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, 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 November 10, 1999 was 1,360,750.


<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, 1999 and June 30, 1999                   2

                  Consolidated   Condensed  Statement  of  Income  for  the
                  three-month periods ended September 30, 1999 and 1998        3

                  Consolidated  Condensed Statement of Shareholders' Equity
                  for the three months ended September 30, 1999                4

                  Consolidated  Condensed  Statement  of Cash Flows for the
                  three months ended September 30, 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          15

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                   17

Item 6.   Exhibits and Reports on Form 8-K                                    17

SIGNATURES                                                                    18



<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.


<PAGE>

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

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


                                                                          September 30,                    June 30,
                                                                             1999                            1999
ASSETS
<S>                                                                       <C>                              <C>
  Cash                                                                    $1,740,991                       $2,225,804
  Short-term interest bearing deposits                                     4,744,450                        6,626,884
                                                                       -----------------------------------------------
    Total cash and cash equivalents                                        6,485,441                        8,852,688

  Investment securities available for sale                                 2,966,775                        3,020,000
  Loans held for sale                                                         15,952                          326,901
  Loans receivable, net                                                  164,926,954                      165,797,406
  Real estate owned, net                                                           0                                0
  Premises and equipment                                                   1,813,273                        2,008,157
  Stock in Federal Home Loan Bank (at cost which
    approximates market)                                                   1,163,600                        1,163,600
  Investment in limited partnerships                                       4,583,675                        4,712,675
  Investment in other affiliate                                              650,000                          650,000
  Core deposit intangibles and goodwill                                      673,330                          698,580
  Other assets                                                             9,730,556                        9,871,482
                                                                       -----------------------------------------------

    Total assets                                                        $193,009,556                     $197,101,489
                                                                       ===============================================

LIABILITIES

  Deposits                                                              $133,238,863                     $142,087,269
  Advances from FHLB                                                      19,301,732                       15,533,732
  Other borrowings                                                         2,825,560                        3,240,344
  Advances by borrowers for taxes and
    insurance                                                                311,904                          201,919
  Other liabilities                                                        5,310,198                        4,294,658
                                                                       -----------------------------------------------
    Total liabilities                                                    160,988,257                      165,357,922

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 -- 1,426,450 and
      1,424,550 shares                                                     8,020,048                        8,001,048
  Retained earnings                                                       23,994,711                       23,728,895
  Accumulated other comprehensive income                                       6,540                           13,624
                                                                       -----------------------------------------------
    Total shareholder's equity                                            32,021,299                       31,743,567
                                                                       -----------------------------------------------

    Total liabilities and shareholders' equity                          $193,009,556                     $197,101,489
                                                                       ===============================================
</TABLE>



<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
                                                                         September 30,
                                                                  1999                 1998
<S>                                                            <C>                    <C>
Interest income
  Loans                                                        $3,532,902             $3,643,893
  Mortgage-backed securities                                            0                    427
  Interest-bearing deposits                                        95,106                 37,663
  Investment securities                                            48,600                 73,803
  Other interest and dividend income                               23,463                 22,960
                                                               ----------------------------------
    Total interest income                                       3,700,071              3,778,746

Interest expense
  Deposits                                                      1,660,355              1,714,329
  Advances from FHLB                                              255,422                232,064
                                                               ----------------------------------
    Total interest expense                                      1,915,777              1,946,393

Net interest income                                             1,784,294              1,832,353

Provision for losses on loans                                     205,000                  9,303
                                                               ----------------------------------

Net interest income after provision                             1,579,294              1,823,050

Other income
  Net loan servicing fees                                          21,221                 20,552
  Annuity and other commissions                                    44,023                 21,457
  Equity in losses of limited
    partnerships                                                (129,000)               (40,500)
  Life insurance income and
    death benefits                                                 39,050                 41,250
  Gain on sale of branch office                                   231,626                      0
  Other income                                                    110,194                 81,859
                                                               ----------------------------------
    Total other income                                            317,114                124,618
                                                               ----------------------------------

Other expenses
  Salaries and employee benefits                                  658,226                670,542
  Occupancy expense                                                68,710                 64,677
  Equipment expense                                                36,670                 30,242
  Deposit insurance expense                                        32,117                 33,872
  Real estate operations, net                                         161                (1,266)
  Data processing expense                                          75,900                 74,862
  Advertising                                                      17,957                 27,987
  Amortization of core deposit
    intangibles and goodwill                                       25,250                 27,053
  Other expenses                                                  223,462                209,489
                                                               ----------------------------------
    Total other expenses                                        1,138,453              1,137,458
                                                               ----------------------------------

