposits and other                         253                  263                  318
                                                         ---------------      ---------------      ---------------
                Total interest income                             12,755               13,084               11,118
                                                         ---------------      ---------------      ---------------

     Interest Expense
         Deposits                                                  4,054                5,661                5,137
         Borrowings                                                1,584                  956                  500
                                                         ---------------      ---------------      ---------------
                Total interest expense                             5,638                6,617                5,637
                                                         ---------------      ---------------      ---------------

     Net Interest Income                                           7,117                6,467                5,481
         Provision for loan losses                                   570                  450                  227
                                                         ---------------      ---------------      ---------------

     Net Interest Income After Provision for Loan
        Losses                                                     6,547                6,017                5,254
                                                         ---------------      ---------------      ---------------

     Other Income
         Service fees and charges                                  1,355                1,099                  931
         Net realized gains (losses) on sales of
           available-for-sale securities                              37                   17                   (2)
         Net gains on loan sales                                   1,226                  772                   44
         Gain on sale of premises and equipment                      352                   --                   42
         Other income                                                124                   34                   38
                                                         ---------------      ---------------      ---------------
                Total other income                                 3,094                1,922                1,053
                                                         ---------------      ---------------      ---------------

     Other Expenses
         Salaries and employee benefits                            2,619                2,291                2,025
         Net occupancy and equipment expenses                        774                  612                  568
         Data processing fees                                        228                  190                  151
         Advertising                                                 209                  208                  190
         Amortization of mortgage servicing rights                   345                  238                   24
         Office supplies                                             159                  101                   96
         Legal and professional fees                                  63                  164                  144
         Other expenses                                            1,058                  902                  566
                                                         ---------------      ---------------      ---------------
                Total other expenses                               5,455                4,706                3,764
                                                         ---------------      ---------------      ---------------

     Income Before Income Tax                                      4,186                3,233                2,543
         Income tax expense                                        1,628                1,257                  933
                                                         ---------------      ---------------      ---------------

     Net Income                                         $          2,558     $          1,976     $          1,610
                                                         ===============      ===============      ===============

     Basic Earnings per Share                           $           3.29     $           2.50     $           1.88
                                                         ===============      ===============      ===============

     Diluted Earnings per Share                         $           3.15     $           2.44     $           1.87
                                                         ===============      ===============      ===============
See Notes to Consolidated Financial Statements
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                              River Valley Bancorp
                 Consolidated Statements of Comprehensive Income
                  Years Ended December 31, 2002, 2001 and 2000


                                                             2002                 2001                2000
                                                     ---------------------------------------------------------------
                                                                             (In Thousands)

<S>                                                    <C>                  <C>                 <C>
     Net Income                                        $          2,558     $          1,976    $          1,610
     Other comprehensive income, net of tax
         Unrealized gains on securities available
           for sale
            Unrealized holding gains arising during
               the period, net of tax expense of
               $220, $18 and $55                                    336                   27                  85
            Less:  Reclassification adjustment for
               gains (losses) included in net
               income, net of tax expense (benefit)
               of $15, $7 and $(1)                                   22                   10                  (1)
                                                        ---------------      ---------------     ---------------
                                                                    314                   17                  86
                                                        ---------------      ---------------     ---------------

     Comprehensive Income                              $          2,872     $          1,993    $          1,696
                                                        ===============      ===============     ===============
See Notes to Consolidated Financial Statements
</TABLE>



<PAGE>


<TABLE>
<CAPTION>

                              River Valley Bancorp
                 Consolidated Statements of Stockholders' Equity
                  Years Ended December 31, 2002, 2001 and 2000


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


<S>                    <C>                <C>        <C>        <C>          <C>          <C>            <C>
     Balances, January 1, 2000            970,497    $ 9,116    $   8,773    $   (967)    $     (56)     $  16,866


         Net income                                                 1,610                                    1,610
         Unrealized gains on
           securities, net of
           reclassification adjustment                                                           86             86
         Cash dividends ($.345 per
           share)                                                    (279)                                    (279)
         Contribution to stock benefit
           plans                                                                   (8)                          (8)
         Amortization of expense
           related to stock benefit
           plans                                          35                      241                          276
         Purchase of stock                (101,623)   (1,016)        (351)                                  (1,367)
                                          --------    ------     --------     -------      --------       --------


     Balances, December 31, 2000          868,874      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 ($.50 per
           share)                                                    (388)                                    (388)
         Exercise of stock options          4,670         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                (64,293)      (643)        (539)                                  (1,182)
                                          -------     ------     --------     -------      --------       --------


