SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                                QUARTERLY REPORT


                       Pursuant to Section 13 or 15 (d) of
                       The Securities Exchange Act of 1934


                      For the Quarter Ended: June 30, 2004

                         Commission File Number: 0-18392


                                Ameriana Bancorp
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Indiana                              35-1782688
-------------------------------        --------------------------------
(State or other jurisdiction of        (I.R.S. employer identification
incorporation or organization)                    number)


2118 Bundy Avenue, New Castle, Indiana                       47362-1048
--------------------------------------                       ----------
(Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, include area code  (765) 529-2230
                                                  --------------



                     Common Stock, par value $1.00 per share
                     ---------------------------------------
                                (Title of Class)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                                            YES  XX     NO __
                                                 --

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of July 30, 2004,  there were issued and outstanding  3,149,088 shares of the
registrant's common stock.


<PAGE>

AMERIANA BANCORP AND SUBSIDIARIES



                                    CONTENTS


PART I  FINANCIAL INFORMATION                                          Page No.
                                                                       -------

  ITEM 1   Financial statements

           Consolidated Condensed Balance Sheets as of June 30, 2004
           and December 31, 2003. . . . . . . . . . . . . . . . . . . . . . . 3

           Consolidated Condensed Statements of Operations for the Three
           and Six Months Ended June 30, 2004 and 2003. . . . . . . . . . . . 4

           Consolidated Condensed Statement of Shareholders' Equity for
           the Six Months Ended June 30, 2004 . . . . . . . . . . . . . . . . 5

           Consolidated Condensed Statements of Cash Flows for the Six
           Months Ended June 30, 2004 and 2003 . . . . . .  . . . . . . . . . 6

           Notes to Consolidated Condensed Financial Statements . . . . . . . 7

  ITEM 2   Management's Discussion and Analysis of Financial Condition
           and Results of Operations . . . . . . . . . . . . . . . . . . . . .9


  ITEM 3   Quantitative and Qualitative Disclosure About Market Risk . . . . 16

  ITEM 4   Controls and Procedures . . . . . . . . . . . . . . . . . . . . . 18

PART II  OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 19

  ITEM 1   Legal Proceedings
  ITEM 2   Changes in Securities, Use of Proceeds and Issuer Purchases of
           Equity Securities
  ITEM 3   Defaults upon Senior Securities
  ITEM 4   Submission of Matters to a Vote of Security Holders
  ITEM 5   Other Information
  ITEM 6   Exhibits and Reports on Form 8-K

SIGNATURES. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 20





                                       2




<PAGE>
PART I  -  FINANCIAL INFORMATION

                         AMERIANA BANCORP AND SUBSIDIARY
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        (In thousands, except share data)
<TABLE>
<CAPTION>

                                                                                 June 30                December 31,
                                                                                  2004                      2003
                                                                               (Unaudited)
                                                                         ------------------------  ------------------------
<S>                                                                               <C>                        <C>
Assets

  Cash on hand and in other institutions                                                $ 11,046                   $ 9,505
  Interest-bearing demand deposits                                                        13,274                     5,044
                                                                         ------------------------  ------------------------
      Cash and cash equivalents                                                           24,320                    14,549

  Investment securities held to maturity (fair value
     of $150,726)                                                                        154,681                        --
  Investment securities available for sale                                                11,797                   137,788
  Mortgage loans available for sale                                                          395                       730
  Loans receivable                                                                       194,641                   207,885
  Allowance for loan losses                                                              (3,182)                   (3,744)
                                                                         ------------------------  ------------------------

      Net loans receivable                                                               191,459                   204,141
  Real estate owned                                                                        1,184                       602
  Premises and equipment                                                                   7,955                     7,887
  Stock in Federal Home Loan Bank                                                          7,110                     6,948
  Mortgage servicing rights                                                                1,270                     1,313
  Investments in unconsolidated affiliates                                                 1,602                     1,592
  Goodwill                                                                                   564                       564
  Cash surrender value of life insurance                                                  20,109                    19,706
  Other assets                                                                             6,092                     6,633
                                                                         ------------------------  ------------------------

          Total assets                                                                  $428,538                  $402,453
                                                                         ========================  ========================

Liabilities and Shareholders' Equity

Liabilities:
  Deposits:
         Noninterest-bearing                                                            $ 23,308                  $ 19,039
         Interest-bearing                                                                323,965                   326,705
                                                                         ------------------------  ------------------------

            Total deposits                                                               347,273                   345,744
  Advances from Federal Home Loan Bank                                                    34,776                     9,630
  Notes payable                                                                              400                       600
  Drafts payable                                                                           3,835                     3,477
  Advances by borrowers for taxes and insurance                                              365                        89
  Other liabilities                                                                        2,744                     4,039
                                                                         ------------------------  ------------------------

          Total liabilities                                                              389,393                   363,579

Shareholders' equity:
  Preferred stock (5,000,000 shares authorized;
      none issued)                                                                            --                        --
  Common stock ($1.00 par value; authorized
       15,000,000 shares; issued shares:
      3,148,988 and 3,148,288, respectively)                                               3,149                     3,148
  Additional paid-in capital                                                                 514                       506
  Retained earnings                                                                       35,157                    35,259
  Accumulated other comprehensive income (loss)                                              325                      (39)
                                                                         ------------------------  ------------------------

          Total shareholders' equity                                                      39,145                    38,874
                                                                         ------------------------  ------------------------

          Total liabilities and shareholders' equity                                    $428,538                  $402,453
                                                                         ========================  ========================
</TABLE>

See accompanying notes to consolidated condensed financial statements.

                                       3
<PAGE>


                         AMERIANA BANCORP AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                        (In thousands, except share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         Three Months Ended June 30,         Six Months Ended June 30,
                                                         ------------------------------------------------------------------

                                                             2004           2003              2004              2003
                                                         ------------  ----------------  ----------------  ----------------
<S>                                                          <C>             <C>               <C>               <C>

Interest Income:
   Interest and fees on loans                                 $3,024            $5,348            $6,472           $10,818
   Interest on investment securities                           1,214               901             2,316             1,357
   Other interest and dividend income                            131               163               286               425
                                                         ------------  ----------------  ----------------  ----------------
      Total interest income                                    4,369             6,412             9,074            12,600

Interest Expense:
   Interest on deposits                                        1,493             2,721             3,022             5,679
   Interest on FHLB advances and other borrowings                309                96               524               199
                                                         ------------  ----------------  ----------------  ----------------
      Total interest expense                                   1,802             2,817             3,546             5,878
                                                         ------------  ----------------  ----------------  ----------------

