SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

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

For the Quarter Ended:
- ---------------------

June 30, 1999 Commission File Number 0-18392
-------

Ameriana Bancorp

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

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

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

Securities registered pursuant to Section 12(g) of Act:

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

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

YES XX NO
----- ----

As of August 6, 1999, there were issued and outstanding
3,383,876 shares of the registrant's common stock.

AMERIANA BANCORP AND SUBSIDIARIES

CONTENTS

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

ITEM 1 Financial statements

Consolidated Statements of Condition
as of June 30, 1999 and December 31,
1998. . . . . . . . . . . . . . . . . . . . . . 3

Consolidated Statements of Income for
the Three and Six Months Ended June 30, 1999
and 1998. . . . . . . . . . . . . . . . . . . . 4

Consolidated Statements of Cash Flows
for the Six Months Ended June 30,
1999 and 1998 . . . . . . . . . . . . . . . . . 5

Notes to Consolidated Financial Statements. . . 6

ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . . 7

ITEM 3 Quantitative and Qualitative Disclosure
About Interest Rate Risk. . . . . . . . . . . 10

PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . 13

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 14

EDGAR - Financial Data Schedule. . . . . . . . . . . . . . 15

PART I - FINANCIAL INFORMATION

AMERIANA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

June 30, December 31,
1999 1998
------------ -----------
ASSETS

Cash on hand and in other institutions $ 8,168,612 $ 7,545,308
Interest-bearing demand deposits 3,485,820 38,005,929
Investment-bearing time deposits 4,686,000 3,487,000
Investment securities held to maturity (fair
value of $76,732,000 and $51,512,000) 80,115,975 51,581,077
Mortgage-backed securities held to maturity
(fair value of $16,978,000 and $20,437,000) 17,090,362 20,217,346
Mortgage loans held for sale 529,500 4,181,256
Loans receivable 266,109,279 263,097,420
Allowance for loan losses (1,326,474) (1,284,286)
------------ ------------
Net loans receivable 264,782,805 261,813,134
Real estate owned 55,549 96,408
Premises and equipment 5,960,723 6,091,944
Stock in Federal Home Loan Bank 3,629,100 3,587,700
Mortgage servicing rights 943,069 1,076,948
Investments in unconsolidated subsidiaries 1,277,657 1,424,455
Intangible assets 1,947,810 2,057,464
Cash value of life insurance 15,759,472 210,738
Other assets 4,651,329 4,341,456
------------ ------------
Total assets $413,083,783 $405,718,163
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Deposits:
Noninterest-bearing $ 15,390,297 $ 14,633,031
Interest-bearing 320,214,792 319,356,272
------------ ------------
Total deposits 335,605,089 333,989,303
Advances from Federal Home Loan Bank 27,066,286 17,100,699
Drafts payable 2,785,494 4,353,792
Advances by borrowers for taxes and insurance 487,718 1,030,976
Other liabilities 3,142,357 3,894,245
------------ ------------
Total liabilities 369,086,944 360,369,015

Shareholders' Equity:
Preferred stock (5,000,000 shares
authorized; none issued) -- --
Common stock ($1.00 par value; authorized
15,000,000 shares; issued shares:
1999 - 3,389,876; 1998 - 3,510,686) 3,389,876 3,510,686
Additional paid-in capital 4,915,392 6,775,114
Retained earnings - substantially restricted 35,691,571 35,063,348
------------ ------------
Total shareholders' equity 43,996,839 45,349,148
------------ ------------
Total liabilities and shareholders'
equity $413,083,783 $405,718,163
============ ============

See accompanying notes.

AMERIANA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1999 1998 1999 1998
------- ------- ------- --------

Interest Income:
Interest on loans $5,105,651 $5,489,161 $10,243,732 $11,283,159
Interest on mortgage-backed securities 281,349 448,650 585,781 947,409
Interest on investment securities 1,201,574 625,090 2,179,044 1,118,888
Other interest and dividend income 293,459 387,432 760,468 653,511
---------- ---------- ----------- -----------
Total interest income 6,882,033 6,950,333 13,769,025 14,002,967

