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, 2000 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)

                                 (765) 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 13, 2000 was 1,368,173.


<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, 2000 and June 30, 2000....................2

                  Consolidated Condensed Statement of
                  Income for the three-month
                  periods ended September 30, 2000 and 1999...............3

                  Consolidated Condensed Statement of
                  Shareholders' Equity for the three
                  months ended September 30, 2000 and 1999................4

                  Consolidated Condensed Statement of
                  Cash Flows for the three months
                  ended September 30, 2000 and 1999.......................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...................................................14


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>
<TABLE>
<CAPTION>



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

             CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
                                   (Unaudited)

                                                              September 30,          June 30,
                                                                  2000                2000
ASSETS

<S>                                                        <C>                   <C>
 Cash                                                      $  2,227,783          $  3,064,789
 Short-term interest bearing deposits                         4,214,175             3,480,337
                                                           ----------------------------------
   Total cash and cash equivalents                            6,441,958             6,545,126

 Investment securities available for sale                     2,982,500             2,975,750
 Loans held for sale                                             89,300                     0
 Loans receivable, net of allowance for loan losses
   of $2,185,781 and $2,282,634                             164,569,938           164,977,577
 Real estate owned, net                                          41,000                70,303
 Premises and equipment                                       1,659,131             1,694,771
 Stock in Federal Home Loan Bank (at cost which
   approximates market)                                       1,654,900             1,654,900
 Investment in limited partnerships                           3,857,375             3,941,675
 Investment in other affiliate                                  650,000               650,000
 Core deposit intangibles and goodwill                          578,343               601,789
 Cash value of life insurance                                11,522,868            11,422,443
 Other assets                                                 4,395,298             4,332,590
                                                           ----------------------------------

   Total assets                                            $198,442,611          $198,866,924
                                                           ==================================

LIABILITIES

 Deposits                                                  $129,693,053          $130,683,323
 Federal Home Loan Bank Advances                             28,750,237            29,008,495
 Other borrowings                                             2,437,368             2,825,560
 Advances by borrowers for taxes and
   insurance                                                    336,966               186,956
 Other liabilities                                            5,190,106             4,377,392
                                                           ----------------------------------
   Total liabilities                                        166,407,730           167,081,726

SHAREHOLDERS' EQUITY
 Preferred stock:
   Authorized and unissued -- 2,000,000 shares
 Common stock, without par value:
   Authorized -- 5,000,000 shares
   Issued and outstanding -- 1,366,506 and
     1,364,695 shares                                         8,089,802             8,107,140
 Retained earnings                                           23,946,745            23,673,789
 Accumulated other comprehensive income (loss)                   (1,666)                4,269
                                                           ----------------------------------
   Total shareholders' equity                                32,034,881            31,785,198
                                                           ----------------------------------

   Total liabilities and shareholders' equity              $198,442,611          $198,866,924
                                                           ==================================
</TABLE>

See notes to consolidated condensed financial statements.
<PAGE>

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

                            CONSOLIDATED CONDENSED STATEMENT OF INCOME
                                            (Unaudited)

                                                    Three Months Ended
                                                       September 30,
                                                  2000            1999
Interest income
  Loans                                        $3,597,148       $3,532,902
  Interest-bearing deposits                        63,358           95,106
  Investment securities                            48,716           48,600
  Other interest and dividend income               35,359           23,463
                                              ---------------------------------
    Total interest income                       3,744,581        3,700,071

Interest expense
  Deposits                                      1,645,592        1,660,355
  Federal Home Loan Bank Advances                 470,626          255,422
                                              ---------------------------------
    Total interest expense                      2,116,218        1,915,777

Net interest income                             1,628,363        1,784,294

Provision for losses on loans                      20,000          205,000
                                              ---------------------------------

Net interest income after provision             1,608,363        1,579,294

Other income
  Net loan servicing fees                          15,423           21,221
  Annuity and other commissions                    58,160           44,023
  Losses from limited
    partnerships                                  (84,300)        (129,000)
  Life insurance income and
    death benefits                                100,425           39,050
  Gain on sale of branch office                         0          231,626
  Net gains on loan sales                           9,863           11,090
  Service charges on deposit accounts              74,671           66,109
  Other income                                     39,208           32,995
                                              ---------------------------------
    Total other income                            213,450          317,114
                                              ---------------------------------