Net interest income                                            2,567             3,595             5,528             6,722

Provision for Loan Losses                                         50             1,400               200             1,550
                                                         ------------  ----------------  ----------------  ----------------
Net interest income after provision for loan losses            2,517             2,195             5,328             5,172

Other Income:
   Net loan servicing fees                                        51               (63)              105               (93)
   Other fees and service charges                                351               345               663               679
   Brokerage and insurance commissions                           252               232               592               482
   Net gain (loss) on investments in unconsolidated
       affiliates                                                 52                49                30                (1)
   Gains on sales of loans and servicing rights                   95               470               173               953
   Gain on sale of investments                                    --                 1                --                41
   Increase in cash surrender value of life insurance            192               204               404               418
   Other                                                          51                16                55                21
                                                         ------------  ----------------  ----------------  ----------------
      Total other income                                       1,044             1,254             2,022             2,500

Other Expense:
   Salaries and employee benefits                              1,863             1,963             4,013             3,968
   Net occupancy and equipment expense                           399               419               780               815
   Federal insurance premium                                      39                46                78                95
   Data processing expense                                       139               130               262               242
   Printing and office supplies                                   50                61               118               113
   Amortization of intangible assets                              --                 8                --                17
   Other                                                         727               864             1,317             1,511
                                                         ------------  ----------------  ----------------  ----------------
      Total other expense                                      3,217             3,491             6,568             6,761
                                                         ------------  ----------------  ----------------  ----------------
Income (loss) before income taxes                                344               (42)              782               911

Income taxes                                                    (91)              (138)             (124)               60
                                                         ------------  ----------------  ----------------  ----------------
Net Income                                                     $ 435              $ 96             $ 906             $ 851
                                                         ============  ================  ================  ================


Basic Earnings Per Share                                       $0.14             $0.03             $0.29             $0.27
                                                         ============  ================  ================  ================

Diluted Earnings Per Share                                     $0.14             $0.03             $0.29             $0.27
                                                         ============  ================  ================  ================

Dividends Declared Per Share                                   $0.16             $0.16             $0.32             $0.32
                                                         ============  ================  ================  ================
</TABLE>



See accompanying notes to consolidated condensed financial statements.

                                       4
<PAGE>


                         AMERIANA BANCORP AND SUBSIDIARY
            CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                         2004
                                    ---------------
<S>                                       <C>
Balances, January 1                        $38,874

Net income                                     906
Other comprehensive income                     364
                                    ---------------
     Comprehensive income                    1,270

Exercise of stock options                        9

Dividends declared                          (1,008)
                                    ---------------

Balances, June 30                          $39,145
                                    ===============
</TABLE>



See accompanying notes to consolidated condensed financial statements.


                                       5
<PAGE>



                         AMERIANA BANCORP AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                   Six Months Ended June 30,
                                                                   -------------------------
                                                                       2004          2003
                                                                   ------------- ------------
<S>                                                                     <C>           <C>
OPERATING ACTIVITIES
  Net income                                                        $     906    $     851
  Items not requiring (providing) cash
    Provision for losses on loans                                         200        1,550
    Depreciation and amortization                                         700          744
    Increase in cash surrender value                                     (403)        (418)
    Mortgage loans originated for sale                                (11,982)    (109,258)
    Proceeds from sale of mortgage loans                               12,399      111,370
    Gains on sale of loans and servicing rights                          (173)        (953)
    Gain on sale of investments                                            --          (41)
    Increase in drafts payable                                            358        1,088
    Other adjustments                                                     680       (1,054)
                                                                    ---------    ---------
      Net cash provided by operating activities                         2,685        3,879
INVESTING ACTIVITIES
  Purchase of investment securities held to maturity                  (56,169)          --
  Purchase of investment securities available for sale                 (6,528)     (99,956)
  Proceeds from sale of investment securities available for sale           --       20,664
  Proceeds from maturities/calls of securities held to maturity        14,248           --
  Proceeds from maturities/calls of securities available for sale      18,499       26,552
  Net change in loans                                                  11,709       18,686
  Net purchases of premises and equipment                                (428)        (315)
  Purchases of federal Home Loan Bank Stock                              (162)         (95)
  Other investing activities                                              165          373
                                                                    ---------    ---------
    Net cash used in investing activities                             (18,666)     (34,091)
FINANCING ACTIVITIES
  Net change in demand and passbook deposits                            9,180       33,782
  Net change in certificates of deposit                                (7,651)     (18,782)
  Net change in short-term borrowings                                   7,000           --
  Proceeds from borrowings                                             18,625           --
  Repayment of borrowings                                                (679)        (595)
  Net change in advances by borrowers for taxes and insurance             276           20
  Exercise of stock options                                                 9            8
  Cash dividends paid                                                  (1,008)      (1,007)
                                                                    ---------    ---------
    Net cash provided by financing activities                          25,752       13,426
                                                                    ---------    ---------
CHANGE IN CASH AND CASH EQUIVALENTS                                     9,771      (16,786)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                         14,549       45,696
                                                                    ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR                            $  24,320    $  28,910
                                                                    =========    =========

Supplemental information:
  Interest paid                                                     $   3,522    $   5,859
  Income taxes paid                                                        --          950
</TABLE>


See accompanying notes to consolidated condensed financial statements.

                                       6
<PAGE>



AMERIANA BANCORP AND SUBSIDIARIES


NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(Table dollar amounts in thousands, except share data)

NOTE A - - BASIS OF PRESENTATION

     Ameriana  Bancorp ("the  Company") is a bank holding  company.  Through its
wholly  owned  subsidiary,  Ameriana  Bank and Trust ("the  Bank"),  the Company
offers an extensive line of banking services and provides a range of investments
and securities  products through branches in the central Indiana area.  Ameriana
Bank and Trust also offers trust and investment  management  services.  The Bank
has three direct wholly owned  subsidiaries,  Ameriana Insurance Agency ("AIA"),
Ameriana Financial Services,  Inc. ("AFS") and Ameriana  Investment  Management,
Inc.  ("AIMI").  AIA  provides  insurance  sales  from  offices  in New  Castle,
Greenfield  and  Avon,  Indiana.  AFS  offers  insurance  products  through  its
ownership of an interest in Family Financial Holdings,  Incorporated,  Columbus,
Indiana,  which offers a full line of credit,  related insurance products.  AIMI
manages the Bank's investment portfolio. In 2002, AFS acquired a 20.9% ownership
interest in Indiana  Title  Insurance  Bank,  LLC through  which it offers title
insurance.   AFS  also  operates  a  brokerage   facility  in  conjunction  with
Linsco/Private Ledger. The Bank maintains a website at www.ameriana.com.
                                                       ----------------

     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  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
Bank's financial  position and results of operations and cash flows. The results
of operations for the period are not necessarily indicative of the results to be
expected  in the full  year.  A summary  of the  Bank's  significant  accounting
policies is set forth in Note 1 of Notes to Consolidated Financial Statements in
the Bank's annual report on Form 10-K for the year ended December 31, 2003.

