FORM -10QSB

                       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, 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. 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                            (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 February 11, 1998, the latest practicable date, 1,335,725 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 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
<PAGE>

<TABLE>

                          Market Financial Corporation
<CAPTION>

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                                December 31,           September 30,
                                                                                    1997                   1997
ASSETS                                                                           (In thousands, except share data)
<S>                                                                                   <C>                    <C>
Cash and due from banks                                                            $    553            $       550
Federal funds sold                                                                    3,039                  1,494
Interest-bearing deposits in other financial institutions                               233                    204
                                                                                  ---------            -----------
          Cash and cash equivalents                                                   3,825                  2,248

Certificates of deposit in other financial institutions                               5,940                  6,690
Investment securities - at amortized cost, approximate market
   value of  $14,659 and $17,316 at December 31, 1997 and September 30,
   1997                                                                              14,598                 17,257
Investment securities designated as available for sale - at market                    1,224                  1,029

Mortgage-backed  securities  - at cost,  approximate  market value of $1,305 and
   $1,338 at December 31, 1997
   and September 30, 1997                                                             1,239                  1,268
Loans receivable - net                                                               28,883                 26,502
Office premises and equipment - at depreciated cost                                     145                    147
Federal Home Loan Bank stock - at cost                                                  397                    390
Accrued interest receivable                                                             389                    520
Prepaid expenses and other assets                                                       193                     70
                                                                                 ----------            -----------
          Total assets                                                              $56,833                $56,121
                                                                                    =======                =======

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                            $35,600                $35,303
Advances by borrowers for taxes and insurance                                            93                     49
Accrued interest payable                                                                112                     99
Other liabilities                                                                        20                    137
Accrued federal income taxes                                                            188                     48
Deferred federal income taxes                                                           610                    590
                                                                                 ----------             ----------

          Total liabilities                                                          36,623                 36,226

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 December 31, 1997 and
    September 30, 1997                                                                    -                      -
   Additional paid-in capital                                                        12,832                 12,832
   Retained earnings - substantially restricted                                       7,560                  7,472
   Shares acquired by Employee Stock Ownership Plan (ESOP)                             (971)                (1,069)
   Unrealized gain on securities designated as available for sale,
    net of related tax effects                                                          789                    660
                                                                                 ----------            -----------
          Total shareholders' equity                                                 20,210                 19,895
                                                                                   --------             ----------

          Total liabilities and shareholders' equity                                $56,833                $56,121
                                                                                    =======                =======
</TABLE>


                                  Page 3 of 14
<PAGE>

<TABLE>

                          Market Financial Corporation
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS


                                                   Three months ended December 31,
                                                      1997                1996
                                                (In thousands, except per share data)
<S>                                                    <C>                  <C>
Interest income
  Loans                                                $556                $460
  Mortgage-backed securities                             29                  34
  Investment securities                                 269                 147
  Interest-bearing deposits and other                   132                 157
                                                      -----               -----
    Total interest income                               986                 798

Interest expense
  Deposits                                              427                 426
                                                      -----               -----

     Net interest income                                559                 372

Other operating income                                    2                   2

General, administrative and other expense
   Employee compensation and benefits                   217                 142
   Occupancy and equipment                               31                  26
   Federal deposit insurance premiums                     6                  22
   Franchise taxes                                       21                  24
   Other operating                                       63                  48
                                                      -----              ------
     Total general, administrative and
       other expense                                    338                 262
                                                      -----               -----

        Earnings before income taxes                    223                 112

Federal income taxes
   Current                                              122                 (29)
   Deferred                                             (46)                 67
                                                     -------             ------
      Total federal income taxes                         76                  38
                                                     ------              ------

        Net Earnings                                   $147               $  74
                                                       ====               =====

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


                                  Page 4 of 14
<PAGE>


<TABLE>

                          Market Financial Corporation
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                          Three months ended December 31,
                                                                              1997               1996
                                                                                   (In thousands)
<S>                                                                            <C>              <C>
Cash flows from operating activities:
  Net earnings for the period                                               $   147         $      74
  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)              (17)
  Depreciation and amortization                                                   8                 8
  Amortization of deferred loan origination fees                                 (4)               (6)
  Amortization of expense related to stock benefit plans                        132                 -
  Federal Home Loan Bank stock dividends                                         (7)               (6)
  Increase (decrease) in cash due to changes in:
    Accrued interest receivable                                                 131                 4
    Accrued interest payable                                                     13                25
    Prepaid expenses and other assets                                          (123)              (29)
    Other liabilities                                                          (117)             (265)
    Federal income taxes
      Current                                                                   140               (29)
      Deferred                                                                  (46)               67
                                                                           --------          --------
        Net cash provided by (used in) operating activities                     273              (174)

Cash flows provided by (used in) investing activities:
  Principal repayments on mortgage-backed securities                             29                54
  Proceeds from maturity of investment securities                             3,460             1,200
  Loan disbursements                                                         (3,966)           (2,166)
  Principal repayments on loans                                               1,589               529
  Purchase of investment securities designated as held to maturity             (800)             (500)
  Purchase of office equipment                                                   (6)               (2)
  Decrease in certificates of deposits in other financial
   institutions - net                                                           750               500
                                                                           --------           -------
        Net cash provided by (used in) investing activities                   1,056              (385)

