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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 September 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 of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|2118 Bundy Avenue, New Castle, Indiana   |  | 47362-1048
|(Address of Principal Executive Offices) |  | (Zip Code)

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

Not Applicable

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





Indicate by check mark whether the registrant
(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   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

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 November 14, 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 September 30, 2008 and December 31, 2007                               |  | 1 
|                              |  |                                                                                                                
|                              |  | Consolidated Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2007 |  | 2 
|                              |  |                                                                                                                
|                              |  | Consolidated Condensed Statements of Shareholders Equity for the Nine Months Ended September 30, 2008          |  | 3 
|                              |  |                                                                                                                
|                              |  | Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007           |  | 4 
|                              |  |                                                                                                                
|                              |  | Notes to Consolidated Condensed Financial Statements                                                            |  | 6 
|                              |  |                                                                                                                
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           |  | 11
|                              |  |                                                                                                                
|Item 3.                       |  | Quantitative and Qualitative Disclosure about Market Risk                                                       |  | 23
|                              |  |                                                                                                                
|Item 4.                       |  | Controls and Procedures                                                                                         |  | 23
|                              | 
|Part II. Other Information    |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                                               |  | 23
|                              |  |                                                                                                                
|Item 1A.                      |  | Risk Factors                                                                                                    |  | 24
|                              |  |                                                                                                                
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                     |  | 24
|                              |  |                                                                                                                
|Item 3.                       |  | Defaults upon Senior Securities                                                                                 |  | 24
|                              |  |                                                                                                                
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                             |  | 24
|                              |  |                                                                                                                
|Item 5.                       |  | Other Information                                                                                               |  | 24
|                              |  |                                                                                                                
|Item 6.                       |  | Exhibits                                                                                                        |  | 24
|                              | 
|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)



|                                                             |  |                   |         |   |                  |   |         |  
|------------------------------------------------------------ |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                             |  | September 30,2008 |         |   | December 31,2007 |  
|                                                             |  | (Unaudited)       |         |   |                  |  
|Assets                                                       |  |                   |         |   |                  |   |         |  
|Cash on hand and in other institutions                       |  | $                 | 10,930  |   |                  | $ | 4,445   |  
|Interest-bearing demand deposits                             |  |                   | 6,876   |   |                  |   | 12,727  |  
|                                                             |  |                   |         |   |                  |   |         |  
|Cash and cash equivalents                                    |  |                   | 17,806  |   |                  |   | 17,172  |  
|Investment securities available for sale                     |  |                   | 78,221  |   |                  |   | 66,692  |  
|Loans held for sale                                          |  |                   | 226     |   |                  |   | 250     |  
|Loans, net of allowance for loan losses of $3,014 and $2,677 |  |                   | 314,725 |   |                  |   | 294,273 |  
|Premises and equipment                                       |  |                   | 13,566  |   |                  |   | 7,696   |  
|Stock in Federal Home Loan Bank                              |  |                   | 5,630   |   |                  |   | 5,630   |  
|Goodwill                                                     |  |                   | 564     |   |                  |   | 564     |  
|Cash value of life insurance                                 |  |                   | 23,453  |   |                  |   | 22,777  |  
|Other real estate owned                                      |  |                   | 4,044   |   |                  |   | 2,517   |  
|Other assets                                                 |  |                   | 9,567   |   |                  |   | 9,220   |  
|                                                             |  |                   |         |   |                  |   |         |  
|Total assets                                                 |  | $                 | 467,802 |   |                  | $ | 426,791 |  
|                                                             |  |                   |         |   |                  |   |         |  
|Liabilities and Shareholders Equity                         |  |                   |         |   |                  |   |         |  
|Liabilities                                                  |  |                   |         |   |                  |   |         |  
|Deposits                                                     |  |                   |         |   |                  |   |         |  
|Noninterest-bearing                                          |  | $                 | 22,806  |   |                  | $ | 20,429  |  
|Interest-bearing                                             |  |                   | 297,969 |   |                  |   | 294,317 |  
|                                                             |  |                   |         |   |                  |   |         |  
|Total deposits                                               |  |                   | 320,775 |   |                  |   | 314,746 |  
|Borrowings                                                   |  |                   | 105,235 |   |                  |   | 68,513  |  
|Drafts payable                                               |  |                   | 1,616   |   |                  |   | 4,556   |  
|Other liabilities                                            |  |                   | 7,194   |   |                  |   | 5,330   |  
|                                                             |  |                   |         |   |                  |   |         |  
|Total liabilities                                            |  |                   | 434,820 |   |                  |   | 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                                            |  |                   | 32,517  |   |                  |   | 32,857  |  
|Accumulated other comprehensive loss                         |  |                   | (795    | ) |                  |   | (467    | )
|Treasury stock at cost  225,000 and 225,000 shares          |  |                   | (2,998  | ) |                  |   | (2,998  | )
|                                                             |  |                   |         |   |                  |   |         |  
|Total shareholders equity                                   |  |                   | 32,982  |   |                  |   | 33,646  |  
|                                                             |  |                   |         |   |                  |   |         |  
|Total liabilities and shareholders equity                   |  | $                 | 467,802 |   |                  | $ | 426,791 |  
|                                                             |  |                   |         |   |                  |   |         |  

See notes to consolidated condensed financial statements.



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Ameriana Bancorp

Consolidated Condensed Statements of Operations

(In thousands, except per
share data)

(Unaudited)