         The consolidated condensed balance sheet of the Bank as of December 31,
2003 has been derived from the audited consolidated balance sheet of the Bank as
of that date.

NOTE B - - SHAREHOLDERS' EQUITY

         On May 20, 2004, the Board of Directors declared a quarterly cash
dividend of $.16 per share. This dividend, totaling $504,000, was accrued for
payment to shareholders of record on June 11, 2004, and was paid on July 2,
2004. Payment was made for 3,148,988 shares, compared to 3,148,788 the previous
quarter. Stock options totaling 200 shares were exercised during the second
quarter of 2004.

                                       7
<PAGE>


NOTE C - - EARNINGS PER SHARE

Earnings per share were computed as follows:
<TABLE>
<CAPTION>

                                                                              (In thousands, except share data)
                                                                                 Three Months Ended June 30,
                                                                          2004                                 2003

                                                                       Weighted                              Weighted
                                                                        Average     Per Share                 Average     Per Share
                                                            Income      Shares       Amount      Income       Shares       Amount
<S>                                                           <C>          <C>          <C>       <C>           <C>          <C>

Basic Earnings per Share: Income available to Common            $435     3,148,922       $0.14         $96     3,148,288       $0.03
shareholders                                                                       ============                          ===========
Effect of dilutive stock options                                  --        23,558                      --         1,279
                                                             ---------------------             --------------------------
Diluted Earnings Per Share: Income available to common
shareholders and assumed conversions                            $435     3,172,480       $0.14         $96     3,149,567       $0.03
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>

                                                                              (In thousands, except share data)
                                                                                  Six Months Ended June 30,
                                                                          2004                                 2003
                                                          --------------------------------------------------------------------------
                                                                       Weighted                              Weighted
                                                                        Average     Per Share                 Average     Per Share
                                                            Income      Shares       Amount      Income       Shares       Amount
<S>                                                           <C>          <C>         <C>        <C>          <C>           <C>
Basic Earnings per Share: Income available to Common            $906     3,148,737       $0.29        $851     3,148,037       $0.27
shareholders                                                                       ============                          ===========
Effect of dilutive stock options                                  --        22,065                      --           270
                                                              ---------------------            --------------------------
Diluted Earnings Per Share: Income available to common
shareholders and assumed conversions                            $906     3,170,802       $0.29        $851     3,148,307       $0.27
====================================================================================================================================
</TABLE>



At June 30,  2004,  options to purchase  34,100  shares were  excluded  from the
computation  of diluted  earnings per share because the options'  exercise price
was greater than or equal to the average market price of common shares.

NOTE D - - STOCK BASED COMPENSATION

The Bank has stock-based  employee  compensation  plans, which are accounted for
under  the  recognition  and  measurement  principles  of APB  Opinion  No.  25,
"Accounting  for Stock Issued to  Employees,"  and related  interpretations.  No
stock-based  employee  compensation  cost is  reflected  in net  income,  as all
options  granted  under those  plans had an  exercise  price equal to the market
value of the underlying  common stock on the date of grant.  The following table
illustrates  the  effect on net income  and  earnings  per share if the Bank had
applied  the fair  value  recognition  provisions  of SFAS  Statement  No.  123,
"Accounting for Stock-Based Compensation," to stock-based employee compensation.
<TABLE>
<CAPTION>

                                                                                          (In thousands, except share data)
                                                                                      Three Months Ended          Six Months Ended
                                                                                            June 30,                  June 30,
                                                                                        2004        2003           2004        2003
                                                                                  --------------------------------------------------
<S>                                                                                     <C>         <C>             <C>         <C>
Net income, as reported                                                                  $435        $ 96           $906       $851
Less:  Total stock-based employee compensation cost determined under the fair
value based method, net of income taxes                                                  (78)         (7)           (78)        (7)
                                                                                  ------------------------   -----------------------
Pro forma net income                                                                     $357        $ 89           $828       $844
                                                                                  ========================   =======================
Earnings per share:
Basic - as reported                                                                    $ 0.14      $ 0.03         $ 0.29     $ 0.27
Basic - pro forma                                                                        0.11        0.03           0.26       0.27
Diluted - as reported                                                                    0.14        0.03           0.29       0.27
Diluted - pro forma                                                                      0.11        0.03           0.26       0.27
</TABLE>


                                       8

<PAGE>




AMERIANA BANCORP AND SUBSIDIARIES


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


General
-------

     This  Quarterly  Report on Form 10-Q ("Form 10-Q") may contain  statements,
which constitute  forward-looking  statements  within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include  statements  regarding the intent,  belief,
outlook,  estimate or  expectations of the Bank primarily with respect to future
events and future financial performance. Readers of this Form 10-Q are cautioned
that any such forward looking  statements are not guarantees of future events or
performance  and involve risks and  uncertainties,  and that actual  results may
differ  materially from those in the forward  looking  statements as a result of
various  factors.  The  acBanking   information  contained  in  this  Form  10-Q
identifies  important factors that could cause such  differences.  These factors
include  changes in interest  rates;  loss of deposits  and loan demand to other
financial  institutions;  substantial  changes in financial markets;  changes in
real estate values and the real estate market or regulatory changes.

     As with most banks,  the Bank's largest source of revenue has  historically
been the net interest  margin,  which is derived from the spread earned  between
its interest income and interest expense.  Consequently, the Bank's earnings are
primarily  dependent on its net interest income,  which is determined by (i) the
difference between rates of interest earned on interest-earning assets and rates
paid on  interest-bearing  liabilities  ("interest  rate spread"),  and (ii) the
relative amounts of interest-earning  assets and  interest-bearing  liabilities.
Levels of other income and  operating  expenses  also  significantly  affect net
income.

