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



                                    FORM 10-Q



 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
                              Act of 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998


                         COMMISSION FILE NUMBER: 0-2616


                         CONSUMERS FINANCIAL CORPORATION
                             1200 CAMP HILL BY-PASS
                               CAMP HILL, PA 17011

      PENNSYLVANIA                                    23-1666392
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

      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 reports), and (2) has been subject to
filing such requirements for the past 90 days.

                          Yes    XX         No         

      Indicate the number of shares outstanding of each of the issuer s classes
of common stock, as of the latest practicable date.

                                                        Outstanding at
      Class of Common Stock                           November 13, 1998
      $.01 Stated Value                                2,583,835 shares

                      CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                                      INDEX

   
                                                                        PAGE
PART 1. FINANCIAL INFORMATION                                           NUMBER

Item 1. Financial Statements:

        Consolidated Statement of Net Assets in Liquidation -                 3
            September 30, 1998

        Consolidated Statement of Changes in Net Assets in Liquidation -      4
            For the Period from March 25, 1998 to September 30, 1998
               and for the Three Months Ended September 30, 1998

        Consolidated Balance Sheet - December 31, 1997                        5

        Consolidated Statements of Operations -                               6
            For the Period from January 1, 1998 to March 24, 1998       
            and for the Nine and Three Months Ended September 30, 1997        
    
        Consolidated Statements of Cash Flows -                               7
            For the Period from January 1, 1998 to March 24, 1998       
            and for the Nine Months Ended September 30, 1997

        Notes to Consolidated Financial Statements                       8 - 14

Item 2. Management s Discussion and Analysis of Results of                15-17
            Operations and Financial Condition                                


            PART 2. OTHER INFORMATION

Item 1. Legal Proceedings                                                    18

Item 2. Changes in Securities                                                18

Item 3. Defaults upon Senior Securities                                      18

Item 4. Submission of Matters to a Vote of Security Holders                  18

Item 5. Other Information                                                    18

Item 6. Exhibits and Reports on Form 8-K                                     18

                          PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)
<TABLE>
 <CAPTION>(in thousands)

 <S>                                                                    <C>
 Assets

 Investments:
      Fixed maturities                                                      $1,050

      Mortgage loans on real estate                                          1,589
      Other invested assets                                                     74

      Short-term investments                                                 2,558


           Total investments                                                 5,271

 Cash                                                                          208

 Accrued investment income                                                      46
 Receivables                                                                21,275

 Prepaid reinsurance premiums                                               36,405
 Deferred policy acquisition costs                                              25

 Property and equipment                                                      1,180
 Other real estate                                                             189

 Other assets                                                                  572


           Total assets                                                     65,171


 Liabilities and Redeemable Preferred Stock
 Liabilities:

      Future policy benefits                                                17,476
      Unearned premiums                                                     37,342

      Other policy claims and benefits payable                               3,367
      Other liabilities                                                      1,247

      Income taxes:
           Current                                                               2

           Deferred                                                           (361)
                                                                            59,073


 Redeemable preferred stock:

      Series A, 8 1/2% cumulative convertible                                4,815
      Total liabilities and redeemable preferred stock                      63,888


 Net assets in liquidation                                                  $1,283



</TABLE>



                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
         CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)
<TABLE>

 <CAPTION>                                                      FOR THE PERIOD
                                                                FROM MARCH 25,          THREE MONTHS
                                                                     1998                   ENDED
                                                                TO SEPTEMBER 30,        SEPTEMBER 30,
 (in thousands)                                                      1998                   1998
 <S>                                                                      <C>                   <C>

 Operating income:
      Net investment income                                              $394                  $122

      Fees from sale of customer accounts                                 215                    60
      Joint venture fees                                                  223                    45
      Net realized investment losses                                       (3)                   (5)

      Gain (loss) on disposal of discontinued business                     84                   (40)
      Miscellaneous                                                       128                    63

                                                                        1,041                   245


 Operating expenses:
      Rent and related costs                                              181                   109

      Salaries, wages and employee benefits                               265                   113
      Professional fees                                                   274                   108

      Taxes, licenses and fees                                            164                    30
      Miscellaneous                                                        80                    30

