UNITED STATES
                      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 December 31, 1997



                           FIDELITY FEDERAL BANCORP
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)



            Indiana                      0-22880                35-1894432
----------------------------           ----------          -------------------
(State of other jurisdiction           Commission             (IRS Employer
    of Incorporation of                 File No.           Identification No.)
       Organization)





                     700 S. Green River Road, Suite 2000
                          Evansville, Indiana  47715
            -----------------------------------------------------
            (Address of principal executive offices)   (Zip Code)



                                (812) 469-2100
              --------------------------------------------------
              Registrant's telephone number, including area code



Indicate by checkmark 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 twelve months and (2) has been subject to such
filing requirements for the past 90 days.

                            YES    X           NO
                                  ---              ---
As of January 6, 1998, there were 3,127,312 shares of the Registrant's common
stock, $1 stated value, issued and outstanding.

Exhibit Index is on page 21.

<PAGE>

                           FIDELITY FEDERAL BANCORP
                               AND SUBSIDIARIES

                                    Index



                                                                          Page
PART I - FINANCIAL INFORMATION

  ITEM 1--Financial Statements:

    Consolidated balance sheet  . . . . . . . . . . . . . . . . . . .       3

    Consolidated statement of income  . . . . . . . . . . . . . . . .       4

    Consolidated statement of changes in stockholders' equity . . . .       5

    Consolidated statement of cash flows  . . . . . . . . . . . . . .       6

    Notes to consolidated financial statements  . . . . . . . . . . .       7

  ITEM 2--Management's Discussion and Analysis of Results of Operation and
  Financial Condition

    Results of Operations . . . . . . . . . . . . . . . . . . . . . .      10

    Financial Condition . . . . . . . . . . . . . . . . . . . . . . .      13

    Capital Resources and Capital Requirements  . . . . . . . . . . .      17

    Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . .      18


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

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

EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . .      21

<PAGE>

ITEM 1 - FINANCIAL STATEMENTS
                        PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                           FIDELITY FEDERAL BANCORP
                               AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                    (IN THOUSANDS, EXCEPT FOR SHARE DATA)
                                 (UNAUDITED)
                                            December 31,             June 30,
                                                1997                   1997
______________________________________________________________________________
<S>                                         <C>                     <C>
ASSETS
Cash and due from banks                     $   1,687               $   1,746
Short-term interest-bearing deposits            2,892                   1,759
Federal funds sold                              8,000
                                            ---------               ---------
   Total cash and cash equivalents             12,579                   3,505

Interest-bearing deposits                           6                       6
Securities available for sale                   8,886                  13,790
Loans                                         177,490                 204,964
Allowance for loan losses                      (1,794)                 (1,781)
                                            ---------               ---------
   Net loans                                  175,696                 203,183
Premises and equipment                          6,197                   6,340
Federal Home Loan Bank of Indianapolis
  stock, at cost                                3,920                   3,920
Other assets                                    8,537                   9,257
                                            ---------               ---------
      Total assets                          $ 215,821               $ 240,001
                                            =========               =========

LIABILITIES
Deposits
   Non-interest bearing                     $   5,805               $   4,714
   Interest-bearing                           155,906                 177,073
                                            ---------               ---------
      Total deposits                          161,711                 181,787
Short-term Borrowings                           2,560                   5,191
Federal Home Loan Bank advances and other
  long-term debt                               33,682                  38,089
Advances by borrowers for taxes and insurance     460                     674
Other liabilities                               1,706                   1,324
                                            ---------               ---------
   Total liabilities                          200,119                 227,065

STOCKHOLDERS' EQUITY
Preferred stock, no par or stated value
   Authorized and unissued - 5,000,000 shares
Common stock, $1 stated value
   Authorized - 5,000,000 shares
   Issued Outstanding - 3,127,712 and
     2,487,385 shares                           3,128                   2,487
Capital surplus                                10,804                   8,708
Stock warrants                                     11                     264
Retained earnings, substantially restricted     1,800                   1,508
Net unrealized losses on securities available
  for sale                                        (41)                    (31)
                                            ---------               ---------
      Total stockholders' equity               15,702                  12,936
                                            ---------               ---------

Total liabilities and stockholders' equity  $ 215,821               $ 240,001
                                            =========               =========
</TABLE>

See notes to consolidated financial statements.

NOTE:  The consolidated balance sheet at June 30, 1997 has been derived from
the audited financial statements.

<PAGE>

                           FIDELITY FEDERAL BANCORP
                               AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF INCOME
                    (IN THOUSANDS, EXCEPT FOR SHARE DATA)
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED         SIX MONTHS ENDED
                                                           DECEMBER 31,              DECEMBER 31,
                                                         1997       1996           1997       1996
                                                        ------------------        -----------------
<S>                                                     <C>        <C>            <C>        <C>
INTEREST INCOME
  Loans                                                 $4,081     $4,732         $8,608     $9,487
  Securities available for sale                            167        280            375        566
  Federal funds sold                                        41          2             70         19
  Interest-bearing deposits                                 86         46            127         63
  Other interest and dividend income                        78         77            160        154
                                                        ------     ------         ------     ------
    Total interest income                                4,453      5,137          9,340     10,289
                                                        ------     ------         ------     ------

INTEREST EXPENSE
  Deposits                                               2,352      2,585          4,885      5,057
  Federal Home Loan Bank advances                          321        544            681      1,197
  Federal funds purchased                                               9                        49
  Other interest expense                                   384        372            775        781
                                                        ------     ------         ------     ------
    Total interest expense                               3,057      3,510          6,341      7,084
                                                        ------     ------         ------     ------

NET INTEREST INCOME                                      1,396      1,627          2,999      3,205
  Provision for loan losses                                 90          5            225        855
                                                        ------     ------         ------     ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      1,306      1,622          2,774      2,350
                                                        ------     ------         ------     ------

NON-INTEREST INCOME
  Fee income-real estate development and management         75         93            182        171
  Service charges on deposit accounts                      126         77            241        146
  Gain on sale of
    Real estate loans                                       48         68            110        145
    Investments                                             74                        74
  Letter of credit fees                                    183        170            377        324
  Agent fees                                               165         84            384        179
  Real estate mortgage banking fees                                   461                       463
  Loan participation fees                                  197                       197
  Other income                                             106        284            259        417
                                                        ------     ------         ------     ------
    Total non-interest income                              974      1,237          1,824      1,845
                                                        ------     ------         ------     ------

NON-INTEREST EXPENSE
  Salaries and employee benefits                           888      1,148          1,727      2,270
  Net occupancy expense                                    109        120            222        232
  Equipment expense                                         89         95            177        179
  Data processing expense                                  100         80            189        153
  Deposit insurance expense                                 45        107             60      1,258
  Legal and professional fees                               61         62            131        184
  Other expense                                            405        543            840      1,161
                                                        ------     ------         ------     ------
    Total non-interest expense                           1,697      2,155          3,346      5,437
                                                        ------     ------         ------     ------

INCOME BEFORE INCOME TAX                                   583        704          1,252     (1,242)
  Income tax expense                                       175        189            335       (513)
                                                        ------     ------         ------     ------
NET INCOME                                               $ 408      $ 515         $  917       (729)
                                                        ======     ======         ======     ======

PER SHARE:
  Basic net income                                       $0.13      $0.21           0.33      (0.29)
  Diluted net income                                      0.13       0.19           0.32      (0.27)
AVERAGE COMMON AND COMMON EQUIVALENT SHARES
  OUTSTANDING                                        3,128,730  2,692,865      2,879,671  2,710,652

</TABLE>

See notes to consolidated financial statements.