Income before income taxes                                        757,955                810,210
  Income tax expense                                              178,540                293,080
                                                               ----------------------------------

Net income                                                       $579,415               $517,130
                                                               ==================================

Per share
  Basic earnings per share                                          $0.41                  $0.32
  Diluted earnings per share                                        $0.40                  $0.31
  Dividends                                                         $0.22                  $0.22
</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 1999 and July 1, 1998                       $31,743,567                 $37,656,627

  Comprehensive income
    Net income                                                    579,415                     517,130
    Other comprehensive income, net of tax
      Unrealized gains on securities                               (7,084)                     39,551
                                                             -----------------------------------------

    Comprehensive income                                          572,331                     556,681

  Exercise of stock options                                        19,000                      10,830

  Repurchase of common stock                                            0                  (2,228,062)

  Cash dividends                                                 (313,599)                   (360,460)
                                                             -----------------------------------------

Balances, September 30, 1999 and September 30, 1998           $32,021,299                 $35,635,616
                                                             =========================================
</TABLE>




<PAGE>


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

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


                                                                                  Three Months Ended
                                                                                     September 30,

OPERATING ACTIVITIES                                                               1999          1998
                                                                               ------------------------
<S>                                                                               <C>          <C>
   Net Income                                                                     $579,415     $517,130
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Provision for loan losses                                                 205,000        9,303
         Equity in loss of limited partnerships                                    129,000       40,500
         Amortization of net loan origination fees                                 (54,641)     (45,728)
         Net amortization of investment securities'
            premiums and discounts                                                     570          159
         Amortization of core deposits and goodwill                                 25,250       27,053
         Depreciation                                                               49,378       43,273
         Deferred income tax                                                      (249,789)      35,792
         Gain on sale of branch office                                            (231,626)           0
         Gain on sale of loans                                                      (6,121)     (20,840)
         Origination of loans for sale                                            (301,189)  (1,891,518)
         Proceeds from sale of loans                                               612,138    1,910,123
         Change in:
            Interest receivable                                                    137,925      128,728
            Interest payable and other liabilities                               1,075,723      671,461
            Cash value of insurance                                               (128,550)     (41,250)
            Prepaid expense and other assets                                       385,986      (93,932)
                                                                               -------------------------
               Net cash provided by operating activities                         2,228,469    1,290,254
                                                                               -------------------------

INVESTING ACTIVITIES
   Proceeds from maturity of investment securities
      held to maturity                                                           1,000,000            0
   Purchase of investment securities available
      for sale                                                                    (959,070)           0
   Payments on mortgage-backed securities                                                0        2,770
   Net changes in loans                                                            718,841   (1,856,942)
   Purchases of premises and equipment                                             (13,777)     (37,371)
   Net cash disposed in sale of branch office                                   (8,593,288)           0
                                                                               -------------------------
      Net cash used by investing activities                                     (7,847,294)  (1,891,543)
                                                                               -------------------------


FINANCING ACTIVITIES
   Net change in:
      Interest-bearing demand and savings deposits                                (858,540)  (2,100,500)
      Certificates of deposit                                                      941,516    4,314,448
   Proceeds from FHLB advances                                                   4,000,000    7,000,000
   Repayment of FHLB advances                                                     (232,000)  (5,227,000)
   Repayment of other borrowings                                                  (414,784)    (394,062)
   Net change in advances by borrowers for taxes
      and insurance                                                                109,985      114,047
   Proceeds from exercise of stock options                                          19,000       10,830
   Repurchase of common stock                                                            0   (2,228,062)
   Dividends paid                                                                 (313,599)    (360,460)
                                                                               -------------------------
      Net cash provided by financing activities                                  3,251,578    1,129,241

                                                                               -------------------------
Net change in cash and cash equivalents                                         (2,367,247)     527,952

Cash and Cash Equivalents, Beginning of Period                                   8,852,688    5,134,764
                                                                               -------------------------

Cash and Cash Equivalents, End of Period                                        $6,485,441   $5,662,716
                                                                               =========================

ADDITIONAL CASH FLOWS AND
SUPPLEMENTARY INFORMATION
   Interest paid                                                                $1,132,098   $1,142,209
   Income tax paid                                                                       0       80,000
</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 September  30, 1999,  results of operations  for the  three-month
periods ended  September  30, 1999 and 1998,  and cash flows for the three month
periods ended September 30, 1999 and 1998.

NOTE B: Dividends and Earnings Per Share

On August 16, 1999, the Board of Directors declared a quarterly cash dividend of
$.22 per share.  This dividend was paid on September 15, 1999 to shareholders of
record as of August 27, 1999.

