SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
                                       OR

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

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 333-35799

                             UNION COMMUNITY BANCORP
               (Exact name of registrant specified in its charter)

          Indiana                                       35-2025237
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                              221 East Main Street
                          Crawfordsville, Indiana 47933
                    (Address of principal executive offices,
                               including Zip Code)

                                 (765) 362-2400
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  report),  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                                    Yes [X] No [ ]


The  number of shares of the  Registrant's  common  stock,  without  par  value,
outstanding as of June 30, 1998 was 3,041,750.




<PAGE>



                             Union Community Bancorp
                                    Form 10-Q

                                      Index


                                                                        Page No.
FORWARD LOOKING STATEMENT ...................................................3

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

                  Consolidated Condensed Balance Sheet ......................4

                  Consolidated Condensed Statement of Income.................5

                  Consolidated Condensed Statement of Changes in
                  Shareholders' Equity.......................................6

                  Consolidated Condensed Statement of Cash Flows.............7

                  Notes to Consolidated Condensed
                  Financial Statements.......................................8

Item 2.       Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..................................9

Item 3.       Quantitative and Qualitative Disclosure about Market Risk.....12

PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings.............................................14
Item 2.       Changes in Securities.........................................14
Item 3.       Defaults Upon Senior Securities...............................14
Item 4.       Submission of Matters to a Vote of Security Holders...........14
Item 5.       Other Information.............................................14
Item 6.       Exhibits and Reports on Form 8-K..............................14

SIGNATURES..................................................................15




<PAGE>








                            FORWARD LOOKING STATEMENT

This  Quarterly  Report on Form 10-Q ("Form  10-Q")  contains  statements  which
constitute  forward  looking  statements  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include  statements  regarding the intent,  belief,
outlook, estimate or expectations of the Company (as defined in the notes to the
consolidated  condensed  financial  statements),  its  directors or its officers
primarily with respect to future events and the future financial  performance of
the  Company.  Readers  of this Form 10-Q are  cautioned  that any such  forward
looking  statements  are not  guarantees  of future  events or  performance  and
involve risks and  uncertainties,  and that actual results may differ materially
from those in the forward looking statements as a result of various factors. The
accompanying  information  contained  in this  Form  10-Q  identifies  important
factors that could cause such  differences.  These  factors  include  changes in
interest   rates;   loss  of  deposits  and  loan  demand  to  other   financial
institutions;  substantial changes in financial markets;  changes in real estate
values and the real estate market; or regulatory changes.




<PAGE>

PART I  FINANCIAL INFORMATION
Item 1.  Financial Statements

                     UNION COMMUNITY BANCORP AND SUBSIDIARY
                      Consolidated Condensed Balance Sheet

<TABLE>
<CAPTION>


                                                                                  June 30,           December 31,
                                                                                    1998                 1997
                                                                             -------------------- --------------------
Assets
<S>                                                                          <C>                  <C>
     Cash and due from banks                                                 $         52,084     $
                                                                                                           22,424
     Short-term interest-bearing deposits                                          7,412,888           44,758,403
                                                                             -------------------- --------------------
         Cash and cash equivalents                                                 7,464,972           44,780,827
     Investment securities held to maturity                                        9,862,388            5,820,069
     Loans                                                                        88,180,255           78,687,999
         Allowance for loan losses                                                  (350,258)            (252,258)
                                                                             -------------------- --------------------
              Net Loans                                                           87,829,997           78,435,741
     Premises and equipment                                                          353,049              367,360
     Federal Home Loan Bank of Indianapolis stock                                    744,500              707,700
     Investment in limited partnership                                             1,115,109            1,176,109
     Interest receivable                                                             622,017              581,526
     Other assets                                                                     95,925              170,925
                                                                             -------------------- --------------------

         Total assets                                                           $108,087,957         $132,040,257
                                                                             ==================== ====================

Liabilities
     Deposits
         Noninterest-bearing                                                   $   1,140,647        $   1,532,647
         Interest-bearing                                                         60,737,577           60,725,398
                                                                             -------------------- --------------------
              Total deposits                                                      61,878,224           62,258,045
     Stock subscription refundable                                                                     22,687,104
     Federal Home Loan Bank of Indianapolis advances                                 772,226            2,373,051
     Note payable                                                                  1,020,642            1,200,042
     Interest payable                                                                 94,813              118,867
     Dividends payable                                                               242,909
     Other liabilities                                                               541,818              497,271
                                                                             -------------------- --------------------
         Total liabilities                                                        64,550,632           89,134,380
                                                                             -------------------- --------------------

Commitments and Contingent Liabilities

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 - 3,041,750 shares                                29,663,815           29,637,592
     Retained earnings                                                            15,658,878           15,108,285
     Unearned employee stock ownership plan ("ESOP") shares                       (1,785,368)          (1,840,000)
                                                                             -------------------- --------------------
         Total stockholders' equity                                               43,537,325           42,905,877
                                                                             -------------------- --------------------

         Total liabilities and stockholders' equity                            $ 108,087,957        $ 132,040,257
                                                                             ==================== ====================
</TABLE>


See notes to consolidated condensed financial statements.