                                      4

<PAGE>

                           FIDELITY FEDERAL BANCORP
                               AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                (IN THOUSANDS)
                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED     SIX MONTHS ENDED
                                                          DECEMBER 31,          DECEMBER 31,
                                                         1997      1996        1997      1996
                                                       -----------------     -----------------
<S>                                                    <C>       <C>         <C>       <C>
BEGINNING BALANCES                                     $14,381   $12,546     $12,936   $14,295
  Net income                                               408       515         917      (729)
  Net change in unrealized gain (loss) on securities
    available for sale                                     (64)       85         (10)      108
  Cash dividends                                          (324)     (498)       (624)     (997)
  Purchase of common stock                                 (10)      (69)        (10)     (102)
  Exercise of stock warrants                             1,311        26       2,493        28
  Exercise of stock options                                                                  2
                                                       -------   -------     -------   -------

BALANCES, DECEMBER 31                                  $15,702   $12,605     $15,702   $12,605
                                                       =======   =======     =======   =======
</TABLE>

See notes to consolidated condensed financial statements.




                                      5

<PAGE>

                           FIDELITY FEDERAL BANCORP
                               AND SUBSIDIARIES
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                 SIX MONTHS ENDED
                                                                                    DECEMBER 31,
                                                                                 1997         1996
                                                                               ---------------------
<S>                                                                            <C>          <C>
OPERATING ACTIVITIES
  Net income                                                                   $   917      $  (729)
  Adjustments to reconcile net income to net cash provided
    by operating activities:
  Provision for loan losses                                                        225          855
  Investment securities gains                                                      (74)
  Net (Gain) Loss on sale of premises and equipment                                 (1)           5
  Depreciation                                                                     228          189
  Investment securities amortization (accretion), net                               19            5
  Amortization of net loan origination fees and points                             (33)          (3)
  Changes in:
    Interest receivable and other assets                                           720         (499)
    Interest payable and other liabilities                                         285        1,135
                                                                               --------     --------
Net cash provided by operating activities                                        2,286          958
                                                                               --------     --------

INVESTING ACTIVITIES
  Purchases of investment securities available for sale                                      (2,015)
  Proceeds from maturities of investment securities available for sale           1,590        2,470
  Proceeds from sale of investment securities available for sale                 3,379
  Net changes in loans                                                          27,295        5,288
  Purchases of premises and equipment                                              (83)      (1,013)
  Proceeds from sale of premises and equipment                                                    3
                                                                               --------     --------

Net cash provided by investing activities                                       32,181        4,733
                                                                               --------     --------

FINANCING ACTIVITIES
  Net change in:
    Noninterest-bearing, NOW, savings and money
      market deposits                                                          (20,052)         335
    Certificates of deposit                                                        (24)       6,196
  Proceeds from short-term borrowings                                            2,203        7,683
  Repayment of short-term borrowings                                            (4,854)      (6,107)
  Proceeds from FHLB advances and other long-term borrowings                                  7,600
  Repayment of FHLB advances other long-term borrowings                         (4,387)     (17,108)
  Net change in advances by borrowers for taxes and insurance                     (214)        (142)
  Purchase of common stock                                                         (10)        (102)
  Cash dividends                                                                  (549)        (998)
  Proceeds from exercise of stock warrants                                       2,493            2
  Proceeds from exercise of stock options                                                        28
                                                                               --------     --------
Net cash used by financing activities                                          (25,394)      (2,613)
                                                                               --------     --------

Change in Cash and Cash Equivalents                                              9,073        3,078
Cash and Cash Equivalents, beginning of year                                     3,506       10,213
                                                                               --------     --------
Cash and Cash Equivalents, end of year                                         $12,579      $13,291
                                                                               ========     ========

Additional Cash Flows and Supplementary information
  Cash paid for income taxes, net of refunds                                   $   425      $   470
  Cash paid for interest                                                         6,401        7,159

</TABLE>

See notes to consolidated financial statements.

                                      6

<PAGE>

                           FIDELITY FEDERAL BANCORP
                               AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)


ACCOUNTING POLICIES

The significant accounting policies followed by Fidelity Federal Bancorp (the
"Company") and its wholly owned subsidiaries for interim financial reporting
are consistent with the accounting policies followed for annual financial
reporting.  All adjustments which are necessary for a fair presentation of the
results for the periods reported, consist only of normal recurring
adjustments, and have been included in the accompanying unaudited consolidated
condensed financial statements.  The results of operations for the six months
ended December 31, 1997 are not necessarily indicative of those expected for
the remainder of the year.


NET INCOME PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement
No.  128 "Earnings Per Share."  This statement simplifies the computation of
earnings per share and requires dual presentation of basic and diluted
earnings per share on the face of the income statement.  This statement is
effective for financial statements issued for periods ending after December
15, 1997, with earlier application not permitted.  Basic and  diluted earnings
per share have been computed based on the weighted average common and common
equivalent shares outstanding during the periods.  Common stock options and
warrants are considered to be common equivalent shares to the extent they are
dilutive.  The Company adopted FAS 128 for the period ending December 31,
1997.  All prior periods earnings per share have been restated for FAS 128.

<TABLE>
<CAPTION>
                                   FOR THE SIX MONTHS                        FOR THE SIX MONTHS
                                     ENDED 12/31/97                            ENDED 12/31/96
                           Income         Shares       Per-Share     Income         Shares       Per-Share
                         (Numerator)   (Denominator)    Amount     (Numerator)   (Denominator)    Amount
                         ---------------------------------------   ---------------------------------------
<S>                        <C>            <C>           <C>        <C>              <C>           <C>
BASIC EPS
Income available to
  common stockholders     $916,661        2,787,879     $  0.33     $(729,250)      2,493,296     $  (0.29)

EFFECT OF DILUTIVE
SECURITIES
Options                                      25,293                                    33,035
Warrants                                     66,499                                   184,321

DILUTED EPS
Income available to
common stockholders
plus assumed
conversions               $916,661        2,879,671     $  0.32     $(729,250)      2,710,652     $  (0.27)
</TABLE>

Options to purchase 55,113 shares of common stock at an average price of
$10.42 were outstanding during the first half of fiscal 1998 but were not
included in the computation of diluted EPS because the options' exercise
price was greater than the average market price of the common shares.