Earnings per share (EPS) were computed as follows:

<TABLE>
<CAPTION>


                                                 Three Months Ended                     Three Months Ended
                                                 September 30, 1999                     September 31, 1998
                                    ----------------------------------------   ---------------------------------------
                                                     Weighted                                  Weighted
                                                      Average      Per Share                   Average       Per Share
                                      Income          Shares        Amount      Income          Shares         Amount
<S>                                 <C>             <C>             <C>        <C>             <C>             <C>
Basic earnings per share
 Income available to
 common shareholders                $ 579,415       1,425,064       $   .41    $ 517,130       1,640,284       $   .32
                                                                    =======                                    =======

Effect of dilutive securities
 Stock Options                                          8,581                                     27,180
                                                    ---------                                  ---------

Diluted earnings per share
 Income available to
 common shareholders and
assumed conversions                 $ 579,415       1,433,645       $   .40    $ 517,130       1,667,464       $   .31
                                    =========       =========       =======    =========       =========       =======
</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:

<TABLE>
<CAPTION>

                                                 Three Months Ended
                                                   September 30
                                             ------------------------
                                               1999            1998
                                             --------        --------
<S>                                            <C>             <C>
Accumulated other comprehensive income
  Balance, July 1                              13,624        $ 30,332
  Net unrealized gains(losses)                 (7,084)         39,551
                                             --------        --------

  Balance, September 30                      $  6,540        $ 69,883
                                             ========        ========

Income tax expense(benefit)
  Unrealized holding gains(losses)           $ (4,646)       $ 25,942
                                             ========        ========
</TABLE>




<PAGE>



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

General

The Company's total assets were $193.0 million at September 30, 1999 compared to
$197.1  million  at June 30,  1999.  Cash and cash  equivalents  decreased  $2.4
million and investment  securities remained  relatively  unchanged from June 30,
1999 to  September  30,  1999.  Net loans  receivable  were  $164.9  million  at
September 30, 1999, a decrease of $1.2 million,  or .7%, from June 30, 1999. The
Company owned no real estate owned at September 30, 1999 and June 30, 1999.

Deposits  decreased to $133.2  million at September  30, 1999 compared to $142.0
million at June 30, 1999,  a 6.2%  decrease.  This $8.8  million  decrease was a
result of the Company  selling its Decatur branch  deposits on September 3, 1999
to another  financial  institution.  The deposits sold amounted to $9.0 million.
Passbook and  transaction  accounts  decreased by $.9 million and certificate of
deposit accounts decreased by $7.9 million.

Federal  Home Loan Bank  advances  increased to $19.3  million at September  30,
1999,  compared to $15.5  million at June 30, 1999, a 24.3%  increase.  Advances
were used to partially fund the sale of the Decatur branch deposits.

Shareholders'  equity was $32.0 million at September 30, 1999, compared to $31.7
million at June 30, 1999.

Results of Operations  Comparison  of Three Months Ended  September 30, 1999 and
September 30, 1998

Net income for the three months ended September 30, 1999 of $579,415 was a 12.0%
increase  from the three  months  ended  September  30,  1998 of  $517,130.  Net
interest income for the quarter ended September 30, 1999, equaled $1,784,294,  a
decrease  of 2.6% over the  quarter  ended  September  30,  1998 of  $1,832,353.
Pre-tax income for the quarter ended  September 30, 1999,  equaled  $757,955,  a
decrease of 6.5% over the quarter  ended  September  30, 1998 of  $810,210.  The
increase of federal income tax credits for the three months ended  September 30,
1999, caused the Company's  effective tax rate to decrease to 24% from the prior
year's effective tax rate of 36%. A recent  investment has generated new credits
beginning  in July 1999 and will  increase to  approximately  $370,000  per year
based on current  projections.  The Company  experienced a higher  effective tax
rate in the prior period since its tax credits  from a previous  investment  had
expired.

A provision  of $205,000 for losses on loans was made for the three months ended
September 30, 1999 compared to a $9,303  provision in the same period last year.
The large  loan loss  provision  was made as a result of the  Company's  ongoing
evaluation of its impaired loans and their net realizable  value. As foreclosure
actions were  proceeding and receivers  were appointed  during the quarter ended
September 30, 1999, on non-residential real estate loans totaling  approximately
$1,400,000,  the Company was able to obtain detailed information to evaluate the
properties  and the length of time  necessary to complete  legal  proceedings to
acquire the assets.  The Company  charged off $327,000 of these loans during the
quarter.  These loans will be  continually  evaluated  each  quarter so that the
Company's loan loss allowance remains adequate to absorb future losses.

