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 SEPTEMBER 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 September 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
                  Stockholders' 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 Disclosures 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
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                  September 30,       December 31,
                                                                      1998                1997
                                                                 -------------       -------------
Assets
<S>                                                              <C>                 <C>          
     Cash and due from banks                                     $      48,688       $      22,424

     Short-term interest-bearing deposits                            8,873,150          44,758,403
                                                                 -------------       -------------
         Cash and cash equivalents                                   8,921,838          44,780,827
     Investment securities held to maturity                          6,779,432           5,820,069
     Loans                                                          90,135,546          78,687,999
         Allowance for loan losses                                    (356,258)           (252,258)
                                                                 -------------       -------------
              Net Loans                                             89,779,288          78,435,741
     Premises and equipment                                            362,226             367,360
     Federal Home Loan Bank of Indianapolis stock                      744,500             707,700
     Investment in limited partnership                               1,085,109           1,176,109
     Interest receivable                                               653,450             581,526
     Other assets                                                      111,238             170,925
                                                                 -------------       -------------

         Total assets                                            $ 108,437,081       $ 132,040,257
                                                                 =============       =============

Liabilities
     Deposits
         Noninterest-bearing                                     $     706,192       $   1,532,647
         Interest-bearing                                           62,766,409          60,725,398
                                                                 -------------       -------------
              Total deposits                                        63,472,601          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                                                  120,973             118,867
     Dividends payable                                                 271,487
     Other liabilities                                                 669,918             497,271
                                                                 -------------       -------------
         Total liabilities                                          66,327,847          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                  29,672,830          29,637,592
     Retained earnings                                              15,891,443          15,108,285
     Unearned employee stock ownership plan ("ESOP") shares         (1,758,052)         (1,840,000)
     Unearned compensation                                          (1,696,987)
                                                                 -------------       -------------
         Total stockholders' equity                                 42,109,234          42,905,877
                                                                 -------------       -------------

         Total liabilities and stockholders' equity              $ 108,437,081       $ 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                 Nine Months Ended
                                                                   September 30,                      September 30,
                                                         -----------------------------       -----------------------------
                                                             1998             1997              1998              1997
                                                         -----------       -----------       -----------       -----------
Interest and Dividend Income:
<S>                                                      <C>               <C>               <C>               <C>        
     Loans                                               $ 1,775,517       $ 1,516,000       $ 5,123,543       $ 4,510,235
     Investment securities                                   146,945           105,953           402,834           312,023
     Dividends on FHLB stock                                  15,069            14,717            43,854            39,686
     Deposits with financial institutions                     97,765            18,227           491,552            68,280
                                                         -----------       -----------       -----------       -----------
         Total interest income                             2,035,296         1,654,897         6,061,783         4,930,224
                                                         -----------       -----------       -----------       -----------

Interest Expense:
     Deposits                                                856,924           846,455         2,484,699         2,500,209
     FHLB advances                                            11,769            83,439            39,804           252,384
                                                         -----------       -----------       -----------       -----------
         Total interest expense                              868,693           929,894         2,524,503         2,752,593
                                                         -----------       -----------       -----------       -----------

Net Interest Income                                        1,166,603           725,003         3,537,280         2,177,631
     Provision for loan losses                                 6,000            27,000           104,000           138,000
                                                         -----------       -----------       -----------       -----------
Net Interest Income After Provision for Loan Losses        1,160,603           698,003         3,433,280         2,039,631
                                                         -----------       -----------       -----------       -----------

Other Income (Losses)
     Equity in losses of limited partnership                 (30,000)          (19,070)          (91,000)         (132,800)
     Other income                                             13,653            14,031            47,165            32,823
                                                         -----------       -----------       -----------       -----------
         Total other income (losses)                         (16,347)           (5,039)          (43,835)          (99,977)
                                                         -----------       -----------       -----------       -----------