     Balances, December 31, 2001          809,251      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 ($.80 per
           share)                                                    (619)                                    (619)
         Exercise of stock options          6,877         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                 (5,284)       (53)         (87)                                    (140)
                                          -------     ------     --------     -------      --------       --------


     Balances, December 31, 2002          810,844    $ 7,957    $  12,654    $   (339)    $     361      $  20,633
                                          =======     ======     ========     =======      ========       ========
See Notes to Consolidated Financial Statements
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                              River Valley Bancorp
                      Consolidated Statements of Cash Flows
                  Years Ended December 31, 2002, 2001 and 2000

                                                                       2002             2001              2000
                                                                ------------------------------------------------------
                                                                                   (In Thousands)
     Operating Activities
<S>                                                               <C>               <C>              <C>
         Net income                                               $        2,558    $        1,976   $        1,610
         Items not requiring (providing) cash
            Provision for loan losses                                        570               450              227
            Depreciation and amortization                                    502               311              240
            Deferred income tax                                               31                 3              (77)
            Investment securities amortization (accretion), net               28                 9              (26)
            Investment securities (gains) losses                             (37)              (17)               2
            Loans originated for sale in the secondary market            (65,339)          (48,428)          (2,614)
            Proceeds from sale of loans in the secondary market           67,589            46,101            2,632
            Gain on sale of loans                                         (1,226)             (772)             (44)
            Amortization of deferred loan origination cost                   175               157               99
            Amortization of expense related to stock benefit
               plans                                                         421               292              276
            Gain on sale of premises and equipment                          (352)               --              (42)
            Capitalized interest on construction                              (1)              (89)              (8)
         Net change in
            Interest receivable                                                8                (7)            (425)
            Interest payable                                                (154)               15              268
         Other adjustments                                                   575               755              (90)
                                                                   -------------     -------------    -------------
                Net cash provided by operating activities                  5,348               756            2,028
                                                                   -------------     -------------    -------------

     Investing Activities
         Purchase of FHLB stock                                             (750)             (307)              --
         Purchases of securities available for sale                      (22,161)          (19,262)          (7,949)
         Proceeds from maturities of securities available for
           sale                                                            4,217             5,204            7,093
         Proceeds from sales of securities available for sale              7,951             3,689            2,002
         Proceeds from maturities of securities held to maturity              --                --            1,204
         Net change in loans                                             (10,385)          (15,078)         (26,165)
         Purchases of premises and equipment                              (1,141)           (2,784)          (1,143)
         Proceeds from sale of premises and equipment                        630                --               56
         Proceeds from sale of real estate acquired through
           foreclosure                                                        98               107               --
         Premiums paid on life insurance                                      --               (95)              --
                                                                   -------------     -------------    -------------
                Net cash used in investing activities                    (21,541)          (28,526)         (24,902)
                                                                   -------------     -------------    -------------

     Financing Activities
         Net change in
            Noninterest-bearing, interest-bearing demand and
               savings deposits                                            3,891             9,643           (2,991)
            Certificates of deposit                                       12,367             5,703           18,965
         Proceeds from borrowings                                         50,000            32,050           23,450
         Repayment of borrowings                                         (36,500)          (19,000)         (16,500)
         Cash dividends                                                     (543)             (261)            (350)
         Purchase of stock                                                  (140)           (1,182)          (1,367)
         Proceeds from exercise of stock options                              99                68               --
         Advances by borrowers for taxes and insurance                        10                 8                5
         Acquisition of stock for stock benefit plans                        (22)               --               (8)
                                                                   -------------     -------------    -------------
                Net cash provided by financing activities                 29,162            27,029           21,204
                                                                   -------------     -------------    -------------

     Net Change in Cash and Cash Equivalents                              12,969              (741)          (1,670)

     Cash and Cash Equivalents, Beginning of Year                          5,641             6,382            8,052
                                                                   -------------     -------------    -------------


     Cash and Cash Equivalents, End of Year                       $       18,610    $        5,641   $        6,382
                                                                   =============     =============    =============


     Additional Cash Flows Information
         Interest paid                                            $        5,792    $        6,691   $        5,369
         Income tax paid                                                   1,480             1,119              876
         Investment securities held to maturity transferred to
           available for sale                                                 --                --            1,934
See Notes to Consolidated Financial Statements
</TABLE>

<PAGE>

                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (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  subsidiary,  River Valley Financial Bank (Bank),  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  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.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     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  nonaccural  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, 2002,  the allowance  for loan losses is adequate  based on
     information currently available. A worsening or protracted economic decline
     in the areas within which the Bank 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.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     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,  2002,  the  Company  has a  stock-based
     employee  compensation  plan, which is described more fully in Note 15. 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>