                                                                          964                   390


 Operating income (loss) before income taxes                               77                  (145)


 Income tax expense                                                      (143)                  (30)


 Decrease in unrealized appreciation of debt securities                   (37)                  (22)


 Preferred stock dividends                                               (204)                 (102)


 Adjustment of preferred stock to redemption value                       (175)


 Retirement of treasury shares-preferred                                   57
 Purchase of treasury shares-common                                        (7)


 Decrease in net assets for the period                                   (432)                 (299)


 Net assets at beginning of period                                      1,715                 1,582


 Net assets at September 30, 1998                                      $1,283                $1,283


</TABLE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                           (IN PROCESS OF LIQUIDATION)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1997
<TABLE>
 <CAPTION>(in thousands)



 <S>                                                                                  <C>
 Assets

 Investments:
      Fixed maturities                                                             $5,857

      Mortgage loans on real estate                                                 2,086
      Other invested assets                                                           295

      Short-term investments                                                       32,763


           Total  investments                                                      41,001


 Cash                                                                                 641
 Accrued investment income                                                            268
 Receivables                                                                       16,639

 Prepaid reinsurance premiums                                                       9,572
 Deferred policy acquisition costs                                                 13,570

 Property and equipment                                                             1,350
 Other real estate                                                                    783

 Other assets                                                                       1,211


                                                                                  $85,035
 Liabilities, Redeemable Preferred Stock and Shareholders  Equity

 Liabilities:
      Future policy benefits                                                      $21,467

      Unearned premiums                                                            49,994
      Other policy claims and benefits payable                                      2,539

      Other liabilities                                                             4,556
      Income taxes:

           Current                                                                    430
           Deferred                                                                  (445)
                                                                                   78,541
 Redeemable preferred stock:

 Series A, 8 1/2% cumulative convertible, net of treasury stock                     4,688



 Shareholders  equity:
      Common stock                                                                     30

      Capital in excess of stated value                                             7,989
      Net unrealized appreciation of debt securities                                   54

      Deficit                                                                      (4,796)
      Treasury stock                                                               (1,471)

                                                                                    1,806


                                                                                  $85,035

</TABLE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                           (IN PROCESS OF LIQUIDATION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>

 <CAPTION>                                        For the Period
                                                       from              Nine Months         Three Months
                                                  January 1, 1998           Ended               Ended
                                                   to March 24,         September 30,       September 30,
 (in thousands, except per share data)                 1998                  1997                1997
 <S>                                                          <C>               <C>                 <C>

 Revenues:
      Premiums written                                                         ($27)               ($10)

      Decrease in unearned premiums                                             296                  99
      Premium income                                                            269                  89

      Net investment income                               $112                   50                  12
      Net realized investment gains                         24                    8                (184)
        (losses)
      Fees and other income                                181                  173                 164

                                                           317                  500                  81


 Benefits and expenses:
      Death and other benefits                                                  374                 143

      Amortization of deferred policy
         acquisition costs                                                        7                   2
      Operating expenses                                   420                  571                  40

                                                           420                  952                 185


 Loss from continuing operations
   before income tax benefit                              (103)                (452)               (104)
 Income tax benefit                                        (15)                (196)                (80)
 Loss from continuing operations                           (88)                (256)                (24)


 Discontinued operations:
      Gain (loss) from operations of 
       discontinued businesses (net of
       income taxes)                                                           (825)                133

      Gain (loss) on disposal of
       discontinued businesses
       (net of  income taxes)                              112                 (125)                 (7)
                                                           112                 (950)                126


 Net income (loss)                                         $24              ($1,206)               $102


 Basic and diluted income (loss) per
 common share:

     Loss from continuing operations                      ($0.08)              ($0.23)             ($0.05)
     Discontinued operations                                0.04                (0.37)               0.04 

     Net loss                                             ($0.04)              ($0.60)             ($0.01)


     Weighted average number of
       shares  outstanding                               2,596                2,602               2,597


 Cash dividends declared per common share                 NONE                 NONE                NONE

