Page 14 of 14 Pages
                                   FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

[X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                                       OR

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

For the transition period from _______________ to _______________

Commission File No. 333-10347

                          MARKET FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

                                                               31-1462464
                Ohio                                        (I.R.S. Employer
   (State or other jurisdiction of                       Identification Number)
    incorporation of organization)

         7522 Hamilton Avenue
                Mt. Healthy, OH                                    45231
   (Address of principal executive                              (Zip Code)
               office)

Registrant's telephone number, including area code:  (513) 521-9772

Check whether the Registrant  (1) has 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_____

As of August 12, 1997, the latest  practicable date,  1,335,725 common shares of
the registrant, no par value, were issued and outstanding.


                               Page 1 of 14 Pages
<PAGE>



                                      INDEX

                          MARKET FINANCIAL CORPORATION

                                                                           Page
PART I  - FINANCIAL INFORMATION
            Consolidated Statements of Financial Condition ...............    3
            Consolidated Statements of Earnings ..........................    4
            Consolidated Statements of Cash Flows ........................    5
            Notes to Consolidated Financial Statements ...................    7
            Management's Discussion and Analysis of Financial
              Condition and Results of Operations ........................   10

PART II - OTHER INFORMATION ..............................................   13

SIGNATURES ...............................................................   14
















                               Page 2 of 14 Pages
<PAGE>

<TABLE>
<CAPTION>
                          Market Financial Corporation

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                              June 30,       September 30,
<S>                                                                             <C>              <C> 
                                                                                1997             1996
ASSETS                                                                              (In thousands)

Cash and due from banks ..................................................    $    513      $       512
Federal funds sold .......................................................       3,472            2,627
Interest-bearing deposits in other financial institutions ................         494              943
                                                                             ---------      -----------
          Cash and cash equivalents ......................................       4,479            4,082

Certificates of deposit in other financial institutions ..................       6,990            7,040
Investment securities - at amortized cost, approximate market
   value of $15,971 and $9,071 at June 30, 1997, and September 30, 1996
 .........................................................................      15,956            9,062
Investment securities designated as available for sale - at market .......       1,021              712
Mortgage-backed securities - at cost, approximate
   market value of $1,349 and $1,612 at June 30, 1997
   and September 30, 1996 ................................................       1,284            1,549
Loans receivable - net ...................................................      25,860           21,996
Office premises and equipment - at depreciated cost ......................         149              168
Federal Home Loan Bank stock - at cost ...................................         383              364
Accrued interest receivable ..............................................         395              339
Prepaid expenses and other assets ........................................          61              196
Prepaid federal income taxes .............................................           -               39
                                                                           -------------    -----------

          Total assets ...................................................      $56,578         $45,547
                                                                                =======         =======

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits .................................................................     $35,918          $37,282
Advances by borrowers for taxes and insurance ............................          11               50
Accrued interest payable .................................................         136              117
Other liabilities ........................................................         165              273
Deferred federal income taxes ............................................         527              311
Accrued federal income taxes .............................................          17                 -
                                                                           -----------      ------------

          Total liabilities ..............................................      36,774           38,033

Shareholders' equity
   Preferred stock - 1,000,000 shares without par value authorized; no
    shares issued ........................................................           -                -
   Common stock - 4,000,000 shares without par value authorized;
    1,335,725 shares issued and outstanding at June 30, 1997 .............           -                -
   Additional paid-in capital ............................................      12,832                -
   Shares acquired by Employee Stock Ownership Plan (ESOP) ...............      (1,069)               -
   Retained earnings - substantially restricted ..........................       7,386            7,063
   Unrealized gains on securities designated as available for sale,
    net of related tax effects ...........................................         655              451
                                                                            ----------       ----------
          Total shareholders' equity .....................................      19,804            7,514
                                                                              --------        ---------

          Total liabilities and shareholders' equity .....................     $56,578          $45,547
                                                                               =======          =======

