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
         SEPTEMBER 30, 1996 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 November 7, 1996 was 1,842,642.


<PAGE>



                          Marion Capital Holdings, Inc.

                                    Form 10-Q

                                      Index

                                                                        Page No.
PART I.   FINANCIAL INFORMATION

Item 1.     Financial Statements                                             3

               Consolidated Condensed Statement of Financial Condition 
               as of September 30, 1996 and June 30, 1996

               Consolidated Condensed Statement of Income for the 
               three-month periods ended September 30, 1996 and 1995

               Consolidated  Condensed  Statement of Changes in 
               Shareholders' Equity for the three months ended 
               September 30, 1996

               Consolidated  Condensed  Statement of Cash Flows 
               for the three months ended September 30, 
               1996 and 1995

               Notes to Consolidated Financial Statements                    8

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

PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings                                               13

Item 6.     Exhibits and Reports on Form 8-K                                13

SIGNATURES                                                                  14


                                        2

<PAGE>



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

             CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION

<TABLE>
<CAPTION>

                                                                        September 30,                  June 30,
                                                                            1996                         1996
                                                                        ------------                 ------------
ASSETS
<S>                                                                       <C>                          <C>       
   Cash                                                                   $1,645,804                   $2,365,805
   Short-term interest bearing deposits                                    5,992,802                    5,154,518
                                                                        ------------                 ------------
     Total cash and cash equivalents                                       7,638,606                    7,520,323
   Investment securities available for sale                                                               999,750
   Investment securities held to maturity
     (market value $7,535,138 and $11,496,535)                             7,595,230                   11,566,476
   Mortgage-backed securities (market value $1,044,223
     and $1,389,232)                                                       1,056,068                    1,491,246
   Loans receivable, net                                                 145,080,244                  143,164,641
   Real estate owned, net                                                    170,089                      182,959
   Premises and equipment                                                  1,443,218                    1,446,025
   Stock in Federal Home Loan Bank (at cost
     which approximates market)                                              988,400                      988,400
   Other assets                                                           10,624,783                   10,406,755
                                                                        ------------                 ------------
   Total assets                                                         $174,596,638                 $177,766,575
                                                                        ============                 ============

LIABILITIES
   Deposits                                                             $123,666,717                 $126,260,010
   Advances from FHLB                                                      5,941,474                    6,241,474
   Advances by borrowers for taxes and
     insurance                                                               305,798                      392,278
   Other liabilities                                                       5,074,757                    3,361,739
                                                                        ------------                 ------------
     Total liabilities                                                   134,988,746                  136,255,501

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--1,842,642 and
       1,933,613 shares                                                   12,040,034                   13,814,937
     Retained earnings                                                    27,887,618                   28,128,458
     Unrealized loss on securities available for sale                              0                         (119)
     Unearned compensation                                                  (319,760)                    (432,202)
                                                                        ------------                 ------------
       Total shareholders' equity                                         39,607,892                   41,511,074
                                                                        ------------                 ------------
   Total Liabilities and Shareholders' Equity                           $174,596,638                 $177,766,575
                                                                        ============                 ============
</TABLE>




                                                         3

<PAGE>

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

                   CONSOLIDATED CONDENSED STATEMENT OF INCOME

<TABLE>
<CAPTION>


                                                                                      Three Months Ended
                                                                                         September 30,
                                                                          ---------------------------------------
                                                                            1996                         1995
                                                                          ----------                   ----------
Interest Income
<S>                                                                       <C>                          <C>       
   Loans                                                                  $3,183,374                   $3,090,063
   Mortgage-backed securities                                                 16,687                       32,251
   Interest-bearing deposits                                                  72,543                       41,235
   Investment Securities                                                     139,044                      235,069
   Other interest and dividend income                                         19,503                       18,332
                                                                          ----------                   ----------
     Total interest income                                                 3,431,151                    3,416,950

