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, 2001

                                       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: 000-23543

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

Indiana                                                  35-2025237
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification  Number)

                              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, 2001 was 2,100,000.




<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 Shareholders' Equity         6

            Consolidated Condensed Statement of Cash Flows                   7

            Notes to Unaudited 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                                                 13
Item 2.   Changes in Securities and Use of Proceeds                         13
Item 3.   Defaults Upon Senior Securities                                   13
Item 4.   Submission of Matters to a Vote of Security Holders               13
Item 5.   Other Information                                                 13
Item 6.   Exhibits and Reports on Form 8-K                                  13

SIGNATURES                                                                  14



<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
<TABLE>
<CAPTION>

                     UNION COMMUNITY BANCORP AND SUBSIDIARY
                      Consolidated Condensed Balance Sheet
                                   (Unaudited)

                                                                                        September 30,            December 31,
                                                                                            2001                     2000
                                                                                  -----------------------------------------------
  Assets
<S>                                                                                  <C>                     <C>
       Cash                                                                          $       339,645         $       210,601
       Interest-bearing demand deposits                                                    1,848,309               4,544,085
                                                                                  -----------------------------------------------
           Cash and cash equivalents                                                       2,187,954               4,754,686
       Investment securities held to maturity                                              4,514,435               7,567,432
       Loans, net of allowance for loan losses of $509,554 and $479,554                  119,864,135             109,505,174
       Premises and equipment                                                                409,036                 373,986
       Federal Home Loan Bank stock                                                        1,180,700               1,043,700
       Investment in limited partnership                                                     866,609                 911,609
       Interest receivable                                                                   863,657                 958,450
       Other assets                                                                          262,998                 238,453
                                                                                  -----------------------------------------------

           Total assets                                                              $   130,149,524         $   125,383,490
                                                                                  ===============================================

  Liabilities
       Deposits
           Noninterest-bearing                                                       $     1,035,371         $     1,769,103
           Interest-bearing                                                               78,443,847              71,047,357
                                                                                  -----------------------------------------------
                Total deposits                                                            79,479,218              72,816,460
       Federal Home Loan Bank advances                                                    15,405,633              14,534,893
       Note payable                                                                          477,142                 654,542
       Interest payable                                                                      198,348                 196,223
       Dividends payable                                                                     292,183                 326,783
       Other liabilities                                                                     830,671                 666,655
                                                                                  -----------------------------------------------
           Total liabilities                                                              96,683,195              89,195,556
                                                                                  -----------------------------------------------

  Commitments and Contingent Liabilities

  Shareholders' 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 - 2,100,000 and 2,341,000 shares                        20,537,252              22,868,943
       Retained earnings                                                                  15,382,324              16,025,304
       Unearned employee stock ownership plan (ESOP) shares                               (1,445,864)             (1,521,125)
       Unearned recognition and retention plan (RRP) shares                               (1,007,383)             (1,185,188)
                                                                                  -----------------------------------------------
           Total shareholders' equity                                                     33,466,329              36,187,934
                                                                                  -----------------------------------------------

           Total liabilities and shareholders' equity                                 $  130,149,524         $   125,383,490
                                                                                  ===============================================
</TABLE>

  See notes to consolidated condensed financial statements.




<PAGE>
<TABLE>
<CAPTION>

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

                                                                        Three Months Ended                  Nine Months Ended
                                                                           September 30                        September 30
                                                               --------------------------------------------------------------------
                                                                      2001              2000             2001              2000
                                                               --------------------------------------------------------------------
<S>                                                               <C>              <C>               <C>              <C>
  Interest and Dividend Income

       Loans                                                      $  2,289,124     $  2,117,128      $  6,682,248     $  6,331,818
       Investment securities                                            85,859          154,266           298,169          419,532
       Dividends on Federal Home Loan Bank stock                        21,576           22,300            67,380           63,820
       Deposits with financial institutions                             13,850           17,989           134,137           54,944
                                                               --------------------------------------------------------------------
           Total interest and dividend income                        2,410,409        2,311,683         7,181,934        6,870,114
                                                               --------------------------------------------------------------------

  Interest Expense
       Deposits                                                      1,026,265          985,976         3,086,361        2,816,628
       Federal Home Loan Bank advances                                 164,416          203,062           544,882          547,856
                                                               --------------------------------------------------------------------
           Total interest expense                                    1,190,681        1,189,038         3,631,243        3,364,484
                                                               --------------------------------------------------------------------

