UNITED STATES
              SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C. 20549


                          FORM 10-QSB


(Mark One)

[X]  QUARTERLY   REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended March 31, 1999


[   ]     TRANSITION   REPORT   PURSUANT  TO  13  OR 15(d) OF THE
          SECURITIES  EXCHANGE ACT OF 1934

     For the transition period from ___________ to __________
     Commission file number 000-25287


                  TOWER FINANCIAL CORPORATION


   (Exact  name  of  small  business issuer as specified  in  its
charter)


          INDIANA                                 35-2051170


(State or other jurisdiction of            (I.R.S. Employer
 incorporation or organization)            Identification No.)


       116 East Berry Street, Fort Wayne, Indiana  46802


           (Address of principal executive offices)


                        (219) 427-7000


                  (Issuer's telephone number)

     Check whether the issuer  (1) filed all reports  required to
be filed by Section 13 or 15(d)  of the  Exchange  Act during the
past 12 months (or for such shorter  period  that the  registrant
was required to file such reports),  and (2) has  been subject to
such filing requirements for the past 90 days. Yes  [X]      No [
]



             APPLICABLE ONLY TO CORPORATE ISSUERS

     State  the  number  of  shares  outstanding of each  of  the
issuer's classes of common equity,  as  of the latest practicable
date:  2,530,000 shares of common stock outstanding  as  of April
30, 1999


     Transitional Small Business Disclosure Format
                   Yes [   ]      No [X]
<PAGE>
                PART I.  FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                  March 31, 1999                 December 31,    
                                                                                    1998
                                                    (unaudited)
<S>                                            <C>                   <C>        <C>
ASSETS
Cash                                                      $468,801          $  5,704
Interest bearing deposits                               13,091,566           208,216
Federal funds sold                                       6,786,238
  Total cash and cash equivalents                       20,346,605           213,920
Securities available for sale, at fair value             5,441,500
Loans                                                   11,392,481
Allowance for loan losses                                  (90,000)
  Net loans                                             11,302,481
Premises and equipment, net                                543,086            57,696
Other assets                                                62,028           124,960
  Total assets                                         $37,695,700          $396,576
LIABILITIES AND STOCKHOLDERS' EQUITY  (DEFICIT)
Liabilities:
Noninterest bearing                                     $3,831,491              $
Interest bearing                                        11,168,365
  Total deposits                                        14,999,856
Accrued expenses and other liabilities                     314,704           110,000
Related party notes payable                                                  760,000
     Total liabilities                                  15,314,560           870,000
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, no par value, 4,000,000
shares authorized; no shares issued and
outstanding
Common stock, no par value, 6,000,000 shares             2,530,000                10
authorized;
  2,530,000 shares issued and
  outstanding at March 31, 1999, and
  1 share issued and outstanding at
  December 31, 1998
Additional paid-in capital                              20,943,770
Accumulated deficit                                     (1,092,544)         (473,434)
Accumulated other comprehensive income                         (86)
  Total stockholders' equity                            22,381,140          (473,424)
  (deficit)
  Total liabilities and                                $37,695,700          $396,576
  stockholders' equity (deficit)
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                                                                Three Months
                                                                    ended
                                                               March 31, 1999
                                                                (unaudited)
Interest income:
  Loans, including fees                                        $    40,083
  Securities                                                        36,706
  Interest bearing deposits with banks                             156,878
     Total interest income                                         233,667
Interest expense on deposits                                        33,709
Net interest income                                                199,958
Provision for loan losses                                           90,000
Net interest income after provision for loan losses                109,958
Noninterest income                                                   6,170
Noninterest expense
  Salaries and benefits                                            426,324
  Occupancy and equipment                                           59,595
  Office supply expense                                             40,541
  Legal and professional expense                                   118,231
  Other expense                                                     90,547
Total noninterest expense                                          735,238
Loss before provision for income taxes                            (619,110)
Provision for income taxes
Net loss                                                        $ (619,110)
Basic and diluted loss per share                                $    (0.35)
Weighted average shares outstanding                              1,775,889
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
                                                               Three Months
                                                                   ended
                                                              March 31, 1999
                                                                (unaudited)
Net loss, as reported                                           $ (619,110)
Unrealized depreciation on securities, net of taxes                    (86)
Comprehensive income                                            $ (619,196)
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
TOWER FINANCIAL CORPORATION
CONSOLIDATED  CONDENSED  STATEMENT  OF  CHANGES  IN STOCKHOLDERS'
EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)