Other expenses
  Salaries and employee benefits                  684,040          658,226
  Occupancy expense                                63,212           68,710
  Equipment expense                                31,948           36,670
  Deposit insurance expense                        18,858           32,117
  Real estate operations, net                      (1,262)             161
  Data processing expense                          79,823           75,900
  Advertising                                      12,084           17,957
  Amortization of core deposit
    intangibles and goodwill                       23,446           25,250
  Merger expenses                                   5,367                0
  Other expenses                                  199,550          223,462
                                              ---------------------------------
    Total other expenses                        1,117,066        1,138,453
                                              ---------------------------------

Income before income taxes                        704,747          757,955
  Income tax expense                              151,510          178,540
                                              ---------------------------------

Net income                                       $553,237         $579,415
                                              =================================

Per share
  Basic earnings per share                          $0.41            $0.41
  Diluted earnings per share                        $0.40            $0.40
  Dividends                                         $0.22            $0.22

See notes to consolidated condensed financial statements.
<PAGE>


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

            CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                                   (Unaudited)

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


Balances, July, 1 2000 and 1999                 $31,785,198         $31,743,567

  Comprehensive income
    Net income                                      553,237             579,415
    Other comprehensive income, net of tax
      Unrealized losses on securities                (5,935)             (7,084)
                                          --------------------------------------

    Comprehensive income                            547,302             572,331

  Exercise of stock options                           3,012              19,000

  Cash dividends                                   (300,631)           (313,599)
                                          --------------------------------------

Balances, September 30, 2000 and 1999           $32,034,881         $32,021,299
                                          ======================================

See notes to consolidated condensed financial statements.
<PAGE>

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

                                     CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                                                      (Unaudited)

                                                                      Three Months Ended
                                                                         September 30

OPERATING ACTIVITIES                                           2000                      1999
                                                          ----------------         ----------------
<S>                                                         <C>                       <C>
   Net Income                                               $  553,237                $  579,415
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Provision for loan losses                              20,000                   205,000
         Losses from limited partnerships                       84,300                   129,000
         Amortization of net loan origination fees             (42,639)                  (54,641)
         Net amortization of investment securities'
            premiums and discounts                             (16,579)                      570
         Amortization of core deposits and goodwill             23,446                    25,250
         Depreciation                                           48,390                    49,378
         Deferred income tax                                  (199,073)                 (249,789)
         Gain on sale of branch office                               0                  (231,626)
         Gain on sale of loans                                  (9,863)                   (6,121)
         Origination of loans for sale                        (126,825)                 (301,189)
         Proceeds from sale of loans                            47,388                   612,138
         Change in:
            Interest receivable                                (27,066)                  137,925
            Interest payable and other liabilities             812,714                 1,075,723
            Cash value of insurance                           (100,425)                 (128,550)
            Prepaid expense and other assets                   167,325                   385,986
                                                          ----------------          ----------------
               Net cash provided by operating activities     1,234,330                 2,228,469
                                                          ----------------          -------------------

INVESTING ACTIVITIES
   Proceeds from maturity of investment securities
      held to maturity                                               0                 1,000,000
   Purchase of investment securities available
      for sale                                                       0                  (959,070)
   Net changes in loans                                        407,409                   718,841
   Proceeds from real estate owned sales                        52,172                         0
   Purchases of premises and equipment                         (12,750)                  (13,777)
   Net cash disbursed in sale of branch office                       0                (8,593,288)
                                                          ----------------          ----------------
      Net cash provided (used) by investing
        activities                                             446,831                (7,847,294)
                                                          ----------------          ----------------
FINANCING ACTIVITIES
   Net change in:
      Interest-bearing demand and savings deposits          (1,637,859)                 (858,540)
      Certificates of deposit                                  647,589                   941,516
   Proceeds from FHLB advances                               4,000,000                 4,000,000
   Repayment of FHLB advances                               (4,258,258)                 (232,000)
   Repayment of other borrowings                              (388,192)                 (414,784)
   Net change in advances by borrowers for taxes
      and insurance                                            150,010                   109,985
   Proceeds from exercise of stock options                       3,012                    19,000
   Dividends paid                                             (300,631)                 (313,599)
                                                          ----------------          ----------------
      Net cash provided (used) by financing activities      (1,784,329)                3,251,578

