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 SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
         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: 0-21108

                          MARION CAPITAL HOLDINGS, INC.
               (Exact name of registrant specified in its charter)


          Indiana                                             35-1872393
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)

                              100 West Third Street
                                  P.O. Box 367
                              Marion, Indiana 46952
                    (Address of principal executive offices,
                               including Zip Code)

                                 (317) 664-0556
              (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 [ ]

The  number of shares of the  Registrant's  common  stock,  without  par  value,
outstanding as of May 4, 1999 was 1,494,854.


<PAGE>




                          Marion Capital Holdings, Inc.

                                    Form 10-Q

                                      Index

                                                                        Page No.

Forward Looking Statements.....................................................1

PART I.   FINANCIAL INFORMATION

Item 1.     Financial Statements...............................................2

               Consolidated Condensed Statement of Financial Condition as of
               March 31, 1999 and June 30, 1998................................2

               Consolidated Condensed Statement of Income for the three-month
               and nine-month periods ended March 31, 1999 and 1998............3

               Consolidated Condensed Statement of Shareholders' Equity
               for the nine months ended March 31, 1999........................4

               Consolidated Condensed Statement of Cash Flows for 
               the nine months ended March 31, 1999 and 1998...................5

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

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

Item 3.     Quantitative and Qualitative Disclosures About Market Risk........16

PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings.................................................18

Item 6.     Exhibits and Reports on Form 8-K..................................18

SIGNATURES....................................................................19



<PAGE>




                           FORWARD LOOKING STATEMENTS

Except for historical  information contained herein, the discussion in this Form
10-Q quarterly  report includes  certain  forward-looking  statements based upon
management expectations. Factors which could cause future results to differ from
these  expectations   include  the  following:   general  economic   conditions,
legislative  and  regulatory  initiatives,  monetary and fiscal  policies of the
federal government,  deposit flows, the costs of funds,  general market rates of
interest,  interest  rates on competing  investments,  demand for loan products,
demand for financial services, changes in accounting policies or guidelines, and
changes in the  quality or  composition  of the  Company's  loan and  investment
portfolios.

The Company does not undertake  and  specifically  disclaims  any  obligation to
update any forward- looking  statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such statements.

                                                         1

<PAGE>

Item 1. Financial Statements

                          MARION CAPITAL HOLDINGS, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                      FIRST FEDERAL SAVINGS BANK OF MARION

             CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>

                                                        March 31,         June 30,
                                                          1999              1998
                                                      ------------      ------------
ASSETS
<S>                                                   <C>               <C>         
  Cash                                                $  2,883,109      $  3,211,191
  Short-term interest bearing deposits                   6,333,266         1,923,573
                                                      ------------      ------------
    Total cash and cash equivalents                      9,216,375         5,134,764

  Investment securities available for sale               3,051,249         3,048,751
  Investment securities held to maturity
    (market value $0 and $2,001,520)                             0         2,002,917
  Loans receivable, net                                164,897,545       164,475,289
  Real estate owned, net                                         0            30,735
  Premises and equipment                                 1,987,795         1,928,772
  Stock in Federal Home Loan Bank (at cost which
    approximates market)                                 1,134,400         1,134,400
  Investment in limited partnerships                     4,742,675         4,883,175
  Investment in other affiliate                            650,000           650,000
  Core deposit intangibles and goodwill                    723,830           802,586
  Other assets                                           9,850,632         9,871,520
                                                      ------------      ------------

    Total assets                                      $196,254,501      $193,962,909
                                                      ============      ============

LIABILITIES

  Deposits                                            $138,951,469      $134,415,469
  Advances from FHLB                                    15,181,300        13,684,302
  Advances by borrowers for taxes and
    insurance                                              433,521           208,331
  Other liabilities                                      8,579,701         7,998,180
                                                      ------------      ------------
    Total liabilities                                  163,145,991       156,306,282

SHAREHOLDERS' EQUITY
  Preferred stock:
    Authorized and unissued -- 2,000,000 shares                  0                 0
  Common stock, without par value:
    Authorized -- 5,000,000 shares
    Issued and outstanding -- 1,492,756 and
      1,699,307 shares                                   7,954,074         7,785,191
  Retained earnings                                     25,123,178        29,841,104
  Accumulated other comprehensive income                    31,258            30,332
                                                      ------------      ------------
    Total shareholder's equity                          33,108,510        37,656,627
                                                      ------------      ------------

    Total liabilities and shareholders' equity        $196,254,501      $193,962,909
                                                      ============      ============
</TABLE>




                                                         2

<PAGE>

                          MARION CAPITAL HOLDINGS, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                      FIRST FEDERAL SAVINGS BANK OF MARION