<TABLE>
<CAPTION>
                          Preferred  Common      Addi-     Accumu-   Net Unrea-        Total
                                                tional       lated     lized
                             Stock    Stock     Paid in     Deficit  Deprecia-
                                                            Capital   tion on
                                                                    Securities
<S>                      <C>          <C>          <C>          <C>           <C>   <C>
Balance, January 1, 1999 $            $       10   $            $ (473,434)  $      $  (473,424)
Issuance of common                     2,530,000    20,943,770                       23,473,770
   stock, net of
   underwriters' fee and
   offering costs
Retirement of common stock                   (10)                                           (10)
Net unrealized                                                                 (86)         (86)
   depreciation on
   securities
Net loss                                                          (619,110)            (619,110)
Balance, March 31, 1999  $            $2,530,000   $20,943,770 $(1,092,544)   $(86) $22,381,140
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                Three Months
                                                                   ended
                                                               March 31, 1999
                                                                 (unaudited)
<S>                                                               <C>
Cash flows from operating activities:
  Net loss                                                                        $ (619,110)
  Adjustments to reconcile net loss to net cash used in operating
activities:
     Depreciation and amortization                                                    13,649
     Provision for loan losses                                                        90,000
     Decrease in accrued interest receivable and other assets                         62,933
     Increase in accrued interest payable and other liabilities                      204,703
          Net cash used in operating activities                                     (247,825)
Cash flows from investing activities:
  Net increase in loans                                                          (11,392,481)
  Purchase of securities available for sale                                       (5,441,586)
  Purchase of equipment and leasehold expenditures                                  (499,039)
     Net cash used in investing activities                                       (17,333,106)
Cash flows from financing activities:
  Net increase in deposits                                                        14,999,856
  Gross proceeds from issuance of common stock                                    25,300,000
  Payment of underwriters' fee and offering costs                                 (1,826,230)
  Retirement of common stock                                                             (10)
  Repayment of related party notes payable                                          (760,000)
     Net cash provided from financing activities                                  37,713,616
Net increase in cash and cash equivalents                                         20,132,685
Cash and cash equivalents, beginning of period                                       213,920
Cash and cash equivalents, end of period                                         $20,346,605
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
TOWER FINANCIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

   A.   ORGANIZATION:    Tower   Financial  Corporation   ("Tower
        Financial") was incorporated  on  July  8,  1998.   Tower
        Financial's  wholly  owned subsidiary, Tower Bank & Trust
        Company ("Tower Bank") opened on February 19, 1999, after
        receiving federal and  state bank regulatory approvals to
        commence banking operations.   Until  February  19, 1999,
        Tower  Financial  was  in  the development stage and  its
        activities were limited to the organization of Tower Bank
        as well as the completion of  its  initial  public  stock
        offering.

   B.   BASIS   OF   PRESENTATION:   The  accompanying  unaudited
        consolidated condensed financial statements were prepared
        in   accordance   with   generally  accepted   accounting
        principles for interim periods  and with instructions for
        Form   10-QSB   and,  therefore,  do  not   include   all
        disclosures required  by  generally  accepted  accounting
        principles  for  complete  presentation  of the financial
        statements.     In  the  opinion  of  management,   Tower
        Financial's consolidated  condensed  financial statements
        contain all adjustments necessary to present  fairly  its
        consolidated  financial  position  at  March 31, 1999 and
        December   31,  1998,  and  consolidated  statements   of
        operations,  stockholders' equity, and cash flows for the
        three months ended  March  31,  1999.   Operating results
        for the three-month period ended  March 31, 1999, are not
        necessarily  indicative  of  the  results   that  may  be
        expected  for  future  interim  periods or the full  year
        ended  December  31, 1999.  These consolidated  condensed
        financial statements  should  be read in conjunction with
        the audited financial statements for the period from July
        8, 1998 (date of inception) through  December  31,  1998,
        and  related  notes  included in Tower Financial's Annual
        Report on Form 10-KSB  for  the period ended December 31,
        1998.