<PAGE>



                     UNION COMMUNITY BANCORP AND SUBSIDIARY
                   Consolidated Condensed Statement of Income
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                Three Months Ended                   Six Months Ended
                                                                     June 30,                            June 30,
                                                         ---------------- ----------------- ----------------- ------------------
                                                              1998              1997              1998              1997
                                                         ---------------- ----------------- ----------------- ------------------
Interest and Dividend Income:
<S>                                                       <C>                <C>               <C>            <C>         
     Loans                                                $1,716,660         $1,507,899        $3,348,026     $  2,994,235
     Investment securities                                    72,549            104,337           179,389           206,070
     Dividends on FHLB stock                                  14,825             13,740            28,785            24,969
     Deposits with financial institutions                    208,734             30,497           470,287            50,053
                                                         ---------------- ----------------- ----------------- ------------------
         Total interest income                             2,012,768          1,656,473         4,026,487         3,275,327
                                                         ---------------- ----------------- ----------------- ------------------

Interest Expense:
     Deposits                                                823,252            834,410         1,627,775         1,653,754
     FHLB advances                                            11,271             83,400            28,035           168,945
                                                         ---------------- ----------------- ----------------- ------------------
         Total interest expense                              834,523            917,810         1,655,810         1,822,699
                                                         ---------------- ----------------- ----------------- ------------------

Net Interest Income                                        1,178,245            738,663         2,370,677         1,452,628
     Provision for loan losses                                98,000             99,000            98,000           111,000
                                                         ---------------- ----------------- ----------------- ------------------
Net Interest Income After Provision for Loan Losses        1,080,245            639,663         2,272,677         1,341,628
                                                         ---------------- ----------------- ----------------- ------------------

Other Income (Losses)
     Equity in losses of limited partnership                 (36,000)           (40,303)          (61,000)         (113,730)
     Other income                                             18,996             10,311            33,512            18,792
                                                         ---------------- ----------------- ----------------- ------------------
         Total other income (losses)                         (17,004)           (29,992)          (27,488)          (94,938)
                                                         ---------------- ----------------- ----------------- ------------------

Other Expenses
     Salaries and employee benefits                          162,230            116,031           380,414           252,272
     Premises and equipment                                   16,449             15,131            28,812            27,303
     Deposit insurance expense                                11,466              9,782            21,177            12,068
     Legal and professional fees                              53,601              7,200            73,491            19,413
     Other expense                                            88,865             79,213           168,359           137,677
                                                         ---------------- ----------------- ----------------- ------------------
         Total other expenses                                332,611            227,357           672,253           448,733
                                                         ---------------- ----------------- ----------------- ------------------

Income Before Income Tax                                     730,630            382,314         1,572,936           797,957
     Income tax expense                                      259,721            113,633           565,103           234,856
                                                         ---------------- ----------------- ----------------- ------------------

Net Income                                               $   470,909        $   268,681       $ 1,007,833        $  563,101
                                                         ================ ================= ================= ==================

Basic earnings per share                                         .16                                 .35
Diluted earnings per share                                       .16                                 .35
</TABLE>

See notes to consolidated condensed financial statements.



<PAGE>



                     UNION COMMUNITY BANCORP AND SUBSIDIARY
       Consolidated Condensed Statement of Changes in Stockholders' Equity

<TABLE>
<CAPTION>


                                                Common Stock
                                       --------------------------------
                                           Shares                             Retained             Unearned
                                         Outstanding        Amount            Earnings            ESOP Shares          Total
                                       ---------------- --------------- --------------------- -------------------- ---------------

<S>                                      <C>            <C>                <C>                   <C>               <C>         
Balances, January 1, 1998                3,041,750      $ 29,637,592       $ 15,108,285          (1,840,000)       $ 42,905,877

    Net income for the period                                                 1,007,833                               1,007,833
    Cash dividends ($0.16 per share)                                           (457,240)                               (457,240)
    ESOP shares earned                                        26,223                                 54,632              80,855
                                       ---------------- --------------- --------------------- -------------------- ---------------

Balances, June 30, 1998                  3,041,750      $ 29,663,815       $ 15,658,878          (1,785,368)       $ 43,537,325
                                       ================ =============== ===================== ==================== ===============
</TABLE>



<PAGE>



                     UNION COMMUNITY BANCORP AND SUBSIDIARY
                 Consolidated Condensed Statement of Cash Flows