</TABLE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                           (IN PROCESS OF LIQUIDATION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
 <CAPTION>                                                  For the Period from      Nine Months Ended
                                                             January 1, 1998 to        September 30,
 (in thousands)                                                March 24, 1998               1997

 <S>                                                                       <C>                    <C>
 Cash flows from operating activities:

      Net income (loss)                                                    $24                ($1,206)


     Adjustments to reconcile net income (loss) to
       net cash used in operating activities:
          Deferred policy acquisition costs incurred                                           (7,543)

          Amortization of deferred policy  costs                                                7,080
          Other amortization and depreciation                               24                    318

          Change in future policy benefits                                                     (3,089)
          Change in unearned premiums                                                          (4,342)
          Change in amounts due reinsurers                                (142)                (1,022)

          Income taxes                                                     (15)                (1,828)
          Change in prepaid reinsurance premiums                                                6,411

          Change in other receivables                                    1,497                  4,303
          Change in other liabilities                                     (376)                  (307)

          Net assets transferred in sale of credit
            insurance business                                          (3,647)
          Other                                                           (434)                    42


     Total adjustments                                                  (3,093)                    23


     Net cash used in operating activities                              (3,069)                (1,183)


 Cash flows from investing activities:

     Purchase of investments                                                (3)               (12,061)
     Maturity of investments                                             1,000                    738

     Sale of investments                                                 1,829                 12,832


     Net cash provided by investing activities                           2,826                  1,509


 Cash flows from financing activities:
     Purchase of treasury stock                                                                   (63)

     Cash dividends to shareholders                                       (109)                  (316)


     Net cash used in financing activities                                (109)                  (379)

 Net decrease in cash                                                     (352)                   (53)
 Cash at beginning of period                                               641                    556


 Cash at end of period                                                    $289                   $503


</TABLE>                                        

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                           (IN PROCESS OF LIQUIDATION)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)

1.  OVERVIEW AND BASIS OF ACCOUNTING:

    The operating losses incurred by the Company over the past five years have
significantly reduced its net worth and liquidity position. As a result, in
late 1997, the Company signed an agreement to sell its core credit insurance
and related products business, which had been its only remaining business
operation, following the sales in 1994 and 1997 of all of its universal life
insurance business and the 1996 sale of its auto auction business. Settlement
on the sale of the credit insurance business took place in May 1998. The
Company s income or loss from operations now consists principally of (i) earned
premium and related costs associated with a small, closed block of extended
service contract business, (ii) fee revenues received from Life of the South
Corporation (LOTS), a Georgia-based financial services holding company which
acquired the Company s credit insurance customer accounts, (iii) investment
income on remaining assets and (iv) corporate expenses.

        On March 24, 1998, the Company s shareholders approved a Plan of 
Liquidation and Dissolution, as discussed in Note 2 below. Accordingly, the 
Company has adopted a liquidation basis of accounting for the period subsequent 
to March 24, 1998. Under the liquidation basis of accounting, assets are stated
at their estimated net realizable values and liabilities are stated at
their anticipated settlement amounts. Prior to March 25, 1998, the Company
reported the results of its operations and its asset and liability amounts
using accounting principles applicable to going concern entities.
     
    Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These  financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1997 Form 10-K.

    The changes in net assets for the period from March 25, 1998 to September
30, 1998 are not necessarily indicative of the changes to be expected for the
full year.

2.  DISCONTINUED OPERATIONS AND PLAN OF LIQUIDATION:

     On December 30, 1997, the Company entered into an agreement with LOTS,
pursuant to which the Company would (i) sell its credit insurance and fee
income accounts to LOTS effective October 1, 1997, (ii) sell its
September 30, 1997 inforce block of credit insurance business to American
Republic Insurance Company (American Republic), LOTS  financial partner in the
transaction, effective January 1, 1998 and (iii) sell one of its wholly-owned
reinsurance subsidiaries to LOTS as of January 1, 1998. LOTS and the Company
also agreed that, with respect to the Company s principal insurance
subsidiary, new credit insurance business produced by that subsidiary s former
customer accounts, which were transferred to LOTS, will continue to be written
on the policy or certificate forms of the subsidiary until September 30, 1999,
or an earlier date which may be agreed to by the parties. This premium and
the related insurance risk are also being reinsured 100% to American Republic.

