**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





(Mark
      One)





[X]
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIE EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005 OR[  
                ]
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD FROM TO





Commission
        file number: 0-21765





RIVER
      VALLEY BANCORP


(Exact
      name of registrant specified in its charter)





**Indiana**
            **35-1984567**(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                Number)







430
      Clifty Drive


Madison,
      Indiana 47250


(Address
      of principal executive offices, including Zip Code)





(812)
      273-4949


(Registrant’s
      telephone number, including area code)








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 report), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes [X] No [   ]





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





The
      number of shares of the Registrant’s common stock, without par value,
      outstanding as of June 30, 2005 was 1,588,987.








RIVER
      VALLEY BANCORP


FORM
      10-Q





INDEX





Page
                No.FORWARD
                LOOKING STATEMENT
            3PART
                I.
            
            FINANCIAL
                INFORMATION
            3Item
                1.
            
            Financial
                StatementsConsolidated
                Condensed Balance Sheets
            3Consolidated
                Condensed Statements of Income
            4Consolidated
                Condensed Statements of Comprehensive Income
            5Consolidated
                Condensed Statements of Cash Flows
            6Notes
                to Unaudited Consolidated Condensed Financial Statements
            7Item
                2.
            
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            10Item
                3.
            
            Quantitative
                and Qualitative Disclosure about Market Risk
            15Item
                4.
            
            Controls
                and Procedures
            16PART
                II.
            
            OTHER
                INFORMATIONItem
                1.
            
            Legal
                Proceedings
            16Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            16Item
                3.
            
            Defaults
                Upon Senior Securities
            16Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            16Item
                5.
            
            Other
                Information
            16Item
                6.
            
            Exhibits
            16SIGNATURES
            17CERTIFICATIONS
            18





2


**PART
      I FINANCIAL INFORMATION**


Item
      1.
      Financial Statements





**RIVER
      VALLEY BANCORP**


Consolidated
      Condensed Balance Sheets





June
                30,
              2005
            
            December
                31,
              2004(In
                Thousands, Except Share Amounts)(Unaudited)**Assets**Cash
                and due from banks
            
            $
            6,308
            
            $
            4,911Interest-bearing
                demand deposits
            
            
            926
            
            
            7,526Cash
                and cash equivalents
            
            
            7,234
            
            
            12,437Investment
                securities available for sale
            
            
            45,541
            
            
            26,964Loans
                held for sale
            
            
            182
            
            
            337Loans
            
            
            235,161
            
            
            233,400Allowance
                for loan losses
            
            
            2,314
            
            
            2,364Net
                loans
            
            
            232,847
            
            
            231,036Premises
                and equipment
            
            
            7,718
            
            
            6,798Federal
                Home Loan Bank stock
            
            
            4,000
            
            
            3,281Interest
                receivable
            
            
            1,790
            
            
            1,599Other
                assets
            
            
            6,614
            
            
            6,975Total
                assets
            
            $
            305,926
            
            $
            289,427**Liabilities**DepositsNon-interest-bearing
            
            $
            17,873
            
            $
            5,066Interest-bearing
            
            
            151,708
            
            
            155,472Total
                deposits
            
            
            169,581
            
            
            170,538Borrowings
            
            
            111,555
            
            
            94,600Interest
                payable
            
            
            445
            
            
            382Other
                liabilities
            
            
            1,357
            
            
            1,514Total
                liabilities
            
            
            282,938
            
            
            267,034**Commitments
                and Contingencies****Shareholders’
                Equity**Preferred
                stock, without par valueAuthorized
                and unissued - 2,000,000 sharesCommon
                stock, without par valueAuthorized
                - 5,000,000 sharesIssued
                and outstanding - 1,588,987 and 1,584,377 sharesAdditional
                paid-in capital
            
            
            8,988
            
            
            8,843Retained
                earnings
            
            
            14,339
            
            
            13,800Shares
                acquired by stock benefit plans
            
            
            (157
            )
            
            (215
            )Accumulated
                other comprehensive income
            
            
            (182
            )
            
            (35
            )Total
                shareholders’ equity
            
            
            22,988
            
            
            22,393Total
                liabilities and shareholders’ equity
            
            $
            305,926
            
            $
            289,427




See
        notes
        to consolidated condensed financial statements.


3


**RIVER
          VALLEY BANCORP**
 Consolidated
          Condensed Statements of Income
 (Unaudited)
 
 Six
                    Months Ended
                
                Three
                    Months EndedJune
                    30,
                
                June
                    30,2005
                
                2004
                
                2005
                
                2004Interest
                    Income
                
                (In
                    Thousands, Except Share Amounts)Loans
                    receivable
                
