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 DECEMBER 31, 1998

                                       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. 000-22255

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

                                                            31-0462464
                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 office)                    (Zip Code)

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 February 8, 1999, the latest practicable date,  1,290,225 common shares of
the registrant, no par value, were issued and outstanding.




                                  Page 1 of 14

<PAGE>



                                      INDEX

                          MARKET FINANCIAL CORPORATION

                                                                        Page
PART I  - FINANCIAL INFORMATION

          Consolidated Statements of Financial Condition                    3
          Consolidated Statements of Earnings                               4
          Consolidated Statements of Other Comprehensive Income             5
          Consolidated Statements of Cash Flows                             6
          Notes to Consolidated Financial Statements                        8
          Management's Discussion and Analysis of Financial
            Condition and Results of Operations                            10

PART II - OTHER INFORMATION                                                13

SIGNATURES                                                                 14






















                                  Page 2 of 14
<PAGE>

<TABLE>

                          Market Financial Corporation

<CAPTION>
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                                 December 31,           September 30,
                                                                                     1998                   1998
ASSETS                                                                            (In thousands, except share data)
<S>                                                                                     <C>                     <C>
Cash and due from banks                                                              $   516                $   615
Federal funds sold                                                                     4,477                  4,493
Interest-bearing deposits in other financial institutions                                314                    273
                                                                                      ------                 ------
          Cash and cash equivalents                                                    5,307                  5,381

Certificates of deposit in other financial institutions                                3,790                  3,790
Investment securities - at amortized cost, approximate market
   value of  $9,829 and $9,394 at December 31, 1998 and September 30, 1998
                                                                                       9,800                  9,300
Investment securities designated as available for sale - at market                     1,881                  1,448
Mortgage-backed securities - at cost, approximate
   market value of  $833 and $902 at December 31, 1998
   and September 30, 1998                                                                803                    859
Loans receivable - net                                                                32,953                 32,816
Office premises and equipment - at depreciated cost                                      523                    127
Federal Home Loan Bank stock - at cost                                                   426                    419
Accrued interest receivable                                                              329                    319
Prepaid expenses and other assets                                                        192                    149
                                                                                      ------                 ------
          Total assets                                                               $56,004                $54,608
                                                                                      ======                 ======
Liabilities and SHAREHOLDERS' EQUITY
Deposits                                                                             $38,671                $37,745
Other borrowed money                                                                     822                    725
Advances by borrowers for taxes and insurance                                             96                     57
Accrued interest payable                                                                 109                     95
Other liabilities                                                                         84                    175
Accrued federal income taxes                                                              36                     18
Deferred federal income taxes                                                            829                    715
                                                                                      ------                 ------
          Total liabilities                                                           40,647                 39,530
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                                                                -                      -
   Additional paid-in capital                                                          8,199                  8,191
   Retained earnings - substantially restricted                                        7,636                  7,650
   Shares acquired by stock benefit plans                                             (1,603)                (1,700)
   Treasury stock - 8,500 shares at December 31, 1998 - at cost                          (97)                     -
   Unrealized gain on securities designated as available for sale,
    net of related tax effects                                                         1,222                    937
                                                                                      ------                 ------
          Total shareholders' equity                                                  15,357                 15,078
                                                                                      ------                 ------
          Total liabilities and shareholders' equity                                 $56,004                $54,608
                                                                                      ======                 ======
</TABLE>


                                  Page 3 of 14
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<TABLE>

                          Market Financial Corporation
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS


                                                                Three months ended December 31,
                                                                    1998                1997
                                                             (In thousands, except per share data)
<S>                                                                 <C>                  <C>
Interest income
  Loans                                                             $642                $556
  Mortgage-backed securities                                          19                  29
  Investment securities                                              164                 269
  Interest-bearing deposits and other                                119                 132
                                                                     ---                 ---
    Total interest income                                            944                 986
Interest expense
  Deposits                                                           460                 427
  Borrowings                                                          16                   -
                                                                     ---                 ---
    Total interest expense                                           476                 427
                                                                     ---                 ---
       Net interest income                                           468                 559

Other operating income                                                 3                   2

General, administrative and other expense
   Employee compensation and benefits                                189                 217
   Occupancy and equipment                                            27                  31
   Federal deposit insurance premiums                                  5                   6
   Franchise taxes                                                    55                  21
   Other operating                                                    74                  63
                                                                     ---                 ---
     Total general, administrative and
       other expense                                                 350                 338
                                                                     ---                 ---

        Earnings before income taxes                                 121                 223