                                                          ----------------          ----------------
Net change in cash and cash equivalents                       (103,168)               (2,367,247)

Cash and Cash Equivalents, Beginning of Period               6,545,126                 8,852,688
                                                          ----------------          ----------------

Cash and Cash Equivalents, End of Period                    $6,441,958                $6,485,441
                                                          ================          ================

ADDITIONAL CASH FLOWS AND
SUPPLEMENTARY INFORMATION
   Interest paid                                            $1,343,824                $1,132,098
   Income tax paid                                             265,000                         0
</TABLE>





                          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, 2000,  results of operations  for the  three-month
periods ended  September  30, 2000 and 1999,  and cash flows for the three month
periods ended September 30, 2000 and 1999.

NOTE B: Dividends and Earnings Per Share

On August 21, 2000, the Board of Directors declared a quarterly cash dividend of
$.22 per share.  This dividend was paid on September 15, 2000 to shareholders of
record as of August  31,  2000.  On October  23,  2000,  the Board of  Directors
declared a quarterly cash dividend of $.22 per share. This dividend will be paid
on November 29, 2000, to  shareholders  of record as of November 15, 2000.  This
dividend,  normally  payable  December 15, was declared  early to facilitate the
anticipated alliance with MutualFirst Financial Inc. in December, 2000.

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

                                                  Three Months Ended                     Three Months Ended
                                                  September 30, 2000                     September 30, 1999
                                                  ------------------                     ------------------

                                                   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                $553,237      1,365,655     $.41         $579,415     1,425,064      $.41
                                                                ====                                     ====

Effect of dilutive securities
 Stock options                                        4,244                                   8,581
                                                      -----                                   -----

Diluted earnings per share
 Income available to
 common shareholders and
 assumed conversions                $553,237      1,369,899     $.40         $579,415     1,433,645      $.40
                                    ========      =========     ====         ========     =========      ====
</TABLE>
<PAGE>

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:

                                                     Three Months Ended
                                                       September 30
                                                       ------------
                                                   2000                 1999
                                                   ----                 ----

Accumulated other comprehensive income (loss)
  Balance, July 1                                 $  4,269            $ 13,624
  Net unrealized losses                           (  5,935)            ( 7,084)
                                                  ---------           ---------

  Balance, September 30                           $( 1,666)           $  6,540
                                                  =========           =========
Income tax credit
  Unrealized holding losses                       $( 3,893)           $( 4,646)
                                                  =========           =========

NOTE D: Merger Information

In June 2000,  the Company  entered into a definitive  agreement  (agreement) to
merge with MutualFirst Financial Inc. (MutualFirst),  Muncie, Indiana. Under the
agreement,  shareholders  of the Company would have 1.862 shares of  MutualFirst
common stock for each share of Company  common  stock owned.  The merger will be
accounted for using the purchase method of accounting.  The merger is subject to
approval by the Company  shareholders and regulatory agencies and is expected to
be consummated before the end of the calendar year 2000.

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

Additional Merger Information.

On October 13, 2000,  MutualFirst common stock closed at $13.00 per share. Based
on that price, the value of 1.862 shares of MutualFirst  common stock would have
been  approximately  $24.21  and  the  aggregate  market  value  of  the  merger
consideration would have been approximately $33.1 million, excluding outstanding
stock options.  These values,  however,  may increase or decrease as a result of
fluctuations in the market price of MutualFirst common stock.

Each  outstanding  option to  purchase  shares of Company  common  stock will be
converted  into an option to purchase  1.862 times as many shares of MutualFirst
common stock.  The per share  exercise  price will be divided by 1.862,  but the
other terms and conditions of the converted  option will not change.  Fractional
shares will be rounded  down to the nearest  whole share and per share  exercise
prices will be rounded down to the nearest whole cent. Options for 31,308 shares
of Company common stock were outstanding on October 13, 2000.

The  combined  banking  operation  will  have a  total  of 16  branch  locations
throughout the counties of Delaware,  Grant,  Kosciusko and Randolph in Indiana,
and will be called Mutual Federal Savings Bank.