                                                                   2002               2001              2000
                                                            --------------------------------------------------------

<S>                                                           <C>                <C>               <C>
            Net income, as reported                           $        2,558     $        1,976    $        1,610
            Less:  Total stock-based employee compensation
               cost determined under the fair value based
               method, net of income taxes                               (54)               (35)              (35)
                                                               -------------      -------------     -------------

            Pro forma net income                              $        2,504     $        1,941    $        1,575
                                                               =============      =============     =============

            Earnings per share
                Basic - as reported                           $         3.29     $         2.50    $         1.88
                                                               =============      =============     =============
                Basic - pro forma                             $         3.22     $         2.45    $         1.83
                                                               =============      =============     =============
                Diluted - as reported                         $         3.15     $         2.44    $         1.87
                                                               =============      =============     =============
                Diluted - pro forma                           $         3.09     $         2.40    $         1.83
                                                               =============      =============     =============
</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.  Unearned ESOP shares have been
     excluded from the computation of average shares outstanding.

     Reclassifications  of  certain  amounts  in the 2001 and 2000  consolidated
     financial statements have been made to conform to the 2002 presentation.







<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

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, 2002,
     was $1,055,000.

Note 3:  Investment Securities
<TABLE>
<CAPTION>

                                                                               2002
                                                                       Gross           Gross
                                                    Amortized       Unrealized       Unrealized         Fair
                                                      Cost             Gains           Losses           Value
                                                --------------------------------------------------------------------
            Available for sale
<S>                                               <C>              <C>              <C>             <C>
                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
                                                   =============    ============     ============    ============


                                                                               2001
                                                                       Gross           Gross
                                                    Amortized       Unrealized       Unrealized         Fair
                                                      Cost             Gains           Losses           Value
                                                --------------------------------------------------------------------
            Available for sale
                Federal agencies                  $       14,756   $         179    $         100   $      14,835
                State and municipal                          335              12               --             347
                Mortgage and other asset-backed
                  securities                                 838               3               10             831
                Corporate obligations                      1,645              18               23           1,640
                                                   -------------    ------------     ------------    ------------

                   Total investment securities    $       17,574   $         212    $         133   $      17,653
                                                   =============    ============     ============    ============
</TABLE>


<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     The  amortized  cost and fair  value of  securities  available  for sale at
     December 31,  2002,  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.

<TABLE>
<CAPTION>
                                                                                      Available for Sale
                                                                                Amortized              Fair
                                                                                   Cost               Value
                                                                           -----------------------------------------

<S>                                                                          <C>                 <C>
            Less than one year                                               $            100    $            102
            One to five years                                                          26,846              27,423
            Five to ten years                                                              60                  66
                                                                              ---------------     ---------------
                                                                                       27,006              27,591
            Mortgage and other asset-backed securities                                    571                 583
                                                                              ---------------     ---------------

                   Totals                                                    $         27,577    $         28,174
                                                                              ===============     ===============
</TABLE>


     Securities  with a carrying value of $10,818,506  and $622,000 were pledged
     at December  31,  2002 and 2001 to secure  certain  deposits  and for other
     purposes as permitted or required by law.

     Proceeds from sales of securities  available for sale during 2002, 2001 and
     2000 were $7,951,000,  $3,689,000 and $2,002,000.  Gross gains of $103,000,
     $33,000 and $10,000 and gross  losses of $66,000,  $16,000 and $12,000 were
     realized on those sales.

     On  April  1,  2000,  the  Company  adopted  SFAS No.  133,  Accounting  of
     Derivative  Instruments  and Hedging  Activities.  As permitted by SFAS No.
     133, all  securities  classified  as held to maturity were  transferred  to
     available  for  sale.  The  adoption  of  this  statement  did  not  have a
     significant impact on the Company's financial statements.