                   CONSOLIDATED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>


                                                 Three Months Ended                   Nine Months Ended
                                                      March 31,                            March 31,
                                          -------------------------------       -------------------------------
                                              1999               1998               1999               1998
                                          ------------       ------------       ------------       ------------
Interest income
<S>                                       <C>                <C>                <C>                <C>         
  Loans                                   $  3,624,006       $  3,400,099       $ 10,971,215       $ 10,038,485
  Mortgage-backed securities                         0                171                 31              2,505
  Interest-bearing deposits                     52,533            111,262            123,964            232,310
  Investment securities                         47,824             77,947            182,199            256,717
  Other interest and dividend income            22,377             20,659             68,212             63,555
                                          ------------       ------------       ------------       ------------
    Total interest income                    3,746,740          3,610,138         11,345,621         10,593,572

Interest expense
  Deposits                                   1,651,935          1,640,979          5,068,533          4,791,744
  Advances from FHLB                           220,991            162,044            686,323            476,506
                                          ------------       ------------       ------------       ------------
    Total interest expense                   1,872,926          1,803,023          5,754,856          5,268,250

Net interest income                          1,873,814          1,807,115          5,590,765          5,325,322

Provision for losses on loans                    1,400              7,534             17,589             23,088
                                          ------------       ------------       ------------       ------------

Net interest income after provision          1,872,414          1,799,581          5,573,176          5,302,234

Other income
  Net loan servicing fees                       23,057             19,566             62,463             58,604
  Annuity and other commissions                 52,743             27,013             98,263             94,472
  Equity in losses of limited
    partnerships                               (35,000)           (22,500)          (140,500)          (147,600)
  Life insurance income and
    death benefits                              39,750             41,251            142,250            133,794
  Other income                                  87,110             53,568            261,262            130,893
                                          ------------       ------------       ------------       ------------
    Total other income                         167,660            118,898            423,738            270,163
                                          ------------       ------------       ------------       ------------

Other expenses
  Salaries and employee benefits               724,474            681,122          2,003,670          1,902,142
  Occupancy expense                             69,688             74,053            199,516            180,721
  Equipment expense                             34,549             27,731             96,849             69,221
  Deposit insurance expense                     32,855             33,119             99,703             96,409
  Real estate operations, net                   (1,628)            85,592             (2,875)           216,372
  Data processing expense                       77,498             60,242            228,632            146,981
  Advertising                                   20,641             27,944             89,944            105,447
  Amortization of core deposit
    intangibles and goodwill                    25,249             27,053             78,755             36,071
  Other expenses                               204,046            191,545            608,255            532,721
                                          ------------       ------------       ------------       ------------
    Total other expenses                     1,187,372          1,208,401          3,402,449          3,286,085
                                          ------------       ------------       ------------       ------------

Income before income taxes                     852,702            710,078          2,594,465          2,286,312
  Income tax expense                           328,751            189,333            968,845            602,756
                                          ------------       ------------       ------------       ------------

Net income                                $    523,951       $    520,745       $  1,625,620       $  1,683,556
                                          ============       ============       ============       ============

Per share
  Basic earnings per share                $       0.35       $       0.29       $       1.04       $       0.95
  Diluted earnings per share              $       0.35       $       0.29       $       1.02       $       0.93
  Dividends                               $       0.22       $       0.22       $       0.66       $       0.66

</TABLE>
<PAGE>

                          MARION CAPITAL HOLDINGS, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                      FIRST FEDERAL SAVINGS BANK OF MARION

            CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>


                                                                   Total
                                                                Shareholders'
                                                                  Equity
                                                       -------------------------------


<S>                                                    <C>                <C>         
Balances, July, 1 1998 and July 1, 1997                $ 37,656,627       $ 39,065,819

  Comprehensive income
    Net income                                            1,625,620          1,683,556
    Other comprehensive income, net of tax
      Unrealized gains on securities                            926             34,533
                                                       ------------       ------------

    Comprehensive income                                  1,626,546          1,718,089

  Exercise of stock options                                  61,901            238,453

  Repurchase of common stock                             (5,311,296)          (501,000)

  Amortization of unearned compensation                           0            124,540

  Tax benefit of stock options excercised and RRP           106,982             96,186

  Cash dividends                                         (1,032,250)        (1,176,670)
                                                       ------------       ------------

Balances, March 31, 1999 and March 31, 1998            $ 33,108,510       $ 39,565,417
                                                       ============       ============
</TABLE>


<PAGE>

                          MARION CAPITAL HOLDINGS, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                      FIRST FEDERAL SAVINGS BANK OF MARION