                $
                6,958
                
                $
                5,856
                
                $
                3,549
                
                $
                2,945Investment
                    securities
                
                
                668
                
                
                470
                
                
                356
                
                
                214Interest-earning
                    deposits and other
                
                
                161
                
                
                88
                
                
                97
                
                
                47Total
                    interest income
                
                
                7,787
                
                
                6,414
                
                
                4,002
                
                
                3,206Interest
                    ExpenseDeposits
                
                
                1,614
                
                
                1,365
                
                
                823
                
                
                666Borrowings
                
                
                2,106
                
                
                1,234
                
                
                1,104
                
                
                651Total
                    interest expense
                
                
                3,720
                
                
                2,599
                
                
                1,927
                
                
                1,317Net
                    Interest Income
                
                
                4,067
                
                
                3,815
                
                
                2,075
                
                
                1,889Provision
                    for loan losses
                
                
                144
                
                
                194
                
                
                72
                
                
                92Net
                    Interest Income After Provision for Loan Losses
                
                
                3,923
                
                
                3,621
                
                
                2,003
                
                
                1,797Other
                    IncomeNet
                    realized gains on sales of available-for-sale securities
                
                
                0
                
                
                9
                
                
                0
                
                
                3Service
                    fees and charges
                
                
                892
                
                
                862
                
                
                464
                
                
                442Net
                    gains on loan sales
                
                
                172
                
                
                262
                
                
                105
                
                
                156Other
                    income
                
                
                171
                
                
                185
                
                
                91
                
                
                97Total
                    other income
                
                
                1,235
                
                
                1,318
                
                
                660
                
                
                698Other
                    ExpensesSalaries
                    and employee benefits
                
                
                1,838
                
                
                1,557
                
                
                909
                
                
                799Net
                    occupancy and equipment expenses
                
                
                546
                
                
                479
                
                
                268
                
                
                240Data
                    processing fees
                
                
                57
                
                
                73
                
                
                31
                
                
                33Advertising
                
                
                117
                
                
                117
                
                
                56
                
                
                66Legal
                    and professional fees
                
                
                153
                
                
                100
                
                
                97
                
                
                70Other Expenses
                
                
                679
                
                
                778
                
                
                414
                
                
                428Total
                    other expenses
                
                
                3,390
                
                
                3,104
                
                
                1,775
                
                
                1,636Income
                    Before Income Tax
                
                
                1,768
                
                
                1,835
                
                
                888
                
                
                859Income
                    tax expense
                
                
                623
                
                
                681
                
                
                258
                
                
                314Net
                    Income
                
                $
                1,145
                
                $
                1,154
                
                $
                630
                
                $
                545Basic
                    earnings per share
                
                $
                .73
                
                $
                .72
                
                $
                .40
                
                $
                .34Diluted
                    earnings per share
                
                
                .70
                
                
                .69
                
                
                .38
                
                
                .33Dividends
                    per share
                
                
                .385
                
                
                .35
                
                
                .195
                
                
                .18
  See
          notes
          to consolidated condensed financial statements.
 4


**RIVER
      VALLEY BANCORP**


Consolidated
      Condensed Statements of Comprehensive Income


(Unaudited)





Six
                  Months Ended
                June
                  30,
              
              Three
                  Months Ended
                June
                  30,2005
              
              2004
              
              2005
              
              2004(In
                  Thousands)Net
                  income
              
              $
              1,145
              
              $
              1,154
              
              $
              630
              
              $
              545Other
                  comprehensive income, net of taxUnrealized
                  gains on securities available for saleUnrealized
                  holding gains arising during the period, net of tax expense (benefit)
                  of
                  $(97), $(149), $33 and $(169)
              
              
              (147
              )
              
              (227
              )
              
              50
              
              
              (277
              )Less:
                  Reclassification adjustment for gains (losses) included in net
                  income, of
                  tax expense (benefit) of $0, $4, $0, and $1
              
              
              --
              
              
              5
              
              
              --
              
              
              2(147
              )
              
              (232
              )
              
              50
              
              
              (279
              )Comprehensive
                  income
              
              $
              998
              
              $
              922
              
              $
              680
              
              $
              266


See
      notes
      to consolidated condensed financial statements.


5




**RIVER
      VALLEY BANCORP**


Consolidated
      Condensed Statements of Cash Flows


(Unaudited)




Six
                  Months EndedJune
                  30,2005
              
              2004Operating
                  Activities
              
              (In
                  Thousands)Net
                  income
              
              $
              1,145
              
              $
              1,154Adjustments
                  to reconcile net income to net cash provided by operating
                  activitiesProvision
                  for loan losses
              
              
              144
              
              
              194Depreciation
                  and amortization
              
              
              284
              
              
              283Investment
                  securities (gains) losses
              
              
              (0
              )
              
              (9
              )Loans
                  originated for sale in the secondary market
              
              
              (7,725
              )
              
              (12,596
              )Proceeds
                  from sale of loans in the secondary market
              
              
              7,958
              
              
              12,571Gain
                  on sale of loans
              
              
              (172
              )
              
              (262
              )Amortization
                  of deferred loan origination cost
              
              
              58
              
              
              151Amortization
                  of expense related to stock benefit plans
              
              
              170
              
              
              210Net
                  change in:Interest
                  receivable
              
              
              (191
              )
              
              65Interest
                  payable
              
              
              63
              
              
              (140
              )Other adjustments
              
              
              12
              
              
              (118
              )Net
                  cash provided by operating activities
              
              
              1,746
              
              
              1,503Investing
                  ActivitiesPurchases
                  of securities available for sale
              