Note 4:  Loans and Allowance
<TABLE>
<CAPTION>

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

            Residential real estate
<S>                                                                        <C>                  <C>
                One-to-four family residential                             $         73,197     $         70,793
                Multi-family residential                                              4,396                3,932
                Construction                                                          4,866                6,874
            Nonresidential real estate and land                                      46,036               41,892
            Commercial                                                               26,203               19,216
            Consumer and other                                                       14,066               17,406
                                                                            ---------------      ---------------
                                                                                    168,764              160,113
            Unamortized deferred loan costs                                             379                  356
            Undisbursed loans in process                                             (2,147)              (3,163)
            Allowance for loan losses                                                (2,101)              (1,972)
                                                                            ---------------      ---------------

                   Total loans                                             $        164,895     $        155,334
                                                                            ===============      ===============
</TABLE>


<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

<TABLE>
<CAPTION>

                                                            2002                 2001                 2000
                                                    ----------------------------------------------------------------

            Allowance for loan losses
<S>                               <C>                 <C>                  <C>                  <C>
                Balances, January 1                   $          1,972     $          1,702     $          1,522
                Provision for losses                               570                  450                  227
                Recoveries on loans                                 60                   31                   37
                Loans charged off                                 (501)                (211)                 (84)
                                                       ---------------      ---------------      ---------------

                Balances, December 31                 $          2,101     $          1,972     $          1,702
                                                       ===============      ===============      ===============
</TABLE>

<TABLE>
<CAPTION>

        Information on impaired loans is summarized below.

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

<S>                                                                        <C>                  <C>
            Impaired loans with an allowance                               $             --     $            339
            Impaired loans for which the discounted cash flows or
               collateral value exceeds the carrying value of the loan                  749                  357
                                                                            ---------------      ---------------

                   Total impaired loans                                    $            749     $            696
                                                                            ===============      ===============

            Allowance for impaired loans (included in the Company's
               allowance for loan losses)                                  $             --     $             78

</TABLE>
<TABLE>
<CAPTION>

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

<S>                                                                        <C>                  <C>
            Average balance of impaired loans                              $            663     $          1,352
            Interest income recognized on impaired loans                                 34                  117
            Cash-basis interest included above                                           35                  110
</TABLE>


     At December 31, 2002 and 2001, the Company had non-accruing  loans totaling
     $1,080,000 and $690,000, respectively. At December 31, 2002 and 2001, there
     were no accruing loans delinquent 90 days or more.

Note 5:  Premises and Equipment

<TABLE>
<CAPTION>
                                                                                 2002                 2001
                                                                         -------------------------------------------

<S>                                                                        <C>                  <C>
            Land                                                           $          1,450     $            952
            Buildings                                                                 3,395                3,457
            Equipment                                                                 2,629                2,509
            Construction in progress                                                     81                   --
                                                                            ---------------      ---------------
                   Total cost                                                         7,555                6,918
            Accumulated depreciation and amortization                                (1,814)              (1,539)
                                                                            ---------------      ---------------

                   Net                                                     $          5,741     $          5,379
                                                                            ===============      ===============

</TABLE>



<PAGE>

                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

Note 6:  Deposits
<TABLE>
<CAPTION>

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

<S>                                                                          <C>                 <C>
            Demand deposits                                                  $         41,763    $         42,321
            Savings deposits                                                           24,538              20,089
            Certificates and other time deposits of $100,000 or more                   41,901              30,343
            Other certificates and time deposits                                       53,627              52,818
                                                                              ---------------     ---------------

                   Total deposits                                            $        161,829    $        145,571
                                                                              ===============     ===============
</TABLE>
<TABLE>
<CAPTION>


            Certificates and other time deposits maturing in

<S>             <C>                                                          <C>
                2003                                                         $         73,737
                2004                                                                   10,166
                2005                                                                    2,046
                2006                                                                    1,585
                2007                                                                    7,574
                Thereafter                                                                420
                                                                              ---------------

                                                                             $         95,528
</TABLE>
<TABLE>
<CAPTION>


Note 7:  Borrowings

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

<S>                                                                          <C>                 <C>
            Federal Home Loan Bank advances                                  $         40,000    $         25,000
            Line of credit                                                                 --               1,500
                                                                              ---------------     ---------------

                   Total borrowings                                          $         40,000    $         26,500
                                                                              ===============     ===============
</TABLE>


     Maturities  by year for  advances at December  31, 2002 are  $6,000,000  in
     2003,   $5,000,000  in  2004,  $5,000,000  in  2005,  $1,000,000  in  2006,
     $10,000,000  in  2007  and  $13,000,000  thereafter.  The  weighted-average
     interest rate at December 31, 2002 and 2001 was 4.48% and 4.54%.

     The Federal Home Loan Bank advances are secured by first-mortgage loans and
     investment  securities totaling  $59,709,000 at December 31, 2002. Advances
     are subject to restrictions or penalties in the event of prepayment.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

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 $76,544,000, $56,057,000 and $37,562,000 at December 31, 2002, 2001
     and 2000, respectively.