<TABLE>
<CAPTION>


                                                                                        Six Months Ended
                                                                                            June 30,
                                                                             ----------------------------------------
                                                                                   1998                1997
                                                                             -------------------- -------------------
Operating Activities:
<S>                                                                            <C>                  <C>        
     Net income                                                                $ 1,007,833          $   563,101
     Adjustments to reconcile net income to net cash provided (used) by
      operating activities:
         Provision for loan losses                                                  98,000              111,000
         Depreciation                                                               16,257               13,364
         Deferred income tax                                                                              4,362
         Investment securities accretion, net                                       (4,691)              (3,362)
         Equity in losses of limited partnership                                    61,000              113,730
         ESOP shares earned                                                         80,855
         Net change in:
              Interest receivable                                                  (40,491)              34,330
              Interest payable                                                     (24,054)              18,719
              Other assets                                                          29,440              (15,385)
              Other liabilities                                                     14,195               94,064
                                                                             -------------------- -------------------
                  Net cash provided by operating activities                      1,238,344              933,923
                                                                             -------------------- -------------------

Investing Activities:
     Purchases of investment securities held to maturity                        (5,903,586)            (700,000)
     Proceeds from paydowns and maturities of securities held to maturity        1,865,959              530,483
     Purchases of loans                                                                                (500,000)
     Other net changes in loans                                                 (9,446,696)            (162,591)
     Purchase of  FHLB of Indianapolis stock                                       (36,800)            (127,600)
     Purchases of property and equipment                                            (1,946)              (7,410)
                                                                             -------------------- -------------------
         Net cash used by investing activities                                 (13,523,069)            (967,118)
                                                                             -------------------- -------------------

Financing Activities:
     Net change in:
         Interest-bearing demand and savings deposits                             (793,169)             791,375
         Certificates of Deposit                                                   413,348              827,246
         Stock subscription escrow accounts                                    (22,687,104)
     Proceeds from borrowings                                                                         1,000,000
     Repayment of borrowings                                                    (1,780,225)          (1,807,277)
     Cash dividends paid                                                          (214,332)
     Net change in advances by borrowers for taxes and insurance                    30,352               14,957
                                                                             -------------------- -------------------
         Net cash provided (used) by financing activities                      (25,031,130)             826,301
                                                                             -------------------- -------------------

Net Change in Cash and Cash equivalents                                        (37,315,855)             793,106

Cash and Cash equivalents, Beginning of period                                  44,780,827            1,465,190
                                                                             -------------------- -------------------

Cash and Cash equivalents, End of period                                     $   7,464,972        $   2,258,296
                                                                             ==================== ===================

Supplemental cash flow disclosures:
     Interest paid                                                           $   1,679,864        $   1,803,980
     Income taxes paid                                                             424,650              230,033
     Loans transferred to foreclosed real estate                                                        203,120

</TABLE>

See notes to consolidated condensed financial statements.


<PAGE>



                     UNION COMMUNITY BANCORP AND SUBSIDIARY
              Notes to Consolidated Condensed Financial Statements

Note 1 Basis of Presentation

The consolidated  financial  statements  include the accounts of Union Community
Bancorp (the "Company") and its wholly owned  subsidiary,  Union Federal Savings
and Loan Association, a federally chartered savings and loan association ("Union
Federal").  A summary of significant  accounting policies is set forth in Note 1
of Notes to Financial Statements included in the December 31, 1997 Annual Report
to Shareholders.  All significant  intercompany  accounts and transactions  have
been eliminated in consolidation.

The interim  consolidated  financial statements have been prepared in accordance
with instructions to Form 10-Q, and therefore do not include all information and
footnotes  necessary for a fair presentation of financial  position,  results of
operations  and cash flows in  conformity  with  generally  accepted  accounting
principles.

The interim consolidated  financial statements at June 30, 1998, and for the six
month  and three  month  periods  ended  June 30,  1998 and 1997,  have not been
audited by independent  accountants,  but reflect, in the opinion of management,
all adjustments (which include only normal recurring  adjustments)  necessary to
present fairly the financial position,  results of operations and cash flows for
such periods.

Note 2 Earnings Per Share

Earnings per share have been  computed  based upon the weighted  average  common
shares outstanding during the period subsequent to Union Federal's conversion to
a stock savings and loan  association  on December 29, 1997.  Unearned  Employee
Stock  Ownership Plan shares have been excluded from the  computation of average
common shares outstanding.  For the six month and three month periods ended June
30, 1998, weighted-average shares outstanding for basic and diluted earnings per
share were 2,860,482 and 2,861,847, respectively.

