##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



---



FORM 10-Q



---



(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



OR



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------



For the transition period from
 to



Commission File Number: 0-18392



---



AMERIANA BANCORP

(Exact name of registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Indiana                                                        |  | 35-1782688                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|2118 Bundy Avenue, New Castle, Indiana                         |  | 47362-1048                          
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          



Registrants
telephone number, including area code: (765) 529-2230



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



---



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 reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act).    Yes ̈No  x



At August 10, 2005, the registrant had 3,161,746 shares of its common stock outstanding.



---



---

##### Table of Contents

AMERIANA BANCORP



Table of Contents



|                              |  |          |  |                                                                                                       |  |   
|----------------------------- |  | -------- |  | ----------------------------------------------------------------------------------------------------- |  | --
|                              |  | Page No.
|Part I. Financial Information |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Financial Statements (Unaudited)                                                                      |  |   
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Balance Sheets at June 30, 2005 and December 31, 2004                          |  | 1 
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004 |  | 2 
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Statements of Shareholders Equity for the Six Months Ended June 30, 2005      |  | 3 
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004       |  | 4 
|                              |  |          | 
|                              |  |          |  | Notes to Consolidated Condensed Financial Statements                                                  |  | 5 
|                              |  |          | 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 8 
|                              |  |          | 
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosure About Market Risk                                             |  | 16
|                              |  |          | 
|                              |  | Item 4.  |  | Controls and Procedures                                                                               |  | 17
|                              | 
|Part II. Other Information    |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Legal Proceedings                                                                                     |  | 18
|                              |  |          | 
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 18
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults upon Senior Securities                                                                       |  | 18
|                              |  |          | 
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                   |  | 18
|                              |  |          | 
|                              |  | Item 5.  |  | Other Information                                                                                     |  | 19
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                                              |  | 19
|                              | 
|Signature                     |  |         



---

##### Table of Contents

PART I - FINANCIAL INFORMATION



ITEM I - FINANCIAL STATEMENTS



Ameriana Bancorp

Consolidated Condensed Balance Sheets

(in thousands, except share data)



|                                                                             |  |                          |         |                  |   |        
|---------------------------------------------------------------------------- |  | ------------------------ | ------- | ---------------- | - | -------
|                                                                             |  | June 30,2005 (Unaudited) |         | December 31,2004
|Assets                                                                       |  |                          |         |                  |   |        
|Cash on hand and in other institutions                                       |  | $                        | 5,455   |                  | $ | 8,645  
|Interest-bearing demand deposits                                             |  |                          | 4,044   |                  |   | 8,408  
|                                                                             |  |                          |         |                  |   |        
|Cash and cash equivalents                                                    |  |                          | 9,499   |                  |   | 17,053 
|Investment securities held to maturity (fair value of $164,787 and $156,294) |  |                          | 166,836 |                  |   | 158,322
|Investment securities available for sale                                     |  |                          | 12,206  |                  |   | 12,032 
|Loans, net of allowance for loan losses of $3,397 and $3,128                 |  |                          | 195,113 |                  |   | 196,344
|Premises and equipment                                                       |  |                          | 7,544   |                  |   | 7,966  
|Stock in Federal Home Loan Bank                                              |  |                          | 7,421   |                  |   | 7,265  
|Goodwill                                                                     |  |                          | 564     |                  |   | 564    
|Cash value of life insurance                                                 |  |                          | 20,801  |                  |   | 20,472 
|Other assets                                                                 |  |                          | 8,721   |                  |   | 8,535  
|                                                                             |  |                          |         |                  |   |        
|Total assets                                                                 |  | $                        | 428,705 |                  | $ | 428,553
|                                                                             |  |                          |         |                  |   |        
|Liabilities and Shareholders Equity                                         |  |                          |         |                  |   |        
|Liabilities                                                                  |  |                          |         |                  |   |        
|Deposits                                                                     |  |                          |         |                  |   |        
|Noninterest-bearing                                                          |  | $                        | 15,533  |                  | $ | 19,649 
|Interest-bearing                                                             |  |                          | 320,336 |                  |   | 324,398
|                                                                             |  |                          |         |                  |   |        
|Total deposits                                                               |  |                          | 335,869 |                  |   | 344,047
|Borrowings                                                                   |  |                          | 47,387  |                  |   | 40,390 
|Drafts payable                                                               |  |                          | 3,060   |                  |   | 2,327  
|Other liabilities                                                            |  |                          | 3,420   |                  |   | 3,146  
|                                                                             |  |                          |         |                  |   |        
|Total liabilities                                                            |  |                          | 389,736 |                  |   | 389,910
|                                                                             |  |                          |         |                  |   |        
|Commitments and contingencies                                                |  |                          |         |                  |   |        
|Shareholders equity                                                         |  |                          |         |                  |   |        
|Preferred stock - 5,000,000 shares authorized and unissued                   |  |                          |        |                  |   |       
|Common stock, $1.00 par value                                                |  |                          |         |                  |   |        
|Authorized 15,000,000 shares                                                 |  |                          |         |                  |   |        
|Issued and outstanding  3,156,155 and 3,150,988 shares                      |  |                          | 3,156   |                  |   | 3,151  
|Additional paid-in capital                                                   |  |                          | 557     |                  |   | 537    
|Retained earnings                                                            |  |                          | 35,152  |                  |   | 34,670 
|Accumulated other comprehensive income                                       |  |                          | 104     |                  |   | 285    
|                                                                             |  |                          |         |                  |   |        
|Total shareholders equity                                                   |  |                          | 38,969  |                  |   | 38,643 
|                                                                             |  |                          |         |                  |   |        
|Total liabilities and shareholders equity                                   |  | $                        | 428,705 |                  | $ | 428,553
|                                                                             |  |                          |         |                  |   |        



See notes to consolidated condensed
financial statements.



(1)



---

##### Table of Contents

Ameriana Bancorp

Consolidated Condensed Statements of Income

(in thousands, except share data)

(Unaudited)