Other Expenses
     Salaries and employee benefits                          225,222           122,722           605,636           374,994
     Premises and equipment                                   15,350            12,364            44,162            39,667
     Deposit insurance expense                                11,013             9,673            32,190            21,741
     Legal and professional fees                              35,376             7,200           108,867            26,613
     Other expense                                            73,153            92,609           241,512           230,286
                                                         -----------       -----------       -----------       -----------
         Total other expenses                                360,114           244,568         1,032,367           693,301
                                                         -----------       -----------       -----------       -----------

Income Before Income Tax                                     784,142           448,396         2,357,078         1,246,353
     Income tax expense                                      280,090           146,459           845,193           381,315
                                                         -----------       -----------       -----------       -----------

Net Income                                               $   504,052       $   301,937       $ 1,511,885       $   865,038
                                                         ===========       ===========       ===========       ===========

Basic earnings per share                                         .18                                 .53
Diluted earnings per share                                       .18                                 .53

</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        Unearned
                                       Outstanding      Amount         Earnings      ESOP Shares    Compensation        Total
                                       ------------- -------------- --------------- -------------- --------------- ----------------

<S>                                      <C>         <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                                           1,511,885                                     1,511,885
    Contribution for unearned
    compensation                                                                                   $ (1,753,853)     (1,753,853)
    Amortization of unearned
    compensation                                                                                         56,866          56,866
    Cash dividends ($0.255 per share)                                    (728,727)                                     (728,727)
    ESOP shares earned                                     35,238                        81,948                         117,186
                                       ------------- -------------- --------------- ------------   -------------   ------------

Balances, September 30, 1998             3,041,750   $ 29,672,830    $ 15,891,443   $(1,758,052)   $ (1,696,987)   $ 42,109,234
                                       ============= ============== =============== ============   =============   ============
</TABLE>



<PAGE>



                     UNION COMMUNITY BANCORP AND SUBSIDIARY
                 Consolidated Condensed Statement of Cash Flows

<TABLE>
<CAPTION>

                                                                                      Nine Months Ended
                                                                                        September 30,
                                                                               -------------------------------
                                                                                    1998               1997
                                                                               ------------       ------------
Operating Activities:
<S>                                                                            <C>                <C>
     Net income                                                                $  1,511,885       $    865,038
     Adjustments to reconcile net income to net cash provided (used) by
         operating activities:
         Provision for loan losses                                                  104,000            138,000
         Depreciation                                                                23,312             20,346
         Investment securities accretion, net                                        (6,603)           (10,212)
         Equity in losses of limited partnership                                     91,000            132,800
         ESOP shares earned                                                         117,186
         Amortization of unearned compensation                                       56,866
         Net change in:
              Interest receivable                                                   (71,924)            (4,353)
              Interest payable                                                        2,106             40,070
              Other assets                                                           14,127            (96,822)
              Other liabilities                                                      27,815             24,494
                                                                               ------------       ------------
                  Net cash provided by operating activities                       1,869,770          1,109,361
                                                                               ------------       ------------

Investing Activities:
     Purchases of investment securities held to maturity                         (6,103,586)          (900,000)
     Proceeds from paydowns and maturities of securities held to maturity         5,150,826            848,657
     Other net changes in loans                                                 (11,401,987)        (2,976,231)
     Purchase of  FHLB of Indianapolis stock                                        (36,800)          (127,600)
     Proceeds on sale of foreclosed real estate                                                         32,163
     Purchases of property and equipment                                            (18,178)            (8,126)
                                                                               ------------       ------------
         Net cash used by investing activities                                  (12,409,725)        (3,131,137)
                                                                               ------------       ------------

Financing Activities:
     Net change in:
         Interest-bearing demand and savings deposits                              (532,450)         1,266,918
         Certificates of Deposit                                                  1,747,006            428,961
         Stock subscription escrow accounts                                     (22,687,104)
     Proceeds from borrowings                                                                        4,000,000
     Repayment of borrowings                                                     (1,780,225)        (3,807,278)
     Cash dividends paid                                                           (457,240)
     Contribution for unearned compensation                                      (1,753,853)
     Net change in advances by borrowers for taxes and insurance                    144,832            126,925
                                                                               ------------       ------------
         Net cash provided (used) by financing activities                       (25,319,034)         2,015,526
                                                                               ------------       ------------

Net Change in Cash and Cash equivalents                                         (35,858,989)            (6,250)

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

Cash and Cash equivalents, End of period                                       $  8,921,838       $  1,458,940
                                                                               ============       ============

Supplemental cash flow disclosures:
     Interest paid                                                                2,522,397          2,712,523
     Income taxes paid                                                              685,900            372,033
     Loans transferred to foreclosed real estate                                                       163,540

</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 September 30, 1998, and for the
nine month and three month periods ended  September 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 and potential 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.

