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, 1997 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 11, 1997 was 1,777,812.


<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
                  September 30, 1997 and June 30, 1997.....................2

                  Consolidated Condensed Statement of 
                  Income for the three-month
                  periods ended September 30, 1997 and 1996................3

                  Consolidated Condensed Statement of 
                  Changes in Shareholders' Equity
                  for the three months ended September 30, 1997............4

                  Consolidated Condensed Statement of 
                  Cash Flows for the three months
                  ended September 30, 1997 and 1996........................5

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

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

Item 3.     Quantitative and Qualitative Disclosures About Market Risk....10

PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings.............................................11

Item 6.     Exhibits and Reports on Form 8-K..............................11

SIGNATURES................................................................12



<PAGE>



                           FORWARD LOOKING STATEMENTS

         This Annual Report on Form 10-Q ("Form 10-Q") contains statements which
constitute  forward  looking  statements  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include  statements  regarding the intent,  belief,
outlook,  estimate  or  expectations  of the Company  (as  defined  below),  its
directors or its officers primarily with respect to future events and the future
financial  performance  of the Company.  Readers of this Form 10-Q are cautioned
that any such forward looking  statements are not guarantees of future events or
performance  and involve risks and  uncertainties,  and that actual  results may
differ  materially from those in the forward  looking  statements as a result of
various  factors.  The  accompanying  information  contained  in this  Form 10-Q
identifies  important factors that could cause such  differences.  These factors
include  changes in interest  rates;  loss of deposits  and loan demand to other
savings and financial  institutions;  substantial  changes in financial markets;
changes in real estate values and the real estate market; regulatory changes; or
unanticipated results in pending legal proceedings.

                                                         1

<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,
                                                                          1997                        1997
                                                               --------------------------- ---------------------------
ASSETS
<S>                                                                     <C>                         <C>       
   Cash                                                                 $1,675,790                  $2,328,605
   Short-term interest bearing deposits                                  3,201,169                   1,294,134
                                                                  ----------------            ----------------
     Total cash and cash equivalents                                     4,876,959                   3,622,739
   Investment securities available for sale                              3,027,500                   2,997,500




   Investment securities held to maturity
     (market value $3,048,746 and $4,824,464)                            3,061,850                   4,847,519
   Loans receivable, net                                               151,815,691                 148,030,991
   Real estate owned, net                                                   65,000                           0
   Premises and equipment                                                1,657,482                   1,520,381
   Stock in Federal Home Loan Bank (at cost
     which approximates market)                                          1,047,300                   1,047,300
   Investment in limited partnerships                                    4,964,175                   1,448,869
   Other assets                                                          9,306,488                   9,788,410
                                                                  ----------------            ----------------
   Total assets                                                       $179,822,445                $173,303,709
                                                                  ================            ================

LIABILITIES
   Deposits                                                           $120,579,368                $121,770,013
   Advances from FHLB                                                   10,884,976                   8,228,976
   Note Payable                                                          3,604,406                           0
   Advances by borrowers for taxes and
     insurance                                                             300,126                     223,520
   Other liabilities                                                     4,986,435                   4,015,381
                                                                  ----------------            ----------------
     Total liabilities                                                 140,355,311                 134,237,890

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--1,775,812 and
       1,768,099 shares                                                 10,195,432                  10,126,365
     Retained earnings                                                  29,343,980                  29,074,055
     Unrealized gain (loss) on securities available for sale                16,406                      (1,961)
     Unearned compensation                                                 (88,684)                   (132,640)
                                                                  -----------------           -----------------
       Total shareholders' equity                                       39,467,134                  39,065,819
                                                                  ----------------            ----------------
         Total Liabilities and Shareholders' Equity                   $179,822,445                $173,303,709
                                                                  ================            ================
</TABLE>


                                                         2

<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,
                                                               -------------------------------------------------------
                                                                          1997                        1996
                                                                          ----                        ----
Interest Income
<S>                                                                     <C>                         <C>       
   Loans                                                                $3,258,100                  $3,183,374
   Mortgage-backed securities                                                1,942                      16,687
   Interest-bearing deposits                                                58,427                      72,543
   Investment securities                                                    92,082                     139,044
   Other interest and dividend income                                       21,778                      19,503
                                                                  ----------------            ----------------
     Total interest income                                               3,432,329                   3,431,151