|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|--------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ----- | -
|                                                    |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                                    |  | 2005                       |       |   | 2004                     |   |       | 2005 |  |   | 2004   |  
|Interest Income                                     |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Interest and fees on loans                          |  | $                          | 3,207 |   |                          | $ | 3,024 |      |  | $ | 6,325  |   |  | $ | 6,472 |  
|Interest on mortgage-backed securities              |  |                            | 540   |   |                          |   | 331   |      |  |   | 979    |   |  |   | 677   |  
|Interest on investment securities                   |  |                            | 928   |   |                          |   | 883   |      |  |   | 1,847  |   |  |   | 1,639 |  
|Other interest and dividend income                  |  |                            | 162   |   |                          |   | 131   |      |  |   | 343    |   |  |   | 286   |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Total interest income                               |  |                            | 4,837 |   |                          |   | 4,369 |      |  |   | 9,494  |   |  |   | 9,074 |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Interest Expense                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Interest on deposits                                |  |                            | 1,966 |   |                          |   | 1,493 |      |  |   | 3,809  |   |  |   | 3,022 |  
|Interest on borrowings                              |  |                            | 394   |   |                          |   | 309   |      |  |   | 782    |   |  |   | 524   |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Total interest expense                              |  |                            | 2,360 |   |                          |   | 1,802 |      |  |   | 4,591  |   |  |   | 3,546 |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Net Interest Income                                 |  |                            | 2,477 |   |                          |   | 2,567 |      |  |   | 4,903  |   |  |   | 5,528 |  
|Provision (adjustment) for loan losses              |  |                            | (982  | ) |                          |   | 50    |      |  |   | (3,032 | ) |  |   | 200   |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Net Interest Income After Provision for Loan Losses |  |                            | 3,459 |   |                          |   | 2,517 |      |  |   | 7,935  |   |  |   | 5,328 |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Other Income                                        |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Other fees and service charges                      |  |                            | 418   |   |                          |   | 351   |      |  |   | 798    |   |  |   | 663   |  
|Brokerage and insurance commissions                 |  |                            | 253   |   |                          |   | 252   |      |  |   | 589    |   |  |   | 592   |  
|Gains on sales of loans and servicing rights        |  |                            | 34    |   |                          |   | 95    |      |  |   | 80     |   |  |   | 173   |  
|Increase in cash value of life insurance            |  |                            | 174   |   |                          |   | 192   |      |  |   | 329    |   |  |   | 404   |  
|Gain on sale of land                                |  |                            |      |   |                          |   |      |      |  |   | 177    |   |  |   |      |  
|Other                                               |  |                            | 79    |   |                          |   | 154   |      |  |   | 143    |   |  |   | 190   |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Total other income                                  |  |                            | 958   |   |                          |   | 1,044 |      |  |   | 2,116  |   |  |   | 2,022 |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Other Expense                                       |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Salaries and employee benefits                      |  |                            | 1,912 |   |                          |   | 1,863 |      |  |   | 5,125  |   |  |   | 4,013 |  
|Net occupancy expense                               |  |                            | 221   |   |                          |   | 198   |      |  |   | 418    |   |  |   | 370   |  
|Furniture and equipment expense                     |  |                            | 213   |   |                          |   | 200   |      |  |   | 426    |   |  |   | 410   |  
|Legal and professional fees                         |  |                            | 459   |   |                          |   | 301   |      |  |   | 784    |   |  |   | 446   |  
|Data processing expense                             |  |                            | 141   |   |                          |   | 139   |      |  |   | 271    |   |  |   | 262   |  
|Printing and office supplies                        |  |                            | 87    |   |                          |   | 50    |      |  |   | 128    |   |  |   | 118   |  
|Other                                               |  |                            | 504   |   |                          |   | 466   |      |  |   | 1,086  |   |  |   | 949   |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Total other expense                                 |  |                            | 3,537 |   |                          |   | 3,217 |      |  |   | 8,238  |   |  |   | 6,568 |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Income Before Income Taxes                          |  |                            | 880   |   |                          |   | 344   |      |  |   | 1,813  |   |  |   | 782   |  
|Income tax expense (benefit)                        |  |                            | 150   |   |                          |   | (91   | )    |  |   | 323    |   |  |   | (124  | )
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Net Income                                          |  | $                          | 730   |   |                          | $ | 435   |      |  | $ | 1,490  |   |  | $ | 906   |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Basic and Diluted Earnings Per Share                |  | $                          | 0.23  |   |                          | $ | 0.14  |      |  | $ | 0.47   |   |  | $ | 0.29  |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  
|Dividends Declared Per Share                        |  | $                          | 0.16  |   |                          | $ | 0.16  |      |  | $ | 0.32   |   |  | $ | 0.32  |  
|                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |       |  



See notes to consolidated condensed
financial statements.



(2)



---

##### Table of Contents

Ameriana Bancorp

Consolidated Condensed Statements of Shareholders Equity

(in thousands, except per share data)

(Unaudited)



|                                                               |  |             |       |                          |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|-------------------------------------------------------------- |  | ----------- | ----- | ------------------------ | - | ---------------- |  | - | ------------------------------------------ | - |  | ----- | ---- | - |  | - | ------ | -
|                                                               |  | CommonStock |       | AdditionalPaid-inCapital |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |     
|Balance at December 31, 2004                                   |  | $           | 3,151 |                          | $ | 537              |  | $ | 34,670                                     |   |  | $     | 285  |   |  | $ | 38,643 |  
|Net income                                                     |  |             |      |                          |   |                 |  |   | 1,490                                      |   |  |       |     |   |  |   | 1,490  |  
|Change in unrealized gain on available-for-sale securities     |  |             |      |                          |   |                 |  |   |                                           |   |  |       | (181 | ) |  |   | (181   | )
|                                                               |  |             |       |                          |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Comprehensive income                                           |  |             |       |                          |   |                  |  |   |                                            |   |  |       |      |   |  |   | 1,309  |  
|Exercise of stock options                                      |  |             | 5     |                          |   | 20               |  |   |                                           |   |  |       |     |   |  |   | 25     |  
|Tax benefit related to exercise of non-qualified stock options |  |             |      |                          |   |                 |  |   | 2                                          |   |  |       |     |   |  |   | 2      |  
|Dividends declared ($0.32 per share)                           |  |             |      |                          |   |                 |  |   | (1,010                                     | ) |  |       |     |   |  |   | (1,010 | )
|                                                               |  |             |       |                          |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Balance at June 30, 2005                                       |  |             | 3,156 |                          |   | 557              |  |   | 35,152                                     |   |  |       | 104  |   |  |   | 38,969 |  
|                                                               |  |             |       |                          |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  



See notes to consolidated condensed
financial statements.



(3)



---

##### Table of Contents

Ameriana Bancorp

Consolidated Condensed Statements of Cash Flows

(in thousands)

(Unaudited)



|                                                                     |  |                           |         |   |      |   |         |  
|-------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                                                     |  | Six Months Ended June 30, |        
|                                                                     |  | 2005                      |         |   | 2004 |  
|Operating Activities                                                 |  |                           |         |   |      |   |         |  
|Net income                                                           |  | $                         | 1,490   |   |      | $ | 906     |  
|Items not requiring (providing) cash                                 |  |                           |         |   |      |   |         |  
|Provision (adjustment) for losses on loans                           |  |                           | (3,032  | ) |      |   | 200     |  
|Depreciation and amortization                                        |  |                           | 756     |   |      |   | 700     |  
|Increase in cash value of life insurance                             |  |                           | (329    | ) |      |   | (403    | )
|Mortgage loans originated for sale                                   |  |                           | (4,155  | ) |      |   | (11,982 | )
|Proceeds from sale of mortgage loans                                 |  |                           | 4,091   |   |      |   | 12,399  |  
|Gains on sale of loans and servicing rights                          |  |                           | (80     | ) |      |   | (173    | )
|Increase (decrease) in drafts payable                                |  |                           | 733     |   |      |   | 358     |  
|Other adjustments                                                    |  |                           | (230    | ) |      |   | 680     |  
|                                                                     |  |                           |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                  |  |                           | (756    | ) |      |   | 2,685   |  
|                                                                     |  |                           |         |   |      |   |         |  
|Investing Activities                                                 |  |                           |         |   |      |   |         |  
|Purchase of investment securities held to maturity                   |  |                           | (14,913 | ) |      |   | (56,169 | )
|Principal collected on mortgage-backed securities held to maturity   |  |                           | 5,812   |   |      |   | 3,616   |  
|Proceeds from maturities/calls of securities held to maturity        |  |                           |        |   |      |   | 10,632  |  
|Purchase of investment securities available for sale                 |  |                           | (225    | ) |      |   | (6,528  | )
|Principal collected on mortgage-backed securities available for sale |  |                           |        |   |      |   | 2,301   |  
|Proceeds from maturities/calls of securities available for sale      |  |                           |        |   |      |   | 16,198  |  
|Net change in loans                                                  |  |                           | 4,352   |   |      |   | 11,709  |  
|Net purchases of premises and equipment                              |  |                           | (67     | ) |      |   | (428    | )
|Purchase of Federal Home Loan Bank stock                             |  |                           | (156    | ) |      |   | (162    | )
|Other investing activities                                           |  |                           | 497     |   |      |   | 165     |  
|                                                                     |  |                           |         |   |      |   |         |  
|Net cash used in investing activities                                |  |                           | (4,700  | ) |      |   | (18,666 | )
|                                                                     |  |                           |         |   |      |   |         |  
|Financing Activities                                                 |  |                           |         |   |      |   |         |  
|Net change in demand and savings deposits                            |  |                           | (7,985  | ) |      |   | 9,180   |  
|Net change in certificates of deposit                                |  |                           | (193    | ) |      |   | (7,651  | )
|Net change in short-term borrowings                                  |  |                           | 4,000   |   |      |   | 7,000   |  
|Proceeds from borrowings                                             |  |                           | 6,750   |   |      |   | 18,625  |  
|Repayment of borrowings                                              |  |                           | (3,753  | ) |      |   | (679    | )
|Net change in advances by borrowers for taxes and insurance          |  |                           | 68      |   |      |   | 276     |  
|Exercise of stock options                                            |  |                           | 25      |   |      |   | 9       |  
|Cash dividends paid                                                  |  |                           | (1,010  | ) |      |   | (1,008  | )
|                                                                     |  |                           |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                  |  |                           | (2,098  | ) |      |   | 25,752  |  
|                                                                     |  |                           |         |   |      |   |         |  
|Change in Cash and Cash Equivalents                                  |  |                           | (7,554  | ) |      |   | 9,771   |  
|Cash and Cash Equivalents at Beginning of Year                       |  |                           | 17,053  |   |      |   | 14,549  |  
|                                                                     |  |                           |         |   |      |   |         |  
|Cash and Cash Equivalents at End of Quarter                          |  | $                         | 9,499   |   |      | $ | 24,320  |  
|                                                                     |  |                           |         |   |      |   |         |  
|Supplemental information                                             |  |                           |         |   |      |   |         |  
|Interest paid                                                        |  | $                         | 4,435   |   |      | $ | 3,552   |  
|Income taxes paid                                                    |  |                           | 300     |   |      |   |        |  