Interest Expense
   Deposits                                                                1,614,238                    1,580,407
   Advances from FHLB                                                        100,033                      119,194
   Securities sold under agreement to repurchase                                   0                       12,724
                                                                          ----------                   ----------
     Total interest expense                                                1,714,271                    1,712,325
                                                                          ----------                   ----------

Net interest income                                                        1,716,880                    1,704,625
   Provision for losses on loans                                               4,190                            0
                                                                          ----------                   ----------

Net interest income after
   provision for losses on loans                                           1,712,690                    1,704,625
                                                                          ----------                   ----------

Other Income
   Net loan servicing fees                                                    22,207                       19,178
   Annuity and other commissions                                              44,516                       44,406
   Equity in losses of limited partnerships                                  (60,000)                     (44,226)
   Other income                                                               18,592                       37,681
                                                                          ----------                   ----------
     Total Other Income                                                       25,315                       57,039
                                                                          ----------                   ----------

Other Expenses
   Salaries and employee benefits                                            685,603                      590,525
   Occupancy expense                                                          43,949                       39,295
   Equipment expense                                                          14,301                       13,036
   Deposit insurance expense                                                 861,651                       80,758
   Real estate operations, net                                                 8,110                        1,465
   Other expenses                                                            217,113                      189,712
                                                                          ----------                   ----------
     Total Other Expenses                                                  1,830,727                      914,791
                                                                          ----------                   ----------

Income (Loss) Before Income Taxes                                            (92,722)                     846,873

   Income Tax Expense (Benefit)                                             (220,210)                     241,045
                                                                          ----------                   ----------

Net Income                                                                  $127,488                     $605,828
                                                                          ==========                   ==========
Per Share
   Net income                                                                  $0.07                        $0.29
   Dividends                                                                   $0.20                        $0.18
</TABLE>




                                                         4

<PAGE>



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

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


                                                                                                                               
                                             Common Stock                                             Unearned          Total
                                  -------------------------------    Retained    Unrealized loss     Compensation      Shareholders'
                                        Shares          Amount       Earnings     on Securities           RRP            Equity
                                        ------          ------       --------     -------------      ------------     --------------
<S>                                 <C>           <C>              <C>               <C>             <C>              <C>        
Balances, July 1, 1996               1,933,613     $13,814,937      $28,128,458       ($119)          ($432,202)       $41,511,074
                                                                                                                   
Stock repurchases                      (96,680)     (1,965,480)                                                         (1,965,480)
                                                                                                                   
Exercise of stock options                5,709          57,090                                                              57,090
                                                                                                                   
Amortization of unearned                                                                                           
  compensation                                                                                          112,442            112,442
                                                                                                                   
Net change in unrealized loss on                                                                                   
  securities available for sale                                                         119                                    119
                                                                                                                   
Net income for the three months                                                                                    
  ended September 30, 1996                                              127,488                                            127,488
                                                                                                                   
Tax benefit on compensation plans                      133,487                                                             133,487
                                                                                                                   
Cash dividends                                                         (368,328)                                          (368,328)
                                     ---------     -----------       ----------          --           ---------        -----------
                                                                                                                   
Balances, September 30, 1996         1,842,642     $12,040,034       27,887,618          $0           ($319,760)       $39,607,892
                                     =========     ===========      ===========       =====           =========        ===========
</TABLE>

                                                            