Interest expense
   Deposits                                                              1,562,266                   1,614,238
   Advances from FHLB                                                      146,925                     100,033
                                                               -------------------         -------------------
     Total interest expense                                              1,709,191                   1,714,271
                                                               -------------------         -------------------

Net interest income                                                      1,723,138                   1,716,880
   Provision for losses on loans                                             8,825                       4,190
                                                                  ----------------            ----------------

Net interest income after
   provision for losses on loans                                         1,714,313                   1,712,690
                                                                  ----------------            ----------------

Other Income
   Net loan servicing fees                                                  19,571                      22,207
   Annuity and other commissions                                            37,897                      44,516
   Equity in losses of limited partnerships                                (89,100)                    (60,000)
   Life insurance income and death benefits                                 48,793                     179,787
   Other income                                                             35,154                      18,592
                                                                  ----------------            ----------------
     Total other income                                                     52,315                     205,102
                                                                  ----------------            ----------------

Other expenses
   Salaries and employee benefits                                          583,961                     865,391
   Occupancy expense                                                        47,387                      43,948
   Equipment expense                                                        17,874                      14,301
   Deposit insurance expense                                                31,638                     861,651
   Real estate operations, net                                                (933)                      8,110
   Data processing expense                                                  39,479                      34,658
   Advertising                                                              26,684                      36,244
   Other expenses                                                          156,787                     146,211
                                                                  ----------------            ----------------
     Total other expenses                                                  902,877                   2,010,514
                                                                  ----------------            ----------------

Income (loss) before income taxes                                          863,751                     (92,722)

   Income tax expense (benefit)                                            203,558                    (220,210)
                                                                  ----------------            -----------------

Net income                                                                $660,193                    $127,488
                                                                  ================            ================
Per Share
   Net income                                                                $0.36                       $0.07
   Dividends                                                                 $0.22                       $0.20
</TABLE>


                                                         3

<PAGE>



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

       CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                        Unearned         Total
                                               Common Stock        Retained        Unrealized gain    Compensation     Shareholders'
                                       Shares           Amount     Earnings     (loss) on Securities       RRP            Equity
                                    ------------------------------------------------------------------------------------------------

<S>                                <C>            <C>             <C>                    <C>             <C>           <C>        
Balances, July 1, 1997              1,768,099      $10,126,365     $29,074,055            ($1,961)        ($132,640)    $39,065,819

Exercise of stock options               7,713           69,067                                                               69,067

Amortization of unearned
  compensation                                                                                               43,956          43,956

Net change in 
  unrealized gain (loss) on
  securities available for sale
                                                                                           18,367                            18,367
Net income for 
  the three months
  ended September 30, 1997                                             660,193                                              660,193

Cash dividends                                                        (390,268)                                            (390,268)

Balances, September 30, 1997        1,775,812      $10,195,432     $29,343,980            $16,406          ($88,684)    $39,467,134
                                    ================================================================================================
</TABLE>


                                                                 4

<PAGE>



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

                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS


                                                        Three Months Ended
                                                           September 30,
                                                   -----------------------------
                                                       1997            1996
                                                       ----            ----
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                           660,193        $127,488
   Adjustments to reconcile net income to
     net cash provided by operating activities:
     Provision for loan losses                            8,825           4,190
     Equity in loss of limited partnerships              89,100          60,000
     Amortization of net loan origination fees          (38,263)        (65,965)
     Net amortization (accretion) of investment
          securities' premiums and discounts              1,113           4,597
   Net amortization (accretion) of mortgage-
     backed securities and CMO premiums                       0             750
   Amortization of unearned compensation                 43,956         112,442
   Depreciation                                          23,706          18,960
   Origination of loans for sale                     (1,416,307)     (1,050,000)
   Proceeds from sale of loans                        1,416,307       1,050,000
   Change in:
     Interest receivable                                (57,997)        (59,244)
     Interest payable and other liabilities             971,054       1,713,018
     Cash value of insurance                            (48,793)       (179,787)
     Prepaid expense and other assets                   (27,297)        120,634
                                                  --------------   ------------

   Net cash provided by operating                     1,625,597       1,857,083
                                                  -------------    ------------
     activities