Federal income taxes
   Current                                                            75                 122
   Deferred                                                          (34)                (46)
                                                                     ---                 ---
      Total federal income taxes                                      41                  76
                                                                     ---                 ---

        Net Earnings                                                $ 80                $147
                                                                     ===                 ===

        Earnings per share
              Basic                                                 $.06                $.12
                                                                     ===                 ===
              Diluted                                               $.06                $.12
                                                                     ===                 ===
</TABLE>




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<PAGE>

<TABLE>

                          Market Financial Corporation

<CAPTION>
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



                                                                         For the three months
                                                                          ended December 31,
                                                                        1998              1997
                                                                            (In thousands)
<S>                                                                      <C>               <C>
Net earnings                                                            $ 80              $147

Other comprehensive income, net of tax:
     Unrealized holding gains on securities during
          the period                                                     285               129
                                                                         ---               ---

Comprehensive income                                                    $365              $276
                                                                         ===               ===

</TABLE>

























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<TABLE>

                          Market Financial Corporation

<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                           Three months ended December 31,
                                                                               1998               1997
                                                                                    (In thousands)
<S>                                                                             <C>                <C>
Cash flows from operating activities:
  Net earnings for the period                                                 $   80             $  147
  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                                                1                 (1)
  Depreciation and amortization                                                    8                  8
  Amortization of deferred loan origination fees                                  (2)                (4)
  Amortization of expense related to stock benefit plans                         105                132
  Federal Home Loan Bank stock dividends                                          (7)                (7)
  Increase (decrease) in cash due to changes in:
    Accrued interest receivable                                                  (10)               131
    Accrued interest payable                                                      14                 13
    Prepaid expenses and other assets                                            (43)              (123)
    Other liabilities                                                            (91)              (117)
    Federal income taxes
      Current                                                                     18                140
      Deferred                                                                   (34)               (46)
                                                                               -----              -----
        Net cash provided by operating activities                                 39                273
Cash flows provided by (used in) investing activities:
  Principal repayments on mortgage-backed securities                              55                 29
  Proceeds from maturity of investment securities                              2,500              3,460
  Loan disbursements                                                          (2,770)            (3,966)
  Principal repayments on loans                                                2,635              1,589
  Purchase of investment securities designated as held to maturity            (3,000)              (800)
  Purchase of office equipment                                                  (404)                (6)
  Decrease in certificates of deposits in other financial
   institutions - net                                                              -                750
                                                                               -----              -----
        Net cash provided by (used in) investing activities                     (984)             1,056

Cash flows provided by (used in) financing activities:
   Net increase in deposits                                                      926                297
   Advances by borrowers for taxes and insurance                                  39                 44
   Proceeds from other borrowed money                                             97                  -
   Purchase of treasury stock                                                    (97)                 -
   Dividends paid on common stock                                                (94)               (93)
                                                                               -----              -----
        Net cash provided by financing activities                                871                248
                                                                               -----              -----
        Net increase (decrease) in cash and cash equivalents (balance
          carried forward)                                                       (74)             1,577
                                                                               -----              -----

</TABLE>


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<TABLE>

                          Market Financial Corporation

<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                           Three months ended December 31,
                                                                               1998               1997
                                                                                   (In thousands)
<S>                                                                            <C>                  <C>
        Net increase (decrease) in cash and cash equivalents
          (balance   brought forward)                                         $  (74)            $1,577

Cash and cash equivalents at beginning of period                               5,381              2,248
                                                                               -----              -----
Cash and cash equivalents at end of period                                    $5,307             $3,825
                                                                               =====              =====
Supplemental  disclosure of cash flow  information:
  Cash paid during the period for:
     Federal income taxes                                                     $   60             $    -
                                                                               =====              =====
     Interest on deposits and borrowings                                      $  462             $  414
                                                                               =====              =====
Supplemental disclosure of noncash investing activities:
    Unrealized gain on securities designated as available for sale,
       net of related tax effects                                             $  285             $  129
                                                                               =====              =====
</TABLE>























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<PAGE>


                          MARKET FINANCIAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        For the three month periods ended
                           December 31, 1998 and 1997

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
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  consolidated  financial
statements  and notes thereto of Market  Financial  Corporation  ("MFC") for the
year ended  September  30,  1998.  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 periods ended December
31, 1998 are not necessarily indicative of the results which may be expected for
an entire fiscal year.

2.       Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
of MFC and its wholly owned  subsidiary,  The Market Building and Saving Company
("Market"). All significant intercompany items have been eliminated.