                                        5

<PAGE>

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

                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                    Three Months Ended
                                                                                       September 30,
                                                                           --------------------------------------
                                                                             1996                         1995
                                                                           ---------                   ---------- 
Cash Flows from Operation Activities
<S>                                                                         <C>                          <C>     
   Net income                                                               $127,488                     $605,828
   Adjustments to reconcile net income to
   net cash provided by operating activities:
     Provision for loan losses                                                 4,190                            0
     Equity in loss of limited partnerships                                   60,000                       44,226
     Amortization of net loan origination fees                               (65,965)                     (63,443)
     Net amortization (accretion) of investment
     securities' premiums and discounts                                        4,597                        5,817
   Net amortization (accretion) of mortgage-
     backed securities and CMO premiums                                          750                        2,336
   Amortization of unearned compensation                                     112,442                      108,943
   Depreciation                                                               18,960                       19,120
   Deferred income tax                                                      (108,978)                     (61,971)
   Origination of loans for sale                                          (1,050,000)                  (1,669,886)
   Proceeds from sale of loans                                             1,050,000                    1,669,886
   Change in:
     Interest receivable                                                     (59,244)                     (91,272)
     Interest payable and other liabilities                                1,713,018                    1,044,515
     Cash value of insurance                                                (179,787)                     (27,000)
     Prepaid expense and other assets                                        229,612                      (31,392)
                                                                           ---------                   ---------- 

   Net cash provided by operating activities                               1,857,083                    1,555,707
                                                                           ---------                   ---------- 
Investing Activities
   Proceeds from maturity of investment
     securities available for sale                                         1,000,000                    1,000,000
   Purchase of investment securities
     held to maturity                                                     (1,000,000)                           0
   Proceeds from maturity of investment
     securities held to maturity                                           4,962,246
   Payments on mortgage-backed securities                                    434,428                       76,433
   Net change in loans                                                    (2,246,239)                  (2,975,563)
   Proceeds from real estate owned sales                                      30,722                       22,500
   Purchases of premises and equipment                                       (16,153)                     (12,126)
   Death benefits received on life insurance                                 352,687                            0
                                                                           ---------                   ---------- 

     Net cash provided (used) by investing
       activities                                                          3,517,691                   (1,888,756)
                                                                           ---------                   ---------- 
</TABLE>




                                        6

<PAGE>



           CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (continued)

<TABLE>
<CAPTION>


Financing Activities
   Net change in:
     Noninterest-bearing deposits, NOW
       passbook and money market savings
<S>                                                                       <C>                            <C>      
       accounts                                                           (1,170,884)                    (138,774)
     Certificates of Deposit                                              (1,422,409)                    (298,939)
   Proceeds from FHLB advances                                             1,500,000                    3,000,000
   Repayment of FHLB advances                                             (1,800,000)                  (3,000,000)
   Proceeds from securities sold under
     agreement to repurchase                                                       0                    2,483,016
   Net change in advances by borrowers for
     taxes and insurance                                                     (86,480)                     (91,455)
   Proceeds from exercise of stock options                                    57,090                       50,850
   Stock repurchases                                                      (1,965,480)                           0
   Dividends paid                                                           (368,328)                    (358,447)
                                                                           ---------                   ---------- 

     Net cash provided (used) by
       financing activities                                               (5,256,491)                   1,829,161
                                                                           ---------                   ---------- 

Net Change in Cash and Cash Equivalents                                      118,283                    1,496,112

     Cash and Cash Equivalents,
       Beginning of Period                                                 7,520,323                    3,483,184
                                                                           ---------                   ---------- 

     Cash and Cash Equivalents,
       End of Period                                                      $7,638,606                   $4,979,296
                                                                          ==========                   ==========

Additional Cash Flows and Supplementary
   Information
   Interest paid                                                            $898,991                     $961,882
   Income tax paid                                                           250,879                       77,458
   Loan balances transferred to real
     estate owned                                                             59,141                       58,879
   Loans to finance the sale of real
     estate owned                                                             38,000                      300,000
</TABLE>




                                        7

<PAGE>



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

                   NOTES TO CONSOLIDATED 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 September  30, 1996,  results of  operations  for the three month
period  ended  September  30, 1996 and 1995,  and cash flows for the three month
period ended September 30, 1996 and 1995.

NOTE B: Dividends and Earnings Per Share

On August 12, 1996, the Board of Directors declared a quarterly cash dividend of
$.20 per share.  This dividend was paid on September 13, 1996 to shareholders of
record as of August 30, 1996.