Significant Events in 2003
--------------------------

     Sale of Cincinnati  Branches:  On April 7, 2003, the Bank announced that it
had  agreed  to sell  its two  Cincinnati-area  branches  to  Peoples  Community
Bancorp, Inc. (NASDAQ/NM:  PCBI)("PCBI") of West Chester, Ohio. The two branches
are located in Deer Park and Landen,  Ohio.  On  September  30,  2003,  the Bank
announced the  completion of the sale of the two branches to PCBI. In connection
with the sale, the Bank recorded an after-tax gain of  approximately  $2,930,000
or $0.93 per diluted share in the third quarter 2003. The  transaction  included
the Bank's real  property  related to the Deer Park branch and its  leasehold on
the  premises  for the  Landen  branch.  Additionally,  the Bank  conveyed  most
consumer and commercial loans at those branches as part of the  transaction,  as
well as the branches' saving deposits, but retained and will continue to service
certain single family residential mortgages originated in those locations.

     Bank Writes Off Troubled Lease Portfolio in 2003: On September 30, 2003 the
Bank charged-off the two troubled equipment leases ("lease pools") originated by
Commercial  Money Center  ("CMC"),  a now bankrupt  Bank.  The Bank  recorded an
after-tax loss of approximately  $2,784,000 or $0.88 per diluted share. Prior to
September 30, 2003, the Bank had established  reserves against these lease pools
equal to approximately 58% of the $10,900,000 that remained outstanding.

                                       9
<PAGE>


Critical Accounting Policies
----------------------------

     The  accounting and reporting  policies of the Bank are in accordance  with
accounting  principles  generally  accepted in the United  States and conform to
general practices within the banking industry. The Bank's significant accounting
policies  are  described  in  detail  in the  Notes to the  Bank's  Consolidated
Financial  Statements for the year ended  December 31, 2003. The  preparation of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions.  The financial  position
and results of operations can be affected by these estimates and assumptions and
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 Bank's  financial  condition and results,  and they require
management to make estimates that are difficult, subjective or complex.

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

     The Bank  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  homogeneous  loans is  based on an  analysis  of loan  mix,  risk
characteristics  of the  portfolio,  fraud loss and bankruptcy  experiences  and
historical losses, adjusted for current trends, for each homogeneous category or
group of loans.  The  allowance  for loan losses  relating to impaired  loans is
based  on the  loan's  observable  market  price,  the  collateral  for  certain
collateral-dependent  loans,  or the  discounted  cash  flows  using the  loan's
effective interest rate.

     Regardless  of the extent of the Bank'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
judgmental 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.  The Bank
estimates  a  range  of  inherent  losses  related  to the  existence  of  these
exposures.  The  estimates are based upon the Bank'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.

                                       10
<PAGE>

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

     The  Cincinnati  branches  sold  had  approximately  $890,000  recorded  as
goodwill and core deposit  intangibles.  The $890,000 was written-off and netted
against the gain on the sale of the branches in the third quarter of 2003.

FINANCIAL CONDITION
-------------------

     Assets  totaled  $428.5  million at June 30,  2004,  an  increase  of $26.1
million,  or 6.5% from  December 31, 2003.  The increase was  primarily due to a
planned  strategy to leverage the  institutions  assets to improve  earnings and
return on equity.  This was accomplished  primarily through new FHLB advances of
$28,625,000 in the first six months of 2004.

     Cash and cash equivalents totaled $24,320,000 at June 30, 2004, an increase
of $9,771,000 from $14,549,000 at December 31, 2003.

     Investment securities totaled $166,478,000 at June 30, 2004, an increase of
$28,690,000 or 20.8% from $137,788,000 at December 31, 2003. The increase is due
to  additional  Federal  Home  Loan  Bank  Advances  and a  decline  in the loan
portfolio partially offset by an increase in cash and cash equivalents. The Bank
transferred the majority of its investment securities from available for sale to
held  to  maturity  in the  first  six  months  of  2004.  The  securities  were
transferred at fair value at the date of the transfer.  The  unrealized  holding
gain  or loss at the  date of the  transfer  will  continue  to be  reported  in
"accumulated  other  comprehensive  income  (loss)",  a  separate  component  of
shareholders'  equity,  but will be  amortized  over the  remaining  life of the
security.  Investments  classified  as  available  for sale are adjusted to fair
value each  month-end  with the  resulting  after-tax  unrealized  gains or loss
included in "accumulated other comprehensive  income (loss)" included in equity.
Investments  classified  as held to maturity are not adjusted to fair value each
month.

     The loan  portfolio  totaled  $194,641,000  at June 30,  2004, a decline of
$13,244,000 or 6.4% from  $207,885,000 at December 31, 2003. Most of the decline
was in  residential  mortgage  loans.  The Bank continued to sell new fixed rate
mortgages to minimize  potential  long-term  interest rate risk  associated with
such long-term, low-interest loans.

     The deposit portfolio totaled $347,273,000 at June 30, 2004, an increase of
$1,529,000 or 0.4% from $345,744,000 at December 31, 2003. Non  interest-bearing
deposits   increased   $4,269,000  while   interest-bearing   deposits  declined
$2,740,000.

     Advances from Federal Home Loan Bank totaled  $35,176,000 at June 30, 2004,
an increase of $24,946,000 or 243.9% from  $10,230,000 at December 31, 2003. The
Bank borrowed  $15,000,000 in ten year putable FHLB advances for an average cost
of 3.67%.  These advances may re-price to the three-month Libor rate should this
index reach 8.00% during any quarterly period after  two-years.  The three-month
Libor  was  1.63% at  August 4,  2004.  The Bank had a total of  $20,000,000  in
putable  FHLB  advances  at June  30,  2004.  The  remaining  advances  were for
fixed-and  variable-rate  advances  to  fund a  security  purchase  and  general
liquidity needs.

     Equity  totaled  $39,145,000  at June 30, 2004,  an increase of $271,000 or
0.7% from  $38,874,000  at December 31, 2003.  The increase was due primarily to
accumulated comprehensive income.

     The  Bank's  capital  ratios  are  well in  excess  of  minimum  regulatory
requirements.  At June 30,  2004,  the Bank had a  risk-based  capital  ratio of
15.83% and a tier 1 capital ratio of 8.97%.


                                       11
<PAGE>

     The Bank had outstanding  commitments to originate  loans of  approximately
$30,925,000  and  $2,845,000  at June  30,  2004  and  December  31,  2003.  The
commitments  outstanding  at June 30, 2004 were  primarily for  commercial  real
estate  loans.  In  addition,  the  Bank  had  $23,177,000  and  $21,409,000  of
conditional  commitments  for lines of credit  receivables  at June 30, 2004 and
December 31, 2003.  The Bank also had  $4,599,000  and  $3,604,000 of letters of
credit outstanding as of June 30, 2004 and December 31, 2003.

