UNITED  STATES  SECURITIES  AND  EXCHANGE  COMMISSION


WASHINGTON,  D.C.  20549

                              FORM 10-KSB
(Mark  One)

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

        For  the  fiscal  year  ended  December  31,  1998
                                       -------------------

                         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  0-11663
                                                 -------

                             Chancellor Corporation
                             ----------------------
              (Exact name of Small Business Issuer in its Charter)

                        Massachusetts          04-2626079
                        -------------          ----------
       (State or other jurisdiction of          (I.R.S. Employer I.D. No.)
      incorporation  or  organization)

             210 South Street, Boston, Massachusetts          02111
             ---------------------------------------          -----
           (Address of principal executive offices)          Zip Code

          Issuer's telephone number, including area code (617) 368-2700
                                                         --------------


           Securities registered pursuant to Section 12(b) of the Act:


     Title of each class          Name of each exchange on which registered
     -------------------          -----------------------------------------
                               None          None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, par value $.01
                          ----------------------------
                                (Title of Class)

Check mark whether the issuer: (1) has filed all reports required to be filed by
Section  13  or  15(d) of the Securities Exchange Act of 1934 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   [  ]

Check  if  there  is  no disclosure of delinquent filers pursuant in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be  contained,  to  the  best  of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [  ]

Issuer's  revenues  for  the  year  ended  December  31, 1998 were approximately
$29,639,000.

As  of  April  13,  1999,  43,226,395 shares of Common Stock, $.01 par value per
share  and  5,000,000  shares of Series AA Convertible Preferred Stock, $.01 par
value  per share (with a liquidation preference of $.50 per share or $2,500,000)
were  outstanding.  Aggregate  market  value  of  the  voting  stock  held  by
non-affiliates  of  the  registrant  as  of  April  13,  1999  was approximately
$9,332,000.  Aggregate  market value of the total voting stock of the registrant
as  of  April  13,  1999  was  approximately  $28,367,000.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Proxy  Statement  for the Annual Meeting of Stockholders to be held at 2:00 p.m.
on  June  25,  1999  at  the  offices  of Bingham Dana, LLP, 150 Federal Street,
Boston,  MA  02109  -  Part  III

<PAGE>

                                       21.

This  Annual Report on Form 10-KSB contains certain "Forward-Looking" statements
as  such term is defined in the Private Securities Litigation Reform Act of 1995
and  information  relating to the Company and its subsidiaries that are based on
the  beliefs  of  the  Company's  management as well as assumptions used in this
report,  the  words  "anticipate", "believe", "estimate", "expect", and "intend"
and  words  or  phrases  of similar import, as they relate to the Company or its
subsidiaries or the Company management, are intended to identify forward-looking
statements.  Such  statements  reflect  the  current  risks,  uncertainties  and
assumptions  related  to  certain  factors  including,  without  limitation,
competitive  factors,  general  economic  conditions,  customer  relations,
relationships  with  vendors,  the  interest  rate  environment,  governmental
regulation  and  supervision,  seasonality,  distribution  networks,  product
introduction  and  acceptance,  technology  changes  and  changes  in  industry
conditions.  Should any one or more of these risks or uncertainties materialize,
or  should  any  underlying assumptions prove incorrect, actual results may vary
materially  from  those  described  herein  as anticipated, believed, estimated,
expected  or  intended.  The  Company  does  not  intend  to  update  these
forward-looking  statements.

                                     PART I

ITEM  1.     DESCRIPTION  OF  BUSINESS
-------      -------------------------

     Chancellor  Corporation ("Chancellor" or the "Company") was incorporated in
Massachusetts  in  January  1977.  It  is  principally  engaged  in  (1) buying,
selling,  leasing  and  remarketing  new  and used transportation equipment, (2)
managing  equipment  on  and  off-lease,  and  (3)  arranging  equipment-related
financing  through  its  principal  subsidiary,  Chancellor  Fleet  Corporation
("Fleet"),  which  was  incorporated  in  Massachusetts  in  January  1980.

HISTORICAL  BUSINESS  AND  FISCAL  YEAR  1998  SIGNIFICANT  DEVELOPMENTS

The  Company  originates lease transactions directly with equipment users and in
most  cases  sells  those leases to investors.  The Company also manages most of
the  leases  it  sells  to  investors  and,  when  the original leases expire or
terminate,  remarket  the  equipment  for  the  benefit of the investors and the
Company.  The  Company  originates  leases  involving  primarily  transportation
equipment,  but  also  other equipment including material handling equipment and
construction  equipment.  Investors  who  purchase  equipment subject to a lease
receive  the  tax  and  most  of the economic benefits associated with the lease
transaction.  In  certain  cases,  the  Company  has retained leases for its own
account.  The  Company  also  arranges  non-recourse  financing  for some of the
leases  which  it  sells  and  for most leases which it has retained for its own
account.  Typically, when the Company originates leases, the investors or buyers
of  those  leases are not known.  Therefore, the Company at the time of entering
into  the  lease  transaction is "underwriting" the lease.  At the expiration or
early termination of the original lease, the Company typically sells or releases
the  equipment  on  behalf  of  the  investor.

During  the  period 1989 through 1997, the Company incurred cumulative losses in
excess  of $56 million.  The Company recorded a loss of $1,802,000 during fiscal
1997.  The  decline  through  1996  led  the  Company  to  the  development  and
implementation  of a restructuring and transition plan.  This plan was developed
and  implemented  under  the  direction  of  Vestex,  the  Company's  majority
shareholder.  The  continued,  but decreasing, loss in 1997 was due primarily to
the  lack  of  sufficient cash flow to add new leases to the Company's own lease
portfolio  and  continued  costs  that  occurred  in  the  first half of 1997 in
connection  with  the  Company's  restructuring  efforts.  For  the  year  ended
December  31, 1998, the Company recorded a profit of $850,000, the first year of
profitability  since  1988.  The  Company's  return  to  profitability  in  1998
reflects  the culmination of new management's efforts and strategies to maximize
remarketing  of  off  lease equipment and fully implement its strategy to expand
its  operations  to  retail  and  wholesale  used transportation equipment.  The
Company  continues  to  develop  and  implement  innovative  financing and fleet
management  programs in the transportation equipment finance industry to further
the  Company's  continued  growth.

     Chancellor  Asset Management Inc. ("CAM"), a wholly owned subsidiary of the
Company,  entered  into a Management Agreement, dated August 1, 1998, as amended
August  17,  1998,  with M.R.B. Inc., a Georgia corporation d/b/a Tomahawk Truck
Sales;  Tomahawk  Truck  &  Trailer Sales, Inc., a Florida corporation; Tomahawk
Truck  &  Trailer  Sales of Virginia, Inc., a Virginia corporation; and Tomahawk
Truck  &  Trailer  Sales of Missouri, Inc., a Missouri corporation (collectively
"Tomahawk").  The  Management  Agreement  provided CAM with effective control of
Tomahawk's  operations  as of August 1, 1998.  Subsequently, CAM acquired all of
the  outstanding  capital  stock  of Tomahawk from the two (2) sole shareholders
(the  "Selling  Shareholders")  pursuant  to  a  Stock  Purchase  Agreement (the
"Agreement")  dated  January  29,  1999.

Tomahawk  is engaged in a similar line of business as CAM.  Tomahawk retails and
wholesales  used  transportation  equipment,  primarily  tractors  and trailers.
Tomahawk  operates  five  (5)  retail  centers  in  Conley,  Georgia;  Richmond,
Virginia;  Pompano  Beach, Florida; Orlando, Florida; and Kansas City, Missouri.
Tomahawk also operates its wholesale division from the Conley, Georgia facility.
Tomahawk  will operate as a wholly owned subsidiary of the Company, coordinating
many  operations  with  the  Company  to  achieve  operating  efficiencies  and
synergies.

The  purchase price paid by CAM consisted of 4,500,000 shares of Common Stock of
Chancellor  (valued at $.96 per share) and future cash consideration pursuant to
an  earn-out  (the  "Earn-Out")  as provided for in the Agreement.  The Earn-Out
provides  that  each of the Selling Shareholders will be paid an amount equal to
seven  and one-half percent (7.5%) of the Adjusted Pre-Tax Earnings of Tomahawk.
The  Earn-Out,  which  is  paid  on a quarterly basis, begins in the fiscal year
ended December 31, 1999 and ends in the fiscal year ended December 31, 2004.  In
connection  with  this Agreement, CAM loaned the Selling Shareholders a total of
$500,000  pursuant  to certain promissory notes payable that are payable in full
on  January  29,  2004.

The  Agreement  also: i) nominates one of the Selling Shareholders as a director
of  Chancellor's Board of Directors; ii) elects both of the Selling Shareholders
as  directors  of  CAM's  Board  of  Directors;  iii)  provides  for  Employment
Agreements  for  the  Selling Shareholders over a period of five years with base
salaries  of  $200,000  per  annum;  iv) prohibits the Selling Shareholders from
competing  against CAM or Tomahawk, or soliciting former employees and customers
of Tomahawk; v) provides for Tomahawk to lease from the Selling Shareholders the
Conley,  Georgia facility at fair market value rents of approximately $8,500 per
month;  and vi) provides CAM an option to purchase from the Selling Shareholders
the  Conley,  Georgia  facility  for  an  amount  not  to  exceed  $950,000.

This  transaction  has  been  recorded in accordance with the purchase method of
accounting.  As  a  result  of  the  effect on the transaction of the Management
Agreement,  the  designated  date of this transaction for accounting purposes is
August 1, 1998.  In connection with this transaction, CAM assumed liabilities of
approximately  $6,414,000  and  incurred  acquisition  costs  of  approximately
$3,405,000.  The  excess  of the purchase price over net assets of approximately
$7,695,000  has  been  recorded  in  intangibles.  Approximately  $154,000  of
intangibles  has  been  amortized  as  of  December  31,  1998.

     In  August  1997,  the  Company  committed  to  make  a  $1  million equity
investment  in  the  New  Africa  Opportunity Fund, LP ("NAOF").  NAOF is a $120
million  investment  fund  composed  of  $40  million  from  equity participants
including  the  Company,  and  $80  million  in  debt  financing provided by the
Overseas Private Investment Corporation ("OPIC"), an independent U.S. government
agency.  The  purpose  of  the  fund  is  to make direct investments in emerging
companies  throughout  Africa.  As  of December 31, 1998, the Company had funded
approximately  $350,000  and  is  obligated to provide additional funding in the
approximate  amount  of  $650,000.  The  Company  has  additionally  invested
approximately  $1,340,000  into  one  of NAOF's investee companies.  The Company
continues  to  negotiate  further  strategic  opportunities  with  this investee
company.

The  Company  undertook  a review of its trust portfolio, including consultation
with legal counsel and industry consultants, and determined that it had not been
recovering  costs associated with administering the trusts.  Management's review
determined that approximately $22,000,000 of costs for periods prior to 1997 had
not  been  recovered  from  the  trusts.  The Company has recorded approximately
$1,498,000  and $994,000 of cost recoveries in the years ended December 31, 1998
and  1997,  respectively.  For  periods prior to 1997, $1,868,000 was recovered.
Management  makes no representations concerning the Company's ability to recover
any  further  costs  for  periods prior to 1997.  Further recoveries for periods
prior  to 1997 are contingent upon the current status of the specific trusts and
the  Company's level of recovery efforts.  Consequently, the Company will record
any  further  recoveries as income in the period in which collection is assured.

The  ability of the Company to profitably operate its lease origination business
unit in the future will depend largely on the amount of new capital available to
the  Company  and  the  cost  of  that capital.  In addition, the success of the
Company's  remarketing,  retailing  and  wholesaling  of  used  transportation
equipment  will  result,  in part, from its ability to locate sources of quality
used  transportation equipment and expansion of its distribution channel through
siting  of  new  retail  facilities.  The  Company continues to explore possible
sources  of  new  capital  including,  for  example, obtaining new or additional
recourse  debt,  obtaining  new equity capital, securitizing lease transactions,
obtaining  equity  capital from private investors, purchases of equipment leases
originated  by  the  Company  and/or  entering  into  strategic  alliances/joint
ventures  with  other  leasing  or  financial services companies and the sale of
ancillary  business  units and/or assets as considered appropriate.  The Company
also utilizes an expansive database of over 75,000 sources and customers of used
transportation  equipment  and the Company's database of over 2,000 Fortune 1000
and  middle  market  customers  to  provide  both  sources  of  quality  used
transportation  equipment  and  end user customers.  This effort is on-going and
includes  a fully staffed telemarketing group to continually upgrade and add new
sources  and  users  of  transportation  equipment.  Additionally, the Company's
management  has  established  a  retail  facility  expansion program through the
investigates  of potential new sites that can be developed internally as well as
acquisition  candidates.  The  Company intends on investing any new capital that
it  obtains  in  leases  for its own portfolios (if practical), expansion of its
remarketing  and  retail/wholesale  operations,  and  other business operations.

Description  of  Business
-------------------------

     The  majority  of the Company's leases are noncancelable "net" leases which
contain  provisions  under  which  the  customer  must  make  all lease payments
regardless  of  any  defects  in the equipment and which require the customer to
insure  the equipment against casualty loss, and pay all related property, sales
and  other  taxes.  Some  of the leases written by the Company provide for early
termination  options.  Generally,  these  options  may be exercised at specified
times  upon receipt by the Company of an amount at least equal to the discounted
present  value  of  remaining rent payments.  The Company intends to collect all
termination payments.  Other leases allow the lessee at certain times to require
the  Company  to  attempt to sell or sublease the equipment for the lessee, with
the  Company  sharing  in  any  losses or gains should a decrease or increase in
revenue  streams  occur  as  a  result.

Leases are generally originated for private third party purchasers of equipment.
The  Company's lease origination marketing strategy is transaction driven.  With
each  lease  origination opportunity, the Company evaluates both the prospective
lessee  and  the equipment to be leased.  With respect to each potential lessee,
the  Company  evaluates  the  lessee's  credit  worthiness.  With respect to the
equipment,  the  Company  evaluates  the  remarketing  potential.

The  Company currently concentrates on leasing transportation equipment, such as
tractors,  trailers and trucks.  The Company also leases construction equipment,
aircraft,  material  handling  equipment  and  other  equipment.  The  Company's
business  plan  calls  for  diversification  of  the  equipment  available to be
financed.  This  diversification  will  provide  for  the  financing  of
low-obsolescence,  hard-asset equipment with predictable and dependable residual
values,  including  but  not  limited  to,  plastics, printing, construction and
general  manufacturing  equipment.  Further,  the Company will seek to syndicate
transactions  not  meeting  these criteria or the Company's credit risk profile.

The  Company  leases  equipment  to lessees in diverse industries throughout the
United  States.  Although  the  Company's  direct solicitation efforts involving
leases  of  new  equipment  have  shifted  from Fortune 100 companies to include
smaller  business  entities,  most of the Company's lessees of new equipment are
still  of  substantial creditworthiness, with minimum net worth in excess of $25
million.

During  1998,  the Company continued its lease originating activities, including
brokering  of  several  new  lease  transactions.  The  Company  also transacted
several  significant  buyouts  of  portfolios  held  by certain trust investors.
During  1998,  31%  (based  on  original  equipment  cost)  of  the  new  lease
transactions  originated  by  the  Company were with the one largest lessee.  In
addition,  approximately  40%  and  31%  (based  on  original equipment cost) of
equipment sold to investors in 1998 were purchased by the two largest investors.
During  1997,  92%  (based  on  original  equipment  cost)  of  the  new  lease
transactions  originated  by  the  Company  were with the one largest lessee. In
addition,  approximately  55%  and  37%  (based  on  original equipment cost) of
equipment sold to investors in 1997 were purchased by the two largest investors.

Equipment  Acquisition.  The Company acquired $5.5 million of equipment under 40
----------------------
leases  during  1998.  The Company acquired $214,000 of equipment under 4 leases
during  1997.  Additionally,  the  Company  acquired  10  existing  leases  in
connection  with  the  prepayment  of  the  intercreditor  loan  in  1997.

Equipment  Disposition.  In  1998,  the  Company  disposed  of  $6.8  million of
-----------------------
portfolio  equipment  (measured  by  its  original cost) on operating leases and
-------
disposed of $139,000 on direct finance leases, reducing the total equipment (net
----
of  depreciation,  pay-down  and  write-downs)  on  operating  leases and direct
finance  leases  to  $702,000  and $359,000, respectively.  In 1997, the Company
disposed  of  $4.0 million of the Company's portfolio equipment (measured by its
original  cost)  on  operating leases and disposed of $590,000 on direct finance
leases,  reducing  the  total  equipment  (net  of  depreciation,  pay-down  and
write-downs)  on  operating  leases  and  direct  finance leases to $232,000 and
$521,000,  respectively.  In 1997, the Company, as a result of a commitment from
the  previous  management and board, sold $1,300,000 (based on original cost) of
equipment  under  one  lease  from  the  portfolio  prior  to  lease expiration.

Remarketing  Activities
-----------------------

The  remarketing  of  equipment  plays  a  vital  role  in the operations of the
Company.  The  Company's  remarketing  efforts  are  directed through Chancellor
Asset  Management,  Inc.  ("CAM"),  the  Company's wholly owned subsidiary.  The
remarketing  effort  has  been further strengthened through the increased retail
and  wholesale  capabilities  provided  as  a  result  of  CAM's  acquisition of
Tomahawk.

In  connection  with  the  sale  of lease transactions to investors, the Company
typically  is entitled to share in a portion of the residual value realized upon
remarketing.  Successful  remarketing  of the equipment is essential not only to
the realization of the Company's interest in the residual value but also for the
Company  to  recover  its original investment in the equipment in its portfolios
and  to  recognize  a  return  on  that  investment.

The  Company continues to dedicate substantial resources towards the development
and  improvement  of its remarketing capabilities, which is a significant profit
center  for  the  Company.  The Company's strategy is to exploit its remarketing
expertise  by providing fee-based remarketing services to fleet equipment owners
and lessees and also to create a dealer capability under which the Company would
buy and re-sell fleet equipment.  This strategy has been enhanced as a result of
the  CAM's  acquisition  of  Tomahawk.  The  Company  continually  explores  the
potential  for  financing  relationships enabling the remarketing group to enter
into transactions to purchase used transportation equipment which can be quickly
and  profitably  remarketed.