The per share amounts were computed based on 1,913,198 average common and common
equivalent  shares  outstanding  for the three month period ended  September 30,
1996 and 2,070,566 average common and common  equivalent shares  outstanding for
the three month period ended September 30, 1995.

NOTE C: Accounting For Mortgage Servicing Rights

The  Company  adopted  Statement  of  Accounting  Standards  ("SFAS")  No.  122,
Accounting for Mortgage  Servicing Rights, on July 1, 1996.  Mortgage  servicing
rights on originated  loans are  capitalized by allocating the total cost of the
mortgage  loans  between the  mortgage  servicing  rights and the loans based on
their  relative  fair  values.  Capitalized  servicing  rights are  amortized in
proportion to and over the period of estimated servicing revenues.  The adoption
of SFAS No.  122 did not  have a  material  effect  on the  Company's  financial
statements.



                                        8

<PAGE>



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

General:

The Company's total assets were $174.6 million at September 30, 1996 compared to
$177.8 million at June 30, 1996. Cash and cash equivalents  remained  relatively
unchanged from June 30, 1996 to September 30, 1996,  and  investment  securities
declined to $7.6 million at September  30,  1996,  a 39.6%  decrease  from $12.6
million  on  June  30,  1996  as  the  Company  used  funds  to  meet  new  loan
originations,   fund  deposit  outflows,  and  repurchase  common  stock.  Loans
receivable  were  $145.1  million at  September  30,  1996,  an increase of $1.9
million,  or 1.3%,  from  June 30,  1996.  This  increase  is due  primarily  to
originations  of 1-4 family  loans.  Real estate owned  decreased to $170,000 at
September 30, 1996, compared to $183,000 at June 30 1996, a 7.0% decrease.

Deposits  decreased to $123.7  million at September  30, 1996 compared to $126.3
million  at  June  30,  1996,  a  2.1%  decrease.  This  $2.6  million  decrease
represented a $1.2 million decrease in passbook and transaction  accounts and an
approximate $1.4 million decline in certificate of deposit accounts.  Management
believes the savings  outflows are the result of changing market interest rates.
The Bank continues to pay competitive  rates on its savings products compared to
other financial institutions in its market area.

Advances from the Federal Home Loan Bank declined by $300,000 as the Bank repaid
maturing advances from liquid funds.

Other  liabilities  increased from $3.4 million at June 30, 1996 to $5.1 million
at September 30, 1996 as a result of an increase in accrued  interest payable on
savings deposits and recording of a liability for the special SAIF assessment of
$777,000.  A majority of the Bank's  savings  accounts are credited  interest on
June 30 and  December 31 of each year  resulting  in a larger  accrued  interest
payable at September 30, compared to June 30.

Shareholders'  equity was $39.6 million at September 30, 1996, compared to $41.5
million at June 30, 1996.

During the quarter  ended  September  30,  1996,  the Company  completed a stock
repurchase  program  to  repurchase  96,680  shares,  or  5%  of  the  Company's
outstanding  common stock in the open market. The Company acquired the shares at
an average  price of $20.33,  or 95% of book  value,  and  reduced the number of
shares outstanding to 1,842,642.

For the three months ended  September 30, 1996, net income amounted to $127,488,
a decrease  from the earnings of $605,828  for the three months ended  September
30, 1995. This decrease in earnings is  attributable  directly to the signing of
the omnibus  appropriations  bill on September  30, 1996,  which  imposes a FDIC
special  assessment  for  all  institutions  with  SAIF-insured  deposits.  This
assessment amounted to $776,717 and is included in deposit insurance expense for
the three months ended  September 30, 1996. The  assessment is payable  November
27, 1996.  The after-tax  effect on net income was $469,059 for the three months
ended September 30, 1996. SAIF-insured  institutions will likely incur a benefit
from reduction of FDIC premiums  beginning  January 1, 1997, which should have a
positive effect on earnings in future periods.