     The sale of the inforce block of business referred to in (ii) above was
completed on May 13, 1998 after the required approvals of the Company s
preferred and common shareholders and state insurance regulators in the states
of Delaware and Ohio were received. Settlement on the sale of the reinsurance
subsidiary referred to in (iii) above occurred on September 28, 1998, following
the approval in late August of the insurance regulators in the state of
Arizona.

    The sale of the inforce block of business resulted in an after-tax loss of
approximately $3,665,000, of which $3,919,000 was reflected in the Company s
fourth quarter 1997 financial statements through a write-down of deferred
policy acquisition costs. The 1997 loss included an $819,000 loss from
operations from September 30, 1997 (the measurement date) to December 31,
1997. An offsetting gain on disposal of $254,000, which results from
adjustments to certain estimates made in 1997, has been included in the
Company s 1998 financial statements.

    In addition to approving the sale of the inforce credit insurance business,
at the Special Meeting of Shareholders held on March 24, 1998, the Company s
shareholders also approved a Plan of Liquidation and Dissolution, pursuant to
which the Company intends to liquidate its remaining assets, provide for all of
its liabilities, redeem its preferred stock at par value and distribute all
remaining cash to its common shareholders. Pursuant to the terms of its
agreement with LOTS, the Company will receive payments from LOTS over a five-
year period based on the amount of credit insurance premiums produced by the
customer accounts sold by the Company to LOTS. The Company may also receive a
payment from a contingency fund established by the parties based on the claims
experience on the inforce credit insurance business from October 1, 1997 to
September 30, 2002. Because of these future payments and potential future
payments, the final distribution to the Company s common shareholders will not
be made until late in 2002 when the amounts due from LOTS have been received.
The Company has made substantial reductions in its number of employees during
the past several years as a result of the discontinuation of its various
businesses. As of November 11, 1998, six people are employed by the Company.
During the liquidation period, the Company intends to outsource most of the
functions which will continue to be required.

3.  INCOME TAXES:

    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows (in 000's):

<TABLE>

 <CAPTION>                                              September 30,         December 31,
                                                            1998                  1997 

 <S>                                                           <C>                     <C>

 Deferred tax liabilities:
      Fixed maturities                                         $11                     $28

      Deferred policy acquisition costs                          9                   4,614
      Other                                                     41                     168
                                                                61                   4,810
 Deferred tax assets:
      Future policy benefits and financial                      70                   5,252
        reinsurance

      Net operating loss carryforwards                       2,464                   2,011
      Other                                                    199                     225
                                                             2,733                   7,488
      Valuation allowance for deferred                       2,311                  (2,233)
        tax assets

                                                               422                   5,255

 Net deferred tax asset                                      ($361)                  ($445)
                                                                                          
</TABLE>

Significant components of the provision for income taxes are as follows (in
000's):

<TABLE>

 <CAPTION>                                For the Period         Nine Months        Three Months
                                         from January 1,            Ended               Ended
                                               1998             September 30,       September 30,
                                        to March 24, 1998            1997               1997
 <S>                                                  <C>                 <C>                 <C>

 Current:
      Federal                                       ($18)              ($186)               ($51)

      State                                            2                  82                  31
      Total current                                  (16)               (104)                (20)


 Deferred                                              1                 (92)                (60)

 Income tax benefit related
   to continuing operations                          (15)               (196)                (80)


 Income tax benefit  included
   with discontinued operations:
            Current                                                     (470)                (58)

            Deferred                                                    (235)               (107)
                                                        0               (705)               (165)


 Total income tax benefit                           ($15)              ($901)              ($245)
       

</TABLE>

     The reconciliation of the provision for income taxes and the amount which
would have been provided at statutory rates is as follows (in 000's):

<TABLE>

 <CAPTION>                                              For the Period
                                                             from                Nine Months
                                                        January 1, 1998             Ended
                                                         to March 24,           September 30,
                                                             1998                   1997

 <S>                                                                <C>                   <C>
 Loss from continuing operations before 
     income tax benefit                                           ($103)                ($452)