</TABLE>
                               Page 3 of 14 Pages

<PAGE>

<TABLE>
<CAPTION>
                          Market Financial Corporation

                       CONSOLIDATED STATEMENTS OF EARNINGS



                                                     Nine months ended June 30,            Three months ended June 30,
<S>                                                   <C>                <C>                  <C>              <C> 
                                                      1997               1996                 1997             1996
                                                                  (In thousands, except per share data)
Interest income
  Loans ......................................      $1,477             $1,414                 $516              $453
  Mortgage-backed securities .................          96                133                   29                46
  Investment securities ......................         429                436                  180               166
  Interest-bearing deposits and other ........         563                486                  239               168
                                                  --------            -------                -----             -----
     Total interest income ...................       2,565              2,469                  964               833

Interest expense
  Deposits ...................................       1,281              1,336                  427               433
                                                   -------            -------                -----             -----

     Net interest income .....................       1,284              1,133                  537               400

Provision for losses on loans ................           -                 13                    -                 -
                                                ----------           --------              -------           -------

     Net interest income after provision for
       losses on loans .......................       1,284              1,120                  537               400

Other operating income .......................           4                  6                    1                 2

General, administrative and other expense
   Employee compensation and benefits ........         483                328                  192                97
   Occupancy and equipment ...................          82                 85                   30                28
   Federal deposit insurance premiums ........          29                 60                    6                22
   Franchise taxes ...........................          78                 70                   24                21
   Other operating ...........................         127                121                   41                34
                                                   -------            -------               ------            ------
     Total general, administrative and
       other expense .........................         799                664                  293               202
                                                   -------            -------                -----             -----

        Earnings before income taxes .........         489                462                  245               200

Federal income taxes
   Current ...................................          55                123                   52                36
   Deferred ..................................         111                 37                   31                31
                                                   -------           --------               ------            ------
     Total federal income taxes ..............         166                160                   83                67
                                                   -------            -------               ------            ------
        Net Earnings .........................      $  323             $  302                 $162              $133
                                                    ======             ======                 ====              ====

Earnings per share ...........................         N/A                N/A                $ .13               N/A
                                                       ===                ===                =====               ===
</TABLE>




                               Page 4 of 14 Pages


<PAGE>

<TABLE>
<CAPTION>
                          Market Financial Corporation

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                           Nine months ended June 30,
<S>                                                                         <C>                <C> 
                                                                            1997               1996
                                                                                 (In thousands)

Cash flows from operating activities:
  Net earnings for the period .......................................    $    323          $    302
  Adjustments to reconcile net earnings to net
      cash provided by (used in) operating
      activities:
    Amortization of premiums and discounts
       on investments and mortgage-backed
       securities, net ..............................................         (34)              (35)
    Depreciation and amortization ...................................          23                25
    Amortization of deferred loan origination
       fees .........................................................         (17)              (25)
    Provision for losses on loans ...................................           -                13
    Federal Home Loan Bank stock dividends ..........................         (19)              (18)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable ...................................         (56)               (2)
      Accrued interest payable ......................................          19                 3
      Prepaid expenses and other assets .............................         135               (83)
      Other liabilities .............................................        (108)               (7)
      Federal income taxes
         Current ....................................................          56               (66)
         Deferred ...................................................         111                37
                                                                         --------         ---------
        Net cash provided by operating
        activities ..................................................         433               144
Cash flows provided by (used in) investing
   activities:
  Principal repayments on mortgage-backed
     securities .....................................................         263               426
  Proceeds from maturity of investment
     securities .....................................................       3,800             2,900
  Loan disbursements ................................................      (5,663)           (2,049)
  Principal repayments on loans .....................................       1,816             2,695
  Purchase of investment securities designated
     as held to maturity ............................................     (10,658)           (3,435)
  Purchase of office equipment ......................................          (4)              (29)
  Decrease (increase) in certificates of deposits in other
     financial institutions - net ...................................          50                (1)
                                                                      -----------         ----------
        Net cash provided by (used in)
           investing activities .....................................     (10,396)              507

Cash flows provided by (used in) financing activities:
   Net increase (decrease) in deposits ..............................      (1,364)              134
   Advances by borrowers for taxes and
      insurance .....................................................         (39)              (47)
   Disbursement of loan to ESOP .....................................      (1,069)                -
   Net proceeds from issuance of common
      shares ........................................................      12,832                 -
                                                                         --------       -----------
        Net cash provided by financing
        activities ..................................................      10,360                87
                                                                         --------         ---------
        Net increase in cash and cash
           equivalents (balance carried
           forward) .................................................         397               738
                                                                       ----------          --------