See notes to consolidated condensed
financial statements.



(4)



---

##### Table of Contents

AMERIANA BANCORP AND SUBSIDIARIES



NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



NOTE A  BASIS OF
PRESENTATION



The consolidated financial statements
include the accounts of Ameriana Bancorp (the Company) and its wholly owned subsidiary, Ameriana Bank and Trust, SB (the Bank). The Bank has three direct wholly owned subsidiaries, Ameriana Insurance Agency, Ameriana
Financial Services, Inc., and Ameriana Investment Management, Inc.



The unaudited interim consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and disclosures required by generally accepted accounting
principles (GAAP) for complete financial statements. In the opinion of management, the financial statements reflect all adjustments (comprised only of normal recurring adjustments and accruals) necessary to present fairly the
Companys financial position and results of operations and cash flows. The results of operations for the period are not necessarily indicative of the results to be expected in the full year. These statements should be read in conjunction with
the consolidated financial statements and related notes, which are included in the Companys Annual Report on Form 10-K for the twelve month period ended December 31, 2004.



NOTE B  SHAREHOLDERS EQUITY



On May 19, 2005, the Board of Directors declared a quarterly cash dividend of $0.16 per share. This dividend, totaling $505,000, was accrued for payment
to shareholders of record on June 10, 2005, and was paid on July 1, 2005. Payment was made for 3,156,155 shares, compared to 3,155,204 the previous quarter. Stock options totaling 951 shares were exercised during the second quarter of 2005.



(5)



---

##### Table of Contents

NOTE C  EARNINGS PER SHARE



Earnings per share were computed as follows:



|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     
|------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------- | ----- | --------------------- | --------- | --------------- | - | ------ |  | --------------------- | --- | --------------- | --------- |  | - | ----
|                                                                                            |  | (In thousands, except share data) Three Months Ended June 30,
|                                                                                            |  | 2005                                                          |       | 2004                 
|                                                                                            |  | Income                                                        |       | WeightedAverageShares |           | Per ShareAmount |   | Income |  | WeightedAverageShares |     | Per ShareAmount
|Basic Earnings per Share: Income available to common shareholders                           |  | $                                                             | 730   |                       | 3,154,765 |                 | $ | 0.23   |  | $                     | 435 |                 | 3,148,922 |  | $ | 0.14
|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     
|Effect of dilutive stock options                                                            |  |                                                               |      |                       | 12,887    |                 |   |        |  |                       |    |                 | 23,558    |  |   |     
|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     
|Diluted Earnings Per Share: Income available to common shareholders and assumed conversions |  | $                                                             | 730   |                       | 3,167,652 |                 | $ | 0.23   |  | $                     | 435 |                 | 3,172,480 |  | $ | 0.14
|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     
|                                                                                            | 
|                                                                                            |  | (In thousands, except share data) Six Months Ended June 30,  
|                                                                                            |  | 2005                                                          |       | 2004                 
|                                                                                            |  | Income                                                        |       | WeightedAverageShares |           | Per ShareAmount |   | Income |  | WeightedAverageShares |     | Per ShareAmount
|Basic Earnings per Share: Income available to common shareholders                           |  | $                                                             | 1,490 |                       | 3,153,892 |                 | $ | 0.47   |  | $                     | 906 |                 | 3,148,737 |  | $ | 0.29
|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     
|Effect of dilutive stock options                                                            |  |                                                               |      |                       | 15,023    |                 |   |        |  |                       |    |                 | 22,065    |  |   |     
|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     
|Diluted Earnings Per Share: Income available to common shareholders and assumed conversions |  | $                                                             | 1,490 |                       | 3,168,915 |                 | $ | 0.47   |  | $                     | 906 |                 | 3,170,802 |  | $ | 0.29
|                                                                                            |  |                                                               |       |                       |           |                 |   |        |  |                       |     |                 |           |  |   |     



Options to purchase 200,272 and 34,100
shares of common stock at exercise prices of $14.72 to $18.30 and $16.75 to $18.30 per share were outstanding at June 30, 2005 and 2004, respectively, but were not included in the computation of diluted earnings per share because the options were
anti-dilutive.



NOTE D  STOCK-BASED COMPENSATION



We have stock-based employee compensation plans, which are accounted for under the
recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if we had applied
the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) Statement No. 123, Accounting for Stock-Based Compensation to stock-based employee compensation.



|                                                                                                                     |  |                                   |      |   |                          |   |      |      |  |   |       |   |  |   |      |  
|-------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ---- | - | ------------------------ | - | ---- | ---- |  | - | ----- | - |  | - | ---- | -
|                                                                                                                     |  | (In thousands, except share data) |     
|                                                                                                                     |  | Three Months Ended June 30        |      |   | Six Months Ended June 30 |  
|                                                                                                                     |  | 2005                              |      |   | 2004                     |   |      | 2005 |  |   | 2004  |  
|Net income, as reported                                                                                              |  | $                                 | 730  |   |                          | $ | 435  |      |  | $ | 1,490 |   |  | $ | 906  |  
|Less: Total stock-based employee compensation cost determined under the fair value based method, net of income taxes |  |                                   | (9   | ) |                          |   | (78  | )    |  |   | (19   | ) |  |   | (78  | )
|                                                                                                                     |  |                                   |      |   |                          |   |      |      |  |   |       |   |  |   |      |  
|Pro-forma net income                                                                                                 |  | $                                 | 721  |   |                          | $ | 357  |      |  | $ | 1,471 |   |  | $ | 828  |  
|                                                                                                                     |  |                                   |      |   |                          |   |      |      |  |   |       |   |  |   |      |  
|Earnings per share:                                                                                                  |  |                                   |      |   |                          |   |      |      |  |   |       |   |  |   |      |  
|Basic and diluted as reported                                                                                        |  | $                                 | 0.23 |   |                          | $ | 0.14 |      |  | $ | 0.47  |   |  | $ | 0.29 |  
|Basic  pro forma                                                                                                    |  | $                                 | 0.23 |   |                          | $ | 0.11 |      |  | $ | 0.47  |   |  | $ | 0.26 |  
|Diluted  pro forma                                                                                                  |  | $                                 | 0.23 |   |                          | $ | 0.11 |      |  | $ | 0.46  |   |  | $ | 0.26 |  



(6)



---

##### Table of Contents

NOTE E  PENSION EXPENSE



We are a participating employer in a multi-employer defined-benefit pension plan, which covers substantially all full-time
employees of the Company. On June 30, 2004, the Company froze the defined-benefit plan and discontinued the accrual of benefits beyond what was already earned to that date. In March 2005, we made a voluntary payment of $1.1 million to the
defined-benefit pension plan to fund a portion of our liability. The payment was made to improve our funded status, which should reduce the overall Normal Cost under the plan and provide greater flexibility in meeting minimum funding requirements in
future periods. Total pension expense recognized for the second quarter of 2005 was $48,000 as compared to $219,000 in the second quarter of 2004. Total pension expense recognized for the first six months of 2005 was $1.4 million as compared to
$447,000 in the first six months of 2004.