Total other income  increased  by $192,496 for the three months ended  September
30,  1999,  compared  to the same  period in the prior  year.  This  increase is
attributable  to the  sale  of  the  Decatur  branch  deposits  and  facilities,
resulting  in a gain  of  $231,626  on  September  3,  1999.  The  Company  also
experienced  an increase in  commissions  from  annuity and mutual fund sales of
$22,566  over the same period last year and an increase of fee income  amounting
to approximately  $14,000.  Equity losses in limited partnerships increased from
$40,500  for the quarter  ended  September  30, 1998 to a $129,000  loss for the
quarter  ended  September  30,  1999,  as  the  new  limited  partnership  begin
operations in July 1999. It is projected that the partnership  will operate at a
loss for many years as designed from inception.

Total other expenses  increased by $995 for the three months ended September 30,
1999, compared to the same period in the prior year.

Income tax expense for the three months  ended  September  30, 1999  amounted to
$178,540, a decrease of $114,540 over the three months ended September 30, 1998,
which resulted in a decreased  effective rate. The Company's  effective tax rate
for the three months ended  September 30, 1999 was 24%,  compared to 36% for the
comparable period in 1998. The decrease in the effective tax rate was attributed
to the increase of low income housing tax credits as described above.

Allowance for loan losses amounted to $2.1 million at September 30, 1999,  which
decreased  $121,458  from June 30,  1999 after  adjusting  for  charge-offs  and
recoveries. The $205,000 1999 provision and resulting level of the allowance for
loan  losses was  determined,  as for any  period,  based on the  evaluation  of
nonperforming  loans and other classified  loans,  changes in the composition of
the loan  portfolio  with  allowance  allocations  made by loan type,  past loss
experience, the amount of loans outstanding and current economic conditions.

The  allowance  for loan losses is  computed  by  assigning  an  estimated  loss
percentage to loans outstanding in each category of loans held in the portfolio.
All  categories of loans,  including  multi-family,  commercial  real estate and
other  commercial,  and consumer  loans,  are assigned a higher  percentage than
single-family  loans based on greater  risk  factors  inherent in these types of
loans.  In  addition  to  maintaining  the  allowance  as a  percentage  of  the
outstanding  loans  in the  portfolio,  additional  reserves  are  provided  for
nonperforming loans and other classified loans based on management's  assessment
of impairment,  if any. Individual loans are specifically  analyzed to determine
an estimate of loss, and those specific allocations are then included as part of
the loan loss allowance. Historically, MCHI has been able to minimize its losses
on  loans  in  relation  to the  allowance  and  loans  outstanding.  Management
considers  the  allowance  to be  adequate  and will  continue  to  monitor  the
allowance for loan losses at least on a quarterly basis and adjust the provision
accordingly to maintain the allowance for loan losses at the  prescribed  level.
The following  table  illustrates  the changes  affecting the allowance for loan
losses for the three months ended September 30, 1999.




<PAGE>
<TABLE>
<CAPTION>

                                          Allowance For      Allowance For         Total
                                           Loan Losses         REO Loses         Allowance
<S>                                        <C>                <C>               <C>
Balances at July 1, 1999 ...........       $ 2,271,701        $         0       $ 2,271,701

Provision for losses ...............           205,000                  0           205,000
Recoveries .........................               542                  0               542
Loans and REO charged off ..........          (327,000)                 0          (327,000)
                                           -----------        -----------       -----------

Balances at September 30, 1999......       $ 2,150,243        $         0       $ 2,150,243
                                           ===========        ===========       ===========
</TABLE>


The loan loss  reserves to total loans at September  30, 1999  equaled  1.29% of
total loans  outstanding,  compared to 1.35% of total loans  outstanding at June
30, 1999.  Total  non-performing  assets decreased during the three months ended
September  30,  1999,  from $3.3  million  at June 30,  1999 to $3.1  million at
September  30,  1999.  Non-performing  assets at  September  30, 1999  consisted
entirely of loans delinquent greater than 90 days.

Total non-performing loans totaled 1.83% of total loans outstanding at September
30, 1999 compared to 1.98% of total loans at June 30, 1999.

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.