 Income tax benefit at 34% statutory rate
      on pre-tax loss                                              ($35)                ($154)

 State income taxes                                                   2                    13
 Items not includable for tax purposes                               79                     7
 Other, net                                                         (61)                  (62)


 Actual income tax benefit                                         ($15)                ($196)





4.  COMMITMENTS AND CONTINGENCIES:

    In 1989, the Company entered into an agreement for the lease of office
space. The facility contains approximately 44,500 square feet of office space.
The term of the lease is ten years with an option to renew for one additional
term of five years. Until March 1994, monthly lease payments were $35,000. In
March 1994, the Company exercised its option to acquire a 50% interest in this
property at a price of $1,750,000. The Company continues to lease the entire
building, which is classified as an operating lease, but at monthly rent of
$17,000 through July 1999, although the Company has subleased a portion of the
office space which it does not otherwise occupy. The Company has no other
significant leases.

    In August 1997, the Company received a notice of proposed adjustment from
the Internal Revenue Service (IRS) as a result of a tax examination for the
years ended December 31, 1992 and 1993. In November 1998, the IRS notified the
Company that virtually all of the proposed adjustment had been rescinded.

    In connection with the cancellation of a joint venture agreement in 1996,
the Company agreed to pay its former joint venture partner a pro rata share of
the proceeds, if any, it receives from the sale of its credit insurance
accounts. Accordingly, over the next five years the Company will pay its former
partner approximately 19% of any gross fee revenues received from LOTS for the
sale of its customer accounts.

    Reinsured risks would give rise to liability to the insurance subsidiaries
only in the event that the reinsuring company is unable to meet its obligations
under the reinsurance agreements in force.

    In November 1997, the Company and a third party reinsurer were sued by a
former general agency with whom the Company had a partnership agreement. The
partnership agreement provided that the agency would market universal life
insurance business for the Company, pursuant to specific criteria established by
the Company, and would also be entitled to a share of the profits, if any,
which arose from the business produced. The claimant is seeking monetary
damages to compensate it for the Company s alleged failure to share profits
and for other alleged losses resulting from the Company s rejection of policy
applications involving unacceptable risks. While management believes this
claim is completely without merit and intends to vigorously defend itself in
this matter, the ultimate outcome of this claim cannot be determined at this
time. 

    Certain claims, suits and complaints arising in the ordinary course of
business have been filed or are pending against the Company or its
subsidiaries. In the opinion of management, based on opinions of legal
counsel, adequate reserves, if deemed necessary, have been established for
these matters and their outcome will not result in a significant effect on the
financial condition or future operating results of the Company or its
subsidiaries. The Company has taken certain income tax positions in previous
years that it believes are appropriate. If such positions were to be
successfully challenged by the Internal Revenue Service, the Company could
incur additional income taxes as well as interest and penalties. Management
believes that the ultimate outcome of any such challenges will not have a
material effect on the Company s financial statements.

5.  PER SHARE INFORMATION:

    The following table sets forth the computation of basic and diluted per
share data.


</TABLE>
<TABLE>

 <CAPTION>                                        For the Period
                                                       from             Nine Months         Three Months
                                                 January 1, 1998            Ended              Ended
                                                   to March 24,        September 30,       September 30,
 (in thousands, except per share amounts)              1998                 1997                1997
 <S>                                             <C>                           <C>                <C>

 Loss from continuing operations                          ($88)              ($256)              ($24)
 Preferred stock dividends                                (109)               (316)              (107)
 Accretion of carrying value of 
      preferred stock                                       (9)                (27)                (9)

 Numerator for basic loss per share - 
      loss attributable to
      common shareholders                                 (206)               (599)              (140)
 Effect of dilutive securities                               0                   0                  0


 Numerator for diluted loss per share                    ($206)              ($599)             ($140)

 Denominator for basic loss per share -
      weighted average shares                            2,596               2,602              2,597

 Effect of dilutive securities                               0                   0                  0

 Denominator for diluted loss per share                  2,596               2,602              2,597


 Basic and diluted loss per common share                ($0.08)           ($0.23)             ($0.05)


</TABLE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION

    A review of the significant factors which affected the Company's 1998
operating performance as well as its financial position at September 30, 1998
is presented below. Information relating to 1997 is also presented for
comparative purposes. This analysis should be read in conjunction with the
Consolidated Financial Statements and the related Notes appearing elsewhere in
this Form 10-Q.