(7)



---

##### Table of Contents

ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with a
narrative on our financial condition, results of operations, liquidity, critical accounting policies, off-balance sheet arrangements, and the future impact of accounting standards that have been issued but are not yet effective. We believe it is
useful to read our MD&A in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and our reports on Forms 10-Q and 8-K and other publicly available information.



FORWARD-LOOKING STATEMENTS



This Quarterly Report on Form 10-Q (Form 10-Q) may contain
statements, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include comments regarding the intent, belief, outlook, estimate or expectations of the Company
primarily with respect to future events and future financial performance. These statements are generally preceded by terms such as expects, believes, anticipates, intends and similar expressions.
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 or interest rates; changes in real estate values and the real estate market or regulatory changes.



The Company does not undertake  and specifically disclaims any obligation  to publicly release the result of any
revisions that may be made to any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.



EXECUTIVE SUMMARY



Ameriana Bancorp is an Indiana chartered bank holding company, which was organized in 1987 by Ameriana Savings Bank, FSB.
The Company is subject to regulation and supervision by the Federal Reserve Board. The Bank began operations in 1890. On June 29, 2002, the Bank converted to an Indiana savings bank and adopted its present name, Ameriana Bank and Trust, SB. The Bank
is subject to regulation and supervision by the Federal Deposit Insurance Corporation (FDIC), and the Indiana Department of Financial Institutions (DFI). Our deposits are insured to applicable limits by the Savings
Association Insurance Fund (SAIF) administered by the FDIC. References in this Form 10-Q to we, us, and our refer to Ameriana Bancorp and/or Ameriana Bank and Trust, as the context requires.



We are headquartered in New Castle, Indiana. We conduct
business through our main office at 2118 Bundy Avenue, New Castle, Indiana and through nine other branch offices located in New Castle, Middletown, Knightstown, Morristown, Greenfield, Anderson, Avon, McCordsville and New Palestine, Indiana. The
Bank has three direct wholly owned subsidiaries, Ameriana Insurance Agency (AIA), Ameriana Financial Services, Inc. (AFS) and Ameriana Investment Management, Inc. (AIMI). AIA provides insurance sales from offices
in New Castle, Greenfield and Avon, Indiana. AFS offers debt protection products through its ownership of an interest in Family Financial Holdings, Incorporated, Columbus, Indiana. In 2002, AFS acquired a 20.9% ownership interest in Indiana Title
Insurance Company, LLC (ITIC) through which it offers title insurance. AFS also operates a brokerage facility in conjunction with Linsco/Private Ledger. AIMI manages the Banks investment portfolio. The Company holds a minority
interest in a limited partnership, House Investments, organized to acquire and manage real estate investments which qualify for federal tax credits.



Ameriana Bank and Trust is a community-oriented financial institution. Our principal business consists of attracting deposits from the general public and
investing those funds primarily in mortgage loans on single-family residences, multi-family and commercial real estate, and to a lesser extent in home improvement and consumer loans. We also invest in various federal and government agency
obligations and other investment securities permitted by applicable laws and regulations, including mortgage-backed, municipal and equity securities. We have from time to time purchased loans and loan participations in the secondary market. We offer
customers in our market area time deposits with terms from three months to seven years, interest-bearing and non interest-bearing checking accounts, savings accounts and money market accounts. Our primary source of borrowings is Federal Home Loan
Bank (FHLB) advances. Through our subsidiaries, we engage in insurance and brokerage activities. We also operate a Trust Department, which provides trust, investment and estate planning services.



(8)



---

##### Table of Contents

Our primary source of income is net interest income, which is the difference between the interest income
earned on our loan and investment portfolios and the interest expense incurred on our deposits and borrowing portfolios. Our loan portfolio typically earns more interest than the investment portfolio, and our deposits typically cost less than FHLB
advances. Several factors affect our net interest income. These factors include the loan, investment, deposit, and borrowing portfolio balances, their composition, the length of their maturity, re-pricing characteristics, liquidity, credit, and
interest rate risk, as well as market and competitive conditions.



Low interest rates in 2001, 2002 and 2003 spurred a great demand for residential mortgage loan refinancing. During this period, we refinanced a large segment of loans that were in our residential mortgage loan portfolio. Most of these
refinanced loans were sold in the secondary market due to the interest rate risk associated with long-term low interest loans. As a result, our residential mortgage loan portfolio declined from $295.9 million at December 31, 2000 to $93.5 million at
December 31, 2004. In 2002, we expanded lending in commercial real estate to help offset the decline in residential mortgage loans. Most of the funds made available from residential mortgage loan pay-offs were reinvested in government agency
securities. Accordingly, our investment securities portfolio increased from $99.7 million at December 31, 2001 to $170.4 million at December 31, 2004.



The substantial shift from higher-earning loans to lower-earning investments is a primary factor in the decline in our net interest margin, which had a
major impact on our core earnings. To improve our net interest margin, we will focus on increasing residential and commercial mortgage loan production, expanding broker relationships, and increasing our level of loan participations with other
financial institutions. Developing a growing, diversified, fundamentally sound and well-priced loan portfolio is a key strategy. We are also focusing deposit efforts on demand deposit account growth and effective pricing strategies.



RECENT DEVELOPMENTS



Harry J. Bailey retired as President and Chief Executive Officer and Director of the Company and the Bank in the second
quarter of 2005. He was with Ameriana since 1984 and a director since 1987. He will remain a consultant to Ameriana for three years.



Jerome J. Gassen was appointed to succeed Mr. Bailey as President and Chief Executive Officer and as a member of the Board of Directors of the Company and
the Bank effective June 1, 2005. Before joining Ameriana, Mr. Gassen was Executive Vice President of Old National Bancorp of Evansville, Indiana.



CRITICAL ACCOUNTING POLICIES



Our accounting and reporting policies are in accordance with accounting principles generally accepted in the United States and conform to general
practices within the banking industry. Our significant accounting policies are described in detail in the Notes to the Consolidated Financial Statements contained in our annual report for the year ended December 31, 2004. The preparation of
financial statements in conformity with GAAP requires us to make estimates and assumptions. Our financial position and results of operations can be affected by these estimates and assumptions. Therefore, an understanding of these estimates and
assumptions is integral to understanding our reported results. Critical accounting policies are those policies that we believe are the most important to the portrayal of our financial condition and results, and they require us to make estimates that
are difficult, subjective or complex.



Allowance for Loan
Losses. The allowance for loan losses provides coverage for probable losses in our loan portfolio. We evaluate the adequacy of the allowance for loan losses each quarter based on changes, if any, in underwriting activities, the loan portfolio
composition (including product mix and geographic, industry or customer-specific concentrations), trends in loan performance, regulatory guidance, asset quality, and economic factors. This evaluation is inherently subjective, as it requires the use
of significant management estimates. Many factors can affect our estimates of specific and expected losses, including volatility of default probabilities, rating changes, loss severity and economic and political conditions. The allowance is
increased through provisions charged to operating earnings and reduced by net charge-offs.



We determine the amount of the allowance based on relative risk characteristics of the loan portfolio. The allowance recorded for commercial loans is based on reviews of individual credit relationships and actual loss
experience. The allowance recorded for other types of loans is based on an analysis of loan mix, risk characteristics of the portfolio, fraud loss and bankruptcy experiences and historical losses, adjusted for current trends, for each homogeneous
category or group of loans. The allowance for loan losses relating to impaired loans is based on the loans observable market price, the collateral for certain collateral-dependent loans or the discounted cash flows using the loans
effective interest rate.