     The  aggregate  fair  value of  capitalized  mortgage  servicing  rights at
     December 31, 2002, 2001 and 2000 totaled  $631,000,  $430,000 and $290,000.
     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.
<TABLE>
<CAPTION>

                                                             2002                 2001                2000
                                                     ---------------------------------------------------------------

            Mortgage Servicing Rights
<S>                               <C>                  <C>                  <C>                 <C>
                Balances, January 1                    $            540     $            227    $            225
                Servicing rights capitalized                        546                  441                  26
                Amortization of servicing rights                   (205)                (128)                (24)
                                                        ---------------      ---------------     ---------------
                                                                    881                  540                 227
                Valuation allowance                                (250)                (110)                 --
                                                        ---------------      ---------------     ---------------

                Balances, December 31                  $            631     $            430    $            227
                                                        ===============      ===============     ===============
</TABLE>


     Activity in the valuation  allowance for mortgage  servicing  rights was as
     follows:
<TABLE>
<CAPTION>

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

<S>                                                                         <C>                 <C>
            Balance, beginning of year                                      $            110    $             --
                Additions                                                                140                 110
                Reductions                                                                --                  --
                Direct write downs                                                        --                  --
                                                                             ---------------     ---------------

            Balance, end of year                                            $            250    $            110
                                                                             ===============     ===============
</TABLE>




<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

Note 9:  Income Tax
<TABLE>
<CAPTION>

                                                             2002                 2001                2000
                                                     ---------------------------------------------------------------
            Income tax expense (benefit)
                Currently payable
<S>                                                    <C>                  <C>                 <C>
                   Federal                             $          1,318     $          1,000    $            805
                   State                                            279                  254                 205
                Deferred
                   Federal                                          (23)                   2                 (61)
                   State                                             54                    1                 (16)
                                                        ---------------      ---------------     ---------------

                       Total income tax expense        $          1,628     $          1,257    $            933
                                                        ===============      ===============     ===============

            Reconciliation of federal statutory to
               actual tax expense
                Federal statutory income tax at 34%    $          1,423     $          1,099    $            865
                Effect of state income taxes                        220                  168                 125
                Other                                               (15)                 (10)                (57)
                                                        ---------------      ---------------     ---------------

                       Actual tax expense              $          1,628     $          1,257    $            933
                                                        ===============      ===============     ===============

            Effective tax rate                                    38.9%                38.8%               36.7%

</TABLE>

     A  cumulative  net  deferred  tax asset is  included in other  assets.  The
     components of the asset are as follows:
<TABLE>
<CAPTION>

                                                                                 2002                 2001
                                                                         -------------------------------------------
            Assets
<S>                                                                        <C>                  <C>
                Allowance for loan losses                                  $            807     $            759
                Deferred compensation                                                   220                  187
                Pensions and employee benefits                                           21                   35
                Securities available for sale                                            --                   72
                Purchase accounting adjustments                                          71                   80
                Other                                                                    11                   11
                                                                            ---------------      ---------------
                       Total assets                                                   1,130                1,144
                                                                            ---------------      ---------------

            Liabilities
                Depreciation and amortization                                          (178)                (119)
                Loan fees                                                              (147)                (139)
                Mortgage servicing rights                                              (249)                (215)
                Securities available for sale                                          (133)                  --
                Other                                                                    (5)                 (17)
                                                                            ---------------      ---------------
                       Total liabilities                                               (712)                (490)
                                                                            ---------------      ---------------

                                                                           $            418     $            654
                                                                            ===============      ===============
</TABLE>


<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     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.

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

<TABLE>
<CAPTION>
                                                                                 2002                 2001
                                                                         -------------------------------------------

<S>                                                                        <C>                  <C>
            Commitments to extend credit                                   $         15,656     $         17,083
            Standby letters of credit                                                   347                  258
</TABLE>


     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 and equipment, and
     income-producing commercial properties.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     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: 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, 2002, the stockholders'  equity of the
     Bank was $19,659,000,  of which approximately  $1,684,000 was available for
     the payment of dividends.



Note 12: 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.





<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     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, 2002 and 2001, the Bank is categorized as well capitalized and
     met all subject capital adequacy  requirements.  There are no conditions or
     events since  December 31, 2002 that  management  believes have changed the
     Bank's classification.