</TABLE>
                               Page 5 of 14 Pages
<PAGE>

<TABLE>
<CAPTION>
                          Market Financial Corporation

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                          Nine months ended June 30,
<S>                                                                       <C>                  <C> 
                                                                          1997                 1996
                                                                                (In thousands)
        Net increase in cash and cash
           equivalents (balance brought
           forward) .................................................   $   397              $   738
Cash and cash equivalents at beginning of
    period ..........................................................     4,082                4,013
                                                                        -------              -------
Cash and cash equivalents at end of period ..........................    $4,479               $4,751
                                                                         ======               ======
Supplemental disclosure of cash flow
    information:
   Cash paid during the period for:
     Federal income taxes .......................................... $        -              $   161
                                                                     ==========              =======

     Interest on deposits ..........................................     $1,262               $1,333
                                                                         ======               ======

Supplemental disclosure of noncash investing
    activities:
    Unrealized gains on securities designated as
        available for sale, net of related tax
        effects ....................................................    $   204             $     78
                                                                        =======             ========


</TABLE>
                               Page 6 of 14 Pages
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          MARKET FINANCIAL CORPORATION

        For the three and nine month periods ended June 30, 1997 and 1996

         On April 16, 1996,  the Board of  Directors of The Market  Building and
Saving Company (the  "Association")  unanimously adopted a Plan of Conversion to
convert the Association  from a mutual savings and loan  association  under Ohio
law to a stock savings and loan  association  under Ohio law with the concurrent
formation of the newly chartered holding company,  Market Financial  Corporation
("MFC").  The conversion was accomplished through amendment of the Association's
Articles of  Incorporation  and Constitution and the sale of MFC's common shares
in an amount equal to the pro forma market value of the Association after giving
effect to the  conversion.  A subscription  offering of the shares of MFC to the
Association's members and to an employee stock benefit plan was conducted.

         The  conversion  was  completed on March 27, 1997,  and resulted in the
issuance  of  1,335,725  common  shares of MFC  which,  after  consideration  of
offering  expenses totaling  approximately  $525,000 and shares purchased by the
ESOP of approximately $1.1 million, resulted in net proceeds of $11.8 million.

         At the time of conversion,  the  Association  established a liquidation
account in an amount equal to its  regulatory  capital as of September 30, 1996.
The  liquidation  account  will  be  maintained  for  the  benefit  of  eligible
depositors who continue to maintain their accounts at the Association  after the
conversion.  The  liquidation  account  will be reduced  annually  to the extent
eligible depositors have reduced their qualifying deposits. Subsequent increases
will not  restore an  eligible  account  holder's  interest  in the  liquidation
account.  In the event of complete  liquidation,  and only in such  event,  each
eligible  depositor  will  be  entitled  to  receive  a  distribution  from  the
liquidation  account  in  an  amount   proportionate  to  the  current  adjusted
qualifying  balances  for  accounts  then  held.  The  Association  may  not pay
dividends that would reduce  shareholders' equity below the required liquidation
account balance.

         Under OTS  regulations,  limitations  have been imposed on all "capital
distributions", including cash dividends by savings institutions. The regulation
establishes a three-tiered system of restrictions, with the greatest flexibility
afforded  to  thrifts  which  are  both  well-capitalized  and  given  favorable
qualitative examination ratings by the OTS.

         The  consolidated  financial  statements for periods prior to March 27,
1997,  contained herein, are those of the Association prior to the completion of
its conversion to stock form.

1.       Basis of Presentation

         The  accompanying  unaudited  consolidated  financial  statements  were
prepared in accordance with instructions for Form 10-QSB, and, therefore, do not
include  information  or  footnotes  necessary  for  complete   presentation  of
consolidated  financial  position,  results  of  operations  and  cash  flows in
conformity with generally accepted  accounting  principles.  Accordingly,  these
financial statements should be read in conjunction with the financial statements
and notes thereto of The Market  Building and Saving  Company for the year ended
September  30, 1996.  However,  in the opinion of  management,  all  adjustments
(consisting  of only normal  recurring  accruals)  which are  necessary for fair
presentation of the consolidated  financial  statements have been included.  The
results of operations  for the three month and nine month periods ended June 30,
1997 and  1996,  are not  necessarily  indicative  of the  results  which may be
expected for an entire fiscal year.