Note 3 Reporting Comprehensive Income

In 1998, the Company adopted Financial  Accounting  Standards No. 130, Reporting
Comprehensive  Income.  For the six  months  ended June 30,  1998 and 1997,  the
Company  had no items  that were  required  to be  recognized  under  accounting
standards as components of comprehensive income in the financial statements.

Note 4 Benefit Plans

On June 30, 1998, the  stockholders of the Company  approved a Stock Option Plan
and a Recognition and Retention Plan and Trust (RRP).  These plans allow for the
purchase in the open market or through the issuance of  authorized  and unissued
shares of up to 304,175  shares of common  stock for the Stock  Option  Plan and
121,670 shares of common stock for the RRP.  Under the Stock Option Plan,  stock
option rights covering  304,175 shares of stock may be granted to officers,  key
employees,  and  directors of the Company and its  subsidiaries  and options for
186,000 of such shares have been granted  effective  June 30, 1998.  The options
have an option price per share equal to the market value at date of grant,  have
ten year terms, and become exercisable at the rate of 20% per year. Stock awards
covering  121,670 shares of common stock may be awarded to the directors and key
employees  of the  Company  and its  subsidiaries  and  awards of 78,900 of such
shares have been awarded  effective June 30, 1998. These awards vest at the rate
of 20% per year.



<PAGE>

Item 2: Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

General

Union Community Bancorp, an Indiana  corporation (the "Company"),  was organized
in September,  1997. On December 29, 1997, it acquired the common stock of Union
Federal Savings and Loan  Association  ("Union  Federal") upon the conversion of
Union Federal from a federal  mutual  savings and loan  association to a federal
stock savings and loan association.

Union Federal was organized as a state-chartered savings and loan association in
1913. Since then, Union Federal has conducted its business from its full-service
office located in Crawfordsville,  Indiana.  Union Federal's  principal business
consists  of  attracting  deposits  from  the  general  public  and  originating
fixed-rate and  adjustable-rate  loans secured primarily by first mortgage liens
on one- to four-family residential real estate. Union Federal's deposit accounts
are insured up to applicable  limits by the Savings  Association  Insurance Fund
("SAIF") of the Federal Deposit Insurance  Corporation  ("FDIC").  Union Federal
offers a number of financial  services,  including:  (i) residential real estate
loans;  (ii)  multi-family  loans;  (iii)  commercial  real estate  loans;  (iv)
construction  loans;  (v) home  improvement  loans;  (vi)  money  market  demand
accounts ("MMDAs");  (vii) passbook savings accounts; and (viii) certificates of
deposit.

Union Federal currently owns one subsidiary,  UFS Service Corp.  ("UFS"),  whose
sole asset is its investment in Pedcor Investments  1993-XVI,  L.P.  ("Pedcor"),
which is an Indiana limited partnership that was established to organize, build,
own, operate and lease a 48-unit  apartment complex in  Crawfordsville,  Indiana
known as Shady Knoll II  Apartments  (the  "Project").  Union  Federal  owns the
limited partner  interest in Pedcor.  The general partner is Pedcor  Investments
LLC. The Project,  operated as a multi-family,  low- and moderate-income housing
project,  is  completed  and is  performing  as  planned.  Because  UFS  engages
exclusively  in  activities  that  are  permissible  for a  national  bank,  OTS
regulations  permit  Union  Federal  to  include  its  investment  in UFS in its
calculation of regulatory capital.

Union  Federal's  results of operations  depend  primarily upon the level of net
interest income,  which is the difference  between the interest income earned on
interest-earning assets, such as loans and investments,  and costs incurred with
respect to  interest-bearing  liabilities,  primarily  deposits and  borrowings.
Results of operations also depend upon the level of Union Federal's non-interest
income,  including  fee  income  and  service  charges,  and  the  level  of its
non-interest expenses, including general and administrative expenses.

Financial Condition

Total assets  decreased  $24.0 million,  or 18.1% at June 30, 1998,  compared to
December 31, 1997. The decline was primarily in cash and cash equivalents  which
decreased $37.3 million. The decrease in cash and cash equivalents,  principally
in short-term  interest-bearing deposits, resulted from the payment of the stock
subscriptions  refundable of $22.7 million at December 31, 1997. The decrease in
cash and cash  equivalents was offset by an increase in net loans and investment
securities held to maturity.  Net loans increased by $9.4 million,  or 12.0% due
to an  increase  in  customer  demand.  Investment  securities  held to maturity
increase by $4.0 million, or 69.5%.

Deposits  decreased  $380,000 to $61.9 million  during the six months ended June
30, 1998.  Demand and savings  deposits  decreased  $793,000,  or 4.9%,  between
December  31,  1997  and June  30,  1998.  Certificates  of  deposits  increased
$413,000,  or .9%,  during this  period.  This  decrease in total  deposits  was
primarily  a result of an outflow  of  existing  accounts  to  different  market
alternatives.