                                        9

<PAGE>



Results of Operations  Comparison  of Three Months Ended  September 30, 1996 and
September 30, 1995

Net income for the three months ended  September 30, 1996 was $127,488  compared
with $605,828 for the three months ended September 30, 1995. Interest income for
the three months ended  September 30, 1996 increased by $14,201 or 0.4% compared
to the same  period in the prior  year,  while  interest  expense  for the three
months ended  September 30, 1996  increased  $1,946 or 0.1% compared to the same
period in the prior year.  These  increases  reflect the repricing of assets and
liabilities to lower rates and a decrease in deposit balances outstanding.  As a
result,  net  interest  income for the three  months  ended  September  30, 1996
amounted to  $1,716,880,  an  increase  of $12,255 or 0.7%  compared to the same
period in the prior year.

The return on assets for the three  months  ended  September  30,  1996 was .29%
compared  to 1.39% for the same  period  last  year.  Without  the SAIF  special
assessment  expense,  the  return on assets  would have been 1.35% for the three
months ended September 30, 1996.

The return on equity for the three months ended  September  30, 1996,  was 1.26%
compared  to 5.75% for the same  period  last  year.  Without  the FDIC  special
assessment  expense,  the  return on equity  would have been 5.88% for the three
months ended September 30, 1996.

A $4,190  provision  for loss on loans for the three months ended  September 30,
1996 was made  compared to no  provision  reported in the same period last year.
With non-performing loans decreasing, management believes that the allowance for
loan losses is adequate at this time.

Total other income decreased by $31,724 for the three months ended September 30,
1996,  compared to the same period in the prior year. The Company  recognized an
increased loss from the limited  partnership  based on expected  operations as a
result of the partnership restructuring its long-term debt.

Total other expenses  increased by $915,936 for the three months ended September
30,  1996,  compared  to the same period in the prior  year.  Deposit  insurance
expense  increased by $780,893 as the result of the SAIF special  assessment  as
discussed above.  Salaries and employee benefits increased to $95,078, or 16.1%.
This increase was attributable to the granting of the remaining  unvested shares
under the RRP program  and  expenses  attributable  to  bringing  other  benefit
programs up to 100% for a deceased  director  resulting in increased  expense of
$88,000.

Income tax benefit for the three months  ended  September  30, 1996  amounted to
$220,210,  compared to tax  expenses of $241,045  reported  for the three months
ended  September 30, 1995.  The tax benefit  results from the pre-tax  operating
loss created by the SAIF special  assessment and low-income  housing tax credits
from the limited  partnership.  The  Company's  effective tax rate for the three
months ended September 30, 1995 was 28.5%.

Allowance for loan losses amounted to $2.0 million at September 30, 1996,  which
was unchanged from June 30, 1995 after adjusting for charge-offs and recoveries.
Management  considered  the  allowances  for  loan  and real  estate  losses  at
September 30, 1996, 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
accounts for the three months ending September 30, 1996.



                                       10

<PAGE>

<TABLE>
<CAPTION>


                                                             Allowance For         Allowance For             Total
                                                             loan losses             REO losses             Allowances
                                                              ----------            ---------              ----------
<S>                                                          <C>                     <C>                  <C>       
Balances at July 1, 1996 .........................            $2,009,250              $16,118              $2,025,368
Provision for losses .............................                 4,190                    0                   4,190
Recoveries........................................                     0                8,853                   8,853
Loans and REO charged off.........................                     0              (19,024)                (19,024)
                                                              ----------            ---------              ----------

Balances at September 30, 1996....................            $2,013,440            $   5,947              $2,019,387
                                                              ==========            =========              ==========
</TABLE>


The loan loss  reserves to total loans at September  30, 1996  equaled  1.37% of
total loans  outstanding,  compared to 1.38% of total loans  outstanding at June
30, 1996.  Total  non-performing  assets decreased during the three months ended
September  30,  1996,  from $1.9  million  at June 30,  1996 to $1.7  million at
September 30, 1996.  Non-performing  assets at September  30, 1996  consisted of
$170,000 in real estate owned and loans delinquent  greater than 90 days of $1.5
million.