MutualFirst's  Board of Directors  will be comprised of four  directors from the
Company and seven directors from Muncie.  Steven L. Banks, the current President
and Chief Executive Officer of the Company,  will serve as Senior Vice President
and Chief  Operating  Officer of Grant County for Mutual Federal Savings Bank, a
subsidiary of MutualFirst  and he will be one of the four directors  joining the
Board of Directors.  The other three  Company  directors who will be joining the
Board are John M. Dalton, Jon R. Marler and Jerry D. McVicker.

General.

The Company's total assets were $198.4 million at September 30, 2000 compared to
$198.9 million at June 30, 2000. Cash and cash  equivalents  decreased  $103,000
and investment securities remained unchanged from June 30, 2000 to September 30,
2000. Net loans receivable were $164.6 million at September 30, 2000, a decrease
of $408,000,  or .2%, from June 30, 2000. The Company owned real estate owned at
September  30, 2000 in the amount of $41,000,  compared to the real estate owned
at June 30, 2000 of $70,000.

Deposits  decreased to $129.7  million at September  30, 2000 compared to $130.7
million at June 30, 2000, a .8%  decrease.  Passbook  and  transaction  accounts
decreased by $1.6 million and certificate of deposit  accounts  increased by $.6
million.

Federal  Home Loan Bank  advances  decreased to $28.8  million at September  30,
2000, compared to $29.0 million at June 30, 2000, a .9% decrease.

Other liabilities  increased from $4.4 million at June 30, 2000, to $5.2 million
at  September  30,  2000,  primarily  as the  result of an  increase  in accrued
interest  payable on deposits.  A large  portion of the  Company's  deposits pay
interest semi-annually at June 30 and December 31 of each year.

Shareholders'  equity was $32.0 million at September 30, 2000, compared to $31.8
million at June 30, 2000.

Results of Operations  Comparison  of Three Months Ended  September 30, 2000 and
September 30, 1999.

Net income for the three months ended  September 30, 2000 of $553,237 was a 4.5%
decrease  from the three  months ended  September  30,  1999,  of $579,415.  Net
interest income for the quarter ended September 30, 2000, equaled $1,628,363,  a
decrease of 8.7% from the quarter  ended  September  30,  1999,  of  $1,784,294.
Interest  income  increased by $44,510 for the three months ended  September 30,
2000, compared to the prior period, while interest expense increased by $200,441
for the three months ended September 30, 2000 compared to the prior period.  The
interest  on  Federal  Home Loan Bank  advances  increased  by  $215,204,  while
interest on deposits decreased by $14,763 from the prior period. The increase in
Federal Home Loan Bank advances  interest is the result of increased  borrowings
and a general overall increase in interest rates.  These borrowings were used to
provide  funding to sell the Decatur Branch  deposits in September 1999 and fund
life insurance policies on directors and officers.

A provision  of $20,000 for losses on loans was made for the three  months ended
September  30,  2000  compared to a $205,000  provision  in the same period last
year.  The large loan loss  provision  was made in the prior year 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 length of time to complete  legal
proceedings  to acquire the assets.  The Company  charged off  $327,000 of these
loans for the period  ending  September  30,  1999.  These  loans  remain in the
process of foreclosure  as of September 30, 2000, and the Company  believes that
the loan loss allowance at September 30, 2000, remains adequate to absorb future
losses.

Total other income  decreased  by $103,664 for the three months ended  September
30,  2000,  compared  to the same  period in the prior  year.  This  decrease is
attributable  to the  sale  of  the  Decatur  branch  deposits  and  facilities,
resulting  in a gain of $231,626  included in the quarter  ended  September  30,
1999. The Company experienced an increase in commissions from annuity and mutual
fund sales of $14,137  over the same  period  last year and an  increase  of fee
income amounting to approximately  $8,562. Equity losses in limited partnerships
decreased  from $129,000 for the quarter  ended  September 30, 1999 to a $84,000
loss  for the  quarter  ended  September  30,  2000.  It is  projected  that the
partnership  will operate at a loss as designed from  inception.  Life insurance
income  increased by $61,375 for the  three-month  period  ending  September 30,
2000.

Total other expenses  decreased by $21,387 for the three months ended  September
30, 2000, compared to the same period in the prior year.

