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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-Q





(Mark One)

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

For the quarterly period ended June 30, 2008

OR



| ̈ | TRANSITION REPORT PURSUANT TO 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 ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification 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
(l) 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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of large accelerated filer,  accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                           |  |  |  |                           |  |  
|-------------------------- |  |  |  | ------------------------- |  | -
|Large accelerated filer   ̈ |  |  |  | Accelerated filer         |  |  ̈
|                           |  |  | 
|Non-accelerated filer     ̈ |  |  |  | Smaller reporting company |  | x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ̈
    No  x

At August 12, 2008, the registrant had 2,988,952 shares of its common stock
outstanding.









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##### 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, 2008 and December 31, 2007                              |  | 1       
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007 |  | 2       
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Statements of Shareholders Equity for the Six Months Ended June 30, 2008          |  | 3       
|                              |  |          | 
|                              |  |          |  | Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007           |  | 4       
|                              |  |          | 
|                              |  |          |  | Notes to Consolidated Condensed Financial Statements                                                      |  | 5       
|                              |  |          | 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                     |  | 9       
|                              |  |          | 
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosure about Market Risk                                                 |  | 20      
|                              |  |          | 
|                              |  | Item 4.  |  | Controls and Procedures                                                                                   |  | 21      
|                             
|Part II. Other Information   
|                              |  |          | 
|                              |  | Item 1.  |  | Legal Proceedings                                                                                         |  | 22      
|                              |  |          | 
|                              |  | Item 1A. |  | Risk Factors                                                                                              |  | 22      
|                              |  |          | 
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                               |  | 22      
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults upon Senior Securities                                                                           |  | 22      
|                              |  |          | 
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                       |  | 22      
|                              |  |          | 
|                              |  | Item 5.  |  | Other Information                                                                                         |  | 23      
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                                                  |  | 23      
|                              | 
|Signatures                    |  |         



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##### Table of Contents

PART I  FINANCIAL INFORMATION

ITEM I  FINANCIAL STATEMENTS

Ameriana Bancorp

Consolidated Condensed Balance Sheets

(In thousands, except share data)



|                                                                                                   |  |              |         |   |                  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                                                                                   |  | June 30,2008 |         |   | December 31,2007 |  
|                                                                                                   |  | (Unaudited)  |         |   |                  |  
|Assets                                                                                             |  |              |         |   |                  |   |         |  
|Cash on hand and in other institutions                                                             |  | $            | 4,791   |   |                  | $ | 4,445   |  
|Interest-bearing demand deposits                                                                   |  |              | 17,893  |   |                  |   | 12,727  |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|Cash and cash equivalents                                                                          |  |              | 22,684  |   |                  |   | 17,172  |  
|Investment securities available for sale                                                           |  |              | 67,311  |   |                  |   | 66,692  |  
|Loans held for sale                                                                                |  |              |        |   |                  |   | 250     |  
|Loans, net of allowance for loan losses of $2,909 and $2,677                                       |  |              | 308,159 |   |                  |   | 294,273 |  
|Premises and equipment                                                                             |  |              | 12,973  |   |                  |   | 7,696   |  
|Stock in Federal Home Loan Bank                                                                    |  |              | 5,630   |   |                  |   | 5,630   |  
|Goodwill                                                                                           |  |              | 564     |   |                  |   | 564     |  
|Cash value of life insurance                                                                       |  |              | 23,212  |   |                  |   | 22,777  |  
|Other real estate owned                                                                            |  |              | 4,026   |   |                  |   | 2,517   |  
|Other assets                                                                                       |  |              | 9,269   |   |                  |   | 9,220   |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|Total assets                                                                                       |  | $            | 453,828 |   |                  | $ | 426,791 |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|                                                                                                   |  |             
|Liabilities and Shareholders Equity                                                               |  |              |         |   |                  |   |         |  
|Liabilities                                                                                        |  |              |         |   |                  |   |         |  
|Deposits                                                                                           |  |              |         |   |                  |   |         |  
|Noninterest-bearing                                                                                |  | $            | 23,712  |   |                  | $ | 20,429  |  
|Interest-bearing                                                                                   |  |              | 290,832 |   |                  |   | 294,317 |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|Total deposits                                                                                     |  |              | 314,544 |   |                  |   | 314,746 |  
|Borrowings                                                                                         |  |              | 98,735  |   |                  |   | 68,513  |  
|Drafts payable                                                                                     |  |              | 1,509   |   |                  |   | 4,556   |  
|Other liabilities                                                                                  |  |              | 6,130   |   |                  |   | 5,330   |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|Total liabilities                                                                                  |  |              | 420,918 |   |                  |   | 393,145 |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|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  3,213,952 and 3,213,952 shares |  |              | 3,214   |   |                  |   | 3,214   |  
|Outstanding  2,988,952 and 2,988,952 shares                                                       |  |              |         |   |                  |   |         |  
|Additional paid-in capital                                                                         |  |              | 1,044   |   |                  |   | 1,040   |  
|Retained earnings                                                                                  |  |              | 32,243  |   |                  |   | 32,857  |  
|Accumulated other comprehensive loss                                                               |  |              | (593    | ) |                  |   | (467    | )
|Treasury stock at cost  225,000 and 225,000 shares                                                |  |              | (2,998  | ) |                  |   | (2,998  | )
|                                                                                                   |  |              |         |   |                  |   |         |  
|Total shareholders equity                                                                         |  |              | 32,910  |   |                  |   | 33,646  |  
|                                                                                                   |  |              |         |   |                  |   |         |  
|Total liabilities and shareholders equity                                                         |  | $            | 453,828 |   |                  | $ | 426,791 |  
|                                                                                                   |  |              |         |   |                  |   |         |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

Ameriana Bancorp

Consolidated Condensed Statements of Operations

(In thousands, except per
share data)

(Unaudited)



|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                    |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                                                    |  | 2008                       |       |   | 2007                     |   |       | 2008 |  |   | 2007   |  
|Interest Income                                                     |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Interest and fees on loans                                          |  | $                          | 4,854 |   |                          | $ | 4,869 |      |  | $ | 9,815  |   |  | $ | 9,397  |  
|Interest on mortgage-backed securities                              |  |                            | 553   |   |                          |   | 424   |      |  |   | 1,011  |   |  |   | 862    |  
|Interest on investment securities                                   |  |                            | 314   |   |                          |   | 602   |      |  |   | 668    |   |  |   | 1,391  |  
|Other interest and dividend income                                  |  |                            | 138   |   |                          |   | 128   |      |  |   | 300    |   |  |   | 263    |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total interest income                                               |  |                            | 5,859 |   |                          |   | 6,023 |      |  |   | 11,794 |   |  |   | 11,913 |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Interest Expense                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Interest on deposits                                                |  |                            | 1,964 |   |                          |   | 2,748 |      |  |   | 4,324  |   |  |   | 5,486  |  
|Interest on borrowings                                              |  |                            | 882   |   |                          |   | 810   |      |  |   | 1,732  |   |  |   | 1,629  |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total interest expense                                              |  |                            | 2,846 |   |                          |   | 3,558 |      |  |   | 6,056  |   |  |   | 7,115  |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net Interest Income                                                 |  |                            | 3,013 |   |                          |   | 2,465 |      |  |   | 5,738  |   |  |   | 4,798  |  
|Provision for loan losses                                           |  |                            | 221   |   |                          |   | 90    |      |  |   | 592    |   |  |   | 180    |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net Interest Income After Provision for Loan Losses                 |  |                            | 2,792 |   |                          |   | 2,375 |      |  |   | 5,146  |   |  |   | 4,618  |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Other Income                                                        |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Other fees and service charges                                      |  |                            | 454   |   |                          |   | 435   |      |  |   | 864    |   |  |   | 828    |  
|Brokerage and insurance commissions                                 |  |                            | 282   |   |                          |   | 277   |      |  |   | 685    |   |  |   | 601    |  
|Net gain (loss) on sale of available-for-sale investment securities |  |                            | 60    |   |                          |   | (11   | )    |  |   | 109    |   |  |   | (11    | )
|Gains on sales of loans and servicing rights                        |  |                            | 14    |   |                          |   | 14    |      |  |   | 41     |   |  |   | 20     |  
|Net gain (loss) on other real estate owned                          |  |                            | (20   | ) |                          |   | 2     |      |  |   | (18    | ) |  |   | 5      |  
|Increase in cash value of life insurance                            |  |                            | 225   |   |                          |   | 220   |      |  |   | 435    |   |  |   | 407    |  
|Other                                                               |  |                            | 5     |   |                          |   | 56    |      |  |   | 45     |   |  |   | 128    |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total other income                                                  |  |                            | 1,020 |   |                          |   | 993   |      |  |   | 2,161  |   |  |   | 1,978  |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Other Expense                                                       |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Salaries and employee benefits                                      |  |                            | 2,108 |   |                          |   | 2,025 |      |  |   | 4,242  |   |  |   | 4,250  |  
|Net occupancy expense                                               |  |                            | 266   |   |                          |   | 222   |      |  |   | 526    |   |  |   | 443    |  
|Furniture and equipment expense                                     |  |                            | 183   |   |                          |   | 185   |      |  |   | 366    |   |  |   | 363    |  
|Legal and professional fees                                         |  |                            | 173   |   |                          |   | 216   |      |  |   | 302    |   |  |   | 526    |  
|Data processing expense                                             |  |                            | 176   |   |                          |   | 152   |      |  |   | 307    |   |  |   | 287    |  
|Printing and office supplies                                        |  |                            | 66    |   |                          |   | 65    |      |  |   | 123    |   |  |   | 111    |  
|Marketing expense                                                   |  |                            | 52    |   |                          |   | 100   |      |  |   | 144    |   |  |   | 161    |  
|Other                                                               |  |                            | 447   |   |                          |   | 402   |      |  |   | 853    |   |  |   | 771    |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Total other expense                                                 |  |                            | 3,471 |   |                          |   | 3,367 |      |  |   | 6,863  |   |  |   | 6,912  |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Income (Loss) Before Income Taxes                                   |  |                            | 341   |   |                          |   | 1     |      |  |   | 444    |   |  |   | (316   | )
|Income tax (benefit)                                                |  |                            | (42   | ) |                          |   | 24    |      |  |   | (322   | ) |  |   | (269   | )
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net Income (Loss)                                                   |  | $                          | 383   |   |                          | $ | (23   | )    |  | $ | 766    |   |  | $ | (47    | )
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Basic Earnings (Loss) Per Share                                     |  | $                          | 0.13  |   |                          | $ | (0.01 | )    |  | $ | 0.26   |   |  | $ | (0.02  | )
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Diluted Earnings (Loss) Per Share                                   |  | $                          | 0.13  |   |                          | $ | (0.01 | )    |  | $ | 0.26   |   |  | $ | (0.02  | )
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Dividends Declared Per Share                                        |  | $                          | 0.04  |   |                          | $ | 0.04  |      |  | $ | 0.08   |   |  | $ | 0.08   |  
|                                                                    |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   |        |  