RESULTS OF OPERATIONS
---------------------

     Net income for the quarter  ended June 30, 2004  totaled  $435,000 or $0.14
per diluted share compared to net income of $96,000,  or $0.03 per diluted share
for the quarter ended June 30, 2003.  The higher  earnings were primarily due to
reduced provision for loan losses,  offset by a reduction in net interest income
and lower gains on sale of loans and servicing rights.

     Net income for the six months ended June 30, 2004 totaled $906,000 or $0.29
per diluted share compared to net income of $851,000, or $0.27 per diluted share
for the six months ended June 30, 2003.  The higher  earnings were primarily due
to reduced  provision  for loan  losses,  offset by a reduction  in net interest
income and lower gains on sale of loans and servicing rights.

     The following  table  summarizes  the Bank's  average net  interest-earning
assets  (which   include   non-accrual   loans)  and  average   interest-bearing
liabilities  with the  accompanying  average  rates for the three and six months
ended June 30,  2004 and 2003.  The yields  shown  below were  adjusted  for the
tax-equivalent benefit of non-taxable municipal securities:
<TABLE>
<CAPTION>

                                                              Three Months Ended June 30,                 Six Months Ended June 30,
                                                                 2004                 2003                   2004              2003
                                                    -----------------------------------------    -----------------------------------
                                                                                 (Dollars in Thousands)
<S>                                                             <C>                    <C>                  <C>                 <C>
Average interest-earning assets                                $379,103             $433,290              $374,056          $431,777
Average interest-bearing liabilities                           $354,963             $400,083              $351,004          $397,004
                                                    -----------------------------------------    -----------------------------------

   Net interest-earning assets                                 $ 24,140             $ 33,207              $ 23,052          $ 34,773
                                                    =========================================    ===================================

Average yield on/cost of:
Interest-earning assets                                           4.73%                5.94%                 4.95%             5.85%
Interest-bearing liabilities                                      2.04%                2.82%                 2.03%             2.97%
                                                    -----------------------------------------    -----------------------------------

   Net interest spread                                            2.69%                3.12%                 2.92%             2.88%
                                                    =========================================    ===================================
</TABLE>

     Net interest income for the quarter ended June 30, 2004 totaled $2,567,000,
a decrease of  $1,028,000,  or 28.6% from  $3,595,000 for the quarter ended June
30, 2003.  Part of the decrease was due to non-taxable  interest income from the
purchase of municipal  securities,  which accounts for approximately  $96,000 of
the  decrease in the second  quarter of 2004 using a federal  income tax rate of
34%.  Average earning assets declined  $54,187,000 to $379,103,000 in the second
quarter of 2004  compared to  $433,290,000  in the second  quarter of 2003.  The
decline was due to the  write-off  of  troubled  leases and the sale of the Ohio
branches,  both of which took place in the third  quarter of 2003.  In addition,
the mix of assets changed as earning asset balances shifted from higher yielding
loans to lower-yielding  investments.  Average loan balances decreased by $105.4
million or 35.0% to $195.4  million.  Lower  yielding  securities and short-term
investment  average  balances  increased  by $51.2  million  or 38.7% to  $183.7
million. The net interest spread,  which is the mathematical  difference between
the  yield on  average  interest-earning  assets  and  cost of  interest-bearing
liabilities,  decreased 43 basis points to 2.69% for the second  quarter of 2004
compared to 3.12% in the second  quarter of 2003. The change in the net interest
spread  is  due  to  a  decrease  in  yield  of  121  basis  points  on  average
interest-earning  assets  offset by a 78 basis  point  reduction  in the cost of
average  interest-bearing  liabilities.  The  change in  interest  rate  spreads
resulted in a decrease of interest income offset by lower interest expense.  The
$1,947,000 decrease in interest income on average interest-earning assets in the
second quarter of 2004 was a combination of a decrease of $1,463,000  because of
lower average  balances and an decrease of $484,000 due to lower average  rates.
The  $484,000  decline  because  of lower  average  rates  included  a  $220,000
correction  for  interest  owed to FHLMC for  loans  sold from June 2002 to June
2004. The decrease of $1,015,000 in cost of interest-bearing  liabilities in the
second  quarter of 2004 was a  combination  of a decrease of $66,000  from lower
average  balances and a decrease of $949,000 from lower average rates. The lower
average  rates  were the  result  of high cost  certificates  that  repriced  at
maturity to a lower rate, and an overall shift from  certificates  to short-term
money market,  Super Now accounts,  and lower  borrowing  cost. The net interest
margin on interest-earning  assets, which is net interest income as a percentage
of average  earning  assets,  decreased  51 basis  points to 2.82% in the second
quarter of 2004 from 3.33% in the second  quarter of 2003.

     Net interest  income  decreased 17.8% or $1,194,000 in the six months ended
June 30, 2004 compared to the same period in 2003.  Part of the decrease was due
to non-taxable interest income from the purchase of municipal securities,  which
accounts  for  approximately  $152,000 of the  decrease for the six months ended
June 30, 2004 using a federal  income tax rate of 34%.  Average  earning  assets
declined  $57,721,000  to  $374,056,000  in the six months  ended June 30,  2004
compared to  $431,777,000 in the same period in 2003. The decline was due to the
write-off of troubled  leases and the sale of the Ohio  branches,  both of which
took place in the third quarter of 2003. In addition,  the mix of assets changed
as earning asset balances  shifted from higher yielding loans to  lower-yielding
investments.  Average  loan  balances  decreased  by $105.0  million or 34.4% to
$199.8  million.  Lower yielding  securities and short-term  investment  average
balances increased by $47.3 million or 37.2% to $174.2 million. The net interest
spread  increased 4 basis points to 2.92% for the six months ended June 30, 2004
compared  to 2.88% for the same period in 2003.  The change in the net  interest
spread  is  due  to  a  decrease  in  yield  of  90  basis   points  on  average
interest-earning  assets  offset by a 94 basis  point  reduction  in the cost of
average  interest-bearing  liabilities.  The  change in  interest  rate  spreads
resulted in a decrease of interest income offset by lower interest expense.  The
$3,374,000 decrease in interest income on average interest-earning assets in the
six months  ended June 30, 2004 was a  combination  of a decrease of  $3,063,000
because of lower  average  balances  and an decrease  of  $311,000  due to lower
average rates.  The $311,000 decline because of lower average rates included the
correction  for interest owed to FHLMC as discussed in the preceding  paragraph.
The decrease of $2,332,000 in cost of interest-bearing  liabilities in the first
six  months of 2004 was a  combination  of a  decrease  of  $296,000  from lower
average  balances and a decrease of  $2,036,000  from lower average  rates.  The
lower average rates were the result of high cost  certificates  that repriced at
maturity to a lower rate, and an overall shift from  certificates  to short-term
money market,  Super Now accounts,  and lower  borrowing  cost. The net interest
margin on interest-earning  assets decreased 8 basis points to 3.04% for the six
months ended June 30, 2004 from 3.12% for the same period in 2003.