                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                      Nine Months Ended
                                                                          March 31,
                                                              -------------------------------
OPERATING ACTIVITIES                                              1999               1998
                                                              ------------       ------------
<S>                                                           <C>                <C>         
   Net Income                                                 $  1,625,620       $  1,683,556
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Provision for loan losses                                  17,589             23,088
         Equity in loss of limited partnerships                    140,500            147,600
         Amortization of net loan origination fees                (196,806)          (136,567)
         Net amortization of investment securities'
            premiums and discounts                                     817              2,957
         Amortization of unearned compensation                           0            124,540
         Amortization of core deposits and goodwill                 25,249             27,053
         Depreciation                                              135,101             91,370
         Deferred income tax                                        14,825            (70,271)
         Origination of loans for sale                          (6,743,872)        (2,950,851)
         Proceeds from sale of loans                             7,479,681          2,950,851
         Change in:
            Interest receivable                                    174,463           (162,349)
            Interest payable and other liabilities                 581,521            940,877
            Cash value of insurance                               (142,250)          (133,793)
            Prepaid expense and other assets                        34,584            (27,887)
                                                              ------------       ------------
               Net cash provided by operating activities         3,147,022          2,510,174
                                                              ------------       ------------

INVESTING ACTIVITIES
   Proceeds from maturity of investment securities
      held to maturity                                           2,000,000          2,610,000
   Payments on mortgage-backed securities                            2,917            228,717
   Net changes in loans                                           (850,747)       (11,608,444)
   Purchases of premises and equipment                            (194,124)          (463,552)
   Death benefits received on life insurance                             0            553,793
   Cash received in branch acquisition                                   0         11,544,302
                                                              ------------       ------------
      Net cash provided by investing activities                    958,046          2,864,816
                                                              ------------       ------------

</TABLE>

<PAGE>

   (CONTINUED)

<PAGE>
<TABLE>
<CAPTION>

<S>                                                             <C>                 <C>      
FINANCING ACTIVITIES
   Net change in:
      Interest-bearing demand and savings deposits              (1,563,053)         3,159,127
      Certificates of deposit                                    6,099,053         (4,371,150)
   Proceeds from FHLB advances                                   8,909,000          6,656,000
   Repayment of FHLB advances                                   (7,412,002)        (4,195,907)
   Net change in advances by borrowers for taxes
      and insurance                                                225,190            152,125
   Proceeds from exercise of stock options                          61,901            238,453
   Repurchase of common stock                                   (5,311,296)          (501,000)
   Dividends paid                                               (1,032,250)        (1,176,670)
                                                              ------------       ------------
      Net cash used by financing activities                        (23,457)           (39,022)

                                                              ------------       ------------
Net change in cash and cash equivalents                          4,081,611          5,335,968

Cash and Cash Equivalents, Beginning of Period                   5,134,764          3,622,739
                                                              ------------       ------------

Cash and Cash Equivalents, End of Period                      $  9,216,375       $  8,958,707
                                                              ============       ============

ADDITIONAL CASH FLOWS AND
SUPPLEMENTARY INFORMATION
   Interest paid                                              $  5,014,576       $  4,464,777
   Income tax paid                                                 585,000            596,139
   Loan balances transferred to real estate owned                        0          1,141,907
   Loans to finance the sale of real estate owned                    8,500          1,248,715
   Loan payable to limited partnership                                   0          3,634,406

</TABLE>







<PAGE>



                          MARION CAPITAL HOLDINGS, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                      FIRST FEDERAL SAVINGS BANK OF MARION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE A: Basis of Presentation

The unaudited interim  consolidated  condensed financial  statements include the
accounts of Marion  Capital  Holdings,  Inc. (the  "Company") and its subsidiary
First Federal Savings Bank of Marion (the "Bank").

The unaudited  interim  consolidated  condensed  financial  statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include  all  information  and  disclosures   required  by  generally   accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management,  the financial  statements reflect all adjustments,  comprising only
normal recurring  accruals,  necessary to present fairly the Company's financial
position as of March 31, 1999,  results of operations  for the  three-month  and
nine month  periods  ended March 31, 1999 and 1998,  and cash flows for the nine
month periods ended March 31, 1999 and 1998.

NOTE B: Dividends and Earnings Per Share

On February 16, 1999, the Board of Directors  declared a quarterly cash dividend
of $.22 per share.  This dividend was paid on March 15, 1999 to  shareholders of
record as of March 1, 1999.