                                    OVERVIEW

    At a Special Meeting of Shareholders held on March 24, 1998, the Company's
preferred and common shareholders approved the sale of the Company's core
credit insurance and related products business, which was the Company's
only remaining business operation, following various sales over the past six
years of its traditional and universal life insurance business and its auto
auction business.

     At the Special Meeting, the shareholders also approved a Plan of
Liquidation and Dissolution, pursuant to which the Company plans to liquidate
its remaining assets, provide for all of its liabilities, redeem its preferred
stock at par value  and distribute all remaining cash to its common
shareholders. Because payments for the sale of the credit insurance customer
accounts will be received from the purchaser over a five-year period, and
since any potential distribution from a contingency fund established by the
Company and the purchaser will not be made to the Company until 2002, the
final liquidating distribution to the common shareholders cannot be made until
late in 2002 when all amounts due from the purchaser have been received. The
Company has reduced its number of employees to six and will eventually
outsource most of the functions which will continue to be required to
complete the liquidation process.

    As a result of the approval of the Plan of Liquidation, the Company has
adopted a liquidation basis of accounting in its financial statements for
periods subsequent to March 24, 1998. Under liquidation accounting rules,
assets are stated at their estimated net realizable values and liabilities
are stated at their anticipated settlement amounts. Prior to March 25, 1998,
the Company reported the results of its operations and its asset and liability
amounts using accounting principles applicable to going concern entities.

                              RESULTS OF OPERATIONS

    As a result of the sale of its remaining business and the adoption of the
Plan of Liquidation, as discussed above, the Company's operating income and
expenses now consist principally of (i) fee income from Life of the South
Corporation (LOTS) for the sale of the Company's customer accounts, (i)
investment income on existing assets and (iii) corporate expenses, primarily
salaries, legal and accounting fees and building rent and related costs. A
discussion of the material factors which affected the Company's results from
both continuing operations and discontinued operations (for the period prior to
March 25, 1998) and its changes in net assets (for the period from March 25,
1998 to September 30, 1998) is presented below. Information for 1997 is also
presented for comparative purposes.

    During the period from March 25, 1998 through September 30, 1998, the
Company's excess of operating income over operating expenses before income
taxes totaled $77,000. A key reason for the excess is the fact that settlement
on the sale of the Company's credit insurance business to LOTS, which
involved the transfer of approximately $30 million to the purchaser, did not
occur until May 13, 1998. The Company therefore earned investment income on
these assets until they were transferred. Investment income will decline
substantially in future periods. The Company also reported a significant
increase in joint venture fees earned on a now terminated venture due to
improved claims experience. Fees from LOTS for the sale of the customer
accounts were $215,000 from March 25 to September 30. Operating expenses
during this period were $964,000, which included $265,000 in salaries and
related benefits and $274,000 in legal, accounting and other fees. Both
salaries and fees are expected to decline in future periods. The Company also
reported income tax expense of $143,000 for the March 25 to September 30
period.

    In the third quarter of 1998, the Company incurred operating expenses which
exceeded its operating income by $145,000 on a pre-tax basis. The loss is
attributable to lower investment income, for the reasons described above, and
to a further write-down of certain real estate.

    During the period from January 1, 1998 to March 24, 1998, the Company
reported an $88,000 loss from continuing operations, income of $112,000 from
discontinued operations (representing an adjustment to certain estimates made
in 1997 with respect to the loss on the sale of the credit insurance
business) and net income of $24,000 ( a loss of $.04 per share).

    On a year-to-date basis, the Company's total net loss for 1998 was $42,000
compared to a $1.2 million net loss in the first nine months of 1997. Virtually
all of the improvement results from the elimination of the losses which were
being incurred in the credit insurance business prior to its sale and from
further reductions of overhead expenses.