Interest Expense:
Interest on deposits 3,532,917 3,715,270 7,141,482 7,550,032
Interest on Federal Home Loan
Bank advances 268,879 187,863 494,727 359,977
---------- ---------- ----------- -----------
Total interest expense 3,801,796 3,903,133 7,636,209 7,910,009
---------- ---------- ----------- -----------
Net interest income 3,080,237 3,047,200 6,132,816 6,092,958

Provision for Loan Losses 30,000 36,000 67,500 72,000
---------- ---------- ----------- -----------

Net interest income after provision for
loan losses 3,050,237 3,011,200 6,065,316 6,020,958

Other Income:
Net loan servicing fees 62,689 57,293 119,041 102,651
Other fees and service charges 238,463 221,673 458,157 399,932
Brokerage and insurance commissions 312,426 321,524 659,680 667,477
Loss on investments in unconsolidated
subsidiaries (98,048) (35,000) (146,798) (90,000)
Gains on sales of loans and servicing
rights 154,245 213,543 316,694 481,590
Life insurance income 65,525 -- 79,645 --
Other 35,955 44,872 64,944 87,730
---------- ---------- ----------- -----------
Total other income 771,255 823,905 1,551,363 1,649,380

Other Expense:
Salaries and employee benefits 1,490,497 1,303,012 2,940,103 2,559,500
Net occupancy expense 339,678 335,155 702,970 655,183
Federal insurance premium 45,226 50,377 91,786 101,217
Data processing expense 63,150 142,397 143,211 218,635
Printing and office supplies 68,700 78,741 172,202 149,888
Goodwill 47,725 31,213 94,960 48,168
Other 505,910 440,274 999,040 918,229
---------- ---------- ----------- -----------
Total other expense 2,560,886 2,381,169 5,144,272 4,650,820
---------- ---------- ----------- -----------

Income before income taxes 1,260,606 1,453,936 2,472,407 3,019,518

Income taxes 399,756 539,364 814,151 1,076,027
---------- ---------- ----------- -----------
Net Income $ 860,850 $ 914,572 $1,658,256 $1,943,491
========== ========== =========== ===========

Basic Earnings Per Share $ 0.25 $ 0.26 $ 0.48 $ 0.55
========== ========== =========== ===========
Diluted Earnings Per Share $ 0.25 $ 0.25 $ 0.48 $ 0.53
========== ========== =========== ===========
Dividends Declared Per Share $0.150 $0.145 $0.300 $0.290
========== ========== =========== ===========

See accompanying notes.

AMERIANA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,
-------------------------
1999 1998
---------- ----------

OPERATING ACTIVITIES
Net income $ 1,658,256 $ 1,943,491
Adjustments to reconcile net income to net
cash provided by operating activities:
Provisions for losses on loans and real
estate owned 75,000 72,000
Depreciation and amortization 280,924 306,747
Equity in loss of limited partnership 146,798 90,000
Mortgage servicing rights amortization 127,280 90,623
Goodwill amortization 94,960 48,168
Deferred income taxes (2,615) 14,620
Gains on sales of real estate owned 1,761 (8,868)
Mortgage loans originated for sale (19,021,576) (45,460,356)
Proceeds from sales of loans 22,937,175 44,972,644
Gains on sales of loans and servicing rights (257,244) (481,590)
Increase in cash value of life insurance (87,734) (8,089)
Increase in other assets (295,179) 22,135
Decrease in drafts payable (1,568,298) (1,374,584)
Increase in other liabilities (1,272,064) (609,703)
------------ ------------
Net cash provided (used) by operating
activities 2,817,444 (382,762)

INVESTING ACTIVITIES
Purchase of interest-bearing time deposits (1,199,000) --
Purchase of investment securities held to
maturity (35,500,444) (24,887,939)
Proceeds from maturity of securities held
to maturity -- 5,000,000
Proceeds from calls of securities held to maturity 6,992,969 17,300,000
Principal collected on mortgage-backed
securities held to maturity 3,076,979 4,510,268
Net change in loans (3,078,562) 27,533,120
Premiums paid on life insurance (15,461,000) --
Proceeds from sale of real estate owned 73,954 123,823
Net purchases of premises and equipment (128,029) (96,430)
Cash received in acquisition -- 11,345,702
Other investing activities (41,456) (4,866)
------------ ------------
Net cash provided (used) by investing
activities (45,264,589) 40,823,678