<TABLE>
<CAPTION>

                                            September 30,    June 30,
                                                1999          1999
                                            -------------    --------
                                              (Dollars in Thousands)
<S>                                            <C>           <C>
Accruing loans delinquent
    more than 90 days ..................       $   --        $   --
Non-accruing loans:
    Residential ........................          752         1,108
    Multi-family .......................          461           462
    Commercial real estate .............        1,645         1,585
    Commercial loans ...................           54           153
    Consumer ...........................           44            21
Troubled debt restructurings ...........           --            --
                                               ------        ------
   Total non-performing loans ..........        3,056         3,329
Real estate owned, net .................            0             2
                                               ------        ------
    Total non-performing assets.........       $3,056        $3,331
                                               ======        ======

Non-performing loans to
    total loans ........................         1.83%         1.98%
Non-performing assets to
    total assets .......................         1.58%         1.69%
</TABLE>



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 September 30
                                ------------------------------------------------------------------------------
                                                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............    $179,258       $3,700      8.26%             $176,490      $3,779      8.56%
Total interest-
  bearing liabilities........     156,586        1,916      4.89%              150,767       1,947      5.16%
                                                 -----                                       -----

Net interest income/
Interest rate spread.........                   $1,784      3.37%                           $1,832      3.40%
                                                 =====                                      ======
</TABLE>



Shareholders' Equity

Shareholders'  equity at  September  30,  1999 was  $32,021,299,  an increase of
$277,732 from June 30, 1999.  The Company's  equity to asset ratio was 16.59% at
September 30, 1999  compared to 16.11% at June 30, 1999.  There are five capital
categories  defined  in  the  regulations,  ranging  from  well  capitalized  to
critically   undercapitalized.   Classification   of  a  bank   in  any  of  the
undercapitalized  categories can result in actions by regulators that could have
a material  effect on a bank's  operations.  At  September  30, 1999 the Bank is
categorized  as  well   capitalized  and  met  all  subject   capital   adequacy
requirements.  There are no conditions  or events since  September 30, 1999 that
management believes have changed the Bank's classification.



<PAGE>
<TABLE>
<CAPTION>




                                                                    1999
                                   -------------------------------------------------------------------------
                                                                   Required
                                                                 for Adequate              To Be Well
                                          Actual                   Capital                 Capitalized
                                   -------------------------------------------------------------------------
September 30                        Amount       Ratio        Amount     Ratio          Amount     Ratio
------------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>         <C>          <C>          <C>          <C>
Total risk-based capital
  (to risk-weighted assets)        $28,375       20.7%       $10,943      8.0%         $13,678      10.0%
Tier I risk based capital
  (to risk-weighted assets)         26,663       19.4%        10,943      8.0%          13,678      10.0%
Core capital
   (to adjusted tangible assets)    26,663       14.4%         5,537      3.0%          11,073       6.0%
Core capital
   (to adjusted total assets)       26,663       14.4%         5,537      3.0%           9,228       5.0%
</TABLE>


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, 1999, the Bank's
liquidity ratio was 5.9% of which 4.0% 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
September  30, 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  during the quarter ended
September  30,  1999.  The  results  from these  extensive  tests  disclosed  no
significant weakness or problems in processing and operating beyond December 31,
1999.

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.

Costs associated with Year 2000 issues have been immaterial. Although management
believes  it has taken  taking  the  necessary  steps to  address  the Year 2000
compliance  issue,  no assurances can be given that some problems will not occur
or that the  Company  will not incur  additional  expenses  in  future  periods.
Amounts expensed in fiscal 1998 and 1997 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).





<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" lev7el 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 September 30, 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 September 30, 1999, 2% of the present value of
the Bank's assets was approximately $3.8 million. Because the interest rate risk
of a 200 basis


<PAGE>



point increase in market rates (which was greater than the interest rate risk of
a 200 basis point  decrease)  was $1.1 million at September  30, 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.

                        Net Portfolio Value             NPV as % of PV of Assets
Change
In Rates       $ Amount       $Change        %Change     NPV Ratio      Change
--------------------------------------------------------------------------------
                           (Dollars in Thousands)
+300 bp         29,135        -2,459           -8%         16.03%         73 bp
+200 bp         30,446        -1,148           -4%         16.50%        -25 bp
+100 bp         31,287          -307           -1%         16.75%          0 bp
   0 bp         31,594                                     16.75%
-100 bp         31,441          -153            0%         16.55%        -21 bp
-200 bp         31,279          -315           -1%         16.34%        -42 bp
-300 bp         31,431          -163           -1%         16.26%        -50 bp

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.




<PAGE>



                            PART II OTHER INFORMATION

Item 1. Legal Proceedings

Neither  the  Company  nor the Bank were,  during the  nine-month  period  ended
September  30,  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
         September 30, 1999.


<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 10, 1999                   By: /s/ Steven L. Banks
                                              -------------------
                                              Steven L. Banks, President



Date: November 10, 1999                   By: /s/ Larry G. Phillips
                                             ----------------------
                                             Larry G. Phillips, Vice President,
                                             Secretary and Treasurer