The  Company  has  found that its ability to remarket equipment is affected by a
number  of  factors.  The  original  equipment  specifications,  current  market
conditions,  technological  changes,  and  condition  of  the equipment upon its
return all influence the price for which the equipment can be sold or re-leased.
Delays  in  remarketing  caused  by  various  market  conditions  reduce  the
profitability  of  remarketing.

Remarketing  efforts  are  pursued  on a direct retail sale, wholesale, or lease
basis.  The  Company's  fleet  equipment  remarketing  experience has shown that
generally  the  greatest  residual  value  is  realized  by initially re-leasing
equipment,  rather  than  immediately  selling  it.  Therefore,  the Company has
concentrated its remarketing efforts on re-leasing, although re-leasing involves
more risks than selling because lessees of used equipment are generally smaller,
less  creditworthy  enterprises than the Company's initial lessees.  The Company
sells fleet equipment through its retail sales centers located in Elizabeth, New
Jersey; Conley, Georgia; Pompano Beach and Orlando, Florida; Richmond, Virginia;
and Kansas City, Missouri.  Additionally, the Company uses indirect retail sales
centers  in  California,  Florida,  Georgia,  Illinois  and  Texas.

Retail  and  Wholesale  Activities
----------------------------------

As  previously  mentioned,  CAM  acquired Tomahawk for purposes of enhancing its
remarketing  of  used  transportation  equipment.  The  acquisition  of Tomahawk
provides  the  Company  with  five additional retail centers in Conley, Georgia;
Pompano  Beach  and  Orlando,  Florida;  Richmond,  Virginia;  and  Kansas City,
Missouri,  in  addition  to  its  previously existing location in Elizabeth, New
Jersey.  Tomahawk  also  provides  additional  wholesale  opportunities from its
Conley, Georgia headquarters.  The Company derives significant revenues from the
retail  and  wholesale  of  used transportation equipment through CAM's Tomahawk
business  unit.  In addition, the Company's ability to utilize retail pricing to
establish  residual values on lease transactions will provide the Company with a
competitive  advantage  in  its  ability  to  originate lease transactions.  The
Company's  business  plan  provides  for further expansion of its retail centers
throughout  the  domestic  marketplace.  CAM  maintains an extensive database of
used  equipment  sources  and customers and continually updates this information
through  a  fully  staffed  telemarketing  group.

Equity  Syndications
--------------------

The  Company  sold  certain  lease transactions to private investors through the
sale  of  interests  in  grantor  trusts.  In  the  grantor trust structure, the
equipment is acquired directly by the trust and the related lease is transferred
to  the  trust.  The  Company or one of its subsidiaries usually acts as trustee
and  in  that  capacity  holds  title  to  the  equipment and performs specified
administrative  functions  for which it is entitled to receive reimbursement for
costs  incurred.  The Company typically sells equipment directly to an investor.
The  Company  receives  fees  upon  these sales.  In addition, the Company often
shares  with  the investor in the residual value derived from the remarketing of
equipment  at  lease  expiration  or  early  termination.  The  Company  sold
approximately  $3  million of equipment to private investors during 1997.  There
were  no  sales of equipment using grantor trusts in 1998.  Although the Company
will  continue its efforts to syndicate lease transactions, it does not envision
the  use  of  grantor  trusts  in  future  transactions.

Competition
-----------

The  principal  methods  by  which  the  Company  competes  are  its  ability to
underwrite  the  lease  transactions  which  it originates; its knowledge of the
equipment used by its lessees; the training and experience of its personnel; the
relationships  and  reputation  it  has  established  with  lessees,  equipment
suppliers  and  financial  institutions;  its  ability  to  adapt  to  changing
regulations  and  tax  laws;  and its experience in successfully remarketing the
equipment  at lease termination.  Additionally, the Company's ability to provide
in-house  retail  and  wholesale  distribution  channels  provides advantages in
establishing  pricing  for  lease origination transactions and inmproving overal
fleet  management  and  total  holding  costs  for  the  customer.

The  equipment  leasing  business,  on  a global basis, is a highly competitive,
fragmented  marketplace  with  thousands  of  competitors.  The  Company  has
identified  emerging  markets  such  as  Russia, the Commonwealth of Independent
States,  the  Republic  of  South  Africa,  the  Kingdom of Swaziland, and other
sub-Saharan  countries.  These  emerging markets hold significant opportunity to
provide  financial  services, such as leasing, that the Company will continue to
explore  as  resources  and  opportunities  permit.  The Company is aggressively
pursuing  the  transacting of lease deals and negotiation of strategic alliances
in  these  markets.  Chancellor's  competitors  include  (1)  large  diversified
financial  services  companies,  (2)  other  leasing  companies  and  (3) vendor
financing  programs.  Many  of  these  organizations  have  greater  financial
resources  than  the  Company  and,  therefore,  may  be able to obtain funds or
equipment  on  more  favorable  terms  than  those  available  to  the  Company.
Additionally,  the  Company  competes  against  other  financing  alternatives
available  to  lessees  for  the  purchase  of  equipment.

BUSINESS  PLAN

The  Company's strategy is to increase profitability, increase market share, and
create  growth  opportunities  by  expanding its core business through servicing
middle  market  clients,  expanding its used transportation equipment retail and
wholesale  distribution channel, expanding into new transportation and equipment
markets  and  seeking  strategic  financial  partnerships  and  joint  ventures
domestically  and  internationally.

Historically,  the  Company  focused  its  efforts on Fortune 100 companies. The
Company  implemented a plan to broaden the focus of its transportation equipment
and remarketing expertise by expanding the number of customers within its target
market.  The  Company  will broaden its scope of lease origination activities to
include  middle  market  clients  with  a  variety  of  transportation equipment
requirements.  The  strategic  decision  to  target  middle  market  origination
activities  is  expected  to  result in higher gross margins while utilizing the
Company's  twenty  years  of  historical  equipment  residual  performance.  The
Company  will  leverage  off  of  its  expertise  allowing  entry  into emerging
international  markets  seeking these basic financial services in their economic
development.

     The  Company  enjoys  a  reputation  as  one  of the premier transportation
equipment  remarketers  in  the  industry.  To  expand  upon  this  position and
capitalize  on  the  opportunity  to offer used transportation equipment in this
highly  fragmented,  yet  lucrative industry, the Company, through CAM, acquired
Tomahawk.  In  connection  with  this acquisition, the Company has available six
(6)  retail  centers  to  directly remarket used transportation equipment in the
northeast  and  southeast US.  This also provides a stable foundation upon which
to implement further expansion to the west and midwest US.  The Company believes
there  is a significant opportunity to offer lease and rental companies, finance
companies, utilities, municipalities, and transportation companies an outlet for
their  used  equipment  other  than  the  traditional  low-end auction channels.

The  Company  also  perceives  significant  opportunities  for  its  services in
international  markets.  Additionally,  the  Company  can  benefit  from  higher
margins  in  less  competitive  international  markets.  In  1997,  the  Company
completed  certain  lease  transactions  in  the  Russian  Federation  and  the
Commonwealth  of  Independent  States  ("Russia and the CIS").  In addition, the
Company  has  made  investments  with  certain  parties  that both invest in and
operate  companies  in  the  Republic  of  South  Africa ("RSA"), the Kingdom of
Swaziland  and  other  sub-Saharan countries.  The Company continues to evaluate
the potential for providing additional financial services in the RSA as a result
of  the  strategic  alliances  established.

Business  Expansion
-------------------

Since the change in management and Board control on December 3, 1996 the Company
closely  scrutinizes  transactions to maximize profitability. As a result of the
restructuring,  which was completed in 1997, and a move towards concentrating on
profit  centers,  the  Company  has  established  a strong foundation upon which
future  profitable  business  expansion can be achieved.  As an outgrowth of the
Company's  core  transportation leasing business, several acquisitions are being
evaluated  that  provide for vertical and horizontal integration into businesses
that  utilize  similar  back  office  operations.

In  1997, the Company instituted an aggressive mergers and acquisition strategy,
seeking  candidates  providing  vertical and horizontal opportunities within the
areas  of  commercial,  consumer  and real estate finance.  The expansion of the
Company's core business through the acquisition of and merger with complementary
businesses  within  financial services will be an ongoing strategic focus.  As a
result  of this merger and acquisition strategy, the Company identified Tomahawk
in  1998  as  a  candidate  meeting  the  Company's  strategic  directives.  The
acquisition of Tomahawk provided the Company an opportunity to enhance its lease
origination  and  remarketing  capabilities.  The  Company  continues  to  seek
opportunities such as Tomahawk, that will be accretive to the Company's business
strategy.  The  implementation  of  this  strategy  involves  members  of senior
management  and  outside  professionals  reporting to a Mergers and Acquisitions
subcommittee  of  the  Board of Directors. This group is constantly evaluating a
variety  of  domestic  and  international  leasing  companies  and  related
opportunities,  for  potential  alliances  and/or  business  combinations.

Communications  and  Year  2000  Disclosure
-------------------------------------------

The  Company  is  in  the  process  of implementing a new Management Information
System  (MIS)  that  will  enhance  the  Company's  back  office  systems.  This
integrated  system  will  provide  back  office  operations  with  the  detailed
information  necessary  to  track  transactions and will facilitate management's
ability  to  evaluate  operations  to  ensure  proactive  decision-making.

In  its  enhancement  of  the  current  MIS  system, attention is being given to
upgrading  to client-server technology, which will increase productivity, reduce
costs,  provide  easy  access to centralized data and improve communications.  A
broader  scope  of benefits includes company re-engineering and cultural change,
sophisticated  customer  services, elimination of outside delivery and soft cost
reductions.
Year  2000  Disclosure

The  Company  has  commenced  efforts  to  assess and where required, remediate,
issues  associated with Year 2000 ("Y2K") issues.  Generally defined, Y2K issues
arise  from computer programs which use only two digits to refer to the year and
which  may experience problems when the two digits become "00" in the year 2000.
In  addition,  imbedded  hardware microprocessors may contain time and two-digit
year  fields  in executing their functions.  Much literature has been devoted to
the  possible  effects  such  programs may experience in the Year 2000, although
significant  uncertainty  exists  as to the scope and effect the Y2K issues will
have  on  industry  and  the  Company.

The  Company has recognized the need to address the Y2K issue in a comprehensive
and  systematic  manner and has taken steps to assess the possible Y2K impact on
the  Company.  Although  the  Company has not completed a 100% assessment of all
its information technology ("IT") and non-IT systems for Y2K issues, the Company
has  completed  its  assessment  of  all  mission-critical  systems.  All
mission-critical  systems  and  most of the major applications and hardware have
been  assessed  to  determine  the  Y2K impact and a plan is in place for timely
resolution  of  potential  issues.

In  1998,  the  Company  developed  a  strategic plan to identify the IT systems
needed  to  accomplish  the  Company's  overall  growth  plans.  As part of this
process,  Y2K  issues  were  considered  and  addressed  by the Company's senior
management  and MIS personnel.  Although this plan was intended to modernize the
IT  systems,  compliance  with  Y2K  requirements  were  incorporated.

The  cost  of  bringing  the  Company  in full compliance should not result in a
material  increase  in  the  recent  levels  of capital spending or any material
one-time  expenses.  The Company has spent approximately $152,000 in modernizing
its  IT  system,  including  compliance  with  Y2K  requirements.  The  Company
anticipates  spending  of  approximately $300,000 during fiscal 1999 to complete
the  modernization  of  its  IT  system.

The failure of either the Company, its vendors or clients to correct the systems
affected  by Y2K issues could result in a disruption or interruption of business
operations.  The  Company  uses computer programs and systems in a vast array of
its  operations  to  collect,  assimilate  and  analyze  data.  Failure  of such
programs  and  systems  could affect the Company's ability to track assets under
lease  and properly bill.  Although the Company does not believe that any of the
foregoing  worst-case  scenarios  will  occur,  there  can  be no assurance that
unexpected  Y2K  problems  of  the  Company's  and  its  vendors' and customer's
operations  will  not  have  a  material  adverse  effect  on  the  Company.

While  it  is  difficult to classify our state of readiness, we believe that our
internal  plans  should  have  the Company ready by the end of 1999 to avoid any
material  Y2K  issues.  We  are  in  the  process  of completing the assessment,
testing  systems  and  developing  contingency plans.  Management is in constant
communication  with  its  IT  personnel  and  has made and will continue to make
reports  to  the  Company's  Board  of  Directors.

     In  1998  the  Company  made  several improvements to its Internet presence
(http://www.chancellorcorp.com)  as  part  of  the Company's strategy to further
    --------------------------
incorporate technology into its marketing and customer service initiatives.  The
Company's goal for 1999 is to create a simple, well-designed and useful Internet
destination  by  redesigning  the  site  and  expanding  content  to improve its
usefulness  as  a  business resource for customers and an informational tool for
investors.

     In  February 1999, Chancellor added on-line small ticket lease applications
to  its  Internet  presence  to  increase  availability  of applications for the
Company's  Small  Business  Solutions  program offered by its Long River Capital
subsidiary.  By  the  end  of  the  second quarter of 1999, the Company plans to
launch  a  comprehensive  upgrade  to its Internet site designed to be more user
friendly.  In  addition  to online lease application forms for small businesses,
the  new Chancellor site will showcase the Company's truck and trailer inventory
available through its Tomahawk subsidiary, provide online and downloadable lease
applications  for  fleet  managers,  and  improve  the  quality  and quantity of
corporate  and  financial  information  tailored  for  the investment community.

Market  Opportunities
---------------------

Through  implementation of a strategy allowing for penetration of middle market,
as  well as Fortune 100 customers, the Company will broaden its target market to
a  less  competitive  and  price  sensitive  arena.  The  Company will focus its
energies  domestically  and  internationally on the multi-billion dollar leasing
marketplace.  The  ability of the Company to originate and remarket equipment in
underdeveloped and inefficient markets translates into higher potential rates of
return.  Additionally,  the  willingness  of  the  Company's strategic financial
partners  to  augment  the  Company's  deal  underwriting  capabilities provides
financial  strength  to  execute  transactions.

The  used  transportation  equipment  market  also  presents  one  of  the  most
fragmented  and  lucrative  markets  available.  Dominated  by local dealers and
manufacturer  remarketers,  the  used  transportation  equipment market presents
Chancellor  an  opportunity  for  consolidation in this industry.  The Company's
management  believes  that  a  significant opportunity exists to offer lease and
rental  companies,  finance  companies,  utilities,  municipalities,  and
transportation  companies a retail outlet for their used equipment as opposed to
the  current  wholesale  and  auction  outlets  currently  used.

The  Company  also  views  its  efforts  to be a global originator/remarketer of
transportation  and  non-transportation equipment as an important element to its
corporate  growth strategy.  The additional international revenue streams, where
margins  are significantly higher than the domestic market, will help facilitate
the  Company's  goal of increasing profitability. Exposure on these transactions
will  be  mitigated through the use of credit enhancement, letters of credit and
other  similar instruments.  The Company's management is committed to a strategy
providing  for  international  diversification  within  emerging global markets.

Additionally,  the  Company  has  made  significant  progress  in establishing a
presence in the Republic of South Africa ("RSA") as a premier financial services
company  in  this  region.  The  Company's  efforts  as a key contributor in the
economic  development  of  the  RSA  are  demonstrated  indirectly  through  an
investment  in  the  New  Africa  Opportunity  Fund,  LP  ("NAOF.


<PAGE>
As  a  result  of  its  strength  in the management of assets, the Company has a
unique  opportunity  to  originate  and/or  remarket  long-lived  assets  in the
international  marketplace.  As  continued  emphasis  is  placed  on projects to
rebuild  and  improve  infrastructure,  the  need for capital equipment in these
international  markets  is  expected  to  grow.

Operating  Facility
-------------------

The Company's fully integrated sales and marketing departments are headquartered
in  Boston, Massachusetts, with a satellite office located in New York City, New
York.  In  addition,  the Company maintains retail used transportation equipment
centers  in Conley, Georgia; Pompano Beach, Florida; Orlando, Florida; Richmond,
Virginia;  Kansas  City,  Missouri;  and  Elizabeth, New Jersey.  A direct sales
staff  and  telemarketing  program  supports  a  national  network  of  sales
representatives.

Seasonality
-----------

     Because  of  tax  and investment considerations, investors frequently defer
their decisions to purchase lease transactions until after the first half of the
calendar  year.

Employees
---------

     As  of  April  13, 1999, the Company employed approximately 90 persons on a
full  time  basis.

ITEM  2.     DESCRIPTION  OF  PROPERTY
-------      -------------------------

     The  Company  leases  an  office  facility  in Boston, Massachusetts.  This
facility  houses  the  Company's  administrative,  financing  and  marketing
operations.  The  Boston,  Massachusetts lease is for a non-cancelable period of
five  years,  with three and a half years remaining in the term, and with a base
rent,  as of December 31, 1998, of approximately $11,000 per month.  The Boston,
Massachusetts  facility  adequately  provides  for  present and future needs, as
currently  planned.

The  Company  also leases six retail centers located in Conley, Georgia; Pompano
Beach, Florida; Orlando, Florida; Richmond, Virginia; Kansas City, Missouri; and
Elizabeth,  New  Jersey.  These locations are utilized for the storage, display,
and  selling of used transportation equipment.  In addition, the Conley, Georgia
facility  is  utilized  for  the  administrative and marketing operations of the
Company's  retail  and  wholesale operations.  These facilities are leased under
non-cancelable arrangements with remaining terms ranging from one to five years.
The  aggregate  monthly  rent  of  these  facilities  as of December 31, 1998 is
approximately  $34,000.  Furthermore,  the  Conley, Georgia facility is owned by
the  former stockholders of M.R.B., Inc. d/b/a Tomahawk Truck and Trailer Sales.
The  monthly  rent  is  $8,500  pursuant  to  a  five  year non-cancelable lease
agreement.  This  lease  agreement  also  provides  an  option  to  purchase the
property  from  the  former  stockholders.

ITEM  3.     LEGAL  PROCEEDINGS
-------      ------------------

     The  Company  is  involved  in  the  following  legal  proceedings:

     The  Company  was named as a defendant along with the Chairman of the Board
and  an affiliate, of the Chairman in a suit brought by Ernest Rolls, the former
Vice-Chairman,  on  February 5, 1998. The suit brought by Mr. Rolls alleges that
the Company is in default on the payment of $2.7 million, which Mr. Rolls claims
he  loaned to the Company. It is the Company's position that $1.5 million of the
loan has been repaid to Mr. Rolls and that the balance is subject to offsets and
counterclaims by the Company.  The Company has removed the case to federal court
and  has  filed an answer. The Company filed a counterclaim against Mr. Rolls in
May,  1998.