See notes to consolidated condensed financial statements



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##### Table of Contents

Ameriana Bancorp

Consolidated Condensed Statements of Shareholders Equity

(In thousands,
except per share data)

(Unaudited)



|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------ |  | ----------- | ----- | ------------------------ | - | ---------------- |  | - | --------------------------------- | - |  | ------------- | ---- | - | ----- | - | ------ | - |  | - | ------ | -
|                                                                                                                         |  | CommonStock |       | AdditionalPaid-inCapital |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveLoss |   |  | TreasuryStock |      |   | Total |  
|Balance at December 31, 2007                                                                                             |  | $           | 3,214 |                          | $ | 1,040            |  | $ | 32,857                            |   |  | $             | (467 | ) |       | $ | (2,998 | ) |  | $ | 33,646 |  
|Net income                                                                                                               |  |             |      |                          |   |                 |  |   | 766                               |   |  |               |     |   |       |   |       |   |  |   | 766    |  
|Change in accumulated other comprehensive income related to retirement plan                                              |  |             |      |                          |   |                 |  |   |                                  |   |  |               | 30   |   |       |   |       |   |  |   | 30     |  
|Increase of $233 in unrealized loss on available-for-sale securities, net of income tax                                  |  |             |      |                          |   |                 |  |   |                                  |   |  |               | (156 | ) |       |   |       |   |  |   | (156   | )
|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  
|Comprehensive income                                                                                                     |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   | 640    |  
|Cumulative effect of a change in accounting principle related to the post-retirement cost of split-dollar life
insurance |  |             |      |                          |   |                 |  |   | (1,141                            | ) |  |               |     |   |       |   |       |   |  |   | (1,141 | )
|Share-based compensation                                                                                                 |  |             |      |                          |   | 4                |  |   |                                  |   |  |               |     |   |       |   |       |   |  |   | 4      |  
|Dividends declared ($0.08 per share)                                                                                     |  |             |      |                          |   |                 |  |   | (239                              | ) |  |               |     |   |       |   |       |   |  |   | (239   | )
|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  
|Balance at June 30, 2008                                                                                                 |  | $           | 3,214 |                          | $ | 1,044            |  | $ | 32,243                            |   |  | $             | (593 | ) |       | $ | (2,998 | ) |  | $ | 32,910 |  
|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  

See notes to consolidated condensed financial statements.



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Ameriana Bancorp

Consolidated Condensed Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                            |  |                           |         |   |      |   |         |  
|----------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                                            |  | Six Months Ended June 30, |        
|                                                            |  | 2008                      |         |   | 2007 |  
|Operating Activities                                        |  |                           |         |   |      |   |         |  
|Net income (loss)                                           |  | $                         | 766     |   |      | $ | (47     | )
|Items not requiring (providing) cash                        |  |                           |         |   |      |   |         |  
|Provision for losses on loans                               |  |                           | 592     |   |      |   | 180     |  
|Depreciation and amortization                               |  |                           | 332     |   |      |   | 474     |  
|Increase in cash value of life insurance                    |  |                           | (435    | ) |      |   | (407    | )
|Mortgage loans originated for sale                          |  |                           | (655    | ) |      |   | (1,248  | )
|Proceeds from sale of mortgage loans                        |  |                           | 912     |   |      |   | 1,260   |  
|Gains on sale of loans and servicing rights                 |  |                           | (41     | ) |      |   | (20     | )
|Loss on sale or write-down of other real estate owned       |  |                           | 112     |   |      |   | 12      |  
|(Gain) loss from sale of available-for-sale securities      |  |                           | (109    | ) |      |   | 11      |  
|Decrease in drafts payable                                  |  |                           | (3,047  | ) |      |   | (732    | )
|(Decrease) increase in accrued interest payable             |  |                           | (356    | ) |      |   | 331     |  
|Other adjustments                                           |  |                           | (337    | ) |      |   | (325    | )
|                                                            |  |                           |         |   |      |   |         |  
|Net cash used in operating activities                       |  |                           | (2,266  | ) |      |   | (511    | )
|                                                            |  |                           |         |   |      |   |         |  
|Investing Activities                                        |  |                           |         |   |      |   |         |  
|Purchase of securities                                      |  |                           | (14,986 | ) |      |   | (192    | )
|Proceeds/principal from the sale of securities              |  |                           | 9,272   |   |      |   | 11,561  |  
|Proceeds/principal from maturities/calls of securities      |  |                           | 1,000   |   |      |   | 20,750  |  
|Principal collected on mortgage-backed securities           |  |                           | 3,935   |   |      |   | 3,405   |  
|Net change in loans                                         |  |                           | (15,709 | ) |      |   | (22,495 | )
|Proceeds from sales of other real estate owned              |  |                           | 106     |   |      |   | 395     |  
|Net purchases of premises and equipment                     |  |                           | (5,622  | ) |      |   | (550    | )
|Redemption of Federal Home Loan Bank stock                  |  |                           |        |   |      |   | 9       |  
|Construction cost for other real estate owned               |  |                           | (496    | ) |      |   |        |  
|Other investing activities                                  |  |                           | 70      |   |      |   | (2      | )
|                                                            |  |                           |         |   |      |   |         |  
|Net cash (used in) provided by investing activities         |  |                           | (22,430 | ) |      |   | 12,881  |  
|                                                            |  |                           |         |   |      |   |         |  
|Financing Activities                                        |  |                           |         |   |      |   |         |  
|Net change in demand and savings deposits                   |  |                           | 2,292   |   |      |   | 2,026   |  
|Net change in certificates of deposit                       |  |                           | (2,494  | ) |      |   | (5,655  | )
|Net change in short-term borrowings                         |  |                           | 4,500   |   |      |   | (17,000 | )
|Proceeds from long-term borrowings                          |  |                           | 27,000  |   |      |   | 20,000  |  
|Repayment of long-term borrowings                           |  |                           | (1,278  | ) |      |   | (11,589 | )
|Repurchase of common stock                                  |  |                           |        |   |      |   | (807    | )
|Net change in advances by borrowers for taxes and insurance |  |                           | 427     |   |      |   | 310     |  
|Cash dividends paid                                         |  |                           | (239    | ) |      |   | (239    | )
|                                                            |  |                           |         |   |      |   |         |  
|Net cash provided by (used in) financing activities         |  |                           | 30,208  |   |      |   | (12,954 | )
|                                                            |  |                           |         |   |      |   |         |  
|Change in Cash and Cash Equivalents                         |  |                           | 5,512   |   |      |   | (584    | )
|Cash and Cash Equivalents at Beginning of Year              |  |                           | 17,172  |   |      |   | 12,070  |  
|                                                            |  |                           |         |   |      |   |         |  
|Cash and Cash Equivalents at End of Quarter                 |  | $                         | 22,684  |   |      | $ | 11,486  |  
|                                                            |  |                           |         |   |      |   |         |  
|                                                            |  |                          
|Supplemental information:                                   |  |                           |         |   |      |   |         |  
|                                                            |  |                          
|Interest paid on deposits                                   |  | $                         | 4,706   |   |      | $ | 6,048   |  
|                                                            |  |                          
|Interest paid on borrowings                                 |  | $                         | 1,706   |   |      | $ | 1,611   |  
|                                                            |  |                          
|Income taxes paid                                           |  | $                         | 100     |   |      |   |        |  

See notes to consolidated condensed financial statements.