     The following table sets forth the impact of rate and volume changes on net
interest income for the three and six months ended June 30, 2004 compared to the
same  periods  in  2003.   The  yields   shown  below  were   adjusted  for  the
tax-equivalent benefit of non-taxable municipal securities:
<TABLE>
<CAPTION>

                                                                          (Dollars in Thousands)
                                                  Three Months Ended June 30,                 Six Months Ended June 30,
                                                         2004 vs 2003                               2004 vs 2003
                                                      Increase (Decrease)                        Increase (Decrease)
                                                       Due to Change in                           Due to Change in

                                                Volume          Rate      Net Change       Volume          Rate      Net Change
<S>                                               <C>          <C>            <C>           <C>            <C>           <C>
Interest-earning assets                      $ (1,463)        $(484)       $ (1,947)    $ (3,063)       $ (311)       $ (3,374)
Interest-bearing liabilities                      (66)         (949)         (1,015)        (296)       (2,036)         (2,332)
                                           ------------ ------------- --------------- ------------ -------------  --------------
Change in net interest income                $ (1,397)        $ 465        $   (932)    $ (2,767)       $1,725        $ (1,042)
                                           ============ ============= =============== ============ =============  ==============
</TABLE>


The following table summarizes the Bank's non-performing assets at June 30, 2004
and December 31, 2003:

                                                         Dollars in Thousands

                                       13
<PAGE>
<TABLE>
<CAPTION>

                                                                       June 30,       December 31,
                                                                         2004             2003
<S>                                                                     <C>               <C>
Loans:
Non-accrual                                                            $ 5,560            $ 8,383
Restructured Loans                                                         356                473

Over 90 days delinquent and still accruing                                 153                 74
Real estate owned                                                        1,184                602
                                                             ------------------ ------------------
Total                                                                  $ 7,253            $ 9,532
                                                             ================== ==================
</TABLE>

     The Bank's  non-performing  assets  decreased  $2,279,000 in the six months
ended June 30,  2004.  The decline  was mainly in  non-accrual  loans  partially
offset by an increase  in other real estate  owned.  The  non-accrual  loans are
mostly made up of commercial  and commercial  real-estate  loans with about half
related to loans to a builder/developer.

     The Bank has a number  of real  estate  development/lot  loans  and  single
family residential loans on existing properties with a builder/developer  group,
and its related parties, that are currently in default and bankruptcy.  The Bank
is working closely with the workout  specialist hired by the bankruptcy  trustee
on liquidation  of the properties  involved in the bankruptcy and is negotiating
with the borrower and its counsel for  resolution of the  remaining  properties.
The total  outstanding  balance of these  loans  totaled  $2.7  million and $3.5
million as of June 30, 2004 and December 31, 2003.

     The Bank is involved in a variety of  litigation  relating to its interests
in the two pools of equipment leases  originated by the Commercial Money Center,
Inc.  ("CMC"),  a  California  based  equipment-leasing  Bank  that  is  now  in
bankruptcy.

     In June and September  2001, the Bank purchased two separate pools of lease
receivables totaling $12,003,000, consisting primarily of equipment leases. Each
lease  within  each pool was  supported  by a surety  bond  issued by one of two
insurance  companies rated at least "A" by Moody's.  The bonds guarantee payment
of all amounts due under the leases in the event of default by the lessee.  Each
pool was sold by the terms of a Sales and  Servicing  Agreement  which  provides
that the  insurers  will  service the  leases.  In each case the  insurers  have
assigned their servicing  rights and  responsibilities  to Commercial  Servicing
Corporation, a Bank, which has now filed bankruptcy.

     When the lease pools went into  default,  notice was given to each insurer.
One of them made  payments for a few months under a reservation  of rights;  the
other paid nothing.  Both insurers claim they were defrauded by Commercial Money
Center  (CMC),  the  Bank  which  sold the  lease  pools.  Both are now  denying
responsibility for payment. CMC has also filed for bankruptcy protection.

     Many other financial  institutions have purchased lease pools from CMC. All
of the lease pools are in default and in litigation.  The Panel on Multidistrict
Litigation  has taken  control of the many actions and assigned them to the U.S.
District Court for the Northern District of Ohio, Eastern Division.  The actions
have  been  consolidated  for  the  purpose  of  discovery  and  other  pretrial
proceedings.

     The Bank  believes the surety bonds are  enforceable  against the insurers.
The current unpaid balance for the pools is $10,900,000. It is unlikely that the
litigation will be resolved in 2004.

     The lease pools had reserves of approximately 50% at December 31, 2002. Due
to the  downgrade  of one of the  sureties  to "D" by A.M.  Best,  the  inherent
uncertainty surrounding the potential for recovery, the Bank charged-off the two
lease  pools  during  the third  quarter  of 2003.  The Bank  believes  that the
charge-off of these lease pools is consistent with the conservative posture that
banking industry regulators will likely assume in this matter.

     Net charge-offs (charge-offs less recoveries) were $95,000 and $185,000 for
the second quarter of 2004 and 2003 respectively.  Net charge-offs were $762,000
and  $358,000  for the  first  six  months  of 2004  and  2003  respectively.  A
charge-off  in the first  quarter of 2004 of a commercial  real-estate  loan for
$509,000 made up most of the net charge-offs for the first six months of 2004.

     Management  believes  the  allowance  for loan losses is adequate  and that
sufficient  provision  has been made to absorb  losses  that may  ultimately  be
incurred on  non-performing  loans and the remainder of the  portfolio  based on
information  at June 30, 2004.  The allowance for loan losses as a percentage of
loans was 1.63% and 1.80% at June 30, 2004 and December 31, 2003,  respectively.

                                       14
<PAGE>

Provision expense was $50,000 and $1,400,000 for second quarter of 2004 and 2003
respectively. Provision expense was $200,000 and $1,550,000 for first six months
of 2004 and 2003 respectively.  The provision in the current-year was lower than
planned levels due to recoveries of earlier  losses;  in the prior-year  period,
the Bank set aside additional specific reserves totaling $1,250,000 on two pools
of  commercial  leases that were written off  completely in the third quarter of
2003.