     The Board of Directors of Chancellor Corporation voted to remove Mr. Ernest
L.  Rolls  as a Director and Vice Chairman of the Board effective March 10,1998.
The  reasons  cited  by  the Board for removing Mr. Rolls included breach of his
fiduciary  duties of care and loyalty, Mr. Rolls' suspected self-dealing and his
failure  to  provide a total of $7.5 million in financing that he represented to
the  Board  he  would provide.  The Board also believed that a suit filed by Mr.
Rolls  was  an  attempt  by  Mr.  Rolls  to  jeopardize  the Company's strategic
alliances  and  other  activities  that  were  being  negotiated.

The  Company  is  also  involved  in routine legal proceedings incidental to the
conduct  of  its  business.  Management  believes  that  none  of  these  legal
proceedings  will  have  a material adverse effect on the financial condition or
operations  of  the  Company.

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

     None.

                                     PART II


ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS
-------      ------------------------------------------------------  -------

     The Company's Common Stock has traded on the NASDAQ OTC Electronic Bulletin
Board  under the symbol "CHLR" since August 21, 1996 and under the symbol "CHCR"
between  January  28,  1994  and  August 21, 1996 on the basis of actual trading
prices.  The Company's Common Stock had traded from June 30, 1992 to January 28,
1994  on the Small Cap Market of the Automated Quotation System of NASDAQ on the
basis  of  actual  trading  prices.

The  following  table  sets forth the high and low sales prices of the Company's
Common  Stock  for  the  periods  indicated,  according  to  published  sources.

<TABLE>
<CAPTION>



1999      High                                 Low
----  --------------------------------------  -----    
<C>   <S>                                     <C>    <C>

      First quarter (through March 30, 1999)  $ .93  $.43

1998
----                                                     

      Fourth quarter                            .88   .50
      Third quarter                            1.34   .24
      Second quarter                            .37   .16
      First quarter                             .44   .27

1997
----                                                     
      Fourth quarter                            .44   .15
      Third quarter                             .18   .10
      Second quarter                            .15   .09
      First quarter                             .10   .04
</TABLE>



     On  April  13,  1999, there were approximately 510 beneficial owners of the
Company's  common stock.  The Company has not paid or declared cash dividends on
its  common  stock during the periods indicated and does not currently intend to
pay  cash  dividends  on  its  common  stock  for  the  foreseeable  future.



<PAGE>
------
ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
-------      -------------------------------------------------------------------
RESULTS  OF  OPERATIONS
-----------------------

Results  of  Operations
-----------------------

     Year  Ended  December  31,  1998  vs.  December  31,  1997

     Revenues.  Total  revenues  for  the  year  ended  December  31,  1998  was
$29,639,000  as  compared  to  $4,433,000  for  the  prior  year, an increase of
$25,206,000  or  568.6%.  For  the  year ended December 31, 1998, transportation
equipment  sales  were $25,096,000 as compared to no sales for the corresponding
prior  year.  This significant revenue stream is attributable in part to a major
purchase  and  sale of equipment from the buy-out of a trust portfolio resulting
in  approximately  $5,647,000  of  revenues  recorded.  More  importantly,  the
acquisition  of  the  Company's  Tomahawk  subsidiary  provided  approximately
$18,930,000  of  revenues from the sale of used transportation equipment through
both  its  retail  and  wholesale  distribution channels.  Through Tomahawk, the
Company  will continue to expand its retail centers geographically.  The Company
will  also  utilize  the  competitive advantage provided by its access to retail
pricing  for  residual  values  to aid in the ability to improve competitiveness
within  the  Company's  lease  origination  business  unit.  For  the year ended
December 31, 1998, rental income increased by $72,000 or 8.3% as compared to the
prior  year.  The  increase  in  rental  income is attributable primarily to the
addition  of  certain  equipment  acquired  in  connection  with the purchase of
several  leases from the trust portfolio.  For the year ended December 31, 1998,
lease  underwriting  income  decreased  by  $219,000 or 74.7% as compared to the
prior  year.  Lease  underwriting income decreased due to a higher concentration
of  broker related activity that results in a lower overall revenue stream.  The
Company does, however, continue its lease origination rebuilding process through
the  addition  of  key senior management and sales personnel, and development of
strategic  alliances  to provide future growth in this area.  For the year ended
December  31,  1998, direct finance lease income decreased by $162,000 or 59.6%,
as  compared  to the prior year.  The decrease in direct finance lease income is
attributable  primarily  to  the  lack  of  additions to its portfolio of direct
finance  leases  in  1998 as compared to the addition of 10 leases in 1997.  For
the  year ended December 31, 1998, gains from portfolio remarketing increased by
$573,000  or  71.5%  as  compared to the prior year.  The increase in gains from
portfolio  remarketing  is  attributable  to  the increase in sales of portfolio
assets  during  the  year ended December 31, 1998 as compared to the prior year.
For the year ended December 31, 1998, fees from remarketing activities decreased
slightly  by  $81,000  or  5.4% as compared to the prior year.  This decrease is
attributable, in part, to management's efforts to increase the level of activity
in  the  sales  of  used  transportation  equipment  through  its newly acquired
Tomahawk retail and wholesale distribution channel.  For the year ended December
31,  1998,  other  income  decreased  by  $224,000  or  33.7% as compared to the
corresponding  prior  year  period.  The decrease is attributable in part to the
inclusion  of  certain consulting fees earned in 1997 that were not recurring in
1998.

     Costs  and  Expenses.  Total costs and expenses for the year ended December
31,  1998  was  $28,789,000  as  compared  to  $7,152,000 for the prior year, an
increase  of  $21,637,000  or  302.5%.  The  significant increase is primarily a
result of the costs associated with sales of transportation equipment.  The cost
of  transportation  equipment  sales was $21,731,000 for the year ended December
31, 1998 and resulted in an overall gross margin of 13.4%.  Selling, general and
administrative  expenses  for the year ended December 31, 1998 was $6,054,000 as
compared  to $6,412,000 for the corresponding prior year, a decrease of $358,000
or  5.6%.  For  the  year  ended  December  31,  1998,  selling,  general  and
administrative  expenses  included  recovered  reimbursable trust administration
costs  of  $1,498,000  as compared to $405,000 for the corresponding prior year.
Approximately $2,441,000 of selling, general and administrative expenses for the
year  ended  December  31,  1998  is  a  result  of  expenses incurred by normal
operations  of  the  Company's  Tomahawk  subsidiary  whose  operations  were
consolidated  with the Company's as of the August 1, 1998 acquisition date.  Net
of  the  reimbursable  trust administration costs and the effect of the Tomahawk
expenses,  selling,  general and administrative expenses decreased to $5,145,000
for  the  year  ended  December  31,  1998  as  compared  to  $6,007,000 for the
corresponding  prior  year,  a  decrease  of $862,000 or 14.3%.  The decrease in
selling,  general  and  administrative  expenses  reflects  the  success  of
management's  cost  containment and stabilization efforts that were finalized in
1997.  Management  believes it has successfully implemented its cost containment
and  stabilization  strategy.  These  cost  improvements  have  resulted  in  a
stabilization  of the corporate infrastructure and provide a firm foundation for
the  new  management  team  to  implement the growth phase of its business plan.


<PAGE>
Interest  expense  for the year ended December 31, 1998 was $343,000 as compared
to  $281,000 for the prior year, an increase of $62,000 or 22.1%.  This increase
is  primarily  a result of increased interest expense associated with Tomahawk's
revolving  credit line with a financial institution utilized for inventory floor
planning.

     Depreciation  and amortization expense for the year ended December 31, 1998
was $661,000 as compared to $459,000 for the prior year, an increase of $202,000
or  44.0%.  The  increase  is  primarily  due  to the amortization of intangible
assets  associated  with  the  acquisition  of  Tomahawk.

          Extraordinary Item - Gain on Debt Forgiveness.  The Company recorded a
gain  on  debt forgiveness for the year ended December 31, 1997 of $930,000.  In
April  1997,  the  Company  repaid  in  advance  of  their  respective  terms an
inter-creditor  loan  and  secured inventory loan.  The aggregate amount of this
debt  on  the repayment date was $1,906,000, of which approximately $976,000 was
paid in cash and the balance of $930,000 was forgiven.  In addition, the Company
paid  approximately $22,000 in legal and bank fees to complete this transaction.

     Net  Income.  Net  income for the year ended December 31, 1998 was $850,000
as  compared  to  a  net  loss  of $1,802,000 for the prior year, an increase of
$2,652,000  or  147.2%.  The increase in net income is primarily attributable to
the significant increase in revenues, primarily from the retail and wholesale of
used  transportation equipment, the buy-out of leases from trust portfolios, and
continued improvements in the containment of costs.  Net income per share (basic
and  diluted)  for  the  year  ended  December  31,  1998 was $0.02 per share as
compared  to a $0.12 net loss per share for the prior year, an increase of $0.14
cents  per  share.  The  increase  is  due  primarily  to the marked increase in
overall  net  income  resulting  from significant revenue growth and recovery of
reimbursable  trust  administration  expenses.

Liquidity  and  Capital  Resources
----------------------------------

     The  Company recognized a net increase in cash and cash equivalents for the
year  ended  December  31,  1998  of $547,00.  Operating activities used cash of
$5,264,000  during the year ended December 31, 1998 and is primarily a result of
the  build-up  of used transportation equipment inventory at the Company's newly
acquired  Tomahawk  subsidiary.  Investing  activities  used  cash of $4,523,000
during the year ended December 31, 1998 and is primarily a result of investments
in  South  Africa,  costs  associated  with  acquisition  activities,  and costs
associated  with  recovery  of  reimbursable  trust  administration  expenses.
Financing activities provided cash of $10,334,000 during the year ended December
31,  1998  and is primarily a result of borrowings on a revolving line of credit
used  for  inventory  floor  planning  purposes  and  increases in recourse debt
provided  by  the  VCC,  the  Company's  majority  stockholder.  Cash  and  cash
equivalents  amounted to $644,000 at December 31, 1998 as compared to $97,000 at
December  31,  1997,  an  increase  of  $547,000  or  563.9%.

     The  Company  is  provided investment banking and consulting services by an
affiliate  of  the  Company's  majority  stockholder, Vestex Capital Corporation
("VCC"),  pursuant to a consulting agreement approved by the shareholders at the
1995  Annual Meeting of the Stockholders, as amended in July 1998.  VCC provides
specified  services  including, but not limited to, general business consulting,
the  development  and  implementation  of  the  Company's  1997  transition  and
turnaround  strategies,  development  of  domestic  and  international  business
opportunities and growth strategies, identification and development of strategic
alliances,  support  of merger and acquisition activity, debt and equity raising
efforts,  and  other  financing  activity.  Fees  related  to  debt  and  equity
transactions  are  up to 3.0% and 7.5%, respectively, of the amount of financing
raised  in  addition  to  related  expenses.  VCC  also provides services to the
Company  on  operational and other matters for which it is compensated at levels
negotiated  with  the  Company.

During  1998,  VCC  investigated  numerous  strategic  alliances  and merger and
acquisition  opportunities  on  behalf  of the Company.  In connection with this
activity,  VCC was instrumental in the negotiation and consummation of the Lease
Servicing  Agreement  entered  into on November 1, 1998 among Chancellor Leasing
Services,  Riviera  Finance  -  East  Bay  and  United  Capital and Finance LLC.
Additionally, VCC identified, negotiated and closed the acquisition of MRB, Inc.
d/b/a  Tomahawk  Truck  and  Trailer  Sales  ("Tomahawk"), a used transportation
equipment  retailer  and  wholesaler  that recorded approximately $39,000,000 in
revenue  for  the  12  month  period  ended  December 31, 1998.  VCC facilitated
approximately  $3,500,000  in  equity  and cash financing in connection with the
Tomahawk  acquisition.  VCC  continues  to  negotiate  and  manage the Company's
financing,  acquisition  and  investment efforts in the Republic of South Africa
and  other international opportunities.  VCC was instrumental in the development
and  implementation  of  the  strategy  to buy-out  and acquire investment grade
transportation  equipment portfolios.  As a result of this strategy, the Company
acquired  portfolios  valued  at  an  original  equipment  cost of approximately
$22,000,000.  The acquisition of these portfolios was further facilitated by VCC
assisting  in  arranging  approximately  $8,000,000  of  financing to effect the
portfolio  buy-out.  VCC  was also instrumental in recruiting and attracting key
employees  to  the  Company.  Additionally,  VCC  provided  these  key employees
warrants  to  purchase  Chancellor  common  stock, beneficially owned by VCC and
valued  at  approximately  $4,500,000.  Certain of these key employees were also
issued an additional 500,000 shares of the Company's stock from VCC's beneficial
holdings.  VCC's  activities  provided  sources  of  funding  to  the Company of
approximately  $6,500,000,  and  $300,000 for fees for services and reimbursable
expenses,  respectively,  converted  into  debt  and  equity  instruments of the
Company.  This included the purchase of 1,946,146 shares of the Company's common
stock  at  a  price  of $.69 per share.  Additionally, VCC infused approximately
$1,200,000  of  cash into or on behalf of the Company during 1998.  As a result,
in  part,  of  VCC's  activities  and services provided, the Company's net worth
increased  to  $7,007,000  at December 31, 1998 from $227,000 as of December 31,
1997  and  from  an approximate $2,550,000 negative net worth as of December 31,
1996.

     Chancellor  Asset Management Inc. ("CAM"), a wholly owned subsidiary of the
Company,  entered  into a Management Agreement, dated August 1, 1998, as amended
August  17,  1998,  with M.R.B. Inc., a Georgia corporation d/b/a Tomahawk Truck
Sales;  Tomahawk  Truck  &  Trailer Sales, Inc., a Florida corporation; Tomahawk
Truck  &  Trailer  Sales of Virginia, Inc., a Virginia corporation; and Tomahawk
Truck  &  Trailer  Sales of Missouri, Inc., a Missouri corporation (collectively
"Tomahawk").  The  Management  Agreement  provided CAM with effective control of
Tomahawk's  operations  as of August 1, 1998.  Subsequently, CAM acquired all of
the  outstanding  capital  stock  of Tomahawk from the two (2) sole shareholders
(the  "Selling  Shareholders")  pursuant  to  a  Stock  Purchase  Agreement (the
"Agreement")  dated  January  29,  1999.

Tomahawk  is engaged in a similar line of business as the CAM.  Tomahawk retails
and  wholesales  used transportation equipment, primarily tractors and trailers.
Tomahawk  operates  five  (5)  retail  centers  in  Conley,  Georgia;  Richmond,
Virginia;  Pompano  Beach, Florida; Orlando, Florida; and Kansas City, Missouri.
Tomahawk also operates its wholesale division from the Conley, Georgia facility.
Tomahawk  will operate as a wholly owned subsidiary of the Company, coordinating
many  operations  with  the  Company  to  achieve  operating  efficiencies  and
synergies.

The  purchase price paid by CAM consisted of 4,500,000 shares of Common Stock of
Chancellor  (valued at $.96 per share) and future cash consideration pursuant to
an  earn-out  (the  "Earn-Out")  as provided for in the Agreement.  The Earn-Out
provides  that  each of the Selling Shareholders will be paid an amount equal to
seven  and one-half percent (7.5%) of the Adjusted Pre-Tax Earnings of Tomahawk.
The  Earn-Out,  which  is  paid  on a quarterly basis, begins in the fiscal year
ended December 31, 1999 and ends in the fiscal year ended December 31, 2004.  In
connection  with  this Agreement, CAM loaned the Selling Shareholders a total of
$500,000  pursuant  to certain promissory notes payable that are payable in full
on  January  29,  2004.

The  Agreement  also: i) nominates one of the Selling Shareholders as a director
of  Chancellor's Board of Directors; ii) elects both of the Selling Shareholders
as  directors  of  CAM's  Board  of  Directors;  iii)  provides  for  Employment
Agreements  for  the  Selling Shareholders over a period of five years with base
salaries  of  $200,000  per  annum;  iv) prohibits the Selling Shareholders from
competing  against CAM or Tomahawk, or soliciting former employees and customers
of Tomahawk; v) provides for Tomahawk to lease from the Selling Shareholders the
Conley,  Georgia facility at fair market value rents of approximately $8,500 per
month;  and vi) provides CAM an option to purchase from the Selling Shareholders
the  Conley,  Georgia  facility  for  an  amount  not  to  exceed  $950,000.

This  transaction  has  been  recorded in accordance with the purchase method of
accounting.  As  a  result  of  the  effect on the transaction of the Management
Agreement,  the  designated  date of this transaction for accounting purposes is
August 1, 1998.  In connection with this transaction, CAM assumed liabilities of
approximately  $6,414,000  and  incurred  acquisition  costs  of  approximately
$3,405,000.  The  excess  of the purchase price over net assets of approximately
$7,695,000  has  been  recorded  in  intangibles.  Approximately  $154,000  of
intangibles  has  been amortized as of December 31, 1998.  Results of operations
of  Tomahawk  after  the  acquisition date are included in the 1998 Consolidated
Statement  of  Operations.

     The  Company  undertook  a  review  of  its  trust  portfolio,  including
consultation with legal counsel and industry consultants, and determined that it
had  not  been  recovering  costs  associated  with  administering  the  trusts.
Management's  review  determined  that  approximately  $22,000,000  of costs for
periods  prior  to 1997 had not been recovered from the trusts.  The Company has
recorded  approximately  $1,498,000 and $994,000 of cost recoveries in the years
ended  December  31,  1998  and  1997, respectively.  For periods prior to 1997,
$1,868,000  was  recovered.  Management  makes no representations concerning the
Company's  ability  to  recover  any  further  costs  for periods prior to 1997.
Further  recoveries  for  periods  prior to 1997 are contingent upon the current
status  of  the  specific  trusts  and  the Company's level of recovery efforts.
Consequently,  the  Company  will record any further recoveries as income in the
period  in  which  collection  is  assured.