2.       Principles of Consolidation

         The accompanying  financial  statements include the accounts of MFC and
the Association. All significant intercompany items have been eliminated.

                               Page 7 of 14 Pages

<PAGE>
3.       Effects of Recent Accounting Pronouncements

         In May 1995,  the FASB issued  SFAS No. 122  "Accounting  for  Mortgage
Servicing  Rights,"  which requires that the  Association  recognize as separate
assets  rights to service  mortgage  loans for others,  regardless  of how those
servicing rights are acquired.  An institution that acquires mortgage  servicing
rights  through  either the purchase or  origination of mortgage loans and sells
those loans with  servicing  rights  retained would allocate some of the cost of
the  loans  to the  mortgage  servicing  rights.  SFAS  No.  122  requires  that
securitizations  of mortgage  loans be accounted for as sales of mortgage  loans
and  acquisitions  of  mortgage-backed  securities.  Additionally,  SFAS No. 122
requires that  capitalized  mortgage  servicing  rights and  capitalized  excess
servicing  receivables be assessed for impairment.  Impairment is measured based
on fair value.  SFAS No. 122 was  effective  for fiscal  years  beginning  after
December 15, 1995 (October 1, 1996, as to the  Association),  to transactions in
which an entity acquires mortgage servicing rights and to impairment evaluations
of all capitalized  mortgage  servicing rights and capitalized  excess servicing
receivables  whenever  acquired.  Retroactive  application  is  prohibited,  and
earlier  adoption  is  encouraged.  Management  adopted  SFAS No. 122  effective
October 1, 1996,  as  required,  without  material  effect on the  Association's
financial position or results of operations.

         In  October  1995,  the FASB  issued  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation,"  establishing  financial  accounting  and  reporting
standards  for  stock-based  compensation  plans.  SFAS No. 123  encourages  all
entities to adopt a new method of accounting to measure the compensation cost of
all stock  compensation  plans based on the estimated fair value of the award at
the date it is granted.  Companies are, however,  allowed to continue to measure
compensation  cost for those plans  using the  intrinsic  value based  method of
accounting,  which generally does not result in compensation expense recognition
for most plans.  Companies that elect to remain with the existing accounting are
required to disclose in a footnote  to the  financial  statements  pro forma net
earnings  and, if  presented,  earnings  per share,  as if SFAS No. 123 had been
adopted.  The  accounting  requirements  of  SFAS  No.  123  are  effective  for
transactions  entered  into during  fiscal  years that begin after  December 15,
1995; however, companies are required to disclose information for awards granted
in their first fiscal year  beginning  after  December 15, 1994.  Management has
determined  that MFC will  continue  to  account  for  stock-based  compensation
pursuant to  Accounting  Principles  Board  Opinion No. 25, and  therefore,  the
disclosure  provisions  of SFAS No. 123 will have no effect on its  consolidated
financial condition or results of operations.

         In June 1996, the FASB issued SFAS No. 125,  "Accounting  for Transfers
of Financial Assets,  Servicing Rights and  Extinguishment of Liabilities," that
provides  accounting  guidance on transfers of  financial  assets,  servicing of
financial assets and  extinguishment of liabilities.  SFAS No. 125 introduces an
approach to accounting  for transfers of financial  assets that provides a means
of dealing with more complex transactions in which the seller disposes of only a
partial  interest in the assets,  retains  rights or  obligations,  makes use of
special  purpose  entities  in the  transaction,  or  otherwise  has  continuing
involvement  with  the  transferred  assets.  The  new  accounting  method,  the
financial  components  approach,  provides  that  the  carrying  amount  of  the
financial assets transferred be allocated to components of the transaction based
on their relative fair values.  SFAS No. 125 provides  criteria for  determining
whether control of assets has been relinquished and whether a sale has occurred.
If the transfer  does not qualify as a sale,  it is  accounted  for as a secured
borrowing. Transactions subject to the provisions of SFAS No. 125 include, among
others, transfers involving repurchase agreements,  securitizations of financial
assets, loan participations, factoring arrangements and transfers of receivables
with recourse.