Borrowed funds decreased $1.8 million,  or 49.8%, from December 31, 1997 to June
30, 1998.  The decline in total  borrowed  funds was  comprised of a decrease in
FHLB advances of $1.6  million,  and a decrease in the note payable to a limited
partnership of $179,000.

Stockholders'  equity increased $631,000 from $42.9 million at December 31, 1997
to $43.5  million at June 30,  1998.  The increase was due to net income for the
six months ended June 30, 1998 of $1.0 million and Employee Stock Ownership Plan
("ESOP") shares earned of $81,000. These increases were offset by cash dividends
of $457,000.


Comparison  of  Operating  Results for the Three  Months Ended June 30, 1998 and
1997

Net income  increased  $202,000,  or 75.1%,  from  $269,000 for the three months
ended June 30, 1997 to $471,000 for the three  months  ended June 30, 1998.  The
increase  is  primarily  due to an  increase in net  interest  income  offset by
increases in other  expenses.  The return on average  assets was 1.74% and 1.28%
for the three months ended June 30, 1998 and 1997, respectively.

Interest income increased  $356,000,  or 21.5%,  from $1.7 million for the three
months ended June 30, 1997 to $2.0 million for the same period in 1998. Interest
expense  decreased  $83,000,  or 9.0%,  from $918,000 for the three months ended
June 30, 1997 to $835,000 for the same period in 1998. As a result, net interest
income for the three  months  ended June 30, 1998  amounted  to $1.2  million an
increase  of  $439,000,  or 59.4%,  compared  to the same  period  in 1997.  The
increase in net interest  income was due  primarily to an increase in the volume
of loans and short-term  interest-bearing  deposits and a decrease in the volume
of Federal Home Loan Bank advances. The increase in interest-earning  assets and
the decrease in interest-bearing  liabilities were primarily attributable to the
proceeds received in conjunction with the Company's stock issuance. Net proceeds
of the Company's stock issuance, after costs and excluding the shares issued for
the ESOP, were $27.8 million.

The  provision  for loan  losses for the three  months  ended June 30,  1998 was
$98,000 as compared to $99,000 for the same period in 1997.  The 1998  provision
and the allowance for losses were considered adequate,  based on size, condition
and components of the loan  portfolio.  While  management  estimates loan losses
using the best  available  information,  no  assurance  can be given that future
addition to the allowance will not be necessary based on changes in economic and
real estate market conditions,  further  information  obtained regarding problem
loans, identification of additional problem loans and other factors, both within
and outside of management's control.

Other losses  decreased  $13,000,  or 43.3%, for the three months ended June 30,
1998 compared to the same period in 1997.

Salaries and employee benefits were $162,000 for the three months ended June 30,
1998 compared to $116,000 for the 1997 period, an increase of $46,000, or 39.7%.
This increase resulted primarily from $27,000 of compensation expense related to
the ESOP and normal  increases  in employee  compensation  and  related  payroll
taxes.  Legal and professional fees were $54,000 for the three months ended June
30, 1998  compared to $7,000 for the 1997 period,  an increase of $47,000.  This
increase was a result of the additional expenses incurred as a public company.

Income tax expense  increased  $146,000,  or 128.1%,  for the three months ended
June 30, 1998  compared to the same period in 1997.  The  increase  was directly
related to the increase in taxable income for the period.

Comparison of Operating Results for the Six Months Ended June 30, 1998 and 1997

Net income increased $445,000,  or 79.0%, from $563,000 for the six months ended
June 30, 1997 to $1 million for the six months ended June 30, 1998. The increase
is primarily  due to an increase in net interest  income  offset by increases in
other  expenses.  The return on  average  assets was 1.87% and 1.35% for the six
months ended June 30, 1998 and 1997, respectively.

Interest  income  increased  $751,000,  or 22.9%,  from $3.3 million for the six
months ended June 30, 1997 to $4.0 million for the same period in 1998. Interest
expense decreased $167,000,  or 9.2%, from $1.8 million for the six months ended
June 30,  1997 to $1.7  million for the same  period in 1998.  As a result,  net
interest  income for the six months ended June 30, 1998 increased  $918,000,  or
63.2%,  compared to the same period in 1997. The increase in net interest income
was  due  primarily  to an  increase  in the  volume  of  loans  and  short-term
interest-bearing deposits and a decrease in the volume of Federal Home Loan Bank
advances.   The  increase  in  interest-earning   assets  and  the  decrease  in
interest-bearing   liabilities  were  primarily  attributable  to  the  proceeds
received in conjunction with the Company's stock issuance.

The provision for loan losses for the six months ended June 30, 1998 was $98,000
as compared to $111,000 for the same period in 1997.