              
              (26,818
              )
              
              (1,147
              )Proceeds
                  from maturities of securities available for sale
              
              
              8,008
              
              
              6,016Proceeds
                  from sale of securities available for sale
              
              
              0
              
              
              4,196Purchase
                  of Federal Home Loan Bank stock
              
              
              (645
              )
              
              (571
              )Net
                  change in loans
              
              
              (16,719
              )
              
              (17,337
              )Proceeds
                  from sale of foreclosed real estate
              
              
              15,000
              
              
              -Purchases
                  of premises and equipment
              
              
              (1,204
              )
              
              (590
              )Net
                  cash used in investing activities
              
              
              (22,378
              )
              
              (9,433
              )Financing
                  ActivitiesNet
                  change inNoninterest-bearing,
                  interest-bearing demand and savings deposits
              
              
              2,257
              
              
              (4,337
              )Certificates
                  of deposit
              
              
              (3,214
              )
              
              (4,160
              )Short
                  term borrowings
              
              
              2,955
              
              
              ---Proceeds
                  from borrowings
              
              
              25,000
              
              
              23,000Repayment
                  of borrowings
              
              
              (11,000
              )
              
              (10,000
              )Cash
                  dividends
              
              
              (597
              )
              
              (555
              )Purchase
                  of stock
              
              
              0
              
              
              (1,455
              )Stock
                  options exercised
              
              
              17
              
              
              78Acquisition
                  of stock for stock benefit plans
              
              
              0
              
              
              (34
              )Advances
                  by borrowers for taxes and insurance
              
              
              11
              
              
              25Net
                  cash provided by financing activities
              
              
              15,429
              
              
              2,562Net
                  Change in Cash and Cash Equivalents
              
              
              (5,203
              )
              
              (5,368
              )Cash
                  and Cash Equivalents, Beginning of Period
              
              
              12,437
              
              
              12,512Cash
                  and Cash Equivalents, End of Period
              
              $
              7,234
              
              $
              7,144Additional
                  Cash Flows and Supplementary InformationInterest
                  paid
              
              $
              3,657
              
              $
              2,739Income
                  tax paid
              
              
              502
              
              
              499


See
        notes
        to consolidated condensed financial statements.
 6
 **RIVER
          VALLEY BANCORP**


Notes
      to
      Unaudited Consolidated Condensed Financial Statements








River
      Valley Bancorp (the “Corporation”) is a unitary savings and loan holding company
      whose activities are primarily limited to holding the stock of River Valley
      Financial Bank (“River Valley” or the “Bank”). The Bank conducts a general
      banking business in southeastern Indiana and portions of northwestern Kentucky
      which consists of attracting deposits from the general public and applying
      those
      funds to the origination of loans for consumer, residential and commercial
      purposes. River Valley’s profitability is significantly dependent on net
      interest income, which is the difference between interest income generated
      from
      interest-earning assets (i.e. loans and investments) and the interest expense
      paid on interest-bearing liabilities (i.e. customer deposits and borrowed
      funds). Net interest income is affected by the relative amount of
      interest-earning assets and interest-bearing liabilities and the interest
      received or paid on these balances. The level of interest rates paid or received
      by the Bank can be significantly influenced by a number of competitive factors,
      such as governmental monetary policy, that are outside of management’s
      control.





Note
      1: Basis of Presentation





The
      accompanying unaudited consolidated condensed financial statements were prepared
      in accordance with instructions for Form 10-Q and, therefore, do not included
      information or footnotes necessary for a complete presentation of financial
      position, results of operations and cash flows in conformity with generally
      accepted accounting principles. Accordingly, these financial statements should
      be read in conjunction with the consolidated financial statements and notes
      thereto of the Corporation included in the Annual Report on Form 10-K for the
      year ended December 31, 2004. However, in the opinion of management, all
      adjustments (consisting of only normal recurring accruals) which are necessary
      for a fair presentation of the financial statements have been included. The
      results of operations for the six and three month periods ended June 30, 2005,
      are not necessarily indicative of the results which may be expected for the
      entire year. The consolidated condensed balance sheet of the Corporation as
      of
      December 31, 2004 has been derived from the audited consolidated balance sheet
      of the Corporation as of that date.





Note
      2: Principles of Consolidation





The
      consolidated condensed financial statements include the accounts of the
      Corporation and its subsidiary, the Bank, and the Bank’s subsidiary, Madison
      First Service Corporation (“First Service”). All significant inter-company
      balances and transactions have been eliminated in the accompanying consolidated
      financial statements.


7
 Note
        3: Earnings Per Share





Earnings
      per share have been computed based upon the weighted average common shares
      outstanding. Unearned Employee Stock Ownership Plan shares have been excluded
      from the computation of average common shares outstanding.