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AMERIANA BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE A  BASIS OF PRESENTATION

The consolidated condensed financial statements include the accounts of Ameriana Bancorp (the Company) and its wholly-owned
subsidiary, Ameriana Bank, 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 year ended December 31, 2007.

Certain reclassifications have been made to the 2007 unaudited interim financial statements to conform to the 2008 unaudited financial
statement presentation. These reclassifications had no effect on net income.

NOTE B  SHAREHOLDERS EQUITY

On May 15, 2008, the Board of Directors declared a quarterly cash dividend of $0.04 per share. This dividend, totaling approximately $120,000, was
accrued for payment to shareholders of record on June 13, 2008, and was paid on July 3, 2008.

No stock options were exercised
during the second quarter of 2008.

NOTE C  EARNINGS PER SHARE

Earnings per share were computed as follows:



|                                                                                                          |  |                                                              |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------ | --- | --------------------- | --------- | --------------- | - | ------ |  | - | --------------------- | - | --------------- | --------- |  | - | ----- | -
|                                                                                                          |  | (In thousands, except share data)Three Months Ended
June 30, |    
|                                                                                                          |  | 2008                                                         |     | 2007                  |          
|                                                                                                          |  | Income                                                       |     | WeightedAverageShares |           | Per ShareAmount |   | Income |  |   | WeightedAverageShares |   | Per ShareAmount |          
|Basic Earnings (Loss) per Share: Income (loss) available to common shareholders                           |  | $                                                            | 383 |                       | 2,988,952 |                 | $ | 0.13   |  | $ | (23                   | ) |                 | 2,988,952 |  | $ | (0.01 | )
|                                                                                                          |  |                                                              |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  
|Effect of dilutive stock options                                                                          |  |                                                              |    |                       |          |                 |   |        |  |   |                      |   |                 |          |  |   |       |  
|                                                                                                          |  |                                                              |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  
|Diluted Earnings (Loss) Per Share: Income (loss) available to common shareholders and assumed conversions |  | $                                                            | 383 |                       | 2,988,952 |                 | $ | 0.13   |  | $ | (23                   | ) |                 | 2,988,952 |  | $ | (0.01 | )
|                                                                                                          |  |                                                              |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  



|                                                                                                          |  |                                                            |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------- | --- | --------------------- | --------- | --------------- | - | ------ |  | - | --------------------- | - | --------------- | --------- |  | - | ----- | -
|                                                                                                          |  | (In thousands, except share data)Six Months Ended
June 30, |    
|                                                                                                          |  | 2008                                                       |     | 2007                  |          
|                                                                                                          |  | Income                                                     |     | WeightedAverageShares |           | Per ShareAmount |   | Income |  |   | WeightedAverageShares |   | Per ShareAmount |          
|Basic Earnings (Loss) per Share: Income (loss) available to common shareholders                           |  | $                                                          | 766 |                       | 2,988,952 |                 | $ | 0.26   |  | $ | (47                   | ) |                 | 3,010,331 |  | $ | (0.02 | )
|                                                                                                          |  |                                                            |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  
|Effect of dilutive stock options                                                                          |  |                                                            |    |                       |          |                 |   |        |  |   |                      |   |                 |          |  |   |       |  
|                                                                                                          |  |                                                            |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  
|Diluted Earnings (Loss) Per Share: Income (loss) available to common shareholders and assumed conversions |  | $                                                          | 766 |                       | 2,988,952 |                 | $ | 0.26   |  | $ | (47                   | ) |                 | 3,010,331 |  | $ | (0.02 | )
|                                                                                                          |  |                                                            |     |                       |           |                 |   |        |  |   |                       |   |                 |           |  |   |       |  



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Options to purchase 208,282 and 222,782 shares of common stock at exercise prices of $9.25 to $17.05 and
$12.43 to $18.30 per share were outstanding at June 30, 2008 and 2007, respectively, but were not included in the computation of diluted earnings per share because the options were anti-dilutive.

NOTE D    FUTURE ACCOUNTING MATTERS

Split-dollar life insurance agreements

In September 2006, the Emerging Issues Task Force Issue 064 (EITF 06-4),
Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement SplitDollar Life Insurance Arrangements, was ratified. EITF 064 addresses accounting for separate agreements which split life insurance policy
benefits between an employer and employee. The Issue requires the employer to recognize a liability for future benefits payable to the employee under these agreements. The effects of applying EITF 06-4 must be recognized through either a change in
accounting principle through an adjustment to equity or through the retrospective application to all prior periods. For calendar year companies, EITF 06-4 was effective beginning January 1, 2008. Early adoption was permitted as of
January 1, 2007. Upon adoption of EITF 06-4 on January 1, 2008, the Company recorded a cumulative effect of a change in accounting principle of $1.1 million.

Fair Value Option for Financial Assets and Financial Liabilities

On February 15, 2007, the FASB
issued its Statement No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of FASB Statement No. 115. FAS 159 permits entities to elect to report most financial assets and liabilities at
their fair value with changes in fair value included in net income. The fair value option may be applied on an instrument-by-instrument or instrument class-by-class basis. The option is not available for deposits withdrawable on demand, pension plan
assets and obligations, leases, instruments classified as stockholders equity, investments in consolidated subsidiaries and variable interest entities and certain insurance policies. The new standard was effective at the beginning of the
Companys fiscal year beginning January 1, 2008, and early application was permitted in certain circumstances. The adoption of SFAS No. 159 on January 1, 2008 did not have a material effect on our financial position or the
results of our operations, as the Company did not elect the fair value option for any financial assets or liabilities.

Business Combinations

Financial Accounting Standards Board Statement No. 141 (SFAS 141R), Business Combinations (Revised 2007), was
issued in December 2007 and replaces SFAS 141 which applies to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141R requires an acquirer, upon initially obtaining control of another
entity, to recognize the assets, liabilities and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and measured at fair value on the date of acquisition
rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. This fair value approach replaces the cost allocation process required under SFAS 141 whereby the cost of an acquisition was allocated
to the individual asset acquired and liabilities assumed based on their estimated fair value. SFAS 141R requires acquirers to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities
assumed. Under SFAS 141R, the requirements of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities,would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition
contingencies are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, nothing should be recognized in purchase accounting. Instead, that contingency would be subject to the
probable and estimable recognition criteria under SFAS 5, Accounting for Contingencies.The Company is evaluating the requirements of SFAS 141R to determine if it will have a significant impact on the Companys financial
condition or results of operations. SFAS 141R is effective as of the beginning of an entitys fiscal year that begins after December 15, 2008.

Noncontrolling Interest in Consolidated Financial Statements

Financial Accounting Standards Board Statement No. 160
(SFAS 160), Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB Statement No. 51, was issued in December 2007 and establishes accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a non-controlling interest in a subsidiary, which is sometimes



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referred to as a minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated
financial statements. Among other requirements, SFAS 160 requires consolidated net income to be reported at amounts that are attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the
consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. SFAS 160 is effective for the Company on January 1, 2009 and is not expected to have a significant impact
on the Companys financial statements.

Disclosures About Derivitive Instruments and Hedging Activities

Financial Accounting Standards Board Statement No. 161 (SFAS 161), Disclosures About Derivative Instruments and Hedging Activities, an
Amendment of FASB Statement No. 133,was issued in March 2008 and amends and expands the disclosure requirements of SFAS 133 to provide greater transparency about (i) how and why an entity uses derivative instruments,
(ii) how derivative instruments and related hedge items are accounted for under SFAS 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entitys financial position, results of
operations and cash flows. To meet those objectives, SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and
disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for the Company on January 1, 2009 and is not expected to have a significant impact on the Companys financial statements.