(9)



---

##### Table of Contents

Regardless of the extent of our analysis of customer performance, portfolio trends or risk management
processes, certain inherent but undetected losses are probable within the loan portfolio. This is due to several factors, including inherent delays in obtaining information regarding a customers financial condition or changes in their unique
business conditions, the subjective nature of individual loan evaluations, collateral assessments and the interpretation of economic trends. Volatility of economic or customer-specific conditions affecting the identification and estimation of losses
for larger, non-homogeneous credits and the sensitivity of assumptions utilized to establish allowances for homogenous groups of loans are among other factors that can affect the adequacy of our allowance for loan losses. We estimate a range of
inherent losses related to the existence of these exposures. The estimates are based upon our evaluation of the imprecision of determining the risk associated with the commercial and consumer allowance levels and the estimated impact of the current
economic environment.



Mortgage Servicing Rights.
Mortgage servicing rights (MSRs) associated with loans originated and sold, where servicing is retained, are capitalized and included in other assets in the consolidated balance sheet. The value of the capitalized servicing rights
represents the present value of the future servicing fees arising from the right to service loans in the portfolio. Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests. The methodology used to
determine the valuation of MSRs requires the development and use of a number of estimates, including anticipated principal amortization and prepayments of that principal balance. Events that may significantly affect the estimates used are changes in
interest rates, mortgage loan prepayment speeds and the payment performance of the underlying loans. The carrying value of the MSRs is periodically reviewed for impairment based on a determination of fair value. Impairment, if any, is recognized
through a valuation allowance and is recorded as amortization of intangible assets.



Goodwill and Other Intangibles. We record all assets and liabilities acquired in purchase acquisitions, including goodwill and other intangibles, at fair value as required by SFAS No. 141. Goodwill is subject,
at a minimum, to annual tests for impairment. Other intangible assets are amortized over their estimated useful lives using straight-line and accelerated methods, and are subject to impairment if events or circumstances indicate a possible inability
to realize the carrying amount. The initial goodwill and other intangibles recorded, and subsequent impairment analysis, requires us to make subjective judgments concerning estimates of how the acquired asset will perform in the future. Events and
factors that may significantly affect the estimates include, among others, customer attrition, changes in revenue growth trends, specific industry conditions and changes in competition.



FINANCIAL CONDITION



Assets totaled $428.7 million at June 30, 2005 compared to $428.6 million at December 31, 2004.



Cash balances declined $3.2 million during the first six months of 2005
primarily as a result of a deposit reclassification program, which enabled us to lower our cash reserves at the Federal Reserve Bank. Interest-bearing demand deposits declined $4.4 million during the period. The decline reflects the reinvestment of
funds from interest-bearing deposits into investment securities and loans. Investments held to maturity increased $8.5 million during the period primarily due to the purchase of mortgage-backed securities totaling $14.9 million with an average
duration of 3.5 years, less normal principal payments. Cash and cash equivalents, payments and payoffs from loans and mortgage-backed securities, and FHLB advances provided most of the funds used to purchase the securities. Loans decreased $1.2
million during the quarter primarily due to low residential mortgage loan volume.



Noninterest-bearing deposits declined $4.1 million during the first six months of 2005 primarily due to funds for the $2.3 million settlement with AMICO that was held in escrow at the Bank at the start of the period
and withdrawn in the first quarter of 2005. Interest-bearing deposits decreased $4.1 million during the period primarily from funds withdrawn from money market accounts. Overall deposits declined $8.2 million during the period.



Borrowings increased $7.0 million during the first six months of 2005 due to
new FHLB advances of $6.8 million reduced by borrowings repaid of $3.8 million and a net increase in short-term advances of 4.0 million. The increase in short-term advances was necessary to replace funds from the decline in deposits.



Equity increased $326,000 during the first six months of 2005. Equity
increased primarily due to an increase in retained earnings of $482,000 mostly due to net income of $1.5 million offset by the payment of dividends at $0.32 per share totaling $1.0 million. Common stock and additional paid-in capital increased
$25,000 due to stock options exercised during the period. Accumulated comprehensive income declined $181,000 due to the change in securities that were marked-to-market.



(10)



---

##### Table of Contents

RESULTS OF OPERATIONS



Second Quarter of 2005 compared to the Second Quarter of 2004



Net income for the second quarter of 2005 was $730,000 or $0.23 per diluted share compared to $435,000 or $0.14 per diluted share for the same period last
year. The increase was primarily due to a $1.1 million recovery of a lease pool that was previously charged-off.



Net interest income declined $90,000, or 3.5%, in the second quarter of 2005 compared to the second quarter of 2004. Net interest income in the second
quarter of 2004 included a one-time unfavorable correction of $220,000 for interest owed to Freddie Mac for loans sold from June 2002 to June 2004. Excluding this correction, net interest income would have declined $310,000 for the second quarter of
2005 compared to the comparable period in 2004. The decline in net interest income was primarily due to the flattening yield curve, which resulted in short-term interest rates rising faster than longer-term interest rates. Our interest-bearing
liabilities have shorter overall maturities and reprice more frequently to market conditions than our interest-earning assets and, thus, our cost of funds rose quicker than our yield on assets. For a further discussion on interest rate risk see
Item 3  Quantitative and Qualitative Disclosure About Market Risk.



Tax-exempt interest for the second quarter of 2005 was $178,000 compared to $186,000 for the second quarter of 2004. Tax-exempt interest is from bank-qualified municipal securities. Total interest income on a tax
equivalent basis for the second quarter of 2005 increased $463,000 compared to the same period of the prior year. This increase was the result of the aforementioned $220,000 Freddie Mac interest correction in 2004, an increase in yield on
interest-earning assets of 8 basis points, and a $13.7 million increase in average interest-earning assets. Total interest expense for the second quarter of 2005 increased $558,000 compared to the same period of the prior year. This increase was the
result of an increase in cost of interest-bearing liabilities of 53 basis points and a $13.8 million increase in average interest-bearing liabilities.



The following table sets forth an analysis of the Banks aggregate allowance for loan losses for the periods indicated:



|                                               |  |                                           |       |   |      |   |       |  
|---------------------------------------------- |  | ----------------------------------------- | ----- | - | ---- | - | ----- | -
|                                               |  | (In thousands)Three Months Ended June 30, |      
|                                               |  | 2005                                      |       |   | 2004 |  
|Balance at beginning of quarter                |  | $                                         | 3,350 |   |      | $ | 3,226 |  
|Transfer to allowance for unfunded commitments |  |                                           | (116  | ) |      |   |      |  
|Provision (adjustment) for losses              |  |                                           | (982  | ) |      |   | 50    |  
|Charge-offs                                    |  |                                           | (24   | ) |      |   | (129  | )
|Recoveries                                     |  |                                           | 1,169 |   |      |   | 35    |  
|                                               |  |                                           |       |   |      |   |       |  
|Net recoveries (charge-offs)                   |  |                                           | 1,145 |   |      |   | (94   | )
|                                               |  |                                           |       |   |      |   |       |  
|Balance at end of period                       |  | $                                         | 3,397 |   |      | $ | 3,182 |  
|                                               |  |                                           |       |   |      |   |       |  
|Allowance to total loans                       |  |                                           | 1.71  | % |      |   | 1.63  |  
|                                               |  |                                           |       |   |      |   |       |  
|Allowance to non-performing loans              |  |                                           | 47.23 | % |      |   | 55.70 | %
|                                               |  |                                           |       |   |      |   |       |  



In June 2005, we
recognized a $1.1 million recovery on a pool of equipment leases originated by Commercial Money Center, Inc. (CMC) and backed by a surety bond issued by RLI Insurance Co. (RLI). The recovery was the result of a settlement
with the Bankruptcy Trustee in the CMC bankruptcy proceedings. The settlement amount reflected actual collections to date on the lease pool. Ameriana continues to pursue its litigation against RLI to collect on the surety bond it issued on the lease
pool (see Part II, Item 1  Legal Proceedings).



In late 2004, we settled our litigation against American Motorist Insurance Company (AMICO) with respect to a surety bond it had issued backing a second pool of equipment leases originated by CMC. We received and recorded the
$2.3 million settlement in February 2005.