Options to purchase 32,340 shares of common stock at an average price of
$10.91 were outstanding during the first half of fiscal 1997 but were not
included in the computation of diluted EPS because the options' exercise
price was greater than the average market price of the common shares.

STOCKHOLDERS' EQUITY

On September 22, 1997, the Company filed a Schedule 13E4 with the Securities
and Exchange Commission regarding a warrant tender offer to holders of its
1994 and 1995 warrants.  The offer and withdrawal rights expired at 5:00 pm,
Central Standard Time, on October 31, 1997.  The Board of Directors of the
Company had decreased the exercise price, upon the terms and subject to the
conditions set forth in the Letter of Transmittal, to $3.70 for the 1994
Warrants and $4.04 for the 1995 Warrants.  The Company raised approximately
$2.5 million in additional capital.

In connection with the Company's second debt and equity rights offering
completed January 31, 1995, the Company has reserved 346,500 shares of its
common stock for issuance upon exercise of 1,500 outstanding warrants.  Each
warrant represents the right to purchase 231 shares of common stock.  The
warrants were valued at $100 per warrant, carry an exercise price of $8.93 per
share, and expire on January 31, 2005.  At December 31, 1997, a total of
210,441 of the shares originally reserved had been issued and 9,471 remained
reserved and unissued.

In connection with the Company's first debt and equity rights offering
completed on April 30, 1994, the Company has reserved 415,500 shares of its
common stock for issuance upon exercise of 1,500 outstanding warrants.  Each
warrant represents the right to purchase 277 shares of common stock.  The
warrants were valued at $100 per warrant, carry an exercise price of $6.22 per
share, and expire on April 30, 2004.  At December 31, 1997, a total of 186,144
of the shares originally reserved had been issued and 18,282 remained reserved
and unissued.

CASH DIVIDEND

On December 4, 1997, the Board of Directors declared a dividend of $0.10 per
share payable on January 5, 1998 to stockholders of record on December 10,
1997.

                                      7

<PAGE>

COMPANY SUBSIDIARIES

United Fidelity Bank, fsb ("Savings Bank") and Village Securities Corporation
are two subsidiaries of the Company. The Savings Bank is a federally chartered
savings bank, and is regulated by the Office of Thrift Supervision.  Village
Securities Corporation began operations July 1, 1997, by providing customers
with discount brokerage services for stocks and bonds.

The Savings Bank's subsidiaries, Village Housing Corporation, Village
Management Corporation and Village Community Development Corporation, (the
"Affordable Housing Group") are involved in various aspects of financing,
owning, developing, building, renting and managing affordable housing
projects.  The Company has found that it may be advantageous for the
Affordable Housing Group to finance, develop, build, rent and manage many
types of housing, including IRS Section 42 housing, condominiums, market- rate
multifamily housing, and others.  Another subsidiary of the Savings Bank,
Village Insurance Corporation, is engaged in the business of selling various
insurance products.

The Company reevaluated its business plan in fiscal 1997.  As a result,
Village Community Development Corporation has reduced its activities
significantly.  Village Capital Corporation (formerly known as Fidelity
Federal Capital Corporation) continues to receive consulting fees for its
services in assisting unaffiliated borrowers obtain financing. Village Housing
Corporation and Village Management Corporation remain fully operational.

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued Statement No.  130,
"Reporting Comprehensive Income," which establishes standards for reporting
and display of comprehensive income and its components.  In addition, the
Financial Accounting Standards Board has issued Statement No.  131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for disclosing information about operating segments in
interim and annual financial statements.  The statement is effective for
fiscal years beginning after December 15, 1997.  The Company will comply with
the new disclosure requirements beginning in fiscal 1999.  The application of
the new rules will not have a material impact on the Company's financial
condition or results of operations.

SEGMENT INFORMATION

The Company operates principally in two industries, banking and real estate
development and management.  The Savings Bank offers traditional banking
products, such as checking, savings, and certificates of deposit, as well as
mortgage, consumer, and commercial loans.  Through the Affordable Housing
Group, the Company is involved in various aspects of financing, owning,
developing, building, renting and managing affordable housing projects.

Operating profit is total revenue less operating expenses.  In computing
operating profit, income taxes have been deducted.

Identified assets are principally those used in each segment.  Real estate
development and management activities conducted by the Company are not asset
intensive. The assets in this segment primarily include cash received in the
form of fees and land to be used for future developments.



                                      8

<PAGE>

<TABLE>
<CAPTION>

Presented below is condensed financial information relating to the Company's
business segments:

(IN THOUSANDS)                                  THREE MONTHS ENDED             SIX MONTHS ENDED
                                                   DECEMBER 31,                  DECEMBER 31,
                                                1997           1996           1997            1996
                                              -----------------------       ------------------------
<S>                                           <C>            <C>            <C>             <C>
REVENUE:
  Banking                                     $  5,235       $  6,183       $ 10,750        $ 11,806
  Real estate development and management           192            191            414             328
                                              --------       --------       --------        --------
    Total consolidated                        $  5,427       $  6,374       $ 11,164        $ 12,134
                                              ========       ========       ========        ========

OPERATING PROFIT:
  Banking                                     $    446       $    455            980            (335)
  Real estate development and management           (38)            60            (63)           (394)
                                              --------       --------       --------        --------
  Total consolidated                          $    408       $    515       $    917        $   (729)
                                              ========       ========       ========        ========

IDENTIFIABLE ASSETS:
  Banking                                     $203,929       $247,601       $203,929        $247,601
  Real estate development and management        11,892         12,570         11,892          12,570
                                              --------       --------       --------        --------
  Total consolidated                          $215,821       $260,171       $215,821        $260,171
                                              ========       ========       ========        ========

DEPRECIATION AND AMORTIZATION:
  Banking                                     $    107       $     87       $    218        $    158
  Real estate development and management             5             17             10              31
                                              --------       --------       --------        --------
  Total consolidated                          $    112       $    104       $    228        $    189
                                              ========       ========       ========        ========
CAPITAL EXPENDITURES:
  Banking                                     $     15       $    584       $     81        $    947
  Real estate development and management             2             60              2              61
                                              --------       --------       --------        --------
  Total consolidated                          $     17       $    644       $     83        $  1,008
                                              ========       ========       ========        ========
</TABLE>


                                      9

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
Financial Condition

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because
the context of the statement will include words such as the Company
"believes", "anticipates", "expects", "estimates" or words of similar import.
Similarly, statements that describe the Company's future plans, objectives or
goals are also forward-looking statements.  Such forward-looking statements
are subject to certain risks and uncertainties which are described in close
proximity to such statements and which could cause actual results to differ
materially from those anticipated as of the date of this report.
Shareholders, potential investors and other readers are urged to consider
these factors in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements.  The
forward-looking statements included herein are only made as of the date of
this report and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