          The  Company's  ability  to underwrite equipment lease transactions is
largely dependent upon the availability of short-term warehouse lines of credit.
Management  is  engaged  in  continuing  dialogue with several inventory lenders
which  appear  be  interested in providing the Company with warehouse financing.
If  the Company experiences delays in putting warehouse facilities in place, the
Company  transacts  deals  by coterminous negotiation of lease transactions with
customers  and  financing  with  institutions upon which it obtains a fee as the
intermediary  of  up  to  3%  of  the  amount  of  financing.

     The remarketing, retailing and wholesaling of equipment has played and will
continue  to  play  a  vital  role  in  the  Company's operating activities.  In
connection  with  the  sale  of  lease  transactions  to  investors, the Company
typically  is entitled to share in a portion of the residual value realized upon
remarketing.  Successful  remarketing  of  the  equipment  is  essential  to the
realization  of  the  Company's  interest  in  the residual value of its managed
portfolio.  It  is  also  essential  to  the  Company's  ability  to recover its
original  investment  in  the equipment in its own portfolios and to recognize a
return  on  that investment.  The Company has found that its ability to remarket
equipment  is  affected  by  a  number  of  factors.  The  original  equipment
specifications,  current market conditions, technological changes, and condition
of the equipment upon its return all influence the price for which the equipment
can  be  sold  or  re-leased.  Delays  in  remarketing  caused by various market
conditions  reduce  the  profitability  of  the  remarketing.

     The  Company anticipates it will continue to dedicate substantial resources
toward the further development and improvement of its remarketing, retailing and
wholesaling  capabilities  and believes that this business unit will continue to
be  a  profit  center  for  the  Company.  The  Company's strategy is to further
exploit  its  remarketing expertise by continuing to develop its ability to sell
remarketing  services  to  other  lessors, fleet owners, and lessees and also to
create  a  dealer  capability under which the Company would buy and resell fleet
equipment.  The  Company  will  also  expand  its  used transportation equipment
retail  and  wholesale  capabilities  through addition of retail centers through
internal  growth  and  acquisitions.  The  Company's  retail  and  wholesale
capabilities  have  been  greatly  improved through its acquisition of Tomahawk.
This  improved  capability  will  be  used  as a competitive advantage that will
enable  the Company to provide a "total holding cost" concept when competing for
new  lease  origination deals.  The Company's retail and wholesale business unit
will  both provide an improved outlet for other lessors, financial institutions,
and  fleet  owners  to  dispose of used transportation equipment and a source of
quality  used transportation equipment for fleet owners and owner-operator.  The
Company  will  also  aggressively  promote  its Internet capabilities to further
promote  its  business  activities  and  as  an  e-commerce  tool.

     In  August  1997,  the  Company  committed  to  make  a  $1  million equity
investment  in  the  New  Africa  Opportunity Fund, LP ("NAOF").  NAOF is a $120
million  investment  fund  composed  of  $40  million  from  equity participants
including  the  Company,  and  $80  million  in  debt  financing provided by the
Overseas Private Investment Corporation ("OPIC"), an independent U.S. government
agency.  The  purpose  of  the  fund  is  to make direct investments in emerging
companies  throughout  Africa.  As  of December 31, 1998, the Company had funded
approximately  $350,000  and  is  obligated to provide additional funding in the
approximate  amount  of  $650,000.  The  Company  has  additionally  invested
approximately  $1,340,000  into  one  of NAOF's investee companies.  The Company
continues  to  negotiate  further  strategic  opportunities  with  this investee
company.

          The  Company's  renewal  or replacement of recently expired lines, its
expected  access  to  the  public  and private securities markets, both debt and
equity,  anticipated  new  lines  of  credit  (both short-term and long-term and
recourse  and  non-recourse),  anticipated  long-term  financing  of  individual
significant lease transactions, and its estimated cash flows from operations are
anticipated to provide adequate capital to fund the Company's operations for the
next twelve months.  Although no assurances can be given, the Company expects to
be  able to renew or timely replace expired lines of credit, to expand currently
existing  lines  for inventory floor planning, to continue to have access to the
public  and  private securities markets, both debt and equity, and to be able to
enter  into  new  lines  of  credit  and  individual  financing  transactions.



Potential  Fluctuations  In  Quarterly  Operating  Results
----------------------------------------------------------

     The  Company's  future  quarterly operating results and the market price of
its  stock  may  fluctuate.  In the event the Company's revenues or earnings for
any  quarter  are  less  than  the  level expected by securities analysts or the
market  in  general,  such  shortfall  could  have  an immediate and significant
adverse  impact  on  the  market price of the Company's stock.  Any such adverse
impact  could  be greater if any such shortfall occurs near the same time of any
material  decrease  in any widely followed stock index or in the market price of
the  stock  of one or more public equipment leasing companies or major customers
or  vendors  of  the  Company.

     The  Company's  quarterly  results  of  operations  are  susceptible  to
fluctuations for a number of reasons, including, without limitation, as a result
of  sales by the Company of equipment it leases to its customers.  Such sales of
equipment,  which  are  an  ordinary  but  not predictable part of the Company's
business,  will have the effect of increasing revenues, and, to the extent sales
proceeds  exceeds  net  book  value, net income, during the quarter in which the
sale occurs.  Furthermore, any such sale may result in the reduction of revenue,
and  net  income, otherwise expected in subsequent quarters, as the Company will
not  receive  lease  revenue  from  the  sold  equipment  in  those  quarters.

     Given  the  possibility  of  such  fluctuations,  the Company believes that
comparisons  of the results of its operations to immediately succeeding quarters
are  not necessarily meaningful and that such results for one quarter should not
be  relied  upon  as  an  indication  of  future  performance.

Recent  Accounting  Pronouncements
----------------------------------

     The  Company  has  adopted  Statement  of  Financial  Accounting  Standards
("SFAS")  No.  130,  "Reporting  Comprehensive Income".  SFAS No. 130 prescribes
standards  for  reporting  comprehensive  income  and  its  components.  The
implementation of this SFAS has no material effect on the Company's consolidated
financial  statements.

     SFAS  No.  131,  "Disclosures  About  Segments of An Enterprise and Related
Information",  requires  disclosures  of certain information about the Company's
operating  segments  on  a basis consistent with the way in which the Company is
managed and operated.  SFAS No. 131 also requires disclosures about products and
services,  geographic  areas  and major customers.  The adoption of SFAS No. 131
did  not  affect  results of operations or the financial position of the Company
but  did  affect  the  disclosure  of  segment  information.

Impact  of  the  Year  2000  Issue
----------------------------------

The  Company  has  commenced  efforts  to  assess and where required, remediate,
issues  associated with Year 2000 ("Y2K") issues.  Generally defined, Y2K issues
arise  from computer programs which use only two digits to refer to the year and
which  may experience problems when the two digits become "00" in the year 2000.
In  addition,  imbedded  hardware microprocessors may contain time and two-digit
year  fields  in executing their functions.  Much literature has been devoted to
the  possible  effects  such  programs may experience in the Year 2000, although
significant  uncertainty  exists  as to the scope and effect the Y2K issues will
have  on  industry  and  the  Company.

The  Company has recognized the need to address the Y2K issue in a comprehensive
and  systematic  manner and has taken steps to assess the possible Y2K impact on
the  Company.  Although  the  Company has not completed a 100% assessment of all
its information technology ("IT") and non-IT systems for Y2K issues, the Company
has  completed  its  assessment  of  all  mission-critical  systems.  All
mission-critical  systems  and  most of the major applications and hardware have
been  assessed  to  determine  the  Y2K impact and a plan is in place for timely
resolution  of  potential  issues.

In  1998,  the  Company  developed  a  strategic plan to identify the IT systems
needed  to  accomplish  the  Company's  overall  growth  plans.  As part of this
process,  Y2K  issues  were  considered  and  addressed  by the Company's senior
management  and MIS personnel.  Although this plan was intended to modernize the
IT  systems,  compliance  with  Y2K  requirements  were  incorporated.

The  cost  of  bringing  the  Company  in full compliance should not result in a
material  increase  in  the  recent  levels  of capital spending or any material
one-time  expenses.  The Company has spent approximately $152,000 in modernizing
its  IT  system,  including  compliance  with  Y2K  requirements.  The  Company
anticipates  spending  of  approximately $300,000 during fiscal 1999 to complete
the  modernization  of  its  IT  system.

The failure of either the Company, its vendors or clients to correct the systems
affected  by Y2K issues could result in a disruption or interruption of business
operations.  The  Company  uses computer programs and systems in a vast array of
its  operations  to  collect,  assimilate  and  analyze  data.  Failure  of such
programs  and  systems  could affect the Company's ability to track assets under
lease  and properly bill.  Although the Company does not believe that any of the
foregoing  worst-case  scenarios  will  occur,  there  can  be no assurance that
unexpected  Y2K  problems  of  the  Company's  and  its  vendors' and customer's
operations  will  not  have  a  material  adverse  effect  on  the  Company.

     While  it  is difficult to classify our state of readiness, we believe that
our internal plans should have the Company ready by the end of 1999 to avoid any
material  Y2K  issues.  We  are  in  the  process  of completing the assessment,
testing  systems  and  developing  contingency plans.  Management is in constant
communication  with  its  IT  personnel  and  has made and will continue to make
reports  to  the  Company's  Board  of  Directors.



<PAGE>
------
ITEM  7.     FINANCIAL  STATEMENTS
-------      ---------------------


     The  following documents are filed as a part of this report on Form 10-KSB:

                    Page  No.

     Independent  Auditors'  Report          F-1

     Independendent  Auditors'  Report          F-2

     Consolidated  Balance  Sheet  as  of
       December  31,  1998          F-3

     Consolidated  Statements  of  Operations  for  the
       years  ended  December  31,  1998  and  1997     F-4

     Consolidated  Statements  of  Stockholders
       Equity  for  the  years  ended  December  31,  1998  and  1997     F-5

     Consolidated  Statements  of  Cash  Flows  for  the
       years  ended  December  31,  1998  and  1997     F-6

     Notes  to  Consolidated  Financial  Statements     F-7

     All  schedules  have  been  omitted  because  they  are inapplicable or the
required  information  is  included  in  the notes to the consolidated financial
statements.

ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
-------      -------------------------------------------------------------------
FINANCIAL  DISCLOSURES
----------------------

          On  February  25,  1999,  our  Audit  Committee and Board of Directors
approved  the  dismissal  of  our  independent  accountants,  Reznick  Fedder  &
Silverman, P.C. ("Reznick Fedder").  We provided Reznick Fedder with the reasons
for  the  dismissal  in a letter on March 4, 1999.  The reasons include, but are
not  limited  to:  (i)  disagreements  on  fees  billed  by  Reznick  Fedder for
services,  including,  but  not  limited to, due diligence and business advisory
services  in  connection with merger and acquisition activity, in the prior year
and estimated fees in connection with the proposed 1998 audit engagement, (ii) a
lack  of  commitment  by  Reznick Fedder to ensure timely completion of the 1998
audit  and  timely  filing  of  the  1998  Annual  Report  on Form 10-KSB, (iii)
dissatisfaction  as  to the timeliness of Reznick Fedder's provision of business
advisory  reports and recommendations in general and Management Reports pursuant
to  the  requirements  of Statements on Auditing Standards No. 61 in particular,
and  (iv)  personality  conflicts  between  Reznick  Fedder's  audit  team  and
management,  including disagreements concerning the quality of staffing provided
previously.

          During  the years ended December 31, 1997 and 1996:  (i) there were no
disagreements  with  Reznick  Fedder  on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Reznick Fedder, would have
caused  Reznick  Fedder  to  make  a  reference  to  the  subject  matter of the
disagreements  in  connection  with  its reports in the financial statements for
such  years and (ii) there were no "reportable events" as described in Items 304
of  Regulation  S-K.  Reznick  Fedder's report of independent accountants on the
Company's  consolidated  financial  statements  for the years ended December 31,
1997  and  1996  each  contained no adverse opinion or disclaimer of opinion and
were  not  qualified  or  modified  as to uncertainty, audit scope or accounting
principles.

          During  the interim period from December 31, 1997 through February 25,
1999  (the  date  of  Reznick  Fedder's  dismissal  as the Company's independent
accountants), Reznick Fedder alleged, solely in their opinion, (i) one potential
disagreement  as  to  a  matter  relating to accounting principles, and (ii) one
suggested  "reportable  event".

          By  letter  dated  March  15, 1999, Reznick Fedder has indicated that,
based on the limited information provided to them as of February 6, 1999, it did
not  appear  that  the  purchase of Atlanta based MRB, Inc. and affiliates d/b/a
Tomahawk Truck & Trailer Sales, Inc. ("MRB") should be reflected as of August 1,
1998,  as  stated  in our Current Report on Form 8-K filed on February 12, 1999.
Reznick  Fedder  based  its  preliminary  determination  on  the  August 1, 1998
Management  Agreement,  the  January  29, 1999 Stock Purchase Agreement, and the
January 29, 1999 Loan Agreement, each with MRB, as indicated in Reznick Fedder's
letter  to  us  dated  March  8 (incorporated by reference from Exhibit 99 t the
Company's  Form 8-K/A filed with the Securities and Exchange Commission on March
22,  1999).

          Reznick  Fedder  also  incorrectly  stated  in  that letter that their
preliminary  determination  was  based  in  part  on  the First Amendment to the
Management  Agreement  dated  August 17, 1998, when in fact,  Reznick Fedder did
not  review that First Amendment until after we filed our Current Report on Form
8-K  on  February  12,  1999 reporting the completion of our acquisition of MRB.
Despite  their  dismissal  as  our  independent accountants, Reznick Fedder also
requested  in  that  letter  that the Company provide any additional information
that  they  should  consider  in  connection  with  their  opinion regarding the
appropriateness  of  the  accounting  disclosures made in the Company's Form 8-K
filed  on February 12, 1999.  Reznick Fedder did not request further information
as  to  this  issue  prior  to  their  dismissal.

          We  engaged  the  Atlanta  based  firm  of Metcalf Rice Fricke & Davis
("Metcalf  Rice") on January 25, 1999 to perform the 1998, 1997, and 1996 audits
of  MRB, a significant subsidiary.  We further engaged the firm of Metcalf Rice,
based  on the merits of their performance of services in connection with the MRB
audits,  to  serve  as  our  independent accountants in February, 1999.  We then
asked  Metcalf Rice to review this potential issue, alleged by Reznick Fedder as
referenced  in  their  letter  dated  March  15,  1999,  using  all  available
information, including materials not previously requested by Reznick Fedder, and
provide us with their determination as to the proper accounting treatment of our
acquisition of MRB under generally accepted accounting principles.  On March 29,
1999,  Metcalf Rice issued a letter pursuant to Statements of Auditing Standards
No.  50  "Independent Accountants Report on Appropriate Application of Generally
Accepted  Accounting  Principles,"  which  addressed  the reporting period under
generally  accepted  accounting  principles  that  the  Company complied with in
preparing  its  December  31,  1998  financial  statements.

          As  to the second paragraph of Reznick Fedder's letter, they were only
provided  with  a  preliminary  unaudited,  unconsolidated, and unadjusted trial
balance  for  fiscal  1998.  In  addition, Reznick Fedder was not engaged as our
independent accountants for the purpose of certifying the consolidated financial
statements  of  Chancellor  Corporation as of December 31, 1998 and for the year
then  ended,  and were therefore not engaged to perform planning for this audit.

          Reznick  Fedder  was  not asked by us to determine whether adjustments
were  required  to recorded assets and liabilities which could materially impact
the  fairness or reliability of financial statements for the year ended December
31,  1998.  Adjustments,  as  necessary,  were  made based on recommendations of
Metcalf  Rice  during  the  course  of  their  audit  fieldwork.


<PAGE>
                                    PART III


ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
-------      -------------------------------------------------------------------
COMPLIANCE  WITH  SECTION  16(a)  OF  THE  EXCHANGE  ACT
--------------------------------------------------------

     The information required by Item 401 and 405 of Regulation S-B with respect
to  directors  and executive officers of the registrant will be set forth in the
Proxy  Statement  for  the Annual Meeting of Stockholders to be held on June 25,
1999  and to be filed with the Securities and Exchange Commission in April 1999,
and  is  incorporated  herein  by  this  reference.

ITEM  10.     EXECUTIVE  COMPENSATION
--------      -----------------------

     The  information  required  by  Item  402 of Regulation S-B with respect to
executive  compensation  will  be set forth in he Proxy Statement for the Annual
Meeting  of  Stockholders  to  be held on June 25, 1999 and to be filed with the
Securities  and Exchange Commission in April 1999, and is incorporated herein by
this  reference.

ITEM  11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT
--------      ------------------------------------------------------------------

     The  information  required  by  Item  403 of Regulation S-B with respect to
security ownership of certain beneficial owners and management will be set forth
in the Proxy Statement for the Annual Meeting of Stockholders to be held on June
25,  1999  and  to be filed with the Securities and Exchange Commission in April
1999,  and  is  incorporated  herein  by  this  reference.

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS
--------      --------------------------------------------------

     The  information  required  by  Item  404 of Regulation S-B with respect to
certain  relationships  and  related transactions will be set forth in the Proxy
Statement for the Annual Meeting of Stockholders to be held on June 25, 1999 and
to  be  filed  with the Securities and Exchange Commission in April 1999, and is
incorporated  herein  by  this  reference.

ITEM  14.     EXHIBITS  AND  REPORTS  ON  FORM  8-K
--------      -------------------------------------

     (a)     Exhibits:

2     Stock  Purchase Agreement, dated January 29, 1999, by and among Chancellor
Asset  Management,  inc., M. Rea Brookings and David F. Herring (incorporated by
reference  from Exhibit 2 to the Company's current report on Form 8-K filed with
the  Securities  and  Exchange  Commission  on  February  12,  1999).

3.1     Restated  Articles  of  Organization  of  the  Company  (Incorporated by
reference  from  Exhibit 3A to the Company's Registration Statement on Form S-1,
filed with the Securities and Exchange Commission on July 22, 1983 (Registration
Statement)),  as  amended  by Articles of Amendment filed with the Massachusetts
Secretary  of  the Commonwealth on May 18, 1990 (incorporated by references from
Exhibit  3(a)  to  the  Company's  Annual  Report, Form 10-K, for the year ended
December  31,  1991),  as  amended  by  Articles  of  Amendment  filed  with the
Massachusetts Secretary of the Commonwealth on January 26, 1995 (incorporated by
reference  from  Exhibit 3(a) to the Company's Annual Report, Form 10-K, for the
year ended December 31, 1994) and as amended by Articles of Amendment files with
the  Massachusetts  Secretary  of  the  Commonwealth  on  October  27,  1997
(incorporated  by  reference  from  Exhibit 3(a) to the Company's annual report,
Form  10-KSB,  for  the  year  ended  December  31,  1997).