         An  institution  that  undertakes an  obligation  to service  financial
assets  recognizes  either a  servicing  asset or  liability  for the  servicing
contract (unless related to a securitization of assets,  and all the securitized
assets are retained and  classified as held to maturity).  A servicing  asset or
liability  that is  purchased  or assumed is  initially  recognized  at its fair
value.  Servicing assets and liabilities are amortized in proportion to and over
the period of  estimated  net  servicing  income or net  servicing  loss and are
subject to subsequent assessments for impairment based on fair value.

         SFAS No. 125  provides  that a  liability  is removed  from the balance
sheet  only if the  debtor  either  pays the  creditor  and is  relieved  of its
obligations  for the  liability  or is legally  released  from being the primary
obligor. SFAS No. 125 supersedes SFAS No. 122 and is effective for transfers and
servicing of financial assets and extinguishment of liabilities  occurring after
December 31, 1997,  and is to be applied  prospectively.  Earlier or retroactive
application is not permitted.  Management  does not believe that the adoption of
SFAS No. 125 will have a material adverse effect on the Association's  financial
position or results of operations.

                               Page 8 of 14 Pages

<PAGE>
         In February 1997,  the FASB issued SFAS No. 128,  "Earnings Per Share,"
which requires companies to present basic earnings per share and, if applicable,
diluted  earnings per share,  instead of primary and fully diluted  earnings per
share,  respectively.  Basic  earnings per share is computed  without  including
potential common shares, i.e., no dilutive effect. Diluted earnings per share is
computed  taking into  consideration  common  shares  outstanding  and  dilutive
potential common shares, including options, warrants, convertible securities and
contingent stock agreements.  SFAS No. 128 is effective for periods ending after
December 15, 1997.  Early  application is not permitted.  The provisions of SFAS
No. 128 are not  applicable  to MFC's three month and nine month  periods  ended
June 30, 1996 and the nine month period ended June 30, 1997,  as the  conversion
was completed in March 1997.  Basic and diluted earnings per share for the three
month period ended June 30, 1997,  calculated  in  accordance  with SFAS No. 128
would each be $.13 per share.

4.       Pending Legislative Changes

         Congress  has  enacted   legislation   that  would  merge  the  Savings
Association  Insurance Fund (the "SAIF") and the Bank Insurance Fund (the "BIF")
on January 1, 1999. The  legislation  currently  provides for the elimination of
the thrift charter or separate thrift  regulation under federal law prior to the
merger of the deposit  insurance  funds. The Association then might be regulated
as a bank under federal law and subject to the more restrictive  activity limits
imposed on national banks.

5.       Earnings Per Share

         Earnings per share is computed  based upon the weighted  average shares
outstanding during the period,  less shares in the ESOP that are unallocated and
not committed to be released. Weighted average common shares deemed outstanding,
which give effect to 106,858  unallocated ESOP shares,  totaled 1,228,867 shares
for the three month period ended June 30, 1997.  The  provisions  of  Accounting
Principles  Board Opinion No. 15 "Earnings Per Share," are not applicable to the
nine and three month periods ended June 30, 1996 and the nine month period ended
June 30,  1997,  as the  conversion  from mutual to stock form was  completed in
March 1997.


                               Page 9 of 14 Pages

<PAGE>



           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

                          MARKET FINANCIAL CORPORATION

         In addition to historical  information  contained herein, the following
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties. Economic circumstances, MFC's operations and actual results could
differ  significantly  from those discussed in the  forward-looking  statements.
Some of the  factors  that could cause or  contribute  to such  differences  are
discussed  herein but also include  changes in the economy and interest rates in
the nation and MFC's market area generally.

         Some  of  the  forward-looking   statements  included  herein  are  the
statements regarding  management's  determination of the amount of allowance for
losses on loans, the adequacy of collateral on nonperforming loans,  legislative
changes  with  respect to the federal  thrift  charter and the effect of certain
accounting pronouncements.