The net income for the three months ended December 31, 1997 was $408,000,
compared to $515,000 for the same period last year.  Basic and diluted net
income per share was $.13 per share for the three months ended December 31,
1997, compared to $0.21 and $0.19 per share, respectively  in 1996.  Net
income for the six months ended was $917,000 compared to a net loss of
$729,000 for the same period last year.  Basic and diluted net income per
share for the six months ended December 31, 1997 was $0.33 and $0.32 per share
compared to a net loss per share of $(0.29) and $(0.27) respectively, for the
same period last year.  Last year's net loss was impacted by the federal
legislation resolving the FDIC insurance funding issue signed by President
Clinton in September, 1996,  requiring thrifts to pay a one-time assessment of
approximately $.66 per $100 of deposits within 60 days of September 30, 1996.
As a result, the Company recorded a charge of $1.0 million during the first
quarter of fiscal 1997.  The legislation provisions include a reduction of the
ongoing insurance premiums thrifts pay from $.23 - $.31 per $100 of deposits
to approximately $.06 per $100, as well as the ultimate merger of the funds by
the year 2000.  In anticipation of this and as a result of continued
consolidation and standardization of the bank and thrift industries, the
Company, in an ongoing effort to more closely resemble a commercial banking
operation, set aside $850,000 in loan loss allowances during the first quarter
of fiscal 1997.  The Company continues developing its agent relationship in
the indirect auto lending markets, resulting in an $205,000 increase in agent
fees for the six months ended December 31, 1997, compared to the six months
ended December 31, 1996.

The Company announced on January 21, 1997 an expense reduction plan calling
for approximately $1 million in after tax savings.  The plan calls for the
Company to work towards achieving optimum efficiency within its banking and
real estate management, development, and financing units by eliminating
duplicative and less profitable activities.  The Company's long term plan
originally called for rapid internal growth to approximately $500 million in
assets. Management mobilized for the ambitious goal by appropriately staffing
the Company to meet the increased demands of a larger organization.  Recently,
management determined that a more conservative growth plan would allow the
Company to grow profitably without straining its capital resources.  As such,
it was determined that some infrastructure that had been developed would not
be required in the short run.  On April 25, 1997 the Company announced the
completion of the cost reduction program.  The Company completed the cost
reduction program ahead of schedule and is anticipating an annual savings of
approximately $2.0 million on a pretax basis.  Excluding the $1.0 million
insurance premium paid last year, non-interest expense decreased $1.1 million
for the six months ended December 31, 1997 compared to the same period last
year.

NET INTEREST INCOME.  Net interest income, the Company's largest component of
income, represents the difference between interest and fees earned on loans,
investments and other interest earning assets, and interest paid on interest
bearing liabilities.  It also measures how effectively management has balanced
and allocated the Company's interest rate-sensitive assets and liabilities.
Net interest income for the three months ended December 31, 1997, was $1.4
million compared to $1.6 million for the three month period ending December
31, 1996, a decrease of $231,000.  A decrease in loans outstanding during the
second quarter was the primary reason for the decline.  Net interest income
for the six months ended December 31, 1997 was $3.0 million compare to $3.2
million a year ago, a decrease of $206,000.  This is primarily due to a
decrease in year-to-date average earning assets of $25.5 million to $217.0
million at December 31, 1997.  The Company's balance sheet has decreased $44.4
million since December 31, 1996 to $215.8 million at December 31, 1997.

The net interest margin is a percentage computed by dividing net interest
income on a fully taxable equivalent basis ("FTE") by average earning assets
and represents a measure of basic earnings on interest bearing assets held by
the Company.  The Company's annualized net interest margin for the quarter
decreased from 2.69% at December 31, 1996, to 2.63% at

                                      10

<PAGE>

December 31, 1997.  The decrease in the margin was caused in part, by a
decrease in multifamily construction and commercial real estate loans, which
typically bear yields that are significantly higher than traditional single
family loans.  The Company has several large multifamily loans in its
portfolio.  When these loans pay off from time to time, the impact on the
Company's asset size and margin can be significant.  In the first half of the
Company's fiscal year, approximately $20 million in these loans paid off.
However, the average yield on all interest earning assets increased 12 basis
points to 8.55% at December 31, 1997, compared to 8.43% at December 31, 1996.
The average yield on interest bearing liabilities remained the same at 5.80%
for the current and previous year.

An ongoing objective of the Company's asset/liability management policy is to
match rate-adjustable assets and liabilities at similar maturity horizons to
minimize wide fluctuations in net interest income.  Management utilizes the
Office of Thrift Supervision Net Portfolio Valve ("NPV") model.  This model
analyzes the NPV and changes in the NPV under several different interest rate
scenarios.  The NPV model utilizes several measures of interest rate risk
(IRR): the IRR Exposure Measure, the Interest Rate Sensitivity Measuring the
Base-Case Net Present Value Capital Ratio and the Percentage Change in NPV.
Results of the NPV model indicate that the Company's rate sensitivity measure
based on a 200 basis points rate shock would be 80 basis points at December
31, 1997, which ranks it among the least sensitive in the thrift industry.
Interest income for the quarter ended December 31, 1997, was $4.5 million
compared to $5.1 million for the quarter ended December 31, 1996, a decrease
of $684,000.  These decreases are primarily due to a decrease in earning
assets compared to the prior year.  Interest expense for the quarter ended
December 31, 1997, decreased $453,000 over the corresponding period in 1996.
This is the result of paying off FHLB advances and allowing agent acquired
funds mature or rollover at the prevailing rate.  The Company is continuing to
monitor the net interest margin which continues to be an area of increased
concentration this year.

NON-INTEREST INCOME.  Non-interest income for the quarter ended December 31,
1997, was $974,000 compared to $1.2 million for the same period in 1996, a
decrease of $263,000.