  Net Interest Income                                                1,219,728        1,122,645         3,550,691        3,505,630
       Provision for loan losses                                                         15,000            30,000           45,000
                                                               --------------------------------------------------------------------
  Net Interest Income After Provision for Loan Losses                1,219,728        1,107,645         3,520,691        3,460,630
                                                               --------------------------------------------------------------------

  Other Income (Losses)
       Equity in losses of limited partnerships                        (10,000)         (25,000)          (45,000)         (80,000)
       Net realized gains on sales of available for sale
  securities                                                                                                                 8,331
       Other income                                                     41,976           41,976           126,160           93,303
                                                               --------------------------------------------------------------------
           Total other income (losses)                                  31,976            6,440            81,160           21,634
                                                               --------------------------------------------------------------------

  Other Expenses
       Salaries and employee benefits                                  329,412          277,294           947,473          810,248
       Net occupancy expenses                                           16,524           11,672            46,402           28,081
       Equipment expenses                                                9,865            6,122            25,701           16,219
       Legal and professional fees                                      22,107           19,934           102,922           58,974
       Data processing fees                                             24,569           19,865            73,099           91,191
       Other expenses                                                   94,380           83,058           329,369          242,320
                                                               --------------------------------------------------------------------
           Total other expenses                                        496,857          417,945         1,524,966        1,247,033
                                                               --------------------------------------------------------------------

  Income Before Income Tax                                             754,847          696,140         2,076,885        2,235,231
       Income tax expense                                              255,867          224,559           692,325          734,032
                                                               --------------------------------------------------------------------

  Net Income                                                       $   498,980     $    471,581      $  1,384,560     $  1,501,199
                                                               ====================================================================

  Basic Earnings per Share                                           $   .25          $   .22          $    .68          $   .67
                                                               ====================================================================

  Diluted Earnings per Share                                         $   .25          $   .22          $    .68          $   .67
                                                               ====================================================================

</TABLE>

  See notes to consolidated condensed financial statements.




<PAGE>
<TABLE>
<CAPTION>

                     UNION COMMUNITY BANCORP AND SUBSIDIARY
            Consolidated Condensed Statement of Shareholders' Equity
                  For the Nine Months Ended September 30, 2001
                                   (Unaudited)


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

<S>                                     <C>          <C>             <C>                <C>             <C>           <C>
Balances, January 1, 2001               2,341,000    $22,868,943     $ 16,025,304       $(1,521,125)    $(1,185,188)  $ 36,187,934
  Net income for the period                                             1,384,560                                        1,384,560
  Cash dividends ($.45 per share)                                        (927,549)                                        (927,549)
  Purchase of common stock               (241,000)    (2,356,034)      (1,099,991)                                      (3,456,025)
  Amortization of unearned
compensation expense                                                                                        177,805        177,805
  ESOP shares earned                                      24,343                             75,261                         99,604
                                      ----------------------------------------------------------------------------------------------
Balances, September 30, 2001            2,100,000    $20,537,252    $  15,382,324       $(1,445,864)    $(1,007,383)   $33,466,329
                                      ==============================================================================================

</TABLE>


See notes to consolidated condensed financial statements.




<PAGE>
<TABLE>
<CAPTION>
                     UNION COMMUNITY BANCORP AND SUBSIDIARY
                 Consolidated Condensed Statement of Cash Flows
                                   (Unaudited)

                                                                                                   Nine Months Ended
                                                                                                   September 30,
                                                                                            -------------------------------
                                                                                                 2001             2000
                                                                                            -------------------------------
Operating Activities
<S>                                                                                         <C>                 <C>
     Net income                                                                             $   1,384,560       $1,501,199
     Adjustments to reconcile net income to net cash provided by operating activities
       Provision for loan losses                                                                   30,000           45,000
       Depreciation and amortization                                                               27,927           20,820
       Investment securities accretion, net                                                        (2,489)        (33,671)
       Gain on sale of investment securities available for sale                                                    (8,331)
       Equity in losses of limited partnerships                                                    45,000           80,000
       Amortization of unearned compensation expense                                              177,805          170,600
       ESOP shares earned                                                                          99,604           86,788
       Net change in:
         Interest receivable                                                                       94,793          (27,621)
         Interest payable                                                                           2,125           88,907
         Other assets                                                                             (24,545)          95,472
         Other liabilities                                                                            (33)          50,691
                                                                                            -------------------------------
              Net cash provided by operating activities                                         1,834,747        2,069,854
                                                                                            -------------------------------