The recoveries from
the CMC lease pools were credited to the allowance for loan losses and resulted in a favorable provision adjustment of $2.1 million and $982,000 for the first and second quarters of 2005, respectively. In 2002 and 2003 we charged off both lease
pools for approximately $5.5 million each. The positive provision adjustment of $982,000 during the second quarter of 2005 compared to a provision expense of $50,000 in the second quarter of



(11)



---

##### Table of Contents

2004. Charge-offs were $24,000 for the second quarter of 2005 compared to $129,000 for the same period in 2004.
Recoveries were approximately $1.2 million during the second quarter of 2005 primarily due to the CMC recovery. This compares to recoveries of $35,000 in the second quarter of 2004. We transferred $116,000 from the allowance for loan losses to a new
reserve account called the allowance for unfunded commitments. The transfer was necessary to be in compliance with GAAP accounting. The allowance for unfunded commitments is included in other liabilities on the consolidated condensed balance sheets.



The following table summarizes the Companys
non-performing assets:



|                                                      |  |                |       |   |      |   |       |  
|----------------------------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | -
|                                                      |  | (in thousands) |      
|                                                      |  | June 30,       |      
|                                                      |  | 2005           |       |   | 2004 |  
|Loans accounted for on a non-accrual basis            |  | $              | 7,050 |   |      | $ | 5,560 |  
|Accruing loans contractually past due 90 days or more |  |                | 143   |   |      |   | 153   |  
|                                                      |  |                |       |   |      |   |       |  
|Total of non-accrual and 90 days past due loans       |  | $              | 7,193 |   |      | $ | 5,713 |  
|                                                      |  |                |       |   |      |   |       |  
|Percentage of total net loans                         |  |                | 3.69  | % |      |   | 2.91  | %
|                                                      |  |                |       |   |      |   |       |  
|Other non-performing assets(1)                        |  |                | 347   |   |      |   | 1,184 |  
|                                                      |  |                |       |   |      |   |       |  

---

|(1) | Other non-performing assets represents property acquired through foreclosure or repossession. This property is carried at the lower of its fair market value or the principal balance
of the related loan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Non-performing loans
increased $1.5 million at June 30, 2005 compared to the previous period. Most of the increase was due to a $1.7 million commercial real estate loan for an apartment complex in Anderson, Indiana classified as a non-accrual loan in the second quarter
of 2005. The disposition of the Anderson loan is uncertain at this time. The remaining non-accrual loans at June 30, 2005 are primarily commercial real estate loans to two borrowers, one for loans to a builder-developer totaling $1.8 million and
another loan for a condominium project for $2.5 million. We anticipate the loans to the two borrowers will be worked out by the end of the year.



Other non-performing assets declined $837,000 to $347,000 at June 30, 2005 from $1.2 million at June 30, 2004. The decline was primarily due to one
commercial property for $494,000 that was acquired in the second quarter of 2004 and disposed of in the third quarter of 2004.



Other income declined $86,000, or 8.2%, to $1.0 million in the second quarter of 2005, compared to the same period in 2004. Other fees and service charges
increased $67,000 in the second quarter of 2005 over the prior period. The increase was primarily due to higher deposit service charge income mainly from a new program that allows qualified depositors to overdraw their checking account. Gain on sale
of loans and servicing rights declined $61,000 in the second quarter of 2005 compared to the same period in 2004, due to a decline in mortgage loans sold during the period. Other income decreased $75,000 during the period, mainly due to income from
investments accounted for using the equity method of accounting, which consist of ITIC, LLC, and House Investments.



Other expenses increased $320,000, or 10.0%, to $3.5 million in the second quarter of 2005 compared to the same period in 2004. We incurred an additional
$93,000 in health insurance premiums to reimburse our health insurance provider for claims in past plan years that were in excess of the annual cap. Professional fees during the quarter included consulting fees paid to Profit Resources for $200,000
for a consulting engagement to improve operational efficiencies through reduced staffing and streamlined operating procedures. We also incurred recruiting fees of $60,000 for the recruitment firm used to locate the Companys new CEO.



Income taxes were $150,000 for the second quarter of 2005
compared to a tax benefit of $91,000 in the prior period. The difference was due to higher federal taxable income in the second quarter of 2005, as compared to the same period in 2004, and the valuation allowance for state income tax benefits
accrued in 2005.



We have a deferred state tax asset that is
primarily the result of operating losses in 2004 and 2003 for state tax purposes. Starting in 2005, we recorded a valuation allowance against our current period state income tax benefit due to our concern that we may not be able to use more than the
$800,000 tax asset already recorded on the books without modifying the use of our investment subsidiary. Operating income from our investment subsidiary, AIMI, is not subject to state income taxes under current state law, and is the primary reason
for the tax asset.



(12)



---

##### Table of Contents

Six Months Ended June 30, 2005 compared to the Six Months Ended June 30, 2004



Net income for the six months ended June 30, 2005 was $1.5 million or $0.47
per diluted share compared to $906,000 or $0.29 per diluted share for the same period last year. The increase was primarily due to lease recoveries of $3.4 million from two lease pools previously charged-off, including a payment of $2.3 million
received during the first quarter in settlement of certain litigation against one of the sureties for the lease pools, partially offset by a voluntary payment of $1.1 million toward our pension plan liability in the first quarter of 2005.



Net interest income declined $625,000, or 11.3%, in the first
six months of 2005 compared to the first six months of 2004. Net interest income in the first six months of 2004 included a $220,000 one-time unfavorable correction for interest owed to Freddie Mac for loans sold from June 2002 to June 2004.
Excluding the correction, net interest income would have declined $845,000 for the six months ended June 30, 2005 compared to the same period in 2004. The decline in net interest income was primarily due to the flattening yield curve as a result of
short-term interest rates rising faster than longer-term interest rates.



Tax-exempt interest for the first six months of 2005 was $356,000 compared to $294,000 for the first six months of 2004. Tax-exempt interest is from bank-qualified municipal securities. Total interest income on a tax
equivalent basis for the six months ended June 30, 2005 increased $452,000 compared to the same period of the prior year. This increase was the result of the aforementioned $220,000 Freddie Mac interest correction in 2004, and a $16.2 million
increase in average interest-earning assets offset by a decrease in yield of 9 basis points. Total interest expense for the six months ended June 30, 2005 increased $1.0 million compared to the same period of the prior year. This increase was the
result of an increase in cost of interest-bearing liabilities of 48 basis points and a $16.9 million increase in average interest-bearing liabilities.



The following table sets forth an analysis of the Banks aggregate allowance for loan losses for the periods indicated:



|                                               |  |                                         |        |   |      |   |       |  
|---------------------------------------------- |  | --------------------------------------- | ------ | - | ---- | - | ----- | -
|                                               |  | (In thousands)Six Months Ended June 30, |       
|                                               |  | 2005                                    |        |   | 2004 |  
|Balance at beginning of the year               |  | $                                       | 3,128  |   |      | $ | 3,744 |  
|Transfer to allowance for unfunded commitments |  |                                         | (116   | ) |      |   |      |  
|Provision (adjustment) for losses              |  |                                         | (3,032 | ) |      |   | 200   |  
|Charge-offs                                    |  |                                         | (101   | ) |      |   | (851  | )
|Recoveries                                     |  |                                         | 3,518  |   |      |   | 89    |  
|                                               |  |                                         |        |   |      |   |       |  
|Net recoveries (charge-offs)                   |  |                                         | 3,417  |   |      |   | (762  | )
|                                               |  |                                         |        |   |      |   |       |  
|Balance at end of period                       |  | $                                       | 3,397  |   |      | $ | 3,182 |  
|                                               |  |                                         |        |   |      |   |       |  



We had a positive
provision adjustment of $3.0 million during the six months ended June 30, 2005 primarily as a result of the aforementioned lease recoveries. This compares to a provision expense of $200,000 in the first six months of 2004. Charge-offs were $101,000
for the second quarter of 2005 compared to $851,000 for the same period in 2004. A charge-off in the first quarter of 2004 of a commercial real-estate loan for $509,000 made up most of the charge-offs for the first six months of 2004. Recoveries
were $3.0 million during the first six months of 2005 primarily due to the lease recoveries. This compares to recoveries of $89,000 in the first six months of 2004. We transferred $116,000 from the allowance for loan losses to a new reserve account
called the allowance for unfunded commitments.