<TABLE>
<CAPTION>
                                                                     Required for Adequate        To Be Well
                                                    Actual                 Capital 1             Capitalized 1
                                               Amount       Ratio      Amount       Ratio      Amount      Ratio
                                           -------------------------------------------------------------------------
            2002

            Total risk-based capital 1 (to
<S>                                          <C>              <C>     <C>              <C>    <C>            <C>
               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 capital 1 (to adjusted
               total assets)                    18,637         8.4%         8,909      4.0%      11,136       5.0%

            Core capital 1 (to adjusted
               tangible assets)                 18,637         8.4%         4,455      2.0%          --        NA

            Tangible capital 1 (to
               adjusted total assets)           18,637         8.4%         3,341      1.5%          --        NA

            2001

            Total risk-based capital 1 (to
               risk-weighted assets)         $  20,162        13.9%   $    11,627      8.0%   $  14,534      10.0%

            Tier 1 capital 1 (to
               risk-weighted assets)            18,398        12.7%         5,814      4.0%       8,720       6.0%

            Core capital 1 (to adjusted
               total assets)                    18,398         9.6%         7,635      4.0%       9,544       5.0%

            Core capital 1 (to adjusted
               tangible assets)                 18,398         9.6%         3,818      2.0%          --       N/A

            Tangible capital 1 (to
               adjusted total assets)           18,398         9.6%         2,863      1.5%          --       N/A

            1 As defined by regulatory
               agencies
</TABLE>


Note 13: 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 for the years ended December 31, 2002, 2001 and
     2000.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

     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  $31,000,  $35,000 and
     $20,000 for the years ended December 31, 2002, 2001 and 2000.

     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 $41,000,  $42,000 and $24,000 for the
     years ended December 31, 2002, 2001 and 2000.

     The Company has an ESOP covering substantially all employees of the Company
     and Bank. The ESOP acquired 95,220 shares of the Company's  common stock at
     $10 per share with funds provided by a loan from the Company. Unearned ESOP
     shares  totaled  25,517 and 38,023 at December 31, 2002 and 2001, and had a
     fair value of $778,000 and $787,000 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, 2002, 2001 and 2000 was $331,000, $196,000 and
     $156,000.  At December  31,  2002,  the ESOP had 69,703  allocated  shares,
     25,517 suspense shares, and no committed-to-be released shares. At December
     31, 2001, the ESOP had 57,197 allocated shares, 38,023 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 47,610 shares of the Company's stock to
     members of the Board of Directors  and  management.  The RRP has  purchased
     33,820 shares of the Company's common stock in the open market. At December
     31, 2002,  33,408 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 $53,000,
     $98,000 and $105,000 for the years ended December 31, 2002, 2001 and 2000.



Note 14: 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.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

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

            Balances, January 1, 2002                 $          1,144

            Change in composition                                  113
            New loans, including renewals                        1,460
            Payments, etc., including renewals                  (1,119)
                                                       ---------------

            Balances, December 31, 2002               $          1,598
                                                       ===============


     Deposits  from  related  parties  held by the Bank at December 31, 2002 and
     2001 totaled $466,000 and $732,000.



Note 15: 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
     119,025  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:

<TABLE>
<CAPTION>
                                                                 2002               2001               2000
                                                          ----------------------------------------------------------

<S>                                                              <C>                <C>            <C>     <C>
            Risk-free interest rates                             3.5%               5.1%           6.5 and 5.9%
            Dividend yields                                      3.1%               2.8%               2.7%
            Volatility factors of expected market price
               of common stock                                   11.2%              7.8%               11.7%

            Weighted-average expected life of the options      10 years           10 years           10 years


</TABLE>


<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

     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, 2002,
     2001 and 2000.
<TABLE>
<CAPTION>

                                             2002                       2001                       2000
                                                Weighted-                   Weighted-                  Weighted-
                                                 Average                     Average                    Average
              Options                Shares   Exercise Price   Shares    Exercise Price    Shares   Exercise Price
 -------------------------------------------------------------------------------------------------------------------


            Outstanding,
<S>                                   <C>       <C>             <C>        <C>              <C>       <C>
               beginning of year      86,083    $     14.16     99,345     $     14.17      93,959    $     14.58
            Granted                    7,000          26.50      2,000           17.90      24,000          13.17
            Exercised                 (6,877)         14.39     (4,670)          14.61          --
            Forfeited/expired         (1,072)         14.78    (10,592)          14.78     (18,614)         14.78
                                     -------                   -------                     -------


            Outstanding, end of
               year                   85,134    $     15.15     86,083     $     14.16      99,345    $     14.17
                                     =======                   =======                     =======


            Options exercisable
               at year end            62,334                    53,287                      51,725
            Weighted-average fair
               value of options
               granted during the
               year                             $      3.04                $      3.08                $      3.18

</TABLE>

     As of December 31,  2002,  options  totaling  15,600 have  exercise  prices
     ranging from $10.75 to $12.63 and a weighted-average  remaining contractual
     life of 7.0 years,  options  totaling  60,534 have exercise  prices ranging
     from $13.97 to $14.78 and a weighted-average  remaining contractual life of
     5.0 years,  options  totaling  2,000 have an exercise price of $17.90 and a
     weighted-average  remaining  contractual  life of 8.5  years,  and  options
     totaling  7,000 have an  exercise  price of $26.50  and a  weighted-average
     remaining contractual life of 9.7 years.