|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                    |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |  
|                                                                    |  | 2008                            |       |   | 2007                           |   |        | 2008 |  |   | 2007   |  
|Interest Income                                                     |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Interest and fees on loans                                          |  | $                               | 4,933 |   |                                | $ | 4,883  |      |  | $ | 14,748 |   |  | $ | 14,280 |  
|Interest on mortgage-backed securities                              |  |                                 | 540   |   |                                |   | 408    |      |  |   | 1,551  |   |  |   | 1,270  |  
|Interest on investment securities                                   |  |                                 | 250   |   |                                |   | 518    |      |  |   | 918    |   |  |   | 1,909  |  
|Other interest and dividend income                                  |  |                                 | 125   |   |                                |   | 132    |      |  |   | 425    |   |  |   | 395    |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total interest income                                               |  |                                 | 5,848 |   |                                |   | 5,941  |      |  |   | 17,642 |   |  |   | 17,854 |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Interest Expense                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Interest on deposits                                                |  |                                 | 1,880 |   |                                |   | 2,794  |      |  |   | 6,204  |   |  |   | 8,280  |  
|Interest on borrowings                                              |  |                                 | 961   |   |                                |   | 720    |      |  |   | 2,693  |   |  |   | 2,349  |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total interest expense                                              |  |                                 | 2,841 |   |                                |   | 3,514  |      |  |   | 8,897  |   |  |   | 10,629 |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net Interest Income                                                 |  |                                 | 3,007 |   |                                |   | 2,427  |      |  |   | 8,745  |   |  |   | 7,225  |  
|Provision (credit) for loan losses                                  |  |                                 | 205   |   |                                |   | (1,927 | )    |  |   | 797    |   |  |   | (1,747 | )
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net Interest Income After Provision for Loan Losses                 |  |                                 | 2,802 |   |                                |   | 4,354  |      |  |   | 7,948  |   |  |   | 8,972  |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Other Income                                                        |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Other fees and service charges                                      |  |                                 | 481   |   |                                |   | 434    |      |  |   | 1,345  |   |  |   | 1,262  |  
|Brokerage and insurance commissions                                 |  |                                 | 225   |   |                                |   | 298    |      |  |   | 910    |   |  |   | 899    |  
|Net (loss) gain on sale of available-for-sale investment securities |  |                                 | (6    | ) |                                |   | 2      |      |  |   | 103    |   |  |   | (9     | )
|Gains on sales of loans and servicing rights                        |  |                                 | 9     |   |                                |   | 30     |      |  |   | 50     |   |  |   | 50     |  
|Net gain (loss) on other real estate owned                          |  |                                 | 9     |   |                                |   | (55    | )    |  |   | (9     | ) |  |   | (50    | )
|Increase in cash value of life insurance                            |  |                                 | 242   |   |                                |   | 224    |      |  |   | 677    |   |  |   | 631    |  
|Other                                                               |  |                                 | 68    |   |                                |   | 52     |      |  |   | 113    |   |  |   | 180    |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total other income                                                  |  |                                 | 1,028 |   |                                |   | 985    |      |  |   | 3,189  |   |  |   | 2,963  |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Other Expense                                                       |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Salaries and employee benefits                                      |  |                                 | 2,041 |   |                                |   | 2,076  |      |  |   | 6,283  |   |  |   | 6,326  |  
|Net occupancy expense                                               |  |                                 | 236   |   |                                |   | 290    |      |  |   | 762    |   |  |   | 733    |  
|Furniture and equipment expense                                     |  |                                 | 187   |   |                                |   | 176    |      |  |   | 553    |   |  |   | 539    |  
|Legal and professional fees                                         |  |                                 | 111   |   |                                |   | 176    |      |  |   | 413    |   |  |   | 702    |  
|Data processing expense                                             |  |                                 | 163   |   |                                |   | 149    |      |  |   | 470    |   |  |   | 436    |  
|Printing and office supplies                                        |  |                                 | 86    |   |                                |   | 111    |      |  |   | 209    |   |  |   | 222    |  
|Marketing expense                                                   |  |                                 | 134   |   |                                |   | 152    |      |  |   | 278    |   |  |   | 313    |  
|Other                                                               |  |                                 | 504   |   |                                |   | 414    |      |  |   | 1,357  |   |  |   | 1,185  |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total other expense                                                 |  |                                 | 3,462 |   |                                |   | 3,544  |      |  |   | 10,325 |   |  |   | 10,456 |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Income Before Income Taxes                                          |  |                                 | 368   |   |                                |   | 1,795  |      |  |   | 812    |   |  |   | 1,479  |  
|Income tax (benefit)                                                |  |                                 | (25   | ) |                                |   | 405    |      |  |   | (347   | ) |  |   | 135    |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net Income                                                          |  | $                               | 393   |   |                                | $ | 1,390  |      |  | $ | 1,159  |   |  | $ | 1,344  |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Basic Earnings Per Share                                            |  | $                               | 0.13  |   |                                | $ | 0.47   |      |  | $ | 0.39   |   |  | $ | 0.45   |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Diluted Earnings Per Share                                          |  | $                               | 0.13  |   |                                | $ | 0.47   |      |  | $ | 0.39   |   |  | $ | 0.45   |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Dividends Declared Per Share                                        |  | $                               | 0.04  |   |                                | $ | 0.04   |      |  | $ | 0.12   |   |  | $ | 0.12   |  
|                                                                    |  |                                 |       |   |                                |   |        |      |  |   |        |   |  |   |        |  

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                                                                                                               |  |             |      |                          |   |                 |  |   | 1,159                             |   |  |               |     |   |       |   |       |   |  |   | 1,159  |  
|Change in accumulated other comprehensive income related to retirement plan                                              |  |             |      |                          |   |                 |  |   |                                  |   |  |               | 45   |   |       |   |       |   |  |   | 45     |  
|Increase of $563 in unrealized loss on available-for-sale securities, net of income tax                                  |  |             |      |                          |   |                 |  |   |                                  |   |  |               | (373 | ) |       |   |       |   |  |   | (373   | )
|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  
|Comprehensive income                                                                                                     |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   | 831    |  
|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 ($0.12 per share)                                                                                     |  |             |      |                          |   |                 |  |   | (358                              | ) |  |               |     |   |       |   |       |   |  |   | (358   | )
|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  
|Balance at September 30, 2008                                                                                            |  | $           | 3,214 |                          | $ | 1,044            |  | $ | 32,517                            |   |  | $             | (795 | ) |       | $ | (2,998 | ) |  | $ | 32,982 |  
|                                                                                                                         |  |             |       |                          |   |                  |  |   |                                   |   |  |               |      |   |       |   |        |   |  |   |        |  

See notes to consolidated condensed financial statements.