Other losses decreased $67,000, or 71.0%, for the six months ended June 30, 1998
compared to the same period in 1997 primarily due to decreased losses of $53,000
from  the  investment  in  a  low-income   housing  income  tax  credit  limited
partnership.  The investment in the limited partnership  represents a 99% equity
in Pedcor.  In  addition  to  recording  the  equity in the losses of Pedcor,  a
benefit of low income  housing  income tax  credits in the amount of $89,000 was
recorded for the six months ended June 31, 1998 and 1997.

Salaries and employee  benefits  were $380,000 for the six months ended June 30,
1998  compared to $252,000  for the 1997  period,  an increase of  $128,000,  or
50.8%.  This increase  resulted  primarily from $81,000 of compensation  expense
related to the ESOP and normal  increases in employee  compensation  and related
payroll taxes. Legal and professional fees were $73,000 for the six months ended
June 30, 1998  compared to $19,000 for the 1997 period,  an increase of $54,000.
This  increase  was a result of the  additional  expenses  incurred  as a public
company.

Income tax expense increased $330,000,  or 140.4%, for the six months ended June
30, 1998 compared to the same period in 1997. The increase was directly  related
to the increase in taxable e income for the period.

Asset Quality

Union  Federal  currently  classifies  loans as  special  mention,  substandard,
doubtful  and loss to  assist  management  in  addressing  collection  risks and
pursuant to regulatory  requirements  which are not necessarily  consistent with
generally  accepted  accounting  principles.  Special  mention  loans  represent
credits  that  have  potential   weaknesses  that  deserve   management's  close
attention.  If left  uncorrected,  these  potential  weaknesses  may  result  in
deterioration  of the repayment  prospects or Union Federal's credit position at
some future date.  Substandard  loans  represent  credits  characterized  by the
distinct  possibility  that some loss will be sustained if deficiencies  are not
corrected.  Doubtful loans possess the characteristics of substandard loans, but
collection  or  liquidation  in full is  doubtful  based  upon  existing  facts,
conditions and values. A loan classified as a loss is considered  uncollectible.
Union Federal had $1.2 million of loans classified as special mention as of June
30, 1998 while there were no special  mention  loans at December  31,  1997.  In
addition,  Union  Federal  had  $846,000  and  $98,000  of loans  classified  as
substandard  at June 30, 1998 and December 31, 1997,  respectively.  At June 30,
1998 and December 31, 1997,  no loans were  classified  as doubtful or loss.  At
June 30, 1998, and December 31, 1997, respectively,  $353,000 and $98,000 of the
substandard  loans were  non-accrual  loans.  The  allowance for loan losses was
$350,000 or .4% of net loans at June 30,  1998 and  $252,000 or .3% of net loans
at December 31, 1997. The increase in classified  loans is primarily a result of
a  regulatory  examination.  As a  result  of  the  examination,  the  examiners
requested  that an  additional  general  reserve  of  approximately  $98,000  be
recorded for these newly  classified  loans in the second quarter of 1998. Union
Federal does not believe  that at this time any loss exists on these  loans.  In
addition,  the loans are not considered  impaired  under  Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan.

Liquidity and Capital Resources

The standard measure of liquidity for savings  associations is the ratio of cash
and eligible  investments to a certain  percentage of net  withdrawable  savings
accounts  and  borrowings  due within one year.  The minimum  required  ratio is
currently set by the Office of Thrift  Supervision  regulation at 4%. As of June
30, 1998, Union Federal had liquid assets of $12.0 million and a liquidity ratio
of 16.9%.

Other

The  Securities  and  Exchange  Commission  maintains  a Web site that  contains
reports,   proxy  information   statements,   and  other  information  regarding
registrants that file electronically with the Commission, including the Company.
The address is (http://www.sec.gov).




<PAGE>
Year 2000 Compliance

Because  computer  memory was so expensive on early  mainframe  computers,  some
computer  programs used only the final two digits for the year in the date field
and  assumed  that the first two digits  were "19." As a result,  some  computer
applications  may be unable to interpret the change from year 1999 to year 2000.
The Holding  Company is actively  monitoring  its year 2000 computer  compliance
issues. The bulk of the Holding Company's computer  processing is provided under
contract by On-Line Financial Services, Inc., Oak Brook, IL. ("On-Line") On-Line
expects to be in year 2000  compliance by June 1999. The Holding  Company's loan
documentation  system is provided by Banker's Systems and is also expected to be
in year 2000  compliance  within the next year.  The  Holding  Company  has also
appointed  the three  executive  officers  to address  all  aspects of year 2000
compliance.   The  Holding  Company's  expense  in  connection  with  year  2000
compliance is not expected to be material to its overall financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

An important  component of Union  Federal's  asset/liability  management  policy
includes  examining the interest rate  sensitivity of its assets and liabilities
and  monitoring  the  expected  effects  of  interest  rate  changes  on its net
portfolio value.