<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

Note 16: Earnings Per Share
<TABLE>
<CAPTION>

                                            2002                           2001                          2000

                                         Weighted-                       Weighted-                    Weighted-    Per
                                          Average  Per Share              Average   Per Share          Average    Share
                                 Income    Shares   Amount     Income     Shares     Amount   Income    Shares    Amount
                               -------------------------------------------------------------------------------------------

            Basic Earnings
               Per Share

             Income available
                to common
<S>                              <C>        <C>      <C>       <C>         <C>       <C>       <C>       <C>       <C>
                stockholders     $ 2,558    778,643  $   3.29  $ 1,976     790,933   $   2.50  $1,610    858,059   $   1.88
                                                     ========                        ========                      ========

            Effect Of
               Dilutive Stock
               Options                       32,445                         17,433                         1,486
                                  ------    -------             ------     -------              -----    -------

            Diluted Earnings
               Per Share

              Income available
                 to common
                 stockholders
                 and assumed
                 conversions     $ 2,558    811,088  $   3.15  $ 1,976     808,366   $   2.44  $1,610    859,545   $   1.87
                                  ======    =======   =======   ======     =======    =======   =====    =======    =======
</TABLE>


     Options to purchase  65,345 shares of common stock with a  weighted-average
     exercise  price of $14.78 per share were  outstanding at December 31, 2000,
     but were not  included  in the  computation  of  diluted  EPS  because  the
     options'  exercise  price was greater than the average  market price of the
     common shares.



Note 17: 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.



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)


     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.

     Line of Credit - The approximate  market value for this variable  borrowing
     approximates carrying value.

     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:

<TABLE>
<CAPTION>
                                                                   2002                            2001
                                                        Carrying          Fair           Carrying         Fair
                                                         Amount           Value           Amount          Value
                                                    ----------------------------------------------------------------

            Assets
<S>                                                   <C>             <C>             <C>             <C>
                Cash and cash equivalents             $     18,610    $      18,610   $      5,641    $       5,641
                Investment securities available for
                  sale                                      28,174           28,174         17,653           17,653
                Loans including loans held for
                  sale, net                                165,957          170,495        157,972          158,931
                Interest receivable                          1,467            1,467          1,475            1,475
                Stock in FHLB                                2,000            2,000          1,250            1,250

            Liabilities
                Deposits                                   161,829          163,776        145,571          145,640
                FHLB advances                               40,000           41,975         25,000           25,284
                Line of credit                                  --               --          1,500            1,500
                Interest payable                               459              459            613              613
                Advance payments by borrowers for
                  taxes and insurance                           59               59             49               49

</TABLE>



<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

Note 18: 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:

<TABLE>
<CAPTION>
                                              Condensed Balance Sheets

                                                                                   2002                2001
                                                                           -----------------------------------------
            Assets
<S>                                                                          <C>                 <C>
                Cash and due from banks                                      $            961    $            400
                Investment in common stock of subsidiary                               19,659              19,016
                Other assets                                                              216                 182
                                                                              ---------------     ---------------

                   Total assets                                              $         20,836    $         19,598
                                                                              ===============     ===============

            Liabilities
                Borrowings                                                   $             --    $          1,500
                Dividends payable                                                         203                 127
                                                                              ---------------     ---------------
                   Total liabilities                                                      203               1,627

            Stockholders' Equity                                                       20,633              17,971
                                                                              ---------------     ---------------

                   Total liabilities and stockholders' equity                $         20,836    $         19,598
                                                                              ===============     ===============
</TABLE>


                                           Condensed Statements of Income
<TABLE>
<CAPTION>

                                                               2002                2001                2000
                                                       -------------------------------------------------------------
            Income
<S>                                                      <C>                 <C>                 <C>
                Dividends from subsidiary                $          2,601    $            425    $          1,621
                Other income                                           35                  45                  65
                                                          ---------------     ---------------     ---------------
                   Total income                                     2,636                 470               1,686
                                                          ---------------     ---------------     ---------------

            Expenses
                Interest expense                                       23                  55                  63
                Other expenses                                        142                 153                 120
                                                          ---------------     ---------------     ---------------
                   Total expenses                                     165                 208                 183
                                                          ---------------     ---------------     ---------------