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Ameriana Bancorp

Consolidated Condensed Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                            |  |                                |         |   |      |   |         |  
|----------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                            |  | Nine Months EndedSeptember 30, |        
|                                                            |  | 2008                           |         |   | 2007 |  
|Operating Activities                                        |  |                                |         |   |      |   |         |  
|Net income                                                  |  | $                              | 1,159   |   |      | $ | 1,344   |  
|Items not requiring (providing) cash                        |  |                                |         |   |      |   |         |  
|Provision (credit) for losses on loans                      |  |                                | 797     |   |      |   | (1,747  | )
|Depreciation and amortization                               |  |                                | 512     |   |      |   | 668     |  
|Increase in cash value of life insurance                    |  |                                | (676    | ) |      |   | (631    | )
|Mortgage loans originated for sale                          |  |                                | (1,096  | ) |      |   | (5,751  | )
|Proceeds from sale of mortgage loans                        |  |                                | 1,129   |   |      |   | 5,180   |  
|Gains on sale of loans and servicing rights                 |  |                                | (52     | ) |      |   | (31     | )
|Loss on sale or write-down of other real estate owned       |  |                                | 124     |   |      |   | 67      |  
|(Gain) loss from sale of available-for-sale securities      |  |                                | (103    | ) |      |   | 9       |  
|(Decrease) increase in drafts payable                       |  |                                | (2,940  | ) |      |   | 1       |  
|Increase in accrued interest payable                        |  |                                | 25      |   |      |   | 1,111   |  
|Other adjustments                                           |  |                                | 155     |   |      |   | 779     |  
|                                                            |  |                                |         |   |      |   |         |  
|Net cash (used in) provided by operating activities         |  |                                | (966    | ) |      |   | 999     |  
|                                                            |  |                                |         |   |      |   |         |  
|Investing Activities                                        |  |                                |         |   |      |   |         |  
|Purchase of securities                                      |  |                                | (30,103 | ) |      |   | (208    | )
|Proceeds/principal from the sale of securities              |  |                                | 9,323   |   |      |   | 16,037  |  
|Proceeds/principal from maturities/calls of securities      |  |                                | 3,000   |   |      |   | 30,750  |  
|Principal collected on mortgage-backed securities           |  |                                | 5,751   |   |      |   | 5,036   |  
|Net change in loans                                         |  |                                | (22,585 | ) |      |   | (34,477 | )
|Proceeds from sales of other real estate owned              |  |                                | 251     |   |      |   | 731     |  
|Net purchases of premises and equipment                     |  |                                | (6,391  | ) |      |   | (656    | )
|Redemption of Federal Home Loan Bank stock                  |  |                                |        |   |      |   | 14      |  
|Construction cost for other real estate owned               |  |                                | (566    | ) |      |   |        |  
|Other investing activities                                  |  |                                | 144     |   |      |   | (4      | )
|                                                            |  |                                |         |   |      |   |         |  
|Net cash (used in) provided by investing activities         |  |                                | (41,176 | ) |      |   | 17,223  |  
|                                                            |  |                                |         |   |      |   |         |  
|Financing Activities                                        |  |                                |         |   |      |   |         |  
|Net change in demand and savings deposits                   |  |                                | (7,043  | ) |      |   | 2,690   |  
|Net change in certificates of deposit                       |  |                                | 13,072  |   |      |   | (5,356  | )
|Net change in short-term borrowings                         |  |                                | 4,000   |   |      |   | (26,000 | )
|Proceeds from long-term borrowings                          |  |                                | 34,500  |   |      |   | 24,000  |  
|Repayment of long-term borrowings                           |  |                                | (1,778  | ) |      |   | (12,379 | )
|Repurchase of common stock                                  |  |                                |        |   |      |   | (807    | )
|Net change in advances by borrowers for taxes and insurance |  |                                | 383     |   |      |   | 215     |  
|Cash dividends paid                                         |  |                                | (358    | ) |      |   | (359    | )
|                                                            |  |                                |         |   |      |   |         |  
|Net cash provided by (used in) financing activities         |  |                                | 42,776  |   |      |   | (17,996 | )
|                                                            |  |                                |         |   |      |   |         |  
|Change in Cash and Cash Equivalents                         |  |                                | 634     |   |      |   | 226     |  
|Cash and Cash Equivalents at Beginning of Year              |  |                                | 17,172  |   |      |   | 12,070  |  
|                                                            |  |                                |         |   |      |   |         |  
|Cash and Cash Equivalents at End of Quarter                 |  | $                              | 17,806  |   |      | $ | 12,296  |  
|                                                            |  |                                |         |   |      |   |         |  



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Ameriana Bancorp

Consolidated Condensed Statements of Cash Flows

(In Thousands)

(Unaudited)



|                                                |  |                                 |       |      |   |      
|----------------------------------------------- |  | ------------------------------- | ----- | ---- | - | -----
|                                                |  | Nine Months Ended September 30,
|                                                |  | 2008                            |       | 2007
|Supplemental information:                       |  |                                 |       |      |   |      
|                                                |  |                                
|Interest paid on deposits                       |  | $                               | 6,218 |      | $ | 7,175
|                                                |  |                                
|Interest paid on borrowings                     |  | $                               | 2,655 |      | $ | 2,344
|                                                |  |                                
|Income taxes paid                               |  | $                               | 100   |      |   |     
|                                                |  |                                
|Non-cash supplemental information:              |  |                                 |       |      |   |      
|                                                |  |                                
|Transfers from loans to other real estate owned |  | $                               | 1,336 |      | $ | 3,151

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 consolidated condensed balance sheet of the Company as of December 31,
2007, has been derived from the audited consolidated balance sheet of the Company as of that date. 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 August 25, 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 September 12, 2008, and was paid on October 3, 2008.

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

NOTE C  EARNINGS PER SHARE

Earnings per share were computed as follows:



|                                                                                            |  |                                   |     |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     
|------------------------------------------------------------------------------------------- |  | --------------------------------- | --- | --------------------- | --------- | --------------- | - | ------ |  | --------------------- | ----- | --------------- | --------- |  | - | ----
|                                                                                            |  | (In thousands, except share data)
|                                                                                            |  | Three Months Ended September 30, 
|                                                                                            |  | 2008                              |     | 2007                 
|                                                                                            |  | Income                            |     | WeightedAverageShares |           | Per ShareAmount |   | Income |  | WeightedAverageShares |       | Per ShareAmount
|Basic Earnings Per Share: Income available to common shareholders                           |  | $                                 | 393 |                       | 2,988,952 |                 | $ | 0.13   |  | $                     | 1,390 |                 | 2,988,952 |  | $ | 0.47
|                                                                                            |  |                                   |     |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     
|Effect of dilutive stock options                                                            |  |                                   |    |                       |          |                 |   |        |  |                       |      |                 |          |  |   |     
|                                                                                            |  |                                   |     |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     
|Diluted Earnings Per Share: Income available to common shareholders and assumed conversions |  | $                                 | 393 |                       | 2,988,952 |                 | $ | 0.13   |  | $                     | 1,390 |                 | 2,988,952 |  | $ | 0.47
|                                                                                            |  |                                   |     |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     