<TABLE>
<CAPTION>

NON-INTEREST INCOME
--------------------------------------------------------------------------------------
(IN THOUSANDS)
                                                        SIX MONTHS ENDED
                                                          DECEMBER 31,       INCREASE
                                                         1997      1996     (DECREASE)
                                                        ------    ------    ----------
<S>                                                     <C>       <C>         <C>
Net income from real estate development and management  $  182    $  171      $   11
Letter of credit fees                                      377       324          53
Service charges on deposit accounts                        241       146          95
Gain on sale of loans                                      110       145         (35)
Gain on sale of investments                                 74                    74
Loan servicing rights net of amortization                   30        48         (18)
Real estate mortgage banking fees                                    463        (463)
Agent fee income                                           384       179         205
Loan participation fees                                    197                   197
Servicing fees on loans sold                                62        89         (27)
Other loan fees                                             13        84         (71)
Other                                                      154       196         (42)
                                                        ------    ------      -------
  Total non-interest income                             $1,824    $1,845      $  (21)
                                                        ======    ======      =======
</TABLE>

Non-interest income for the six months ended December 31, 1997, decreased by
$21,000 as compared to the six months ended December 31, 1996.  The Company's
fee income from real estate development and management was up slightly from
$171,000 last year to $182,000 for the first six months of fiscal 1998.  These
fees, which are transaction-based, are volatile in nature.  There is no
assurance that individual transactions, once initiated, will be completed.
While the Company may continue to participate in development activities, it
has shifted its primary focus to financing multifamily real estate for
non-affiliated borrowers.  The Company has not exited the development
industry, but has significantly reduced its activities.  The Company intends
to remain active in financing multifamily transactions.  The Affordable
Housing Group has encountered increased competition in the financing and
development of multifamily housing.  The IRS Section 42 tax credit program has
been used by the Company to develop affordable housing for individuals with
low to moderate incomes.  The Company has provided financing for other
developers which began utilizing the program, due to increased competition in
this area.  As a result, the Company has noted a significant reduction in the
amount of fees it has been able to collect on individual transactions. The
Company recognized $463,000 in real estate mortgage banking fees for fiscal
1997 compared to zero in fiscal 1998.  As mentioned above, the increase in
competition plus a decrease in multifamily transactions has reduced fee
income.  The Company has replaced some of these fees with consulting fees of
$92,000 earned for packaging

                                      11

<PAGE>

multifamily deals for non-affiliated borrowers. These fees are included in the
category net income from real estate development and management.  The Company
did recognize $377,000 in multifamily loan letter of credit fees compared to
$324,000 in fiscal 1997.

Service charges on deposit accounts increased $95,000 over the prior fiscal
year due to the continued growth in the deposit base.  Agent fee income
increased $205,000 over December 31, 1996, as a result of the Company's
origination of auto loans as agent for another financial institution.  Net
gain on sale of loans decreased $35,000 as the volume of loans has decreased.
This was offset by $74,000 in securities gains compared to zero last year.
Loan servicing rights also decreased $18,000 from prior year due to a decrease
in the volume of loans.  The Company arranged a participation for a large
multifamily loan customer and collected $197,000 in loan participation fees.
The Company sold approximately $48 million in loan servicing rights last year,
as a result, servicing fees on loan sold decreased $27,000 from the prior
year, along with a reduction in servicing rights amortization, noted below.
Other loan fees decreased $71,000 from the prior year due to large prepayment
penalties fees on multifamily loans in the prior year.  Other income decreased
$42,000 from the prior year due to a recovery of $48,000 on a lawsuit
settlement in the prior year.

PROVISION FOR LOAN LOSSES.  The provision for loan losses for the current
quarter increased $85,000 compared to the quarter ended December 31, 1996. The
provision for loan losses for the six months ended was $225,000 compared to
$855,000 in the prior year, a decrease of $630,000.  As a result of the
continued consolidation and standardization of the bank and thrift
institutions, the Company, in an ongoing effort to more closely resemble a
commercial banking operation, set aside $850,000 in loan loss allowance during
the first quarter of fiscal 1997.  The increase in the provision in the
previous year did not result from the identification of any particular problem
credit or credits, but does reflect the diversity in the Company's loan
portfolio.

NON-INTEREST EXPENSE.  Non-interest expense for the quarter ended December 31,
1997, was $1.7 million compared to $2.2 million for the same period in 1996, a
decrease of $458,000, or 21.3%.  The Company continues to work hard on
controlling costs.

<TABLE>
<CAPTION>

NON-INTEREST EXPENSE
--------------------------------------------------------------------------
(IN THOUSANDS)
                                      SIX MONTHS ENDED
                                        DECEMBER 31,             INCREASE
                                      1997        1996          (DECREASE)
                                      ----        ----          ----------
<S>                                  <C>         <C>             <C>
Salaries and employee benefits       $1,727      $2,270          $  (543)
Legal and professional                  131         184              (53)
Occupancy expense                       222         232              (10)
Equipment expense                       177         179               (2)
Deposit insurance                        60       1,258           (1,198)
Data processing expense                 189         153               36
Advertising                             103         127              (24)
Printing and supplies                    49         108              (59)
Travel and lodging                       25          30               (5)
Telephone                                38          56              (18)
Postage                                  35          51              (16)
Abandoned projects                                  145             (145)
Loss on investment                       51         115              (64)
Other operating expense                 539         529               10
                                     ------      ------          --------
  Total non-interest expense         $3,346      $5,437          $(2,091)
                                     ======      ======          ========
</TABLE>

Salaries and employee benefits decreased $543,000 for the six months ended
December 31, 1997, compared to the same period last year.  The Company
completed a cost reduction in the fourth quarter of fiscal 1997, resulting in
a significant reduction in staff.   The Company should realize the full impact
of the cost reduction during fiscal 1998. Legal and professional fees
decreased $53,000 from the prior year due to the legal costs associated with
the affordable housing segment, which has decreased from the prior year.
Occupancy and equipment expense decreased by $12,000 compared to the prior
year as management continues to closely monitor these expenses.  Deposit
insurance decreased $1,198,000 from the prior year, due primarily to the
one-time special SAIF assessment imposed on thrifts in September 1996.  Data
processing expense increased $36,000 due primarily to the increase in the
Company's retail deposit base and increased volumes in other areas.
Advertising expense decreased $24,000 from the prior year primarily due to a
decrease in media spending this year. Printing and supplies decreased $59,000
from the prior year due to the cost reduction program and increased cost
control  measures.  Travel and lodging decreased $5,000 from prior year due to
the decreased activities in

                                      12

<PAGE>

the Company's affordable housing segment. Telephone and postage decreased
$18,000 and $16,000, respectively, also a result of fewer employees.  The
Company's housing subsidiaries continue to search for new sites to develop
and/or finance, but sometimes expenses are incurred on potential sites that do
not materialize and are expensed as abandoned projects.  Abandoned projects
expense was $145,000 in the previous year compared to zero in the current
year.  The Company has written down the investment in various developments by
$51,000 compared to $115,000 in the prior year.  These writedowns are offset
by tax credits received for the investments in these developments.  Other
operating expense increased only $10,000 over the prior year due to a $14,000
increase in indirect consumer credit reports as a result of increased volume
over prior year and a $14,000 writeoff of leasehold improvements due to the
relocation of the Indianapolis, IN offices to Evansville, IN.  These increases
were offset by decreases in other miscellaneous expenses.

INCOME TAX EXPENSE.  Income tax expense increased $848,000 for the six months
ended December 31, 1997, compared to the same period in 1996, due to the
taxable net loss in the previous year compared to the current year's taxable
net income.