Investing Activities
     Purchases of Federal Home Loan Bank stock                                                   (137,000)
     Purchase of securities held to maturity                                                                      (300,000)
     Proceeds from sales of investment securities available for sale                                                87,997
     Proceeds from maturities of securities held to maturity and paydowns of mortgage-
       backed securities                                                                        3,085,486          211,966
     Net changes in loans                                                                     (10,388,961)      (1,955,826)
     Purchases of property and equipment                                                          (62,977)         (19,820)
                                                                                            -------------------------------
              Net cash used by investing activities                                            (7,503,452)      (1,975,683)
                                                                                            -------------------------------

Financing Activities
     Net change in
       Interest-bearing demand and savings deposits                                             4,997,774          544,943
       Certificates of deposit                                                                  1,664,984        3,060,201
     Proceeds from borrowings                                                                   9,000,000       14,000,000
     Repayment of borrowings                                                                   (8,306,660)     (13,306,533)
     Cash dividends                                                                              (962,149)        (989,397)
     Repurchase of common stock                                                                (3,456,025)      (2,584,847)
     Net change in advances by borrowers for taxes and insurance                                  164,049          126,624
                                                                                            -------------------------------
              Net cash provided (used) by financing activities                                  3,101,973          850,991
                                                                                            -------------------------------

Net Change in Cash and Cash Equivalents                                                        (2,566,732)         945,162

Cash and Cash Equivalents, Beginning of Period                                                  4,754,686        3,117,024
                                                                                            -------------------------------

Cash and Cash Equivalents, End of Period                                                    $   2,187,954       $4,062,186
                                                                                            ===============================

Additional Cash Flows Information
     Interest paid                                                                          $   3,629,118       $3,275,577
     Income tax paid                                                                              786,000          724,025

</TABLE>


See notes to consolidated condensed financial statements.







<PAGE>


                     UNION COMMUNITY BANCORP AND SUBSIDIARY
         Notes to Unaudited 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, 2000 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, 2001, and for the
three and nine months ended  September 30, 2001 and 2000,  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 has been  computed  based upon the  weighted-average  common
shares  outstanding.  Unearned  Employee  Stock  Ownership Plan shares have been
excluded from the computation of average common shares outstanding.
<TABLE>
<CAPTION>

                                              Three Months Ended                            Three Months Ended
                                              September 30, 2001                            September 30, 2000
                                              ------------------                            ------------------
                                                   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                        $498,980    1,991,166         $ .25         $ 471,581   2,184,351          $  .22
                                                                  ===========                                  ===========

Effect of dilutive RRP awards
and stock options
                                   -----------------------------                  -------------------------

Diluted earnings per share
   Income available to  common
    shareholders and assumed
    conversions                         $498,980    1,991,166         $ .25         $ 471,581   2,184,351          $  .22
                                   ==========================================     ========================================


                                               Nine Months Ended                             Nine Months Ended
                                              September 30, 2001                             September 30, 2000
                                              ------------------                             ------------------
                                                   Weighted                                       Weighted
                                                    Average        Per Share                      Average      Per Share
                                      Income        Shares           Amount          Income        Shares        Amount
                                      ------        ------           ------          ------        ------        ------
Basic earnings per share
   Income available to common
    shareholders                      $1,384,560    2,033,036          $ .68        $1,501,199   2,256,188          $  .67
                                                                  ===========                                    ==========

Effect of dilutive RRP awards
and stock options
                                   -----------------------------                  --------------------------

Diluted earnings per share
   Income available to  common
    shareholders and assumed
    conversions                       $1,384,560    2,033,036          $ .68       $ 1,501,199   2,256,188          $  .67
                                   ===========================================   ==========================================

</TABLE>



Note 3: Business Combinations

On July  23,  2001,  the  Company  signed  a  definitive  agreement  to  acquire
Montgomery Financial Corporation  ("Montgomery"),  Crawfordsville,  Indiana. The
acquisition will be accounted for under the purchase method of accounting. Under
the terms of the agreement,  shareholders  of Montgomery have the right to elect
to receive either 1.1244 shares of the Company's common stock or $15.00 in cash.
However, fifty percent of the aggregate  consideration must be paid in shares of
common  stock  and there may be pro rata  allocations  of cash or stock  made to
shareholders  to ensure that this  requirement is satisfied.  The transaction is
subject  to  approval  by   shareholders  of  the  Company  and  Montgomery  and
appropriate  regulatory  agencies.  As of June 30,  2001,  Montgomery  had total
assets  and   shareholders'   equity  of  $136.9   million  and  $16.9  million,
respectively.