|                                                                                            |  |                                   |       |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     
|------------------------------------------------------------------------------------------- |  | --------------------------------- | ----- | --------------------- | --------- | --------------- | - | ------ |  | --------------------- | ----- | --------------- | --------- |  | - | ----
|                                                                                            |  | (In thousands, except share data)
|                                                                                            |  | Nine Months Ended September 30,  
|                                                                                            |  | 2008                              |       | 2007                 
|                                                                                            |  | Income                            |       | WeightedAverageShares |           | Per ShareAmount |   | Income |  | WeightedAverageShares |       | Per ShareAmount
|Basic Earnings Per Share: Income available to common shareholders                           |  | $                                 | 1,159 |                       | 2,988,952 |                 | $ | 0.39   |  | $                     | 1,344 |                 | 3,003,127 |  | $ | 0.45
|                                                                                            |  |                                   |       |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     
|Effect of dilutive stock options                                                            |  |                                   |      |                       |          |                 |   |        |  |                       |      |                 |          |  |   |     
|                                                                                            |  |                                   |       |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     
|Diluted Earnings Per Share: Income available to common shareholders and assumed conversions |  | $                                 | 1,159 |                       | 2,988,952 |                 | $ | 0.39   |  | $                     | 1,344 |                 | 3,003,127 |  | $ | 0.45
|                                                                                            |  |                                   |       |                       |           |                 |   |        |  |                       |       |                 |           |  |   |     



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Options to purchase 199,482 and 206,282 shares of common stock at exercise prices of $9.25 to $15.56 and
$12.43 to $17.05 per share were outstanding at September 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  INVESTMENT SECURITIES

The following
tables provide the composition of investment securities at September 30, 2008, and December 31, 2007:



|                                         |  |               |        |                      |   |                       |  |           |       |  |   |       
|---------------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | --------- | ----- |  | - | ------
|                                         |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|Available for sale at September 30, 2008 |  |               |        |                      |   |                       |  |           |       |  |   |       
|Mortgage-backed securities               |  | $             | 55,802 |                      | $ | 332                   |  | $         | 247   |  | $ | 55,887
|Federal agencies                         |  |               | 3,013  |                      |   | 7                     |  |           |      |  |   | 3,020 
|Municipal securities                     |  |               | 18,703 |                      |   | 25                    |  |           | 905   |  |   | 17,823
|Mutual funds                             |  |               | 1,498  |                      |   | 0                     |  |           | 7     |  |   | 1,491 
|                                         |  |               |        |                      |   |                       |  |           |       |  |   |       
|                                         |  | $             | 79,016 |                      | $ | 364                   |  | $         | 1,159 |  | $ | 78,221
|                                         |  |               |        |                      |   |                       |  |           |       |  |   |       



|                                        |  |               |        |                      |   |                       |  |           |     |  |   |       
|--------------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | --------- | --- |  | - | ------
|                                        |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|Available for sale at December 31, 2007 |  |               |        |                      |   |                       |  |           |     |  |   |       
|Mortgage-backed securities              |  | $             | 31,522 |                      | $ | 208                   |  | $         | 221 |  | $ | 31,509
|Federal agencies                        |  |               | 5,964  |                      |   | 47                    |  |           |    |  |   | 6,011 
|Municipal securities                    |  |               | 27,932 |                      |   | 32                    |  |           | 310 |  |   | 27,654
|Mutual funds                            |  |               | 1,506  |                      |   | 13                    |  |           | 1   |  |   | 1,518 
|                                        |  |               |        |                      |   |                       |  |           |     |  |   |       
|                                        |  | $             | 66,924 |                      | $ | 300                   |  | $         | 532 |  | $ | 66,692
|                                        |  |               |        |                      |   |                       |  |           |     |  |   |       

At September 30, 2008, the Companys unrealized losses related to municipal securities
were attributable primarily to yields and liquidity issues. The Company has the intent and ability to hold these municipals until a recovery of fair value, which may be maturity.

NOTE E  CURRENT AND 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.



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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.

Determining Fair Value in a Market that is not Active

In October 2008, the FASB issued FASB Staff Position No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. This FASB staff position clarifies the application of
SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. This FASB staff position became
effective for the Company on October 10, 2008, and did not have a material impact on the consolidated financial position or results of operations.

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 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.



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Disclosures About Derivative 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 F  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 September 30, 2008, the interest rate was 5.51%. The subordinated debentures
mature on March 15, 2036, and may be redeemed at par anytime after March 15, 2011.

NOTE G  RETIREMENT PLAN

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



|                                                |  |                                 |    |                                |   |      |  |      |     |  |   |    
|----------------------------------------------- |  | ------------------------------- | -- | ------------------------------ | - | ---- |  | ---- | --- |  | - | ---
|                                                |  | Three Months EndedSeptember 30, |    | Nine Months EndedSeptember 30,
|In thousands                                    |  | 2008                            |    | 2007                           |   | 2008 |  | 2007
|Service cost                                    |  | $                               | 9  |                                | $ | 8    |  | $    | 26  |  | $ | 25 
|Interest cost                                   |  |                                 | 27 |                                |   | 29   |  |      | 82  |  |   | 88 
|Amortization of actuarial loss                  |  |                                 |   |                                |   | 3    |  |      |    |  |   | 8  
|Amortization of unrecognized prior service cost |  |                                 | 15 |                                |   | 15   |  |      | 45  |  |   | 45 
|                                                |  |                                 |    |                                |   |      |  |      |     |  |   |    
|Net periodic pension cost                       |  | $                               | 51 |                                | $ | 55   |  | $    | 153 |  | $ | 166
|                                                |  |                                 |    |                                |   |      |  |      |     |  |   |    

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.

NOTE H  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



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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 September 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 |  | $          | 78,221,000 |                                                             | $ |                                            |  | $                                      | 78,221,000 |  | $ | 

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 charged against the allowance when management believes the uncollectability of the loan is confirmed. During the nine months of 2008, sixteen impaired loans were partially charged-off or re-evaluated, resulting in a remaining
balance for these loans, net of specific reserve, of $9.3 million as of September 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 September 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 |  | $          | 9,284,000 |                                                             | $ |                                            |  | $                                      |  |  | $ | 9,284,000



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NOTE I  SUBSEQUENT EVENT

On October 3, 2008, the Emergency Economic Stabilization Act of 2008 (the EESA) was signed into law, pursuant to which the U.S. Treasury will have the authority to, among other things, purchase up to
$700 billion of mortgages, mortgage-backed securities and certain other financial instruments from financial institutions for the purpose of stabilizing and providing liquidity to the U.S. financial markets.