Other income
increased $94,000, or 4.6%, to $2.1 million in the first six months of 2005, compared to the same period in 2004. Other fees and service charges increased $135,000 in the first six months of 2005 over the prior period. The increase was primarily due
to higher deposit service charge income mainly from a new program that allows qualified depositors to overdraw their checking account. Gain on sale of loans and servicing rights declined $93,000 in the first six months of 2005 compared to the same
period in 2004, due to a decline in mortgage loans sold during the period with only $4.2 million in loans originated for sale for the six months ended June 30, 2005 compared to $12.0 million for the six months ended June 30, 2004. Increase in cash
surrender value of life insurance was $75,000 lower in the first six months of 2005 compared to the same period in 2004, due primarily to lower investment rates. We incurred a gain on sale of land of $177,000 in the first six months of 2005 from the
sale of land we owned which was adjacent to our branch lot in Greenfield, Indiana and which was not needed for expansion purposes. Other income decreased $47,000 during the period, mainly due to income from investments accounted for using the equity
method of accounting.



(13)



---

##### Table of Contents

Other expenses increased $1.7 million, or 25.4%, to $8.2 million in the first six months of 2005 compared
to the same period in 2004. The primary reason for the increase was due to the $1.1 million voluntary payment we made towards our pension plan liability in the first quarter of 2005. We also incurred an additional $93,000 in health insurance
premiums to reimburse our health insurance provider for claims in past plan years that were in excess of the annual cap. Professional fees during the period included consulting fees paid to Profit Resources for $300,000 for a consulting engagement
to improve operational efficiencies. We incurred recruiting fees of $60,000 for the recruitment firm used to locate our new CEO. We also contributed $70,000 in the first quarter of 2005 to the City of Anderson, Indiana for its downtown
revitalization project. The donation was part of an agreement between the City and a group of Banks, including Ameriana, where the City paid off loans secured by commercial buildings in downtown Anderson.



Income taxes were $323,000 for the first six months of 2005 compared to a tax
benefit of $124,000 in the prior period. The difference was due to higher federal taxable income in the first six months of 2005, as compared to the same period in 2004, and the valuation allowance for state income tax benefits accrued in 2005.



OFF-BALANCE SHEET ARRANGEMENTS



In the normal course of operations, we engage in a variety of financial
transactions that, in accordance with GAAP, are not recorded in our financial instruments. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage
customers requests for funding and take the form of loan commitments and lines of credit.



For the six months ended June 30, 2005, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our
financial condition, results of operations or cash flows.



LIQUIDITY AND
CAPITAL RESOURCES



Liquidity is the ability to meet
current and future obligations of a short-term nature. Historically, funds provided by operations, loan principal repayments and new deposits have been our principal sources of liquid funds. In addition, we have the ability to obtain funds through
the sale of new mortgage loans and through borrowings from the FHLB system. We regularly adjust the investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on
interest-earning deposits and securities and (4) the objectives of our asset/liability program.



At June 30, 2005, we had $14.0 million in loan commitments outstanding and $23.1 million of additional commitments for line of credit receivables.
Certificates of deposit due within one year of June 30, 2005 totaled $104.1 million, or 31.0% of total deposits. If these maturing certificates of deposit do not remain with us, other sources of funds must be used, including other certificates of
deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than currently paid on the certificates of deposit due on or before June 30, 2006. However, based on past
experiences, we believe that a significant portion of the certificates of deposit will remain. We have the ability to attract and retain deposits by adjusting the interest rates offered.



Our primary investing activities are the origination of loans and purchase of securities. In the first six months of 2005,
we originated $47.8 million of loans and purchased $15.1 million of securities. In the first six months of 2004, we originated $49.2 million of loans and purchased $62.7 million of securities.



Financing activities consist primarily of activity in deposit accounts and in
FHLB advances. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by the Bank and our local competitors and other factors. Deposits decreased $8.2 million for the six months ended June 30,
2005. We had FHLB advances of $47.1 million and $34.8 million for the quarter ended June 30, 2005 and 2004, respectively.



The Bank is subject to various regulatory capital requirements administered by the FDIC including a risk-based capital measure. The risk-based capital
guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At June 30, 2005, we exceeded all of regulatory capital
requirements. We are considered well capitalized under regulatory guidelines.



(14)



---

##### Table of Contents

RECENT ACCOUNTING ISSUES



In December 2004, the Financial Accounting Standards Board issued an amendment to SFAS 123 (SFAS 123R) which eliminates the ability to
account for share-based compensation transactions using APB Opinion No. 25 and generally requires that such transactions be accounted for using a fair-value based method. The effective date of SFAS No. 123R is the beginning of our next fiscal year,
January 1, 2006. SFAS 123R applies to all awards granted after the required effective date and to awards modified, repurchased or cancelled after that date. The cumulative effect of initially applying this Statement, if any, is recognized as of the
required effective date.



As of the required effective date, we
will apply SFAS 123R using either the modified version of prospective application or the modified version of retrospective application. Under the prospective transition method, compensation cost is recognized on or after the required effective date
for the portion of outstanding awards for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated under SFAS 123 for either recognition or pro-forma disclosures. For periods before the
required effective date, a company may elect to apply a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro-forma disclosures required for those periods by
SFAS 123.



We are currently evaluating the effect of the
recognition and measurement provisions of SFAS 123R but believe the adoption of SFAS 123R will not result in a material impact on our results of operations or financial condition.



In June 2005 the FASB Board decided not to provide additional guidance on the meaning of other-than-temporary impairment,
but directed the FASB staff to issue a staff position (FSP), which will be re-titled FSP 115-1 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. The final FSP will supersede EITF Issue No. 03-1,
The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, and EITF Topic No. D-44, Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair
Value. FSP FAS 115-1 will replace guidance in EITF Issue 03-1 on loss recognition with references to existing other-than-temporary impairment guidance, such as FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity
Securities. FSP FAS 115-1 will clarify that an investor should recognize an impairment loss no later than when the impairment is deemed other than temporary, even if a decision to sell has not been made.



FSP FAS 115-1 will be effective for other-than-temporary impairment analysis
conducted in periods beginning after September 15, 2005. The Company has consistently followed the loss recognition guidance in SFAS No. 115, so the adoption of FSP FAS 115-1 will not have any significant impact on the Companys financial
condition or results of operation.



AVAILABLE INFORMATION



Our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on our website, www.ameriana.com, as soon as
reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission. Information on our website should not be considered a part of this Form 10-Q.



(15)



---

##### Table of Contents

ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK



We are subject to interest rate risk to the degree that our interest-bearing liabilities, primarily deposits and borrowings from the FHLB, mature or
reprice at different rates than our interest-earning assets. Although having liabilities that mature or reprice more frequently on average than assets may not be beneficial in times of rising interest rates, such an asset/liability structure could
result in higher net income during periods of declining interest rates, unless offset by other factors.



The Asset-Liability Management Committee and the Board of Directors review our exposure to interest rate changes and market risk on a quarterly basis.
This review is accomplished by the use of a cash flow simulation model using detailed securities, loan, deposit, borrowings and market information to estimate fair values of assets and liabilities using discounted cash flows. The difference between
our estimated fair value of assets and the estimated fair value of liabilities is the fair value of equity, also referred to as net present value of equity (NPV). The change in the NPV is calculated at different interest rate intervals.
This tests the interest rate risk exposure from movements in interest rates to determine the change in our NPV. The model also tests the impact various interest rate scenarios have on net interest income and net income over a stated period of time
(one year, for example).



The model uses a number of
assumptions, including the relative levels of market interest rates and prepayments or extension in maturity and repayment in loans, mortgage backed securities and collateral mortgage obligations, and certain types of callable investments. These
computations do not contemplate actions we may undertake to reposition the assets and liabilities, and should not be relied upon as indicative of actual results. In addition, certain shortcomings are inherent in the model of computing NPV. Should
interest rates remain or decrease below present levels, the portion of adjustable-rate loans could decrease in future periods due to loan refinancing or payoff activity. If interest rates change, pre-payment levels would likely be different from
those assumed in the model and the ability of borrowers to repay their adjustable-rate loans may decrease during rising interest rate environments.