Discussion of Financial Condition Changes from September 30, 1996 to June 30,
  1997

         MFC's assets at June 30, 1997, totaled  approximately $56.6 million, an
$11.0  million,  or 24.2%,  increase over the total at September  30, 1996.  The
increase  was funded  primarily  through the  proceeds of the issuance of common
shares of MFC in March of 1997.

         Liquid assets (cash and cash  equivalents,  certificates of deposit and
investment  securities)  totaled  $28.4 million at June 30, 1997, an increase of
$7.6 million  over the total at  September  30,  1996.  This  increase  resulted
primarily  from the net proceeds from the offering of MFC common shares in March
1997,  which  was  partially  offset  by the use of  liquid  assets to fund loan
originations  during  the nine  months  ended  June 30,  1997.  Repayments  from
mortgage-backed  securities  also provided  funds for the growth in loans during
the period.

         Loans receivable totaled $25.9 million at June 30, 1997, an increase of
$3.9  million,  or 17.6%,  over  September  30,  1996.  This  increase  resulted
primarily  from loan  originations  of $5.7 million,  which  exceeded  principal
repayments of $1.8 million. The Association's  allowance for loan losses totaled
$52,000 at both June 30, 1997 and September 30, 1996. The allowance  represented
 .20%  and  .24% of  total  loans  at June 30,  1997,  and  September  30,  1996.
Nonperforming  loans totaled  $425,000 and $139,000,  or 1.64% and .63% of total
loans, at June 30, 1997, and September 30, 1996,  respectively.  The increase of
$286,000 in nonperforming  loans was primarily  attributable to a nonresidential
real estate loan with an outstanding balance of $325,000.  Such loan was paid in
full in July 1997.

         Although management believes that its allowance for loan losses at June
30, 1997, was adequate based upon the available facts and  circumstances,  there
can be no assurances  that  additions to such allowance will not be necessary in
future  periods,  which  could  adversely  affect the  Association's  results of
operations.

         Deposits  totaled  $35.9  million at June 30,  1997, a decrease of $1.4
million, or 3.7%, from the total at September 30, 1996, primarily as a result of
depositors  withdrawing  funds to purchase common shares in the  conversion.  At
June 30,  1997,  certificates  of  deposit  that  will  mature  within  one year
accounted for 52.1% of the Association's deposit liabilities.

         Shareholders' equity increased $12.3 million, or 163.6%, as a result of
net conversion proceeds of $12.8 million,  net earnings of $323,000 for the nine
months ended June 30, 1997 and a $204,000 or 45.2%  increase in unrealized  gain
on securities  designated as available for sale,  which were partially offset by
the Market  Financial  Corporation  Employee  Stock  Ownership Plan (the "ESOP")
purchase of MFC common shares totaling $1.1 million.

         The  Association  is  required  to meet each of three  minimum  capital
standards   promulgated  by  the  Office  of  Thrift  Supervision  (the  "OTS"),
hereinafter  described as the  tangible  capital  requirement,  the core capital
requirement  and  the  risk-based  capital  requirement.  The  tangible  capital
requirement  provides  for the  maintenance  of  shareholders'  equity  less all
intangible  assets  equal to 1.5% of adjusted  total  assets.  The core  capital


                              Page 10 of 14 Pages
<PAGE>

requirement  provides for the maintenance of tangible capital plus certain forms
of  supervisory  goodwill  equal  to 3% of  adjusted  total  assets,  while  the
risk-based capital requirement mandates maintenance of core capital plus general
loan loss  allowances  equal to 8% of  risk-weighted  assets as  defined  by OTS
regulations.  As of June 30, 1997, the  Association's  tangible and core capital
totaled $12.7 million,  or 22.9%,  of adjusted total assets,  which exceeded the
minimum  requirements  of $834,000 and $1.7  million by $11.9  million and $11.0
million, respectively. As of June 30, 1997, the Association's risk-based capital
was $12.8  million,  or 68.3% of  risk-weighted  assets,  exceeding  the minimum
requirement by $11.3 million.

Comparison of Operating Results for the Three-Month Periods Ended June 30, 1997
  and 1996

         General.  Net earnings totaled $162,000 for the three months ended June
30,  1997,  a $29,000,  or 21.8%,  increase  over the  $133,000 of net  earnings
recorded  for the three  months  ended June 30,  1996.  The increase in earnings
resulted  primarily from a $137,000  increase in net interest income,  which was
partially  offset by a $91,000  increase  in general,  administrative  and other
expense and a $16,000 increase in the provision for federal income taxes.

