<PAGE>   1
                                   FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

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

         For the fiscal Year Ended September 30, 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: 000-22255

                          MARKET FINANCIAL CORPORATION
                          ----------------------------
                 (Name of small business issuer in its charter)

            Ohio                                        34-0462464
            ----                                        ----------
 (State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                    Identification Number)
                       

                  7522 Hamilton Avenue, Mt. Healthy, Ohio 45231
                  ---------------------------------------------
               (Address of principal executive offices) (Zip Code)

                           Issuer's telephone number:
                                 (513) 521-9772
                                 --------------

         Securities registered under Section 12(b) of the Exchange Act:
                                      None
                                      ----

         Securities registered under Section 12(g) of the Exchange Act:
                        Common Shares, without par value
                        --------------------------------
                                (Title of class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes_X_ No___

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B 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. [X]

         The issuer's revenues for the fiscal year ended September 30, 1998,
were $3.9 million.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant, computed by reference to the average of the closing bid and
asked prices quoted by the Nasdaq Small Cap Market, was $12.2 on December 21,
1998.

         1,335,725 of the registrant's common shares were issued and outstanding
on December 15, 1998.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part I of Form 10-KSB - Safe Harbor Under the Private Securities Litigation
Reform Act of 1995. 

Part II of Form 10-KSB - Portions of the Annual Report to Shareholders for the
fiscal year ended September 30, 1998.

Part III of Form 10-KSB - Portions of the Proxy Statement for 1999 Annual
Meeting of Shareholders.



<PAGE>   2



                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS

GENERAL

         Market Financial Corporation ("MFC") is a unitary savings and loan
holding company which was organized under Ohio law in February 1997 and which
owns all of the issued and outstanding common shares of The Market Building and
Saving Company, a savings and loan association incorporated under Ohio law
("Market").

         Market is principally engaged in the business of originating mortgage
loans secured by first mortgages on one- to four-family residential real estate
located in its primary market area of Hamilton County, Ohio, and portions of the
contiguous counties. MFC also originates a limited number of loans for the
construction of one- to four-family residential real estate, permanent mortgage
loans secured by multifamily real estate (over four units) and nonresidential
real estate in its primary market area, and secured consumer loans. For
liquidity and interest rate risk management purposes, MFC invests in
interest-bearing deposits in other financial institutions, U.S. Government and
agency obligations and mortgage-backed securities. Funds for lending and other
investment activities are obtained primarily from savings deposits, which are
insured up to applicable limits by the FDIC, and loan principal repayments.

         Interest on loans and investments is Market's primary source of income.
Market's principal expense is interest paid on deposit accounts. Operating
results are dependent to a significant degree on the net interest income of
Market, which is the difference between interest income earned on loans,
mortgage-backed securities and other investments and interest paid on deposits.
Like most thrift institutions, Market's interest income and interest expense are
significantly affected by general economic conditions and by the policies of
various regulatory authorities.

         Market conducts business from its main office in Mt. Healthy, Ohio, and
from its full-service branch office located in North Bend, Ohio. Market's
primary market area for lending and deposit activity is Hamilton County, Ohio,
which includes the City of Cincinnati within its boundaries.

         As a savings and loan holding company, MFC is subject to regulations,
supervision and examination by the Office of Thrift Supervision of the United
States Department of the Treasury (the "OTS"). As a savings and loan association
incorporated under the laws of the State of Ohio, Market is subject to
regulations, supervision and examination by the OTS, the Federal Deposit
Insurance Corporation (the "FDIC") and the Ohio Division of Financial
Institutions (the "Division"). Market is also a member of the Federal Home Loan
Bank (the "FHLB") of Cincinnati.

FORWARD-LOOKING STATEMENTS

         When used in this Form 10-KSB, the words or phrases "will likely
result," "are expected to," "will continue," "anticipated," "estimated,"
"projected," or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties
including changes in economic conditions in Market's market area, changes in
policies by regulatory agencies, fluctuations in interest rates, demand for
loans in Market's market area and competition that could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. Factors listed above could affect MFC's financial performance and
could cause MFC's actual results for future periods to differ materially from
any statement expressed with respect to future periods. See Exhibit 99 hereto
"Safe Harbor Under the Private Securities Litigation Reform Act of 1995," which
is incorporated herein by reference.

         MFC does not undertake, and specifically disclaims any obligation, to
publicly revise any forward-looking statement to reflect events or circumstances
after the date of such statements or to reflect the occurrence of anticipated or
unanticipated events.

LENDING ACTIVITIES

         GENERAL. Market's principal lending activity is the origination of
conventional real estate loans secured by one- to four-family residences located
in Market's primary market area. A limited number of loans secured by
multifamily properties containing five units or more and by nonresidential real
estate and loans for the construction of residences have


                                      -2-

<PAGE>   3



been originated by Market. Market does not originate first mortgage loans
insured by the Federal Housing Authority or guaranteed by the Veterans
Administration. In addition to real estate lending, Market originates a limited
number of loans secured by deposit accounts.

         LOAN PORTFOLIO COMPOSITION. The following table presents certain
information in respect of the composition of Market's loan portfolio at the
dates indicated:

<TABLE>
<CAPTION>
                                                                 At September 30,  
                                   ---------------------------------------------------------------------------
                                            1998                       1997                     1996
                                            ----                       ----                     ----
                                                   Percent                  Percent                  Percent
                                                   of total                 of total                 of total
                                     Amount          loans       Amount       loans      Amount       loans
                                     ------          -----       ------       -----      ------       -----
                                                              (Dollars in thousands)

<S>                               <C>               <C>        <C>            <C>      <C>            <C>  
Real estate loans:
   One- to four-family              $29,225           89.1%      $24,669        93.1%    $20,404        92.8%
   Multifamily                        1,507            4.6           573         2.2         407         1.9
   Nonresidential                     1,879            5.7           811         3.0       1,168         5.3
   Construction                         150             .5           527         2.0           -           -
                                    -------          -----       -------       -----     -------       ----- 

      Total real estate loans        32,761           99.9        26,580       100.3      21,979       100.0

Consumer loans:
   Loans on deposits                    106             .3           134          .5          96         0.4
                                    -------          -----       -------       -----     -------       ----- 

Total loans                          32,867          100.2        26,714       100.8      22,075       100.4

  Less:
   Undisbursed portion of loans
     in process                           -              -           156          .6           -           -
   Unearned and deferred income          (1)             -             4           -          27         0.2
   Allowance for losses on loans         52             .2            52          .2          52         0.2
                                    -------          -----       -------       -----     -------       -----

     Net loans                      $32,816          100.0%      $26,502       100.0%    $21,996       100.0%
                                    =======          =====       =======       =====     =======       =====
</TABLE>


         LOAN MATURITY SCHEDULE. The following table sets forth certain
information at September 30, 1998, regarding the dollar amount of loans maturing
in Market's portfolio based on their contractual terms to maturity. Demand loans
and other loans having no stated schedule of repayments or no stated maturity
are reported as due in one year or less.


<TABLE>
<CAPTION>
                               Amounts        Amounts       Amounts       Amounts          Amounts                              
                              due within      due in        due in        due in           due in        Amounts due           
                                1 year      1 to 3 years  3 to 5 years  5 to 10 years   10 to 20 years  after 20 years     Total
                                ------      ------------  ------------  -------------   --------------  --------------     -----
                                                                                                                                
<S>                              <C>           <C>           <C>          <C>             <C>             <C>            <C>
Real estate mortgage loans                                                                                                      
   Adjustable-rate                $413          $651          $ 96         $  198          $    28         $    --        $ 1,386 
   Fixed-rate                       63           200           324          2,940           14,221          13,576         31,324 
Consumer and other                  16            80            10             --               --              --            106 
                                  ----          ----          ----         ------          -------         -------        ------- 
Total loans                       $492          $931          $430         $3,138          $14,249         $13,576        $32,816 
                                  ====          ====          ====         ======          =======         =======        ======= 
</TABLE>



                                      -3-

<PAGE>   4


         The following table sets forth the dollar amount of loans maturing
after one year from September 30, 1998, which have pre-determined interest rates
or floating or adjustable interest rates.

<TABLE>
<CAPTION>
                                            Predetermined rates          Floating or adjustable rates
                                            -------------------          -----------------------------
                                                                (In thousands)
<S>                                                <C>                                 <C>   
Real estate mortgage loans                         $29,382                             $  973
Nonresidential real estate                           1,879                                  -
Consumer and other                                       -                                 90
                                                   -------                             ------
         Total loans                               $31,261                             $1,063
                                                   =======                             ======
</TABLE>

         LOANS SECURED BY ONE- TO FOUR-FAMILY RESIDENCES. The principal lending
activity of Market is the origination of conventional loans secured by first
mortgages on one- to four-family residences, primarily single-family residences
located within Market's primary market area. At September 30, 1998, Market's
one- to four-family residential loans totaled approximately $29.2 million, or
89.1% of total loans.

         OTS regulations and Ohio law limit the amount which Market may lend in
relationship to the appraised value of the real estate and improvements which
will secure the loan (the "LTV") at the time of loan origination. In accordance
with such regulations, Market makes fixed-rate loans on one- to four-family
residences up to 95% of the value of the real estate and improvements thereon,
although most of Market's one- to four-family loans have an LTV of 80% or less.
Market requires private mortgage insurance for the amount of such loans in
excess of 89% of the value of the real estate securing such loans.

         Fixed-rate loans are offered by Market, currently for terms of up to 30
years, though most loans are originated with terms of 20 years or less. Market
also offers adjustable-rate mortgage loans ("ARMs") for terms of up to 30 years
with various alternative features in an effort to decrease Market's interest
rate risk. The interest rate adjustment periods on the ARMs are either one year
or a fixed rate for three or seven years followed by one-year adjustment
periods. The interest rate adjustments on ARMs presently originated by Market
are tied to the U.S. Treasury maturities index. Rate adjustments are computed by
adding a stated margin, typically 2.75%, to the index. The maximum allowable
adjustment at each adjustment date is usually 1% with a maximum adjustment of 5%
over the term of the loan.

         The initial rate on ARMs originated by Market may be less than the sum
of the index at the time of origination plus the specified margin. Such loans
may be subject to greater risk of default as the interest rate adjusts to the
fully-indexed level, although such increase is considered in Market's
underwriting of any such loans with a one-year adjustment period. Of the total
mortgage loans originated by Market during the fiscal year ended September 30,
1998, 99.8% were fixed-rate.

         Market also makes closed-end home equity loans, which do not provide
the borrower with a line of credit at Market, in an amount which, when added to
the prior indebtedness secured by the real estate, does not exceed 80% of the
estimated value of the real estate. Home equity loans are secured by real estate
and are made only to borrowers as to whom Market holds the first mortgage. Of
the $29.2 million of one- to four-family residential loans, approximately
$146,000 were closed-end home equity loans.