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


                                              Three Months Ended                       Three Months Ended
                                                March 31, 1999                           March 31, 1998
                                                --------------                           --------------

                                                    Weighted                                Weighted
                                                    Average       Per Share                 Average       Per Share
                                       Income       Shares         Amount    Income         Shares         Amount
<S>                                <C>             <C>            <C>       <C>            <C>            <C>       
Basis earnings per share
 Income available to
 common shareholders               $  523,951      1,493,227      $   .35   $ 520,745      1,770,586      $      .29
                                                                  =======                                 ==========

Effect of dilutive securities
 RRP program                                                                                   3,102
 Stock Options                                        17,432                                  36,595
                                    ---------     ----------                ---------     ----------

Diluted earnings per share
 Income available to
 common shareholders and
 assumed conversions               $  523,951      1,510,659      $   .35   $ 520,745      1,810,283      $      .29
                                   ==========      =========      =======   =========      =========      ==========

</TABLE>


                                                         7

<PAGE>

<TABLE>
<CAPTION>
                                               Nine Months Ended                                 Nine Months ended
                                                 March 31, 1999                                    March 31, 1998
                                                 --------------                                    --------------

                                                     Weighted                                         Weighted
                                                      Average        Per Share                        Average      Per Share
                                     Income            Shares         Amount           Income          Shares       Amount

<S>                                <C>             <C>            <C>       <C>            <C>            <C>       
Basis earnings per share
 Income available to
 common shareholders                $1,625,620       1,568,802       $1.04           $1,683,556      1,765,161       $.95
                                                                     =====                                           ====
                                                                                                   
Effect of dilutive securities                                                                      
 RRP program                                                --                                           3,324
 Stock Options                                          22,198                                          41,086
                                    ----------       ---------                        ---------      ---------
                                                                                                   
Diluted earnings per share                                                                         
  Income available to                                                                              
  common shareholders and                                                                          
  assumed conversions               $1,625,620        1,591,000      $1.02           $1,683,556      1,809,571       $.93
                                    ==========        =========      =====           ==========      =========       ====
</TABLE>

                  


NOTE C: Reporting Comprehensive Income

The  Company  adopted  Statement  of  financial  Accounting  Standards  No. 130,
Reporting  comprehensive Income.  Comprehensive income includes unrealized gains
on securities  available for sale, net of tax.  Accumulated other  comprehensive
income and income tax on such income reported are as follows:

                                             Nine Months Ended
                                                 March 31
                                           ---------------------
                                             1999         1998
                                           --------     --------
Accumulated other comprehensive income
  Balance, July 1                          $ 30,332     $ (1,961)
  Net unrealized gains                          926       34,533
                                           --------     --------

  Balance, March 31                        $ 31,258     $ 32,572
                                           ========     ========

Income tax expense
  Unrealized holding gains                 $    607     $ 22,650
                                           ========     ========


                                                         8

<PAGE>




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

General

The  Company's  total assets were $196.3  million at March 31, 1999  compared to
$194.0  million  at June 30,  1998.  Cash and cash  equivalents  increased  $4.1
million and investment  securities  decreased $2.0 million from June 30, 1998 to
March 31, 1999. Net loans  receivable  were $164.9 million at March 31, 1999, an
increase of $.4 million,  or .3%, from June 30, 1998.  The Company owned no real
estate owned at March 31, 1999, down from the $31,000 reported at June 30, 1998.

Deposits  increased  to $138.9  million  at March 31,  1999  compared  to $134.4
million  at  June  30,  1998,  a  3.4%  increase.  This  $4.5  million  increase
represented a $1.6 million decrease in passbook and transaction  accounts and an
approximate $6.1 million increase in certificate of deposit accounts.


Federal Home Loan Bank  advances  increased to $15.2  million at March 31, 1999,
compared to $13.7 million at June 30, 1998, an 10.9% increase.

Shareholders'  equity was $33.1  million at March 31,  1999,  compared  to $37.7
million at June 30,  1998.  During the nine  months  ended March 31,  1999,  the
Company  repurchased 217,550 shares of common stock in the open market at a cost
of $5.3  million,  or an average  price of $24.41 per share.  During the quarter
ended March 31, 1999, the Company  repurchased  69,493 shares of common stock in
the open market at an average price of $21.94. This reduced the number of shares
outstanding to 1,492,756 at March 31, 1999.

Net income for the nine months ended March 31, 1999 of $1.6 million represents a
3.4%  decrease in income  reported  for the same  period in the prior year.  Net
interest  income,  other  income and other  expenses  increased  resulting in an
increase in pre-tax  income of  $308,000,  or 13.5%,  for the nine months  ended
March 31,  1999,  compared  to the same prior year  period.  Income tax  expense
increased by $366,000  for the period ended March 31, 1999,  due to the increase
in pre-tax income and a reduction in tax credits  recorded causing the decreased
in net income.

Results of Operations  Comparison of Three Months Ended March 31, 1999 and March
31, 1998

Net income for the three  months  ended  March 31,  1999 of  $523,951  was a .6%
increase  from the three months  ended March 31, 1998 of $520,745.  Net interest
income for the quarter ended March 31, 1999, equaled $1,873,814,  an increase of
3.7% over the quarter ended March 31, 1998 of $1,807,115. Pre-tax income for the
quarter ended March 31, 1999,  equaled  $852,702,  an increase of 20.1% over the
quarter ended March 31, 1998 of $710,078.  The  reduction of federal  income tax
credits  for the  three  months  ended  March 31,  1999,  caused  the  Company's
effective  tax rate to increase to 38% from the prior year's  effective tax rate
of 27%.  Although  certain  credits  have been  fully  utilized,  a more  recent
investment should generate new credits beginning in mid 1999

                                                         9

<PAGE>




increasing  to  approximately  $370,000  per year based on current  projections.
Until tax credits resume,  the Company will experience this higher effective tax
rate.