An asset or liability is interest rate  sensitive  within a specific time period
if it will mature or reprice within that time period.  If Union Federal's assets
mature or reprice  more  quickly or to a greater  extent  than its  liabilities,
Union  Federal's  net  portfolio  value and net  interest  income  would tend to
increase  during periods of rising interest rates but decrease during periods of
falling interest rates. Conversely,  if Union Federal's assets mature or reprice
more slowly or to a lesser extent than its liabilities,  its net portfolio value
and net interest income would tend to decrease during periods of rising interest
rates but increase during periods of falling interest rates.

Management  believes it is critical to manage the relationship  between interest
rates and the  effect on Union  Federal's  net  portfolio  value  ("NPV").  This
approach  calculates the  difference  between the present value of expected cash
flows from assets and the present value of expected cash flows from liabilities,
as well as cash flows from off-balance  sheet  contracts.  Union Federal manages
assets  and  liabilities  within  the  context  of the  marketplace,  regulatory
limitations  and within  limits  established  by its Board of  Directors  on the
amount of change in NPV which is acceptable given certain interest rate changes.

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

Presented  below,  as of June 30, 1998,  is an analysis  performed by the OTS of
Union  Federal's   interest  rate  risk  as  measured  by  changes  in  NPV  for
instantaneous  and sustained  parallel  shifts in the yield curve,  in 100 basis
points  increments,  up and down 400 basis  points.  At June 30, 1998, 2% of the
present value of Union Federal's assets was approximately $2.2 million.  Because
the interest rate risk of a 200 basis point  increase in market rates (which was
greater  than the  interest  rate risk of a 200 basis point  decrease)  was $4.7
million at June 30, 1998. Union Federal would have been required to deduct $1.25
million from its total  capital  available to calculate  its risk based  capital
requirement if it had been subject to the OTS" reporting requirements under this
methodology.  This amount  represents  an increase of $400,000 over the $850,000
calculated at December 31, 1997. Union Federal's  exposure to interest rate risk
results from a concentration of fixed rate mortgage loans in its portfolio.
<PAGE>

<TABLE>
<CAPTION>



                                 Net Portfolio Value                                 NPV as % of PV of Assets
Change
in Rates            $ Amount            $ Change           % Change                  NPV Ratio            Change
--------            --------            --------           --------                  ---------            ------
<S>                   <C>                  <C>                   <C>                  <C>                  <C>   
+400 bp               24,714              -9,951                -29%                  24.66%              -654 bp

+300 bp               27,307               -7,358               -21%                  26.50%              -470 bp

+200 bp               29.940               -4,724               -14%                  28.26%              -294 bp

+100 bp               32,460               -2,204                -6%                  29.87%              -133 bp

      0 bp                                                            34,664            31.20%

 -100 bp              36,322                1,658                 5%                  32.15%                +95 bp

 -200 bp              37,524                2,860                 8%                  32.80%              +161 bp

 -300 bp              38,888                4,224                12%                  33.54%              +234 bp

 -400 bp              40,522                5,857                17%                  34.42%              +322 bp

</TABLE>


This chart illustrates,  for example, that a 200 basis point (or 2%) increase in
interest  rates  would  result in a $4.7  million,  or 14%,  decrease in the net
portfolio  value of Union Federal's  assets  compared to a $3.9 million,  or 12%
decrease,  at December 31, 1997.  This  hypothetical  increase in interest rates
would also result in a 294 basis point,  or 2.94%,  decrease in the ratio of the
net portfolio value to the present value of Union Federal's assets compared to a
246 basis point, or 2.46%, decrease at December 31, 1997.

As with any method of measuring  interest rate risk,  certain  shortcomings  are
inherent in the methods of  analysis  presented  above.  For  example,  although
certain  assets  and  liabilities  may have  similar  maturities  or  periods to
repricing,  they may react in  different  degrees to changes in market  interest
rates.  Also the interest rates on certain types of assets and  liabilities  may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
assets,  such as adjustable-rate  loans, have features which restrict changes in
interest rates on a short-term basis and over the life of the asset. Further, in
the event of a change in interest rates,  expected rates of prepayments on loans
and early withdrawals from certificates could likely deviate  significantly from
those assumed in calculating the table.


<PAGE>

PART II.   OTHER INFORMATION

Item 1.       Legal Proceedings

              None.

Item 2.       Changes in Securities and Use of Proceeds

              None.

Item 3.       Defaults Upon Senior Securities.

              None.

Item 4.       Submission of Matters to Vote of Security Holders.