         At September 30, 1998, Market had nonperforming loans totaling $171,000
in its one- to four-family portfolio. Residential real estate loans (including
one- to four-family and multifamily lending) constituted $11.0 million, or
88.2%, of the $12.5 million of loans originated in fiscal 1998.

         LOANS SECURED BY MULTIFAMILY RESIDENCES. In addition to loans on one-
to four-family properties, Market originates a limited number of loans secured
by multifamily properties, which contain more than four units. At September 30,
1998, loans secured by multifamily residences totaled approximately $1.5
million, or 4.6% of total loans. At September 30, 1998, the largest single loan
secured by a multifamily residence was $296,000 and was performing in accordance
with its terms. Multifamily loans are offered with fixed or adjustable rates for
terms of up to 30 years and have LTVs of up to 80%.

         Multifamily lending is generally considered to involve a higher degree
of risk than one- to four-family residential lending because the borrower
typically depends upon income generated by the project to cover operating
expenses and debt service. The profitability of a project can be affected by
economic conditions, government policies and other factors beyond the control of
the borrower. Market attempts to reduce the risk associated with multifamily
lending by evaluating the creditworthiness of the borrower and the projected
income from the project and by obtaining personal guarantees on loans made to
corporations and partnerships. Market requires borrowers to agree to submit
financial statements annually to enable Market to monitor the loan and requires
the assignment of rents.




                                      -4-
<PAGE>   5



         At September 30, 1998, Market had no nonperforming loans in its
multifamily residential real estate portfolio.

         LOANS SECURED BY NONRESIDENTIAL REAL ESTATE. Market also originates
loans for the purchase of nonresidential real estate located within close
proximity to Market's offices. Among the properties securing the nonresidential
real estate loans originated by Market are office buildings, retail properties
and a veterinary clinic, all located within the immediate vicinity of MFC's
offices. At September 30, 1998, approximately $1.9 million, or 5.7%, of MFC's
total loans were secured by mortgages on nonresidential real estate. Market's
nonresidential real estate loans have fixed rates, terms of up to 20 years and
LTVs of up to 75%.

         Although loans secured by nonresidential real estate have higher
interest rates than one- to four-family residential real estate loans,
nonresidential real estate lending is generally considered to involve a higher
degree of risk than residential lending due to the relatively larger loan
amounts and the effects of general economic conditions on the successful
operation of income-producing properties. Market has endeavored to reduce such
risk by evaluating the credit history of the borrower, the location of the real
estate, the financial condition of the borrower, the quality and characteristics
of the income stream generated by the property and the appraisals supporting the
property's valuation. Market also requires personal guarantees.

         At September 30, 1998, Market had no nonperforming loans in its
nonresidential real estate portfolio. Nonresidential real estate loans
constituted $1.1 million, or 8.9%, of the $12.5 million of loans originated in
fiscal 1998.

         CONSTRUCTION LOANS. Market has made in the past a limited number of
loans for the construction of residential real estate. Such loans are structured
as permanent loans with fixed rates of interest and terms of up to 30 years.
During the first six months while the residence is being constructed, the
borrower is required to pay interest only. Such loans have an LTV of 80% or
less, with the value of the land counting as part of the down payment if already
owned. Construction loans originated by Market are made to owner-occupants for
the construction of single-family homes by a general contractor. At September
30, 1998, Market had construction loans of approximately $150,000, or .5% of
total loans outstanding, with the undisbursed portion of such loans totaling
approximately $50.

         Construction loans generally involve greater underwriting and default
risks than do loans secured by mortgages on existing properties. In addition,
such loans are more difficult to evaluate and monitor. Loan funds are advanced
upon the security of the project under construction, which is more difficult to
value before the completion of construction. Moreover, because of the
uncertainties inherent in estimating construction costs, it is relatively
difficult to evaluate the LTV's and the total loan funds required to complete a
project. In the event a default on a construction loan occurs and foreclosure
follows, Market would have to take control of the project and attempt either to
arrange for construction or dispose of the unfinished project. Almost all of
Market's construction loans are secured by properties in Hamilton County. The
economy of such lending area has been relatively stable over the three years
ended September 30, 1998.

         None of Market's construction loans were nonperforming at September 30,
1998.

         COMMERCIAL LOANS. Market does not issue any letters of credit or
originate or purchase any loans for commercial, business or agricultural
purposes, other than loans secured by real estate.

         CONSUMER LOANS. Market makes loans at adjustable rates of interest to
depositors on the security of their deposit accounts. At September 30, 1998,
Market had approximately $106,000 or .3% of total loans, invested in such
consumer loans.

         Consumer loans may entail greater risk than do residential real estate
loans. The risk of default on consumer loans increases during periods of
recession, high unemployment and other adverse conditions. At September 30,
1998, Market had no nonperforming loans in its consumer loan portfolio.

         LOAN SOLICITATION AND PROCESSING. Loan originations are developed from
a number of sources, including continuing business with depositors, other
borrowers and real estate developers, solicitations by Market's lending staff
and walk-in customers.

         Loan applications for permanent real estate loans are taken by loan
personnel. Market typically obtains a credit report, verification of employment
and other documentation concerning the creditworthiness of the borrower. An
appraisal of the fair market value of the real estate which will be given as
security for the loan is prepared by an appraiser approved by 



                                      -5-
<PAGE>   6



the Board of Directors. Upon the completion of the appraisal and the receipt of
information on the credit history of the borrower, the application for a loan is
submitted for review in accordance with Market's underwriting guidelines. The
Managing Officer of Market has authority to approve loans of $100,000 or less.
Loans for amounts ranging from $100,001 to $200,000 must be approved by a
directors' committee, and loans of greater than $200,000 must be approved by the
full Board of Directors of Market.

         Until October 1995, if a mortgage loan application was approved, Market
typically obtained an attorney's opinion of title. Presently, Market obtains
title insurance on loans secured by real estate unless the borrower is seeking
to refinance a loan Market originated. Borrowers are required to carry
satisfactory fire and casualty insurance and flood insurance, if applicable, and
to name Market as an insured mortgagee.

         The procedure for approval of construction loans is the same as for
permanent real estate loans, except that an appraiser evaluates the building
plans, construction specifications and estimates of construction costs. Market
also evaluates the feasibility of the proposed construction project and the
experience and record of the builder. Once approved, the construction loan is
disbursed in portions based upon periodic inspections of construction progress.

         LOAN ORIGINATIONS AND PARTICIPATION. Currently, Market is offering both
fixed-rate and adjustable-rate loans, with no intention of selling such loans in
the secondary market. Prior to September 1996, Market originated only fixed-rate
mortgage loans. Market does not service loans for other financial institutions.

         The following table presents Market's loan origination activity for the
periods indicated:


<TABLE>
<CAPTION>
                                                        Year ended September 30,  
                                             ---------------------------------------------
                                              1998                 1997               1996
                                              ----                 ----               ----
                                                              (In thousands)

<S>                                          <C>                 <C>                <C>
Loans originated:
  Residential (1)                             $11,023             $6,978             $ 2,515
  Nonresidential                                1,107                 70                  38
  Construction                                    324                527                   -
  Consumer                                         40                157                  30
                                              -------             ------             -------
    Total loans originated                     12,494              7,732               2,583

Principal repayments                           (6,183)            (3,229)             (3,621)

Increase in other items, net (2)                    3                  3                  16
                                              -------             ------             -------
Net increase (decrease)                       $ 6,314             $4,506             $(1,022)
                                              =======             ======             =======
</TABLE>
-------------

(1)      Includes one- to four-family and multifamily loans.

(2)      Other items consist of loans in process, deferred loan origination fees
         and allowance for loan losses.

         OTS regulations generally limit the aggregate amount that a savings
association may lend to any one borrower to an amount equal to 15% of the
association's total capital for risk-based purposes plus any loan reserves not
already included in total capital (collectively, "Lending Limit Capital"). A
savings association may lend to one borrower an additional amount not to exceed
10% of the association's Lending Limit Capital if the additional amount is fully
secured by certain forms of "readily marketable collateral." Real estate is not
considered "readily marketable collateral." In applying this limit, the
regulations require that loans to certain related or affiliated borrowers be
aggregated. An exception to this limit permits loans of any type to one borrower
of up to $500,000. In addition, the OTS, under certain circumstances, may permit
exceptions to the lending limit on a case-by-case basis.

         Based on such limits, Market was able to lend approximately $2.1
million to one borrower at September 30, 1998. The largest amount Market had
outstanding to one borrower, who is a director of Market, at September 30, 1998,
was $494,000, consisting of three loans, the largest of which had an outstanding
balance of $294,000, which was secured by one- to four-family real estate and
which was performing in accordance with its terms. The other two loans were
secured by nonresidential real estate and were performing in accordance with
their terms.



                                      -6-
<PAGE>   7


         DELINQUENT LOANS, NONPERFORMING ASSETS AND CLASSIFIED ASSETS. Payments
on loans made by Market are due on the first day of the month with the interest
portion of the payment applicable to interest accrued during the prior month.
When a loan payment has not been made by the thirtieth of the month, a late
notice is sent. In addition, if the loan is on the borrower's primary residence,
Market will send a notice of available counseling for delinquent borrowers. If
payment is not received by the sixtieth day, a second notice is sent. Telephone
calls are made to the borrower in connection with both the 30- and 60-day
notices. If Market is unable to make contact with the borrower by mail or
telephone, a representative from Market will make a personal visit to the
property in an attempt to speak with the borrower.

         When a loan secured by real estate becomes more than 90 days delinquent
it is considered nonperforming by Market and the above steps are repeated and a
letter is sent to the borrower by Market to inform the borrower that foreclosure
proceedings will begin if the loan is not brought current promptly. The borrower
is also counseled to make every effort to sell the property before it is lost in
a sheriff's sale. If the customer fails to take any action, a request is made to
the Board of Directors to authorize foreclosure proceedings.

         If a foreclosure occurs, the real estate is sold at public sale and may
be purchased by Market, to be sold as soon as possible by Market without the use
of a real estate agent.