On October 14, 2008, the Department of the Treasury announced it will purchase equity stakes in qualifying banks and thrifts. Under this program,
known as the Troubled Asset Relief Program Capital Purchase Program (the TARP Capital Purchase Program), the Treasury will make $250 billion of capital available to U.S. financial institutions in the form of preferred stock. In
conjunction with the purchase of preferred stock, the Treasury will receive warrants to purchase common stock with an aggregate market price equal to 15% of the preferred investment. Participating financial institutions will be required to adopt the
Treasurys standards for executive compensation and corporate governance for the period during which the Treasury holds equity issued under the TARP Capital Purchase Program. The Company is assessing its participation in the TARP Capital
Purchase Program, but has not yet made a decision as to whether it will participate.

Also on October 14, 2008, Secretary Paulson
signed the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily provide a 100% guarantee of the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing transaction
deposit accounts under a Temporary Liquidity Guarantee Program. Coverage under the Temporary Liquidity Guarantee Program is available for 30 days without charge and thereafter at a cost of 75 basis points per annum for senior unsecured debt and 10
basis points per annum for non-interest bearing transaction deposits. The Company is assessing its participation in the Temporary Liquidity Guarantee Program, but has not yet made a decision as to whether it will participate.

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, laws and regulations, 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



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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.

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 retail 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 along with borrowed 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 ranging 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 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.



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##### Table of Contents

Executive Overview of the Third Quarter of 2008

The Company recorded net income of $393,000, or $0.13 per share, for the third quarter of 2008, which followed earnings of $383,000 for each of the first
two quarters of 2008. Other highlights for the quarter include the following:



| |  |  | The quarterly dividend of $0.04 per share represented a payout ratio of 30.4%.
| | - |  | ------------------------------------------------------------------------------



| |  |  | The Companys closing stock price of $8.62 per share on September 30, 2008 represented 78.2% of its book value of $11.03 per share on that date, and
represented a market capitalization of $25.8 million.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Net interest income for the third quarter of 2008 was $3.0 million, 23.9% higher than the same quarter in 2007, primarily a result of a 38 basis point improvement
in net interest margin to 3.12%, on a fully tax-equivalent basis.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Net interest margin of 3.12%, on a fully tax-equivalent basis for the third quarter of 2008, represented a 7 basis point decline from the 3.19% recorded for the
second quarter of 2008. The decrease was due primarily to $54,000 of accrued interest not being recognized as income as a result of a $1.7 million loan being placed on non-accrual status.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Total non-performing loans of $4.5 million, or 1.44% of total net loans at September 30, 2008, represented a $1.0 million increase from June 30, 2008. The
increase in non-performing loans was primarily due to the classification of a multi-family loan of $1.7 million in Anderson, Indiana. The total for OREO of $4.0 million was essentially unchanged from June 30, 2008.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The provision for loan losses for the third quarter of 2008 was $205,000, which represented a reduction from the $221,000 and $371,000 recorded for the second
quarter and first quarter of 2008, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other income for the third quarter was $43,000, or 4.4%, higher than the same quarter of 2007, primarily a result of an increase in other fees and service charges
on deposit accounts, and a net gain on other real estate owned compared to a net loss in the prior year. The increases were offset in part by a decrease in brokerage commissions due to reduced sales resulting from the current global financial
crisis.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other expense for the third quarter was $82,000, or 2.3%, lower than the same quarter of 2007, with legal and professional decreasing $65,000, which was due
primarily to a significant decline of legal fees as a result of the third quarter 2007 settlement of the RLI litigation involving pools of leases.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The income tax benefit of $25,000 for the third quarter of 2008 was related primarily to a significant amount of tax-exempt income from municipal securities and
bank-owned life insurance.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the third quarter of 2008, the balance sheet grew by $14.0 million, or 3.1%, to $467.8
million:



| |  |  | The third quarter balance sheet growth included a $10.9 million increase in the investment portfolio resulting primarily from the purchase of Ginnie Mae
mortgage-backed securities totaling $15.1 million, and a $6.6 million, or 2.1%, increase in the loan portfolio to $314.7 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As of September 30, 2008, the Company did not own Fannie Mae or Freddie Mac preferred stock, and did not own private-label mortgage-backed securities. The
Company has no direct exposure to sub-prime loans in its loan portfolio.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | During the third quarter of 2008, total deposits increased by $6.2 million, or 2.0%, to $320.8 million, primarily due to a new deposit relationship with the State
of Indiana. The States total investment of $15 million in certificate accounts is expected to provide stable deposits for the Bank. No brokered certificates of deposit were held at September 30, 2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The growth in the investment portfolio and in the loan portfolio for the third quarter of 2008 was funded with a combination of deposit growth and a $7.5 million
long-term repurchase agreement involving one of the two new Ginnie Mae mortgage-backed 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, was 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 three new
full-service banking centers in Hamilton County, which lies just north of Marion County and Indianapolis. The new offices in Fishers, Carmel and Westfield, expected to open in November 2008, December 2008, and the second quarter of 2009,
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.

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



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##### Table of Contents

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 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 $467.8 million
at September 30, 2008, represented growth of $41.0 million, or 9.6%, from the December 31, 2007 total of $426.8 million. This increase resulted primarily from investment portfolio and loan portfolio growth.

Cash and cash equivalents of $17.8 million at September 30, 2008, which were slightly higher than the December 31, 2007 total of $17.2 million,
represent an immediate source of liquidity to fund loans or meet deposit outflows.

Investment securities available for sale increased
17.3% to $78.2 million at September 30, 2008 from $66.7 million at December 31, 2007, and there also was a material change in the investment mix. Mortgage-backed securities increased $24.4 million to $55.9 million, while municipal
securities declined $9.8 million to $17.8 million, primarily through a second quarter sale of $9.2 million designed to support the Banks income tax and liquidity strategies. The growth in mortgage-backed securities resulted primarily from a
first quarter purchase of $15.0 million of Fannie Mae securities, and a third quarter purchase of $15.1 million of Ginnie Mae securities. The third quarter purchase was funded with FHLB borrowings and a $7.5 million repurchase agreement embedded
with two interest caps totaling $15.0 million in notional value. The interest rate caps are designed to provide protection against a negative impact on the Companys net interest income that could result from rising interest rates. All
mortgage-backed securities in the portfolio at September 30, 2008, are insured by either Ginnie Mae, Fannie Mae or Freddie Mac.