A provision  of $1,400 for losses on loans was made for the three  months  ended
March 31, 1999 compared to a $7,534  provision in the same period last year. The
Company has reduced its provision for losses since desired  reserve  levels have
been obtained in prior years.

Total other  income  increased  by $48,762 for the three  months ended March 31,
1999,  compared  to the  same  period  in  the  prior  year.  This  increase  is
attributable to an increase in fee income on deposit accounts which includes ATM
fees and  transaction  account fees and increased  commissions  from annuity and
mutual fund sales.

Total other  expenses  decreased by $21,029,  or 1.7% for the three months ended
March 31,  1999,  compared  to the same  period in the prior  year.  Real estate
operations  expense  decreased  $87,220 as a result of the 1998 period including
expenses of operating the nursing home received by deed in lieu of  foreclosure.
Data processing expense, salaries and benefits increased as the result of adding
the two new branch  locations in October and December of 1998, as well as adding
additional  features  including a voice response unit and Sunday  processing for
our Wal-Mart branch location.

Income tax  expense  for the three  months  ended  March 31,  1999  amounted  to
$328,751,  an increase of $139,418  over the three  months ended March 31, 1998,
which resulted in an increased  effective rate. The Company's effective tax rate
for the three  months ended  December 31, 1998 was 38%,  compared to 27% for the
comparable period in 1998. The increase in the effective tax rate was attributed
to the expiration of low income housing tax credits as described above.

Results of  Operations  Comparison of Nine Months Ended March 31, 1999 and March
31, 1998

Net income for the nine months ended March 31,  1999,  was  $1,625,620  compared
with $1,683,556 for the nine months ended March 31, 1998, a decrease of $57,936,
or 3.4%.  Interest  income for the nine months ended March 31,  1999,  increased
$752,049 or 7.1% compared to the same period in the prior year,  while  interest
expense for the nine months  ended March 31,  1999,  increased  $486,606 or 9.2%
compared to the same period in the prior year. As a result,  net interest income
for the nine months ended March 31, 1999, amounted to $5,590,765, an increase of
$265,443 or 5.0% compared to the same period in the prior year. Earnings for the
nine months ended March 31,  1998,  included an  additional  $225,000 in federal
income tax credits as compared to the nine  months  ended March 31,  1999.  This
reduction of tax credits had the effect of increasing  the effective tax rate of
the Company from  approximately 26% for the nine months ended March 31, 1998, to
37% for the nine months ended March 31, 1999.

A $17,589  provision for loss on loans for the nine months ended March 31, 1999,
was made compared to a $23,088 provision reported in the same period last year.


                                                        10

<PAGE>




Total other  income  increased  by $153,575  for the nine months ended March 31,
1999,  compared to the same period in the prior year. This increase is primarily
attributable to increased fee income from ATM and transaction accounts.

Total other  expenses  increased  by $116,364 or 3.5% for the nine months  ended
March 31,  1999,  compared to the same period in the prior  year.  Salaries  and
employee  benefits  increased  $101,528  or  5.3%,  due  to  normal  operational
increases.  Real estate  operating  expense  decreased  by $219,247 for the nine
months ended March 31, 1999,  compared to the same period in the prior year as a
result of the expenses  associated  with operating the nursing home in the prior
period.  Data processing  expense  increased $81,651 as the result of adding the
two new branch  locations  in October and  December  of 1998,  as well as adding
additional  features  including a voice response unit and Sunday  processing for
our Wal-Mart branch location.  Other  operational  expense  increases of $75,534
were generally normal operational increases and included the amortization of the
premium for the  purchase of the Gas City branch  which  amounted to $78,755 for
the nine  months  ended March 31,  1999,  compared to $36,071 for the prior nine
month period.

Income tax  expense  for the nine  months  ended  March 31,  1999,  amounted  to
$968,845,  an increase of $366,089  from the nine months  ended March 31,  1998,
resulting in an increase in the  effective tax rate from 26% for the nine months
ended  March 31,  1998 to 37% for the nine months  ended  March 31,  1999.  This
change in effective tax rate is the result of an increase in pre-tax  income and
a reduction in federal income tax credits as previously described above.