NOTE E    TRUST PREFERRED SECURITIES

During March 2006, the Company completed a private placement of $10 million in trust preferred securities through Ameriana Capital Trust I (the Trust), a statutory business trust formed by the Company. The
proceeds from the issuance, along with the Companys $310,000 capital contribution for the Trusts common securities, were used to acquire $10.3 million in subordinated debentures issued by the Company, which constitute the sole asset of
the Trust. Because the Trust is not consolidated with the Company, pursuant to FASB Interpretation No. 46, the Companys financial statements reflect the subordinated debt issued to the Trust. Interest payments are payable quarterly at a
rate equal to the average of 6.71% and the three-month London Interbank Offered Rate (LIBOR) plus 150 basis points for the first five years following the offering. After the first five years, the subordinated debentures will bear
interest at a rate equal to 150 basis points over the three month LIBOR. The Company has the option to defer interest payments from time to time for a period not to exceed 20 consecutive quarters. At June 30, 2008, the interest rate was 5.49%.
The subordinated debentures mature on March 15, 2036, and may be redeemed at par anytime after March 15, 2011.

NOTE
F    RETIREMENT PLAN

The following table summarizes the components of net periodic pension cost:



|                                                |  |                            |    |                          |   |      |  |      |     |  |   |    
|----------------------------------------------- |  | -------------------------- | -- | ------------------------ | - | ---- |  | ---- | --- |  | - | ---
|                                                |  | Three Months EndedJune 30, |    | Six Months EndedJune 30,
|In thousands                                    |  | 2008                       |    | 2007                     |   | 2008 |  | 2007
|Service cost                                    |  | $                          | 9  |                          | $ | 8    |  | $    | 17  |  | $ | 17 
|Interest cost                                   |  |                            | 27 |                          |   | 29   |  |      | 55  |  |   | 59 
|Amortization of actuarial loss                  |  |                            |   |                          |   | 3    |  |      |    |  |   | 5  
|Amortization of unrecognized prior service cost |  |                            | 15 |                          |   | 15   |  |      | 30  |  |   | 30 
|                                                |  |                            |    |                          |   |      |  |      |     |  |   |    
|Net periodic pension cost                       |  | $                          | 51 |                          | $ | 55   |  | $    | 102 |  | $ | 111
|                                                |  |                            |    |                          |   |      |  |      |     |  |   |    

Net periodic pension cost is recorded as a component of employee benefits in the Consolidated
Condensed Statements of Operations. The plan assumptions are evaluated annually and are updated as necessary. The discount rate assumption reflects the yield on a portion of high quality fixed-income instruments that have a similar duration to the
plans liabilities.



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NOTE G  DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES

Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157).
FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 has been applied prospectively as of the beginning of the year/period.

FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. FAS 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair value:



|        |  |                                                                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Quoted prices in active markets for identical assets or liabilities                                                                                                                                                                                                                                         
|        | 
|Level 2 |  | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or
can be corroborated by observable market data for substantially the full term of the assets or liabilities
|        | 
|Level 3 |  | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities                                                                                                                                                              

Following is a description of the valuation methodologies used for instruments measured at fair
value on a recurring basis and recognized in the accompanying balance sheet, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market,
securities are classified within Level 1 of the valuation hierarchy. There currently are no securities valued in Level 1. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of
securities with similar characteristics or discounted cash flows and are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Government Agency notes and mortgage-backed securities, municipal bonds, and mutual
funds. There currently are no securities valued in Level 3.

The following table presents the fair value measurements of assets and
liabilities recognized in the accompanying balance sheet measured at fair value on a recurring basis and the level within the FAS 157 fair value hierarchy in which the fair value measurements fall at June 30, 2008:



|                              |  |            |            |                                                             |   |                                             |  |                                        |            |  |   |  
|----------------------------- |  | ---------- | ---------- | ----------------------------------------------------------- | - | ------------------------------------------- |  | -------------------------------------- | ---------- |  | - | -
|                              |  |            |            | Fair Value Measurements Using                              
|                              |  | Fair Value |            | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservableInputs(Level
3)
|Available-for-sale securities |  | $          | 67,311,000 |                                                             | $ |                                            |  | $                                      | 67,311,000 |  | $ | 

Following is a description of valuation methodologies used for instruments measured at fair value
on a non-recurring basis and recognized in the accompanying balance sheet, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Impaired Loans

Loan impairment is reported when scheduled payments under contractual terms
are deemed uncollectible. Impaired loans are carried at the present value of estimated future cash flows using the loans existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan
losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan
losses. Loan losses are



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charged against the allowance when management believes the uncollectability of the loan is confirmed. During the six months of 2008, fourteen impaired loans
were partially charged-off or re-evaluated, resulting in a remaining balance for these loans, net of specific reserve, of $7.6 million as of June 30, 2008. This valuation would be considered Level 3, consisting of appraisals of underlying
collateral and discounted cash flow analysis.

The following table presents the fair value measurements of assets and liabilities
recognized in the accompanying balance sheet measured at fair value on a nonrecurring basis and the level within the FAS 157 fair value hierarchy in which the fair value measurements fall at June 30, 2008:



|               |  |            |           |                                                             |   |                                             |  |                                        |   |  |   |          
|-------------- |  | ---------- | --------- | ----------------------------------------------------------- | - | ------------------------------------------- |  | -------------------------------------- | - |  | - | ---------
|               |  |            |           | Fair Value Measurements Using                              
|               |  | Fair Value |           | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservableInputs(Level
3)
|Impaired loans |  | $          | 7,579,000 |                                                             | $ |                                            |  | $                                      |  |  | $ | 7,579,000

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 (the
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. We believe it is useful to read our MD&A in conjunction with the consolidated financial statements contained in Part I in this Quarterly Report on Form 10-Q (this Form 10-Q), our Annual Report on Form 10-K for
the fiscal year ended December 31, 2007, and our other reports on Forms 10-Q and 8-K and other publicly available information.

FORWARD-LOOKING
STATEMENTS

This Form 10-Q may contain certain forward-looking statements within the meaning of the federal securities laws.
These statements are not historical facts, rather statements based on Ameriana Bancorps current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are generally preceded by terms
such as expects, believes, anticipates, intends and similar expressions. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Companys
market area, changes in policies by regulatory agencies, the outcome of litigation, fluctuations in interest rates, demand for loans and deposits in the Companys market area, changes in the quality or composition of our loan portfolio, changes
in accounting principles, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Additional factors that may affect our results are discussed in the Form 10-K under
Part I, Item 1A.- Risk Factors, in this Form 10-Q under Part II, Item 1A -Risk Factors, and in other reports filed with the Securities and Exchange Commission. The Company cautions readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date made. The Company advises readers that the factors listed above could affect the Companys financial performance and could cause the Companys actual results
for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

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 statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events.

Who We Are

Ameriana Bancorp (the Company) is an Indiana chartered bank holding company subject to regulation and supervision by the Board of Governors of
the Federal Reserve System (the Federal Reserve Board) under the Bank Holding Company Act of 1956 (the BHCA). The Company became the holding company for Ameriana Bank, SB, an Indiana chartered savings bank headquartered in
New Castle, Indiana (the Bank) in 1990. The Company also holds a minority interest in a limited partnership organized to acquire and manage real estate investments, which qualify for federal tax credits.



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The Bank began operations in 1890. Since 1935, the Bank has been a member of the Federal Home Loan Bank
(the FHLB) System. Its deposits are insured to applicable limits by the Deposit Insurance Fund, administered by the Federal Deposit Insurance Corporation (the FDIC). On June 29, 2002, the Bank converted to an Indiana
savings bank and adopted the name Ameriana Bank and Trust, SB. On July 31, 2006, the Bank closed its Trust Department and adopted its present name on September 12, 2006. As a result of the conversion in 2002, the Bank became
subject to regulation by the Indiana Department of Financial Institutions (the DFI) and the FDIC. The Bank conducts business through its main office at 2118 Bundy Avenue, New Castle, Indiana and through nine branch offices located in New
Castle, Middletown, Knightstown, Morristown, Greenfield, Anderson, Avon, McCordsville and New Palestine, Indiana and a loan production office in Carmel, Indiana. The Bank offers a wide range of consumer and commercial banking services, including:
(i) accepting deposits; (ii) originating commercial, mortgage, consumer and construction loans; and (iii) through its subsidiaries, providing investment and brokerage services and insurance services.

The Bank has three 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 insurance products through its ownership of an interest in Family Financial Life Insurance
Company, New Orleans, Louisiana, which offers a full line of credit-related insurance products. In 2002, AFS acquired a 20.9% ownership interest in Indiana Title Insurance Company, LLC through which it offers title insurance. AFS also operates a
brokerage facility in conjunction with LPL Financial that provides non-bank investment product alternatives to its customers and the general public. AIMI manages the Companys investment portfolio.

What We Do

The Bank 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 loans, construction loans, commercial real estate
loans, and, to a lesser extent, commercial and industrial loans, small business lending, home improvement loans, and consumer loans. We have from time to time purchased loans and loan participations in the secondary market. 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 offer customers in our market area time deposits with terms from
three months to seven years, interest-bearing and noninterest-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.

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 have
a lower average rate 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.