3.2     By-laws  of  the  Company, as amended to date (incorporated by reference
from  Exhibit 3(b) to the Company's Annual Report, Form 10-K, for the year ended
December  31,  1994)

10.1     Recapitalization and Stock Purchase Agreement dated as of September 20,
1994  among  the  Company,  Bruncor Inc. and Vestex Corporation (incorporated by
reference from Exhibit 3 to the Company's Form 8-K filed with the Securities and
Exchange Commission on September 27, 1994 and dated August 26, 1994), as amended
by  Amendment  No. 1 (incorporated by reference from Appendix I to the Company's
Proxy  Statement  dated     December 9, 1994), by a letter agreement dated as of
February  28,  1995     among  the  Company, Bruncor Inc. and Vestex Corporation
(incorporated  by     reference  from  Exhibit  10(t)  to  the  Company's Annual
Report, Form 10-K,     for the year ended December 31, 1994), by Amendment No. 3
to     Recapitalization  and  Stock Purchase Agreement dated as of July 14, 1995
by  and among the Company, Bruncor Inc., and Vestex Corporation (incorporated by
reference from Exhibit 1 to the Company's Form 8-K filed with the Securities and
Exchange Commission on August 4, 1995 and dated July 25, 1995), and by Amendment
No. 4 to Recapitalization and Stock Purchase Agreement dated as of July 14, 1995
by  and among the Company, Bruncor Inc., and Vestex Corporation (incorporated by
reference from Exhibit 1 to the Company's Form 8-K filed with the Securities and
Exchange  Commission  on  April  22,  1996  and  dated  April  12,  1996).

10.2     Loan  Reduction and Purchase and Assignment Agreement dated as of April
4,  1997  among  the Company, Chancellor Fleet Corporation, Chancellor Financial
Sales  Service,  Inc.,  Chancellor  Fleet  Remarketing,  Inc.,  Chancellor Asset
Corporation,  Chancellor  Financialease,  Inc.,  Valmont  Financial Corporation,
Chancellor  DataComm, Inc., Alco 474N Trust, Cains 931D Trust, Cains 931E Trust,
Chrysler  Bo4E  Trust,  Conagra  25405  Trust, Conagra 25409 Trust, Dallas 38329
Trust,  H.E.  Butt  796C Trust, Kraft 79328 Trust, Savrn B063 Trust, Saturn B067
Trust,  Shamrock  25748  Trust,  Tyler  3Mo  Trust, Whirlpool 49434 Trust, Fleet
National  Bank  and  VESTEX  Capital  Corporation.

10.3     *1994  Stock  Option  Plan,  adopted  by  the Board of Directors of the
Company  on  August  12, 1994 and approved by the Stockholders of the Company on
January  20,  1995 (incorporated by reference from Appendix III to the Company's
Proxy  Statement  dated  December  9,  1994).

10.4     *1994  Directors'  Stock Option Plan, adopted by the Board of Directors
of  the  Company  on  August  12,  1994  and approved by the Stockholders of the
Company  on January 20, 1995 (incorporated by reference from Appendix III to the
Company's Proxy Statement dated December 9, 1994) and as amended by the Board of
Directors  of  the Company on December 30, 1996 and approved by the Stockholders
of  the  Company on August 29, 1997 (incorporated by reference from Appendix III
to  the  Company's  Proxy  Statement  dated  July  30,  1997.

10.5     *1994  Employee  Stock Purchase Plan, adopted by the Board of Directors
of  the  Company  on  August  12,  1994  and approved by the Stockholders of the
Company  on  January 20, 1995 (incorporated by reference from Appendix IV to the
Company's  Proxy  Statement  dated  December  9,  1994).

10.6     *1997  Stock  Option  Plan,  adopted  by  the Board of Directors of the
Company  on  March  20,  1997 and approved by the stockholders of the Company on
August  29,  1997  (incorporated by reference from Appendix III to the Company's
proxy  statement  dated July 30, 1997), and as amended by the Board of Directors
of  the Company on April 1, 1998 and approved by the stockholders of the Company
on  May  15,  1998 (incorporated by reference from Appendix III to the Company's
proxy  statement  dated  April  9,  1998).

10.7     $200,000  Subordinated Promissory Note dated as of July 25, 1995 by the
Company  in  favor of Bruncor, Inc. (incorporated by reference from Exhibit 3 to
the  Company's  Form  8-K  filed  with the Securities and Exchange Commission on
August  4,  1995  and  dated  July  25,  1995).

10.8     Specimen  of  Final  Form  of  Warrant  to  Purchase  Common  Stock  of
Chancellor  Corporation issued by the Company on April 1, 1998 to VESTEX Capital
Corporation.

10.9     Consulting  Agreement, dated July 1, 1998, by and among the Company and
VMI  Corporation.

10.10     Management  Agreement,  dated  August 1, 1998, by and among Chancellor
Asset  Management,  Inc.  and  M.R.B.,  Inc.  d/b/a  (Tomahawk Truck and Trailer
Sales).

10.11     Stock  Redemption  Agreement,  dated  August 7, 1998, by and among the
Company  and  VESTEX  Capital  Corporation.

10.12     First Amendment to the Management Agreement, dated August 17, 1998, by
and  among  Chancellor  Asset  Management, Inc. and M.R.B., Inc. d/b/a (Tomahawk
Truck  and  Trailer  Sales).

10.13     Lease  Agreement,  dated  January  29,  1999,  by  and  among  M.  Rea
Brookings, David F. Herring, and Chancellor Asset Management, Inc. (incorporated
by  reference  from  Exhibit  10.1  to the Company's current report on Form 8-K,
filed  with  the  Securities  and  Exchange  Commission.

10.14     Memorandum  of  lease,  dated  January  29,  1999, by and among M. Rea
Brookings, David F. Herring, and Chancellor Asset Management, Inc. (incorporated
by  reference  to  Exhibit  10.2  to the Company's Current Report on Form 8-K as
filed  with  the  Securities  and  Exchange  Commission  on  February 12, 1999).

10.15     Employment  Agreement,  dated  January  29, 1999, by and among M.R.B.,
Inc.  and  M.  Rea  Brookings  (incorporated by reference to Exhibit 10.3 to the
Company's  Current  Report on Form 8-K as filed with the Securities and Exchange
Commission  on  February  12,  1999).

10.16     Promissory Note, dated January 29, 1999, by and among M. Rea Brookings
and Chancellor Asset Management, Inc. (incorporated by reference to Exhibit 10.4
to  the  Company's  Current  Report on Form 8-K as filed with the Securities and
Exchange  Commission  on  February  12,  1999).

10.17     Stock  Pledge  Agreement,  dated  January  29,  1999,  by  and  among
Chancellor  Asset  Management,  Inc.  and  M.  Rea  Brookings  (incorporated  by
reference  to  Exhibit 10.5 to the Company's Current Report on Form 8-K as filed
with  the  Securities  and  Exchange  Commission  on  February  12,  1999).

10.18     Employment  Agreement,  dated  January  29, 1999, by and among M.R.B.,
Inc.  and  David  F.  Herring  (incorporated by reference to Exhibit 10.6 to the
Company's  Current  Report on Form 8-K as filed with the Securities and Exchange
Commission  on  February  12,  1999).

10.19     Promissory Note, dated January 29, 1999, by and among David F. Herring
and Chancellor Asset Management, Inc. (incorporated by reference to Exhibit 10.7
to  the  Company's  Current  Report on Form 8-K as filed with the Securities and
Exchange  Commission  on  February  12,  1999).

10.20     Stock  Pledge  Agreement,  dated  January  29,  1999,  by  and  among
Chancellor  Asset  Management,  Inc.  and  David  F.  Herring  (incorporated  by
reference  to  Exhibit 10.8 to the Company's Current Report on Form 8-K as filed
with  the  Securities  and  Exchange  Commission  on  February  12,  1999).

10.21     Promissory  Note,  dated  December 22, 1998, in the original principal
amount  of $3,475,000 from Chancellor Corporation to Vestex Capital Corporation.

10.22     Security  Agreement,  dated  as  of  December  22,  1998, by and among
Chancellor  Corporation  and  Vestex  Capital  Corporation.

10.23     Employment  Agreement,  dated October 1, 1998, by and among Chancellor
Corporation  and  Franklyn  E.  Churchill.

16(a)  Letter dated January 9, 1997, from Deloitte & Touche LLP (incorporated by
reference  from  Exhibit to the Company's Amendment No. 1 to Form 8-K filed with
the  Securities  and  Exchange Commission on January 13, 1997 and dated December
26,  1996).

21     Subsidiaries of the Company (incorporated by reference from Exhibit 21 to
the  Company's Annual Report on Form 10-K for the year ended December 31, 1995).

23.1     Independent  Auditor's  Consent  -  Metcalf,  Rice,  Fricke  and  Davis

23.2     Independent  Auditors'  Consent  -  Reznick  Fedder  &  Silverman

27.1     Financial  Data  Schedule  for  year  ended  December  31,  1998.

*     Management  contract  or  compensatory  plan or arrangement required to be
filed  as  an  exhibit  pursuant  to  Item 601(b)(10)(iii)(A) of Regulation S-K.

     Copies  of  these  exhibits  are  available  to stockholders of record at a
charge of $.09 per page, plus postage upon written request.  Direct requests to:
Peter  J.  Mullen,  Clerk,  Chancellor Corporation, 210 South Street, Boston, MA
02111.

     (b)     Reports  on  Form  8-K:

     Current  Report  on  Form  8-K,  dated  February  10,  1999
     Current  Report  on  Form  8-K,  dated  March  4,  1999
     Current  Report  on  Form  8-K/A,  dated  March  22,  1999
     Current  Report  on  Form  8-K/A,  dated  April  13,  1999

<PAGE>

                                       F-1
                          INDEPENDENT AUDITORS' REPORT



To  the  Stockholders  and  Board  of  Directors
of  Chancellor  Corporation


We  have  audited  the  accompanying  consolidated  balance  sheet of Chancellor
Corporation  and  subsidiaries  as  of  December  31,  1998  and  the  related
consolidated  statements  of operations, stockholders' equity (deficit) and cash
flows  for  the  year  then  ended.  These  financial  statements  are  the
responsibility  of the Company's management. Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audit.  The financial
statements  of  Chancellor  Corporation  and  subsidiaries  for  the  year ended
December  31,  1997  were audited by other auditors whose report dated March 27,
1998  expressed  an  unqualified  opinion  on  those  statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those  standards require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audit  provides  a  reasonable  basis  for  our opinion.

In  our  opinion,  the  1998 consolidated financial statements referred to above
present  fairly,  in all material respects, the financial position of Chancellor
Corporation  and  its  subsidiaries  as of December 31, 1998, and the results of
their  operations  and  their  cash flows for the year then ended, in conformity
with  generally  accepted  accounting  principles.





                                                 /s/ METCALF RICE FRICKE & DAVIS

Atlanta,  Georgia
April  13,  1999



<PAGE>
                          INDEPENDENT AUDITORS' REPORT



To  the  Stockholders  and  Board  of  Directors
of  Chancellor  Corporation


We  have  audited  the  accompanying  consolidated  statements  of  operations,
stockholders'  equity  (deficit)  and cash flows for the year ended December 31,
1997.  These  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  based  on  our  audit.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audits  provide  a  reasonable  basis  for  our opinion.

In  our  opinion,  the  1997 consolidated financial statements referred to above
present fairly, in all material respects, and the results of operations and cash
flows of Chancellor Corporation and its subsidiaries for the year ended December
31,  1997,  in  conformity  with  generally  accepted  accounting  principles.





                                                  /s/ REZNICK FEDDER & SILVERMAN

Boston,  Massachusetts
March  18,  1998,  except  for  Note  V
which  is  as  of  March  27,  1998

<PAGE>


                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-3
<TABLE>
<CAPTION>

                       CHANCELLOR CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEET
                          In Thousands, Except Share Data)



                                                                       DECEMBER 31,
                                                                           1998
                                                                      --------------


<S>                                                                   <C>
ASSETS

   Cash and cash equivalents                                          $         644 
   Receivables, net                                                           3,255 
   Inventory                                                                 10,758 
   Net investment in direct finance leases                                      359 
   Equipment on operating lease, net of accumulated depreciation
     of $2,351                                                                  702 
   Residual values, net                                                         219 
   Furniture and equipment, net of accumulated depreciation
     of $1,290                                                                  999 
   Other investments                                                          3,681 
   Intangibles, net                                                           7,541 
   Other assets, net                                                          1,411 
                                                                      --------------

                                                                      $      29,569 
                                                                      ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

   Accounts payable and accrued expenses                              $       6,366 
   Deferred reimburseable expenses                                            1,068 
   Indebtedness:
     Revolving credit line                                                    9,063 
     Notes payable                                                              942 
     Nonrecourse                                                                889 
     Recourse                                                                 4,234 
          Total liabilities                                                  22,562 
                                                                      --------------

Commitments and contingencies

Stockholders' equity:
   Preferred Stock, $.01 par value, 20,000,000 shares authorized:
     Convertible Series AA, 5,000,000  shares issued and outstanding             50 
     Convertible Series B, 2,000,000 shares authorized,
       none issued and outstanding                                              --- 
   Common stock, $.01 par value; 75,000,000 shares authorized,
     43,041,895 shares issued and outstanding                                   430 
   Additional paid-in capital                                                34,217 
   Accumulated deficit                                                      (27,690)
                                                                              7,007 
                                                                      --------------

                                                                      $      29,569 
                                                                      ==============
</TABLE>

    The accompanying notes are an integral part of these consolidated financial
                                   statements.

                                       F-3

<PAGE>


                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-4
<TABLE>
<CAPTION>

                         CHANCELLOR CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF OPERATIONS
                          (In Thousands, Except Per Share Data)



                                                            DECEMBER 31,
                                                        1998           1997
                                                    -------------  --- ----     


<S>                                                 <C>            <C>       <C>
Revenues:
   Transportation equipment sales                   $      25,096  $      ---- 
   Rental income                                              942          870 
   Lease underwriting income                                   74          293 
   Direct finance lease income                                110          272 
   Interest income                                            195           44 
   Gains from portfolio remarketing                         1,374          801 
   Fees from remarketing activities                         1,407        1,488 
   Other income                                               441          665 
                                                           29,639        4,433 
                                                    -------------  ------------

Costs and expenses:
   Cost of transportation equipment sales                  21,731         ---- 
   Selling, general and administrative                      6,054        6,412 
   Interest expense                                           343          281 
   Depreciation and amortization                              661          459 
                                                           28,789        7,152 
                                                    -------------  ------------

Income (loss) before extraordinary item and
   provision (benefit) for income tax                         850       (2,719)

Provision (benefit) for income tax                           ----           13 
                                                    -------------  ------------
Income (loss) before extraordinary item                       850       (2,732)

Extraordinary item - gain on debt forgiveness                ----          930 
                                                    -------------  ---         
Net income (loss)                                   $         850   (   $1,802)
                                                    =============       =======

Basic net income (loss) per share:
   Income (loss) before extraordinary item          $         .02  $       .18 
   Extraordinary item                                        ----         (.06)
   Net income (loss)                                $         .02   (   $  .12)
                                                    =============      =======

Diluted net income (loss) per share:
   Income (loss) before extraordinary item          $         .02  $       .18 
   Extraordinary item                                        ----         (.06)
   Net income (loss)                                $         .02   (   $  .12)
                                                    =============       =======

Shares used in computing basic net income (loss)
   per share                                           36,695,162   15,224,432 
                                                    =============  ============

Shares used in computing diluted net income (loss)
   per share                                           52,941,579   15,224,432 
                                                    =============  ============
</TABLE>

    The accompanying notes are an integral part of these consolidated financial
                                   statements.