INVESTING ACTIVITIES
   Proceeds from maturity of investment
     securities available for sale                            0       1,000,000
   Purchase of investment securities
     held to maturity                                         0      (1,000,000)
   Proceeds from maturity of investment
     securities held to maturity                      1,610,000       4,962,246
   Payments on mortgage-backed securities               174,970         434,428
   Net change in loans                               (3,817,317)     (2,246,239)
   Proceeds from real estate owned sales                      0          30,722
   Purchases of premises and equipment                 (113,395)        (16,153)
   Death benefits received on life insurance            553,793         352,687
                                                  -------------    ------------

     Net cash provided (used) by investing
       activities                                    (1,591,949)      3,517,691
                                                  --------------   ------------


                                                                 5

<PAGE>



           CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (continued)

                                                    Three Months Ended
                                                      September 30,
                                                 1997                1996
                                               ------------------------------
FINANCING ACTIVITIES
   Net change in:
     Noninterest-bearing deposits, NOW
       passbook and money market savings
       accounts                                   322,812          (1,170,884)
     Certificates of deposit                   (1,513,645)         (1,422,409)
   Proceeds from FHLB advances                  5,656,000           1,500,000
   Repayment of FHLB advances                  (3,000,000)         (1,800,000)
   Net change in advances by borrowers for
     taxes and insurance                           76,606             (86,480)
   Proceeds from exercise of stock options         69,067              57,090
   Stock repurchases                                    0          (1,965,480)
   Dividends paid                                (390,268)           (368,328)
                                             -------------    ----------------

     Net cash provided (used) by
       financing activities                     1,220,572          (5,256,491)
                                             ------------     ----------------

NET CHANGE IN CASH AND CASH EQUIVALENTS         1,254,220             118,283

     Cash and Cash Equivalents,
       Beginning of Period                      3,622,739           7,520,323
                                             ------------     ---------------

     Cash and Cash Equivalents,
       End of Period                           $4,876,959          $7,638,606
                                             ============     ===============

ADDITIONAL CASH FLOWS AND
   SUPPLEMENTARY INFORMATION
   Interest paid                                 $911,814            $898,991
   Income tax paid                                153,139             250,879
   Loan balances transferred to real
     estate owned                                  69,694              59,141
   Loans to finance the sale of real
     estate owned                                       0              38,000


                                               

<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 September  30, 1997,  results of operations  for the  three-month
period ended  September  30, 1997 and 1996,  and cash flows for the  three-month
period ended September 30, 1997 and 1996.

NOTE B: Dividends and Earnings Per Share

On August 19, 1997, the Board of Directors declared a quarterly cash dividend of
$.22 per share.  This dividend was paid on September 15, 1997 to shareholders of
record as of August 29, 1997.

The per  share  amounts  were  computed  based  on  average  common  and  common
equivalent  shares  outstanding for the  three-month  period ended September 30,
1997 of 1,811,651.  For the three month period ended  September 30, 1996 average
common and common equivalent shares outstanding amounted to 1,913,198.

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

General:

The Company's total assets were $179.8 million at September 30, 1997 compared to
$173.3  million  at June 30,  1997.  Cash and cash  equivalents  increased  $1.3
million or 34.6%, and investment securities decreased $1.8 million or 22.4% from
June 30, 1997 to September 30, 1997.  Loans  receivable  were $151.8  million at
September 30, 1997, an increase of $3.8  million,  or 3.0%,  from June 30, 1997.
This increase is due, in part,  to an  origination  of a $2.7 million  long-term
loan to a limited partnership described below.

 Investment in limited  partnerships  increased by $3.5 million at September 30,
1997  compared to June 30,  1997.  This  increase is related to another  limited
partnership  agreement entered into by the Company on a low income  multi-family
housing project, which benefits the Company in the form of tax credits.

Deposits  decreased to $120.6  million at September  30, 1997 compared to $121.8
million  at  June  30,  1997,  a  1.0%  decrease.  This  $1.2  million  decrease
represented  a $300,000  increase in passbook  and  transaction  accounts and an
approximate  $1.5 million  decrease in  certificate  of deposit  accounts.  This
decrease  in total  deposits  results  primarily  from an  outflow  of  existing
accounts to different market alternatives.


                                                             7

<PAGE>



Note  payable was  increased to $3.6  million at  September  30, 1997.  The note
payable is for amounts due under a limited partnership agreement entered into by
the Company on a low income multi-family  housing project.  This agreement calls
for the Company to disburse  $3.6 million,  in the form of annual  installments,
over a ten-year period in exchange for tax credits.