Allowance for loan losses amounted to $2.1 million at March 31, 1999,  which was
unchanged from June 30, 1998 after  adjusting for  charge-offs  and  recoveries.
Management  considered  the  allowances for loan and real estate losses at March
31, 1999, to be adequate to cover estimated  losses inherent in those portfolios
at that date,  and its  consideration  included  probable  losses  that could be
reasonably  estimated.  Such belief is based upon an analysis of loans currently
outstanding,   real  estate  owned,  past  loss  experience,   current  economic
conditions  and other  factors  and  estimates  which are subject to change over
time. The following table  illustrates  the changes  affecting the allowance for
loan losses for the three months ended March 31, 1999.


                                 Allowance For    Allowance For       Total
                                  Loan Losses      REO Losses       Allowance
                                                                 
                                                                 
Balances at July 1, 1998 ....... $ 2,087,412      $       275      $ 2,087,687
Provision for losses ...........      17,589            2,255           19,844
Recoveries .....................           0              130              130
Loans and REO charged off.......     (29,487)          (2,660)         (32,147)
                                 -----------      -----------      -----------
Balances at March 31, 1999...... $ 2,075,514      $         0      $ 2,075,514
                                 ===========      ===========      ===========
                                                                 
                                                               
                                                        11

<PAGE>




The loan loss  reserves to total loans at March 31, 1999 equaled  1.24% of total
loans  outstanding,  compared  to 1.25% of total loans  outstanding  at June 30,
1998. Total  non-performing  assets decreased during the nine months ended March
31, 1999,  from $2.0 million at June 30, 1998 to $1.6 million at March 31, 1999.
Non-performing  assets at March 31, 1999 consisted  entirely of loans delinquent
greater than 90 days.

Total  non-performing loans totaled .93% of total loans outstanding at March 31,
1999 compared to 1.16% of total loans at June 30, 1998.

The  following  table further  depicts the amounts and  categories of the Bank's
non-performing  assets.  It is the  policy  of the  Bank  that  all  earned  but
uncollected  interest  on all loans be  reviewed  monthly  to  determine  if any
portion thereof should be classified as  uncollectable  for any loan past due in
excess of 90 days. All loans  delinquent  over 90 days are placed in non-accrual
status. Any loan deemed to be uncollectible is charged off.

                                       March 31,     June 30,
                                        1998           1998
                                       ------         ------
                                       (Dollars in Thousands)

Accruing loans delinquent
    more than 90 days .........          $---           $---
Non-accruing loans:
    Residential ...............           985          1,454
    Multi-family ..............           464            193
    Commercial ................            71              5
    Consumer ..................            33            286
Troubled debt restructurings ..            --             --
                                       ------         ------
   Total non-performing loans .         1,553          1,938
Real estate owned, net ........             0             31
                                       ------         ------
    Total non-performing assets        $1,553         $1,969
                                       ======         ======

Non-performing loans to
    total loans ...............          0.93%          1.16%
Non-performing assets to
    total assets ..............          0.79%          1.02%

Average Balances and Interest

The  following  table  presents for the periods  indicated  the monthly  average
balances  of  the  Company's   interest-earning   assets  and   interest-bearing
liabilities, the interest earned or paid on such amounts, and the average yields
earned and rates paid.  Such yields and costs are determined by dividing  income
or  expense by the  average  balance of assets or  liabilities  for the  periods
presented.


                                                        12

<PAGE>

<TABLE>
<CAPTION>

                                                   Three Months Ended March 31
                               -------------------------------------------------------------------
                                             1999                              1998
                               --------------------------------    -------------------------------
                                                     (Dollars in thousands)

                               Average                  Average    Average                 Average
                               Balance     Interest      Rate      Balance   Interest       Rate
                               -------     --------      ----      -------   --------       ----

<S>                            <C>         <C>          <C>       <C>         <C>            <C>  
Total interest-
  earnings assets ...........  $175,724    $  3,747     8.53%     $175,316    $  3,610       8.24%
Total interest-
  bearing liabilities .......   153,192       1,873     4.89%      143,532       1,803       5.02%
                                           --------                           --------

Net interest income/
Interest rate spread ........              $  1,874     3.64%                 $  1,807       3.21%
                                           ========                           ========

</TABLE>

<TABLE>
<CAPTION>
                                                    Nine Months Ended March 31
                               -------------------------------------------------------------------
                                             1999                              1998
                               --------------------------------    -------------------------------
                                                     (Dollars in thousands)

                               Average                  Average    Average                 Average
                               Balance     Interest      Rate      Balance   Interest       Rate
                               -------     --------      ----      -------   --------       ----

<S>                           <C>         <C>           <C>       <C>        <C>             <C> 
Total interest-
  earnings assets ........... $176,260    $ 11,346      8.58%     $169,202   $ 10,594        .35%
Total interest-
  bearing liabilities .......  150,421       5,755      5.10%      135,768      5,268       5.17%
                                          --------                           --------

Net interest income/
Interest rate spread ........             $  5,591      3.48%                $  5,326       3.18%
                                          ========                           ========
</TABLE>