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##### Table of Contents

We realized a $20.5 million, or 7.0%, increase in net loans receivable to $314.7 million from $294.3
million at December 31, 2007. Our loan portfolio growth objectives for 2008 have been negatively impacted by the slowing economy, which has included significant weakness in the housing sector, but our overall results are encouraging considering
this difficult economic environment. For the nine month period ended September 30, 2008, commercial real estate, commercial construction and commercial business loans increased $16.9 million, or 10.9%, to $172.0 million, with most of the
lending activity occurring in the Indianapolis metropolitan market. The residential real estate first mortgage loan portfolio grew $2.2 million, or 1.8%, to $119.2 million at September 30, 2008, which was reflective of generally poor mortgage
market conditions. During the nine month period ended September 30, 2008,, the Bank designated only $1.1 million 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 originations 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 $13.6 million at September 30, 2008 represented a $5.9 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 two acquired
properties and an extensive remodel of the Greenfield banking center.

Total deposits of $320.8 million at September 30, 2008
increased only $6.0 million, or 1.9%, from $314.7 million at December 31, 2007, but strategies employed by management to add new checking customers produced a continuing improvement in the deposit mix. Noninterest-bearing checking core deposits
increased $2.4 million, or 11.6%, for the nine-month period to $22.8 million at September 30, 2008. The Bank also added a deposit relationship with the State of Indiana that produced $15 million in certificates of deposit, which are expected to
be stable deposits for the Bank, based on the prior history of the related investment program as administered by the State. Our markets remain very competitive for deposit products and the Bank continues to utilize pricing strategies designed to
produce growth with an acceptable marginal cost for both existing and new deposits.

Borrowings increased by $36.7 million during the first
nine months of 2008 to $105.2 million, primarily to fund loan portfolio growth, investment portfolio growth, 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.

Drafts payable of $1.6 million at September 30, 2008 were $2.9 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
the time required for those checks to clear.

Shareholders equity declined $664,000 during the nine months ended September 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 $1,159,000, a reduction of $373,000 representing the after-tax affect of the $563,000 decline in the market value of the Banks available-for-sale investment securities, and a total of
$358,000 in three quarterly dividends, each at $0.04 per share.

RESULTS OF OPERATIONS

Third Quarter of 2008 compared to the Third Quarter of 2007

The Company realized net income
of $393,000, or $0.13 per diluted share, for the third quarter of 2008, compared to $1.4 million, or $0.47 per diluted share, for the third quarter of 2007. Net income in the year-earlier period included a recovery of $2.8 million, with an after-tax
benefit of $1.8 million, in settlement of litigation related to the purchases of pooled leases. The Company realized improvements in many areas of the income statement, excluding those line items affected by the aforementioned recovery:



| |  |  | The Company produced a $580,000, or 23.9%, increase in net interest income resulting primarily from a 38 basis point improvement in net interest margin from 2.74%
to 3.12%, on a fully tax-equivalent basis. The significant improvement in net interest income was accomplished with an average earning asset total of $399.2 million for the third quarter of 2008 that was only 5.6% higher than the $378.0 million for
the same period in 2007.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Other income for the third quarter of 2008 was $1.0 million, which was a $43,000, or 4.4%, improvement over the total recorded for the same quarter of 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other expense for the third quarter of 2008 was $3.5 million, which represented an $82,000, or 2.3%, decrease from total other expense for the same quarter of 2007.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Income before income taxes of $368,000 for the third quarter of 2008 represented a decrease of $1.4 million from the $1.8 million income before income taxes for the
same period a year earlier, but the results for the third quarter of 2007 benefited from the aforementioned $2.8 million recovery.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income

Net interest income on a fully tax-equivalent basis increased $525,000, or 20.1%, to $3.1
million for the third 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 38 basis points to 3.12% for the third quarter of 2008 from 2.74% for the
third 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 initiated in November of 2006, which has resulted in significant
commercial loan growth, and through well-managed deposit re-pricing during a falling interest rate environment in 2008.

Tax-exempt
interest was $249,000 for the third quarter of 2008 compared to $352,000 for the same period of 2007. Our tax-exempt interest was from bank-qualified municipal securities and municipal loans. The tax-equivalent adjustments were $125,000 and $180,000
for the third quarters 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)           |      
|                                   |  | Three Months Ended September 30, |      
|                                   |  | 2008                             |       |   | 2007 |  
|Balance at beginning of quarter    |  | $                                | 2,909 |   |      | $ | 2,730  |  
|Provision (credit) for loan losses |  |                                  | 205   |   |      |   | (1,927 | )
|Charge-offs                        |  |                                  | (105  | ) |      |   | (818   | )
|Recoveries                         |  |                                  | 5     |   |      |   | 2,754  |  
|                                   |  |                                  |       |   |      |   |        |  
|Net (charge-offs) recoveries       |  |                                  | (100  | ) |      |   | 1,936  |  
|                                   |  |                                  |       |   |      |   |        |  
|Balance at end of period           |  | $                                | 3,014 |   |      | $ | 2,739  |  
|                                   |  |                                  |       |   |      |   |        |  
|Allowance to total loans           |  |                                  | 0.95  | % |      |   | 0.96   | %
|                                   |  |                                  |       |   |      |   |        |  
|Allowance to non-performing loans  |  |                                  | 66.76 | % |      |   | 112.25 | %
|                                   |  |                                  |       |   |      |   |        |  

We had a provision for loan losses of $205,000 in the third quarter of 2008, compared to a credit
of $1.9 million for the same period in 2007. The credit in 2007 was due to the loss recovery in the third quarter of 2007 of $2.8 million that resulted from a settlement of litigation related to purchases of pooled leases, reduced by a net provision
of $823,000 that included amounts related to write-downs of two commercial credits previously totaling $2.3 million. The provision for the third quarter of 2008 reflected the additional portfolio growth, the increase in non-performing loans, and the
increasing pressure of current economic conditions on credit quality. Based on the results of the Companys standard quarterly review process, it is managements opinion that the allowance for loan losses is adequate as of
September 30, 2008.



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##### Table of Contents

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



|                                                      |  |                        |       |   |      |   |       |  
|----------------------------------------------------- |  | ---------------------- | ----- | - | ---- | - | ----- | -
|                                                      |  | (Dollars in thousands) |      
|                                                      |  | September 30,          |      
|                                                      |  | 2008                   |       |   | 2007 |  
|Loans accounted for on a non-accrual basis            |  | $                      | 4,467 |   |      | $ | 2,388 |  
|Accruing loans contractually past due 90 days or more |  |                        | 49    |   |      |   | 52    |  
|                                                      |  |                        |       |   |      |   |       |  
|Total of non-accrual and 90 days past due loans       |  | $                      | 4,516 |   |      | $ | 2,440 |  
|                                                      |  |                        |       |   |      |   |       |  
|Percentage of total net loans                         |  |                        | 1.43  | % |      |   | 0.86  | %
|                                                      |  |                        |       |   |      |   |       |  
|Other non-performing assets(1)                        |  | $                      | 4,044 |   |      | $ | 2,962 |  
|                                                      |  |                        |       |   |      |   |       |  



|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The allowance for loan losses to non-performing loans ratio decreased from 112.25% at
September 30, 2007, to 66.76% at September 30, 2008, as a result of an increase in non-performing loans. Non-performing loans at September 30, 2008, totaled $4.5 million, an increase of $2.1 million from September 30, 2007. The
increase was due primarily to the classification of a multi-family loan of $1.7 million in Anderson, Indiana, as non-performing.