         The following table reflects the amount of loans in a delinquent status
as of the dates indicated:

<TABLE>
<CAPTION>
                                                    At September 30,
                        ---------------------------------------------------------------------------
                                 1998                      1997                      1996
                                 ----                      ----                      ----
                                        Percent                  Percent                    Percent
                                        of total                 of total                   of total
                        Number  Amount   loans    Number  Amount  loans     Number   Amount  loans
                        ------  ------   -----    ------  ------  -----     ------   ------  -----
                                                 (Dollars in thousands)

<S>                      <C>    <C>      <C>      <C>     <C>     <C>       <C>     <C>      <C> 
Loans delinquent for:
  30 - 59 days             7     $125     0.4%      5      $ 64    0.3%      14      $337     1.6%
  60 - 89 days             5       85     0.3      13       244    0.9        3       380     1.7
  90 days and over        11      171     0.5      13       191    0.7        6       139      .6
                          --     ----     ---      --      ----    ---       --      ----     ---
   Total delinquent 
      loans               23     $381     1.2%     31      $499    1.9%      23      $856     3.9%
                          ==     ====     ===      ==      ====    ===       ==      ====     ===
</TABLE>




                                      -7-
<PAGE>   8



         The following table sets forth information with respect to the accrual
and nonaccrual status of Market's loans and other nonperforming assets at the
dates indicated:

<TABLE>
<CAPTION>
                                                      At September 30,   
                                        ---------------------------------------------
                                         1998               1997                 1996
                                         ----               ----                 ----
                                                    (Dollars in thousands)  

<S>                                    <C>                <C>                 <C> 
Accruing loans delinquent more
   than 90 days (1)                      $ 171              $ 191               $ 139
Loans accounted for on a
   nonaccrual basis:
   Real estate
     One- to four-family                     -                  -                   -
     Multifamily                             -                  -                   -
     Nonresidential                          -                  -                   -
   Consumer                                  -                  -                   -
                                         -----              -----               -----
     Total nonaccrual loans                  -                  -                   -
                                         -----              -----               -----

     Total nonperforming loans             171                191                 139

   Real estate acquired through
     foreclosure                             -                  -                   -
                                         -----              -----               -----

     Total nonperforming assets          $ 171              $ 191               $ 139
                                         =====              =====               =====

     Allowance for loan losses           $  52              $  52               $  52
                                         =====              =====               =====
     Nonperforming assets as a
       percent of total assets             0.3%               0.3%                0.3%

     Nonperforming loans as a
       percent of total loans              0.5%               0.7%                0.6%

     Allowance for loan losses
       as a percent of
       nonperforming loans                30.4%              27.2%               37.4%
</TABLE>


---------------

(1)      Consists entirely of one- to four-family residential loans for all
         dates presented.


         Market had no nonaccruing loans during the year ended September 30,
1998.

         Market classifies its own assets on a regular basis in accordance with
federal regulations. Problem assets are classified as "substandard," "doubtful"
or "loss." "Substandard" assets have one or more defined weaknesses and are
characterized by the distinct possibility that Market will sustain some loss if
the deficiencies are not corrected. "Doubtful" assets have the same weaknesses
as "substandard" assets, with the additional characteristics that (i) the
weaknesses make collection or liquidation in full, on the basis of currently
existing facts, conditions and values, questionable and (ii) there is a high
possibility of loss. An asset classified "loss" is considered uncollectible and
of such little value that its continuance as an asset of Market is not
warranted. The regulations also contain a "special mention" category, consisting
of assets which do not currently expose an institution to a different degree of
risk to warrant classification but which possess credit deficiencies or
potential weaknesses deserving management's close attention.



                                      -8-
<PAGE>   9



         The aggregate amounts of Market's classified assets at the dates
indicated were as follows:

<TABLE>
<CAPTION>
                                                  At September 30,  
                                    ------------------------------------------------ 
                                    1998                 1997                   1996
                                    ----                 ----                   ----
                                                    (In thousands)

<S>                                <C>                  <C>                   <C>
Classified assets:
   Substandard                       $60                  $17                   $51
   Doubtful                           23                    9                     -
   Loss                                2                    2                     2
                                     ---                  ---                   ---
    Total classified assets          $85                  $28                   $53
                                     ===                  ===                   ===
</TABLE>


         Market establishes general allowances for loan losses for any loan
classified as substandard or doubtful. If an asset, or portion thereof, is
classified as loss, Market establishes specific allowances for losses in the
amount of 100% of the portion of the asset classified loss. See "Allowance for
Loan Losses." Generally, Market charges off the portion of any real estate loan
deemed to be uncollectible.

         Market analyzes each classified asset on a monthly basis to determine
whether changes in the classifications are appropriate under the circumstances.
Such analysis focuses on a variety of factors, including the amount of any
delinquency and the reasons for the delinquency, if any, the use of the real
estate securing the loan, the status of the borrower and the appraised value of
the real estate. As such factors change, the classification of the asset will
change accordingly.

         ALLOWANCE FOR LOAN LOSSES. Market maintains an allowance for loan
losses based upon a number of relevant factors, including, but not limited to,
growth and changes in the composition of the loan portfolio, trends in the level
of delinquent and problem loans, current and anticipated economic conditions in
the primary lending area, past loss experience and possible losses arising from
specific problem assets.

         The single largest component of Market's loan portfolio consists of
one- to four-family residential real estate loans. Substantially all of these
loans are secured by property in Market's lending area of Hamilton County, Ohio,
which has a fairly stable economy. Market's practice of making loans primarily
in its local market area has contributed to a low historical charge-off rate. In
addition to one- to four-family residential real estate loans, Market makes home
equity, multifamily residential real estate, nonresidential real estate and
construction loans. These real estate loans are also secured by property in
Market's lending area. Market has not experienced any significant charge-offs
from these other real estate loan categories in recent years. Only .3% of
Market's total loans are comprised of consumer loans, which carry a higher
degree of risk than the real estate loans.

         The following table sets forth an analysis of Market's allowance for
loan losses for the periods indicated:

<TABLE>
<CAPTION>
                                                          Year ended September 30,  
                                                -----------------------------------------------
                                                1998                 1997                  1996
                                                ----                 ----                  ----
                                                            (Dollars in thousands)

<S>                                             <C>                  <C>                  <C>
Balance at beginning of period                   $52                  $52                  $39
Loans charged-off:
   Residential real estate loans                   -                    -                    -
   Nonresidential real estate loans                -                    -                    -
   Consumer loans                                  -                    -                    -
                                                 ---                  ---                  ---
Total charge-offs                                  -                    -                    -
Recoveries                                         -                    -                    -
Provision for loan losses                          -                    -                   13
                                                 ---                  ---                  ---
Balance at end of period                         $52                  $52                  $52
                                                 ===                  ===                  ===

Ratio of net charge-offs to average
   loans                                           -                    -                    -
                                                 ===                  ===                  ===
Ratio of allowance for loan losses
   to total loans                                .16%                 .20%                 .24%
                                                 ===                  ===                  ===
</TABLE>


                                      -9-
<PAGE>   10



         The allowance for loan losses is based on estimates and is, therefore,
monitored monthly and adjusted as necessary to provide an adequate allowance.

INVESTMENT ACTIVITIES

         Federal regulation and Ohio law permit Market to invest in various
types of investment securities, including interest-bearing deposits in other
financial institutions, U.S. Treasury and agency obligations, mortgage-backed
securities and certain other specified investments. The Board of Directors of
Market has adopted an investment policy which authorizes management to make
investments in U.S. Government and agency securities, deposits in the FHLB,
certificates of deposit in federally-insured financial institutions, and federal
funds at commercial banks. The Board of Directors has primary responsibility for
implementation of the investment policy. Market's investment policy is designed
primarily to provide and maintain liquidity within regulatory guidelines, to
maintain a balance of high quality investments to minimize risk and to maximize
return without sacrificing liquidity and safety. The following table sets forth
the composition of the Company's investment portfolio, excluding mortgage-backed
securities, at the dates indicated:


<TABLE>
<CAPTION>
                                                                        At September 30,    
                                         ----------------------------------------------------------------------------------
                                               1998                            1997                        1996
                                               ----                            ----                        ----
                                         Carrying      Percent       Carrying        Percent       Carrying       Percent
                                          value        of total       value          of total       value         of total
                                          -----        --------       -----          --------       -----         --------
                                                                     (Dollars in thousands)

<S>                                     <C>             <C>         <C>                <C>         <C>             <C>  
Interest-bearing deposits
  in other financial institutions (1)    $ 8,556         43.4%       $ 8,388            31.0%       $10,610         51.1%
U.S. Government agency obligations (2)     9,300         47.2         17,257            63.8          9,062         43.7
FHLMC stock (3)                            1,448          7.3          1,029             3.8            712          3.4
FHLB stock                                   419          2.1            390             1.4            364          1.8
                                         -------        -----        -------           -----        -------        -----
   Total                                 $19,723        100.0%       $27,064           100.0%       $20,748        100.0%
                                         =======        =====        =======           =====        =======        =====
</TABLE>
-----------------

(1)      Includes interest-bearing deposits, Federal Funds sold and certificates
         of deposit.

(2)      Consists primarily of investments in U.S. Treasury Notes and Bills,
         FHLB bonds and a Student Loan Marketing Association ("SLMA") bond,
         which are classified as held to maturity at September 30, 1998, 1997
         and 1996.

(3)      Classified as available for sale at September 30, 1998, 1997 and 1996.





                                      -10-
<PAGE>   11



         Market maintains a portfolio of mortgage-backed securities in the form
of fixed-rate participation interests issued by the Government National Mortgage
Association ("GNMA"). Mortgage-backed securities generally entitle Market to
receive a portion of the cash flows from an identified pool of mortgages and are
guaranteed by the issuing agency as to principal and interest. Although
mortgage-backed securities generally yield less than individual loans originated
by Market, management believes they are a prudent alternative for investing
excess cash flow when available funds exceed local loan demand and as part of
Market's interest rate risk management. The following table sets forth certain
information regarding Market's investments in mortgage-backed securities at the
dates indicated, all of which are classified as held to maturity:


<TABLE>
<CAPTION>
                                   At September 30, 1998                            At September 30, 1997  
                        -------------------------------------------------------------------------------------------------
                                     Gross       Gross      Estimated                  Gross       Gross       Estimated
                        Amortized  unrealized  unrealized     fair       Amortized   unrealized  unrealized      fair
                          cost       gains        loss        value        cost        gains        loss         value
                          ----       -----        ----        -----        ----        -----        ----         -----
                                                               (In thousands)

<S>                      <C>         <C>        <C>          <C>         <C>           <C>        <C>          <C>
GNMA participation
 certificates             $859        $43        $  --        $902        $1,268        $70        $  --        $1,338
                          ====        ===        =====        ====        ======        ===        =====        ======
</TABLE>


<TABLE>
<CAPTION>
                                           At September 30, 1996
                              -------------------------------------------------
                                              Gross       Gross      Estimated   
                               Amortized   unrealized   unrealized     fair
                                 cost         gains       loss        value
                                 ----         -----       ----        -----
                                                (In thousands)
                                                                                 
<S>                           <C>            <C>         <C>        <C>
GNMA participation                                                           
 certificates                   $1,549         $63         $ -        $1,612
                                ======         ===         ===        ======
</TABLE>





                                      -11-
<PAGE>   12



         The maturities of Market's investment securities at September 30, 1998,
are indicated in the following table:


<TABLE>
<CAPTION>
                                                              At September 30, 1998   
                                 --------------------------------------------------------------------------------------------
                                                            1-5                  5-10                    Total
                                 Less than 1 year          years                 years             investment securities
                                 ----------------          -----                 -----             ---------------------
                                 Book                 Book                  Book                 Book      Market    Average
                                 value     Yield     value       Yield     value      Yield      value     value      yield
                                 -----     -----     -----       -----     -----      -----      -----     -----      -----
                                                                  (Dollars in thousands)

<S>                              <C>       <C>       <C>         <C>      <C>         <C>       <C>        <C>       <C>  
Certificates of deposit in
   other financial               $3,500     6.29%    $  290      5.98%    $     -         -%     $3,790    $3,790      6.27%
   institutions
U.S. Government agency
   obligations (1)                4,300     6.28      3,500      6.48       1,500      6.07       9,300     9,394      6.32
</TABLE>


--------------------

(1)      Consists primarily of investments in U.S. Treasury Notes and Bills and
         FHLB bonds, which are classified as held to maturity at September 30,
         1998.