Cash flows provided by (used in) financing activities:
   Net increase in deposits                                                     297               143
   Advances by borrowers for taxes and insurance                                 44                45
   Dividends paid on common stock                                               (93)                -
                                                                          ----------       ----------
        Net cash provided by financing activities                               248               188
                                                                           --------           -------
        Net increase (decrease) in cash and cash equivalents (balance
          carried forward)                                                    1,577              (371)
                                                                            -------           -------

</TABLE>


                                  Page 5 of 14
<PAGE>

<TABLE>

                          Market Financial Corporation
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                          Three months ended December 31,
                                                                              1997              1996
                                                                                  (In thousands)
<S>                                                                            <C>               <C>
        Net increase (decrease) in cash and cash equivalents
          (balance   brought forward)                                        $1,577           $  (371)

Cash and cash equivalents at beginning of period                              2,248             4,082
                                                                            -------           -------

Cash and cash equivalents at end of period                                   $3,825            $3,711
                                                                             ======            ======

Supplemental  disclosure of cash flow  information: 
  Cash paid during the period for:
     Federal income taxes                                                   $     -           $     -
                                                                            =======           =======

     Interest on deposits                                                   $   414           $   401
                                                                            =======           =======

Supplemental disclosure of noncash investing activities:
    Unrealized gain on securities designated as available for sale,
       net of related tax effects                                           $   129           $    61
                                                                            =======           =======
</TABLE>













                                  Page 6 of 14


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          MARKET FINANCIAL CORPORATION

                        For the three month periods ended
                           December 31, 1997 and 1996

         On April 16, 1996,  the Board of  Directors of The Market  Building and
Saving Company  ("Market")  unanimously  adopted a Plan of Conversion to convert
Market  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  Market'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  Market  after  giving  effect  to the
conversion. A subscription offering of the shares of MFC to Market's members and
to a 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.

         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 financial statements for periods prior to March 27, 1997, contained
herein,  are those of Market 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
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 MFC for the year  ended  September  30,  1997.
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, 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 consolidated financial statements include the accounts
of MFC and Market. All significant intercompany items have been eliminated.

3.       Effects of Recent Accounting Pronouncements

         In October 1995, the Financial  Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("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  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.

                                  Page 7 of 14

<PAGE>
         In June 1996, the FASB issued SFAS No. 125,  "Accounting  for Transfers
and Servicing of Financial  Assets and  Extinguishments  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 adopted SFAS No. 125 effective January
1, 1998, as required, without material effect on Market's consolidated financial
position or results of operations.

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income."  SFAS No.  130  establishes  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.  SFAS No. 130 is not expected to have a material  adverse 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.


                                  Page 8 of 14

<PAGE>

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 charger or separate thrift  regulation under federal law prior to the
merger of the deposit insurance funds.  Market then might be regulated as a bank
under federal law and be subject to the more restrictive activity limits imposed
on national banks.

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  give  effect to 97,144  unallocated  ESOP  shares,  totaled
1,238,581  shares for the three month period ended  December 31, 1997.  Dilutive
earnings  per  share  is  computed  taking  into  consideration   common  shares
outstanding and dilutive potential common shares. Presently, MFC has no dilutive
potential  common shares.  Weighted-average  shares  outstanding for purposes of
computing  dilutive  earnings per share  totaled  1,238,581 for the three months
ended  December 31, 1997.  The  provisions of SFAS No. 128 "Earnings Per Share,"
are not  applicable  to the three month period ended  December 31, 1996,  as the
conversion from mutual to stock form was completed in March 1997.









                                  Page 9 of 14
<PAGE>


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

                          MARKET FINANCIAL CORPORATION

                    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, 1997 to
  December 31, 1997

         MFC's assets at December 31, 1997, totaled approximately $56.8 million,
a $712,000,  or 1.3%,  increase  over the $56.1  million  total at September 30,
1997. 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 $25.6 million at December 31, 1997, a decrease of
$1.6 million  from the total at  September  30,  1997.  This  decrease  resulted
primarily from the use of proceeds from  maturities of investment  securities to
fund loan  originations  during the quarter ended December 31, 1997.  Repayments
from mortgage-backed  securities and an increase in deposits also provided funds
for the growth in loans during the period.

         Loans  receivable  totaled  $28.9  million at  December  31,  1997,  an
increase of $2.4  million,  or 9.0%,  over  September  30, 1997.  This  increase
resulted  primarily  from loan  originations  of $4.0  million,  which  exceeded
principal repayments of $1.6 million. Market's allowance for loan losses totaled
$52,000 at both  December 31,  1997,  and  September  30,  1997.  The  allowance
represented .18% and .20% of total loans at December 31, 1997, and September 30,
1997.  Nonperforming  loans totaled  $193,000 and $191,000,  or .67% and .72% of
total loans, at December 31, 1997, and September 30, 1997, respectively.