   C.   PRINCIPALS    OF    CONSOLIDATION:    The    accompanying
        consolidated condensed  financial  statements include the
        accounts  of  Tower  Financial  and  Tower   Bank.    All
        significant  intercompany accounts and transactions  have
        been eliminated in consolidation.

   D.   COMPARATIVE  DATA:    Comparable  statements  of  income,
        stockholders' equity and  cash flows for the three months
        ended March 31, 1998 have not  been presented since Tower
        Financial  had not been incorporated  and  did  not  have
        operations during that period.

2.      INITIAL PUBLIC OFFERING:

   On January 29, 1999,  Tower  Financial  completed  an  initial
   public  offering  of  its  common stock during which 2,200,000
   shares were sold at $10.00 per  share.   On February 12, 1999,
   Tower Financial completed the sale  of  330,000  common shares
   included in the underwriters' over-allotment option  at $10.00
   per  share.  Total proceeds from the offering were $25,300,000
   less underwriters'  fees  and offering expenses of $1,826,230,
   for  net  proceeds  of  $23,473,770.    Tower  Financial  used
   $15,000,000 of the net proceeds  from  the  stock  offering to
   provide  the initial capitalization of Tower Bank in  February
   1999.

3.      NOTES PAYABLE TO RELATED PARTIES:

   Noninterest  bearing  notes  payable in the amount of $760,000
   were outstanding to current and former members of the Board of
   Directors of Tower Financial at  December 31, 1998.  The notes
   were  paid  during the first quarter  of  1999  from  proceeds
   received from the public offering.

4.      EARNINGS PER SHARE:

   Earnings per  share  is computed based on the weighted average
   number of shares outstanding  during  the  entire  quarter  of
   1,775,889.    If   the   weighted  average  number  of  shares
   outstanding subsequent to  the  closing  of the initial public
   offering  of common stock and commencement  of  operations  of
   Tower Bank  through  March  31,  1999,  had  been  used in the
   calculation,  the  resulting  loss  per share would have  been
   $.24.

   All stock options granted through March 31, 1999, had an anti-
   dilutive effect on earnings per share.

5.      INCOME TAXES:

   At  March  31, 1999, Tower Financial had  net  operating  loss
   carryforwards  of  approximately  $1,092,544.  No deferred tax
   asset is recorded as a valuation allowance  reduces  the gross
   deferred tax asset of approximately $437,017 to zero.

6.      STOCK OPTION PLAN:

   On December 14, 1998, and subsequently amended on January  21,
   1999,  the stockholder and Board of Directors adopted the 1998
   Stock Option  and  Incentive  Plan  (the "Plan") for officers,
   employees and directors.  The maximum  number of shares, which
   may be issued under the Plan, may not exceed  310,000 and will
   include   both   incentive  stock  options  and  non-qualified
   options.  The exercise  price for incentive stock options will
   not be less than the fair  market  value  of the shares at the
   time  of  grant, except as granted to a 10% shareholder  where
   the option  price  will  not  be less than 110% of fair market
   value.   The exercise price for  non-qualified  stock  options
   will not be  less  than  the  fair market value at the time of
   grant.  The duration of each option  may  not exceed ten years
   from the date of grant.

   At  March  31,  1999,  options  for 290,440 shares  have  been
   granted to certain officers, employees,  and  directors.   The
   options were granted at the market price on the dates of grant
   in a range from $9.875 to $10.1875 per share.


Item 2.      MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN OF
             OPERATIONS

OVERVIEW

   Tower Financial was formed in July 1998 to be the bank holding
company  for  Tower  Bank.   Tower Financial was in a development
stage until Tower Bank commenced operations on February 19, 1999.
Tower Bank is an Indiana chartered  bank with depository accounts
insured by the Federal Deposit Insurance Corporation.  Tower Bank
is  also  a  member of the Federal Reserve  System.   Tower  Bank
provides a full range of commercial and consumer banking services
primarily in Allen  County, Indiana, including Fort Wayne and its
suburbs.