              On June 30,  1998,  the  Company  held its  annual  meeting of the
              shareholders.  A total of  2,854,107  shares were  represented  in
              person or by proxy at the meeting.  Philip L. Boots was elected to
              the Board of  Directors  for a three-year  term  expiring in 2001.
              2,817,138  shares  were  voted  in favor  of the  election  of the
              nominee and there were 36,969 votes withheld. Marvin L Burkett was
              elected to the Board of Directors  for a one-year term expiring in
              1999.  2,811,938 shares were voted in favor of the election of the
              nominee and there were 42,169 votes withheld. Phillip E. Grush was
              elected to the Board of Directors  for a one-year term expiring in
              1999.  2,817,138 shares were voted in favor of the election of the
              nominee and there were 36,969 votes withheld. Samuel H. Hildebrand
              was elected to the Board of Directors for a two-year term expiring
              in 2000.  2,817,138  shares were voted in favor of the election of
              the nominee and there were 36,969 votes  withheld.  John M. Horner
              was  elected  to the  Board of  Directors  for a  three-year  term
              expiring  in 2001.  2,817,138  shares  were  voted in favor of the
              election  of the nominee  and there were  36,969  votes  withheld.
              Harry A.  Siamas  was  elected  to the  Board of  Directors  for a
              two-year  term  expiring in 2000.  2,817,138  shares were voted in
              favor of the  election of the nominee and there were 36,969  votes
              withheld.  Joseph E Timmons was elected to the Board of  Directors
              for a one-year term expiring in 1999.  2,816,885 shares were voted
              in favor of the  election  of the  nominee  and there were  37,222
              votes withheld.  The shareholders  approved and ratified the Union
              Community Bancorp Stock Option Plan (Plan).  1,624,432 shares were
              voted in favor of the Plan,  284,246  were voted  against the Plan
              and there were 45,551 abstentions.  The shareholders  approved and
              ratified   the  Union   Federal   Savings  and  Loan   Association
              Recognition and Retention Plan & Trust (Trust).  1,599,097  shares
              were voted in favor of the Trust,  326,620 were voted  against the
              Trust and there were 51,328 abstentions.

Item 5.       Other Information.

              None.

Item 6.       Exhibits and Reports on Form 8-K.

              (a)  Exhibits

                  3.1      The Articles of  Incorporation  of the Registrant are
                           incorporated  by  reference  to  Exhibit  3.1  to the
                           Registation  Statement on Form S-1  (Registration No.
                           333-35799)

                  3.2      The Code of Bylaws of the Registrant are incorporated
                           by  reference  to  Exhibit  3.2 to  the  Registration
                           Statement on Form S-1 (Registration No. 333-35799)

                  10.1     The Union  Community  Bancorp  Stock  Option  Plan is
                           incorporated   by  reference  to  Exhibit  A  of  the
                           Registrant's   Proxy   Statement   filed   with   the
                           Commission May 15, 1998

                  10.2     Union   Federal   Savings   and   Loan    Association
                           Recognition   and   Retention   Plan  and   Trust  is
                           incorporated  by  reference  to Exhibit B of the
                           Registrant's   Proxy   Statement   filed   with   the
                           Commission May 15, 1998
     
                  27       Financial Data Schedule

              (b)  No  reports on Form 8-K were  filed  during the  quarter
                   ended June 30, 1998.


<PAGE>

                                   Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                             UNION COMMUNITY BANCORP

Date:         August 13, 1998              By: /s/ Joseph E. Timmons
              ---------------              -------------------------

                                                     Joseph E. Timmons
                                                     President and
                                                     Chief Executive Officer

Date:         August 13, 1998              By: /s/ Denise E. Swearingen
              ---------------              ----------------------------

                                                     Denise E. Swearingen
                                                     Treasurer



<PAGE>





                                  EXHIBIT INDEX




EXHIBIT NO.                                DESCRIPTION                   PAGE

   3.1         The Articles of  Incorporation  of the  Registrant  are
               incorporated   by  reference  to  Exhibit  3.1  to  the
               Registation  Statement  on Form S-1  (Registration  No.
               333-35799)

   3.2         The Code of Bylaws of the Registrant  are  incorporated
               by  reference  to  Exhibit  3.2  to  the   Registration
               Statement on Form S-1 (Registration No. 333-35799)

   10.1        The  Union  Community  Bancorp  Stock  Option  Plan  is
               incorporated   by   reference   to  Exhibit  A  of  the
               Registrant's Proxy Statement filed with the Commission
               May 15, 1998

   10.2        Union Federal Savings and Loan Association  Recognition
               and  Retention  Plan  and  Trust  is   incorporated  by
               reference  to Exhibit B of the  Registrant's  Proxy
               Statement filed with the Commission May 15, 1998
     
   27          Financial Data Schedule