FINANCING ACTIVITIES
Net change in demand and passbook deposits 6,089,108 8,203,744
Net change in certificates of deposit (4,473,322) (32,170,124)
Advances from Federal Home Loan Bank 12,500,000 4,000,000
Repayment of Federal Home Loan Bank advances (2,534,413) (7,237,769)
Proceeds from exercise of stock options 66,937 302,843
Purchase of common stock (2,047,470) --
Cash dividends paid (1,050,500) (1,037,587)
------------ ------------
Net cash used by financing activities 8,550,340 (27,938,893)
------------ ------------
Increase (decrease) in cash and cash equivalents (33,896,805) 12,502,023

Cash and cash equivalents at beginning of year 45,551,237 15,209,080
------------ ------------
Cash and cash equivalents at end of period $ 11,654,432 $ 27,711,103
============ ============
Supplemental information:
Interest paid $ 7,772,312 $ 6,245,352
Income taxes paid 1,120,000 1,260,000

See accompanying notes.
5

AMERIANA BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
NOTE A -- BASIS OF PRESENTATION

The unaudited interim consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q
and, therefore, do not include all information and disclosures
required by generally accepted accounting principals for
complete financial statements. In the opinion of management,
the financial statements reflect all adjustments (comprised only
of normal recurring adjustments and accruals) necessary to
present fairly the Company's financial position as of June 30,
1999, and the results of operations and changes in cash flows
for the three-month and six-month periods ended June 30, 1999
and 1998. A summary of the Company's significant accounting
policies is set forth in Note 1 of Notes to Consolidated
Financial Statements in the Company's annual report on Form 10-K
for the year ended December 31, 1998.

NOTE B - - SHAREHOLDERS' EQUITY

On May 20, 1999, the Board of Directors declared a quarterly
cash dividend of $.15 per share. This dividend, totaling
$509,324, was accrued for payment to shareholders of record on
June 11, 1999, and was paid on July 2, 1999.

During the six months ended June 30, 1999, 6,810 new shares were
issued from exercise of stock options and total equity was
increased by $66,937 due to cash proceeds and tax benefits from
these stock option exercises.

The Company repurchased 127,620 shares of its common stock on
the market during the first six months of 1999 for a total of
$2,047,470. The price of stock repurchased ranged from $15.675
to $17.00 per share.

Earnings per share were computed as follows:

Three Months Ended June 30,
---------------------------
1999 1998
- ------------------------------------------------------------------------------------
Weighted Per Weighted Per
Average Share Average Share
Income Shares Amount Income Shares Amount
- ------------------------------------------------------------------------------------

Basic Earnings per Share:
Income available to
Common shareholders $860,850 3,419,487 $.25 $914,572 3,577,664 $ .26
Effect of dilutive stock
options -- 26,179 -- 55,381
- ------------------------------------------------------------------------------------
Diluted Earnings Per Share:
Income available to
common shareholders and
assumed conversions $860,850 3,445,666 $.25 $914,572 3,633,045 $ .25
- ------------------------------------------------------------------------------------

Six Months Ended June 30,
---------------------------
1999 1998
- ------------------------------------------------------------------------------------
Weighted Per Weighted Per
Average Share Average Share
Income Shares Amount Income Shares Amount
- ------------------------------------------------------------------------------------

Basic Earnings per Share:
Income available to
Common shareholders $1,658,256 3,454,866 $.48 $1,943,491 3,572,392 $.55
Effect of dilutive stock
options -- 29,844 -- 57,216
Diluted Earnings Per Share:
- ------------------------------------------------------------------------------------
Income available to
common shareholders and
assumed conversions $1,658,256 3,484,710 $.48 $1,943,491 3,629,608 $.53
- ------------------------------------------------------------------------------------

NOTE C - - RECLASSIFICATIONS

Certain reclassifications of 1998 amounts have been made to
conform to the 1999 presentation.

AMERIANA BANCORP AND SUBSIDIARIES

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

General
- -------

This Quarterly Report on Form 10-Q ("Form Q") may contain
statements which constitute forward looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements appear in a number of places in this
Form 10-Q and include statements regarding the intent, belief,
outlook, estimate or expectations of the Company primarily with
respect to future events and future financial performance.
Readers of this Form 10-Q are cautioned that any such forward
looking statements are not guarantees of future events or
performance and involve risks and uncertainties, and that actual
results may differ materially from those in the forward looking
statements as a result of various factors. The 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.