Executive Overview of the Second Quarter
of 2008

The Company recorded net income of $383,000, or $0.13 per share, for the second quarter of 2008, which equaled the
earnings of $383,000 for the first quarter of 2008:



| |  |  | The quarterly dividend of $0.04 per share represented a payout ratio of 31.2%.
| | - |  | ------------------------------------------------------------------------------



| |  |  | The Companys closing stock price of $9.48 per share on June 30, 2008 represented 86.1% of its book value of $11.01 per share on that date, and
represented a market capitalization of $28.3 million.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Net interest income for the second quarter of 2008 was 22.2% higher than the same quarter in 2007, primarily a result of a 44 basis point improvement in net
interest margin to 3.19%, on a fully tax-equivalent basis.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Net interest margin of 3.19%, on a fully tax-equivalent basis, for the second quarter of 2008 represented a 22 basis point improvement over the 2.97% recorded for
the first quarter of 2008.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Total non-performing loans of $3.5 million, or 1.13% of total net loans at June 30, 2008, represented a $1.1 million decrease from March 31, 2008. The
decrease in non-performing loans was primarily due to the migration of a single commercial credit to other real estate owned (OREO). The total for OREO increased $1.3 million during the second quarter.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The provision for loan losses for the second quarter of 2008 was $221,000, which was higher than the $90,000 booked for the same quarter a year earlier, but a
reduction from the $371,000 recorded for the first quarter of 2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other income for the second quarter was 2.7% higher than the same quarter of 2007, primarily a result of a $60,000 gain from the sale of municipal securities, which
was a part of the continuation of the Banks overall balance sheet restructuring strategy.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other expense for the second quarter was 3.1% higher than the same quarter of 2007, with compensation costs, which were impacted by growth strategies, increasing by
4.1%.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The income tax benefit of $42,000 for the second quarter of 2008 was related primarily to a significant amount of tax-exempt income from municipal securities and
bank-owned life insurance.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the second quarter of 2008, the balance sheet grew by $8.5 million, or 1.9%, to $453.8
million:



| |  |  | The second quarter balance sheet growth resulted primarily from a $12.6 million, or 4.3%, increase in the loan portfolio to $308.2 million. As a result of the
increase in commercial loans, the mix of the loan portfolio changed, with commercial loans becoming a larger percentage of total loans.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the second quarter of 2008, total deposits declined by $7.9 million, or 2.4%, to $314.5 million. No brokered certificates of deposit were held at
June 30, 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The loan portfolio growth and decline in deposits for the second quarter of 2008 was funded with a combination of Federal Home Loan Bank advances and cash flows
from the investment portfolio, which consisted primarily of $9.3 million in principal proceeds from the sale of municipal securities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Strategic Issues

As part of the Banks efforts to expand its commercial lending capabilities, in the second
quarter of 2007, we opened a commercial lending center in the fast growing suburban area of Carmel, Indiana. This office and the Banks current emphasis on commercial lending have contributed to our continued loan growth, which coupled with our
strong focus on retail banking activities, is expected to allow us to produce earnings growth for the Company.

A major remodeling of our
Greenfield Banking Center, our second largest office, is scheduled to be completed in the third quarter of 2008. The renovations will provide our customers the opportunity to interact with our banking associates in a new and dynamic environment that
will include interactive terminals, an internet café, and multi-media in-store marketing.

The Company also recently announced plans
to open two new full-service banking centers in Hamilton County, which lies just north of Marion County and Indianapolis. The new offices in Fishers and Carmel, expected to open in October 2008 and November 2008, respectively, will enhance
Amerianas presence in one of the fastest growing areas of Indiana, considerably increase the footprint in the Indianapolis area, and boost the Companys overall visibility in this market.



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We believe the continued success of the Company is dependent on its ability to provide its customers with
financial advice and solutions that assist them in achieving their goals. We will accomplish this mission by:



| |  |  | being our customers first choice for financial advice and solutions;
| | - |  | ---------------------------------------------------------------------



| |  |  | informing and educating customers on the basics of money management; and
| | - |  | ------------------------------------------------------------------------



| |  |  | understanding and meeting customers financial needs throughout their life cycle.
| | - |  | ---------------------------------------------------------------------------------

Serving customers requires the commitment of all Ameriana associates to provide exceptional service and sound advice. We believe these qualities will
differentiate us from our competitors and increase profitability and shareholder value.

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are maintained in accordance with GAAP and conform to general practices within the banking industry.
The Companys significant accounting policies are described in detail in the Notes to the Companys Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. The financial condition and results of operations can be affected by these estimates and assumptions, and such estimates and
assumptions are integral to the understanding of reported results. Critical accounting policies are those policies that management believes are the most important to the portrayal of the Companys financial condition and results of operations,
and they require management to make estimates that are difficult, subjective or complex. We consider the allowance for loan losses and mortgage servicing rights to be our critical accounting policies.

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

The Company determines 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 an analysis of the migration of commercial loans and actual loss experience. The allowance recorded for non-commercial 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 loan 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.

Regardless of the extent of the Companys 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 considered. The Company estimates a range of inherent losses related to the existence of these
exposures. The estimates are based upon the Companys evaluation of imprecision 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 intangible 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



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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.

FINANCIAL CONDITION

Total assets of $453.8 million at June 30, 2008, represented growth of $27.0 million from the
December 31, 2007 total of $426.8 million. This increase resulted primarily from loan growth.

Cash and cash equivalents of $22.7
million at June 30, 2008, which were $5.5 million greater than the December 31, 2007 total of $17.2 million, represent an immediate source of liquidity to fund loans or meet deposit outflows. The increase resulted primarily from a $5.0
million short-term investment of funds earmarked for use later in the year to fund a commercial loan commitment.

Although the total for
investment securities available for sale of $67.3 million at June 30, 2008, was relatively unchanged from $66.7 million at December 31, 2007, there was a material change in the investment mix. The total for mortgage-backed securities
increased $11.1 million to $42.7 million, while municipal securities declined $9.6 million to $18.1 million, primarily through a second quarter sale of $9.2 million designed to improve the Banks immediate liquidity position. All
mortgage-backed securities in the portfolio at June 30, 2008, are insured by either Ginnie Mae, a U.S. Government agency, or Fannie Mae or Freddie Mac, U.S. Government sponsored enterprises.

We realized a $13.9 million increase from December 31, 2007 in net loans receivable. Our growth efforts in the first quarter were negatively
impacted by a combination of seasonality and the slowing economy, which included significant weakness in the housing sector. Commercial lending activity improved during the second quarter. For the six-month period, the total of commercial real
estate, commercial construction and commercial business loans increased by $13.1 million, or 8.5%, to $158.9 million, with most of the lending activity occurring in the Indianapolis metropolitan market. The residential real estate first mortgage
loan portfolio grew only slightly by $940,000, or 0.8%, to $117.8 million at June 30, 2008, which was reflective of generally poor mortgage market conditions. During the six month period, the Bank designated only $655,000 of mortgage
originations as loans for sale, as widening spreads to funding costs resulted in management modifying its mortgage banking strategy to put a larger percentage of new product in portfolio. The residential mortgage loan strategy is reviewed regularly
to ensure that it remains consistent with the Banks overall balance sheet management objectives.

Premises and equipment of $13.0
million at June 30, 2008 represented a $5.3 million increase over the total of $7.7 million at December 31, 2007. The increase was related primarily to the Indianapolis market expansion strategy, with total acquisition costs of $4.7
million for new properties, in addition to construction costs related to the remodel of the Greenfield banking center.

Total deposits of
$314.5 million at June 30, 2008 were virtually unchanged from $314.7 million at December 31, 2007, but strategies employed by management produced a continuing improvement in the deposit mix. The combined total for checking, savings, and
money market accounts was up $2.3 million for the period, while typically higher-costing certificates of deposit declined $2.5 million. The Banks markets remain very competitive for deposit products and the Bank continues to utilize pricing
strategies designed to produce an acceptable marginal cost for both existing and new deposits.

Borrowings increased by $30.2 million
during the first six months of 2008 to $98.7 million, primarily to fund loan portfolio growth, including the $5.0 million short-term investment earmarked for the funding of a commercial loan commitment, and for investments in premises and equipment
that are part of the Indianapolis retail banking expansion strategy. Wholesale funding strategies and sources are continuously being analyzed in an effort to control costs using this alternative to organic deposit account funding.



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##### Table of Contents

Drafts payable of $1.5 million at June 30, 2008 were $3.0 million less than the total of $4.5
million at December 31, 2007. This difference will vary and is a function of the dollar amount of checks issued near period end and how quickly they clear.

Shareholders equity declined $736,000 during the six months ended June 30, 2008, due to the Company recording a $1.1 million liability, effective January 1, 2008, for post retirement benefits, as
required under EITF Issues 06-04 and 06-10, with a corresponding direct charge to retained earnings. Other major items impacting shareholders equity included net income of $766,000, a reduction of $156,000 representing the after-tax affect of
the $233,000 decline in the market value of the Banks available-for-sale investment securities, and a total of $239,000 in two quarterly dividends of $0.04 each.