   Since its organization, Tower Financial's principal activities
have related to the organization of Tower Bank and the conducting
of Tower Financial's  initial  public  offering.  Tower Financial
funded its start-up and organizational costs  through  loans from
directors  in  an aggregate amount of $760,000, which loans  were
repaid upon completion of the public offering.  Total proceeds to
Tower Financial from the initial public offering were $22,713,770
(net of offering  expenses,  underwriters discounts and repayment
of director loans), of which $15,000,000  was  used to capitalize
Tower Bank.

   The following discussion presents management's  discussion and
analysis of the consolidated financial condition and  results  of
operations  of  Tower Financial as of March 31, 1999 and December
31, 1998 and for  the  three  months  ended March 31, 1999.  This
discussion should be read in conjunction  with  Tower Financial's
unaudited  consolidated  condensed financial statements  and  the
related  notes  appearing  elsewhere   in   this  report.   Since
principal banking operations commenced on February  19,  1999,  a
comparison  of  the  March  31, 1999 results (when Tower Bank was
operating) to those of March  31,  1998  (prior  to  formation of
Tower Financial) is not meaningful.


FINANCIAL CONDITION

   Total assets of Tower Financial were $37,695,700 at  March 31,
1999  compared  to  its development stage assets at December  31,
1998 of $396,576.     The  significant  increase  in  assets  was
primarily  attributable  to  the inflow of funds from the initial
public  offering  ("IPO")  and  the   deposit   growth  from  the
commencement of bank operations.  As Tower Bank is in its initial
year of operations, Tower Financial anticipates that  assets will
continue to increase significantly.

   Cash  and cash equivalents, which include federal funds  sold,
increased  by  $20,132,685  to $20,346,605 at March 31, 1999 from
$213,920 at December 31, 1998.   Securities  available  for  sale
were  $5,441,500 at the end of the first quarter of 1999.   There
were no securities owned by Tower Financial at December 31, 1998.
The significant  increase  was  again the result of the inflow of
funds from the IPO and the investment  of customer deposits after
commencement of Tower Bank's operations.

   Total loans were $11,392,481 at March  31, 1999 as significant
growth  also  occurred in this category.   There  were  no  loans
recorded at December  31,  1998.    The loan growth occurred as a
result   of   the  commencement  of  bank  operations   and   was
attributable mainly to the commercial and small business sector.

   The allowance  for  loan losses at March 31, 1999 was $90,000.
This  represented .8% of  total  loans  outstanding.   Management
considers  the allowance for loan losses to be adequate; however,
there can be no assurance that charge-offs in future periods will
not exceed the  allowance  for  loan  losses  or  that additional
provisions  of  the  allowance  will  not  be  required.    Tower
Financial  had  not  experienced  any loan losses as of March 31,
1999.

   Premises and equipment increased  by $485,390 during the first
three months of 1999.   The increase resulted  from  the purchase
of computer and communications equipment and software, as well as
expenditures  for  leasehold  improvements  to  Tower Financial's
office space to begin bank operations.

   Other assets decreased by $62,932 during the first  quarter of
1999 as deferred offering costs recorded at December 31,  1998 of
$124,960 were netted against the proceeds from the IPO, and  this
decrease  was  offset  by  $62,028 of interest accrued on earning
assets.

   Total  deposits increased  sharply  when  the  bank  commenced
operations  and  were $14,999,856 at March 31, 1999.   There were
no deposits recorded  at  December  31, 1998.  At March 31, 1999,
noninterest-bearing  deposit  balances   were   $3,831,491  while
interest-bearing deposit balances were $11,168,365.

   Accrued expenses and other liabilities increased  by  $204,704
from  $110,000  at  December  31, 1998.  This increase was mainly
attributable  to  accrued start-up  costs.   Additionally,  Tower
Financial repaid the  $760,000  of  related party notes that were
recorded at December 31, 1998, concurrently  with  the closing of
the IPO.