The largest components of the Company's total revenue and total
expenses are interest income and interest expense, respectively.
Consequently, the Company's earnings are primarily dependent on
its net interest income, which is determined by (i) the
difference between rates of interest earned on interest-earning
assets and rates paid on interest-bearing liabilities ("interest
rate spread"), and (ii) the relative amounts of interest earning
assets and interest-bearing liabilities. Levels of other income
and operating expenses also significantly affect net income.

Management believes that interest rate risk, i. e., the
sensitivity of income and net asset values to changes in
interest rates, is one of the most significant determinants of
the Company's ability to generate future earnings. Accordingly,
the Company has implemented a long-range plan intended to
minimize the effect of changes in interest rates on operations.
The asset and liability management policies of the Company are
designed to stabilize long-term net interest income by managing
the repricing terms, rates an relative amounts of interest-
earning assets and interest-bearing liabilities.

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

During the first six months of 1999, the Company was compelled
by low fixed rate mortgage rates to make fixed rate loans and
sell them to the secondary market. The past theory of
emphasizing variable rate mortgage loans and keeping them in the
portfolio could not be continued because consumers were
satisfied with the low fixed rates. During the latter part of
the second quarter, the interest rates on mortgage loans
increased and the Company has seen a return to a preference for
variable rate loans by our customers, and these loans are
retained in portfolio. Also retained in portfolio are the
fifteen or less year fixed rate mortgage loans and thirty year
fixed rate jumbo loans. The Company has also been successful in
increasing the volume of new commercial loans with the
outstanding portfolio increasing by over five million dollars
during the first six months of 1999. The loans outstanding
increased $3,011,859 and 1.14% to $266,109,279 during the six
months from $263,097,420 at December 31, 1998. This increase is
lower than the commercial loan increase due to having to
overcome a decrease of $5,449,600 in all categories of
outstanding loans during the first quarter of 1999. The
mortgage loans held for sale decreased to $529,500 at June 30,
1999, from $4,181,256 at December 31,
7

1998, but these are loans that have been committed to be sold to
the secondary market but had not been delivered as of the end of
the period.

Sales of loans to the secondary market significantly decreased
to $22,937,175 during the first six months of 1999 compared to
$44,972,644 during the same period in 1998. This is only 50.59%
of the 1998 volume of loans sold and had a significant effect on
other income by the reduction of the gain on sale of loans. See
comments on other income for detail of gains on loans sold.

The net interest spread, difference between yield on interest-
earning assets and cost on interest-bearing liabilities, has
increased during the second quarter of 1999 compared to the same
period in 1998. This increase is due to the interest yield
reduction of .39% on interest-earning average assets for the
second quarter being more than offset by the .42% reduction in
cost on interest-bearing average liabilities for the second
quarter. This reduction of the cost of liabilities has resulted
from decreased rates on the Federal Home Loan Bank borrowings
and deposit costs during the second quarter of 1999 compared to
second quarter 1998. This same explanation can be made for the
first six months of 1999 compared to the first six months of
1998, when interest spread increased. The yield on average
earning assets decreased .39% during the first half of 1999
while the yield on average interest bearing liabilities
decreased .41%.

The following table summarizes the Company's average net
interest-earning assets and interest-bearing liabilities with
the accompanying average rates for the second quarter and first
six months of 1999 and 1998:

Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------- ------- ------ ------
(Dollars in Thousands)
---------------------

Interest-earning assets $378,390 $362,422 $380,518 $366,899
Interest-bearing liabilities 337,498 316,905 336,484 319,529
-------- -------- -------- --------
Net interest-earning assets $ 40,892 $ 45,517 $ 44,034 $ 47,370
-------- -------- -------- --------
Average yield on:
Interest-earning assets 7.30% 7.69% 7.30% 7.69%
Interest-bearing liabilities 4.52 4.94 4.58 4.99
---- ---- ---- ----