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

         Deposits  totaled  $35.6  million at December 31, 1997,  an increase of
$297,000, or .8% over the total at September 30, 1997. Demand accounts decreased
by approximately  $145,000,  while certificates of deposit increased by $442,000
during the quarter ended  December 31, 1997. At December 31, 1997,  certificates
of deposit  that will  mature  within one year  accounted  for 53.3% 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
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,
1997,  Market's  tangible and core capital  totaled $13.2  million,  or 23.7% of
adjusted total assets,  which exceeded the minimum  requirements of $832,000 and
$1.7 million, by $12.3 million and $11.5 million,  respectively.  As of December
31,  1997,   Market's   risk-based  capital  was  $13.2  million,  or  64.1%  of
risk-weighted assets, exceeding the minimum requirement by $11.6 million.

                                 Page 10 of 14
<PAGE>



Comparison of Operating Results for the Three-Month Periods Ended December 31, 
  1997 and 1996

General

         Net earnings  totaled  $147,000 for the three months ended December 31,
1997, a $73,000,  or 98.6%,  increase over the $74,000 of net earnings  recorded
for the three months ended December 31, 1996. The increase in earnings  resulted
primarily from a $187,000  increase in net interest income,  which was partially
offset by a $76,000 increase in general,  administrative and other expense and a
$38,000 increase in the provision for federal income taxes.

Net Interest Income

         Interest income  increased by $188,000,  or 23.6%, for the three months
ended  December 31, 1997,  compared to the three months ended December 31, 1996.
The increase  resulted  primarily from an increase in the investment  securities
portfolio  and the  balance of loans  outstanding  during the  period.  Interest
expense on deposits increased by $1,000, or .2%, due primarily to an increase in
the deposit portfolio.  Net interest income increased by $187,000, or 50.3%, for
the three months ended December 31, 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 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,  1997.  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  $2,000 for each of the  three-month  periods ended
December 31, 1997 and 1996.

General, Administrative and Other Expense

         General,  administrative  and other  expense  increased by $76,000,  or
29.0%, for the quarter ended December 31, 1997,  compared to the same quarter in
1996.  The increase  resulted  primarily from a $75,000,  or 52.8%,  increase in
employee  compensation  and  benefits  due to  normal  merit  increases  and the
expenses related to the stock benefit plan.


                                 Page 11 of 14
<PAGE>


Federal Income Tax

         The provision for federal  income taxes totaled  $147,000 for the three
months ended  December 31, 1997,  compared to $38,000 for the same 1996 quarter.
The $38,000 or 100.0%,  increase resulted from a $111,000, or 99.1%, increase in
earnings  before  taxes.  The  effective  tax rates were 34.1% and 33.9% for the
three months ended December 31, 1997 and 1996, respectively.

Other Matters

         Market's operations, like those of most financial institutions,  depend
almost entirely on computer systems. Market is addressing the potential problems
associated  with the  possibility  that the  computers  which control or operate
Market's operating systems,  facilities 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 is working with the companies that supply or
service its  computer-operated  or -dependent systems to identify and remedy any
year-2000 related problems.

         At this time, no specific  material expenses have been identified which
are  reasonably  likely to be incurred by Market in  connection  with  year-2000
issues and  Market  does not expect to incur  significant  expense to  implement
corrective  measures.  No  assurance  can be given at this time,  however,  that
significant  expense will not be incurred in future  periods.  In the event that
Market is ultimately required to purchase replacement computer systems, programs
and  equipment,  or that  substantial  expense must be incurred to make Market's
current systems,  programs and equipment year-2000  compliant,  MFC's net income
and financial condition could be adversely affected. While Market is endeavoring
to ensure that its  computer-dependent  operations are year-2000  compliant,  no
assurance can be given that some year-2000 problems will not occur.

         In addition to possible  expense related to its own systems,  MFC could
incur  losses if  year-2000  issues  adversely  affect  Market's  depositors  or
borrowers.  Such problems  could include  delayed loan payments due to year-2000
problems  affecting  any of Market's  significant  borrowers  or  impairing  the
payroll  systems of large  employers 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 year-2000 related difficulties that will affect net
earnings or cash flow.




                                 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 30, 1998,  MFC held its Annual Meeting of  Shareholders.  In
connection therewith, two matters were submitted to the shareholders for a vote.
First,  shareholders  elected three  directors for terms expiring in 2000 by the
following votes:

         Robert Gandenberger

                  FOR:     1,038,081        WITHHELD:         2,809

         John T. Larimer

                  FOR:     1,035,581        WITHHELD:         5,309

         Edgar H. May

                  FOR:     1,036,581        WITHHELD:         4,309

         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:  976,267     AGAINST:  64,616    ABSTAIN:    0     BROKER NON-VOTES:    7
      -------               ------             ------                     ------

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: 2/12/98                    By: /s/ John T. Larimer
                                      John T. Larimer, President and
                                          Managing Officer



Date 2/12/98                     By: /s/ Julie M. Bertsch
                                      Julie M. Bertsch, Chief Financial Officer


















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