Six
                  Months Ended
                June
                  30, 2005
              
              Six
                  Months Ended
                June
                  30, 2004Income
              
              Weighted
                  Average Shares
              
              Per
                Share
                  Amount
              
              Income
              
              Weighted
                  Average Shares
              
              Per
                Share
                  Amount(Dollar
                  Amounts In Thousands, Except Share Amounts)**Basic
                  earnings per share**Income
                  available to common shareholders
              
              $
              1,145
              
              
              1,576,385
              
              $
              .73
              
              $
              1,154
              
              
              1,606,296
              
              $
              .72**Effect
                  of dilutive RRP****awards
                  and stock options**
              
              
              
              
              
              62,038
              
              
              
              
              
              
              
              
              73,618**Diluted
                  earnings per share**Income
                  available to common shareholders and assumed conversions
              
              $
              1,145
              
              
              1,638,423
              
              $
              .70
              
              $
              1,154
              
              
              1,679,914
              
              $
              .69
   
 Three
                  Months Ended
                June
                  30, 2005
              
              Three
                  Months Ended
                June
                  30, 2004Income
              
              Weighted
                  Average Shares
              
              Per
                Share
                  Amount
              
              Income
              
              Weighted
                  Average Shares
              
              Per
                Share
                  Amount(Dollar
                  Amounts In Thousands, Except Share Amounts)**Basic
                  earnings per share**Income
                  available to common shareholders
              
              $
              630
              
              
              1,579,634
              
              $
              .40
              
              $
              545
              
              
              1,599,284
              
              $
              .34**Effect
                  of dilutive RRP****awards
                  and stock options**
              
              
              
              
              
              60,330
              
              
              
              
              
              
              
              
              70,747**Diluted
                  earnings per share**Income
                  available to common shareholders and assumed conversions
              
              $
              630
              
              
              1,639,964
              
              $
              .38
              
              $
              545
              
              
              1,670,031
              
              $
              .33


8


Note
      4:  Stock
      Options





The
      Company has a stock-based employee compensation plan, which is described more
      fully in Notes to Financial Statements included in the December 31, 2004 Annual
      Report to shareholders. The Company accounts for this plan 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 the plan had an exercise price
      equal
      to the market value of the underlying common stock on the grant date. The
      following table illustrates the effect on net income and earnings per share
      if
      the Company had applied the fair value provisions of Statement of Financial
      Accounting Standards (“SFAS”) No. 123, *Accounting
      for Stock-Based Compensation* ,
      to
      stock-based employee compensation.




Six
                Months
              Ended
              June
                30,2005
            
            Six
                Months
              Ended
              June
                30, 2004
            
            Three
              Months
              Ended
              June
                30, 2005
            
            Three
              Months
              Ended
              June
                30, 2004Net
                income, as reported
            
            $
            1,145
            
            $
            1,154
            
            $
            630
            
            $
            545Less:
                Total stock-based employee compensation cost determined under the
                fair
                value based method, net of income taxes
            
            
            8
            
            
            13
            
            
            3
            
            
            7Pro
                forma net income
            
            $
            1,137
            
            $
            1,141
            
            $
            627
            
            $
            538Earnings
                per share:Basic
                - as reported
            
            $
            .73
            
            $
            .72
            
            $
            .40
            
            $
            .34Basic
                - pro forma
            
            
            .72
            
            
            .71
            
            
            .40
            
            
            .34Diluted
                - as reported
            
            
            .70
            
            
            .69
            
            
            .39
            
            
            .33Diluted
                - pro forma
            
            
            .69
            
            
            .68
            
            
            .38
            
            
            .32





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





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





The
      Company is currently evaluating the effect of the recognition and measurement
      provisions of SFAS 123R but believes the adoption of SFAS 123R will not result
      in a material impact on the Company’s results of operation or financial
      condition.





9


Note
      5: Reclassifications





Certain
      reclassifications have been made to the 2004 consolidated condensed financial
      statements to conform to the June 30, 2005 presentation.





Note
      6: Recent Accounting Developments





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





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








**Item
      2: Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**





**Forward
      Looking Statement**





This
      Quarterly Report on Form 10-Q ("Form 10-Q") contains 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 Corporation (as defined in the notes to the
      consolidated condensed financial statements), its directors or its officers
      primarily with respect to future events and the future financial performance
      of
      the Corporation. Readers of this Form 10-Q are cautioned that any such forward
      looking statements are not guarantees of future events or performance and
      involve risks and uncertainties, and that actual results may differ materially
      from those in the forward looking statements as a result of various factors.
      The
      accompanying information contained in this Form 10-Q identifies important
      factors that could cause such differences. These factors include changes in
      interest rates; loss of deposits and loan demand to other financial
      institutions; substantial changes in financial markets; changes in real estate
      values and the real estate market; or regulatory changes.





**Critical
      Accounting Policies**





The
      notes
      to the consolidated financial statements contain a summary of the Corporation’s
      significant accounting policies presented on pages 24 through 26 of the Annual
      Report to Shareholders for the year ended December 31, 2004. Certain of these
      policies are important to the portrayal of the Corporation’s financial
      condition, since they require management to make difficult, complex or
      subjective judgments, some of which may relate to matters that are inherently
      uncertain. Management believes that its critical accounting policies include
      determining the allowance for loan losses and the valuation of mortgage
      servicing rights.