                                       F-4

<PAGE>

<TABLE>
<CAPTION>

                                          CHANCELLOR CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                          YEARS ENDED DECEMBER 31, 1998 AND 1997
                                                      (In Thousands)


                          Stockholders
                        Preferred Stock    Common Stock   Additional Paid - In    Accumulated    Treasury Stock    Equity
                        ----------------  --------------                                        ----------------      
                             Shares           Amount             Shares             Amount          Capital       Deficit
                        ----------------  --------------  ---------------------  -------------  ----------------  --------

<S>                     <C>               <C>             <C>                    <C>            <C>               <C>
BALANCE, 1/1/97                   5,000   $          50                  6,567   $         65   $        24,609         ( 

Preferred stock,
   Series A issued                  711               7                  1,343          1,350 

Preferred stock,
   Series AA issued               3,000              30                 20,250            870               900 

Common stock issued                 203           2,123                  2,326 

Exercise of stock
   Options                           15               3                      3 

Retirement of treasury
   Stock                         (1,431)            (14)                  (522)        (1,431)              536         - 

Net loss                         (1,802)         (1,802)
                        ----------------  --------------                                                                  

BALANCE, 12/31/97                 8,711              87                 25,401            254            28,426   (28,540)

Preferred stock,
   Series A converted
   To common stock                 (711)             (7)                 7,105             71               (64)     ---- 

Preferred stock,
   Series AA converted
   To common stock               (3,000)            (30)                 3,000             30              ----           

Common stock issued               6,646              66                  5,571          5,637 

Exercise of stock
   Options                          892               9                    284            293 

Net income                          850             850 
                        ----------------  --------------                                                                  

BALANCE, 12/31/98                 5,000   $          50                 43,044   $        430   $        34,217         ( 
                        ================  ==============  =====================  =============  ================          





                         Shares   Amount   (Deficit)
                        --------  -------  ----------                   

<S>                     <C>       <C>      <C>         <C>      <C>  <C>
BALANCE, 1/1/97         $26,738)    1,431           (  $  536)    (  $2,550)

Preferred stock,
   Series A issued

Preferred stock,
   Series AA issued

Common stock issued

Exercise of stock
   Options

Retirement of treasury
   Stock

Net loss


BALANCE, 12/31/97          ----      ----         227

Preferred stock,
   Series A converted
   To common stock

Preferred stock,
   Series AA converted
   To common stock         ---- 

Common stock issued

Exercise of stock
   Options

Net income


BALANCE, 12/31/98       $27,690)  $  ----  $     ----  $7,007 
                        ========  =======  ==========  =======              
</TABLE>


<PAGE>



<TABLE>
<CAPTION>

                                         CHANCELLOR CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (In Thousands)


                                                                              YEARS ENDED DECEMBER 31,
                                                                           ---------------------               
                                                                                      1998               1997
                                                                           -------- ------------  --------     

<S>                                                                                            <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                       $            850         (   $1,802)
                                                                           -----------------            -------
   Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
      Depreciation and amortization                                                              661       459 
      Residual value estimate realizations and
         reductions, net of additions                                                            246       283 
      Gain on debt forgiveness                                                                  ----      (930)
      Changes in assets and liabilities, net of effects of acquisitions:
            Receivables                                                                       (2,366)    1,896 
            Inventory                                                                         (5,184)     ---- 
            Deferred reimbursable expenses                                                     1,068      ---- 
            Accounts payable and accrued expenses                                               (539)    1,828 
                                                                           -----------------  --------         
                                                                                              (6,114)    3,536 
                                                                           -----------------  --------         
                Net cash provided (used) by operating activities                              (5,264)    1,734 
                                                                           -----------------  --------         
CASH FLOWS FROM INVESTING ACTIVITIES
   Leased equipment held for underwriting                                                        502       729 
   Net investments in direct finance leases                                                      162       227 
   Equipment on operating lease                                                                 (588)       59 
   Other investments                                                                          (2,680)     (185)
   Net change in cash restricted and escrowed                                                  2,419     1,134 
   Additions to furniture and equipment, net                                                    (244)   (1,018)
   Increase in intangibles, net                                                               (3,322)     ---- 
   Net change in other assets                                                                 (1,170)      141 
   Purchase of Tomahawk, net of cash acquired                                                    398      ---- 
                Net cash provided (used) by investing activities                              (4,523)    1,087 
                                                                           -----------------  --------         
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings under revolving line of credit                                              4,611      ---- 
   Increase in indebtedness - nonrecourse                                                        689        40 
   Increase in indebtedness - recourse                                                         4,236     1,879 
   Repayments of indebtedness - nonrecourse                                                     (328)     (701)
   Repayments of indebtedness - recourse                                                        (417)   (3,966)
   Repayments of notes payable                                                                   (36)     ---- 
   Issuance of common stock, net                                                               1,579         3 
                Net cash provided (used) by financing activities                              10,334    (2,745)
                                                                           -----------------  --------         
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                        547        76 
CASH AND CASH EQUIVALENTS, BEGINNING                                                              97        21 
CASH AND CASH EQUIVALENTS, ENDING                                          $                     644   $    97 
                                                                           ==========================  ========
Non-Cash Activity:
   Issuance of common stock in exchange for fees due
      To related party                                                     $                   1,343   $ 4,556 
                                                                           ==========================  ========
   Issuance of common stock for acquisition of
      subsidiary company                                                   $                   4,320   $    20 
                                                                           ==========================  ========
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-6

<PAGE>

                                       F-7

                     CHANCELLOR CORPORATION AND SUBSIDIARIES
                     ---------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                DECEMBER 31, 1998
                                -----------------

1.     Business  Organization  and  Significant  Accounting  Policies
       --------------------------------------------------------------

     Business
     --------

          Chancellor Corporation and Subsidiaries (the "Company") are engaged in
(1)  buying,  selling, leasing and remarketing new and used equipment, primarily
transportation,  material  handling  and  construction  equipment,  (2) managing
equipment  on and off-lease, and (3) arranging equipment-related financing.  The
Company's  primary  market has historically been the United States.  During 1998
the  Company  expanded  its  market  presence  to  include  minor  activities in
international  markets  such  as  Russia  and  the  Republic  of  South  Africa.

     Principles  of  Consolidation
     -----------------------------

     The  consolidated  financial statements include the accounts of the Company
and  its  wholly  owned  subsidiaries.  All  significant  intercompany accounts,
transactions  and  profits  and  losses  have  been eliminated in consolidation.

On  August  1, 1998, pursuant to a Management Agreement dated August 1, 1998, as
amended  on  August  17,  1998, and a Stock Purchase Agreement dated January 29,
1999,  Chancellor  Asset  Management  Inc.  ("CAM"),  the Company's wholly owned
subsidiary,  acquired  all of the outstanding shares of MRB, Inc. d/b/a Tomahawk
Truck  and  Trailer  Sales  and  affiliates  ("Tomahawk").  The  acquisition was
accounted  for  under  the  purchase  method  of  accounting.

Accounting  for  Estimates
--------------------------

     The  preparation  of  financial  statements  in  accordance  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amounts of assets and liabilities, the
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements,  and  the  reported  amounts  of  revenues  and  expenses during the
reporting  period.  These  assumptions  could  change based on future experience
and,  accordingly,  actual  results  may  differ  from  these  estimates.

     Revenue  Recognition
     --------------------

     Transportation equipment sales - Revenues on transportation equipment sales
is  recognized  in  the  period  in  which  the  sale  is completed and title is
transferred.  Deposits  on  transportation equipment, that may be required under
certain  financing  contracts,  are  shown  as deposits on sales and included in
accrued  expenses.

     Lease  underwriting income - Lease underwriting fees arise from the sale of
equipment  leasing  transactions  and  include  cash  underwriting  margins  and
residual  value  fees. The excess of the sales price of equipment to an investor
(including  the assumption of any nonrecourse indebtedness) over its cost to the
Company  represents  lease underwriting fees. The Company typically arranges for
the lease of equipment to a lessee and, in some cases, for borrowings to finance
the purchase of the equipment, assigning lease rentals to secure such borrowings
on  a  nonrecourse  basis.  If  the  Company  elects to sell the transaction (as
opposed  to  retaining  the  transaction  for its own portfolio), the equipment,
subject  to  the  lease  and  the borrowing (if any), is then sold to investors.
Consideration  for  the sale of the leased equipment to investors is normally in
the  form  of  a  cash  investment.

     Residual value fees arise from the sale of lease transactions to investors.
These  fees  represent  the Company's present value share of the future residual
value  of  the  leased  equipment  that  the  Company  expects  to  realize upon
successful  remarketing  of  the  equipment.


<PAGE>
Direct  finance  lease  income - Lease contracts which qualify as direct finance
leases  are  accounted  for  by  recording  on  the  balance sheet minimum lease
payments  receivable  and  estimated  residual  values  on leased equipment less
unearned lease income and credit allowances. Revenues from direct finance leases
are  recognized as income over the term of the lease, on the basis that produces
a  constant  rate  of  return.

     Operating  leases  (Rental  Income)  -  Lease  contracts,  which qualify as
operating  leases,  are  accounted  for  by recording the leased equipment as an
asset,  at cost. The equipment is then depreciated on a straight-line basis over
two  to  fifteen  years  to  its  estimated residual value. Equipment is further
depreciated  below  its  initial  residual  value  upon release to its estimated
revised  residual  value  at  lease expiration. Any changes in depreciable lives
affect  the  associated  expense  on  a  prospective  basis.  Rental income from
operating  leases  is  recognized  using a straight-line method over the initial
term  of  the  lease.

     Reimbursable  Expenses
     ----------------------

The Company is entitled to reimbursement of expenses incurred in the remarketing
of  certain equipment as outlined in various remarketing agreements. Pursuant to
the terms of the trust agreements, the Company is permitted to charge the trusts
for  its  costs  associated with administrating the trust.  The reimbursement of
these  costs  is recorded as a reduction of general and administrative expenses.

     Residual  Values
     ----------------

     The  Company  reviews  recorded  residual values on an annual basis.  Write
downs  in  estimated  residual values, due to declines in equipment value or the
financial  creditworthiness  of  individual  customers and major industries into
which  the  Company  leases  equipment,  are recorded when considered other than
temporary.  The  residual  valuation  is  based  on independent valuation of the
equipment  held  under  trust  lease  and  its  internal  valuation assessments.

     Cash  and  Cash  Equivalents
     ----------------------------

     The  Company  considers  all  highly  liquid  investments  purchased with a
remaining  maturity  of  three  months  or  less  to  be  cash  equivalents.

     Concentration  of  Credit  Risk
     -------------------------------

     The  Company  maintains  its  cash  balances in several banks.  The Federal
Deposit  Insurance  Corporation insures up to $100,000 the balances held by each
bank.  The  Company  also  has  arrangements  whereby  the  funds  in  excess of
specified cash balances are invested in overnight repurchase agreements and such
overnight  investments  are  collateralized  by  high-grade  corporate  debt
securities.  As of December 31, 1998, the uninsured portion of the cash balances
held  at  one  bank was approximately $573,000 of which $532,000 was invested in
overnight  repurchase  agreements.

     Inventory
     ---------

All  inventories  are  valued  at  the  lower  of  cost  or market.  The cost of
transportation equipment, including reconditioning parts and other direct costs,
is  determined  using  the  specific  identification  method.

     Furniture,  Equipment  and  Leaseholds
     --------------------------------------

     Furniture  and  equipment  are  recorded at cost.  Depreciation is computed
using  a the straight-line method over the estimated useful lives of the related
assets,  typically  3 to 7 years.  Leasehold improvements are amortized over the
lease  term.

Intangibles
-----------

     Intangibles  consist  of  goodwill, data files and customer lists which are
amortized  over  an  estimated  life  of  fifteen to twenty-five years using the
straight-line  method.  License  agreements,  included in intangibles, are being
amortized  over  an estimated life of four years using the straight-line method.


<PAGE>
------
Income  Taxes
-------------

     Statement  of  Financial Accounting Standards ("SFAS") No. 109, "Accounting
for  Income  Taxes,"  requires  an  asset  and  liability approach for financial
accounting  and  reporting  for  income taxes. In addition, future tax benefits,
such  as  net  operating  loss  tax  carryforwards, are recognized to the extent
realization  of  such  benefits  is  more  likely  than  not.

     Stock-based  Compensation
     -------------------------

     The  Company  has  adopted  SFAS  No.  123,  "Accounting  for  Stock-Based
Compensation",  which  allows  the  Company  to  account  for stock-based awards
(including  stock  options)  to  employees  using  the intrinsic value method in
accordance  with  Accounting  Principles  Board  Opinion No, 25, "Accounting for
Stock  Issued  to  Employees".

     Net  Income  (Loss)  per  Share
     -------------------------------

Basic  net  income  per  share  is  computed by dividing net income available to
common  shareholders by the weighted average number of common shares outstanding
for  the  period.  Diluted  net income per share reflects the potential dilution
that  could occur from potential common stock such as stock issuable pursuant to
the  exercise  of  stock  options  outstanding  and  conversion  of  debt.

     Basic net loss per share amounts are computed based on the weighted average
number  of  common  shares  and  diluted net loss per share amounts are based on
common  and common equivalent shares, when dilutive.  Diluted net loss per share
is  not presented for 1997 since common stock equivalent shares from convertible
preferred  stock  and  from  stock  options  and  warrants  are  antidilutive.

Supplemental  Cash  Flow  Information
-------------------------------------

     Cash  paid  for  income taxes during 1998 and 1997 was $13,000 and $13,000,
respectively.  Interest  paid  during  1998  and 1997 was $630,000 and $340,000,
respectively.  The  Company issued stock valued at $4,320,000 in exchange of all
of  the  net  assets  of  its  Tomahawk  subsidiary  in a non-cash investing and
financing  transaction.

Other  Investments
------------------

The  Company accounts for its equity investment of less than 20% ownership in an
investee  on  a  cost  basis.

     Recent  Accounting  Pronouncements
     ----------------------------------

          The  Company  has  adopted Statement of Financial Accounting Standards
("SFAS")  No.  130,  "Reporting  Comprehensive Income".  SFAS No. 130 prescribes
standards  for  reporting  comprehensive  income  and  its  components.  The
implementation of this SFAS has no material effect on the Company's consolidated
financial  statements.

SFAS  No.  131,  "Disclosures  About  Segments  of  An  Enterprise  and  Related
Information",  requires  disclosures  of certain information about the Company's
operating  segments  on  a basis consistent with the way in which the Company is
managed and operated.  SFAS No. 131 also requires disclosures about products and
services,  geographic  areas  and major customers.  The adoption of SFAS No. 131
did  not  affect  results of operations or the financial position of the Company
but  did  affect  the  disclosure  of  segment  information.

Impact  of  the  Year  2000  Issue
----------------------------------

     The  Company has commenced efforts to assess and where required, remediate,
issues  associated with Year 2000 ("Y2K") issues.  Generally defined, Y2K issues
arise  from computer programs which use only two digits to refer to the year and
which  may experience problems when the two digits become "00" in the year 2000.
In  addition,  imbedded  hardware microprocessors may contain time and two-digit
year  fields  in executing their functions.  Much literature has been devoted to
the  possible  effects  such  programs may experience in the Year 2000, although
significant  uncertainty  exists  as to the scope and effect the Y2K issues will
have  on  industry  and  the  Company.

The  Company has recognized the need to address the Y2K issue in a comprehensive
and  systematic  manner and has taken steps to assess the possible Y2K impact on
the  Company.  Although  the  Company has not completed a 100% assessment of all
its information technology ("IT") and non-IT systems for Y2K issues, the Company
has  completed  its  assessment  of  all  mission-critical  systems.  All
mission-critical  systems  and  most of the major applications and hardware have
been  assessed  to  determine  the  Y2K impact and a plan is in place for timely
resolution  of  potential  issues.

In  1998,  the  Company  developed  a  strategic plan to identify the IT systems
needed  to  accomplish  the  Company's  overall  growth  plans.  As part of this
process,  Y2K  issues  were  considered  and  addressed  by the Company's senior
management  and MIS personnel.  Although this plan was intended to modernize the
IT  systems,  compliance  with  Y2K  requirements  were  incorporated.

The  cost  of  bringing  the  Company  in full compliance should not result in a
material  increase  in  the  recent  levels  of capital spending or any material
one-time  expenses.  The Company has spent approximately $152,000 in modernizing
its  IT  system,  including  compliance  with  Y2K  requirements.  The  Company
anticipates  spending  of  approximately $300,000 during fiscal 1999 to complete
the  modernization  of  its  IT  system.

The failure of either the Company, its vendors or clients to correct the systems
affected  by Y2K issues could result in a disruption or interruption of business
operations.  The  Company  uses computer programs and systems in a vast array of
its  operations  to  collect,  assimilate  and  analyze  data.  Failure  of such
programs  and  systems  could affect the Company's ability to track assets under
lease  and properly bill.  Although the Company does not believe that any of the
foregoing  worst-case  scenarios  will  occur,  there  can  be no assurance that
unexpected  Y2K  problems  of  the  Company's  and  its  vendors' and customer's
operations  will  not  have  a  material  adverse  effect  on  the  Company.

     While  it  is difficult to classify our state of readiness, we believe that
our internal plans should have the Company ready by the end of 1999 to avoid any
substantial  material  Y2K  issues.  We  are  in  the  process of completing the
assessment,  testing systems and developing contingency plans.  Management is in
constant  communication  with its IT personnel and has made and will continue to
make  reports  to  the  Company's  Board  of  Directors.

     Fair  Value  of  Financial  Instruments
     ---------------------------------------

     The  fair  value  of  the  Company's assets and liabilities that constitute
financial  instruments  as defined in SFAS No. 107, "Disclosure about Fair Value
of  Financial  Instruments",  approximate  their  recorded  amounts.

     Risk  Management
     ----------------

The  Company  is exposed to risks of loss related to torts; theft of, damage to,
and destruction of assets; errors and omissions; injuries to employees; material
disasters;  and product liability.  The Company carries commercial insurance for
risks  of  loss.

     Foreign  Currency  Translation
     ------------------------------

The  Company  uses  the  US dollar as its functional currency.  Foreign currency
assets  are  recoverable  in  US  dollars,  including  equipment lease payments.
However,  the  Company has recorded an allowance equal to the net book value for
leases  receivable  from  a party in Russia.  The effect of any foreign currency
fluctuations  is  not  considered  material  in  these  financial  statements.


<PAGE>
2.     Receivables

     Receivables  consists  of  the  following  as  of  December  31,  1998  (in
thousands):
<TABLE>
<CAPTION>



                                             December 31,
                                                 1998
<S>                                          <C>

Note receivable on international investment  $       1,242
Receivables from trust, net                            855
Trade accounts receivable                              375
Loans receivable                                       373
Other notes receivable                                 137
Accrued rents receivable, net                           40
Interest receivable                                    104
Other receivables                                      129
                                             -------------

                                             $       3,255
                                             =============
</TABLE>



     Receivables  from  trusts  include amounts due the Company for cash outlays
associated  with the remarketing of equipment of $72,000.  These amounts will be
collected  upon  successful  remarketing  of  such  equipment.  Additionally,
receivables  from  trusts includes amounts due for costs incurred by the Company
for  administration  of  the  trusts  in accordance with the trust agreements of
$1,764,000.  Collection  of  costs  of  administration  is  not  certain  due to
numerous  factors  and  is,  therefore,  included  net of the estimated reserve.
Accrued  rents  represent amounts due from portfolio leases, net of an allowance
of  $88,000.

3.     Residual  Values,  Net

     The  Company's  lease  underwriting  income  includes  consideration in the
residual  value sharing arrangements received from originating and selling lease
transactions  to  investors.  The  Company, upon remarketing of the equipment at
termination  or  expiration  of  the  related  leases, will realize this type of
consideration  (residual  values).  The  Company's  share  of  expected  future
residual  values  is recorded as income at their discounted present value at the
time  the  underlying  leases  are  sold  to  investors.  Any  increases  in the
Company's  expected  residual  sharing  are  recorded as gains upon realization.
Write-down in estimated residual value due to declines in equipment value or the
financial  creditworthiness  of  individual  customers and major industries into
which  the  Company  leases  equipment,  are recorded when considered other than
temporary.  The  Company  evaluates  residual  values  based  upon  independent
assessments  by  industry  professionals,  in  addition  to  already established
internal  criteria.