   At the completion of its IPO, Tower Financial issued 2,530,000
shares of common stock and redeemed the one share of common stock
outstanding at December 31, 1998.  The net proceeds from the sale
of  common  stock  in  the  IPO  were $23,473,770 after deducting
offering expenses and underwriters' discounts; $20,943,770 of the
net proceeds were recorded as additional  paid-in  capital.   The
accumulated  deficit increased during the first quarter  of  1999
from $473,424  at  December  31,  1998 to $1,092,544 at March 31,
1999.   See "Results of Operations."


RESULTS OF OPERATIONS

   While Tower Financial was formed  in  July  1998;  its wholly-
owned  subsidiary,  Tower Bank did not commence operations  until
February 1999.  Accordingly,  results  for the three-month period
ended  March  31,  1999,  reflect  a  mix of start-up  costs  and
operating results.  Tower Financial reported  a  net loss for the
three-month  period  ended  March  31,  1999,  in  the amount  of
$619,110.  At March 31, 1999, Tower Financial had an  accumulated
deficit of $1,092,544.  The accumulated deficit and net  loss are
mainly  reflective  of organizational and start-up costs incurred
during the development stage of Tower Financial from July 1998 to
February 1999, including  salaries paid to employees and expenses
incurred  in  applying for and  obtaining  regulatory  approvals.
Management believes that Tower Financial will generate a net loss
for the year ended  December  31,  1999  as  a  result  of  these
expenditures  and  as  Tower  Bank  continues  to  build its loan
portfolio.   Management  believes that the expenditures  made  in
1998 and 1999 have created  the  infrastructure to achieve future
growth and profitability.

   Loss  per share for the three-month  period  ended  March  31,
1999, was  $.35,  which amount is $.11 greater than the $.24 loss
per share previously  reported  in Tower Financial's news release
concerning the first quarter results  for  1999.   See  Note  4 -
"Earnings Per Share" to the financial statements.

   Interest  income  for  the  three-month period ended March 31,
1999, was $233,667 while interest  expense was $33,709, resulting
in net interest income of $199,958 and  a  net interest margin of
4.61%.    A loan loss provision was recorded  in  the  amount  of
$90,000.    As Tower Financial had no loan loss experience in the
first quarter  of  1999, the provision was established based upon
peer industry data for  comparable  commercial banks and adjusted
to reflect the start-up nature of the loan portfolio.

   Noninterest income was $6,170 while  noninterest  expense  was
$735,238.   The main components of noninterest expense during the
first quarter of 1999 were salaries and benefits in the amount of
$426,324, occupancy  and  equipment in the amount of $59,595, and
legal  and  professional expenses  in  the  amount  of  $118,231.
These costs were  primarily  the  result  of  organizational  and
start-up activities.


LIQUIDITY AND CAPITAL RESOURCES

   In  its  IPO,  Tower  Financial  raised  equity  capital  with
aggregate  proceeds,  net  of underwriters' discount and offering
expenses,   of   $23,473,770.    Tower    Financial   contributed
$15,000,000 of the net proceeds from the offering  to Tower Bank.
Based  upon  pre-opening  growth  projections and deposit  levels
achieved  during  the  first  weeks  of   operations,  management
believes that Tower Financial is likely to have adequate funds to
meet  its  capital requirements and the capital  requirements  of
Tower Bank for at least twelve months.


YEAR 2000 COMPLIANCE

   THE YEAR  2000  PROBLEM. The "Year 2000" problem arose because
many existing computer  systems  use  only the last two digits to
refer  to the year.  Therefore, these computer  programs  do  not
properly recognize a year that begins with a year "20" instead of
the familiar  "19."  If not corrected, many computer applications
and other technology-based systems could fail or create erroneous
results.