ESTIMATED NET EXPENSES DURING LIQUIDATION PERIOD

    As indicated above, the Company's liquidation process is expected to
continue for a period of approximately five years, at which time all fee
payments and other potential distributions will have been received from LOTS.
During this period, certain corporate expenses will continue to be incurred and
investment income will continue to earn on any assets which have not been
distributed to shareholders. Further, the Board of Directors may determine
during this period that distributions to the common shareholders would be
increased by transferring all of the Company's remaining net assets into a
liquidating trust, in which case the trustees of such trust would be
responsible for liquidating all remaining assets, paying all liabilities and
making the final distributions to shareholders. Based on current estimates
which exclude any potential savings, if any, from the use of a liquidating
trust, the Company believes that its future operating expenses and other
costs, including preferred stock dividends, will exceed fee income and other
revenues during the five-year period by approximately $300,000 to $400,000.
Actual income and expenses could vary significantly from the present estimates
due to uncertainties as to when certain assets will be liquidated, when the
preferred stock will be redeemed, the level of actual expenses which will be
incurred and the ultimate resolution of various contingencies which may arise. 

YEAR 2000 COMPLIANCE

    Because the Company is no longer conducting any business operations and is
in the process of liquidating its remaining assets, it is therefore relying,
both directly and indirectly, on fewer computer systems than in the past to
complete its day to day activities. Consequently, management believes that the
impact of any potential failure of its own computer systems or those of its
relatively few service providers to properly distinguish the year 2000 from the
year 1900 will not be significant. However, management has reviewed its own
computer systems (consisting principally of a general ledger account system and
a shareholder data base system) and determined that those systems are currently
year 2000 compliant. Further, management is in the process of determining,
through inquiry and documentation, that the systems used by certain third party
vendors are or will be year 2000 compliant before December 31, 1999.

                               FINANCIAL CONDITION

    The Company's net assets in liquidation were $1,715,000 at March 24, 1998
compared to $1,283,000 at September 30, 1998. Net assets decreased by $66,000
as a result of the excess of operating expenses and income taxes over operating
income during the period. Additional decreases resulted from $204,000 in
preferred stock dividends and a $175,000 adjustment to reflect the preferred
stock at its redemption value of $10 per share. In May, the Company reduced
both its assets and liabilities by approximately $30 million when it closed on
the sale of its credit insurance business. Similarly, in September, the Company
utilized the $3 million in proceeds it received from the sale of one of its
insurance subsidiaries to pay the remaining amount due to the purchaser of the
credit insurance business.

INVESTED ASSETS

    Total investments decreased from $41 million at the end of 1997 to $5.3
million at September 30, 1998. The decrease is the result of the transfer of
approximately $36 million to the purchaser of the Company s credit insurance
business.

                            PART 2. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Except for the matters discussed in Note 4 of the Notes to Consolidated
Financial Statements included elsewhere in this Form 10-Q, neither the
registrant nor its subsidiaries are involved in any pending legal
proceedings other than routine litigation incidental to the normal
conduct of its business nor have any such proceedings been terminated during
the three months ended September 30, 1998.

ITEM 2. CHANGES IN SECURITIES

      During the three months ended September 30, 1998, there have been no
limitations or qualifications, through charter documents, loan agreements
or otherwise, placed upon the holders of the registrant's common or
preferred stock to receive dividends.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      The registrant has not defaulted in the payment of principal, interest or
in any other manner on any indebtedness and is current with all its
accounts. There is no arrearage in the payment of dividends on the
registrant's preferred stock.

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

      No matters were submitted to a vote of the stockholders of the registrant
during the three months ended September 30, 1998.

ITEM 5. OTHER INFORMATION

      None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits required to be filed by Item 601 of Regulation S-K:

            None

      (b)   No reports on Form 8-K were filed by the Company during the three
            months ended September 30, 1998.

                                               SIGNATURES



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



                                  CONSUMERS FINANCIAL CORPORATION
                                           Registrant




Date  November 17, 1998             By     /S/
                                          James C. Robertson, President
                                          (Chief Executive Officer)




Date  November 17, 1998             By     /S/
                                          R. Fredric Zullinger
                                          Senior Vice President,
                                          Chief Financial Officer
                                          and Treasurer