**Allowance
      for loan losses**





The
      allowance for loan losses is a significant estimate that can and does change
      based on management’s assumptions about specific borrowers and current general
      economic and business conditions, among other factors. Management reviews the
      adequacy of the allowance for loan losses on at least a quarterly basis. The
      evaluation by management includes consideration of past loss experience, changes
      in the composition of the loan portfolio, the current condition and amount
      of
      loans outstanding, identified problem loans and the probability of collecting
      all amounts due.




10


The
      allowance for loan losses represents management’s estimate of probable losses
      inherent in the Corporation’s loan portfolios. In determining the appropriate
      amount of the allowance for loan losses, management makes numerous assumptions,
      estimates and assessments.





The
      Corporation’s strategy for credit risk management includes conservative,
      centralized credit policies, and uniform underwriting criteria for all loans
      as
      well as an overall credit limit for each customer significantly below legal
      lending limits. The strategy also emphasizes diversification on a geographic,
      industry and customer level, regular credit quality reviews and quarterly
      management reviews of large credit exposures and loans experiencing
      deterioration of credit quality.





The
      Corporation’s allowance consists of three components: probable losses estimated
      from individual reviews of specific loans, probable losses estimated from
      historical loss rates, and probable losses resulting from economic or other
      deterioration above and beyond what is reflected in the first two components
      of
      the allowance.






Larger
      commercial loans that exhibit probable or observed credit weaknesses are subject
      to individual review. Where appropriate, reserves are allocated to individual
      loans based on management’s estimate of the borrower’s ability to repay the loan
      given the availability of collateral, other sources of cash flow and legal
      options available to the Corporation. Included in the review of individual
      loans
      are those that are impaired as provided in SFAS No. 114, *Accounting
      by Creditors for Impairment of a Loan.* Any
      allowances for impaired loans are measured based on the present value of
      expected future cash flows discounted at the loan’s effective interest rate or
      fair value of the underlying collateral. The Corporation evaluates the
      collectibility of both principal and interest when assessing the need for a
      loss
      accrual. Historical loss rates are applied to other commercial loans not subject
      to specific reserve allocations




Homogenous
      loans, such as consumer installment and residential mortgage loans are not
      individually risk graded. Rather, standard credit scoring systems are used
      to
      assess credit risks. Reserves are established for each pool of loans based
      on
      the expected net charge-offs for one year. Loss rates are based on the average
      net charge-off history by loan category.




Historical
      loss rates for commercial and consumer loans may be adjusted for significant
      factors that, in management’s judgment, reflect the impact of any current
      conditions on loss recognition. Factors which management considers in the
      analysis include the effects of the national and local economies, trends in
      the
      nature and volume of loans (delinquencies, charge-offs and non-accrual loans),
      changes in mix, credit score migration comparisons, asset quality trends, risk
      management and loan administration, changes in the internal lending policies
      and
      credit standards, collection practices and examination results from bank
      regulatory agencies and the Corporation’s internal loan review.




An
      unallocated reserve is maintained to recognize the imprecision in estimating
      and
      measuring loss when evaluating reserves for individual loans or pools of loans.
      Allowances on individual loans and historical loss rates are reviewed quarterly
      and adjusted as necessary based on changing borrower and/or collateral
      conditions and actual collection and charge-off experience.




The
      Corporation’s primary market area for lending is southeastern Indiana and
      portions of northwestern Kentucky. When evaluating the adequacy of allowance,
      consideration is given to this regional geographic concentration and the closely
      associated effect changing economic conditions have on the Corporation’s
      customers.




The
      Corporation has not substantively changed any aspect to its overall approach
      in
      the determination of the allowance for loan losses. There have been no material
      changes in assumptions or estimation techniques as compared to prior periods
      that impacted the determination of the current period allowance.




11


**Valuation
      of Mortgage Servicing Rights**





The
      Company recognizes the rights to service mortgage loans as separate assets
      in
      the consolidated balance sheet. The total cost of loans when sold is allocated
      between loans and mortgage servicing rights based on the relative fair values
      of
      each. Mortgage servicing rights are subsequently carried at the lower of the
      initial carrying value, adjusted for amortization, or fair value. Mortgage
      servicing rights are evaluated for impairment based on the fair value of those
      rights. Factors included in the calculation of fair value of the mortgage
      servicing rights include, estimating the present value of future net cash flows,
      market loan prepayment speeds for similar loans, discount rates, servicing
      costs, and other economic factors. Servicing rights are amortized over the
      estimated period of net servicing revenue. It is likely that these economic
      factors will change over the life of the mortgage servicing rights, resulting
      in
      different valuations of the mortgage servicing rights. The differing valuations
      will affect the carrying value of the mortgage servicing rights on the
      consolidated balance sheet as well as the income recorded from loan servicing
      in
      the income statement. As of June 30, 2005 and December 31, 2004, mortgage
      servicing rights had carrying values of $918,000 and $860,000,
      respectively.