YEAR 2000.  The Company has an ongoing program to ensure that its operational
and financial systems will not be adversely affected by year 2000 software
failures.  While the Company believes it is taking all appropriate steps to
assure year 2000 compliance, it is dependent on vendor compliance to some
extent.  The Company is requiring its systems and software vendors to
represent that the services and products provided are, or will be, year 2000
compliant, and has planned a program of testing compliance.  The Company
estimates that the cost to redevelop, replace or repair its technology will
not be material.


FINANCIAL CONDITION

Total assets decreased by $24.2 million from June 30, 1997, to approximately
$215.8 million at December 31, 1997. The decrease is primarily the result of
payoffs received on certain multifamily loans.  The Company continues to sell
current production of fixed 1-4 family mortgages, and also pass through
consumer loans to another institution that meet certain criteria, and receive
payments and payoffs in the normal course of business.

LOANS.  The following table shows the composition of the Company's loan
portfolio as of December 31, 1997 and June 30, 1997.

<TABLE>
<CAPTION>

LOANS OUTSTANDING
-------------------------------------------------------------------------------
(IN THOUSANDS)
                                                     DECEMBER 31,      JUNE 30,
                                                         1997            1997
                                                     ------------      --------
<S>                                                    <C>             <C>
Real estate mortgage loans
 First mortgage loans
   Conventional                                        $ 84,597        $ 94,293
   Construction                                          16,339          32,577
   Commercial                                            24,348          26,668
   Multifamily loans                                      8,482           9,602
   First mortgage real estate loans purchased             3,052           3,184

 Commercial loans - other than secured by real estate    11,409          12,522
 Consumer and home equity loans                          29,263          26,118
                                                       --------        --------
     Total loans                                        177,490         204,964
                                                       ========        ========

Total assets                                           $215,821        $240,001
                                                       ========        ========
Total loans to total assets                               82.2%           85.4%
                                                       ========        ========
</TABLE>

Total loans decreased by $27.5 million or 13.4% to $177.5 million at December
31, 1997, compared to June 30, 1997.  The largest component of the decrease is
in the construction real estate area, which was primarily three multifamily
construction loans.  The Company continues to sell new single family loan
production, recognize the gain or loss on the sale, and use the proceeds to
fund more single family loan production.  The Savings Bank is continually
offering new and competitive first mortgage and multifamily loan products.
The Company's construction loan category, which includes approximately $14.8
million in commercial and multi-family loans and $1.5 million in 1-4 family
real estate loans, has decreased since June 30, 1997, due to several large
payoffs on multifamily and commercial real estate loans, which could

                                      13

<PAGE>

negatively impact the interest rate margin if the decrease becomes a trend.
Commercial real estate loans and multifamily loans also decreased $2.3 million
and $1.1 million, respectively, due to paydowns and payoffs.  Consumer and
home equity loans increased $3.1 million due to the Company's retention of a
portion of indirect automobile loan originations.

NON-PERFORMING LOANS.  The Company discontinues the accrual of interest income
on loans when, in the opinion of management, there is reasonable doubt as to
the timely collectibility of interest or principal.  Non-accrual loans are
returned to an accrual status when, in the opinion of management, the
financial position of the borrower indicates that there is no longer any
reasonable doubt as to the timely payment of principal and interest.
Management believes that loans now current where there are reasonable doubts
as to the ability of the borrower to comply with the present loan repayment
terms are immaterial.  The Company adopted SFAS Nos. 114 and 118, Accounting
by Creditors for Impairment of a Loan and Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures on July 1, 1995.  The
adoption of SFAS Nos. 114 and 118 did not have a material impact on the
Company's financial position or results of operations.  The Company has not
experienced any impaired loans since the adoption of SFAS Nos. 114 and 118.

NON-PERFORMING LOANS
---------------------------------------------------------------
(IN THOUSANDS)
                                DECEMBER 31,           JUNE 30,
                                    1997                 1997
                                ------------           --------

Nonaccrual loans                    $599                 $256
Restructured
90 days or more past due             101                   29
                                    ----                 ----
  Total                             $700                 $285
                                    ====                 ====

Percent of total loans              0.39%                0.14%
                                    =====                =====


The ratio increased from 0.14% at June 30, 1997, to 0.59% at December 31, 1997
as non-performing loans increased $415,000.  The nonaccrual loan total is
entirely made up of five mortgage loans, while the 90 days past due total
consists of consumer loans only.  Management is not aware of any loans that
have not been disclosed that represent or result from trends or uncertainties
which may have a material impact on the Company's future operating results,
liquidity or capital resources.

ANALYSIS OF ALLOWANCE FOR LOAN LOSSES.  The Company establishes its provision
for loan losses and evaluates the adequacy of its allowance for loan losses
based on management's evaluation of its loan portfolio and changes in loan
activity.  Such evaluation, which includes a review of all loans for which
full collectiblity may not be reasonably assured, considers among other
matters, the estimated fair value of the underlying collateral, economic
conditions, historical loan loss experience, the composition of the loan
portfolio and other factors that warrant recognition in providing for an
adequate loan loss allowance.  This evaluation is performed on a monthly basis
and is designed to ensure that all relevant matters affecting loan
collectibility will consistently be identified in a detailed loan review and
that the outcome of the review will be considered in a disciplined manner by
management in determining the necessary allowance and the provision for loan
losses.  The amounts actually reported in each period will vary with the
outcome of this detailed review.

                                      14

<PAGE>

The following table sets forth an analysis of the allowance for loan losses
for the six months ended December 31, 1997, and the year ended June 30, 1997.

Allowance for Loan Losses
(in thousands)
                                        DECEMBER 31,     JUNE 30,
                                            1997           1997
                                        -------------------------
Allowance for loan losses:
   Balances, beginning of year             $1,781         $1,059
   Provision for losses                       225            975
   Loans charged off                         (221)          (267)
   Recoveries on loans                          9             14
                                           ------         ------
Balances, end of quarter                   $1,794         $1,781
                                           ======         ======

As of December 31, 1997, net loan charge-offs were $212,000, or 0.22%
(annualized) of average loans for the period, compared to $253,000 or 0.07% of
average loans as of June 30, 1997.  The provision for loan losses decreased
$750,000 for the six months ended December 31, 1997 compared to the previous
year as the Company set aside $850,000 in loan loss allowance in the first
quarter of fiscal 1997 in an ongoing effort to more closely resemble
commercial banking allowance levels, compared to a more normalized provision
in the current fiscal year.  The allowance for loan losses to total loans
outstanding increased from .87% at June 30, 1997 to 1.01% at December 31,
1997.  The Company still has a number of large multifamily loans, both
completed and in construction in its portfolio. These credits are currently
performing, but present a higher amount of risk than other loans due to their
size in relationship to the Company's net worth and loan loss allowances.  The
loans are primarily outside the Company's geographic market.  Management
considers the allowance for loan losses adequate to meet losses inherent in
the loan portfolio as of December 31, 1997.