Total non-performing loans totaled 1.01% of total loans outstanding at September
30, 1996 compared to 1.18% of total loans at June 30, 1996.

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  uncollectible  for any loan past due in
excess of 90 days.

                                                   September 30,        June 30,
                                                       1996               1996
                                                   -------------        --------
                                                        (Dollars in Thousands)

Accruing loans delinquent
    more than 90 days ...........................       $---              $---
Non-accruing loans:                                                   
    Residential .................................      1,428             1,659
    Multi-family ................................         --                -- 
    Commercial ..................................         45                47
    Consumer ....................................         11                11
Troubled debt restructurings ....................         --                --
                                                      ------            ------
    Total non-performing loans ..................      1,484             1,717
Real estate owned, net ..........................        170               183
                                                      ------            ------
    Total non-performing assets .................     $1,654            $1,900
                                                      ======            ======
                                                                      
Non-performing loans to                                               
    total loans, net.............................       1.01%             1.18%
Non-performing assets to                                              
    total assets ................................        .95%             1.07%
                                                                



                                       11

<PAGE>



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.

<TABLE>
<CAPTION>

                                                    Three Months Ended September 30
                              --------------------------------------------------------------------------
                                               1996                                    1995
                              -----------------------------------     -----------------------------------
                                                         (Dollars in thousands)

                               Average                    Average      Average                   Average
                               Balance      Interest        Rate       Balance      Interest      Rate
                               -------      --------        ----       -------      --------      ----
<S>                            <C>            <C>          <C>           <C>          <C>           <C>  
Total interest-
  earnings assets..........      $164,604       $3,431       8.34%         $163,427     $3,417        8.36%
Total interest-
  bearing liabilities......       130,370        1,714       5.26%          127,959      1,712        5.35%

Net interest income/
  interest rate spread....                      $1,717       3.08%                       1,705        3.01%
                                                 =====                                   =====
</TABLE>



Financial Condition

Shareholders'  equity at  September  30,  1996 was  $39,607,892,  a decrease  of
$1,903,182 or 4.6% from June 30, 1996.  The Company's  equity to asset ratio was
22.69% at  September  30, 1996  compared to 23.35% at June 30,  1996.  All fully
phased-in  capital  requirements  are currently met. The following table depicts
the amounts (in  thousands) and ratios of the Bank's capital as of September 30,
1996 under each of the three regulatory capital  requirements  (tangible,  core,
and fully phased-in risk based):

                                            Tangible      Core      Risk-Based
                                             Capital     Capital      Capital
                                           ---------     -------    ----------
Amount . . . . . . . . . . . . . . . .     $35,809       $35,809     $37,223
As a percent of assets, as defined . .        21.0%         21.0%       33.1%
Required amount   . . . . . . . . . . .      2,557         5,114       9,004
As a percent of assets, as defined . .         1.5%          3.0%        8.0%
Capital in excess of
   required amount . . . . . . . . . .     $33,252       $30,695     $28,219


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 September 30, 1996, the Bank's
liquidity ratio was 10.2% of which 6.0% was comprised of short-term investments.


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<PAGE>



                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings

Neither  the  Company  nor the Bank were  during the  three-month  period  ended
September  30,  1996,  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)         Exhibit 27 is the Financial Data Schedule

b)         The  Company  filed no reports on Form 8-K during the  quarter  ended
           September 30, 1996.


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<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:  November 14, 1996                         By: /s/ John M. Dalton
                                                     ------------------
                                                        John M. Dalton,
                                                        President
                                        
                                        
Date:  November 14, 1996                       By: /s/ Larry G. Phillips
                                                   ---------------------
                                                        Larry G. Phillips, 
                                                        Vice President,
                                                        Secretary and Treasurer
                                        

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