Net interest spread 2.78% 2.75% 2.72% 2.70%
---- ---- ---- ----

Net interest income for the second quarter 1999 was $3,080,237
and was $33,037 and 1.08% more than $3,047,200 during the second
quarter of 1998. Net interest income for the first six months
of 1999 was $6,065,316 and was $39,858 and .65% more than
$6,092,958 during the first six months of 1998. This increase
in net interest income for the six months is due to lower
interest income being more than offset by lower interest
expense. The $234,000 decrease in interest income on earning
assets is a combination of an increase of $170,000 because of
the volume mix of average outstanding interest-bearing assets
offset by a decrease of $404,000 due to rate decreases on
average interest-earning assets. The $274,000 decrease in
interest expense is a combination of an increase of $424,000
because of higher outstanding average interest-bearing
liabilities offset by a $698,000 reduction in costs due to lower
rates on interest-bearing liabilities. The net interest margin
ratio, which is net income divided by average earning assets,
decreased to 3.27% for the second quarter 1999 compared to 3.37%
for the second quarter of 1998. This same ratio for the six
months ended June 30, 1999, decreased to 3.25% from 3.35% for
the same period in 1998.

The provision for loan losses was $30,000 during the second
quarter of 1999 compared to $36,000 during the same period in
1998. The provision for loan losses for the six months ended
June 30, 1999, was $67,500 compared to $72,000 for the first six
months of 1998. Net charge-offs for the first six months of
1999 and 1998 were $25,312 and $84,068, respectively. The
following table summarizes the Company's non-performing assets
at:

June 30, December 31, June 30,
1999 1998 1998
---- ---- ----
(Dollars in Thousands)
----------------------

Loans:
Non-accrual $ 828 $ 745 $ 731
Over 90 days delinquent 152 40 237
Trouble debt restructured 805 914 971
Real estate owned 56 96 154
------ ------ ------
Total $1,841 $1,795 $2,093
------ ------ ------

Management believes the allowance for loan losses is adequate
and that sufficient provision has been provided to absorb any
losses, which may ultimately be incurred on non-performing loans
and the remainder of the portfolio. The allowance for loan
losses as a percentage of loans at the end of the period was
.50%, .49% and .43% at June 30, 1999, December 31, 1998 and June
30, 1998, respectively. Through June 30, 1999, $7,500 has also
been charged directly to the reduction of real estate owned.

Total other income for the second quarter of 1999 decreased
$52,650 and 6.39% to $771,255 from $823,905 in the same period
during 1998. Total other income for the six months ended June
30, 1999, was down $98,017 and 5.94% to $1,551,363 from
$1,649,380 during the first six months of 1998. As noted
earlier, sales of loans to the secondary market reduced
dramatically in 1999 compared to 1998 and gains on sales of
loans and servicing rights during the second quarter of 1999
decreased $59,298 and 27.77% to $154,245 from $213,543 during
the same period in 1998. This gain in 1999 also included a gain
of $59,450 on the sale of $19,572,000 of loan servicing compared
to none in 1998. Actual gain on loan sales decreased $118,748
in the second quarter of 1999 compared to the second quarter of
1998. Gains on sales of loans and servicing rights decreased
$164,896 and 32.24% during the six months ended June 30, 1999,
to $316,694 from $481,590 during the same period in 1998.
Brokerage and insurance commissions decreased $7,797 and 1.17%
due to lower loan demand and a loss from an unconsolidated
investment increased $56,798 and 63.11%. Gains for the six
months were noted in net loans serving increasing $16,390 and
15.97%, other fees and servicing increasing $58,225 and 14.56%
and other income, mostly due to new investments in bank owned
officer life insurance (BOLI), increasing $56,859 and 64.81%.