     The Company's  non-interest  income was  $1,044,000  and  $1,254,000 in the
second  quarter  of 2004 and  2003  respectively,  for an  overall  decrease  of
$210,000  or 16.8%.  The main cause of the  decrease  was due to gain on sale of
loans and  servicing  rights  which  declined  $375,000 to $95,000 in the second
quarter of 2004 from $470,000 in the same period in 2003. The decline was due to
a drop in the volume of mortgage loan  refinancing  which resulted in less loans
sold.  Mortgage  loans  originated by the Bank  declined  $54.1 million to $10.5
million from $64.6 million in the second quarter of 2004 and 2003, respectively.
Net loan  servicing  fees improved  $114,000 to $51,000 in the second quarter of
2004 from a net expense of $63,000 in the same period in 2003.  The  improvement
was due to a decline in mortgage loan  refinancing in the second quarter of 2004
compared  to the same  period in 2003,  which  resulted  in less  write-offs  of
mortgage  loan  servicing  rights  remaining  on  the  Bank's  loans  that  were
refinanced.  Mortgage  loan  servicing  rights is an asset that is created  when
mortgage loans are sold and the Bank retains the servicing rights. The servicing
rights are  recognized  as income at the time the loan is sold and the servicing
asset is also  recorded.  The asset is then  amortized as an expense to mortgage
servicing income over the life of the loan. Brokerage and insurance  commissions
increased  $20,000  or 8.6% to  $252,000  in the  second  quarter  of 2004  from
$232,000 in the same period in 2003.

     The Company's  non-interest  income was  $2,022,000  and  $2,500,000 in the
first six  months of 2004 and 2003  respectively,  for an  overall  decrease  of
$478,000  or 19.1%.  The main cause of the  decrease  was due to gain on sale of
loans and servicing rights which declined  $780,000 to $173,000 in the first six
months of 2004 from $953,000 in the same period in 2003.  The decline was due to
a drop in the volume of mortgage loan  refinancing  which resulted in less loans
sold.  Mortgage  loans  originated by the Bank  declined  $76.3 million to $20.4
million  from  $96.7  million  in  the  first  six  months  of  2004  and  2003,
respectively. Net loan servicing fees improved $198,000 for the first six months
of 2004  compared  to the same  period  in 2003.  The  improvement  was due to a
decline in mortgage loan  refinancing  in the second quarter of 2004 compared to
the same period in 2003,  which  resulted in less  write-offs  of mortgage  loan
servicing rights  remaining on the Bank's loans that were refinanced.  Brokerage
and insurance  commissions  increased $110,000 or 22.8% to $592,000 in the first
six months of 2004 from  $482,000 in the same period in 2003.  Net realized gain
on sale of  securities  was zero in the first six  months  of 2004  compared  to
$41,000 in the same period in 2003.

     Non-interest  expense  was  $3,217,000  in the  second  quarter of 2004 and
$3,491,000 in the second quarter of 2003, for an overall decrease of $274,000 or
7.9%.  The  largest  component  of the  decline  is  attributable  to salary and
benefits  expense,  which  made-up 57.9% of total  non-interest  expenses in the
second  quarter  of  2004,  compared  to 56.2% in the  second  quarter  of 2003.
Salaries and employee benefits  decreased  $100,000 or 5.1% to $1,863,000 in the
second  quarter of 2004,  compared to $1,963,000 in the second  quarter of 2003.
The decline was attributable to the closure of the Ohio branches offset by lower
deferred loan expenses due to a decline in mortgage loan originations.

     Non-interest  expense was $6,568,000 and $6,761,000 in the first six months
of 2004 and 2003  respectively,  for an overall  decrease  of  $193,000 or 2.9%.
Salaries and employee benefits made-up 61.1% of total  non-interest  expenses in
the first six months of 2004 compared to 58.7% in the first six months of 2003.

     Income  taxes  was a benefit  of  $91,000  in the  second  quarter  of 2004
compared to a benefit of  $138,000 in the second  quarter of 2003 for an overall
reduction of $47,000.  The  reduction in the tax benefit is due to higher pretax
income in the second quarter of 2004 offset by higher nontaxable interest income
from  municipal  securities  and higher  investment  income from AIMI,  which is
exempt  from state  income  tax.  Income  taxes was a benefit of $124,000 in the
first six months of 2004  compared to a expense of $60,000 in the same period in
2003 for an overall tax expense decrease of $184,000.

     The effective tax rates and the statutory tax rates differ primarily to tax
credits,  cash  value  of life  insurance,  nontaxable  interest  income,  and a
reduction  in state tax  expense.  The  factors  that  affected  this change are
similar to the aforementioned factors for the quarter.



                                       15
<PAGE>

OTHER
-----

The  Securities  and  Exchange  Commission  ("SEC")  maintains  reports,   proxy
information,  statements and other information  regarding  registrants that file
electronically   with   the  SEC,   including   the   Bank.   The   address   is
(http://www.sec.gov).


                                       16
<PAGE>



ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The  Asset/Liability  Committee  and the Board of  Directors  reviews the Bank's
exposure to interest  rate  changes and market risk on a quarterly  basis.  This
review is accomplished by the use of a cash flow simulation model using detailed
securities,  loan and deposit,  and market information to estimate the potential
impact of interest  rate  increases  and  decreases  on the  earning  assets and
liabilities. The model tests the impact on the net interest income under various
interest rate scenarios by estimating the interest rate sensitivity  position at
each interest rate  interval.  The change in the net portfolio  value ("NPV") is
also  calculated at each interest  rate  interval.  This tests the interest rate
risk exposure from  movements in interest  rates by using  interest  sensitivity
analysis to determine the change in the NPV of discounted cash flows from assets
and liabilities.

NPV  represents  the  market  value  of  portfolio  equity  and is  equal to the
estimated   market  value  of  assets  minus  the  estimated   market  value  of
liabilities.  The model uses a number of  assumptions,  including  the  relative
levels of market  interest  rates and  prepayments in mortgage loans and certain
types of callable investments. These computations do not contemplate any actions
management may undertake to reposition the assets and liabilities in response to
changes in the interest  rate,  and should not be relied upon as  indicative  of
actual results. In addition,  certain  shortcomings are inherent in the model of
computing NPV.  Should  interest rates remain or decrease below present  levels,
the portion of  adjustable  rate loans could  decrease in future  periods due to
loan  refinancing or payoff  activity.  In the event of an interest rate change,
pre-payment levels would likely be different from those assumed in the model and
the ability of  borrowers  to repay  their  adjustable  rate loans may  decrease
during rising interest rate environments.