   TOWER FINANCIAL'S  STATE  OF READINESS.  Tower Financial is in
the process of assessing the impact  of  the  arrival of the year
2000 on its computerized information systems and other electronic
equipment.  Tower  Financial's  main data processing  vendor  has
represented to Tower Financial that it will be Year 2000 ready or
compliant  by  June 30, 1999, and has  provided  updates  on  its
progress to Tower  Financial.   In  addition, Tower Financial has
begun  an  internal  evaluation of equipment  and  vendor  supply
products to assess its  Year  2000  readiness  in  the  areas  of
processing  services  and  reports,  electronic banking services,
correspondent services and communications systems.  Other systems
which Tower Financial plans to assess  include  security systems,
HVAC  systems  and  local utility services.  Tower Financial  has
appointed one of its  senior  officers  to  oversee the Year 2000
process and to inform its board of directors  on  a regular basis
of the progress being made.  Tower Financial intends  to complete
this  assessment  by  June  30,  1999.   Tower  Financial is also
developing a contingency plan to address Year 2000  problems that
may  occur  after December 31, 1999, and expects to complete  the
plan by June 30, 1999.

   Tower  Bank   requires   general  assurances  from  commercial
borrowers as to their Year 2000  readiness  as  part  of the loan
application  and review process.  Additionally, Tower Bank  plans
to use the following  steps  to  minimize  Year  2000  risks: (1)
internal  communications  to  keep  employees  knowledgeable  and
updated  on   Year 2000 readiness; (2) written communications  to
all loan applicants  to  notify  them  of  Tower Bank's Year 2000
readiness  efforts;  (3) questionnaires to be  completed  by  all
significant commercial borrowers to apprise them of possible Year
2000 issues applicable  to  them; and (4) continued dialogue with
loan clients during 1999 to review Year 2000 readiness.

   Because it is starting with  new  equipment,  Tower  Financial
does  not expect to incur large operating expenses to modify  its
systems  to be Year 2000 ready.  Costs to Tower Financial related
to Year 2000  readiness  are  estimated  to be less than $25,000.
These  costs  may  include  testing  of  equipment  and  software
programs,  equipment  upgrades  and customer  education.   It  is
difficult to predict such costs,  and  additional  funds  may  be
needed.   The  failure  of  Tower  Financial,  its vendors or its
customers   to  successfully  address  Year  2000  issues   could
interfere with  Tower Financial's ability to operate its business
and could have an  adverse  effect on its financial condition and
results of operation.


FORWARD-LOOKING STATEMENTS

   The statements contained in  this  Quarterly  Report  filed on
Form  10-QSB  that  are  not historical facts are forward-looking
statements  within  the  meaning   of   the   Private  Securities
Litigation Reform Act.  Forward-looking statements are made based
upon  management's  current  expectations and beliefs  concerning
future  developments  and  their  potential  effects  upon  Tower
Financial or Tower Bank.  There  can  be no assurance that future
developments affecting Tower Financial  or  Tower  Bank  will  be
those  anticipated  by  management.  Actual  results  may  differ
materially from those included in the forward-looking statements.
These  forward-looking statements involve risks and uncertainties
including, but not limited to, the following:

   <circle>Tower Financial's status as a start-up company with no
        significant operating history;
   <circle>Tower  Financial's  expectation  of significant losses
        for at least the first two years of operations;
   <circle>the  effect of extensive banking regulation  on  Tower
        Bank's ability to grow and compete;
   <circle>the effect of changes in federal economic and monetary
        policies  on  Tower  Bank's  ability to attract deposits,
        make loans and achieve satisfactory interest spreads;
   <circle>the  competitive  disadvantage  resulting  from  Tower
        Financial's  status  as   a   highly-regulated,  start-up
        company;
   <circle>Tower  Financial's  dependence   on   key   management
        personnel;
   <circle>the  increased  risk  of  losses  due to loan defaults
        caused by Tower Bank's commercial loan concentration;
   <circle>Tower  Financial's  dependence  on  a favorable  local
        economy in Tower Bank's primary service area;
   <circle>Tower  Bank's  dependence on net interest  spread  for
        profitability; and
   <circle>Tower  Bank's ability  to  implement  developments  in
        technology to be competitive.

Readers  are  also directed  to  other  risks  and  uncertainties
discussed in other  documents  filed  by Tower Financial with the
Securities and Exchange Commission.  Tower  Financial  undertakes
no   obligation   to   update   or   revise  any  forward-looking
information,  whether  as  a  result of new  information,  future
developments or otherwise.