DEPOSITS AND BORROWINGS

         GENERAL. Deposits have traditionally been the primary source of
Market's funds for use in lending and other investment activities. In addition
to deposits, Market derives funds from interest payments and principal
repayments on loans and income on interest-earning assets. Loan payments are a
relatively stable source of funds, while deposit inflows and outflows fluctuate
in response to general interest rates and money market conditions.

         DEPOSITS. Deposits are attracted principally from within Market's
market area through the offering of a selection of deposit instruments,
including regular passbook savings accounts, term certificate accounts and
Individual Retirement Accounts ("IRAs"). Interest rates paid, maturity terms,
service fees and withdrawal penalties for the various types of accounts are
monitored weekly by the Managing Officer and reviewed monthly by the Board of
Directors of Market. Market does not use brokers to attract deposits. The amount
of deposits from outside Market's market area is not significant.

         At September 30, 1998, Market's certificates of deposit totaled
approximately $26.0 million, or 68.9% of total deposits. Of such amount,
approximately $20.0 million in certificates of deposit mature within one year.
Based on past experience and Market's prevailing pricing strategies, management
believes that a substantial percentage of such certificates will be renewed with
Market at maturity. If, however, Market is unable to renew the maturing
certificates for any reason, borrowings of up to $8.4 million are available from
the FHLB of Cincinnati.

         The following table sets forth the dollar amount of deposits in the
various types of accounts offered by Market at the dates indicated:


<TABLE>
<CAPTION>
                                                                 At September 30,
                                -------------------------------------------------------------------------------------------
                                         1998                          1997                                1996  
                                         ----                          ----                                ----  
                                               Percent                         Percent                            Percent
                                              of total                        of total                            of total
                                 Amount       deposits         Amount         deposits            Amount          deposits
                                 ------       --------         ------         --------            ------          --------
                                                               (Dollars in thousands)

<S>                             <C>          <C>            <C>              <C>               <C>                <C>  
Transaction accounts:
   Passbook accounts (1)         $ 9,510        25.2%          $10,094          28.6%             $11,027            29.6%
   Club accounts (2)                  51          .1                52            .2                   51              .1
   Money market accounts (3)       2,178         5.8             2,374           6.7                3,380             9.1
                                 -------       -----           -------         -----              -------           ----- 
    Total transaction accounts    11,739        31.1            12,520          35.5               14,458            38.8

Certificates of deposit (4)       26,006        68.9            22,783          64.5               22,824            61.2
                                 -------       -----           -------         -----              -------           ----- 

     Total deposits              $37,745       100.0%          $35,303         100.0%             $37,282           100.0%
                                 =======       =====           =======         =====              =======           =====
</TABLE>
--------------------
(Footnotes on next page)



                                      -12-
<PAGE>   13

(1)      The weighted average interest rates on passbook accounts were 2.83% at
         September 30, 1998, 1997 and 1996.

(2)      The weighted average interest rates on club accounts were 5.07%, 5.07%
         and 5.08% at September 30, 1998, 1997 and 1996, respectively.

(3)      The weighted average interest rates on money market accounts were 2.83%
         at September 30, 1998 and 1997 and 3.09% at September 30, 1996.

(4)      The weighted average rates on all certificates of deposit were 5.89%,
         5.97% and 5.74% at September 30, 1998, 1997 and 1996, respectively.


         The following table shows rate and maturity information for Market's
certificates of deposit at September 30, 1998:

<TABLE>
<CAPTION>
                                                     Amount Due  
                            ---------------------------------------------------------------
                                                Over              Over
                             Up to            1 year to         2 years to
Rate                        one year           2 years           3 years             Total
----                        --------           -------           -------             -----
                                                     (In thousands)

<S>                         <C>                <C>              <C>                <C>    
5.00 - 5.99%                 $19,751            $3,621           $   792            $24,164
6.00 - 6.99%                     268               556             1,018              1,842
                             -------            ------           -------            -------
Total certificates
  of deposit                 $20,019            $4,177           $ 1,810            $26,006
                             =======            ======           =======            =======
</TABLE>


         The following table presents the amount of Market's certificates of
deposit of $100,000 or more by the time remaining until maturity at September
30, 1998:

<TABLE>
<CAPTION>
  Maturity                                               Amount
  --------                                               ------
                                                     (In thousands)

<S>                                                     <C>   
  December 31, 1998                                      $    -
  March 31, 1999                                            840
  June 30, 1999                                             400
  September 30, 1999                                        850
  After September 30, 1999                                1,078
                                                         ------

    Total                                                $3,168
                                                         ======
</TABLE>

         The following table sets forth Market's deposit account balance
activity for the periods indicated:


<TABLE>
<CAPTION>
                                                 Year ended September 30,
                                      ------------------------------------------------
                                        1998               1997                 1996
                                        ----               ----                 ----
                                                  (Dollars in thousands)

<S>                                   <C>                <C>                 <C>
  Beginning balance                    $35,303            $37,282             $38,056
  Deposits                              14,656             40,650              13,155
  Withdrawals                          (13,580)           (43,940)            (15,249)
  Interest credited                      1,366              1,311               1,320
                                       -------            -------             -------
  Ending balance                       $37,745            $35,303             $37,282
                                       =======            =======             =======

  Net increase (decrease)              $ 2,442            $(1,979)            $  (774)
                                       =======            =======             =======
  Percent increase (decrease)              6.9%              (5.3)%              (2.0)%
                                           ===               ====                ====
</TABLE>



                                      -13-
<PAGE>   14



         BORROWINGS. The FHLB system functions as a central reserve bank
providing credit for its member institutions and certain other financial
institutions. See "REGULATION - Federal Home Loan Banks." As a member in good
standing of the FHLB of Cincinnati, Market is authorized to apply for advances
from the FHLB of Cincinnati, provided certain standards of creditworthiness have
been met. Under current regulations, an association must meet certain
qualifications to be eligible for FHLB advances. The extent to which an
association is eligible for such advances will depend upon whether it meets the
Qualified Thrift Lender (the "QTL") test. See "REGULATION - Office of Thrift
Supervision -- Qualified Thrift Lender Test." At September 30, 1998, Market was
not utilizing FHLB advances.

         Other borrowed money totaled $725,000 at September 30, 1998, and
consisted of a one-year, unsecured note from another financial institution.

COMPETITION

         Market competes for deposits with other savings and loan associations,
savings banks, commercial banks and credit unions and with issuers of commercial
paper and other securities, including shares in money market mutual funds. The
primary factors in competition for deposits are customer service and convenience
of office location. In making loans, Market competes with other savings
associations, savings and loan associations, commercial banks, mortgage brokers,
consumer finance companies, credit unions, leasing companies and other lenders.
Market competes for loan originations primarily through the interest rates and
loan fees it charges and through the efficiency and quality of services it
provides to borrowers. Competition is intense and is affected by, among other
things, the general availability of lendable funds, general and local economic
conditions, current interest rate levels and other factors which are not readily
predictable. Market does not offer all of the products and services offered by
some of its competitors, particularly commercial banks.

YEAR 2000 COMPLIANCE MATTERS

         As with most providers of financial services, Market's operations are
heavily dependent on information technology systems. Market is addressing the
potential problems associated with the possibility that the computers that
control or operate Market's information technology system and infrastructure may
not be programmed to read four-digit date codes and, upon arrival of the year
2000, may recognize the two-digit code "00" as the year 1900, causing systems to
fail to function or to generate erroneous data.

         Market has appointed a Year 2000 Coordinator who, with support and
oversight from management and the Boards of Directors of both Market and MFC,
shall analyze the risk of potential problems that might arise from the failures
of computers and microprocessors to recognize the Year 2000, and to develop a
plan to mitigate such risks. The Year 2000 Coordinator submits monthly and
quarterly progress reports to the Boards of Directors. The impact upon MFC's
results of operations, liquidity and capital resources will be immaterial;
however, approximately $16,000 has been budgeted to ensure Year 2000 compliance.
Through December 1998, Year 2000 expenditures have totaled approximately $3,200.

         The Year 2000 Coordinator has determined that the greatest potential
impact upon Market and MFC is the risk related to vendors used by Market,
particularly its data processing service bureau. The service bureau has advised
Market that it has changed to a fully Year 2000 compliant processing system that
will be fully tested by January 1, 1999.

         Management and the Boards of Directors of Market and MFC have reviewed
the reports regarding Year 2000 testing results to date and are in the process
of developing appropriate remedial measures without material cost. No assurance
can be given, however, that significant expense will not be incurred in future
periods. In the unlikely event that Market is ultimately required to purchase
replacement computer systems, programs and equipment, or incurs substantial
expense to make its current systems, programs and equipment year 2000 compliant,
Market's net earnings and financial condition could be adversely affected.

         The Year 2000 Coordinator has written a contingency plan to provide
options for the Boards of Directors and management in order to ensure that
Market's core business functions can continue to operate in the event of a Year
2000 problem.

         In addition to possible expense related to its own systems, Market
could incur losses if loan payments are delayed due to year 2000 problems
affecting any major borrowers in Market's primary market area. Because Market's
loan portfolio is highly diversified with regard to individual borrowers and
types of businesses and Market's primary market area is not 



                                      -14-
<PAGE>   15



significantly dependent upon one employer or industry, Market does not expect
any significant or prolonged difficulties that will affect net earnings or cash
flow.

         In addition, financial institutions may experience increases in problem
loans and credit losses in the event that borrowers fail to prepare properly for
Year 2000, and higher funding costs could result if consumers react to publicity
about the issue by withdrawing deposits. MFC could also be materially adversely
affected if other third parties, such as governmental agencies, clearing houses,
telephone companies, utilities and other service providers fail to prepare
properly. Market is therefore attempting to assess these risks and take action
to minimize their effect.

EMPLOYEES

         At September 30, 1998, Market had seven full-time employees and two
part-time employees. Market believes that relations with its employees are
excellent. Market offers health, life and disability benefits to all full-time
employees and although it has had a defined benefit pension plan for its
full-time employees in the past, such plan has been terminated. Currently,
Market has an employee stock ownership plan for employees who are 21 or older
and who have completed at least one year of service. None of the employees of
Market are represented by a collective bargaining unit.