Income tax expense for the three months  ended  September  30, 2000  amounted to
$151,510,  a decrease of $27,030 from the three months ended September 30, 1999.
The Company's  effective tax rate for the three months ended  September 30, 2000
was 21%,  compared to 24% for the comparable period in 1999. The decrease in the
effective  tax rate was  primarily  attributed  to the increase  life  insurance
income and death benefits.

Allowance for loan losses amounted to $2.2 million at September 30, 2000,  which
decreased  $96,853  from June 30,  2000  after  adjusting  for  charge-offs  and
recoveries.  The $20,000 provision for the three months ended September 30, 2000
and the 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, the Company 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  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, 2000.

                                                      Allowance For
                                                       Loan Losses

         Balances at July 1, 2000......................$2,282,634
         Provision for losses..............................20,000
         Recoveries...........................................217
         Loans charged off..............................( 117,070)
                                                        ----------

         Balances at September 30, 2000................$2,185,781
                                                       ==========
<PAGE>

The loan loss  reserves to total loans at September  30, 2000  equaled  1.31% of
total loans  outstanding,  compared to 1.36% of total loans  outstanding at June
30, 2000.  Total  non-performing  assets increased during the three months ended
September  30,  2000,  from $2.1  million  at June 30,  2000 to $2.3  million at
September 30, 2000.  Non-performing  assets at September 30, 2000,  consisted of
non-accruing loans in the amount of $2,224,000 and real estate owned of $41,000.

Total non-performing loans totaled 1.33% of total loans outstanding at September
30, 2000 compared to 1.22% of total loans at June 30, 2000.

The  following  table further  depicts the amounts and  categories of the Bank's
non-performing  assets.  All  loans  delinquent  over  90  days  are  placed  in
non-accrual status. Any loan deemed to be uncollectible is charged off.

                                     September 30,            June 30,
                                        2000                    2000
                                        ----                    ----
                                           (Dollars in Thousands)

Accruing loans delinquent
    more than 90 days................  $     ---              $     ---
Non-accruing loans:
    Residential......................        719                    551
    Multi-family.....................        ---                    ---
    Commercial real estate...........      1,224                  1,305
    Commercial loans.................        220                    152
    Consumer.........................         61                     28
Troubled debt restructurings.........        ---                    ---
                                       ---------              ---------
   Total non-performing loans........      2,224                  2,036
Real estate owned, net...............         41                     72
                                        --------              ---------
    Total non-performing assets......  $   2,265              $   2,108
                                       =========              =========
Non-performing loans to
    total loans......................       1.33%                  1.22%
Non-performing assets to
    total assets.....................       1.14%                  1.06%

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.


<PAGE>
<TABLE>
<CAPTION>


                                                           Three Months September 30
                                                           -------------------------
                                                2000                                    1999
                                   -------------------------------       ----------------------------------
                                                             (Dollars in Thousands)

                                   Average                  Average      Average                    Average
                                   Balance     Interest      Rate        Balance      Interest       Rate
                                   -------     --------      -----       -------      --------       ----
<S>                                <C>           <C>         <C>         <C>           <C>           <C>
Total interest-
  earnings assets..........        $176,169      $3,744      8.50%       $179,258      $3,700        8.26%
Total interest-
  bearing liabilities......         158,817       2,116      5.33%        156,586       1,916        4.89%
                                                 ------                                 -----
Net interest income/
Interest rate spread.......                      $1,628      3.17%                     $1,784        3.37%
                                                 ======                                ======

</TABLE>
Shareholders' Equity.

Shareholders'  equity at  September  30,  2000 was  $32,034,881,  an increase of
$249,683 from June 30, 2000.  The Company's  equity to asset ratio was 16.14% at
September 30, 2000,  compared to 15.98% at June 30, 2000. 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, 2000,  the Bank is
categorized  as  well   capitalized  and  met  all  subject   capital   adequacy
requirements.  There are no conditions or events since  September 30, 2000, that
management believes have changed the Bank's classification.