     The  activity  in  the residual value accounts for the years ended December
31,  1998  and  1997  is  as  follows  (in  thousands):
<TABLE>
<CAPTION>



                                          December 31,
                                         --------------     
                                              1998        1997
<S>                                      <C>             <C>

Residual values, beginning of year, net  $         465   $ 748 
Residual realization                              (204)   (283)
Residual value estimate reduction                  (42)   ---- 
                                         --------------  ------

Residual values, end of year, net        $         219   $ 465 
                                         ==============  ======
</TABLE>



     Residual  value estimate reductions represent reductions in expected future
residual  values on certain equipment, the residuals that were substantially all
recorded  prior  to 1997.  Such reductions resulted from an extensive review and
valuation of all assets owned, leased and managed by the Company.  For the years
ended  December  31, 1998 and 1997, the Company realized income of approximately
$1,395,000  and  $1,488,000,  respectively,  relating  to  the  remarketing  of
equipment  for which no residuals were recorded or realized amounts exceeded the
booked  residual.

     Aggregate  residual  value  fees expected to be realized as of December 31,
1998  are  as  follows  (in  thousands):

<TABLE>
<CAPTION>



                                               December 31,
                                         --------------     
                                              1998        1997

<S>                                      <C>             <C>
Residual values, beginning of year, net  $         465   $ 748 
Residual realization                              (204)   (283)
Residual value estimate reduction                  (42)   ---- 
                                         --------------  ------

Residual values, end of year, net        $         219   $ 465 
                                         ==============  ======
</TABLE>


Net investment in direct finance leases consisted of the following as of 
December 31, 1998 (in thousands):

<TABLE>
<CAPTION>

                                            December 31,
                                                1998
<S>                                        <C>
Minimum lease payments receivable          $         389 
Estimated unguaranteed residual values of
      leased equipment, net                           53 
Less:  Unearned income                               (83)
                                           --------------
                                           $         359 
                                           ==============
</TABLE>




     The  cost of equipment on operating lease by category of equipment consists
of  the  following  as  of  December  31,  1998  (in  thousands):

<TABLE>
<CAPTION>

                                 December 31,
                                     1998

<S>                              <C>
Transportation equipment         $         819
Other equipment                          2,234
                                 -------------
                                         3,053

Less - accumulated depreciation          2,351
                                 -------------

                                 $         702
                                 =============
</TABLE>


The aggregate amounts of minimum lease payments to be received from
 noncancelable direct finance and operating leases are as follow

<TABLE>
<CAPTION>

                            Direct
Year ending December 31:   Finance   Operating
                           --------  ----------

<S>                        <C>       <C>
1999                       $    195  $      219
2000                            110          34
2001                             72          31
2002                              8          30
2003                              4          30
                                389    $    344
=========================  ========            
</TABLE>

<PAGE>
5.     Accounts  Payable  and  Accrued  Expenses:
       -----------------------------------------

     Accounts  payable  and  accrued  expenses  consists  of the following as of
December  31,  1998  (in  thousands):
<TABLE>
<CAPTION>



                                                     December 31,
                                                         1998
<S>                                                  <C>

Trade accounts payable                               $       1,326
Payables to investors                                        1,361
Fees payable to related party                                  895
Contribution payable to New Africa Opportunity Fund            650
Accrued commissions payable                                    453
Accrued legal and accounting fees                              272
Accrued interest payable                                       185
Other accrued expenses                                       1,224
                                                     -------------

                                                     $       6,366
                                                     =============
</TABLE>



6.     Early  Extinguishment  of  Intercreditor  Loan
       ----------------------------------------------

     In  April  1997,  the Company executed and delivered (1) the Loan Reduction
and  Purchase  and  Assignment Agreement dated April 1997 among the Company, its
corporate affiliates, a bank, as agent (the "Agent") for the Company's principal
recourse  lenders,  and  VCC, the Company's majority shareholder; (2) release in
favor  of  the principal recourse lenders to be given by VCC and Brian M. Adley,
Chairman  of  the  Board  of  Directors  of  the  Company  and President of VCC,
individually; (3) release in favor of the principal recourse lenders to be given
by  the  Company, its corporate affiliates and/or subsidiaries, in favor of VCC.
Coterminous  with  this  transaction,  both  the  intercreditor loan and secured
inventory  loan were repaid in advance of their respective terms.  The aggregate
amount of this debt on the repayment date was approximately $1,906,000, of which
approximately  $976,000  was  paid  in  cash  and  the  balance  of $930,000 was
forgiven.  In addition, the Company paid approximately $22,000 in legal and bank
fees  to  complete  this  transaction.

7.     Revolving  Lines  of  Credit
       ----------------------------

During  1994, and prior to its acquisition by the Company, Tomahawk entered into
a  revolving  line  of  credit  agreement  with  a financial institution whereby
Tomahawk can borrow up to $7,500,000 to floor plan used transportation equipment
inventory.  The  maximum  amount  outstanding  during  1998  was $7,500,000.  In
addition, during 1998, Tomahawk entered into a financing agreement with the same
institution  to floor plan additional used transportation equipment inventory in
the  approximate  amount  of  $4,500,000.  Interest  is  accrued  monthly at the
financial  institution's prime plus .75 to 1.5 percent, depending upon the floor
planned  inventory amounts.  The effective rate of interest at December 31, 1998
was  9.7  percent.  The aggregate principal balance outstanding on the revolving
line  of  credit  and  the  financing  agreement  as  of  December  31,  1998 is
approximately  $9,063,000.  The  Company,  in  connection  with  the  Tomahawk
acquisition,  assumed  the  obligation pursuant to this revolving line of credit
and  financing  agreement.  The revolving line of credit and financing agreement
are  both  personally  guaranteed  by  the  selling  stockholders  of  Tomahawk.


<PAGE>
8.     Notes  Payable
       --------------

     Notes  payable  consists  of  the  following  as  of  December 31, 1998 (in
thousands):
<TABLE>
<CAPTION>



                                                                December 31,
                                                                    1998
<S>                                                             <C>

Unsecured notes payable to individuals due on demand
   Including interest at 10 percent per annum.                  $         256

Unsecured notes payable to selling stockholders of Tomahawk,
   Including interest payable at 10 percent.                              300

Notes payable to a bank, payable in various monthly
   Installments including interest at the prime rate (7.75% at
   December 31, 1998) plus 2%, secured by automobiles
   Financed by the Company.                                               115

Note payable to a financial institution, payable in monthly
   Installments of $4,135 including interest at a rate of 10
   Percent per annum, due February 15, 1999, secured by
   Automobiles and equipment.                                               8

Bridge loan payable to a financial institution providing for
   Maximum borrowings up to $400,000 for working capital
   Purposes, interest payable monthly at the rate of 10.5
   Percent per annum, principal balance due on March 27, 1999.            163

Various notes payable to a financial institution, payable in
   Monthly installments of $2,753 including interest at rates
   Of 9 and 10 percent per annum, due from September 2001
   To May 2003, secured by automobiles and equipment.                     100
                                                                -------------
                                                                          942
Less - current portion                                                    821
                                                                -------------

                                                                $         121
                                                                =============
</TABLE>



     Aggregate annual maturities of notes payable as of December 31, 1998 are as
follows  (in  thousands):
<TABLE>
<CAPTION>



Years ending December 31:
<S>                         <C>
1999                        $821
2000                          64
2001                          34
2002                          17
2003                           6
                            ----

942
==========================      
</TABLE>



9.     Non-Recourse  and  Recourse  Debt
       ---------------------------------

     Nonrecourse  indebtedness  consists of notes payable to banks and financial
institutions arising from assignments of the Company's rights, (most notably the
right to receive rental payments) as lessor, at interest rates ranging from 7.8%
to  13.6%.  Amounts  due  under nonrecourse notes are obligations of the Company
which  are  secured  only  by  the  leased  equipment  and  assignments of lease
receivables,  with  no recourse to any other assets of the Company.  The Company
is  at  risk,  however, for the amount of residual value booked on equipment for
its  own  portfolio  in  the  event  of  a  lessee  default.

     Aggregate  future  maturities  of non-recourse debt as of December 31, 1998
are  as  follows  (in  thousands):

<TABLE>
<CAPTION>



Years ending December 31:
<S>                         <C>
1999                        $698
2000                          87
2001                          91
2002                          13
                            ----

889
==========================      
</TABLE>



Recourse  debt consists of the following as of December 31, 1998 (in thousands):
<TABLE>
<CAPTION>



                                                                December 31,
                                                                    1998
<S>                                                             <C>

Promissory note payable to the Company's majority
   Stockholder, bearing interest at the prime rate (7.75% at
   December 31, 1998) plus 2%, principal and accrued interest
   Payable December 31, 2001, secured by substantially
   All of the assets of the Company                             $       3,978

Subordinated promissory note payable to a former
   Stockholder of the Company, bearing interest at the prime
   Rate (7.75% at December 31, 1998) plus 1%, principal and
   Accrued interest payable on demand.                                    200

Equipment line of credit with two leasing companies, aggregate
   Monthly payments of $2,183 and leases expiring from
   November 2000 to January 2001                                           56
                                                                -------------
                                                                        4,234
Less - current portion                                                  4,198
                                                                -------------

                                                                $          36
                                                                =============
</TABLE>



Aggregate  future  maturities  of  recourse  debt as of December 31, 1998 are as
follows  (in  thousands):
<TABLE>
<CAPTION>



Years ending December 31:
<S>                         <C>
1999                        $  220
2000                            23
2001                         3,985
2002                             6
                            ------

4,234
==========================        
</TABLE>








10.     Income  Taxes
        -------------

     The  provision  (benefit)  for  income  taxes consists of the following (in
thousands):
<TABLE>
<CAPTION>



1998             1997
<S>              <C>    <C>

Current:
        Federal  $----  $----
        State     ----     13

Deferred:
        Federal   ----   ----
        State     ----   ----
                 -----  -----

    $----        $  13
===============  =====       
</TABLE>



A  reconciliation  of the rate used for the provision (benefit) for income taxes
is  as  follows:
<TABLE>
<CAPTION>



                                                     1998    1997
                                                    ------  ------

<S>                                                 <C>     <C>
Tax benefit at statutory rate                        34.0%   34.0%
Net operating loss carry forward benefit for which
   Utilization is not assured and other items       (34.0)  (34.0)
                                                    ------  ------

                                                      0.0%    0.0%
                                                    ======  ======
</TABLE>



     The  Company  files consolidated federal income tax returns with all of its
subsidiaries,  with  the  exception  of  Tomahawk.  As of December 31, 1998, the
Company  has  net  operating  loss  carryforwards  of  approximately $21,771,000
available for federal tax purposes, which expire in the years 2001 through 2012.
In  addition,  at  December  31,  1998,  the  Company  has investment tax credit
carryforwards  for  federal income tax purposes available to offset future taxes
of  approximately $1,855,000 expiring in the years 1999 through 2002 and minimum
tax  credit  carryforwards  for  federal income tax purposes available to offset
future  taxes  of  approximately  $135,000 which do not expire.  For federal tax
purposes,  utilization of net operating losses and tax credit carryforwards will
be limited in future years as a result of a greater than 50% change in ownership
which  occurred  in  July  1995.

     Deferred  income  taxes  reflect  the  net  tax  effects  of  (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes  and  the  amounts  used  for  income  tax purposes, and (b)
operating  loss  and  tax  credit  carryforwards.

     The  tax effects of significant items comprising the Company's net deferred
tax  liability  as  of  December  31,  1998  are  as  follows  (in  thousands):
<TABLE>
<CAPTION>



                                                             December 31,
                                                                 1998
                                                            --------------

<S>                                                         <C>
Deferred tax liabilities:
        Differences between book and tax basis of property  $         189 
                                                            --------------

Deferred tax assets:
        Reserves not currently deductible                             552 
        Net operating loss carryforwards                            8,708 
        Tax credit carryforwards                                    1,990 
        Other                                                       1,000 
                                                            --------------
                Total deferred tax assets                          11,248 
                                                            --------------
                                                                   11,059 
Valuation allowance                                               (11,059)
                                                            --------------

Net deferred tax liability                                  $        ---- 
                                                            ==============
</TABLE>



     All  deferred  tax  liabilities  and deferred tax assets (except tax credit
carryforwards)  are  tax  effected  at  the  enacted rates for state and federal
taxes.  The  valuation  allowance  relates  primarily  to  net  operating  loss
carryforwards  and  tax  credit  carryforwards  that  may  not be realized.  The
valuation  allowance decreased by $940,000 in 1998.  For the year ended December
31,  1997  the  valuation  allowance  decreased  by  $1,050,000.

     The  deferred  tax asset is available to offset taxable income in excess of
book income generated from the lease portfolio and residual values which are the
principal  components  of  the  total deferred tax liabilities of $189,000 as of
December  31,  1998.  The deferred tax asset, net of the deferred tax liability,
has  been  fully  reserved  as  of  December  31,  1998.

11.     Stockholders  Equity
        --------------------

     The  Preferred  Stock issued by the Company carries certain preferences and
rights  as  discussed  below.  Each  share of Preferred Stock is entitled to the
number  of  votes equal to the number of whole shares of Common Stock into which
the  share  of the Preferred Stock held are then convertible. The holders of the
Preferred  Stock  shall be entitled to receive cash dividends only to the extent
and  in  the  same  amounts  as  dividends are declared and paid with respect to
Common  Stock  as  if  the Preferred Stock has been converted to Common Stock in
accordance  with  the provisions related to conversion.  Preferences specific to
each  series  are  as  follows:

Series  AA  -  convertible  into  one  share  of  Common Stock for each share of
Preferred  Stock  and  has  a  liquidation  preference  of  $.50  per  share.

Series  B  -  convertible  into  ten  shares  of  Common Stock for each share of
Preferred  Stock  and  has  a  liquidation  preference  of  $2.00  per  share.

12.     Stock  Option  Plans  and  Stock  Purchase  Plan
        ------------------------------------------------

     The  Company has three stock option plans: a 1994 Stock Option Plan, a 1994
Directors'  Stock  Option  Plan  and  a  1997  Stock  Option  Plan.

     The  Company's  stock  option  plans provide for incentive and nonqualified
stock  options  to  purchase  up  to  an  aggregate  of  7,207,000 shares of the
Company's  Common Stock which may be granted to key contributors of the Company,
including  officers,  directors,  employees  and  consultants.  The  options are
generally  granted at the fair market value of the Company's Common Stock at the
date  of  the  grant, vest over a five-year period, are exercisable upon vesting
and  expire  five  years  from  the  date  of  grant.

Information  with  respect  to  the  stock  option  plans  was  as  follows:
<TABLE>
<CAPTION>



      Weighted
1994    1994    1997  1983  Average
                            Stock                            Directors       Stock         Stock      Exercise
                            Option Plan                     Option Plan   Option Plan   Option Plan     Price
                            ------------------------------  ------------  ------------  ------------  ---------    

<C>   <C>       <C>   <C>   <S>                             <C>           <C>           <C>           <C>        <C>
                            Outstanding, December 31, 1996    1,081,466       329,500          ----      3,244   $.18

                            Options granted                     775,000       337,500     2,245,000       ----    .51
                            Options exercised                   (15,000)         ----          ----       ----    .15
                            Options canceled and expired       (973,716)         ----          ----       ----    .18
                            Options canceled and reissued         3,244          ----          ----     (3,244)   .01
                                                            ------------  ------------  ------------  ---------  ----

                            Outstanding, December 31, 1997      870,994       667,000     2,245,000       ----    .49

                            Options granted                     355,991          ----     1,911,500       ----    .52
                            Options exercised                  (384,583)      (40,000)     (467,000)      ----    .33
                            Options canceled and expired        (59,985)         ----      (952,500)      ----    .52
                                                            ------------  ------------  ------------  ---------  ----

                            Outstanding, December 31, 1998      782,417       627,000     2,737,000       ----   $.54
                                                            ============  ============  ============  =========  ====
</TABLE>




<PAGE>
Additional  information regarding options outstanding as of December 31, 1998 is
as  follows:
<TABLE>
<CAPTION>


                                       Options Outstanding
                                       -------------------




Exercise     Number
Price       of Shares  Weighted Average Contractual Life  Exercisable Options  Date of Expiration
----------  ---------  ---------------------------------  -------------------  ------------------

<S>         <C>        <C>                                <C>                  <C>
0.01           1,917                               5.00                1,917                2002
0.05         112,500                               8.00              112,500                2006
0.06         112,500                               8.00              112,500                2006
0.10         364,000                               4.75              267,000         2003 - 2004
0.13          27,911                               2.59               27,911                2001
0.16           5,000                               2.59                5,000                2001
0.19          27,589                               2.59               27,589                2001
0.20         675,000                               6.15              475,000         2004 - 2007
0.25         602,000                               6.13              177,000         2004 - 2005
0.30          40,000                               4.75               40,000                2003
0.50         591,333                               6.64                 ----         2005 - 2006
0.60          40,000                               5.75                 ----                2004
0.70         120,000                               7.34                 ----         2004 - 2008
0.71          10,000                               5.75                 ----                2004
0.75         588,333                               7.64                 ----         2006 - 2007
0.80          30,000                               7.75                 ----         2004 - 2008
0.81          10,000                               6.75                 ----                2005
0.91          10,000                               7.75                 ----                2006
1.00         678,334                               9.09                 ----         2007 - 2008
1.01          10,000                               8.75                 ----                2007
1.11          10,000                               9.75                 ----                2008
1.50          40,000                               8.75                 ----         2007 - 2008
2.00          40,000                               8.75                 ----         2007 - 2008

4,146,417   1,246,417
==========  =========                                                                            
</TABLE>




     Pro  forma  information.  The Company has elected to follow APB Opinion No.
     ------------------------
25,  "Accounting  for Stock Issued to Employees," in accounting for its employee
stock options because, as discussed below, the alternative fair value accounting
provided  for  under  SFAS  No.  123, "Accounting for Stock-Based Compensation,"
requires  the  use of option valuation models that were not developed for use in
valuing employee stock options.  Under APB No. 25, because the exercise price of
the  Company's  employee  stock options equal or exceeds the market price of the
underlying stock on the date of the grant, no compensation expense is recognized
in  the Company's financial statements.  SFAS No. 123 requires the disclosure of
pro forma net income (loss) and earnings per share as if the Company had adopted
the  fair  value method as of the beginning of fiscal 1995.  Under SFAS 123, the
fair value of stock options to employees is calculated through the use of option
pricing  models,  even  though  such  models were developed to estimate the fair
value  of  freely  tradable,  fully  transferable  options  without  vesting
restrictions, which significantly differ from the Company's stock option awards.
These  models  also require subjective assumptions, including future stock price
volatility  and  expected  time  to  exercise,  which  greatly  differs from the
calculated values.  The Company's calculations were made using the Black-Scholes
option  pricing  model with the following weighted average assumptions: expected
life,  48 months following vesting; stock volatility 200% in 1998 and 1997; risk
free interest rate, 8%, in 1998 and in 1997 and no dividends during the expected
term.  The  forfeitures  of  the  options  are recognized as they occur.  If the
computed  fair  values  of  the  1997 and 1998 awards had been expensed over the
vesting  period  of the awards, the pro forma net income in 1998 would have been
$547,000  or  $0.01 per share and the pro forma net loss in 1997 would have been
$1,850,000  or  $0.12  per  share.