Other  liabilities  increased from $4.0 million at June 30, 1997 to $5.0 million
at September 30, 1997 as a result of normal operational increases.  The increase
consists  primarily  in an increase of $795,000 in accrued  interest  payable on
deposits since a majority of the certificates of deposit compound  semi-annually
at June 30 and December 31.

Shareholders'  equity was $39.5 million at September 30, 1997, compared to $39.1
million  at June 30,  1997.  This  increase  was  primarily  the  result  of the
Company's  earnings  during the three months  ended  September  30, 1997.  As of
September 30, 1997, the Company was in the process of repurchasing an additional
5% of its outstanding  shares.  The current  repurchase program was announced in
May 1997  totaling  87,905  shares of which no shares  had been  repurchased  by
September  30,  1997,  leaving  the entire  amount to be  repurchased  under the
current program.

Net income  amounted to $660,193 for the three months ended  September 30, 1997.
This  amount   represents  a  $532,705   increase  from  the  earnings  for  the
three-months ended September 30, 1996 of $127,488. Earnings for the three months
ended September 30, 1996 included a FDIC special assessment for all institutions
with SAIF- insured deposits, which amounted to $776,717 and is included in other
expense.  The  after-tax  effect on net income was $469,059 for the three months
ended September 30, 1996. SAIF-insured institutions,  like the Company, are also
benefiting from a reduction of FDIC premiums  beginning  January 1, 1997,  which
should  have a positive  effect on  earnings  in future  periods.  For the three
months ended September 30, 1997, the Bank made a provision of $8,825 for general
loan  losses  compared to $4,190 in loss  provisions  for the same period in the
prior year.  Management continues to review its current portfolio to ensure that
total loss reserves remain adequate.

In October  1997,  the Company  opened its second Grant County office at the new
Wal-Mart  SuperCenter in Marion,  Indiana. The other branch office is located in
Decatur,  Indiana. This second Marion, Indiana location is a full-service branch
and the area's first seven-day-a-week banking facility. The high volume shopping
traffic and repeat weekly visits of customers,  make this an attractive location
to provide financial services.  The new branch,  operates approximately 57 hours
per  week  with a staff  of 6-7  individuals.  The  Company  believes  that  the
long-term prospects for growth from this new branch location are excellent.

Results of Operations  Comparison  of Three Months Ended  September 30, 1997 and
September 30, 1996

Net income for the three months ended  September 30, 1997 was $660,193  compared
with  $127,488  for the three months ended  September  30, 1996,  an increase of
$532,705.  During the quarter  ended  September  30, 1996,  net income  includes
expense of $469,059 after taxes for the FDIC special assessment. Interest income
for the three months ended September 30, 1997 increased $1,178 or 0.03% compared
to the same  period in the prior  year,  while  interest  expense  for the three
months ended  September 30, 1997  decreased  $5,080 or 0.3% compared to the same
period in the prior year. As a result,  net interest income for the three months
ended  September  30, 1997  amounted to $1,723,138 an increase of $6,258 or 0.4%
compared to the same period in the prior year.

A provision  of $8,825 for losses on loans was made for the three  months  ended
September  30, 1997  compared  to a provision  of $4,190 in the same period last
year.


                                                             8

<PAGE>



Total other income  decreased  by $152,787 for the three months ended  September
30,  1997,  compared  to the same period in the prior year.  This  decrease  was
primarily  attributed  to the  amount  of  death  benefits  received  on key man
insurance policies during the quarter ended September 30, 1996,  compared to the
quarter ended for 1997.

Total  other  expenses  decreased  by  $1,107,637,  for the three  months  ended
September  30,  1997,  compared to the same  period in the prior  year.  Deposit
insurance expense  decreased  $830,013 as the result of the special FDIC special
assessment included in the prior year and a reduction in FDIC premiums. Salaries
and employee benefits decreased  $281,430,  primarily as a result of the vesting
of remaining  shares under the RRP program and expense  attributable to bringing
other  benefit  programs  up to 100% for a deceased  director  included  for the
period ended September 30, 1996.

Income tax expense for the three months  ended  September  30, 1997  amounted to
$203,558  compared to income tax benefit of $220,210  for the three months ended
September 30, 1996.  The 1996 tax benefit  resulted  from the pre-tax  operating
loss created by the SAEF special  assessment  and low income housing tax credits
from the limited  partnership  investment.  The Company's effective tax rate for
the three months ended September 30, 1997 was 23.6%.