                                   REGULATION

GENERAL

         MFC is a savings and loan holding company within the meaning of the
Home Owners Loan Act, as amended (the "HOLA"). Consequently, MFC is subject to
regulation, examination and oversight by the OTS and must submit periodic
reports to the OTS concerning its activities and financial condition. In
addition, as a corporation organized under Ohio law, MFC is subject to
provisions of the Ohio Revised Code applicable to corporations generally.

         As a savings and loan association chartered under the laws of Ohio,
Market is subject to regulation, examination and oversight by the Superintendent
of the Division (the "Ohio Superintendent"). Because Market's deposits are
insured by the FDIC, Market also is subject to regulatory oversight by the FDIC.
Market must file periodic reports with the OTS concerning its activities and
financial condition. Examinations are conducted periodically by federal and
state regulators to determine whether Market is in compliance with various
regulatory requirements and is operating in a safe and sound manner. Market is a
member of the FHLB and is subject to certain regulations promulgated by the
Board of Governors of the Federal Reserve System (the "FRB").

         Congress is considering legislation to eliminate the federal savings
and loan charter and the separate federal regulation of savings and loan
associations. Pursuant to such legislation, Congress may eliminate the OTS and
Market may be regulated under federal law as a bank or be required to change its
charter. Such change in regulation or charter would likely change the range of
activities in which Market may engage and would probably subject Market to more
regulation by the FDIC. In addition, MFC might become subject to a different set
of holding company regulations limiting the activities in which MFC may engage
and subjecting MFC to additional regulatory requirements, including separate
capital requirements. At this time, MFC cannot predict when or whether Congress
may actually pass legislation regarding MFC's and Market's regulatory
requirements or charter. Although such legislation, if enacted, may change the
activities in which MFC or Market are authorized to engage, it is not
anticipated that the current activities of either MFC or Market will be
materially affected by those activity limits.

OHIO CORPORATION LAW

         MERGER MORATORIUM STATUTE. Chapter 1704 of the Ohio Revised Code
regulates certain takeover bids affecting certain public corporations which have
significant ties to Ohio. This statute prohibits, with some exceptions, any
merger, combination or consolidation and any of certain other sales, leases,
distributions, dividends, exchanges, mortgages or transfers between an Ohio
corporation and any person who has the right to exercise, alone or with others,
10% or more of the voting power of such corporation (an "Interested
Shareholder"), for three years following the date on which such person first
becomes an Interested Shareholder. Such a business combination is permitted only
if, prior to the time such person first becomes an Interested Shareholder, the
Board of Directors of the issuing corporation has approved the purchase of
shares which resulted in such person first becoming an Interested Shareholder.



                                      -15-
<PAGE>   16



         After the initial three-year moratorium, such a business combination
may not occur unless (1) one of the specified exceptions applies, (2) the
holders of at least two-thirds of the voting shares, and of at least a majority
of the voting shares not beneficially owned by the Interested Shareholder,
approve the business combination at a meeting called for such purpose, or (3)
the business combination meets certain statutory criteria designed to ensure
that the issuing public corporation's remaining shareholders receive fair
consideration for their shares.

         An Ohio corporation may, under certain circumstances, "opt out" of the
statute by specifically providing in its articles of incorporation that the
statute does not apply to any business combination of such corporation. However,
the statute still prohibits for twelve months any business combination that
would have been prohibited but for the adoption of such an opt-out amendment.
The statute also provides that it will continue to apply to any business
combination between a person who became an Interested Shareholder prior to the
adoption of such an amendment as if the amendment had not been adopted. Neither
MFC nor Market has opted out of the protection afforded by Chapter 1704.

         CONTROL SHARE ACQUISITION. Section 1701.831 of the Ohio Revised Code
(the "Control Share Acquisition Statute") requires that, with certain
exceptions, acquisitions of voting securities which would result in the
acquiring shareholder owning 20%, 33-1/3% or 50% of the outstanding voting
securities of an Ohio corporation (a "Control Share Acquisition") must be
approved in advance by the holders of at least a majority of the outstanding
voting shares of such corporation represented at a meeting at which a quorum is
present and a majority of the portion of the outstanding voting shares
represented at such a meeting excluding the voting shares owned by the acquiring
shareholder, by certain other persons who acquire or transfer voting shares
after public announcement of the acquisition or by certain officers of the
corporation or directors of the corporation who are employees of the
corporation. The Control Share Acquisition Statute was intended, in part, to
protect shareholders of Ohio corporations from coercive tender offers.

         TAKEOVER BID STATUTE. Ohio law provides that an offeror may not make
not make a tender offer or request or invitation for tenders that would result
in the offeror beneficially owning more than ten percent of any class of the
target company's equity securities unless such offeror files certain information
with the Ohio Division of Securities (the "Securities Division") and provides
such information to the target company and the offerees within Ohio. The
Securities Division may suspend the continuation of the control bid if the
Securities Division determines that the offeror's filed information does not
provide full disclosure to the offerees of all material information concerning
the control bid. The statue also provides that an offeror may not acquire any
equity security of a target company within two years of the offeror's previous
acquisition of any equity security of the same target company pursuant to a
control bid unless the Ohio offerees may sell such security to the offeror on
substantially the same terms as provided by the previous control bid. The
statute does not apply to a transaction if either the offeror or the target
company is a savings and loan holding company and the proposed transaction
requires federal regulatory approval.

OHIO SAVINGS AND LOAN REGULATION

         The Ohio Superintendent is responsible for the regulation and
supervision of Ohio savings and loan associations in accordance with the laws of
the State of Ohio and imposes assessments on Ohio associations based on their
asset size to cover the costs of supervision and examination. Ohio law
prescribes the permissible investments and activities of Ohio savings and loan
associations, including the types of lending that such associations may engage
in and the investments in real estate, subsidiaries and corporate or government
securities that such associations may make. The ability of Ohio associations to
engage in these state-authorized investments and activities is subject to
oversight and approval by the FDIC, if such investments or activities are not
permissible for a federally-chartered savings association. The Ohio
Superintendent also has approval authority over any mergers involving, or
acquisitions of control of, Ohio savings and loan associations. The Ohio
Superintendent may initiate certain supervisory measures or formal enforcement
actions against Ohio associations. Ultimately, if the grounds provided by law
exist, the Superintendent may place an Ohio association in conservatorship or
receivership.

         In addition to being governed by the laws of Ohio specifically
governing savings and loan associations, Market is also governed by Ohio
corporate law, to the extent such law does not conflict with the laws
specifically governing savings and loan associations.

OFFICE OF THRIFT SUPERVISION

         GENERAL. The OTS is an office of the Department of the Treasury and is
responsible for the regulation and supervision of all federally-chartered
savings associations and all other savings associations the deposits of which
are insured


                                      -16-
<PAGE>   17



by the FDIC in the SAIF. The OTS issues regulations governing the operation of
savings associations, regularly examines such associations and imposes
assessments on savings associations based on their asset size to cover the costs
of general supervision and examination. The OTS also may initiate enforcement
actions against savings associations and certain persons affiliated with them
for violations of laws or regulations or for engaging in unsafe or unsound
practices. If the grounds provided by law exist, the OTS may appoint a
conservator or receiver for a savings association.

         Savings associations are subject to regulatory oversight under various
consumer protection and fair lending laws. These laws govern, among other
things, truth-in-lending disclosures, equal credit opportunity, fair credit
reporting and community reinvestment. Failure to abide by federal laws and
regulations governing community reinvestment could limit the ability of an
association to open a new branch or engage in a merger. Community reinvestment
regulations evaluate how well and to what extent an institution lends and
invests in its designated service area, with particular emphasis on low- to
moderate-income communities and borrowers in that area.

         REGULATORY CAPITAL REQUIREMENTS. Market is required by OTS regulations
to meet certain minimum capital requirements. The tangible capital requirement
requires savings associations to maintain "tangible capital" of not less than
1.5% of their adjusted total assets. Tangible capital is defined in OTS
regulations as core capital minus any intangible assets.

         "Core capital" is comprised of common stockholders' equity (including
retained earnings), noncumulative preferred stock and related surplus, minority
interests in consolidated subsidiaries, certain nonwithdrawable accounts and
pledged deposits of mutual associations. OTS regulations require savings
associations to maintain core capital of at least 3% of their total assets. The
OTS has proposed to amend the core capital requirement so that those
associations that do not have the highest examination rating and exceed an
acceptable level of risk will be required to maintain core capital of from 4% to
5%, depending on the association's examination rating and overall risk. Market
does not anticipate that it will be adversely affected if the core capital
requirement regulation is amended as proposed.

         OTS regulations require that savings associations maintain "risk-based
capital" in an amount not less than 8% of their risk-weighted assets. Risk-based
capital is defined as core capital plus certain additional items of capital,
which in the case of Market includes a general loan loss allowance of $50,000 at
September 30, 1998.

         The OTS has adopted an interest rate risk component to the risk-based
capital requirement, though the implementation of that component has been
delayed. Pursuant to the interest rate risk component, a savings association
will have to measure the effect of an immediate 200 basis point change in
interest rates on the value of its portfolio as determined under the methodology
of the OTS. If the measured interest rate risk is above the level deemed normal
under the regulation, the association will be required to deduct one-half of
such excess exposure from its total capital when determining its risk-based
capital. In general, an association with less than $300 million in assets and a
risk-based capital ratio in excess of 12% will not be subject to the interest
rate risk component. Pending implementation of the interest rate risk component,
the OTS has the authority to impose a higher individualized capital requirement
on any savings association it deems to have excess interest rate risk. The OTS
also may adjust the risk-based capital requirement on an individualized basis to
take into account risks due to concentrations of credit and non-traditional
activities.

         The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings
associations. At each successively lower defined capital category, an
association is subject to more restrictive and more numerous mandatory or
discretionary regulatory actions or limits, and the OTS has less flexibility in
determining how to resolve the problems of the institution. In addition, the OTS
generally can downgrade an association's capital category, notwithstanding its
capital level, if, after notice and opportunity for hearing, the association is
deemed to be engaging in an unsafe or unsound practice because it has not
corrected deficiencies that resulted in it receiving a less than satisfactory
examination rating on matters other than capital or it is deemed to be in an
unsafe or unsound condition. All undercapitalized associations must submit a
capital restoration plan to the OTS within 45 days after becoming
undercapitalized. Such associations will be subject to increased monitoring and
asset growth restrictions and will be required to obtain prior approval for
acquisitions, branching and engaging in new lines of business. Furthermore,
critically undercapitalized institutions must be placed in conservatorship or
receivership within 90 days of reaching that capitalization level, except under
limited circumstances. Market's capital at September 30, 1998, met the standards
for the highest category, a "well-capitalized" institution.