3.       Effects of Recent Accounting Pronouncements

         In June 1996,  the Financial  Accounting  Standards  Board (the "FASB")
issued Statement of Financial  Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive  Income."  SFAS No. 130  established  standards  for reporting and
display of comprehensive income and its components (revenue, expenses, gains and
losses)  in a full set of  general-purpose  financial  statements.  SFAS No. 130
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  It does not require a specific format for that financial  statement
but  requires  that  an  enterprise   display  an  amount   representing   total
comprehensive income for the period in the financial statement.

         SFAS No. 130 requires  that an enterprise  (a) classify  items of other
comprehensive  income by their nature in a financial  statement  and (b) display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in capital in the equity section of a statement of
financial condition.  SFAS No, 130 is effective for fiscal years beginning after
December 15, 1997.  Reclassification of financial statements for earlier periods
is required.  Management  adopted  SFAS No. 130  effective  October 1, 1998,  as
required, without material effect on MFC's consolidated financial statements.

         In June 1997, the FASB issued SFAS No. 131," Disclosures about Segments
of an Enterprise and Related  Information."  SFAS No. 131 significantly  changes
the way that public  business  enterprises  report  information  about operating
segments in annual  financial  statements  and requires  that those  enterprises
report  selected  information  about  reportable  segments in interim  financial
reports  issued to  shareholders.  It also  establishes  standards  for  related
disclosures  about products and services,  geographic areas and major customers.
SFAS No. 131 uses a "management  approach" to disclose financial and descriptive
information  about the way that  management  organizes  the segments  within the
enterprise for making operating  decisions and assessing  information.  For many
enterprises,  the management  approach will likely result in more segments being
reported. In addition,  SFAS No. 131 requires  significantly more information to
be disclosed for each  reportable  segment than is presently  being  reported in
annual  financial  statements  and also requires that  selected  information  be
reported in interim financial  statements.  SFAS No. 131 is effective for fiscal
years beginning  after December 15, 1997. The disclosure  provisions of SFAS No.
131 are not  expected to have a material  adverse  effect on MFC's  consolidated
financial statements.

         In June 1998, the FASB issued SFAS No. 133,  "Accounting for Derivative
Instruments and Hedging  Activities,"  which requires  entities to recognize all



                                  Page 8 of 14


<PAGE>
derivatives  in their  financial  statements  as either  assets  or  liabilities
measured at fair value.  SFAS No. 133 also  specifies  new methods of accounting
for hedging  transactions,  prescribes  the items and  transactions  that may be
hedged,  and  specifies  detailed  criteria  to be  met  to  qualify  for  hedge
accounting.

         The definition of a derivative  financial instrument is complex, but in
general it is an instrument  with one or more  underlyings,  such as an interest
rate or foreign exchange rate, that is applied to a notional amount,  such as an
amount of currency, to determine the settlement amount(s). It generally requires
no  significant  initial  investment and can be settled net or by delivery of an
asset that is readily  convertible to cash.  SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.

         SFAS No. 133 is  effective  for fiscal years  beginning  after June 15,
1999.  On adoption,  entities are  permitted to transfer  held-to-maturity  debt
securities to the  available-for-sale  or trading  category without calling into
question  their intent to hold other debt  securities to maturity in the future.
SFAS No.  133 is not  expected  to have a  material  impact  on MFC's  financial
statements.

4.       Pending Legislative Changes

         The  deposit  accounts  of Market and other  savings  associations  are
insured  up to  applicable  limits  by the  FDIC  in the  SAIF.  Legislation  to
recapitalize  the SAIF was  enacted on  September  30,  1996.  Such  legislation
provided that the SAIF will be merged into the Bank  Insurance Fund if there are
no remaining  federal savings  associations.  Such legislation also requires the
Department  of Treasury to submit a report to Congress on the  development  of a
common charter for all financial institutions.

         Pursuant to such  legislation,  Congress  may  eliminate  the OTS,  and
Market may be regulated under federal law as a bank or may 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,  Market  might become  subject to a
different form of holding company regulation,  which may limit the activities in
which  MFC  may  engage,   and  subject  MFC  to  other  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 may
change  the  activities  in which  either MFC or Market  may  engage,  it is not
anticipated  that the  current  activities  of  either  MFC and  Market  will be
materially affected by those activity limits.