                 PART II.   OTHER INFORMATION

Item 1.      LEGAL PROCEEDINGS

   Tower  Bank  may be involved from  time  to  time  in  various
routine legal proceedings  incidental  to  its business.  Neither
Tower Financial nor Tower Bank is engaged in any legal proceeding
that is expected to have a material adverse effect on the results
of operation or financial position of Tower  Financial  or  Tower
Bank.


Item 2.      CHANGES IN SECURITIES AND USE OF PROCEEDS

CHANGES IN SECURITIES

   The  following  information  is  furnished as to securities of
Tower Financial sold during the quarter ended March 31, 1999 that
were not registered under the Securities Act of 1933, as amended.

   <circle>On  January  4, 1999, Tower  Financial's  Compensation
        Committee  granted   options   to  certain  officers  and
        directors under the 1998 Stock Option  and Incentive Plan
        (the "Plan") for an aggregate of 90,000  shares of common
        stock, effective at the closing date of the  IPO,  at  an
        exercise price equal to the IPO price ($10.00 per share).
        Each  of these options has a term of ten years.  Of these
        option  grants, non-qualified stock options to purchase a
        total of  10,000  shares were granted to two directors as
        compensation for consulting  services  provided  to Tower
        Financial.  These non-qualified stock options vested upon
        the  closing  of  the  IPO.   Incentive  stock options to
        purchase a total of 80,000 shares were granted to certain
        executive officers as compensation for services  rendered
        in  their  capacities as officers of Tower Financial  and
        Tower Bank.   These  incentive stock options vest in four
        annual increments of 25%  of  the  total number of shares
        included in the stock option, commencing  on  January 29,
        2000.

   <circle>On  January  29,  1999, Tower Financial's Compensation
        Committee granted non-qualified options under the Plan to
        purchase an aggregate  of 150,000 shares to the directors
        of Tower Financial concurrently  with  the closing of the
        IPO.   These  options  were granted on a pro  rata  basis
        based upon the number of shares of common stock purchased
        in the offering by the directors.   Each of these options
        has an exercise price equal to the IPO  price ($10.00 per
        share)  and a term of ten years.  These options  vest  in
        increments  of  one-third  of  the total number of shares
        included in the stock option six months, one year and two
        years after January 29, 1999.

   <circle>On  February 15, 1999, Tower Financial's  Compensation
        Committee  granted incentive stock options under the Plan
        to purchase  an  aggregate  of  44,440  shares to certain
        employees  of  Tower Financial and Tower Bank.   Each  of
        these options has  an  exercise price equal to the market
        value (as defined in the  Plan)  of  one  share  of Tower
        Financial's  common  stock on February 15, 1999 ($10.1875
        per share) and a term  of  ten years.  These options vest
        in four annual increments of  25%  of the total number of
        shares  included  in  the  stock  option,  commencing  on
        February 15, 2000.

   <circle>On  March  15,  1999,  Tower Financial's  Compensation
        Committee granted incentive  stock options under the Plan
        to  purchase  an  aggregate of 6,000  shares  to  certain
        employees of Tower  Financial  and  Tower  Bank.  Each of
        these options has an exercise price equal to  the  market
        value  (as  defined  in  the  Plan) of one share of Tower
        Financial's common stock on March  15,  1999  ($9.875 per
        share)  and a term of ten years.  These options  vest  in
        four annual  increments  of  25%  of  the total number of
        shares included in the stock option, commencing  on March
        15, 2000.

The transactions described above are exempt from the registration
requirements  of  the  Securities  Act  pursuant  to Section 4(2)
thereof.   Tower  Financial  filed its Registration Statement  on
Form S-8 on April 1, 1999 for  the  purpose  of registering under
the  Securities  Act  310,000 shares of Tower Financial's  common
stock issuable pursuant to the Plan.