         Federal law prohibits a savings association from making a capital
distribution to anyone or paying management fees to any person having control of
the association if, after such distribution or payment, the association would be
undercapitalized. In addition, each company controlling an undercapitalized
association must guarantee that the association



                                      -17-
<PAGE>   18



will comply with its capital plan until the association has been adequately
capitalized on an average during each of four preceding calendar quarters and
must provide adequate assurances of performance. The aggregate liability
pursuant to such guarantee is limited to the lesser of (a) an amount equal to 5%
of the association's total assets at the time the institution became
undercapitalized and (b) the amount that is necessary to bring the association
into compliance with all capital standards applicable to such association at the
time the association fails to comply with its capital restoration plan.

         LIQUIDITY. OTS regulations require that a savings association maintain
an average daily balance of liquid assets (cash, certain time deposits, bankers'
acceptances and specified United States government, state or federal agency
obligations) equal to a monthly average of not less than 5% of its net
withdrawable savings deposits plus borrowings payable in one year or less.
Monetary penalties may be imposed upon associations failing to meet these
liquidity requirements. The eligible liquidity of Market at September 30, 1998,
was approximately $15.2 million, or 41.72%, and exceeded the then applicable
5.0% liquidity requirement by approximately $13.7 million. Effective November
24, 1997, the liquidity requirement was reduced to 4%.

         QUALIFIED THRIFT LENDER TEST. Savings associations are required to meet
the QTL test. Prior to September 30, 1996, the QTL test required savings
associations to maintain a specified level of investments in assets that are
designated as qualifying thrift investments ("QTI"), which are generally related
to domestic residential real estate and manufactured housing and include credit
card, student and small business loans and stock issued by any FHLB, the FHLMC
or the FNMA. Under such test, 65% of an institution's "portfolio assets" (total
assets less goodwill and other intangibles, property used to conduct business
and 20% of liquid assets) must consist of QTI on a monthly average basis in nine
out of every 12 months. Effective September 30, 1996, a savings association may
also qualify as a QTL by meeting the definition of "domestic building and loan
association" under the Internal Revenue Code of 1986, as amended (the "Code").
In order for an institution to meet the definition of a "domestic building and
loan association" under the Code, at least 60% of such institution's assets must
consist of specified types of property, including cash loans secured by
residential real estate or deposits, educational loans and certain governmental
obligations. The OTS may grant exceptions to the QTL test under certain
circumstances. If a savings association fails to meet the QTL test, the
association and its holding company become subject to certain operating and
regulatory restrictions. A savings association that fails to meet the QTL test
will not be eligible for new FHLB advances. At September 30, 1998, Market met
the QTL test.

         LENDING LIMIT. OTS regulations generally limit the aggregate amount
that a savings association can lend to one borrower to an amount equal to 15% of
the association's Lending Limit Capital. A savings association may lend to one
borrower an additional amount not to exceed 10% of the association's Lending
Limit Capital, if the additional amount is fully secured by certain forms of
"readily marketable collateral." Real estate is not considered "readily
marketable collateral." Certain types of loans are not subject to the lending
limit. A general exception to the 15% limit provides that an association may
lend to one borrower up to $500,000, for any purpose. In applying the limit on
loans to one borrower, the regulations require that loans to certain related
borrowers be aggregated. At September 30, 1998, Market was in compliance with
this lending limit.

         TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
directors and principal shareholders and their related interests must conform to
the lending limit on loans to one borrower, and the total of such loans to
executive officers, directors, principal shareholders and their related
interests cannot exceed the association's Lending Limit Capital (or 200% of
Lending Limit Capital for qualifying institutions with less than $100 million in
deposits). Most loans to directors, executive officers and principal
shareholders must be approved in advance by a majority of the "disinterested"
members of the board of directors of the association, with any "interested"
director not participating. All loans to directors, executive officers and
principal shareholders must be made on terms substantially the same as offered
in comparable transactions with the general public or as offered to all
employees in a company-wide benefit program, and loans to executive officers are
subject to additional limitations. Market was in compliance with such
restrictions at September 30, 1998.

         All transactions between savings associations and their affiliates must
comply with Sections 23A and 23B of the Federal Reserve Act (the "FRA"). An
affiliate of a savings association is any company or entity that controls, is
controlled by or is under common control with the savings association. MFC is an
affiliate of Market. Generally, Sections 23A and 23B of the FRA (i) limit the
extent to which a savings association or its subsidiaries may engage in "covered
transactions" with any one affiliate to an amount equal to 10% of such
institution's capital stock and surplus, (ii) limit the aggregate of all such
transactions with all affiliates to an amount equal to 20% of such capital stock
and surplus, and (iii) require that all such transactions be on terms
substantially the same, or at least as favorable to the association, as those
provided in transactions with a non-affiliate. The term "covered transaction"
includes the making of loans, purchasing of assets, issuance of a guarantee and
other similar types of transactions. In addition to the limits in Sections 23A
and 23B, a savings association



                                      -18-
<PAGE>   19



may not make any loan or other extension of credit to an affiliate unless the
affiliate is engaged only in activities permissible for a bank holding company
and may not purchase or invest in securities of any affiliate except shares of a
subsidiary. Market was in compliance with these requirements and restrictions at
September 30, 1998.

         LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various
restrictions or requirements on the ability of associations to make capital
distributions, including dividend payments. An association which has converted
from mutual to stock form is prohibited from declaring or paying any dividends
or from repurchasing any of its stock if, as a result, the net worth of the
association would be reduced below the amount required to be maintained for the
liquidation account established in connection with its mutual to stock
conversion. OTS regulations also establish a three-tier system limiting capital
distributions according to ratings of associations based on their capital level
and supervisory condition.

         Tier 1 consists of associations that, before and after the proposed
distribution, meet their fully phased-in capital requirements. Associations in
this category may make capital distributions during any calendar year up to the
greater of (i) 100% of net income, current year-to-date, plus 50% of the amount
by which the lesser of the association's tangible, core or risk-based capital
exceeds its fully phased-in capital requirement for such capital component, as
measured at the beginning of the calendar year, and (ii) the amount authorized
for a Tier 2 association. A Tier 1 association deemed to be in need of more than
normal supervision by the OTS may be downgraded to a Tier 2 or Tier 3
association. Market meets the requirements for a Tier 1 association and has not
been notified of any need for more than normal supervision.

         Tier 2 consists of associations that, before and after the proposed
distribution, meet their current minimum, but not fully phased-in, capital
requirements. Associations in this category may make capital distributions of up
to 75% of net income over the most recent four quarters. Tier 3 associations do
not meet current minimum capital requirements and must obtain OTS approval of
any capital distribution. Tier 2 associations that propose to make a capital
distribution in excess of the noted safe harbor level must also obtain OTS
approval. Tier 2 associations proposing to make a capital distribution within
the safe harbor provisions and Tier 1 associations proposing to make any capital
distribution need only submit written notice to the OTS 30 days prior to such
distribution.

         As a subsidiary of MFC, Market is required to give the OTS 30 days'
notice prior to declaring any dividend on its stock. The OTS may object to the
distribution during such 30-day period based on safety and soundness concerns.
Market paid no dividends to MFC during fiscal 1998.

         HOLDING COMPANY REGULATION. MFC is a savings and loan holding company
within the meaning of the HOLA. As such, MFC has registered with the OTS and is
subject to OTS regulations, examination, supervision and reporting requirements.

         The HOLA generally prohibits a savings and loan holding company from
controlling any other savings association or savings and loan holding company,
without prior approval of the OTS, or from acquiring or retaining more than 5%
of the voting shares of a savings association or holding company thereof, which
is not a subsidiary. Under certain circumstances, a savings and loan holding
company is permitted to acquire, with the approval of the OTS, up to 15% of the
previously unissued voting shares of an undercapitalized savings association for
cash without such savings association being deemed to be controlled by MFC.
Except with the prior approval of the OTS, no director or officer of a savings
and loan holding company or person owning or controlling by proxy or otherwise
more than 25% of such holding company's stock may also acquire control of any
savings institution, other than a subsidiary institution, or any other savings
and loan holding company.

         As a unitary savings and loan holding company, MFC generally has no
restrictions on its activities. Such companies are the only financial
institution holding companies which may engage in any commercial, securities and
insurance activities without restriction. Congress is considering legislation
which may limit MFC's ability to engage in these activities. It cannot be
predicted whether and in what form these proposals might become law. However,
such limits would not impact MFC's current activities, which consist solely of
holding stock of Market. The broad latitude to engage in activities under
current law can be restricted. If the OTS determines that there is reasonable
cause to believe that the continuation by a savings and loan holding company of
an activity constitutes a serious risk to the financial safety, soundness or
stability of its subsidiary savings association, the OTS may impose such
restrictions as deemed necessary to address such risk, including limiting (i)
payment of dividends by the savings association, (ii) transactions between the
savings association and its affiliates, and (iii) any activities of the savings
association that might create a serious risk that the liabilities of MFC and its
affiliates may be imposed on the savings association. Notwithstanding the
foregoing rules as to permissible business activities of a unitary savings and
loan holding company, if the savings association subsidiary of a holding company
fails to 



                                      -19-
<PAGE>   20



meet the QTL test, then such unitary holding company would become subject to the
activities restrictions applicable to multiple holding companies. At September
30, 1998, Market met both those tests.

         If MFC acquired control of another savings institution, other than
through a merger or other business combination with Market, MFC would become a
multiple savings and loan holding company. Unless the acquisition was an
emergency thrift acquisition and each subsidiary savings association met the QTL
test, the activities of MFC and any of its subsidiaries (other than Market or
other subsidiary savings associations) would thereafter be subject to activity
restrictions. The HOLA provides that, among other things, no multiple savings
and loan holding company or subsidiary thereof that is not a savings institution
shall commence or continue for a limited period of time after becoming a
multiple savings and loan holding company or subsidiary thereof, any business
activity other than (i) furnishing or performing management services for a
subsidiary savings institution, (ii) conducting an insurance agency or escrow
business, (iii) holding, managing or liquidating assets owned by or acquired
from a subsidiary savings institution, (iv) holding or managing properties used
or occupied by a subsidiary savings institution, (v) acting as trustee under
deeds of trust, (vi) those activities previously directly authorized by federal
regulation as of March 5, 1987, to be engaged in by multiple holding companies,
or (vii) those activities authorized by the FRB as permissible for bank holding
companies, unless the OTS by regulation prohibits or limits such activities for
savings and loan holding companies. Those activities described in (vii) above
must also be approved by the OTS prior to being engaged in by a multiple holding
company.