Other
real estate owned of $4.0 million at September 30, 2008, was up only $18,000 for the quarter, but there were two properties added and two sales during the period. Additionally, the Bank capitalized $70,000 in construction costs to complete a
previously foreclosed on a single-family property. The two sales coupled with a write-down on one other property resulted in a net gain of $9,000. Other real estate owned at September 30, 2007, totaled $3.0 million.

Other Income

The Company produced a $43,000,
or 4.4%, increase in total other income for the third quarter of 2008, compared to the same period in 2007. The major positive items affecting the change for the period included a $47,000, or 10.8%, improvement in other fees and service charges on
deposit accounts, and a net gain of $9,000 on other real estate owned compared to a net loss of $55,000 for the same period in 2007. They were partially offset by a $73,000 decrease in brokerage and insurance commissions. The increase in other fees
and service charges on deposit accounts resulted primarily from increased fees received for checks drawn on insufficient funds, and an improved distribution rate of debit cards to checking account customers. The decline in brokerage and insurance
commissions was due primarily to reduced sales of investment products by Ameriana Financial Services as a result of the current global financial crisis.

Other Expense

The $82,000, or 2.3%, decrease in total other expense in the third quarter of 2008, compared to the
third quarter of 2007, resulted primarily from:



| |  |  | A $35,000 decrease in salaries and employee benefits that resulted primarily from lower expenses for employee retirement plans in the third quarter of 2008,
compared to the same period in 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A $54,000 decrease in office occupancy expense that resulted primarily from lower expenditures for major repairs to facilities in the third quarter of 2008,
compared to the same period in 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A $65,000 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 involving pools of leases.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | The decreases in expense listed above were offset in part by a $90,000 rise in other that was due primarily to a $24,000 increase in expense for other real estate
owned, a $16,000 increase in expense for the directors supplemental retirement plan, and the $27,000 bank-owned life insurance (BOLI) post-retirement benefit expense recorded under new accounting rules effective January 1,
2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income Tax Expense

An income tax benefit of $25,000 was recorded for the third quarter of 2008, compared to income tax expense of $405,000 for the same period of 2007. The difference was due primarily to the additional income tax
expense in 2007 resulting from the $2.8 million recovery related to purchases of pooled leases. The third quarters of both 2008 and 2007 benefited from significant amounts of tax-exempt income from municipal securities and BOLI.

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.

Nine Months Ended September 30, 2008 compared to the Nine Months Ended September 30, 2007

The Company
realized net income of $1.2 million, or $0.39 per diluted share, for the nine months of 2008, compared to net income of $1.3 million, or $0.45 per diluted share, for the first nine months of 2007. The decrease of $185,000 was due to the credit to
the loan loss provision recorded in 2007, which was partially offset by improvements in 2008 in most areas of the income statement:



| |  |  | The Company produced a $1.5 million, or 21.0%, increase in net interest income resulting primarily from a 39 basis point improvement in net interest margin on fully
tax-equivalent basis from 2.70% to 3.09%. The significant improvement in net interest income was accomplished with an average earning asset total of $395.7 million for the nine months of 2008 that was only 3.0% higher than the $384.1 million for the
same period in 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A provision for loan losses of $797,000 was recorded during the first nine months of 2008, compared to a credit of $1.7 million for the same period of 2007, a
difference of $2.5 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other income for the nine months of 2008 was $3.2 million, a $226,000, or 7.6%, improvement over the $3.0 million recorded for the same period in 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $10.3 million in other expense for the nine months of 2008 was $131,000, or 1.3%, lower than the total for the same period of 2007.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Income before income taxes of $812,000 for the nine months of 2008 represented a decrease of $667,000 from the $1.5 million income before income taxes for the same
period a year earlier, but the results for the third quarter of 2007 benefited from the aforementioned $2.8 million recovery related to purchases of pooled leases. The income tax benefit of $347,000 for the nine months of 2008 included $150,000
related to a favorable tax court ruling, and the income tax expense of $135,000 for the same period of 2007 was negatively impacted by a $219,000 income tax liability resulting from the restructuring of the Companys BOLI program.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income

Net interest income on a fully tax-equivalent basis increased $1.4 million to $9.2 million for the nine months of 2008 compared to $7.8 million for the same period of 2007. The Company improved its net interest margin on a fully
tax-equivalent basis by 39 basis points to 3.09% for the nine months of 2008 from 2.70% for the first nine 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 initiated in November of 2006, which has resulted in significant commercial loan growth, and through well-managed deposit re-pricing during a falling interest rate environment in 2008.



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##### Table of Contents

Tax-exempt interest was $818,000 for the nine months of 2008 compared to $1.0 million for the same period
of 2007. Our tax-exempt interest was from bank-qualified municipal securities and municipal loans. The tax-equivalent adjustments were $415,000 and $524,000 for the first nine 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)         |      
|                                   |  | Nine Months EndedSeptember 30, |      
|                                   |  | 2008                           |       |   | 2007 |  
|Balance at beginning of year       |  | $                              | 2,677 |   |      | $ | 2,616  |  
|Provision (credit) for loan losses |  |                                | 797   |   |      |   | (1,747 | )
|Charge-offs                        |  |                                | (546  | ) |      |   | (926   | )
|Recoveries                         |  |                                | 86    |   |      |   | 2,796  |  
|                                   |  |                                |       |   |      |   |        |  
|Net (charge-offs ) recoveries      |  |                                | (460  | ) |      |   | 1,870  |  
|                                   |  |                                |       |   |      |   |        |  
|Balance at end of period           |  | $                              | 3,014 |   |      | $ | 2,739  |  
|                                   |  |                                |       |   |      |   |        |  

We had a provision for loan losses of $797,000 for the nine months of 2008, compared to a credit
of $1.7 million for the same period in 2007. The credit for 2007 was due to the loss recovery in the third quarter of $2.8 million that resulted from a settlement of litigation related to purchases of pooled leases, reduced by a net provision of
$1.0 million for the nine months ended September 30, 2007, that included amounts related to write-downs of two commercial credits previously totaling $2.3 million. The provision for the nine months of 2008 reflected the additional portfolio
growth, the increase in non-performing loans, and the increasing pressure of current economic conditions on credit quality. The allowance to total loans ratio increased to 0.94% at September 30, 2008 from 0.90% at December 31, 2007.