         Net Interest Income.  Interest income increased by $131,000,  or 15.7%,
for the three  months  ended June 30,  1997,  compared to the three months ended
June 30, 1996. The increase resulted  primarily from an increase in the weighted
average  balance of loans  outstanding  during the period.  Interest  expense on
deposits  decreased  by $6,000,  or 1.4%,  due  primarily  to a decrease  in the
deposit  portfolio,  resulting  primarily  from  customers'  use of  deposits to
purchase common shares in the conversion in March 1997,  coupled with a decrease
in the cost of deposits.  Net interest income  increased by $137,000,  or 34.3%,
for the three months ended June 30, 1997, compared to the same quarter in 1996.

         Provision  for  Losses on Loans.  A  provision  for  losses on loans is
charged  to  earnings  to  bring  the  total  allowance  to a  level  considered
appropriate by management based on historical experience, the volume and type of
lending  conducted  by the  Association,  the status of past due  principal  and
interest payments, general economic conditions,  particularly as such conditions
relate to the  Association's  market  area,  and other  factors  related  to the
collectibility  of  the  Association's  loan  portfolio.  As a  result  of  such
analysis,  management  decided no  additional  provision for losses on loans was
necessary  during the quarter  ended June 30, 1997.  There can be no  assurance,
however,  that the allowance for loan losses of the Association will be adequate
to cover losses on nonperforming assets in the future.

         The foregoing  statement is a  "forward-looking"  statement  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange  Act of 1934,  as amended.  Factors  that could
affect the adequacy of the loan loss allowance include,  but are not limited to,
the  following:  (1)  changes  in the  national  and  local  economy  which  may
negatively  impact the ability of  borrowers  to repay their loans and which may
cause the value of real  estate and other  properties  that  secure  outstanding
loans to decline;  (2) unforeseen  adverse changes in circumstances with respect
to uncertain  large loan  borrowers;  (3)  decreases in the value of  collateral
securing  consumer loans to amounts equal to less than the outstanding  balances
of the consumer loans; and (4)  determinations  by various  regulatory  agencies
that the Association  must recognize  additions to its loan loss allowance based
on such  regulators'  judgment of  information  available to them at the time of
their examinations.

         Other Operating Income. Other operating income,  primarily service fees
on money  orders  and  travelers'  checks,  totaled  $1,000  and  $2,000 for the
three-month periods ended June 30, 1997 and 1996, respectively.

         General,  Administrative and Other Expense. General, administrative and
other  expense  increased by $91,000,  or 45.0%,  for the quarter ended June 30,
1997, compared to the same quarter in 1996. The increase resulted primarily from
a $95,000,  or 97.9%,  increase in employee  compensation  and  benefits  due to
increased staffing, normal merit increases and the expenses related to the stock
benefit plan,  which were partially offset by a $16,000,  or 72.7%,  decrease in
federal deposit  insurance  premiums due to a decline in premium rates following
the SAIF recapitalization assessment.

         Federal  Income Tax. The  provision  for federal  income taxes  totaled
$83,000 for the three months  ended June 30,  1997,  compared to $67,000 for the
1996 quarter. The $16,000, or 23.9%, increase resulted from a $45,000, or 22.5%,
increase in earnings before taxes.  The effective tax rates were 33.9% and 33.5%
for the three months ended June 30, 1997 and 1996, respectively.

                              Page 11 of 14 Pages
<PAGE>

Comparison of Operating Results for the Nine-Month Periods Ended June 30, 1997
  and 1996

         General.  Net earnings  totaled $323,000 for the nine months ended June
30,  1997,  a $21,000,  or 7.0%,  increase  over the  $302,000  of net  earnings
recorded  for the nine  months  ended June 30,  1996.  The  increase in earnings
resulted primarily from a $151,000 increase in net interest income and a $13,000
decrease in the provision for losses on loans,  which were partially offset by a
$135,000  increase in general,  administrative  and other  expenses and a $6,000
increase in the provision for federal income taxes.