RESULTS OF OPERATIONS

Second Quarter of 2008 compared to the Second Quarter of 2007

The Company realized net income of $383,000, or $0.13 per diluted share, for the second quarter of 2008, compared to a net loss of $23,000, or $0.01 per
diluted share, for the second quarter of 2007. The difference of $406,000 represented improvements in many areas of the income statement:



| |  |  | The Company produced a $548,000, or 22.2%, increase in net interest income resulting primarily from a 44 basis point improvement in net interest margin from 2.75%
to 3.19%, on a fully tax-equivalent basis. The significant improvement in net interest income was accomplished with an average earning asset total of $397.8 million for the second quarter of 2008 that was only 3.2% higher than the $385.5 million for
the same period in 2007.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other income for the second quarter of 2008 was $1.0 million, which was a $27,000, or 2.7%, improvement over the total recorded for the same quarter of 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $3.5 million in other expense for the second quarter of 2008, which represented a $104,000, or 3.1%, increase from other expense of $3.4 million for the same
quarter of 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Income before income taxes of $341,000 for the second quarter of 2008 represented an improvement of $340,000 over the $1,000 income before income taxes for the same
period a year earlier. The Company recorded an income tax benefit of $42,000 for the second quarter of 2008, compared to a $24,000 income tax expense in the second quarter of 2007, which was primarily the result of a special charge related to
bank-owned life insurance
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Improvement in other areas of the income statement was partially offset by a higher provision for loan losses of $221,000 for the second quarter of 2008, compared
to $90,000 for the same quarter of 2007.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income

Net interest income on a fully tax-equivalent basis increased $510,000, or 19.3%, to $3.1 million for the second quarter of 2008 compared to $2.6 million
for the same period of 2007. The Company improved its net interest margin on a fully tax-equivalent basis by 44 basis points to 3.19% for the second quarter of 2008 from 2.75% for the second quarter of 2007. The improvement in net interest income
and net interest margin was accomplished primarily through the continuation of the balance sheet restructuring strategy implemented in November of 2006, which has resulted in significant commercial loan growth, and through well-managed deposit
re-pricing in 2008 during a falling interest rate environment, which also led to a higher concentration of core deposits to total deposits.

Tax-exempt interest was $270,000 for the second quarter of 2008 compared to $341,000 for the same period of 2007. Our tax-exempt interest was from bank-qualified municipal securities and municipal loans. The tax-equivalent adjustments were
$137,000 and $175,000 for the second quarters of 2008 and 2007, respectively.



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##### Table of Contents

Provision for Loan Losses

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



|                                  |  |                                                   |       |   |      |   |       |  
|--------------------------------- |  | ------------------------------------------------- | ----- | - | ---- | - | ----- | -
|                                  |  | (Dollars in thousands)Three Months Ended June 30, |      
|                                  |  | 2008                                              |       |   | 2007 |  
|Balance at beginning of quarter   |  | $                                                 | 2,909 |   |      | $ | 2,707 |  
|Provision for loan losses         |  |                                                   | 221   |   |      |   | 90    |  
|Charge-offs                       |  |                                                   | (276  | ) |      |   | (84   | )
|Recoveries                        |  |                                                   | 55    |   |      |   | 17    |  
|                                  |  |                                                   |       |   |      |   |       |  
|Net charge-offs                   |  |                                                   | (221  | ) |      |   | (67   | )
|                                  |  |                                                   |       |   |      |   |       |  
|Balance at end of period          |  | $                                                 | 2,909 |   |      | $ | 2,730 |  
|                                  |  |                                                   |       |   |      |   |       |  
|Allowance to total loans          |  |                                                   | 0.94  | % |      |   | 1.00  | %
|                                  |  |                                                   |       |   |      |   |       |  
|Allowance to non-performing loans |  |                                                   | 83.30 | % |      |   | 82.23 | %
|                                  |  |                                                   |       |   |      |   |       |  

We had a provision for loan losses of $221,000 in the second quarter of 2008, compared to a
provision of $90,000 for the same period in 2007. The increase in provision expense was primarily the result of a $135,000 charge-off to a commercial real estate development loan based on a new appraisal received at the time the property was
transferred to other real estate owned. The change in provision also incorporated the additional portfolio growth and the increasing pressure of current economic conditions on credit quality.

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



|                                                      |  |                                |       |   |      |   |       |  
|----------------------------------------------------- |  | ------------------------------ | ----- | - | ---- | - | ----- | -
|                                                      |  | (Dollars in thousands)June 30, |      
|                                                      |  | 2008                           |       |   | 2007 |  
|Loans accounted for on a non-accrual basis            |  | $                              | 2,543 |   |      | $ | 3,320 |  
|Accruing loans contractually past due 90 days or more |  |                                | 949   |   |      |   |      |  
|                                                      |  |                                |       |   |      |   |       |  
|Total of non-accrual and 90 days past due loans       |  | $                              | 3,492 |   |      | $ | 3,320 |  
|                                                      |  |                                |       |   |      |   |       |  
|Percentage of total net loans                         |  |                                | 1.13  | % |      |   | 1.22  | %
|                                                      |  |                                |       |   |      |   |       |  
|Other non-performing assets(1)                        |  | $                              | 4,026 |   |      | $ | 806   |  
|                                                      |  |                                |       |   |      |   |       |  

| | 
| | 

| | (1) | Other non-performing assets represent 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 at June 30, 2008, totaled $3.5 million, a decrease of $1.1 million from $4.6
million at March 31, 2008, and up $172,000 from June 30, 2007. The decline in non-performing loans from March 31, 2008, resulted primarily from the migration of the previously mentioned commercial real estate development loan to other
real estate owned. This loan had a balance of $879,000 prior to the $135,000 charge-off.

Other real estate owned increased $1.3 million to
$4.0 million at June 30, 2008 from $2.7 million at March 31, 2008. The major components of the increase relate to the commercial real estate development loan written down to $744,000 from $879,000, foreclosure of four single-family
property credits, and $191,000 in construction cost to complete a previously foreclosed on single-family property. Other real estate owned at June 30, 2007, totaled $806,000.



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##### Table of Contents

Other Income

The Company produced a $27,000, or 2.7%, increase in total other income for the second quarter of 2008, compared to the same period in 2007. The increase was due primarily to a $60,000 gain resulting from the $9.2
million sale of municipal securities and a $19,000, or 4.4%, improvement in other fees and service charges on deposit accounts, partially offset by $51,000 in losses from unconsolidated subsidiaries, compared to a net gain of $5,000 for the same
period of 2007. The increase in other fees and service charges on deposit accounts resulted primarily from an improved distribution rate of debit cards to checking account customers. The decline in the earnings of the unconsolidated subsidiaries was
due primarily to the weaker housing market.

Other Expense

The $104,000, or 3.1%, increase in total other expense in the second quarter of 2008, compared to the second quarter of 2007, resulted primarily from:



| |  |  | An $83,000, or 4.1%, increase in salaries and employee benefits resulted primarily from normal annual increases, but also included the impact of staff additions in
commercial lending and marketing needed to support growth initiatives.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A $44,000 increase in office occupancy expense that resulted primarily from higher real estate tax rates and major repairs to facilities.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A $45,000 rise in other that was due primarily to an $18,000 increase in expense for the directors supplemental retirement plan, and the $23,000 bank-owned
life insurance (BOLI) post-retirement benefit expense recorded under new accounting rules effective January 1, 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The increases in expense listed above were offset in part by a $43,000 reduction of legal and professional fees, due primarily to the significant decline in legal
fees as a result of the third quarter 2007 settlement of the RLI litigation, and a $20,000 recovery of legal fees paid in a prior year. Marketing expense in the second quarter of 2008 was $48,000 lower than the same period of 2007, during which a
major initiative of re-branding the Company contributed to total marketing expense of $100,000.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income Tax Expense

Although income before income taxes for the second quarter of 2008 was up $340,000 from the same period in 2007, the Company
recorded an income tax benefit of $42,000, compared to income tax expense of $24,000 for the second quarter of 2007. The second quarters of both 2008 and 2007 benefited from significant amounts of tax-exempt income from municipal securities and
BOLI, but in 2007 our income tax expense was negatively impacted by a $219,000 income tax liability resulting from the restructuring of the Companys BOLI program.