**Financial
      Condition**





At
      June
      30, 2005, the Corporation’s consolidated assets totaled $305.9 million, an
      increase of $16.5 million, or 5.7%, from December 31, 2004. The increase in
      assets resulted from an increase in securities of $18.6 million and an
      offsetting decrease of approximately $5.2 million in cash and cash equivalents.
      Net loans receivable, including loans held for sale, were $233.0 million at
      June
      30, 2005, an increase of $1.6 million, or .7%, from $231.4 million at December
      31, 2004.





The
      Corporation’s allowance for loan losses totaled $2.4 million at December 31,
      2004 and $2.3 million at June 30, 2005, which represented approximately 1.0%
      for
      both periods. Non-performing loans (defined as loans delinquent greater than
      90
      days and loans on non-accrual status) totaled $2,100,000.00 and $1,272,000.00
      million at December 31, 2004 and June 30, 2005, respectively. Although
      management believes that its allowance for loan losses at June 30, 2005, was
      adequate based upon the available facts and circumstances, there can be no
      assurance that additions to such allowance will not be necessary in future
      periods, which could negatively affect the Corporation’s results of
      operations.





Deposits
      totaled $169.6 million at June 30, 2005, a decrease of $957,000, or .6%,
      compared to total deposits at December 31, 2004. The decrease for the six-month
      period is a result of the increased competition for funds. Increasing or even
      maintaining current funds is very difficult in our market area. Rates are slowly
      rising, customers are moving funds for even a slight difference in rate.





Advances
      from the Federal Home Loan Bank totaled $65.0 million at December 31, 2004
      and
      $79.0 million at June 30, 2005. These advances had a negative effect on the
      bottom line during the first and second quarters due to an increase in their
      interest rates. The average cost of Federal Home Loan Bank advances at June
      30,
      2005 was 4.24%, a .14% increase over the average cost at December 31, 2004.
      Total borrowings were $111,555,000 as of June 30, 2005. The short term portion
      of this amount is $25,555,000, which is repurchase agreements pledged to certain
      retail deposit “Sweep” accounts not included in deposit balances.





Stockholders’
      equity totaled $23.0 at June 30, 2005, an increase of $.6 million, or 2.7%,
      from
      $22.4 million at December 31, 2004. The increase resulted primarily from net
      income for the period partially offset by cash dividends. We did also increase
      our dividend, paying $0.195 per share to the holders of record on June 25,
      2005,
      payable on July 15, 2005.





The
      Bank
      is required to maintain minimum regulatory capital pursuant to federal
      regulations. At June 30, 2005, the Bank’s regulatory capital exceeded all
      applicable regulatory capital requirements.






**Comparison
      of Operating Results for the Six Months Ended June 30, 2005 and
      2004**





**General**





The
      Corporation’s net income for the six months ended June 30, 2005, totaled
      $1,145,000, a decrease of $9,000 or .8% from the $1,154,000 reported for the
      period ended June 30, 2004. This decrease is primarily caused by the Company’s
      decreasing gains on sale of loans.




12
 **Net
          Interest Income**





Total
      interest income for the six months ended June 30, 2005 amounted to $7.8 million,
      an increase of $1.4 million, or 21.4%, above the comparable period in 2004,
      reflecting the effects of a large increase in our loan portfolio and an increase
      in the loan yield from 5.8% for the 2004 period to 6.1% for the 2005 period.





Interest
      expense on deposits increased by $249,000, or 18.2%, to a total of $1.6 million
      for the six months ended June 30, 2005, due primarily to a increase in the
      average cost of deposits. Interest expense on borrowings totaled $2,106,000
      for
      the six months ended June 30, 2005, an increase of $872,000, from the comparable
      period in 2004. The increase resulted primarily from an increase in average
      borrowings year-to-year and an increase of approximately .25% in the
      rate.





As
      a
      result of the foregoing changes in interest income and interest expense, net
      interest income increased by $252,000 or 6.6%, for the six months ended June
      30,
      2005, as compared to the comparable period in 2004.





**Provision
      for Losses on Loans**





A
      provision for losses on loans is charged to income to bring the total allowance
      for loan losses to a level considered appropriate by management based upon
      historical experience, the volume and type of lending conducted by the Bank,
      the
      status of past due principal and interest payments, general economic conditions,
      particularly as such conditions relate to the Bank’s market area, and other
      factors related to the collectibility of the Bank’s loan portfolio. As a result
      of such analysis, management recorded a $144,000 provision for losses on loans
      for the six months ended June 30, 2005, compared to the $194,000 amount recorded
      in the 2004 period. The 2005 provision amount was predicated on the increase
      in
      the balance of the loan portfolio, coupled with the decrease in the level of
      delinquent loans year-to-year. While management believes that the allowance
      for
      losses on loans is adequate at June 30, 2005, based upon the available facts
      and
      circumstances, there can be no assurance that the loan loss allowance will
      be
      adequate to cover losses on non-performing assets in the future.