Total other expense increased $179,717 and 7.54% during the
second quarter of 1999 to $2,560,886 from $2,381,169 during the
same period in 1998 and increased $493,452 and 10.61% to
$5,144,272 during the first six months of 1999 from $4,650,820
during the first six months of 1998. The salary and employee
benefits expense increased $187,485 and 14.39% during the second
quarter of 1999 to $1,490,497 from $1,303,012 during the same
period in 1998. Salary expense for the first six months of 1999
increased $380,603 and 14.87% to $2,940,103 from $2,559,500
during the same period in 1998. These increases are mostly due
to the addition of one new branch for four extra months in 1999
and two new branches for six extra months in 1999 compared to
1998 and to the addition of personnel to meet our initiative for
commercial loans and another title insurance branch location.
The data processing expense decreased $79,247 and 55.65% during
the second quarter of 1999 to $63,150 from $142,397 during the
same period in 1998. Data processing expense decreased $75,424
and 34.50% to $143,211 for the six months ended June 30, 1999,
compared to $218,635 during the same period in 1998. The data
processing operations of our Ohio bank subsidiary were converted
to the same in-house computer system already operated by our
Indiana bank subsidiary, from an outside service bureau,
effective June 1, 1998, and has provided for reduced expenses
during 1999. The increase in goodwill expense to $94,960 during
the first six months of 1999 compared to $48,168 during the same
period in

1998 is due to increased amortization related to the
new branches purchased. The efficiency ratio, which is other
expense (not including amortization of goodwill) divided by net
interest income before the provision for loan losses plus other
income, decreased to 65.71% during the six months of 1998 from
59.45% during the same period in 1998.

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

The Company's principal sources of funds are cash generated from
operations, deposits, loan principal repayments and advances
from the Federal Home Loan Bank ("FHLB"). As of June 30, 1999,
the Company's cash and interest-bearing demand deposits totaled
$11,654,432 and 2.82% of total assets. This compares with
$45,551,237 and 11.23% of total assets at December 31, 1998.
The Company's banking subsidiaries, Ameriana Bank of Indiana
("ABI") and Ameriana Bank of Ohio ("ABO") have regulatory
liquidity ratios at June 30, 1999, of 28.04% and 15.55%,
respectively, which exceeds the 4.0% liquidity base set by the
Office of Thrift Supervision ("OTS").

Investments have increased $28,534,898 and 55.32% to $80,115,975
during 1999 due to loan volume being down and cash flows being
put into investments. Both banks also currently employ the
strategy to increase interest income through the purchase of
investments with the proceeds of advances from the FHLB and/or
from public deposits purchased from local municipalities. These
arbitrages are implemented when investment rates are sufficient
to provide an adequate spread to the borrowing costs.

The cash value of life insurance has also increased $15,548,734
during 1999 after the Company implemented the use of life
insurance products to fund retirement benefits for certain key
employees and directors and for investment in bank owned life
insurance (BOLI) on other employees. These BOLI policies are
being used to offset the future costs of providing these
employees with fringe benefits and all life insurance policies
earn tax free interest income.

The regulatory minimum net worth requirement for ABI and ABO
under the most stringent of the three capital regulations (total
risk-based capital to risk-weighted assets) at June 30, 1999,
was $13,997,000 and $3,599,000, respectively. At June 30, 1999,
ABI had total risk based capital of $31,577,000 and ABO had
$8,436,000.

At June 30, 1999, the Company's commitments for loans in process
totaled $18,401,000, with more than 95% being for real estate
secured loans. Management believes the Company's liquidity and
other sources of funds will be sufficient to fund all
outstanding commitments and other cash needs.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT INTEREST
RATE RISK

INTEREST RATE RISK
- ------------------

ABI and ABO are subject to interest rate risk to the degree that
their interest-bearing liabilities, primarily deposits, mature
or reprice at different rates than their interest-earning
assets. Although having liabilities that mature or reprice less
frequently on average than assets will be beneficial in times of
rising interest rates, such an asset/liability structure will
result in lower net income during periods of declining interest
rates, unless offset by other factors.

It is important to ABI and ABO to manage the relationship
between interest rates and the effect on their net portfolio
value ("NPV"). This approach calculates the difference between
the present value of expected cash flows from assets and the
present value of expected cash flows from liabilities, as well
as cash flows from off-balance sheet contracts. Assets and
liabilities are managed within the context of the marketplace,

regulatory limitations and within its limits on the amount of
change in NPV, which is acceptable given certain interest rate
changes.