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

Six Months Ended June 30, 2008 compared to the Six Months
Ended June 30, 2007

The Company realized net income of $766,000, or $0.26 per diluted share, for the six months of 2008,
compared to a net loss of $47,000, or $0.02 per diluted share, for the first six months of 2007. The difference of $813,000 represented improvements in most areas of the income statement:



| |  |  | The Company produced a $940,000, or 19.6%, increase in net interest income resulting primarily from a 40 basis point improvement in net interest margin on fully
tax-equivalent basis from 2.68% to 3.08%. The significant improvement in net interest income was accomplished with an average earning asset total of $393.6 million for the six months of 2008 that was only 1.7% higher than the $386.9 million for the
same period in 2007.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Other income for the six months of 2008 was $2.2 million, a $183,000, or 9.3%, improvement over the $2.0 million recorded for the same period in 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $6.9 million in other expense for the six months of 2008 was 0.7% lower, or virtually the same as the total for the same period of 2007.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Income before income taxes of $444,000 for the six months of 2008 represented an improvement of $760,000 over the $316,000 loss before income taxes for the same
period a year earlier. The income tax benefit of $322,000 for the six months of 2008 included $150,000 related to a favorable tax court ruling, and the income tax benefit of $269,000 for the same period of 2007 was reduced by $219,000 due to an
income tax liability resulting from the restructuring of the Companys BOLI program.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Improvement in other areas of the income statement was partially offset by a higher provision for loan losses of $592,000 for the six months of 2008, compared to
$180,000 for the first six months of 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income

Net interest income on a fully tax-equivalent basis increased $884,000 to $6.0 million for the six months of 2008 compared to $5.1 million for the same
period of 2007. The Company improved its net interest margin on a fully tax-equivalent basis by 40 basis points to 3.08% for the six months of 2008 from 2.68% for the first six months of 2007. The improvement in net interest income and net interest
margin was accomplished primarily through the continuation of the balance sheet restructuring strategy implemented in November of 2006, which has resulted in significant commercial loan growth, and through well-managed deposit re-pricing in 2008
during a falling interest rate environment, which also led to a higher concentration of core deposits to total deposits

Tax-exempt
interest was $568,000 for the six months of 2008 compared to $671,000 for the same period of 2007. Our tax-exempt interest was from bank-qualified municipal securities and municipal loans. The tax-equivalent adjustments were $289,000 and $345,000
for the first six months of 2008 and 2007, respectively.

Provision for Loan Losses

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



|                             |  |                                                 |       |   |      |   |       |  
|---------------------------- |  | ----------------------------------------------- | ----- | - | ---- | - | ----- | -
|                             |  | (Dollars in thousands)Six Months Ended June 30, |      
|                             |  | 2008                                            |       |   | 2007 |  
|Balance at beginning of year |  | $                                               | 2,677 |   |      | $ | 2,616 |  
|Provision for loan losses    |  |                                                 | 592   |   |      |   | 180   |  
|Charge-offs                  |  |                                                 | (441  | ) |      |   | (108  | )
|Recoveries                   |  |                                                 | 81    |   |      |   | 42    |  
|                             |  |                                                 |       |   |      |   |       |  
|Net charge-offs              |  |                                                 | (360  | ) |      |   | (66   | )
|                             |  |                                                 |       |   |      |   |       |  
|Balance at end of period     |  | $                                               | 2,909 |   |      | $ | 2,730 |  
|                             |  |                                                 |       |   |      |   |       |  

We had a provision for loan losses of $592,000 for the six months of 2008, compared to a provision
of $180,000 for the same period in 2007. The increase in provision expense related primarily to four real estate development loans, currently classified as nonperforming loans, in the Hancock County, Indiana, area that represented two long-time
lending relationships, and the second quarter $135,000 write-down of a real estate development loan in Lebanon, Indiana, that was part of $360,000 of net charge-offs during the six months of 2008. The change in provision also incorporated the
additional portfolio growth and increasing pressure of current economic conditions on credit quality, which resulted in the allowance to total loans ratio increasing to 0.94% at June 30, 2008 from 0.90% at December 31, 2007.



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##### Table of Contents

Other Income

The $183,000 increase in total other income for the six months of 2008, compared to the same period in 2007, resulted primarily from an increase of $84,000 in brokerage and insurance commissions, a net gain of $60,000
from the sale of municipal securities, and a $49,000 gain from the partial redemption of the Companys equity interest in Visa realized through Visas recent initial public offering. The improvement in brokerage and insurance commissions
was mainly due to higher commission income from both the insurance agency and the investment center that resulted from increased sales. Other income was negatively impacted in the six months of 2008 by $70,000 in losses from unconsolidated
subsidiaries, compared to a net gain of $10,000 for the same period of 2007.

Other Expense

The Company had a $49,000 decrease in total other expense for the six months of 2008, compared to the first six months of 2007, with the following major
differences:



| |  |  | A $224,000, or 42.6%, reduction of legal and professional fees due primarily to the significant decline in legal fees as a result of the third quarter 2007
settlement of the RLI litigation. Expense for the first six months of 2007 included $147,000 of RLI related legal fees. The total for the six months of 2008 also benefited from a $20,000 recovery of legal fees paid in a prior year. Additionally,
there were no recruiting fees in the six months of 2008, compared to $42,000 for the same period of 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The decrease in expense detailed above was offset in part by an $83,000 increase in office occupancy expense that resulted from increased real estate tax rates,
major repairs to facilities, and office rent for the new Carmel LPO that was opened in the second quarter of 2007. Additionally, the Company experienced an $82,000 rise in other that was due primarily to a $32,000 increase in expense for the
directors supplemental retirement plan, and the $53,000 BOLI post-retirement benefit expense recorded under new accounting rules effective January 1, 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income Tax Expense

Although income before income taxes for the six months of 2008 was up
$760,000 from the same period in 2007, the 2008 income tax benefit of $322,000 was $53,000 greater than the $269,000 income tax benefit recorded for the first six months of 2007. The income tax benefit for 2008 included a $150,000 reversal of an
income tax liability recorded in prior years that resulted from a favorable tax court ruling regarding the application of the Tax Equity and Fiscal Responsibility Act penalty to investment subsidiaries of commercial banks. The income tax benefit for
the first six months of 2007 was negatively impacted by a $219,000 income tax liability resulting from the restructuring of the Companys BOLI program.

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 statements. 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, 2008, 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 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 mortgage loans and investment securities, through borrowings from the FHLB
system and the Federal Reserve Bank Discount Window programs, through the brokered certificates market, and securities sold under agreements to repurchase. 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.



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At June 30, 2008, we had $9.8 million in loan commitments outstanding and $35.1 million of available
commercial and consumer lines of credit. Certificates of deposit due within one year of June 30, 2008, totaled $117.8 million, or 37.5% 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, brokered certificates of deposit, securities sold under agreements to repurchase, and other borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or
other borrowings than the rates that we are now paying on those certificates of deposit that are due within one year of June 30, 2008. However, based on past experiences we believe that a significant portion of the certificates of deposit will
remain. We also have the ability to attract and retain deposits by adjusting the interest rates offered.

Our primary investing activity,
the origination and purchase of loans, produced growth of $13.9 million in net loans receivable for the six months of 2008, with no new purchases of loans. In the first six months of 2007, we experienced an increase of $21.9 million in net loans
receivable, with $3.9 million the result of the purchase of one package of residential mortgage loans.

Financing activities consist
primarily of activity in retail deposit accounts and FHLB advances. Deposit flows are affected by the overall level of interest rates, the interest rates and products we offer, and our local competitors and other factors. Total deposits declined by
$202,000 and FHLB advances increased by $30.2 million during the six months of 2008. There were no brokered certificates at either June 30, 2008 or December 31, 2007.

In March 2006, the Company completed a private placement of $10.0 million in trust preferred securities. The proceeds from the private placement are
included in Borrowings on the Consolidated Condensed Balance Sheets. The proceeds were used initially for paying down short-term borrowings and were also used to fund the stock repurchase program. We paid $239,000 in cash dividends to our
shareholders for both the six-month periods ended June 30, 2008 and 2007. The dividend rates were $0.08 per share for the first six months of 2008 and 2007.

The Bank is subject to various regulatory capital requirements set by the FDIC including a risk-based capital measure. The Company is also subject to similar capital requirements set by the Federal Reserve Bank. 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, 2008, both the Company
and the Bank exceeded all of their regulatory capital requirements and were considered well capitalized under regulatory guidelines.

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification in any of the undercapitalized categories can result in actions by regulators that could have a
material effect on a banks operations. At June 30, 2008 and December 31, 2007, the Bank was categorized as well capitalized and met all subject capital adequacy requirements. There are no conditions or events since June 30,
2008, that management believes have changed this classification.