<TABLE>
<CAPTION>

                                                Three Months Ended                           Nine Months Ended
                                                September 30, 1998                           September 30, 1998
                                                ------------------                           ------------------
                                                   Weighted                                       Weighted
                                                   Average          Per Share                     Average      Per Share
                                     Income          Shares          Amount       Income           Shares       Amount
                                     ------          ------          ------       ------           ------       ------
<S>                                  <C>           <C>            <C>             <C>            <C>            <C>    
Basic earnings per share
  Income available to common
  shareholders                       $504,052      2,805,067      $     .18       $1,511,885     2,842,010      $   .53
                                                                 ===========                                    ========
                                                                                                               
Effect of dilutive RRP awards and                                                                            
stock options                                                                                           11      
                                     ---------   --------------                 -------------    ---------    
Diluted earnings per share                                                                                     
Income available to  common                                                                                    
shareholders and assumed                                                                                       
conversions                          $504,052      2,805,067     $      .18       $1,511,885     2,842,021      $   .53
                                     =========   ==============  ===========    =============    =========      ========
</TABLE>
                                


Note 3:  Reporting Comprehensive Income

In 1998, the Company adopted Financial  Accounting  Standards No. 130, Reporting
Comprehensive Income. For the nine months ended September 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.


<PAGE>

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.  Under the
RRP, 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.


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 $23.6 million,  or 17.9% at September 30, 1998,  compared
to December 31,  1997.  The decline was  primarily in cash and cash  equivalents
which  decreased  $35.9  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 $11.3 million, or
14.5% due to an increase  in  customer  demand.  Investment  securities  held to
maturity increase by $959,000, or 16.5%.


<PAGE>

Deposits  increased  $1.2 million to $63.5 million  during the nine months ended
September  30,  1998.  Demand and savings  deposits  decreased  $532,000 or 3.3%
between  December  31, 1997 and  September  30, 1998.  Certificates  of deposits
increased $1.7 million or 3.8% during this period.

Borrowed  funds  decreased  $1.8  million,  or 49.8% from  December  31, 1997 to
September  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 decreased $797,000 from $42.9 million at December 31, 1997
to $42.1  million at September  30, 1998.  The decrease was primarily due to the
$1.8  million   contribution   made  to  fund  the   recognition  and  retention
compensation plan and cash dividends of $729,000. These decreases were offset by
net  income  for the nine  months  ended  September  30,  1998 of $1.5  million,
Employee  Stock   Ownership  Plan  shares  earned  of  $117,000,   and  unearned
compensation amortization of $57,000.

Comparison  of Operating  Results for the three months Ended  September 30, 1998
and 1997

Net income increased $202,000, or 66.9% from $302,000 for the three months ended
September  30, 1997 to $504,000 for the three months ended  September  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 1.86% and 1.43%
for the three months ended September 30, 1998 and 1997, respectively.

Interest  income  increased  $380,000,  or 23.0% from $1.7 million for the three
months  ended  September  30, 1997 to $2.0  million for the same period in 1998.
Interest  expense  decreased  $61,000 or 6.6% from $930,000 for the three months
ended  September  30, 1997 to $869,000 for the same period in 1998. As a result,
net interest  income for the three months ended  September  30, 1998 amounted to
1.2 million,  an increase of $442,000,  or 61.0%  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  September 30, 1998 was
$6,000 as compared to $27,000  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  increased  $11,000 for the three months ended  September  30, 1998
compared to the same period in 1997.