            Income before income tax and equity in
               undistributed (distribution in excess
               of) income of subsidiary                             2,471                 262               1,503
                Income tax benefit                                     51                  65                  47
                                                          ---------------     ---------------     ---------------

            Income before equity in undistributed
               (distribution in excess of) income of
               subsidiary                                           2,522                 327               1,550
                Equity in undistributed income of
                  subsidiary                                           36               1,649                  60
                                                          ---------------     ---------------     ---------------

            Net Income                                   $          2,558    $          1,976    $          1,610
                                                          ===============     ===============     ===============

</TABLE>

<PAGE>



                              River Valley Bancorp
                   Notes to Consolidated Financial Statements
                        December 31, 2002, 2001 and 2000
                       (Table Dollar Amounts in Thousands
                            Except Per Share Amounts)

                                         Condensed Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                     2002             2001              2000
                                                              ------------------------------------------------------

            Operating Activities
<S>                                                             <C>               <C>              <C>
                Net income                                      $        2,558    $        1,976   $        1,610
                Items not requiring (providing) cash                       109            (1,453)              (4)
                                                                 -------------     -------------    -------------
                   Net cash provided by operating activities             2,667               523            1,606
                                                                 -------------     -------------    -------------

            Financing Activities
                Purchase of stock                                         (140)           (1,182)          (1,367)
                Proceeds from exercise of stock options                     99                68               --
                Acquisition of stock for stock benefit plans               (22)               --               (8)
                Proceeds from borrowings                                    --             1,050              450
                Repayment of borrowings                                 (1,500)               --             (500)
                Cash dividends                                            (543)             (261)            (350)
                                                                 -------------     -------------    -------------
                   Net cash used in financing activities                (2,106)             (325)          (1,775)
                                                                 -------------     -------------    -------------

            Net Change in Cash and Cash Equivalents                        561               198             (169)

            Cash and Cash Equivalents at Beginning of Year                 400               202              371
                                                                 -------------     -------------    -------------

            Cash and Cash Equivalents at End of Year            $          961    $          400   $          202
                                                                 =============     =============    =============

</TABLE>










<PAGE>

<TABLE>
<CAPTION>


                      GENERAL INFORMATION FOR SHAREHOLDERS


<S>                                                           <C>
Transfer Agent and Registrar:                                 Shareholder and General Inquiries:

Corporate Trust Services                                      River Valley Bancorp
Fifth Third Center                                            Attn: Matthew P. Forrester
38 Fountain Square Plaza                                      430 Clifty Drive, P.O. Box 1590
Cincinnati, Ohio  45263                                       Madison, Indiana  47250
Tel: (800) 837-2755 or (513) 579-5320                         Tel: (812) 273-4949   Fax: (812) 273-4944
Monday thru Friday 8 a.m. to 5 p.m. EST
http://investordirect.53.com


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   Fax: (812) 273-3143                     Tel: (317) 236-1313   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


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>

                      DIRECTORS OF THE COMPANY AND THE BANK


Fred W. Koehler
Chairman

Robert W. Anger
Director

Jonnie L. Davis
Director

Matthew P. Forrester
Director & President

Michael J. Hensley
Director

L. Sue Livers
Director

Charles J. McKay
Director

*****************

Lonnie D. Collins
Secretary


                EXECUTIVE OFFICERS OF RIVER VALLEY FINANCIAL BANK

Matthew P. Forrester
President, CEO

Mark A. Goley
Vice President of Lending

Anthony D. Brandon
Vice President of
Loan Administration

Barbara J. Eades
Vice President of
Retail Banking

Larry C. Fouse
Vice President of Finance

Deanna J. Liter
Vice President of
Data Services

Loy M. Skirvin
Vice President of
Human Resources

Dawn M. Moore
Internal Audit
Compliance Officer

John Muessel
Vice President
Trust Officer

<PAGE>


OFFICERS AND MANAGERS OF RIVER VALLEY FINANCIAL BANK

Loan Officers

Theresa A. Dryden
Sherri Furnish
Natasha Jenkins
Rick T. Nelson
Robert J. Schoenstein--AVP


Customer Service Managers

Angela D. Adams
Debbie R. Finnegan
Rachael A. Goble
Sandy Stilwell

Other Managers

Kenneth L. Cull - Collection Officer
Mary Ellen McClelland - Executive Secretary
Luann Nay - Loan Administrator
Kelly Shelton - Loan Operations Manager
Teresa J. Smith - Data Processing Manager
Mary Ellen Wehner -  Commercial Loan Operations Manager