         The OTS may approve acquisitions resulting in the formation of a
multiple savings and loan holding company that controls savings associations in
more than one state only if the multiple savings and loan holding company
involved controls a savings association that operated a home or branch office in
the state of the association to be acquired as of March 5, 1987, or if the laws
of the state in which the institution to be acquired is located specifically
permit institutions to be acquired by state-chartered institutions or savings
and loan holding companies located in the state where the acquiring entity is
located (or by a holding company that controls such state-chartered savings
institutions). As under prior law, the OTS may approve an acquisition resulting
in a multiple savings and loan holding company controlling savings associations
in more than one state in the case of certain emergency thrift acquisitions.
Bank holding companies have had more expansive authority to make interstate
acquisitions than savings and loan holding companies since August 1995.

         FEDERAL REGULATION OF ACQUISITIONS OF CONTROL OF MFC AND MARKET. In
addition to the Ohio law limitations on the merger and acquisition of Market and
MFC, federal limitations generally require regulatory approval of acquisitions
at specified levels. Under pertinent federal law and regulations, no person,
directly or indirectly, or acting in concert with others, may acquire control of
Market or MFC without 60 days' prior notice to the OTS. "Control" is generally
defined as having more than 25% ownership or voting power; however, ownership or
voting power of more than 10% may be deemed "control" if certain factors are in
place. If the acquisition of control is by a company, the acquiror must obtain
approval, rather than give notice, of the acquisition as a savings and loan
holding company.

         In addition, any merger of Market must be approved by the OTS as well
as the Superintendent. Further, any merger of MFC in which MFC is not the
resulting company must also be approved by both the OTS and the Superintendent.

FEDERAL DEPOSIT INSURANCE CORPORATION

         DEPOSIT INSURANCE AND ASSESSMENTS. The FDIC is an independent federal
agency that insures the deposits, up to prescribed statutory limits, of
federally insured banks and savings and loan associations and safeguards the
safety and soundness of the banking and savings and loan industries. The FDIC
administers two separate insurance funds, the Bank Insurance Fund ("BIF") for
commercial banks and state savings banks and the SAIF for savings associations.
Market is a member of the SAIF and its deposit accounts are insured by the FDIC
up to the prescribed limits. The FDIC has examination authority over all insured
depository institutions, including Market, and has authority to initiate
enforcement actions against federally-insured savings associations if the FDIC
does not believe the OTS has taken appropriate action to safeguard safety and
soundness and the deposit insurance fund.

         The FDIC is required to maintain designated levels of reserves in the
SAIF and in the BIF. The FDIC may increase assessment rates for either fund if
necessary to restore the fund's ratio of reserves to insured deposits to its
target level within a reasonable time and may decrease such rates if such target
level has been met. The FDIC has established a risk-based assessment system for
both SAIF and BIF members. Under this system, assessments vary based on the risk
the institution poses to its deposit insurance fund. The risk level is
determined based on the institution's capital level and the FDIC's level of
supervisory concern about the institution.



                                      -20-
<PAGE>   21


         Prior to September 1996, the SAIF's ratio of reserves to insured
deposits was significantly below the level required by law, while the BIF's
ratio was above the required level. As a result, institutions with SAIF-insured
deposits were paying higher deposit insurance assessments than institutions with
BIF-insured deposits. Federal legislation providing for the recapitalization of
the SAIF became effective in September 1996 and included a special assessment of
$.657 per $100 of SAIF-insured deposits held at March 31, 1995. Market had
approximately $37.6 million in deposits at March 31, 1995, and paid a special
assessment of $246,000.

         STATE-CHARTERED ASSOCIATION ACTIVITIES. The ability of state-chartered
associations to engage in any state-authorized activities or make any
state-authorized investments is limited if such activity is conducted or
investment is made in a manner different than that permitted for, or subject to
different terms and conditions than those imposed on, federally chartered
savings associations. Engaging as a principal in any such activity or investment
not permissible for a federal association is subject to approval by the FDIC.
Such approval will not be granted unless certain capital requirements are met
and there is not a significant risk to the FDIC insurance fund. All of Market'
activities and investments at September 30, 1998, were permissible for a federal
association.

FRB RESERVE REQUIREMENTS

         Effective December 1, 1998, FRB regulations require savings
associations to maintain reserves of 3% of net transaction accounts (primarily
NOW accounts) up to $46.5 million (subject to an exemption of up to $4.9
million), and of 10% of net transaction accounts in excess of $46.5 million. At
September 30, 1998, Market was in compliance with the reserve requirements then
in effect and also the new requirements.

FEDERAL HOME LOAN BANKS

         The FHLBs provide credit to their members in the form of advances.
Market is a member of the FHLB of Cincinnati and must maintain an investment in
the capital stock of the FHLB of Cincinnati in an amount equal to the greater of
1.0% of the aggregate outstanding principal amount of Market's residential
mortgage loans, home purchase contracts and similar obligations at the beginning
of each year, or 5% of its advances from the FHLB of Cincinnati. Market was in
compliance with this requirement with an investment in stock of the FHLB of
Cincinnati of $419,000 at September 30, 1998.

         FHLB advances to member institutions who meet the QTL Test are
generally limited to the lower of (i) 25% of the member's assets or (ii) 20
times the member's investment in FHLB stock. At September 30, 1998, Market's
maximum limit on advances was approximately $8.4 million. The granting of
advances is also subject to the FHLB's collateral and credit underwriting
guidelines.

         Upon the origination or renewal of a loan or advance, the FHLB is
required by law to obtain and maintain a security interest in collateral in one
or more of the following categories: fully-disbursed, whole first mortgage loans
on improved residential property or securities representing a whole interest in
such loans; securities issued, insured or guaranteed by the United States
Government or an agency thereof; deposits in any FHLB; or other real estate
related collateral (up to 30% of the member association's capital) acceptable to
the FHLB, if such collateral has a readily ascertainable value and the FHLB can
perfect its security interest in the collateral.

         The FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances. The standards take into account a member's performance under the
Community Reinvestment Act and its record of lending to first-time home buyers.
All long-term advances by the FHLB must be made only to provide funds for
residential housing finance.


                                    TAXATION

FEDERAL TAXATION

         MFC and Market are each subject to the federal tax laws and regulations
which apply to corporations generally. In addition to the regular income tax,
MFC and Market may be subject to the alternative minimum tax which is imposed at
a minimum tax rate of 20% on "alternative minimum taxable income" (which is the
sum of a corporation's regular taxable income, with certain adjustments, and tax
preference items), less any available exemption. Such tax preference items
include interest on certain tax-exempt bonds issued after August 7, 1986. In
addition, 75% of the amount by which a corporation's 



                                      -21-
<PAGE>   22



"adjusted current earnings" exceeds its alternative minimum taxable income
computed without regard to this preference item and prior to reduction by net
operating losses, is included in alternative minimum taxable income. Net
operating losses can offset no more than 90% of alternative minimum taxable
income. The alternative minimum tax is imposed to the extent it exceeds the
corporation's regular income tax. Payments of alternative minimum tax may be
used as credits against regular tax liabilities in future years. However, the
Taxpayer Relief Act of 1997 repealed the alternative minimum tax for certain
"small corporations" for tax years beginning after December 31, 1997. A
corporation initially qualifies as a small corporation if it had average gross
receipts of $5,000,000 or less for the three tax years ending with its first tax
year beginning after December 31, 1996. Once a corporation is recognized as a
small corporation, it will continue to be exempt from the alternative minimum
tax for as long as its average gross receipts for the prior three-year period
does not exceed $7,500,000. In determining if a corporation meets this
requirement, the first year that it achieved small corporation status is not
taken into consideration.

         Market's average gross receipts for the three tax years ending on
December 31, 1997, is $3.3 million and as a result, Market does qualify as a
small corporation exempt from the alternative minimum tax.

         Prior to the enactment of the Small Business Jobs Protection Act (the
"Act"), which was signed into law on August 21, 1996, certain thrift
institutions, such as Market, were allowed deductions for bad debts under
methods more favorable than those granted to other taxpayers. Qualified thrift
institutions could compute deductions for bad debts using either the specific
charge-off method of Section 166 of the Code or one of two reserve methods of
Section 593 of the Code. The reserve methods under Section 593 of the Code
permitted a thrift institution annually to elect to deduct bad debts under
either (i) the "percentage of taxable income" method applicable only to thrift
institutions, or (ii) the "experience" method that also was available to small
banks. Under the "percentage of taxable income" method, a thrift institution
generally was allowed a deduction for an addition to its bad debt reserve equal
to 8% of its taxable income (determined without regard to this deduction and
with additional adjustments). Under the "experience" method, a thrift
institution was generally allowed a deduction for an addition to its bad debt
reserve equal to the greater of (i) an amount based on its actual average
experience for losses in the current and five preceding taxable years, or (ii)
an amount necessary to restore the reserve to its balance as of the close of the
base year. A thrift institution could elect annually to compute its allowable
addition to bad debt reserves for qualifying loans either under the experience
method or the percentage of taxable income method. For tax years 1995, 1994 and
1993 Market used the percentage of taxable income method and was subject to
certain limitations based on aggregate loans and savings account balances at the
end of the calendar year.

         The Act eliminated the percentage of taxable income method of
accounting for bad debts by thrift institutions, effective for taxable years
beginning after 1995. Thrift institutions that are treated as small banks are
allowed to utilize the experience method applicable to such institutions, while
thrift institutions that are treated as large banks are required to use only the
specific charge off method.

         A thrift institution required to change its method of computing
reserves for bad debt will treat such change as a change in the method of
accounting, initiated by the taxpayer and having been made with the consent of
the Secretary of the Treasury. Section 481(a) of the Code requires certain
amounts to be recaptured with respect to such change. Generally, the amounts to
be recaptured will be determined solely with respect to the "applicable excess
reserves" of the taxpayer. The amount of the applicable excess reserves will be
taken into account ratably over a six-taxable year period, beginning with the
first taxable year beginning after 1995, subject to the residential loan
requirement described below. In the case of a thrift institution that is treated
as a large bank, the amount of the institution's applicable excess reserves
generally is the excess of (i) the balances of its reserve for losses on
qualifying real property loans (generally loans secured by improved real estate)
and its reserve for losses on nonqualifying loans (all other types of loans) as
of the close of its last taxable year beginning before January 1, 1996, over
(ii) the balances of such reserves as of the close of its last taxable year
beginning before January 1, 1988 (i.e., the "pre-1988 reserves"). In the case of
a thrift institution that is treated as a small bank, like Market, the amount of
the institution's applicable excess reserves generally is the excess of (i) the
balances of its reserve for losses on qualifying real property loans and its
reserve for losses on nonqualifying loans as of the close of its last taxable
year beginning before January 1, 1996, over (ii) the greater of the balance of
(a) its pre-1988 reserves or (b) what the thrift's reserves would have been at
the close of its last year beginning before January 1, 1996, had the thrift
always used the experience method.