Shareholders' Equity

Shareholders' equity at March 31, 1999 was $33,108,510, a decrease of $4,548,117
from June 30, 1998. The Company's  equity to asset ratio was 16.87% at March 31,
1999  compared  to  19.41%  at  June  30,  1998.  All  fully  phased-in  capital
requirements  are  currently  met. The  following  table depicts the amounts and
ratios of the  Bank's  capital  as of March 31,  1999,  under  each of the three
regulatory  capital  requirements  (tangible,  core,  and fully  phased-in  risk
based):



                                                        13

<PAGE>




                                        Tangible       Core        Risk-Based
                                        Capital       Capital        Capital
                                        -------       -------        -------
                                               (Dollars in thousands)

Amount .............................    $28,184       $28,184         $29,764
As a percent of assets, as defined..       15.0%         15.0%           23.6%
Required amount ....................    $ 3,755       $ 7,511         $10,091
As a percent of assets, as defined..        2.0%          4.0%            8.0%
Capital in excess of
   required amount .................    $24,429       $20,673         $19,673


      Liquidity and Capital Resources

      The standard measure of liquidity for savings associations is the ratio of
cash and  eligible  investments  to a  certain  percentage  of net  withdrawable
savings  accounts and borrowings due within one year. The minimum required ratio
is currently set by the Office of Thrift Supervision  regulation at 5%, of which
1% must be comprised of short-term  investments.  At March 31, 1999,  the Bank's
liquidity ratio was 8.4% of which 6.3% was comprised of short-term investments.


      Year 2000

      The Company's lending and deposit activities, like those of most financial
institutions,  depend  significantly  upon  computer  systems.  The  Company  is
addressing  the potential  problems  associated  with the  possibility  that the
computers which control its systems,  facilities and  infrastructure  may not be
programmed  to read  four-digit  date  codes.  This could  cause  some  computer
applications to be unable to recognize the change from the year 1999 to the year
2000, which would cause computer systems to generate erroneous data or to fail.

      Management  recognizes the  possibility of certain risks  associated  with
Year 2000 and is  continuing  to  evaluate  appropriate  courses  of  corrective
action.  As of March 31,  1999,  the Company has  completed  an inventory of all
hardware and software systems and has made all mission critical classifications.
The Company has implemented  both an employee  awareness  program and a customer
awareness  program aimed at educating people about the efforts being made by the
Company as well as bank regulators regarding the Year 2000 issue.

      The  Company's  data  processing  is performed  primarily by a third party
servicer.  In  November,  1998,  the  Company  began  testing the systems of its
primary service  provider.  Such testing was continued and completed the quarter
ended March 31,  1999.  The results  from these  extensive  tests  disclosed  no
significant weakness or problems in processing and operating beyond December 31,
1999.


                                                        14

<PAGE>




      The Company  also uses  software  and  hardware  which are  covered  under
maintenance  agreements with third party vendors.  Consequently,  the Company is
dependent on these  vendors to conduct its  business.  The Company has contacted
each vendor to request  time tables for Year 2000  compliance  and the  expected
costs, if any, to be passed along to the company.  Most of the Company's vendors
have provided  responses as to where they stand  regarding Year 2000  readiness.
Those  who have  not  responded  to the  Company's  status  requests  are  being
contacted  again.  Depending  on the  responses  received  from the third  party
vendors,  the  Company  will make  decisions  as to  whether to  continue  those
relationships or to search for new providers of those services.

      In addition to possible  expenses related to the Company's own systems and
those of its service  providers,  the Company could be affected by the Year 2000
problems  affecting  any of its  depositors or  borrowers.  Such problems  could
include delayed loan payments due to Year 2000 problems  affecting the borrower.
Selected borrowers were sent questionnaires to assess their readiness. Those who
did not  respond to the initial  inquiry  have been sent a second  request.  The
Company is still in the process of collecting that information.

      The  Company  has  completed a Year 2000  Business  Continuity  Plan which
addresses  the  ability  to  continue  operations  in  the  event  of  power  or
telecommunication  outages.  Although  complete,  the Year 2000  Committee  will
systematically monitor the Plan and make changes where necessary.

      At this time, it is estimated that costs  associated with Year 2000 issues
will be less than $75,000 for fiscal 1999.  Although  management  believes it is
taking  the  necessary  steps to  address  the Year 2000  compliance  issue,  no
assurances  can be given that some  problems will not occur or that t he Company
will not incur additional expenses in future periods. Amounts expensed in fiscal
1998 and 1998 were immaterial.

      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 Company.
The address is (http://www.sec.gov).




                                                        15

<PAGE>




      Item 3:  Quantitative and Qualitative Disclosure About Market Risk

      The  Bank is  subject  to  interest  rate  risk  to the  degree  that  its
interest-bearing  liabilities,  primarily  deposits with short- and  medium-term
maturities,  mature or reprice  at  different  rates  than our  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.