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

General

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 opened its first branch
office in  Crawfordsville on April 2, 2001. 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 of
the Federal  Deposit  Insurance  Corporation.  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 and consumer loans, including single-pay loans, loans
secured by deposits,  installment  loans and commercial loans; (vi) money market
demand accounts;  (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 increased approximately $4.8 million, or 3.8%, to $130.2 million at
September 30, 2001,  from $125.4  million at December 31, 2000. The increase was
primarily  due to loan growth of $10.4  million  offset by decreases in cash and
cash equivalents and investment securities held to maturity. Net loans increased
by 9.5% to $119.9 million due to an increase in customer  demand.  Cash and cash
equivalents  decreased by $2.6 million from  December 31, 2000 to September  30,
2001.  Investment  securities held to maturity decreased $3.1 million during the
nine months ended  September 30, 2001 primarily due to $2.8 million  received on
investment securities that were called prior to their scheduled maturity dates.

Deposits increased by $6.7 million to $79.5 million during the nine months ended
September  30, 2001.  The increase in deposits was  primarily  used to fund loan
growth. Borrowed funds increased by $693,000, or 4.6%, from December 31, 2000 to
September  30,  2001.  The increase in total  borrowed  funds  resulted  from an
increase in Federal  Home Loan Bank  advances of $871,000  and a decrease in the
note payable to a limited partnership of $178,000.

Stockholder's  equity decreased  approximately  $2.7 million to $33.5 million at
September 30, 2001. The decrease was primarily due to stock  repurchases of $3.5
million and cash  dividends  of  $928,000.  These  decreases  were offset by net
income for the nine months ended  September 30, 2001 of $1.4  million,  Employee
Stock  Ownership  Plan  shares  earned of  $100,000  and  unearned  compensation
amortization of $178,000.

Comparison  of Operating  Results for the Three Months Ended  September 31, 2001
and 2000

Net income  increased  approximately  $27,000 from $472,000 for the three months
ended  September  30, 2000 to $499,000 for the three months ended  September 30,
2001.  The  return on average  assets  was 1.55% and 1.54% for the three  months
ended September 30, 2001 and 2000, respectively.

Interest income increased $98,000, or 4.2%, from $2,312,000 for the three months
ended  September  30,  2000 to  $2,410,000  for the  comparable  period in 2001.
Interest expense  increased  approximately  $1,000 from $1,189,000 for the three
months ended  September 30, 2000 to $1,190,000 for the same period in 2001. As a
result,  net  interest  income for the three  months  ended  September  30, 2001
amounted to $1,220,000, a $97,000 increase from the third quarter of 2000.

No provision for loan losses made for the three months ended  September 30, 2001
as  compared  to a  provision  of $15,000  for the third  quarter  of 2000.  The
allowance for loan losses at September 30, 2001 was considered  adequate,  based
on the 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 income  (losses) was $32,000 for the three months ended September 30, 2001
compared to $7,000 for the same period in 2000.  Other income (losses)  includes
the  equity in  losses of the  Company's  investment  in a limited  partnership,
Pedcor.  The Company  recorded $10,000 in equity losses during the third quarter
of 2001 as  compared to $25,000  during the same period in 2000.  In addition to
recording the equity in the losses of Pedcor,  a benefit of  low-income  housing
income tax credits in the amount of $45,000 was  recorded  for the three  months
ended September 30, 2001 and 2000.  Other income also increased during the three
months  ended  September  30, 2001 as compared to the same period in 2000 due to
nominal increases in a variety of income categories.

Other  expenses  increased  approximately  $79,000  from  $418,000 for the three
months ended  September 30, 2000 to $497,000 for the comparable  period in 2001.
The increase was primarily due to the opening of Union  Federal's  branch office
in Crawfordsville, Indiana on April 2, 2001.

Income tax expense  increased  $31,000,  or 13.8%,  for the three  months  ended
September 30, 2001 compared to the same period in 2000.  The effective tax rates
for the three months ended  September 30, 2001 and 2000 were  approximately  34%
and 32%, respectively.