         Net Interest Income. Interest income increased by $96,000, or 3.9%, for
the nine months ended June 30, 1997,  compared to the nine months ended June 30,
1996. The increase  resulted  primarily from an increase in the weighted average
balance of loans outstanding during the period,  which was partially offset by a
decrease in the weighted average balances of  mortgage-backed  securities during
the period.  Interest  expense on deposits  decreased by $55,000,  or 4.1%,  due
primarily  to a decrease  in the deposit  portfolio,  due to  customers'  use of
deposits to purchase common shares in the conversion in March 1997, coupled with
a decrease in the cost of deposits.  Net interest income  increased by $151,000,
or 13.3%,  for the nine months ended June 30, 1997,  compared to the same period
in 1996.

         Provision  for  Losses on Loans.  A  provision  for  losses on loans is
charged  to  earnings  to  bring  the  total  allowance  to a  level  considered
appropriate by management based on historical experience, the volume and type of
lending  conducted  by the  Association,  the status of past due  principal  and
interest payments, general economic conditions,  particularly as such conditions
relate to the  Association's  market  area,  and other  factors  related  to the
collectibility  of  the  Association's  loan  portfolio.  As a  result  of  such
analysis,  management  decided no  additional  provision for losses on loans was
necessary during the nine months ended June 30, 1997. There can be no assurance,
however,  that the allowance for loan losses of the Association will be adequate
to cover losses on nonperforming assets in the future.

         The foregoing  statement is a  "forward-looking"  statement  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange  Act of 1934,  as amended.  Factors  that could
affect the adequacy of the loan loss allowance include,  but are not limited to,
the  following:  (1)  changes  in the  national  and  local  economy  which  may
negatively  impact the ability of  borrowers  to repay their loans and which may
cause the value of real  estate and other  properties  that  secure  outstanding
loans to decline;  (2) unforeseen  adverse changes in circumstances with respect
to uncertain  large loan  borrowers;  (3)  decreases in the value of  collateral
securing  consumer loans to amounts equal to less than the outstanding  balances
of the consumer loans; and (4)  determinations  by various  regulatory  agencies
that the Association  must recognize  additions to its loan loss allowance based
on such  regulators'  judgment of  information  available to them at the time of
their examinations.

         Other Operating Income. Other operating income,  primarily service fees
on money  orders  and  travelers'  checks,  totaled  $4,000  and  $6,000 for the
nine-month periods ended June 30, 1997 and 1996, respectively.

         General,  Administrative and Other Expense. General, administrative and
other expense  increased by $135,000,  or 20.3%,  for the nine months ended June
30, 1997,  compared to the same period in 1996. The increase resulted  primarily
from a $155,000, or 47.3%,  increase in employee compensation and benefits,  due
to increased  staffing,  normal merit increases and the expenses  related to the
stock benefit plan, which were partially offset by a $31,000, or 51.7%, decrease
in  federal  deposit  insurance  premiums  due to a  decline  in  premium  rates
following the SAIF recapitalization assessment.

         Federal  Income Tax. The  provision  for federal  income taxes  totaled
$166,000 for the nine months  ended June 30, 1997,  compared to $160,000 for the
1996 period.  The $6,000, or 3.8%,  increase  resulted from a $27,000,  or 5.8%,
increase in earnings before taxes.  The effective tax rates were 33.9% and 34.6%
of the nine months ended June 30, 1997 and 1996, respectively.


                              Page 12 of 14 Pages
<PAGE>



                                     PART II
                          MARKET FINANCIAL CORPORATION

Item 1.  Legal Proceedings

         Not applicable.

Item 2.  Changes in Securities

         Not applicable.

Item 3.  Defaults Upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5.  Other Materially Important Events

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         Exhibit 27 - Financial Data Schedule.











                              Page 13 of 14 Pages
<PAGE>


                                   SIGNATURES

                          MARKET FINANCIAL CORPORATION


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


Date: August 12, 1997                 By:/s/ John T. Larimer
                                            -------------------
                                       John T. Larimer, President and
                                             Chief Executive Officer


Date: August 12, 1997                 By:/s/ Julie M. Bertsch
                                           --------------------
                                       Julie M. Bertsch, Chief Financial Officer



















                              Page 14 of 14 Pages