      The Bank  protects  against  problems  arising in a falling  interest rate
environment  by  requiring   interest  rate  minimums  on  its  residential  and
commercial real estate adjustable-rate mortgages and against problems arising in
a rising  interest rate  environment  by having in excess of 85% of its mortgage
loans with  adjustable rate features.  Management  believes that these minimums,
which establish  floors below which the loan interest rate cannot decline,  will
continue to reduce its interest rate  vulnerability in a declining interest rate
environment.  For the loans  which do not adjust  because of the  interest  rate
minimums, there is an increased risk of prepayment.

      The Bank  believes  it is  critical  to manage  the  relationship  between
interest rates and the effect on its 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.  The Bank  manages  assets and
liabilities  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 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 changed 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).
Associates which do not meet either of the filing  requirements are not required
to file OTS Schedule CMR, but may do so  voluntarily.  As the Bank does not meet
either of these requirements,  it is not required to file Schedule CMR, although
it does no voluntarily.  Under the regulation,  associations which must file are
required to take a deduction  (the  interest rate risk capital  component)  form
their total capital available to calculate their risk based capital  requirement
of 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.

      Presented below, as of March 31, 1999, is an analysis performed by the OTS
of the Bank's interest rate risk as measured by changed in NPV for instantaneous
and sustained parallel shifts in the yield curve, in 100 basis point increments,
up and down 300 basis points. At March 31, 1999,

                                                        16

<PAGE>




2% of the present  value of the Bank's  assets was  approximately  $3.8 million.
Because the  interest  rate risk of a 200 basis point  decrease in market  rates
(which was greater  than the interest  rate risk of a 200 basis point  increase)
was $.8 million at March 31, 1999, the Bank would not have been required to make
a deduction from its total capital available to calculate its risk based capital
requirement  if it had been subject to the OTS's  reporting  requirements  under
this methodology.
<TABLE>
<CAPTION>



              Net Portfolio Value                    NPV as % of PV of Assets
Change
in Rates    $ Amount          $ Change         % Change        NPV Ratio         Change
---------------------------------------------------------------------------------------
               (Dollars in Thousands)

<S>             <C>                <C>                <C>           <C>              <C>  
+300 bp         31,673           - 296              - 1%            16.89%          +30 bp

+200 bp         32,374             405                1%            17.06%          +47 bp

+100 bp         32,455             486                2%            16.96%          +36 bp

   0 bp         31,969                                              16.59%

-100 bp         31,436           - 533              - 2%            16.21%          -38 bp

-200 bp         31,216           - 752              - 2%            15.97%          -62 bp

-300 bp         31,292           - 677              - 2%            15.85%          -74 bp
</TABLE>

      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. Most of the
Bank's   adjustable  rate  loans  have  interest  rate  minimums  of  6.00%  for
residential  loans  and 8.50%  for  commercial  real  estate  loans.  Currently,
originations  of  residential  adjustable  rate  mortgages  have  interest  rate
minimums of 6.25%. 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  although  the Bank does  underwrite  these
mortgages  at  approximately  2.0%  above  the  origination  rate.  The  Company
considers all of these factors in monitoring its exposure to interest rate risk.



                                                        17

<PAGE>




                            PART II OTHER INFORMATION

      Item 1.              Legal Proceedings

      Neither the Company nor the Bank were,  during the nine-month period ended
March 31, 1999, or are, as of the date hereof,  involved in any legal proceeding
of a  material  nature.  From  time  to  time,  the  Bank is a  party  to  legal
proceedings  wherein it enforces its security  interests in connection  with its
mortgage loans.

      Item 6.     Exhibits and Reports on Form 8-K

      a) Exhibits

         3(1)     The  Articles  of   Incorporation   of  the   Registrant   are
                  incorporated by reference to Exhibit 3(1) to the  Registration
                  Statement on Form S-1 (Registration No. 33- 55052).

         3(2)     The Code of  By-Laws  of the  Registrant  is  incorporated  by
                  reference  to Exhibit  3(2) to the  Registration  Statement on
                  Form S-1 (Registration No. 33-55052).

         27       Financial Data Schedule

      b) Reports on Form 8-K

         The Company filed no reports on Form 8-K during the quarter ended March
         31, 1999.

                                                        18

<PAGE>



                                                     Signatures


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

                                          MARION CAPITAL HOLDINGS, INC.



      Date: May 14, 1999                  By:/s/ Steven L. Banks
                                             ----------------------------
                                             Steven L. Banks, President



      Date: May 14, 1999                  By: /s/ Larry G. Phillips
                                             ----------------------------
                                             Larry G. Phillips, Vice President,
                                             Secretary and Treasurer