Ameriana Bancorp to Boost Reserves in the Fourth Quarter.

Business Editors

NEW CASTLE, Ind.--(BUSINESS WIRE)--Dec. 20, 2002

Ameriana Bancorp (Nasdaq:ASBI) today announced that it will set aside additional reserves of up to $5.6 million in the Company's fourth quarter ending December 31, 2002. This action will reduce fourth quarter after-tax net income approximately $3.4 million or $1.08 per share, resulting in a net loss for both the quarter and full year. In 2001, Ameriana reported net income of $1,216,000 or $0.39 per diluted share for the fourth quarter and full-year net income of $3,800,000 or $1.21 per diluted share.

Approximately $4.7 million of the additional reserves to be set aside pertain to Ameriana's investment in a pool of leases acquired from the Commercial Money Center ("CMC"), a now-bankrupt equipment leasing company. Ameriana originally purchased two separate pools of equipment lease receivables totaling $12,000,000 from CMC in June and September 2001, of which approximately $10,900,000 currently remains unpaid. Each lease in the pools was backed by a surety bond issued by one of two insurance companies rated at least "A" by Moody's Investors Services. The bonds guaranteed payment of all amounts due under the leases in the event of default by the lessee. Each pool was sold under a Sales and Service Agreement by which the insurers serviced the leases. In each case, the insurers assigned their servicing rights and responsibilities to Commercial Servicing Corporation, an affiliate of CMC, which also has filed bankruptcy.

When the lease pools went into default earlier this year, one insurer made payments for several months under a reservation of rights while the other refused to make any payments. Both insurers now claim they were defrauded by CMC and are denying responsibility for payment.

Ameriana is one of a number of financial institutions around the country that purchased interests in lease pools from CMC. All of the CMC lease pools are in default and in litigation. The Federal Panel on Multi-District Litigation has taken control over most of the federal actions involving the insurers of the lease pools and has assigned them to the U.S. District Court for the Northern District of Ohio, Eastern Division, for consolidated pre-trial purposes.

Commenting on the announcement, Harry J. Bailey, President and Chief Executive Officer of Ameriana, said, "While we continue to believe that the surety bonds are enforceable against the insurers and that we will ultimately prevail in litigation, we also have concluded that recovery may take an extended period of time and may require significant legal expense. Because of these challenges, and our understanding of the conservative posture that industry regulators will likely assume as this matter develops further, we have determined that it is appropriate to take additional reserves against the leasing pools at this time. As a result of the action we announce today, we have now increased our reserves on the lease portfolio to 50% of the currently outstanding amount. With specific reserves at this level, we believe that the lease portfolio will not have a significant impact on earnings in future periods."

Bailey noted that the Company's regulatory capital is expected to remain well above required levels at December 31, 2002.

Ameriana Bancorp is a bank holding company. Through its wholly owned subsidiary, Ameriana Bank and Trust, the Company offers an extensive line of banking services and provides a range of investments and securities products through branches in central Indiana and in the greater Cincinnati, Ohio area. As its name implies, Ameriana Bank and Trust also offers trust and investment management services, has interests in Family Financial Life Insurance Company and Indiana Title Insurance Company, and owns Ameriana Insurance Agency, a full-service insurance agency.

This news release contains forward-looking statements within the meaning of the federal securities laws. Statements in this release that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results. These forward-looking statements, identified by words such as "believe," "will," "expect," "anticipate," and "potential" involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. These risks and uncertainties involve general economic trends and changes in interest rates, increased competition, changes in consumer demand for financial services, the possibility of unforeseen events affecting the industry generally, the uncertainties associated with newly developed or acquired operations, the amount of losses incurred from the liquidation of certain of the Company's investments, and market disruptions and other effects of terrorist activities. The Company undertakes no obligation to release revisions to these forward-looking statements publicly to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.