**Other
      Income**





Other
      income decreased by $83,000, or 6.3%, for the six months ended June 30, 2005,
      as
      compared to the same period in 2004, due primarily to the $90,000 decrease
      in
      gains on sale of loans. There is a 50 basis point difference(increase) in the
      rates charged for the fixed rate loans that are sold. This is enough to deter
      many borrowers from refinancing their mortgage loans. This decrease in sold
      loan
      gains was partially offset by an increase in service fees and charges of $30,000
      and a decrease in other income of $14,000.





**Other
      Expense**





Other
      expense increased by $286,000, or 9.2%, during the six months ended June 30,
      2005, as compared to the same period in 2004. The increase was due primarily
      to
      the increase in salary/ benefit expense. This increase was the result of the
      increase in employees to service an increased asset base and expanded branch
      network.





**Income
      Taxes**





The
      provision for income taxes totaled $623,000 for the six months ended June 30,
      2005, a decrease of $58,000, or 8.5%, as compared to the same period in 2004.
      The effective tax rates were 35.2% and 37.1% for the six months ended June
      30,
      2005 and 2004, respectively.





13





**Comparison
      of Operating Results for the Three Months Ended June 30, 2005 and
      2004**





**General**





The
      Corporation’s net income for the three months ended June 30, 2005, totaled
      $630,000, a increase of $85,000, or 15.6%, from the $545,000 of net income
      reported in the comparable 2004 period. The increase in earnings in the 2005
      period was primarily attributable to an increase in total interest income of
      approximately $800,000, which was offset by an increase in total interest
      expense of approximately $610,000 and salaries / employee benefits of
      $110,000.





**Net
      Interest Income**





Total
      interest income for the three months ended June 30, 2005 amounted to $4.0
      million, an increase of $796,000, or 24.8%, from the comparable quarter in
      2004,
      reflecting the effects of an increase in average balance of loans and securities
      year to year. Interest income on loans totaled $3.5 million for the three months
      ended June 30, 2005, an increase of approximately $604,000, or 20.5%, from
      the
      comparable 2004 quarter.





Interest
      expense on deposits increased by $157,000, or 23.6%, to a total of $.8 million
      for the quarter ended June 30, 2005, due primarily to an increase in the average
      cost of deposits. Interest expense on borrowings totaled $1,104,000 for the
      three months ended June 30, 2005, an increase of $453,000 over the comparable
      quarter in 2004. The increase resulted primarily from an increase in average
      borrowings outstanding from year-to-year.





As
      a
      result of the foregoing changes in interest income and interest expense, net
      interest income increased by $186,000, or 9.8%, for the three months ended
      June
      30, 2005, as compared to the same quarter in 2004.





**Provision
      for Losses on Loans**





A
      provision for losses on loans is charged to earnings to bring the total
      allowance for loan losses to a level considered appropriate by management based
      upon historical experience, the volume and type of lending conducted by the
      Bank, the status of past due principal and interest payments, general economic
      conditions, particularly as such conditions relate to the Bank’s market area,
      and other factors related to the collectibility of the Bank’s loan portfolio. As
      a result of such analysis, management recorded a $72,000 provision for losses
      on
      loan for the three months ended June 30, 2005, compared to the $92,000 recorded
      in the 2004 period. While management believes that the allowance for losses
      on
      loans is adequate at June 30, 2005, based upon the available facts and
      circumstances, there can be no assurance that the loan loss allowance will
      be
      adequate to cover losses on non-performing assets in the future.





**Other
      Income**





Other
      income decreased by $38,000 for the three months ended June 30, 2005, as
      compared to the same period in 2004, due primarily to a $51,000 decrease in
      gains on loan sales and a $22,000 increase in service fees and charges for
      the
      three months ended June 30, 2005, as compared to the same period in 2004. Higher
      mortgage rates that deterred borrowings from refinancing was the main reason
      for
      the decline in income.





**Other
      Expense**





Other
      expense increased by $139,000, or 8.5%, during the three months ended June
      30,
      2005, compared to the same period in 2004. This increase resulted primarily
      from
      the increase in salaries/benefits and occupancy/equipment expenses, which was
      the result of hiring several new employees for a new branch due to open early
      in
      the 3 rd quarter
      of 2005 and because of more expense related to the branch opened approximately
      a
      year ago.





**Income
      Taxes**





The
      provision for income taxes totaled $258,000 for the three months ended June
      30,
      2005, a decrease of $56,000, or 17.8%, as compared to the same period in 2004.
      The effective tax rates were 29.0% and 36.6% for the three months ended June
      30,
      2005 and 2004, respectively.








14





**Other**





The
      Securities and Exchange Commission maintains a Web site that contains reports,
      proxy information statements, and other information regarding registrants that
      file electronically with the Commission, including the Corporation. The address
      is http://www.sec.gov .








**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk**





An
      important part of River Valley Financial Bank’s asset/liability management
      policy includes examining the interest rate sensitivity of the assets and
      liabilities and monitoring the expected effects of interest rate changes on
      its
      net portfolio value.