<PAGE>
------
Employee  Stock  Purchase  Plan
-------------------------------

     The  Company's 1994 Employee Stock Purchase Plan authorizes the offering to
employees of up to 250,000 shares of Common Stock in six semiannual offerings at
a  price of 85% of the Common Stock's bid price and in an amount determined by a
formula  based  on  each employee's estimated annual compensation. The Company's
stockholders  authorized  this  plan  in January 1995. No shares of Common Stock
have  been  offered  pursuant  to  the  plan  to  date.

     The  Company  has  reserved  250,000 shares of Common Stock for all amounts
that  may  be  offered  to  employees  under  this  plan.

13.     Major  Customers
        ----------------

     The  Company  is  engaged  principally in originating and selling equipment
leasing  transactions.  During  1998,  31% (based on original equipment cost) of
the  new  lease transactions originated by the Company were with the one largest
lessee.  In  addition,  approximately  40%  and 31% (based on original equipment
cost)  of  equipment sold to investors in 1998 were purchased by the two largest
investors.  During 1997, 92% (based on original equipment cost) of the new lease
transactions  originated  by  the  Company  were with the one largest lessee. In
addition,  approximately  55%  and  37%  (based  on  original equipment cost) of
equipment sold to investors in 1997 were purchased by the two largest investors.

14.     Employee  Benefit  Plan
        -----------------------

     The  Company  sponsors a 401(k)retirement plan (the "Plan") for the benefit
of  its  employees.  The Plan enables employees to contribute up to 15% of their
annual compensation. The Company's contributions to the Plan, up to a maximum of
$500  per  participating employee, amounted to approximately $11,000 and $18,000
in  1998  and  1997,  respectively.

15.     Acquisition
        -----------

Chancellor  Asset  Management  Inc.  ("CAM"),  a  wholly owned subsidiary of the
Company,  entered  into a Management Agreement, dated August 1, 1998, as amended
August  17,  1998,  with M.R.B. Inc., a Georgia corporation d/b/a Tomahawk Truck
Sales;  Tomahawk  Truck  &  Trailer Sales, Inc., a Florida corporation; Tomahawk
Truck  &  Trailer  Sales of Virginia, Inc., a Virginia corporation; and Tomahawk
Truck  &  Trailer  Sales of Missouri, Inc., a Missouri corporation (collectively
"Tomahawk").  The  Management  Agreement  provided CAM with effective control of
Tomahawk's  operations  as of August 1, 1998.  Subsequently, CAM acquired all of
the  outstanding  capital  stock  of Tomahawk from the two (2) sole shareholders
(the  "Selling  Shareholders")  pursuant  to  a  Stock  Purchase  Agreement (the
"Agreement")  dated  January  29,  1999.

Tomahawk  is engaged in a similar line of business as CAM.  Tomahawk retails and
wholesales  used  transportation  equipment,  primarily  tractors  and trailers.
Tomahawk  operates  five  (5)  retail  centers  in  Conley,  Georgia;  Richmond,
Virginia;  Pompano  Beach, Florida; Orlando, Florida; and Kansas City, Missouri.
Tomahawk also operates its wholesale division from the Conley, Georgia facility.
Tomahawk  will operate as a wholly owned subsidiary of the Company, coordinating
many  operations  with  the  Company  to  achieve  operating  efficiencies  and
synergies.

The  purchase price paid by CAM consisted of 4,500,000 shares of Common Stock of
Chancellor  (valued at $.96 per share) and future cash consideration pursuant to
an  earn-out  (the  "Earn-Out")  as provided for in the Agreement.  The Earn-Out
provides  that  each of the Selling Shareholders will be paid an amount equal to
seven  and one-half percent (7.5%) of the Adjusted Pre-Tax Earnings of Tomahawk.
The  Earn-Out,  which  is  paid  on a quarterly basis, begins in the fiscal year
ended December 31, 1999 and ends in the fiscal year ended December 31, 2004.  In
connection  with  this Agreement, CAM loaned the Selling Shareholders a total of
$500,000  pursuant  to certain promissory notes payable that are payable in full
on  January  29,  2004.

The  Agreement  also: i) nominates one of the Selling Shareholders as a director
of  Chancellor's Board of Directors; ii) elects both of the Selling Shareholders
as  directors  of  CAM's  Board  of  Directors;  iii)  provides  for  Employment
Agreements  for  the  Selling Shareholders over a period of five years with base
salaries  of  $200,000  per  annum;  iv) prohibits the Selling Shareholders from
competing  against CAM or Tomahawk, or soliciting former employees and customers
of Tomahawk; v) provides for Tomahawk to lease from the Selling Shareholders the
Conley,  Georgia facility at fair market value rents of approximately $8,500 per
month;  and vi) provides CAM an option to purchase from the Selling Shareholders
the  Conley,  Georgia  facility  for  an  amount  not  to  exceed  $950,000.

This  transaction  has  been  recorded in accordance with the purchase method of
accounting.  As  a  result  of  the  effect on the transaction of the Management
Agreement,  the  designated  date of this transaction for accounting purposes is
August 1, 1998.  In connection with this transaction, CAM assumed liabilities of
approximately  $6,414,000  and  incurred  acquisition  costs  of  approximately
$3,405,000.  The  excess  of the purchase price over net assets of approximately
$7,695,000  has  been  recorded  in  intangibles.  Approximately  $154,000  of
intangibles  has  been  amortized  as  of  December  31,  1998.

Results of operations of Tomahawk after the acquisition date are included in the
1998  Consolidated Statement of Operations.  The following pro forma information
has  been  prepared  assuming  that  this  acquisition  had  taken  place at the
beginning of the respective periods.  The pro forma financial information is not
necessarily  indicative of the results of operations as they would have been had
the  transactions  been  effected  on  the  assumed  dates.
<TABLE>
<CAPTION>



Year ended December 31,                              1998      1997
--------------------------------------------------  -------  --------
In thousands, except per share amounts (unaudited)

<S>                                                 <C>      <C>
Net revenues                                        $49,782  $31,765 
Net income (loss)                                       951   (1,734)
Net income (loss) per common share                      .03     (.11)

</TABLE>




16.     Other  Investment
        -----------------

     Other  investment includes a $1 million equity investment in the New Africa
Opportunity  Fund, LP ("NAOF").  NAOF is a $120 million investment fund with the
backing  of the Overseas Private Investment Corporation ("OPIC") created to make
direct investments in emerging companies throughout sub-Saharan Africa.  Capital
contributions  are payable within 10 business days of a capital call pursuant to
the  terms  of  the partnership agreement.  As of December 31, 1998, the Company
funded $350,000 of a $1 million commitment for its 2.5% interest in NAOF and the
remaining  obligation  of  $650,000  is included in accounts payable and accrued
expenses.

17.     Related  Party  Activities
        --------------------------

     The  Company  is  provided investment banking and consulting services by an
affiliate  of  the  Company's  majority  stockholder, Vestex Capital Corporation
("VCC"),  pursuant to a consulting agreement approved by the shareholders at the
1995  Annual Meeting of the Stockholders, as amended in July 1998.  VCC provides
specified  services  including, but not limited to, general business consulting,
the  development  and  implementation  of  the  Company's  1997  transition  and
turnaround  strategies,  development  of  domestic  and  international  business
opportunities and growth strategies, identification and development of strategic
alliances,  support  of merger and acquisition activity, debt and equity raising
efforts,  and  other  financing  activities.  Fees  related  to  debt and equity
transactions  are  up to 3.0% and 7.5%, respectively, of the amount of financing
raised  in  addition  to  related  expenses.  VCC  also provides services to the
Company  on  operational and other matters for which it is compensated at levels
negotiated  with  the  Company.

During  1998,  VCC  investigated  numerous  strategic  alliances  and merger and
acquisition  opportunities  on  behalf  of the Company.  In connection with this
activity,  VCC was instrumental in the negotiation and consummation of the Lease
Servicing  Agreement  entered  into on November 1, 1998 among Chancellor Leasing
Services,  Riviera  Finance  -  East  Bay  and  United  Capital and Finance LLC.
Additionally, VCC identified, negotiated and closed the acquisition of MRB, Inc.
d/b/a  Tomahawk  Truck  and  Trailer  Sales  ("Tomahawk"), a used transportation
equipment  retailer  and  wholesaler  that recorded approximately $39,000,000 in
revenue  for  the  12  month  period  ended  December 31, 1998.  VCC facilitated
approximately  $3,500,000  in  equity  and cash financing in connection with the
Tomahawk  acquisition.  VCC  continues  to  negotiate  and  manage the Company's
financing,  acquisition  and  investment efforts in the Republic of South Africa
and  other international opportunities.  VCC was instrumental in the development
and  implementation  of  the  strategy  to buy-out  and acquire investment grade
transportation  equipment portfolios.  As a result of this strategy, the Company
acquired  portfolios  valued  at  an  original  equipment  cost of approximately
$22,000,000.  The acquisition of these portfolios was further facilitated by VCC
assisting  in  arranging  approximately  $8,000,000  of  financing to effect the
portfolio  buy-out.  VCC  was also instrumental in recruiting and attracting key
employees  to  the  Company.  Additionally,  VCC  provided  these  key employees
warrants  to  purchase  Chancellor  common  stock, beneficially owned by VCC and
valued  at  approximately  $4,500,000.  Certain of these key employees were also
issued an additional 500,000 shares of the Company's stock from VCC's beneficial
holdings.  VCC's  activities  provided  sources  of  funding  to  the Company of
approximately  $6,500,000,  and  $300,000 for fees for services and reimbursable
expenses,  respectively,  converted  into  debt  and  equity  instruments of the
Company.  This included the purchase of 1,946,146 shares of the Company's common
stock  at  a  price  of $.69 per share.  Additionally, VCC infused approximately
$1,200,000  of  cash into or on behalf of the Company during 1998.  As a result,
in  part,  of  VCC's  activities  and services provided, the Company's net worth
increased  to  $7,007,000  at December 31, 1998 from $227,000 as of December 31,
1997  and  from an approximate $12,000,000 negative net worth as of December 31,
1996.

     During  1998, in connection with VCC's consulting agreement for the various
activities  as previously discussed, VCC received cash payments of approximately
$1,390,000.  The Company recorded consulting expenses of approximately $255,000.
In  connection  with  various financing, investment and acquisition transactions
the  Company  capitalized  costs  charged  by  VCC  of approximately $6,803,000.
Approximately  $3,439,000  of  VCC's cash advances, loans and costs accrued were
converted  into  a  three-year  note payable, bearing interest at the prime rate
plus  2  percent  (9.75%  as  of  December  31,  1998).

Chancellor  has  entered  into  two  lease  transactions with Kent International
("Kent"),  a  company  owned  50  percent  by  a director of the Company.  Total
original equipment cost for these transactions amount to approximately $144,000.
During  1997,  the  Company  loaned  Kent $128,500.  The loan is repaid in equal
monthly  installments  of  $5,296  and  matures  December  1999.  The loan bears
interest  at 15 percent per annum.  As of December 31, 1998, Kent was in default
of  the  loan.  As  of December 31, 1998, the outstanding balance on the loan is
approximately  $62,000.

18.     Commitments  and  Contingencies
        -------------------------------

     The  Company  rents  its corporate offices under a five-year non-cancelable
lease.  In  addition,  the  Company  leases  regional marketing offices at three
locations  along  the  east  coast. The future minimum rental commitments are as
follows  (in  thousands):
<TABLE>
<CAPTION>


                            Years ending December 31:


<S>     <C>
1999    $359
2000     300
2001     233
2002     201
2003     102
        ----

1,195
======      
</TABLE>


     Rental  expense,  net  of abatements, for the years ended December 31, 1998
and 1997 amounted to approximately $421,000, and $194,000, respectively.  Rental
expense  paid  to  related  parties was approximately $80,000 for the year ended
December  31,  1998.

     The  Company  undertook  a  review  of  its  trust  portfolio,  including
consultation with legal counsel and industry consultants, and determined that it
had  not  been  recovering  costs  associated  with  administering  the  trusts.
Management's  review  determined  that  approximately  $22,000,000  of costs for
periods  prior  to 1997 had not been recovered from the trusts.  The Company has
recorded  approximately  $1,498,000 and $994,000 of cost recoveries in the years
ended  December  31,  1998  and  1997, respectively.  For periods prior to 1997,
$1,868,000  was  recovered.  Management  makes no representations concerning the
Company's  ability  to  recover  any  further  costs  for periods prior to 1997.
Further  recoveries  for  periods  prior to 1997 are contingent upon the current
status  of  the  specific  trusts  and  the Company's level of recovery efforts.
Consequently,  the  Company  will record any further recoveries as income in the
period  in  which  collection  is  assured.

19.     Legal  Proceedings

The Company was named as a defendant along with the Chairman of the Board and an
affiliate  of  the  Chairman  in  a  suit  brought  by  Ernest Rolls, the former
Vice-Chairman,  on  February 5, 1998. The suit brought by Mr. Rolls alleges that
the Company is in default on the payment of $2.7 million, which Mr. Rolls claims
he  loaned to the Company. It is the Company's position that $1.5 million of the
loan has been repaid to Mr. Rolls and that the balance is subject to offsets and
counterclaims  by  the Company.  The Company has moved the case to federal court
and  has filed an answer. The Company intends to file a counterclaim against Mr.
Rolls.

The  Board  of Directors of Chancellor Corporation voted to remove Mr. Ernest L.
Rolls as a Director and Vice Chairman of the Board effective March 10, 1998. The
reasons  cited  by  the  Board  for  removing  Mr.  Rolls included breach of his
fiduciary  duties of care and loyalty, Mr. Rolls' suspected self-dealing and his
failure  to  provide a total of $7.5 million in financing that he represented to
the  Board  he  would provide.  The Board also believed that a suit filed by Mr.
Rolls  was  an  attempt  by  Mr.  Rolls  to  jeopardize  the Company's strategic
alliances  and  other  activities  that  are  currently  being  negotiated.

In  the  normal course of its business, the Company is from time to time subject
to  litigation.  Management  does  not  expect  that the outcome of any of these
actions,  or  the actions as noted above, will have a material adverse impact on
the  Company,  its business or its consolidated financial position or results of
operations.

20.     Operating  Segments
        -------------------

     The  Company  operates  in  two  primary  business  segments:  1)  sales of
transportation  equipment  and  2)  leasing activity, as follows (in thousands):


<TABLE>
<CAPTION>


                               Years Ended December 31,
                               ------------------------
                                  1998          1997
                                  ----          ----


<S>                                                  <C>      <C>

Sales of Transportation Equipment:
---------------------------------------------------                

      Revenues                                       $25,096  $----
      Cost and expenses:
            Cost of transportation equipment          21,731   ----
            Selling, general and administrative        2,441   ----
            Interest expense                             142   ----
            Depreciation and amortization                 19   ----
                                                     $24,333  $----
                                                     =======  =====


      Income from sales of transportation equipment  $   763  $----
                                                     =======  =====


Total transportation equipment assets
   As of December 31, 1998                           $11,468
                                                     =======       
</TABLE>




<PAGE>
<TABLE>
<CAPTION>

                               Years Ended December 31,
                               ------------------------
                                  1998          1997
                                  ----          ----


<S>                                                <C>      <C>     <C>

Leasing Activity
-------------------------------------------------                          

      Revenues:
            Leasing activity                       $ 3,907  $3,724
            Interest income                            195      44
            Other income                               441     665
                                                     4,543   4,433
                                                   -------  ------         

      Costs and expenses:
            Selling, general and administrative      3,613   6,412
            Interest expense                           201     281
            Depreciation and amortization              642     459
                                                     4,456   7,152
                                                   -------  ------         

      Income (loss) from leasing activity          $    87       (  $2,719)
                                                   =======          =======

Total leasing assets as of December 31, 1998       $13,648
                                                   =======                 

      Income (loss) before extraordinary item and
            provision (benefit) for income taxes   $   850       (  $2,719)
                                                   =======          =======
</TABLE>



Domestic  and  Foreign  Operations

The  Company  has foreign operating segments in Russia and the Republic of South
Africa.  Operating  income from these operations for the year ended December 31,
1998  was  approximately  $13,000 in Russia and $96,000 in the Republic of South
Africa.  Foreign  assets  and  U.S. assets collateralized by equipment in Russia
and the Republic of South Africa are approximately $3,902,000 as of December 31,
1998.  The  assets,  which  include  intangibles  and  a  note  receivable,  are
recoverable  or  collectable  in  U.S.  dollars.

<PAGE>

                                   Signatures

Pursuant  to  the requirements of Section 13 or 15(d) 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.

     CHANCELLOR  CORPORATION
Dated:  April  15,  1999

     By:  /s/  Brian  M.  Adley
        -----------------------
     Brian  M.  Adley
Chairman  of  the  Board  and  Director


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been  signed below by the following persons on behalf of the registrant and
in  the  capacities  and  on  the  dates  indicated.



Dated:  April  15,  1999     By:  /s/  Brian  M.  Adley
                                -----------------------
                                      Brian  M.  Adley
                                      Chairman  of  the  Board  and  Director
                                      (Principle  Executive  Officer)


Dated  April  15,  1999
                            By:  /s/  Franklyn  E.  Churchill
                                ------------------------------
                                      Franklyn  E.  Churchill
                                      President


Dated:  April  15,  1999     By:  /s/  Rudolph  Peselman
                                ------------------------
                                       Rudolph  Peselman
                                       Director


Dated:  April  15,  1999     By:  /s/  Michael  J.  Marchese
                                ----------------------------
                                       Michael  J.  Marchese
                                       Director


Dated:  April  15,  1999     By:  /s/  Jonathan  C.  Ezrin
                                --------------------------
                                       Jonathan  C.  Ezrin
                                       Corporate  Controller
                                       (Principal  Accounting  Officer)