INVESTMENT SECURITIES.  The Savings Bank's investment policy is annually
reviewed by its Board of Directors and any significant changes to the policy
must be approved by the Board.  The Board has an asset/liability management
committee which is responsible for keeping the investment policy current.

As of December 31, 1997, the investment portfolio represented 4.1% of the
Company's assets compared to 5.7% at June 30, 1997, and is managed in a manner
designed to meet the Board's investment policy objectives.  The Savings Bank
sold $3.4 million in securities during the second quarter resulting in net
gains of $74,000.  The remaining decrease is the monthly payments of principal
and interest on the Savings Bank's mortgage-backed securities.  The primary
objectives, in order of priority, are to further the safety and soundness of
the Company, to provide the liquidity necessary to meet day to day funding
needs, cyclical and long-term changes in the mix of our assets and
liabilities, and to provide for diversification of risk and management of
interest rate and economic risk.  At December 31, 1997, the entire investment
portfolio was classified as available for sale, in accordance with Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investment
in Debt and Equity Securities".  The net unrealized loss at December 31, 1997
was $41,000, which was comprised of gross gains of $2,000, gross losses of
$73,000, and a tax benefit of $30,000.  The increase of $10,000 over June 30,
1997 was caused by market interest rate changes during the period.  Although
the entire portfolio is available for sale, management has not identified
individual investments for sale in future periods.

The following table sets forth the components of the Savings Bank's securities
available for sale as of the dates indicated.

                                                  DECEMBER 31,     JUNE 30,
                                                      1997           1997
                                                  ------------     --------
                                                        (IN THOUSANDS)
Securities available for sale:
   U.S. Treasury securities                        $  1,002       $  1,000
   Federal agencies securities                        2,984          2,944
   Federal Home Loan Mortgage Corporation
      mortgage-backed securities                      1,077          3,003
   Federal National Mortgage Association
      mortgage-backed securities                      1,172          1,562
   Government National Mortgage Association
      mortgage-backed securities                      2,597          4,223
   Municipal revenue bonds                                           1,058
   Other securities available for sale                   54
                                                   --------       --------
      Total securities available for sale          $  8,886       $ 13,790
                                                   ========       ========



                                      15

<PAGE>

FUNDING SOURCES

DEPOSITS.  The Savings Bank attracts both short-term and long-term deposits
from the retail market by offering a wide assortment of accounts with
different terms and different interest rates.  These deposit alternatives
include checking accounts, regular savings accounts, money market deposit
accounts, fixed rate certificates with varying maturities, variable interest
rate certificates, negotiable rate jumbo certificates ($100,000 or more), and
variable rate IRA certificates.

Average deposits decreased by $6.2 million during the first six months of
fiscal 1998.  Most of the decreases were due to certificates of deposit
acquired through agents, which decreased $18.3 million to $52.0 million at
December 31, 1997.   This decrease was offset by the Company's savings bank
subsidiary promoting selected retail certificates of deposit, which have
increased $12.1 million since June 30, 1997 in an effort to increase its core
deposit base. Demand accounts and money market accounts  decreased $722,000
and $811,000, respectively, offset by an increase in a premium rate NOW
accounts product of $1.7 million.  The Company's savings bank subsidiary
continues to actively market this premium rate NOW account product.

The following table sets forth the average balances of and the average rate
paid on deposits by deposit category for the six months ended December 31,
1997 and for the year ended June 30, 1997.

<TABLE>
<CAPTION>
                                            SIX MONTHS ENDED            YEAR ENDED
                                            DECEMBER 31, 1997         JUNE 30,  1997
                                            -----------------         --------------
                                            AVERAGE                 AVERAGE
                                            BALANCE      RATE       BALANCE      RATE
                                            -------      ----       -------      ----
                                                       (DOLLARS IN THOUSANDS)
<S>                                        <C>           <C>       <C>           <C>
Average Deposits
  Demand                                   $   4,963               $   5,685
  Now accounts                                22,311     4.31%        20,585     4.22%
  Money market accounts                        3,079     2.71          3,890     2.72
  Savings accounts                             4,666     2.51          4,792     2.90
  Certificates of deposit                     90,461     5.79         78,408     5.68
  Agent-acquired certificates of deposit      52,011     6.30         70,346     6.31
                                           ---------               ---------
     Total                                 $ 177,491     5.44%     $ 183,706     5.45%
                                           =========               =========
</TABLE>

FEDERAL HOME LOAN BANK ADVANCES AND OTHER LONG-TERM DEBT.  The following table
summarizes the Company's borrowings as of December 31, 1997, and June 30,
1997.

<TABLE>
<CAPTION>

                                              DECEMBER 31,     JUNE 30,
                                                  1997           1996
                                              ------------     --------
                                                     (IN THOUSANDS)
<S>                                              <C>            <C>
Note payable, 7.70% adjusted annually,
  payable $16,443 per month, including
  interest, due April 1, 2009, secured
  by specific multifamily mortgages              $ 2,223        $ 2,234
Note payable, 8.75% adjusted annually,
  payable $8,018 per month, including
  interest, due September 14, 2010, secured
  by specific multifamily mortgages                1,003          1,006
Note payable, 8.75% adjusted annually,
  payable $12,190 per month, including
  interest, due September 22, 2010,
  secured by specific multifamily mortgages        1,536          1,542
Junior subordinated notes, 9 1/8%,
  interest paid semi-annually, due April 30,
  2001, unsecured                                  1,476          1,476
Junior subordinated notes, 9 1/4% interest
  paid semi-annually, due January 31, 2002
  unsecured                                        1,494          1,494
Senior subordinated notes, 10%, interest
  paid semi-annually, due June 1, 2005,
  unsecured                                        7,000          7,000
Federal Home Loan Bank advances                   18,950         23,337
                                                 -------        -------
  Total                                          $33,682        $38,089
                                                 =======        =======
</TABLE>

Borrowings decreased $4.4 million to $33.7 million at December 31, 1997.
Borrowings have been reduced during fiscal 1998 primarily due to large payoffs
received in loans and the continued sales of current 1-4 family loan
production.  This allows the Company to use the proceeds to fund new loan
originations and ease the need for additional borrowings in the

                                      16

<PAGE>

future.  The decrease is due primarily to the maturity of FHLB advances.  The
Company, thus far, has been in a position to allow FHLB advance levels to
decline.

CAPITAL RESOURCES AND CAPITAL REQUIREMENTS

The ratio of stockholders' equity to total assets for the Savings Bank, was
8.74% at December 31, 1997, compared to 6.93% at June 30, 1997.  The dividends
paid and declared on common stock, and an increase in the unrealized loss on
available for sale investment decreased the ratio, while net income for the
period, and an infusion of capital from the Savings Bank's parent company
increased the ratio.  The Company's book value per share at December 31, 1997
was $5.02, compared to $5.20 at June 30, 1997.