5.       Earnings Per Share

         Basic  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
outstanding,  which gives effect to 95,863 and 97,144  unallocated  ESOP shares,
totaled 1,329,492 and 1328,581 shares for the three month periods ended December
31,  1998  and  1997.  Diluted  earnings  per  share  is  computed  taking  into
consideration  common shares outstanding and dilutive potential common shares to
be issued under MFC's stock option plan. Weighted-average shares outstanding for
purposes of computing diluted earnings per share totaled 1,329,492 and 1,328,581
for the three  months  ended  December  31,  1998 and 1997.  Options to purchase
113,526 shares of common stock with a weighted-average  exercise price of $13.50
were outstanding at December 31, 1998, but were excluded from the computation of
common  stock  equivalents  because  their  exercise  price was greater than the
average market price of the common shares.












                                  Page 9 of 14
<PAGE>


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

                    Note Regarding Forward-Looking Statements

         In addition to historical  information  contained herein, the following
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  Economic  circumstances,  Market'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, the effect
of the year 2000 on information  technology  systems,  legislative  changes with
respect to the  federal  thrift  charter  and the  effect of certain  accounting
pronouncements.

Discussion of Financial Condition Changes from September 30, 1998 to December
31, 1998

         MFC's assets at December 31, 1998, totaled approximately $56.0 million,
a $1.4 million,  or 2.6%, increase over the $54.6 million total at September 30,
1998. The increase was funded  through growth in deposits,  net earnings for the
quarter and unrealized gains on securities designated as available for sale.

         Liquid assets (cash and cash  equivalents,  certificates of deposit and
investment  securities)  totaled $20.8 million at December 31, 1998, an increase
of  $859,000  from the total at  September  30,  1998.  This  increase  resulted
primarily  from the use of funds  from  deposit  growth to  purchase  investment
securities,  fund loan  originations  and purchase  office  premises  during the
quarter ended December 31, 1998 along with the  unrealized  gains of $433,000 on
securities  designated as available for sale. Additional borrowed money provided
funds to purchase  8,500 MFC shares during the quarter,  which is the start of a
5% stock repurchase announced in November 1998.

         Loans  receivable  totaled  $33.0  million at  December  31,  1998,  an
increase of $137,000,  or .4%, over September 30, 1998.  This increase  resulted
primarily  from loan  originations  of $2.8 million,  which  exceeded  principal
repayments of $2.6 million.  Market's  allowance for loan losses totaled $52,000
at both December 31, 1998,  and September  30, 1998.  The allowance  represented
 .16% of total loans at December 31, 1998, and September 30, 1998.  Nonperforming
loans  totaled  $172,000 and $171,000,  or .52% of total loans,  at December 31,
1998 and September 30, 1998, respectively.

         Although  management  believes  that its  allowance  for loan losses at
December  31,  1998,   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  Market's
results of operations.

         During the quarter  ended  December  31,  1998,  Market  purchased  the
adjoining  property to its main office in Mt. Healthy,  Ohio.  This  acquisition
will allow  Market to expand the  facilities  in Mt.  Healthy and  increase  the
services  available to its customers,  including the expected  installation of a
drive-thru automated teller window and an ATM.

         Deposits  totaled  $38.7  million at December 31, 1998,  an increase of
$926,000,  or 2.5%,  over the  total at  September  30,  1998.  Demand  accounts
increased by approximately  $265,000,  and certificates of deposit  increased by
$661,000  during the quarter  ended  December  31,  1998.  At December 31, 1998,
certificates  of deposit that will mature within one year accounted for 53.8% of
Market's deposit liabilities.

         Market 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  requirement  provides for the
maintenance of tangible capital plus certain forms of supervisory goodwill equal


                                 Page 10 of 14

<PAGE>
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 December 31,
1998,  Market's  tangible and core capital  totaled $13.9  million,  or 25.7% of
adjusted total assets,  which exceeded the minimum  requirements of $810,000 and
$1.6 million, by $13.0 million and $12.2 million,  respectively.  As of December
31,  1998,   Market's   risk-based  capital  was  $13.9  million,  or  59.4%  of
risk-weighted assets, exceeding the minimum requirement by $12.0 million.

Comparison of Operating Results for the Three-Month Periods Ended December 31,
1998 and 1997

General

         Net earnings  totaled  $80,000 for the three months ended  December 31,
1998, a $67,000,  or 45.6%,  decrease from the $147,000 of net earnings recorded
for the three months ended December 31, 1997. The decrease in earnings  resulted
primarily from a $42,000,  or 4.3%,  decrease in interest income, a $49,000,  or
11.5%, increase in interest expense and a $12,000, or 3.6%, increase in general,
administrative and other expense,  which were partially offset by a $35,000,  or
46.1%, decrease in the provision for federal income taxes.