Comparison of Operating Results for the Nine Months Ended September 31, 2001 and
2000

Net income  decreased  $116,000,  or 7.7%,  from  $1,501,000 for the nine months
ended  September 30, 2000 to $1,385,000 for the nine months ended  September 30,
2001. The return on average assets was 1.45% and 1.65% for the nine months ended
September 30, 2001 and 2000, respectively.

Interest income increased $312,000, or 4.5%, from $6,870,000 for the nine months
ended  September  30, 2000 as compared to  $7,182,000  for the nine months ended
September  30,  2001.  Interest  expense  increased  $267,000,   or  7.9%,  from
$3,364,000  for the nine months ended  September 30, 2000 to $3,631,000  for the
same period in 2001. As a result,  net interest income for the nine months ended
September  30, 2001  amounted to  $3,551,000,  a 1.3%  increase from nine months
ended  September  30, 2000.  The interest  rate spread for the nine months ended
September 30, 2001 was 2.28% compared to 2.15% for the same period in 2000.

The provisions for loan losses made for the nine months ended September 30, 2001
and 2000 were  $30,000 and $45,000,  respectively.  The 2001  provision  and the
allowance for loan losses were considered adequate, based on the 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 income  (losses) was $81,000 for the nine months ended  September 30, 2001
compared to $21,000 for the same period in 2000. Other income (losses)  includes
the equity losses of the Company's investment in a limited partnership,  Pedcor.
The Company  recorded $45,000 in equity losses during the nine months ended 2001
as compared to $80,000  during the same period in 2001. In addition to recording
the equity 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  30,
2001 and 2000. Other income (losses) also increased during the nine months ended
September  30,  2001 as  compared  to the same  period  in 2000  due to  nominal
increases in a variety of income categories.

Other  expenses  increased  $278,000 from  $1,247,000  for the nine months ended
September 30, 2000 to $1,525,000 for the comparable period in 2001. The increase
was primarily due to the opening of Union  Federal's  branch office as mentioned
above.

Income tax expense decreased approximately $42,000, or 5.7%, for the nine months
ended  September 30, 2001 compared to the same period in 2000. The effective tax
rate was 33% for both nine-month periods ended September 30, 2001 and 2000.

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 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 are
characterized  by the distinct  possibility  that some loss will be sustained if
deficiencies are not corrected.  Doubtful loans possess the  characteristics  of
substandard loans, however,  their 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  $454,000  and  $461,000 of loans
classified  as special  mention as of September  30, 2001 and December 31, 2000,
respectively.  In addition,  Union  Federal had $1.3 million and $1.4 million of
loans  classified  as  substandard  at September 30, 2001 and December 31, 2000,
respectively.  At  September  30,  2001 and  December  31,  2000,  no loans were
classified as doubtful or loss.  At September  30, 2001,  and December 31, 2000,
respectively,  $306,000 and $406,000 of the substandard  loans were  non-accrual
loans.  The allowance for loan losses was $510,000 or .42% of loans at September
30, 2001 as compared to $480,000 or .44% of loans at December 31, 2000.

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  ("OTS") regulation at 4%. As
of September  30, 2001,  Union  Federal had liquid  assets of $6.8 million and a
liquidity ratio of 7.0%.

Impact of New Accounting Standards

Accounting  for  a  Business  Combination.  Statement  of  Financial  Accounting
Standards  ("SFAS") No. 141 requires  that all business  combinations  should be
accounted for using the purchase method of accounting; use of the pooling method
is prohibited.  A business combination occurs when an enterprise acquires all or
a portion of the net assets that  constitutes a business or the equity interests
of one or more other  enterprises and that  enterprise  obtains control over the
other  enterprise  or  enterprises.   All  two-party  and  multi-party  business
combinations,  including "roll-up" and "put-together"  transactions are included
in the scope of this Statement.

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

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

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

Impairment testing is a two step process.  The first step is a comparison of the
reporting unit's fair value to its carrying amount,  including its goodwill.  If
the reporting unit's fair value is greater than its carrying value, its goodwill
is not  impaired  and no further  comparisons  are  required.  Companies  should
perform the first step of the impairment  test on all goodwill within six months
of initially applying the Statement.  If the reporting unit's fair value is less
than its carrying amount,  the second step should be performed.  The second step
is to compare  the fair value of goodwill to the  carrying  amount.  If the fair
value of goodwill is less than the carrying  value,  then the goodwill is deemed
impaired and a loss is recognized. Any impairment loss recognized as a result of
completing  the  transitional  impairment  test should be treated as a change in
accounting  principle  and  recognized  in the first  interim  period  financial
statements.