The information below provides an assessment of the risk of NPV in the event of sudden and sustained 200 basis point increases and decreases in the
prevailing interest rates as of June 30, 2005.



|                       |  |                     |        |              |                                           |        |               |  |        |          |  |       |        |  |     |    
|---------------------- |  | ------------------- | ------ | ------------ | ----------------------------------------- | ------ | ------------- |  | ------ | -------- |  | ----- | ------ |  | --- | ---
|                       |  | Net Portfolio Value |        |              | NPV as Percent of Present Value of Assets |       
|Change in Rates        |  | DollarAmount        |        | DollarChange |                                           |        | PercentChange |  |        | NPVRatio |  |       | Change | 
|(Dollars in thousands) | 
|+200 bp *              |  | $                   | 43,113 |              | $                                         | (4,916 | )             |  | (10.24 | )%       |  | 10.31 | %      |  | (81 | )bp
|Base or 0%             |  |                     | 48,029 |              |                                           |       |               |  |       |          |  | 11.12 |        |  |    |    
|-200 bp                |  |                     | 49,271 |              |                                           | 1,242  |               |  | 2.59   |          |  | 11.10 |        |  | (2  | )bp



---

|* | basis points
|- | ------------



The interest rate risk position of the Bank for the period ending June 30, 2005 was within the Banks risk parameters specified in its interest rate risk policy.



(16)



---

##### Table of Contents

The information below provides an assessment of the risk of NPV in the event of sudden and sustained 200
basis point increases and decreases in the prevailing interest rates as of December 31, 2004.



|                       |  |                     |        |              |                                           |        |               |  |       |          |  |       |        |  |     |    
|---------------------- |  | ------------------- | ------ | ------------ | ----------------------------------------- | ------ | ------------- |  | ----- | -------- |  | ----- | ------ |  | --- | ---
|                       |  | Net Portfolio Value |        |              | NPV as Percent of Present Value of Assets |       
|Change in Rates        |  | DollarAmount        |        | DollarChange |                                           |        | PercentChange |  |       | NPVRatio |  |       | Change | 
|(Dollars in thousands) | 
|+200 bp *              |  | $                   | 42,271 |              | $                                         | (4,629 | )             |  | (9.87 | )%       |  | 10.11 | %      |  | (75 | )bp
|Base or 0%             |  |                     | 46,900 |              |                                           |       |               |  |      |          |  | 10.86 |        |  |    |    
|-200 bp                |  |                     | 48,329 |              |                                           | 1,429  |               |  | 3.05  |          |  | 10.87 |        |  | 1   | bp 

---

|* | basis points
|- | ------------



The interest rate risk position of the Bank for the period ending December 31, 2004 was within the Banks risk parameters specified in its interest rate risk policy.



The change in our net portfolio value at June 30, 2005 compared to December
31, 2004 reflects that we were slightly more sensitive to rate changes on the liability side at June 30, 2005 compared to December 31, 2004.



ITEM 4  CONTROLS AND PROCEDURES



As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure
controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934, as amended, (1) is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms and (2) is accumulated and communicated to
our management, including our principal executive and principal financial officers as appropriate to allow timely discussions regarding required disclosures. It should be noted that the design of our disclosure controls and procedures is based in
part upon certain reasonable assumptions about the likelihood of future events, and there can be no reasonable assurance that any design of disclosure controls and procedures will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote, but our principal executive and financial officers have concluded that our disclosure controls and procedures are, in fact, effective at a reasonable assurance level.



(17)



---

##### Table of Contents

PART II - OTHER INFORMATION



ITEM 1 - Legal Proceedings



As previously reported, the Bank has been involved in litigation relating to its interests in the two pools of equipment leases originated by Commercial Money Center, Inc. (CMC), a California-based equipment leasing company that
is now in bankruptcy.



The Bank purchased the income streams
from two pools of commercial leases totaling $12,003,000.00. Each lease within each pool was supported by a surety bond issued by either American Motorist Insurance Company (AMICO) or RLI Insurance Company. The pool purchased in June 2001 contained
53 leases, each of which was bonded by RLI. The pool purchased in September 2001 contained 40 leases, each of which was bonded by AMICO. The Bank has now settled its litigation with AMICO for $2.3 million. That sum was paid to the Bank in the first
quarter of 2005 and the litigation between the Bank and AMICO was dismissed. The litigation involving the RLI pool continues to pend in proceedings in the Northern District of Ohio (Cleveland). The Bank filed a motion seeking dismissal of RLIs
complaint, which seeks to avoid the bonds. That motion has been under advisement for quite some time.



The Trustee in the CMC/CSC bankruptcies filed adversary proceedings seeking to avoid the sale of the payment streams to the Bank. The Bank had previously
filed its claim in the CMC/CSC bankruptcies. A global settlement has now been reached between the Bank (and the approximately 17 other banks who have bought lease pools from CMC) and the Trustee, which has resulted in the bank receiving payment of
$1.1 million in the second quarter of 2005. Additionally, the Trustee has dismissed its adversary proceedings against the Bank. The principal amount owed by RLI (excluding attorney fees, litigation expenses, damages, interest, etc.) is now
approximately $4.9 million.



ITEM 2 - Unregistered Sales of Equity Securities and Use of Proceeds



The Company did not repurchase any of its common stock during the three months ended June 30, 2005.



ITEM 3 - Defaults Upon Senior Securities



Not Applicable



ITEM 4 - Submission of Matters to a Vote of Security Holders



The Annual Meeting of the Stockholders of the Company was held on May 19, 2005. The results of the vote were as follows:



| | 1. | The following individuals were elected as directors, each for a three year term:
| | -- | --------------------------------------------------------------------------------



|                         |  |           |  |               
|------------------------ |  | --------- |  | --------------
|                         |  | VOTES FOR |  | VOTES WITHHELD
|Harry J. Bailey          |  | 2,624,968 |  | 113,138       
|Charles M. Drackett, Jr. |  | 2,663,499 |  | 74,607        
|Richard E. Hennessey     |  | 2,629,177 |  | 108,929       
|Ronald R. Pritzke        |  | 2,664,671 |  | 73,435        



| | 2. | The appointment of BKD, LLP as independent auditors of Ameriana Bancorp for the year ended December 31, 2005 was ratified by the stockholders by the following vote:
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|          |  |         |  |        
|--------- |  | ------- |  | -------
|FOR       |  | AGAINST |  | ABSTAIN
|2,722,623 |  | 7,869   |  | 7,614  



(18)



---

##### Table of Contents

ITEM 5 - Other Information



Not Applicable



ITEM 6 - Exhibits



|            |  |                                                                          
|----------- |  | -------------------------------------------------------------------------
|No.         |  | Description                                                              
|Exhibit 10, |  | Employment Agreement between Ameriana Bank and Trust and Jerome J. Gassen
|            | 
|Exhibit 31, |  | Rule 13a-14(a)/15d-14(a) Certifications                                  
|            | 
|Exhibit 32, |  | Section 1350 Certifications                                              



(19)



---

##### Table of Contents

SIGNATURES



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



|                       |  |                                      
|---------------------- |  | -------------------------------------
|                       |  | AMERIANA BANCORP                     
|                       | 
|DATE: August 10, 2005  |  | /s/ Jerome J. Gassen                 
|                       |  | Jerome J. Gassen                     
|                       |  | President and Chief Executive Officer
|                       |  | (Duly Authorized Representative)     
|                       | 
|DATE: August 10 , 2005 |  | /s/ Bradley L. Smith                 
|                       |  | Bradley L. Smith                     
|                       |  | Senior Vice President-Treasurer and  
|                       |  | Chief Financial Officer              
|                       |  | (Principal Financial Officer         
|                       |  | and Accounting Officer)