The OTS has adopted capital standards under which savings associations must
maintain (i) "core capital" in an amount not less than 3% of total assets,
(ii) "tangible capital" in an amount not less than 1.5% of total adjusted
assets, and (iii) a level of risk-based capital equal to 8.0% of risk-weighted
assets.  The capital standards established by the OTS for savings associations
must generally be no less stringent than those applicable to national banks.

Under OTS regulations "core capital" includes common stockholders' equity,
noncumulative perpetual preferred stock and related surplus, and minority
interests in the equity accounts of consolidated subsidiaries, less intangible
assets other than certain qualifying supervisory goodwill and certain
purchased mortgage servicing rights.  In determining compliance with the
capital standards, a savings association must deduct from capital its entire
investment in and loans to any subsidiary engaged in activities not
permissible for a national bank, other than subsidiaries (i) engaged in such
non-permissible activities solely as agent for their customers; (ii) engaged
in mortgage banking activities; or (iii) that are themselves savings
associations, or companies the only investment of which is another insured
depository institution, acquired prior to May 1, 1989.

In determining total risk-weighted assets for purposes of the risk based
requirement, (i) each off-balance sheet asset must be converted to its
on-balance sheet credit equivalent amount by multiplying the face amount of
each such item by a credit conversion factor ranging from 0% to 100%
(depending upon the nature of the asset), (ii) the credit equivalent amount of
each off-balance sheet asset and the book value of each on-balance sheet asset
must be multiplied by a risk factor ranging from 0% to 100% (again depending
upon the nature of the asset), and (iii) the resulting amounts are added
together and constitute total risk-weighted assets.  Total capital, for
purposes of the risk-based capital requirement, equals the sum of core capital
plus supplementary capital (which, as defined, includes, among other items,
perpetual preferred stock not counted as core capital, limited life preferred
stock, subordinated debt, and general loan and lease loss allowances up to
1.25% of risk-weighted assets) less certain deductions including the savings
association's interest-rate risk component.  The amount of supplementary
capital that may be counted towards satisfaction of the total capital
requirement may not exceed 100% of core capital.

At December 31, 1997, actual and required minimum levels of regulatory capital
for the Savings Bank were as follows:

                            (Dollars in Thousands)

                                   Required
               Amount    Percent    Amount   Percent   Excess
               ----------------------------------------------
Core           $18,399    8.74%    $ 6,318    3.0%    $12,081
Tangible       $18,399    8.74%    $ 3,159    1.5%    $15,240
Risk-based     $24,954   13.16%    $17,085    8.0%    $ 7,869

Pursuant to HOLA of 1933, as amended, the OTS is required to issue capital
standards that are no less stringent than those applicable to national banks.
In April 1991, the OTS proposed to amend its capital regulations to reflect
amendments made by the OCC to the leverage ratio capital requirement for
national banks.  The proposal would establish a core capital leverage ratio
(core capital to adjusted total assets) of 3% for savings associations rated
composite 1 under the OTS MACRO rating system.  For all other savings
associations, the minimum core capital leverage ratio would be 3% plus at
least an additional 100 to 200 basis points.  Under the proposal, the OTS may
impose higher regulations for individual savings associations.  The OTS has
not adopted this regulation in final form. The prompt corrective action
regulation adopted by the OTS provides that a savings association that has a
leverage capital ratio of less than 4% will be considered "undercapitalized"
and may be subject to certain restrictions.  At December 31, 1997 the Savings
Bank had a core capital leverage ratio (as defined in the proposal) of 8.74%.

                                      17

<PAGE>

The OTS adopted a final regulation adding an interest-rate risk component to
its risk-based capital rule.  A savings association's interest-rate risk is
generally defined as the change that occurs to its net portfolio value as a
result of a hypothetical two hundred basis point increase or decrease in
market interest rates.  A "normal level" of interest-rate risk is defined as
any decline in net portfolio value of up to 2% of the institution's assets.
If the 2% threshold is exceeded, a savings association will be required to
deduct from its capital, for purposes of determining whether the institution
meets its risk-based capital requirements, an amount equal to one-half of the
difference between the measured risk and 2% of assets.

Capital requirements higher than the generally applicable minimum requirement
may be established for a particular savings association if the OTS determines
that the institution's capital was or may become inadequate in view of its
particular circumstances.  Individual minimum capital requirements may be
appropriate where the savings association is receiving special supervisory
attention, has a high degree of exposure to interest rate risk, or poses other
safety or soundness concerns.

LIQUIDITY

Liquidity for a savings bank represents its ability to accommodate growth in
loan demand and/or reduction in deposits.  The Savings Bank liquidity ratio
was 11.87% on December 31, 1997, up from 5.57% on June 30, 1997. On November
24, 1997, the OTS adopted a new liquidity ratio which lowered liquidity
requirements for savings associations from 5 to 4 percent of the association's
liquidity base.  The liquidity base has been reduced by modifying the
definition of net withdrawable accounts to exclude, at the association's
option, accounts with maturities exceeding one year.  Another change removes
the requirement that certain obligation must mature in five years or less in
order to qualify as a liquid asset.  Finally, the rule added certain
short-term mortgage-related securities and short- term first lien residential
mortgage loans to the list of assets includable as regulatory liquidity.
Management believes that this level of liquidity is sufficient to meet any
anticipated requirements for the Bank's operations.


                                      18

<PAGE>

                         PART II -- OTHER INFORMATION


ITEM 1  LEGAL PROCEEDINGS:
        ------------------
        There are no material pending legal proceedings, other than ordinary
        routine litigation incidental to the Registrant's business, to which
        the Registrant or its subsidiaries are a party of or which any of
        their property is the subject.


ITEM 2  CHANGES IN SECURITIES:
        ----------------------
        Not applicable.


ITEM 3  DEFAULTS UPON SENIOR SECURITIES:
        --------------------------------
        Not applicable.


ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
        ----------------------------------------------------
        None

ITEM 5  OTHER INFORMATION:
        ------------------
        None

ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K:
        ---------------------------------
        a.   The following exhibit is submitted herewith:
             27 Financial Data Schedule

        Reports on Form 8-K
        b.   No reports were filed





                                      19

<PAGE>

                                  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.

                                                FIDELITY FEDERAL BANCORP



Date: JANUARY 13, 1998                By:   /s/ M. BRIAN DAVIS
      ---------------------------           ---------------------------------
                                            M. Brian Davis
                                            President and CEO



                                      By:   /s/ DONALD R. NEEL
                                            ---------------------------------
                                            Donald R. Neel,
                                            Executive Vice President, CFO and
                                            Treasurer
                                            (Principal Financial Officer)




                                      20

<PAGE>

                                Exhibit Index


Reg. S-K

Exhibit No.     Description of Exhibit                                    Page
------------------------------------------------------------------------------
   27           Financial Data Schedule


















                                      21