Presented  below is the assessment of the risk of NPV in the event of sudden and
sustained  200 and 100 basis point  increases  and  decreases  respectively,  in
prevailing interest rates as of June 30, 2004.
<TABLE>
<CAPTION>

                                                                                                        NPV as Percent of
                                    Net Portfolio Value                                              Present Value of Assets
------------------------------------------------------------------------------------------------------------------------------------
    Change in Rates           Dollar Amount           Dollar Change        Percent Change         NPV Ratio             Change
------------------------------------------------------------------------------------------------------------------------------------
                                                           (Dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                       <C>                    <C>                  <C>                  <C>
+200 bp*                         $ 40,691               $ (7,565)              (15.68)%              9.77%           (138) bp*
Base or 0%                         48,256                                                           11.15
-100 bp*                           50,319                   2,063                4.28               11.44              29 bp*
------------------------------------------------------------------------------------------------------------------------------------
* basis points
</TABLE>

Presented  below is the assessment of the risk of NPV in the event of sudden and
sustained  200 and 100 basis  point  increases  and  decreases  respectively  in
prevailing interest rates as of December 31, 2003.
<TABLE>
<CAPTION>

                                                                                                        NPV as Percent of
                                   Net Portfolio Value                                               Present Value of Assets
------------------------------------------------------------------------------------------------------------------------------------
     Change in Rates          Dollar Amount        Dollar Change        Percent Change           NPV Ratio              Change
------------------------------------------------------------------------------------------------------------------------------------
                                                          (Dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
       <S>                       <C>                  <C>                   <C>                    <C>                   <C>
+200 bp*                       $ 41,094            $ (2,751)                (6.27)                10.37%              (38) bp*
Base or 0%                       43,845                  --                    --                 10.75                --
-100 bp*                         44,538                 693                  1.58                 10.77                 3  bp*
------------------------------------------------------------------------------------------------------------------------------------
* basis points
</TABLE>

At June 30, 2004,  an increase in interest  rates of 200 basis points would have
resulted  in a  decrease  of 15.68% in the net  portfolio  value  compared  to a
decrease of 6.27% at December 31, 2003.  This change was primarily the result an
increase  in the  duration  of  investment  securities  from 1.90 to 2.44 and an
increase in the duration of the loan portfolio from 3.64 to 3.82 at December 31,
2003 and June 30,  2004,  respectively.  Duration is a measure of price or value
sensitivity typically expressed in years. It is calculated by time-weighting the
present value of an instrument's cash flows.

                                       17
<PAGE>


ITEM 4 - CONTROLS AND PROCEDURES

As of the end of the  period  covered  by this  report,  management  of the Bank
carried out an evaluation,  under the supervision and with the  participation of
the Bank's principal  executive officer and principal  financial officer, of the
effectiveness of the Bank's  disclosure  controls and procedures.  Based on this
evaluation,  the Bank's  principal  executive  officer and  principal  financial
officer  concluded  that the  Bank's  disclosure  controls  and  procedures  are
effective in ensuring that  information  required to be disclosed by the Bank in
reports that it files or submits under the  Securities  Exchange Act of 1934, as
amended,  is  recorded,  processed,  summarized  and  reported,  within the time
periods specified in the Securities and Exchange  Commission's  rules and forms.
It should  be noted  that the  design  of the  Bank's  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 the Bank's  principal  executive and financial  officers have concluded that
the Bank's  disclosure  controls  and  procedures  are, in fact,  effective at a
reasonable assurance level.

In  addition,  there have been no changes in the Bank's  internal  control  over
financial  reporting  (to the extent  that  elements of  internal  control  over
financial  reporting are subsumed  within  disclosure  controls and  procedures)
identified in connection  with the evaluation  described in the above  paragraph
that  occurred  during the  Bank's  last  fiscal  quarter,  that has  materially
affected,  or is reasonably  likely to materially  affect,  the Bank's  internal
control over financial reporting.


                                       18
<PAGE>



PART II - OTHER INFORMATION


ITEM 1  -  Legal Proceedings
           -----------------

           Not Applicable


ITEM 2  -  Changes in Securities,Use of Proceeds and Issuer Purchases of Equity
           Securities
           --------------------------------------------------------------------

           Not Applicable

ITEM 3  -  Defaults in Senior Securities
           -----------------------------
           Not Applicable

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

          On  May  20,  2004,   the  Bank  held  its  2004  annual   meeting  of
          shareholders.  A total of 2,685,116 shares,  representing 85.3% of the
          total  outstanding  shares,  were present in person or by proxy at the
          meeting, constituting quorum.

          Two directors were nominated by the Bank's Board of Directors to serve
          new three-year terms. The nominees and the voting results for each are
          listed below:

                                          FOR              WITHHELD

          Donald C. Danielson        2,618,958 (97.5%)   66,158 (2.5%)
          Paul W. Prior              2,619,069 (97.5%)   66,047 (2.5%)

          The  terms of office  as a  director  of  directors  Harry J.  Bailey,
          Charles M.  Drackett,  Jr.,  Ronald R.  Pritzke,  R.  Scott  Hayes and
          Michael E. Kent continued after the meeting.

          The shareholders also ratified the appointment of BKD, LLP as auditors
          for the Bank for the fiscal year ended  December 31, 2004. At total of
          2,654,863  votes  (98.9%) in favor,  16,671 votes  (0.6%)  against and
          13,582 (0.5%) abstained from voting on the proposal.

ITEM 5  -  Other Information
           -----------------

           Not Applicable

ITEM 6  -  Exhibits and Reports on Form 8-K
           --------------------------------

           a.   Exhibits.

                The following exhibits are filed with this report:

           No.   Description
           ---   -----------

           Exhibit 31, Rule 13a-14(a) Certifications

           Exhibit 32, Section 1350 Certifications

           b.  Current Reports on Form 8-K
               ---------------------------

               On May 7, 2004,  the Bank filed a Current Report on 8-K reporting
               under Item 12 its  unaudited  financial  results  for the quarter
               ended March 31, 2004. A copy of the press release was attached to
               this Report as an exhibit.

                                       19
<PAGE>

SIGNATURES


AMERIANA BANCORP AND SUBSIDIARIES


Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                      AMERIANA BANCORP




DATE: August 16, 2004           /s/ Harry J. Bailey
      ---------------           --------------------------------
                                Harry J. Bailey
                                President and
                                Chief Executive Officer
                                (Duly Authorized Representative)



DATE: August 16, 2004           /s/ Bradley L. Smith
      ---------------           -------------------------------
                                Bradley L. Smith
                                Senior Vice President-Treasurer
                                (Principal Financial Officer
                                and Accounting Officer)