Other Income

The $226,000
increase in total other income for the nine months of 2008, compared to the same period in 2007, resulted primarily from the following items:



| |  |  | An increase of $83,000, or 6.6%, in other fees and service charges on deposit accounts, which resulted primarily from increased fees received for checks drawn on
insufficient funds, and an improved distribution rate of debit cards to checking account customers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Only $9,000 in net losses on other real estate owned for the nine months ended September 30, 2008, compared to $50,000 in the first nine months of 2007.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A $46,000 increase in income related to the growth in cash value of life insurance.
| | - |  | -----------------------------------------------------------------------------------



| |  |  | The change in other income was negatively impacted in the nine months of 2008 by $61,000 in losses from unconsolidated subsidiaries, compared to a net gain of
$12,000 for the same period of 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other Expense

The Company had a $131,000 decrease in total other expense for the nine months of 2008, compared to the first nine months of 2007, with the following
major differences:



| |  |  | Additional compensation costs were incurred in 2008 related to the Companys growth initiatives, as well as due to higher salaries and employee benefits
related to normal annual increases, but the total for the nine months of 2008 was $43,000 less than for the same period of the prior year due to severance costs of $273,000 recorded in 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | A $289,000, or 41.2%, reduction of legal and professional fees was 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 nine months of 2007 included $203,000 of RLI related legal fees. The total for the nine 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 nine months of 2008, compared to $42,000 for the same period of 2007.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The decreases in total other expense detailed above were offset in part by a $172,000 increase in other that was due primarily to:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| | 1) | A $48,000 increase in expense for the directors supplemental retirement plan,
| | -- | ------------------------------------------------------------------------------



| | 2) | the $80,000 BOLI post-retirement benefit expense recorded under new accounting rules effective January 1, 2008,
| | -- | ---------------------------------------------------------------------------------------------------------------



| | 3) | a $22,000 increase in education and training from expanded training efforts related to retail sales; and
| | -- | --------------------------------------------------------------------------------------------------------



| | 4) | An increase of $44,000 in other real estate owned expense, which was mostly offset by a $42,000 decrease in losses on debit card fraud.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------

Income Tax Expense

An income tax benefit of
$347,000 was recorded for the nine months of 2008, compared to an income tax expense of $135,000 for the same period of 2007. The difference was due primarily to the additional income tax expense in 2007 resulting from the $2.8 million RLI recovery
related to purchases of pooled leases.

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 nine months of 2007
was negatively impacted by a $219,000 income tax liability resulting from the restructuring of the Companys BOLI program. The nine-month periods for both 2008 and 2007 benefited from significant amounts of tax-exempt income from municipal
securities and BOLI.

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 nine months ended September 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 September 30, 2008, we had $12.0 million in loan commitments outstanding and $34.7 million of
available commercial and consumer lines of credit. Certificates of deposit due within one year of September 30, 2008, totaled $126.5 million, or 39.4% 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 September 30, 2008. However, based on past experiences we believe that a significant portion of the
certificates of deposit will remain with us. 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 $20.5 million in net loans receivable for the nine months of 2008, with no new purchases of loans. In the first nine months of 2007, we experienced an
increase of $33.1 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 increased by $6.0 million, FHLB advances increased by $29.2 million, and a repurchase agreement for $7.5 million was added during the nine months of 2008. There were no brokered certificates at either September 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 a stock repurchase program. We paid
$358,000 in cash dividends to our shareholders for both the nine-month periods ended September 30, 2008 and 2007. The dividend rates were $0.12 per share for the first nine 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 Board. 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 September 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 September 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 September 30, 2008, that management believes have changed this classification.

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

September 30, 2008



|                                                                           |  |                |        |       |                              |   |        |                       |        |  |      |        |  |       |        |  |       |  
|-------------------------------------------------------------------------- |  | -------------- | ------ | ----- | ---------------------------- | - | ------ | --------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                                                           |  | Actual Capital |        |       | Required ForAdequate Capital |   |        | To Be WellCapitalized |       
|                                                                           |  | Amount         |        | Ratio |                              |   | Amount |                       | Ratio  |  |      | Amount |  | Ratio |       
|Total risk-based capital ratio(risk based capital to risk-weighted assets) |  | $              | 41,582 |       | 12.82                        | % |        | $                     | 25,950 |  | 8.00 | %      |  | $     | 32,438 |  | 10.00 | %
|Tier 1 risk-based capital ratio(tier 1 capital to risk-weighted assets)    |  | $              | 38,441 |       | 11.85                        | % |        | $                     | 12,975 |  | 4.00 | %      |  | $     | 19,463 |  | 6.00  | %
|Tier 1 leverage ratio(tier 1 capital to adjusted average total assets)     |  | $              | 38,441 |       | 8.64                         | % |        | $                     | 13,351 |  | 3.00 | %      |  | $     | 22,251 |  | 5.00  | %



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##### Table of Contents

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

Not applicable as issuer is a smaller reporting company.

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.

There were no changes in the Companys internal control over financial reporting during the three months ended September 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.



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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

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

ITEM 3  DEFAULTS UPON
SENIOR SECURITIES

Not Applicable

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5  OTHER INFORMATION

Not Applicable

ITEM 6  EXHIBITS



|     |  |                                                               
|---- |  | --------------------------------------------------------------
|No.  |  | Description                                                   
|31.1 |  | Rule 13a-14(a)/15d-14(a) Chief Executive Officer Certification
|31.2 |  | Rule 13a-14(a)/15d-14(a) Chief Financial Officer Certification
|     | 
|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: November 14, 2008 |  | /s/ Jerome J. Gassen                                
|                        |  | Jerome J. Gassen                                    
|                        |  | President and Chief Executive Officer               
|                        |  | (Duly Authorized Representative)                    
|                        | 
|DATE: November 14, 2008 |  | /s/ John J. Letter                                  
|                        |  | John J. Letter                                      
|                        |  | Senior Vice President-Treasurer and                 
|                        |  | Chief Financial Officer                             
|                        |  | (Principal Financial Officer and Accounting Officer)