         For taxable years that begin after December 31, 1995, and before
January 1, 1998, if a thrift meets the residential loan requirement for a tax
year, the recapture of the applicable excess reserves otherwise required to be
taken into account as a Code Section 481(a) adjustment for the year will be
suspended. A thrift meets the residential loan requirement if, for the tax year,
the principal amount of residential loans made by the thrift during the year is
not less than its base amount. The 



                                      -22-
<PAGE>   23


"base amount" generally is the average of the principal amounts of the
residential loans made by the thrift during the six most recent tax years
beginning before January 1, 1996. A residential loan is a loan as described in
Section 7701(a)(19)(C)(v) (generally a loan secured by residential or church
property and certain mobile homes), but only to the extent that the loan is made
to the owner of the property. The Company has provided deferred taxes of
approximately $22,000 and will be permitted to amortize the recapture of the bad
debt reserve over a six year period commencing in fiscal 1997.

         The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e), as modified by the Act, which require recapture in the case of
certain excessive distributions to shareholders. The pre-1988 reserves may not
be utilized for payment of cash dividends or other distributions to a
shareholder (including distributions in dissolution or liquidation) or for any
other purpose (except to absorb bad debt losses). Distribution of a cash
dividend by a thrift institution to a shareholder is treated as made: first, out
of the institution's post-1951 accumulated earnings and profits; second, out of
the pre-1988 reserves; and third, out of such other accounts as may be proper.
To the extent a distribution by Market to MFC is deemed paid out of its pre-1988
reserves under these rules, the pre-1988 reserves would be reduced and the gross
income of Market for tax purposes would be increased by the amount which, when
reduced by the income tax, if any, attributable to the inclusion of such amount
in its gross income, equals the amount deemed paid out of the pre-1988 reserves.
As of September 30, 1998, the pre-1988 reserves of Market for tax purposes
totaled approximately $1.3 million. Market believes it had approximately $6.2
million of accumulated earnings and profits for tax purposes as of September 30,
1998, which would be available for dividend distributions, provided regulatory
restrictions applicable to the payment of dividends are met. No representation
can be made as to whether Market will have current or accumulated earnings and
profits in subsequent years.

         The tax returns of Market have been audited or closed without audit
through calendar year 1994. In the opinion of management, any examination of
open returns would not result in a deficiency which could have a material
adverse effect on the financial condition of Market.

OHIO TAXATION

         MFC is subject to the Ohio corporation franchise tax, which, as applied
to MFC, is a tax measured by both net earnings and net worth. The rate of tax is
the greater of (i) 5.1% on the first $50,000 of computed Ohio taxable income and
8.9% of computed Ohio taxable income in excess of $50,000 or (ii) 0.582% times
taxable net worth. For tax years beginning after December 31, 1998, the rate of
tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio taxable
income and 8.5% of computed Ohio taxable income in excess of $50,000 or (ii)
 .400% times taxable net worth.

         In computing its tax under the net worth method, MFC may exclude 100%
of its investment in the capital stock of Market, as reflected on the balance
sheet of MFC in computing its taxable net worth as long as it owns at least 25%
of the issued and outstanding capital stock of Market. The calculation of the
exclusion from net worth is based on the ratio of the excludable investment (net
of any appreciation or goodwill included in such investment) to total assets
multiplied by the net value of the stock. As a holding company, MFC may be
entitled to various other deductions in computing taxable net worth that are not
generally available to operating companies.

         A special litter tax is also applicable to all corporations, including
MFC, subject to the Ohio corporation franchise tax other than "financial
institutions." If the franchise tax is paid on the net income basis, the litter
tax is equal to .11% of the first $50,000 of computed Ohio taxable income and
 .22% of computed Ohio taxable income in excess of $50,000. If the franchise tax
is paid on the net worth basis, the litter tax is equal to .014% times taxable
net worth.

         Market is a "financial institution" for State of Ohio tax purposes. As
such, it is subject to the Ohio corporate franchise tax on "financial
institutions," which is imposed annually at a rate of 1.5% of the book net worth
of Market determined in accordance with generally accepted accounting
principles. For tax year 1999, however, the franchise tax on financial
institutions will be 1.4% of the book net worth and for tax year 2000 and years
thereafter the tax will be 1.3% of the book net worth. As a "financial
institution," Market is not subject to any tax based upon net income or net
profits imposed by the State of Ohio.



                                      -23-
<PAGE>   24




ITEM 2.       DESCRIPTION OF PROPERTY

         The following table sets forth certain information at September 30,
1998, regarding the properties on which the main office and the branch office of
Market are located:

<TABLE>
<CAPTION>
                                           Owned or             Date           Square        Net book
Location                                    leased            acquired         footage         value           Deposits
--------                                    ------            --------         -------         -----           --------
                                                                                                             (In thousands)

<S>                                        <C>                 <C>             <C>           <C>               <C>
7522 Hamilton Avenue                        Owned               1964            2,325         $67,000           $33,223
Mt. Healthy, Ohio 45231

125-127 Miami Avenue                        Owned               1994            1,753           6,000             4,522
North Bend, Ohio  45052
</TABLE>

ITEM 3.       LEGAL PROCEEDINGS

         Market is not presently involved in any material legal proceedings.
From time to time, Market is a party to legal proceedings incidental to its
business to enforce its security interest in collateral pledged to secure loans
made by Market.

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

              Not applicable.

ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
              MATTERS

              The information contained in the Market Financial Corporation
Annual Report to Shareholders for the fiscal year ended September 30, 1998 (the
"Annual Report") under the caption "Market Price of MFC Common Shares and
Related Shareholder Matters" is incorporated herein by reference.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

              The information contained in the Annual Report under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is incorporated herein by reference.

ITEM 7.       FINANCIAL STATEMENTS

              The Consolidated Financial Statements appearing in the Annual
Report and the report of Grant Thornton LLP dated December 4, 1998, are
incorporated herein by reference.

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

              Not applicable.



                                    PART III

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

              The information contained in the definitive Proxy Statement for
the 1998 Annual Meeting of Shareholders of MFC (the "Proxy Statement"), under
the caption "Board of Directors" is incorporated herein by reference.




                                      -24-
<PAGE>   25



ITEM 10.      EXECUTIVE COMPENSATION

              The information contained in the Proxy Statement under the caption
"Compensation of Executive Officers and Directors" is incorporated herein by
reference.

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              The information contained in the Proxy Statement under the caption
"Voting Securities and Ownership of Certain Beneficial Owners and Management" is
incorporated herein by reference.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

              Not Applicable.


ITEM 13.      EXHIBITS AND REPORTS ON FROM 8-K

(a)       EXHIBITS

          3           Articles of Incorporation and Code of Regulations

          10.1        The Market Financial Corporation Employee Stock Ownership
                      Plan

          10.2        Employment Agreement between John T. Larimer and Market,
                      dated April 1, 1997

          10.3        Market Financial Corporation 1998 Stock Option and
                      Incentive Plan

          10.4        Market Financial Corporation Recognition and Retention
                      Plan and Trust Agreement

          13          Annual Report to Shareholders (the following parts of
                      which are incorporated herein by reference; "Market Price
                      of MFC's Common Shares and Related Shareholders' Matters,"
                      "Management's Discussion and Analysis of Financial
                      Condition and Results of Operations" and Consolidated
                      Financial Statements)

          20          Proxy Statement for 1999 Annual Meeting of Shareholders

          21          Subsidiaries of Market Financial Corporation

          27          Financial Data Schedule

          99          Safe Harbor Under the Private Securities Litigation Reform
                      Act of 1995

(b)       REPORTS ON FORM 8-K

          No reports on Form 8-K have been filed by MFC during the quarter ended
September 30, 1998.




                                      -25-
<PAGE>   26



                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                               MARKET FINANCIAL CORPORATION


                                               By:/s/John T. Larimer       
                                                  -----------------------------
                                                  John T. Larimer, President and
                                                  Chief Executive Officer
                                                  (Principal Executive Officer)

                                               Date: December 15, 1998

         In accordance with 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.


/s/ John T. Larimer                          /s/ Julie M. Bertsch 
-----------------------------                -------------------------------
John T. Larimer,                             Julie M. Bertsch,
President and Director                       Chief Financial Officer
                                             (Principal Financial Officer)

Date: December 15, 1998                      Date: December 15, 1998



/s/ Edgar H. May                             /s/ Rae Skirvin Larimer.
-----------------------------                -------------------------------
Edgar H. May                                 Rae Skirvin Larimer
Director and Vice President                  Director and Secretary


Date: December 15, 1998                      Date: December 15, 1998



/s/ Robert Gandenberger                      /s/ R. C. Meyerenke 
-----------------------------                -------------------------------
Robert Gandenberger                          R. C. Meyerenke
Director                                     Director


Date: December 15, 1998                      Date: December 15, 1998



/s/ Wilbur H. Tisch                          /s/ Kathleen H. White
-----------------------------                -------------------------------
Wilbur H. Tisch                              Kathleen H. White
Director                                     Director


Date: December 15, 1998                      Date: December 15, 1998

                                      -26-


<PAGE>   27
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
     EXHIBIT
     NUMBER        DESCRIPTION                                  PAGE NUMBER
     ------        -----------                                  -----------

<S>                <C>                                          <C>
     3.1           Articles of Incorporation of MFC Financial   Incorporated by reference to the Registration Statement on
                   Corporation                                  Form S-1 filed by MFC on August 16, 1996 (the "S-1") with the
                                                                Securities and Exchange Commission (the "SEC"), Exhibit 3.1.

     3.2           Certificate of Amendment to Articles of      Incorporated by reference to Pre-Effective Amendment No. 1 to
                   Incorporation of MFC Financial Corporation   the S-1, Exhibit 3.2.

     3.4           Code of Regulations of MFC Financial         Incorporated by reference to the S-1, Exhibit 3.3.
                   Corporation

     10.1          The Market Financial Corporation Employee    Incorporated by reference to Pre-Effective Amendment No. 1 to
                   Stock Ownership Plan                         the S-1 filed with the SEC on January 22, 1997 ("Amendment
                                                                No. 1"), Exhibit 10.3.

     10.2          Employment Agreement between Market and      Incorporated by reference to Amendment No. 1, Exhibit 10.4.
                   John T. Larimer, dated April 1, 1997

     10.3          Market Financial Corporation 1998 Stock
                   Option and Incentive Plan

     10.4          Market Financial Corporation Recognition
                   and Retention Plan and Trust Agreement

     13            Market Financial Corporation 1998 Annual
                   Report to Shareholders

     20            Proxy Statement for 1999 Annual Meeting of
                   Shareholders

     21            Subsidiaries of Market Financial             Incorporated by reference to the Form 10-KSB for the year
                   Corporation                                  ended September 30, 1998, filed with the SEC on December 23,
                                                                1997, Exhibit 21
     27            Financial Data Schedule

     99            Safe Harbor Under the Private Securities
                   Litigation Reform Act of 1995
</TABLE>

                                      -27-