<TABLE>
<CAPTION>
                                                                 September 30, 2000
                                                --------------------------------------------------
                                                                      Required
                                                                    for Adequate            To Be Well
                                          Actual                       Capital              Capitalized
                                      ------------------------------------------------------------------------
                                      Amount         Ratio         Amount       Ratio        Amount      Ratio
--------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>           <C>          <C>          <C>         <C>
Total risk-based capital
  (to risk-weighted assets)          $29,043         20.5%         $11,307      8.0%         $14,134     10.0%
Tier I risk based capital
  (to risk-weighted assets)           27,273         19.3%          11,307      8.0%          14,134     10.0%
Core capital
   (to adjusted tangible assets)      27,273         14.3%           5,727      3.0%          11,455      6.0%
Core capital
   (to adjusted total assets)         27,273         14.3%           5,727      3.0%           9,546      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, 2000, the Bank's
liquidity ratio was 8.7%.


<PAGE>

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 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 87% of its mortgage
loans with  adjustable rate features.  Management  believes that these minimums,
which establish  floors below which the loan interest rate cannot decline,  will
continue to reduce its interest rate  vulnerability in a declining interest rate
environment.  For the loans  which do not adjust  because of the  interest  rate
minimums, there is an increased risk of prepayment.

The Bank  believes it is critical to manage the  relationship  between  interest
rates  and  the  effect  on its  net  portfolio  value  ("NPV").  This  approach
calculates the difference  between the present value of expected cash flows from
assets and the present value of expected cash flows from liabilities, as well as
cash  flows  from  off-balance  sheet  contracts.  The Bank  manages  assets and
liabilities  within the context of the marketplace,  regulatory  limitations and
within  its  limits on the  amount of  change in NPV which is  acceptable  given
certain interest rate changes.

The OTS  issued a  regulation,  which  uses a net market  value  methodology  to
measure the interest rate risk exposure of savings associations.  Under this OTS
regulation,  an institution's  "normal" level of interest rate risk in the event
of an assumed changed in interest rates is a decrease in the  institution's  NPV
in an amount  not  exceeding  2% of the  present  value of its  assets.  Savings
associations  with over  $300  million  in assets or less than a 12%  risk-based
capital  ratio are required to file OTS Schedule  CMR. Data from Schedule CMR is
used by the OTS to calculate  changes in NPV (and the related  "normal" level of
interest rate risk) based upon certain interest rate changes  (discussed below).
Associations that 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 so voluntarily.  Under the regulation,  associations which must file are
required to take a deduction  (the  interest rate risk capital  component)  from
their total capital available to calculate their risk based capital  requirement
if 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, 2000 and September 30, 1999, is an analysis
performed by the OTS of the Bank's  interest rate risk as measured by changes 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, 2000, 2%
of the  present  value of the Bank's  assets  was  approximately  $3.9  million.
Because the  interest  rate risk of a 200 basis point  decrease in market  rates
(which was greater  than the interest  rate risk of a 200 basis point  increase)
was $1.3 million at September 30, 2000, 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.


<PAGE>


                                       September 30, 2000
                                       ------------------
                   Net Portfolio Value           NPV as % of PV of Assets
Change
In Rates      $ Amount      $Change      %Change      NPV Ratio      Change
---------------------------------------------------------------------------
                (Dollars in Thousands)

+300 bp      $ 29,662        $ -902         -3%         15.85%        +9 bp

+200 bp        30,424          -140          0%         16.02%       +27 bp

+100 bp        30,737           172          1%         16.00%       +24 bp

   0 bp        30,565                                   15.75%

-100 bp        29,953          -612         -2%         15.32%       -43 bp

-200 bp        29,273        -1,291         -4%         14.86%       -90 bp

-300 bp        28,908        -1,657         -5%         14.53%      -122 bp


                                       September 30, 1999
                                       ------------------
                   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

<PAGE>

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 that 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 7.50%. 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.

                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings

Neither the Company nor the Bank were,  during the quarter  ended  September 30,
2000,  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, 2000.


<PAGE>



                                   Signatures

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

                                       MARION CAPITAL HOLDINGS, INC.



Date: November 14, 2000                By:/s/ Steven L. Banks
                                          --------------------------------------
                                              Steven L. Banks, President

Date: November 14, 2000                By:/s/ Larry G. Phillips
                                          --------------------------------------
                                              Larry G. Phillips, Vice President,
                                              Secretary and Treasurer