Presented
      below, as of March 31, 2005 and 2004, is an analysis performed by the OTS of
      River Valley’s interest rate risk as measured by changes in River Valley’s net
      portfolio value (“NPV”) for instantaneous and sustained parallel shifts in the
      yield curve, in 100 basis point increments, up 300 basis points and down 200
      basis points. Down -200 basis points was added back as of the March 31, 2005
      calculations.





March
      31,
      2005





Net
                Portfolio Value
            
            NPV
                as% of PV of AssetsChangesIn
                Rates
            
            $
                Amount
            
            $
                Change
            
            %Change
            
            NPV
                Ratio
            
            Change(Dollars
                in thousands)+300
                bp
            
            
            39,448
            
            
            763
            
            
            +2
            %
            
            13.10
            %
            
            +80bp+200
                bp
            
            
            39,747
            
            
            1,063
            
            
            +3
            %
            
            13.06
            %
            
            +56bp+100
                bp
            
            
            39,566
            
            
            881
            
            
            +2
            %
            
            12.88
            %
            
            +38bp0
                bp
            
            
            38,684
            
            
            
            
            
            
            
            
            12.50
            %-100
                bp
            
            
            36,909
            
            
            -1,775
            
            
            -5
            %
            
            11.86
            %
            
            -64bp-200
                bp
            
            
            34,220
            
            
            -4,464
            
            
            -12
            %
            
            10.96
            %
            
            -154bp





March
      31,
      2004





Net
                Portfolio Value
            
            NPV
                as% of PV of AssetsChangesIn
                Rates
            
            $
                Amount
            
            $
                Change
            
            %Change
            
            NPV
                Ratio
            
            Change(Dollars
                in thousands)+300
                bp
            
            
            35,327
            
            
            2,381
            
            
            +7
            %
            
            14.00
            %
            
            +125
                bp+200
                bp
            
            
            35,351
            
            
            2,405
            
            
            +7
            %
            
            13.86
            
            
            +112
                bp+100
                bp
            
            
            34,572
            
            
            1,627
            
            
            +5
            %
            
            13.45
            
            
            +70
                bp0
                bp
            
            
            32,946
            
            
            
            
            
            
            
            
            12.75-100
                bp
            
            
            30,661
            
            
            -2,284
            
            
            -7
            %
            
            11.82
            
            
            -93
                bp





Management
      believes at June 30, 2005 there have been no material changes in River Valley’s
      interest rate sensitive instruments which would cause a material change in
      the
      market risk exposures which affect the quantitative and qualitative risk
      disclosures as presented in Item 6., Management’s Discussion and Analysis or
      Plan of Operation, of the Company’s Annual Report on Form 10-KSB for the period
      ended December 31, 2004.





15





**Item
      4. Controls and Procedures**




A.  Evaluation
      of disclosure controls and procedures. The Company’s chief executive officer and
      chief financial officer, after evaluating the effectiveness of the Company’s
      disclosure controls and procedures (as defined in Sections 13a-15(e) and
      15d-15(e) of regulations promulgated under the Securities Exchange Act of 1934,
      as amended), as of the end of the most recent fiscal quarter covered by this
      quarterly report (the “Evaluation Date”), have concluded that as of the
      Evaluation Date, the Company’s disclosure controls and procedures were adequate
      and are designed to ensure that material information relating to the Company
      would be made known to such officers by others within the Company on a timely
      basis.





B.  Changes
      in internal controls. There were no significant changes in the Company’s
      internal control over financial reporting identified in connection with the
      Company’s evaluation of controls that occurred during the Company’s last fiscal
      quarter that has materially affected, or is reasonably likely to materially
      affect, the Company’s internal control over financial reporting.





**PART
      II. OTHER INFORMATION**





Item
      1.Legal
      Proceedings





None.





Item
      2.Changes
      in Securities and Use of Proceeds and Issuers Purchases of Equity
      Securities.





None.





Item
      3.Defaults
      Upon Senior Securities.





None.





Item
      4.Submission
      of Matters to Vote of Security Holders.





On
      April
      20, 2005, the Annual Meeting of the Corporation’s shareholders was held. Three
      directors were  elected
      to the following terms and by the following votes:


For
              Votes
                  WithheldMichael
                  J. Hensley (three-year term)
              1,378,027
              4,684Fred
                  W. Koehler (three-year term)
              1,378,215
              4,496L.
                  Sue Livers, M. S., R. D. (three-year term)
              1,377,246
              5,465


Directors
      continuing in office are Robert W. Anger, Matthew P. Forrester, and Charles
      J.
      McKay.




Item
      5.Other
      Information.





None.




Item
      6.Exhibits





31(1) CEO
      Certification required by 17 C.F.R. Section 240.13a-14(a)





31(2) CFO
      Certification required by 17 C.F.R. Section 240.13a-14(a)





32Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.





16


**SIGNATURES**





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








**RIVER
                VALLEY BANCORP**Date:
            August
                12, 2005
            By:
            /s/
Matthew
              P. ForresterMatthew
                P. ForresterPresident
                and Chief Executive OfficerDate:
            August
                12, 2005
            By:
            /s/
Larry
              C. FouseLarry
                C. FouseVice
                President of Finance











17