Salaries  and  employee  benefits  were  $225,000  for the  three  months  ended
September  30, 1998  compared to $123,000  for the 1997  period,  an increase of
$102,000,   or  82.9%.  This  increase   resulted   primarily  from  $93,000  of
compensation  expense  related  to the ESOP and the  recognition  and  retention
compensation plan. Legal and professional fees were $35,000 for the three months
ended September 30, 1998 compared to $7,000 for the 1997 period,  an increase of
$28,000.  This increase was a result of the  additional  expenses  incurred as a
public company.

Income tax  expense  increased  $134,000,  or 91.2% for the three  months  ended
September  30,  1998  compared  to the same  period in 1997.  The  increase  was
directly related to the increase in taxable income for the period.


<PAGE>

Comparison of Operating Results for the Nine months Ended September 30, 1998 and
1997

Net income increased $647,000, or 74.8%, from $865,000 for the nine months ended
September 30, 1997 to $1.5 million for the nine months ended September 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 1.38%
for the nine months ended September 30, 1998 and 1997, respectively.

Interest income  increased  $1,132,000,  or 23.0% from $4.9 million for the nine
months  ended  September  30, 1997 to $6.1  million for the same period in 1998.
Interest  expense  decreased  $228,000,  or 8.3%, from $2.8 million for the nine
months ended  September 30, 1997 to $2.5 million for the same period in 1998. As
a result,  net  interest  income for the nine months  ended  September  30, 1998
increased  $1.4  million,  or 62.5%,  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 nine months ended  September 30, 1998 was
$104,000 as compared to $138,000 for the same period in 1997.

Other  losses  decreased  $56,000 for the nine months ended  September  30, 1998
compared to the same period in 1997 primarily due to decreased losses of $42,000
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 $134,000 was
recorded for the nine months ended September 31, 1998 and 1997.

Salaries and employee benefits were $606,000 for the nine months ended September
30, 1998  compared to $375,000 for the 1997  period,  an increase of $231,000 or
61.6%.  This increase resulted  primarily from $174,000 of compensation  expense
related to the ESOP and the recognition and retention  compensation  plan. Legal
and professional fees were $109,000 for the nine months ended September 30, 1998
compared to $27,000 for the 1997 period,  an increase of $82,000.  This increase
was a result of the additional expenses incurred as a public company.

Income tax expense  increased  $464,000,  or 121.7%,  for the nine months  ended
September  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 $1.1 million and $98,000 of loans classified as substandard at
September  30, 1998 and December 31, 1997,  respectively.  At September 30, 1998
and  December  31,  1997,  no loans were  classified  as  doubtful  or loss.  At
September 30, 1998, and December 31, 1997, respectively, $575,000 and $98,000 of
the substandard loans were non-accrual  loans. The allowance for loan losses was
$356,000 or .4% of net loans at  September  30, 1998 and  $252,000 or .3% of net
loans at December 31, 1997. Approximately $492,000 of the increase in classified
loans is a result of a regulatory  examination.  Union  Federal does not believe
that at this time any loss exists on this loan  classified by the examiners.  In
addition,  loans of $40,000 are considered impaired under Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan.



<PAGE>

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
September  30,  1998,  Union  Federal had liquid  assets of $11.5  million and a
liquidity ratio of 15.5%.

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).

Year 2000 Compliance

Union  Federal's  lending and deposit  activities,  like those of most financial
institutions,  depend  significantly  upon  computer  systems.  Union Federal is
addressing  the potential  problems  associated  with the  possibility  that the
computers  that  it  uses to  control  its  operating  systems,  facilities  and
infrastructure  may not be programmed to read four-digit date codes.  This could
cause some computer  applications  to be unable to recognize the change from the
year 1999 to the year 2000,  which  could  cause  computer  systems to  generate
erroneous data or to fail.