The Office of Thrift Supervision ("OTS") issued a regulation,
which uses a net market value methodology to measure the
interest rate risk exposure of savings associations. Under this
OTS regulation an institution's "normal" level of interest rate
risk in the event of an assumed change in interest rates is a
decrease in the institution's NPV in an amount not exceeding 2%
of the present value of its assets. Savings associations with
over $300 million in assets or less than a 12% risk-based
capital ratio are required to file OTS Schedule CMR. Data from
Schedule CMR is used by the OTS to calculate changes in NPV (and
the related "normal" level of interest rate risk) based upon
certain interest rate changes (discussed below). Associations
which do not meet either of the filing requirements are not
required to file OTS Schedule CMR, but may do so voluntarily.
ABI, with assets over $300 million, is required to file the
schedule. As ABO does not meet either of these requirements, it
is not required to file Schedule CMR, although it does so
voluntarily. Under the regulation, associations which must file
are required to take a deduction (the interest rate risk capital
component) from their total capital available to calculate their
risk based capital requirement if their interest rate exposure
is greater than "normal". The amount of that deduction is one-
half of the difference between (a) the institution's actual
calculated exposure to a 200 basis point interest rate increase
or decrease (whichever results in the greater pro forma decrease
in NPV) and (b) its "normal" level of exposure which is 2% of
the present value of its assets on the Thrift Financial Report
filed two quarters earlier.

The following information and schedule for ABO and the
subsequent information and schedule for ABI are required to be
presented. The current analysis for ABO and ABI performed by
the OTS as of June 30, 1999, has not been received from the OTS
and the following interest rate risk measurements for ABO and
the subsequent rate risk measurements for ABI are being
submitted with information from the OTS analysis as of March 31,
1999. Management believes there has been no significant change
in the interest rate risk measures since March 31, 1999, for
either ABO or ABI.

Presented below, as of March 31, 1999, is an analysis performed
by the OTS of ABO's interest rate risk as measured by changes in
NPV for instantaneous and sustained parallel shifts in the yield
curve, in 100 basis point increments, up and down 300 basis
points. At September 30, 1998, 2% of the present value of ABO's
assts was $1.933 million. Because the interest rate risk of a
200 basis point increase in market rates (which was greater than
the interest rate risk of a 200 basis point decrease) was $1.585
million at March 31, 1999, ABO would not have been required to
make a capital deduction.

- ----------------------------------------------------------------------------------------
NPV as Percent of
Net Portfolio Value Present Value of Assets
- ----------------------------------------------------------------------------------------
Change Dollar Dollar Percent
In Rates Amount Change Change NPV Ratio Change
- ----------------------------------------------------------------------------------------
(Dollars in thousands)
- ----------------------------------------------------------------------------------------

+300 bp 10,062 -2,753 -21% 11.69% -215 bp
+200 bp 11,230 -1,585 -12% 12.70% -114 bp
+100 bp 12,175 -640 -5% 13.44% -40 bp
0 bp 12,815 13.84%
- -100 bp 13,408 593 +5% 14.17% +33 bp
- -200 bp 14,215 1,400 +11% 14.66% +82 bp
- -300 bp 15,445 2,630 +21% 15.48 +164 bp

* basis points

Also presented below, as of March 31, 1999, is an analysis,
performed by the OTS, of ABI's interest rate risk as measured by
changes in NPV for instantaneous and sustained parallel shifts
in the yield curve, in 100 basis point increments, up and down
300 basis points. At September 30, 1998, 2% of the present
value of ABI's assets was $6.204 million. Because the interest
rate risk of a 200 basis point increase in market rates (which
was greater than the interest rate risk of a 200 basis point
decrease) was $10.439 million at March 31, 1999, ABI would have
been required to make a $2.118 million deduction from its total
capital available to calculate its risk based capital
requirement. This reduction in capital would reduce ABI's risk-
based capital ratio to 19.82% from 21.15%, which is still far in
excess of the required risk-based capital ratio of 8.0%.