Actual, required, and well capitalized amounts and ratios for the Bank
are as follows:



|                                                                            |  |                |        |  |                              |   |  |                       |        |  |       |   |  |   |        |  |       |  
|--------------------------------------------------------------------------- |  | -------------- | ------ |  | ---------------------------- | - |  | --------------------- | ------ |  | ----- | - |  | - | ------ |  | ----- | -
|June 30, 2008                                                               | 
|                                                                            |  | Actual Capital |        |  | Required ForAdequate Capital |   |  | To BeWell Capitalized |       
|                                                                            |  |                | Amount |  | Ratio                        |   |  |                       | Amount |  | Ratio |   |  |   | Amount |  | Ratio |  
|Total risk-based capital ratio (risk based capital to risk-weighted assets) |  | $              | 41,337 |  | 12.92                        | % |  | $                     | 25,601 |  | 8.00  | % |  | $ | 32,002 |  | 10.00 | %
|Tier 1 risk-based capital ratio (tier 1 capital to risk-weighted assets)    |  | $              | 38,299 |  | 11.97                        | % |  | $                     | 12,801 |  | 4.00  | % |  | $ | 19,201 |  | 6.00  | %
|Tier 1 leverage ratio (tier 1 capital to adjusted average total assets)     |  | $              | 38,299 |  | 8.68                         | % |  | $                     | 13,235 |  | 3.00  | % |  | $ | 22,058 |  | 5.00  | %



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|                                                                            |  |                |        |  |                              |   |  |                       |  |       |   |  |   |        |  |       |  
|--------------------------------------------------------------------------- |  | -------------- | ------ |  | ---------------------------- | - |  | --------------------- |  | ----- | - |  | - | ------ |  | ----- | -
|December 31, 2007                                                           | 
|                                                                            |  | Actual Capital |        |  | Required ForAdequate Capital |   |  | To BeWell Capitalized | 
|                                                                            |  |                | Amount |  | Ratio                        |   |  | Amount                |  | Ratio |   |  |   | Amount |  | Ratio |  
|Total risk-based capital ratio (risk based capital to risk-weighted assets) |  | $              | 42,388 |  | 13.76                        | % |  | $24,667               |  | 8.00  | % |  | $ | 30,341 |  | 10.00 | %
|Tier 1 risk-based capital ratio (tier 1 capital to risk-weighted assets)    |  | $              | 39,569 |  | 12.85                        | % |  | $12,334               |  | 4.00  | % |  | $ | 18,204 |  | 6.00  | %
|Tier 1 leverage ratio (tier 1 capital to adjusted average total assets)     |  | $              | 39,569 |  | 9.47                         | % |  | $12,538               |  | 3.00  | % |  | $ | 21,484 |  | 5.00  | %

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.

ITEM 3  QUANTITATIVE AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk (IRR) is the risk to earnings and capital arising from
movements in interest rates. IRR can result from:



| |  |  | timing differences in the maturity/re-pricing of an institutions assets, liabilities, and off-balance sheet contracts;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | the effect of embedded options, such as call or convertible options, loan prepayments, interest rate caps, and deposit withdrawals;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | unexpected shifts of the yield curve; and
| | - |  | -----------------------------------------



| |  |  | differences in the behavior of lending and funding rates, sometimes referred to as basis risk. An example would occur if floating rate assets and liabilities, with
otherwise identical re-pricing characteristics, were based on market indexes that were imperfectly correlated.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
Asset-Liability Committee and the Board of Directors review our exposure to interest rate changes and market risk quarterly. 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. We monitor IRR from two perspectives:



| |  |  | Economic value at risk  long-term exposure
| | - |  | -------------------------------------------

The difference between the Banks 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 levels. This measures our IRR exposure from movements in interest rates and the resulting change in the NPV.



| |  |  | Earnings at risk  near-term exposure
| | - |  | -------------------------------------

The model also tests the impact various interest rate scenarios have on net interest income over a stated period of time (one year, for example). See Interest Rate Scenarios below.

We recognize that effective management of IRR includes an understanding of when potential adverse changes in interest rates will flow through the income
statement. Accordingly, we manage our position so that exposure to net interest income is monitored over both a one-year planning horizon (accounting perspective) and a longer-term strategic horizon (economic perspective).



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##### Table of Contents

Our objective is to manage our exposure to IRR, bearing in mind that we will always be in the business of
taking on rate risk and that complete rate risk immunization is not possible. Also, it is recognized that as exposure to IRR is reduced, so too may the net interest margin be reduced.

Interest Rate Scenarios

Effect of change in net interest income for Year 1 and Year 2

(Dollars in thousands)



|                  |  |                              |        |                           |   |          |  |            |        |  |          |    |  |       |   
|----------------- |  | ---------------------------- | ------ | ------------------------- | - | -------- |  | ---------- | ------ |  | -------- | -- |  | ----- | --
|                  |  | Projected Net InterestIncome |        | % Change From Year 1 Base |  
|                  |  | Down200 bp                   |        | Base                      |   | Up200 bp |  | Down200 bp |        |  | Up200 bp |   
|June 30, 2008     |  |                              |        |                           |   |          |  |            |        |  |          |    |  |       |   
|Year 1            |  | $                            | 12,542 |                           | $ | 12,680   |  | $          | 12,668 |  | (1.09    | )% |  | 0.09  | % 
|Year 2            |  | $                            | 13,960 |                           | $ | 13,736   |  | $          | 12,836 |  | 10.09    | %  |  | 1.23  | % 
|                  |  |                              |        |                           |  
|December 31, 2007 |  |                              |        |                           |   |          |  |            |        |  |          |    |  |       |   
|Year 1            |  | $                            | 10,663 |                           | $ | 10,796   |  | $          | 10,774 |  | (1.23    | )% |  | (0.20 | )%
|Year 2            |  | $                            | 11,152 |                           | $ | 10,985   |  | $          | 10,295 |  | 3.30     | %  |  | (4.64 | )%

The results from modeling our balance sheet structure as of June 30, 2008, incorporating
current replacement assumptions, indicate a minimal impact on net interest income from either rising or falling interest rates for the first year. In the second year, stable or falling interest rates are projected to significantly improve net
interest income with the cost of interest-bearing liabilities dropping more sharply than yields on earning assets.

The substantial
increase in projected base net interest income at June 30, 2008 compared to December 31, 2007 was reflective primarily of the Companys growth in earning assets, and the benefit from pricing strategies that have produced continuing
improvement in the interest rate spread between interest-earning assets and interest-bearing liabilities.

Our IRR exposure has been
maintained well within acceptable levels. Management plans to remain highly focused on developing additional strategies designed to further grow net interest income, and also intends to add interest rate risk hedge positions if it is determined to
be necessary to keep the Company within reasonable risk levels.

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.



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##### Table of Contents

Except as indicated herein, there were no changes in the Companys internal control over financial
reporting during the three months ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

PART II    OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

The Abstract & Title Guaranty
Company, Inc. (AGT) sued the Bank in 2003 to recover for checks issued by AGT and delivered to one of its title insurance customers for delivery to various payees. Generally, the checks were issued in conjunction with real estate
transactions and were issued to pay mortgage liens in full. Forty-one such checks were deposited into the wrong account at the Bank. The litigation was initiated in Hendricks County Superior Court in May of 2003 and the plaintiff is seeking damages
of $1.9 million plus interest. The Bank has adequate insurance to protect it from any judgment rendered based upon the complaint. However, the insurance does not provide indemnification for the costs of defending the litigation. Discovery is now
being conducted by both parties.

Except as indicated above, neither the Company nor the Bank is involved in any pending legal proceedings
other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the financial condition and results of operations of the company.

ITEM 1A  RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended
December 31, 2007 which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not Applicable.
The Company did not repurchase any of its common stock during the quarter ended June 30, 2008.

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 15, 2008. The results of the vote were as follows:



| | 1. | The following individuals were elected as directors:
| | -- | ----------------------------------------------------



|                               |  |            |  |           |  |               
|------------------------------ |  | ---------- |  | --------- |  | --------------
|                               |  | Term       |  | Votes For |  | Votes Withheld
|Charles M. (Kim) Drackett, Jr. |  | Three Year |  | 2,132,527 |  | 351,312       
|Richard E. Hennessey           |  | Three Year |  | 2,139,389 |  | 344,450       
|Ronald R. Pritzke              |  | Three Year |  | 2,133,899 |  | 349,940       



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| | 2. | The appointment of BKD, LLP as independent auditors of Ameriana Bancorp for the year ended December 31, 2008 was ratified by the stockholders as follows:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|2,471,874 |  | 10,893  |  | 1,072  

ITEM 5    OTHER INFORMATION

Not Applicable

ITEM 6  EXHIBITS



|    |  |                                        
|--- |  | ---------------------------------------
|No. |  | Description                            
|31  |  | Rule 13a-14(a)/15d-14(a) Certifications
|    | 
|32  |  | Section 1350 Certifications            



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##### 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 12, 2008 |  | /s/ Jerome J. Gassen Jerome J. Gassen                      
|                      |  | President and Chief Executive Officer                      
|                      |  | (Duly Authorized Representative)                           
|                      |  |                                                            
|DATE: August 12, 2008 |  | /s/ John J. Letter John J. Letter                          
|                      |  | Senior Vice President-Treasurer and Chief Financial
Officer
|                      |  | (Principal Financial Officer and Accounting Officer)