Allowance for loan losses amounted to $2.0 million at September 30, 1997,  which
was unchanged from June 30, 1997 after adjusting for charge-offs and recoveries.
Management  considered  the  allowances  for  loan  and real  estate  losses  at
September 30, 1997, 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 ended September 30, 1997.

                                  Allowance For    Allowance For   Total
                                  Loan Losses      REO Losses      Allowances

Balances at July 1, 1997          $2,031,535           $0           $2,031,535
Provision for losses                   8,825            0                8,825
Recoveries                                 0            0                    0
Loans and REO charged off             (4,695)           0               (4,695)
                                  -----------        ----          -----------

Balances at September 30, 1997    $2,035,665           $0           $2,035,665

The loan loss  reserves to total loans at September  30, 1997  equaled  1.32% of
total loans  outstanding,  compared to 1.35% of total loans  outstanding at June
30, 1997.  Total  nonperforming  assets  increased during the three months ended
September  30,  1997,  from $1.4  million  at June 30,  1997 to $1.9  million at
September 30, 1997.  Non-  performing  assets at September 30, 1997 consisted of
$1.9 million of loans delinquent  greater than 90 days and $66,000 of other real
estate owned.

Total non-performing loans totaled 1.23% of total loans outstanding at September
30, 1997 compared to .94% of total loans at June 30, 1997.

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.

                                                             9

<PAGE>



                                           September 30,        June 30,
                                              1997                1997
                                                (Dollars in Thousands)

Accruing loans delinquent
more than 90 days                            $   --               $   --
Non-accruing loans:                                         
Residential                                   1,625                1,238
Multi-family                                     --                   --
Commercial                                      153                  139
Consumer                                        107                   34
Troubled debt restructurings                     --                   --
                                             ------               ------
Total non-performing loans                    1,885                1,411
Real estate owned, net                           66                    0
                                             ------               ------
Total nonperforming assets                   $1,951               $1,411
                                             ======               ======
                                                            
Non-performing loans to                                     
total loans                                    1.23%                 .94%
Non-performing assets to                                    
total assets                                   1.08%                 .81%
                                                       
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
                                                           1997                        1996
                                                              (Dollars in thousands)

                                    Average                           Average   Average                          Average
                                    Balance          Interest          Rate     Balance          Interest          Rate
                                    -------          --------          ----     -------          --------          ----
Total interest-
<S>                                  <C>              <C>              <C>       <C>              <C>               <C>  
         earnings assets             $164,550         $3,432           8.34%     $164,604         $3,431            8.34%
Total interest-
         bearing liabilities          130,149          1,709           5.25%      130,370          1,714            5.26%


Net interest income/
         interest rate spread                          1,723           3.09%                       1,717            3.08%
                                                     =======                                      =====
 
</TABLE>


                                                            10

<PAGE>



Financial Condition

Shareholders'  equity at  September  30,  1997 was  $39,467,134,  an increase of
$401,315 or 1.0% from June 30,  1997.  The  Company's  equity to asset ratio was
21.95% at  September  30, 1997  compared to 22.54% at June 30,  1997.  All fully
phased-in  capital  requirements  are currently met. The following table depicts
the amounts and ratios of the Bank's  capital as of September  30,  1997,  under
each of the three regulatory  capital  requirements  (tangible,  core, and fully
phased-in risk based):

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

Amount                              $ 35,595          $ 35,595      $37,078
As a percent of assets, as defined      20.3%             20.3%        31.4%
Required amount                        2,634             5,269        9,444
As a percent of assets, as defined       1.5%              3.0%         8.0%
Capital in excess of
   required amount                    32,961          $ 30,326      $27,634

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, 1997, the Bank's
liquidity ratio was 8.8% of which 4.5% was comprised of short-term investments.

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).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market interest rates or in the Company's
interest rate sensitive  instruments  which would cause a material change in the
market  risk  exposures  which  effect the  quantitative  and  qualitative  risk
disclosures  as presented in Item 7A of the  Registrant's  Annual Report on Form
10-K for the period ended June 30, 1997.

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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,  1997,  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
September 30, 1997.



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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 11, 1997             By: /s/ John M. Dalton
                                        ------------------
                                             John M. Dalton, President



Date: November 11, 1997             By: /s/ Larry G. Phillips
                                        ---------------------
                                             Larry G. Phillips, Vice President,
                                             Secretary and Treasurer




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