Union Federal is actively  monitoring its Year 2000 computer  compliance issues.
Union Federal intends to replace its current  electronic data service  provider,
On-Line Financial Services, Inc., of Oak Brook, Illinois ("On-Line"), during the
first quarter of 1999. At that time,  Intrieve  Incorporated  ("Intrieve")  will
become Union Federal's electronic data service provider.  Because of the pending
transfer of data  processing  responsibility,  Union  Federal has not tested the
electronic  data that  On-Line  currently  maintains on its system for Year 2000
compliance.  Union Federal intends to begin testing its electronic data for Year
2000 compliance within 30 days of March 23, 1999, the date that Intrieve assumes
the responsibility for processing Union Federal's electronic data. Union Federal
has received written  confirmation  from Intrieve that testing will occur within
30 days of Union Federal's  conversion to its system.  Banker's  Systems,  which
maintains Union Federal's loan documentation system, will conduct tests for Year
2000 compliance which are expected to be completed during December, 1998.

The  Company's  Board of  Directors  reviews on a monthly  basis its progress in
addressing  Year 2000  issues and has  appointed  three  executive  officers  to
address  all  aspects of Year 2000  compliance.  The  Company  believe  that its
expenses  related to upgrading its systems and software for Year 2000 compliance
will  not  exceed  $10,000.  At  September  30,  1998,  the  Company  had  spent
approximately  $6,000 in  connection  with Year 2000  compliance.  Although  the
Company  believes  it is taking the  necessary  steps to  address  the Year 2000
compliance  issue,  no assurances can be given that some problems will not occur
or that it will not incur significant  additional expenses in future periods. In
the event that the  Company  is  ultimately  required  to  purchase  replacement
computer systems,  programs and equipment,  or to incur substantial  expenses to
make its current  systems,  programs and equipment Year 2000 compliant,  its net
income and financial condition could be adversely affected.

In  addition to  possible  expenses  related to its own systems and those of its
service providers, Union Federal could incur losses if Year 2000 problems affect
any of its  depositors or borrowers.  Such problems  could include  delayed loan
payments due to Year 2000 problems affecting any of its significant borrowers or
impairing  the payroll  systems of large  employers  in its market  area.  Union
Federal has contacted its commercial  borrowers with outstanding loans in excess
of $500,000 to request that they certify by the end of December, 1998 that their
computer systems are, or soon will be, Year 2000 compliant.  In addition,  Union
Federal  currently  require that borrowers  under new  commercial  loans that it
originates  to certify  that they are aware of the Year 2000 issue and will give
all necessary attention to insure that their information technology will be Year
2000 compliant.  Because Union Federal's loan portfolio to individual  borrowers
is  diversified  and its  market  area does not  depend  significantly  upon one
employer or industry,  Union  Federal does not expect any such Year 2000 related
difficulties  that may affect its  depositors  and  borrowers  to  significantly
affect its net earnings or cash flow.


<PAGE>

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 September 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 September 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 $4.0 million at September  30, 1998.  Union Federal would have been required
to deduct $928,000 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 $78,000 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>



                      Net Portfolio Value        NPV as % of PV of Assets
Change      ----------------------------------   ------------------------
in Rates    $ Amount     $ Change     % Change     NPV Ratio     Change
--------    --------     --------     --------     ---------     ------

+400 bp       24,402       -9,058          -27%     23.94%        -596 bp

+300 bp       26,948        -6,513         -19%     25.73%        -417 bp

+200 bp       29,436        -4,024         -12%     27.40%        -250 bp

+100 bp       31,709        -1,751          -5%     28.84%        -106 bp

   0 bp       33,460                                29.90%

 -100 bp      34,644         1,184           4%     30.57%         +67 bp

 -200 bp      35,698         2,438           7%     31.27%        +137 bp

 -300 bp      37,398         3,938          12%     32.10%        +220 bp

 -400 bp      39,014         5,554          17%     32.98%        +308 bp



This chart illustrates,  for example, that a 200 basis point (or 2%) increase in
interest  rates  would  result in a $4.0  million,  or 12%,  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 250 basis point,  or 2.50%,  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 a Vote of Security Holders.

              None.

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    Registration    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
                    September 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:         November 11, 1998              By: /s/ Joseph E. Timmons
              -----------------              -------------------------
                                                       Joseph E. Timmons
                                                       President and
                                                       Chief Executive Officer

Date:         November 11, 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 Registration
          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