The  provisions  of  Statement  No.  142 would be  effective  for  fiscal  years
beginning  after  December  15, 2001.  Early  adoption  would be  permitted  for
companies with a fiscal year beginning after March 15, 2001, provided,  that the
first quarter  financial  statements  have not been  previously  issued.  In all
cases,  the  Statement  must be adopted as of the  beginning  of a fiscal  year.
Goodwill and intangible  assets  acquired in a transaction  completed after June
30, 2001, but before this Statement as initially  applied would be accounted for
in  accordance  with the  amortization  and  nonamortization  provisions of this
Statement.  The useful economic life of previously  recognized intangible assets
should be reassessed upon adoption of this Statement, and remaining amortization
periods  should be adjusted  accordingly.  Intangible  assets  deemed to have an
indefinite life would no longer be amortized.

At September  30,  2001,  the Company has no legacy  goodwill.  The Company will
adopt these new  accounting  rules on January 1, 2002. As a result,  the Company
will not amortize any future  goodwill that it records,  but will make an annual
assessment  of any  impairment  in goodwill  and,  if  necessary,  recognize  an
impairment  loss at that time. On July 23, 2001, the Company signed a definitive
agreement to acquire Montgomery Financial Corporation.  The proposed transaction
is expected to close during the first quarter of 2002.

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Presented below, as of September 30, 2001 and 2000, is an analysis  performed by
the OTS of Union  Federal's  interest  rate risk as measured by changes in Union
Federal's net portfolio value ("NPV") for instantaneous  and sustained  parallel
shifts in the yield curve, in 100 basis point increments,  up and down 300 basis
points.
<TABLE>
<CAPTION>

                                           September 30, 2001
                                           ------------------
                                Net Portfolio Value                       NPV as % of PV of Assets
 Changes
 In Rates            $ Amount         $ Change          % Change          NPV Ratio          Change
 --------            --------         ---------         --------          ---------          ------
<S>                    <C>               <C>               <C>              <C>               <C>
+300 bp                28,162           -8,154            -22               22.63%           -408 bp
+200 bp                30,967           -5,349            -15               24.13%           -258 bp
+100 bp                33,799           -2,518             -7               25.55%           -116 bp
   0 bp                36,317                                               26.71%
-100 bp                37,840            1,523              4               27.28%            +57 bp
-200 bp                38,983            2,667              7               27,62%            +91 bp
-300 bp                39,952            3,636             10               27.86%           +115 bp


                                          September 30, 2000
                                          ------------------
                                Net Portfolio Value                       NPV as % of PV of Assets
 Changes
 In Rates            $ Amount         $ Change          % Change          NPV Ratio          Change
 --------            --------         ---------         --------          ---------          ------
+300 bp                26,087           -8,728            -25               23.03%           -518 bp
+200 bp                28,968           -5,847            -17               24.84%           -337 bp
+100 bp                31,896           -2,919             -8               26.58%           -163 bp
   0 bp                34,815                                               28.21%
-100 bp                37,363            2,548              7               29.55%            +134bp
-200 bp                39,185            4,370             13               30.44%            +223bp
-300 bp                40,948            6,133             18               31.27%            +306bp

</TABLE>
<PAGE>

The analysis at September  30, 2001  indicates  that there have been no material
changes in market  interest  rates or in the Company's  interest rate  sensitive
instruments  which  would cause a material  change in the market risk  exposures
which affect the  quantitative  and qualitative risk disclosures as presented in
Item 7A of the  Company's  Annual  Report  on Form  10-K  for the  period  ended
December 31, 2000.



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.

            None.

Item 5.     Other Information.

            None.

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

               (a)  The following exhibits are included herein:

                    Exhibit  3.2  Code of  Bylaws  of Union  Community  Bancorp,
                    amended as of October 1, 2001.

               (b)  On July 24, 2001, the Company filed a current report on Form
                    8-K disclosing the merger  between Union  Community  Bancorp
                    and Montgomery Financial  Corporation the Agreement and Plan
                    of Reorganization attached to which is an exhibit thereto.





<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 14, 2001                      By: /s/ Joseph E. Timmons
        -----------------                      -------------------------

                                                         Joseph E. Timmons
                                                         President and
                                                         Chief Executive Officer

Date:   November 14, 2001                      By: /s/ Denise E. Swearingen
        -----------------                      ----------------------------

                                                         Denise E. Swearingen
                                                         Treasurer