Net Interest Income

         Interest  income  decreased by $42,000,  or 4.3%,  for the three months
ended  December 31, 1998,  compared to the three months ended December 31, 1997.
The   decrease   resulted   primarily   from  a  decrease  in   investment   and
mortgage-backed  securities  portfolios,  which  were  partially  offset  by  an
increase in the balance of loans outstanding during the period. Interest expense
on deposits  increased by $33,000,  or 7.7%, due primarily to an increase in the
deposit  portfolio.  Interest  expense on  borrowings  increased  $16,000 due to
proceeds from other  borrowed  money  outstanding  during the 1998 quarter.  Net
interest  income  decreased  by $91,000,  or 16.3%,  for the three  months ended
December 31, 1998, compared to the same quarter in 1997.

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 Market, the
status of past due principal and interest payments, general economic conditions,
particularly  as such  conditions  relate to  Market's  market  area,  and other
factors related to the collectibility of Market's loan portfolio. As a result of
such analysis,  management  decided no additional  provision for losses on loans
was  necessary  during the quarter  ended  December  31,  1998.  There can be no
assurance,  however,  that the  allowance  for loan  losses  of  Market  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 or less  than  the  outstanding
balances of the consumer loans;  and (4)  determinations  by various  regulatory
agencies that Market 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 $3,000 and $2,000 for the three-month  periods ended
December 31, 1998 and 1997, respectively.

General, Administrative and Other Expense

         General,  administrative  and other  expense  increased by $12,000,  or
3.6%, for the quarter ended  December 31, 1998,  compared to the same quarter in
1997. The increase  resulted  primarily from a $34,000,  or 161.9%,  increase in
franchise taxes and an $11,000,  or 17.5%,  increase in other operating expense,
which  were  partially  offset by a  $28,000,  or 12.9%,  decrease  in  employee
compensation and benefits due to the decreased number of employees.


                                 Page 11 of 14
<PAGE>


Federal Income Tax

         The  provision for federal  income taxes totaled  $41,000 for the three
months ended  December 31, 1998,  compared to $76,000 for the same 1997 quarter.
The $35,000, or 46.1%,  decrease resulted from a $102,000, or 45.7%, decrease in
earnings  before  taxes.  The  effective  tax rates were 33.9% and 34.1% for the
three months ended December 31, 1998 and 1997, respectively.

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 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  operation,  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.  STARCOM is the system used by
the service bureau (NCR) to process account data and generate necessary reports.
NCR has stated in its  October 31, 1998  Quarterly  Update  Letter (a "Year 2000
Readiness  Disclosure") that the STARCOM system is Year 2000 qualified per their
Year 2000 Qualification Requirements Definition document.

         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 the 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 incur substantial expense to make
Market's 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  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.




                                 Page 12 of 14
<PAGE>



                                     PART II
                          MARKET FINANCIAL CORPORATION

Item 1.  Legal Proceedings

         Not applicable.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable.

Item 3.  Defaults Upon Senior Securities

         Not applicable.

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

         On January 26, 1999,  MFC held its Annual Meeting of  Shareholders.  In
connection therewith, two matters were submitted to the shareholders for a vote.
First,  shareholders  elected four  directors for terms  expiring in 2001 by the
following votes:

         Rae Skirvin Larimer

                  FOR:  1,128,194           WITHHELD:   7,678    
                       -------------                  -----------

         R.C. Meyerenke

                  FOR:  1,128,494           WITHHELD:    7,378   
                       -------------                  -----------

         Wilbur H. Tisch

                  FOR:  1,112,494           WITHHELD:   23,378   
                       -------------                  -----------

         Kathleen A. White

                  FOR:  1,128,994           WITHHELD:   6,878   
                       -------------                  ----------

         The  shareholders  also ratified the selection of Grant Thornton LLP as
the auditors of MFC for the current fiscal year, pursuant to the following vote:

FOR: 1,125,669    AGAINST: 9,696      ABSTAIN: 507     BROKER NON-VOTES:  -
     ---------             -----               ---                       ---

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         Exhibit 27 - Financial Data Schedule.




                                 Page 13 of 14
<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: 2/12/99                   By: /s/ John T. Larimer 
                                     John T. Larimer, President and
                                         Managing Officer



Date 2/12/99                    By: /s/ Julie M. Bertsch 
                                     Julie M. Bertsch, Chief Financial Officer




































                                 Page 14 of 14