USE OF PROCEEDS

   Tower Financial's Registration  Statement  on  Form SB-2 (File
No. 333-67235), registering 2,300,000 shares of common  stock for
sale  to the public, was declared effective on January 26,  1999.
Tower Financial  filed  its  Registration  Statement on Form SB-2
(File  No.  333-71219)  on  January  26,  1999,  registering   an
additional  230,000  shares  pursuant  to  Rule  462(b) under the
Securities  Act.   Of  the aggregate 2,530,000 shares  registered
with the Securities and  Exchange  Commission,  all of the shares
were sold in a firm commitment underwriting.  The closing for the
2,200,000  firm  shares  included  in  the  offering occurred  on
January 29, 1999, and the closing for the 330,000 shares included
in  the underwriters' overallotment option occurred  on  February
12, 1999.   The managing underwriters for the offering were Roney
Capital Markets,  a  division  of  First Chicago Capital Markets,
Inc., and McDonald Investments, Inc.  The shares were sold to the
public at a price of $10.00 per share for  an  aggregate offering
price of 25,300,000.

   After   the   underwriters'  discount  of  $1,581,250,   Tower
Financial  received   proceeds   aggregating  $23,718,750  before
expenses of the offering.  Through  March 31, 1999, the aggregate
amount  of  expenses incurred for Tower  Financial's  account  in
connection with the issuance and distribution of its common stock
was $244,980.   Accordingly,  the total expenses incurred for the
offering   through  March  31,  1999,   including   underwriters'
discount, was $1,826,230.

   The net offering  proceeds to Tower Financial, after deducting
the   underwriters'   discount   and   offering   expenses,   was
$23,473,770.  As of March  31,  1999,  the  net offering proceeds
received by Tower Financial have been applied as follows:

   <circle>$760,000 was applied to repay loans that had been made
        by directors and former directors of  Tower  Financial to
        cover organizational and other pre-opening expenses.

   <circle>$15,000,000   was   contributed   to   Tower  Bank  by
        purchasing  all  of  its  issued  and outstanding  common
        stock.  Tower Bank applied approximately  $96,000 of this
        amount    for    leasehold   improvements   and   related
        architectural and  engineering services and approximately
        $460,000  to  purchase  furniture,  equipment  and  other
        assets  necessary   for  operations.   Of  the  remaining
        $14,444,000 received  by Tower Bank from Tower Financial,
        Tower Bank retained approximately  $470,000  for  working
        capital   and   used  the  remaining  funds,  along  with
        increases in deposits, to make new loans to customers and
        to purchase interest-bearing bank deposits and investment
        securities.

   The  balance  of  the  net  offering  proceeds,  approximately
$7,700,000,  has been invested  in  demand  and  interest-bearing
deposits with  banks  and  will be retained by Tower Financial as
working  capital  for  general  corporate  purposes  and  to  pay
operating  expenses,  as well  as  for  possible  future  capital
contributions to Tower Bank.


Item 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   By written consent dated  January  4,  1999, Tower Financial's
sole  shareholder  re-elected  all of Tower Financial's  fourteen
directors for the respective  terms outlined in Tower Financial's
Registration  Statement  on Form  SB-2  (Registration  No.   333-
67235).   By  written  consent  dated  January  21,  1999,  Tower
Financial's sole shareholder  approved  an  amendment to the 1998
Stock Option and Incentive Plan.  The amended  1998  Stock Option
and Incentive Plan was filed as an exhibit to Amendment  No. 2 to
Tower   Financial's   Registration   Statement   on   Form   SB-2
(Registration  No.   333-67235).  No other matters were submitted
to a vote of security  holders during the quarter ended March 31,
1999.


Item 6.      EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Exhibits:

        (27) Financial Data Schedule

   (b)  No reports on Form 8-K were filed during the quarter.


<PAGE>
                          SIGNATURES

   In accordance with the  requirements  of the Exchange Act, the
registrant caused this report to be signed  on  its behalf by the
undersigned, thereunto duly authorized.


                            TOWER FINANCIAL CORPORATION


Dated:  May 14, 1999             /S/ DONALD F. SCHENKEL
                            Donald F. Schenkel, Chairman  of  the
                            Board,  President and Chief Executive
                            Officer

Dated:  May 14, 1999             /S/ KEVIN J. HIMMELHAVER
                            Kevin J. Himmelhaver, Chief Financial
                            Officer