+300 bp 28,851 -16,148 -36% 9.47% -433 bp
+200 bp 34,560 -10,439 -23% 11.08% -273 bp
+100 bp 39,949 - 5,050 -11% 12.52% -129 bp
0 bp 44,999 13.81%
- -100 bp 50,570 5,572 +12% 15.17% +136 bp
- -200 bp 56,865 11,866 +26% 16.64% +283 bp
- -300 bp 64,420 19,422 +43% 18.33% +453 bp

basis points

As with any method of measuring interest rate risk, certain
shortcomings are inherent in the methods of analysis presented
above. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react
in different degrees to changes in market interest rates. Also,
the interest rates on certain types of assets and liabilities
may fluctuate in advance of changes in market interest rates,
while interest rates on other types may lag behind changes in
market rates. Additionally, certain assets, such as adjustable-
rate loans, have features, which restrict changes in interest
rates on a short-term basis and over the life of the asset.
Further, in the event of a change in interest rates, expected
rates of prepayments on loans and early withdrawals from
certificates could likely deviate significantly from those
assumed in calculating the table. Finally, the ability of many
borrowers to service their debt may decrease in the event of an
interest rate increase. The Company considers all of these
factors in monitoring its exposure to interest rate risk.

YEAR 2000 ISSUE
- ---------------

The Company is aware of the issues associated with the
programming code in existing computer systems as the millennium
("Year 2000") approaches. The Year 2000 problem is pervasive
and complex as virtually every computer operation and any
equipment with computer chips may be affected in some way by the
rollover of the two-digit year value to 00. The issue is
whether computer systems and computer chips will properly
recognize date-sensitive information when the year changes to
2000. Computer chips that do not properly recognize such
information could generate erroneous data or cause a system to
fail. The Company has developed an extensive Year 2000
Compliance Plan. The Company has completed the assessment
process of all its business processes to make a determination of
areas that could be affected by the Year 2000 problem. The
review included all hardware, software and any interaction with
third party vendors. The Company has completed the testing of
all on-site hardware and software. In addition, the Company has
tested the interfaces and communications with third party
vendors with which it conducts business through automated or
computerized processes. All tests indicated readiness for the
Year 2000.

The Company believes that its assessment, remediation and
testing of all of its hardware, software and processes have
adequately addressed all Year 2000 issues. The Company has,
however, developed, and will continue to modify, a Business
Resumption Plan ("Plan"). The Plan attempts to anticipate all
scenarios of failure, either in our own systems or the failure
of an organization on which the Company is dependent for
services. The Plan creates alternate plans to conduct business
in the event of any system failure. The Company has committed a
great deal of management time in creating and implementing its
Year 2000 Compliance Plan. To date the Company has not incurred
a significant amount of external costs in the remediation and
replacement of existing systems and did not track internal
personnel costs associated with the Year 2000 work. Management
believes that expenses associated with the Year 2000 compliance
have not, nor are they expected to have, a material impact on
the Company's net income.

OTHER
- -----

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

PART II - OTHER INFORMATION

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

No changes have taken place in regard to the legal
proceedings disclosed in the registrant's report
on Form 10-K for the year ended December 31, 1998.

ITEM 2 - Changes in Securities
---------------------

Not Applicable

ITEM 3 - Defaults in Senior Securities
-----------------------------

Not Applicable

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

On May 20, 1999, the Company held its 1999 annual
meeting of shareholders. A total of 2,922,037
shares, or 84.4% of the Company's shares outstanding,
were represented at the meeting either in person or
by proxy.

Three Directors were nominated by the Company's Board
of Directors to serve new three-year terms expiring
in 2002. The nominees and the voting results for
each are listed below:

For Withheld
--------- --------
Harry J. Bailey 2,790,210 131,827
Charles M. Drackett, Jr. 2,908,359 13,678
Ronald R. Pritzke 2,909,173 12,864

The following Directors, whose three year terms of
service have not expired, continue as Directors of
the Company:
R. Scott Hayes, Michael E. Kent, Donald C.
Danielson and Paul W. Prior

The Shareholders ratified the appointment of Olive
LLP as auditors for the Company for the fiscal year
ended December 31, 1999. A total of 2,909,961 shares
voted in favor of this proposal, 8,773 shares voted
against the proposal and 9,303 shares abstained from
voting on the proposal.

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

Not Applicable

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

Not Applicable

AMERIANA BANCORP AND SUBSIDIARIES

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

AMERIANA BANCORP

DATE: August 6, 1999 /s/ Harry J. Bailey
-------------- -------------------
Harry J. Bailey
President and
Chief Executive Officer
(Duly Authorized Representative)

DATE: August 6, 1999 /s/ Richard E. Welling
-------------- ----------------------
Richard E. Welling
Senior Vice President-
Treasurer
(Principal Financial Officer
and Accounting Officer)